Detailed Information on the
Rural Development Broadband Loan and Loan Guarantee Program Assessment

Review program operations and community/constituent/borrower needs to identify program improvements to increase program efficiency and demand for under utilized loan types.

Implement a process for conducting periodic independent reviews that assess the program's performance.

Develop a method to collect cost information to allow tracking of all direct and indirect costs and to develop baselines and targets for the efficiency measure cost per loan.

Measure: Percent of rural households subscribing to broadband (take rate).

Explanation:This measure will look at the number of rural households that actually subscribe to the available broadband service. This measure is indicative of the success of the Broadband Program borrowers and non-funded providers in providing access to broadband in rural communities. It is obtained from industry statistics.

Measure: Percent of Rural Development borrowers meeting their subscriber forecasts.

Explanation:Broadband Loan Program borrowers must provide a subscriber forecast as part of the loan application. Then they must report quarterly on progress in meeting those forecasts. This measures the rate of deployment of broadband services. Program staff verify the borrowers' reports.

Measure: Percent growth in borrowers' subscribers receiving new or improved service.

Explanation:This measure indicates the growth rate of broadband provision in rural America. It is derived from loan applications and verified by program staff.

Measure: Application processing time.

Explanation:This measure looks at the time involved in receiving, reviewing and approving a loan application. Broadband staff works with applicants to assist them in applying and to increase efficiency. This measure is an indication of the program staff's ability to process loan applications in a timely manner to maximize obligating loan funds while maintaining fiduciary responsibility. It is tracked by program staff.

Measure: Percent of rural households with broadband access whether funded by RD broadband loan program or not.

Explanation:This measures the percentage of rural households that have access to broadband. The long-term targets are based on historical information from various industry publications. This measure tracks progress in increasing access to broadband, the major goal of the Broadband Loan Program. Program staff continues to work with industry stakeholders to improve the accuracy of the available data.

Measure: The number of borrowers' subscribers receiving new or improved broadband service.

Explanation:This measure will target and report the number of subscribers (residents and businesses) to be provided with broadband access as a result of approved financing. This information is obtained from the loan applications and verified by program staff. The annual targets will be based on historical funding and subscriber forecasts for the funding provided (i.e., the number of subscribers to receive access to broadband per loan dollar approved). This demonstrates the end result of the broadband loan funding - increasing numbers of residents and businesses gaining the benefit of broadband infrastructure.

Measure: Cost per loan.

Explanation:

Measure: Cost per loan.

Explanation:

Is the program purpose clear?

Explanation: The Broadband direct and guaranteed loan program (Broadband loan program) has a clear purpose as laid out in the authorizing legislation, 7 USC 950 bb. The purpose of this program is to provide loans and loan guarantees to provide funds for the cost of construction, improvement, and acquisition of facilities and equipment for broadband service in rural communities with a population of 20,000 or less.

Evidence: 1) 7 USC 950bb, Rural Electrification Act of 1936, as amended by the 2002 farm bill; 2) 7 CFR Part 1738; and 3) RUS Bulletin 1738-1, 1738-2.

Does the program address a specific and existing problem, interest, or need?

Explanation: Due to the remoteness and smaller populations of rural areas it is more expensive to provide broadband and other telecommunications services on a per customer basis. This has lead to lower penetration rates in rural areas than in urban areas. Several publications note the lower availability and/or usage of broadband in rural areas.

Evidence: 1) A National Telecommunications and Information Administration September 2004 Article "A Nation Online: Entering the Broadband Age" stated that "A lower percentage of internet households have broadband connections in rural areas (24.7 percent) than in urban areas (40.4 percent)??" In addition, the article stated that "Although the rate of Internet penetration among rural households (54.1 percent) is similar to that in urban areas (54.8 percent), the proportion of Internet users with home broadband connections remained much lower in rural areas than in urban areas." 2) Amber Waves Article February 2006 "Internet on the Range" stated that "In 2003, 60 percent of all U.S. households had at least one adult who used the Internet someplace, such as at work, school, home, or the library. The rate was 51 percent in rural households, compared with 62 percent in urban households." 3) PEW Research, February 2006 found that "24% of rural Americans have high-speed internet connections at home compared with 39% of urban and suburban dwellers." 4) A recent report issued by the FCC based on June 30, 2006 data found that high speed subscribers were reported to be present in 99% of the most densely populated Zip Codes (with more 3,147 persons per square mile) and in 89% of Zip Codes with the lowest densities (with fewer than six persons per square mile). The FCC data is believed to overstate the availability of broadband due to the methodology used. Program staff is working with the FCC to determine how to better estimate the true extent of broadband availability in rural areas.

Is the program designed so that it is not redundant or duplicative of any other Federal, state, local or private effort?

Explanation: There are no federal programs that provide loans specifically for the provision of broadband service. Most federal support for broadband is focused on the reduction of taxes and regulatory burdens/hurdles. A few states have provided financing for broadband projects (e.g. the Michigan Broadband Development Authority) but at higher cost to the borrower and with limited funds available. These entities also have more restrictive requirements (e.g., the Michigan Broadband Development Authority restricts participation by start-up businesses). State and local programs are restricted geographically to in-state or local communities and do not have rural communities as a primary focus or objective. Commercial credit is available. However, due to the risk and the expense of broadband, most private lenders have restricted the amount of capital available. USDA's program is filling those pockets of needs that continue to go unmet with the other limited programs that do exist for this purpose. A recent report by the Congressional Research Service stated that "Currently RUS/USDA houses the only two federal assistance programs exclusively dedicated to financing broadband deployment: the Rural Broadband Access Loan and Loan Guarantee Program and the Community Connect Grant Program."

Evidence: 1) President Bush's Technology Agenda; 2) Industry consultants; 3) www.michigan.gov. and 4) CRS Report for Congress: Broadband Loan and Grant Programs in the USDA's Rural Utilities Service, Jan. 23, 2007 (Order Code RL33816).

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: The President has set forth a goal for universal, affordable access for broadband technology by 2007. The Administration has enacted economic incentives, and created a regulatory environment to encourage innovation and investment in new broadband technologies. Specifically, the Administration supports the expansion of broadband through tax incentives, removal of regulatory barriers, promotion of innovative, market-driven technologies, freeing up of new spectrum that balances the commercial spectrum needs of critical government agencies, and investment in research and development. These activities and the general demand for broadband have resulted in significant increases in the availability of broadband. The Broadband loan program is not a significant tool for the Administration to expand the availability of broadband and broadband is expanding into rural areas without this loan program. However, there is a need for support for rural areas due to the high cost of service and lower income of residents (see explanation and evidence to question 1.2). The Broadband loan program consists of three loan types (cost of money, 4% and guaranteed). Even though there are communities that do not have broadband, neither the 4% or guaranteed loan types are utilized by borrowers. Modifications to the 4% program may increase the applications. The guaranteed loan application, award and post award processes are identical to the direct loan processes, providing no incentive for borrowers to try to find private financing using a government guarantee. In addition, direct cost of money loans are issued to provide service to communities that can obtain financing elsewhere.

Evidence: 1) President Bush's Technology Agenda; 2) Office of the Inspector General (OIG) report 09601-4-Te; and 3) FCC data show that the availability has increased from 73.63% of zip codes in 2002 to 99% in 2006.

Is the program design effectively targeted so that resources will address the program's purpose directly and will reach intended beneficiaries?

Explanation: USDA has processes and procedures in place ensuring resources are addressing the program's purpose directly and intended beneficiaries are being reached. The enacting legislation defines eligible rural community as any area of the United States that is not contained in an incorporated city or town with a population in excess of 20,000 inhabitants. Although one of the main purposes of the authorizing legislation was to provide broadband service to areas without service, the legislation also authorized loans for areas where service does exist. USDA structured the Broadband Program to take both of these scenarios into account. The eligibility determination is a multi-step process. The first criterion is population and the second is availability of broadband. The Broadband program focuses its resources on unserved communities by giving priority to loan applications proposing to serve areas without service. Applications are reviewed to determine if the eligibility requirements are met before the loan progresses through the application process. Eligibility must be documented as part of the loan application package before the loan is approved. The program staff monitors the use of funds and uses field staff and field accountants to perform field verification that funds have been expended for approved purposes. When a loan is approved to an entity where broadband service exists, the entity is encouraged to extend their service territory into unserved areas as soon as economically feasible. Most Broadband Loan applications include both served and unserved communities. Public notice is required of the applicant's intention to serve a community, which provides an opportunity for both the field staff and others to ensure eligibility of the community. A list of communities for which pending or approved applications have been received is maintained on the Rural Development website.

Evidence: 1) 7 USC Chapter 31; 2) Rural Electrification Act of 1936, as amended; 3) 7 CFR Part 1738; 4) RUS Bulletin 1738-1, 1738-2; and 5) OIG report 09601-4-TE.

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: The performance of this program is linked with USDA's strategic goal to support increased economic opportunities and improved quality of life in rural America. Increasing access to broadband can increase economic opportunities available to rural businesses and improve the quality of life of rural residents. USDA has developed long-term performance measures that will measure household access to broadband and households subscribing for broadband services. These provide a measure of how well the program is meeting its end purpose of providing broadband service to rural communities. There are three long term measures. The first measure is the percent of rural households with access to broadband service, whether financed by Rural Development or not. This information is obtained from industry statistics and the FCC. This measure indicates how close we are to meeting the ultimate long term goal, which is providing access to 100% of rural households by 2010. This overall measure of rural broadband availability is a good indicator of whether the ultimate goal is being achieved, even though the Broadband Loan Program is not directly controlling this outcome. The second measure is the percent of rural households subscribing to broadband services, whether financed by the Broadband Loan Program or not. This is another industry-wide statistic obtained from industry estimates. It indicates the extent to which rural residents and businesses are actually subscribing to broadband service. The intent of the Broadband Loan Program is to increase access to broadband services; however, for the maximum socio-economic benefit, rural Americans must actually be subscribing to the services. Tracking the total take rate for rural subscribers provides a benchmark for comparison. The third measure is the percent of Rural Development broadband loan borrowers meeting their subscriber forecasts, which are submitted as part of the loan application. This measure is generated internally as a result of quarterly reports from borrowers required under the loan agreement. This measure is important as an indicator of the success of the projects financed under the loan program.

Evidence: 1) Percent of rural households with broadband access; 2) Percent of rural households subscribing to broadband (take rate); and 3) Percent of Rural Development broadband loan borrowers meeting their subscriber forecasts.

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: Baselines and targets have been established. The targets are ambitious due to the fact that the broadband program is new and many of the borrowers obtaining loans are start-up companies with little operational history on which to base forecasts. As more data becomes available, the targets can be fine tuned.

Evidence: As of 2004 87% of rural households had access to broadband and 17% of rural households subscribed to broadband. The performance goals are to have 100% access and 30% subscribership by 2010. In addition, the percent of Rural Development broadband borrowers currently meeting their subscriber forecasts is 36% and our goal for 2010 is 60%.

Does the program have a limited number of specific annual performance measures that can demonstrate progress toward achieving the program's long-term goals?

Explanation: The primary annual performance measure is the percent growth in subscribers receiving new or improved broadband service from RD broadband loan funds. This measure supports the purpose of the program of increasing access to broadband in rural communities. Additional annual measures include number of subscribers receiving new or improved service and the percent of rural households subscribing to broadband (take rate), whether financed by the RD broadband loan program or not. The number of projected subscribers is obtained from the approved loan applications and the percentage growth is calculated by broadband staff. The percent of rural households subscribing to broadband service is obtained from industry estimates. These measures demonstrate progress toward achieving the program's long-term goal of bringing the benefits of broadband infrastructure to rural America. In addition, this program has two efficiency measures.

Evidence: 1) Number of subscribers receiving new or improved service; 2) Percent growth in subscribers receiving new or improved service; 3) Percent of rural households subscribing to broadband (take rate); and 4) Efficiency measures include cost per loan and application processing time.

Does the program have baselines and ambitious targets for its annual measures?

Explanation: Baselines and targets have been developed. Targets are ambitious because this is a new program and there is limited historical information on which to base targets. As more data becomes available, the targets can be fine tuned.

Evidence: In 2006 the number of subscribers receiving new or improved service was 159,571, the percent growth was 53.08%, and the percent of rural households subscribing to broadband was 17%. The target for 2007 for number of subscribers is 175,000, for percent growth is 38.03%, and percent of rural households subscribing to broadband is 27%. The loan application process took an average of 9 months in 2003, 4.5 months in 2005, 4.0 months in 2006, and the target for 2007 is 3 months.

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) commit to and work toward the annual and/or long-term goals of the program?

Explanation: All loan funds must be used to support the provision of broadband service. The broadband loan agreement between USDA and the borrower requires quarterly reporting of specific performance data to include revenues, expenses and number of subscribers. In the application borrowers provide a forecast of the number of subscribers. Data reported by the borrowers are used to track performance in providing broadband, meeting forecasts, and maintaining financial health necessary to repay debt.

Evidence: 1) Quarterly borrower reports; 2) standard loan contract; and 3) RUS Bulletin 1738-1, 1738-2.

Are independent evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: USDA's Rural Development does not have a policy or process to have independent evaluations of programs on a regular or as needed basis. However, USDA did use contractors to evaluate specific parts of the broadband loan program due to problems experienced during the first year of operation related to the loan application, review and approval process. In addition, the USDA Inspector General performed an audit of the program in 2005. A recent report by the Congressional Research Service reviewed the Broadband Loan Program (CRS Report for Congress: Broadband Loan and Grant Programs in the USDA's Rural Utilities Service, Jan. 23, 2007, Order Code RL33816). The Administrator and Assistant Administrator, Telecommunications, conducted a thorough strategic and operational review of the Broadband program in mid-2006. As a result, modifications to the program have been developed and are under review. An external consultant (SAIC) was involved in the development of the proposed changes. A Management Control Review of the Broadband Program is underway and is scheduled to be completed in the third quarter of FY2007.

Evidence: 1) OIG report 09601-4-Te; and 2) RUS Bulletin 1738-1, 1738-2

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: Funding requests do not detail why the requested funding level is reasonable and adequate and why the requested performance resource mix is appropriate. In addition, USDA's Rural Development does not have the ability to track and report all direct and indirect costs at the program level. Due to this, there is no way of knowing the total costs associated with operating the Broadband loan program.

Evidence: USDA explanatory notes.

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: The Broadband loan program has developed annual and long-term performance measures, baselines and targets. Performance measures are reviewed on an annual basis to ensure current applicability to program delivery.

Evidence: A review of long-term performance measures, annual performance measures, and outcomes is required as part of the Rural Development budgeting process.

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: Quarterly reporting requirements are incorporated into the Broadband loan agreement. Borrowers must report specific performance data for the quarter, which can be compared to the proposed schedule in the loan application. This data includes revenues, expenses, number of subscribers by community, and other important information. This data is used by the Broadband staff to (1) evaluate each individual borrower's financial and deployment status compared to their application schedules and projections as well as to ensure they are meeting financial requirements; (2) obtain data for portfolio management purposes, such as assessing the validity of credit models; (3) obtain data for risk management analysis; and (4) obtain data for quarterly financial reporting and program performance measurement. The program staff has developed the Broadband Collection and Analysis System, which provides timely information on borrower performance, tracking of loan approvals and loan obligations. In addition, the Broadband Application Information Log provides immediate access to information on application status and processing statistics. Loan performance and borrower characteristics are collected and analyzed. This data is used to update credit models, determine troubled borrowers, and adjust the application review requirements. Borrower reported information is used to track program performance and to set baselines and targets.

Evidence: 1) Quarterly borrower reports; 2) standard loan contract; 3) Broadband Application Information Log; and 4) Broadband Collection and Analysis System.

Are Federal managers and program partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) held accountable for cost, schedule and performance results?

Explanation: The Federal Manager directly responsible for the Broadband loan program has specific performance measures in their performance elements and evaluation that ensure accountability. Loan contracts require borrowers to use loan funds for specific purposes. Borrowers are required to provide quarterly financial and performance data which is reviewed by program staff.

Evidence: 1) Program Manager Performance Elements and Evaluations; 2) Quarterly reports from borrowers; and 3) Bulletin 1738-2.

Are funds (Federal and partners') obligated in a timely manner, spent for the intended purpose and accurately reported?

Explanation: There are procedures in place to ensure that funds are used for their intended purpose. However, funds have not been obligated in a timely manner. New discretionary funding for this program provided in 2005 was not utilized in full in the first fiscal year and funding provided in 2006 was carried forward into 2007 in full. However, in 2004 all discretionary funds were utilized. Mandatory funds apportioned in 2002 and 2003 (but not available until 2004 due to not having regulations) had not been utilized by this program by the end of 2005. Congress blocked the use of the mandatory funds in 2006 and reconciliation rescinded any balances as of October 1, 2006. The 2008 budget requests funds that are in line with expected demand which should reduce carryover. In addition, RUS is holding information sessions to increase knowledge of and applications to the program.

Evidence: 1) Loan processing schedules; 2) Obligation schedules; 3) Loan applications, which provide information used to make sure loan is for eligible purposes; 4)Loan Budgets; and 5) Loan Fund and Accounting Reviews, which provides an "audit" on the use of expended funds to ensure that funds are used only for approved purposes.

Does the program have procedures (e.g. competitive sourcing/cost comparisons, IT improvements, appropriate incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: The program staff has developed the Broadband Collection and Analysis System, an IT data analysis tool which provides timely information on borrower performance, tracking of loan approvals and loan obligations. In addition, the Broadband Application Information Log provides immediate access to information on application status and processing statistics. This program has two efficiency measures, cost per loan and application processing time. The baseline for application processing time is 4.5 months, and the result for 2006 was 4.0 months. The target for 2007 is 3 months.

Evidence: 1) Broadband Application Information Log; and 2) Broadband Collection and Analysis System.

Does the program collaborate and coordinate effectively with related programs?

Explanation: The Broadband program collaborates and works extensively with industry-related and government partners. USDA's Rural Development cosponsors outreach efforts with local and state governments and other federal agencies. Rural Development also participates in industry conferences, telephone industry association meetings and technical symposia to ensure that there is broad knowledge of the Broadband loan program and that Rural Development personnel are aware of current trends, technologies and industry issues that could impact the program. In addition, Rural Development has targeted specific groups, such as Native Americans. For example, Rural Development employees participate in the annual Reservation Economic Summit. Collaboration increases awareness of the program which increases the number of companies applying for loans. This should result in more communities having access to broadband.

Evidence: 1) Committee meeting notes; and 2) Multi-agency conferences. The program works with the Appalachian Regional Commission, the National Telecommunications and Information Administration, the Federal Communications Commission, Federal Emergency Management Agency, Institute of Electrical and Electronic Engineers, National Association of Regulatory Utility Commissioners, National Exchange Carrier Association, National Telecommunications Cooperative Association, and National Rural Telecom Association, among others.

Does the program use strong financial management practices?

Explanation: USDA's Rural Development has strong financial management practices. The program has procedures in place to ensure that loan approvals are given to eligible entities and loan advances are made to borrowers who comply with contract terms and only for approved purposes. The program also has procedures in place to comply with FCRA, DCIA and OMB Circular A-129. In addition, Rural Development has received clean audit opinions since 2001. The Broadband Credit Committee reviewed and revised the Broadband Loan Program financial analysis criteria and Senior Loan Committee review package. Financial analysis of loan applications was made consistent and more thoroughly documented across the organization. An increased emphasis on risk analysis was implemented. The program staff has developed the Broadband Collection and Analysis System. This system provides timely information on borrower performance, tracking of loan approvals and loan obligations. In addition, the Broadband Application Information Log provides immediate access to information on application status and processing statistics.

Evidence: 1) Reports of Broadband Credit Committee; 2) Senior Loan Committee loan review requirements; 3) the Broadband Collection and Analysis System; 4) Broadband Application Information Log; 5) RUS Bulletin 1738-2; and 6) Directive #A-10-RMC.

Has the program taken meaningful steps to address its management deficiencies?

Explanation: The program has only been operating for a few years but has made changes to address identified problems. A comprehensive internal program review was conducted and process improvements identified. OIG conducted an audit and consultants and borrowers have provided suggestions for process and policy improvement. Materials and processes have been improved as a result of the feedback, including the application guide, outreach materials and application processing. USDA's Rural Development has a process in place to perform Management Control Reviews at least once every five years. These reviews look specifically at the management of the program. The Management Control Review for this program is underway and is scheduled for completion in the third quarter of FY2007. In addition, program staff is developing proposed rules to modify certain aspects of the Broadband loan program to facilitate participation in the program.

Evidence: 1) OIG report 09601-4-Te; and 2) RUS Bulletin 1738-1, 1738-2

Is the program managed on an ongoing basis to assure credit quality remains sound, collections and disbursements are timely, and reporting requirements are fulfilled?

Explanation: All applicants are reviewed using a standardized credit risk model and required financial analysis. Borrower's performance is monitored on an ongoing basis. Borrowers submit quarterly financial and statistical data and annual audited financial statements which are reviewed by program staff. The program has procedures in place to monitor borrower compliance. Reported financial information is reviewed and each borrower's risk is established by a pre-established set of financial criteria. Borrowers rated as high or imminent risk are reviewed for the cause and agreed upon corrective action is pursued. Rural Development's accounting staff review borrower's audited financial statements and monitor borrower compliance. Deficiencies noted in the audit and downward trends in financial performance are reported to the program for correction. The accounting staff independently tracks the program's progress in obtaining corrective action. Monthly the accounting staff notifies the program staff of any late payments, at which time the program takes immediate action to remedy.

Evidence: 1) Broadband Collection and Analysis System; 2) Borrowers' audited financial statements: 3) Accounting and Program tracking reports, which provide information on deficiencies noted in financial audits, downward trends in financial performance and progress in obtaining corrective action; 4) Accounting staff's audit review checklists; and 5) Monthly Delinquency Report, which provides information on any late payments.

Do the program's credit models adequately provide reliable, consistent, accurate and transparent estimates of costs and the risk to the Government?

Explanation: Loans have been provided since 2001. The models were updated in 2003 after the program's regulations were finalized. The new models more accurately reflected the risk of the program. Actual program performance, to date, indicates that the current estimates are accurate.

Evidence: Credit reestimate apportionment dated 9/25/06.; Broadband Loan Program credit model.

Has the program demonstrated adequate progress in achieving its long-term performance goals?

Explanation: This program met or shows progress in achieving all of its annual measures. This trend supports that progress is being made towards achieving the long term measures. However, since only one measure has more than 2 years of data, a small extent is warranted.

Evidence: 1) Long term performance measures include the percent of rural households with broadband access, percent of rural households subscribing to broadband (take rate), and percent of Rural Development broadband loan borrowers meeting their subscriber forecasts; and 2) FCC data indicates the growth in the number of households with access to broadband services ( ("Broadband connections increased by 26% in the first six months of 2006 and by 52% for the full year ending in June 2006") 3) "Broadband penetration in total U.S. households reached 50% at the end of 2006 and is projected to reach 80% of total households by 2009." (B& C/IGI Consulting).

Does the program (including program partners) achieve its annual performance goals?

Explanation: The Broadband Loan Program met or exceeded its targets for two of four measures. The program did not meet one target and the other measure was a baseline year. Since only two years of data are available and only two targets were met, a small extent is warranted.

Evidence: 1) Annual performance measures include the number of subscribers receiving new or improved service, percent growth in subscribers receiving new or improved service, percent of rural households subscribing to broadband (take rate), cost per loan, and application processing time; and 2) FCC data indicates the growth in the number of households with access to broadband services ("Broadband connections increased by 26% in the first six months of 2006 and by 52% for the full year ending in June 2006") 3) "Broadband penetration in total U.S. households reached 50% at the end of 2006 and is projected to reach 80% of total households by 2009." (B& C/IGI Consulting).

Does the program demonstrate improved efficiencies or cost effectiveness in achieving program goals each year?

Explanation: One efficiency measure is the loan application processing time. In 2003 the average loan application review took 9 months, while in 2006 the average loan application review was completed in 4.0 months, though the goal of 3.5 months for FY2006 was not met. The reduction in processing time was the result of an improved customer application guide, increased and improved outreach, employee training, modification of internal processes, implementing suggestions of the Broadband Credit Committee, the implementation of the Broadband Application Information Log, and internal management review of processes. This improved efficiency has been achieved while the size and complexity of applications has been increasing. Program staff has benchmarked loan application review and processing measures with private equity financing organizations. FTEs dedicated to the Broadband program are identified, as well as expenses related to Broadband outreach, customer service and application processing.

Evidence: The program has two efficiency measures: application processing time and cost per loan.

Does the performance of this program compare favorably to other programs, including government, private, etc., with similar purpose and goals?

Explanation: The Broadband loan program is the only federal program that provides funds to support the provision of broadband, so there is no comparable federal program. There are some state and local programs which can not provide funds to support broadband to multiple states. In addition, the federal program has more funding allowing support for larger projects. The private sector does not provide significant amounts of capital to provide broadband to rural areas.

Evidence: For example, one major rural telecommunications lender only lends to cooperative telephone companies which results in this bank not providing financing to startups. In addition, this same lender has limited its exposure to the risk in the telecommunications market by reducing investments into telecommunications (of which broadband is a subset).

Do independent evaluations of sufficient scope and quality indicate that the program is effective and achieving results?

Explanation: No regular independent evaluations are conducted, nor does Rural Development have a process in place to perform regular independent program evaluations. However, the OIG did conduct an audit of this program in 2005. The OIG report found significant problems with the program that directly impact the ability to meet the program's goal. A recent report by the Congressional Research Service reviewed the Broadband Loan Program (CRS Report for Congress: Broadband Loan and Grant Programs in the USDA's Rural Utilities Service, Jan. 23, 2007, Order Code RL33816).

Evidence: 1) OIG report 09601-4-Te.; CRS Report for Congress: Broadband Loan and Grant Programs in the USDA's Rural Utilities Service, Order Code RL33816, Jan. 23, 2007.