04/12/1993 09:20 AM Senate FIN

                                                                               
  SENATE BILL NO. 129                                                          
                                                                               
       An  Act  relating  to  the  state's  chief  procurement                 
       officer.                                                                
                                                                               
  Co-chair  Pearce directed  that  SB 129  be  brought on  for                 
  discussion.    SENATOR  RANDY  PHILLIPS  again  came  before                 
  committee.  He explained that the legislation was introduced                 
  at  the  request   of  the  Legislative  Budget   and  Audit                 
  Committee.    It  responds  to   past  problems  surrounding                 
  issuance of an  $800.0 sole-source contract.   RANDY WELKER,                 
  Legislative  Auditor, concurred  in  comments regarding  the                 
  noted  sole-source contract, but  he advised that  it is not                 
  the  only example  of an  improperly entered  contract.   In                 
  examining the  root of the  problem, it was  determined that                 
  when   the  procurement  code  was  established,  the  chief                 
  procurement officer was envisioned as an autonomous position                 
  with  statutory  protection.    The   position  was  to  act                 
  independently  of  agencies  doing  the  contracting in  the                 
  approval  or  denial of  contracts.   That position  has not                 
  functioned as envisioned.                                                    
                                                                               
                                                                               
  The proposed  bill provides  more autonomy  by changing  the                 
  position  to a  six-year  term to  ensure  overlap from  one                 
  administration to  another.   It further  provides statutory                 
  salary   protection   to   deter   an  administration   from                 
  retaliating  against  the  procurement  officer  by   salary                 
  manipulation.                                                                
                                                                               
  For sole-source  contracts, the chief procurement officer is                 
  required  to independently examine  the facts  and determine                 
  whether the procurement is eligible for sole-source.  At the                 
  present  time,   requests  for  sole-source   contracts  are                 
  reviewed by the procurement officer  and approved based only                 
  on  information   provided  by   the   agency  seeking   the                 
  procurement.                                                                 
                                                                               
  In response to an inquiry from  Senator Kerttula, Mr. Welker                 
  said that, per  the procurement code, the  chief procurement                 
  officer can only be removed  for cause.  Since cause is  not                 
  necessarily defined, that aspect remains in question.                        
                                                                               
  DUGAN PETTY, Director,  Division of General Services,  Dept.                 
  of Administration,  came before  committee, voicing  support                 
  for the bill.  He said the department believes the bill will                 
  improve state procurement.  Several sections seek to improve                 
  efficiencies and standardize the  treatment of procurements.                 
  The   department   supports   those  streamlining   efforts.                 
  Increased  effort   and  review   required   of  the   chief                 
  procurement officer are  offset by increased  accountability                 
  and enhanced integrity of the process.                                       
                                                                               
  Mr.  Petty  directed  attention  to  Sec. 5  and  registered                 
  concern regarding emergency procurements.  He cited  current                 
  statutory  provisions  and  noted   that  revisions  in  the                 
  proposed bill  would remove  an  agency procurement  officer                 
  from making  that determination and  vest it totally  in the                 
  chief procurement officer.  It  allows the chief procurement                 
  officer to delegate that duty  only when he or she  does not                 
  have  sufficient time  to make  such a  determination.   Mr.                 
  Petty  voiced  his  understanding  that  the  department may                 
  interpret Sec. 5 broadly enough to allow it to encompass not                 
  only the chief procurement officer's written  determination,                 
  but the process of gathering and  submitting facts.  If that                 
  could not  be done  within a  72-hour period,  the power  of                 
  determination would be delegated, in  advance, to the agency                 
  that  might  incur  the  emergency.    Mr.  Petty  said  the                 
  department  would have  no objection  to Section  5,  if the                 
  foregoing  represents  an  acceptable   interpretation.  Mr.                 
  Welker subsequently concurred  in Mr. Petty's interpretation                 
  of  Section  5 and  voiced  hope that  the  department would                 
  develop regulations further defining procedures.                             
                                                                               
  Senator Rieger directed attention of  Section 9 and inquired                 
  concerning provisions exempting contracts between the  Dept.                 
  of  Law  and  contract  attorneys  from  provisions  of  the                 
                                                                               
                                                                               
  procurement  code.     Mr.  Petty  said  that   a  statewide                 
  procurement audit  recommended that selection  and contracts                 
  for  special prosecutors  be exempted  from the  procurement                 
  process.   Issues surrounding these  arrangements are  often                 
  confidential.   A  public procurement  process negates  that                 
  confidentiality.                                                             
                                                                               
  Discussion  followed between  Senator Rieger  and  Mr. Petty                 
  regarding  cost-reimbursement contracts.    Mr. Petty  noted                 
  that   a   variety  of   cost-reimbursement   contracts  are                 
  legitimate, effective  contract tools.   The  administration                 
  feels agencies should have  the latitude to use the  form of                 
  contract that most  effectively meets  needs.  The  proposed                 
  change  eliminates  need for  advance  determination  that a                 
  cost-reimbursement  contract  would  be the  most  efficient                 
  means of contracting.                                                        
                                                                               
  Co-chair Pearce called for additional questions or testimony                 
  on the bill.  None were  forthcoming.  Co-chair Frank stated                 
  need to  offer an amendment  relating to the  leasing budget                 
  within  the  Dept.   of  Administration.     He   referenced                 
  department complaints that  the division  does not have  the                 
  ability to renegotiate existing leases.  That portion of the                 
  procurement system fails to operate  properly.  He explained                 
  that he had been  working with both the department  and bill                 
  drafters to develop language that would allow the department                 
  to  renegotiate  with  an  existing  lessor.    The  initial                 
  reaction  from the department has  been that a savings would                 
  occur.  Co-chair Frank asked that  the proposed bill be HELD                 
  in committee pending development of  that language.  Senator                 
  Phillips advised that  he had no  problem with inclusion  of                 
  that effort  within the bill.   Senator Kerttula  asked that                 
  renegotiation provisions also apply to the legislature.