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Federal Register / Vol. 86, No. 166 / Tuesday, August 31, 2021 / Rules and Regulations
related to internal labor costs, including carrier internal project management.
The Bureau recognizes that the Reimbursement Program will demand significant employee time and resources. Internal labor costs, like other program costs, are reimbursable to the extent they are reasonably incurred removing, replacing, and disposing of covered communications equipment and services. However, for internal labor costs to be reimbursable, they must be entirely related to transition efforts, that is, the costs would not have been incurred but for Reimbursement Program participation removing, replacing, and disposing of covered communications equipment and services. In other words, participants are only eligible to recover that portion of employee time attributable to transitioning equipment and services, not unrelated employee time or expenses related to overhead. Labor costs associated with normal system or network maintenance and administration, conducted in the ordinary course of business, are not reimbursable. The Bureau will review internal labor costs with heightened scrutiny to ensure that such expenses are reasonably necessary for removal, replacement, and disposal of covered communications equipment or services, and to avoid waste, fraud, and abuse in the Program. Generally, the Bureau expects cost estimates for internal labor to be lower than cost estimates for outside services for the same work.
79. The Bureau finds that the Catalog adequately identifies and accounts for employee time, i.e., internal labor costs, that could be quantified for a range of cost estimates based on pricing data submitted by industry stakeholders to Widelity. For example, the Catalog includes a range of cost estimates for internal labor including project management and engineer/staff network operations which are on a per person per month basis. The Bureau makes no changes to the Catalog with respect to internal labor costs. Internal labor costs identified in the Catalog are reimbursable to the extent they are reasonably incurred removing, replacing, and disposing of covered communications equipment and services. Applicants may rely on the Catalog to estimate internal labor costs for their application submissions where applicable but will be required to submit additional documentation accounting for actual costs during the reimbursement stage to ensure that reimbursement funds are entirely related to transition efforts.
80. Applicants seeking reimbursement for internal labor costs that are not
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identified in the Catalog will be required to submit individualized cost estimates and documentation and certify that the estimates are made in good faith. In particular, to ensure that internal labor costs are entirely related to transition efforts, such costs must be estimated on a per-hour and per-project basis, providing both an estimate of labor hours to be incurred for each project and the internal labor rate to be used. Evidence of the salary/hourly rate of internal labor must be provided to establish the reimbursable portion of labor costs. Labor rates may be inclusive of salary and benefits. When submitting cost estimates for internal labor costs, the applicant should provide the employee hourly rates, a description of the work performed, and the number of hours to be worked e.g., copies of employee timesheets or paystubs with hours worked, and Internal Revenue Service Form W2, Wage and Tax Statement.
81. The Bureau will exercise its discretion in determining whether the hours and/or labor rates satisfy the costs reasonably incurred standard. When submitting actual costs for reimbursement for internal labor, participants should provide: A report listing the hours incurred for each transition task, the applicable labor rate, and the resulting cost; and copies of employee timesheets showing hours worked on each transition task, by day.
Timesheet hours must match the totals reported by the task in this document.
Timesheets either may come from the participants time and expense reporting systems or can be manually prepared using spreadsheets or other means. The Bureau may request additional supporting information for internal labor costs, such as payroll, human resources, or financial records.
82. RWA argues that costs associated with long term maintenance contracts or managed service contracts to maintain and operate Huawei and ZTE
networks may need to be terminated prior to the service terms being completed and that the costs associated with the termination . . . should be reimbursed as part of the costs associated with replacing the networks. Observing that other prepaid service contracts may need to be terminated prior to the service terms being completed, RWA argues that these costs should be eligible for reimbursement and included in the Cost Catalog because they are outlays already made that are not otherwise recoverable. The Bureau rejects RWAs request because these expenses are incurred to maintain Huawei and ZTE
networks that the Reimbursement
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Program is designed to replace. These expenses are not reasonably necessary to remove, replace, and dispose of covered communications equipment and services.
83. The Bureau does, however, clarify that early termination fees incurred by providers terminating long term service contracts, managed service contracts, or other prepaid contracts entered into prior to their application submission may be reimbursable to the extent they are reasonably necessary for removing, replacing, and disposing of covered communications equipment and services. The Bureau will not reimburse early termination fees for contracts entered into after June 30, 2020, as Congress has established that date as the eligibility cut-off for eligible expenses.
Beyond our statutory obligation, after June 30, 2020, the date on which the Public Safety and Homeland Security Bureau released orders designating Huawei and ZTE as covered companies under our rule 54.9, no Universal Service Funds could be used to purchase, obtain, maintain, improve, modify, or support Huawei or ZTE
equipment or services. The Bureau declines to reward business decisions where a participant should be on notice to not enter into arrangements with such fees given the programs goals to incentivize providers to remove, replace, and dispose of Huawei and ZTE
equipment and services. Participants seeking reimbursement for early termination fees must provide supporting documentation, including copies of vendor contracts with the early termination fee provisions.
84. CCA requested that certain integration costs be included in the Catalog. CCA requested that any Citizens Broadband Radio Service CBRS equipment being replaced should include the costs of reintegration of the new CBRS equipment with Spectrum Access Systems.
Because Spectrum Access Systems SAS integration costs may be reasonably necessary to replace CBRS
equipment, these costs may be reimbursable under the program. The Bureau revises the Catalog to include cost categories for access layer and distribution layer SAS Integration Costs and a range of cost estimates based on Widelitys confidential interviews with communications industry stakeholders.
85. CCA also requested inclusion in the Catalog of a cost category for thirdparty integration costs such as billing software, messaging platforms, roaming services, WEAS systems, and robocall blocking services. While these expenses are not in the Catalog, some of these expenses may be reimbursable.

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