Legislature(2003 - 2004)

03/23/2004 01:35 PM Senate L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
               SB 358-ALASKA RAILROAD TRACK WORK                                                                            
CHAIR CON BUNDE  announced SB 358 to be up  for consideration and                                                               
that it  is a  work in  progress and  he didn't  plan to  move it                                                               
MR.  RICHARD SCHMITZ,  staff to  Senator John  Cowdery, explained                                                               
that  until recently  the  Department  of Transportation  (DOTPF)                                                               
would treat  the railroad the same  way it would treat  a utility                                                               
or power company when crossing a  highway by putting the work out                                                               
to bid.                                                                                                                         
     Over the last  few years, there have not  been bids put                                                                    
     on some of  this work and the railroad  itself has come                                                                    
     in and  done it because  they have the equipment  to do                                                                    
     it.  So, the  purpose of  the bill  is to  basically go                                                                    
     back  and  allow  DOT  to have  the  choice  of  either                                                                    
     putting  the  work  out  to  competitive  bid  or  just                                                                    
     allowing the  railroad to do  the work under  a utility                                                                    
     type agreement....                                                                                                         
MS.  WENDY  LINDSKOOG,  Director,  External  Affairs,  said  that                                                               
Eileen  Riley, Vice  President of  Projects, Engineering  Signals                                                               
and  Technology,  ARRC,  would  help her  answer  questions.  She                                                               
supported  Mr.  Schmitz'  statements   elaborating  that  SB  358                                                               
retains  the DOTPF's  ability  to work  with  the private  sector                                                               
under  the competitive  bid  process for  the  DOT projects  that                                                               
include track construction, like a crossing over a road.                                                                        
     In addition,  SB 358 amends the  state procurement code                                                                    
     so that  DOT can  also work directly  with the  ARRC on                                                                    
     track  work through  a  reimbursable service  agreement                                                                    
     similar to  other utilities. Prior to  1996, the Alaska                                                                    
     Railroad  could conduct  work with  DOT projects  under                                                                    
     the  utility agreement  arrangement. The  railroad work                                                                    
     was  treated just  as a  utility  relocation with  cost                                                                    
     reimbursed in the same manner  as the relocation of any                                                                    
     other  utilities similar  to a  power line  or a  water                                                                    
     line.  The utility  agreements  include cost  estimates                                                                    
     that are  reviewed and  approved by  DOT in  advance of                                                                    
     the work.  After 1996, due  to private  sector interest                                                                    
     in the  track work  part of  these projects,  the state                                                                    
     procurement code was amended  requiring DOT to contract                                                                    
     track work under the competitive bid process.                                                                              
     Over the years, contractors have  bid and won the track                                                                    
     construction  work from  DOT. Today,  however, some  of                                                                    
     the   specific  railroad   work  does   require  highly                                                                    
     specialized equipment  that is  not cost  effective for                                                                    
     the private  sector to support  or maintain  in Alaska.                                                                    
     This has affected the level  of interest on certain DOT                                                                    
     projects  and it  also has  contributed to  some recent                                                                    
     work  that  was  not  completed  to  railroad  industry                                                                    
     standards.  For  an  example, in  the  past  year,  the                                                                    
     railroad  has had  to redo  some  projects including  a                                                                    
     mainline  crossing  at C  Street  in  Anchorage and  in                                                                    
     Talkeetna  along the  spur road.  These factors  led to                                                                    
     support for  SB 358 from  the Alaska Railroad,  DOT and                                                                    
     the Associated General Contractors.                                                                                        
     The goal  of the  bill is to  ensure that  DOT projects                                                                    
     involving rail construction can  move forward by giving                                                                    
     DOT the  flexibility to use either  the competitive bid                                                                    
     process  or to  work  directly with  the railroad.  And                                                                    
     more  specifically,  SB  358 would  allow  basic  track                                                                    
     construction  work to  be done  by  the private  sector                                                                    
     and, I say basic track  construction work, but it would                                                                    
     also allow the highly  specialized work like a mainline                                                                    
     crossing  to  be constructed  by  the  railroad at  the                                                                    
     discretion  of DOT.  Either  way,  Alaska laborers  are                                                                    
     constructing the project.                                                                                                  
     Finally,  we  believe  that  there  are  advantages  to                                                                    
     working with the railroad  directly on certain projects                                                                    
     and  the advantages  for DOT  would include  some lower                                                                    
     costs  and  savings of  time.  There  are a  couple  of                                                                    
     reasons  for  some  cost  savings.  For  starters,  the                                                                    
     railroad does  buy railroad  materials in  quantity and                                                                    
     we're  able to  pass those  savings along.  We own  the                                                                    
     specialized equipment; it's very  expensive and we also                                                                    
     have the skilled  labor force who know how  to work the                                                                    
     equipment and work around  track issues. So, therefore,                                                                    
     cost  savings are  realized because  the railroad  does                                                                    
     not have  to mobilize the specialized  equipment out of                                                                    
     state.  We already  have it  here in  Alaska. Excessive                                                                    
     contractor  premiums  will  be avoided  for  the  small                                                                    
     specialty  market and  the railroad  provides federally                                                                    
     required   inspection   and   coordination   for   road                                                                    
     projects. DOT must pay the  railroad for these services                                                                    
     even  under the  competitive  bid  process. An  example                                                                    
     would  be flagging,  so that  everybody who  is working                                                                    
     around the track is protected from moving trains.                                                                          
     The advantage of this bill  for the Alaska Railroad, in                                                                    
     our opinion,  would be  enhanced quality  and assurance                                                                    
     that  our   industry  standards  are  being   met.  The                                                                    
     Railroad, the DOTPF  and Associated General Contractors                                                                    
     do support SB 358.                                                                                                         
CHAIR  BUNDE noted  that  there were  concerns  from the  private                                                               
sector and asked if those had been addressed.                                                                                   
MS.  LINDSKOOG replied  that they  had not  heard any  opposition                                                               
after  a couple  of hearings,  but last  week received  word from                                                               
some  companies  that were  concerned.  Local  341 Laborers  were                                                               
being  used for  this work.  Other facts  have come  forward, but                                                               
their  concern  over quality  issues  hasn't  changed on  certain                                                               
parts of  the rail projects  that are highly specialized.  One of                                                               
the companies  may even be  new to the  scene. The bill  has been                                                               
drafted  in a  manner  as to  allow DOT  the  flexibility to  use                                                               
either method to get the work done.                                                                                             
CHAIR BUNDE  asked her to  work with  DOT and the  contractors to                                                               
see if there is some middle ground.                                                                                             
SENATOR  HOLLIS  FRENCH  asked  if  this  bill  just  applies  to                                                               
railroads where they cross roads.                                                                                               
MS.   LINDSKOOG  answered   that  the   bill  amends   the  state                                                               
procurement  code. When  DOT  has a  road  project, sometimes  it                                                               
might  be over  a rail  crossing or  maybe straightening  out the                                                               
highway like along Turnagain Arm  where the railroad track has to                                                               
be moved.  DOT is funding and  managing the work, so  it can mean                                                               
more than a crossing.                                                                                                           
MS.   NONA    WILSON,   Legislative   Liaison,    Department   of                                                               
Transportation and Public Facilities  (DOTPF), said Mark O'Brien,                                                               
Chief Contracting  Officer, is out  of town and had  been working                                                               
closely  with Ms.  Lindskoog who  has already  hit all  the major                                                               
points. She offered to answer questions.                                                                                        
CHAIR BUNDE  said he  would delay  action on  the bill  until Mr.                                                               
O'Brien could testify.                                                                                                          
MR.  J.R.  WOOD, owner,  Railway  Support  Services, said  he  is                                                               
concerned  that  the bill  would  limit  the procurement  of  the                                                               
Alaska Railroad  from the DOT  to just railroad crossing  per se.                                                               
For instance, the job he just  bid on in Wasilla is approximately                                                               
4,000 ft. adjacent to the highway.                                                                                              
     Our  major  concern here  is  that  we feel  there  are                                                                    
     quality  contractors here  available  that  can do  the                                                                    
     work. In  fact, I have worked  with one of them  that I                                                                    
     bid  against  this year.  We  do  work in  the  transit                                                                    
     industry where the standards are  much higher than they                                                                    
     are in the  freight industry and we  manage to maintain                                                                    
     those standards, which are nationwide....                                                                                  
MR.  WOOD  said that  he  has  hired  and  trained more  than  80                                                               
personnel including  personnel with the local  laborers union who                                                               
are  exceptional  workers and  could  compete  with any  railroad                                                               
laborer in the country.                                                                                                         
     Some of  the specifications we  follow up here  are not                                                                    
     nearly as tight as they are  in the states. I feel that                                                                    
     probably  our abilities  to perform  the  work and  our                                                                    
     efficiency because we do  work as 'hungry contractors,'                                                                    
     would be much greater.                                                                                                     
MR. MARK  CONDON, President,  Condon Railroad  Construction, said                                                               
he  had been  working on  projects in  Alaska for  the last  four                                                               
years and  planned on continuing  bidding on projects,  but said,                                                               
"If they  go through with this,  it would pretty much  put us out                                                               
of business."                                                                                                                   
MR. JOHN  LANDERFELT, Laborers  Local 341, opposed  SB 358  as it                                                               
has  potential  to work  harm  against  contractors who  are  now                                                               
engaged  in   this  kind  of   rail  work  and,   therefore,  his                                                               
membership. He  felt that the  problems could easily  be resolved                                                               
through the bidding process. He  suggested holding the bill until                                                               
all  the parties  concerned  could  come to  the  table and  work                                                               
things out.                                                                                                                     
CHAIR BUNDE said that was his  recommendation as well - to see if                                                               
they could  come to some  compromise and  bring that back  to the                                                               
committee. There  being no  further business  to come  before the                                                               
committee, he adjourned the meeting at 2:52 p.m.                                                                                

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