Nearly three months after announcing an exclusive agreement with the C&P Telephone Co. to link Maryland's high schools and colleges with a high-technology "distance learning" network, top state officials conceded yesterday that they should have given other firms an opportunity to compete.
On the advice of Attorney General J. Joseph Curran Jr. -- and on the eve of a General Assembly investigation into the way state contracts are awarded -- Schaefer administration officials disclosed that they now intend to seek proposals from any other interested companies.
But Gov. William Donald Schaefer's budget secretary, Charles L. Benton Jr., admitted that he hopes to put the bidding on such a fast track that a contract could be awarded before the year is out -- making it likely that Chesapeake & Potomac Telephone Co. of Maryland would be the only firm capable of responding.
"In my opinion, it would be unlikely that other providers would be able to provide this service in a time frame that would be acceptable to the state, although they certainly would have that opportunity," Mr. Benton said.
The lack of bidding has been a frequently raised complaint, mostly from the rival cable television industry, ever since Governor Schaefer and C&P President Frederick D. D'Alessio jointly announced plans for the futuristic project June 30.
The state's goal is to allow students in one part of the state to receive instruction from a teacher in another with the help of interactive video equipment connected by high-capacity fiber optics cables.
C&P, which plans to spend $30 million to install the cable network, had agreed to link as many as 270 schools around the state for a monthly hookup fee that could bring the company $4.4 million a year for the first three years and $8.8 million a year thereafter.
To entice schools to sign up, C&P also said it would donate about $50,000 in video conferencing equipment to participants.
Apart from the impact on schools, C&P's network would allow it to offer services to businesses that wanted to tap in. Their fees would be determined by state utility regulators.
Network can be built
C&P can build its network whether or not state schools are linked to it. What the state is now seeking are proposals to provide the equipment and technology to allow "distance learning," or interactive video, between the schools.
Administration officials initially said they felt they did not have to seek proposals from other companies because the schools were under no contractual obligation to hook into the network.
But Attorney General Curran and Mr. Benton recently concluded otherwise.
Mr. Curran said his office intervened after reading newspaper stories in which the cable television industry complained that the project should have been competitively bid. He said C&P itself, in seeking permission from the Public Service Commission to charge schools a hookup fee of $1,365 a month for the first three years and $2,730 a month thereafter, characterized those rates as "competitive."
Mr. Benton said he was convinced that the project should be bid after reading a letter to the editor of The Evening Sun from C&P Vice President John W. Dillon in which he stated: "C&P's distance learning service is available to those who want it at a price set by public tariff. And it's a competitive offering; there are other providers of such services."
If that was the case, he said, then state procurement laws require that competitive bids be solicited.
The state's unexpected and belated decision to seek bids caught C&P officials by surprise.
Paul Wood, a spokesman for C&P, said that officials at the Bell Atlantic Corp. subsidiary knew there was an internal debate within the Schaefer administration on the bidding question but were unaware that a final decision had been reached.
"If it is true, we would be disappointed because it will delay the implementation of a technology that would be important to the state's education system," he said.
He said he could not imagine circumstances in which C&P would not bid to participate in the project. He also said the decision to solicit bids would not interfere with C&P plans to lay a network of fiber optics throughout the state.
Support for open bids
J. Edward Davis, general counsel to the Cable Television Association of Maryland, Delaware and D.C., said the cable industry as well as some legislative critics believed all along that the state might get a better deal if it opened the process to all interested parties.
"We felt from the outset that this should be made very public and put out for bids, so not only our industry but any other parties who feel they can provide the service would be on the same playing field," Mr. Davis said. He declined to comment, however, when asked if the cable industry had threatened to sue the state if it did not open the project for bids.
Page W. Boinest, Governor Schaefer's press secretary, said the administration still believes it is "a reasonably close call" whether the project had to be bid.