Minutes | Meeting of the Finance Committee of the Board (BFC) | 22 October 2024

BFC Attendees: Maarten Botterman, Edmon Chung, Danko Jevtović (Chair), Patricio Poblete, and León Sánchez

BFC Member Apology: Harald Alvestrand

Other Board Member Attendees: Sally Costerton, Sajid Rahman, and Tripti Sinha

ICANN Org Attendees: Francisco Arias (VP, GDS Technical Services), Kristy Buckley (Outreach & Digital Inclusion Director), Xavier Calvez (SVP, Planning and Chief Financial Officer), Lars Hoffman (VP, new gTLD Program Management and Deputy Program Lead), Julie Hofmeister (Implementation Manager), Gustavo Lozano Ibarra (Senior Director, Technical Services), Aaron Jimenez (Sr. Board Operations Specialist), Marita Konings (VP, New gTLD Program Lead), Elizabeth Le (Deputy General Counsel), Becky Nash (VP, Planning), Shani Quidwai (VP, Finance), Vivek Sengupta (Senior Director, Procurement), and Theresa Swinehart (SVP, Global Domains and Strategy)

The following is a summary of discussions, actions taken and actions identified:

1. BFC Workplan – The Committee discussed its workplan, which is on target.
2. Agenda Review – The Chair reviewed the agenda for the meeting.

3. Operating Fund Forecast – The BFC reviewed the most recent Operating Fund forecast to determine whether the Operating Fund remains compliant with the minimum level as set out in the Board-approved Investment Policy. ICANN org reported that Operating Fund has a balance of US$38 million as of September 2024, an increase from US$34 million as of June 2024. ICANN org noted that last year US$20 million was transferred from the Operating Fund to the Supplemental Fund for Implementation of Community Recommendations (SFICR), which is being utilized for costs associated with implementation of the Next Round of the New gTLD Program. ICANN org noted that, historically, the Operating Fund level tends to take a slight downturn in December before normalizing the following months. It is anticipated that the same pattern will occur in 2024. The BFC considered options if the anticipated downturn brings the Operating Fund below the three-month minimum balance requirement. Specifically, the BFC considered whether to transfer US$5 million from the Reserve Fund or to continue monitoring the situation and make a transfer later, if necessary. Following discussion, the BFC agreed to continue monitoring the situation. The Committee asked ICANN org to ensure transparency and consistent reporting to the BFC on the matter.
   • Action: ICANN org to prepare monthly reports for the BFC to monitor Operating Fund level.

4. Contracting Approvals
   • Next Round – Service Level Agreement (SLA) Monitoring System Upgrade – Edmon Chung recused himself from the discussion, out of an abundance of caution to avoid any conflict of interest. ICANN org presented the BFC with the proposed contract to upgrade the SLA Monitoring System, so it can support the anticipated additional load due to the expected increase in gTLDs resulting from the New gTLD Program: Next Round. ICANN org previously engaged the recommended vendor to develop the SLA Monitoring System for the 2012 round of the New gTLD Program. The provider has vast experience and a proven track record that made it a reliable choice for this project. The provider customized its proprietary monitoring platform to ICANN’s needs for monitoring the Service Level Requirements that are specified in the Base Registry Agreement and Registrar Accreditation Agreement. For more than ten years, ICANN org has been augmenting the functionality of the SLA Monitoring System by signing yearly development contracts with the provider. Due to the New gTLD Program: Next Round, an extensive code optimization is necessary in the SLA Monitoring System to support the anticipated increased volume of new gTLDs. The org team explained that this item is in front of the BFC because the cost of the contract is greater than US$500,000. The BFC determined that the procurement process has been respected and that costs are reasonable and affordable. Following discussion, the BFC approved a recommendation to the Board to authorize ICANN org to enter into, and make disbursement in furtherance of, a contract with the recommended provider.
     • Action: ICANN org to prepare relevant materials for Board consideration.
   • Support Applicant Review Panel (SARP) for New gTLD Program: Next Round – Edmon Chung recused himself from the discussion, out of an abundance of caution to avoid any conflict of interest. ICANN org presented the BFC with a proposed contract with a provider for the Support Applicant Review Panel (SARP) for the Applicant Support Program (ASP) of the New gTLD Program: Next Round. The recommended vendor would provide external expertise and is sourced to carry out a fair, consistent, efficient, and reliable process to evaluate ASP applicants based on applicant eligibility criteria as described in the New gTLD Next Round Applicant Support Handbook. It is anticipated that the work will continue through Q3 of calendar year 2026. The org team explained that this item is in front of the BFC because the cost of the contract is greater than US$500,000. The BFC determined that the procurement process has been respected and that costs are reasonable and affordable. Following discussion, the BFC approved a recommendation to the Board to authorize ICANN org to enter into, and make disbursement in furtherance of, a contract with the selected provider.
     • Action: ICANN org to prepare relevant materials for Board consideration.

5. Next Round Update– Edmon Chung recused himself from the discussion, out of an abundance of caution to avoid any perception of a conflict of interest. Given that the BFC is responsible for the overall project management oversight for the Next Round, org presented the BFC with a status of implementation update, and overall progress of the New gTLD Program: Next Round. ICANN org reported that the Registry Service Provider Program (RSP) and Applicant Support Program (ASP) are both on schedule for implementation in November 2024. ICANN org reported that the Applicant Guidebook (AGB) is scheduled for publication by December 2025 and noted that for the application submission period to open by April 2026, the AGB must be published by December 2025 and the gTLD Application Management System (TAMS) must be ready to take applications by April 2026. ICANN org noted that while the work on the gTLD Application Processing project progresses to meet the deadline, some policy requirements are still being finalized, which poses a risk and may necessitate adjustments to the project. ICANN org also flagged some resource constrains that pose risks to the implementation timeline, particularly on the Registry Services Testing and Shared Services, but ICANN org has identified resources to mitigate impact to the project timelines. There are also resource constraints on ICANN org staff that are impacting project timelines, but ICANN org is actively evaluating how to address the constraints. ICANN org also briefed the BFC on the financial status of the program to date, noting that of the approved US$45 million budget, US$24 million has been spent and an equivalent of 31 full-time staff have spent their time working on the Program.
6. FY25 Financial Forecast – The Committee received an update on the FY25 financial forecast.