Legislature(1995 - 1996)
04/25/1996 01:50 PM House FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL 482
"An Act relating to state procurement practices and
procedures; and providing for an effective date."
DUGAN PETTY, DIRECTOR, DIVISION OF GENERAL SERVICES,
DEPARTMENT OF ADMINISTRATION, stated that HB 482 was the
result of an effort which began in the Summer, 1995, in
order to streamline the State's procurement practices. A
Procurement Advisory Council was established. The
responsibility of the council is to:
* Look at the procurement law and note the changes
needed to be implemented to streamline it.
* Rewrite regulations and review all procurement
policies to conform with the revised regulations
and statutes.
* Target non-responsive procurement practices.
Mr. Petty spoke in support of HB 482 and provided an
analysis of the substantive changes between current law and
HB 482. [Copy on file]. Mr. Petty provided four amendments
which the Department requests be adopted. [Copies on file].
Representative Parnell asked why Legal Services was not
subject to the competitive bid process. Mr. Petty replied
that it did not make sense to award Legal Services contracts
through the competitive bid process. An invitation to bid
usually is awarded to the low-responsive bidder. The only
specifications would be that the bid complies with the
document. Although, the process for legal services does not
allow consideration of factors other than cost.
Representative Parnell questioned if the Department of Law
currently uses the Request For Proposal (RFP) process. Mr.
Petty suggested that they do for some of their contracts.
Often times, a suit will be brought against the State
requiring legal services to defend the State.
Representative Parnell indicated concern with a contract
copy which the Department of Law entered into in 1983,
stipulating that the State should not pay more than $75
thousand dollars for the contract. By 1995, the State added
an amendment to that contract bringing the amount up to
$19.9 million dollars. He objected to the disparity
implicated, and requested proof that the Department of Law
3
is not "sole sourcing" contracts. The procurement process
needs to be competitive.
Mr. Petty pointed out that Legislative Audit had
investigated the Legal Services contracts, finding problems
with the Department of Law's procurement process.
Representative Kelly asked the difference between "sole
source" and "single source" return. Mr. Petty replied that
"sole source" means that there is only one source available
to do the work. The statute currently reads "sole source".
HB 482 proposes a "single source" allowing the State to
enter into a contract with a "single source" after
determination is made that the bid process would not be
practical to use.
Representative Kelly questioned the need for a business
proposing to bid to be required to have a valid Alaska
business license. Mr. Petty interjected, to receive the
license would cost $50 dollars including and a returned
application.
Representative Kelly recommended adding language clarifying
that the bidding contender would only need to have applied
for an Alaskan business license. Mr. Petty repeated that
under current law, if a bidder submitted a bid, and they did
not have the license, the bid would not be considered. In
order to be on that list, there must be a business license.
If the business has a license, has operated a business for
six months in Alaska, and is a resident of the State, or if
in a partnership, all are residents of the State, they would
then qualify for the Alaska Bidders Preference which
provides a 5% evaluation preference. To change the law
would encourage people to compete from other states; that
was not the intent of the original legislation when passed.
Mr. Petty added, current statutes requires that the
Department not send bids to out-of-state bidders.
Representative Mulder asked if the Division of General
Services kept a list of legal service contracts in the
State. Mr. Petty noted that they do keep on file, the
professional service contracts over $25 thousand dollars.
Those reports are kept in the Department of Administration
(DOA). That Division is required by law to keep a
procurement report. Representative Mulder inquired the
number of contracts currently on file within the Department.
Mr. Petty offered to provide that information.
Representative Therriault referenced Section #23, Page 11,
the delivery of supplies. Mr. Petty noted that "supplies"
is well defined in statute as equipment and services. He
referenced AS 36.36.90 which requires that supply purchases
4
be delivered to locations within the State. The Department
shall determine that a point of delivery outside the State
must be in the best interest of the State. The Department
is not proposing a change under that statute to the existing
reference. Current procurement code has sections that are
applied to preferences for Alaskan business.
(Tape Change, HFC 96-138, Side 2).
Representative Kohring agreed with the legislation's intent
to save costs, although, pointed out the excessive fiscal
notes attached. Mr. Petty commented that some of the fiscal
notes reflect savings. The central purchasing fiscal notes
require action which will take additional time to show a
savings. He added, to date, the State of Alaska has widely
decentralized procurement. Regardless of the fiscal notes,
the legislation will make the State run more effectively.
Mr. Petty spoke to Amendment #1. [Copy on file]. Amendment
Hanley noted that the "a" should not be deleted. Mr. Petty
agreed. Representative Parnell MOVED the amended Amendment
Mr. Petty spoke to Amendment #2. [Copy on file]. Amendment
legislation with the Senate version. Representative Navarre
MOVED to adopt Amendment #2. There being NO OBJECTION, it
was adopted.
Co-Chair Hanley asked if bidder preferences would be
cumulative. Mr. Petty replied that some would be
cumulative. The net effect does not always accomplish the
intended net result. The Department requests to have a
uniform way of applying the preferences. Discussion
followed between Co-Chair Hanley and Mr. Petty regarding the
possible bidder preferential percentage reaching 20%.
Representative Brown MOVED to change the semicolon in
Amendment #2 to a comma so that it would be grammatically
correct. There being NO OBJECTION, it was amended.
Mr. Petty explained Amendment #3. [Copy on file]. He noted
that the amendment would reduce the rent threshold
requirement for lease concessions from 15% to 10%.
Representative Kohring suggested that drop was too steep.
Mr. Petty replied, under authority granted, leases have been
extended for 5 years in return for a 10% rent concession. A
number of lessors were below market, and he thought that a
15% rent concession would be fair.
Representative Kohring questioned the percentage of profit
on a lease payment received by the lessee through the State
5
of Alaska. Mr. Petty explained that the State considers the
indirect costs to be about 35% of the lease; beyond that
would be operating and maintenance costs. The 35% number is
the one used by the State to determine the profit margin.
Representative Brown asked if there would be rent
adjustments in the 10 year extensions. Mr. Petty pointed
out that the base rent in the extensions would be reduced by
10%, and that the Consumer Price Index (CPI) always would
affect the base rent.
Representative Brown MOVED to adopt Amendment #3. There
being NO OBJECTION, it was adopted.
Mr. Petty explained Amendment #4. [Copy on file]. He
stated that the added language would conform to that
established in the Senate State Affairs Committee. The
intent would be to use the Government Service Information
(GSI) schedules when purchasing from State vendors.
Co-Chair Hanley recommended amending the amendment by adding
"made" and then insert "from persons located in the state".
Representative Mulder MOVED to adopt the amended amendment.
There being NO OBJECTION, it was adopted as amended.
Representative Martin MOVED to adopt Amendment #5, 9-
GH2020\F.3, Bannister, 4/24/96. [Copy on file]. He pointed
out that the amendment would provide a title change while
addressing lobbying concerns. Co-Chair Hanley noted that
the amendment would prohibit the agencies listed from hiring
a contract lobbyist.
Representative Navarre commented that the language on Page
2, Line 5, would prohibit having employees lobby.
Representative Brown disagreed, indicating that it is
necessary for the agencies listed to have some contact with
the Legislature regarding their interests. Following
discussion among Committee members, Representative Brown
MOVED to delete Page 2, Line 5. There being NO OBJECTION,
the amendment was amended.
Mr. Petty advised that the proposed amendment did not
address procurement issues. He stated that the Division
would not support the amendment from a procurement
perspective, suggesting that these were operational
decisions which should be made by each individual agency.
Representative Navarre OBJECTED to Amendment #5 in order
that Legal Services could provide an opinion on the single
subject rule prohibition. He noted that he supported the
intent. Co-Chair Hanley advised that he would request a
legal opinion and if there was a problem, that portion would
6
be removed from the bill. Representative Navarre agreed and
WITHDREW the OBJECTION to the amendment.
Representative Brown asked why only Alaska Industrial
Development and Export Authority (AIDEA) had been referenced
in the title. Representative Martin responded that the
intent was to place AIDEA under the procurement code. Co-
Chair Hanley understood the intent was to include AIDEA
under the prohibition on hiring.
(Tape Change, HFC 96-139, Side 1).
Co-Chair Hanley pointed out that Senator Pearce had
submitted the amendment. He noted that he agreed with the
intent, although, questioned the referenced section.
Representative Mulder MOVED to amend Amendment #5, Page 1,
Line 2, striking "," and then deleting material: "Including
entities owned and operated by the Alaska Industrial
Development and Export Authority,"; and deleting Lines 16
through 18 beginning with the "," on Line 16. There being
NO OBJECTION, it was amended.
Representative Navarre recommended that Legal Services
provide an opinion on the amended amendment. There being NO
OBJECTION, Amendment #5 was adopted.
Representative Parnell spoke to Amendment #6. [Copy on
file]. Mr. Petty noted that Amendment #6 would add language
to allow for accredited youth education programs to be
exempted from the procurement statute. Representative
Parnell MOVED to adopt Amendment #6. There being NO
OBJECTION, it was adopted.
Co-Chair Foster MOVED to report CS HB 482 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CS HB 482 (FIN) was reported out of Committee with "no
recommendations" and with zero fiscal notes by the (2)
Department of Administration dated 2/9/96, the Department of
Commerce and Economic Development dated 2/9/96, the
Department of Community and Regional Affairs dated 2/9/96,
the Department of Health and Social Services dated 2/9/96,
the Department of Labor dated 2/9/96, the Department of Law
dated 2/9/96, the Department of Military and Veterans
Affairs dated 2/9/96, the Department of Corrections dated
2/9/96, the Department of Education dated 2/9/96, the
Department of Environmental Conservation dated 2/9/96, the
Department of Fish and Game dated 2/9/96, the Department of
Natural Resources dated 2/9/96, the Department of Public
Safety dated 2/9/96, the Department of Revenue dated 2/9/96,
7
Statewide dated 2/9/96 and a fiscal impact note by the
Department of Transportation and Public Facilities dated
2/9/96, and the Department of Administration.
| Document Name | Date/Time | Subjects |
|---|