Legislature(2009 - 2010)HOUSE FINANCE 519

03/11/2010 09:00 AM House FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to 2:00 pm Today --
+= HB 225 STATE PROCUREMENT CODE TELECONFERENCED
Heard & Held
+ HJR 45 OPPOSE FEDERAL CAP AND TRADE LEGISLATION TELECONFERENCED
Scheduled But Not Heard
+ HB 342 EXTEND BOARD OF REAL ESTATE APPRAISERS TELECONFERENCED
Moved Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                      March 11, 2010                                                                                            
                         9:07 a.m.                                                                                              
                                                                                                                                
                                                                                                                                
9:07:30 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Stoltze called the  House Finance Committee meeting                                                                    
to order at 9:07 a.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Mike Hawker, Co-Chair                                                                                            
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Bill Thomas Jr., Vice-Chair                                                                                      
Representative Allan Austerman                                                                                                  
Representative Mike Doogan                                                                                                      
Representative Anna Fairclough                                                                                                  
Representative Neal Foster                                                                                                      
Representative Les Gara                                                                                                         
Representative Reggie Joule                                                                                                     
Representative Mike Kelly                                                                                                       
Representative Woodie Salmon                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative  Tammie  Wilson;  Pat  Davidson,  Legislative                                                                    
Auditor,  Legislative  Audit Division,  Legislative  Affairs                                                                    
Agency;   Jennifer   Strickler,    Director,   Division   of                                                                    
Occupational  Licensing, Department  of Commerce,  Community                                                                    
and  Economic  Development;  Vern Jones,  Chief  Procurement                                                                    
Officer,  Department  of   Administration;  Adam  Blomfield,                                                                    
Owner,  The  Blomfield   Company  Crystal  Koeneman,  Staff,                                                                    
Representative Fairclough                                                                                                       
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Butch Olmstead, Vice Chairman, Alaska Appraisal Board                                                                           
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 342    EXTEND BOARD OF REAL ESTATE APPRAISERS                                                                                
                                                                                                                                
          HB 342 was REPORTED out of Committee with a "do                                                                       
          pass" recommendation and with a previously                                                                            
          published fiscal note: FN1                                                                                            
                                                                                                                                
HB 225    STATE PROCUREMENT CODE                                                                                                
                                                                                                                                
          CSHB 225 (FIN) was HEARD and HELD in Committee                                                                        
          for further consideration.                                                                                            
                                                                                                                                
HJR 45    OPPOSE FEDERAL CAP AND TRADE LEGISLATION                                                                              
                                                                                                                                
          HJR 45 was SCHEDULED but not HEARD.                                                                                   
                                                                                                                                
9:07:36 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze brought  the meeting  to order  and listed                                                                    
the bills to be heard.                                                                                                          
                                                                                                                                
9:08:39 AM                                                                                                                    
HOUSE BILL NO. 342                                                                                                            
                                                                                                                                
     "An Act extending the termination date of the Board of                                                                     
     Certified Real Estate Appraisers; and providing for an                                                                     
     effective date."                                                                                                           
                                                                                                                                
REPRESENTATIVE TAMMIE  WILSON presented  an overview  of her                                                                    
bill  to   extend  the  Board   of  Certified   Real  Estate                                                                    
Appraisers to June 30, 2014. She reported that the Board of                                                                     
Certified Real  Estate Appraisers (BCREA) is  comprised of a                                                                    
five   member   board    to   establish:   (1)   examination                                                                    
specifications   for   certification   as  a   real   estate                                                                    
appraiser; (2)  rules of  professional conduct  to establish                                                                    
and  maintain  a high  standard  of  integrity in  the  real                                                                    
estate appraisal  profession; and (3)  regulations necessary                                                                    
to carry  out the purposes  of the statutes.  The conclusion                                                                    
of the Legislative  Audit is a recommendation  to extend the                                                                    
BCREA's  termination date  by four  years rather  than eight                                                                    
due  to   the  deficiencies  identified  by   the  appraisal                                                                    
subcommittee. The  deficiencies have or are  being addressed                                                                    
by the  board. The board is  funded by the RSS  fund through                                                                    
receipts  from  licensing fees.  She  stressed  that no  new                                                                    
funds will be required to implement the bill.                                                                                   
                                                                                                                                
9:10:32 AM                                                                                                                    
                                                                                                                                
PAT   DAVIDSON,  LEGISLATIVE   AUDITOR,  LEGISLATIVE   AUDIT                                                                    
DIVISION,  LEGISLATIVE AFFAIRS  AGENCY,  recommended a  four                                                                    
year extension for  the board instead of  eight years. There                                                                    
was  concern the  board failed  to  act in  following up  on                                                                    
issues  identified during  their federal  review. She  added                                                                    
that   there  were   also  administrative   deficiencies  in                                                                    
financial accounting  and reporting by the  board. She noted                                                                    
that there  have been extended  vacancies on the  board this                                                                    
year  as  the  governor's   office  failed  to  make  timely                                                                    
appointments.  There are  recommendations to  the governor's                                                                    
office to address more timely  appointments of board members                                                                    
and  a  recommendation  to the  department  to  improve  its                                                                    
administrative support  to the board. Ms.  Davidson stressed                                                                    
that these boards are self  supporting and maintaining a fee                                                                    
level  appropriate  for  their  expenses.  In  FY2009,  they                                                                    
substantially dropped their fees.                                                                                               
                                                                                                                                
9:12:32 AM                                                                                                                    
                                                                                                                                
Representative Doogan  inquired about  the fiscal  note. Ms.                                                                    
Davidson  replied that  she could  not speak  to the  fiscal                                                                    
note.                                                                                                                           
                                                                                                                                
Representative Austerman asked for  the reason to extend the                                                                    
board  for  four  years  rather  than  eight.  Ms.  Davidson                                                                    
replied  that it  was primarily  due  to the  lack of  board                                                                    
responsiveness  and follow  up  to the  federal review.  The                                                                    
board  is required  to certify  real estate  appraisers, and                                                                    
then  state  residents  could participate  in  federal  loan                                                                    
programs.  There  is a  federal  agency  that does  periodic                                                                    
reviews  of the  activities  of the  board  and that  agency                                                                    
found  that   the  board  and  department   were  not  being                                                                    
sufficiently   responsive   to    address   the   identified                                                                    
shortcomings.                                                                                                                   
                                                                                                                                
Representative  Austerman   asked  if  the  board   will  be                                                                    
reviewed  again   within  the   four  years.   Ms.  Davidson                                                                    
responded that there is currently  a federal review in draft                                                                    
form that  should be finalized  soon, but  legislative audit                                                                    
will not  be going back  to look at  the board for  the next                                                                    
four years. Representative Austerman  maintained it does not                                                                    
make sense to wait four years  if they are having a problem,                                                                    
but  should be  reviewed  again in  one  year. Ms.  Davidson                                                                    
reminded  the  committee  that  at any  point  in  time  the                                                                    
legislature can  ask Legislative Audit to  conduct an audit.                                                                    
There can  also be  a request  to see  if the  problems have                                                                    
been  resolved.  Representative  Austerman  asked  if  there                                                                    
would be  an automatic  follow up due  to the  problems. Ms.                                                                    
Davidson  indicated  that  if the  legislature  extends  the                                                                    
board for four years, then  Legislative Audit will follow up                                                                    
in four years.                                                                                                                  
                                                                                                                                
9:16:04 AM                                                                                                                    
                                                                                                                                
Representative Fairclough referred to  page 11 of the report                                                                    
under  "Findings  and   Recommendations"  where  the  second                                                                    
bullet  point states  that the  board does  not have  enough                                                                    
authority  to  carry  out  its  functions  under  TITLE  XI.                                                                    
Representative  Fairclough asked  Ms. Davidson  to speak  to                                                                    
this finding  (Alaska State Legislature,  Legislative Budget                                                                    
and   Audit  Committee,   Division  of   Legislative  Audit,                                                                    
December 7,  2009, Pat  Davidson, Legislative  Auditor, copy                                                                    
on file).                                                                                                                       
                                                                                                                                
Ms. Davidson responded that the  bullet points state that if                                                                    
the federal agency came in and  found that the board did not                                                                    
meet these  criteria, but it does  not specifically indicate                                                                    
that they  do not have  enough authority. These are  set out                                                                    
as criteria, not as findings.                                                                                                   
                                                                                                                                
Representative  Fairclough inquired  if the  state needs  to                                                                    
act to  provide additional  authority to  the board  so they                                                                    
can  carry out  their mission  under TITLE  XI. Ms.  Davison                                                                    
reported  that  they did  a  review  of the  federal  report                                                                    
before  it became  final. The  recommendations in  the audit                                                                    
are minor  housekeeping and statutory cleanups,  but nothing                                                                    
substantial.                                                                                                                    
                                                                                                                                
9:18:23 AM                                                                                                                    
                                                                                                                                
Representative Austerman asked if  the statement that it was                                                                    
only minor problems was why  the department was recommending                                                                    
the  four  years. Ms.  Davidson  responded  that there  were                                                                    
operational  and statutory  issues.  The operational  issues                                                                    
had  to  do  with  how  well  the  applications  were  being                                                                    
reviewed and  the follow up  when the board really  needs to                                                                    
take immediate  action. In the  draft report,  federal level                                                                    
changes  were made  in some  laws, statutes  and regulations                                                                    
changes  sometime get  behind. They  do not  have the  final                                                                    
report  yet,  but  when reviewing  the  draft  the  problems                                                                    
appeared to be minor clean up that needed to be addressed.                                                                      
                                                                                                                                
9:20:06 AM                                                                                                                    
                                                                                                                                
JENNIFER   STRICKLER,   OPERATIONS  MANAGER,   DIVISION   OF                                                                    
OCCUPATIONAL  LICENSING, DEPARTMENT  OF COMMERCE,  COMMUNITY                                                                    
AND ECONOMIC  DEVELOPMENT, answered  some of  the questions.                                                                    
The  division  went  through difficulties  with  unqualified                                                                    
staff, but  these individuals have  moved on and  new people                                                                    
hired. The  issues in the  audit regarding the board  as not                                                                    
being   in  compliance   with  the   appraisal  subcommittee                                                                    
findings were  related to three licensed  individuals. These                                                                    
individuals lacked  some submissions  of work logs  in their                                                                    
licensing  files.  The  department took  action  to  contact                                                                    
these individuals to  have them submit their  work logs; one                                                                    
complied,  two did  not. The  department fell  short on  not                                                                    
being  more assertive  with the  board to  take disciplinary                                                                    
action against the two licensees  who continue to hold their                                                                    
license. It has  been brought to the attention  of the board                                                                    
and  the boar  referred those  two individuals  over to  the                                                                    
investigative until to start disciplinary proceedings.////                                                                      
                                                                                                                                
9:22:37 AM                                                                                                                    
                                                                                                                                
Representative Doogan inquired again about the fiscal note.                                                                     
                                                                                                                                
Ms. Strickler related that personal  services are made up of                                                                    
licensing staff, management  staff, and investigative staff.                                                                    
Licensing  staff operates  on a  positive timekeeping  basis                                                                    
because  of the  receipt supported  services funding  so the                                                                    
only time attributed to this  board is recorded and charged.                                                                    
She continued that travel,  consisting of transportation and                                                                    
per dieum  is for the board  and staff to meet  at least two                                                                    
times  a year.  The contractual  costs are  high because  in                                                                    
2008 there were litigations and  hearing costs which tend to                                                                    
drive  expenses up.  Representative  Doogan  asked what  the                                                                    
contractual  are being  paid for.  Ms. Strickler  noted that                                                                    
the division  has an investigation unit  comprised of twenty                                                                    
investigators. They  are assigned  to this program  so their                                                                    
salary  is  paid  by  the   department  as  they  are  state                                                                    
employees.                                                                                                                      
                                                                                                                                
Representative Doogan  asked if  this was charged  back from                                                                    
other agencies. Ms. Strickler replied yes.                                                                                      
                                                                                                                                
9:25:04 AM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze  asked about a  consistent failure  to fill                                                                    
the board seats. He inquired  if this problem had been fixed                                                                    
over  the past  several months.  Ms. Strickler  stated there                                                                    
have been a  lot of appointments to various  boards, but she                                                                    
was unable to say if it has been a problem.                                                                                     
                                                                                                                                
Co-Chair Stoltze  questioned if  there was  any improvement.                                                                    
Ms. Strickler contended that she could not say.                                                                                 
                                                                                                                                
9:26:27 AM                                                                                                                    
                                                                                                                                
BUTCH OLMSTEAD,  VICE CHAIRMAN, ALASKA APPRAISAL  BOARD (via                                                                    
teleconference), talked  about the  two recent  vacancies on                                                                    
the board and  believed there were two  new appointees ready                                                                    
to fill  those vacancies.  In the past  it was  noticed that                                                                    
open  seats on  the board  were  vacant for  a long  period,                                                                    
therefore in that  regard there has been  an improvement. He                                                                    
referred to  some of the  housekeeping matters  and problems                                                                    
from  the  audit  and  acknowledged   that  they  have  been                                                                    
addressed.                                                                                                                      
                                                                                                                                
Co-Chair Stoltze closed public testimony.                                                                                       
                                                                                                                                
9:28:26 AM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  commented that he has  noticed consistently                                                                    
that every  single sunset audit  has involved  criticisms of                                                                    
the support  services provided to the  department or agency.                                                                    
He  has asked  for all  the past  reports on  audit problems                                                                    
with  plans to  insist on  a  more consistent  follow up  by                                                                    
them.                                                                                                                           
                                                                                                                                
Co-Chair  Stoltze   responded  that  he   preferred  shorter                                                                    
sunsets when there are concerns.                                                                                                
                                                                                                                                
Vice-Chair Thomas  MOVED to report  HB 342 out  of Committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
note. There being No Objection, it was so ordered.                                                                              
                                                                                                                                
HB  342  was  REPORTED  out  of  Committee  with  "do  pass"                                                                    
recommendation and with a  previously published fiscal note:                                                                    
FN1                                                                                                                             
                                                                                                                                
9:31:05 AM                                                                                                                    
                                                                                                                                
HOUSE BILL NO. 225                                                                                                            
                                                                                                                                
     "An Act relating to the State Procurement Code;                                                                            
     relating to the procurement of supplies, services,                                                                         
     professional  services,  construction  services,  state                                                                    
     fisheries products, state  agricultural products, state                                                                    
     timber,  and  state  lumber;  relating  to  procurement                                                                    
     preferences; relating  to procurement by the  office of                                                                    
     the  ombudsman, the  Alaska Industrial  Development and                                                                    
     Export  Authority,  the  Alaska Energy  Authority,  and                                                                    
     other  state  agencies  and  public  corporations;  and                                                                    
     providing for an effective date."                                                                                          
                                                                                                                                
                                                                                                                                
Representative Fairclough welcomed her staff.                                                                                   
She noted it would change from inside the.                                                                                      
                                                                                                                                
Co-Chair Hawker MOVED to ADOPT CS for House Bill 225(FIN),                                                                      
26\LS079\S, Bannister, 2/16/10.                                                                                                 
                                                                                                                                
Co-Chair Stoltze OBJECTED for the purpose of discussion.                                                                        
                                                                                                                                
Representative Fairclough asked for a sectional analysis.                                                                       
                                                                                                                                
9:32:28 AM                                                                                                                    
                                                                                                                                
VERN JONES, CHIEF PROCUREMENT OFFICER, DEPARTMENT OF                                                                            
ADMINISTRATION, reviewed the forty six sections in the                                                                          
Sectional Analysis (copy on file).                                                                                              
                                                                                                                                
                      CSHB 225 (FIN)                                                                                          
                    Sectional Analysis                                                                                        
                                                                                                                              
* Section 1:   Amends AS 24.55.275                                                                                            
                                                                                                                                
          Updates a  citation to reflect the  renumbering of                                                                    
          a preference.                                                                                                         
                                                                                                                                
* Section 2:   Amends AS 36.15.050(a)                                                                                         
                                                                                                                                
          Amends the local  agricultural preference to grant                                                                    
          a seven percent cost  preference to the qualifying                                                                    
          bid  rather  than  to the  low  bid,  making  this                                                                    
          preference   consistent  with   other  procurement                                                                    
          preferences.                                                                                                          
                                                                                                                                
* Section 3:   Amends AS 36.15.050(b)                                                                                         
                                                                                                                                
          Amends the  local fisheries preference to  grant a                                                                    
          seven  percent cost  preference to  the qualifying                                                                    
          bid  rather  than  to the  low  bid,  making  this                                                                    
          preference   consistent  with   other  procurement                                                                    
          preferences.                                                                                                          
                                                                                                                                
* Section 4:   Amends AS 36.15.050 by adding a new                                                                            
          subsection (h)                                                                                                        
                                                                                                                                
          Amends  the   local  agricultural   and  fisheries                                                                    
          preferences  to  disallow   a  bidder  from  being                                                                    
          granted   both   a  local   agricultural/fisheries                                                                    
          preference and an  Alaska product preference under                                                                    
          another statute.                                                                                                      
                                                                                                                                
* Section 5:   Amends AS 36.30.015(e)                                                                                         
                                                                                                                                
          Updates a  citation to reflect the  renumbering of                                                                    
          a preference.                                                                                                         
                                                                                                                                
* Section 6:   Amends AS 36.30.015(f)                                                                                         
                                                                                                                                
          Adds the  Alaska Industrial  Development Authority                                                                    
          and  the  Alaska Energy  Authority  to  a list  of                                                                    
          agencies  exempt  from  the procurement  code  and                                                                    
          updates a  citation to reflect the  renumbering of                                                                    
          a preference.                                                                                                         
                                                                                                                                
* Section 7:   Amends AS 36.30.015(h)                                                                                         
                                                                                                                                
          Updates a  citation to reflect the  renumbering of                                                                    
          a preference.                                                                                                         
                                                                                                                                
* Section 8:   Amends AS 36.30.020                                                                                            
                                                                                                                                
          Updates a  citation to reflect the  renumbering of                                                                    
          a preference.                                                                                                         
                                                                                                                                
* Section 9:   Amends AS 36.30.030                                                                                            
                                                                                                                                
          Updates a  citation to reflect the  renumbering of                                                                    
          a preference.                                                                                                         
                                                                                                                                
* Section 10: Amends AS 36.30.080(f)                                                                                          
                                                                                                                                
          Increases   the   threshold    limit   for   small                                                                    
          procurements  of leased  space  from 3,000  square                                                                    
          feet  to   7,000  square  feet,   consistent  with                                                                    
          section 24.                                                                                                           
                                                                                                                                
* Section 11: Amends AS 36.30.110(b)                                                                                          
                                                                                                                                
          Clarifies  Alaska  business  license  requirements                                                                    
          for competitive sealed  bids and qualification for                                                                    
          the  Alaska  bidder   preference.    Change  would                                                                    
          require  bidders to  show  proof  of their  Alaska                                                                    
          Business  License   prior  to  award,   but  would                                                                    
          require the license at the  time of bid submission                                                                    
          in  order   to  qualify  for  the   Alaska  bidder                                                                    
          preference.                                                                                                           
                                                                                                                                
Mr.  Jones interjected  that this  change was  suggested and                                                                    
recommended  by  Legislative  Audit.  It was  to  address  a                                                                    
problem  where  bidders   were  disqualified  for  technical                                                                    
reasons on  high dollar procurements because  they failed to                                                                    
get  a business  license  in time.  Also  some bidders  were                                                                    
disqualified if  they changed their business  name or merged                                                                    
their business and  failed to change this  on their business                                                                    
license.                                                                                                                        
                                                                                                                                
* Section 12: Amends AS 36.30.130(a)                                                                                          
                                                                                                                                
          Eliminates  reference to  a procurement  officer's                                                                    
          use of vendor lists,  reflecting the repeal of the                                                                    
          statute establishing the vendor lists.                                                                                
                                                                                                                                
Mr.  Jones  noted that  the  state  has taken  its  business                                                                    
online for  the past  ten years, but  the statute  makes the                                                                    
state keep  vendor lists even  though they are  seldom used.                                                                    
There are those on the  vendor list with a false expectation                                                                    
that  they  will  be  notified   when  bidding  occurs.  All                                                                    
notification now is done online.                                                                                                
                                                                                                                                
* Section 13: Amends AS 36.30.170                                                                                             
                                                                                                                                
          Updates a  citation to reflect the  renumbering of                                                                    
          the Alaska bidder preference.                                                                                         
                                                                                                                                
* Section 14: Amends AS 36.30 by adding a new section                                                                         
          36.30.195                                                                                                             
                                                                                                                                
          Adds a  new section  to the procurement  code that                                                                    
          allows  for multi-step  revised sealed  bidding, a                                                                    
          new process that will  allow a procurement officer                                                                    
          to  use  successive  steps of  sealed  bidding  to                                                                    
          obtain the  best and final bid  price for purposes                                                                    
          of  award.  Excludes construction  contracts  from                                                                    
          this provision.                                                                                                       
                                                                                                                                
* Section 15: Amends AS 36.30.200(b)                                                                                          
                                                                                                                                
          Minor    modification   to    language   regarding                                                                    
          construction procurements.                                                                                            
                                                                                                                                
* Section 16: Amends AS 36.30.210(b)                                                                                          
          Clarifies  construction   contractor  registration                                                                    
          requirements,     now     explicitly     requiring                                                                    
         registration before award of a contract.                                                                               
                                                                                                                                
                                                                                                                                
9:39:10 AM                                                                                                                    
                                                                                                                                
* Section 17: Amends AS 36.30.210(e)                                                                                          
                                                                                                                                
          Clarifies  Alaska  business  license  requirements                                                                    
          for     competitive    sealed     proposals    and                                                                    
          qualification  for  the Alaska  bidder  preference                                                                    
          using  language  consistent   with  that  used  in                                                                    
          Section 11.                                                                                                           
                                                                                                                                
* Section 18: Amends AS 36.30 by adding a new section                                                                         
          36.30.245                                                                                                             
                                                                                                                                
          Adds a  new section  to the procurement  code that                                                                    
          allows  for  multi-step   negotiations.  This  has                                                                    
          essentially the same effect as  Section 14, but it                                                                    
          applies   to  the   competitive  sealed   proposal                                                                    
          process.  A procurement  officer will  be able  to                                                                    
          gain the  best and final proposal  for purposes of                                                                    
          award through successive  steps of negotiation and                                                                    
          proposal    submission.   Excludes    construction                                                                    
          contracts from this provision                                                                                         
                                                                                                                                
* Section 19: Amends AS 36.30.250(a)                                                                                          
                                                                                                                                
          Updates a  citation to reflect the  renumbering of                                                                    
          a preference.                                                                                                         
                                                                                                                                
* Section 20: Amends AS 36.30 by adding a new section                                                                         
          36.30.255                                                                                                             
                                                                                                                                
          Directs procurement officers  to consider only the                                                                    
          preferences  listed   in  statute   when  applying                                                                    
          preferences  under a  competitive sealed  proposal                                                                    
          process,   and  instructs   them   to  apply   the                                                                    
          preferences  only  to  the   price  portion  of  a                                                                    
          proposal. This  effectively eliminates  the Alaska                                                                    
          offeror's preference contained  in regulation at 2                                                                    
          AAC 12.260(e), and which has no basis in statute.                                                                     
                                                                                                                                
* Section 21: Amends AS 36.30 by adding a new section                                                                         
          36.30.290                                                                                                             
                                                                                                                                
          Adds a  new section  allowing an agency  to accept                                                                    
          electronic bids and proposals.                                                                                        
                                                                                                                                
* Section 22: Amends AS 36.30.310                                                                                             
                                                                                                                                
          Revises   the   statute  relating   to   emergency                                                                    
          procurements, clarifying that  the commissioner of                                                                    
          administration  shall  adopt regulations  defining                                                                    
          emergency conditions and  who shall be responsible                                                                    
          for  written determinations  of the  basis for  an                                                                    
          emergency procurement.                                                                                                
                                                                                                                                
* Section 23: Amends AS 36.30.320(a)                                                                                          
                                                                                                                                
          Increases  the  threshold   under  which  a  state                                                                    
          agency  may use  informal  procurement process  to                                                                    
          $100,000 for  goods and professional  services, to                                                                    
          $200,000 for  construction, and 7,000  square feet                                                                    
          for lease of space.                                                                                                   
                                                                                                                                
9:43:32 AM                                                                                                                    
                                                                                                                                
* Section 24: Amends AS 36.30 by adding a new section                                                                         
          36.30.321                                                                                                             
                                                                                                                                
          Adds  a  new   section  consolidating  the  Alaska                                                                    
          bidder  and  related  preferences formerly  at  AS                                                                    
          36.30.170(b).   This  section also  simplifies the                                                                    
          qualification  for the  disability and  employment                                                                    
          program  preferences, eliminates  the seldom  used                                                                    
          employers of people  with disabilities preference,                                                                    
          and establishes the  Alaska veteran preference and                                                                    
          its qualifications.                                                                                                   
                                                                                                                                
* Section 25: Amends AS 36.30.322(a)                                                                                          
                                                                                                                                
          Modifies the use of  local forest products statute                                                                    
          to grant  a seven  percent cost preference  to the                                                                    
          qualifying bid rather than to  the low bid, making                                                                    
          this    preference     consistent    with    other                                                                    
          preferences.                                                                                                          
                                                                                                                                
* Section 26: Amends AS 36.30.336 by repealing and                                                                            
          reenacting                                                                                                            
                                                                                                                                
          Clarifies  which  preferences are  cumulative  and                                                                    
          which  may  not  be  combined.  (example:  bidders                                                                    
          cannot   claim   both    an   employment   program                                                                    
          preference and disabled bidder preference)                                                                            
                                                                                                                                
* Section 27: Amends AS 36.30 by adding a new section                                                                         
          36.30.364                                                                                                             
                                                                                                                                
          Adds a new section  allowing the chief procurement                                                                    
          officer  to  renegotiate  a  contract  without  an                                                                    
          additional   competitive   process,   subject   to                                                                    
          several conditions ensuring  that the renegotiated                                                                    
          contract is at least as  favorable to the state as                                                                    
          the  original  contract  and that  the  additional                                                                    
          period of performance does not exceed five years.                                                                     
                                                                                                                                
* Section 28: Amends AS 36.30.560                                                                                             
                                                                                                                                
          Clarifies  the  timeframe  within with  a  protest                                                                    
          must be filed.                                                                                                        
                                                                                                                                
* Section 29: Amends AS 36.30.565(b)                                                                                          
                                                                                                                                
          Clarifies  the meaning  of "good  cause" requiring                                                                    
          that a  protestor show why  they could not  file a                                                                    
          protest   before   the    deadline,   allowing   a                                                                    
          procurement  officer to  better determine  whether                                                                    
          to consider a filed protest that is not timely.                                                                       
                                                                                                                                
* Section 30: Amends AS 36.30 by adding a new section                                                                         
          36.30.567                                                                                                             
                                                                                                                                
          Adds new sections  relating to protests, requiring                                                                    
          a   protest  filing   to  be   accompanied  by   a                                                                    
          refundable $250 filing fee.                                                                                           
                                                                                                                                
                                                                                                                                
9:48:18 AM                                                                                                                    
                                                                                                                                
* Section 31: Amends AS 36.30 by adding a new section                                                                         
          36.30.572                                                                                                             
                                                                                                                                
          Adds a new section  to allow a procurement officer                                                                    
          to temporarily delay award of  a contract in order                                                                    
          to address a protest, rather  than issue a stay of                                                                    
          award.                                                                                                                
                                                                                                                                
* Section 32: Amends AS 36.30.655                                                                                             
                                                                                                                                
          Eliminates  reference to  the removal  of debarred                                                                    
          or   suspended   persons    from   vendor   lists,                                                                    
          reflecting the  repeal of  a law  establishing the                                                                    
          vendor lists.                                                                                                         
                                                                                                                                
* Section 33: Amends AS 36.30.700                                                                                             
                                                                                                                                
          Adds  language   to  the   cooperative  purchasing                                                                    
          section that allows the  state to more effectively                                                                    
          use   contracts   established  by   other   public                                                                    
          procurement units.                                                                                                    
                                                                                                                                
* Section 34: Amends AS 36.30.700 by adding a new                                                                             
          subsection (b)                                                                                                        
                                                                                                                                
          Adds  a  new  section explicitly  authorizing  the                                                                    
          state to  participate in  cooperative procurements                                                                    
          with  other  governments and  waiving  procurement                                                                    
          preferences  that otherwise  prevent other  public                                                                    
          purchasing    units    from    participating    in                                                                    
          cooperative   purchase  agreements   sponsored  or                                                                    
          conducted by the state.                                                                                               
                                                                                                                                
* Section 35: Amends AS 36.30.850(b) by adding new                                                                            
          paragraphs                                                                                                            
                                                                                                                                
          Adds  new  exemptions  for;  contracts  for  lease                                                                    
          space  located outside  the  state; for  contracts                                                                    
          for  investigative services  entered  into by  the                                                                    
          department  for the  Alaska  personnel board,  the                                                                    
          office of  public advocacy, and the  Alaska Public                                                                    
          Offices  Commission; for  commodities used  in the                                                                    
          prisoner employment program;  and for professional                                                                    
          training.                                                                                                             
                                                                                                                                
* Section 36: Amends AS 36.30.900(1)                                                                                          
                                                                                                                                
          Adds  the  exemption  for  the  Alaska  Industrial                                                                    
          Development  and Export  Authority and  the Alaska                                                                    
          Energy Authority.                                                                                                     
                                                                                                                                
* Section 37: Amends AS 36.30.900 by adding new paragraphs                                                                    
                                                                                                                                
          Moves   the   definition   for   "Alaska   bidder"                                                                    
          (formerly  contained  in 36.30.170(b)),  and  adds                                                                    
          new  definitions for  "electronic signature,"  "in                                                                    
          writing," "signature," and "written."                                                                                 
                                                                                                                                
9:49:49 AM                                                                                                                    
                                                                                                                                
* Section 38: Amends AS 36.90.049(a)                                                                                          
                                                                                                                                
          Updates a  citation to reflect the  renumbering of                                                                    
          a preference.                                                                                                         
                                                                                                                                
* Section 39: Amends AS 38.35.017(a)                                                                                          
                                                                                                                                
          Updates a  citation to reflect the  renumbering of                                                                    
          a preference.                                                                                                         
                                                                                                                                
* Section 40: Amends AS 44.62.310(d)                                                                                          
                                                                                                                                
          Adds language  to clarify that  the Administrative                                                                    
          Procedure  Act does  not  apply  to meetings  with                                                                    
          offerors under the  multi-step negotiation process                                                                    
          contained  in section  18 or  to renegotiation  of                                                                    
          contracts in section 28.                                                                                              
* Section 41: Amends AS 44.88.085(a)                                                                                          
                                                                                                                                
          Technical  change  regarding  application  of  the                                                                    
          Administrative Procedure Act to AIDEA.                                                                                
                                                                                                                                
* Section 42: Repeals statutes establishing the vendor                                                                        
          list and relationships to other preferences.                                                                          
                                                                                                                                
* Section 43: Amends the uncodified law of the State of                                                                       
          Alaska                                                                                                                
                                                                                                                                
          Clarifies the  application of the  procurement act                                                                    
          to   pending   solicitations   during   transition                                                                    
          period.                                                                                                               
                                                                                                                                
                                                                                                                                
* Section 44: Amends the uncodified law of the State of                                                                       
          Alaska                                                                                                                
                                                                                                                                
          Adds  in  transition  language  stating  that  the                                                                    
          Dept. of  Administration shall include in  the two                                                                    
          successive  biennial reports  after the  effective                                                                    
          date of  this Act information on  the savings that                                                                    
          have been achieved  by Sections 14 and  28 of this                                                                    
          Act.                                                                                                                  
                                                                                                                                
* Section 45: Amends the uncodified law of the State of                                                                       
          Alaska                                                                                                                
                                                                                                                                
          Changes   the  catch   line   of  36.30.360   from                                                                    
          "Determination      of     responsibility"      to                                                                    
          Determination of nonresponsibility."                                                                                  
                                                                                                                                
* Section 46: Effective Date                                                                                                  
                                                                                                                                
          Language  making  the  procurement  act  effective                                                                    
          immediately.                                                                                                          
                                                                                                                                
9:51:01 AM                                                                                                                    
                                                                                                                                
Representative Austerman  mentioned his  confusion regarding                                                                    
Section 11 and asked for some clarification.                                                                                    
                                                                                                                                
Mr.  Jones replied  that there  are two  issues at  play. He                                                                    
noted  that at  present to  be considered  one must  have an                                                                    
Alaskan Business  License at  the time  a bid  is submitted.                                                                    
This change  would require an Alaska  Business License prior                                                                    
to receiving an award.                                                                                                          
                                                                                                                                
Representative  Austerman noted  the  electronic bidding  in                                                                    
Section  21 and  inquired how  this would  be monitored  for                                                                    
rural areas that often have internet problems.                                                                                  
                                                                                                                                
Mr.  Jones  replied  that  it   would  require  systems  and                                                                    
protocols to be  put into place that  were unavailable right                                                                    
now,  but this  section  would just  allow  them to  receive                                                                    
electronic  bids  and proposals.  It  would  not require  an                                                                    
electronic  submission,  but  would   allow  it  instead  of                                                                    
requiring  a signature  on  paper. Representative  Austerman                                                                    
stressed  that  he did  not  want  those without  access  to                                                                    
electronic bidding  to be penalized.  Mr. Jones  agreed that                                                                    
was not anticipated.                                                                                                            
                                                                                                                                
Representative  Austerman asked  the  time frame  difference                                                                    
between a temporary  delay rather than a "stay"  of an award                                                                    
in Section 31.  Mr. Jones explained that right  now the only                                                                    
tool to delay an award is  to "stay" an award. When an award                                                                    
is  stayed,  that  means  that the  stay  remains  in  place                                                                    
throughout the  protest. This gives the  procurement officer                                                                    
time  to  postpone   an  award  with  time   to  review  the                                                                    
situation. He added  this is happening right  now, but there                                                                    
is no official permission in statute to do it.                                                                                  
                                                                                                                                
9:55:18 AM                                                                                                                    
                                                                                                                                
Representative  Austerman  asked  if there  are  issues  ofn                                                                    
frivolous protests.  Mr. Jones  replied that there  are some                                                                    
frivolous protests,  but this section would  not necessarily                                                                    
be aimed  at those. This section  gives a tool to  take time                                                                    
and not make an award  immediately if there are unsure facts                                                                    
or more investigating  is necessary to see  if the protestor                                                                    
has a reasonable case.                                                                                                          
                                                                                                                                
9:56:09 AM                                                                                                                    
                                                                                                                                
Representative  Gara  noted he  was  happy  to give  bidders                                                                    
preference  to those  who work  in  various industries,  but                                                                    
concerned  that if  it  is not  carefully  done, then  state                                                                    
money will be given away  and more expensive. He referred to                                                                    
page 16,  lines 20-28 of  the bill.  He noted that  the only                                                                    
requirement  to get  an Alaska  bidder preference  is to  be                                                                    
qualified  to do  business  in the  state,  have an  Alaskan                                                                    
business  license and  maintain a  place of  business within                                                                    
the  state staffed  at  least  six months  of  the year.  He                                                                    
expressed  concern  that  an  expensive  bidders  preference                                                                    
could  be given  to outside  companies with  a shell  office                                                                    
here  in the  state.  He asked  if the  bill  could read  "a                                                                    
principle place of business."                                                                                                   
                                                                                                                                
Mr. Jones  remarked that  was a  good observation.  He noted                                                                    
that  this  does  not  change  from  existing  statute.  The                                                                    
problem  with requiring  a principle  place  of business  is                                                                    
that it  is difficult  to track and  define. He  added there                                                                    
are  some  businesses here,  even  though  it is  not  their                                                                    
primary place of business, may  employ more people here than                                                                    
a smaller Alaskan firm.  Representative Gara reiterated that                                                                    
it was a big concern.                                                                                                           
                                                                                                                                
9:59:12 AM                                                                                                                    
                                                                                                                                
                                                                                                                                
9:59:44 AM                                                                                                                    
                                                                                                                                
ADAM  BLOMFIELD,  OWNER,  THE BLOMFIELD  COMPANY,  testified                                                                    
that Section 25,  page 9 which would add the  new section AS                                                                    
36.30.321   eliminates   the   employers  of   people   with                                                                    
disabilities  preference. He  also referred  to Section  25,                                                                    
page  10, letter  J eliminating  the  preferences for  lease                                                                    
contracts.  Mr.   Blomfield  related  the  history   of  his                                                                    
company. He  added that removing this  preference for hiring                                                                    
people  with  disabilities  would   be  detrimental  to  his                                                                    
company. His only employee is  his disabled sister, although                                                                    
he has  also hired  others. This preference  allows disabled                                                                    
people to have  a better chance of being hired  to work in a                                                                    
company.  Mr. Blomfield's  second  concern  is removing  all                                                                    
preferences for lease contracts. It  is his belief that this                                                                    
would  affect  all Alaskans.  He  explained  that once  when                                                                    
bidding on  a contact,  he was the  only Alaskan  bidder and                                                                    
came in sixth in a pool of six bidders.                                                                                         
                                                                                                                                
10:06:08 AM         RECESSED                                                                                                  
2:11:47 PM          RECONVENED                                                                                                
                                                                                                                                
Co-Chair Stoltze called the meeting back to order.                                                                              
                                                                                                                                
Representative  Fairclough  remarked  that  Mr.  Blomfield's                                                                    
business  is   directly  impacted  by  removing   the  lease                                                                    
provision  therefore  she  inquired why  the  department  is                                                                    
recommending the change.                                                                                                        
                                                                                                                                
Mr. Jones  replied that in  regards to Section 24  there are                                                                    
several  changes  to  the section  with  two  affecting  Mr.                                                                    
Blomfield's business. One change  would eliminate the seldom                                                                    
used  employers of  the  disabled  preference. He  mentioned                                                                    
that  there are  three  businesses  currently enjoying  this                                                                    
preference.  The sponsor's  bill  would  also eliminate  the                                                                    
leases from applications of  preferences in procurement. The                                                                    
thought when  the legislature passed this  several years ago                                                                    
is that  it would not be  applied to leases. There  are many                                                                    
things  that are  looked  at when  looking  for office  real                                                                    
estate;  price, location,  condition, and  environment. They                                                                    
are not concerned  with the residence of  the owners because                                                                    
it is a building in Alaska regardless of who owns it.                                                                           
                                                                                                                                
2:16:21 PM                                                                                                                    
                                                                                                                                
Representative  Fairclough  asked  for an  estimate  on  the                                                                    
additional  costs that  have been  paid on  lease spaces  to                                                                    
those employers hiring disabled  Alaskans. She questioned if                                                                    
this was a big or small issue.                                                                                                  
                                                                                                                                
Mr.  Jones replied  that the  current procurement  system is                                                                    
not automated and  there is no means on  collecting the data                                                                    
on the  cost of  this or any  other preference.  He stressed                                                                    
that  General   Services  is  the  only   branch  with  this                                                                    
preference  and  only  two  or   three  employees  would  be                                                                    
affected. In  a few  instances it has  made a  difference in                                                                    
who  received the  award when  the preference  was put  into                                                                    
practice.                                                                                                                       
                                                                                                                                
Co-Chair  Stoltze  inquired if  Mr.  Jones  could project  a                                                                    
ballpark  figure or  percentage. Mr.  Jones guessed  that it                                                                    
would be  several hundred  thousand dollars,  but he  had no                                                                    
direct information.                                                                                                             
                                                                                                                                
2:19:49 PM                                                                                                                    
                                                                                                                                
Representative   Gara  agreed   that   removing  the   lease                                                                    
preference sounded reasonable, but  wanted to make sure that                                                                    
other disability  preferences were  not affected.  Mr. Jones                                                                    
replied that the  Blind Vendor program still  remains in the                                                                    
Department  of Labor.  He  added that  there  were also  two                                                                    
other  disability  related  preferences  that  will  not  be                                                                    
affected.                                                                                                                       
                                                                                                                                
2:21:12 PM                                                                                                                    
                                                                                                                                
Representative  Fairclough asked  how many  square feet  are                                                                    
affected under  the employer  preference. Mr.  Jones replied                                                                    
he did not know.                                                                                                                
                                                                                                                                
Mr.  Blomfield replied  that zero  has been  affected. There                                                                    
are three other companies under  the same ownership with one                                                                    
disabled employee.  He spoke of  eight year  litigation with                                                                    
the  state  over this  preference  and  thought his  company                                                                    
might be caught in the middle of this.                                                                                          
                                                                                                                                
Representative  Fairclough  inquired  how this  affects  Mr.                                                                    
Blomfield's  company if  they had  not won  any awards.  Mr.                                                                    
Blomfield  replied  he  had  bid  two  contracts  with  this                                                                    
preference and came  very close. For his company  to take on                                                                    
a giant company, it would be difficult for him to compete.                                                                      
Representative  Fairclough  remarked  that  this  would  not                                                                    
negatively affect  Mr. Blomfield's  company if he  had never                                                                    
won   an  award.   She  elaborated   that   it  may   reduce                                                                    
opportunities in  the future  to win  a contract,  but there                                                                    
has  been no  negative impact  at this  time. Mr.  Blomfield                                                                    
agreed that  it has  not affected him  or his  company right                                                                    
now, but it could in the future.                                                                                                
                                                                                                                                
Representative Fairclough  asked if Mr.  Blomfield's company                                                                    
won  any  contracts  with   the  employment  provision.  Mr.                                                                    
Blomfield  replied  yes  he had.  Representative  Fairclough                                                                    
asked how many square feet  has been affected. Mr. Blomfield                                                                    
responded  that the  awards were  not  for lease  contracts,                                                                    
they were supply  contracts. Representative Fairclough asked                                                                    
how he  would be  affected. She inquired  if Mr.  Jones knew                                                                    
the dollar value  for the committee to consider  on how many                                                                    
supply  contracts have  been won.  She understood  that some                                                                    
under small procurement  would not even be  affected by what                                                                    
the legislature is doing.                                                                                                       
                                                                                                                                
Mr. Jones  replied that the  preference does apply  to small                                                                    
procurements.  He  clarified  that there  have  been  leases                                                                    
awarded where this preference was the determining factor.                                                                       
                                                                                                                                
2:25:40 PM                                                                                                                    
                                                                                                                                
Representative  Fairclough   asked  if   that  was   to  the                                                                    
Fairbanks contractor. Mr. Jones replied yes.                                                                                    
                                                                                                                                
2:25:53 PM                                                                                                                    
                                                                                                                                
Representative Gara reiterated the  deletion of the employer                                                                    
preference  for  hiring   employees  with  disabilities  and                                                                    
wondered how many employees a  company must have to get this                                                                    
preference.                                                                                                                     
                                                                                                                                
Mr.  Jones replied  that there  is  no number,  but the  law                                                                    
states that fifty  percent of a company's  workforce must be                                                                    
disabled.                                                                                                                       
                                                                                                                                
Representative  Gara   asked  how  those   companies  hiring                                                                    
individuals  with  disabilities  would be  helped  with  the                                                                    
Employment  Training preference.  Mr.  Jones responded  that                                                                    
there are  two other disabilities preferences;  the disabled                                                                    
bidder preference and the employment program preference.                                                                        
                                                                                                                                
Representative Gara asked Mr.  Blomfield if he received this                                                                    
preference  because   of  hiring  one  family   member  with                                                                    
disabilities.  Mr.   Blomfield  replied  that  he   has  one                                                                    
employee who  is disabled,  making this  100 percent  in his                                                                    
company.                                                                                                                        
                                                                                                                                
2:28:22 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze questioned  the  work load  of the  second                                                                    
employee  who  only   works  a  few  hours   per  month.  He                                                                    
emphasized that  it strikes him  as a loophole. He  asked if                                                                    
there was any requirement for  the activity of the employee.                                                                    
Mr.  Jones  replied that  he  does  not believe  having  one                                                                    
employee who qualifies is what  the original drafters had in                                                                    
mind.                                                                                                                           
                                                                                                                                
2:29:24 PM                                                                                                                    
                                                                                                                                
Representative  Gara asked  Mr. Blomfield  if he  would hire                                                                    
his sister even if there was not a bidder preference.                                                                           
                                                                                                                                
Mr. Blomfield stressed  that he would like to  hire her, but                                                                    
not sure  how this would  impact his business.  He commented                                                                    
that without  the preference, outside companies  would bring                                                                    
in their own employees and may not use Alaskans.                                                                                
                                                                                                                                
Representative Gara referred  to page 9, line  21, listing a                                                                    
preference that  allows the company  to charge  five percent                                                                    
more  if it  is  an insurance  related  contract. Mr.  Jones                                                                    
replied  that this  is not  connected  with the  preference.                                                                    
This  just  states  that  an  insurance  company  with  that                                                                    
qualification can  substitute for having an  Alaska business                                                                    
license and  still qualify to  submit a  bid. Representative                                                                    
Gara asked if  an insurance company can  charge five percent                                                                    
more. Mr. Jones responded no.                                                                                                   
                                                                                                                                
2:32:25 PM                                                                                                                    
                                                                                                                                
Representative Fairclough asked what  percentage of work Mr.                                                                    
Blomfield's  disabled  sister  does  for his  company  on  a                                                                    
weekly basis. Mr.  Jones elaborated that she is  a full time                                                                    
secretary working at least 40 hours a week.                                                                                     
                                                                                                                                
                                                                                                                                
2:33:17 PM                                                                                                                    
                                                                                                                                
Mr.  Jones commented  that the  Committee Substitute  before                                                                    
the committee  makes certain changes to  exempt construction                                                                    
from  new innovative  types of  procurement. The  change was                                                                    
never  intended  for  construction  and  the  Department  of                                                                    
Transportation  had  never  intended  to use  this  type  of                                                                    
procurements  and   they  had  no  objection   to  exempting                                                                    
themselves.                                                                                                                     
                                                                                                                                
Co-Chair Hawker closed public testimony.                                                                                        
                                                                                                                                
2:36:01 PM                                                                                                                    
                                                                                                                                
Representative Doogan  inquired if Section 23,  page 9, line                                                                    
5, updates the amount of  money the agency can spend without                                                                    
going to a  formal bidding procedure. Mr.  Jones agreed that                                                                    
was the intent. Representative  Doogan asked why that should                                                                    
be done. Mr.  Jones replied that the intent  was to simplify                                                                    
a larger number  of procurements. This is  a more simplified                                                                    
form  of competition  to  get quotes  instead  of issuing  a                                                                    
formal  invitation  to  bid  and having  a  twenty  one  day                                                                    
circulation  period. His  noted  that his  agency only  does                                                                    
high dollar  procurements, not small ones.  He believed this                                                                    
would free  up the  number of  procurements under  the small                                                                    
procurement threshold.                                                                                                          
                                                                                                                                
2:38:15 PM                                                                                                                    
                                                                                                                                
Representative Doogan  questioned why this would  be wanted.                                                                    
He did  not feel it was  a compelling argument to  just make                                                                    
life easier  in agencies at  the expense of  the protections                                                                    
of a formal procurement process  to everyone else. Mr. Jones                                                                    
responded that he would not  characterize it in this manner.                                                                    
He  stressed that  it was  a  response to  many things,  but                                                                    
would  primarily  allows  the agency  staff  to  concentrate                                                                    
their time  on doing more  of the high  dollar procurements.                                                                    
Representative Doogan  remarked why  the square  footage was                                                                    
increasing. If square footage gets  more expensive and there                                                                    
is  a concern  about  some level  payment,  then the  square                                                                    
footage should be decreased rather than doubling.                                                                               
                                                                                                                                
Mr.  Jones remarked  that right  now  the small  procurement                                                                    
threshold for leases is 3000  square feet. He contended that                                                                    
this is  a very small piece  of real estate that  requires a                                                                    
lengthy and expensive process. He  believed that 7000 square                                                                    
feet would  be a better  fit for the  moment to free  up the                                                                    
time for the more complex and larger procurements.                                                                              
                                                                                                                                
Representative  Doogan  voiced  his concern  that  this  was                                                                    
being suggested  as a  method to free  up people's  time. He                                                                    
noted that procurement codes were  necessary due to the long                                                                    
history  of government  contracting  to  some companies  for                                                                    
reasons other than their ability  to do the job. He believed                                                                    
there  was something  more at  play than  how difficult  for                                                                    
staff to do the job.                                                                                                            
                                                                                                                                
2:42:47 PM                                                                                                                    
                                                                                                                                
Representative Fairclough  responded that she  believed this                                                                    
to  be  a policy  call.  She  inquired  if Mr.  Jones  could                                                                    
provide  the committee  with additional  information on  the                                                                    
average  square  footage the  state  of  Alaska leases.  She                                                                    
asked if  it was  above the  3000 or  7000 square  feet. Mr.                                                                    
Jones responded  that he  does not  have exact  figures, but                                                                    
the majority  of the  leases are over  the 7000  square foot                                                                    
amount.   He  added   that   only   contracting  agents   in                                                                    
contracting  services  of  the  executive  branch  have  the                                                                    
authority  to   do  leases.  This   is  completed   by  five                                                                    
contracting  officers   and  not   a  delegation   of  lease                                                                    
procurements.                                                                                                                   
                                                                                                                                
Representative  Fairclough  voiced  a concern  that  someone                                                                    
will receive bids  or awards and not have to  go through the                                                                    
process.  She wanted  to make  sure the  state is  receiving                                                                    
benefit and that  there is fair competition.  She also asked                                                                    
about  the  cost of  living  adjustments  and wondered  when                                                                    
these numbers were looked at  last and what legislative body                                                                    
put them in place. Mr.  Jones responded that last change was                                                                    
in  the mid-1990s  when  it was  increased  from $25,000  to                                                                    
$50,000 per  non-construction procurement.  Mr.  Jones added                                                                    
it  would be  a  minority of  procurements  that would  fall                                                                    
under   the   7000   square  foot   limits.   Representative                                                                    
Fairclough reiterated  that this  is a policy  decision. She                                                                    
emphasized that  the ceilings were determined  almost twenty                                                                    
years  ago and  the  average amount  of  square footage  the                                                                    
state tries to  procure is larger than the  3000 square foot                                                                    
number.                                                                                                                         
                                                                                                                                
2:47:30 PM                                                                                                                    
                                                                                                                                
Representative  Doogan  referred  to   page  13,  under  the                                                                    
protest  filing  fee,  and  he  noted that  if  there  is  a                                                                    
complaint one  has to  pay a $250  filing fee.  He continued                                                                    
that  if the  company wins  the protest,  then the  money is                                                                    
returned,  but if  they lose,  the money  is forfeited.  Mr.                                                                    
Jones  responded  that  was correct.  Representative  Doogan                                                                    
questioned how that  amount was arrived at  and wondered if,                                                                    
since there was no fee before,  this just seemed like a fair                                                                    
number. Mr.  Jones replied that was  correct. Representative                                                                    
Doogan  inquired  on page  14,  section  33, on  cooperative                                                                    
purchasing agreements  and wondered  if he was  correct that                                                                    
in  all  cases  the  cooperating  entities  would  be  state                                                                    
agencies.  Mr.  Jones  replied that  would  be  the  typical                                                                    
situation,  but  any  qualifying governmental  entity  would                                                                    
also  qualify. Representative  Doogan asked  if the  purpose                                                                    
was  to drive  down the  cost.  Mr. Jones  replied that  was                                                                    
correct.                                                                                                                        
                                                                                                                                
2:49:52 PM                                                                                                                    
                                                                                                                                
Representative  Fairclough asked  for  Mr. Jones  if in  the                                                                    
procurement process they are procuring  at the dollar amount                                                                    
or  at 7000  square  feet. She  wondered  under the  current                                                                    
statute what  happens to those procurements  fewer than 3000                                                                    
square feet.  Mr. Jones replied that  small procurements put                                                                    
the notice  on line at  the public notice website,  take all                                                                    
qualified offers,  and proceed to an  evaluation process. He                                                                    
noted  that the  issue is  a little  less formal  with fewer                                                                    
days getting the information out.  He added that up to $5000                                                                    
there  is  reasonable  competition; from  $5000  to  $25,000                                                                    
there is  a minimum of  three quotes or  informal proposals.                                                                    
Over  $25,000 up  to  the  cap, the  rule  is three  written                                                                    
quotes or informal proposals.                                                                                                   
                                                                                                                                
2:52:10 PM                                                                                                                    
                                                                                                                                
Co-Chair  Hawker targeted  Section 24,  the new  section for                                                                    
preferences section  under public contracts. He  inquired if                                                                    
there  is a  current preference  in these  areas. Mr.  Jones                                                                    
responded  that there  are a  number  of differently  worded                                                                    
preferences in different sections  of the statutes that will                                                                    
have  to be  tracked down  that are  worded differently.  In                                                                    
this  bill they  have  tried to  take  all the  preferences,                                                                    
revise the  wording so that they  all work and act  the same                                                                    
so  people can  understand them,  and  put them  all in  one                                                                    
place.                                                                                                                          
                                                                                                                                
Co-Chair  Hawker  noted  if  there  is going  to  be  a  new                                                                    
amalgamating  section of  code then  look in  the "repealer"                                                                    
section  of the  bill  to  see what  is  being repealed.  He                                                                    
voiced that  he was having a  hard time finding how  much of                                                                    
the  existing  preference  process has  been  determined  by                                                                    
regulation rather than  by pure statute. Mr.  Jones said all                                                                    
the procurement preferences that  exist now, except one, are                                                                    
statutorily  based and  that one  would  be eliminated  with                                                                    
this bill in Section 24.                                                                                                        
                                                                                                                                
Co-Chair  Hawker   noted  that  the  only   place  he  found                                                                    
references to  this is AS 36.30.170  and he does not  see it                                                                    
being deleted. Mr.  Jones responded that there  are a number                                                                    
of  sections that  updates section,  AS 36.30.015  and moves                                                                    
it.                                                                                                                             
                                                                                                                                
2:57:21 PM                                                                                                                    
                                                                                                                                
CRYSTAL   KOENEMAN,    STAFF,   REPRESENTATIVE   FAIRCLOUGH,                                                                    
interjected  that in  Section 13,  page  6 of  the bill,  AS                                                                    
36.30.170  states  that it  "is  repealed  and reenacted  to                                                                    
read."                                                                                                                          
                                                                                                                                
Mr.  Jones   elaborated  that  other   preferences  relating                                                                    
procurement  are being  drawn in.  Co-Chair Hawker  remarked                                                                    
that  was the  link he  was determining  to find,  but added                                                                    
that  some  points  in  the   language  were  confusing.  He                                                                    
referred to  the issue of  domestic insurers in  Section 25,                                                                    
subsection  (a) that  establishes  the general  rule if  the                                                                    
"offeror is an  Alaska bidder, a preference  of five percent                                                                    
shall be  applied to the price  in the bid or  proposal." He                                                                    
agreed  this was  very clear.  He noted  that in  (c) "If  a                                                                    
bidder or  offeror qualifies as  an Alaska bidder and  is an                                                                    
Alaska domestic  insurer, and if  the procurement is  for an                                                                    
insurance-related contract, a  five percent preference shall                                                                    
be applied  to the  price in  the bid  or the  proposal." He                                                                    
asked  if Alaska  domestic insurers  are not  included under                                                                    
subsection (a).  Mr. Jones replied  this is not a  change to                                                                    
this  existing   language.  The  difficulty  is   that  some                                                                    
insurance  companies are  not required  to  have a  business                                                                    
license; therefore  they would  not otherwise qualify  for a                                                                    
preference.                                                                                                                     
                                                                                                                                
Co-Chair Hawker  questioned if  an Alaskan  domestic insurer                                                                    
is  being  disqualified  under  subsection  (a).  Mr.  Jones                                                                    
replied that  was true. Co-Chair Hawker  continued that this                                                                    
was difficult to  read and figure out. He  preferred to have                                                                    
bills written more  simply. He wondered if  the bill writers                                                                    
were aware  of how difficult  this would be for  the average                                                                    
person  to understand.  Mr. Jones  agreed that  it could  be                                                                    
worded better, but  pointed out that this  section would not                                                                    
change  any existing  language.  Co-Chair Hawker  reiterated                                                                    
that   there   are   lots  of   complaints   regarding   the                                                                    
interpretation of the procurement code.                                                                                         
                                                                                                                                
3:03:07 PM                                                                                                                    
                                                                                                                                
Representative Gara  stressed that  if the  only requirement                                                                    
would  be to  the have  an  Alaska Business  license and  an                                                                    
office for  six months,  then the  person would  receive the                                                                    
five percent  preference. He  believed this  to be  ripe for                                                                    
abuse  and an  extra expense  for the  state. He  emphasized                                                                    
that  he  does not  want  to  spend  five percent  more  for                                                                    
insurance just because the company  has an office in Alaska.                                                                    
Representative Gara  wondered if there was  an exemption for                                                                    
health insurance,  lawyers and  doctors. Mr.  Jones remarked                                                                    
that there  are specific  procurements that are  exempt from                                                                    
the   procurement  code,   such   as  physicians,   doctors,                                                                    
dentists, and  psychiatrists. The  state does  procure third                                                                    
party administrator  health care for its  employees that are                                                                    
not exempt. He added that  insurance services are not exempt                                                                    
from  the procurement  code.  Representative  Gara asked  if                                                                    
that  means  they  get the  bidders  preference.  Mr.  Jones                                                                    
responded that the procurement  code applies and preferences                                                                    
would  apply. He  added that  in  order to  qualify for  the                                                                    
preference if  you are  in the  insurance business,  then it                                                                    
must  qualify as  a domestic  insurer through  the division.                                                                    
Representative Gara  inquired if one  just has to  file with                                                                    
the Division  of Insurance.  Mr. Jones  answered that  he is                                                                    
not sure of the requirements.                                                                                                   
                                                                                                                                
3:07:14 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze  declared that the  bill needed to  be held                                                                    
over to clarify some existing questions.                                                                                        
                                                                                                                                
Representative  Fairclough agreed  that procurement  is very                                                                    
complicated.                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze WITHDREW  his  OBJECTION.  There being  NO                                                                    
further   OBJECTION,  CS   for   HB  225(FIN),   26\LS079\S,                                                                    
Bannister, 2/16/10, was ADOPTED as a working document.                                                                          
                                                                                                                                
CSHB 225 (FIN)  was HEARD and HELD in  Committee for further                                                                    
consideration.                                                                                                                  
                                                                                                                                
Representative Fairclough asked  committee members to please                                                                    
address any concerns about the bill to her office.                                                                              
                                                                                                                                
HOUSE JOINT RESOLUTION NO. 45                                                                                                 
                                                                                                                                
     Urging the United States Congress not to enact Cap and                                                                     
     Trade legislation.                                                                                                         
                                                                                                                                
     HJR 45 was SCHEDULED but not HEARD.                                                                                        
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 3:09 PM.                                                                                           

Document Name Date/Time Subjects
01 HB0225A.pdf HFIN 3/11/2010 9:00:00 AM
HSTA 4/14/2009 8:00:00 AM
HB 225
02 HB 225 Sponsor Statement.doc HFIN 2/8/2010 1:30:00 PM
HFIN 3/11/2010 9:00:00 AM
HSTA 4/14/2009 8:00:00 AM
HB 225
05 HB225-DOC-OC-04-13-09.pdf HFIN 3/11/2010 9:00:00 AM
HSTA 4/14/2009 8:00:00 AM
HB 225
HB 225 Sponsor Statement - Electronic.doc HFIN 4/16/2009 8:30:00 AM
HFIN 3/11/2010 9:00:00 AM
HB 225
CSHJR45(ENE)-LEG-COU-3-8-10 NEW.pdf HFIN 3/11/2010 9:00:00 AM
HJR 45
Gov Letter.pdf HFIN 3/11/2010 9:00:00 AM
HJR 45
HB342 Legislative Audit Report.pdf HFIN 3/11/2010 9:00:00 AM
HB 342
HB342 Legislative Audit Summary.pdf HFIN 3/11/2010 9:00:00 AM
HB 342
HB342 Sponsor Statement ver A.pdf HFIN 3/11/2010 9:00:00 AM
HB 342
CS for HB 225 WORK DRAFT Version 26 LSO791 P 0309.pdf HFIN 3/11/2010 9:00:00 AM
HB 225
CSHB225 Explanation of Changes HFIN Version P UPDATED 0309.doc HFIN 3/11/2010 9:00:00 AM
HB 225
CSHB 225FIN Sectional Analysis - 0309 UPDATED.doc HFIN 3/11/2010 9:00:00 AM
HB 225
HB225CS-DOA-DGS-03-09-10 (2).pdf HFIN 3/11/2010 9:00:00 AM
HB 225
HB 225 Blomfield Letter.pdf HFIN 3/11/2010 9:00:00 AM
HB 225