BEAD Letter of Credit Waiver

The National Telecommunications and Information Administration (NTIA), the agency responsible for administering the Broadband Equity, Access, and Deployment (BEAD) Program, provided notice of a conditional programmatic waiver of the letter of credit requirements set forth in the BEAD Program Notice of Funding Opportunity (NOFO). The BEAD NOFO requires Eligible Entities to establish a model letter of credit substantially similar to the model letter of credit established by the Commission in connection with the Rural Digital Opportunity Fund. NTIA has determined that, for good cause shown, and in the best interest of the Federal Government, a conditional programmatic waiver of the letter of credit obligation should be granted. The waiver modifies the letter of credit requirement in the following ways: 

• Allow Credit Unions to Issue LOCs. The NOFO requires subgrantees to obtain a LOC from a U.S. bank with a safety rating issued by Weiss of B− or better. The waiver permits subgrantees to fulfill the LOC Requirement (or any alternative permitted under the waiver) utilizing any United States credit union that is insured by the National Credit Union Administration and that has a credit union safety rating issued by Weiss of B− or better.   

• Allow Use of Performance Bonds. The waiver permits a subgrantee to provide a performance bond equal to 100% of the BEAD subaward amount in lieu of a letter of credit, provided that the bond is issued by a company holding a certificate of authority as an acceptable surety on federal bonds as identified in the Department of Treasury Circular 570.  

• Allow Eligible Entities to Reduce the Obligation Upon Completion of Milestones.  The waiver allows an Eligible Entity to reduce the amount of the letter of credit obligation below 25% over time, or reduce the amount of the performance bond below 100% over time, upon a subgrantee meeting deployment milestones specified by the Eligible Entity. 

• Allow for an Alternative Initial LOC or Performance Bond Percentage. The NOFO requires that the initial amount of the letter of credit be 25% of the subaward (or the initial amount of the performance bond be 100% of the subaward under the option described above). The waiver allows the initial amount of the letter of credit or performance bond to be 10% of the subaward amount during the entire period of performance when an Eligible Entity issues funding on a reimbursable basis consistent with Section IV.C.1.b of the NOFO and reimbursement is for periods of no more than six months each.