Legislature(1999 - 2000)
05/07/1999 05:08 PM House RLS
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE RULES STANDING COMMITTEE
May 7, 1999
5:08 p.m.
MEMBERS PRESENT
Representative John Cowdery, Chairman
Representative Brian Porter
Representative Joe Green
Representative Gail Phillips
Representative Pete Kott
Representative Ethan Berkowitz
Representative Reggie Joule
MEMBERS ABSENT
COMMITTEE CALENDAR
CS FOR SENATE BILL NO. 141(L&C)
"An Act relating to construction contracts and subcontractors;
relating to design- build construction contracts; and providing for
an effective date."
- MOVED HCS CSSB 141(RLS) OUT OF COMMITTEE
(* 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
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
4/30/99 1122 (H) JUD REFERRAL ADDED
5/04/99 (H) JUD AT 1:00 PM CAPITOL 120
5/04/99 (H) HEARD AND HELD
5/05/99 (H) JUD AT 1:00 PM CAPITOL 120
5/05/99 (H) MOVED HCS CSSB 141(JUD) OUT OF
COMMITTEE
5/07/99 (H) RLS AT 5:00 PM CAPITOL 120
WITNESS REGISTER
SUSAN BURKE, Attorney
Gross & Burke
424 North Franklin Street
Juneau, Alaska 99801
Telephone: (907) 586-2777
POSITION STATEMENT: Discussed her opinion regarding
HCS CSSB 141(JUD).
RICK JOHNSON, Member
City Council
City of Delta Junction
PO Box 229
Delta Junction, Alaska 99737
Telephone: (907) 895-4656
POSITION STATEMENT: Discussed the situation in Delta Junction.
ACTION NARRATIVE
TAPE 99-6, SIDE A
Number 0001
CHAIRMAN JOHN COWDERY called the House Rules Standing Committee
meeting to order at 5:08 p.m. Members present at the call to order
were Representatives Cowdery, Porter, Green, Phillips, Kott and
Berkowitz. Representative Joule arrived at 5:14 p.m.
SB 141-PROCUREMENT: CONTRACTS/SUBCONTRACTS
CHAIRMAN COWDERY announced that only order of business before the
committee would be CS FOR SENATE BILL NO. 141(L&C), "An Act
relating to construction contracts and subcontractors; relating to
design-build construction contracts; and providing for an effective
date."
Number 0080
REPRESENTATIVE PORTER moved to adopt HCS CSSB 141, Version
LS0827\S, Bannister, 5/7/99, as the working document before the
committee.
REPRESENTATIVE BERKOWITZ objected. He commented that he would like
to see the work done by the other committees prior to this meeting
before adopting a committee substitute (CS).
CHAIRMAN COWDERY noted that there has been over seven hours of work
on this legislation prior to this hearing. There have been some
legal questions. He pointed out that there are three memos in the
committee packet. One memo is from Legislative Legal Services, one
from the Attorney General's Office, and the third memo is from a
private attorney. He noted that there have been two different
opinions on the title issue from the legislative attorneys,
therefore outside counsel, Gross & Burke, was sought. Chairman
Cowdery asked if Representative Berkowitz maintained his objection.
Number 0223
REPRESENTATIVE BERKOWITZ said that he maintained his objection. It
is conceivable with an amendment, Section 6 may fall within the
single title rule.
REPRESENTATIVE PORTER noted that there are members from the
previous committee of referral which would be available for
information during debate.
CHAIRMAN COWDERY announced that it was his intention not to take
testimony, but questions can be answered. In response to
Representative Berkowitz, Chairman Cowdery asked if there was
anyone present from Legislative Legal Services. No one came forth.
Chairman Cowdery asked if there was anyone present from the
Attorney General's Office. There was a representative who
indicated that she was present to listen only and noted that the
committee has the opinion from the Attorney General's Office.
Chairman Cowdery noted that Susan Burke was present for questions.
CHAIRMAN COWDERY requested a roll call on the motion to adopt the
proposed HCS CSSB 141, Version S.
Upon a roll call vote, Representatives Porter, Phillips, Kott, and
Cowdery voted in favor of the adoption of the proposed HCS CSSB
141. Representatives Green and Berkowitz voted against the
adoption of the proposed HCS CSSB 141. Representative Joule was
not present. Therefore, the proposed HCS CSSB 141, Version S was
adopted with a vote of 4-2.
Number 0417
SUSAN BURKE, Attorney, Gross & Burke, informed the committee that
she was asked to review the bill, its title, and whether certain
provisions could be included under the existing title. She noted
that the committee has her opinion. Ms. Burke expressed concern
with two provisions of the CS adopted by the House Judiciary
Committee, the design-build procurement section and the price per
bed day section. Ms. Burke concluded that the price per day
section which was part of the House Judiciary Committee CS was not
sufficiently related to the subject in the title of the bill.
However, the design-build provision was acceptable. She pointed
out that the Attorney General's Office issued an opinion this
afternoon in agreement with that conclusion.
REPRESENTATIVE BERKOWITZ asked if the clause, "the agreement to
lease subsequent to a design-build construction contract" inserted
in that paragraph would effect Ms. Burke's opinion.
MS. BURKE said that it could help a bit, but it would depend upon
the purpose. She believed the underlying purpose of that kind of
section is to establish a ceiling on at least the first year's
price provision in the agreement. The reference to the
design-build contract would be ancillary. Ms. Burke stated that
the reference to the design-build in the other provision is an
integral part of the whole purpose underlying that provision. "In
other words, if the municipality adopts this kind of a procurement,
that is a design-build construction type of procurement, then it
would comply with the other requirement, the procurement
requirements under the other legislation." Therefore, Ms. Burke
felt even with the insertion of Representative Berkowitz's language
there would still be problems.
REPRESENTATIVE BERKOWITZ asked if that clause was inserted in the
subsequent section, would it make any difference.
MS. BURKE explained that the difficulty is that the price mechanism
is not a term of the design-build construction contract, but rather
a term of the lease agreement between the state and the City of
Delta Junction. She clarified that she was not taking any position
on the merits of either provision, but rather if the provisions can
logically fit within the existing title.
CHAIRMAN COWDERY surmised then that Ms. Burke believed that the
title fits.
MS. BURKE clarified, "The one, but not the other and I'm not sure
that the amendments that Representative Berkowitz mentioned would
go terribly far to cure what I think is the problem with the price
provision."
REPRESENTATIVE BERKOWITZ said that he imagined that much of Ms.
Burke's opinion was conditioned on the definition of a design-build
construction contract. He asked if the definition of design-build
contract would be binding.
MS. BURKE stated that she did not believe the definition was
critical here. She indicated that the definition does not relate
to the title problem.
REPRESENTATIVE BERKOWITZ asked what the result would be if the
definition were expanded.
MS. BURKE commented then that she understood Representative
Berkowitz to be pulling in the price section in with the other
section. She said that it might help a bit, but hesitated to
recommend that approach without reviewing the entire bill to
determine if other problems would be created.
Number 0860
REPRESENTATIVE BERKOWITZ indicated that those sort of problems
could possibly be cured with a disjunctive.
MS. BURKE said that she did not believe so. If one or the other
applies, then that is the definition.
REPRESENTATIVE BERKOWITZ inquired as to the effect if one section
was left as it is and the "or" included agreements to lease.
MS. BURKE replied then that the agreements to lease would always be
design-build construction contracts.
REPRESENTATIVE PORTER asked if there was anyone else to testify.
CHAIRMAN COWDERY reiterated that this hearing was not taking
testimony, but only answering any questions.
REPRESENTATIVE PORTER commented that the discussion would get
moving if a motion to report the proposed CS out of committee was
made.
REPRESENTATIVE BERKOWITZ informed the committee that prior to that
motion he may have a conceptual amendment. He noted that he has
not sat through the prior testimony. He understood that today the
Mayor of Delta Junction expressed new reservations regarding the
prison. Representative Berkowitz believed that Delta Junction was
concerned about the possibility of a lawsuit based on procurement
issues related to the prison. Would that be accurate?
CHAIRMAN COWDERY understood that the City of Delta Junction was
about 60-40 in favor of this with the outlying areas having a split
of 50-50. Therefore, overall the majority of the people were in
favor of this. He requested that a Delta Junction council member
come forward to speak on the situation in Delta Junction.
Number 1039
RICK JOHNSON, Member, City Council, City of Delta Junction, agreed
with Chairman Cowdery's assessment of the vote. Mr. Johnson also
agreed with Chairman Cowdery that currently there is a very vocal
minority in Delta Junction.
CHAIRMAN COWDERY asked if the city council approved this.
MR. JOHNSON replied yes, the city council adopted Resolution 9904
which authorized the city to go to a sole source. In further
response to Chairman Cowdery, Mr. Johnson said that the resolution
was signed by the mayor.
CHAIRMAN COWDERY understood the city council to be made of elected
members who then elect a mayor.
MR. JOHNSON replied yes.
REPRESENTATIVE BERKOWITZ asked if the decision to go to the sole
source contract was partially based on a concern that Delta
Junction might be sued if it did not.
MR. JOHNSON commented that it would be hard not to take that into
consideration. Any threat of a lawsuit must be considered. Mr.
Johnson stressed that the primary reason for going with the sole
source contract was more of a time line issue. The city council
adopted Resolution 99013 which authorized the city to release a
RFP. In fact, the city hired a nationally renowned RFP writer for
private prisons, Richard Crane(ph). He commented that Mr. Barton
laid out the time line from design of the proposal through to
actual design and construction and matched it with the Base
Realignment and Closure Commission (BRAC) time line. The BRAC time
line says that July 2001, the lights will be turned off. When the
competitive process was compared to the BRAC time line it would not
work. Mr. Johnson said that the only way to make the remodeling
process was to go with the sole source contract which barely makes
it to the deadline July 2001.
REPRESENTATIVE BERKOWITZ stated that the problem with that decision
is that it brings the decision before the committee today. The
decision to go to sole source was clearly not the understanding of
the legislature when it passed HB 53 last year. He reiterated his
question regarding the threat of a lawsuit being a part of the
decision to go to the sole source contract.
Number 1256
MR. JOHNSON discussed the process leading up to Delta Junction's
decision to go to a sole source. In February 1995, the BRAC
Commission announced Fort Greely to be realigned from 1997-2001.
In May 1995, the governor recognized a broad-based community
coalition to be the local reuse authority (LRA). For two years,
the reuse authority sought a tenant without receiving any solid
proposals. In the fall of 1997, the LRA received a proposal from
Allvest to use the facility as a private prison. In January 1998,
the community had an election regarding whether the community
should use the Allvest proposal which resulted in 62 percent voting
in favor of the Allvest proposal. In the spring of 1998, Allvest
and the Community Coalition entered into an agreement. Mr. Johnson
stressed that at that time, there were no other interested bidders.
He noted that there was interest from a company, CCA, who he
understood to be interested in a design-build contract. Mr.
Johnson pointed out that it was known that the design-build would
not have been in Delta Junction, but in another part of the state.
MR. JOHNSON continued with the passage of HB 53 in the spring of
1998. In September 1998, the city was designated as the
Implementing Local Reuse Authority(ILRA). He explained that for
the BRAC process, the assets of the post are to be given to the
state government. The governor identified that he wanted a local
government to receive those. The LRA was merely a community
coalition. Therefore, the city was designated as the ILRA which is
how the city entered into the picture. In October 1998, there was
a city council election in which the three incumbents lost there
seats and three new members were elected as was Mr. Johnson, the
mayor, and another member. He informed the committee, "I was for
it, the mayor was against it, and the other person was for it, but
had concerns." Mr. Johnson said that it was his consensus that the
community wanted people of business to review this and make a good
decision for the community.
Number 1483
REPRESENTATIVE BERKOWITZ reiterated his question regarding why
there were concerns of a possible lawsuit.
CHAIRMAN COWDERY interjected that he did not know if there could
ever be an answer as to why people sue.
REPRESENTATIVE BERKOWITZ pointed out that Mr. Johnson testified
that there was concern regarding a possible lawsuit.
Representative Berkowitz clarified that he was interested in what
the concern was and what the possible lawsuit might be.
MR. JOHNSON informed the committee that in January 1999, another
election was held in which the community supported the reuse of
Fort Greely as a prison facility. In February, Richard Crane(ph)
was hired. In March, a vote was taken to go with the RFP (Request
for Proposal) process. Mr. Johnson emphasized that the threat of
a lawsuit had no bearing on the city council's decision to go with
a sole source process. The city Resolution 99013 authorized the
city to RFP. The nationally renowned expert concluded that the
city did not have time to do so. Only then was it decided to go
with the sole source process. With that decision, they followed
the portion of HB 53 which said "a procurement process similar to".
Mr. Johnson noted that it was an extremely technical process and
council had to relied upon. The council was extremely comfortable
that there was a basis for that sole source.
Number 1600
REPRESENTATIVE BERKOWITZ inquired as to why we are here then.
MR. JOHNSON understood that when it was time to write the IGA, the
Attorney General was uncomfortable.
REPRESENTATIVE BERKOWITZ commented, "You said it had to be
something similar to the procurement process and I would imagine
it'd be similar unless there were some given exceptions. I was
wondering if any of those exceptions came to bear in this case."
MR. JOHNSON deferred to counsel.
Number 1629
REPRESENTATIVE PHILLIPS stressed that the committee is present to
address a bill that has questions regarding the title and a section
of the bill. The task of the Rules Committee is to review that
question and make a determination. The committee is not debating
the issue.
REPRESENTATIVE PHILLIPS clarified, in response to Representative
Berkowitz, that Section 6 of the House Judiciary Committee CS which
dealt with the price per day is removed in the proposed CS before
the committee.
REPRESENTATIVE BERKOWITZ understood that the prior section was
inserted in order to balance that last section. Therefore, the
removal of the price section would lose the balance achieved in the
House Judiciary Committee CS.
Number 1707
REPRESENTATIVE PORTER moved to report HCS CSSB 141, Version LS
0827\S, Bannister, 5/7/99, from committee with a letter of intent
as included in the committee packet.
REPRESENTATIVE BERKOWITZ objected.
REPRESENTATIVE PORTER pointed out that the concern regarding the
removal of the section by the House Rules Committee proposed CS is
addressed by the letter of intent. The letter of intent indicates
that the $70 cap be established. There is also a letter from the
Commissioner Pugh, Department of Corrections, saying that if that
is the intent that would be done.
REPRESENTATIVE KOTT agreed with Representative Porter's comments.
He stated, "When we in Judiciary inserted the $70 per day issue we
dealt with, somewhat, the RFP process and competitive bidding
recognizing that there was a provision in the procurement code that
allowed for a single source. Then the next concern was well, if it
went out to single source, let's make sure it is contained or
restrained within the dollar amount that was discussed with the
previous legislature, primarily in the Finance Committee. They
used $70 as the main number for the per diem, per prisoner, per day
and that was the reason why we stuck it in there. And when we
stuck that provision in there, we recognized that perhaps, there
was a constitutional problem with the title and those issues
dealing with the single subject." Representative Kott believed
that with the impartial opinion received by the Gross & Burke firm
and the letter from Commissioner Pugh the intent of the legislature
when HB 53 was passed will be maintained.
Number 1821
REPRESENTATIVE PHILLIPS clarified that the letter of intent to
which Representative Porter spoke is the House Rules Committee
letter of intent.
REPRESENTATIVE BERKOWITZ withdrew his objection.
CHAIRMAN COWDERY asked if there were any other objections. There
being no objections, HCS CSSB 141(RLS), Version LS 0827\S,
Bannister, 5/7/99, passed out of committee.
ADJOURNMENT
There being no further business before the committee, the House
Rules Standing Committee meeting was adjourned at 5:45 p.m.
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