HB 204-STATE PROCUREMENT CODE  [Contains discussion of HB 205.] 9:12:10 AM CHAIR LYNN announced that the next order of business was HOUSE BILL NO. 204, "An Act relating to the State Procurement Code, including the use of small procurement provisions for certain amounts of leased space, the requirement of Alaska business license proof for Alaska bidder and other procurement preferences, the registration of construction contract bidders and offerors, the establishment and maintenance of lists of persons who want to provide supplies or services to the state, state agencies, and state instrumentalities, electronic bids and proposals, small procurements, and writings; and providing for an effective date." 9:12:41 AM REPRESENTATIVE ANNA FAIRCLOUGH, Alaska State Legislature, as sponsor, presented HB 204. She explained that during the Twenty-Sixth Alaska State Legislature, while bringing forth a veterans' procurement bill that addressed Alaska bidder preferences, she discovered that procurement preferences were "scattered throughout the code" and the state's "large procurement versus small procurement code" had not been updated in a long time. Representative Fairclough said HB 204 would: increase the square footage for small procurement from 3,000 to 7,000 square feet; increase small procurement from 50,000 to 100,000 square feet for professional services and from 100,000 to 200,000 for construction; and eliminate "the employers for the disabled." She said House Bill 225 - the procurement bill of the last legislature - was split into HB 204 and HB 205, and the only significant difference between the former bill and current bills is that neither HB 204 nor HB 205 has anything to do with "the offeror's preference." REPRESENTATIVE FAIRCLOUGH, in response to Chair Lynn, explained that during the Twenty-Sixth Alaska State Legislature, a veterans' preference bill was passed, which allowed stackable credit limited by $5,000 "on top of every other preference that an individual or a company could qualify for." She said HB 204 focuses specifically on statutes related to Alaska's small procurement codes. 9:15:00 AM REPRESENTATIVE JOHANSEN asked the sponsor to confirm if the "offeror's preference" had been removed. 9:15:28 AM REPRESENTATIVE FAIRCLOUGH responded yes. 9:18:00 AM REPRESENTATIVE GRUENBERG asked why the bill sponsor chose to use two bills as a vehicle for the remaining content of House Bill 225. REPRESENTATIVE FAIRCLOUGH explained that she put the least controversial issue - the changes to the small procurement code - in HB 204. In response to Representative Gruenberg, she said the veteran [preference] was repealed and realigned in one section of HB 205. REPRESENTATIVE GRUENBERG asked what the reason is behind raising the procurement code requirements and how many contracts will no longer be done through the procurement code as a result. 9:20:01 AM REPRESENTATIVE FAIRCLOUGH clarified that the bill is not about not being in the procurement code, but is about raising the limits for small procurement acquisitions. She explained that the purpose of doing this is to reduce the load being carried currently by those in charge of procurements and allow them to focus on "the larger square footage issues." A further result of HB 204, she said, would be the increase of competition. 9:21:28 AM VERN JONES, Chief Procurement Officer, Central Office, Division of General Services, Department of Administration, echoed Representative Fairclough's response. In response to Representative P. Wilson, he confirmed that the process for smaller procurements is easier and may increase the number of people responding to a request for proposals. 9:25:16 AM REPRESENTATIVE FAIRCLOUGH paraphrased the sectional analysis, which read as follows: Section 1: Amends AS 36.30.080(f) Increases the threshold limit for small procurements of leased space from 3,000 square feet to 7,000 square feet, consistent with section 7. Section 2: Amends AS 36.30.110(b) Clarifies Alaska business license requirements for competitive sealed bids and qualification for the Alaska bidder preference. Change would require bidders to show proof of their Alaska Business License prior to award, but would require the license at the time of bid submission in order to qualify for the Alaska bidder preference. Section 3: Amends AS 36.30.130(a) Eliminates reference to a procurement officer's use of vendor lists, reflecting the repeal of the statute establishing the vendor lists, consistent with section 10. Section 4: Amends AS 36.30.210(b) Clarifies construction contractor registration requirements, now explicitly requiring registration before award of a contract. Section 5: Amends AS 36.30.210(e) Clarifies Alaska business license requirements for competitive sealed proposals and qualification for the Alaska bidder preference using language consistent with that used in section 2. Section 6: Amends AS 36.30 by adding a new section 36.30.290 Adds a new section allowing an agency to accept electronic bids and proposals. Session: Alaska State Section 7: Amends AS 36.30.320(a) Increases the threshold under which a state agency may use informal procurement process to $100,000 for goods and professional services, to $200,000 for construction, and 7,000 square feet for lease of space. Section 8: Amends AS 36.30.655 Eliminates reference to the removal of debarred or suspended persons from vendor lists, reflecting the repeal of a law establishing the vendor lists, consistent with section 10. Section 9: Amends AS 36.30.990 Adds new definitions for "in writing" and "written." Section 10: Repeals statute establishing the vendor list. Section 11: Amends the uncodified law of the State of Alaska Clarifies the application of the procurement act to pending solicitations during transition period. Section 12: Effective Date Language making the procurement act effective immediately. 9:27:55 AM REPRESENTATIVE GRUENBERG directed attention to Section 11(b), on page 4, lines 17-19, which read as follows: (b) Notwithstanding (a) of this section, this Act applies to procurements or contracts described in (a)(1) of this section if all parties to the procurement or contract agree in writing that the applicable provisions of this Act apply to the solicitation or contract. REPRESENTATIVE GRUENBERG described a hypothetical situation in which both the government and the person who gets a contract agree that the Act applies, but someone else who did not get a contract might be aggrieved. MR. JONES said he thinks practically speaking that would not happen. He said the division issues procurements under the code enforced at the time of issuance. He said under HB 204, only the procurement methodology that would be used to get to an award would be changed, not the protest and appeal procedures. REPRESENTATIVE GRUENBERG asked Mr. Jones to confirm that what he is saying is that the government "would not agree to that." MR. JONES said that is correct. REPRESENTATIVE GRUENBERG said with that assurance he thinks HB 204 is a good bill. 9:31:22 AM REPRESENTATIVE KELLER moved to report HB 204 out of committee with individual recommendations and the accompanying fiscal notes. 9:31:30 AM REPRESENTATIVE JOHANSEN objected. CHAIR LYNN, in response to the bill sponsor, ascertained that there was no one else who wished to testify. REPRESENTATIVE JOHANSEN directed attention to Sections 8 and 10, which require the commissioner to "maintain a list of all persons debarred or suspended from consideration" and remove AS 36.30.050, respectively. He expressed concern that the public be made aware of any person who has been debarred. 9:33:14 AM MR. JONES responded that [AS 36.30.050] is statute that refers to the Alaska bidders' list. He explained that the division is doing away with the bidders' list, because it is an outdated system that has fallen out of use; an on line system is currently being used. He stated that the division will continue to keep the list of debarred individuals. REPRESENTATIVE JOHANSEN said he understands that, but wants to ensure that the commissioner's list is made public. REPRESENTATIVE JOHANSEN removed his objection. There being no further objection, HB 204 was reported out of the House State Affairs Standing Committee. HB 205-PUBLIC PROCUREMENT  9:37:02 AM CHAIR LYNN announced that the final order of business was HOUSE BILL NO. 205, "An Act relating to state and public entity procurement, including the State Procurement Code, procurement preferences, and contract awards; relating to the meaning of 'Alaska bidder'; and providing for an effective date." 9:37:37 AM REPRESENTATIVE FAIRCLOUGH, Alaska State Legislature, presented HB 205 as sponsor. She paraphrased the sponsor statement, which read as follows: House Bill 205 makes changes to the state's procurement code. Collectively, these changes streamline the procurement code to ensure consistent application of the law, and results in a more understandable, efficient procurement process for the state's business partners as well as our employees who conduct procurements. Streamlining is accomplished by simplifying the application of our many preferences, which is currently complex and confusing for employees and vendors requiring a certain level of expertise. The bill makes application of the preferences uniform - currently, preferences do not contain the same language so they must be applied differently. It also clarifies which preferences are cumulative and those that may not be combined. House Bill 205 would add a new section to the procurement code consolidating the Alaska bidder preference, Alaska veterans' preference, and other preferences formerly at AS 36.30.170(b). This section also simplifies the qualification for the disability and employment program preferences and eliminates the seldom used employers of people with disabilities preference. With the passage of this legislation, our procurement process will be simplified and more user friendly to Alaska business owners and our state workers. I appreciate your support and consideration of this legislation. 9:39:55 AM REPRESENTATIVE JOHANSEN noted that similar legislation was proposed the prior year, and he asked if any of the language in Section 15, regarding marine vessels owned by the state, has been changed from corresponding language in last years' bill. 9:40:18 AM REPRESENTATIVE FAIRCLOUGH offered her understanding that there is no change. CHAIR LYNN offered his understanding that Vern Jones, had nodded in the affirmative. 9:40:43 AM REPRESENTATIVE P. WILSON offered her understanding that the bill sponsor is "consolidating all the Alaska bidder preferences into one section." She asked for further details regarding the Alaska veterans' preference and "the one that you eliminated." 9:41:16 AM REPRESENTATIVE FAIRCLOUGH talked about the Alaska veterans' preference "stacked" with other preferences, including a disabled veterans' preference. She said, "With this alignment, there is one calculation and it is explicitly outlined." Regarding the "eliminated preference," she related an incident where a committee chose to eliminate a preference after hearing testimony from an individual regarding his/her access and use of a preference. She offered her understanding that the result was the state's paying more because of the preference without really receiving the benefit. 9:43:39 AM VERN JONES, Chief Procurement Officer, Central Office, Division of General Services, Department of Administration, added that the Alaska veterans' preference remains unchanged under HB 205; it is just in another section. Generally speaking, he said, the only other changes to preferences is that they have all been given uniform language to make them easier to understand and apply. One exception is the employers of the disabled preference. He asked the committee to consider that the state already has disabled bidder preference and an employment program preference to benefit developmentally disabled people and shelter workshops that employ them. He said only two firms qualify for the employer of the disabled preference; the requirement is that 50 percent of the workforce must be disabled. He said what happens is a business will "spin off a subsidiary" with one disabled employee and an additional preference, which gives that company an advantage. Mr. Jones concluded, "We feel that ... it's being taken advantage of; ... it's not widely used; and I believe it's duplicative." 9:45:17 AM MR. JONES, in response to Representative Gruenberg, explained that there is a Blind Vendor Act, which mandates the state to "solicit qualified, blind-owned businesses" when there are concession contracts in state facilities. He said that Act is not affected by HB 205. 9:45:53 AM REPRESENTATIVE KELLER moved to report HB 205 out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, HB 205 was reported out of committee. CHAIR LYNN acknowledged that there was another person who wished to testify and invited him to do so. 9:46:45 AM SCOTT THORSON, testifying on behalf of himself, thanked the bill sponsor and Mr. Jones for their work in "cleaning this part of the procurement code up." He related that he owns a small company and has done a lot of work for the state over the years. He expressed his support of HB 205. 9:47:19 AM CHAIR LYNN restated that HB 205 had been reported out of committee.