04/14/1993 09:15 AM Senate FIN

                                                                               
  SENATE BILL NO. 129                                                          
                                                                               
       An  Act  relating  to  the  state's  chief  procurement                 
       officer.                                                                
                                                                               
  Co-chair Frank directed attention to Amendments 1 and 2.  He                 
  explained that Amendment No. 2 was drafted  by Senator Randy                 
  Phillips  in  response to  concerns  regarding the  Wildwood                 
  Prison  acquisition.    It  requires that  a  lease-purchase                 
  agreement be approved by the legislature if real property is                 
  to be acquired.                                                              
  SENATOR RANDY  PHILLIPS advised  that the  amendment results                 
  from  a  recent audit  of the  Wildwood  purchase.   He then                 
  deferred further comments to the legislative Auditor.                        
                                                                               
  RANDY WELKER,  Legislative Auditor, Division  of Legislative                 
  Audit, came before committee.  He explained that the  above-                 
  noted  audit was  issued  by the  Office  of Management  and                 
  Budget.   A companion audit  by the Division  of Legislative                 
  Audit is underway.   Information in the OMB  audit concluded                 
  it was  likely the purchase  was divided  to circumvent  the                 
  legislative  approval process  when acquiring  the facility.                 
  The OMB  report  recommends  that Title  36  be  amended  to                 
  provide that  all lease-purchase/lease-financing  agreements                 
  require  legislative  approval,  regardless  of  the  dollar                 
  amount.  Amendment No.  2 attempts to make that  change.  In                 
  response to  a question  from Senator  Kelly  asking if  all                 
  lease-purchase/lease-finance arrangements would  fall within                 
  approval  requirements,  Mr.   Welker  and  Co-chair   Frank                 
  clarified that Amendment No. 2 is  intended to apply to real                 
  property  acquisitions.     Both  concurred  that  amendment                 
  language does not so indicate at this time.                                  
                                                                               
  End, SFC-93, #59, Side 1                                                     
  Begin, SFC-93, #59, Side 2                                                   
                                                                               
  Mr. Welker noted  that legislative approval is  not meant to                 
  cover  items  of   personal  property  such  as   desks  and                 
  computers.                                                                   
                                                                               
  In response to  a further question  from Senator Kelly,  Co-                 
  chair Frank explained that "real  estate" is defined as land                 
  or "anything attached to land, including the  building."  If                 
  the  state is  acquiring a building,  it must  seek approval                 
  from the legislature.  The  Co-chairman noted the difference                 
  between leasing property and acquiring ownership.                            
                                                                               
  Co-chair Pearce asked  if Amendment No.  2 would have to  be                 
  amended to apply to real property.  Co-chair Frank responded                 
                                                                               
                                                                               
  affirmatively.  He  then MOVED for adoption of Amendment No.                 
  2 with addition  of conceptual language applying  it to real                 
  property.  No objection having been raised,  Amendment No. 2                 
  was ADOPTED, subject to the conceptual addition.                             
                                                                               
  Co-chair Frank explained  that Amendment No. 1  results from                 
  lack  of  department  ability  to  negotiate  with  existing                 
  landlords  under  the  new  procurement  code.   It  appears                 
  reasonable for the state  to have this ability if  a savings                 
  can  be  achieved.    The  proposed  amendment  provides  an                 
  exemption from the procurement code  to allow the department                 
  to negotiate  with current  landlords.   The amendment  also                 
  requires quarterly  reports to  the  Legislative Budget  and                 
  Audit Committee.   The  Co-chairman further  noted need  for                 
  review of amendment language by  the Dept. of Law.   He then                 
  MOVED  for  adoption of  Amendment  No. 1.    Senator Rieger                 
  inquired concerning how renegotiations  would be impacted if                 
  a cost savings  was not achieved.  Co-chair  Frank explained                 
  that  if the original lease  contains a renewal option, that                 
  option could be  exercised.  If  the lease has no  provision                 
  for renewal or extension, and the state would have to go out                 
  to bid for like space, under  the terms of the amendment the                 
  state  could work  with the  existing landlord to  achieve a                 
  reduced lease cost rather than going to bid.                                 
                                                                               
  No objection to Amendment  No. 1 having been raised,  it was                 
  ADOPTED.                                                                     
                                                                               
  DUGAN PETTY, Director, Division  of General Services,  Dept.                 
  of Administration, came before committee voicing support for                 
  the  bill.  He said it would provide a window of opportunity                 
  to renegotiate  leases and obtain cost savings in return for                 
  the extension price.  It will  also provide leverage for ADA                 
  improvements needed at many  sites.  Further, it  will allow                 
  the  division to better deal with  a growing workload crisis                 
  since  renewal  of existing  leases  requires less  time and                 
  effort than putting space requirements out to bid.                           
                                                                               
  Senator  Kelly asked if  Range 23 was  sufficiently high for                 
  the  chief  procurement  officer.    Mr.  Petty  voiced  the                 
  department position that the range is appropriate.                           
                                                                               
  The bill was  HELD in committee for  Dept. of Law  review of                 
  Amendment No. 1 language.