APPROVED

IHETS Board of Directors and Management Committee
April 11, 2005
Boardroom

PRESENT
Patrick Alles, Independent Colleges of Indiana
Lloyd Benjamin, Indiana State University
Hans Giesecke, Independent Colleges of Indiana
Michael Huffman, Department of Education
David Jent, Indiana University
Martin Jischke, Purdue University
William Kramer, Ivy Tech State College
Gerald Lamkin, Ivy Tech State College
Joe Misciewicz , Indiana Public Broadcasting
Mark Rozewski, University of Southern Indiana
O'Neil Smitherman, Ball State University
Phyllis Usher, Department of Education
Lloyd Wright, Indiana Public Broadcasting

David Hensel, Sommer and Barnard, legal counsel for IHETS

Staff: Dave King, Susan Scott, Kevin Siminski, Tim Fisher, Lynn Ward, Ed Stockey, Rauf Khalid, Tim Ping, Julie Wheeler

Chairman Benjamin called the meeting to order at 11:00am and introductions were made.

Chairman Benjamin adjourned to EXECUTIVE SESSION (Pursuant to IC 5-14-1.5-6.1 (b) (1), (2) & (7) and IC 5-14-3-4 (a) (4) & (5)

Public Session:
King reviewed the State Network RFP Options. He outlined the options with benefits and concerns of each.

Option One:
IHETS and one or more private sector telecommunications firms partner and respond to the RFP in one of the following scenarios:

a)       IHETS as the prime contractor to the State of Indiana , private sector partners or vendors as subcontractors  

Benefits-

• IHETS knows the business.  Relationships are established and transition will NOT impact operations of any the entities currently utilizing services 

• RFP outlines several fiscal responsibilities that the successful bidder/vendor must agree to.
• $1,000,000 Performance bond needed to even be a valid bid and IU, as IHETS' fiscal agent, might not approve.
• No guaranteed customer base.  K12 segment already planning on separating from the network by July 1, 2005.
• IHETS will be vendor, not a partner with the state.
• Continued exposure to political pressures and controls.
• Continued fiscal liabilities.
• Support for IHETS state appropriated activities would continue to be held hostage as a result of  higher exposure to political scrutiny.

• IHETS would ultimately be assuming the fiscal responsibility for guaranteeing services to the State of Indiana .  These responsibilities could exceed $30-40 Million over the life of the contract. Indiana University would , based on the fiscal history of the network, might not agree to act as purchasing agent for IHETS under this scenario.
  • IHETS is still owed approximately $2M from the state of Indiana for services already rendered.
• IHETS' state appropriated account could continue to be jeopardized by the political powers to be.

• Private sector brings a wealth of experience in managed large scale state contracts of this nature.
• Established billing systems already exist with Telecommunications firms.
• IHETS can focus on its core competencies- managing complex networks.
• Prime contractor assumes fiscal responsibility for State operations eliminating the risk directly to IHETS and to IU

• Private sector motivation, would they be interested in utilizing IHETS services over the entire term of contract.
• Will have to go through this process again in two to four years.

• Preference for fixed cost reimbursement agreement which would minimize  fiscal impact on IHETS.

• IHETS would partner with ENA to bring K-12 and keep the “state network” together.  Users gain the value of being part of the state network.
• A large number of users could drive network prices down
• Private sector brings a wealth of experience in managed large scale state contracts of this nature.
• Established billing systems already exist with Telecommunications firms.
• IHETS can focus on its core competencies- managing complex networks.
• Prime contractor assumes fiscal responsibility for State operations, eliminating the risk directly to IHETS. 

• Complex relationships will exist
• E-Rate for the K12 could become complex
• Process will be repeated in two to four years again

• This option would have a minimal fiscal responsibility from IHETS perspective.  IHETS would just bill our services to the Prime contractor.
• Contract(s) would be need to be negotiated with prime to ensure smooth transition with preference given to a fixed price contract .  

• The difficulties dealing with State bureaucracy would be eliminated
• Educational network focus on IHETS competencies
• Network will focus on member relations and outreach.

• IHETS will need to reduce the engineering workforce to some degree (probably 30-40%)
• Question about access to I-Light2.
• Whether ENA's contract with DOE will be renewed in 2 years.

• With consolidated user base, IHETS and ENA could drive the network member user fees.
• Impact on user fees if ENA contract not renewed by DOE in two years.
• IHETS will need to spend approximately $700-900k to re-establish a new network operating infrastructure.  Costs would be offset by revenue from member fees.

• IHETS will re-establish INDnet
• Solely focus on Higher Education relationship 

• Will Higher Education members choose to participate in INDnet
• Circuit Volume will not drive down member user fees
• IHETS engineering workforce would need to be reduced significantly.

• IHETS will need to spend approximately $700-900k to re-establish a new network operating infrastructure.  Costs would be offset by revenue from member fees.

IHETS does NOT response to the RFP and Higher Education buys services from the Indiana Office of Technology.  IHETS is no longer in the network operation business.

• IHETS would continue the focus on member-support for e-Learning and technology-mediated education (depending on budget issues)

• All of the networking staff would be eliminated. Mass exodus could occur while IHETS is still contracted to operate the State network.  IHETS would then be required to piece together contracted supported for operations.  All institutional knowledge would be lost.
• Higher Education members would no longer have a forum to interact.
• Would services provided by IOT align with member needs
• Current RFP has not recognized the customer requirements.

• Higher education customers will have little leverage and input in establishing pricing for services.
• Costs for ‘advanced services' might not be affordable by the higher ed customers.

King stated that staff feels Option 1B/C or 2A are the best options, however 2A would require that a substantial portion our current budget to be in place.

Kramer asked if partnering with ENA and DOE would create a conflict of interest for with our Board member representing DOE (ie; setting prices, etc.)

Jischke stated that with the current budget issues, it would be unwise to go with the 1A option as it has the potential for creating more problems.

Kramer reported that when the Management Committee met last, the consensus was to eliminate option 1A and they felt that 2A was preferred. Kramer added that a partnership with ENA might be beneficial, and since that meeting we have received additional information from ENA and they have proposed maintaining the helpdesk. The group encouraged staff to continue conversations with vendors and ENA.

Smitherman added that it is important to do everything we can to provide the best quality network and let the other things fall out.

How to Proceed?
King noted that the budget decision might narrow our options. The current Intelenet contract states that IHETS continue to manage the network operations center through July 2007. It is unknown how much of IHETS appropriation needs to be in place to keep the network running through that period. With the on-going commitments, (ie; lease agreements, satellite and building) if might be difficult to have enough staff to keep it running if the proposed cuts are approved.

Following a lengthy discussion, the consensus of the group was that there are too many unknowns to make a decision at this time. The group recommended that at this point staff should explore every option and meet again in a week to ten days to review the status of the budget and make a decision on how to respond to the RFP.

With no further business to discuss the meeting adjourned at 1:20pm.