Legislature(2019 - 2020)ANCH BENSON BLDG
10/06/2020 01:00 PM House STATE AFFAIRS
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| Audio | Topic |
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| Start | |
| Presentation: State Procurement and Contracts | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE STATE AFFAIRS STANDING COMMITTEE
Anchorage, Alaska
October 6, 2020
1:00 p.m.
MEMBERS PRESENT
Representative Zack Fields, Co-Chair
Representative Jonathan Kreiss-Tomkins, Co-Chair (via
teleconference)
Representative Andi Story (via teleconference)
Representative Steve Thompson (via teleconference)
MEMBERS ABSENT
Representative Grier Hopkins
Representative Sarah Vance
Representative Laddie Shaw
COMMITTEE CALENDAR
PRESENTATION: STATE PROCUREMENT AND CONTRACTS
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
BARRY JACKSON
Anchorage, Alaska
POSITION STATEMENT: Provided a PowerPoint presentation,
entitled "Presentation on Procurement and Contracts," dated
10/6/20.
EMILY NAUMAN, Deputy Director
Division of Legal and Research Services
Legislative Affairs Agency
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the presentation
on state procurement and contracts.
JAMES BALDWIN, Attorney
Juneau, Alaska
POSITION STATEMENT: Testified during the presentation on state
procurement and contracts.
ROSS KOPPERUD
Palmer, Alaska
POSITION STATEMENT: Testified during the presentation on state
procurement and contracts.
ACTION NARRATIVE
1:00:54 PM
CO-CHAIR ZACK FIELDS called the House State Affairs Standing
Committee meeting to order at 1:00 p.m. Representatives
Thompson (via teleconference) and Fields were present at the
call to order. Representatives Story (via teleconference) and
Kreiss-Tomkins (via teleconference) arrived as the meeting was
in progress.
^PRESENTATION: State Procurement and Contracts
PRESENTATION: State Procurement and Contracts
1:01:13 PM
CO-CHAIR FIELDS announced that the only order of business would
be a presentation on state procurement and contracts by Barry
Jackson, retired state procurement officer.
1:01:29 PM
BARRY JACKSON informed the committee that he is a retired state
procurement officer with 30 years of experience in the
Department of Administration's (DOA's) statewide procurement
functions. While working for the state, Mr. Jackson said he
functioned as an assistant purchasing agent; purchasing agent I,
II, and III; and the state contracting and facilities manager.
He said during that time, he conducted thousands of competitive
sealed bids and competitive sealed proposals. He continued to
provide a short history of his work experience, which included
negotiating the purchase of the Robert B. Atwood Building in
downtown Anchorage to consolidate state offices. He noted that
during his tenure as a state employee, he served as president of
the Alaska Public Employees Association (APEA) and as a chief
negotiator of the first collective bargaining agreement for the
General Government Bargaining Unit. Later, he was the campaign
chairman for the successful effort to separate the general
government employees bargaining unit from APEA, which initiated
the Alaska State Employees Association (ASEA). After
retirement, Mr. Jackson said he was hired as an IT developer and
project manager for multimillion-dollar contracts with firms
such as BP, ConocoPhillips Alaska, ENSTAR Natural Gas Company,
and Chugach Electric Association. He added that he is qualified
to examine state contracts; IT practices; and labor, employment,
and personnel issues.
1:05:10 PM
MR. JACKSON provided a PowerPoint presentation, entitled
"Presentation on Procurement and Contracts." He directed
attention to slide 2, which indicated that the request for
proposal (RFP) 2020-0200-4381 was developed and conducted with
severe faults, including [original punctuation provided]:
-illegal specifications
-unduly restrictive responsiveness requirements
-irrelevant required services
-suppression of competition
-failure to preserve critical public records
-contract execution in willful violation of a clear
due process statutory restraint
-contract execution despite the lack of statutorily
required licensing
MR. JACKSON directed attention to slide 3, which highlighted
Alaska case law from McBirney & Associates v. State of Alaska,
which read as follows [original punctuation provided]:
The state has an established procurement process which
includes competitive bidding. The purposes of
competitive bidding are to prevent fraud, collusion,
favoritism, and improvidence in the administration of
*1136 public business, as well as to ensure that the
[state] receives the best work or supplies at the most
reasonable prices practicable. ... [T]he requirement
of public bidding is for the benefit of property
holders and taxpayers, and not for the benefit of the
bidders; and such requirements should be construed
with the primary purpose of best advancing the public
interest.
MR. JACKSON said the case law provides a heightened
understanding of why Alaska puts competition first and foremost
in public procurement. He explained that [competitive bidding]
should be conducted with absolute fairness, adding that it's
vitally important that the citizens of Alaska have confidence in
the expenditure of state funds. He continued to slide 4, which
provided the following quote from the State of Alaska
Procurement Manual [original punctuation provided]:
The State of Alaska has several procurement methods
available to ensure that when an agency acquires goods
or services, they are procured at the best possible
cost to meet the needs of the agency while promoting
fair and open competition and protecting the interests
of both the state and the vendors.
MR. JACKSON explained that the state is generally interested in
getting the best price while vendors are interested in having a
fair opportunity to compete for the state's business. Slide 5
highlighted additional text from the procurement manual, which
read as follows [original punctuation provided]:
Competition is important to both the state government
and the vendor community in that it encourages not
only better pricing and value, but also fairness,
transparency, and innovation. ... Regardless of the
procurement method used, how an agency describes what
they need can also affect competition. In general,
this description - referred to as the specification -
should be written to allow as much competition as
possible.
1:10:21 PM
MR. JACKSON continued to slide 6. He explained that RFP 2020-
0200-4381 was intended to be the means by which the APEX project
was undertaken and the beginning of its early operational pilot
program. The RFP was issued on September 19, 2019 with
Commissioner Kelly Tshibaka as the project manager. He stated
that one section of the RFP, the prior experience clause,
contains all the difficulties that were encountered and
reviewed. Slide 7 provided part of Section 1.04, which read as
follows [original punctuation provided]:
SEC. 1.04 PRIOR EXPERIENCE
"Offerors must have experience in strategy, planning,
and implementation of large-scale government shared
services or Information Technology consolidations. All
Offerors must be a member of the National Governors
Association Partners (NGA Partners), or a firm that
offers all the following services in-house (without
subcontracting): professional services, audit,
assurance services, taxation, management consulting,
advisory, actuarial, corporate finance and legal
services. Offerors must have been in business as a
company in good standing for at least 25 years.
An offeror's failure to meet these minimum prior
experience requirements will cause their proposal to
be considered non-responsive and their proposal will
be rejected."
MR. JACKSON directed attention to slide 8, which highlighted
issues with the first sentence of Section 1.04, "Offerors must
have experience in strategy, planning, and implementation of
large-scale government shared services or Information Technology
consolidations." He explained that the placement of "or"
creates two options: the opening sentence allows potential
offerors to have experience in strategy planning, implementation
of large-scale government shared services or experience in
information technology consolidations. He said in contracting
law, ambiguities are held against the author of the
specification, which, in this case, is the State of Alaska.
1:16:12 PM
MR. JACKSON continued to slide 9, which exhibited a flow chart
that mapped the issues with the prior experience clause.
Essentially, he said, there are numerous combinations that
result in a PEC evaluation, adding that "any modest failure
stops you in your tracks." Slides 10-11 addressed the
requirement that "all Offerors must be a member of the National
Governors Association Partners (NGA Partners)." He noted that
he had never seen such a requirement. Furthermore, he reported
that NGA partners are corporate donor organizations with no
particular specialty or expertise. He speculated that any of
the donor companies, including Walmart, Land O' Lakes, Toyota,
and Hyundai, could have met the "IT consolidation experience"
requirement, the "NGA experience" requirement, and the "in
business 25 years and in good standing" requirement. He
reiterated that those companies could have met the previous
experience clause because of their NGA membership without being
able to provide any "worthwhile" assistance regarding the
contract.
MR JACKSON turned attention to slide 12 and noted that BDO, one
of the contract bidders that could not claim membership in the
NGA, performed the audit for the NGA in 2019. Slide 13, which
addressed procurement specifications in Alaska statutes and
regulations, read as follows [original punctuation provided]:
AS 36.30.060
(c) The commissioner may obtain expert advice and
assistance from personnel of using agencies in the
development of specifications. Specifications must
promote overall economy for the purposes intended and
encourage competition in satisfying the state's needs
and may not be unduly restrictive. The requirements of
this subsection regarding the purposes and
nonrestrictiveness of specifications apply to all
specifications, including those prepared by
architects, engineers, designers, and other
professionals.
2 AAC 12.090 - No unduly restrictive specifications
Except for specifications relating to procurements
under 2 AAC 12.400(b), all specifications must
describe the requirements to be met without having the
effect of exclusively requiring a proprietary supply,
service, or construction item, or procurement from a
single source, unless no other manner of description
will suffice.
2 AAC 12.790 - No restrictive terms and conditions
Contractual terms and conditions may not have the
effect of unnecessarily limiting competition or
exclusively requiring a proprietary supply, service,
or construction item or procurement from a single
source unless no other requirements will suffice.
MR. JACKSON pointed out that AS 36.30.060(c) emphasizes the need
for specifications to encourage competition, satisfy the state's
needs, and may not be unduly restrictive. He explained that
specifications cannot provide for a service or product that "is
there for the purpose of slimming down the competition that is
not actually going to be used or performed." He said the same
applies to restrictive terms and conditions in reference to the
"25-year issue."
1:24:53 PM
MR. JACKSON slide 14 displayed an opinion from the Division of
Legal and Research Services, LAA, which questioned the
appropriateness of including the NGA partnership requirement in
the RFP. Slide 15 examined a proposed amendment to the RFP, in
which at least one bidder asked if the NGA membership
requirement could be altered from a paid association membership
to a requirement based on relevant work experience. Rather than
explaining how NGA membership offers advantage to the State of
Alaska and the public interest, the state denied the request.
Other potential offerors requested an extension for the period
of solicitation to allow time for them to join the NGA, but they
were also denied. Slide 16 reexamined the prior experience
clause, highlighting the "or" in the second sentence, " All
Offerors must be a member of the National Governors Association
Partners (NGA Partners), or a firm that offers all the following
services in-house (without subcontracting): professional
services, audit, assurance services, taxation, management
consulting, advisory, actuarial, corporate finance and legal
services."
1:28:37 PM
MR. JACKSON turned attention to slides 17-18 and analyzed the
aforementioned in-house services in terms of their usefulness
regarding the solicitation. He questioned why "in-house"
services are critical to the RFP and why a bidder would be
denied for having in-house services as opposed to subcontracting
services. Furthermore, he questioned how the nine services -
professional services, audit services, assurance services,
taxation services, management consulting services, advisory
services, actuarial services, corporate finance services, and
legal services - connect to the purpose of the RFP. He
indicated that all nine requirements are generic, ill-defined,
and unduly restrictive.
1:39:39 PM
MR. JACKSON directed attention to slide 19, which highlighted AS
36.30.015(d) and 2 AAC 12.040 as follows [original punctuation
provided]:
(d) An agency may not contract for the services of
legal counsel without the approval of the attorney
general. An agency may not contract for the services
of a hearing officer or administrative law judge for
an administrative, quasi-judicial hearing without the
approval of the attorney general and the chief
administrative law judge of the office of
administrative hearings (AS 44.64.010).
2 AAC 12.040 - Procurement of legal counsel
An agency may not contract for the services of legal
counsel without the prior written approval of the
attorney general. Contracts for the services of legal
counsel may incorporate clauses for adjustments in
prices, time of performance, and total dollar amount.
MR. JACKSON continued to slide 20, which displayed the open
records request he made in search of the prior written approval
of the attorney general to contract for the legal services
stipulated in the RFP. He received a response stating that no
record matched the records description listed, indicating that
no prior approval exists. Slide 21 addressed the purpose of the
attorney general's prior written approval for any contractor to
provide "legal services" on behalf of the state. He cited
Article 18 from the Alvarez & Marsal contract, which read:
Firm will not be prevented or restricted by virtue of
providing the services under this agreement from
providing services to other entities or individuals,
including those whose interests may be in competition
or conflict with the State of Alaska's, provided Firm
discloses the conflict, the state consents, and the
contractor makes appropriate arrangements to ensure
that the confidentiality of information is maintained.
1:44:13 PM
MR. JACKSON directed attention to slides 22-24, which addressed
the requirement that "offerors must have been in business as a
company in good standing for at least 25 years" from the prior
experience clause. Slide 25 exhibited one of the RFP draft
edits, in which Commissioner Tshibaka inserted the words "in
good standing" and "25 [years]". He speculated that
Commissioner Tshibaka was writing the restrictive
specifications; however, he noted that the commissioner's degree
of involvement in drafting the entire prior experience clause is
unknown because previous drafts were unattainable. Slide 24
read as follows [original punctuation provided]:
IT 25 years ago in 1995
? Browser war was between Netscape and Microsoft
Internet Explorer
? DVD introduced
? Java 1.0 introduced
? Javascript developed
? World Wide Web is beginning to grow quickly (36
million users vs. today's 4-5 billion)
? Compuserve and AOL are the major online services
? First Sony Playstation
? Windows 95 launched (first of new generation
Operating Systems)
? Amazon.com opens
? HTML 2.0 is new standard; we are now on HTML 5
How are these relevant to today's IT capabilities and
design and development needs?
Why is 25 years in business and in good standing an
essential requirement to meeting the needs of the work
described by this RFP? It suppresses modern
competitors.
MR. JACKSON surmised that if a bidder would have been denied for
having only 24 years and 11 months in business as a company in
good standing because the requirements cannot be negotiated or
reviewed. He continued to slide 25, which readdressed the
missing draft versions of the RFP that were "identified,
described, and withheld on deliberative process privilege on
[April 27, 2020]." He opined that effort has not been put forth
to find the missing documents.
1:50:13 PM
MR. JACKSON turned attention to slide 26 and stated that the
overall result is suppression of competition through the use of
the prior experience clause. He said the only Alaska offeror,
BDO, was disqualified solely on the basis of not including the
words "legal services" in their offer. He noted that BDO's
offer was $400,000 less than Alvarez & Marsal's. Furthermore,
by disqualifying BDO, the Alaska offeror was denied the points
scoring benefits of 20 percent for the lowest cost, the Alaska
bidder preference of 5 percent, and the Alaska offeror
preference of 10 percent of points. He conveyed that whether
intended or not, the only Alaska offeror was denied the benefits
of being a qualified Alaska business. He opined that the
restrictions preventing BDO from being considered were illegally
included in the RFP. Slide 27 displayed emails from and to
Commissioner Tshibaka regarding the RFP. In the emails,
participating businesses, including Asante Alliance, requested a
deadline extension; however, the commissioner denied the
requests without further discussion.
1:56:07 PM
MR. JACKSON continued to slide 28, which read as follows:
The effect of the prior experience clause was to
preclude bidders:
? who were not Partner members of NGA, an
unaffiliated, irrelevant, voluntary organization, or
? who could not offer the nine in-house services
stipulated by section 1.04.
? in so doing, it also eliminated the only Offeror who
could receive the scoring benefits of the lowest cost,
the Alaska Bidder's Preference, and the Alaska
Offeror's Preference.
Further attempts by bidders to compete by becoming
members of NGA were denied on the basis of lack of
time; there were at least 2 requests to extend the
bidding period. Both requests were denied.
The result was that when bids were opened, there was
only 1 responsive bidder.
MR. JACKSON turned attention to slide 29 and explained that BDO
filed a formal protest, which was denied. Subsequently, BDO
appealed, followed by DOA's final decision to deny the appeal.
He noted that the State of Alaska did not inform BDO that legal
services inappropriately listed among the nine required services
in the prior experience clause. He surmised that had legal
services not been included, BDO's offer would have been
acceptable.
2:00:28 PM
MR. JACKSON continued to slide 30, which highlighted AS
36.30.365 [notice of intent to award a contract]. He stated
that AS 36.30.365 requires that the notice of intent to award is
issued to all offerors at least 10 days prior to the formal
award of a contract. He reported that in this case, the
contract was signed during that ten-day period; consequently,
the state eliminated BDO's chance of being awarded the contract,
should they have won the protest. Slide 31 provided a copy of
BDO's official protest. The protest indicated that Section 1.04
- the prior experience clause - had ironclad consequences: those
who did not list legal services in prior experience were
excluded. BDO pointed out that "legal services" is mentioned
nowhere else in the RFP, other than Section 1.04 and Section
4.04. Slide 32 examined DOA's protest response, which explained
that BDO listed all other services except legal services. DOA
maintained that BDO's failure to include legal services
prevented the bid from being considered at all because it gave
the prior experience clause a pass/fail criterion. Slide 33
addressed BDO's protest appeal to Dave Donley, DOA's deputy
commissioner. The appeal noted that legal services were never
addressed in any other section of the RFP and seem unrelated to
the work. Slide 34 detailed the state's final decision, which
reiterated that the inclusion of legal services was a
requirement; further, that failure to include legal services in
the offer resulted in BDO's rejection. Mr. Jackson explained
that by declaring the appeal as a matter of law, and facts not
in dispute, the state avoided an independent administrative
hearing, and therefore, further scrutiny of an irregular bidding
process. He pointed out that the after the appeal was denied,
BDO's only option would be a Superior Court hearing or for the
Superior Court to refer the case back to the Office of
Administrative Hearings (OAH), DOA. He noted that BDO elected
not to pursue the matter further. Nonetheless, he said that had
the appeal been properly referred to OAH, many of the questions
at hand would have been addressed.
2:09:40 PM
MR. JACKSON explained that a majority of funds appropriated for
the operation of state government and the conduct of its day-to-
day business are spent through the state's procurement system.
He emphasized the system is purposely constructed to acquire
goods, services, and supplies fairly and economically in a
manner that promotes the public interest. He reiterated that
fair competition is the keystone to promoting confidence and the
public interest. He stated that examination of several recent
large procurements revealed that faults exist. He expressed his
concern that a pattern is emerging, which indicates that the
state's procurement function is being utilized in a manner that
demotes confidence and the public interest and promotes
malfeasance. He opined that recent procurement misconduct
demands continuing examination and oversight.
2:13:35 PM
MR. JACKSON directed attention to slide 35, which read as
follows [original punctuation provided]:
The State's Procurement function is being utilized to
direct State funds toward friends and favored parties
through pressure; manipulation of Statutes and
Regulations; willful ignorance of procurement laws and
standards; and outright deception directed towards
career procurement officials for the purpose of
obtaining a desired outcome.
-Alvarez & Marsal ($5,000,000).
-Tandem Motion ($15,000,000).
-API -Wellpath ($140,000,000).
-Microsoft Azure Cloud Usage work with no contract
($15,000,000).
-AIDEA Clark Penney contract ($400,000).
-Emergency RAP allowing unrestricted contracting
($3,000,000).
- Microsoft Memorandum of Understanding with OIT for
free work on Azure Cloud.
- Removal of former CPO after threatening to reduce
salary if reappointed.
- Hiring of new CPO at $70,000 higher salary than
previous CPO.
- Use of State letterhead for multiple favorable
recommendations by Commissioners and other highly
placed partially exempt appointees to influence the
award of a multi-million-dollar State contract to a
favored Offeror in what was supposed to be a
competitive bid process.
MR. JACKSON urged the legislature to take appropriate action to
encourage confidence among the citizens of Alaska in the state
procurement system.
2:17:34 PM
The committee took a brief at-ease.
2:19:55 PM
REPRESENTATIVE THOMPSON opined that the presentation was
informative, but one-sided. He asked if the committee is
performing a "witch hunt" and expressed his concern that Mr.
Jackson is working with reporter Dermot Cole in an attempt to
gather information. Nonetheless, he acknowledged that there are
existing problems in the state's procurement system that need to
be addressed.
REPRESENTATIVE FIELDS noted that the administration was invited
to answer questions and address some of the issues raised by Mr.
Jackson, but they declined to participate. He asked Mr. Jackson
if he is associated with media or offerors engaged in the
solicitation.
MR. JACKSON said he is not associated with any of the offerors.
2:21:28 PM
CO-CHAIR KREISS-TOMKINS questioned whether Mr. Jackson has seen
any procurement precedence similar to what was described in the
presentation during his service in state employment or since
then.
MR. JACKSON answered no. He opined that making use of the NGA
membership - an organization that requires a fee to join - as a
requirement of the specification is "so far off the normal path
that it's stunning."
CO-CHAIR FIELDS said he shares Mr. Jackson's concern that the
NGA membership essentially becomes "pay to play," an outcome
that is not appropriate for the procurement process.
2:22:54 PM
REPRESENTATIVE STORY asked why the state converted to a more
thorough procurement process in 1988.
MR. JACKSON explained that from 1984-1986 there was a
procurement and subsequent grand jury investigation regarding a
transaction under the Sheffield administration attempted to
restrict the bidding boundaries for an office building to favor
a friend and contributor to the governor. After the grand jury
investigation and potential impeachment action, the legislature
considered ways to improve the procurement process and decided
on the model procurement code of the American Barr Association,
a key portion of which is the establishment of a chief
procurement officer who is intended to be the ultimate authority
with regard to procurement organization and decision making in
the State of Alaska. He noted that the position was established
as a six-year position in partially exempt service that could
only be discharged for cause.
REPRESENTATIVE STORY expressed concerned about the information
that was shared today. She offered her belief that there is a
lack of understanding in regard to the procurement process. She
expressed her appreciation for the recommendation to form a
special committee on procurement. She emphasized the importance
of state dollars going towards local business that provide
necessary services.
2:27:25 PM
CO-CHAIR FIELDS stated that the procurement process is in the
jurisdiction of the House State Affairs Committee, which is why
the committee is holding this hearing. He inquired about the
recourse for someone making a records request under the Public
Records Act when DOA claims the records do not exist.
MR. JACKSON offered his understanding that if DOA asserts that
the record does not exist, the citizen or government operative
who made the public records request cannot pursue the matter
through to its conception.
CO-CHAIR FIELDS directed the same question to Emily Nauman.
2:30:05 PM
EMILY NAUMAN, Deputy Director, Division of Legal and Research
Services, Legislative Affairs Agency (LAA), said she does not
know the answer. She opined that part of the recourse for the
legislature is to hold a committee hearing. She offered to
follow up with the requested information.
2:30:37 PM
CO-CHAIR FIELDS added that he does not know whether an
administration in state history has ever refused to participate
in a wide series of legislative hearings on different oversight
issues. He opined that it is a "middle finger" to the very
notion of the balance of power and government between the
executive, legislative, and judicial branches. Regarding a
protest appeal, he questioned whether it's normal for a
subordinate of a commissioner to defy to protest on a bid where
the commissioner was involved in the original RFP.
MR. JACKSON opined that it is a conflict of interest; however,
he said he is unaware of a deputy commissioner fulfilling the
role of a commissioner in the process of ruling on a protest
denial. He said Alaska statutes place that duty in the hands of
the commissioner.
2:32:33 PM
CO-CHAIR FIELDS asked who normally writes the prior experience
clause in a typical procurement process.
MR. JACKSON stated that the prior experience clause is
ordinarily developed by the entity requesting the service, such
as a department or subagency; however, the statewide procurement
agency would have some role in questioning and refining those
specifications.
CO-CHAIR FIELDS asked who the project manager was for this
particular RFP.
MR. JACKSON answered Commissioner Tshibaka.
2:34:27 PM
CO-CHAIR FIELDS asked what how the language in the prior
experience clause affects the process.
MR. JACKSON said the prior experience clause is specifically
used to determine whether a potential bidder is worth taking the
time and making the effort to evaluate. If a bidder fails the
prior experience clause, the evaluator never considers them
again, which is why it is essential that the requirements in the
prior experience clause have the least amount of restriction
possible. He opined that in this case, that clause was
specifically used to eliminate competition.
2:35:44 PM
CO-CHAIR FIELDS surmised that several aspects of the contract
were unusual: firstly, potential bidders had to pay a
substantial sum of money to be a member of an unrelated
organization, the NGA; secondly, there was a 25-year prior
experience threshold; thirdly, the commissioner had a high level
of involvement. He asked if that is correct.
MR. JACKSON answered yes. He reiterated that everything wrong
with the procurement is contained within the prior experience
clause.
CO-CHAIR FIELDS inquired as to the recourse for a procurement
officer when an RFP is so unduly restrictive that only one
potential bidder can bid.
MR. JACKSON said he faced that problem many times during his
time as a contractor and facilities manager. He explained that
the usual solution is to cure the restrictive language and
reissue the solicitation.
2:38:47 PM
CO-CHAIR FIELDS asked if Mr. Baldwin and Mr. Kopperud, two
retired state employees with experience in the field of
procurement, share the same concern about the 25-year prior
experience threshold and NGA membership requirement in terms of
inappropriately preventing competition in the contract.
2:39:27 PM
JAMES BALDWIN, Attorney, agreed with comments in the memorandum
from legislative counsel, Marie Marx, on slide 14, which was
properly conditioned on the ability to find out more about the
procurement and other factors that related to the decision
making. He opined that the appearance leads one to suspect that
there was intent to restrict the number of firms that could
qualify to make an offer. Furthermore, he pointed out that
there is a protection for both sealed proposal procurements and
seal bid contracts, which prohibits overly restrictive terms in
the solicitation. Those protections are important to protect
the interests of the public by ensuring the contracts are not
contrary to the public interest. After reviewing the DOA's
decision on the protest filed by BDO, he expressed concern with
the decision making regarding the nature of the RFP
qualifications. He remarked:
The only reason that they were made restrictive and
non-waiverable was because the department said so.
And if they're confronted with circumstances, which
indicate that those conditions are not reasonable,
they can be waived. They probably should have been
waived - they probably should have gone to the next
phase of the contracting process [that] involves
discussions, which authorizes the parties to discuss
matters related to responsiveness in the various terms
of the solicitation.
MR. BALDWIN encouraged the committee to examine existing law to
decide whether some of the rewrites of the model procurement
code should be considered in connection with Alaska law. Beyond
that, he offered his assistance in helping the committee perform
its duties in this regard.
2:43:56 PM
ROSS KOPPERUD, a retired assistant attorney general, also agreed
with the LAA attorney's analysis and Mr. Baldwin's comments. He
offered his understanding that the denial of a hearing on the
grounds of responsiveness was wrong. He opined that a hearing
should have been granted; additionally, that the matters used as
rejection for the bid were matters of responsibility, which are
curable up to the time of award. He said the particular facts
of this case indicate that BDO's bid was rejected through
failure to state that they would provide in-house legal services
when in fact, as a matter of law, the attorney general is
required to approve such a service. He said the 25-year
experience requirement is generally considered a matter of
responsibility, which determines whether the contractor is
capable as opposed to responsiveness - a legal matter. He
offered his believe that the matter was wrongfully rejected and
there should have been a full hearing on the issue.
Furthermore, he pointed out that in this particular proposal,
legal services to be offered by a contractor is not material.
He said Alaska law dictates that immaterial matters should be
waived.
2:47:24 PM
CO-CHAIR FIELDS deduced that there was unusual involvement by
the commissioner and staff in a rather large contract. He asked
why the legislature established a model procurement code and a
chief procurement officer position. Additionally, he inquired
as to the importance of the procurement staff being independent
of the commissioner and other political appointees.
MR. BALDWIN explained that the model procurement code contained
that structure. He added that the purpose of the chief
procurement officer was to achieve some level of independence in
decision making regarding policy employed in the procurement
field - the idea being that there should be some separation
between policy makers and those who must implement it.
2:50:58 PM
CO-CHAIR FIELDS, returning to slide 14, asked Ms. Nauman to
explain why it's inappropriate for a state agency to use paid
membership in an outside organization to effectively exclude
bidders from participating in a process that is intended to
foster competition.
MS. NAUMAN explained that the memorandum discusses the standard
by which a court would judge an agency determination, such as
including the NGA membership as a requirement in the RFP. She
observed that one of the bidders pursued the necessary
administrative steps to appeal to the Supreme Court. In the
event that it did go to the Supreme Court, she opined that the
court would apply a rational basis test, which determines
whether the agency's decision to include this factor in the RFP
is supported by fact and has a reasonable basis. She added that
it's difficult to speculate whether a court would find a
rationale basis for the requirement inclusion.
MS. NAUMAN continued to explain that the recourse for someone
who was denied a records request on the agency's assertion that
the records do not exist is specified under AS 40.25.124, which
indicates that a person can appeal a final administrative order
to the Superior Court. Furthermore, AS 40.25.125 read as
follows:
A person having custody or control of a public record
who denies, obstructs, or attempts to obstruct, or a
person not having custody or control who aids or abets
another person in denying, obstructing, or attempting
to obstruct, the inspection of a public record subject
to inspection under AS 40.25.110 or 40.25.120 may be
enjoined by the superior court from denying,
obstructing, or attempting to obstruct, the inspection
of public records subject to inspection under AS
40.25.110 or 40.25.120. A person may seek injunctive
relief under this section without exhausting the
person's remedies under AS 40.25.123 - 40.25.124.
MS. NAUMAN said it appears that injunctive relief through the
Superior Court or an appeal to the Superior Court is the remedy.
2:54:36 PM
CO-CHAIR FIELDS welcomed the opportunity to hear from the
department to discern whether there are additional facts on the
matter. He reiterated that the administration declined to
attend today's hearing.
2:55:46 PM
ADJOURNMENT
There being no further business before the committee, the House
State Affairs Standing Committee meeting was adjourned at [2:55]
p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HSTA Hearing on Procurement RFP 2020-0200-4381 10.6.20.pdf |
HSTA 10/6/2020 1:00:00 PM |
|
| 1. RFP 2020-0200-4381 Timeline, Summary. HSTA Hearing 10.6.20.pdf |
HSTA 10/6/2020 1:00:00 PM |
|
| 2. Legislative Legal Opinion on NGA Membership Requirement, RFP 2020-0200-4381 10.6.20.pdf |
HSTA 10/6/2020 1:00:00 PM |
|
| 3. Oct 25th 2019 BDO Protest of RFP 2020-0200-4381 10.6.20.pdf |
HSTA 10/6/2020 1:00:00 PM |
|
| 4. Oct 29th 2019 State of Alaska Protest Response -4381 10.6.20.pdf |
HSTA 10/6/2020 1:00:00 PM |
|
| 5. Nov 8th 2019 BDO Protest Appeal -4381 10.6.20.pdf |
HSTA 10/6/2020 1:00:00 PM |
|
| 6. Dec 4th 2019 Final State of Alaska Decision on RFP 2020-0200-4381 10.6.20.pdf |
HSTA 10/6/2020 1:00:00 PM |
|
| 7. RFP 2020-0200-4381 10.6.20.pdf |
HSTA 10/6/2020 1:00:00 PM |
|
| Barry Jackson Response to Commissioner Tshibaka on HSTA Hearing 12.1.2020.pdf |
HSTA 10/6/2020 1:00:00 PM |
|
| DOA Response HSTA-BJackson-Procurement-Presentation 11.16.2020.pdf |
HSTA 10/6/2020 1:00:00 PM |