Under North Carolina's 2001 MBE construction-contracting law, does each state agency receiving construction money have to develop its own minority-business outreach plan, or can the Department of Administration write one plan covering all of them?

Plain-English summary

The 2001 General Assembly passed Chapter 496 of the Session Laws, tightening rules on minority business enterprise (MBE) participation in state-funded construction. The new statute required "each public entity" awarding construction contracts to set a 10% verifiable goal for MBE participation and to establish good faith efforts to meet it. The Department of Administration asked the AG whether it could write a single outreach plan covering all the agencies it awards contracts on behalf of, or whether each agency had to write its own.

Senior Deputy AG Reginald Watkins, with Special Deputy Roy Giles and Assistant AG Jeffrey Parsons, concluded that "public entity" meant something broader than just the Department of Administration. The phrase covered every elected or appointed authority with legislative, policy-making, quasi-judicial, administrative, or advisory authority. As a practical matter, every cabinet department and every constituent UNC institution that entered into construction contracts under Article 8 of Chapter 143 counted as a separate public entity.

The AG built the analysis on two sources. First, the courts had already defined "public body" under the Open Meetings Law (G.S. § 143-318.10) and Public Records Act (G.S. § 132-1) to reach broadly across state government and its subdivisions. News and Observer v. Poole and DTH Publishing v. UNC-Chapel Hill confirmed that subdivisions of state government, including the UNC undergraduate honor court, were independent "public bodies." The statute used "public entity" and "public body" interchangeably, so the same broad scope applied. Second, Chapter 496 itself contemplated that each public entity could impose stricter requirements than the Secretary's minimum rule. That language only made sense if "public entity" was distinct from the Department of Administration. If the Secretary alone spoke for the entire state, the additional discretionary authority would have nothing to operate on.

The bottom line: the Department of Administration sets a floor by rule, but each agency awarding construction contracts must adopt its own outreach plan and can exceed the floor.

Currency note

This opinion was issued in 2002. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. The MBE/HUB construction-contracting framework in Article 8 of Chapter 143 has been amended several times since 2002, and the "Historically Underutilized Businesses" (HUB) program has evolved alongside the original MBE statute. Anyone currently designing an agency outreach plan should consult the current statute and any rules adopted by the Department of Administration's HUB office.

Background and statutory framework

Why "public entity" mattered. The 2001 reform built on existing law requiring 10% MBE participation goals on state construction projects. Whoever counted as a "public entity" had to publish goals, document good faith efforts, and stand ready to defend its outreach plan if challenged. The Department of Administration was asking, in essence, whether it could centralize compliance for the agencies it served, or whether each of those agencies (Transportation, UNC campuses, etc.) had to run its own program.

Statutory construction principles. Sutton v. Aetna, Savings and Loan League, and Food Town Stores all confirmed the basic canon that the legislature's intent governs and that words get their ordinary meaning unless a technical definition controls. The AG used the open-government statutory definitions of "public body" as the closest source of ordinary meaning because the 2001 Session Laws used the same vocabulary interchangeably.

The Open Meetings Law definition. Under G.S. § 143-318.10(b), a "public body" is any elected or appointed authority, board, commission, committee, council, or other body of the State or political subdivisions in the State composed of two or more members and exercising or authorized to exercise a legislative, policy-making, quasi-judicial, administrative, or advisory function. DTH Publishing applied this definition expansively, treating the UNC Undergraduate Student Honor Court as a public body in its own right.

Implication for UNC and state agencies. The opinion drove home that constituent UNC institutions, when they entered into construction contracts under Article 8 of Chapter 143, were public entities for MBE purposes and had to develop their own outreach plans. The same was true for every cabinet-level department.

Statutory structure pointing the same way. Chapter 496 used "public entity" in N.C.G.S. § 143-128.2(b) as the subject of the duty to establish good faith efforts, while N.C.G.S. § 143-128.3(e) gave the Secretary of Administration rulemaking authority "for state entities." N.C.G.S. § 143-128.2(f) then expressly allowed "the public entity" to require additional good faith efforts beyond what the Secretary imposed. That structure only worked if "public entity" was a different actor from the Secretary.

Common questions

Q: Did this opinion mean every small board or commission had to develop a complex MBE plan?

A: Only those awarding construction contracts subject to Article 8 of Chapter 143. Boards that did not enter into qualifying construction contracts did not need outreach plans. The opinion's scope was about who has to write a plan when the agency is in fact buying construction services.

Q: Could the Department of Administration still help agencies write their plans?

A: Yes. The opinion did not prohibit the Secretary from providing model language, templates, or technical assistance. What it ruled out was substituting a single Department-wide plan for the individual agency plans required by statute.

Q: Were UNC system campuses really separate "public entities" from the UNC General Administration?

A: The opinion's logic strongly suggested yes. Each constituent institution had its own board of trustees with legislative, policy-making, and administrative authority. Court of Appeals cases like Charlotte Parks and Recreation and WINFAS supported treating legislatively-created sub-units as separate public bodies from their parent governments.

Q: What was the consequence if an agency relied on the Department of Administration's plan instead of writing its own?

A: An MBE compliance failure could become a contractor protest issue or a basis for state oversight intervention. The opinion did not impose a specific remedy; it answered the upstream question of whether each agency had a standalone obligation, which it did.

Citations

Statutes and session laws:
- Chapter 496 of the 2001 Session Laws (MBE reform)
- N.C.G.S. § 143-128 (public construction contracts)
- N.C.G.S. § 143-128.2 (good faith MBE participation efforts)
- N.C.G.S. § 143-128.3 (Secretary's rulemaking authority for state entities)
- N.C.G.S. § 143-64.31 (announcement of architectural/engineering/construction manager at risk services)
- N.C.G.S. § 143-318.10 (Open Meetings Law definition of "public body")
- N.C.G.S. § 132-1 (Public Records Act)

Cases:
- Sutton v. Aetna Casualty and Surety Co., 325 N.C. 259, 280 S.E.2d 759 (1989) (intent governs statutory construction)
- Savings and Loan League v. Credit Union Comm., 302 N.C. 458, 276 S.E.2d 404 (1981) (language, spirit, purpose are indicia of intent)
- Food Town Stores v. City of Salisbury, 300 N.C. 21, 265 S.E.2d 123 (1980) (ordinary meaning of words)
- News and Observer Publishing Co. v. Poole, 330 N.C. 465, 412 S.E.2d 7 (1992) (broad reach of "public body")
- DTH Publishing Corp. v. UNC-Chapel Hill, 128 N.C. App. 534, 496 S.E.2d 8 (1998) (UNC honor court as public body)
- Board of Transportation v. Charlotte Parks and Recreation Commission, 38 N.C. App. 708, 248 S.E.2d 909 (1978) (legislatively-created subunit treated as separate public entity)
- WINFAS, Inc. v. Region P Human Development Agency, 64 N.C. App. 724, 308 S.E.2d 99 (1983) (county-created entity is separate public entity under Open Meetings Law)

Source

• Landing page: https://ncdoj.gov/opinions/public-entity-definition/

Original opinion text

Re: Advisory Opinion: Definition of "Public Entity"

Dear Mr. Skinner:

This letter responds to your request for an Attorney General's opinion regarding the definition of "public entity" as that term is used in Chapter 496 of the 2001 Session Laws. Specifically, you request whether each public agency for which the Department of Administration awards construction contracts must have its own "outreach plan" or whether the Department of Administration may develop an "outreach plan" to be applied to all entities for which it is the awarding authority.

Based on our analysis set forth below, we conclude that the terminology "public entity" as utilized in Chapter 496 of the 2001 Session Laws refers to any elected or appointed authority under state law which is authorized to exercise a legislative, policy making, quasijudicial, administrative or advisory function. Practically speaking, such definition includes all cabinet level departments and other state agencies, including the constituent institutions of the University of North Carolina, which enter into contracts for construction subject to Article 8, Chapter 143 of the General Statutes.

As a general rule of statutory construction, legislation must be construed to accomplish the General Assembly's intent. Sutton v. Aetna Casualty and Surety Co., 325 N.C. 259, 265, 280 S.E.2d 759 (1989). The best indicia of legislative intention are the language of the statute, its spirit and purpose. Savings and Loan League v. Credit Union Comm., 302 N.C. 458, 276 S.E.2d 404 (1981). When interpreting statutes, the words in the statute are to be given their ordinary meaning unless the General Assembly has specifically defined them or they have acquired a technical meaning. Food Town Stores v. City of Salisbury, 300 N.C. 21, 265 S.E.2d 123 (1980).

As a starting point, we note that the phrase "public entity" has been used interchangeably with the phrase "public body" in Chapter 496 of the 2001 Session Laws. See, N.C.G.S. § 143-128(b) and (e). The North Carolina courts have defined the term "public body" in connection with their interpretation of both the Open Meetings Law, N.C.G.S. § 143-318.10 and Public Records Act, N.C.G.S. § 132-1. N.C.G.S. § 132-1 defines "Public Records" as applying to a broad category of "documentary material made or received pursuant to law or ordinance in connection with the transaction of public business by any agency of North Carolina Government or its subdivisions." The statute defines subject agencies and subdivisions as "every public office, public officer or official (State or local, elected or appointed), institution, board, commission, bureau, council, department, authority or any unit of government of the State or of any county, unit, special district or other political subdivision of government." N.C.G.S. § 132-1; News and Observer Publishing Company v. Poole, 330 N.C. 465, 477, 412 S.E.2d 7, 14 (1992).

The Open Meetings Law more narrowly defines "public body" to mean:

any elected or appointed authority, board, commission, committee, council or any other body of the State, or one or more counties, cities, school administrative units, constituent institutions of the University of North Carolina, or other political subdivisions or public corporations in the State that (i) is composed of two or more members and, (ii) exercises or is authorized to exercise a legislative, policy making, quasijudicial, administrative, or advisory function.

N.C.G.S. § 143-318.10(b); DTH Publishing Corp. v. UNC-Chapel Hill, 128 N.C.App. 534, 537, 496 S.E.2d 8, 10 (1998), rev. den., 348 N.C. 496, 510 S.E.2d 382 (1998).

Both Poole and DTH Publishing Corp. hold that a subdivision of State Government is a public body for purposes of complying with the Public Records Act or Open Meetings Law. Poole, 330 N.C. at 478, 412 S.E.2d at 14-15; DTH Publishing Corp., 128 N.C.App. at 539, 496 S.E.2d at 11. In DTH Publishing Corp., the court analyzed why the Undergraduate Student Honor Court (hereinafter "Undergraduate Court") of the University of North Carolina in Chapel Hill qualifies as a "public body" pursuant to the Open Meetings Law, N.C.G.S. § 143-318.10. The court noted that the Undergraduate Court has a chairperson, vice chairs, at least thirty members, and hears evidence in the presence of four members led by the chair or vice chair. DTH Publishing Corp., 128 N.C.App. at 539, 496 S.E.2d at 11. The Undergraduate Court is also authorized to exercise an administrative or advisory function pursuant to N.C.G.S. § 143-318.10 when it holds hearings, issues subpoenas, renders verdicts and recommends sanctions pursuant to the power granted it by the University. Id. Consequently, the court found that given the decision-making authority and membership of the Undergraduate Court, it is considered a public body for purposes of the Open Meetings Law.

Thus, taking into consideration the definition of "public body" utilized by the North Carolina courts in interpreting the Open Meetings Law and Public Records Acts, the term "public body," as used interchangeably with "public entity," includes all elected or appointed authorities of the State and their individual departments, commissions, committees, councils, including the constituent institutions of the University of North Carolina.

In addition, acts of the North Carolina General Assembly creating public entities within city governments have been interpreted as creating public entities separate from the city itself. In Board of Transportation v. Charlotte Parks and Recreation Commission, 38 N.C. App. 708, 710, 248 S.E.2d 909, 911 (1978), app. dism., 296 N.C. 583, 254 S.E.2d 35 (1979), the Court of Appeals held that the Charlotte Parks and Recreation Commission created by an act of the General Assembly in 1927 and extended in 1965 is a separate public entity from the City of Charlotte. While no case has been reported in North Carolina holding that a state agency's creation by the General Assembly makes it a separate public entity from the State, one can easily apply the logic in Charlotte Parks and Recreation Commission to reach the same conclusion. Accord WINFAS, Inc. v. Region P Human Development Agency, 64 N.C. App. 724, 308 S.E.2d 99 (1983) (Entity created by an act of a county commission and later incorporated under the Nonprofit Incorporation Act is still a separate public entity under the Open Meetings Law).

Significantly, Chapter 496 of the 2001 Session Laws itself is instructive on the meaning of "public entity." N.C.G.S. § 143-64.31(a) states that "the public policy of the State and all public subdivisions and Local Government Units thereof [is] to announce all requirements for architectural, engineering and surveying and construction manager at risk services…." Shortly thereafter, in section (b), the term "public entity" is first used when referring to the unit of government required by the legislation to take action.

Throughout the remainder of Chapter 496 of the 2001 Session Laws, "public entity" or "public body" is used to describe the governmental unit required or otherwise authorized to take action consistent with the legislation. For example, in N.C.G.S. § 143-128.2(b) each public entity must "establish prior to solicitation of business the good faith efforts it will take to make it feasible for minority businesses to submit successful bid proposals for the contracts for building projects." While N.C.G.S. § 143-128.3(e) authorizes the Secretary of Administration to adopt rules "for state entities" to implement the provisions of N.C.G.S. § 143-128.2, N.C.G.S. § 143-128.2(f) specifically provides that "[t]he public entity may require additional good faith efforts to be taken, as indicated in its bid specifications."

Clearly, if the State were treated as the only public entity, then the Secretary of Administration alone could speak for the State in promulgating rules to establish good faith efforts. On the other hand, when public entities are specifically authorized to exceed what the Secretary establishes by rule, then public entities have additional discretionary authority to act in achieving the objectives set forth in G.S. § 143-128.2.

When considering this legislation in line with the above cited legal authority, it is clear that the General Assembly intended for all subdivisions of the State with discretionary decision making authority to exercise that authority to meet or exceed the ten percent (10%) verifiable goal set by statute while allowing the Secretary of Administration to set a minimum threshold by rule for achieving such a goal. The minimum threshold adopted by rule shall control unless the State agency adopts a more stringent guideline. Consequently, we do not read Chapter 496 of the 2001 Session Laws as treating the State as one public body or one public entity.

By referring to "public entity" or "public body" and nothing more in establishing what actions must be taken to comply with the newly enacted provisions of Article 8, Chapter 143, the General Assembly did not single out any one agency of State Government as the public entity required to take such action. All public bodies of the State must heed the provisions set forth in Chapter 496 of the 2001 Session Laws.

Very truly yours,

Reginald L. Watkins
Senior Deputy Attorney General

Roy A. Giles, Jr.
Special Deputy Attorney General

Jeffrey B. Parsons
Assistant Attorney General

No. 7304