04/07/2009 08:00 AM House STATE AFFAIRS

HB  24-PROCUREMENT PREFERENCE FOR VETERANS                                                                                    
                                                                                                                                
9:42:11 AM                                                                                                                    
                                                                                                                                
CHAIR LYNN  announced that the  last order of business  was HOUSE                                                               
BILL NO. 24, "An Act  relating to a public procurement preference                                                               
for Alaska veterans."                                                                                                           
                                                                                                                                
[Before the committee was CSHB 24(MLV).]                                                                                        
                                                                                                                                
9:42:23 AM                                                                                                                    
                                                                                                                                
CRYSTAL KOENEMAN,  Staff, Representative Anna  Fairclough, Alaska                                                               
State Legislature,  presented HB  24 on behalf  of Representative                                                               
Fairclough,  co-prime  sponsor.   She  stated  that currently  in                                                               
statute, [bidder]  preference is  given to Alaska  bidders, local                                                               
agriculture  and fisheries,  Alaska product  preference, recycled                                                               
products,  employment programs,  Alaskans with  disabilities, and                                                               
employers of people with disabilities.   She indicated there is a                                                               
preference for Alaska officers in Alaska Administrative Code.                                                                   
                                                                                                                                
MS.  KOENEMAN said  the co-prime  sponsors feel  that because  of                                                               
what veterans  give, the state should  give back to them  what it                                                               
can.  She said  HB 24 is a step in that  direction; it would give                                                               
a 5  percent [bidder] preference  to Alaska veteran  business, up                                                               
to $5,000.                                                                                                                      
                                                                                                                                
9:44:13 AM                                                                                                                    
                                                                                                                                
MS.  KOENEMAN, in  response to  Representative Gatto,  noted that                                                               
the definition of an Alaska veteran  is found in Section 2 of HJR
, and  the change in statute  would be permanent.   In response                                                               
to a follow-up question, she cited  the language on page 2, lines                                                               
7-8, which read:                                                                                                                
                                                                                                                                
     (b) A preference under this section is in addition to                                                                      
     any other preference for which the bidder qualifies.                                                                       
                                                                                                                                
9:45:36 AM                                                                                                                    
                                                                                                                                
MS. KOENEMAN, in  response to Chair Lynn, said the  bill does not                                                               
address the issue of disability;  however, it can be "attached to                                                               
the Alaskans With Disabilities preference."                                                                                     
                                                                                                                                
CHAIR  LYNN asked,  "And so,  this  and the  disability would  go                                                               
together then?"                                                                                                                 
                                                                                                                                
MS. KOENEMAN answered that's correct.                                                                                           
                                                                                                                                
9:46:20 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO noted that language  on page 1 sets a $5,000                                                               
limit, while  language on  page 2 states  that the  preference is                                                               
"in  addition  to  any  other preference  for  which  the  bidder                                                               
qualifies."  He questioned whether that might be conflicting.                                                                   
                                                                                                                                
9:47:28 AM                                                                                                                    
                                                                                                                                
VERN  JONES,  Chief  Procurement  Officer,  Division  of  General                                                               
Services,  Department  of   Administration,  responded  that  the                                                               
$5,000 cap  is for a particular  preference; it has no  impact on                                                               
the  value of  any  other preference  for  which a  veteran-owned                                                               
business would  qualify.  In response  to Representative Johnson,                                                               
he confirmed, "This preference would  be in addition to any other                                                               
preference that  that business or individual  otherwise qualified                                                               
for."    He  told  Representative Johnson  that  there  are  some                                                               
federal preferences that do not involve the state.                                                                              
                                                                                                                                
9:49:47 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   GRUENBERG   directed   attention   to   language                                                               
beginning on page 2, line 11, which read:                                                                                       
                                                                                                                                
     "or the bidder must have sold supplies of the general                                                                      
     nature solicited to other state agencies, governments,                                                                     
     or the general public."                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG   suggested  that   would  discriminate                                                               
against someone who is new in business.                                                                                         
                                                                                                                                
MR.  JONES drew  attention to  the  first part  of the  sentence,                                                               
which  states that  value must  be  added "by  the bidder  itself                                                               
actually  performing, controlling,  managing,  and supervising  a                                                               
significant part of the services  provided".  He pointed out that                                                               
the word in between those two parts of the sentence is "or".                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG  noted  that  the  first  part  of  the                                                               
conjunctive sentence  does not deal  with goods -  only services.                                                               
The second  part of that  sentence refers  to supplies.   He said                                                               
there  may be  a  bidder  who is  not  dealing  with services  or                                                               
supplies, but rather is dealing  vehicles, which is not a supply,                                                               
unless  it  is  included  somewhere  in  the  language  within  a                                                               
definition of supply.                                                                                                           
                                                                                                                                
MR.  JONES  said this  language  is  what  is currently  used  in                                                               
disability statute and  "we" suggested it be used in  HJR 24.  He                                                               
stated the  intent is  to prevent a  person from  "shopping their                                                               
preferences around their status as  a disabled bidder or, in this                                                               
case, an  Alaska vendor,  and actually being  a front  person and                                                               
bidding on  jobs and  not actually  performing them  and skimming                                                               
off  the  preference."    He  said  "we"  have  interpreted  this                                                               
language to mean that the  bidder would actually have to perform,                                                               
do the  work, or have  been in  business performing this  kind of                                                               
business in the past.                                                                                                           
                                                                                                                                
REPRESENTATIVE GRUENBERG emphasized  that that is not  the way he                                                               
reads the  language; he opined  that it  is very misleading.   He                                                               
expressed concern  that the  language would  not aide  a start-up                                                               
business.   He  said he  supports the  legislation but  thinks it                                                               
needs some work.                                                                                                                
                                                                                                                                
CHAIR  LYNN  suggested  Representative Gruenberg  might  consider                                                               
addressing these concerns via an amendment.                                                                                     
                                                                                                                                
9:53:48 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG  noted  that the  House  State  Affairs                                                               
Standing  Committee  is  the  only committee  of  referral.    He                                                               
remarked that  there may  be a bidder  who provides  services but                                                               
will not  be supervising; therefore, he  recommended changing the                                                               
"and" to  an "or" in  the previously provided language  from page                                                               
2, line 10.                                                                                                                     
                                                                                                                                
REPRESENTATIVE GRUENBERG  directed attention  to the  language on                                                               
page 2, lines 3-6, which read as follows:                                                                                       
                                                                                                                                
               (3) limited liability company organized                                                                          
          under AS 10.50 if a majority of the members are                                                                       
          Alaska veterans; or                                                                                                   
               (4) corporation that is wholly owned by                                                                          
          individuals and a majority of the individuals are                                                                     
          Alaska veterans.                                                                                                      
                                                                                                                                
REPRESENTATIVE GRUENBERG  said companies differ in  the amount of                                                               
people involved and the amount  of shares controlled.  He offered                                                               
an example.   He  said, "What you're  doing is  inviting somebody                                                               
who doesn't  qualify to get nine  of her buddies who  do qualify,                                                               
give them 1 percent of the stock,  and lo and behold they get the                                                               
break  and get  the bid."   He  said he  thinks "the  opposite is                                                               
true,"  but said  he cannot  think of  a hypothetical  example at                                                               
present.  He recommended that language be "tightened up."                                                                       
                                                                                                                                
9:55:56 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHNSON said he wants  this legislation to benefit                                                               
Alaskans, not  a veteran  who moves  up to  Alaska and  becomes a                                                               
resident  in  30  days.   He  asked  if  the  words "at  time  of                                                               
discharge" could be  added following "resident of  this state" on                                                               
page 2, line 14, without running afoul of the constitution.                                                                     
                                                                                                                                
9:57:06 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON directed  attention to  the aforementioned                                                               
language  on page  2,  beginning on  line  9.   He  asked if  the                                                               
leasing  of an  office building  to  the state  would be  covered                                                               
under supplies or service.                                                                                                      
                                                                                                                                
MR.  JONES responded  that leases  are  defined in  statute as  a                                                               
supply.                                                                                                                         
                                                                                                                                
9:57:47 AM                                                                                                                    
                                                                                                                                
RICHARD  DAVIDGE, Member,  Board  of  Directors, Alaska  Veterans                                                               
Business  Alliance;, President,  State Council,  Vietnam Veterans                                                               
of  America,  stated  that  when   people  volunteer  to  protect                                                               
America,  they "disadvantage  themselves  from  staying home  and                                                               
being involved  in the development  of all the other  things that                                                               
we do  in our community."   He spoke of giving  veterans a little                                                               
bit of  an advantage once they  return home, so that  they can be                                                               
competitive  even though  they have  been disadvantaged  by their                                                               
service and, most often, separation from the state.                                                                             
                                                                                                                                
MR.   DAVIDGE   congratulated  [Representatives   Gruenberg   and                                                               
Johnson] for  "their technical observations,"  and said  he looks                                                               
forward to working  with their staff in an effort  to solve those                                                               
problems.   He stated that "we"  do not want veterans  to "hire a                                                               
vet" to  qualify a  company.   He said  "we" support  the changes                                                               
that  were made  to  HB  24 in  the  House  Special Committee  on                                                               
Military and Veterans' Affairs.                                                                                                 
                                                                                                                                
10:00:02 AM                                                                                                                   
                                                                                                                                
CHAIR  LYNN, after  ascertaining that  there was  no one  else to                                                               
testify, closed public testimony.                                                                                               
                                                                                                                                
10:00:10 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE GRUENBERG, in  response to Chair Lynn,  said he is                                                               
not prepared to propose any amendments at this time.                                                                            
                                                                                                                                
10:00:24 AM                                                                                                                   
                                                                                                                                
MS. KOENEMAN stated:                                                                                                            
                                                                                                                                
     In order to qualify  for the veterans' preference, they                                                                    
     have to qualify as an  Alaska bidder, and under current                                                                    
     statute ...  I don't  believe that  it qualifies  for a                                                                    
     start-up company initially.   So, that would be dealing                                                                    
     with the entire procurement  code, instead of this bill                                                                    
     itself.                                                                                                                    
                                                                                                                                
CHAIR LYNN  said the  House State  Affairs Standing  Committee is                                                               
the last committee of referral.   He relayed that he would not be                                                               
opposed to having  amendments made on the House floor.   He asked                                                               
Representative Gruenberg if  he would prefer to hold  the bill in                                                               
committee.                                                                                                                      
                                                                                                                                
The committee took an at-ease from 10:01:21 AM to 10:01:44 AM.                                                              
                                                                                                                                
10:01:50 AM                                                                                                                   
                                                                                                                                
CHAIR LYNN said Representative  Gruenberg's suggestions should be                                                               
addressed.  He suggested that  Representative Gruenberg work with                                                               
the bill  sponsors and have  some new language ready  to consider                                                               
at the next committee meeting.                                                                                                  
                                                                                                                                
[HB 24 was held over.]