Legislature(2019 - 2020)CAPITOL 106

04/02/2019 03:00 PM HEALTH & SOCIAL SERVICES

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Audio Topic
03:04:37 PM Start
03:06:08 PM Presentation: Procurement Process & Contracts for Services for Alaska Psychiatric Institute
05:31:07 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Joint with House STA
+ Presentation: Procurement Process & Contracts TELECONFERENCED
for Services for Alaska Psychiatric Institute by
-Shared Service Div., Dept. of Administration
-Alaska Psychiatric Institute, Dept. of Health
& Social Services
                    ALASKA STATE LEGISLATURE                                                                                  
                         JOINT MEETING                                                                                        
             HOUSE STATE AFFAIRS STANDING COMMITTEE                                                                           
      HOUSE HEALTH AND SOCIAL SERVICES STANDING COMMITTEE                                                                     
                         April 2, 2019                                                                                          
                           3:04 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
HOUSE STATE AFFAIRS STANDING COMMITTEE                                                                                          
                                                                                                                                
 Representative Zack Fields, Co-Chair                                                                                           
 Representative Jonathan Kreiss-Tomkins, Co-Chair                                                                               
 Representative Gabrielle LeDoux                                                                                                
 Representative Andi Story                                                                                                      
 Representative Adam Wool                                                                                                       
 Representative Sarah Vance                                                                                                     
 Representative Laddie Shaw                                                                                                     
                                                                                                                                
HOUSE HEALTH AND SOCIAL SERVICES STANDING COMMITTEE                                                                             
                                                                                                                                
 Representative Ivy Spohnholz, Co-Chair                                                                                         
 Representative Tiffany Zulkosky, Co-Chair                                                                                      
 Representative Matt Claman                                                                                                     
 Representative Harriet Drummond                                                                                                
 Representative Geran Tarr                                                                                                      
 Representative Sharon Jackson                                                                                                  
 Representative Lance Pruitt                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
HOUSE STATE AFFAIRS STANDING COMMITTEE                                                                                          
                                                                                                                                
 All members present                                                                                                            
                                                                                                                                
HOUSE HEALTH AND SOCIAL SERVICES STANDING COMMITTEE                                                                             
                                                                                                                                
 All members present                                                                                                            
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                                
Senator Tom Begich                                                                                                              
Representative Dan Ortiz                                                                                                        
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
PRESENTATION: PROCUREMENT  PROCESS &  CONTRACTS FOR  SERVICES FOR                                                               
ALASKA PSYCHIATRIC INSTITUTE                                                                                                    
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JASON SOZA, Chief Procurement Officer                                                                                           
Shared Services of Alaska                                                                                                       
Department of Administration                                                                                                    
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Presented a PowerPoint  titled "Procurement                                                             
Overview".                                                                                                                      
                                                                                                                                
ALBERT WALL, Deputy Commissioner                                                                                                
Office of the Commissioner                                                                                                      
Department of Health and Social Services                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:     Testified  during  discussion  regarding                                                             
procurements.                                                                                                                   
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:04:37 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  KREISS-TOMKINS called  the joint  meeting of  the House                                                             
Health  and  Social Services  Standing  Committee  and the  House                                                               
State  Affairs   Standing  Committee   to  order  at   3:04  p.m.                                                               
Representatives  Kreiss-Tomkins,   Fields,  Zulkosky,  Spohnholz,                                                               
Drummond, Jackson,  Tarr, Claman,  Story, Wool, Shaw,  and LeDoux                                                               
were present  at the call  to order.  Representatives  Pruitt and                                                               
Vance  arrived  as  the  meeting  was  in  progress.    Also,  in                                                               
attendance were Senator Begich and Representative Ortiz.                                                                        
                                                                                                                                
^PRESENTATION: PROCUREMENT  PROCESS & CONTRACTS FOR  SERVICES FOR                                                             
ALASKA PSYCHIATRIC INSTITUTE                                                                                                  
 PRESENTATION: PROCUREMENT PROCESS & CONTRACTS FOR SERVICES FOR                                                             
                  ALASKA PSYCHIATRIC INSTITUTE                                                                              
                                                                                                                                
3:06:08 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  KREISS-TOMKINS  announced  that   the  first  order  of                                                               
business  would  be  a  presentation  regarding  the  procurement                                                               
process  and  contracts  for   services  for  Alaska  Psychiatric                                                               
Institute.                                                                                                                      
                                                                                                                                
3:07:13 PM                                                                                                                    
                                                                                                                                
JASON  SOZA,  Chief  Procurement   Officer,  Shared  Services  of                                                               
Alaska,  Department of  Administration, presented  a Power  Point                                                               
titled  "Procurement  Overview."     He  shared  his  background,                                                               
reporting that he  had worked for the State of  Alaska for almost                                                               
20 years, with more than 18  years in procurement.  He noted that                                                               
he held  two professional public procurement  certifications.  He                                                               
introduced  slides  1  and  2,  titled  "General  Overview,"  and                                                               
paraphrased from the slides, which read:                                                                                        
                                                                                                                                
     State procurement is governed by law.                                                                                      
       Became effective January 1988.                                                                                           
       Based on the Model Procurement Code.                                                                                     
       Adopted in whole or in part by at least 30 states.                                                                       
                                                                                                                                
       Applies to all expenditures of state money except                                                                        
     where exempted by statute.                                                                                                 
                                                                                                                                
        Various competitive processes exist depending on                                                                        
     dollar amount.                                                                                                             
                                                                                                                                
       Competition is required unless certain conditions                                                                        
     exist.                                                                                                                     
                                                                                                                                
     If these conditions are present, alternate procurement                                                                     
     processes may be pursued.                                                                                                  
                                                                                                                                
MR. SOZA explained that less than  $100,000 was the cut off to be                                                               
considered   a  small   procurement,   which   entailed  a   more                                                               
straightforward,  quicker,  and  easier  to  understand  process;                                                               
whereas,   everything  greater   than  $100,000   was  a   formal                                                               
procurement with a more complex and rigid process.                                                                              
                                                                                                                                
3:09:35 PM                                                                                                                    
                                                                                                                                
MR. SOZA  moved on to  slides 3 and 4,  "Alternate Procurements,"                                                               
and  discussed the  typical procurement  workflow.   He explained                                                               
that the competitive  process would start when  an agency program                                                               
manager identified the  need for goods or services.   The program                                                               
manager  would  list  the requirements  and  ensure  the  funding                                                               
before  submitting  the request  to  the  procurement office  for                                                               
review of  a procurement strategy  and the ensuing  path forward.                                                               
He  noted that  the procurement  officer may  assist with  market                                                               
research,  benchmarking, and  identification  of the  competitive                                                               
pool and then  put together a solicitation document  to be issued                                                               
to  the public  and  the vendor  community.   He  added that  the                                                               
procurement officer would  act as the liaison  between the agency                                                               
and the  vendor community.   The  vendor community  would respond                                                               
with a proposal or a  bid, the procurement officer would evaluate                                                               
these, make  a determination  based on  the low  bid or  the most                                                               
advantageous offer, and  then negotiate as necessary.   After the                                                               
award, the contractor would begin.                                                                                              
                                                                                                                                
3:11:31 PM                                                                                                                    
                                                                                                                                
MR.   SOZA   directed   attention    to   slide   4,   "Alternate                                                               
Procurements," which read:                                                                                                      
                                                                                                                                
     There are five types of alternate procurements:                                                                            
       Single Source                                                                                                            
       Limited Competition                                                                                                      
       Unanticipated Amendment                                                                                                  
       Emergency                                                                                                                
       Innovative                                                                                                               
                                                                                                                                
MR.  SOZA stated  that four  of these  types of  procurement were                                                               
available under law and one  was available under regulations.  He                                                               
stated  that  the  single source  and  limited  competition  were                                                               
closely  related,  with  similar evidentiary  requirements.    He                                                               
explained that  unanticipated amendment was found  in regulations                                                               
and  was intended  to prevent  performance under  small contracts                                                               
from  being grown  into  a  giant contract.    He explained  that                                                               
emergency  procurements  were  for  the  state  to  purchase  the                                                               
necessary goods or services to  treat threats to public health or                                                               
welfare without the necessity of  a competitive process requiring                                                               
time that may ultimately put the  public in danger.  He explained                                                               
the  innovative alternate  procurement as  a means  for when  the                                                               
necessary  process   does  not  "fit   within  the  box   of  the                                                               
procurement  code" and  allows for  a "distinct  procurement plan                                                               
that gets  vetted by the  Department of Law  and my office."   He                                                               
acknowledged that this was not often used.                                                                                      
                                                                                                                                
3:13:28 PM                                                                                                                    
                                                                                                                                
MR. SOZA continued with slide 5, "Single Source," which read:                                                                   
                                                                                                                                
     Single source procurements:                                                                                                
       Authorized under AS 36.30.300.                                                                                           
       Requires written evidence supporting:                                                                                    
                                                                                                                                
       Why it is not practicable to pursue a competitive                                                                        
     process.                                                                                                                   
      Why award to the identified vendor is in the state's                                                                      
     best interest.                                                                                                             
                                                                                                                                
MR.  SOZA   explained  that  the   review  of  a   single  source                                                               
procurement, as well as any  alternate procurement, was to ensure                                                               
due  diligence by  his office  and  to guarantee  the agency  was                                                               
complying with the law.  He  added that his office wanted to make                                                               
sure there was written evidence in support.                                                                                     
                                                                                                                                
3:14:26 PM                                                                                                                    
                                                                                                                                
MR.  SOZA   shared  slide  6,  "Alternate   Procurements,"  which                                                               
depicted a typical alternate procurement  workflow procedure.  He                                                               
said  that  this  procedure  would still  start  with  an  agency                                                               
identifying  a  need,   developing  a  scope  of   the  need  and                                                               
collecting written  factual evidence,  as necessary.   The agency                                                               
would work with  its internal procurement officer to  look at the                                                               
request  and help  ensure  that the  evidence  complied with  the                                                               
legal requirements,  as well  as requesting  additional evidence,                                                               
as  necessary, before  preparing the  document for  submission to                                                               
the  internal agency  leadership.   After approval,  the document                                                               
would  be  forwarded  to the  statewide  contracting  office  for                                                               
further review of the evidence  supplied for what was required by                                                               
law.   After this approval,  it would  be forwarded to  the chief                                                               
procurement officer  for the  ultimate review  and approval.   If                                                               
there  were  still questions  or  a  need for  more  information,                                                               
additional evidence could be requested.                                                                                         
                                                                                                                                
3:16:25 PM                                                                                                                    
                                                                                                                                
MR. SOZA paraphrased slide 7, "API Procurement", which read:                                                                    
                                                                                                                                
      First contacted about potential API single source on                                                                      
     January 25, 2019.                                                                                                          
                                                                                                                                
       Met with HSS leadership and counsel on January 31,                                                                       
     2019.                                                                                                                      
                                                                                                                                
         Single source request received and approved on                                                                         
     February 7, 2019.                                                                                                          
                                                                                                                                
MR. SOZA  explained that he  had first been contacted,  by phone,                                                               
by Deputy  Commissioner Wall late  in the day on  Friday, January                                                               
25,  at which  time  the Deputy  Commissioner  had explained  the                                                               
situation  at  API  and  asked  for guidance  to  what  might  be                                                               
required under law for a  single source procurement.  He reported                                                               
that he  was also  invited to  a meeting  with the  Department of                                                               
Health and  Social Services leadership  and their counsel  on the                                                               
following Thursday, January  31, to speak about  the situation at                                                               
API  and the  single source  procurement process.   He  said that                                                               
they discussed in more detail  the types of evidence necessary to                                                               
meet  the   statutory  requirements,  including   expert  written                                                               
testimony and other evidence which  would substantiate the single                                                               
source procurement.   He  reported that  his office  received the                                                               
single source  request in the  following week.  It  was processed                                                               
in the normal  way with a review by a  contracting officer in his                                                               
office  and then  forwarded to  Mr. Soza  for his  approval.   He                                                               
acknowledged that, as  there had been some  confusion for whether                                                               
this  should  be an  emergency  procurement  or a  single  source                                                               
procurement,  the  initial  request  had been  for  an  emergency                                                               
procurement.   He  said  that when  he  sought clarification,  he                                                               
found  that it  was  a mistake  in terminology.    He noted  that                                                               
Deputy Commissioner Wall had labeled  this as an "emergent single                                                               
source," which  a procurement officer  had taken as  an emergency                                                               
procurement request.   He  stated that the  intent all  along had                                                               
been for a  single source procurement, and  he directed attention                                                               
to the e-mails which spoke to this.   He said the request was re-                                                               
submitted as  a single  source, was  reviewed, and  was approved.                                                               
This  concluded his  "material involvement  in the  API contract"                                                               
and this  granted the authority  to the Department of  Health and                                                               
Social Services to move forward on a contract with Wellpath.                                                                    
                                                                                                                                
3:19:51 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SPOHNHOLZ  expressed her confusion between  an emergency                                                               
contract and  a single  source contract.   She  asked why  it was                                                               
thought there was only one provider  in the United States able to                                                               
do this  as there was  not a focus on  the emergency.   She asked                                                               
about the research that documented and justified this decision.                                                                 
                                                                                                                                
3:20:42 PM                                                                                                                    
                                                                                                                                
MR. SOZA  expressed his agreement  that an  emergency procurement                                                               
was for  a specific situation.   He relayed that  the discussions                                                               
"spoke  to  the possibility  that  yes,  there was  a  short-term                                                               
situation  that needed  to be  addressed."   He  stated that  the                                                               
Department of Health  and Social Services wanted  to maintain the                                                               
possibility that "if the service provider  did a good job in that                                                               
window, or  performed within  that window,  that they  wanted the                                                               
ability to go  more long term with that, which  leant itself more                                                               
to a single  source procurement."  He reported  that the evidence                                                               
provided with  the request indicated  it was in the  state's best                                                               
interest  to  award Wellpath  as  it  was  the most  prepared  to                                                               
respond to the situation.                                                                                                       
                                                                                                                                
3:21:59 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SPOHNHOLZ  asked if  there had  ever been  a multi-year,                                                               
$44  million per  year, single  source contract  fast tracked  in                                                               
this way.                                                                                                                       
                                                                                                                                
MR.  SOZA replied  that  the evidence  provided  had an  emergent                                                               
quality, as  there was  risk for  decertification and  closing at                                                               
API.  He  said that, although that applied a  sense of urgency to                                                               
the situation,  the level of  review and evidence applied  to the                                                               
single source request substantiated the application.                                                                            
                                                                                                                                
3:23:00 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SPOHNHOLZ  repeated  her  request to  Mr.  Soza  asking                                                               
whether he had ever seen a  contract of this size awarded in this                                                               
manner and in this time frame.                                                                                                  
                                                                                                                                
MR. SOZA  replied that  he could  only think  of one  contract of                                                               
similar size to a single source,  although it was not in the same                                                               
time frame.   In response,  he expressed his agreement  that this                                                               
was exceptional.                                                                                                                
                                                                                                                                
3:23:42 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FIELDS  relayed that testimony indicated  an incident of                                                               
immediate  jeopardy   had  been  a  determining   factor  in  the                                                               
selection of  Wellpath.   He pointed out  that this  incident had                                                               
happened a week after the  Deputy Commissioner had "started going                                                               
down the  road of pursuing  a single source contract"  on January                                                               
22; whereas,  the contact with  Mr. Soza had occurred  on January                                                               
25.  He asked  if it was normal to start the  pursuit of a single                                                               
source procurement  before the event  that was the  stated reason                                                               
for this pursuit.                                                                                                               
                                                                                                                                
MR. SOZA replied  that he did not know what  had precipitated Mr.                                                               
Wall to  contact him  on January  25.  He  relayed that,  at that                                                               
time,  Mr. Wall  had explained  the  situation with  API and  had                                                               
asked about the parameters for a single source procurement.                                                                     
                                                                                                                                
CO-CHAIR FIELDS said that, during  testimony in the Senate Health                                                               
and Social Services  Standing Committee, Mr. Wall  had stated the                                                               
reason for the  request for a single source request  had been for                                                               
the incident of  immediate jeopardy on January 29.    He asked if                                                               
concerns  would have  been raised  if an  agency were  pursuing a                                                               
procurement and  then subsequently attempted to  justify a single                                                               
source  procurement based  on  an event  after  they sought  this                                                               
procurement.                                                                                                                    
                                                                                                                                
MR.  SOZA expressed  his agreement  that this  would have  raised                                                               
concerns  but  added  that  nothing   dated  on  January  29  was                                                               
considered as part of the evidence in the alternate procurement.                                                                
                                                                                                                                
3:26:13 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FIELDS  pointed out  that this was  the reason  Mr. Wall                                                               
stated for the request, and he  asked what the average size for a                                                               
single source procurement was.                                                                                                  
                                                                                                                                
MR. SOZA replied  that these procurements ran the  gamut for size                                                               
but that the average would be below $44 million.                                                                                
                                                                                                                                
3:27:04 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  KREISS-TOMKINS,  referencing  an  earlier  question  by                                                               
Representative  Spohnholz,  asked  about the  one  single  source                                                               
contract  that  had  exceeded  the size  of  this  single  source                                                               
contract.                                                                                                                       
                                                                                                                                
MR.  SOZA  replied  it  had   been  a  longer-term  contract  for                                                               
firefighting  related  equipment.    He said  that  although  two                                                               
single   source   procurements    typically   requested   maximum                                                               
authorization,  the  actual  contract  may  come  in  under  that                                                               
amount.                                                                                                                         
                                                                                                                                
3:27:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  offered her  understanding that  there had                                                               
been  discussions between  the Department  of  Health and  Social                                                               
Services  and Providence  Alaska Medical  Center.   She asked  if                                                               
anyone had  reached out to  Providence Alaska Medical  Center for                                                               
immediate support.                                                                                                              
                                                                                                                                
3:28:21 PM                                                                                                                    
                                                                                                                                
ALBERT  WALL, Deputy  Commissioner, Office  of the  Commissioner,                                                               
Department of Health and Social  Services, in response, said that                                                               
there  had  been  discussions  with  several  CEOs  of  hospitals                                                               
throughout  Alaska, including  Providence Alaska  Medical Center.                                                               
He  added that  the department  had a  good partner  relationship                                                               
with   Providence  Alaska   Medical   Center,  that   he  had   a                                                               
conversation with them yesterday  about this very issue, although                                                               
he could  not recall the exact  date on which he  had spoken with                                                               
them previously.                                                                                                                
                                                                                                                                
3:29:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  asked if Providence Alaska  Medical Center                                                               
had said they could not do this in a timely manner.                                                                             
                                                                                                                                
MR. WALL replied,  "not exactly in those words."   He stated that                                                               
he  was  aware  of  the capacity  at  Providence  Alaska  Medical                                                               
Center,  and that  they would  continue to  work together  toward                                                               
meeting these needs.                                                                                                            
                                                                                                                                
REPRESENTATIVE  LEDOUX  asked   what  Providence  Alaska  Medical                                                               
Center had said.                                                                                                                
                                                                                                                                
MR.  WALL  replied  that Providence  Alaska  Medical  Center  had                                                               
offered to do  whatever possible within their means to  help.  He                                                               
added  that  Providence  Alaska Medical  Center  had  shared  two                                                               
advance nurse  practitioners with  psychiatric specialty  to help                                                               
with the situation at API.                                                                                                      
                                                                                                                                
3:30:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  WOOL asked  for a  distinction between  the terms                                                               
emergent and emergency.                                                                                                         
                                                                                                                                
MR. SOZA explained that, as the  term emergent did not show up in                                                               
procurement, this had led to the mistake.                                                                                       
                                                                                                                                
REPRESENTATIVE WOOL expressed his  confusion for the relationship                                                               
of the two terms.                                                                                                               
                                                                                                                                
MR.  SOZA expressed  his  agreement that  this  was an  emergency                                                               
situation.                                                                                                                      
                                                                                                                                
REPRESENTATIVE WOOL  asked when  the evidence had  been presented                                                               
to authorize approval for a single source procurement.                                                                          
                                                                                                                                
MR. SOZA replied  that all the evidence was  presented along with                                                               
the request  on February 7, and  that the initial phone  call had                                                               
been to determine what constituted a single source procurement.                                                                 
                                                                                                                                
3:32:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE WOOL referenced the  discussions on January 25 and                                                               
January  31 for  a single  source  procurement and  asked if  the                                                               
evidence  for  single source  procurement  had  been supplied  on                                                               
February 7, with approval on that same date.                                                                                    
                                                                                                                                
MR. SOZA said that was correct.                                                                                                 
                                                                                                                                
REPRESENTATIVE WOOL asked about the evidence.                                                                                   
                                                                                                                                
MR.  SOZA said  that  the  evidence was  provided  in the  single                                                               
source request, adding  that this was on record.   He stated that                                                               
it  consisted  mainly  of  testimony   in  either  e-mail  or  by                                                               
Commissioner Crum exercising  his authority to take  over API and                                                               
"put  in  a  contractor."    He  noted  that,  as  they  had  the                                                               
conversations and he  was familiar with the situation  at API and                                                               
the direction that  Department of Health and  Social Services was                                                               
moving,  the  expert  written testimony  submitted  by  Mr.  Wall                                                               
became  part of  the evidence  to be  considered for  whether the                                                               
request met the statutory requirements.                                                                                         
                                                                                                                                
3:34:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   WOOL   referenced   the  other   single   source                                                               
procurement situations and asked if  it was common to receive the                                                               
evidence and offer approval on the same day.                                                                                    
                                                                                                                                
MR.  SOZA replied  that  a  lot of  the  evidence gathering,  and                                                               
vetting would take place prior  to the submission of the request.                                                               
He pointed out that, as  Department of Health and Social Services                                                               
had  their  own   procurement  staff,  as  well,   there  was  an                                                               
assumption that they were putting  this together and had it ready                                                               
on February 7.                                                                                                                  
                                                                                                                                
3:35:35 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE WOOL asked if he  was aware that Providence Alaska                                                               
Medical Center  had approached API  prior to this  situation with                                                               
an offer to take over the management.                                                                                           
                                                                                                                                
MR. SOZA said that he was not aware of that.                                                                                    
                                                                                                                                
3:36:17 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CLAMAN  asked whether  Mr. Soza believed  that the                                                               
procurement code  had a strong  bias in favor of  competitive bid                                                               
contracts, and not in support of single source contracts.                                                                       
                                                                                                                                
MR. SOZA replied, "yes."                                                                                                        
                                                                                                                                
REPRESENTATIVE CLAMAN asked if there  was agreement that a single                                                               
source contract was an exception, and not the rule.                                                                             
                                                                                                                                
MR. SOZA replied, "yes."                                                                                                        
                                                                                                                                
REPRESENTATIVE  CLAMAN asked  whether  there  had been  occasions                                                               
when an  application for  a single  source contract  was rejected                                                               
with a determination that it would  be necessary to "put this out                                                               
for bid."                                                                                                                       
                                                                                                                                
MR. SOZA replied, "yes."                                                                                                        
                                                                                                                                
REPRESENTATIVE CLAMAN asked how frequently this occurred.                                                                       
                                                                                                                                
MR. SOZA replied  that his office tried to  stop any applications                                                               
that would  be rejected prior  to submission.  He  explained that                                                               
this was often resolved with a preliminary talk.                                                                                
                                                                                                                                
REPRESENTATIVE CLAMAN  asked how  often there was  a conversation                                                               
that determined  a contract needed "to  be bid out and  hear from                                                               
other parties."                                                                                                                 
                                                                                                                                
MR. SOZA replied that this probably happened 10 times each year.                                                                
                                                                                                                                
REPRESENTATIVE CLAMAN  asked how  often there  was approval  of a                                                               
single source contract for more than $10 million.                                                                               
                                                                                                                                
MR. SOZA  replied that more than  $10 million was "on  the higher                                                               
end of what we see."                                                                                                            
                                                                                                                                
REPRESENTATIVE CLAMAN asked why his  office had followed the lead                                                               
of  the Department  of Health  and Social  Services and  did "not                                                               
push  them  to go  to  bid  this out"  as  it  was no  longer  an                                                               
emergency.   He  asked  how  hard the  Department  of Health  and                                                               
Social Services had been pushed to contract this out.                                                                           
                                                                                                                                
MR.  SOZA replied  that  the leadership  from  the Department  of                                                               
Health and  Social Services had  made the approach and  asked for                                                               
advice about  the single source  contract.  He stated  that there                                                               
had been discussions and, as there  had been a meeting on January                                                               
31  with the  department's legal  counsel, commissioner,  and two                                                               
deputies, the discussion and evidence  seemed to support a single                                                               
source contract per the current statute.                                                                                        
                                                                                                                                
MR. SOZA,  in response  to Representative  Claman, said  that the                                                               
legal  counsel  had  been someone  from  the  Attorney  General's                                                               
Office.                                                                                                                         
                                                                                                                                
3:40:22 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  ZULKOSKY  referenced  a  memo dated  February  15  from                                                               
Commissioner  Crum in  which he  stated  that Wellpath  employees                                                               
arrived in Anchorage on Monday,  February 4, and had then assumed                                                               
the safety  protocols from  the department.   She noted  that the                                                               
request  for   alternate  procurement  was  not   approved  until                                                               
February 7,  with the full  contract signed  on February 8.   She                                                               
asked if this was proper  protocol or practice for the Department                                                               
of  Health and  Social  Services  to engage  in  services with  a                                                               
contractor  prior to  the authorization  for  procurement with  a                                                               
signed contract.                                                                                                                
                                                                                                                                
MR. SOZA replied that this  was not proper protocol, stating that                                                               
a contract should be signed before services were rendered.                                                                      
                                                                                                                                
CO-CHAIR  ZULKOSKY  asked   for  the  reasons  to   not  have  an                                                               
authorized  contractor in  any state  facility before  a contract                                                               
was signed.                                                                                                                     
                                                                                                                                
MR.  SOZA replied  that prior  to the  execution of  the contract                                                               
there was not any protection for the state.                                                                                     
                                                                                                                                
CO-CHAIR ZULKOSKY directed attention  to the facility serving the                                                               
most vulnerable Alaskans  and asked whether it  was good practice                                                               
for any state  department to invite contractors who  had not been                                                               
fully authorized prior to the date the contract was signed.                                                                     
                                                                                                                                
MR.  SOZA  said  that  he  did not  know  in  what  capacity  the                                                               
contractors were  brought in or  if any protocols  were violated,                                                               
but  it would  not be  proper protocol  for a  vendor to  provide                                                               
billable  services  to the  state  prior  to the  contract  being                                                               
executed.                                                                                                                       
                                                                                                                                
3:42:39 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TARR  asked  about  an evaluation  for  a  single                                                               
source contract  with conflicting requests.   She pointed  to the                                                               
short-term request which  presupposed the long-term relationship,                                                               
even as  it appeared this  would have allowed sufficient  time to                                                               
go through a procurement process.                                                                                               
                                                                                                                                
MR. SOZA  expressed his agreement  that the dates  kept changing,                                                               
and that there  were some conflicting dates.  He  shared that the                                                               
explanation and discussion  for Phase 1 was that  if a short-term                                                               
management  service came  in, it  would be  counter-productive to                                                               
change out the service provider in Phase 2.                                                                                     
                                                                                                                                
3:45:04 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TARR shared  her  concern for  the  size of  this                                                               
long-term contract with someone for  whom the state had no short-                                                               
term work  experience.  She  stated that the vendor  should prove                                                               
they were  the right operator  "for this facility  for vulnerable                                                               
Alaskans."   She declared  that it did  not seem  appropriate "to                                                               
enter into a  conversation that seems more  long-term in nature."                                                               
She stated that this was very  troubling as it was "getting ahead                                                               
of ourselves in the process  because there's plenty of reasons to                                                               
be  concerned  about this  particular  company."   She  asked  if                                                               
looking at  the "storied  past" of this  company would  have been                                                               
part of the decision making to enter into a contract.                                                                           
                                                                                                                                
MR. SOZA  offered his understanding  of the contract that  it was                                                               
in  two  distinct  phases  with the  second  phase  dependent  on                                                               
performance in  the first phase.   He said that his  office would                                                               
rely heavily on the agency to  conduct due diligence and that his                                                               
staff  would  also  conduct due  diligence  if  something  looked                                                               
askance.  He  said that there had not been  any indicators to his                                                               
staff to consider a "storied past."                                                                                             
                                                                                                                                
REPRESENTATIVE  TARR  said  that,   as  quick  internet  research                                                               
revealed  troubling  articles  about death  and  lawsuits,  there                                                               
should  have been  more research  given the  sum of  money.   She                                                               
acknowledged  that  she  did  not know  the  benchmarks  used  to                                                               
determine the agreement.                                                                                                        
                                                                                                                                
MR. SOZA  replied that he was  not sure to what  degree his staff                                                               
would  have   researched.    He   pointed  out  that   they  were                                                               
procurement experts  and did  their best  to advise  the agencies                                                               
for  procurement  laws.   He  declared  that,  as they  were  not                                                               
experts  in  a subject  area,  they  would  rely heavily  on  the                                                               
agency.  He  noted that written testimony in support  of award of                                                               
a contract  draws a  lot of  deference.   He emphasized  that his                                                               
office advised  on procurement  law and did  their best  with due                                                               
diligence to ensure that it was being upheld.                                                                                   
                                                                                                                                
3:49:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   JACKSON  referred   to   the  Ombudsman   report                                                               
detailing  the decline  of API.   She  asked why  the procurement                                                               
request was not in the emergency category.                                                                                      
                                                                                                                                
MR.  SOZA explained  that  it was  presented  that the  emergency                                                               
posed by  decertification would be dealt  with in Phase 1  of the                                                               
contract, with the  potential to go for a longer  term.  He added                                                               
that the  emergency procurement  rules would  only allow  for the                                                               
initial situation to be dealt with.                                                                                             
                                                                                                                                
REPRESENTATIVE JACKSON  asked why,  if Providence  Alaska Medical                                                               
Center had  shown interest before  this urgent situation,  it was                                                               
not considered.                                                                                                                 
                                                                                                                                
MR. SOZA said he was not aware of any interest.                                                                                 
                                                                                                                                
3:51:11 PM                                                                                                                    
                                                                                                                                
MR. WALL, in response to  Representative Jackson, said that there                                                               
was  record of  conversations about  the  needs of  API over  the                                                               
years.   He referenced  a letter  from Providence  Alaska Medical                                                               
Center  to   the  House  Health  and   Social  Services  Standing                                                               
Committee which  explained their  position on  API and  the speed                                                               
"at which they  could be there to perform the  work."  He pointed                                                               
to  the  significant  difference   for  the  type  of  in-patient                                                               
psychiatric care of  the two institutions, which had a  lot to do                                                               
with the speed of intervention.                                                                                                 
                                                                                                                                
REPRESENTATIVE   JACKSON  asked   for   clarification  that   the                                                               
necessary level  of care  required more  special needs  than what                                                               
Providence Alaska Medical  Center could have offered  in the time                                                               
to save API.                                                                                                                    
                                                                                                                                
MR. WALL  stated that it  was almost  na?ve to consider  that all                                                               
in-patient  psychiatric care  was the  same.   He detailed  three                                                               
basic  types  of  in-patient psychiatric  care:    the  voluntary                                                               
psychiatric patient  who does  not need  court intervention  or a                                                               
court order, noting  that Providence Alaska Medical  Center did a                                                               
great job  providing that level  of care;  those  individuals who                                                               
need in-patient  care but do  not want to willingly  submit which                                                               
raises a  legal issue  for intervention  into a  person's rights,                                                               
noting that Providence  Alaska Medical Center did  not offer this                                                               
level  of care;  and finally,  those individuals  charged with  a                                                               
crime and  held until  Title 12 for  either restorative  care for                                                               
competency  to stand  trial, or  for  evaluation for  restorative                                                               
care, pointing out  that this was also a  very complex population                                                               
which required  a great  deal of  interaction with  the law.   He                                                               
shared that  there was a  courtroom at API  for these cases.   It                                                               
was  the   level  of  complexity  and   legality  involved  which                                                               
differentiated these three types.                                                                                               
                                                                                                                                
3:55:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE VANCE  asked if  the state was  still at  risk for                                                               
the loss of certification and its funding at API.                                                                               
                                                                                                                                
MR. WALL  stated, "absolutely, we  are."  He shared  the timeline                                                               
of events.   The survey team  from CMS (Centers for  Medicare and                                                               
Medicaid  Services) was  at API  during the  week of  January 29,                                                               
which  was to  be  the  last survey.    The  department was  very                                                               
concerned  by the  letter  threatening  decertification from  CMS                                                               
dated February  1.  He offered  that the reason he  contacted the                                                               
procurement  office  was  to be  pro-active  for  options  should                                                               
certain things occur.   He reported that he sent  an e-mail which                                                               
outlined "where exactly we were  and how dire the situation was."                                                               
The survey  result was  "even worse  than I  had thought  it was,                                                               
although  we did  not lose  certification because  of actions  we                                                               
took."   He explained  that he had  re-sent the  original e-mail,                                                               
adding an  amendment paragraph at  the bottom which  included the                                                               
findings of  the survey team.   At  that point, he  stated, there                                                               
was a choice  to either make immediate change  or be de-certified                                                               
with a  threat for the loss  of accreditation and licensure.   He                                                               
pointed  out  that  this  would  mean closure  of  API  with  the                                                               
patients  being  moved   to  hospitals  in  other   states.    He                                                               
reiterated  that he  was being  pro-active by  exploring all  the                                                               
options up  to this point.   Upon  receiving the findings  of the                                                               
survey  team,  the  department immediately  instituted  a  higher                                                               
level  of  safety   protocol.    The  patient   involved  in  the                                                               
altercation  who  had been  the  immediate  jeopardy finding  was                                                               
isolated  and  moved   to  a  different,  vacant   ward  for  the                                                               
protection of all patients and  staff.  A 24/7 video surveillance                                                               
of all  patients was  instituted for all  wards and  all patients                                                               
with an hourly  accounting until a safety officer was  hired.  He                                                               
noted that  the safety  protocol and the  safety officer  were in                                                               
place prior  to the arrival  of the  contractor.  He  pointed out                                                               
that they had an informed idea  of what could potentially be done                                                               
in  case of  an emergency,  which  resulted in  the selection  of                                                               
these options.   He offered  his belief that the  confusion about                                                               
the  emergency  language, the  emergent  language,  and the  sole                                                               
source language all "really speaks  in my mind about stability at                                                               
API."  He reminded the committee  that a contract for $44 million                                                               
in perpetuity had not been signed,  but that this was a two-phase                                                               
contract stating  that the vendor must  meet certain expectations                                                               
prior to  movement to the  next phase.   He pointed out  that the                                                               
date to move to the next phase  had been amended from April 15 to                                                               
June 15, 2019.   He added that, if Wellpath  did not meet certain                                                               
deadlines  and  outcomes,  they  would  not  be  the  contractor.                                                               
However, as the department was  looking for stability to maintain                                                               
the hospital certification  and licensure, to open  more beds and                                                               
bring on  more providers,  and to increase  the safety  for staff                                                               
and patients,  there was no  reason to  put the hospital  back in                                                               
chaos in order to find another provider.                                                                                        
                                                                                                                                
4:02:08 PM                                                                                                                    
                                                                                                                                
MR. SOZA, in response to  Representative Pruitt, said that he had                                                               
been in his position for about six years.                                                                                       
                                                                                                                                
REPRESENTATIVE PRUITT asked about the terms of the appointment.                                                                 
                                                                                                                                
MR.  SOZA  explained  that  the  position  of  Chief  Procurement                                                               
Officer  was created  under  statute with  a  six-year term,  was                                                               
appointed, and was "for cause."                                                                                                 
                                                                                                                                
REPRESENTATIVE PRUITT  asked if four different  agency letters of                                                               
correction had been presented to him as evidence.                                                                               
                                                                                                                                
MR. SOZA  offered his belief  that this  was part of  the written                                                               
testimony.                                                                                                                      
                                                                                                                                
REPRESENTATIVE PRUITT asked  if it had been  presented that there                                                               
would  be a  potential  loss  of $37  million  in annual  federal                                                               
funding.                                                                                                                        
                                                                                                                                
MR.  SOZA offered  his  belief that  this was  also  part of  the                                                               
evidence.                                                                                                                       
                                                                                                                                
REPRESENTATIVE PRUITT asked if the  necessity of swift action had                                                               
also been presented.                                                                                                            
                                                                                                                                
MR.  SOZA said  that there  was a  sense of  urgency for  certain                                                               
upcoming dates whereby actions could  happen to potentially cause                                                               
an adverse impact.                                                                                                              
                                                                                                                                
REPRESENTATIVE PRUITT  asked about  the difference in  time frame                                                               
for the regular procurement process instead of this process.                                                                    
                                                                                                                                
MR. SOZA replied  that a formal request for  proposals could take                                                               
between 90 - 120 days.                                                                                                          
                                                                                                                                
REPRESENTATIVE PRUITT  asked if  he had  been informed  about the                                                               
90-day deadline, imposed in July 2018, which had not been met.                                                                  
                                                                                                                                
MR. SOZA replied that this had been part of the evidence.                                                                       
                                                                                                                                
REPRESENTATIVE  PRUITT asked  if  it had  been  reported that  on                                                               
November 26, 2018,  there was a potential to  revoke the license,                                                               
but  that the  earthquake  four  days later  had  allowed for  an                                                               
extension.                                                                                                                      
                                                                                                                                
MR. SOZA replied, "I do recall that."                                                                                           
                                                                                                                                
REPRESENTATIVE  PRUITT   reiterated  that   Mr.  Soza   had  been                                                               
approached on January 22 with the  need for a contract as quickly                                                               
as possible  because the third  and final chance would  expire on                                                               
February 1; whereas, it would take  potentially 90 - 120 days for                                                               
the  regular procurement  process  to find  someone  to fill  the                                                               
contract.                                                                                                                       
                                                                                                                                
MR. SOZA said, "that is correct."                                                                                               
                                                                                                                                
4:05:47 PM                                                                                                                    
                                                                                                                                
CO-CHAIR   KREISS-TOMKINS  asked   if   the   decision  for   the                                                               
appropriateness of  a single source  contract was made  solely by                                                               
Mr. Soza.                                                                                                                       
                                                                                                                                
MR. SOZA replied, "that is accurate."                                                                                           
                                                                                                                                
CO-CHAIR  KREISS-TOMKINS  asked if  it  was  typical for  a  sole                                                               
source contract proposal to be  received and approved on the same                                                               
day.                                                                                                                            
                                                                                                                                
MR. SOZA  replied "yes," and noted  that it was atypical  for him                                                               
to be involved as early in the process as for this proposal.                                                                    
                                                                                                                                
CO-CHAIR  KREISS-TOMKINS asked  if  the decision  to approve  the                                                               
sole  source  contract in  this  instance  was "yours  and  yours                                                               
alone."                                                                                                                         
                                                                                                                                
MR. SOZA  replied, "at  the end  of the day,  it does  roll, this                                                               
responsibility rolls to  me as part of statute."   In response to                                                               
Co-Chair Kreiss-Tomkins, he added that this was a "yes."                                                                        
                                                                                                                                
4:07:41 PM                                                                                                                    
                                                                                                                                
CO-CHAIR KREISS-TOMKINS offered Mr.  Wall the opportunity to make                                                               
any comments  that would  be helpful for  how the  department had                                                               
encountered Wellpath and any other important points.                                                                            
                                                                                                                                
MR. WALL replied  that he did not have a  prepared statement.  He                                                               
offered his  belief that there  had been  a lot of  confusion for                                                               
the  timeline of  events  and  why, to  the  different types  and                                                               
levels of  care and who could  provide these, and to  what was at                                                               
stake.   He stated that, as  the Department of Health  and Social                                                               
Services was  faced with an  upcoming event that could  have been                                                               
catastrophic, there were  many things to be  done in preparation.                                                               
He said that  many eventualities had to be vetted  and, as he did                                                               
not know  exactly what was coming,  it was necessary to  ask many                                                               
questions   of   many   people,  including   procurement,   other                                                               
providers, and legal guidance.  He  stated that the team from CMS                                                               
was going  to be on-site during  the week of January  29 and that                                                               
the  department  was  more  than   180  days  in  arrear  of  the                                                               
contractual obligation for the conditions  of inclusion with CMS.                                                               
He expressed his  concern that API would be  de-certified, if not                                                               
closed.    [Due  to  technical  difficulties,  segments  of  this                                                               
testimony  are  not  audible.]    He  listed  concerns  for  many                                                               
complexities  of detail,  including  knowing which  out of  state                                                               
agencies  could take  patients and  under what  terms, and  would                                                               
they honor  the Alaska  Title 12  conditions of  competency under                                                               
the law.   He cited  that this was what  the agency was  doing in                                                               
the weeks prior to the arrival  of the team from CMS, emphasizing                                                               
that "I would be remiss in my duties  had I not."  He shared that                                                               
there  had been  a  series of  conversations  about the  upcoming                                                               
events to ensure  the involved staff were aware for  how dire the                                                               
circumstances could be.   He relayed that there was  a very short                                                               
period of  time after  the arrival  of the CMS  team in  which to                                                               
respond, as  the team left on  January 29 and the  department had                                                               
until February 1  "to get our ducks  in a row and  show them that                                                               
(1)  we could  meet the  danger that  we were  facing and  (2) we                                                               
could care for patients in  an appropriate manner."  He expressed                                                               
his  pleasure that  the  department had  done a  lot  of work  in                                                               
advance, as otherwise they "would  have been caught flat-footed."                                                               
He acknowledged  that Wellpath was  not the only provider  on the                                                               
planet, "but  they were  there, and they  have done  this before.                                                               
They know  CMS and CMS  knows them."   He reported that  the work                                                               
and  the plans  of  correction  by Wellpath  had  allowed API  to                                                               
remain certified, accredited,  and licensed.  For  the first time                                                               
in two  years, CMS teams  had reviewed the  department's response                                                               
to an  issue and  said, "you  did the right  thing" and  that the                                                               
plan of  correction was  working.   He declared  that this  was a                                                               
sign of  improvement at  API.   He reported  that there  had been                                                               
recent  success with  recruiting providers  and  a new  CEO.   He                                                               
emphasized that  the change in  culture at API and  the stability                                                               
for providers and patients was extremely important.                                                                             
                                                                                                                                
4:13:57 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SPOHNHOLZ  expressed her  concern  for  safety at  API,                                                               
pointing out that  the House Health and  Social Services Standing                                                               
Committee had  held a  hearing in  the spring  of 2018  about the                                                               
safety at  API, and  that the Alaska  State Legislature  had seen                                                               
fit to  fund additional positions  at API to ensure  the staffing                                                               
ratios were appropriate  and to increase salaries as  well as add                                                               
hiring bonuses.   She  expressed her  concerns for  the contract,                                                               
pointing out that  "how you do something is as  important as what                                                               
you do."  She referenced that  Mr. Soza had described this as "an                                                               
exceptional  contract" given  its  scope and  size, pointing  out                                                               
that  Phase 2  was for  five years  at $44  million each  year to                                                               
operate  the  only  in-patient   acute  psychiatric  hospital  in                                                               
Alaska.  She asked if it  had occurred to separate the two phases                                                               
of the contract.                                                                                                                
                                                                                                                                
MR.  SOZA replied  that the  concept did  come up  in discussions                                                               
with  the Department  of Health  and Social  Services leadership,                                                               
and that  Mr. Wall had  explained why  this approach would  be in                                                               
the state's best interest.                                                                                                      
                                                                                                                                
CO-CHAIR SPOHNHOLZ questioned some of  the logic used to underpin                                                               
this.   She acknowledged that  although there were  challenges at                                                               
API,  there were  other alternatives  that  had not  meaningfully                                                               
explored.  She pointed out  that Providence Alaska Medical Center                                                               
did operate  in-patient acute psychiatric  hospital care  as well                                                               
as emergency  psych care, in Alaska.   She asked if  Mr. Wall had                                                               
every  asked  Providence  Alaska  Medical  Center  if  they  were                                                               
willing to operate API.                                                                                                         
                                                                                                                                
MR. WALL offered his belief  that although they had conversations                                                               
about it in the past, he had  not asked directly.  He shared that                                                               
there was  some concern  for how  fast Providence  Alaska Medical                                                               
Center could have been ready.                                                                                                   
                                                                                                                                
CO-CHAIR  SPOHNHOLZ  asked   whether  Providence  Alaska  Medical                                                               
Center  had   been  asked  specifically   and  under   what  time                                                               
constraints they would be able to perform.                                                                                      
                                                                                                                                
MR. WALL  replied that they  had this general  conversation prior                                                               
to this emergency.                                                                                                              
                                                                                                                                
CO-CHAIR SPOHNHOLZ emphasized that this  was in contrast with her                                                               
conversations with  Providence Alaska  Medical Center,  which had                                                               
stated  that  they were  not  asked  and  were  not told  that  a                                                               
contract to  run API  was being undertaken,  but that  they would                                                               
have liked to bid on such a contract.                                                                                           
                                                                                                                                
MR.  WALL replied  that  there had  been  a general  conversation                                                               
prior to this,  noting that Providence Alaska  Medical Center had                                                               
sent a  letter to the  House Health and Social  Services Standing                                                               
Committee sharing the type of care  and the time frame they could                                                               
offer.                                                                                                                          
                                                                                                                                
4:18:14 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SPOHNHOLZ  declared that,  as Providence  Alaska Medical                                                               
Center was  a place committed  hospital which provides  a similar                                                               
level of  care in  the State  of Alaska, as  well as  seven other                                                               
states,  she was  perplexed  that  there had  not  been a  direct                                                               
conversation as a crisis was  looming.  She directed attention to                                                               
the  e-mail  dated  January  22,  in which  it  was  stated  that                                                               
decertification  of API  would mean  the loss  of $37  million of                                                               
federal funding.   Subsequently, in testimony to  both the Senate                                                               
and  House  committees it  was  stated  this  loss would  be  $23                                                               
million in federal funds.  Finally,  a fiscal note attached to HB                                                               
86, regarding the prevention of  privatization of API, stated the                                                               
amount  to be  $12 million  of federal  funds.   She asked  which                                                               
figure was true.                                                                                                                
                                                                                                                                
MR.  WALL stated  that this  depended on  what federal  funds and                                                               
what time period  as there were many separate  federal funds, not                                                               
all of them Medicaid, which were directed to API.                                                                               
                                                                                                                                
CO-CHAIR SPOHNHOLZ asked about the  federal funds for fiscal year                                                               
(FY) 20.                                                                                                                        
                                                                                                                                
MR. WALL said that he would get those exact numbers.                                                                            
                                                                                                                                
CO-CHAIR SPOHNHOLZ expressed concern  for the wide discrepancy to                                                               
the numbers presented on the record.   She declared that this was                                                               
a  real  problem.   This  was  a  case  statement for  an  urgent                                                               
situation, and  it was necessary  for those  supporting documents                                                               
to be  accurate and consistent.   She emphasized that it  made it                                                               
difficult  to trust  the veracity  of these  statements when  the                                                               
statements changed over time.                                                                                                   
                                                                                                                                
MR.  WALL  offered his  belief  that  the differences  for  these                                                               
numbers had  already been explained  by the Department  of Health                                                               
and  Social Services  to  the House  Health  and Social  Services                                                               
Standing Committee.   In response, he  said that he did  not have                                                               
the numbers with him.                                                                                                           
                                                                                                                                
CO-CHAIR SPOHNHOLZ, referencing the  Wellpath contract, asked who                                                               
would be  doing the medical  billing and financial  management at                                                               
API.                                                                                                                            
                                                                                                                                
MR. WALL  said that the  billing for patient  activity, including                                                               
Medicaid, would  be done by the  vendor but those funds  would go                                                               
back to the state.                                                                                                              
                                                                                                                                
CO-CHAIR  SPOHNHOLZ asked  if the  financial management  would be                                                               
done by the vendor or the department.                                                                                           
                                                                                                                                
MR.  WALL replied  that the  facility  and the  structure at  API                                                               
would remain  owned by the  state but  would be run  by contract.                                                               
In response to Co-Chair Spohnholz,  he said that the current food                                                               
service  contract was  up for  renewal and  the department  would                                                               
have "that conversation when the time comes."                                                                                   
                                                                                                                                
CO-CHAIR SPOHNHOLZ asked  if there would be  an additional fiscal                                                               
note to  fund these contracts  which were not  currently included                                                               
in the budget.                                                                                                                  
                                                                                                                                
MR.  WALL offered  his belief  that  these were  included in  the                                                               
"pass-through cost"  and said that  he would supply  the specific                                                               
numbers.                                                                                                                        
                                                                                                                                
4:22:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX  asked  whether   the  conclusion  by  the                                                               
Department  of  Health  and  Social   Services  was  regarded  as                                                               
evidence in the discussion for a single source contract request.                                                                
                                                                                                                                
MR. SOZA  explained that written  testimony becomes  evidence and                                                               
part  of the  file in  the single  source contract  request.   In                                                               
response  to Representative  LeDoux,  he said  that the  solution                                                               
presented  by Mr.  Wall was  similar to  evidence presented  by a                                                               
witness on the stand in a courtroom trial.                                                                                      
                                                                                                                                
MR. WALL explained that there had  been a search for solutions to                                                               
the API  problems which did  not include "any sort  of takeover."                                                               
He acknowledged that the problems at  API were known prior to the                                                               
emergency situation,  as "beds were closed,  there weren't enough                                                               
providers,  there  was an  unsafe  work  environment, there  were                                                               
findings  from  many  different organizations,  and  so  we  were                                                               
looking  for  solutions  to  those problems  in  advance  of  any                                                               
decision that we  made in this procurement."  He  stated that the                                                               
procurement  was  the  result  of  an  emergency  situation  that                                                               
required immediate  response.  He acknowledged  that the decision                                                               
for  privatization was  not "necessarily  done under  procurement                                                               
law.  It was done under  Title 47.32 which gives the Commissioner                                                               
of [Department  of] Health and  Social Services the  authority to                                                               
step into  any facility licensed  by the state that  has patients                                                               
that in  jeopardy of life,  limb, or  eyesight."  He  stated that                                                               
the procurement process had allowed  the commissioner to exercise                                                               
that authority.  He noted  that, although the department had been                                                               
looking for solutions  to other problems prior to  this, this was                                                               
not a solution that they had planned for ahead.                                                                                 
                                                                                                                                
4:26:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  relayed that  she was really  confused, as                                                               
testimony for  the past  one- and one-half  hours had  been about                                                               
procurement,  and now  she  "was hearing  that  this wasn't  done                                                               
under the procurement policy, it was done under something else."                                                                
                                                                                                                                
MR. WALL  declared that this  was done under the  procurement law                                                               
and that the department had  followed procurement rules.  He said                                                               
that  the  decision  for  the  commissioner to  step  in  was  an                                                               
exercise of  Title 47,  and not an  exercise of  the procurement,                                                               
per se.                                                                                                                         
                                                                                                                                
CO-CHAIR   KREISS-TOMKINS   shared    that   the   request   from                                                               
Representative  LeDoux had  been  for  what constituted  evidence                                                               
when a procurement decision for  a sole source contract was being                                                               
made.                                                                                                                           
                                                                                                                                
REPRESENTATIVE LEDOUX asked for  clarification from Mr. Soza that                                                               
the decision  to approve this  was his decision and  his decision                                                               
alone.   She  pointed out  that he  had not  investigated whether                                                               
there were  any lawsuits, judgements,  or litigation  against the                                                               
provider.    She asked  who  was  responsible to  determine  this                                                               
information.                                                                                                                    
                                                                                                                                
MR.  SOZA expressed  his agreement  that "part  of that  does lie                                                               
with us in  procurement to look at vendors  capability to perform                                                               
under  a contract,  to perform  the services  that they  say they                                                               
will."   In a situation like  this, his office would  rely on the                                                               
agency and its procurement staff to  have done due diligence on a                                                               
vendor who  was presented as  the only capable vendor  that could                                                               
perform   the  services.     He   acknowledged  that   the  final                                                               
determination was his responsibility.                                                                                           
                                                                                                                                
REPRESENTATIVE LEDOUX  asked if anyone from  the agency discussed                                                               
these judgements or litigations against the vendor.                                                                             
                                                                                                                                
MR. SOZA replied, "no."                                                                                                         
                                                                                                                                
4:29:32 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FIELDS  asked if Mr.  Soza would have an  opportunity to                                                               
review  the   1400  lawsuits  and  numerous   examples  of  death                                                               
resulting  from negligent  care in  other facilities  and examine                                                               
the  appropriateness  of  the  continuation  for  a  sole  source                                                               
contract  for "what  is effectively  permanent management  of API                                                               
under Wellpath."                                                                                                                
                                                                                                                                
MR. SOZA explained that the  procurement law stated that an award                                                               
could only be made to  responsive, responsible vendors.  If there                                                               
were  questions  as  to  the responsibility  of  a  vendor  under                                                               
contract,  there  were actions  that  could  be taken  to  either                                                               
investigate and remedy, or to terminate the contract.                                                                           
                                                                                                                                
MR.  WALL, in  response to  Co-Chair Fields,  replied that  there                                                               
were currently 26 patients at API.                                                                                              
                                                                                                                                
CO-CHAIR  FIELDS  offered  his understanding  that  Wellpath  was                                                               
being paid $43.7 million for  available beds, and not necessarily                                                               
beds that were filled.                                                                                                          
                                                                                                                                
MR. WALL asked if this was a reference  for Phase 1 or Phase 2 of                                                               
the contract.                                                                                                                   
                                                                                                                                
CO-CHAIR FIELDS  asked about  both as  the budget  proposal would                                                               
potentially cross over into both.                                                                                               
                                                                                                                                
MR. WALL  explained that  Phase 1  was a  $5 million  contract to                                                               
make the deliverables,  or the contract would be  terminated.  He                                                               
pointed out  that in this first  phase there was not  any payment                                                               
for beds and there was not  any medical service or clinical care.                                                               
He  reported that  Phase 2  was  paid at  a bed  rate, which  was                                                               
slightly under the  current cost for beds,  although inclusion of                                                               
the pass-through costs brought this  "just a little over what our                                                               
current cost is."                                                                                                               
                                                                                                                                
CO-CHAIR  FIELDS  asked  whether  Wellpath would  draw  the  full                                                               
contract value if the number remained about 26 patients.                                                                        
                                                                                                                                
MR. WALL  replied that this was  not correct.  He  stated that it                                                               
would be failure  for the contract if API did  not return to full                                                               
capacity of 80 beds.                                                                                                            
                                                                                                                                
CO-CHAIR  FIELDS replied  that  this was  not  what the  contract                                                               
appeared  to say.   He  asked Mr.  Soza whether  they would  have                                                               
approved the  single source contract  or done  more investigation                                                               
had   he  known   about  the   multiple  lawsuits,   deaths,  and                                                               
understaffing.                                                                                                                  
                                                                                                                                
MR. SOZA  replied:   "it certainly  would have  become a  line of                                                               
questioning  and  further   information  gathering  to  determine                                                               
exactly  the nature  of all  of that  and how  it relates  to the                                                               
responsibility of the contract."                                                                                                
                                                                                                                                
4:33:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CLAMAN asked  for an  explanation why  the second                                                               
phase of  the project was  not made  a competitive bid  given the                                                               
amount of time available.                                                                                                       
                                                                                                                                
MR. SOZA  replied that  the idea presented  had been  to maintain                                                               
stability,  as   a  switch  to  another   vendor  could  possible                                                               
jeopardize that.                                                                                                                
                                                                                                                                
REPRESENTATIVE CLAMAN asked whether it  was a typical process for                                                               
determination in any open bid contract  to factor in how well the                                                               
party had been performing.  He  said that this would not prohibit                                                               
Wellpath from competing  for Phase 2 in an open  bid process.  He                                                               
declared that he was "at a loss  as to why for Phase 2, given the                                                               
time that you  had, that you're not going and  having an open bid                                                               
for Phase  2."   He added that  the answers so  far had  not been                                                               
very compelling.                                                                                                                
                                                                                                                                
MR.  SOZA offered  his belief  that, as  this contract  was about                                                               
people, he could  "relate to instability and it  certainly had it                                                               
in my  life."  He  acknowledged that, although Wellpath  may have                                                               
prevailed in  the bid  for Phase  2 after 5  months, a  change in                                                               
vendors would have required to "essentially start over."                                                                        
                                                                                                                                
REPRESENTATIVE CLAMAN  asked what the  next plan was  if Wellpath                                                               
did not  produce the deliverables,  as there  was not even  a bid                                                               
for an alternative.                                                                                                             
                                                                                                                                
MR. SOZA  replied that  the evidence  presented to  him described                                                               
Wellpath  as   the  only  vendor  capable   of  performing  these                                                               
services.                                                                                                                       
                                                                                                                                
MR.  WALL  said  that  there  were  at  least  three  overlapping                                                               
significant dates  and requirements  from three  separate bodies.                                                               
He listed CMS  for the ongoing plans of correction  and the dates                                                               
to meet these deadlines, noting  that there were roughly 20 plans                                                               
of correction  at API.  He  reported that the other  target dates                                                               
were set  by the  joint commission,  which was  the accreditation                                                               
body, as  they also had findings  and plans of correction  at API                                                               
included  in those  20 plans.   He  added that  these dates  were                                                               
different  or overlapped  with the  dates  from CMS.   He  shared                                                               
that, as the  state's licensure body had given  API a provisional                                                               
license, June 30 was when  many of the requirement dates crossed.                                                               
He  pointed  out  that  it  was  necessary  to  do  whatever  was                                                               
important to  maintain the accreditation and  the licensure, and,                                                               
as  the  dates  were  somewhat spread  out,  the  department  was                                                               
attempting to provide  continuity over those periods  of dates as                                                               
it moved forward.                                                                                                               
                                                                                                                                
4:38:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CLAMAN  offered his  belief that,  as there  was a                                                               
lot  of uncertainty,  this  made a  compelling  case for  another                                                               
competitive bid effective July 1.                                                                                               
                                                                                                                                
MR. WALL offered  his belief that Wellpath were the  only ones to                                                               
do this  in a timely  fashion.   He acknowledged that  there were                                                               
other providers "who could do this over time."                                                                                  
                                                                                                                                
REPRESENTATIVE  CLAMAN  expressed  his understanding  for  hiring                                                               
Wellpath in February.  He  shared his concern that the department                                                               
had not  made any case  for Phase 2, as  it had been  stated that                                                               
Wellpath could be  terminated if they did not deliver.   He asked                                                               
when Wellpath was scheduled to have filled 80 beds.                                                                             
                                                                                                                                
MR.  WALL clarified  that Wellpath  only needed  to have  80 beds                                                               
prepared to be filled, and that  the current amended date was for                                                               
September 1.  He detailed that  April 15 was a decision point and                                                               
that July  1 was the  date to meet all  the goals and  that these                                                               
were the only two dates in the  contract.  He added that both had                                                               
been extended  60 days from the  original dates in order  to give                                                               
more  time to  move forward  with  the process  and complete  the                                                               
update of the feasibility study.                                                                                                
                                                                                                                                
REPRESENTATIVE CLAMAN asked Mr. Soza  at what point he could step                                                               
in and  tell the department  this would have to  be competitively                                                               
bid  as  he was  hearing  more  problems  and questions  for  the                                                               
validity of  this method.   He pointed  out that  should Wellpath                                                               
not meet  the qualifications for  Phase 1, there would  really be                                                               
issues for Phase 2.                                                                                                             
                                                                                                                                
MR. SOZA  replied that, under  procurement law, he could  do that                                                               
today.    In  further  response   to  Representative  Claman,  he                                                               
explained that  he could  step in  at any point  in which  it was                                                               
evident that  the vendor was not  capable of doing the  work.  If                                                               
they were  not a responsible party,  there was no longer  a legal                                                               
contract and it  would have to be terminated.   He declared that,                                                               
based on  the information that had  come to light, "I  don't know                                                               
where that line in the sand is right now."                                                                                      
                                                                                                                                
4:42:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE WOOL  asked about the  date for the firing  of the                                                               
two  API psychiatrists  and  whether it  had  contributed to  the                                                               
emergency.                                                                                                                      
                                                                                                                                
MR. WALL  reflected that it might  have been the second  or third                                                               
week of December.                                                                                                               
                                                                                                                                
REPRESENTATIVE WOOL asked  if that would have  elevated the state                                                               
of emergency per the CMS team of examiners.                                                                                     
                                                                                                                                
MR.  WALL  acknowledged  that  it  would  have  been  a  concern;                                                               
however,  he  explained  that  the   emergency  was  the  overall                                                               
situation of  dire emergency  as well  as the  immediate jeopardy                                                               
finding for  a single point  in time.   He stated  that emergency                                                               
could be defined by CMS citation,  or by "the state of how things                                                               
are."   He expressed  his agreement that  CMS was  concerned when                                                               
there  were only  a  certain number  of  medical prescribers  per                                                               
patient load.                                                                                                                   
                                                                                                                                
REPRESENTATIVE  WOOL  asked  about   the  difference  between  an                                                               
emergency procurement and a single source procurement.                                                                          
                                                                                                                                
MR. SOZA explained  that the emergency procurement  statute had a                                                               
different set  of requirements and  that the agency  would review                                                               
the competition practical  for the emergency situation.   He said                                                               
that it was "a very loose  regulation because it tries to account                                                               
for any type  of emergency situation that might ever  exist."  He                                                               
relayed that  the single source requirements  were more stringent                                                               
for review and  evidentiary requirements.  He said  that the main                                                               
limitation to  an emergency  procurement was  that it  could only                                                               
address a specific emergency.                                                                                                   
                                                                                                                                
REPRESENTATIVE WOOL  asked if an emergency  procurement was "more                                                               
of a short-term fix."                                                                                                           
                                                                                                                                
MR. SOZA  replied that, in general,  it would be shorter  term as                                                               
it could only address the duration of the emergency.                                                                            
                                                                                                                                
REPRESENTATIVE WOOL  reviewed the timeline, noting  that Mr. Soza                                                               
had been  contacted on  January 25 and  that the  procurement was                                                               
approved on February  7, the same day that Mr.  Soza received the                                                               
evidence.   He  asked if  Mr.  Soza had  been in  touch with  the                                                               
department  in  the  intervening  time  to  detail  the  type  of                                                               
evidence necessary.   He  offered his belief  that there  had not                                                               
been any due diligence for the evidence.                                                                                        
                                                                                                                                
MR.  SOZA  replied that  he  took  pride  in  his staff  for  its                                                               
integrity  in upholding  the procurement  process, and  that they                                                               
did  their due  diligence to  ensure the  necessary evidence  was                                                               
collected  to satisfy  the statutory  requirements.   He reported                                                               
that, with any trigger for concern,  his staff would ask for more                                                               
information.    He stated  that  the  proactive approach  by  the                                                               
Department of Health  and Social Services to  learn the necessary                                                               
evidence required  had resulted in  a quicker review, even  as it                                                               
went through the  same process and was reviewed at  the same high                                                               
level of detail as any  other single source request for alternate                                                               
procurement (RAP).  He stated that  he and his staff read all the                                                               
provided evidence.                                                                                                              
                                                                                                                                
REPRESENTATIVE  WOOL pointed  out that  this contract  was for  a                                                               
large amount of  money in a short period of  time, which Mr. Soza                                                               
had  stated  was  unusual  because it  involved  taking  care  of                                                               
vulnerable  people.   He  asked  if  Mr.  Soza should  have  been                                                               
informed  about   lawsuits,  litigation,  and  deaths   at  other                                                               
facilities run by this contractor.                                                                                              
                                                                                                                                
MR. SOZA  replied that this  would have been  helpful information                                                               
to have considered.                                                                                                             
                                                                                                                                
REPRESENTATIVE WOOL  asked when  the last time  was that  API had                                                               
been at full  capacity, noting that the hospital  in his district                                                               
had shared its problem for  transferring patients to API for long                                                               
term care.                                                                                                                      
                                                                                                                                
MR. WALL replied, "July of 2017."                                                                                               
                                                                                                                                
REPRESENTATIVE  WOOL asked  why the  capacity was  going down  so                                                               
quickly and why was there a lack of staffing at API.                                                                            
                                                                                                                                
MR. WALL  replied that  the problem  resulted from  attrition and                                                               
the  difficulty  for recruitment  and  retention  of staff.    He                                                               
expressed his  appreciation for the  efforts by the  Alaska State                                                               
Legislature  in  recruitment  and  increased pay  for  staff  but                                                               
pointed out that the "net gain  in staff is going backwards."  He                                                               
reiterated  that it  was  very difficult  to  recruit and  retain                                                               
personnel and reported that applicants  were either not qualified                                                               
or not interested after the interview.                                                                                          
                                                                                                                                
REPRESENTATIVE  WOOL asked  if Providence  Alaska Medical  Center                                                               
and other medical hospitals had the same recruitment issues.                                                                    
                                                                                                                                
MR.  WALL,  in  response,  said that  API  was  using  travelling                                                               
nurses.   He  stated that  health  care professionals  were at  a                                                               
shortage across the state and across  the nation.  He pointed out                                                               
that  the  greatest dearth  of  care  was for  psychiatric  care,                                                               
noting  that  there  were  very  few  licensed  psychiatrists  in                                                               
Alaska.                                                                                                                         
                                                                                                                                
REPRESENTATIVE  WOOL  asked  about   the  plan  for  hiring  more                                                               
psychiatrists.                                                                                                                  
                                                                                                                                
MR. WALL  offered his belief that  one of the providers  who left                                                               
had returned  to API,  and that two  more psychiatrists  had been                                                               
hired.   He added that  by the end of  April there would  be more                                                               
psychiatrist medical doctors in API  than were there in December.                                                               
He shared that "I tend to beg  a lot for help," reporting that he                                                               
had  spoken  with the  Alaska  State  Hospital and  Nursing  Home                                                               
Association and had called the  list of licensed psychiatrists in                                                               
Alaska.    He  declared  that  the greatest  need  was  for  more                                                               
qualified,   good  psychiatric   nurses.     He   pointed  to   a                                                               
misunderstanding for the  staffing of units, stating  that it was                                                               
necessary for a certain number  of staff in some units regardless                                                               
of the number of patients.                                                                                                      
                                                                                                                                
4:55:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  WOOL asked  whether Mr.  Wall had  spoken to  the                                                               
other local  hospitals, in addition to  Providence Alaska Medical                                                               
Center.                                                                                                                         
                                                                                                                                
MR. WALL clarified that Providence  Alaska Medical Center did not                                                               
do forensics  care, and  that was  the biggest  area of  need for                                                               
API, as  there were "people  backed up  in our prisons  right now                                                               
who have need of evaluation  and restorative care and nobody else                                                               
in the state does it."   He pointed out that other hospitals were                                                               
already  doing the  evaluation and  treatment, but  the forensics                                                               
was unique and very difficult.                                                                                                  
                                                                                                                                
REPRESENTATIVE WOOL opined  that the bigger problem  was that the                                                               
80 beds  were underutilized, even  as the 10 beds  designated for                                                               
forensics were not being utilized.                                                                                              
                                                                                                                                
4:59:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JACKSON stated  that "this  has been  the biggest                                                               
political theater  I've ever witnessed,  but, that's okay."   She                                                               
pointed out that  funding seemed to be the  answer to everything.                                                               
She asked  how much had been  spent on "bad behavior  last spring                                                               
on bonuses and all the  other things that Representative Co-Chair                                                               
Spohnholz has mentioned."                                                                                                       
                                                                                                                                
MR. WALL asked if she was referring to the sign-on bonuses.                                                                     
                                                                                                                                
REPRESENTATIVE JACKSON said  that she was referring  to the money                                                               
spent last spring on bonuses and other fixes at API.                                                                            
                                                                                                                                
MR. WALL  said that  he would  provide that.   He reflected  on a                                                               
presentation on February 13 [2018]  in front of Senate Health and                                                               
Social Services Standing Committee  which "reported on everything                                                               
that had  happened for bonuses  and such  until then."   He added                                                               
that he would update this to the present.                                                                                       
                                                                                                                                
REPRESENTATIVE JACKSON  opined that  the questions  regarding the                                                               
contract  seemed to  be "fear  based"  in order  to undermine  it                                                               
before results  were available.   She shared her  confidence that                                                               
the contract could be canceled at any time.                                                                                     
                                                                                                                                
MR. WALL expressed his agreement.                                                                                               
                                                                                                                                
5:01:49 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DRUMMOND reflected  on earlier  testimony by  Mr.                                                               
Wall  and  asked  about  the   original  means  of  contact  with                                                               
Wellpath.  She  asked if CMS had ever stated  that February 1 was                                                               
the last  chance for  API "to get  their ducks in  a row  or that                                                               
they would de-certify."                                                                                                         
                                                                                                                                
MR. WALL  clarified that his  first introduction to  Wellpath was                                                               
during  a  discussion  for healthcare  at  the  juvenile  justice                                                               
facilities  in  December  [2018].    He  added  that  there  were                                                               
conversations regarding  psychiatric care  at a  later date.   He                                                               
directed attention to  a letter from CMS  regarding conditions of                                                               
participation,  the February  1  date, and  the  loss of  "deemed                                                               
status" or decertification.                                                                                                     
                                                                                                                                
REPRESENTATIVE  DRUMMOND  asked  whether there  would  have  been                                                               
decertification if API did not have a contractor by February 1.                                                                 
                                                                                                                                
MR. WALL replied:   "I am surprised we were  not decertified even                                                               
with the contractor, but the answer to your question is yes."                                                                   
                                                                                                                                
5:04:40 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  ZULKOSKY   declared  that  the  timelines   offered  in                                                               
response  by the  Department of  Health and  Social Services  had                                                               
shifted and that she would  instead focus on timelines identified                                                               
from e-mails and time stamps.   She expressed concerns about pre-                                                               
supposed  outcomes that  had  pushed the  state  in a  particular                                                               
direction.   She referenced an  e-mail dated January 22  from Mr.                                                               
Wall  to  department  leadership  which indicated  that  CMS  had                                                               
discovered a  series of  immediate jeopardy,  yet the  CMS survey                                                               
team had not  arrived at API for a return  visit until January 28                                                               
when  a  violation was  discovered  which  put API  in  immediate                                                               
jeopardy on  January 29.  She  referenced additional departmental                                                               
e-mails with the  subject relating to the  privatization of state                                                               
hospitals,  and no  reference to  emergent  circumstance at  API.                                                               
She asked if there was an  intent by the Department of Health and                                                               
Social  Services throughout  this series  of events  to privatize                                                               
API, or to resolve accreditation in the related findings.                                                                       
                                                                                                                                
MR. WALL  offered his belief  that the clarification of  dates on                                                               
the  specific e-mail  had  already been  addressed  to the  House                                                               
Health and  Social Services Standing  Committee.  He  pointed out                                                               
that this  e-mail originally had an  addendum in red at  the end,                                                               
after  it had  occurred.   He  declared  that privatization  "has                                                               
never been the  point to me.   This is a matter  of patient care,                                                               
it's a matter  of how we are possibly going  to solve the problem                                                               
of an  institution that  is falling apart,  that is  failing, and                                                               
that, in any  moment, has patients and staff members  that are in                                                               
danger of  being hurt."   He suggested that  providing continuity                                                               
and consistency  in leadership within  that organization  was the                                                               
direction.   He stated that privatization  was a means to  an end                                                               
if it  was necessary.  He  emphasized that "the state  has failed                                                               
that hospital.  It has failed  its patients, and I believe it has                                                               
failed its staff."                                                                                                              
                                                                                                                                
CO-CHAIR ZULKOSKY  highlighted that  the e-mails provided  by the                                                               
department  had   indicated  that  an  individual   from  NASMHPD                                                               
(National Association  of State Mental Health  Program Directors)                                                               
had  followed  up  the discussions  for  privatization  of  state                                                               
hospitals.   She read:   "with whom  you've talked  about getting                                                               
information  on other  states experiences  with privatization  of                                                               
their state hospitals."   She pointed out  that Providence Alaska                                                               
Medical Center  had reached out  to the Department of  Health and                                                               
Social  Services several  times  over the  past  three years,  as                                                               
recently as February.  She  asked if the procurement division was                                                               
aware that local, non-profit,  established health care facilities                                                               
in Alaska  had indicated  an interest in  a partnership  with the                                                               
state on some elements of the operation of API.                                                                                 
                                                                                                                                
MR. SOZA replied "no, we were not."                                                                                             
                                                                                                                                
5:09:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  PRUITT asked  about the  Division of  Health Care                                                               
Services  and the  National Association  of  State Mental  Health                                                               
Program  Directors  (NASMHPD)  and  any  information  that  these                                                               
organizations had  provided for entities that  could provide this                                                               
service.                                                                                                                        
                                                                                                                                
MR. WALL replied  that the department was being  proactive in its                                                               
search for  solutions to  the problems  before they  reached "the                                                               
worst point."   He declared  that NASMHPD was a  tremendous, non-                                                               
profit  organization, the  association  of all  the state  mental                                                               
health directors.   He  explained that it  was a  specialty group                                                               
which helped  states with the in-patient  psychiatric process and                                                               
best practice; although they did  not specifically offer "this is                                                               
what you  should do,"  they would report  what other  states were                                                               
doing and  what had  worked.   They were  able to  address things                                                               
from  the clinical  milieu to  the structure  of states  and laws                                                               
regarding competency  evaluations.  He declared  that NASMHPD was                                                               
a group of experts that did this work on behalf of states.                                                                      
                                                                                                                                
REPRESENTATIVE PRUITT  asked if this  had been the  initial point                                                               
of information regarding Wellpath.                                                                                              
                                                                                                                                
MR.  WALL  offered  his  belief   that  Wellpath  may  have  been                                                               
discussed during a  telephone conversation.  He  reported that he                                                               
had  called NASMHPD  almost immediately  upon his  appointment to                                                               
his   current  position,   explained  the   current  issues   and                                                               
situation, and asked for recommendations.                                                                                       
                                                                                                                                
REPRESENTATIVE  PRUITT  asked  if  this  was  comparable  to  the                                                               
National  Conference of  State Legislatures  and  the Council  of                                                               
State  Governments,  as an  equivalent  for  state mental  health                                                               
operators.                                                                                                                      
                                                                                                                                
MR. WALL replied that it was a good analogy.                                                                                    
                                                                                                                                
REPRESENTATIVE  PRUITT offered  his belief  that it  was Wellpath                                                               
that had been referenced by  NASMHPD in the e-mail dated February                                                               
7.                                                                                                                              
                                                                                                                                
MR.  WALL   opined  that,  after  the   initial  introduction  to                                                               
Wellpath,  he  had  asked  about  Wellpath  during  his  on-going                                                               
conversations with NASMHPD.                                                                                                     
                                                                                                                                
REPRESENTATIVE PRUITT questioned whether  Wellpath only worked in                                                               
mental health hospitals,  or if they also  worked in correctional                                                               
facilities.                                                                                                                     
                                                                                                                                
MR. WALL stated  that he was not an authority  on the company and                                                               
pointed  out that  representatives  from  Wellpath had  testified                                                               
before the committee.   He offered that the  majority of lawsuits                                                               
associated with the  parent company were on  the corrections side                                                               
of  the  business,  although  he   did  not  know  the  corporate                                                               
structure.   He  stated that  the hospitals  run by  the Wellpath                                                               
agency,  as well  as the  state  officials in  those states,  had                                                               
shared glowing recommendations.                                                                                                 
                                                                                                                                
REPRESENTATIVE  PRUITT reported  that previous  testimony to  the                                                               
House  Health   and  Social  Services  Standing   Committee  from                                                               
Wellpath had  indicated that most  of the lawsuits were  from the                                                               
corrections side of the company.                                                                                                
                                                                                                                                
MR. WALL pointed  out that API also had lawsuits  against it.  He                                                               
declared that this was a  litigious field of work, and everything                                                               
about this field had legal overtones.                                                                                           
                                                                                                                                
REPRESENTATIVE PRUITT  offered his belief that  CMS had indicated                                                               
through its investigation that there  were instances of immediate                                                               
jeopardy discovered,  and that the provider  was so non-compliant                                                               
that there was  a concern for potential harm or  impairment to an                                                               
individual.   He  asked  whether Mr.  Wall,  in hindsight,  still                                                               
believed that  this was the  best course  of action for  the most                                                               
vulnerable  people at  API.   He  stated that  his  care was  for                                                               
providing "the best  thing for those people who happen  to be the                                                               
patients there."                                                                                                                
                                                                                                                                
MR. WALL  said that he  did feel he  had made the  best decision.                                                               
He expressed his  desire that others could see  the challenges to                                                               
the care providers and advocates, as  this group of people had no                                                               
voice.   He pointed  out that  a lot  of treatment  was initially                                                               
against the  patient's will  although when  they "come  back into                                                               
compliance with treatment  in their right mind then  they know it                                                               
was the  right thing to  do."  He declared  that this was  a very                                                               
difficult field,  and that the  decisions were ever  changing and                                                               
made it feel like an ongoing  battlefield.  He offered his belief                                                               
that something had to  be done in a major way  in order to effect                                                               
safety and ongoing change in the hospital for our patients.                                                                     
                                                                                                                                
5:18:07 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TARR asked what could  have been done differently.                                                               
She pointed out that the issues  at API were a known problem, and                                                               
that  three individuals  had resigned  in  mid-September with  an                                                               
entirely new leadership  put in place.  She added  that the FY 19                                                               
budget had  included additional funding for  salary increases and                                                               
the hiring  of 20 new  staff at API.   She reiterated that  a new                                                               
administration  had  been  elected,  knowing  that  there  was  a                                                               
problem at  API.  Even though  there was new leadership,  and the                                                               
budget had  been increased  to fill  staff positions,  instead of                                                               
identifying   the  problems   to  make   them  a   priority,  the                                                               
administration,  on November  15,  had  forced the  "resignations                                                               
from  all state  employees."    She pointed  out  that this  only                                                               
served to  further increase the disruption  at API as two  of the                                                               
doctors  refused to  participate "in  what they  felt like  was a                                                               
partisan  shakedown,  like  some  kind  of  political  allegiance                                                               
rather than the  commitment to their patients."   She stated that                                                               
this action  could have  been done  differently.   She continued,                                                               
noting that  the new  administration took  office on  December 3,                                                               
"fully  aware  of all  these  problems,  already two  weeks  into                                                               
firing people, don't change course."   She declared that it would                                                               
have  been   possible  to  go  through   the  proper  procurement                                                               
procedure for a  contract.  She reported that  many API employees                                                               
had contacted legislators expressing  fear for losing their jobs.                                                               
She  acknowledged   that,  although   these  problems   had  been                                                               
mounting, she was not convinced that  this was the only option to                                                               
address these problems.  She  addressed Mr. Wall, and pointed out                                                               
that, as he  had a lot of experience in  the Department of Health                                                               
and Social  Services, he had full  knowledge of the problem.   He                                                               
could  have  made this  a  number  one priority  and  immediately                                                               
entered into  a proper procurement procedure  without firing some                                                               
of  the  most difficult  to  find  professionals in  this  field.                                                               
There would not  have been the loss of key  professionals to help                                                               
address the  problem but  would have instead  allowed a  focus on                                                               
the necessary  staff hiring.   She reminded that the  problem had                                                               
already  been identified  by the  funding for  20 new  positions.                                                               
Instead, "all  of that was  just sort  of thrown by  the wayside,                                                               
and it  feels very arbitrary  that instead this was  just plopped                                                               
in  place  of everything  that  had  happened  before it."    She                                                               
declared that  she was  aware of  "a completely  alternative path                                                               
that could have  been taken that maintained  safety for patients,                                                               
that maintained  key professionals at the  institution, that gave                                                               
more support."   She added that  the staff was very  receptive to                                                               
more training.   She pointed to the first  document received from                                                               
Wellpath, dated January 21, which  would have required many weeks                                                               
to  prepare.   She stated  that it  was clear  that conversations                                                               
were taking place before there  was any e-mail proof, noting that                                                               
the first report  referenced long term privatization.   She asked                                                               
why the alternative path had not been taken.                                                                                    
                                                                                                                                
MR. WALL  stated that, in  actuality, "that alternative  path was                                                               
being  taken."   He  clarified that  he had  been  gone from  the                                                               
department  for  three years,  and  that  API  had not  had  full                                                               
capacity since 2017.  He stated  that he "was not entirely in the                                                               
know," that  he did  not know  where things were  in the  plan of                                                               
correction  process.   He  added that  the  180-day deadline  had                                                               
already  been  passed  when  he returned  to  the  department  on                                                               
December 3.  He declared  that the department had been pro-active                                                               
by putting  things out for  procurement and looking at  a longer-                                                               
term process.  He declared that  everything was on the table in a                                                               
review for solutions,  and that there was  not any pre-determined                                                               
idea  or  course of  action.    He  shared that  the  discussions                                                               
included what  had happened  in other  states, how  problems were                                                               
fixed,  how criminal  cases were  handled, and  how the  Title 47                                                               
process  was  to  be  fixed  in  Alaska.    He  stated  that  the                                                               
department had been seeking information  "in order to roll things                                                               
out in  a much more  languid pace."   That would have  been great                                                               
had  they  not  been  forced  in  early  February  to  make  this                                                               
decision.   He  acknowledged  that, although  there were  surface                                                               
appearances  that everything  had  been  pre-determined, "man,  I                                                               
wish  I was  that smart."   They  were looking  for solutions  to                                                               
problems,  with  nothing off  the  table,  and planning  to  roll                                                               
things out  methodically to fix  those problems.  He  listed some                                                               
of  the possible  actions:   contracting  out  the medical  care,                                                               
contracting with  an administrative  services organization  to do                                                               
the  plans of  correction,  contracting out  other pieces,  doing                                                               
nothing, having an  entire privatization, having one  expert or a                                                               
team of experts, and "looking  at everything we possibly could do                                                               
to  fix  this  problem."    This had  been  the  plan  until  the                                                               
immediate jeopardy occurred.  He  expressed his understanding for                                                               
her viewpoint, but  declared "our hand was forced, and  I wish it                                                               
hadn't a been that way."  He  stated his desire to roll things in                                                               
at  a much  more languid  pace  and for  API  not to  be in  this                                                               
situation.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  TARR pointed  out  that the  January 21  proposal                                                               
from  Wellpath proposed  the provision  of treatment  and support                                                               
services  and  total  facility  management  for  API,  which,  it                                                               
appeared, had been the intention  of Wellpath since "the get-go."                                                               
She declared  that this  was inconsistent  with the  testimony by                                                               
Mr. Wall.  She offered  her belief that the emergency procurement                                                               
would have been  appropriate for a short duration  while a proper                                                               
procurement procedure  could have been presented  for a long-term                                                               
contract.  She stated:  "I think we did it wrong."                                                                              
                                                                                                                                
5:26:23 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  KREISS-TOMKINS, noting  that there  had been  a lot  of                                                               
attention and  scrutiny, and he  opined that this was  a critical                                                               
juncture for the procurement policy.   He offered his belief that                                                               
the   role  of   chief   procurement   officer  was   politically                                                               
independent.   [Mr.  Soza  indicated that  this  was an  accurate                                                               
statement.]   He asked whether, with  additional information, Mr.                                                               
Soza had  the ability  in his "present  position in  this present                                                               
climate"  to "pull  the  plug" for  proceeding  with this  single                                                               
source contract.   He asked  Mr. Soza  if, when the  proposal had                                                               
been presented  to him on February  7, he had the  ability to say                                                               
"no, there is  not sufficient evidence, or this does  not seem in                                                               
the best interest of the State of Alaska."                                                                                      
                                                                                                                                
MR. SOZA  replied that,  if the  evidence had  not been  there on                                                               
February 7  that met the  statutory requirements,  his department                                                               
could have  said "no, this  isn't the  way to proceed"  and "that                                                               
call could have been made."                                                                                                     
                                                                                                                                
CO-CHAIR KREISS-TOMKINS  asked if Mr.  Soza felt that he  had the                                                               
independence on that day to make that call.                                                                                     
                                                                                                                                
MR. SOZA  offered, as  an analogy  to his  position, that  he was                                                               
"Switzerland,  we're  comparing what's  presented  to  us to  the                                                               
law."  He noted that he  was engaged with the information [Due to                                                               
technical  difficulties  this  was   not  on  the  recording  but                                                               
reconstructed  from the  Gavel Alaska  recording.] that  had been                                                               
given to him  and it went through the review  process, at the end                                                               
of the  day it was  approved.  He shared  that, as he  had worked                                                               
with  the  department  leadership   and  the  assistant  attorney                                                               
general, the  level of  scrutiny that this  was getting  prior to                                                               
his reception of  the application had felt sufficient.   "It felt                                                               
like a lot of care was  being put into ensuring that the evidence                                                               
being provided was going to  meet our statutory requirement."  He                                                               
acknowledged  that he  had the  independence to  go back  and ask                                                               
more  questions and  he had  not because  he felt  what had  been                                                               
given to him had met the statutory requirements.                                                                                
                                                                                                                                
CO-CHAIR KREISS-TOMKINS  asked whether, in  yes or no  terms, Mr.                                                               
Soza felt he  had the political independence and  could have said                                                               
no had he felt it was warranted.                                                                                                
                                                                                                                                
MR. SOZA  agreed that he  could have  said no, although  it would                                                               
have required a  "different set of talks."  He  added that, if he                                                               
did  not   feel  that   the  evidence   had  met   the  statutory                                                               
requirements, he  could have  and would have  gone back  for more                                                               
information "or said no at that point."                                                                                         
                                                                                                                                
5:31:07 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Health  and  Social  Services   Standing  Committee  meeting  was                                                               
adjourned at 5:31 p.m.