LIHWAP DCL-2022-11 Stakeholders Meeting FY2022

The Office of Community Services (OCS) held a Low Income Household Water Assistance Program (LIHWAP) National Stakeholders Meeting on March 30, 2022. The purpose of this Dear Colleague Letter (DCL) is to answer questions from LIHWAP stakeholders that were raised during this meeting. OCS will publish additional answers to critical or frequently asked questions (FAQs) throughout the administration of LIHWAP.

Vendor Agreements and Relations

1. Question: What guidance exists to help multi-state vendors coordinate service delivery across multiple areas and agencies?

OCS Response: OCS recognizes the challenge of negotiating vendor agreements. Multi-state vendors are encouraged to work with grant recipients in each of the states they serve. LIHWAP grant recipient contact information can be found on the LIHWAP website under contacts.

To help establish vendor agreements, OCS has published a Sample Vendor Agreement along with a few agreements being used by LIHWAP grant recipients. Grant recipients are encouraged to review each section and adapt/modify the content to meet their needs and align with their LIHWAP Implementation Plan. Please note that OCS does not endorse any of the published sample vendor agreements created by LIHWAP grantees. We are sharing these agreements merely as examples of current LIHWAP agreements that are in place. We thank the grant recipients who have graciously offered to share their draft/current vendor agreements with the LIHWAP network.

Regardless of the vendor’s service delivery area, all agreements need to be consistent with the LIHWAP Terms and Conditions. The LIHWAP Terms and Conditions can be found here for States/Territories: Supplemental Terms and Conditions (PDF) , and here for Tribes: Supplemental Terms and Conditions.

2. Question: Are water systems able to apply directly on behalf of customers?

OCS Response: Water systems are not able to apply directly on behalf of customers. Each household served by a utility service provider must submit their own application to the grant recipient or local administering agency. Grant recipients may adopt specific terminologies and procedures in their vendor agreements; therefore, the responsibilities of the utility service vendor may vary among states, territories, and tribes. Many grant recipients have asked utility service vendors to include advertisements about LIHWAP with bills they send to households. In addition, grant recipients may partner with utility service providers to identify accounts with arrearages that may benefit from LIHWAP assistance. Once identified, the grant recipient must confirm household applicant information and eligibility for LIHWAP benefit payment.

The primary role of utility service vendors is to work with the grant recipient or the local administering agency to receive and apply LIHWAP benefit payments to customers’ bills and arrearages to eliminate the amount owed by the customer for a period as approved. After receiving these LIHWAP benefit payments, utility service vendors notify the household of the amount of benefit payment applied to the household’s billing account. In situations where the customers’ water and wastewater services were interrupted due to arrearages, the expectation is to restore services to those households.

In receiving LIHWAP benefit payments to maintain water and wastewater services for their customers, utility service vendors must not treat adversely, or discriminate against any household that receives LIHWAP benefit payments, either in the cost of the goods supplied or the services provided.

3. Question: What is the process and engagement plan for local utilities to become LIHWAP vendors?

OCS Response: LIHWAP grant recipients may identify their process for the establishment of vendor agreements in their Implementation Plan and report on the establishment of vendor agreements during quarterly reporting. While OCS will provide general feedback on the establishment of vendor agreements and building of relationships with utility service vendors, LIHWAP grant recipients are in the best position to design these engagement plans. Common approaches used by grant recipients to date include:

• Sending correspondence via mail and email to all utility service vendors covering the state, territory, or tribe informing them of the program;
• Sending vendor agreements via mail and email to all utility service vendors covering the state, territory, or tribe;
• Working with water boards to disseminate program information and vendor agreements to utility service vendors;
• Hosting virtual meetings for all utility service vendors covering the state, territory, or tribe to share information about LIHWAP and answer questions from utility service vendors; and
• Reaching out to utility service vendors individually when they receive an application from a household served by that vendor.

4. Question: Why are vendor agreements not required and how much spending has gone towards these vendors?

OCS Response: OCS recommends written agreements or contracts with water utilities for the protection of all parties. In the absence of a written vendor agreement, a grant recipient would need to propose rigorous alternate procedures to assure consumer protections, financial accountability, and consistency with the Terms and Conditions. These funds are subject to the Single Audit Act, and any procedure created in the absence of a written vendor agreement must provide assurances that protections are being made for all parties and households. There are over 50,000 water and wastewater utility vendors across the country. Given the temporary, emergency nature of LIHWAP, it is not feasible to require grant recipients to enter into agreements with each vendor.

To help establish vendor agreements, OCS has published a Sample Vendor Agreement and shared some agreements being used by LIHWAP grant recipients.

Grant recipients are not required to use OCS’ Sample Vendor Agreement Template (or the sample vendor agreements forms from LIHWAP grantees), but OCS encourages all grant recipients to review the Sample Vendor Agreement Template and consider if the information and categories included in the template is useful for their agreement(s). Grant recipients that do not have an existing format for agreements are encouraged to use and adapt the sample agreement, which has been designed to help ensure accountability to the Terms and Conditions of the award. OCS strongly encourages LIHWAP grant recipients and subgrant recipients to work with their own legal counsel in adapting the sample vendor agreement or creating their own vendor agreement.

The LIHWAP Terms and Conditions can be found here for States/Territories: Supplemental Terms and Conditions (PDF) , and here for Tribes: Supplemental Terms and Conditions.

5. Question: How can vendors separate water and wastewater charges if they are on the same invoice?  

OCS Response: Water and wastewater charges do not need to be separated if they are on the same invoice. LIHWAP funds may be used to pay for both water and wastewater services.

6. Question: How has OCS advised state programs to offer a communication method to vendors with bundled bills?

OCS Response: OCS suggests working with utility service providers that provide multiple utility services that are not all covered by LIHWAP, such as a solid waste program (e.g., household garbage, tree limbs, and other trash), to produce an itemized bill listing the cost of each service. Each vendor will need to provide an invoice that clearly states the cost of the water and/or wastewater service only. Most utility service vendors already have a way to produce this type of itemized bill. We recommend that grant recipients include this requirement in their vendor agreement and negotiate, as part of the agreement, consumer protections that require water restoration when LIHWAP benefits cover the amount owed for water services, even if the other utilities are still in a negative balance.

If the utility vendor is unable to itemize a bill and indicate what amount of the bill is for water and/or wastewater services, the grant recipient should work with the vendor to determine an appropriate percentage of a bill that is attributable to the vendor’s cost of providing the water and/or wastewater services. This percentage should be used for all payments made to that vendor.

7. Question: Have state agencies approached their legislatures to require more vendor agreements? For example, could a legislature require a deadline for water utilities to sign into a vendor agreement?

OCS Response: OCS is not aware of any state agencies that have approached their legislatures to require more vendor agreements. Some grant recipients have implemented their own deadlines for utility service providers to sign into a vendor agreement.

OCS recommends written agreements or contracts with water utilities for the protection of all parties. In the absence of a written vendor agreement, a grant recipient would need to propose rigorous alternate procedures to assure consumer protections, financial accountability, and consistency with the Terms and Conditions. These funds are subject to the Single Audit Act, and any procedure created in the absence of a written vendor agreement must provide assurances that protections are being made for all parties and households.

The LIHWAP Terms and Conditions can be found here for States/Territories: Supplemental Terms and Conditions (PDF), and here for Tribes: Supplemental Terms and Conditions.