Since January 2025, much has changed about the Broadband Equity Access Deployment program (BEAD), but some things have stayed the same.  Billions are at stake, and BEAD-funded providers need to deliver for the program to succeed.  To ensure this happens, states and territories must use all the tools at their disposal to (1) incentivize compliance, (2) ensure providers keep their promises, and (3) take swift, decisive action to fully remedy any failures to perform. 

BEAD already includes several compliance and enforcement mechanisms.  But because it is a grant program, unlike the Federal Communications Commission’s (FCC) regulatory programs, BEAD does not impose punitive monetary penalties on providers that fail to deliver.  Unless states and territories take steps now, the only monetary consequence for defaulting is that providers must return their BEAD-awarded funding.  Too often, that will be too little, too late for the families still waiting for broadband connections. 

The time to act is now.  States and territories are still drafting subgrantee agreements—and this is the moment to build in stronger protections. These agreements should include “make whole” or liquidated damages clauses that remedy nonperformance in ways that allow BEAD to connect locations that have gone too long without access to high-speed internet service.  These provisions would raise the monetary stakes for providers in ways that help deter nonperformance, and, in the event of default, put the government in the best position to make up for any delayed deployments, connect unserved homes, and ensure BEAD’s success.

BEAD Must Do Better Than Earlier Government Programs 

BEAD is the $42.45 billion grant program administered by the Department of Commerce’s National Telecommunications and Information Administration (NTIA) to fund high-speed broadband access throughout the United States.  On June 6, 2025, the NTIA issued a Policy Notice restructuring BEAD to, among other things, require technology neutral subgrantee selections and restrict the use of non-cost factors in making those selections.  Yet one thing has not changed: success depends on strong enforcement. Without it, BEAD cannot achieve its central mission—connecting everyone in America to the high-speed internet service necessary for full participation in modern society.

Unfortunately, the federal government has a spotty track record when it comes to funding broadband deployment.  In 2020, the FCC’s Rural Digital Opportunity Fund (RDOF) tentatively awarded $9.2 billion to providers to deploy internet service to over 5.2 million locations.  But today—as BEAD is rolling out—we are seeing significant RDOF defaults.  According to the Benton Institute’s analysis, as of mid-February 2025, providers in every state have failed to deliver, defaulting on nearly $3.3 billion and leaving more than one third of the promised locations, or 1.9 million homes, unconnected.  And more RDOF defaults keep coming.

These RDOF defaults are the latest chapter in a familiar story.  A recent efficacy review of the FCC’s 2010 era Connect America Fund (CAF) program revealed that it too significantly failed to deliver.  Of the CAF homes included in the review, nearly 50 percent are not served today and only 33 percent of the homes met CAF's required speeds of 10/1 megabits per second (mbps).  As that study concluded,  “while a few users have benefited from this multi-billion-dollar program, it has largely failed to achieve its intended goal, leaving many targeted rural communities with inadequate or no broadband connectivity.”

NTIA, states, and territories need to do everything they can to avoid repeating the failures of prior FCC programs. As a grant program, BEAD presents an additional challenge.  Unlike the FCC’s regulatory subsidy programs, NTIA does not impose a specific monetary penalty for a BEAD subgrantee provider’s default or failure to perform.  Instead, the BEAD grant and subgrant funding arrangements are akin to contracts.  They include provisions to address termination and noncompliance, but do not impose monetary fines intended to punish the nonperforming party.  Instead, consistent with grants law, providers can terminate their obligations to perform subject to the terms of the subgrant agreement, and BEAD’s default enforcement tools focus on the clawback of funds and other administrative consequences. 

Existing BEAD Compliance and Enforcement Tools 

Certain compliance and enforcement tools are already embedded in the BEAD program.  The Infrastructure Investment and Jobs Act empowers NTIA and states and territories to recoup “up to the entire amount of the subgrant” when subgrantee providers fail to comply with BEAD requirements.  To that end, the law requires states and territories to include in subgrant agreements “reasonable provisions for recovery of funds for nonperformance.”  The NTIA’s Notice of Funding Opportunity (“NOFO”) expressly requires that those subgrant agreements include clawback provisions.  In addition, the BEAD NOFO’s enforcement provisions authorize remedial actions for nonperformance, including “but not limited to, imposition of additional award conditions, payment suspension, award suspension, grant termination, de-obligation/clawback of funds, and debarment of organizations and/or personnel.” 

As administered by NTIA, BEAD also includes certain requirements that help the government mitigate the risk of nonperformance.  Pursuant to NTIA Policy Guidance, providers applying for BEAD infrastructure funding must provide the state or territory with a letter of credit or performance bond.  These tools help to ensure that BEAD applicants have the financial capacity to deliver reliable high-speed internet service as promised.  But, they also serve a second purpose.  If a subgrantee fails to meet its BEAD obligations, states and territories can trigger these mechanisms to recover the portion of funding at issue and potentially achieve performance through other means.    

Why Clawback Falls Short

But there is reason to be concerned that the clawback of BEAD funds and the other existing tools will not do enough to deter—or, where necessary, remedy—BEAD nonperformance.  Remedies to recoup funding essentially put the parties in the position they were in prior to the grant agreement.  This may or may not be much of a loss for the broadband provider, depending on the circumstances, but it is a devastating loss to BEAD’s mission and the homes that remain unconnected.  The amount of funding originally awarded and ultimately recovered may not be sufficient to re-award and cover the costs of another provider’s deployment.  And—in the meantime—NTIA, the state or territory, and the families affected lose months, or even years, of connectivity. 

In certain circumstances, clawback clauses are particularly toothless.  First, based on the publicly-available draft final proposals, some provisionally selected providers were awarded zero or near zero dollars in funding to connect certain BEAD locations.  Pennsylvania’s draft final proposal, for example, identified over 3,000 locations for which the provisionally selected BEAD provider will receive zero BEAD funds.  Instead, such providers promise to use 100 percent of private (also called “match”) funds to connect BEAD locations.  Nothing in the BEAD statute or rules prevents this and it is a great outcome from the perspective of conserving taxpayer funds.  Everyone can agree that BEAD should not be subsidizing providers that do not need government funds to build out.  Indeed, BEAD likely created an incentive for such providers to promise to build rather than face a government-funded competitor.  But if these BEAD providers fail to perform and don’t actually build out their networks, BEAD’s clawback provisions will be meaningless.  Without any funds to recover following a failure to perform, the state or territory will most likely not have any remaining BEAD funding to competitively re-award the subgrant to another provider, leaving these homes unconnected.

Second, under NTIA’s BEAD guidance for Low Earth Orbit (LEO) providers, BEAD funding is awarded for the reservation of capacity on LEO networks to provide BEAD-quality service upon request.  Based on the provisional awards in the draft final proposals, the BEAD amounts sought by LEO providers for capacity reservation awards are relatively low compared to the cost of deploying a terrestrial network, and likely tiny compared to the costs of deploying the overall LEO constellation and network.  Thus, the amount of funds being clawed back if a LEO provider fails to deliver will significantly limit a state or territory’s options to competitively re-award funds to another provider to connect any defaulted locations. 

More generally, clawback clauses alone are insufficient to make BEAD whole.  For all subgrantees, the harm from a BEAD-funded provider’s failure to deliver as promised is not fully bounded by the award amount.  Returning states and territories back to the beginning is not enough.  States and territories need to be able to claim sufficient funds to account for the harm to homes from remaining unserved and to cover the costs of finishing the job to connect them to high-speed internet service as promised. 

The Case for Make Whole Clauses in BEAD Subgrant Agreements

BEAD subgrant agreements create binding obligations for each party—the government and the provider receiving a BEAD award.  Thus, the terms of these agreements can include the equivalent of a liquidated damages clause, which specifies a reasonable estimate of the harm to the state or territory that would occur in the event of a provider’s failure to deliver broadband service as promised.  These clauses provide certainty and incentivize compliance with BEAD obligations.  Beyond that, however, including such a clause can establish, from the outset, a remedy that will put the state or territory in the best position to achieve the purpose of the grant—connecting BEAD locations. 

While unusual in grant agreements, such clauses are permissible when they are tied to program requirements, consistent with the statutory authority for the program, and written into the subaward conditions.  Applied to BEAD, states and territories can and should include a subaward condition that specifies a per location monetary payment for missing a performance milestone or failing to deploy entirely.  Nothing in the statute or the BEAD program precludes such a provision, which would strengthen preexisting BEAD remedies. 

To be enforceable, the amount must be a reasonable estimate of the harm from the providers’ nonperformance.  There are two different, but not mutually exclusive, harms that states and territories should consider incorporating into monetary recoveries for nonperformance.  First, states and territories can estimate a per location cost to a home from going without high-speed internet service.  The Quello Center’s Johannes Bauer has persuasively argued that incorporating this cost into states and territories’ subgrant agreements would incentivize accurate bidding behavior.  To estimate this cost, Bauer uses an opportunity cost framing of work done by John Horrigan and others on the benefit to families from having a high-speed internet connection.  Drawing from such research, Bauer estimates that the lower bound for such costs may range between $1,800-$2,400 per year for every household that is not connected.  Even after bids are in, incorporating that social cost into a make whole clause would incentivize provider compliance and, in the event of nonperformance, help compensate for deployment delays. 

Second, states and territories can estimate the amount of money that they will need to deliver BEAD service to defaulted locations.  In the event of a provider default, states and territories may need to re-run the competitive subgrantee selection process and re-award funding to a different provider to connect the impacted locations.  At the time of default, there will most likely not be extra BEAD funding available.  Thus, states and territories must recover enough money from a nonperforming provider to ensure another competitively-selected provider has sufficient funding to finish the job.  To estimate that amount for locations or project areas now, states or territories could rely on cost model data  for deployment or look to data they received as part of the subgrantee selection process. 

Conclusion

BEAD is not just another grant program; it is a binding commitment to connect every home. But commitments without consequences are fragile.  States and territories have both the authority and the responsibility to go beyond clawbacks and embed enforceable remedies—such as make whole or liquidated damages clauses—into subgrant agreements.  Doing so ensures that when providers fall short, states and territories have the resources and leverage to finish the job.  The lessons from RDOF and CAF are clear: without strong enforcement, billions can be spent without closing the digital divide.  With robust terms in place, however, BEAD can be best positioned to finally deliver the universal connectivity Congress intended.

Stephanie Weiner is a Senior Research Fellow at Georgetown Law’s Institute for Technology, Law and Policy. Prior to her fellowship, she served as Chief Counsel at the National Telecommunications and Information Administration (NTIA), where she led the legal teams implementing historic federal investments to expand broadband internet access and to foster wireless supply chain innovation. Earlier in her career, Stephanie served as Senior Legal Advisor to a former Federal Communications Commission Chairman and a former U.S. Department of Energy General Counsel. Her private sector experience includes working as a partner at a leading telecommunications law firm and as Deputy General Counsel for an information and analytics company.

The Benton Institute for Broadband & Society is a non-profit organization dedicated to ensuring that all people in the U.S. have access to competitive, High-Performance Broadband regardless of where they live or who they are. We believe communication policy - rooted in the values of access, equity, and diversity - has the power to deliver new opportunities and strengthen communities.

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