Legislature(2005 - 2006)
05/07/2005 05:45 PM Senate FIN
| Audio | Topic |
|---|---|
| Start | |
| SB54 | |
| HB106 | |
| HB257 | |
| HB279 | |
| HB53 | |
| HB257 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR HOUSE BILL NO. 257(JUD)
"An Act relating to and extending the pilot program for state
procurement and electronic commerce tools; and providing for
an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken moved to adopt committee substitute Version
LS0826\P as the working document.
There being no objection, the Version "P" committee substitute was
ADOPTED as the working document.
JANE ALBERTS, Staff to Senator Bunde, the bill's sponsor, explained
that, contrary to the original version of the bill which would have
eliminated a termination date for the Pilot Procurement Program and
could have allowed the Program to be implemented in every State
department, the Version "P" committee substitute would
"significantly scale back" the proposal.
6:16:41 PM
Ms. Alberts stated that the Version "P" committee substitute would
not expand the Program to additional agencies; it would simply
extend the current Program's termination date. Furthermore, in
response to significant testimony by public employee
representatives, a new Department of Administration $350,000 fiscal
note, dated May 7, 2005, would allow union members in "two new
agencies outside the Pilot, operating with state employee
procurement personnel", to acquire similar eCommerce tools to those
utilized by the Pilot Program "in order to provide side-by-side"
procurement comparisons. The software to be purchased must to
similar, but would not be required to be identical, to the software
used by the contractor in the Pilot Program. The dollar amount
specified in the fiscal note would sufficiently allow for the
purchase of such equipment.
Ms. Alberts communicated that Version "P" would extend the
termination date of the Pilot Program to July 1,2009 in order to
allow the State's procurement program time to become functional and
provide sufficient data for the comparison study. Were the State to
decide "within 14 months to discontinue the program, there would be
time to wind down and perhaps select a different Contractor".
6:18:48 PM
Senator Hoffman, noting that technology advances in the computer
industry are constantly occurring, asked whether the State agencies
could purchase "better" computer programs were they to become
available.
Ms. Alberts understood there to be a variety of programs from which
to choose. In recognition of the fact that the two agencies might
desire differing programs to meet their needs, any appropriate
program within the specified price parameter could be purchased.
Senator Hoffman, agreeing that several programs could be suitable,
asked for confirmation that no particular computer program had been
specified.
Ms. Alberts understood that the agencies would be able to choose
the program they deemed appropriate, "within the constraints of the
fiscal note".
Senator Hoffman remarked that his concern would be met "as long as
they are able to buy the best available program..."
Co-Chair Green asserted that the specification that the agencies
must acquire an eCommerce program similar to the one utilized by
the contractor in the Pilot Procurement Program would assure that a
good program could be purchased.
Ms. Alberts affirmed that the fiscal note would allow the agencies
to purchase a program comparable to that utilized by the
contractor, Alaska Supply Chain Integrators (ASCI).
6:20:41 PM
Amendment #1: This amendment inserts a new subsection in Sec. 5 on
page four, following line 20.
"(v) The contract authorized by (a) of this section must
include terms that protect the interests of the state if the
contractor stops performing or fails to perform the
contractor's obligations under the contract. In order to
allow the Department of Administration and the departments and
other instrumentalities of the state participating in the
pilot program authorized by (a) of this section to make the
transition back to having state instrumentalities handle the
activities provided by the contractor under the contract,
these required terms must include provisions that
(1) give the Department of Administration and the
departments and other instrumentalities of the state
participating in the pilot program the right to use, for a
reasonable period of time after the contractor stops
performing or fails to perform, the electronic commerce tools,
including all software, used by the contractor to perform the
contract; the provision required by this paragraph must allow
use by the employees or contractors of the Department of
Administration or the departments or other instrumentalities
of the state participating in the pilot program; and
(2) require the contractor to provide whatever
assistance the contractor is able to provide to the Department
of Administration and the departments and other
instrumentalities of the state participating in the pilot
program in using the electronic commerce tools referred to in
(1) of this subsection and otherwise making the transition."
Senator Dyson understood that the affect of the Version "P"
committee substitute would be to eliminate as of July 1, 2009, the
entirety of Sec. 2, page one, line 11 through page two, line one.
This action would remove the limitations as to which agencies the
pilot program could be applied. To that point, an amendment has
been developed "that would protect the State in case the contractor
providing the services fails to perform". While placing the
entirety of a State department's "procurement capacity in the hands
of the contractor …. might be wonderful", "the danger is that" were
the contractor to fail to perform, the State would have "no
fallback position" in which to "to pick up the pieces and start
doing their own purchasing". The amendment would require that were
the contractor "unable to perform" or to choose "not to perform,
their software and files" would become available to the State. This
would allow the State to assume those activities.
Co-Chair Green voiced concern that the proprietary rights of
contractor to that property might prohibit the State from enacting
such language.
Ms. Alberts informed the Committee that the issue has been
discussed. The determination was that this would be an acceptable
amendment. However, a representative from the Department of
Administration could more appropriately respond to the concern.
Senator Dyson moved for the adoption of Amendment #1.
AT EASE 6:23:42 PM / 6:25:32 PM
Co-Chair Green noted that the amendment is accompanied by a May 4,
2005 Memorandum to Senator Dyson from Theresa Bannister,
Legislative Council, Legal Services, Division of Legal and Research
Services, Legislative Affairs Agency [copy on file] that further
explains the amendment. The Memorandum reads as follows.
Impairment of contracts issue. If the proposed amendment
requires the parties to modify an existing contract with the
pilot program contractor, this requirement may raise an issue
under the constitutional prohibitions against the impairment
of contracts.1 The initial question appears to be whether or
not the change in state law operates as a substantial
impairment of the parties' contractual relationship.2 Because
this amendment is limited to the remedies under the contract
and not the performance obligation to the contract, it may be
considered not be to a substantial impairment of the
contract.3 So it may not be a problem, but I wanted you to be
aware of the issue.
1. U.S. Const. Art. I, sec. 10; Alaska Const. Art. I, sec. 15.
2. 2 Rotunda and Nowak, Treatise on Constitutional Law 15.8,
p. 654 (3rd ed. 1999).
3. 2 Rotunda and Nowak, Treatise on Constitutional Law 15.8,
p. 654 - 655 (3rd ed. 1999); and see Hagberg v. Alaska
National Bank, 585 P. 2d 559, 561-562 (Alaska 1978).
Co-Chair Green voiced concern as to how this amendment might impact
either the State or the contractor in regards to the terms that
already exist in the Pilot Procurement Program contract.
6:27:07 PM
Ms. Alberts noted that because Senator Dyson had voiced this
concern in previous hearings, an answer could be provided shortly.
Co-Chair Green ordered the bill SET ASIDE in order to allow the
Department of Administration and other concerned parties to review
the amendment.
[NOTE: The Committee readdressed this bill at time stamp 6:59:44
PM.]
6:27:27 PM
CS FOR HOUSE BILL NO. 257(JUD)
"An Act relating to and extending the pilot program for state
procurement and electronic commerce tools; and providing for
an effective date."
Co-Chair Green announced that this bill was again before the
Committee. The discussion would continue in regards to the impact
that might result by the adoption of Amendment #1.
Ms. Alberts expressed that the Amendment has been deemed acceptable
to the sponsor.
6:59:44 PM
KEVIN BROOKS, Deputy Commissioner, Department of Administration,
stated that after discussing the issue with Senator Dyson and Ms.
Alberts, the understanding is that the intent of the amendment
would be to provide protection to the State were the Pilot Program
to fail at some point in the future. The Department appreciates the
intent and viewed this as a positive amendment to the bill.
Amendment-to-Amendment #1: This amendment-to-the-amendment would
replace the words "whatever assistance the contractor is able to
provide" with the words "reasonable assistance" in subsection
(v)(2) of the amendment, following the word "provide". The amended
language would read as follows.
(2) require the contractor to provide reasonable
assistance to the Department of Administration and the
departments and other instrumentalities of the state
participating in the pilot program in using the electronic
commerce tools referred to in (1) of this subsection and
otherwise making the transition.
Senator Dyson moved to amend the amendment.
There being no objection, the amendment-to-the-amendment was
ADOPTED.
There being no objection, Amendment #1, as Amended, was ADOPTED.
Senator Dyson stated for the record that a representative of the
contractor has conveyed that the contractor is in agreement with
the amendment.
Co-Chair Wilken moved to report the bill, as amended, from
Committee with accompanying fiscal notes and individual
recommendations.
There being no objection, SCS CS HB 257(FIN) was REPORTED from
Committee zero fiscal note #1, dated April 8, 2005 from the Alaska
Court System, indeterminate fiscal note #2, dated April 8, 2005
from the Division of General Services, Department of
Administration, and a new $350,000 fiscal note from the Senate
Labor & Commerce Committee for the Department of Administration,
dated May 7, 2005.
Senator Hoffman, while voicing no objection to the action, asked
that the State's Chief Procurement Officer provide a position
statement regarding the legislation prior to its' Senate Floor
Session hearing.
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