Legislature(1995 - 1996)
03/12/1996 03:32 PM Senate STA
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* first hearing in first committee of referral
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SB 275 STATE PROCUREMENT PRACTICES & PROCEDURES
Number 090
SENATOR SHARP brought up SB 275 as the next order of business
before the Senate State Affairs Committee and called the first
witness. He noted that the legislation was introduced at the
request of the governor.
Number 099
DUGAN PETTY, Director - Division of General Services, Department of
Administration, representing the governor, prime sponsor of SB 275,
stated that the State of Alaska reviewed the federal Acquisitions
Streamlining Act of 1994 to find things that would be applicable to
state procurement procedures. The State of Alaska is fortunate in
that the existing procurement law is relatively new, and is based
on the model procurement code. Many of the complexities that the
federal government suffers from are not suffered by the State of
Alaska. However, the procurement practices that used to work,
don't work as well as they used to, and need to change with the
times and the business environment. The state also cannot afford
to continue to conduct business in the manner in which it has been
previously conducted. We need to look for innovative and effective
ways of conducting business. We are beginning to make inroads in
that area, and SB 275 represents that. To that end, Commissioner
Boyer of the Department of Administration initiated the Procurement
Advisory Council. He charged that council with the responsibility
of looking at the statutes, regulations, and policies and making
changes to bring about efficiencies in the operation of state
procurement practices.
Number 145
MR. PETTY stated that the other duty of the Procurement Advisory
Council was to look at individual, non-functional or non-responsive
procurement practices and see if a better approach to doing
business couldn't be engineered. SB 275 is a result of about
thirty of the recommendations of the council. The Procurement
Advisory Council was made up of state practitioners, customers of
state government, officials from the University of Alaska,
procurement officials from outside state government, vendors, and
representatives from Buy Alaska.
Number 160
MR. PETTY stated he would like to briefly review the changes. He
won't cover every section; in members' bill packets is a matrix
which addresses the significant changes to the law.
SENATOR LEMAN asked Mr. Petty to identify the section as he reads
the matrix. [The bill sections are identified in the matrix.]
MR. PETTY reviewed the matrix submitted to the committee from the
administration:
MATRIX TO SB 275
Procurement Procedures:
Raises the threshold for state's use of simplified small
procurement procedures from $25,000.000 to $50,000.000. (Section
23)
Raises the threshold for construction simplified small
procurement procedures from $25,000.00 to $100,000.00. (Section 23)
Permits a streamlined simplified protest process for small
procurements. (Section 29)
Small office leases of up to 5,000 s.f. acquired through
simplified small procurement procedures. (Sections 4 and 23)
Bidders for other than construction contracts will no longer
be required to list sub-contractors within five days of award.
(Sections 8 and 12)
Bidders for other than construction contracts are given more
latitude to replace sub-contractors. (Sections 8 and 12)
Proposals will be returned to proposers when an RFP is
cancelled to prevent disclosure to competitors. (Section 14)
Procurement Officers:
A procurement officer may shorten the notice of period for a
purchase if adequate competition is anticipated. (Section 9)
Permits greater use of RFPs when advantageous as determined by
the procurement officer. (Section 11)
Decreases restrictions on entering into a sole-source contract
by providing greater discretion to contract with a single source
when in the state's best interest and award through a formal bid or
RFP is not practical. (Section 16)
Grants discretion to the Chief Procurement Officer to permit
other procurement officers to make determinations to enter into
single-source and limited-competition procurements. (Section 16 and
17)
Expands requirement to independently verify material facts in
a determination to any state official completing the determination
of a single source, limited competition, or emergency contract.
(Section 22)
Expands penalty for a knowing false statement to any state
official making a false statement in an alternate procurement
determination. (Section 22)
Permits the attorney general to determine when a legal
services contract meets the requirements for a limited competition
procurement. (Section 17)
Contracts & Practices:
Prevents brokering of bidder preferences. (Section 10)
Protects the state from protest damages beyond reasonable bid
preparation costs. (Section 33)
Removes debarred and suspended bidders from the bidders' list.
(Sections 3 and 38)
Protects the state from untimely contract controversy claims.
(Sections 36 and 37)
Procurement Practices:
Permits a streamlined and simplified protest process for small
procurements. (Section 29)
Exempts the operation and disposal of assets acquired through
foreclosure of agricultural loans from the complexities of the
state procurement process. (Section 39)
Permits purchase of lobbying, public relations, and
advertising contracts by the Governor's Office and livestock by
Alaska Correctional Industries outside the requirements of the
procurement code. (Section 40)
Makes protest time deadlines more uniform and consistent with
court rules.(Sections 31, 32, 34, and 35)
Places all preference requirements in one part of statute for
ease of reference by procurement officers. (Sections 24-26, and 45)
Restricts disclosure of proposals until notice of intent to
award is issued. (Section 13)
Innovation & Better Value:
Provides for an innovative method of procurement for new,
unique requirements, new technology, or to acquisition best value
when advantageous to the state. (Section 19)
Encourages the use of RFPs when appropriate to achieve best
value. (Section 11)
Allows for economical and convenient purchases from federal
supply schedules as authorized by the Federal Acquisition
Streamlining Act of 1994. (Section 41)
Reductions in Operating Costs:
Lease rent concessions of at least 10% may be received in
return for extensions of existing leases up to 10 years. (sec. 5)
Lease purchases of real property not exceeding $500,000.00
per year or $2,500,000.00 for full-term may be entered into without
legislative approval or law. (Sections 6 and 7)
Number 205
SENATOR RANDY PHILLIPS stated he has a problem with Sections 16,
22, 40, 6, and 7.
MR. PETTY asked the committee to support the efforts of the
Procurement Advisory Council.
CHAIRMAN SHARP stated he would like to take testimony from other
people before taking questions from committee members.
Number 275
RALPH WINTERROWD, Owner - Winter Telecom, Inc., testifying from
Anchorage, stated he is a probably a procurement expert, and SB 275
is not going to fix the problems of the state procurement code. SB
275 will make absolutely, positively sure that there will never be
any bids, at least in the telecommunications systems area. He
wished that he had been invited to help write the legislation, and
stated SB 275 is anti-American. There needs to be the ability to
bid on best product at best price. He stated his company submitted
a bid to the Department of Fish & Game and beat the competitors on
bid and on points. He stated his company has won bids, which it
has then lost because of sole-source awarding of contracts. His
company currently has a case in court where the judge stated that
the Alaska Court System is not in compliance with the Alaska
Statutes, Winter Telecom has been irreparably damaged, but the
judge will vote against him. Mr. Winterrowd listed other examples
of problems he has had in bidding on procurement contracts. He
stated that everyone should have an equal and fair footing from
which to bid. If SB 275 is adopted, it will close out all
competitive bidding in the State of Alaska. He would be willing to
work with the committee on new procurement procedures. He stated
that the federal government has some excellent guidelines. He has
bid on some federal contracts, and you can win on those: they write
a reasonably fair bid. Mr. Winterrowd stated he can back up his
testimony with documented facts. All he is asking for is the
opportunity to bid fairly and equally for state contracts.
Number 360
SENATOR LEMAN stated that a number of Mr. Winterrowd's statements
were rather aggressive. He would like to see the documentation to
which Mr. Winterrowd referred. He asked Mr. Winterrowd to provide
that documentation to the committee.
MR. WINTERROWD responded he can do that.
SENATOR LEMAN stated what he wants to know, is how SB 275 would do
damage to the competitive process, and what the legislature can do
to enhance the competitive process.
MR. WINTERROWD replied he would work on that.
Number 387
SENATOR RANDY PHILLIPS informed Mr. Winterrowd that his best bet
would be to submit suggestions regarding procurement in general.
He also suggested sending information about the federal procurement
program.
MR. WINTERROWD responded it is rather lengthy, but he can give a
brief overview of the federal process. The main reason the federal
bidding process is fair, is that they don't try to slant the bid
toward a particular brand or try to disqualify other bidders: they
write a fair bid.
CHAIRMAN SHARP encouraged Mr. Winterrowd to work with the committee
on the procurement process. SB 275 is also referred to the Senate
Judiciary and Finance Committees.
SENATOR RANDY PHILLIPS asked Mr. Winterrowd to get his information
to the committee as soon as possible.
MR. WINTERROWD responded he would work on putting some information
together this weekend.
CHAIRMAN SHARP asked committee members to identify areas of concern
so they can be worked on at a later date.
Number 425
SENATOR RANDY PHILLIPS stated he is concerned with Sections 6 and
7, which he would refer to as "condo-izing" a building. He would
rather leave the law the way it is now, than do that. He is
concerned with Sections 16, 22, and 40.
CHAIRMAN SHARP is also concerned with those sections. There will
be a subcommittee on SB 275, and Senator Phillips will be chairman
of that subcommittee. Chairman Sharp stated he has a problem with
Section 9, because he thinks it could be in conflict with Section
30. Section 9 states days of notice can be shortened to less than
21, but Section 30 states, "A protest based upon alleged
improprieties or ambiguities in a solicitation must be filed at
least 10 days before the due date of the bid or proposal as stated
in the solicitation." If it is shortened much before 21 days,
there would be no chance to protest. The other area with which the
chairman is concerned with Section 10. He would like to see "six
months" extended to "twelve months".
SENATOR RANDY PHILLIPS asked if he was picked for chairman of the
subcommittee on SB 275 because "the spouting whale gets the
harpoon"?
CHAIRMAN SHARP replied that Senator Phillips was chosen because he
appeared to have significant ideas on how to improve the
legislation. The subcommittee will consist of Senator Phillips as
chairman, and Senators Leman and Donley as the other members of the
subcommittee.
SENATOR LEMAN asked Mr. Petty if he would be available to work on
SB 275 with the subcommittee.
MR. PETTY responded he would.
CHAIRMAN SHARP stated the committee would move on to the next bill.
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