Legislature(2011 - 2012)BUTROVICH 205
04/03/2012 09:00 AM Senate STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| SJR20 | |
| HB205 | |
| HB216 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SJR 20 | TELECONFERENCED | |
| + | HB 205 | TELECONFERENCED | |
| + | HB 169 | TELECONFERENCED | |
| + | HB 216 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 205-PUBLIC PROCUREMENT
9:15:37 AM
CHAIR WIELECHOWSKI announced that HB 205 was before the
committee. He said HB 205 addresses preferences in the state's
procurement code; it consolidates some preferences and sets
standards for how they accumulate.
REPRESENTATIVE ANNA FAIRCLOUGH, sponsor of HB 205, introduced
the bill. She related that the bill changes and streamlines the
procurement code to ensure consistency in application of the law
resulting in a more understandable, efficient procurement
process. It eliminates a seldom-used preference for employers
with disabilities, it consolidates procurement preferences under
one statute, and it clarifies which preferences are cumulative
and those that may not be combined. It makes application of
preferences uniform. Currently, the preferences do not contain
the same language so they must be applied differently.
LAURA PIERRE, staff to Representative Anna Fairclough, explained
the sections of HB 205 on behalf of the sponsor.
CHAIR WIELECHOWSKI requested information about the substantive
changes.
MS. PIERRE described Section 1 as the renumbering of the
preferences.
CHAIR WIELECHOWSKI asked why the numbers changed.
VERN JONES, Chief Procurement Officer, Division of General
Services, Department of Administration, testified that the bill
aims to pull the preferences out of the various sections in
statute and put them all into one section and make the language
uniform so they are more easily applied.
CHAIR WIELECHOWSKI summarized that preferences are scattered
throughout the statutes and the bill consolidated them into one
section.
MS. PIERRE explained Section 2 amends the local agriculture
preference to grant a 7 percent cost preference to the
qualifying bid, rather than to the low bid, making it consistent
with other procurement preferences.
CHAIR WIELECHOWSKI requested more information.
MS. PIERRE repeated her explanation.
MR. JONES pointed out that the statute is currently written to
say a procurement must be awarded to the bidder that qualifies
for this preference if their bid is within a certain percentage
of the low bid.
9:20:03 AM
CHAIR WIELECHOWSKI asked how the bidder qualifies.
MR. JONES explained that the bidder, in this case, qualifies
when producing a local agricultural or fisheries product.
CHAIR WIELECHOWSKI asked if the new bill provides that the
procurement officer would screen bidders for qualifications and
then award a 7 percent preference.
MR. JONES said yes.
SENATOR PASKVAN asked how a qualifying bid is determined.
MR. JONES said he did not understand the question. He offered
that the preference is based on a qualified bid and would be
reduced by 7 percent, instead of figuring out who the low bidder
was.
9:21:25 AM
SENATOR MEYER requested an example of when a procurement officer
would go with a low bid rather than with a qualifying bid.
MR. JONES called that a misnomer because a low bid has not gone
through the bid process to qualify for the 7 percent preference.
SENATOR PASKVAN asked if the award is issued in the amount of
the original bid or with the 7 percent removed.
MR. JONES said it was in the amount of the original bid. He
further explained that the preferences are for evaluation
purposes only.
CHAIR WIELECHOWSKI asked if the bill has the ability to change
the results of procurement.
MR. JONES said it could because the low bid is different than a
bid with a percentage removed resulting in a greater amount.
9:24:17 AM
REPRESENTATIVE FAIRCLOUGH further explained that the purpose of
the section is twofold, to clarify language, but also to ensure
that Alaskan-owned businesses that are harvesting seafood or
agriculture receive a preference because they compete in a
market made up of large suppliers. She gave an example of
lettuce bought for schools.
MS. PIERRE related that Section 3 does the same thing as Section
2, but for local fisheries.
She said that Section 4 would amend the local agriculture and
fisheries preference to not allow a bidder to be granted both
preferences.
CHAIR WIELECHOWSKI requested clarification.
MR. JONES explained that the preferences are duplicative. A
bidder cannot have more than one preference, such as an
agricultural and fisheries preference, as well as an Alaskan
preference.
CHAIR WIELECHOWSKI asked if that is in current law and involves
"stacking".
MR. JONES reported that it has been the division's practice to
not allow stacking of preferences.
SENATOR PASKVAN gave an example of a local agricultural bidder
who would likely elect the 7 percent preference rather than the
Alaskan 5 percent preference.
MR. JONES clarified that the Alaska product preference is a
three-tiered process with a 3 percent, 5 percent, and 7 percent
preference based on the percentage produced or manufactured in
the state. For example, a fisheries product, which is produced
100 percent in Alaska, would get one 7 percent preference, but
not a fisheries product preference, because that would be
duplication.
9:27:50 AM
MS. PIERRE reported that Sections 5-10 are renumbering sections.
She related that Section 11 adds a new section consolidating the
Alaska bidder preference, the Alaska Veterans' preference, and
other preferences formerly at AS 36.30.170(b). The section also
simplifies the qualification for the disability and employment
program preferences, eliminates the seldom-used employers of
people with disabilities preference, and excludes real estate
leases from application of procurement preferences.
CHAIR WIELECHOWSKI requested more information about Section 11.
MR. JONES explained about the three disability-related
preferences, the employment program, the disabled bidder
preference, and the employers of the disabled preference. This
section eliminates the last preference because it is seldom
used. It has only been used by two companies and has benefited
only two people. The remaining two preferences are left in
statute.
SENATOR MEYER asked if there is a cap or a limit to how many
preferences a bidder can receive.
MR. JONES did not know, but thought it might be between 12 to 15
percent. He said it was typically 5 percent, plus an Alaska
preference, or fisheries.
SENATOR MEYER used an example of a road construction bid which
was the high bid, but was awarded the contract due to
preferences totally 15 percent.
MR. JONES said, generally speaking, a road project bid would
receive a 5 percent bidder preference and a 7 percent Alaska
preference to equal a 12 percent total preference.
SENATOR MEYER suggested if the persons hired were disabled, the
bid would qualify for an additional preference.
MR. JONES noted it would be another 7 percent.
SENATOR PASKVAN asked for more information about what type of
work the two companies previously mentioned did in order to
receive the employer of disabled preference.
MR. JONES replied that one firm was a business that offers
office space leases to the state and the other was a
construction firm. He opined that the preference did not make
sense in either case.
SENATOR PASKVAN noted, as currently written, a company that
employs a 100 percent disabled workforce could obtain a lease by
bidding $107,000 and win the bid over another company that bid
$100,000.
MR. JONES said yes, but HB 205 changes that.
9:36:28 AM
REPRESENTATIVE FAIRCLOUGH stated that the reason there are
preferences in this bill is so that the population in Alaska
will benefit. The same is true for disabled preferences that
remain in the bill in order to motivate the hiring of disabled
people.
SENATOR PASKVAN agreed with that intent. He suggested that the
work being done should be connected with the disability, which
is currently not in place in the one preference.
MR. JONES agreed that there is no connection. The employment
program preference, which used to be called a Shelter Workshop,
provides that connection, as does the disabled bidder
preference. The two preferences remaining in the bill do provide
a connection.
9:39:00 AM
REPRESENTATIVE FAIRCLOUGH explained the purpose of Section 11 is
also to clarify the "stackability" of preferences and how the
calculations are done. The complication of having preferences
located throughout statute was confusing.
SENATOR PASKVAN followed up on the example of a 50 percent
disabled workforce and asked if the Department of Administration
was taking any action to remedy the problem of the disabled
person not receiving the benefit. He questioned who the true
beneficiary was.
MR. JONES said part of the issue is that the preference did not
require any benefit to the disabled person, but HB 205
eliminates that problem.
SENATOR PASKVAN agreed with that. He asked if there are other
areas where a front corporation is used to scam Alaskans. The
resolution only focuses on one area.
9:42:48 AM
REPRESENTATIVE FAIRCLOUGH noted that there were other areas in
previous bills, but they were controversial and are not included
in this bill. She used the offerors preference as an example.
She said this bill hopes to reach consensus. She noted wide
support for HB 205 bill from various entities.
SENATOR PASKVAN did remember that controversial bill two years
ago.
MR. JONES noted another important change in Section 11,
subsection (a), where a number of third-party qualifications
that would indicate disability are listed. The current process
requires the disabled person to have a doctor's note in order to
qualify for the preference. HB 205 instead, substitutes third-
party qualifications, such as a Veteran Administration
Disability or Social Security records or state authorities'
determination, for Vocational Rehabilitation to accept.
CHAIR WIELECHOWSKI asked how disability is proved currently.
MR. JONES explained that it is a case-by-case evaluation process
by the Division of Vocational Rehabilitation and requires a
letter from a physician, which is cumbersome.
SENATOR MEYER asked if there is some protection to the state if
a disabled person is injured on the job.
MR. JONES pointed out that the state requires standard insurance
coverage.
SENATOR MEYER gave an example of a crime lab construction bid,
which would be very specialized and technical. He questioned if
a sole source bid could be requested.
MR. JONES replied that would be possible. He noted that there
were stringent requirements for approval of single source bids.
9:48:39 AM
CHAIR WIELECHOWSKI referred to page 7, line 6, and asked if that
information was currently the law, or if temporary disabilities
were allowed preferences under the bill.
MR. JONES said that language was consistent with current
statute.
SENATOR PASKVAN asked if there was any provision in procurement
statutes whereby someone is subject to criminal prosecution for
sham entities.
MR. JONES replied that the Alaska Product Preference does have a
penalty for illegally claiming a preference. There is also a
requirement of good faith in procurement statutes.
SENATOR PASKVAN pointed out that the covenant of good faith and
fair dealing is implied in a contractual civil sense. He thought
he heard no as the answer to criminal prosecution.
MR. JONES understood that fraud is a crime and can be prosecuted
by the attorney general.
SENATOR PASKVAN suggested there was no process for that so it
was meaningless.
SENATOR KOOKESH asked if any shams had been prosecuted.
MR. JONES replied that several times false preferences were
claimed resulting in no contract being awarded.
9:52:34 AM
CHAIR WIELECHOWSKI asked if the current definition of "disabled"
means permanently, totally disabled. He asked if the resolution
changes that.
MR. JONES explained that the definition of disability does not
change. Currently, Vocational Rehabilitation determines who is
disabled and they feel they are not qualified, so the bill
changes who can determine that the person is disabled.
CHAIR WIELECHOWSKI asked if the standard is now "permanently
disabled" according to Vocational Rehabilitation.
MR. JONES said yes.
CHAIR WIELECHOWSKI asked if it was a "total disability"
standard.
MR. JONES explained how Vocational Rehabilitation determines the
definition of disability; the individual has some type of bar to
employment. He said he did not know what standard was used.
CHAIR WIELECHOWSKI did not want to set a higher standard of
disability.
REPRESENTATIVE FAIRCLOUGH understood that the resolution uses
the current standard but relieves the Division of Vocational
Rehabilitation from determining the standard. People with
disabilities have already qualified under one of the avenues
included in HB 205. The resolution removes a duplication of
process. She offered to find out more about the standard used.
CHAIR WIELECHOWSKI noted he was looking at the workers'
compensation definition and was looking for further information
regarding the definition of disabled.
9:56:32 AM
MS. PIERRE explained Section 12, which modifies the use of local
forest products statute to grant a seven percent cost preference
to the qualifying bid rather than to the low bid. Section 13
clarifies in statute which preferences are cumulative and which
cannot be combined. Section 14 moves the definition for "Alaska
bidder" to a new section. Sections 15 and 16 are renumbering
sections. Section 17 repeals statute establishing the veteran
preference because it was moved to another section. It also
repeals employment program language and relationship to other
preferences. Section 18 clarifies the application of the
Procurement Act to pending solicitations during transition
period. Section 19 is language making the Procurement Act
effective immediately.
9:59:19 AM
CHAIR WIELECHOWSKI asked if any preferences are new or amended.
MR. JONES replied that none are new. The bill exempts lease of
office space real estate leases from preferences and makes
changes to third-party qualification for the disabled
preferences.
CHAIR WIELECHOWSKI asked if Section 11 (c) is in existing
statute.
MR. JONES said it was. A domestic insurer does not currently
have to obtain an Alaska business license, so in order to keep
the preference consistent for them, subsection (c) would exempt
them from having to have a business license; however, they would
still have to qualify for all the other elements of the Alaska
bidder preference.
CHAIR WIELECHOWSKI opened public testimony.
10:01:12 AM
SCOTT THORSON, representing himself, testified in favor of HB
205. He spoke from a small business owner's perspective about
the advantages of HB 205. It makes doing business with the state
easier and more efficient. He said he appreciated the benefits
to locally-owned businesses.
CHAIR WIELECHOWSKI closed public testimony.
REPRESENTATIVE FAIRCLOUGH thanked the committee for hearing the
bill.
CHAIR WIELECHOWSKI said he would hold HB 205 in committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SJR 20 |
SSTA 4/3/2012 9:00:00 AM |
SJR 20 |
| SJR20.Eielson's Strategic Importance Overview.pdf |
SSTA 4/3/2012 9:00:00 AM |
SJR 20 |
| SJR20.Legislative Journal.Impact of F-16 Move from Eielson.pdf |
SSTA 4/3/2012 9:00:00 AM |
SJR 20 |
| SJR20.Murkowski and Begich Fighting F-16 Move.pdf |
SSTA 4/3/2012 9:00:00 AM |
SJR 20 |
| SJR 20.pdf |
SSTA 4/3/2012 9:00:00 AM |
SJR 20 |
| SJR20 STA Fiscal Note.pdf |
SSTA 4/3/2012 9:00:00 AM |
SJR 20 |
| SJR20 Article.Interior AK Eielson AFB closure. whats really going on.pdf |
SSTA 4/3/2012 9:00:00 AM |
SJR 20 |
| SJR20 Sponsor Statement.pdf |
SSTA 4/3/2012 9:00:00 AM |
SJR 20 |
| SJR20.Eielson AFB Fact Sheet.pdf |
SSTA 4/3/2012 9:00:00 AM |
SJR 20 |
| 01 HB 205 (1).pdf |
SSTA 4/3/2012 9:00:00 AM |
HB 205 |
| 03 HB 205 Sectional Analysis.pdf |
SSTA 4/3/2012 9:00:00 AM |
HB 205 |
| 02 HB 205 Sponsor Statement.pdf |
SSTA 4/3/2012 9:00:00 AM |
HB 205 |
| 04 HB205-DOA-PUR-03-23-11.pdf |
SSTA 4/3/2012 9:00:00 AM |
HB 205 |