Frequently Asked Questions and Answers for the State Digital Equity Capacity Grant Program

The amount of funding Eligible States (including the District of Columbia and the Commonwealth of Puerto Rico) will receive through the Capacity Grant Program will be determined pursuant to the statutory formula set forth at 47 U.S.C. §1723(d)(3)(A)(I) and the NOFO. U.S. Territories will receive equal shares of the Capacity Grant Program funding set aside for U.S. Territories consistent with 47 U.S.C. §1723(a)(3).

Pursuant to §1723(d)(3)(A)(i) of the Digital Equity Act, the amount awarded to each Eligible State in a given fiscal year will be calculated by applying a formula in which:

1. Fifty (50) percent of the total grant amount is based on the population of the Eligible State in proportion to the total population of all Eligible States;
2. Twenty-five (25) percent of the total grant amount is based on the number of individuals in the Eligible State who are members of the Covered Populations, in proportion to the total number of individuals in all Eligible States who are members of the Covered Populations; and
3. Twenty-five (25) percent of the total grant amount is based on the comparative lack of availability and adoption of broadband in the Eligible State relative to all Eligible States, as determined by data collected from the annual inquiry of the Federal Communications Commission pursuant to Section 706(b) of the Telecommunications Act of 1996, the American Community Survey, NTIA Internet Use Survey, and any other source that the Assistant Secretary, after appropriate notice and opportunity for public comment, determines to be appropriate.

** In the event that certain data on broadband availability or adoption are unavailable for the Commonwealth of Puerto Rico during a given fiscal year, the Assistant Secretary shall use the median value among all Eligible States for each affected factor in the formula and assign it to Puerto Rico for the purposes of making the calculations for that fiscal year.

After reviewing applications and determining which States are eligible to receive Capacity Grants, NTIA will apply the funding formula as detailed in Appendix A of the NOFO.

Consistent with the Digital Equity Act, NTIA has reserved one (1) percent of the funds made available for fiscal years 2022, 2023, and 2024 ($8,400,000) to award grants to, or enter into contracts or cooperative agreements with, the United States Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, and any other territory or possession of the United States that is not a State, to enable those entities to carry out the activities described in the statute.

Further, the Assistant Secretary tentatively allocates $2,100,000 to each of:

1. the United States Virgin Islands,
2. Guam,
3. American Samoa, and
4. the Commonwealth of the Northern Mariana Islands

for the purpose of implementing the Digital Equity Plans each U.S. Territory has developed pursuant to 47 U.S.C. §1723(c).

**This tentative funding amount may be modified if one of the named U.S. Territories does not apply, applies but fails to receive a grant under this Program, or is awarded a grant for an amount less than the tentative allocation identified in the NOFO.

Yes. However, duplication of federal or state funding must be avoided. Grants or subgrants awarded under the Grant Program must supplement, not supplant (e.g., supersede, replace, or take the place of), federal or state funds available to the State to carry out digital equity and inclusion activities.

Yes. Applicants are required to certify that the Capacity Grant funds will be used to supplement, not supplant, other Federal or State funds that have been made available to carry out the activities in the Digital Equity Plan and the State Digital Equity Capacity Grant NOFO. However, the NOFO recognizes that other sources of funding may be utilized. To maintain financial transparency and ensure the effective use of funds, any State or Territory that plans to use multiple funding sources in the implementation of its Digital Equity Plan must submit a description of all other funding sources (including funding applied for) the State or Territory intends to use, the amounts to be allocated, and the specific Digital Equity Plan elements to be funded using alternative sources. See Section II.C.5 of the NOFO for further information.

Grant recipients may only use federal award funds to pay for allowable costs under the Capacity Grant Program. Allowable costs are determined in accordance with the cost principles identified in 2 C.F.R. Part 200, including Subpart E of such regulations and in the grant program’s authorizing legislation. In addition, costs must be reasonable, necessary, allocable, and allowable for the proposed project, and conform to generally accepted accounting principles. Grant funds may be used to cover only eligible costs incurred by the recipient during the period of performance, and for allowable costs incurred by the recipient during the grant closeout process.

Applicants must comply with the requirements of 47 U.S.C. §1723(d)(3)(D) of the Digital Equity Act and the NOFO. An eligible State or Territory to which a Capacity Grant is awarded must, through its designated Administering Entity or Administering Organization (as applicable), use the grant funds only for the following purposes:

1. To update or maintain the State Digital Equity Plan of the State or Territory, provided, however, that the awardee may not use more than 20 percent of the amount of the grant for this purpose.
2. To implement the State Digital Equity Plan of the State or Territory.

3. To make subgrants to any of the eligible entities identified at 47 U.S.C. §1724(b) that are located in the State or Territory to: (a) assist in the implementation of the Digital Equity Plan of the State or Territory; (b) pursue digital inclusion activities in the State or Territory consistent with the Digital Equity Plan of the State or Territory; and (c) report to the State or Territory regarding the digital inclusion activities of the entity.

   1. Before an Administering Entity or Administering Organization may award a subgrant, the Administering Entity or Administering Organization must require that the entity to which a subgrant is to be awarded certify that: The entity shall carry out the activities required under items (a), (b), and (c) of this subsection;
   2. The receipt of the subgrant shall not result in unjust enrichment of the entity; and
   3. The entity shall cooperate with any evaluation of the program as it relates to a grant awarded to the entity and that is carried out by or for the Administering Entity or Administering Organization, the Assistant Secretary, or another Federal official.

   Failure to comply with these certification requirements will result in appropriate enforcement action in accordance with 2 CFR 200.339, up to and including termination under a Capacity Grant Program award.

4. To evaluate the efficacy of the efforts funded by grants made to subgrantees under paragraph iii above, provided that the Administering Entity or Administering Organization may not use more than 5 percent of the amount of the grant for this purpose.
5. For administrative costs (exclusive of costs for program evaluation and updating the Digital Equity Plan) incurred in carrying out the activities described above, provided that an Administering Entity or Administering Organization may not use more than 3 percent of the amount of the grant for this purpose.

NTIA recognizes that Digital Equity Plans will contain a wide variety of potential programs, activities and interventions, and encourages the development of new and innovative strategies to address the barriers to digital equity. These programs must focus on creating the necessary conditions to empower individuals and communities with the technological capacity to fully participate in society and the economy.

Capacity Grant Program funding may include uses such as pursuing digital inclusion activities, facilitating adoption of high-speed Internet, implementing training and workforce development programs, or making equipment and software for high-speed Internet services available.

As set forth in the NOFO, the Capacity Grant funds for States (including the District of Columbia and the Commonwealth of Puerto Rico) will be tentatively allocated (subject to challenges to the allocation formula and participation levels) in accordance with the Digital Equity Act. See Section II.A.4.b of the NOFO for the tentative State award allocation amounts. States, the District of Columbia and the Commonwealth of Puerto Rico may challenge their allocation amounts. Refer to Section II.A.4.c of the NOFO for additional guidance on the allocation Challenge Process.

The period of performance for the Capacity Grant is 5 years from the effective date of the Federal award and will be listed in the grant award documents. In general, work may begin after the award is issued and has been signed by the recipient. Applicants may incur pre-award costs pursuant to 2 CFR § 200.458 which requires written approval from NTIA. Without prior written approval pre-award costs are incurred at the risk of the applicant.

Pre-award costs are those incurred prior to the effective date of the Federal award or subaward where such costs are necessary for efficient and timely performance of the negotiated scope of work. All costs incurred before the Federal awarding agency makes the Federal award are at the recipient’s risk (i.e., the Federal awarding agency is not required to reimburse such costs if for any reason the recipient does not receive a Federal award or if the Federal award is less than anticipated and inadequate to cover such costs). See also § 200.458. In addition, such costs are allowable only to the extent that they would have been allowable if incurred during the period of performance. If charged to the award, these costs must be charged within the period of performance of the award, unless otherwise specified by the NTIA or recipient. Additionally, as applicable, applicants must meet the terms of the Human Subjects Research (HSR) Specific Award Condition before beginning any project activities prior to the period of performance.