Legislature(1999 - 2000)
05/04/1999 01:15 PM House JUD
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE JUDICIARY STANDING COMMITTEE
May 4, 1999
1:15 p.m.
MEMBERS PRESENT
Representative Pete Kott, Chairman
Representative Joe Green
Representative Norman Rokeberg
Representative Jeannette James
Representative Lisa Murkowski
Representative Eric Croft
Representative Beth Kerttula
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 141
"An Act relating to construction contracts and subcontractors;
relating to design-build construction contracts; and providing for
an effective date."
- HEARD AND HELD
(* First public hearing)
PREVIOUS ACTION
BILL: SB 141
SHORT TITLE: PROCUREMENT: CONTRACTS/SUBCONTRACTS
SPONSOR(S): SENATOR(S) LEMAN BY REQUEST
Jrn-Date Jrn-Page Action
4/12/99 879 (S) READ THE FIRST TIME - REFERRAL(S)
4/12/99 879 (S) L&C
4/20/99 (S) L&C AT 1:30 PM BELTZ 211
4/20/99 (S) MOVED CS (L&C) OUT OF COMMITTEE
(S) MINUTES(L&C)
4/21/99 985 (S) L&C RPT CS 4DP SAME TITLE
4/21/99 985 (S) DP: MACKIE, LEMAN, HOFFMAN, TIM KELLY
4/21/99 985 (S) ZERO FISCAL NOTE (DOT)
4/22/99 (S) RLS AT 12:05 PM FAHRENKAMP 203
4/22/99 (S) MINUTE(RLS)
4/23/99 1064 (S) RULES TO CALENDAR AND 1 OR 4/23/99
4/23/99 1064 (S) READ THE SECOND TIME
4/23/99 1064 (S) L&C CS ADOPTED UNAN CONSENT
4/23/99 1064 (S) ADVANCED TO THIRD READING UNAN
CONSENT
4/23/99 1065 (S) READ THE THIRD TIME CSSB 141(L&C)
4/23/99 1065 (S) PASSED Y20 N-
4/23/99 1065 (S) EFFECTIVE DATE(S) SAME AS PASSAGE
4/23/99 1071 (S) TRANSMITTED TO (H)
4/27/99 1020 (H) READ THE FIRST TIME - REFERRAL(S)
4/27/99 1020 (H) L&C
4/28/99 (H) L&C AT 3:15 PM CAPITOL 17
4/28/99 (H) MOVED HCS CSSB 141(L&C) OUT OF
COMMITTEE
4/28/99 (H) MINUTE(L&C)
4/29/99 1071 (H) L&C RPT HCS(L&C) 2DP 2NR 1AM
4/29/99 1071 (H) DP: ROKEBERG, HARRIS; NR: CISSNA,
4/29/99 1071 (H) HALCRO; AM: MURKOWSKI
4/29/99 1071 (H) SENATE ZERO FISCAL NOTE (DOT) 4/21/99
4/29/99 1071 (H) REFERRED TO RULES
4/30/99 1122 (H) JUD REFERRAL ADDED
5/04/99 (H) JUD AT 1:00 PM CAPITOL 120
WITNESS REGISTER
ANNETTE KREITZER, Legislative Assistant
to Senator Loren Leman
Alaska State Legislature
Capitol Building, Room 115
Juneau, Alaska 99801
Telephone: (907) 465-2095
POSITION STATEMENT: Introduced SB 141.
JEREMY KERR, Student Intern
for Senator Loren Leman
Alaska State Legislature
Capitol Building, Room 115
Juneau, Alaska 99801
Telephone: (907) 465-2095
POSITION STATEMENT: Presented sponsor statement for SB 141.
DAVID ROGERS, Representative
City of Delta Junction
P.O. Box 33930
Juneau, Alaska 99803
Telephone: (907) 586-1107
POSITION STATEMENT: Testified on SB 141.
RICK JOHNSON, Member
Delta Junction City Council
P.O. Box 877
Delta Junction, Alaska 99737
Telephone: (907) 895-4194
POSITION STATEMENT: Testified on SB 141.
BRIAN ROGERS, Advisor
to the City Attorney
City of Delta Junction
751 Old Richardson Highway
Fairbanks, Alaska 99701
Telephone: (907) 452-2461
POSITION STATEMENT: Testified on SB 141.
JIM DeWITT, City Attorney
City of Delta Junction
100 Cushman Street, Suite 500
Fairbanks, Alaska 99701
Telephone: (907) 452-8486
POSITION STATEMENT: Testified on SB 141.
THERESA BANNISTER, Attorney
Legislative Legal Counsel
Legislative Legal and Research Services
Legislative Affairs Agency
130 Seward Street, Suite 409
Juneau, Alaska 99801-2105
Telephone: (907) 465-2450
POSITION STATEMENT: Testified on SB 141.
LANE McCOTTER, Director
of New Business Development
Management and Training Corporation
Address not provided
Telephone: (Not provided)
POSITION STATEMENT: Testified on SB 141.
ROY GILBERTSON, Mayor
City of Delta Junction
P.O. Box 487
Delta Junction, Alaska 99737
Telephone: (907) 895-4663
POSITION STATEMENT: Testified on SB 141.
K. LESLIE KIRK, Colonel (retired)
Fort Greely
P.O. Box 261
Delta Junction, Alaska 99737
Telephone: (907) 895-4047
POSITION STATEMENT: Testified on SB 141.
DENNIS POSHARD, Legislative Liaison/Special Assistant
Office of the Commissioner
Department of Transportation
and Public Facilities
3132 Channel Drive
Juneau, Alaska 99801-7898
Telephone: (907) 465-3904
POSITION STATEMENT: Testified on SB 141.
RON LORENSEN, Attorney
Simpson Tillinghast Sorensen and Lorensen
One Sealaska Plaza, Suite 300
Juneau, Alaska 99801
Telephone: (907) 586-1400
POSITION STATEMENT: Testified on SB 141.
GARY DAMRON, Legislative Liaison
Public Safety Employees Association
P.O. Box 772592
Eagle River, Alaska 99577
Telephone: (907) 694-7099
POSITION STATEMENT: Testified on SB 141.
DIANA KASSIE FRARRAR
P.O. Box 57
Delta Junction, Alaska 99737
Telephone: (907) 895-4282
POSITION STATEMENT: Testified on SB 141.
LAMAR COTTEN, Deputy Commissioner
Department of Community and Regional Affair
P.O. Box 112100
Juneau, Alaska 99811-2100
Telephone: (907) 465-4700
POSITION STATEMENT: Testified on SB 141.
MARJORIE VANDOR, Assistant Attorney General
Governmental Affairs Section
Civil Division
Department of Law
P.O. Box 110300
Juneau, Alaska 99811-0300
Telephone: (907) 465-3600
POSITION STATEMENT: Testified on SB 141.
DON McCLINTOCK, Attorney at Law
Ashburn and Mason
1130 West Sixth Avenue, Suite 100
Anchorage, Alaska 99501-5914
Telephone: (907) 276-4331
POSITION STATEMENT: Testified on SB 141.
PATRICK SCHLICHTING
H.C. 60 Box 3050
Delta Junction, Alaska 99737
Telephone: (907) 895-4896
POSITION STATEMENT: Testified on SB 141.
WAYNE CARPENTER
P.O. Box 765
Delta Junction, Alaska 99737
Telephone: (907) 895-4071
POSITION STATEMENT: Testified on SB 141.
MARGARET PUGH, Commissioner
Department of Corrections
240 Main Street, Suite 700
Juneau, Alaska 99801
Telephone: (907) 465-4652
POSITION STATEMENT: Testified on SB 141.
RUSSELL BOWDRE
P.O. Box 1048
Delta Junction, Alaska 99737
Telephone: (907) 895-4328
POSITION STATEMENT: Testified on SB 141.
CARMEN CARPENTER
P.O. Box 765
Delta Junction, Alaska 99737
Telephone: (907) 895-4071
POSITION STATEMENT: Testified on SB 141.
MICHAEL KINGSTON
P.O. Box 545
Delta Junction, Alaska 99737
Telephone: (907) 895-1011
POSITION STATEMENT: Testified on SB 141.
MARY ELLEN LUCAS
P.O. Box 1084
Delta Junction, Alaska 99737
Telephone: (907) 895-4576
POSITION STATEMENT: Testified on SB 141.
SAM DIGHTON
P.O. Box 121
Delta Junction, Alaska 99737
Telephone: (907) 895-4186
POSITION STATEMENT: Testified on SB 141.
DEAN WILLIAM CUMMINGS
P.O. Box 737
Delta Junction, Alaska 99737
Telephone: (907) 895-1010
POSITION STATEMENT: Testified on SB 141.
SHELLIE MATHEWS, Member
Citizens for Positive Reuse
P.O. Box 236
Delta Junction, Alaska 99737
Telephone: (907) 895-4039
POSITION STATEMENT: Testified on SB 141.
NANCI RUTHSCHILD-KENNEDY
P.O. Box 1323
Delta Junction, Alaska 99737
Telephone: (907) 895-5134
POSITION STATEMENT: Testified on SB 141.
MICHELLE TRAINOR
P.O. Box 324
Delta Junction, Alaska 99737
Telephone: (907) 895-4254
POSITION STATEMENT: Testified on SB 141.
BILL JOHNSON
P.O. Box 236
Delta Junction, Alaska 99737
Telephone: (907) 895-4039
POSITION STATEMENT: Testified on SB 141.
P.R. MILLER
P.O. Box 384
Delta Junction, Alaska 99737
Telephone: (907) 895-4493
POSITION STATEMENT: Testified on SB 141.
ACTION NARRATIVE
TAPE 99-50, SIDE A
Number 0001
CHAIRMAN PETE KOTT called the House Judiciary Standing Committee
meeting to order at 1:15 p.m. Members present at the call to order
were Representatives Kott, Green, Rokeberg, James, Murkowski, Croft
and Kerttula.
SB 141 - PROCUREMENT: CONTRACTS/SUBCONTRACTS
CHAIRMAN KOTT announced the only order of business today is Senate
Bill No. 141, "An Act relating to construction contracts and
subcontractors; relating to design-build construction contracts;
and providing for an effective date."
ANNETTE KREITZER, Legislative Assistant to Senator Loren Leman,
Alaska State Legislature, came before the committee to present the
sponsor statement. She explained that Senator Leman introduced
this bill at the request of the Department of Transportation and
Public Facilities. She asked Jeremy Kerr to make his presentation.
Number 0139
JEREMY KERR, Student Intern for Senator Loren Leman, Alaska State
Legislature, came before the committee. He informed the committee
that SB 141 was introduced at the request of the Department of
Transportation and Public Facilities (DOT/PF) to give the
department greater flexibility in contracts known as design-build.
A design-build contract is one in which the owner, in this case the
state, chooses a contractor that will build and design a project.
He cited the Whittier tunnel as an example of this. The more
typical contract is one in which the owner picks a design, and then
the contractor builds according to that design. Current law states
that construction contractors must list the subcontractors they
plan on using within five days of the award of a contract. Because
of the nature of design-build contracts, it is not always possible
for the contractor to have identified the necessary subcontractors.
For example, a construction contractor building a ferry may
suddenly realize they need to change the propulsion system, and
thus would need to change subcontractors in order to meet the
requirements of that new propulsion system. This bill gives
flexibility to DOT/PF to allow design-build contractors to provide
subcontractor information at a later date. This bill also contains
protections in that requested subcontractor changes by the primary
contractor must be in writing. He noted that the bill will only
affect state contracts.
Number 0281
MS. KREITZER pointed out that the House Labor and Commerce Standing
Committee amended the bill, adding new Sections 7 and 8. Senator
Leman had no objection to that amendment because he understood that
the amendment was not controversial and the Administration
supported this amendment. However, Senator Leman was contacted by
Mr. Springer, Executive Director, Associate General Contractors
(AGC), regarding problems with Section 3. The language in Section
3 [page 2, lines 19-26] was put in at the request of the Alaska
Professional Design Council. Senator Leman believes that this
language makes no substantive changes to the law and merely
provides clarity. The language in Section 3 would not increase or
decrease the design-build contracts that the state would contract
to do. Section 3 is not a make-or-break issue on this bill.
Number 0416
REPRESENTATIVE ROKEBERG said there was some misunderstanding in the
House Labor and Commerce Standing Committee. He asked
Representative Murkowski to review that section for the record to
ensure that has been addressed.
REPRESENTATIVE MURKOWSKI explained that when this bill was
presented in the House Labor and Commerce Standing Committee there
really wasn't much discussion about the initial portion of the
bill. She recalled that most of the controversy or discussion
centered around Sections 7 and 8. It was only at the end of the
hearing that the House Labor and Commerce Standing Committee heard
some brief testimony about what the "meat" of the bill actually
does. She noted that she had some concerns with Section 2, which
deals with adding or replacing a listed subcontractor. She
understood, as had been explained to her in the House Labor and
Commerce Standing Committee, that a subcontractor could be removed
from a list based on written documentation provided by the
contractor; essentially a note would go to the procurement officer
saying that a subcontractor was to be removed. Upon asking whether
there was any appeal process, it was confirmed that there is no
such process. She was concerned about how that process
specifically worked, and therefore she spoke with Mark O'Brien and
Dennis Poshard from DOT/PF. Both Mr. O'Brien and Mr. Poshard
confirmed how that process works. She explained that the
subcontractor will always have a cause of action against the prime
contractor in that case. Therefore, Representative Murkowski said
her concerns were addressed and she no longer has any problem with
Section 2.
REPRESENTATIVE ROKEBERG asked Ms. Kreitzer whether that would be a
correct interpretation.
MS. KREITZER answered yes.
CHAIRMAN KOTT asked Representative Rokeberg to explain the
rationale for a memorandum dated April 27, 1999, which was
distributed to committee members.
REPRESENTATIVE ROKEBERG said that the memorandum drafted by Donald
W. McClintock III, Attorney of Ashburn and Mason, was in response
to a request made by Representative Rokeberg to legislative counsel
regarding the issue of local and special legislation and its
constitutionality. He explained that he requested and received an
opinion from Teresa Bannister, Legislative Counsel, Legal Services,
Legislative Affairs Agency, regarding the issue of local and
special legislation and its constitutionality. At that time, she
could not give or was not comfortable giving a definitive statement
on this issue. Therefore, Representative Rokeberg requested that
the House Labor and Commerce Standing Committee receive additional
opinions which resulted in the memorandum from Ashburn and Mason.
Representative Rokeberg said that he did not want to adopt or
advocate for the adoption of Section 7 in the House Labor and
Commerce Standing Committee meeting until he was satisfied that it
could not be considered local or special legislation. He informed
the committee that the memorandum from Ashburn and Mason was
delivered to Ms. Bannister. Upon Ms. Bannister's review of this
opinion and her own research, she concluded that it was not local
or special legislation. However, Ms. Bannister indicated that it
wasn't bulletproof. At that time, Representative Rokeberg said he
felt comfortable recommending to the House Labor and Commerce
Standing Committee that Section 7 be adopted. Therefore, he wanted
to enter the opinion of Ashburn and Mason into the record as it was
not done in the House Labor and Commerce Standing Committee.
REPRESENTATIVE KERTTULA asked whether the committee could obtain a
copy of Ms. Bannister's original memorandum.
REPRESENTATIVE ROKEBERG replied that Ms. Bannister's memorandum was
issued to him personally. He said he would prefer not to
distribute Ms. Bannister's memorandum because she verbally moved on
her opinion. He offered to provide Ms. Bannister's memorandum to
Representative Kerttula, but not for the record.
REPRESENTATIVE GREEN asked Ms. Kreitzer whether she has had any
response from Senator Leman on Sections 7 and 8.
MS. KREITZER answered that Senator Leman is neutral on the addition
of Sections 7 and 8 to the bill. She noted that the language "The
adoption by a municipality" in Section 7 did pose a question which
was directed to Ms. Bannister. Section 7 does apply to more than
Delta Junction due to the way that section is written. Ms.
Kreitzer didn't know whether that is problematic for this
committee.
Number 0941
DAVID ROGERS, Representative, City of Delta Junction, testified in
support of Sections 7 and 8. The amendment basically means that
the public procurement process undertaken by the City of Delta
Junction over the last several months - which included two public
meetings, one public hearing and much discussion in the community
- satisfies the requirements of HB 53 [HB 53, LEASE-PURCHASE
CORRECTIONAL FACILITIES, Twentieth Legislature]. He explained
that, among other things, HB 53 authorizes the state to enter into
an agreement with Delta Junction to lease prison facilities as long
as the prison is operated by a private, third-party vendor selected
by a process that is similar to the procedures established in AS
36.30, the state procurement code. Similar isn't defined in HB 53.
MR. DAVID ROGERS indicated that this process started competitive by
preference and concluded by necessity, in his opinion, with an
ordinance - adopted on a 6-1 vote - authorizing a sole source
contract to design, build and operate, for the first five years, a
private prison in Delta Junction. He noted that subsequent
contracts would be awarded by competitive bid. He reminded the
committee that these types of decisions are typically made behind
closed doors by government employees. Typically, there are no
public discussions or votes by elected, multi-member bodies
representing the affected population as there were in the Delta
Junction situation. Nevertheless, some people have raised concerns
about the process; there is a lawsuit brought by citizens of the
community pending. While one can definitely second guess any of
the assumptions and conclusions, Mr. David Rogers believed they
had done it right and arrived at a good decision for Delta
Junction. He indicated that the decision provides Delta Junction
with its best, and maybe only, shot at success. This amendment
will effectively ratify the [City of Delta Junction's] process,
resolving some of the most significant questions about that
process. Hopefully, this amendment will allow the city to get
started as soon as possible.
RICK JOHNSON, Member, Delta Junction City Council, informed the
committee that he is a 25-year resident of Delta Junction, who has
raised his family, has a small business and teaches school in Delta
Junction. Mr. Rick Johnson noted that he was one of the city
council members elected last October when the City of Delta
Junction chose to turn over the city council in order for some new
council members to review this large issue. He read the following
testimony:
Last winter the city council brought the question of the
private prison project to Delta Junction voters. Once
again, they [Delta Junction voters] said that we should
proceed and that is what we are trying to do. Delta
Junction is going to be in a world of hurt when Fort
Greely closes, unless this base is reused. Our best shot
for economic reuse of the base is the prison project.
The prison is controversial in our community and there is
a vocal opposition. But they [those opposing the prison]
have been in the minority both times.
Both changes in Section 7 of this bill are designed to
help the city with the goals set out in HB 53 last year
and I quote: "to take advantage of the unique opportunity
to use surplus military facilities on a road system that
are becoming available through the United States' Army's
realignment of Fort Greely's mission; to prevent and
ameliorate economic hardship in the Delta region
occasioned by the realignment, relieve overcrowding of
existing facilities within the state, and the extensive
use of out-of-state correctional facilities to house
Alaska inmates."
The legislature's intent was to provide economic
redevelopment relief to Delta Junction by seizing the
unique opportunity of using the abandoned buildings left
after the realignment of Fort Greely. At the same time
it applies to a matter of statewide concern because
capitalizing on this unique opportunity will have a
positive impact on the state by returning prisoners to
the custody of Alaska. The city is under tremendous time
pressure to move this project forward for timely
completion to even have a chance of realigning or
aligning the prison project with the closure of Fort
Greely. These pressures include the need to begin the
landfill construction and permitting this summer to
handle the demolition that will be needed for a major
conversion project. Survey work has to be done to begin
the process of land transfers.
Most importantly, we [the City of Delta Junction] have to
demonstrate to the Army that we have a viable plan to
proceed because without it we cannot. If the reuse plan
is not in acceptable form by January of 2000, then the
opportunity to seek an economic development transfer for
this project will be gone. If the prison is not ready to
operate by July of 2001, the jobs in Delta Junction will
be gone and our families will suffer. To meet this
schedule, Delta must select our design-build and initial
operations contractor now. This amendment will keep the
project on track. For the state, that means the goals of
economic redevelopment and in-state prison, our prisoner
housing can be met; and for Delta Junction, that means
our community can survive the base's closure. I would
like to thank you for helping us to meet this challenge.
CHAIRMAN KOTT asked Mr. Rick Johnson whether he said there were two
city councils, a previous one and a new one, that have reviewed
[the prison issue].
MR. RICK JOHNSON said there was a council before this committee
last year which lobbied for support for HB 53. The community
elected and turned over that council. He clarified that the Delta
Junction City Council consists of seven members, of which three new
members were elected for the regular term of office. When the new
council members took office, they reviewed this issue and the City
Council arrived at its current position with regard to the prison
issue.
CHAIRMAN KOTT asked Mr. Rick Johnson whether, prior to that
turnover, there was a vote by the public.
MR. RICK JOHNSON replied yes. In further response to Chairman
Kott, he informed the committee that there was one vote and the
community supported the proposed use of Fort Greely as a prison
facility by a 62 percent margin. In response to Representative
Rokeberg, Mr. Rick Johnson stated that the second vote was a
majority as well, however the margin was maybe only 55 percent.
REPRESENTATIVE MURKOWSKI inquired as to whether the second vote was
an identical vote.
MR. RICK JOHNSON answered yes it was, although the wording was a
bit different. He recalled that the language of the second vote
was more specific. He indicated that others could speak to that
question.
REPRESENTATIVE GREEN asked Mr. Rick Johnson whether the election of
the three new members was between the two votes on the prison.
MR. RICK JOHNSON said that the election was between the two votes.
REPRESENTATIVE GREEN mentioned that legislators have been getting
a lot of public opinion messages (POMs) stating objection to
Section 7. Representative Green surmised that these people want
the prison, but they don't want the "sole-sourcing." He asked Mr.
Rick Johnson whether that was ever an issue in any of these votes.
MR. RICK JOHNSON replied no.
Number 1468
REPRESENTATIVE ROKEBERG read from a POM received from a Delta
Junction citizen which said: "This law, if passed, sends the
message that one can just alter the original plan by just adding a
clause that benefits whoever stands to gain." He asked Mr. Rick
Johnson what that person is talking about.
MR. RICK JOHNSON commented that he thought it was a political
statement. There is a minority of constituents in the Delta
Junction area that are taking this position; to the degree that
this section helps remediate their concerns, he said "we" are in
support of it.
REPRESENTATIVE GREEN noted the vote went from 62 to 55 percent. He
indicated that he has received [POMs] that are running about three
to one against the situation brought up in the bill. He asked Mr.
Johnson whether he has an explanation for that; is there just a
vocal minority?
MR. RICK JOHNSON said that he truly believes that they are just a
vocal minority.
REPRESENTATIVE KERTTULA asked why there is a need to speed up this
process.
MR. DAVID ROGERS suggested that the testimony of Brian Rogers and
Jim DeWitt will discuss the process and the reasons for the
decision, which may put the situation in perspective.
Number 1604
BRIAN ROGERS, Advisor to the City Attorney, City of Delta Junction,
testified via teleconference from Fairbanks. He said that he would
go through the process beginning with the passage of HB 53. In
August, the state awarded a contract to Rise Alaska to review the
feasibility of a state contract for a private prison in Delta
Junction. Following that award, the city decided that it needed
some additional advising, which is when he started working for the
city. Mr. Brian Rogers explained that he basically helped the city
determine how to respond to the multiple demands of the state, the
state's contractors and the military. There was an election in
October. At that point, the city council wanted to make sure
people understood what the city was getting into. Therefore, the
city worked with the state on the feasibility study process to try
to make sure that the issues that people needed to consider
regarding the impacts of a private prison on the city and the
city's economy were understood. That led to the issuance, in
January, of the feasibility study report by Rise Alaska. A large
public hearing occurred in January. At that public hearing,
representatives of the state, the military, the city and state
contractors basically presented [the feasibility study]. He noted
that the hearing was prior to a public vote as to whether the city
should proceed.
MR. BRIAN ROGERS said that the public vote was a yes. Therefore,
he was told to go ahead and work on a request for proposals (RFP)
that would allow the city to procure both the design-build and the
operations contract. There was review regarding whether there was
the need for one RFP for construction and one for operations or a
single RFP for construction and operations. The [city] looked for
those with experience in writing RFPs for private prisons. From
that search Richard Crane was identified and brought on, with the
consent of the state, to assist the city in drafting the RFP.
During February, Mr. Crane was working on the schedule for the RFP
while Mr. DeWitt and Mr. Brian Rogers were trying to decide whether
it made more sense to proceed with one or two RFPs. They [Mr.
DeWitt and Mr. Brian Rogers] made a recommendation on the RFP
process to the city council, which voted in early March to proceed
with a single RFP for construction and operation because the issues
were so interwoven. At the same time, Mr. Crane revealed a
schedule which caused [Mr. DeWitt and Mr. Brian Rogers] to rethink
the whole process which was headed to issuance of an RFP. Mr.
Crane's schedule made it clear that the overall objective of the
city council, which was to have a prison open by the time Fort
Greely was realigned in July 2001, would not be achieved. Frankly,
going the full RFP process doesn't meet that deadline. The full
RFP process would conclude about nine months too late, which is
nine months without jobs for residents between the closure of the
base and the opening of the prison.
MR. BRIAN ROGERS informed the committee that all along the
objective has been to make this a seamless transition. Mr. Brian
Rogers said that, from the beginning, he knew that this was a
complex procurement with substantial unknowns which would make an
RFP difficult, especially since the process with the military is a
moving target. From the outset, there was substantial public
support and substantial public opposition for a private prison in
Delta Junction. Therefore, there was the knowledge that whatever
route was chosen the city could face litigation. Mr. Crane's
schedule indicated that in order to be open in 2001, construction
needed to commence beginning in the construction season in 2000.
In order to do that, some demolition work was necessary over the
winter. That demolition work required a new landfill to be
completed by September/October of 1999. Under Mr. Crane's
schedule, the RFP couldn't be awarded in time to do that landfill
work. That time trigger forced review as to whether there is a
basis for a sole source procurement since an RFP does not achieve
the procurement objective of a July 2001 opening. That is a legal
decision that the city council ultimately made. Mr. Brian Rogers
said that [the city] entered into settlement discussions with
Allvest and Delta Corrections Group, and the city began drafting a
sole source procurement. He informed the committee that there was
a public process with two city council meetings and a hearing. He
emphasized that the drafts for the sole source were posted on the
city's web site.
Number 1884
JIM DeWITT, City Attorney, City of Delta Junction, testified via
teleconference from Fairbanks. He said Mr. Brian Rogers touched on
the time constraints which was a contributing factor in the sole
source determination. As Mr. David Rogers said in his comments,
the language of Sections 7 and 8 effectively ratifies what the city
has done. In addition to the time constraints that Mr. Brian
Rogers described, there were resource constraints, complexity
issues and a host of other limits and constraints which are
outlined in the city ordinance 99-04. Mr. DeWitt believed that Mr.
David Rogers has copies of that list for those interested.
MR. DeWITT explained that in order to have land and buildings
available for a private prison, the City of Delta Junction has to
comply with applicable federal law. The [federal] government would
want a reuse plan, an economic development plan and an application
for an economic development conveyance (EDC). Furthermore, if one
wants to take possession of the property before the deed is issued,
a lease and furtherance of conveyance, which is a very substantial
amount of paper, is necessary. The City of Delta Junction can't
handle such a task on its own. Therefore, whether by sole source
or by competitive proposal, the vendor - the builder/operator - of
the private prison is going to have to assist the city in that
process. All of those things have to happen before land is
available for any purpose other than to walk around and
investigate.
MR. DeWITT noted, as Mr. Brian Rogers pointed out, that to have
that land available in a timely fashion, it needs to be surveyed
this year. The RFP process simply did not permit that. The
creation of the private prison is also going to pose new burdens on
the city's infrastructure: a new school, new city services, and
other city resources are going to be required. The city does not
have the finances to undertake those expansions, and therefore the
city would have to look to a successful proposer or sole source
vendor to provide assistance for those as well. Mr. DeWitt pointed
out that the military still operates Fort Greely and will continue
to do so until July 13, 2001. Therefore, whether by RFP or sole
source, there will have to be very close cooperation between the
vendor and the Army as well as the City of Delta Junction. There
will also have to be close coordination with the State of Alaska,
Department of Corrections. He emphasized, "It is difficult to
impossible to write an RFP to direct that level of cooperation."
This project will also require financing. The financing has to be
bridged between construction financing and permanent financing.
Furthermore, the various types of cash flow generated by the
private prison also makes preparation of an RFP extremely complex.
He informed the committee that there are known environmental
conditions which include lead-based paint and asbestos-containing
materials. That has implications for the cost of remodeling and
the disposition of the demolished materials which is related to the
landfill that Mr. Brian Rogers described.
MR. DeWITT pointed out that Allvest had a significant role in HB 53
and it also had a prior written agreement with the Delta-Greely
Community Coalition. Allvest threatened the city with legal action
to preserve rights it claimed under that written agreement. Mr.
DeWitt said that he believes, as he believed the city council
believes, that the city would have won that lawsuit. However, this
is an instance of the lawsuit being the problem as opposed to the
outcome of the lawsuit being the problem. The city has neither the
time nor the resources for the lawsuit. If the city prevails, that
resolution would come too late to allow the seamless transition
with minimal economic impact. The resolution from the lawsuit
could possibly come too late to allow the city to acquire the
property from the Army in the first place. With regard to Richard
Crane's RFP process and the time line associated with it, Mr. Crane
proposed to give interested proposers 60 days to assemble the
information in order to prepare their proposals. That time frame
was too short. No one can identify all of the issues, all the
problems and associate costs with each of them on a fixed price bid
in 60 days. The city would have been faced, in a competitive RFP
process, with repeated demands for additional time to prepare and
the threat of protest and litigation if that time wasn't granted.
Therefore, Mr. Crane's proposal to have a contract in place by
September or October was fairly optimistic, and perhaps even
unrealistic under the circumstances.
MR. DeWITT explained that taking all of those factors into account,
the city examined the State of Alaska's regulations implementing
the sole source statutes. Those regulations impose five
requirements for a sole source determination. First, the
competitive procurement has to be found to be not practicable. He
hoped that he and Mr. Brian Rogers' testimony has illustrated that
isn't the case; there was no way to make competitive procurement
practicable. Second, the sole source contract has to be found
reasonable under the circumstances. He believed that an
examination of the settlement agreement with the Delta Corrections
group and Allvest, exhibit A of the ordinance, will demonstrate
that it is imminently reasonable under all the circumstances.
Third, the sole source contract has to be in the city's best
interest. He believed that had been shown. He indicated that
examination of exhibit A, the settlement agreement, would reveal
that the city was able to obtain the concessions it needs in order
to make this process work. Fourth, the decision may not be
arbitrary or capricious. He assured the members of the committee
that this was not an arbitrary or capricious decision, but rather
a painful and difficult decision. The decision involved evolving
from a strong preference, if not overwhelming preference, for a
competitive process to the conclusion that the only chance to make
this project work would be by sole source procurement. Lastly, the
decision cannot be prompted by corruption. As Mr. Brian Rogers has
described, this was an intensely public process; there is nothing
resembling corruption in any aspect of this. He acknowledged that
it is controversial in the City of Delta Junction. However, there
has been a vote and the process is as clean as the city and he
could make it. He submitted that it is worthy of the committee's
ratification.
CHAIRMAN KOTT announced that the committee would now hear from Ms.
Bannister regarding the Ashburn and Mason memorandum.
REPRESENTATIVE ROKEBERG requested that Ms. Bannister come up to
discuss the Ashburn and Mason memorandum dated April 27, 1999. He
reiterated the scenario which led to Ms. Bannister's response to
the Ashburn and Mason memorandum. He understood from staff that,
after reviewing the Ashburn and Mason memorandum, Ms. Bannister
felt more comfortable. He stressed that he wanted to make sure
that the record is clear on Ms. Bannister's opinion and how that
fact pattern took place.
Number 2308
THERESA BANNISTER, Attorney, Legislative Legal Counsel, Legislative
Legal and Research Services, Legislative Affairs Agency, stated,
"At that time, I thought it had a better chance than maybe I do
today. But I expressed that to you; that I thought it had a chance
of being successful."
REPRESENTATIVE ROKEBERG asked Ms. Bannister whether she recalled
having a change of opinion after reading the Ashburn and Mason
memorandum.
MS. BANNISTER recalled that the Ashburn and Mason memorandum did
bring up some more details which seemed to alleviate some of her
concerns. In further response to Representative Rokeberg, Ms.
Bannister agreed with his characterization of her comments, that
[the language] wasn't "bulletproof" but better than before. She
also agreed with Representative Rokeberg that the Baxley v. State
decision lent stronger support to it not being held as local and
special legislation.
REPRESENTATIVE CROFT asked whether Ms. Bannister could put her
current thoughts regarding whether this violates the special
legislation in some sort of memorandum for him. He requested that
the memorandum include how the Baxley v. State opinion works.
REPRESENTATIVE ROKEBERG said the reason he didn't share the
memorandum was that he thought it would be confusing. He indicated
that he could provide copies of Ms. Bannister's memorandum.
REPRESENTATIVE GREEN asked Ms. Bannister whether she has read any
dissenting opinion, that this might be a violation of the single-
subject rule.
MS. BANNISTER replied she can't disclose whether something has been
submitted to her without the permission of the person who submitted
it to her.
REPRESENTATIVE ROKEBERG turned to Section 8 of the bill which was
inserted in the House Labor & Commerce Standing Committee.
TAPE 99-50, SIDE B
REPRESENTATIVE ROKEBERG noted that one of the sponsors had
indicated that Section 8, the retroactive clause, is not necessary.
He also requested the opinions of Ms. Bannister and Mr. DeWitt
regarding whether a local ordinance in Delta Junction would suffice
to replace Section 8.
Number 0019
MS. BANNISTER replied it is arguable. If it went before a court,
the court would say that the statute is operating prospectively by
ratifying what occurred in the past. A better approach would be
making it retroactive, so that it is clear to everyone that it is
operating back to March 17.
REPRESENTATIVE ROKEBERG asked Ms. Bannister whether a subsequent
ordinance would suffice, so that a retroactive provision wouldn't
be necessary.
MS. BANNISTER answered that is possible. She commented that even
doing what was done before would be alright, however that might
cause problems due to any contracts that [the City of Delta
Junction] has already done. She then stated that it wouldn't
really be an issue. Ms. Bannister concluded by saying that it is
possible for an ordinance, enacted after this bill is enacted, to
suffice without using the retroactivity clause.
REPRESENTATIVE ROKEBERG directed the same question to Mr. DeWitt.
MR. DeWITT stated that he isn't qualified to answer the
retroactivity question as a pure question of law. However, the
practical effect is to inject another two to four weeks of delay in
a process that is already seriously time bound. He said, "The
council, I assume, would be willing to adopt it again, if that were
necessary. I don't understand that there's a retroactivity problem
here. Certainly, if a court had it in front of it, I think a court
would deem the ordinance valid or invalid." Mr. DeWitt noted that
the legislature here is being asked to interpret its own prior
decision under HB 53. He concluded, "So, I would think not. I
don't pretend to expertise in the area. Again, though, we're time
bound. I have concerns about anything that injects additional
requirements of time."
Number 0132
REPRESENTATIVE CROFT asked Mr. DeWitt what claims were made by
Allvest, referring to testimony that there had been a settlement.
MR. DeWITT replied that Allvest had drafted a complaint. The
lawsuit threatened was over the city's refusal to honor the prior
commitment with the Delta-Greely Community Coalition. Mr. DeWitt
specified that he didn't want to overstate the importance of that
lawsuit as a motive for the overall settlement agreement, but it
was one reason it got on the table.
REPRESENTATIVE CROFT referred to page 6 of the ordinance that
Delta-Greely enacted, "It says here, 'Allvest has made clear to the
city that if the city proceeds to an RFP process, Allvest will seek
judicial relief on several grounds.' So, it was essentially, 'If
you seek any other bidder besides us, we'll sue?'"
MR. DeWITT replied, "Any other bidder for the builder, as distinct
from the operator. I don't understand Allvest to ever have claimed
that HB 53 gave it the right to operate, only the right to be the
builder."
REPRESENTATIVE CROFT pointed out this ordinance says [the city]
strongly disputes the claim and believed it would prevail on the
merits. Therefore, Representative Croft understood [Mr. DeWitt and
the city] to believe that was a meritorious position on Allvest's
part.
MR. DeWITT affirmed that. He recognized that the attorney for
Allvest would almost certainly disagree. However, Mr. DeWitt said
that he was not seriously troubled. He said that he was much more
troubled by the costs of defending that lawsuit and by the delay
that lawsuit would cause.
Number 0213
REPRESENTATIVE CROFT referred to the portion of the ordinance that
lists "best cases of time lines." Representative Crane understood
that in February, or possibly March, the city faced the decision of
whether to do an RFP or do this sole source. At some point in that
time frame, Mr. Crane's opinion regarding the time line came out.
Representative Croft asked when exactly the council first got
Crane's opinion that it is 60 days.
MR. DeWITT replied that it was sent to him, but he didn't have that
exact date. He offered to provide that date via fax.
REPRESENTATIVE CROFT said that from Mr. Brian Rogers' testimony, he
understood the receipt of Mr. Crane's time line to be about
February or March.
MR. DeWITT said he believed it was late February.
REPRESENTATIVE CROFT referred again to the ordinance, which lists
"best case with RFP, September or maybe early October; best case
with a sole source, April." He noted that the city wasn't going to
make that April sole source.
MR. DeWITT agreed, adding, "Perhaps May."
REPRESENTATIVE CROFT asked Mr. DeWitt whether the date of the vote
on this by the city council was March 30.
MR. DeWITT affirmed that.
Number 0279
REPRESENTATIVE CROFT referred to the "October or September date."
He asked, "If Crane was right about a 60-day time, why wouldn't
that be more like a - if it was late February or early March, early
April early May for, under Crane's estimate."
MR. DeWITT offered to send Mr. Crane's chronology, which would
provide a better answer than he could provide. "He [Mr. Crane]
laid out intervals to develop and evaluate the terms and conditions
of the RFP, obtain approval ... with the State of Alaska, develop
standards to evaluate the RFP, evaluate the RFP, negotiate the
contract, issue the notice of intent to award, let the statutory
time go by, and then award." Mr. DeWitt explained that the 60-day
evaluation amounts to approximately a third of that total time, and
as previously stated, may very well have been too short.
REPRESENTATIVE CROFT noted the almost five-month difference between
the two estimates, "May, June, July, August and part of September."
He asked whether it is that sort of time frame that is being
discussed, in reference to doing a competitive bid or doing a sole
source.
MR. DeWITT replied that the answer is yes and no. He agreed that
would be the case when reviewing the calendar intervals. However,
the practical effect would be the loss of the 1999 construction
season which caused the most consternation and alarm, for himself
and Mr. Brian Rogers. He explained that the field surveys could
not have been performed nor could the process of getting the land
filled. Furthermore, he noted that even the applications for the
economic development conveyances would have necessarily been set
over to the year 2000. "So, yes, it's calendared. No, because of
the loss of the construction season. The real delay was closer to
12 months."
Number 0363
REPRESENTATIVE CROFT referred to the city ordinance, page 6, which
says the total delay might be in the range of 14 to 18 months,
depending on appeals to the Alaska Supreme Court from a suit from
the sole source recipient of the contract. He asked, "How do we
know whether foremost in the council's mind was this 14 to 18 month
delay, based on a suit you didn't think had merit, or based on this
distinction between the RFP and sole source process?"
MR. DeWITT answered, "I can't speak for the city council as a
whole, Representative, but ... I think I can infer that all of
these were issues that went into the city council's consideration,
because they're all set out in the ordinance. It is a mix of
criteria. You've identified two of the eight or nine that are in
there."
Number 0428
LANE McCOTTER, Director of New Business Development, Management and
Training Corporation, testified via teleconference from Ogden,
Utah, where his company is headquartered. His company operates ten
private prison facilities for several states with about 7,200 beds
under contract in Utah, Texas, Arizona and California. The company
has followed this project for more than a year, and was greatly
interested in bidding on it. Mr. McCotter explained that the
company had hoped for a level playing field under the procurement
code, and for an opportunity to compete, along with other private
vendors, for this 800-bed facility. The company is very
disappointed that this is probably not going to happen. He
concluded by saying, "And we just wanted to state that we felt we
were fully qualified to finance, design, and operate this private
facility for the State of Alaska and Delta Junction."
REPRESENTATIVE GREEN asked Mr. McCotter whether their capabilities
were made known to the City of Delta Junction.
MR. McCOTTER replied that the Management and Training Corporation
had certainly tried to do that. Last year, when HB 53 was first
passed, the company began trying to pursue getting in position for
the RFP. Three "corporate people" were sent to Alaska to look at
the area in order to gain information. Initially, the company was
directed to a project manager who he believes was Sara Walker (ph)
with a company called Rise Alaska, which had performed a
feasibility study. The Management and Training Corporation
received copies of that feasibility study. Later, the company was
directed to Mr. DeWitt and his law firm, and to the web site for
this project.
MR. McCOTTER informed the committee that initially, the Management
and Training Corporation was told that this project would be out as
an RFP as early as March of 1999. Therefore, the Management and
Training Corporation contacted Mr. DeWitt's office and was told
that it would probably be a while because there were other things
going on. Later, the Management and Training Corporation was
informed that there was a partnership between Delta Junction and a
particular private vendor, Cornell [Corrections, Incorporated], who
he believed had bought out Allvest. The company was further
informed that the private vendor had offered a large sum of money
to the City of Delta Junction for this contract and thus the
project would probably not proceed to an open bid. Therefore, the
Management and Training Corporation basically closed its files on
this project because it felt that there was no longer a level
playing field and the company would not be able to compete for this
project.
Number 0579
REPRESENTATIVE GREEN asked Mr. McCotter whether, in their
evaluations, the company was able to come up with a reasonable
operating cost, or was it too superficial at the time of review?
MR. McCOTTER agreed that it was too superficial. The company had
contacted Mr. DeWitt's office to try to receive some answers, he
said, in order to do preliminary work in anticipation of an RFP.
However, the company was never able to get enough information to
put together even a bid estimate.
REPRESENTATIVE GREEN asked whether Mr. McCotter had heard the
discussion today regarding the time frame. He also asked whether
Mr. McCotter agreed with the tightness of the decision-making
process now.
MR. McCOTTER affirmed that he had heard that discussion. He stated
that if the RFP was complete, with all the necessary information,
Mr. Crane's estimate of 60 days would certainly be well within the
time frame for a company such as the Management and Training
Corporation to put together an appropriate response to that bid.
REPRESENTATIVE CROFT inquired about Mr. McCotter's firm.
MR. McCOTTER clarified that the company is the Management and
Training Corporation which has been in business for many years.
The Management and Training Corporation is probably most well
known, throughout the nation, for its Job Corps side of the house.
The Management and Training Corporation has been involved in Job
Corps for 20-30 years, and is the largest private vendor of the
federal government in Job Corps and running Job Corps centers. In
1987, the company viewed private prison operations as a natural
bridge to get into, because the company was already running
residential centers. Therefore, the Management and Training
Corporation added the security component and obtained its first
contract for the State of California, a 400-bed facility that the
company still operates. A few years later, the company opened its
first facility in Arizona. Currently, the Management and Training
Corporation has a number of facilities in Texas and the company
also operates a 400-bed facility in the State of Utah.
MR. McCOTTER informed the committee that he has only been with the
Management and Training Corporation since July of last year. Prior
to that, he was in the public sector. He reviewed his background
in corrections. For the past 14 years, he was the Director of the
Texas Department of Corrections, and then he was the Director of
the New Mexico state prison system for four years. In 1991, he
became the Director of the Utah Department of Corrections. He
pointed out that he left public corrections in 1997, after six and
a half years with the State of Utah.
Number 0710
REPRESENTATIVE JAMES asked Mr. McCotter to explain his earlier
comment that a private vendor had offered a large sum of money to
the City of Delta Junction for this contract.
MR. McCOTTER explained that the Management and Training Corporation
was waiting for the RFP to come out. Initially, the information on
the web site indicated that the RFP was anticipated in March of
1999, however that did not occur. From time to time, the company
would try to contact various entities, including the Department of
Corrections and Mr. DeWitt's office, in order to obtain answers to
questions that had arisen as well as to obtain information
regarding when that RFP could be expected. Those attempts were
made so that the company could begin putting together preliminary
information. Mr. McCotter informed the committee that about two or
three weeks ago the company heard from various sources, which he
couldn't identify, that stated this project would probably not go
out to [competitive] bid now. Furthermore, sources said that
Cornell Corrections had offered a large sum of money, on the order
of $500,000, in a settlement to the City of Delta Junction.
Therefore, Cornell Corrections had a partnership with the City of
Delta Junction, and this project would be a "sole source." So, the
Management and Training Corporation focused its efforts elsewhere.
REPRESENTATIVE MURKOWSKI returned to the time line. She referred
to Mr. McCotter's statement that a couple of weeks ago he learned
that the RFP wouldn't be coming out and the city would be looking
to a sole source. She asked whether, up to that point in time, the
information from the web site or elsewhere still indicated there
would be an RFP forthcoming.
MR. McCOTTER answered that the company thought there would be an
RFP forthcoming. The company continued to monitor the web site, as
it was told to do because additional information would be
forthcoming on this project. At that point, the company felt that
there would still be an RFP for which it could offer a competitive
bid. However, just two or three weeks ago the company was told
that [an RFP] would probably not be the case.
Number 0818
REPRESENTATIVE MURKOWSKI asked Mr. McCotter whether the Management
and Training Corporation had learned that by viewing the web site
or from elsewhere.
MR. McCOTTER informed the committee that, basically, there have
been no changes on the web site for quite some time. The company
had contacted various people that it thought might have some
knowledge of when the RFP could be anticipated. He reiterated that
information received from various sources indicated, "that it [the
project] would probably be a 'sole source' because of the
agreement, or some kind of a settlement offer, that had been
offered between the City of Delta Junction and Allvest and Cornell
Corrections. And there was a sum of money involved, probably
somewhere around $500,000."
CHAIRMAN KOTT asked Mr. McCotter how long the Management and
Training Corporation has been in corrections.
MR. McCOTTER answered that the Management and Training Corporation
has been involved in corrections since 1987 when it contracted its
first facility with the State of California.
REPRESENTATIVE ROKEBERG inquired as to whether the Management and
Training Corporation has ever bid on any RFPs in the State of
Alaska.
MR. McCOTTER replied no.
Number 0896
REPRESENTATIVE CROFT asked whether there have been any RFPs for
private prisons in the State of Alaska.
MR. McCOTTER stated that he was in public corrections until July
1997, and therefore didn't have the background to answer that
question.
REPRESENTATIVE GREEN asked Mr. McCotter whether he has or has had
operations in Palmer in the Job Corps site.
MR. McCOTTER stated that presently the Management and Training
Corporation has ten contracts in corrections for the states of
California, Arizona, Texas and Utah. Mr. McCotter specified that
the company has no operations in Alaska.
Number 0984
ROY GILBERTSON, Mayor, City of Delta Junction, testified via
teleconference from Delta Junction. He stated that when the city
council came on, after the turnover, it was faced with the
possibility of a lawsuit with (indisc.). He noted that he was on
the city council at that time and opposed to the prison. The
lawsuit led to the settlement to develop a "sole source." Mayor
Gilbertson mentioned that he wasn't very aware of Mr. McCotter
until after the "sole source" was almost completed.
CHAIRMAN KOTT asked whether Mayor Gilbertson is a recent electee to
the position of mayor.
MAYOR GILBERTSON replied yes and informed the committee that he was
elected in October of last year.
REPRESENTATIVE GREEN acknowledged that some time has been lost in
determining that there probably should be a sole source and now the
committee is being pushed hard to accept this. He asked Mayor
Gilbertson why there was a three-month gap from the time it looked
like something was going to have to be done and the present time.
Number 1142
MAYOR GILBERTSON explained that when the city council came on in
October the RFP was about eight months old and they decided to go
for another RFP in February which led to the passage of a
resolution. The passage of the resolution led to the threat of a
lawsuit which has progressed to the present situation.
REPRESENTATIVE GREEN recalled testimony that this issue began with
a popular vote of about 62 percent in support which decreased to 55
percent. Representative Green indicated that his office has
received a lot of POMs in opposition to this issue with a margin of
two or three to one. Testimony has claimed that those are a group
of dissidents. He inquired as to Mayor Gilbertson's view on that.
MAYOR GILBERTSON replied that the last advisory vote resulted in a
tie with a vote of 486 to 486. In that vote, approximately 53
percent of the city voted in support of the prison, while [47]
percent voted in opposition to it. Since that vote, he has
received several calls from people saying that the last vote was
not on the prison, but rather on the reuse of Fort Greely. Mayor
Gilbertson said that he wasn't sure how another vote, taken today,
would go.
REPRESENTATIVE JAMES informed everyone that her POMs, telephone
calls, and letters do not have the same skew as Representative
Green. She assessed, from what she has heard, that support and
opposition is split in half. She asked if that was what Mayor
Gilbertson was indicating.
MAYOR GILBERTSON commented that the 50-50 split would be a fairly
close assumption.
Number 1286
REPRESENTATIVE MURKOWSKI expressed some concern about the momentum
around the issue. Perhaps, everyone is not "on top of the steam
roller" at this point. With regards to the sentiments of the
community, Representative Murkowski didn't think the committee
wanted to tell the people in Delta Junction what is best for them.
She indicated that she is seeking a degree of comfort in that what
is happening in Juneau is a good thing for those people working and
living in Delta Junction and for Alaska as a whole.
MAYOR GILBERTSON stated that Delta Junction definitely needs the
jobs; Fort Greely is being realigned and the city will lose about
100 jobs. A lot of work has been done by the seven-member city
council, all volunteers. He pointed out that he was so overtaxed
with paperwork that it has been hard to keep up with this process.
He realized that the latest fast track occurred in an attempt to
stave off the lawsuit, and get this bill to go through. In the
mean time, he has received more calls from people that are against
it. This places Delta Junction in a difficult situation, because
it is such a small community and this is a big deal for the
community.
REPRESENTATIVE CROFT inquired about the tie vote and whether it
encompassed more than the city.
MAYOR GILBERTSON explained that it was a vote in the outlying area,
which is approximately three times the population of the City Delta
Junction. He feels that it is an overall community project, so the
outlying area was welcomed to be a part of the advisory vote. He
said that within the city limits it was 53 percent for it and 47
percent against it.
Number 1453
REPRESENTATIVE CROFT wondered whether the total area was tied,
including those within the city limits, or whether it was just
those outside the city limits.
MR. GILBERTSON clarified that the vote within the city was 118
against it and 188 for it. Outside the city limits the vote was
397 to 397.
MAYOR GILBERTSON in response to Chairman Kott, answered that his
position and the city council positions are elected positions.
CHAIRMAN KOTT related his understanding that the city council
almost unanimously supports the project. He asked Mayor Gilbertson
whether the issue of a private prison was an issue during his
election for mayor.
MAYOR GILBERTSON replied yes.
CHAIRMAN KOTT surmised then that during his election, citizens knew
his position on this issue before voting him in. Chairman Kott
also surmised that citizens knew the position, on the prison issue,
of those elected to the city council.
MAYOR GILBERTSON replied yes to both questions.
REPRESENTATIVE GREEN pointed out that the committee has been told
that the City of Delta Junction would be economically strapped if
there was not a seamless transition. In other words, it would be
problematic if the people working at the base were out of work for
as much as five or six months, if the committee chose to take the
competitive bid route. He asked Mayor Gilbertson how many people
work at the base.
MAYOR GILBERTSON stated that 271 people work at the base.
Number 1626
REPRESENTATIVE GREEN asked Mayor Gilbertson how many people might
stay there after the base closes. He noted that he has heard that
many are near retirement and may not seek new employment.
MAYOR GILBERTSON acknowledged that some will be retiring. He
informed the committee that approximately 55 positions will be
retained after the realignment.
REPRESENTATIVE GREEN wondered whether there has been any talk in
the community with regards to the Pogo mine.
MAYOR GILBERTSON replied yes.
REPRESENTATIVE GREEN stated his understanding that there may be a
couple hundred jobs available with the mine.
MR. GILBERTSON said that currently there are approximately 47 to 60
people working on the mine and about 20 working for the mine within
Delta Junction.
Number 1706
REPRESENTATIVE KERTTULA returned to the comments about a $500,000
payment made to the city and asked whether that was part of the
settlement.
MAYOR GILBERTSON explained that the $500,000 will come in over a
two-year period to help offset the attorney fees of the city. The
city will receive $62,500 quarterly which equates to $20,833 a
month.
REPRESENTATIVE KERTTULA asked whether that was a part of the
settlement on attorney's fees.
MAYOR GILBERTSON replied that it was part of the settlement to help
the community to be able to bear the cost of doing this.
REPRESENTATIVE KERTTULA asked, "Doing what?"
MAYOR GILBERTSON reiterated that it would help bear the cost of the
attorney and consulting fees. He mentioned that so far the city's
attorney fees and consulting fees on this project have summed about
$185,000. Thus far, the city has received $50,000 in a grant from
the Department of Community & Regional Affairs. The city will have
to bear the remainder of the fees on their own, except for the
$20,833 a month from Allvest - providing this project proceeds.
Number 1802
REPRESENTATIVE JAMES inquired as to the source of revenue that the
City of Delta Junction has to operate on ordinarily.
MAYOR GILBERTSON responded that the only thing Delta Junction has
presently is some money in lieu of taxes from the state. Last year
the city operated on a budget of $130,000, but this year the city's
budget is a little higher. He stated that Delta Junction does not
have a tax base, although there is some help from the revenue
sharing program.
REPRESENTATIVE JAMES asked Mayor Gilbertson whether he felt a bit
overwhelmed in having to deal with his normal duties as mayor and
this issue.
MAYOR GILBERTSON commented that the State of Alaska and the
Department of Corrections would have to come on board in order for
this project to proceed.
Number 1931
K. LESLIE KIRK, retired Colonel, Fort Greely, informed the
committee that he retired in 1984 and has lived in Delta Junction
ever since. He noted that he has been involved with real estate
and has an understanding of it. He also has also been teaching at
the University of Alaska. He mentioned that he became involved
with the Concerned Citizens of Delta Junction who were against the
prison after the first vote.
MR. KIRK turned to the votes on this issue. He informed the
committee of a meeting held on January 7, 1998, or January 8, 1998,
at which Allvest gave a presentation. At that meeting, Mr. Kirk
inquired as to how it would be determined what the people want.
The response was, "Well, we'll know." He posed the question again
and "they" said that the only way to determine what the people want
is to have a vote. However, "they" said there wasn't time for a
vote. Others indicated the need for a vote as well. Finally,
"they" agreed to have a vote, but specified that the vote would
have to be held on [January] 17th, in 10 days. Upon the conclusion
of that meeting "they" agreed to delay the vote for about a month.
On [January] 15th, the next Thursday, there was another open
session during which people received a brochure saying there would
be a vote in two days, on Saturday January 17th, and that people
must be registered to vote. Mr. Kirk noted that was kind of a
surprise, he had no idea what the ballot would say. Still, he, as
unorganized as anyone, went to vote. Ironically, he saw an older
couple being allowed to register, on the spot, before voting. He
said, "That's interesting, this is not an official state vote
anyway, so we went ahead and did this."
MR. KIRK informed the committee that 640 voted in support of the
prison and 397 in opposition. Later, Mr. Kirk requested the
numbers of people who registered to vote at the same time they
voted. He was told that 122 registered to vote at the same time
they voted. "That's quite a difference." He also asked, "'I want
to know how many said, no, that were allowed to register before
they voted.' It was zero." With regard to whether there was a
difference between the vote, he pointed out that the question was
whether the city should continue to investigate Allvest. He said
that people were told to vote yes if they didn't know, because
there would be another chance to vote. During the second vote,
people were not allowed to register to vote at the same time they
voted which resulted in quite a difference. "In essence, what I'm
really saying is we have over 500 and I think we have much more
than the majority now that's saying that they do not want to have
a prison in Delta Junction. It's growing all the time."
MR. KIRK said that there are quite a few reasons for the growing
opposition to the prison. First, the Pogo mine is coming in and
providing free training for the people that are going to be working
there. Furthermore, the ballistic missile sight has been narrowed
down to two locations: Healy and Fort Greely. He mentioned that
he has personally spoken with those investigating this, who say
that Healy doesn't have an airfield while Fort Greely does.
Therefore, Fort Greely is more of a prospect than Healy. He also
mentioned that, from his information, those investigators came out
to Fort Greely in March in order to test the land and the ground to
make sure the missiles would be able to be carried. There were
also indications that they wanted 250 sets of quarters, housing,
because they have some people coming in. He commented that the
missile sight will be located at a former missile site.
MR. KIRK turned to the question that arose regarding what would
happen if Delta Junction did not have a prison. He assured the
committee that Delta Junction is not going to dry up and blow away.
TAPE 99-51, SIDE A
Number 0001
MR. KIRK continued. He indicated that upon review of the permanent
fund list, it was discovered that 663 people had moved out [of
Delta Junction], including soldiers at Fort Greely, in the last
five years. In that same period of time, 667 people have moved
into Delta Junction. He discussed the influx of people in Delta
Junction which he said was not associated with the prison. There
is also an influx of Russians. Mr. Kirk commented, "Our
headquarters in the Army said if this happens and it brackets it
up, the Army will reactivate Fort Greely."
MR. KIRK informed the committee that the people in Delta Junction
are concerned about Allvest's tactics. The reason the folks in
Utah were not getting any place in 1998 was because on November 4,
1997, the coalition signed an agreement with Allvest to deal only
with them on prison activity. On November 16, 1997, a referendum
to that extent was signed and later a contract was signed. The
contract was illegal because [the coalition] did not have the
authority to sign it. He emphasized that the residents of Delta
Junction are very concerned about this and whether the community
wants to do business with Allvest.
Number 0224
MR. KIRK referred the committee to page 4 of the agreement between
Allvest and the city. The agreement states that the contractor
shall pay the city an initial payment of ground lease rent in the
amount of $500,000. The agreement further states that the
contractor will pay $450,000 to expand the size of city hall, as
well as $2 million for the housing of Fort Greely. This amounts to
$3 million that the city could use. He indicated that this a big
temptation. "Do you think their getting bought off?" With regard
to the housing, Mr. Kirk pointed out that there are 262 units of
housing. When the number of units is divided into the $2 million
the result is $7,000 per house which he indicated is not much.
Again, Mr. Kirk asked if the city council was bought off. However,
he stated that the city council members are good people. He
surmised that Allvest offered the city $3 million and said it would
not provide that money without the prison. The city was facing
bills and attorney's fees; that would be a difficult decision.
MR. KIRK addressed the question regarding how many jobs would be
created. There are 250 civilian jobs at Fort Greely, 55 positions
would remain because of the nuclear power plant at Fort Greely. He
noted that the residents of Delta Junction do not have the
expertise in corrections. Mr. Kirk determined that the prison will
create 50 jobs at the lowest level for which people in the area
would qualify. He pointed out that the city has to sign a contract
for over $100 million to do this, to provide Allvest with the
opportunity to make money. Theoretically, the prison was coming in
to replace those jobs lost with the realignment of Fort Greely, but
it does not replace that many.
MR. KIRK informed the committee that when the new council came in
October, it was clear that Roy Gilbertson opposed the prison. All
three new council members opposed the prison, until one member
changed his mind. He restated his earlier discussion regarding the
denial of some to vote. Many people are not registered to vote in
Delta Junction. The only government in Delta Junction is the city
which represents 18 percent of the community. Therefore, the city
government had to speak for the entire community.
MR. KIRK turned to SB 141. He said that this legislation would
effect more than just Delta Junction. He pointed out that this is
a design-build construction contract. Companies which could
perform such would have to be fairly large. This will effect the
small builder who he indicated would not be able to compete.
Therefore, all the small builders in Alaska would be impacted. Mr.
Kirk recommended that this legislation be dropped; legally it is
not sound. Furthermore, it does not make sense to have a bill to
legalize something that has been accomplished illegally. Mr. Kirk
emphasized that is not the government he fought for. He referred
to a letter to the editor from Michael Frarrar (ph) that should be
in the Daily News Miner which he offered to provide to the
committee. Mr. Frarrar's (ph) letter says that the city, when it
signed the contract, was aware that it was breaking state
procurement laws and city codes and would have to change the laws
to accommodate this. Therefore, SB 141 was created. He said that
SB 141 would allow municipal governments and state agencies to sole
source projects to be designed and built by a single contractor.
Therefore, many state projects could be obtained through "wining
and dining." He discussed the competitive bid process that saved
the people of Alaska 5 percent on the Fairbanks court house
project. Mr. Kirk suggested having a competitive bid for the
prison in Delta Junction. He pointed out that HB 53 said that
Delta Junction "may" have a private prison. Mr. Kirk strongly
recommended that SB 141 be found illegal and thrown out. He
believed that with the other things happening in Delta Junction a
prison is not necessary.
Number 0864
DENNIS POSHARD, Legislative Liaison/Special Assistant, Office of
the Commissioner, Department of Transportation and Public
Facilities, came before the committee to testify. He noted that
his testimony would be limited to Sections 1-6 of the bill. As
pointed out by the bill sponsor's staff earlier, this legislation
was introduced at the department's request in order to fix some
statutory problems with the current procurement process. The
legislation was intended to remove the requirement of a contractor
to list all subcontractors in the case of design-build contracts
where it is not feasible. Furthermore, the legislation would
provide a mechanism for a contractor to remove or add a
subcontractor when determined by the department to be in the
state's best interest. With regards to Section 3 of SB 141, the
AGC would like Section 3 to be deleted. Section 3 was added in
order to address concerns of the Alaska Professional Design
Council. Mr. Poshard said that the department does not have any
preference as to whether Section 3 remains or not because the
department's objectives would be met with or without Section 3. In
conclusion, Mr. Poshard pointed out that this legislation passed
from the Senate with a 20-0 vote.
Number 1030
RON LORENSEN, Attorney, Simpson Tillinghast Sorensen and Lorensen,
came before the committee to testify. Another potential bidder,
the Corrections Corporation of America (CCA), requested that Mr.
Lorensen provide the corporation and the committee with his firm's
views on constitutional questions relating to Sections 7 and 8.
Mr. Lorensen informed the committee that he has been in private
practice for the last eight years. Prior to that, Mr. Lorensen was
the Deputy Attorney General for Alaska in the 1980's. Prior to
that, Mr. Lorensen was Assistant Attorney General for five years.
He pointed out that he has in excess of 15 years of direct public
law experience. Therefore, he has had much exposure and experience
with constitutional, municipal and public law questions as well as
public policy issues.
MR. LORENSEN identified three constitutional law issues which arise
from the proposal to add Sections 7 and 8. Firstly, Mr. Lorensen
believed that there is a substantial single subject problem with
the bill. The problem is highlighted by the testimony of the
sponsor's representative and the DOT/PF representative. The
purpose of the bill, to correct certain problems existing in the
procurement code for design-build contracts, is not connected to
what is happening in Delta-Greely. Mr. Lorensen suggested that the
title of the bill is not connected enough to what Section 7 and 8
would do. Section 7 attempts to amend Section 4 of Chapter 15 of
SLA 1998 which addresses only the operation and contracting for the
operation of a correctional facility. Therefore, an amendment to
that provision within the scope of a bill that is aimed at
construction and design-build is outside the single subject rules.
MR. LORENSEN identified the second legal issue as a substantive due
process issue. Mr. Lorensen suggested that Section 7 is not
rationally related to its purpose. Furthermore, he would argue
that it would be irrational for the legislature to do what Section
7 proposes. Section 7 discusses validating a requirement for
contracting for operation of a prison facility by adopting a
design-build ordinance. He stressed that the connection is not
close enough between the subject and the manner in which it is
dealt with. Therefore, it is a substantive due process violation.
MR. LORENSEN identified the third concern as special legislation.
Legislation is not necessarily impermissible if it meets certain
standards that the courts have articulated. He pointed to Baxley
v. State in which the Alaska Supreme Court determined that yes the
legislation may be special, but it is permissible due to the
purposes of the legislature, the fact that those purposes were
articulated, and that those purposes were valid. In this
situation, the legislation does not articulate the purposes.
Furthermore, it is not clear that the purposes are valid. Mr.
Lorensen said, "In other words, to validate a procurement process
that is flawed and so as a result, there is substantial issue as to
whether or not here you have special legislation - whether it meets
the fair and substantial relationship test to the purposes of the
legislature." He said that it is difficult to say that Section 7
would further the purposes articulated in Section 4 of last year's
bill, HB 53. Therefore, the special legislation concern is raised.
If Mr. Lorensen is correct, then it [Section 7] is struck on that
basis.
Number 1482
MR. LORENSEN recalled the testimony from another potential bidder,
the Management and Training Corporation, who expressed
disappointment in not having the opportunity to participate in a
RFP process. A large part of what Section 4 called for in HB 53
was a level playing field without anyone having a head start. As
it has turned out, one entity did receive a head start and now the
playing field is such that other participants are not even allowed
to start. Mr. Lorensen commented that clearly the testimony has
indicated that big money is at stake. He doubted that the payments
being offered by Allvest are being offered from its charitable
nature. Mr. Lorensen said that whatever the cost of operation is
under this contract will not be born by Delta Junction, those costs
will be born by the state. The legislature through payment of the
annual operational costs, the per diem costs, will bear the costs.
Therefore, Delta Junction will receive some substantial financial
benefits from this deal with Allvest, without worrying about the
per diem cost. He reiterated that the per diem cost will be passed
on to the legislature. He believed that the legislature's purpose,
last year, in calling for competition was to assure that a
reasonable and fair price would be obtained for the per diem cost
of administering prisoners. Mr. Lorensen did not believe that
anyone is currently in a position to say that by doing a sole
source, a reasonable and fair price will have been obtained. It is
unknown what competition, which drives prices down, would have
forced, which is ultimately to the detriment of the state and its
citizens.
Number 1654
REPRESENTATIVE JAMES asked Mr. Lorensen whether the Corrections
Corporation of America is the same place that Alaska houses its
prisoners in Arizona.
MR. LORENSEN deferred to Jerry Reinwand who indicated that the
Corrections Corporation of America is the same place that Alaska's
prisoners are housed in Arizona.
REPRESENTATIVE JAMES asked Mr. Lorensen whether there would be any
advantage to having a design-build contract and the first five
years of operations. She asked Mr. Lorensen whether, in a
design-build contract, the operations should have some voice in the
design and construction.
MR. LORENSEN said that he was not qualified to answer. However,
Mr. Lorensen indicated that the Department of Corrections would
have the capacity and expertise to provide the necessary input in
evaluating design-build contracts, irrespective of Delta Junction.
REPRESENTATIVE JAMES referred to Mr. Lorensen's comment that the
money given to Delta Junction from Allvest would be paid for by the
state because the state is ultimately the payer of everything.
Representative James understood that the reuse would be given to
Delta Junction and Delta Junction would be the owners of the
facility. Therefore, if there is any other facility leftover from
the construction of a prison that would be left to the city to
manage. Is that correct?
MR. LORENSEN said that he did not know. He commented that he would
not be surprised if that were the case. Mr. Lorensen clarified
that his comment was in reference to the flow of payments between
Allvest and Delta Junction with respect to the construction
operation of the facility.
REPRESENTATIVE JAMES said that she also understood if the scenario
she described was not the case, then Delta Junction would not be
needed and the state could enter into a contract and take over the
reuse of the facility. Is that correct?
MR. LORENSEN agreed that was probably correct.
Number 1772
REPRESENTATIVE GREEN inquired as to what would happen to the
permission saying that the conditions on the sole source bidding
had been satisfied, if this legislation passed and action was
brought forth. Would that be placed in jeopardy?
MR. LORENSEN said that he believed that whether that exemption is
valid and permissible would be what the litigation would be about.
If the court were to throw it out, the entire arrangement would
probably be thrown out.
REPRESENTATIVE GREEN posed the scenario in which this legislation
passed this legislative session and work began on the facility and
there was litigation. If things were built before litigation, who
would be responsible for that amount of work?
MR. LORENSEN declined to venture a guess. The further this
progresses the more difficult it becomes to unravel. He indicated
it would be a legal question as to whether it would be a
substantial justification for changing the rules about procurement.
REPRESENTATIVE ROKEBERG asked Mr. Lorensen whether the substantive
due process issue was connected to the single subject rule.
MR. LORENSEN said that he did not mean to connect the two.
However, in a particular situation there may be a connection. Mr.
Lorensen clarified that the connection is whether the legislation
is rationally related to the purpose for which the legislature
passed the legislation. In this situation, he would argue that
there is no connection between this provision and the underlying
requirement to do procurement consistent with the procurement code.
REPRESENTATIVE KERTTULA asked whether Mr. Lorensen believed that
the previous legislation, HB 53, would supply the necessary
justification to overcome the reason for special legislation in
this case.
MR. LORENSEN stated that it would have to be part of the analysis
to review the purpose of the initial legislation because Section 7
proposes to amend the original legislation. Therefore, there would
need to be a connection between the initial purposes of the
legislation and the amendment. Mr. Lorensen reiterated that it is
not clear to him that connection exists.
Number 1944
GARY DAMRON, Legislative Liaison, Public Safety Employees
Association, testified via teleconference from Anchorage. He
informed the committee that in 1994 and 1995, prisoners began to be
transported to Florence, Arizona to a private facility operated by
Corrections Corporation of America. Initially, there were 300
prisoners there. He indicated that he is one of the people
responsible for transporting the prisoners. It costs approximately
$5 million per year to transport those prisoners to Arizona.
Currently, there are about 750 prisoners in the Florence, Arizona
facility. The current out-of-state contractual obligation for that
operation is almost $21 million by the House's proposed budget this
year. He pointed out that would be a 400 percent increase while
the population has only increased by 100 percent in Arizona. He
noted that is based on a sole source contract.
MR. DAMRON did not believe sole source contracting for any state
service should occur unless there is a valid and justifiable
reason. In the case of Delta Junction, there have been problems.
Firstly, there were no other bidders allowed. Two bidders have
come forward today that expressed interest in the project.
Secondly, the sole source contract provides that there be no
corruption. Mr. Damron believed that this process has been corrupt
from start to finish. He noted that Allvest threatened a lawsuit
against the City of Delta Junction which only has an annual budget
of $180,000 while Allvest earns $13 million in its halfway house
beds for Alaska. The city probably had a legitimate fear which
probably added to the corruption of the process. Mr. Damron
pointed out that this contract was entered into, in December 1997
with the Base Realignment and Closure Commission (BRAC), without
any input at that time from the city council or public hearings.
He believed that the contract was made before the first public
hearing which further illustrates that there was not a proper
forum.
REPRESENTATIVE GREEN asked whether a contract entered into under
duress would be legal.
REPRESENTATIVE MURKOWSKI said that it is a defense.
REPRESENTATIVE GREEN expressed concern that two avenues of
potential grief have already been discussed. The bill could be
determined to be mute and later the entire contract could be found
to be illegal.
REPRESENTATIVE CROFT commented that this situation is gray and
seems to have elements of duress as well as elements of just
settling a difference in opinion.
REPRESENTATIVE ROKEBERG stated that it is quite common to settle
disputes if there is a chance for economic loss or opportunity
which is not illegal.
Number 2210
DIANA KASSIE FRARRAR testified via teleconference from Delta
Junction. She informed the committee that she has been an artist
and resident of Delta Junction since 1955. She noted that her
husband, Michael Frarrar, works at Fort Greely. She also noted
that she has attended town meetings since the idea of private
prisons was introduced. Ms. Frarrar said that, at the time, it was
indicated that time was of the essence because there is a small
window of opportunity. However, over a year and a half later the
legislature still needs to be convinced that actions must be taken
now or there is no deal. Ms. Frarrar informed the committee that
as of today, the Army has not approved the reuse plan. If the City
of Delta Junction and the state would put as much effort for a RFP
as is being put forth to sole source this project, things would be
ready if and when the Army approves the reuse plan. She noted that
the original coalition recognized, by the BRAC Commission, as the
local reuse authority was not an elected board and had no authority
granted by anyone. The coalition was appointed by boards that
existed in the area such as the Chamber of Commerce and the Farm
Board. There were some members that were elected to their
respective boards and then arbitrarily appointed to serve on the
coalition. She discussed the problems with such a coalition. Ms.
Frarrar said that the current city council, with the settlement
with Allvest, has vastly improved the position of the City of Delta
Junction if it has to have a prison. With regard to duress, she
believed it played a part. The words lawsuit and litigation have
been thrown out by Allvest from the beginning. In conclusion, Ms.
Frarrar did not believe that this legislation served the purposes
of Alaskans, and therefore it should not be considered.
The committee took an at-ease from 3:34 p.m. to 4:20 p.m.
LAMAR COTTEN, Deputy Commissioner, Department of Community and
Regional Affair (DCRA), came before the committee to testify. He
stated that DCRA has been working with Delta Junction since the
1995 announcement that the base would be closed in March of 2001.
As of last year with the passage of HB 53, the community has
primarily reviewed the option of a prison. The state's role has
primarily been to help the community work through the BRAC laws,
Department of Conservation issues, et cetera.
TAPE 99-51, SIDE B
Number 0001
MR. COTTEN continued. With that in mind, the administration
[Administration] does not object to the efforts by the legislature
to amend HB 53 with Section 7 of SB 141. This remains an issue
that the commissioner of the Department of Corrections may choose
to proceed with. He thinks if the commissioner does choose to
proceed and if the bill passes, the stage is again set for the
state to negotiate a contract and to enter in an intergovernmental
agreement. He believed the state would still have a lot of work in
front of it and a lot of decisions to make before anything was
officially signed. He noted that Marjorie Vandor, Assistant
Attorney General, Governmental Affairs Section, Civil Division,
Department of Law, is available to answer any legal questions.
REPRESENTATIVE JAMES asked with whom the Department of Corrections
would be entering into a contract.
MR. COTTEN responded that the department would be entering into a
contract with the City of Delta Junction.
Number 0067
REPRESENTATIVE JAMES further asked whether the City of Delta
Junction needed an arrangement with somebody first in order to
enter into a contract.
MR. COTTEN replied that was the intent of HB 53.
REPRESENTATIVE JAMES understood then that the city would have to
find someone and then [the city] would enter into a contract with
the state.
MARJORIE VANDOR, Assistant Attorney General, Governmental Affairs
Section, Civil Division, Department of Law, explained that, under
HB 53, with the city owning the facility it would be presumed that
[the city] would have to build the facility ahead of time. The
operations were made an issue, separately, in the bill last year.
REPRESENTATIVE MURKOWSKI referred to the Delta Junction Ordinance
which mentions the requests of the Department of Law for some
guidance on this sole source. The ordinance says that the State of
Alaska, she assumed that reference was to the Department of Law, on
two occasions has declined to specifically address the issue of a
sole source contract. She read Section 9.3 of the ordinance as
follows:
Both the attorney general and Legislative Affairs Agency
have been asked to address the ambiguities regarding sole
source. The attorney general and his opinion dated
February 18, 1999 declined to elaborate on whether HB 53
required the city to follow competitive RFP process. ...
The [Legislative] Council opined in February 25, 1999,
that a sole source determination meeting the requirements
of the state procurement code and regulations might be
permissible under HB 53.
REPRESENTATIVE MURKOWSKI noted that she has asked whether there
have been any opinions from the Department of Law other than the
opinion that was provided to Representative Rokeberg because she
has not seen any. She asked whether those opinions have been
provided, with regards to sole source, and are those opinions
available.
MS. VANDOR replied that the one opinion that is referenced was
written by the Attorney General himself. She did not recall any
request to do a written opinion on any particular sole source
contract. As stated earlier, when this sole source was entered
into the Attorney General had stated on the record through Mr.
Cotten that he had concerns with it. However, there is no formal
written opinion on it at this time.
REPRESENTATIVE MURKOWSKI understood then that there is apparently
an opinion dated February 18, 1999, which declined to discuss the
sole source issue as well as a second opinion dated February 25,
1999, saying sole source contracts might be permissible.
Therefore, Representative Murkowski assumed that there are at least
two opinions.
MS. VANDOR assumed that one opinion must be from the Legislative
Affairs Agency, which she is not aware of. The other opinion is a
response from the Attorney General dated February 18, 1999, but she
did not have a copy with her. She believed there is a separate
issue related to the sole source contract.
REPRESENTATIVE MURKOWSKI requested a copy of that opinion. She
expressed concern and asked, "Why are we not seeing the written
opinion?"
REPRESENTATIVE GREEN asked if Ms. Vandor was saying that she
recalled that the Attorney General had questions with this.
MS. VANDOR clarified that the Attorney General had stated on the
record that he had concerns with this particular sole source
contract that was entered into at the end of March. She reiterated
that there is no formal written opinion regarding that.
Number 0270
REPRESENTATIVE GREEN pointed out that the committee had heard from
[Ms. Bannister] who originally had some concern, but after reading
another outside opinion felt that maybe it was okay. He asked what
happens if the bill passes as it is and later it is discovered that
there is a problem with what was done.
MS. VANDOR responded that she thinks it is two different things.
She believed Ms. Bannister was speaking to whether this amendment
to the bill would be in violation of the single subject rule and
various other bill rules in the constitution. She pointed out that
Section 7 is amending HB 53 explicitly. In the Department of
Law's opinion, HB 53, even if it were considered to be special and
local legislation, would be deemed to be proper use of that under
the constitution. She said this is through the test that a general
law would not be applicable. She said:
With that particular bill, on the sections that enacted
the Fort Greely parts - Fort Greely and its closure is
unique to that area .... There was much legislative
discussion and debate on that as to the goals that were
intended by allowing a prison to be built there, allowing
the Department of Corrections to enter into an agreement
to have a private prison there and to do it on a
government-to-government basis with the city itself. So,
there's an awful lot of back-up there that's very unique
.... We think even if HB 53 were challenged as being an
improper, special, or local legislation, it is just the
type that is considered to be when a general law is not
applicable. And, of course, as Mr. Lorensen said, and I
think every attorney will, only the court can rule
whether a general law would have been proper there. No
one else can do that. But there is the test set out, and
that's the reasonable basis test. The goal and the
reasons and the whole due process, equal protection which
we think was met with [HB] 53.
MS. VANDOR believed the issue is whether or not the analysis has to
be gone through again with Section 7 in order to make it
specifically fit into that category of not being special
legislation, when really a bill is being amended that is believed
to satisfy the criteria.
REPRESENTATIVE GREEN recalled that Ms. Vandor said that intent
would be a big issue in trying to determine either what was meant
or what finally happened. He asked whether Ms. Vandor felt that
this [SB 141] would meet the intent of the Administration.
MS. VANDOR stated that a better question would be whether it [SB
141] meets the intent of the legislature. In other words, does SB
141 adhere to what the legislature meant in passing HB 53 and what
the legislature meant by the procurement procedures to be followed.
She said this is clarifying, in our [the department's] opinion,
that the process used that has been set out in Section 7 satisfies
what was meant by "similar procedures" for the operating contract
in HB 53. She believed it relates to that. Ms. Vandor believed
part of the problem to be whether the legislature is properly
interpreting what was intended by the legislature. She indicated
that the bill before the committee would let the department know if
the legislature feels the process used by the city to enter into
this contract satisfies what is similar and intended.
REPRESENTATIVE GREEN expressed concern with the press release from
last year, although he realized the issue to be a legal issue now.
With regard to Ms. Vandor's comments that intent is a large part of
this issue, Representative Green read the following quote from the
Governor:
Another cornerstone to this undertaking is that a
competitive bid process be used to select the operator
facility and that there be a level playing field between
the competitors for the contract.
REPRESENTATIVE GREEN specified that the aforementioned quote was
referring to this legislation, HB 53, of just a year ago. He was
concerned that somehow an abrupt turn has been taken. He clarified
that he was inquiring as to whether the Administration and,
perhaps, the Department of Law now have the same concern since he
understood Ms. Vandor to be asking the legislature what it really
meant. Representative Green said, "I think we [the legislature]
meant, at the time, what the governor thought we meant."
Number 0511
MS. VANDOR offered to check with the Administration on that.
REPRESENTATIVE GREEN commented that the committee is having a hard
time getting a legal opinion which has led to reviewing the intent.
Therefore, he was trying to offer that as part of the intent.
REPRESENTATIVE KERTTULA stated that although it wasn't part of the
original legislation, if it's now necessary to amend it that would
seem to speak to the intent. She asked Ms. Vandor whether there
has been any background research into the legislative intent.
MS. VANDOR informed the committee that she has reviewed it.
However, she couldn't really say that [the intent] was always drawn
from comments by legislators versus comments by people that were
testifying. She seemed to recall that "similar procedures," as to
whether it had to be substantially similar or merely similar, was
something that was amended several times as the bill progressed.
She noted that it was definitely toned down with the final version.
Number 0580
REPRESENTATIVE KERTTULA asked Ms. Vandor whether she recalled any
mention of a sole source contract possibly being allowed.
MS. VANDOR replied yes. She pointed out, as she had during
hearings on HB 53, that the concept of a competitive process is
utilized first when referring to procedures under the state
procurement code. She stated, "It doesn't mean that you may not
end up at sole source, but there are procedures to get there."
REPRESENTATIVE ROKEBERG asked whether the issue in SB 141 is should
the legislature amend HB 53 to allow a sole source contract, in
these peculiar circumstances, in order to qualify for the BRAC
reuse plan and meet the intent and purpose of the legislature. He
recalled that language in HB 53 specifically prohibited sole source
contracting. The purpose and intent of HB 53 was to provide for
the private facility in Delta Junction. Therefore, the decision now
is whether to amend it in order to allow for sole source
contracting under the circumstances. Is that the correct issue?
MS. VANDOR answered that she is not prepared to say that's the
issue as the Department of Law sees it. From the department's
view, the department's legal concern would rest with whether or not
this bill clears up the ambiguity of what was intended by "similar
procedures" in the original bill. She said it is ambiguous when
terms like "similar process to the state procurement code," which
does allow for a sole source at a certain stage, are utilized. Ms.
Vandor said, "This, we believe, is allowing for an ordinance on a
design-build contract passed when ... an entity, a city, is
operating a facility extraterritorially .... That that will
satisfy the requirements and the process intended in [HB] 53." She
didn't think she could speak to more than that, from a legal
standpoint.
Number 0747
REPRESENTATIVE ROKEBERG asked Mr. Vandor why Section 7 was needed;
is it to clear up the ambiguity?
MS. VANDOR stated that was her understanding.
REPRESENTATIVE JAMES recalled that when HB 53 was passed last year,
the issue of how the contracting would be done was not dealt with.
House Bill 53 simply said that a process similar to the procedures
established in AS 36.30 should be used. She pointed out that the
procedures established in AS 36.30 do allow for a single source
contract in some instances. Representative James said that it
seems that Delta Junction, in its process and time restraints,
could have concluded by reading AS 36.30 that a sole source
contract is acceptable. Therefore, she identified the question as
whether in the circumstances that Delta Junction faced, it was
acceptable to do a sole source contract. She said, "The attorney
advice that I've heard, not directly to me, but that 'Yes' we
believe it fits that." She informed everyone that she interpreted
Section 7 to merely say that the choice of a sole source contract
is acceptable. Or is other language necessary? She understood
that the language was suggested by the Department of Law in order
to make it perfectly clear, with regards to the intent of HB 53.
REPRESENTATIVE JAMES referred to Chapter 15, SLA 1998 which reads
as follows:
The commissioner of Corrections shall require in the
agreement with the City of Delta Junction, that the City
of Delta Junction procure the private third-party
operator through a process similar to the procedures
established in AS 36.30 (state procurement code).
REPRESENTATIVE JAMES asked whether Ms. Vandor agrees that language
allows a sole source contract in certain circumstances.
MS. VANDOR replied yes.
REPRESENTATIVE JAMES said her question was whether or not Section
7 was being inserted in order to make it perfectly clear that this
does allow it.
Number 0937
MS. VANDOR stated that, all the other issues aside, it is the
position of the Department of Law that this would clear up that
ambiguity.
REPRESENTATIVE KERTTULA asked: if the procurement code was being
met as it is, would an entity have to verify or at least ask that
a company could not meet a deadline before it was determined that
there was such a delay that other companies would have to go to
sole source contract.
MS. VANDOR stated that it is the standard procurement procedure to
rule out that there are others that could provide the service or
product.
REPRESENTATIVE GREEN referred to a letter from Margaret Pugh,
Commissioner, Department of Corrections, to the Senate Finance
Standing Committee. In the letter, Ms. Pugh stated that she
assumed the legislature shared her opinion that the operation of
the prison would be put out to a fair competitive bid. In a
letter to the House Rules Standing Committee, Ms. Pugh stated that
the committee substitute does allow for a competitive bid process
for which she was pleased because following the competitive process
is good government. Representative Green surmised from
Commissioner Pugh's statements and the Governor's statements, he
quoted earlier, that they were thinking all along that this was
going to be a competitive bid process, not a sole source.
Number 1046
MS. VANDOR said she believed that is truly what they testified to
at the time.
REPRESENTATIVE GREEN asked Ms. Vandor whether the Commissioner and
the Governor have changed their minds since then.
MS. VANDOR replied, she did not know.
MR. COTTEN commented that the picture that Brian Rogers, David
Rogers, and Jim DeWitt have painted is the basis for the
legislature to not object to what the amendment could do. This is
a picture of complexity, deadlines and uncertainty which is in the
context of a small community. Furthermore, the indication is that
this may be the only opportunity for this community to have an
economic base. Mr. Cotten said, "It seems to me what they're
arguing is that it had gone through a very detailed analysis, a
very open process to try to figure out what they can do to survive
as a community and nothing has come up except a prison." Moreover,
the deadlines and the other issues facing the community seem to
have left the community in its current position.
REPRESENTATIVE CROFT asked Ms. Vandor what the cite is for the
regulations that provide this exception, the defining regulations
under AS 36.30.
MS. VANDOR replied that it should be "2AA C12" up near the three
hundreds. She indicated that she would need to check to be sure.
REPRESENTATIVE CROFT said that is good enough.
Number 1163
REPRESENTATIVE MURKOWSKI said she is hung up on the time line. She
referred to testimony from Mr. McCotter in Utah who said that up
until just a few weeks ago there was the assumption that there was
still going to be an RFP on this. Furthermore, Representative
Green's comments regarding the legislative intent also seem to
point to an assumption that there was going to be a competitive
bid. She was concerned that, perhaps, the assumption of a
competitive bid was followed until so much time had elapsed that
there was a realization that the city had to go sole source.
Representative Murkowski wondered whether that could have happened.
Number 1222
MR. COTTEN said he was not sure he could characterize it that way.
He believed the community honestly tried to walk through a very
complicated process. He didn't believe that anyone was
intentionally trying to delay the process. He pointed out that, as
an issue, the community of Delta Junction has never dealt with
anything this complex. Furthermore, what has been dumped in front
of the city, BRAC law, is something that is very convoluted; in his
mind, BRAC law still has not proven to be successful anywhere. Mr.
Cotten said he is personally sympathetic to the city's situation,
and therefore he gives the city a lot of credit for having the
patience to try to put up with both the process and the people.
REPRESENTATIVE GREEN asked, "If this amendment hadn't been added,
where would we be?"
MS. VANDOR reiterated that the opinion of the Attorney General is
not completed. She believed if it was found that this sole source
agreement was in violation of the process set out in HB 53, there
were other avenues that could have been taken. One avenue could
have been to take a step back and do some sort of solicitation to
see what was out there through another public hearing process, or
to completely start over and issue the RFP. She indicated that
there is almost always a means to fix a procurement by starting
over, if it was determined that the sole source entered into was
found to be not properly done under HB 53.
Number 1368
REPRESENTATIVE GREEN noted that the committee has heard testimony
regarding concerns which surround a time certain in 2001 that you
have to start backing up from, as far as this transition. He
pointed out that one of the major issues is the construction of the
pit. He asked if it is possible to get the RFPs out so that the
contract can continue with whoever is digging the pit. Therefore,
time wouldn't be lost. He asked if allowing things to proceed
concurrently would create more problems legally.
MS. VANDOR stated that she could not speak for the city attorney
regarding the city's options under that circumstance. However,
there is always an emergency procurement, which has similar
standards to sole source with the health safety and welfare aspect
thrown in, when something becomes a true emergency. She mentioned
that she has seen procurement cases which have been pieced-meal
out. In other words, something is continued while an agreement
regarding the amount of the contract or whether it will continue
will be decided later in order to remedy an earlier wrong.
REPRESENTATIVE JAMES expressed appreciation for Mr. Cotten's
explanation of the dilemma of small communities. She said, "And
they're out there making these kind of agreements, and having these
obligations of things to do, being threatened to being sued, of
which they have no money to even represent that." She asked
whether that is an important part of the city's frustration in
trying to get this thing going.
MR. COTTEN guessed that could play into it. He commented that as
a small community with a limited tax base, he was sure the
community probably always has its eye on its pocketbook.
Number 1564
MS. VANDOR pointed out that because this is a BRAC closure, there
will be certain types of contracts and willing contractors who are
going to just want to do a certain part of the contract and not be
guaranteed of getting the whole contract. She felt that access to
the fort is probably a very important criteria for a contractor to
get.
REPRESENTATIVE KERTTULA inquired as to the current status of the
agreement with the military.
MR. COTTEN said that he believed the military's intent is to
decrease the staff to a skeleton force of around 55 of both
military and civilian personnel in March of 2001. He mentioned
his belief that part of the problem is that very few places have
done a base closure; the rules and the dates have a habit of
changing.
Number 1694
DON McCLINTOCK, Attorney at Law, Ashburn and Mason, testified via
teleconference from Anchorage. He informed the committee that he
is testifying on behalf of Delta Corrections Group and Allvest, the
contractors with the City of Delta Junction on this project. He
noted that he had been asked to address some legal points raised on
the actual drafting of Section 7 of SB 141.
MR. McCLINTOCK referred to the issue of single subject legislation
under Article II, Section 13, of the constitution. He said that
the level of review for that is very deferential. He cited Suber
v. Alaska State Bond Commission and indicated that for a court to
step in and strike a bill for a violation of the single subject
rule, there must be a substantial and plain violation; the test
basically resolves doubts in favor of validity. The general test
is that the bill need only embrace one general subject or idea that
is connected or related in some sort of logical, "popular
understanding" way. This bill, SB 141, deals with designing
construction aspects as well as some procurement issues. He
summarized by saying that he basically agrees with everything
Assistant Attorney General Vandor said on the subject: one has to
review HB 53 in order to understand Section 7. This is a unique
project with multiple goals which are set forth in the statement of
intent in HB 53. He pointed out that one of the goals is
preserving the economic vitality of this region. There was also an
intent to facilitate bringing prisoners back to Alaska and this was
one vehicle that would accomplish both goals. Therefore, it [SB
141] does meet the requirement by the fact that it is a unique
matter. He pointed to the Baxley case as an example in which the
supreme court determined the amendments to four North Star leases
to be unique and have a general impact on the state at large.
MR. McCLINTOCK turned to the issue of substantive process. He said
that doctrine is one that is not of much threat to legislation that
has passed. The supreme court said that a substantive due process
violation, if established, can only stand if these actions are so
irrational or arbitrary or so lacking in fairness as to shock the
universal sense of justice. Clearly, that does not apply here. He
indicated the goal of Section 7 is to deal with the factual
realities that this is one year after HB 53 was passed. He noted
that it should be clear on the record, that the city started off
very vigorously trying to pursue a competitive procurement. In
bringing in the consultant, Richard Crane, the city arrived at the
realization that it was out of time. The city realized that if it
was going to meet the BRAC deadlines and get the project going, it
had to proceed quickly, and it did. Those findings are set out, in
detail, in the city's ordinance.
REPRESENTATIVE CROFT asked whether Mr. McClintock drafted the
settlement agreement between Allvest and the City of Delta
Junction.
MR. McCLINTOCK stated that he and Mr. DeWitt drafted it.
REPRESENTATIVE CROFT also wondered whether they drafted the
ordinance.
MR. McCLINTOCK specified that was under the control of Mr. DeWitt
and the city council.
Number 2078
REPRESENTATIVE CROFT noted that the ordinance discusses a number of
reasons for needing to go to sole source. One reason was timing
and the other was the threat of the lawsuit from Allvest. He
wondered whether there was a complaint drafted, but not filed.
MR. McCLINTOCK clarified that there was not a complaint filed
against the City of Delta Junction nor had there been a demand
letter delivered to Delta Junction. He stated:
Mr. DeWitt and the City of Delta Junction were quite
aware that Allvest, because it had earlier reached a
contract with the ... Delta-Greely Community Coalition
for the development of the prison, maintained that it had
certain contract rights that it wanted honored; but it
had not reached that point. One of the things the city
wanted to do, in proceeding with this, is to remove any
of those claims, which is one of the things that they
(indisc.) negotiate for.
REPRESENTATIVE CROFT asked Mr. McClintock whether a complaint was
drafted.
MR. McCLINTOCK replied yes. He stated that it was never shown or
shared with anyone other than his client.
REPRESENTATIVE MURKOWSKI turned to the language of Section 7, she
appreciated the direction that language attempts. She referred to
Mr. McClintock's mention of still having to meet the five
requirements of sole source. She expressed concern with the part
of Section 7 that allows the municipality, if it adopts this
ordinance, to proceed with the sole source route. She indicated
the need to continue that statement by saying one can do that if
it's warranted or justified under the procurement accord. As it is
left now, it is wide open and allows a municipality to the adopt an
ordinance for this. She asked if, regardless of any ordinance that
a municipality is going to adopt, a municipality would still have
to meet those five criteria for a sole source.
MR. McCLINTOCK said:
The (indisc.) of this drafting is whether you want to
leave the timing and the future of the progress of this
project in your hands and the hands of the legislature by
giving your endorsement basically to what has happened.
... As opposed to putting in language that (indisc.)
would put it back into the purview of the court and let
the judge decide. And that is one of the practical
impacts of this language, is that the decision as to
whether the procurement process met the procurement code
is ... a factual scrutiny. It's one that you would have
to go in a court hearing, (indisc.) the process, try it
in front of the judge and then the judge would apply the
law to the facts and say, "Yes that process has (indisc.)
met the code. Or it did not." ... If you add language
like that to Section 7, you essentially have about that
process to go again and I think one of the reasons for
Section 7 is to say, you know, we reaffirm the original
goal of the HB 53. We understand the problems that Delta
Junction has entered into, as a second-class
municipality, to take on a project that's basically
unprecedented for it, and probably any other city of its
size. We've looked at the ordinance they passed and ...
heard the testimony of what they've gone through and we
believe that that ordinance is sufficient to meet HB 53
as a means to bring this project on track.
TAPE 99-52, SIDE A
Number 0001
MR. McCLINTOCK added that it is his position and Delta Correctional
Group's position that the ordinance that was passed did meet the
requirements of the state procurement code and it was a (indisc.)
process. He commented that this basically removes that question
from further examination in order to allow an endorsement of this
project proceeding, on track and on time.
Number 0118
PATRICK SCHLICHTING testified via teleconference from Delta
Junction. He indicated he would read from a letter he has provided
and then would relate some experience he has with contracting. Mr.
Schlichting expressed concern with the provisions in SB 141 which
address sole source [contracts] and the retroactive aspect of it.
If that remains, he wanted the committee to vote against these
bills. He commented that the legislation appears to be on a fast
track at the 11th hour of this session and represent, in part, the
interests of one very specific interest group - the Delta
Corrections Group. The beneficiary of the inserted language into
SB 141 is Allvest. The inserted language would eliminate
competition for the construction and operation of a privately
operated prison at Fort Greely. Allvest threatened the Delta
Junction City Council with a lawsuit if the council followed city
and state procurement codes. The city, mandated by an advisory
vote to pursue the construction and operation of a prison, was
forced to accept the deal with Allvest or lose that opportunity.
The Rise Alaska report referenced competitive bids as a
requirement, while the consequence of the city's vote has yielded
the opposite.
MR. SCHLICHTING emphasized that the wisdom of "your predecessors"
guaranteed "us" with statutes requiring open competitive bids in
order that the best, fairest, and most economical deal could be
reached. Mr. Schlichting said he thought that the dealings between
the city and Allvest - also known as Delta Corrections Group -
would be sorted out by the legislature or possibly the judiciary
branch. Provisions in SB 141 are very alarming because it seems
that the process can be manipulated. He requested this be
corrected; level the playing field and allow for competitive
bidding. This needs to be a requirement as stated in Alaska
procurement code. Mr. Schlichting said that there is time for
competitive bidding - the window of opportunity is wider than being
portrayed by the backers of the clauses inserted into these bills.
The United States Army is not leaving Fort Greely for two more
years. He pointed out that Allvest, through its parent company,
"St. Johns (ph) Investments," ranked number 7 (indisc. -- coughing)
most money spent for lobbying the recent state legislature. Mr.
Schlichting asked for a no vote on any bill that needs special
consideration to work around existing statute. He stated, "Dispel
my suspicions that the legislative process works best for those
with money ...." Furthermore, it seems wrong to use the the
legislature, with the retroactive provision of SB 141, to solve a
legal matter. There needs to be a separation of powers as provided
in the state constitution. In conclusion, Mr. Schlichting urged
the committee to oppose SB 141 if this language remains.
MR. SCHLICHTING informed the committee that he has worked as an
area engineer and delivery order manager for Brother Route (ph)
Service Corporation owned by Halliburton (ph) Company. The
[Brother Route (ph) Service Corporation] has contracted with the
Army. He explained that only in instances of change orders, such
as for additional quantities, was the company allowed to use a sole
source [provider]. In his opinion, Delta Junction's process with
sole sourcing is not similar to that seen with other companies.
Further, he indicated that Delta Junction's process is an abuse of
sole source.
Number 0452
WAYNE CARPENTER, a general contractor and 25-year resident of Delta
Junction, testified via teleconference from Delta Junction. Mr.
Carpenter said he wanted to address the time line and his belief
that through this entire process there was never an intent - on the
part of Allvest, a few people in Delta Junction, and in the
legislature - to ever let this become a fair and competitive
proposal process. Beginning back in November of 1997, members of
"our" coalition [Delta-Greely Community Coalition] signed an
agreement with Allvest to deal exclusively with Allvest for a
prison at Fort Greely. In December of 1997, it was announced to
the community that there was a company which wanted a proposal to
the table and a prison to Delta Junction. Mr. Carpenter commented,
"They neglected to tell us about the fact that they'd already
signed an exclusive agreement to deal exclusively with Allvest."
In January, there was a vote. He noted that much discussion
centered around what the vote should be about. He said, "They told
us ... it would be for informational purposes only; that anything
that we did at that vote wouldn't really affect us going ahead and
looking at the possibilities of using Greely as a prison site, and
other types of proposals that might hit the table also."
MR. CARPENTER said, at that time, he felt that it was imperative
for the city to look around and see if there were other companies
that would come to the table. He informed the committee that the
two companies mentioned at this hearing were discussed over and
over at various meetings. In addition, Mr. Carpenter said he was
in touch with "Seva Jennings (ph)" from the East Coast, a $40
million per year prison company which has 12 or 14 correctional
facilities in the East. Mr. Carpenter said he would fax this
company's letters of intent to participate in this process which
where "literally rejected." He noted there are a great deal of
people in this room [Delta Junction Legislative Information Office]
who saw copies of those letters which he attempted to present to
the coalition in January and February of 1998. The present
coalition members did not want to see the letters nor did they want
to discuss any of the information Mr. Carpenter had gathered about
Mr. Weimer's (ph) company and past dealings in the Anchorage area.
Therefore, Mr. Carpenter believed that there was never any intent
on the part of certain coalition members, certain legislators, and
Allvest to have an RFP process. He informed the committee, "But
luckily, between April of '98 and October of '98, people were so
put off by the process that when election time came, the pro-prison
council was 'dumped out on their ears.' And I mean, literally,
60/40 [vote] they were put out of office." That election resulted
in the election of some new city council members who wanted to take
a careful look at this. Mr. Carpenter related that they [the new
city council members] said that the process will not move forward
unless it's a fair and competitive RFP.
MR. CARPENTER continued saying:
That brings us to February of this year when certain
members that have testified down there today are telling
us that the city was unprepared to deal with this, ...
they had to do something. The truth is the city was --
there was so much pressure put on the city council to
deal with Allvest and Allvest only. You've heard about
the lawsuit, you've heard about the landfill having to be
built this summer and there's a lot of misinformation out
there. And I just want to say that we feel that the city
has been shoved around, people in this community have
been shoved around, and we need a fair proposal process.
Number 0810
CHAIRMAN KOTT announced the committee would next hear from
Commissioner Pugh of the Department of Corrections. He pointed out
that Representative Green had brought forward some issues
suggesting that, during the debate on this particular issue dealing
with the prison in Delta-Greely, the Administration or perhaps the
department was under the assumption that the bid would go out
competitively.
REPRESENTATIVE GREEN provided some background to Commissioner Pugh.
They have requested legal opinions as to whether or not "we're
getting ourselves sideways with this amendment" which has been made
to SB 141. He indicated the amendment made in the House Labor and
Commerce Standing Committee would retroactively allow the
requirements of the procurement code for this particular issue to
have been satisfied. Representative Green indicated the attorney
opinions were divided. Then there was discussion regarding the
intent meant when HB 53 was passed last session. Representative
Green noted he had quoted Commissioner Pugh from some minutes from
the Senate Finance Standing Committee and the House Rules Standing
Committee. Referring to the Senate Finance minutes, Representative
Green said, "'She (Commissioner Pugh) had said she assumed the
legislature shared her opinion that the operation of the prison
would be put out to a fair competitive bid.'" Referring to the
House Rules minutes, Representative Green said, "'She (Commissioner
Pugh) stated that the committee substitute does allow for a
competitive bid process. She said she is pleased because following
a competitive process is good government.'" He commented that such
dialog indicates to him that both the Administration and the
legislature were of the opinion, at least at that time, that they
were speaking of a competitive bid rather than a sole source.
However, now there is some thought that perhaps sole source would
be understandable, as long as the competitive bid procurement
record is followed. Representative Green stated, "And we're having
some difficulty. How can it be procurement code guidelines saying
you need to have competitive bid, and yet it's okay if you go sole
source 'cause that's essentially the same thing, and it's kind of
a mess."
Number 0988
MARGARET PUGH, Commissioner, Department of Corrections, came before
the committee to answer questions. She requested the additional
presence of an assistant attorney general, with the committee's
permission. Commissioner Pugh apologized for not attending the
first portion of this hearing, noting she had been in another
meeting, and had been called out of that meeting to join this
hearing.
REPRESENTATIVE GREEN summarized, "What do you consider was the
intent when [HB] 53 was passed?"
COMMISSIONER PUGH responded that her understanding corresponded to
the quotes Representative Green had read. She said, "I assumed
that, that my opinion of competitive bid was what everybody was
agreeing upon; that that's what the amendment to the bill meant
last year." Commissioner Pugh believed that over time, the opinion
of the City of Delta Junction, with regard to how it would prefer
to go about a procurement, has changed. Therefore, the city has
brought this amendment before the legislature to make a decision
regarding whether or not that would be the way to go.
Number 1080
CHAIRMAN KOTT asked whether Commissioner Pugh could address the
Administration's position, when HB 53 passed last year, with regard
to this project going out for a competitive bid.
COMMISSIONER PUGH indicated that Representative Green had,
probably, fairly represented the Administration's position. She
said that the Administration assumed that HB 53, with the "may"
language meant [a competitive bid process].
REPRESENTATIVE JAMES noted that prior to the commissioner's arrival
the committee had discussed the language in HB 53, relating,
"'Procure the private third-party operator through a process
similar to the procedures established in AS 36.30,' which does
under certain circumstances allow sole source contract
(indisc.--coughing) when the conditions suggest it."
Representative James believed that at that time, at least the
Administration had the position that there would be a competitive
bid for this project. However, she did not know if there are any
quotes from legislators expressing the same position as the
Administration. She questioned whether it is possible that the
circumstances facing the City of Delta Junction, changed the
options such that the city was in a time crunch, and therefore
decided that it should do a sole source. She noted that a sole
source is available under AS 36.30, if the circumstances are
correct. Representative James asked, "Couldn't it be assumed that
the language that's in House Bill 53; that, given that opportunity
to go sole source, ... they believed that they had the right to do
that and their legal advice from their attorney?"
Number 1203
COMMISSIONER PUGH deferred to the Department of Law.
MS. VANDOR understood Representative James' question to be
regarding whether it was reasonable for them [the city] to decide
that sole source was one of the options under AS 36.30. She said
that would be reasonable because that is part of the code.
REPRESENTATIVE ROKEBERG asked for Commissioner Pugh's best estimate
of the demand for bed space (indisc.) classified prisoners circa
July 1, 2001. He explained, "That is to say, the need for the 800
beds contemplated by HB 53, and where we'd be regarding the Cleary
[consent decree] caps and so forth, but for ... those 800 beds, and
is there any alternative on the horizon?"
COMMISSIONER PUGH explained that the Administration first put
forth an expansion bill several years ago, before the Fort Greely
prison became a possibility and then more of a reality, because of
the growth in the prison population. Currently, Alaska has very
nearly 800 prisoners in a private prison in Arizona. While the
[prison population] growth has slowed, Commissioner Pugh noted
that this is the first time in 10 years there has been slower
growth. Therefore, she did not anticipate that to remain the case.
Although she did not have projections for that time frame with her,
she indicated that the prison population would have increased yet
again by 2001.
Number 1320
REPRESENTATIVE ROKEBERG asked Commissioner Pugh how the state is
doing in terms of the Cleary caps; he understood it has inched up
a little bit, although it is currently at a plateau.
COMMISSIONER PUGH answered that today the state is at 97 percent
system-wide and is only overcrowded at the Cook Inlet Pre-Trial
Facility. She noted this is bearing in mind the 771 prisoners in
Arizona.
REPRESENTATIVE ROKEBERG questioned, "Is the Florence (ph), Arizona
Correctional Corporation of America contract, a sole source
contract? Or do you have the ability to expand and contract that
on a per diem basis?"
COMMISSIONER PUGH responded it is on per diem basis, but she did
not know the circumstances of this most recent contract.
REPRESENTATIVE ROKEBERG questioned whether it was [a competitive]
bid or sole source.
COMMISSIONER PUGH answered that [the state] put out bids. She
believed that only one bid was received. However, she said she
would have to check on those circumstances and could provide that
information.
REPRESENTATIVE ROKEBERG mentioned earlier testimony, "that there
was like a 400 percent budget increase for out-of-state contracts
..." which he did not believe to be accurate.
CHAIRMAN KOTT confirmed there were no additional questions for
Commissioner Pugh and the committee would return to teleconference
testimony.
Number 1446
RUSSELL BOWDRE testified via teleconference from Delta Junction.
He commented that if this is special interest legislation, there
should be a decision as to whether it is good for Delta Junction.
He contended that this legislation [SB 141] is not good for Delta
Junction because it intends to validate an illegal and very bad
contract his city was coerced into signing with Allvest. "The
contract is contested on legal points and should be decided in
court, not fixed by special interest legislation." Mr. Bowdre
asked, "Do we all have the privilege of changing the law after
purposely and knowingly violating it?" He pointed out that Allvest
lobbied for HB 53 last year and never contested the competitive bid
section of it. He noted that he had been present at many of the
hearings. Mr. Bowdre asked whether the legislature is prepared to
waste the state's money in a battle to the supreme court for this
issue and this corporation. Many have joined together in the suit
to void this contract because it is a very bad business deal for
the city and community. Obviously, the lawsuit is legitimate or
this legislation, with its retroactive clause, would not be before
the committee. "This is a gross misuse of our legislature by
special interests."
MR. BOWDRE turned to the loss of jobs in the [Delta-Greely]
community. For those who wish to remain in the area, there will be
business and support to the industries built around Pogo [mine].
Furthermore, there is a very strong possibility of a refinery being
built in the Delta area which will provide good jobs that pay very
well. Mr. Bowdre said, "I encourage you to please scrutinize your
bills and ... pass good bills, but ... please do not be made
perpetrator, judge, jury and executioner for special interests."
In conclusion, Mr. Bowdre expressed the need to return to the
business of legislating good laws that represent the people of the
state; forget about these special interests altogether.
Number 1595
REPRESENTATIVE GREEN referred to the Pogo mine project and asked
whether Mr. Bowdre had any idea when those jobs would become
available to the Delta Junction area.
MR. BOWDRE responded that those jobs are slowly becoming available
now. He estimated that there are approximately 60 people currently
working at the Pogo mine and 20 more are being trained. Mr. Bowdre
commented that it is a slow positive build-up. He added, "There
are opportunities -- like at Fort Greely whether you were told
there were gonna be 55 jobs left up there. Well, in a sense that's
true - there's gonna be 55 jobs in public works labor, but there's
gonna be 31 more in CRTC (Cold Regions Test Center) plus
subcontractors and test people coming in. That was a very
misleading answer that you got on that question."
Number 1655
CARMEN CARPENTER testified via teleconference from Delta Junction.
She believed that the advisory polls that took place in Delta over
the last two years were flawed. She understood that the first
advisory vote was taken after the commitment to Allvest was made.
After that, the propaganda started circulating. The second vote
was very slanted to the prison in that people were told that voting
for the prison would be a vote for reuse, while voting against the
prison would likely result in no reuse. Furthermore, the vote was
flawed because it didn't take into consideration a very large and
growing part of Delta's population. Ms. Carpenter indicated the
need to accommodate newcomers to Delta who are awaiting citizenship
status and who obviously could not vote. She understood that the
newcomers are, for the most part, against the prison coming to
town. Even with the aforementioned flaws, the yes vote did not
obtain the large majority of which they speak. She informed the
committee, "With 1,080 vote[s] counted, the yes voters won by 70
votes. So [with] an issue of such political consequences for
possibly many years to come, there has to be an overwhelming
majority, and this is a far cry from one, from that."
Number 1789
MICHAEL KINGSTON testified via teleconference from Delta Junction.
Mr. Kingston informed the committee that he works for the Cold
Regions Test Center at Fort Greely. He further informed the
committee that although, on paper, he is going to Fort Wainwright,
he is actually staying in Delta and working at Bolio Lake. With
regard to Section 7 of SB 141, Section 7 seems to favor one group
and one company only. This type of legislation can, and I feel
will, lead to more corruption by big business. He implored the
committee to stop Section 7 of this bill. He indicated that this
prison will greatly hurt Delta.
Number 1850
MARY ELLEN LUCAS testified via teleconference from Delta Junction.
Ms. Lucas informed the committee that she too works for the Cold
Regions Test Center. She said that there are more than 55 jobs
remaining at Fort Greely. She noted, "Our own station in itself
will have over 30 personnel remaining and working on Fort Greely.
We'll be occupying different buildings, some down at the Bolio Lake
facility, which is 10 miles away." She expressed concern with
retroactive laws. "You can't allow people to break the law and not
be accountable for their actions." With regard to the issue of
time lines, when the coalition signed the agreement there were two
years. Furthermore, the coalition knew that it was breaking the
sole source laws. Ms. Lucas believed it to be morally
reprehensible to pass a law in order to make an exception to a law
after the original law was broken. She indicated that this could
set a very dangerous precedent.
Number 1938
SAM DIGHTON testified via teleconference from Delta Junction. Mr.
Dighton said that he has been disappointed from the very beginning.
However, if there has to be a prison, it should be by the
competitive bid process. He informed the committee that from the
testimony on HB 53, to which he listened, it was clear that the
competitive bid was to be taken into account. Mr. Dighton
commented, "This whole thing's been about Allvest from the very
beginning. The coalition showed it's a lobby from them from the
very beginning. To me it's very suspicious, Representative
[Mulder] has been a spearhead on this thing all through last year,
with his wife being a paid lobbyist for Allvest. Something doesn't
seem right there to me." He believed that there could be no better
example for the need for a competitive process than to look at
Allvest and the way they've handled this. Mr. Dighton believed
this [the prison] will hurt the spirit of Delta which doesn't need
it [the prison] because the mine and other things will offset [the
jobs lost through the realignment of Fort Greely].
Number 2018
DEAN WILLIAM CUMMINGS, a lifelong and second-generation Alaskan,
testified via teleconference from Delta Junction. He urged the
committee to strike the clauses in SB 141 that allow the city and
private prison to enter into a sole source contract. He agreed
with Ms. Lucas that passing a law in order to legalize a broken law
sets a very bad precedent. Furthermore, the notion that the
[Delta-Greely] community will cease to exist without this prison
is extremely false. He informed the committee that the majority of
the private prison jobs will have a projected pay rate of $11 per
hour with some of the service jobs paying even less. One cannot
raise a family in this community on such a salary without some sort
of government assistance which doesn't benefit the [Delta-Greely]
community or the state. He predicted that the millions of dollars
made on the prison will go to the owners and even out of this
state.
MR. CUMMINGS informed the committee that there are several other
solid opportunities to enhance the local economy. First, there is
a gold mine just north of town. The Pogo company has already
started development and, this month, will be begin a mile-long
tunnel underground to one of the richest veins of gold ever
discovered. Currently, the Pogo company employs at least 84 people
and also boosts several local businesses with associated revenue.
"This is just the tip of this project." Furthermore, there are 22
other major mining companies with claims in the immediate area. He
identified the second opportunity as the ballistic missile defense
system. He informed the committee that recent developments
indicate that Fort Greely is a solid contender as a site for this
ballistic missile defense system. This ballistic missile defense
system will bring 280 high tech jobs with salaries ranging from
$50,000 to $130,000 yearly. There will also be National Guard and
Military Police stationed in the area. He identified the third
opportunity as a refinery, which is being developed by a local
corporation to assist in the overload of North Slope 1. He said
that the refinery will provide several jobs with oil and pipeline
type salaries. He turned to the fourth opportunity; there are
military indications that Fort Greely will be needed by the Army
for further Arctic testing due to recent threats against world
peace. In conclusion, Mr. Cummings stressed that unethical means
are not necessary to maintain a viable economy in Delta Junction.
Number 2160
SHELLIE MATHEWS, Member, Citizens for Positive Reuse, testified via
teleconference from Delta Junction. She informed the committee
that she is a business owner in Delta Junction. She echoed prior
comments regarding the time constraints on this matter. She
pointed out that the legislature was not bullied into making a
decision on subsistence. On that matter, the legislature received
for an extension. Ms. Mathews indicated that the time frame on the
prison is not that critical and with a viable plan in process in
the year 2001, an extension could be obtained.
MS. MATHEWS informed the committee that the Citizens for Positive
Reuse is the group that initiated the lawsuit regarding the illegal
sole source agreement between Allvest and the City of Delta
Junction. She noted that the Citizens for Positive Reuse are being
referred to as a minority living out on the fringe as well as
dissidents, however that is hardly the case. She explained that
while only seven people are listed as plaintiffs in the lawsuit,
Citizens for Positive Reuse is supported by a large diverse
population. In January, over 500 people voted in opposition to the
prison which was a 12 percent increase over the first opinion poll.
She emphasized, "Every time that we have a vote, what we vote on is
not what we get. The more information that people get, the more
they turn against this terrible project. Many more now oppose the
proposed prison because of this sole source agreement forced on us
by threats from Allvest-Cornell."
MS. MATHEWS noted that about 80 percent of Delta Junction's
population lives outside of the city limits. Therefore, most of
the population does not have a vote or voice in city business. The
lawsuit is the only avenue available for those outside the city
limits. Ms. Mathews emphasized that Sections 7 and 8 were
specifically written to silence citizens' voices and grant special
favors to a specific company which seems to be a gross violation of
the governmental system of checks and balances. She questioned the
legality of such an act. Ms. Mathews urged the committee to remove
Sections 7 and 8 from SB 141 and allow the citizens to have a
voice. Ms. Mathews pointed out that there is a bigger question
looming today and that is the process of the law.
Number 2345
NANCI RUTHSCHILD-KENNEDY testified via teleconference from Delta
Junction. She noted that she has faxed the committee letters which
relate her opposition to the prison. She found Sections 7 and 8
offensive. Attempts to make a rule to change one that has already
been violated is not an appropriate message to send about how
government works. Ms. Ruthschild-Kennedy said that it was
inconceivable to her that this legislation would even be considered
for passage. As her letter states, the city didn't have a business
plan and still doesn't have a business plan to determine if it
would be economically feasible for the city to run such a project.
She asked, "Why are we pushing laws when we don't even know we can
do it?"
MICHELLE TRAINOR testified via teleconference from Delta Junction.
She requested that the committee not approve nor send SB 141 to the
floor, particularly in its current form. Currently, there is a
lawsuit in progress in Delta Junction. If a legal question exists,
it should be allowed to move through the due process of the law.
She stated, "Furthermore, if at the time of the signing of the
contract in question, the group stated with full knowledge that
they were indeed infringing on the law, the Alaskan legislature
should allow this due process law to move forward unhindered." Ms.
Trainor commented that tailoring a law to protect a private
interest from a lawsuit sets a precedent and it will only be a
matter of time before others request the same protection citing
this legislation.
TAPE 99-52, SIDE B
MS. TRAINOR said that the current city council inherited this and
intended to go to a competitive bid to ensure that Delta Junction
and the vicinity received the best for the money. However, the
city council was coerced by Allvest, with the threat of lawsuit, to
go for a sole-bid. Therefore, the amended SB 141 merely appears to
be another mandate to help protect the interests of Allvest.
Number 0033
BILL JOHNSON, 47-year resident of Delta Junction, testified via
teleconference from Delta Junction. He informed the committee
that he works for the Division of Forestry and is an adjunct
faculty member for the University of Alaska. Furthermore, Mr.
Johnson noted that he is also one of the plaintiffs in the lawsuit
against the City of Delta Junction, Cornell Correction,
Incorporated, Allvest and Delta Corrections Group. He finds this
blatant attempt to change the existing process of procurement under
state law very offensive. The complaint asks that the best deal be
arrived at for the citizens of Delta Junction and the state. He
believed the best deal to follow the existing law. The Allvest
people are not contesting the fact that the laws have been broken
instead they are just going to change those laws. That's the ends
justifying the means.
MR. Bill JOHNSON mentioned that some members may have been told
that the lawsuit or opposition will be eliminated if the bill is
passed. However, that is not necessarily the case. He explained
that the case involves five points and this addresses one of them.
There may be a new claim that comes out of this dealing with the
constitutional issues as Mr. Lorensen already discussed. In
addition, a petition to overturn Ordinance 99-04 is circulating in
Delta Junction. The petition needs 43 signatures and he did not
doubt those signatures would be obtained. He noted that the
petition has a 90-day time line, which means it will be submitted
in mid-July. At which time, the city will have to vote on whether
or not to overturn the ordinance, which can't happen before 45
days. Therefore, it will be before the middle of August before
this petition process plays out. Again, the intent of SB 141 may
not be effective as other things are going on.
Number 0159
P.R. MILLER testified via teleconference from Delta Junction. He
informed the committee that he was a member of the [Delta-Greely
Community Coalition] coalition for a year. After he left the
coalition, he discovered that BRAC had established that there would
no longer be a coalition unless a major contractor came into the
area by March 15, 1996. After sending out six letters to civilian
prisons, two organizations came to look. One determined that it
didn't have any business in the prison business in Alaska. The
other came up with a proposal, which meant the coalition would
exist for another two years. Then [INRC], a daughter of the
coalition came in.
MR. MILLER turned to contracts. He noted that he has done much
work with contracts and the federal government. Although all
contracts are open for bid, sometimes the contracts are only-source
or sole source. The problem is once there is a request for
proposal bid there are 90 days in which to solicit another bid
before going to a single source. At that time a bid can either be
accepted or rejected, or a proposal that both sides can live with
can be developed. Mr. Miller pointed out that he is not one of the
concerned citizens; he just wants to see something happen.
Number 0354
MR. RICK JOHNSON came before the committee again to give closing
comments. He reminded everyone that he was representing the Delta
Junction City Council. There is no denying that a lot of people in
the community are opposed to this piece of legislation and the idea
of a prison. The legal issues are real and as a city council
member he has been inundated with the complicated and convoluted
legal issues. The city has racked up a tremendous bill for legal
and consulting fees in an attempt to keep it understandable and
workable. The city is at the end of a four-year process. In 1995,
BRAC decided to close Fort Greely and the 250 civilian jobs and
400-500 military jobs began to leave. In two years that process
will terminate. He explained that for two years after the
announcement of the closure of Fort Greely, the community searched
for an anchor-tenant - a tenant that the military said was
necessary to make a reuse plan work. An anchor-tenant couldn't be
found.
MR. RICK JOHNSON stated, in reference to CCA, he was told that CCA
only wanted to do a design-build construction. Mr. Rick Johnson
was led to believe that CCA was not interested in a project.
Furthermore, he, a very active person in city politics, had never
heard of the other company mentioned.
MR. RICK JOHNSON stated, in that four year period of time, there
have been two votes. In both votes the majority of the community
members said that they wanted a prison. He further mentioned that
he was elected by over a 60 percent margin after sending a letter
to his constituents stating that he supported the prison. An
individual was also elected that is opposed to the prison as well.
Three members, all business people, were elected. He suggested
that the three members were elected to make decisions based on good
judgement. Mr. Rick Johnson, as an elected representative, said
his mandate is clear - the community wants a prison. After the
first of the year, there was a vote on a city resolution to seek an
RFP. A consultant, Mr. Crane, was hired to do the RFP, but the
consultant said there was no time for an RFP. The consultant also
identified the problems which would prohibit meeting the schedule.
The city's consultants agreed with that. After serious and long
deliberations/negotiations, the sole source contract was arrived
at. The bottom line was, if the city went to the RFP process,
there probably wouldn't be the option for a prison.
MR. RICK JOHNSON addressed the legislation before the committee,
which is seen by many as an opportunity to clarify the original
intent of HB 53. But, in light of the lawsuit, there is a good
chance that there won't be a prison anyway just because of the time
frame and time in court. In two years there is a federal mandate
for Fort Greely to be completely realigned. The numbers heard
today indicate that there isn't a whole lot of solid information
out there on what is or isn't going to happen, but he guaranteed
the committee that come July of 2000 the post will have its lights
turned out. He acknowledged that the lights might be turned on
again, but nobody can say for sure. As an elected official, he has
to deal with what is real. He reiterated that his mandate is clear
- pursue the prison concept.
Number 0649
REPRESENTATIVE GREEN asked Mr. Rick Johnson whether there is any
possibility for the earthwork, which has to be done this summer, to
be done at the same time the actual RFP is being processed. If
that could be done, then the construction which needs to begin in
2000 could occur. Representative Green also asked whether anyone
has talked with Senator Ted Stevens regarding the firmness of the
closure date for the fort.
MR. RICK JOHNSON first addressed the dump site. He explained that
the dump site is very expensive and the city does not have the
money to do it. He informed the committee that Allvest, as part of
the negotiated agreement, is willing to fund the construction [of
the dump site]. Therefore, he believed Representative Green's
suggestion is worthy of consideration.
MR. RICK JOHNSON turned to the question of how firm the closure
date is. He noted that the city council was invited to a hearing
with Senator Stevens and his staff. During that hearing, Senator
Stevens stated emphatically that the deadline is firm. The city is
already working on an extension beyond the BRAC deadline. He
indicated that the fort was to have been realigned in 1997. During
the aforementioned hearing, Senator Stevens expressed concern about
where the money will come from to keep the post "warm" after 2001
when the city is to take over the fort. He reiterated that the
city doesn't have the money to keep the fort "warm;" it will have
to be put to work.
Number 0812
REPRESENTATIVE JAMES commented that it's hard to find a community
who wants a prison. As a state legislator, she is excited to find
a community who has voted a couple of times and supports a prison.
She asked Mr. Rick Johnson whether he received any legal advise
that indicated a sole source contract, with the pending conditions,
was allowed under HB 53.
MR. RICK JOHNSON replied yes. The city's attorney believes that
the city has the legal standing to do this.
REPRESENTATIVE JAMES asked Mr. Rick Johnson whether it's true that
the city's attorney believes that Section 7, although it offers
clarity, isn't needed to protect the city.
MR. RICK JOHNSON answered that although he hasn't spoken directly
with the city's attorney, he knew that the city's attorney does
support it [Section 7] as it clears up the ambiguity. There have
been hours and hours of discussion on the meaning of "similar."
Number 0938
MR. DAVID ROGERS specified that he's not authorized to speak for
the city's attorney. However, he said that Mr. DeWitt believes
that Section 7 is very defensible.
REPRESENTATIVE JAMES stated she was led to believe that was the
case as well. Therefore, Section 7 doesn't change the law, it only
clarifies the law.
REPRESENTATIVE MURKOWSKI said, regardless of what happens with
Section 7, it sounds like there are other issues that directly
affect the prison. She cited the petition mentioned earlier as an
example. She asked Mr. Rick Johnson what is plan "B."
MR. RICK JOHNSON replied when Allvest stepped forward and became
the proposed anchor-tenant, the city was sealed into a process of
legal challenges because there are people who do not want a prison
in the community. Mr. Rick Johnson deferred to the attorney.
Number 1086
REPRESENTATIVE MURKOWSKI asked Mr. Rick Johnson, as a city council
member, if Section 7 falls through, what is the next step.
MR. RICK JOHNSON stated that he cannot speak for the council on
that because it has not discussed it.
MR. DAVID ROGERS stated that plan "B" would be the next topic of
discussion, when that day comes.
REPRESENTATIVE MURKOWSKI said: "So, no contingency plan as yet."
MR. RICK JOHNSON replied that would be correct. That doesn't leave
the city without recourse, however. It's not for a lack of want or
desire; the city council members are just very busy with meetings
on BRAC and BRAC-related issues. With regards to the referendum,
the city council is discussing whether there should be another
vote. He is very confident that the city would support the deal
with Allvest.
Number 1207
MR. BRIAN ROGERS, in response to Representative Murkowski's
question regarding a contingency plan, said he and the city
attorney have reviewed the alternatives. He indicated agreement
with Representative Murkowski that there are a number of places
that the process could go off track and not meet the deadline. If
it goes off track now, his advise to the city council would have to
be it is not possible to meet a July 2001 deadline. Furthermore,
there would be a period of economic disaster and the city should
seek to amend SB 101 relating to disasters and the disaster relief
fund.
REPRESENTATIVE JAMES asked Mr. Rick Johnson whether those who filed
the lawsuit live in the city.
MR. RICK JOHNSON replied that after reviewing the list he found
that one of the seven did live in the city.
REPRESENTATIVE JAMES commented that it was very gracious to give a
vote to the folks who weren't in the city when it was a city
operation. One of the things citizens of Alaska must learn is that
in order to have a voice, they must be a government. She pointed
out that the Delta Junction area has resisted a borough
organization for a number of years and they [Delta Junction] didn't
want to become a government until there was an opportunity to make
a decision as a government. Representative James stated:
The question that you've asked each time, for a vote of
the people, has been a little different wording - which
that makes a lot of sense because you want to be sure
that you're trying to get the point out there. If you
were to put it out there to get three out of five, what
other questions are you going to ask that's any different
than what you've already asked.
MR. RICK JOHNSON replied, speaking as a duly elected official, he
would vote to put before the city voters the language that they
[the city council] voted on themselves.
CHAIRMAN KOTT recalled that Mr. Bill Johnson indicated there is a
petition being circulated which would repeal the city ordinance.
He asked Mr. Rick Johnson whether there is something to that
process that might suggest looking toward a plan "B."
Number 1407
MR. RICK JOHNSON responded yes. He explained that due to the time
frame, the aforementioned referendum would supplement or supplant
that question. "It would be the city ratifying exactly what they
hoped to overturn."
REPRESENTATIVE GREEN asked Mr. Rick Johnson whether another vote
would be confined to the city, or would it be open to the area
affected.
MR. RICK JOHNSON replied that this particular vote, as a result of
the legality of the question, would be in the city proper. The
petition circulated addresses only the city because it is a legally
recognized entity.
Number 1480
MR. BILL JOHNSON noted that the vote was 397 to 397 outside the
immediate city, within the city it was 118 to 188, which is 53
percent. People keeping saying that it was won by a large
majority, which is not so. With regard to the notion of an "anchor
tenant," there is no mention of such until December 1997, after
Allvest and the coalition signed an exclusive agreement. He said
the draft plan that was put forth by their [the coalition's]
consultants listed three options: minimal reuse, moderate use and
industrial reuse. Industrial reuse, even without the prison
involved, was discussed as probably the worst of the three options.
With regard to the vote of 53 percent that said yes, that was
definitely a vote for an RFP process.
MR. BILL JOHNSON turned to the issue of a contingency plan. He
indicated that several people came up with plan "B." He emphasized
there's mining in the area, the richest gold strike in the world.
Furthermore, the area has ballistic missiles and the potential of
Arctic testing and a refinery, and so on. He said he took offense
with Mr. Roger's comment about disaster aid because the people
don't believe they need it. Mr. Johnson referred to the building
of a dump site. The dump site would require millions of dollars to
handle lead and asbestos which DEC and EPA will have to approve.
He informed the committee that the dump site could be constructed
in two to three weeks and could even be done in the winter. He
explained that one can build cells and add more cells along, and
therefore that doesn't have to be started on immediately.
Number 1741
REPRESENTATIVE CROFT said, "Essentially Councilmen Johnson is
right, with 397 to 397 - that's a tie outside the city; 188 to 118
... in a city vote that's 62 percent, when you combine it with the
greater area, it gets this 53 [percent to] 47 [percent]."
Therefore, Representative Croft didn't believe that anybody is
lying; rather different numbers are being spotlighted.
Representative Croft clarified that those numbers are from the
second vote in breaking it out between the greater area and the
city. He said he doesn't have the numbers on the first vote,
however he heard it was approximately 63 percent.
REPRESENTATIVE ROKEBERG asked what was the time frame on both those
votes.
REPRESENTATIVE CROFT responded October 1998 for the first vote, and
January or February of 1999 on the second vote.
REPRESENTATIVE ROKEBERG asked whether the votes were concurrent
with the city council elections in October.
UNIDENTIFIED SPEAKER replied no.
REPRESENTATIVE ROKEBERG indicated that was a third election.
UNIDENTIFIED SPEAKER replied yes it was.
Number 1837
REPRESENTATIVE ROKEBERG said the legal opinion states that on the
first issue regarding single subject, that's not a problem except
the question portion of it is a problem. With regard to the legal
opinion on the issue of special legislation, he said, "Leaning
towards okay but without the entire factual situation, I cannot
predict whether this part of the text would be met."
Number 1911
REPRESENTATIVE GREEN asked Mr. Rick Johnson whether he is familiar
with the Delta Junction-Fort Greely Prison Feasibility Workgroup.
MR. RICK JOHNSON replied that he is.
REPRESENTATIVE GREEN read [from the Delta Junction-Fort Greely
Prison Feasibility Workgroup] the following, "recognition or legal
requirements can be satisfied but the best correctional practices
cannot be fully achieved at Fort Greely."
MR. RICK JOHNSON informed the committee of his personal thoughts
as follows:
Is it perfect, no. Is it okay, yes and it can be. Even
... Rise Alaska, that put that together agree that it can
be, but the IGA (intergovernmental agreement) will be the
vehicle that's used to address those inadequacies and
those inadequacies will be thoroughly reviewed - we want
a safe prison. In fact I'll stand before this [House]
Judiciary [Standing] Committee and say that I will do
everything I can to stop this project if it is not going
to be a safe one. But I throughly do believe that, in
working with the state, I believe the state wants a safe
prison - our community wants a safe prison. Allvest, I
believe, wants a safe prison. We will maximize the reuse
of Fort Greely to the best that we possibly can. Is it
a new construction, no and I don't think the state wants
to pay for that and I know we can't afford it. So what
is the win-win here, I think we're getting real close to
it to the best that we possibly can.
The committee stood at-ease from 6:36 p.m. to 7:00 p.m.
CHAIRMAN KOTT closed public testimony.
Number 2168
REPRESENTATIVE MURKOWSKI said she would like to address a
noncontroversial amendment which deletes Section 3. She then
referred to two letters from the AGC, who had some concern with
this language and the broad authority that is given to the
commissioner in the design-build construction contract process.
She mentioned that she spoke with the executive director of the AGC
about his concerns. She also mentioned that the executive director
of the AGC spoke with the sponsor about removing this section.
Furthermore, she understood that the Design Council has no
objection to deleting Section 3 from the bill. Representative
Murkowski recalled that Dennis Poshard, DOT/PF, said this was not
critical to the bill. Therefore, she didn't believe that they will
have any objections to removing it. Representative Murkowski moved
to adopt Amendment 1 which would delete Section 3.
REPRESENTATIVE GREEN objected; he was not sure he understood
Amendment 1.
REPRESENTATIVE MURKOWSKI explained that if Section 3 was deleted,
the language would revert back to the old language of AS 36.30.200
subsection (c), which is the intent of Amendment 1.
Sec. 3. AS 36.30.200(c) is amended to read:
(c) When the commissioner of transportation and public
facilities determines that it is advantageous to the state, a
procurement officer may issue a request for proposals
requesting the submission of offers for a design-build
construction contract [TO PROVIDE CONSTRUCTION IN ACCORDANCE
WITH A DESIGN PROVIDED BY THE OFFEROR]. The request for
proposals must [SHALL] require that each proposal submitted
contain a single price for the entire design-build
construction contract [THAT INCLUDES THE DESIGN/BUILD].
REPRESENTATIVE GREEN removed his objection. There being no further
objection, Amendment 1 was adopted.
Number 2390
REPRESENTATIVE ROKEBERG offered a conceptual Amendment 2 which
deletes Section 8, the retroactivity clause.
CHAIRMAN KOTT recognized that Representative Green objected.
REPRESENTATIVE ROKEBERG noted that Section 8 was put in by the
House Labor and Commerce Standing Committee after hearing testimony
which was predominantly from the supporters of Section 7.
TAPE 99-53, SIDE A
Number 0001
REPRESENTATIVE ROKEBERG continued. He stated that after hearing
the testimony today, from the folks of Delta Junction, he is
concerned about what they perceive to be underhanded legislative
action that does something that they may find unethical. It might
be in the best interest of the committee, the legislature and
everyone involved to remove that section, especially since there
have been indications that section isn't necessary. He believed
that there will be discussions regarding Section 7 and allowing the
due process portions of the law to take their course; therefore, he
feels Section 7 just clouds the issue if left in.
Number 0128
REPRESENTATIVE CROFT indicated that they were objecting to it
having a retroactive effect; therefore, it depends on what the
effect is of the committee deleting the retroactive clause. If it
still applies to the ordinance that was passed, effective March 30,
then the committee is still having a retroactive effect and the
complaints of the citizens of Delta Junction are still accurate.
If it means that it does not apply retroactively and only applies
prospectively, then it doesn't help the situation. At least with
the retroactivity clause the committee was clear about what it is
doing, which was going back and retroactively sanctioning something
that had happened before. He indicated that some legal opinions
have shown that without Section 8 it would still happen, because it
is still retroactive; at least with it, it is clear. He stated
that the committee should probably remove Sections 7 and 8. The
committee needs to be very clear, because a court could very well
understand removal of the retroactivity portion to mean that it was
only meant to apply prospectively and had nothing to do with the
ordinance that was passed.
REPRESENTATIVE JAMES disagreed with Representative Croft's
assessment of the issue. She believed that Section 7 doesn't do
anything except clarify what they can already do; therefore, there
is no need to say that it's retroactive to March 17th because the
same authority is already in Section 4, Chapter 15 of SLA 1998.
She agreed with the sponsor of the amendment, that Section 8 is
distressing to the folks who think the committee is making some
retroactive law. Therefore, Representative James supported the
removal of Section 8.
REPRESENTATIVE CROFT withdrew his objection. He specified his
understanding that it does not apply to the March 30, 1999,
contract, and only applies to things after the effective date,
which would be immediately after it is passed.
Number 0371
REPRESENTATIVE ROKEBERG stated that he appreciates the analysis of
Representative James; it is right on point. He referred to the
testimony of Mr. DeWitt who thought that if the city is required to
undertake a readoption of another ordinance, it may delay their
activities two to three weeks. He proposed that it would be the
City of Delta Junction's decision. He pointed out that all the
committee is doing with this legislation is facilitating the
ability of Delta Junction to either construct a private prison or
not. It is the city's decision. All this provision does, Sections
7 and 8, is allow the city to proceed. Therefore, he believed that
removal of Section 8 would help the issue as opposed to harm it.
CHAIRMAN KOTT stated that there being no further objection,
conceptual Amendment 2 is adopted, and thus Section 8 is deleted.
REPRESENTATIVE CROFT made a motion to adopt Amendment 3, which
deletes Section 7.
REPRESENTATIVE ROKEBERG objected to Amendment 3.
REPRESENTATIVE ROKEBERG made a motion to adjourn. Upon discussion,
he removed his motion to adjourn.
REPRESENTATIVE JAMES objected to Amendment 3.
REPRESENTATIVE ROKEBERG renewed his motion to adjourn. There being
no objection, the motion to adjourn was carried.
ADJOURNMENT
Number 0603
CHAIRMAN KOTT adjourned the House Judiciary Standing Committee
meeting at 7:15 p.m.
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