Legislature(2003 - 2004)
03/18/2003 01:47 PM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE BILL NO. 67 An Act relating to construction of highways by the Department of Transportation and Public Facilities. REPRESENTATIVE JIM HOLM commented that the Alaska statute requires that construction and maintenance contracts be awarded to the private sector on the basis of competitive bidding. However, statute also allows the State to fund small projects or repairs in-house through a "force account", meaning that the State uses its own forces to accomplish the work. To date, force account spending by Department of Transportation & Public Facilities has been frequently used to fund projects costing considerably more than $250,000 dollars. Such action takes dollars out of the private sector and omits the checks and balance over-sight of the competitive bidding process. HB 67 was introduced to insure that State force accounts continue to be allowed for smaller jobs while requiring that projects over $250,000 dollars utilize private contractors in the competitive bidding process. Private contractors not only maintain an inventory of specialized equipment and employ skilled managers, but they assume risk-costs, thus providing the State with considerable savings. Representative Hawker agreed that the bill makes sense, however, the fiscal note indicates that assuming that the forced account projects remain constant over the next six years, the lost savings would total $25.6 million dollars. Representative Holm responded that the analysis indicates that potential loss. He added that he had not seen any back up material to justify the number and that he believed it was a "fear" tactic. He claimed that the fiscal note would be zero and that putting a project out to bid would not cost more. Co-Chair Harris pointed out that the Department does not support the bill. He acknowledged that the concept was good, however, certain communities do have a difficult time retaining Department of Transportation & Public Facilities employees. If those employees were laid off in the summer, there would be a tremendous amount of turn over. He asked if there was a way to address this concern without affecting the rural communities. Co-Chair Harris advised that he did not support the bill; however, he would be willing to work with Representative Holm. MARK O'BRIEN, CHIEF CONTRACT OFFICIER, COMMISSIONER'S OFFICE, DEPARTMENT OF TRANSPORTATION & PUBLIC FACILITIES, stated that the effect of HB 67 would prohibit the Department and any agency that transfers projects from using its own employees to perform the work on projects that exceed $250 thousand dollars. There are two categories of projects that fall under the force account: · Community roads · State maintenance forces Using capital funds, the Department is able to develop programs within the three regions to address some of the $200 million dollar backlog in the deferred maintenance program. Mr. O'Brien noted that there are four key benefits of the program: · Ability to transfers the cost of the winter maintenance employees to federal aid money which allows the Department to preserve general fund money for severe wintertime events; · Retain year round employees; · Use the federal aid funds to fund a portion of the equipment costs which then helps to defer the cost of repair for maintenance activities; and · Extend and utilize the money further. TAPE HFC 03 - 36, Side A Mr. O'Brien concluded his discussion regarding the four key benefits. Representative Stoltze asked if there was a definition of "construction projects" for major capital and maintenance. Co-Chair Williams stated that HB 67 would be HELD in Committee for further consideration.