DIGITAL NC Act.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
S 1
SENATE BILL 1037

Short Title: DIGITAL NC Act. (Public)
Sponsors: Senators Lee, Hise, and Overcash (Primary Sponsors).
Referred to: Rules and Operations of the Senate
May 4, 2026
*S1037-v-1*
A BILL TO BE ENTITLED 1
AN ACT TO ENACT THE DATA INFRASTRUCTURE, GOVERNANCE, INNOVATION, 2
TECHNOLOGY, ACCOUNTABILITY, AND LEADERSH IP FOR NORTH CAROLIN A 3
ACT (THE DIGITAL NC ACT) BY ESTABLISHING THE BOARD OF GOVERN ORS 4
OF THE NORTH CAROLIN A DIGITAL SOVEREIGNT Y AUTHORITY AND 5
DIRECTING THE BOARD TO DEVELOP AND PRESE NT TO THE GENERAL 6
ASSEMBLY A COMPREHEN SIVE PLAN FOR THE MO DERNIZATION, 7
CONSOLIDATION, AND C YBER DEFENSE OF THE STATE'S INFORMATION 8
TECHNOLOGY ENTERPRISE. 9
The General Assembly of North Carolina enacts: 10
SECTION 1. Legislative Findings and Purpose. – The General Assembly finds that 11
the continued technological competitiveness, operational efficiency, and cybersecurity posture 12
of the State of North Carolina require a coordinated, long -range strategy for inf ormation 13
technology that transcends individual administrations and agency silos. To that end, the General 14
Assembly further finds that a qualified, independent Board of Governors, composed of 15
individuals with demonstrated expertise in technology leadership, cybersecurity, and large-scale 16
digital transformation, should be established to develop a comprehensive plan for the 17
modernization and unification of the State's information technology enterprise and to present that 18
plan to the General Assembly for its consideration and enactment. 19
SECTION 2. Establishment of the Board of Governors of the North Carolina Digital 20
Sovereignty Authority. – There is hereby established the Board of Governors of the North 21
Carolina Digital Sovereignty Authority (the Board). The Board shall be administratively housed 22
within the Department of Information Technology for budgeting and logistical support but shall 23
exercise the powers granted under this act independently. 24
SECTION 3. Composition and Qualifications. – The Board shall cons ist of nine 25
members, appointed to staggered four-year terms, as follows: 26
(1) Gubernatorial appointees. – Three members appointed by the Governor, each 27
of whom must be a current or former chief executive officer of a technology 28
company with a market capital ization exceeding one billion dollars 29
($1,000,000,000). 30
(2) House appointees. – Three members appointed by the Speaker of the House 31
of Representatives, each of whom must be a recognized expert in 32
cybersecurity, artificial intelligence, or quantum computing. 33
(3) Senate appointees. – Three members appointed by the President Pro Tempore 34
of the Senate, each of whom must have extensive experience in large -scale 35
digital transformation or infrastructure management. 36
General Assembly Of North Carolina Session 2025
Page 2 Senate Bill 1037-First Edition
(4) Initial terms. – Of the initial appointments, three shall serve two -year terms, 1
three shall serve three -year terms, and three shall serve four -year terms, as 2
designated by the respective appointing authority, so as to establish staggered 3
terms. Thereafter, all terms shall be for four years. 4
(5) Vacancies. – An appointed member whose term has expired but whose 5
qualified successor has not been appointed shall continue to serve on the 6
Board until a qualified successor is duly appointed. Any vacancy in a position 7
held by an appointive member shall be fill ed by a new appointment made by 8
the applicable appointing authority for the vacant seat. 9
(6) Removal. – A duly appointed member may be removed by the applicable 10
appointing authority for misfeasance, malfeasance, or nonfeasance. 11
(7) Reappointment. – Any member of the Board is eligible for reappointment, 12
except that no appointed member may serve for more than two consecutive, 13
full, four-year terms without at least a one -year break in membership on the 14
Board. 15
(8) Chair; meetings; quorum. – The Board shall elec t a chair from among its 16
members. The Board shall meet at least quarterly and at such other times as 17
called by the chair. Five members shall constitute a quorum. 18
(9) Compensation. – Members of the Board shall serve without compensation but 19
shall be reimbur sed for necessary travel and subsistence expenses in 20
accordance with G.S. 138‑5 or G.S. 138-6, as appropriate. 21
(10) Disqualifications. – An individual is not eligible to serve on the Board if that 22
individual has been indicted or charged with, been convicted of, pleaded guilty 23
or nolo contendere to, or forfeited bail concerning a felony, or a misdemeanor 24
involving fraud, theft, or dishonesty under the laws of any jurisdiction in the 25
United States. 26
SECTION 4. Duty to Develop Comprehensive Plan. – The Board i s hereby 27
authorized and directed to develop a comprehensive plan (the Plan) for the modernization, 28
consolidation, and cyber defense of the State's information technology enterprise. The Plan shall, 29
at a minimum, address and make specific legislative and ad ministrative recommendations on 30
each of the following: 31
(1) Twenty-year vision. – A twenty-year strategic vision for State information 32
technology covering the period 2026 through 2046, including objectives for 33
digital sovereignty of citizen -facing services, transition of the State from a 34
hardware-owner to a service -consumer posture, and modernization of the 35
information technology workforce classification system. 36
(2) Infrastructure modernization and asset liquidation. – A plan for the orderly 37
divestment of St ate-owned data center properties, migration of remaining 38
physical State servers to Tier III or Tier IV co -location facilities or secure 39
cloud environments, and the establishment of a "cloud -first" procurement 40
posture, together with a recommended structure for a nonreverting 41
Technology Modernization Fund to capture proceeds. 42
(3) Workforce consolidation. – A plan for the consolidation of information 43
technology positions currently residing within Cabinet-level agencies under a 44
unified information technology en terprise, including recommendations 45
regarding career pathways, standardized pay scales, and a shared 46
organizational culture. 47
(4) Innovation Center of Excellence. – A plan for the establishment of a 48
centralized Innovation Center of Excellence to serve Cabin et agencies, 49
including a secure environment for prototyping emerging technologies, 50
General Assembly Of North Carolina Session 2025
Senate Bill 1037-First Edition Page 3
Master Service Agreements to expedite procurement of pre -vetted 1
technologies, and an internal strategy-consulting function. 2
(5) Cybersecurity and the Digital Guard. – A plan for aligning the operational 3
defense of the State's network with the North Carolina National Guard's Cyber 4
Protection Teams, establishing a volunteer cyber reserve of private -sector 5
experts, providing continuous vulnerability assessments and incident response 6
to local governments and school systems, and housing the State Chief 7
Information Security Officer and supporting staff within the National Guard 8
pursuant to a unified, multiyear statewide cyber plan. 9
(6) Reorganization as a principal department. – Recommendations regarding the 10
reconstitution of the Department of Information Technology as the North 11
Carolina Digital Sovereignty Authority, including the Authority's status, 12
powers, duties, and relationship to other principal departments, the Governor's 13
Cabinet, and the General Assembly. 14
(7) Self-funding and rate setting. – Recommendations regarding a fee-for-service 15
rate structure for executive, legislative, and judicial agencies; the treatment of 16
service-fee and asset-liquidation proceeds as nonreverting funds continuously 17
appropriated to the Authority; and performance benchmarks against which the 18
State Chief Information Officer shall be held accountable. 19
(8) Primacy of technical standards. – Recommendations regarding the resolution 20
of conflicts between the technical standards of the Authority and the policies 21
of Cabinet-level agencies and regarding dollar thresholds at which the State 22
Chief Information Officer's signature should be required for the release of 23
technology-project funds. 24
(9) Executive leadership. – Recommendations regarding the Board's authority to 25
conduct a national search for, and to appoint, supervise, compensate, and 26
remove, the State Chief Information Officer, including supermajority voting 27
thresholds, performance -based compensation tied t o verifiable key 28
performance indicators, and the extent to which the Chief Information Officer 29
shall serve at the pleasure of the Board. 30
(10) Strategic oversight. – Recommendations regarding the Board's fiduciary 31
responsibilities for State digital assets, a periodic "State of the Silicon" report 32
to the General Assembly, and the dollar threshold above which major 33
architectural shifts or multiyear contracts shall require a formal vote of the 34
Board. 35
SECTION 5. Consultation. – In developing the Plan, the Board shall consult with 36
the State Chief Information Officer, the Department of Information Technology, the Office of 37
the State Auditor, the North Carolina National Guard, the Office of State Human Resources, the 38
Office of State Budget and Management, affected Cabinet-level agencies, local governments, 39
public school units, institutions of higher education, and such private -sector subject -matter 40
experts as the Board deems appropriate. State agencies shall cooperate with the Board and shall 41
provide information reasonably requested by the Board in furtherance of this act. 42
SECTION 6. Staff and Resources. – The Department of Information Technology 43
shall provide the Board with such professional, clerical, and technical staff support as is 44
reasonably necessary to carry out the Board's duties under this act. The Board may, subject to the 45
availability of funds, contract for outside legal, technical, and consulting services. 46
SECTION 7. Report to the General Assembly. – The Board shall submit the Plan, 47
together with propos ed legislation to implement the Plan, to the President Pro Tempore of the 48
Senate, the Speaker of the House of Representatives, the chairs of the Joint Legislative Oversight 49
Committee on Information Technology, and the Fiscal Research Division no later than March 1, 50
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Page 4 Senate Bill 1037-First Edition
2027. The Board may submit interim reports at any time and shall appear before the Joint 1
Legislative Oversight Committee on Information Technology upon request. 2
SECTION 8. No Substantive Reorganization Without Further Enactment. – Nothing 3
in this act shall be construed to reorganize the Department of Information Technology, transfer 4
personnel or property, establish a fee -for-service structure, realign cybersecurity functions, or 5
otherwise effect any of the substantive changes addressed by the Pla n. Such changes shall take 6
effect only upon subsequent enactment by the General Assembly. 7
SECTION 9. There is appropriated from the General Fund to the Department of 8
Information Technology the sum of one hundred thousand dollars ($100,000) in nonrecurring 9
funds for the 2026 -2027 fiscal year to be used to support the Board of Governors of the North 10
Carolina Digital Sovereignty Authority described in this act. 11
SECTION 10.(a) Initial Appointments. – Initial appointments to the Board shall be 12
made not later t han 90 days after the effective date of this act. The Board shall hold its first 13
meeting not later than 30 days after a quorum of members has been appointed. 14
SECTION 10.(b) Effective Date. – This act becomes effective July 1, 2026. 15