Pre-Purchase of Materials

Pre-Purchase of Materials via the Pre-Construction Grant Program

Background:  Using the authority granted in 8085(b) to include in the Preconstruction Program “any other costs deemed appropriate by the Board” or in 8084(a)(6) “all the powers necessary and convenient” to solve the issue of materials procurement prior to the approval of the construction plans, the VCBB has adopted the following process for including the Pre-Purchase of Materials in the Pre-Construction Grant Program:  

Application:  How to Apply

Requirements and Criteria: 

  “Specified Lead-Time Materials” subject to this proposed procurement grant process shall be limited to materials that are:

(a) Specifically identified by quantity, manufacturer, SKU (or another product identifier), and description.

(b) Consistent with the standards set by the VCBB Outside Plan Design standards published by the VCBB.

(c) Demonstrated or represented in writing by the supplier or a memo provided by the CUD summarizing the suppliers’ responses to an RFP or RFI (i) to have limited availability in the next 6-12 months such that orders placed after April 15, 2022 will not arrive prior to September 1, 2022 or an expected start of construction that is accepted by the VCBB, whichever is sooner, (ii) for which the price will increase more than five percent if not ordered before April 15, 2022, or (iii) ordering such Specific Lead-Time Materials separately from other items will cause an increase in cost.; (Iv) materials in which lead times exceed 36 weeks and are necessary for subsequent construction seasons.

(e) Specified by a knowledgeable construction or network design vendor under contract to the applicant with the certification that the materials are required for the applicant’s anticipated construction plan that is the subject of a grant application to the VCBB; Currently are available to arrive in Vermont by or before August 1, 2022 or the expected start of Construction; scheduled for a date accepted by VCBB; and

(f) materials otherwise meeting the criteria of Specified Lead-Time Materials that have already been ordered and are back by a letter of credit with payment due by the CUD prior to the issuance of a Construction Grant are also eligible for this program.

2. Materials shall be added as an eligible expense in the Pre-Construction Grant Program (preferred) or a new supplemental grant program via 30 V.S.A. § 8084(a)(6) and will be deducted from the CUD’s Construction Grant available funds allocation.  If the amount necessary exceeds the allotment of fundings to each CUD via the Pre-Construction Program, additional funds can be transferred from the CUD’s Construction Grant program allotment.

  1. $4 Million shall be transferred to the Pre-Construction Grant program from and allocated based on the formula used in the Construction Grant Program.  
  2. CUDs are allowed to purchase necessary materials meeting the criteria of Specified Lead-Time Materials for the next 24 months (ending March 31, 2024). Applicants must demonstrate that the materials meet the requirements of Specified Lead-Time Materials before approval will be granted by the Staff. Staff will be authorized to approve grants for Specified Lead-Time Materials not to exceed $6 million per CUD per fiscal year. The Staff will report approved Specified Lead-Time Material grants and the amendments to the Pre-Construction grants to the Board.  
  3. If the amount necessary exceeds the allotment of the additional $4M in fundings to each, additional funds awarded with be deducted moved from the CUD’s Construction Grant program allotment to the Pre-Construction Program.
  4. CUDs shall own the Specified Lead Time Materials, but they are subject to claw back in the case of a failure to meet grant standards under the following terms:

(a)that the Specified Lead-Time Materials cannot be used, opened, installed, distributed, or possession transferred to a third party unless or until a construction grant application for the CUD in possession of the Specified Lead-Time Materials has been approved by the VCBB.

(b)All contracts for materials shall include a restocking clause acceptable to VCBB staff (i.e., materials may be returned, and funds expended will be returned to the VCBB if the CUD fails to meet their obligations under either the Construction Grant or the Preconstruction Grant, or in the event that the quantity purchased by the CUD materially exceeds its requirements). CUDs must report back to the VCBB if a restock clause is not available for a material they purchase. 

(c)the standard general default language shall be included in every grant agreement

(d)the CUD will specify the location of the Specified Lead-Time Materials, and will maintain such materials in the condition delivered and will protect and insure the Specified Lead Time Materials to their full value.

(e)the CUD will transfer any Specified Lead Time Materials purchased in this process to the VCBB if the CUD has not received the VCBB’s approval of a construction grant by December 31, 2022.

Staff will collaborate with VCUDA to study the pros and cons of using a third party to contract for all the CUDs or the VCBB incentivizing the CUDs to using a third-party procurement and inventory management system for future purchases. This may include covering the cost of any markup for the “convenience” of having an ongoing purchasing relationship with on-time delivery and inventory management. 

Additional Pre-Construction Funding for Materials ($4M)

CVFiber

10.25%

$410,185.36

DVFiber

11.70%

$468,141.21

ECFiber

6.85%

$274,169.27

Lamoille FiberNet

7.04%

$281,651.27

Maple Broadband

10.47%

$418,806.40

NEK Community Broadband

33.85%

$1,353,914.54

Northwest Fiberworx

9.99%

$399,674.27

Otter Creek

5.09%

$203,604.37

Southern Vermont

4.75%

$189,850.18