Legislature(1999 - 2000)

05/05/1999 01:47 PM House JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                                                                                
                                                                                                                                
CSSB 141(L&C) - PROCUREMENT:  CONTRACTS/SUBCONTRACTS                                                                            
                                                                                                                                
CHAIRMAN KOTT announced the next order of business is CS FOR SENATE                                                             
BILL NO. 141(L&C), "An Act relating to construction contracts and                                                               
subcontractors; relating to design-build construction contracts;                                                                
and providing for an effective date."                                                                                           
                                                                                                                                
CHAIRMAN KOTT referred to a memorandum dated May 5, 1999, from                                                                  
Theresa Bannister [Attorney, Legislative Legal Counsel, Legislative                                                             
Legal and Research Services, Legislative Affairs Agency] to                                                                     
Representative Pete Kott.  It discusses the intent language that                                                                
has been incorporated into a new committee substitute [1-LS0827\K,                                                              
Bannister, 5/5/99].  It cleans up the changes from yesterday [May                                                               
4, 1999] - the removal of the retroactive clause, the removal of                                                                
Section 3, and the addition of a new Section 7, which deals with                                                                
intent language that primarily comes from Chapter 15, SLA 1998.                                                                 
                                                                                                                                
Number 0513                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT called for an at-ease at 2:48 p.m. and called the                                                                 
meeting back to order at 2:50 p.m.                                                                                              
                                                                                                                                
CHAIRMAN KOTT asked Ms. Theresa Bannister from the Legislative                                                                  
Affairs Agency whether a title amendment is required.                                                                           
                                                                                                                                
Number 0534                                                                                                                     
                                                                                                                                
THERESA BANNISTER, Attorney, Legislative Legal Counsel, Legislative                                                             
Legal and Research Services, Legislative Affairs Agency, believed                                                               
a title amendment is required.  It would be better in its own bill,                                                             
however.                                                                                                                        
                                                                                                                                
CHAIRMAN KOTT asked Ms. Bannister whether she was referring to the                                                              
intent language.                                                                                                                
                                                                                                                                
MS. BANNISTER clarified that she was speaking in general.  The                                                                  
title does not quite express what is in the bill.                                                                               
                                                                                                                                
CHAIRMAN KOTT said:  "If we get into the title amendment, would we                                                              
not also perhaps be crossing over the single-subject rule or are we                                                             
still okay with that?"                                                                                                          
                                                                                                                                
MS. BANNISTER replied:  "Basically, the single-subject rule boils                                                               
down right now to contracts.  It may be okay still.  It is getting                                                              
broad, but it still seems to apply to contracts.  Everything you've                                                             
got in your--the intent language.  But, as I said, it probably                                                                  
would be better to have it in its own bill.  I'm just saying it."                                                               
                                                                                                                                
REPRESENTATIVE JAMES asked how Section 7 was placed in the                                                                      
committee substitute.                                                                                                           
                                                                                                                                
CHAIRMAN KOTT explained that Section 7 was extracted from the                                                                   
letter of intent that accompanied HB 53 out of the House Rules                                                                  
Standing Committee.                                                                                                             
                                                                                                                                
Number 0622                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG said:  "Mr. Chairman, counsel says                                                                      
(indisc.--talking) is redundant.  It does recommend intent language                                                             
(indisc.--talking) for what we're doing here.  Is that correct?                                                                 
That's what is says in here."                                                                                                   
                                                                                                                                
CHAIRMAN KOTT replied it's helpful.  This is nothing more than                                                                  
confirming the original letter of intent.  A letter of intent does                                                              
not carry a lot of weight.                                                                                                      
                                                                                                                                
Number 0660                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG asked Chairman Kott whether this is                                                                     
creating intent language out of a letter of intent.                                                                             
                                                                                                                                
CHAIRMAN KOTT replied it incorporates intent language into statute.                                                             
                                                                                                                                
CHAIRMAN KOTT said:  "Well, I think I agree with counsel.  If you                                                               
have intent language it ought to be about what we're intending to                                                               
do with the actual (indisc.)."                                                                                                  
                                                                                                                                
Number 0676                                                                                                                     
                                                                                                                                
REPRESENTATIVE JAMES expressed concern that Section 7 explains                                                                  
Section 6, which has no connection to the rest of the bill.  The                                                                
intent language for one section of the bill seems out of character.                                                             
                                                                                                                                
CHAIRMAN KOTT recognized that it may seem out of character, but                                                                 
believed it is within the committee's prerogative.                                                                              
                                                                                                                                
Number 0713                                                                                                                     
                                                                                                                                
REPRESENTATIVE GREEN stated that kind of language does seem                                                                     
self-serving; but, in looking at HB 53, it was specific to Fort                                                                 
Greely, which is what this is all about.                                                                                        
                                                                                                                                
REPRESENTATIVE JAMES commented that she did not disagree with that,                                                             
but this is an entirely different bill.  She indicated that it was                                                              
not necessary to re-indicate the intention to try to prove that                                                                 
Section 6 is appropriate.                                                                                                       
                                                                                                                                
REPRESENTATIVE ROKEBERG agreed with Representative James.                                                                       
                                                                                                                                
Number 0756                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI inquired as to why the committee spent                                                                 
seven hours yesterday [May 4, 1999] on this.                                                                                    
                                                                                                                                
REPRESENTATIVE JAMES stated because it is implicit.                                                                             
                                                                                                                                
REPRESENTATIVE ROKEBERG noted that it is already in the bill.                                                                   
                                                                                                                                
Number 0768                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT explained that it is in the bill in order to satisfy                                                              
those who feel that it is not clearly visible.                                                                                  
                                                                                                                                
REPRESENTATIVE JAMES stated she did not want to belabor the issue.                                                              
If everyone is comfortable with the intent language, she indicated                                                              
she could pass the bill out of the committee with it.  But it's                                                                 
drawing attention to something that's implicit.                                                                                 
                                                                                                                                
Number 0850                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG made a motion to adopt the House committee                                                              
substitute for SB 141, 1-LS0827\K, Bannister, 5/5/99.  There being                                                              
no objection, it was so adopted.                                                                                                
                                                                                                                                
Number 0878                                                                                                                     
                                                                                                                                
REPRESENTATIVE GREEN proposed an amendment, noting it had                                                                       
originally been for Version K.  He stated, "In essence what it says                                                             
is that if now we are going to agree that the action that's                                                                     
happened up there at Fort Greely is in compliance with the                                                                      
procurement code, I think that we should probably enshrine that -                                                               
all that intent language that went into [HB] 53 originally and has                                                              
been talked about subsequently.  ... I've talked to the chairman of                                                             
the Finance Committee, they all understand that there should be                                                                 
sideboard, and now that we have already decided through the legal                                                               
system that we do need an amendment change [title change] which is                                                              
gonna require a joint resolution, I would submit that the language                                                              
... -- I can read for conceptual acceptance and then we can get                                                                 
copies of it.  It would be put in here under ... Chapter 15, SLA                                                                
1998, it would be:  'For the agreement to lease must provide a                                                                  
fixed rate per day adjusted annually during the term of the lease                                                               
according to an appropriate index.  The fixed rate for the first                                                                
year of the lease must include all capital and operating costs and                                                              
may not exceed $70 per each bed day, then renumber accordingly.'"                                                               
Representative Green indicated the $70 figure resulted from all the                                                             
year's prior discussion that this operation could be done for that                                                              
amount per day, arrived at through both Arizona and the in-Alaska                                                               
costs.  This is simply removing it from the intent language and                                                                 
codifying it in the legislation.                                                                                                
                                                                                                                                
REPRESENTATIVE ROKEBERG and REPRESENTATIVE JAMES both objected to                                                               
the conceptual amendment.                                                                                                       
                                                                                                                                
REPRESENTATIVE ROKEBERG spoke to his objection.  He recalled there                                                              
was a great deal of discussion regarding the cost element.  He                                                                  
believed there is a question about what is included in and what is                                                              
excluded from the determination of what is the cost and the per                                                                 
diem cost.  Representative Rokeberg indicated he has some questions                                                             
about reviewing the record.                                                                                                     
                                                                                                                                
Number 1015                                                                                                                     
                                                                                                                                
REPRESENTATIVE GREEN questioned whether an exception was being                                                                  
taken to the prior dialog and the letter of intent.  He asked                                                                   
whether it was the number or the concept of a fixed number.                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG responded, "I followed it (indisc.--talked                                                              
over) any testimony update us on that figure.  I think (indisc.)                                                                
last year, is that what you're saying?"                                                                                         
                                                                                                                                
REPRESENTATIVE GREEN agreed, noting no one objected to it then.                                                                 
                                                                                                                                
REPRESENTATIVE ROKEBERG mentioned it was the letter of intent not                                                               
the (indisc.).  He said that was theory, but would have to look at                                                              
that.                                                                                                                           
                                                                                                                                
REPRESENTATIVE GREEN commented it is for that very reason he is                                                                 
concerned.  If it is left as a letter of intent and left ambiguous,                                                             
there are no sideboards.  He said, "We've gone to a sole-source                                                                 
contract and we say, 'We don't care what it costs.'"                                                                            
Representative Green emphasized that is not in the best interest of                                                             
the state.                                                                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG pointed out there are sideboards, stating,                                                              
"There's gotta be total review by the governor, the                                                                             
inter-governmental agreement, the military, I mean there's so many                                                              
other hurdles that have to be accomplished."                                                                                    
                                                                                                                                
REPRESENTATIVE GREEN questioned, "And cost?"                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG responded, "(Indisc.) and cost, and then                                                                
the financing of it and everything else."  He indicated his                                                                     
impression is the contract would be between the state and the city                                                              
with the third-party provider.  He agreed they should have a                                                                    
standard, but indicated his reluctance over the proposed amendment.                                                             
He noted that had been a controversial figure and would like to                                                                 
review it.                                                                                                                      
                                                                                                                                
Number 1099                                                                                                                     
                                                                                                                                
REPRESENTATIVE GREEN asked whether Representative Rokeberg agreed                                                               
there should be a figure.                                                                                                       
                                                                                                                                
REPRESENTATIVE ROKEBERG answered no, and adding, "I agree there was                                                             
a letter of intent (indisc.) in the bill last year is the problem.                                                              
Now you want to codify it, then I got a problem with that."                                                                     
                                                                                                                                
REPRESENTATIVE GREEN stated, per the chairman's recollection, that                                                              
HB 53 from the previous year covered the prison as well as the jail                                                             
in Anchorage.  In the jail, there were specific numbers, but there                                                              
was nothing referred to in the prison other than the conceptual $70                                                             
per day.  However, Representative Green noted in the bill itself                                                                
there was a fixed figure for the jail, and it seemed strange to him                                                             
that in one case they would agree to fix the figure.                                                                            
                                                                                                                                
REPRESENTATIVE ROKEBERG mentioned "the dollar figure."  He                                                                      
questioned that it had sought $53 million.                                                                                      
                                                                                                                                
REPRESENTATIVE GREEN noted, "And operating costs."                                                                              
                                                                                                                                
REPRESENTATIVE ROKEBERG indicated there was not a per diem cost in                                                              
there.                                                                                                                          
                                                                                                                                
Number 1141                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT pointed to Chapter 15 regarding this issue,                                                                
specifically Section 5, Authorization to Lease Correctional                                                                     
Facility Space with Municipality of Anchorage.  He stated, "Section                                                             
(b) The authorization given is subject to the following conditions.                                                             
These provide for a maximum of 400 beds, the capital costs may not                                                              
exceed [$]146,000 per bed or a total of [$]56 million.  The annual                                                              
lease payments may not exceed [$]16,700 per bed or a total of an                                                                
additional -- I mean it's very clear on both the capital and the                                                                
lease operating per bed (indisc.)."                                                                                             
                                                                                                                                
CHAIRMAN KOTT indicated all the conceptual amendment is saying is                                                               
$70 per day.  He indicated a total figure could be arrived at, but                                                              
keeping it at $70 leaves it in simpler terms.                                                                                   
                                                                                                                                
REPRESENTATIVE ROKEBERG said his concern is that was a target                                                                   
number and whether it should be codified is the issue.  He                                                                      
mentioned that was to give direction to the department, but it                                                                  
wasn't a "lock-in" number as he recalls.  He indicated his desire                                                               
to check on this.                                                                                                               
                                                                                                                                
CHAIRMAN KOTT believed there had been discussion with the                                                                       
department during the discussion regarding the letter of intent.                                                                
                                                                                                                                
REPRESENTATIVE ROKEBERG spoke over, "We've had no testimony on that                                                             
issue before this year is the trouble."  He indicated he would just                                                             
like to recall what happened and withdraw his objection.                                                                        
Representative Rokeberg questioned if there was anyone present from                                                             
the Department of Law.                                                                                                          
                                                                                                                                
CHAIRMAN KOTT said he believes it was clearly indicated by both                                                                 
sides that they would be satisfied with the $70 per day.                                                                        
                                                                                                                                
REPRESENTATIVE ROKEBERG confirmed from Chairman Kott that he was                                                                
referring to the previous year.                                                                                                 
                                                                                                                                
Number 1247                                                                                                                     
                                                                                                                                
REPRESENTATIVE JAMES noted this a whole different legislature.                                                                  
                                                                                                                                
REPRESENTATIVE ROKEBERG agreed with Representative James.  The                                                                  
issue, as he recalled and the reason for his concern, is that was                                                               
a target to provide guidance to the Department of Corrections when                                                              
entering into a contract.  He noted, "If you stipulate a (indisc.)                                                              
force - a cap on the price - it could be a (indisc.) and I think it                                                             
came in at $70 to one cent ...."                                                                                                
                                                                                                                                
CHAIRMAN KOTT pointed out that the letter of intent from last year                                                              
was for a period of five years, therefore they were entering into                                                               
this agreement with the understanding that they would be able to                                                                
meet the target goal for five years.  After that, it would be                                                                   
adjusted.                                                                                                                       
                                                                                                                                
REPRESENTATIVE ROKEBERG said that he understood that.  He                                                                       
emphasized that there was a target not a specific.  He asked                                                                    
whether the intent is to insert the intent language.                                                                            
                                                                                                                                
REPRESENTATIVE CROFT stressed that the intent language is something                                                             
short of statute, but it is important to the bill.  Here, the                                                                   
intent language was not goals, but rather that "...the agreement to                                                             
lease the facility must provide a fixed rate per bed adjusted                                                                   
annually according to terms.  The fixed rate for the first year                                                                 
must include all and may not exceed and will cover.  These are not                                                              
general goal languages, these are requirements."  Representative                                                                
Croft recalled that being an important portion of the debate last                                                               
year when the thought was that there would be a competitive bid.                                                                
Now, with sole source, it becomes even more important to have these                                                             
requirements.                                                                                                                   
                                                                                                                                
REPRESENTATIVE JAMES said that she did not know how those numbers                                                               
were arrived at and she noted that she was not present at all the                                                               
meetings last year.  Representative James stressed that she was                                                                 
being asked to support something that is not backed up in any way.                                                              
She requested that she be shown the evidence.                                                                                   
                                                                                                                                
REPRESENTATIVE GREEN interjected and stated that Representative                                                                 
James voted in favor of it.                                                                                                     
                                                                                                                                
REPRESENTATIVE JAMES emphasized that was last year and that she did                                                             
not recall those numbers.                                                                                                       
                                                                                                                                
The committee stood at-ease from 3:09 p.m. to 3:45 p.m.                                                                         
                                                                                                                                
Number 1425                                                                                                                     
                                                                                                                                
CHAIRMAN KOTT noted that there were questions regarding how the $70                                                             
amount was arrived at.  After review of the House Finance Standing                                                              
Committee minutes, Chairman Kott said that he was still unsure as                                                               
to how that amount was determined.  However, the minutes contained                                                              
discussion from Commissioner Pugh, Department of Corrections, and                                                               
from Mr. Diamond, Senior Vice President and Secretary, Management                                                               
& Training Corporation in Ogden, Utah.  That discussion referred to                                                             
the $70.  Chairman Kott indicated that the formulation involved                                                                 
perhaps, the number of beds and the fiscal note attached.  However,                                                             
the Department of Corrections seems to suggest that it may be                                                                   
closer to $85.  Chairman Kott noted that he had inquired with the                                                               
commissioner on this issue, she recommended doing a cost analysis.                                                              
He noted that Representative Murkowski had pointed out that the $70                                                             
was included in the ordinance passed by Delta Junction.                                                                         
                                                                                                                                
Number 1695                                                                                                                     
                                                                                                                                
DON McCLINTOCK, Attorney, Ashburn and Mason, testified via                                                                      
teleconference from Anchorage.  As the committee is aware, there                                                                
was a legislative letter of intent that was transmitted which                                                                   
predicated the negotiations.  The Delta Junction Ordinance 6.1                                                                  
references the $70 pre day limitation.  The settlement agreement                                                                
basically used the $70 per day as a basis for negotiating the                                                                   
ground lease rent amount, Section 3B of the settlement agreement.                                                               
Using an 800 bed facility the cap of ground lease rent, $1,022,000,                                                             
is based on the $70 per day.  Mr. McClintock pointed out that the                                                               
$70 per day was projected using 1998 dollars with an appropriate                                                                
cost of living index which was not specified.                                                                                   
                                                                                                                                
CHAIRMAN KOTT stated that was what the committee had also                                                                       
concluded.  After further review of the proposed committee                                                                      
substitute, Chairman Kott agreed with Representative James that the                                                             
new Section 7, intent language, is probably redundant and not                                                                   
necessary.                                                                                                                      
                                                                                                                                
Number 1862                                                                                                                     
                                                                                                                                
REPRESENTATIVE GREEN moved that the committee adopt Amendment 1                                                                 
which would remove Section 7, on page 3, lines 10-17, of the                                                                    
proposed committee substitute.  There being no objection, it was so                                                             
ordered.                                                                                                                        
                                                                                                                                
REPRESENTATIVE CROFT noted that when the previous hearing was                                                                   
adjourned he had an amendment before the committee.  He inquired as                                                             
to what happened with that amendment.                                                                                           
                                                                                                                                
CHAIRMAN KOTT explained that the proposed committee substitute                                                                  
wiped out that amendment.                                                                                                       
                                                                                                                                
REPRESENTATIVE GREEN moved to adopt Amendment 2 which reads as                                                                  
follows:                                                                                                                        
                                                                                                                                
     Page 3, line 10, insert a new section to read                                                                              
                                                                                                                                
          "Sec. 7.  Section 4(c), ch. 15, SLA 1998 is                                                                           
          amended by adding:                                                                                                    
                                                                                                                                
          (4) the agreement to lease must provide a                                                                             
          fixed rate per each bed day, adjusted annually                                                                        
          during the term of the lease according to an                                                                          
          appropriate index.  The fixed rate for the                                                                            
          first year of the lease must include all                                                                              
          capital and operating costs and may not exceed                                                                        
          $70 per each bed day."                                                                                                
                                                                                                                                
     Renumber previous Sections 7 and 8 accordingly.                                                                            
                                                                                                                                
REPRESENTATIVE GREEN explained that Amendment 2 would codify the                                                                
earlier discussion regarding fixing the base rate at $70 per day                                                                
before the escalator takes off.  There being no objection,                                                                      
Amendment 2 was so adopted.                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT asked whether that had a title change.                                                                     
                                                                                                                                
REPRESENTATIVE GREEN replied no, but noted that Amendment 2 would                                                               
require a title change.                                                                                                         
                                                                                                                                
Number 2090                                                                                                                     
                                                                                                                                
REPRESENTATIVE KERTTULA moved that Section 6 be removed from the                                                                
proposed committee substitute and to renumber accordingly.                                                                      
                                                                                                                                
REPRESENTATIVE JAMES objected.                                                                                                  
                                                                                                                                
REPRESENTATIVE KERTTULA said that she appreciated the efforts to                                                                
establish a cap, however that does not resolve the underlying                                                                   
concerns.  There is still a sole-source contract.                                                                               
                                                                                                                                
REPRESENTATIVE JAMES understood the concern of Representative                                                                   
Kerttula.  Representative James believed there is a sole-source                                                                 
contract and they have a right to do that.  Although Representative                                                             
James was not sure that what is specified in Section 6 is                                                                       
necessary, she was willing to do so if the language is better than                                                              
that in HB 53.  Representative James pointed out the need to worry                                                              
about the state and how these prisoner facilities will be provided.                                                             
She interpreted this as merely providing an explanation of what                                                                 
Delta Junction has done to this point.  She said that she did not                                                               
want to make decisions for Delta Junction nor did she want to do                                                                
anything changing what has been done.                                                                                           
                                                                                                                                
CHAIRMAN KOTT stated, "It would appear to me that Section 6                                                                     
somewhat substantiates the position, at least in my interpretation                                                              
of what occurred during the passage of HB 53, that the legislature                                                              
felt that there was an opportunity for competitive bidding, but if                                                              
all the parameters were met and under certain circumstances--if the                                                             
parties wanted to go to a sole source and they met those specific                                                               
circumstances that fell within that parameter, in this particular                                                               
case it was a time constraint, that would be allowed."  He believed                                                             
that rejection of Section 6 would seem to indicate that was not the                                                             
legislature's intent.                                                                                                           
                                                                                                                                
TAPE 99-55, SIDE A                                                                                                              
Number 0001                                                                                                                     
                                                                                                                                
REPRESENTATIVE KERTTULA expressed concern with saying that this                                                                 
satisfies it.  Although there has been lengthy testimony, it has                                                                
not been enough.  She reiterated her concerns for those in Delta                                                                
Junction and those in overcrowded prisons.  Therefore,                                                                          
Representative Kerttula felt that the intent of HB 53 should                                                                    
remain.                                                                                                                         
                                                                                                                                
Number 0060                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT said that it seemed that, in the area of                                                                   
privatization, extreme care must be taken to have it be                                                                         
competitive.  Privatization is sold on the benefits of competition                                                              
and free enterprise.  He emphasized that in this area there should                                                              
be concern about sole-sourcing privatization contracts.                                                                         
Historically, a lot of abuses have occurred in this area.                                                                       
Representative Croft felt that Delta Junction was placed in a                                                                   
difficult situation and has attempted to handle it well.  He noted                                                              
that there must be review of the broader public policy goal.                                                                    
Representative Croft stated, "I think we want to be very strict on                                                              
our efforts in privatization, that it doesn't get sole-sourced."                                                                
In his view, the benefit of privatization is competition.                                                                       
Furthermore, the worst of both worlds is achieved with a                                                                        
sole-source privatization contract.  He noted that he expected this                                                             
situation, but not that the first competitive bid would not be                                                                  
achieved.  Doing this retroactively presents another layer of                                                                   
worry.                                                                                                                          
                                                                                                                                
Number 0331                                                                                                                     
                                                                                                                                
REPRESENTATIVE JAMES agreed and understood many of Representative                                                               
Croft's comments.  However, she was not convinced that a                                                                        
competitive bid would have resulted in a better bid in this case.                                                               
She said that she was not even convinced that a competitive bid                                                                 
would have resulted in another bid.  Representative James pointed                                                               
out that she was not always pleased with competitive bids because,                                                              
as has been the case in Fairbanks, companies from outside Alaska                                                                
bid on something that cannot be done in Alaska.  At least Allvest                                                               
has been doing business in Alaska, has been around since the                                                                    
beginning of this issue and has committed to the $70.                                                                           
Representative James informed the committee that her biggest                                                                    
concern  is the time line.  She did not want to do anything that                                                                
will end a deal or place Delta Junction in jeopardy.  Delta                                                                     
Junction has good council, Jim DeWitt, and she did not believe he                                                               
would lead Delta Junction to the path of destruction.  Therefore                                                                
based on the interest of the state and the need for a prison,                                                                   
Representative James expressed the need to clarify what was meant.                                                              
She did not believe it would change anything nor did she believe it                                                             
was retroactive.                                                                                                                
                                                                                                                                
REPRESENTATIVE GREEN reviewed the various points of view presented                                                              
in yesterday's testimony [May 4, 1999].  He noted that he was in                                                                
favor of competitive bidding and expressed the need to do                                                                       
privatization on a competitive basis.  However, Representative                                                                  
Green stressed that he did not like the concept of sole-sourcing,                                                               
especially on something as important as this.  He indicated that                                                                
some merit must be given to the testimony that Allvest was the only                                                             
one coming forward.  Weighing all those aspects and recognizing the                                                             
sideboards that have been inserted, Representative Green feels more                                                             
at ease.  Therefore, Representative Green said that he would vote                                                               
to move this legislation out of committee.                                                                                      
                                                                                                                                
CHAIRMAN KOTT asked whether there was any further discussion on                                                                 
Amendment 3.                                                                                                                    
                                                                                                                                
REPRESENTATIVE KERTTULA commented that she too knew Mr. DeWitt and                                                              
others involved and did not question their motives.  She expressed                                                              
the need for them to stand on HB 53 which provides broad latitude                                                               
that could conceivably allow for a sole source as long as the                                                                   
process was similar to the procurement code.  Representative                                                                    
Kerttula believed this to be a step too far.                                                                                    
                                                                                                                                
Upon a roll call vote, Representatives Croft and Kerttula voted in                                                              
favor of Amendment 3 and Representatives Green, Rokeberg, James,                                                                
Murkowski, and Kott voted against Amendment 3.  Therefore,                                                                      
Amendment 3 failed to be adopted.                                                                                               
                                                                                                                                
Number 0881                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT moved Amendment 4.                                                                                         
                                                                                                                                
REPRESENTATIVE ROKEBERG objected.                                                                                               
                                                                                                                                
REPRESENTATIVE CROFT offered the following amendment to Amendment                                                               
4:  Delete "17" and insert "9", delete "A contractor who" and                                                                   
insert "An entity that".  There being no objection, the amendment                                                               
to Amendment 4 was so adopted.  Therefore, Amendment 4, as amended,                                                             
would read as follows:                                                                                                          
                                                                                                                                
     Page 3, line 9, following "section."                                                                                       
                                                                                                                                
          Insert "An entity that brings an action in                                                                            
          court to stop the procurement of a facility or                                                                        
          operation on a design-build construction                                                                              
          contract basis from being handled on a                                                                                
          competitive basis may be awarded the contract                                                                         
          on only on a competitive basis."                                                                                      
                                                                                                                                
REPRESENTATIVE CROFT expressed concern with the Delta Junction                                                                  
situation because a sole-source party threatened to sue in order to                                                             
stop competitive bidding.  He informed the committee that in                                                                    
discussion with the drafter, he has discovered there are legitimate                                                             
bases to sue to object to how a competitive bid is being run.                                                                   
Under this, an entity could sue, win and have a bid reworked while                                                              
allowing the competitive bid to be satisfied.  This language would                                                              
merely prevent an entity from suing against competitive bidding and                                                             
then receiving the bid sole source.  If this had been in the                                                                    
statute a month or so ago, Delta Junction could have merely pointed                                                             
to the RFP [Request for Proposals] time line equation.  He                                                                      
recognized that there is much disagreement regarding the underlying                                                             
fundamental reason for going sole source in this situation.                                                                     
                                                                                                                                
REPRESENTATIVE JAMES said that she did not have problems with the                                                               
amendment, however she did have the purpose for which the amendment                                                             
was offered.  She took issue with Representative Croft's statement                                                              
that if this had been law, Delta Junction would have done things                                                                
differently.  Delta Junction does not have any money.  Furthermore,                                                             
Delta Junction is having problems with this issue regardless of the                                                             
lawsuit.  From what Representative James had read, she believed                                                                 
that Delta Junction faired better than if the agreement did not                                                                 
exist.  She said that she had much sympathy for the folks in Delta                                                              
Junction.                                                                                                                       
                                                                                                                                
REPRESENTATIVE MURKOWSKI asked whether Amendment 4 would make this                                                              
retroactive.                                                                                                                    
                                                                                                                                
Number 1245                                                                                                                     
                                                                                                                                
REPRESENTATIVE CROFT clarified that to the extent Section 6 was                                                                 
retroactive before, so is Amendment 4.                                                                                          
                                                                                                                                
REPRESENTATIVE MURKOWSKI said that if the language was included as                                                              
part of subsection (d), of Section 4 of HB 53, there would be a                                                                 
valid argument that it is retroactive and Allvest would not be able                                                             
to be in their current position with their sole-source contract.                                                                
                                                                                                                                
REPRESENTATIVE CROFT pointed out that Amendment 4 says, "brings an                                                              
action in court" which has not happened.  Therefore, the threat of                                                              
doing so would be removed, but they could not be disqualified                                                                   
currently since they have not met that.                                                                                         
                                                                                                                                
Number 1367                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG agreed with Representative James.  He                                                                   
indicated that this clause is probably unconstitutional.                                                                        
Furthermore, if this were enacted it could be used as a tool by a                                                               
party to get out of a contract.  He also believed that this is a                                                                
deal killer due to the possibility of retroactive effects.                                                                      
                                                                                                                                
REPRESENTATIVE CROFT surmised from Mr. DeWitt's high                                                                            
recommendations that he ably represented his client in this matter,                                                             
although there were not many tools available.  This would have made                                                             
that situation somewhat easier because the threatening could not                                                                
have occurred.  He noted that one of the reasons competitive                                                                    
bidding did not occur was due to the threat of lawsuit from an                                                                  
entity that then received the sole-source bid.  That is poor public                                                             
policy.                                                                                                                         
                                                                                                                                
REPRESENTATIVE JAMES said that she did not think that Delta                                                                     
Junction received a bad deal.                                                                                                   
                                                                                                                                
REPRESENTATIVE ROKEBERG said that he believed that this language                                                                
was being inserted into statute with the law of general                                                                         
applicability.  He said that if he were a client who had hired a                                                                
contractor on a sole-source basis and he wanted to get rid of that                                                              
contractor, this could be used as leverage to do so.  This should                                                               
be a tool and would frustrate privity of contract.                                                                              
                                                                                                                                
REPRESENTATIVE CROFT commented that Representative Rokeberg is                                                                  
wrong on both counts.  It is not a law of general application,                                                                  
although it should be.  Furthermore, he indicated that this could                                                               
not be used to push someone out of the competitive process.                                                                     
Representative Croft clarified that even an entity that brings a                                                                
suit can be awarded on a competitive basis, but that entity cannot                                                              
be awarded on a sole-source basis.                                                                                              
                                                                                                                                
REPRESENTATIVE MURKOWSKI noted that Representative Rokeberg has                                                                 
brought forth a couple of constitutional privity of contract issues                                                             
which have not been addressed.                                                                                                  
                                                                                                                                
The committee stood at-ease from 4:29 p.m. to 4:37 p.m.                                                                         
                                                                                                                                
CHAIRMAN KOTT reminded the committee that there is objection to                                                                 
Amendment 4.                                                                                                                    
                                                                                                                                
REPRESENTATIVE MURKOWSKI moved to amend Amendment 4 to delete "line                                                             
9" and insert "line 10" and before "An entity", insert "Section 7".                                                             
                                                                                                                                
REPRESENTATIVE ROKEBERG objected.                                                                                               
                                                                                                                                
REPRESENTATIVE GREEN pointed out that Section 7 already exists.  Is                                                             
the intent to place Amendment 4 after Section 7 which would make it                                                             
Section 8.                                                                                                                      
                                                                                                                                
REPRESENTATIVE MURKOWSKI agreed her amendment should insert                                                                     
"Section 8" on whatever line is appropriate.                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG inquired as to which statute.                                                                           
                                                                                                                                
REPRESENTATIVE MURKOWSKI clarified that it would add a new section,                                                             
8.                                                                                                                              
                                                                                                                                
REPRESENTATIVE CROFT clarified that it would be AS 36.30.300 (f).                                                               
                                                                                                                                
CHAIRMAN KOTT asked whether there was objection to the amendment to                                                             
Amendment 4.                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG objected.                                                                                               
                                                                                                                                
CHAIRMAN KOTT said, "Hearing no objection to the amendment to the                                                               
amendment.  We have the amendment as amended before us.  Is there                                                               
any objection to the amendment?"                                                                                                
                                                                                                                                
REPRESENTATIVE JAMES objected.                                                                                                  
                                                                                                                                
REPRESENTATIVE ROKEBERG commented that, as a matter of general                                                                  
applicability law, this is ludicrous.  He reiterated that this                                                                  
could be used by a business person to their benefit which would                                                                 
have a negative impact on the contracting business.  This could be                                                              
used to frustrate and get rid of a sole-source contractor.                                                                      
                                                                                                                                
Number 1843                                                                                                                     
                                                                                                                                
ANNETTE KRIETZER, Legislative Assistant to Senator Loren Leman,                                                                 
Alaska State Legislature, informed the committee that this                                                                      
amendment was reviewed by Senator Leman when it was felt to be                                                                  
applicable to the special section of the bill.  Ms. Krietzer said                                                               
that Senator Leman would prefer that the amendment not be applied                                                               
to the entire bill because there are issues he would like to work                                                               
on during the interim with the Association of General Contractors                                                               
and the Alaska Professional Design Council with regard to                                                                       
design-build contracts.  With regard to the amendment applied only                                                              
to this section, Ms. Krietzer said Senator Leman had no comment.                                                                
                                                                                                                                
CHAIRMAN KOTT requested a roll call vote on the motion to adopt                                                                 
Amendment 4 as amended.  Representatives Murkowski, Croft and                                                                   
Kerttula voted in favor of Amendment 4.  Representatives Green,                                                                 
Rokeberg, James and Kott voted against Amendment 4.  Therefore,                                                                 
Amendment 4 failed to be adopted.                                                                                               
                                                                                                                                
CHAIRMAN KOTT asked whether there were any further amendments or                                                                
discussion.                                                                                                                     
                                                                                                                                
Number 1941                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG moved to report HCS CSSB 141(JUD), Version                                                              
LS0827\K, Bannister, 5/5/99, as amended, out of committee with                                                                  
individual recommendations and the accompanying zero fiscal notes.                                                              
                                                                                                                                
REPRESENTATIVE KERTTULA objected.                                                                                               
                                                                                                                                
Upon a roll call vote, Representatives Green, Rokeberg, James,                                                                  
Murkowski and Kott voted in favor of reporting HCS CSSB 141(JUD)                                                                
out of committee.  Representatives Croft and Kerttula voted against                                                             
reporting HCS CSSB 141(JUD) out of committee.  Therefore,  HCS CSSB
141(JUD) was so moved from the House Judiciary Standing Committee.                                                              

Document Name Date/Time Subjects