Legislature(2011 - 2012)CAPITOL 106
03/29/2012 08:00 AM House STATE AFFAIRS
| Audio | Topic |
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| Start | |
| HB239 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 239 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE STATE AFFAIRS STANDING COMMITTEE
March 29, 2012
8:08 a.m.
MEMBERS PRESENT
Representative Bob Lynn, Chair
Representative Wes Keller, Vice Chair
Representative Paul Seaton
Representative Peggy Wilson
Representative Max Gruenberg
Representative Pete Petersen
Representative Kyle Johansen
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 239
"An Act relating to the procurement of architectural,
engineering, or land surveying contracts funded by money from
the state."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 239
SHORT TITLE: PROF. SERVICES IN STATE-FUNDED CONTRACTS
SPONSOR(s): REPRESENTATIVE(s) HOLMES
04/16/11 (H) READ THE FIRST TIME - REFERRALS
04/16/11 (H) STA, L&C
03/13/12 (H) STA AT 8:00 AM CAPITOL 106
03/13/12 (H) Heard & Held
03/13/12 (H) MINUTE(STA)
03/29/12 (H) STA AT 8:00 AM CAPITOL 106
WITNESS REGISTER
MIKE COUMBE, Staff
Representative Lindsey Holmes
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 239 on behalf of
Representative Holmes, sponsor.
TERRY SCHOENTHAL
USKH
Anchorage, Alaska
POSITION STATEMENT: Testified on behalf of USKH Engineers
during the hearing on HB 239.
CHRIS HLADICK, City Manager
City of Unalaska
Unalaska, Alaska
POSITION STATEMENT: Testified during the hearing on HB 239 to
explain why the proposed legislation is not necessary.
CHRIS KOWALCZEWSKI, Program Manager
Pre-Development (Pre-D) Program
The Foraker Group
Anchorage, Alaska
POSITION STATEMENT: Testified during the hearing on HB 239.
COLIN MAYNARD, Member
Alaska Professional Design Council (APDC);
Chair
Qualifications-Based Selection (QBS) Committee
Anchorage, Alaska
POSITION STATEMENT: Testified during the hearing on HB 239.
TERRY NEIMEYER, Chair
American Council of Engineering Company (ACEC)
Washington, D.C.
POSITION STATEMENT: Testified during the hearing on HB 239.
MARK O'BRIEN, Chief Contracts Officer
Contracting and Appeals
Office of the Commissioner
Department of Transportation & Public Facilities
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
239.
SAM KITO III, Architect
School Finance and Facilities Section
Department of Education & Early Development
Juneau, Alaska
POSITION STATEMENT: Testified during the hearing on HB 239.
KATHIE WASSERMAN, Executive Director
Alaska Municipal League
Juneau, Alaska
POSITION STATEMENT: Testified in opposition to HB 239.
ACTION NARRATIVE
8:08:49 AM
CHAIR BOB LYNN called the House State Affairs Standing Committee
meeting to order at 8:08 a.m. Representatives Keller, Seaton,
Johansen, Petersen, Gruenberg, and Lynn were present at the call
to order. Representative P. Wilson arrived as the meeting was
in progress.
HB 239-PROF. SERVICES IN STATE-FUNDED CONTRACTS
8:09:05 AM
CHAIR LYNN announced that the only order of business was HOUSE
BILL NO. 239, "An Act relating to the procurement of
architectural, engineering, or land surveying contracts funded
by money from the state."
8:09:25 AM
MIKE COUMBE, Staff, Representative Lindsey Holmes, Alaska State
Legislature, presented HB 239 on behalf of Representative
Holmes, sponsor. He stated that the proposed legislation would
apply the standards currently used to select those who plan
public works projects to all state-funded projects, including
projects run by nonprofit organizations and local governments.
He said the standards are already in place for projects using
federal funds. He relayed that HB 239 would require the
contractor to choose the most qualified, most experienced person
to do the design work, to help ensure that projects are designed
correctly the first time. Mr. Coumbe said this system is
currently used by the federal government, 41 other states, and
many other local governments around the state, including
Fairbanks, Anchorage, and Juneau. He noted those available to
testify.
8:11:47 AM
REPRESENTATIVE SEATON directed attention to [subsection (b)],
beginning on page 2, line 3, of HB 239, which read as follows:
(b) If negotiations with the most qualified and
suitable professional person under (a) of this section
are not successful, the contracting person shall
negotiate a contract with other qualified professional
persons of demonstrated competence, in order of the
ranking of the proposals by the contracting person.
REPRESENTATIVE SEATON asked if there has been much litigation
related to the choice of most qualified bidder. He then noted
that the State of Alaska has a small procurement process for
those procurements under $100. He related that several of the
municipalities in his district already use this process. He
said [the state] gives a lot of small grants to nonprofit
organizations that may need to do some minor surveying or
engineering. He stated, "I would like to find out whether the
people who are testifying on this bill have a problem with
inserting the same level of procurement ... in this bill, so
that small procurement processes for nonprofits and
municipalities -- that the small capital grants that we give
could be under the small procurement process instead of this
process."
8:14:43 AM
REPRESENTATIVE SEATON drew attention to a proposed amendment in
the committee packet, labeled 27-LS0596\M.2, Bannister, 3/28/12,
which read as follows [original punctuation provided]:
Page 2, line 22, following "that":
Insert "(1)"
Page 2, line 23, following "construction":
Insert "; or
(2) would not exceed the amount for small
procurements under AS 36.30.320(a) if the contract
were subject to AS 36.30 (State Procurement Code)"
REPRESENTATIVE SEATON clarified, "In other words, if the amount
of the grant that we're giving is less than the amount that the
state uses for small procurement process, then it would be
exempt from the procedure."
8:15:52 AM
MR. COUMBE, in response to Chair Lynn, said the definition of
"best qualified" is set by [the person doing the contracting] -
the person who is the receiver of the state funds - and it will
differ depending upon the needs of the localities.
8:16:57 AM
REPRESENTATIVE P. WILSON said she knows of contractors who
repeatedly get bids by under-bidding, but end up charging more
when the cost of the project rises above the bid price. She
said there has even been a law suit, which takes considerable
time, during which one of the contractors that was sued
successfully got another project started by under bidding yet
again. She questioned what affect HB 239 would have on such a
practice.
8:18:13 AM
MR. COUMBE said HB 239 is designed to help solve that problem,
because instead of going to the lowest bid for design work there
would be a ranking of the people as to qualification. The
proposed legislation takes the lowest bid choice out of the
equation. He said, "You have to choose the most qualified first
[and] negotiate. If you're not satisfied with that negotiation,
you can go to the next most qualified next, but you're always
going through the list as you have determined where the ranking
of qualifications are." In response to a follow-up question, he
said this pertains to the design of the project, not for the
construction of the project.
REPRESENTATIVE P. WILSON concluded that under HB 239, those who
are not experienced would not be given a chance.
MR. COUMBE responded that the intent is to pick the most
experienced first for the design phase, because the design of
the project will determine how the rest of the project will go.
REPRESENTATIVE P. WILSON reiterated that this would never give a
chance for someone new to come in and do something.
MR. COUMBE ventured there is probably some other way for a brand
new person to work with someone with more experience first.
REPRESENTATIVE P. WILSON opined that the proposed legislation
would set things up well for those already established and that
is not fair.
CHAIR LYNN concurred. He offered his understanding that a
person who gained experience by working with someone who is
experienced, then started his/her own company, would again be
considered inexperienced.
8:21:25 AM
MR. COUMBE deferred to those in the practice.
8:21:45 AM
REPRESENTATIVE KELLER asked how the state monitors what
municipalities do on their state contracts.
MR. COUMBE answered that currently state agencies deal with the
people who are running the state funds projects - municipalities
or nonprofit organizations - and those agencies are currently
responsible for monitoring the contracts and enforcing the law,
and they will continue to do so under HB 239. In response to a
follow-up question, he said the agency involved is whichever
agency is doing the contract work.
8:23:26 AM
REPRESENTATIVE P. WILSON offered another example of those with
experience keeping those without experience from having a good
chance at working. She said the result was increasing costs
around the state. She opined that someone with more experience
may not necessarily be the better choice over someone just out
of school. She posited that [HB 239] will raise the cost of
doing business in Alaska.
8:24:46 AM
MR. COMBE reminded the committee that the state currently uses
this qualification-based selection, and the intent of HB 239 is
to expand that practice to municipalities when state funds are
involved.
8:25:55 AM
REPRESENTATIVE GRUENBERG directed attention to a legal
memorandum, dated 1/24/11, [included in the committee packet],
which he said raises a number of issues that he wants addressed
at some point.
8:26:22 AM
REPRESENTATIVE SEATON opined that the question Representative P.
Wilson raised is an important one. He suggested that a bidder
who underbids and ends up charging more could be lowered on the
qualified bidder ranking list.
MR. COUMBE deferred to a future testifier, but said HB 239 would
not limit the criteria that the municipalities or nonprofit
organizations would use to determine the qualifications.
8:28:01 AM
MR. COUMBE, in response to Chair Lynn, said under HB 239 the
municipalities would still determine the qualification factors
to ensure that the design work is done by the most qualified.
8:30:28 AM
TERRY SCHOENTHAL, USKH, testified on behalf of USKH, which he
imparted is a design firm that has architects, engineers,
landscape architects, and surveyors. He addressed some of the
issues brought up by committee members. He predicted that HB
239 would have significant ramifications in cost to the state,
because smaller communities do not hire solely on cost, but also
on expertise. He relayed that in cases where cost is factor,
there is a high preponderance of cases that go to the low
bidder.
MR. SCHOENTHAL said there seems to be a consistent pattern of
confusing the construction portion of a project with the design
portion. He said they are two completely different animals. A
designer is hired not only to do the design, but also to prepare
a set of legal documents that allow the community to bid the
project and get fair bids. Those documents can be lengthy;
every aspect of the project is identified in them. When and
request for proposals (RFPs) come out for design, it is about 20
pages long, and there is perhaps only 1 page that describes the
design aspect. Frequently, at the start of a project, he said,
everything that will be needed is not known.
MR. SCHOENTHAL, in response to Representative Seaton's concern
about litigation, relayed that although selection based on
qualification occasionally results in protest, it rarely results
in litigation. Regarding small procurement, he said it already
exists throughout the state. Regarding fairness to those with
less experience, he said he has helped people get their start in
the business, but does not recommend hiring someone without
experience in design work when spending state money, especially
in rural areas. He said, for example, that when people are
brought from outside Alaska, they are not familiar with the
circumstances that are common to the Alaska environment. He
said it takes years of practice to be able to design for Alaska.
He said a person who leaves a firm and starts off on his/her own
does not start from scratch, but carries a collection of work to
the new venture.
8:37:40 AM
MR. SCHOENHAL mentioned fairness, and he said at the start of a
project, with the RFP, the actual statement of work for almost
all design projects is minimal, which makes it virtually
impossible to bid on the work itself. He said many communities
already have a qualification-based process in hand.
8:39:00 AM
CHAIR LYNN asked Mr. Schoenthal to explain why municipalities,
rather than state, should be able to decide between methods of
procurement.
MR. SCHOENTHAL answered that when state money is involved,
Alaskans have a vested interest in how that state money will be
spent in municipalities, and he opined that the state should
have a say in how the municipalities will spend that money. He
said at the local level, larger communities often have staff
with experience on how to select the best contractors, whereas
smaller communities "have a tougher go of it" and go through the
bidding process. He indicated that some communities may be
accustomed to using the bidding process for small projects and
think they might as well use the bidding process for design
work, but he said they should not do that. He explained that
the design aspect often is not clearly defined and can include a
much broader range of services.
CHAIR LYNN interpreted Mr. Schoenthal as saying that "this" is
akin to the federal government telling Alaska how to spend the
money it gives the state. He asked if that is correct.
MR. SCHOENTHAL answered that it is to a degree. He said
currently the federal government requires designers to be
selected based on qualifications for virtually all state
projects, "and what we're asking is that when state monies pass
through to these smaller communities that they ... use a ...
similar way of making those selections."
CHAIR LYNN asked, "So, we follow the federal model?"
MR. SCHOENTHAL answered, "Well, I would say we follow the state
model."
8:41:45 AM
REPRESENTATIVE SEATON directed attention to [the first sentence]
of subsection (e), on page 2, beginning line 12, which read as
follows:
(e) Notwithstanding the other provisions of
this section, a contracting person may include price
as an added factor in selecting architectural,
engineering, or land surveying services when, in the
judgment of the contracting person, the services
required are repetitious in nature, and the scope,
nature, and amount of services required are thoroughly
defined by measurable and objective standard to enable
professional persons making proposals to compete with
a clear understanding and interpretation of the
services required.
REPRESENTATIVE SEATON asked Mr. Schoenthal if he thinks those
are necessary restrictions. He opined that the language seems
so heavily modified that it may make the ability to include
price meaningless.
8:43:16 AM
MR. SCHOENTHAL explained that the language illustrates that when
services are going to be put to bid, there needs to be a clearly
defined scope. He said he does not have a problem with a
municipality or small community bidding design services, as long
as there is a clear scope of work. He stated, "The Corps of
Engineers frequently ... bids it as part of the design/build
project." He pointed out that an RFP for a Corps of Engineers'
project is often 1,000 pages long. Using a vehicle purchase as
an analogy, he said that when someone says they want a car, then
that information does not reveal whether he/she wants a Cadillac
or a [Ford] Fiesta. He said it is difficult to get reasonable
bids on a project when the description of that project is only
two pages long.
8:45:03 AM
REPRESENTATIVE GRUENBERG ventured that subjective criteria as
opposed to objective could cause protest and litigation. He
said state procurement code falls under AS 36.30 and HB 239
would create AS 36.90. He said he sees potential for protests
involving communities and/or various professional firms across
the state. He said the committee has not seen estimates to what
additional costs to consumers may be, and he questioned who
should adjudicate these issues.
8:48:37 AM
MR. SCHOENTHAL said in his 25 years of experience he has never
worked for a firm that litigated as a result of not having been
chosen for a project based on what Representative Gruenberg has
identified as subjective criteria. He suggested to the
committee that "it's much less subjective than you think it
might be." Those who write RFPs must identify exact projects,
references, and other objective information. He clarified that
his experience has shown far less litigation [resulting from
design bidding] compared to litigants from the contracting side
that are protesting bids.
REPRESENTATIVE GRUENBERG questioned whether there may be a need
for a provision in bill as to how any disputes should be
resolved by the state.
MR. SCHOENTHAL responded that currently litigation is handled
locally by municipalities.
8:52:49 AM
REPRESENTATIVE GRUENBERG offered an example wherein a group of
his constituents used state money to purchase land on which to
build a cultural center, but subsequently realized they could
not afford the project and asked for the money back, which they
had a right to do. However, the person who had sold the land
not only did not give the money back, he/she also tried to file
for bankruptcy. Representative Gruenberg said there is no
provision to protect the state's money in this type of
situation. He observed that under HB 239 there may be a lot of
state money given to municipalities, but there is no language in
the bill to the state's investments.
8:55:10 AM
MR. SCHOENTHAL said, "This bill doesn't change that." However,
he said in the bidding of contracts, it is the oversight of
other contractors that "keeps the system honest."
8:56:27 AM
REPRESENTATIVE PETERSEN questioned that this bill may perpetuate
the "good ol' boys' club," which could result in the hiring of
people with connections.
MR. SCHOENTHAL said that happens not only on the municipal
level, but also on projects throughout the state, and "we"
accept it as part of the process. He noted that that happens
almost as often when bids are accepted, because bidders "are
privy to information that other contractors might not have when
they put that bid together." He said it is possible only to aim
for perfection and get as close to it as possible in an
imperfect world.
8:57:56 AM
CHRIS HLADICK, City Manager, City of Unalaska, testified that he
has been a city manager in Alaska for 20 years and has been
awarded millions of dollars in projects over the years. He said
Unalaska has constructed many public works projects, which have
been financed in partnership with the State of Alaska, and he
said the community appreciates the state's support and has
always complied with purchasing and procedural rules. He
offered examples of projects done with state money.
MR. HLADICK offered his understanding that the intent of the
bill is to prevent municipalities from coming back to the state
to ask for more money as a result of design errors. He said the
City of Unalaska has never done this. He said the most
significant design problems he has dealt with as a city manager
have been on projects where the designer was selected by the
state. He said the City of Unalaska thinks the current system
of grant agreements and regulations as a source of purchasing
procedures for design services adequately protects the state
from cities using incompetent design professionals. He opined
that his community does not need another state mandate. He said
the City of Unalaska is not aware of any information suggesting
projects built by municipalities have more design problems than
projects built by the state or the Corps of Engineers. In fact,
he said, 1,200 pages of documents would result in higher costs
overall. He mentioned an upcoming presentation by the City of
Unalaska that explains the process the city uses in selecting
design consultants. Mr. Hladick stated that HB 239 is not
needed, because design professionals are already selected based
on qualifications, and any requirements regarding the method of
selection the state desires can be contained in grant agreements
or regulations, which are much more easily adaptable to changing
circumstances than a state statute.
9:01:09 AM
REPRESENTATIVE GRUENBERG suggested that if the committee is
going to hear testimony from design professionals who support HB
239 and individual cities that oppose HB 239, then it should
also hear from state agencies to address whether the legislation
should focus on providing a mechanism for the state to be able
to monitor the situation to see if any problems arise as a
result of HB 239.
9:03:14 AM
REPRESENTATIVE SEATON asked Mr. Hladick if he would support HB
239 if it included an exclusion for small procurements of, for
example, $100,000 or $200,000.
9:03:54 AM
MR. HLADICK replied that he would have to consider the question
and return with an answer. In response to Representative
Gruenberg's previous suggestion, he said an issue for the state
has always been how to get the most for the money and assure
quality control. He said, "I think we all can't disagree with
that comment."
9:05:28 AM
CHRIS KOWALCZEWSKI, Program Manager, Pre-Development (Pre-D)
Program, The Foraker Group, stated that one purpose of the Pre-D
Program is to prevent situations such as Representative
Gruenberg described from occurring in his district. She said
the Pre-D Program assists with the procurement of design
services about 12 times a year.
MS. KOWALCZEWSKI said she would focus on whether or not the
proposed legislation is needed, from the standpoint of the
recipients of state grants. She said most of the organizations
the Pre-D Program works with are small non-profits and
communities with little experience with capital project
[grants]. Many of them assume that professional services are
bid to just like construction services. Some municipalities
have procurement codes that require this approach, she said, but
in most organizations it is usually a case of not understanding
the options; some think that the same process is used to apply
for design bids as is used to apply for construction bids. When
an inexperienced organization attempts to bid design services,
it is usually not in a position to clearly define the scope of
work. She offered an example wherein the bids varied greatly
because the bidders had to make assumptions as to the level of
public involvement, how many public meetings there would be, and
when specialists should be utilized. The main concern of the
municipality had been to get a firm price within its budget.
9:09:26 AM
MS. KOWALCZEWSKI said an organization must negotiate with the
most qualified firm to obtain the services desired within
budget. If a negotiation does not result in agreement, then the
organization can then negotiated with the next most qualified
firm. She said most projects go through the qualification-based
selection process, and most experienced developers know they are
better off using a competitive qualification-based selection
process or they have the expertise to develop the detailed bid
specifications that are needed to bid it. She stated that
communities and non-profit organizations are told about the
advantages of the qualification-based system and are "quite
willing to ... go down that road"; it is only the municipalities
and organizations with procurement policies requiring that
services be bid and inexperienced organizations that don't know
about qualification-based elections that run the risk of getting
less than they need in terms of services, with no option for
negotiations.
MS. KOWALCZEWSKI indicated that although this issue is not a big
problem in the state, there is no reason not to support the
proposed legislation. She said HB 239 would remove some of the
uncertainty about the process of obtaining professional services
and ensure that the most vulnerable of the state's small non-
profit organizations and communities do not waste their limited
resources on less than adequate lowest bidders' designs.
9:12:29 AM
MS. KOWALCZEWSKI talked about the criteria to decide who is most
qualified. She said it usually has to do with experience with a
specific type of design and locale of a project, considers the
history of a design firm in staying within budget and on
schedule, and looks at the specific way a firm delivers
services. All of that information helps an organization or
municipality to decide who is in the best position to deliver
the service.
9:13:53 AM
MS. KOWALCZEWSKI, in response to Chair Lynn, clarified that
local communities know best the qualifications that need to be
met to design a project for their area. Once a selection is
made based on qualification, she said, it is up to the community
to include costs, if it wishes to do so. She said, "This does
not take away that control from the community; it just gives
them more options for getting a better choice."
CHAIR LYNN offered his understanding that under HB 239, "they"
don't have that many options.
MS. KOWALCZEWSKI offered her understanding that under HB 239,
the selection would be made on the basis of qualification first
and then, following that, negotiations on costs could be made.
She added, "In practice, it becomes part of the selection
process."
9:17:12 AM
REPRESENTATIVE SEATON referred back to the first sentence of
subsection (e), on page 2, lines 12-18 [text provided
previously], and he noted that there are many restrictions
placed on the ability of contracting persons to include price as
an added factor in selecting services. He asked Ms. K if The
Foraker Group would have any objection to the removal of those
restrictions.
MS. KOWALCZEWSKI responded that she is against the removal of
that language, because it is necessary to ensure a clearly
defined level of work.
9:19:12 AM
REPRESENTATIVE GRUENBERG offered his understanding that The
Foraker Group assists smaller non-profit organizations rather
than municipalities.
MS. KOWALCZEWSKI said that is correct; however, she relayed that
recently The Foraker Group has worked with municipalities on
library projects.
REPRESENTATIVE GRUENBERG offered his understanding that Ms. K is
the only one who has testified on behalf of nongovernmental
grantees. He said he is wondering whether HB 239 will provide
an opportunity for "us" to assist grantees in successfully
negotiating the process. He said he may be looking more to Ms.
Kowalczewski's clientele, rather than municipalities, because
municipalities already have a set of laws.
MS. KOWALCZEWSKI responded, "That is exactly my direction here."
She reiterated that the smaller non-profit organizations are
confused by the process. She posited that the benefit of [HB
239] to the non-profit sector would be to clarify expectations.
She added, "And I think they would be happy to comply with
those."
REPRESENTATIVE GRUENBERG said he would like Ms. Kowalczewski's
advice as to helping "these people" to prevent the type of
situation as he previously described in his district from
reoccurring.
9:25:49 AM
COLIN MAYNARD, Member, Alaska Professional Design Council
(APDC); Chair, Qualifications-Based Selection (QBS) Committee,
said qualifications-based selection is already used across the
state, and HB 239 would remove only the fee as one of the
criterion. He said unfortunately the fees can run a wide gamut,
because the scope of work is not clearly defined. He offered an
example. He said most organizations do not have the
sophistication to well-define the scope of work, which leaves
those submitting bids to doing a lot of guesswork. He said
negotiating a fee and scope of work with the most qualified team
will result in a meeting of the minds between the two parties
and a much better project, with a design team that will "get you
a better set of construction documents that are going to save
you a lot of money on 99 percent of the total project costs."
MR. MAYNARD addressed previous questions. He said he has only
heard of one instance in his 32 years of experience where the
most qualified was not able to negotiate a scope and fee, and he
said he has not heard of any litigation regarding selection of
design (indisc. - coughing) and qualifications-based selection.
Regarding the small procurement process, he said APDC does not
have a problem with that. In response to Representative
Seaton's question about the language on page 2, [subsection
(e)], he said he would not advise eliminating the [restrictive]
language because it would gut the bill. He offered an analogy
of buying a car without specifying its features. He said when
fee is used as part of the selection criteria, many times what
the owner thinks is included and what the designer thinks is
included differ.
9:30:42 AM
REPRESENTATIVE SEATON asked Mr. Maynard if he thinks there has
to be a qualification that price can only be included when [the
services required] are "repetitious in nature", even when the
scope of the work has been fully defined.
MR. MAYNARD recommended leaving "repetitious in nature" in the
language, because it would leave another option. He said
repetition in services could aid in determining price or scope.
REPRESENTATIVE SEATON pointed out that the way the language is
in subsection (e), "repetitious in nature" is connected to "the
scope, nature, and amount of services required" by "and";
therefore, it cannot be considered individually. He asked Mr.
Maynard, "Do you think that it needs to be that you can only use
price if the service is repetitious in nature?"
MR. MAYNARD answered yes, because every construction project is
different.
9:32:31 AM
TERRY NEIMEYER, Chair, American Council of Engineering Company
(ACEC), relayed that ACEC is an advocacy organization comprised
of 5,000 members and over 500,000 employees throughout the U.S.
He further relayed that ACEC of Alaska is comprised of 33 member
firms, with 1,264 employees, and is a member of APDC. Mr.
Neimeyer said he would give a perspective on what is happening
in relation to qualifications-based selection across the
country. He said from ACEC's perspective, qualifications-based
selection is the preferred method of selection for four reasons.
The first reason is because it is unique. He echoed Mr.
Maynard's comment that scope needs to be defined in order to
find the proper engineer. The second reason is that there are
long-term savings on projects. He said the following costs are
considered: the cost of engineering, the cost of construction,
and the cost of change orders associated with the construction.
He said engineers are in the business of securing the public
interest, and low bidding is not a good technique to do so. He
said many of Alaska's problems are unique to the state. He
mentioned studies in which ACEC participated in the late '80s,
in Florida and Maryland, which proved conclusively that low-bid
engineer services cost total projects more than final costs.
Including Alaska, there are 46 states that require
qualifications-based selection, and of those 46, 25 have
statutes that require local entities using state funds to use
qualifications-based selection. He said Washington, Oregon, and
Montana "have it on their books."
MR. NEIMEYER said at the last hearing he attended people
[asked], "Is it broken?" He said his answer is: "Yes, it's
broken but it's not visible, because it's buried in the total
project cost ...." He relayed that QBS is endorsed by the
American Bar Association, the American General Contractors
Council, and the American Public Works Association. He said the
reason QBS is chosen is because it results in the overall lowest
cost. Mr. Neimeyer stated that he has never heard of an
instance where there has been litigation over this issue. He
posited that QBS actually reduces litigation by reducing the
number of change orders.
MR. NEIMEYER said it is not impossible to hire someone new, but
in terms of public safety, he used a heart surgeon analogy:
"Even though you don't want to use the guy that's having his
first major heart surgery, you wouldn't mind if somebody is
looking over your doctor's shoulder, who's the most qualified,
who is watching him do the surgery before they would operate on
you." Regarding whether it is possible to use a percentage of
change order on a contract as a selection criterion, Mr.
Neimeyer said yes. He explained that a person could answer "not
as qualified" under the question, "What is your change order
experience?"
9:37:57 AM
REPRESENTATIVE GRUENBERG asked Mr. Neimeyer if he thinks it
would be helpful to have some way to assist communities in
having this new requirement given to them.
MR. NEIMEYER responded that there are two states in union,
Wyoming and Montana, which are similar to Alaska in that much of
the land area is sparsely populated. Both those states have QBS
statute. He relayed there are two resources for small
communities. The first, he said, is a section regarding QBS on
ACEC's web site, which shows the whole process. The second is
that American Public Works Association has a group of officials
that can help during a typical highway project, for example, by
providing a list of qualifications to use to set up criteria.
Both resources are complimentary.
9:42:06 AM
MARK O'BRIEN, Chief Contracts Officer, Contracting and Appeals,
Office of the Commissioner, Department of Transportation &
Public Facilities, offered to answer questions from the
committee. In response to Representative Seaton, he said
currently the provision for QBS is found in the competitive
sealed proposal statute and "triggers at [an] amount above the
small procurement threshold." He said "in this case" the QBS
procedure does not apply to the small procurement statute. He
said a QBS is conducted for most small procurements done by
architects, engineers, and land surveyors, because it is the
right thing to do.
REPRESENTATIVE SEATON asked Mr. O'Brien to explain how integral
land surveying is to the architectural and engineering sections
of HB 239.
MR. O'BRIEN said he is not sure it is an issue of integration,
but rather is a question of history. He said the Brooks Act,
which mirrors the QBS on the federal side, started with those
three categories. As states, municipalities, and other owners
adopted similar provisions, they did so based on the same
structure that was in that Act. He said AS 36.30.270 is often
called "the mini Brooks Act," because it closely resembles the
original Act.
9:45:22 AM
REPRESENTATIVE SEATON asked Mr. O'Brien if he sees the same
savings and problems occurring in engineering and architectural
[services] as in land surveying services or if he sees them at
the level of fairly small grants, as being a "different animal."
MR. O'BRIEN answered that he does not have experience in that
area. Notwithstanding that, he ventured, "In general since
they're similar in their licensure and similar in the way
they're treated as professionals, I think that's why they're
included in the same category."
9:46:43 AM
REPRESENTATIVE GRUENBERG observed there are governmental and
non-governmental grantees. He said he would like to see an
encouragement on policy basis and assistance from the state to
help grantees see the benefit and make the transition.
9:47:41 AM
MR. O'BRIEN said he agrees that providing assistance makes
sense; however, he said he does not know what resources are
available to do that. He said there are grant administrators in
the state.
REPRESENTATIVE GRUENBERG asked Mr. O'Brien to think on this.
9:48:55 AM
REPRESENTATIVE P. WILSON asked if currently a rebid can take
place if negotiations are not successful.
MR. O'BRIEN answered yes, under certain circumstances.
REPRESENTATIVE P. WILSON offered her understanding that "this
bill takes that away."
MR. O'BRIEN said he is not aware that that would occur under HB
239.
REPRESENTATIVE P. WILSON said a memorandum from the city manager
of Unalaska is where she read that comment.
MR. O'BRIEN said he has seen a rebuttal to that from APDC, and
he offered his understanding that APDC does not believe that
that language is in the proposed legislation. In response to
Chair Lynn, he said the department does not have position on the
bill. He added, "It doesn't really affect us."
9:50:58 AM
SAM KITO III, Architect, School Finance and Facilities Section,
Department of Education & Early Development, stated that the
department passes funding through to the school districts, which
then implement the projects. He said the department has a
regulation that requires that school facility projects be
selected with a most qualified offer; it is regulation 4 AAC 31
06 5. One component of the regulation is the most qualified
offer and the other is ensuring competition. He said the
regulation requires that the process be followed for those
projects that have a design fee that exceeds $50,000, which is
significantly higher than the small procurement level for the
Department of Transportation. He offered his understanding that
there are two reasons for that: to ensure that the process is
competitive and qualifications based.
9:53:05 AM
KATHIE WASSERMAN, Executive Director, Alaska Municipal League,
testified in opposition to HB 239. She remarked that so much
time has been devoted by the legislature in discussing this
issue, when there is really no need for it. Furthermore, she
stated that the majority of municipalities that do not use this
method also do not see a need for it. She questioned a
statement made by a previous testifier that a majority of
municipalities in the state use this method, but said even if
that is true, she does not see what the problem is. She said
she also does not see a problem with those municipalities that
choose not to use it.
MS. WASSERMAN stated that when she was the city manager and
mayor of Pelican and received money from the state, usually the
agency that gave the money - the Department of Transportation -
helped with the RFP process. She said help is already there for
the asking. She opined that HB 239 is "terribly intrusive
legislation."
REPRESENTATIVE GRUENBERG said he has heard a dichotomy in the
testimony: the design professionals opined it would be
beneficial and Ms. Wasserman says it should not be mandatory.
He said he does not see those two views as mutually exclusive.
He suggested the needs of nongovernmental and governmental
entities may differ. He asked Ms. Wasserman how AML would feel
about having legislation that would assist those communities
that would like to learn about the process and, if so, how that
should be done.
MS. WASSERMAN said the state could help those communities
through the RFP process without any new legislation. She stated
that remote municipalities have found numerous times that the
state steps in to do something and then leaves the
municipalities on their own to figure out the process.
REPRESENTATIVE GRUENBERG suggested that HB 239 could be a
vehicle to assist those communities.
MS. WASSERMAN said while she appreciates that thought process,
she thinks "that is another problem outside of the scope of
this."
9:59:19 AM
REPRESENTATIVE SEATON moved to adopt Conceptual Amendment 1, to
change [the first] "and" on page 2, line 15, to "or". There
being no objection, Conceptual Amendment 1 was adopted.
10:00:13 AM
REPRESENTATIVE SEATON moved to adopt Conceptual Amendment 2, to
remove "land surveying" from the bill title and from the body of
the bill. There being no objection, Conceptual Amendment 2 was
adopted.
10:00:47 AM
CHAIR LYNN said HB 239 is a complicated piece of legislation.
He talked about trying to be fair to everyone, while protecting
local governments and the state's money - which is really the
people's money.
10:01:11 AM
CHAIR LYNN closed public testimony.
CHAIR LYNN announced that HB 239 was held over.
10:01:45 AM
ADJOURNMENT
There being no further business before the committee, the House
State Affairs Standing Committee meeting was adjourned at 10:02
a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 12 Additional Documents - HB239 Seaton Amendment M.2.pdf |
HSTA 3/29/2012 8:00:00 AM |
HB 239 |