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How state broadband leaders can protect distributed capital from the IIJA

State and territory broadband leaders must proactively address funding clawback risks to allow for successful and equitable broadband deployment.

In brief
  • The IIJA provides state broadband leaders opportunity but also clawback risk if grants are not managed successfully by strong grant management programs.
  • Leaders should develop a comprehensive project plan; structure grant agreements effectively; and monitor and implement compliance leading practices.
  • With limited resources available, leveraging technology solutions to execute on proper grant funding management is key in financing projects.

Over the last few years, the US government has made a once-in-a-generation investment in the bipartisan Infrastructure Investment and Jobs Act (IIJA) with $550 billion in new federal spending. It provides $65 billion in funding to expand constituent broadband access by making it more affordable and funding infrastructure investments to address the needs of covered populations, as defined in the Digital Equity Act (DEA). The distributed capital is allocated across several programs, including Broadband Equity, Access, and Deployment (BEAD) and the DEA, and has components of formula and discretionary grants.

The arrival of federal funding comes with mandated requirements for action and accountability for financial resources deployed through the states. State and local government leaders are eager for the opportunity to help their constituents through increased broadband access, but as with any federal funding, it is critical that recipients of IIJA funds thoughtfully prepare for funding. For example, the BEAD Initial Proposal describes the competitive process that will be used to select subgrantees to construct broadband projects.


All government entities and agencies are also responsible for monitoring the continued compliance of distributed capital to subrecipients for the IIJA awards. Projects funded through the IIJA are subject to administrative requirements, cost principles and audit requirements under the Code of Federal Regulations known as 2 CFR 200. This lays out the responsibilities of grant recipients and their subrecipients. Failure to understand the obligations and comply with applicable laws and IIJA regulations can result in funding clawbacks, reputational risk and increased scrutiny by oversight organizations.


State and local governments and agencies face a unique set of risks as they are responsible for managing the grants and are accountable for any error or mistake made downstream. Figure 1 highlights areas of risk:

Figure 1: Government and agency risks

Governments and agencies


State, territory and tribal governments

  • Lack of resources (people, process, technology) to distribute funds quickly while adhering to federal guidelines
  • Additional reporting requirements
  • Lack of coordination among agencies
  • Insufficient focus on economically distressed areas

Local governments and education authorities

  • Limited technical and financial capacity
  • Potential lack of experience in managing broadband projects.

Further, per the regulation, governments and agencies assume the risk of any errors, mistaken or intentional, performed by the subrecipients they grant funding through. Various parties are involved in using the funds to support constituents. Areas of risks that government and agency leadership need to be aware of for recipient pools are highlighted in Figure 2.

Figure 2: Recipient risks

Recipient pool



  • Complex application process and reporting requirements to primary recipient beyond current experience and capability
  • Inexperienced in delivering proposed projects of similar scope and scale

Internet service providers (ISPs)

  • Profitable areas prioritized over underserved regions, hindering equitable broadband deployment

Utilities and other infrastructure providers

  • Integration challenges between broadband infrastructure and existing utility systems
  • Public-private partnership not structured correctly

Nonprofit organizations

  • Lack of sustainable business models
  • Inadequate community engagement and support
  • Insufficient focus on underserved areas

General public

  • Low awareness and adoption of broadband services
  • Limited digital literacy skills or resistance to new technologies

Governments and agencies should consider the following five areas to better manage the risks within grant management:

Tools and enablers for distributed capital

The federal grants landscape is complex, but there are tools that can help organizations navigate end-to-end grant management and reduce the administrative burden on governments and agencies. With limited resources, grant recipients need to plan smartly for the challenges of IIJA broadband funding. Efficient integration of technology into the grant funding management process can also help streamline workflows and save valuable time by providing efficient data entry, flagging missing documentation and providing auto-generated compliance dashboards for decision-makers to identify action items. Technology-based tools are typically easier for subrecipients (such as ISPs, utilities and other nonprofit organizations) to use to assist them in tracking their records and providing a defendable audit trail for what items have been provided and when those items were provided. Key features available in technology solutions that make this process easier include:

  • Built-in compliance checklists
  • Automated workflows
  • Communication with subgrantees and other stakeholders
  • Integration with existing financial systems
  • Dashboards and reporting
  • Availability of audit documentation

These above features allow governments and agencies to manage their grant compliance with lower reoccurring costs and a one-time process change, while providing information for leadership and the future. EY Grants Accelerator (EYGA) contains all these features and more. EYGA is a tool that manages grant programs and improves outcomes for citizens. EYGA covers the entire grant management journey, including the pre-award, award and post-award stages, resulting in end-to-end support. However, this is not a one-size-fits-all solution. We understand that state leaders have their challenges and risks, and therefore, there are options for customization specific to IIJA-based broadband grants.

Another aspect to consider is if the grant administration team has enough personnel to manage the influx of grant funding and investigate complicated issues to maintain compliance with federal requirements. We suggest that states and agencies determine what the estimated time requirements will be for managing a certain set of grants and validate there are sufficient internal headcount and/or external contractors able to properly support the needs of the grant program.


IIJA presents a significant opportunity to bridge the digital divide and improve broadband access across the United States. State and territory broadband leaders must proactively address funding clawback risks to allow for successful and equitable broadband deployment. To prepare for this funding, gather grant process owners and key stakeholders to understand the challenges to their capital deployment processes and how to address any challenges. Effective use of technology and infrastructure can minimize risk and supplement existing resources. By implementing rigorous evaluation processes, fostering collaboration and maintaining stringent compliance and monitoring measures, state broadband leaders can minimize risks and maximize the impact of IIJA’s broadband grant programs.

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