Debate over the Stokes County Schools Wide Area Network (WAN) contract continued Tuesday as the school board responded to a request from county commissioners to reconsider their bid process.
Three companies, the existing provider Time Warner Cable (TWC), RiverStreet Networks, and BroadPlex, had submitted bids for three-year WAN service for the school system.
The county has been working with RiverStreet Networks for over a year to try to expand high speed internet access to residents in some of the more rural areas of the county, a plan which depended partially on getting the school system’s business, but Time Warner submitted a bid that was over $100,000 less per year than the bid submitted by RiverStreet Networks.
Schools Director of Technology Sarah Wood told the board the system had received a revised bid from Time-Warner Cable which include state sales taxes, an omission which county leaders had argued made it difficult to accurately compare the three bids received for the service.
Wood noted that the school system receives an 80 percent reimbursement for WAN service costs through a federal program called E-Rate, but is required through that program to choose the lowest bidder.
“If we do not receive the E-Rate reimbursement we would be responsible for paying the entire bill,” she said.
School Board Chair Sonya Cox said if the school system chose to go with the RiverStreet bid to help improve service throughout the county it ran the risk of losing the E-Rate reimbursement.
“Best case scenario, we go with Time Warner and get the E-Rate and pay approximately $46,000 a year out of pocket,” said Cox. “Worst case scenario we go with a company that causes us to lose our E-Rate and we would be responsible for approximately $340,000 a year. It is a gamble we have to decide if we want to make. The difference would be about $300,000 a year. If we go with RiverStreet and lose the E-Rate where to do we get that? Would the commissioners agree to give us $300,000 a year?”
County Manager Rick Morris said he could not make any promises for the Board of Commissioners, but said it would be worth asking them.
“I would not take any discussion off the table about funding and various funding scenarios they may be willing to support,” said Morris. “I have had citizens tell me they would be glad to pay more taxes if they could get internet connectivity. I think that is a very valid conversation to have with the commissioners.”
School Board Finance Director Lanette Moore asked if the current Board of Commissioners could commit future boards to such expenditures.
“We do lots of long-term leases and other contracts,” replied Morris. “I can’t think of any board coming in and completely undoing things the previous board did with financial obligations.”
Morris noted that he considered the exclusion of taxes from the original Time Warner bid to be non-responsive and reason to disregard that bid.
“Tweaking it afterward I consider to be non responsive and if I were any of the other companies I would take issue with that,” he said. “I think the solicitation is flawed if you allow them to add additional information.”
But School Board Attorney Fred Johnson said his opinion was that the way the request for proposals was worded, the school board had the option of waiving irregularities in proposals.
“There is only one case in North Carolina regarding that question,” he said. “Would such a waiver give the bidder an unfair advantage? Even if you applied the taxes it does not effect the outcome of the bids. There is still a $100,00 difference. Does it give the bidder an unfair advantage? In my opinion it does not.”
Morris argued that since the initial bid did not include taxes or fees and previous contracts with Time Warner had included hefty fees the ability to change that information later in the bid process did give Time Warner an advantage.
Johnson told the board they needed to decide on the bid based on what was best for the school system.
“I think Mrs. Wood did a great job on the matrix,” he said. “You want to keep in mind that price is the number one priority. It has to be the price to the school system and not the price county-wide but to the individual schools for providing that service.”
Johnson warned that the school board had to be careful how they handled the situation.
“I am sitting here thinking if I was counsel for Time Warner what is my strategy if they did not get this bid,” he said noting that they could sue the school board. “There are a lot of things out there to look at. There are a lot of hands a play here and a lot of issues.”
School Board members stressed that they would like to see improved connectivity in the county, but noted that they also had to worry about their budget.
“We have just recently reduced our budget by $700,000,” said Board Member Bill Hart. “We don’t have the money. I hear you say people are willing to increase taxes for connectivity, but when I sit in these meetings I hear people who are not willing to increase taxes for anything. We need assurances that we are not going to be left holding the bag.”
“We would not only be taking the risk for putting RiverStreet in the county with our budget,” agreed Board Member Pat Messick, “but then we would have to worry if future boards over the next two years after that would be able to commit to that. We would need to have some sort of written agreement to even consider it. You are asking the school board, whose fund balance is so very low, to commit to a tremendous risk that we just don’t have the money for.”
School Board Member Becky Boles asked why the county commissioners had not addressed the issue earlier.
“We knew this was coming,” she said. “We should have been talking about this beforehand so we would be comfortable about this.”
“What RiverStreet wants to do is good for the county, it is good for the people,” added Cox. “But, our decision is what is best for the school system and what is best financially for the school system.”
The board agreed to set up a meeting with the Board of Commissioners at a later date to discuss what the county could offer in the way of funding.
Nicholas Elmes may be reached at 336-591-8191 or on Twitter @NicholasElmes.