August 6, 1993
Edward Renfrow State Controller 200 West Jones Street Raleigh, N.C. 27603
Re: Advisory Opinion; North Carolina Information Highway Project
Dear Mr. Renfrow:
You have asked for an opinion on whether the State can lawfully accept a donation of services from a private concern to assist in the development and implementation of the North Carolina Information Highway (NCIH).
We understand that the NCIH will be an integrated public network of telecommunications facilities capable of carrying a large amount of voice, data, image and video signals at very high speeds. The NCIH will employ state of the art telecommunications technology, including fiberoptics and high-speed cell-switching equipment. The public will receive substantial benefits from NCIH through public schools, universities, vocational training facilities, medical centers, prison units and governmental offices.
The NCIH requires major investments in two areas–transmission facilities (primarily fiber-optic cable and sophisticated switching equipment) and on premises user equipment, such as computers, video equipment, LANs, etc. Three telephone companies, GTE, Southern Bell and Carolina Telephone are making the transmission facilities investments. Recovery of these costs will be controlled by the State Utilities Commission. The State plans to procure the on premises user equipment from a variety of vendors through the public bid process. Cost, compatibility and quality are major considerations for these purchases. Over the ten to fifteen year implementation period, the total cost of the NCIH is anticipated to be over $ 1 Billion.
The State expects Northern Telecom to offer to donate a three to five person team of consultants to work over a twelve to eighteen month period to assist the State in integrating the diverse equipment of the NCIH into a telecommunications system. Under the proposal the Northern Telecom team will work directly with State personnel and will be incorporated into the NCIH team. State employees will supervise the Northern Telecom work team. The value of the assistance to be donated by Northern Telecom is estimated at approximately $500,000 to $1 Million.
We further understand that the State will accept the donation under the following conditions:
1) Northern Telecom will not gain any information that may be used to the State’s disadvantage as a result of the proposed donation;
2) the State incurs no current or future obligation as a result of the donation;
3) the State and Northern Telecom will take necessary steps to insure that Northern Telecom will not obtain any advantage in the competitive bid process for purchases of equipment for the NCIH as a result of the donation of consulting services; and
4) the State will accept similar donations from other companies and individuals if justified by the State’s needs.
Under the facts as described above, we are aware of no legal prohibition to the State accepting the contemplated donation of consultation assistance from Northern Telecom. We do advise that prior to accepting the donation, the State and Northern Telecom execute a Memorandum of Understanding setting forth the conditions under which the State accepts the donation. These conditions would include items 1 through 4 above.
Of course, our lawyers are available to assist the State in implementing this important project. In particular, Buie Costen, head of our Property Control Section, is available to assist the State in insuring that the NCIH complies with all competitive bid laws.
If I can be of further assistance, please do not hesitate to let me know.
John R. McArthur Chief Counsel