The Stokes County school system will re-solicit bids for Wide Area Network (WAN) service following a decision by the School Board Monday night.
The decision will come as a relief to county residents without internet access who had feared a vote to award the WAN contract to Time-Warner Cable could delay plans by a competing company, RiverStreet Networks, to expand service into un-served and under-served areas.
Stokes County has been working with RiverStreet Networks for over a year to try and 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 bids submitted from RiverStreet and BroadPlex.
The current bids for WAN service range from $232,848 to $358,800 per year. While the school system is not technically required to accept the lowest bidder, if it does not it would likely lose reimbursement through a federal program called E-rate which covers 80 percent of the cost of WAN services.
In Monday evening’s school board meeting Angie Rominger shared the difficulties of raising school-aged children without internet at home.
“I understand money is tight; it’s tight at my house too. But I look around this room and there are tablets and laptops and that’s doesn’t happen at my house and it isn’t going to,” she said. “It’s very frustrating. If you sign the contract with Time Warner it’s going to be five, six, or seven years before we have this opportunity again.”
Rominger explained she has a rising ninth grader who will be attending South Stokes next year and he needs internet access for research and homework.
“My kids don’t have that same opportunities as others. When I came in the door tonight, the mission statement says for Stokes County Schools ‘To provide, in a safe and supportive environment, a 21st Century education for all students to be globally competitive’. Not all students are getting a 21st century education.”
After a closed session with school board attorney Fredrick G. Johnson, the board opted to reject the current set of bids and direct the administration of the Stokes County schools to resubmit a request for the proposals for the three fiscal years (2016-2019) clarifying the specifications related to taxes and fees.
Decision comes after meeting with Board of Commissioners
Last week the Board of Commissioners and the School Board held a joint meeting to discuss how the decision on who to award the WAN contract to could impact the county.
County Manger Rick Morris argued that both boards had the same objective — to expand internet service in the county.
“The question is how wide do you want the network to be,” he said, pointing out that while the county was not trying to favor RiverStreet Networks it was fighting to encourage companies willing to expand access in the county.
“RiverStreet has designed the system” said Morris. “They have marked it on the ground. They have already spent $3 million of an $11 million investment in the county. They have demonstrated that they are the only people who are interested at this time in doing an expansion. We would support any provider willing to do the same thing equally.”
Morris described the current collection of bids for WAN service as “tainted” arguing that Time Warner had not originally included taxes and fees and had been allowed to amend their bid with those figures.
“Re-advertisement of the solicitation would be a good option,” he said, noting that from his perspective RiverStreet Networks was the lowest responsive bidder. “I recommend you either award it to RiverStreet Networks or re-advertise it. Awarding it to Time-Warner would be a very dangerous decision.”
School Board attorney Fred Johnson offered a different view of the bid process, explaining that RiverStreet Networks had also asked to modify its bid because their original bid used an incorrect percentage for calculating taxes and noting that Time Warner’s bid did address taxes on page 46.
“If we are going to argue non-responsiveness on the bids, then we have three bids that on the tax issue are arguably non-responsive,” said Johnson.
School Board Chair Sonya Cox said that based on the advice of their attorney and NC Department of Public Instruction E-rate Specialist Jeannene Hurley her board would not feel comfortable applying for E-rate reimbursements if they did not award the contract to Time Warner.
“Based on the best advice we can get we would be rejected so then where do we come up with $300,000 per year?” said Cox.
Hurley explained to both boards that the E-rate program was designed specifically to help schools afford WAN connections between K-12 school buildings, not to help expand internet service to un-served areas.
“There are other federal programs that can help other communities,” she said. “The foundational elements of E-rates are competitive bidding. You have to run an open and fair bidding process and your bid has to be cost effective.”
She noted that in the current bids Time Warner would be charging about 67 cents per megabyte of transmission speed and RiverStreet would be charging close to $1 per megabyte of transition speed.
“That is a cost effectiveness issue right there,” said Hurley, noting that the difference would likely raise flags in the E-rate application process and likely result in an investigation. “They will make a judgment on if you had a cost effective review and from what I have seen this is kind of a slam dunk. I don’t see anyway out of this.”
Hurley said if the bid process was challenged it could result in years of investigation from the FCC.
“It is not for the faint of heart,” she said. “You have to be ready to do battle. If you get a denial, then the school district is still responsible for paying every dime of the bill until it gets resolved.”
Several commissioners asked if the fact that Time Warner’s current bid was half of what they had been charging the school system would not be factored into the lowest cost evaluation.
“It is from today going forward,” responded Hurley. “Cost effectiveness is the rule. The winner of this bid is Time Warner. Awarding it to any other bidder will result in scrutiny and likely denial. They are solely looking at cost effectiveness. I have been doing this for 15 years and I can see the writing on the wall with this one.
“Whoever loses will probably file a Code 9 which will have the FCC begin an investigation,” she added. “Either way there will likely be a complaint to the FCC. The question is how do you mitigate that. If you picked Time Warner, you have all of your documentation here and can just send them the bids.”
Drive to expand connectivity
The Board of Commissioners argued that encouraging RiverStreet Networks to expand connectivity was vitally important to the future of the county.
“If we miss this opportunity we have missed the opportunity of our lifetime to expand broadband in our community,” said Commissioner James Booth, who was a key player in getting RiverStreet to look at providing service in Stokes County. “It takes the connecting to the schools and the government and hospital to get this started.”
Board of Commissioners Chair Ronda Jones said the expansion of service was both vital to economic development and to retaining a younger population in the county.
“This provides not only for the current students in the schools, it provides a followup mechanism for those who graduate and want to start businesses and move our county forward,” she said.
Commissioner Ernest Lankford said the issue was similar to the how the county dealt with cell phone access several years ago.
“If we don’t eventually think enough of the people in Stokes County to figure out a way to provide this service that is needed by school children and also for businesses and entrepreneurs then we will miss an opportunity we will probably never have again,” he said. “My recommendation is we re-bid this and make sure the RFP is designed specifically for a three-year term and designed specifically for each company to bid on the same thing. I would like to see the RFP before they send it out for bids.”
Commissioner Leon Inman said expansion of internet connectivity was the single most important issue in Stokes County.
“There is no one sitting at this table who in their lifetimes will see Time Warner expand up here,” he said.
It all comes down to money
School Board Member Jamie Yontz said none of his board liked the position they were in but had limited choices.
“It is out of our hands,” he said. “This E-rate may not be the rules we want to live by, but they are the rules.”
“The Board of Education has been put in a no-win situation,” agreed School Board Member Bill Hart. “If we don’t take the lowest bidder people are going to come in and investigate us.”
Jones acknowledged the situation saying, “We see the trap you are in and feel like we are in a trap as well.”
“We all want the same thing but we are being held hostage by Time Warner and E-rate,” agreed Inman.
School Board member Pat Messick asked where the school system was supposed to come up with over $300,000 a year to pay for WAN services if it awarded the contract to RiverStreet Networks and was not able to get an E-Rate reimbursement.
“I want to hear from each county commissioner,” she said, “are you willing to pay for that $330,00 each year?”
“We do not have enough money in our fund balance to even cover one year of this,” said Cox. “If we lose the E-rate then we are stuck with a contract for three years and we would not be able to afford to have internet to any of schools. What would that say?
“I do very much value a company that is willing to expand into rural areas,” she added. “It is a great benefit to us and to our students at home. Having all of our kids with internet access is a big priority, but we don’t have $300,000 a year to gamble with. It comes back to dollars for us and the gamble and risk we have to look at.”
Three commissioners, Jones, Inman and Jimmy Walker said that they would be willing to work with the school system on funding the issue.
“For me it is important enough that I would go that route,” said Jones.
“I don’t want to put an excessive burden on the schools,” said Walker. “I will support holding the board harmless for any loss in moving this forward. I would be willing to look at what economic development funds we could use this way.”
Cox questioned if the county was really wiling to cover the cost if the school system could not get E-rate reimbursements.
“So you are saying you are willing to pay us nearly $1 million over three years of tax payer money that the federal government would cover?” she said.
“Right now the number one thing I am looking at is rebidding these bids,” replied Walker. “If that works then we will not be obligated for that much. But if we have put you at risk and if ultimately there is a cost I am saying that to some extent we have created the situation you are faced with and there is responsibility on the part of our board. Will every tax payer be excited to see their tax money spent that way? No. But I am asked more by our citizens when we are going to get internet than any other question.”
Questions over rebidding
Yontz noted that rebidding the contract might raise questions over whether the school system was trying to swing the bid to one particular company.
“It is going to look like we are showing favoritism to RiverStreet,” he said.
But Morris continued to maintain that the existing bids were tainted.
“You cannot accept the current bids,” he said. “The other two bidders are not going to be satisfied. With a re-solicitation you could end up with lower bids than you have right now. You will get lower bids and a clean solicitation. I have done a lot more of these things than everyone in this room together. I do not see any downsides to you rebidding.”
Impact on RiverStreet expansion
Morris said he did not think RiverStreet would stop its plans for the county if they did not win the school system’s bid, but said it would dramatically slow down the rate of expansion into un-served areas.
“They will have to re-evaluate,” he said. “They will stay here and keep working, but it will be a totally different program.”
Nicholas Elmes may be reached at 336-591-8191 or on Twitter @NicholasElmes.