Legislature(2013 - 2014)BUTROVICH 205
02/05/2013 09:00 AM Senate STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| SB12 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 12 | TELECONFERENCED | |
SB 12-PUBLIC PROCUREMENT
9:00:30 AM
CHAIR DYSON announced that SB 12 was before the committee.
9:01:38 AM
SENATOR ANNA FAIRCLOUGH, sponsor of SB 12, introduced the bill.
She read from the sponsor statement:
Before you is Senate Bill 12, an effort and proposal
to modify Alaska's small procurement code definition.
It clarifies Alaska business license requirements,
stating that a bidder must have a business license at
the time the bid is open, otherwise you do not qualify
for the Alaska bidder's preference. This bill
increases a threshold under which a state agency may
use in the informal procurement process from $50,000
to $100,000 for goods and services and from $100,000
to $200,000 for construction. It changes the small
procurement lease base threshold from 3,000 square
feet to 7,000 square feet. It allows for the
submission of electronic bids, modernizing our system.
It eliminates an outdated vendor list. The department
handles this currently on line. It makes application
of the preferences that are currently spread
throughout state statute to one section and uniform.
It clarifies what preferences can be cumulative and
those that cannot be combined.
CHAIR DYSON asked for clarification of Senator Fairclough's last
statement.
SENATOR FAIRCLOUGH explained that currently there are times when
people in the procurement process are requesting procurement
officers to calculate a bid at each level under each preference.
The bill changes this to say that one calculation will be done
if preferences can be stacked. Previously, there was a
disagreement on the interpretation of preferences, since they
were located in different parts of the statute. The bill pulls
all statutes that discuss preference under one statute and sets
out a process by which preferences can be combined.
CHAIR DYSON requested returning to that item later on.
SENATOR FAIRCLOUGH continued to explain that SB 12 changes the
pay for the Chief Procurement Officer from a range 27 to a range
25. The administration is splitting this position so the Chief
Procurement Officer is no longer the Director of the Division of
General Services.
She stated that, collectively, these changes streamline the
procurement process for the agency and, in the end, will benefit
the state by allowing enough time to really investigate the cost
benefit of larger procurements. It will also benefit rural
Alaska by allowing more to take part in the small procurement
process.
9:04:35 AM
LAURA PIERRE, staff, Senator Anna Fairclough, explained the
sections of the bill. She said Section 1 updates a citation to
reflect the renumbering of a preference. Section 2 amends the
local agricultural preference to grant a seven percent cost
preference to the qualifying bid, rather than to the low bid.
SENATOR WIELECHOWSKI understood that SB 12 is the same bill that
came out of the Senate State Affairs Committee last year, except
for the range change.
MS. PIERRRE agreed.
CHAIR DYSON said he was intrigued by all the preferences to
instate residents. He wondered if there was a scoring method in
place.
SENATOR FAIRCLOUGH suggested Mr. Jones address this issue.
9:07:10 AM
VERNON JONES, Chief Procurement Officer, Division of General
Services, Department of Administration, described the
preferences and their value. The local agricultural preference
currently says "only agricultural products harvested in the
state shall be purchased when priced no more than seven percent
above product harvested outside the state." Currently, the
evaluator must go through the process of determining the low bid
and figuring out what seven percent of that is, and subtracting
that number from the bid with the qualifying agricultural
preference. SB 12 would simplify that process and award a seven
percent preference. The goal of SB 12 is to simplify and
clarify.
CHAIR DYSON assumed that businesses would be bidding against an
outside provider.
MR. JONES said yes. He noted that the main preference is the
five percent Alaska bidder preference contained in AS 36.30.321.
He related that many of the other preferences require the bidder
to qualify for the Alaska bidder preference.
He said that the employment program preference is also found in
AS 36.30.321.
CHAIR DYSON asked if that preference was for employing Alaskans.
MR. JONES explained that it was for employing developmentally
disabled employees - a 15 percent preference. There is also the
disabled bidder preference, at 10 percent, contained in AS
36.33.21. He noted that preferences could be combined such as
with the 5 percent Alaska bidder and 10 percent disabled bidder
preferences. He pointed out that SB 12 eliminates the "employers
of disabled" preference because it is seldom used and sometimes
misused. Only two bidders and two individuals have ever
benefitted from that preference.
9:11:41 AM
MR. JONES spoke of the Alaska veterans preference at 5 percent
contained in AS 36.33.21. In order to qualify for the veterans'
preference, a person must first qualify for the Alaska bidder
preference. A disabled veteran would qualify for a 20 percent
preference.
CHAIR DYSON asked if there was a disadvantaged minority
preference.
MR. JONES replied that Alaska does not have such a preference;
it is a federal preference, such as when federal funds are used
to build highways. The state is not allowed to apply residency
preferences, but is required to apply federal preferences.
CHAIR DYSON asked if there are any preferences for Alaska Native
Corporations.
MR. JONES stated that the state has no Alaska Native Corporation
preferences.
CHAIR DYSON asked if that preference exists when federal money
is involved in a project.
MR. JONES replied that it depends on what restrictions accompany
the project - if it has strings attached. It also depends on the
grant requirements.
CHAIR DYSON said that a lot of Native Corporations have a
security-providing business. He asked if a preference would be
given for that business only under a federal grant.
MR. JONES said yes.
9:14:17 AM
MR. JONES informed the committee that the rest of the
preferences are for actual products bid. These do not require an
Alaska bidder preference. For example, the application for
forest, agricultural, and fisheries products preferences are
being simplified in SB 12.
SENATOR WIELECHOWSKI mentioned constitutional limits for in-
state versus out-of-state preference. He assumed that a 7
percent preference was constitutional. He asked what the outer
limit of preference percentage was.
MR. JONES replied that the state has been challenged only once
in twenty years. The Alaska Offerers Preference, a 10 percent
overall preference, not in statute, but in regulation, was
challenged. It was challenged in court and the case was dropped.
SENATOR WIELECHOWSKI asked where the 7 percent number comes
from.
MR. JONES did not know. He said the legislature decided on that
number at the time the statute was written.
9:16:36 AM
MR. JONES said the rest of the preferences are the Alaska
product preferences, class 1, 2, and 3, contained in AS
36.30.330. The difference between the classes is the percentage
that is manufactured or built in Alaska. Class 1 is 25 percent
or more, class 2 is 50 percent or more, and class 3 is 75
percent or more, corresponding to a 4 percent, 6 percent, or 8
percent preference. He explained that you can't combine an
Alaska product preference and an agricultural preference. He
related that Alaska has a total of 13 preferences, some of which
are not contained in SB 12. Alaska has the highest number of
preferences of any state.
9:18:12 AM
MR. JONES mentioned that the bill simplifies the qualifications
for the disability preference. Currently, Vocational
Rehabilitation manages the qualification process and is required
under statute to evaluate each case individually. He gave an
example of a veteran who produces a copy of discharge papers
that show the Veteran Administration's qualification of a 90
percent disability. The Vocational Rehabilitation Office must
still speak to that person's doctor for verification. Senate
Bill 12 would simplify that by allowing Vocational
Rehabilitation to request a copy of the VA's determination or
other third party qualifications.
CHAIR DYSON asked if there were limits on stacking preferences.
MR. JONES provided an example of a person who is an Alaska
resident receiving a 5 percent bidder preference, a 10 percent
disability preference, and a 5 percent veteran preference, which
would result in the highest possible personal preference of 20
percent. If that person was also offering a product, they could
also get additional preferences, depending on where the product
is manufactured and whether it is an Alaska product.
MR. JONES pointed out that the preferences "all go to cost." In
a Request for Proposal (RFP) situation, the preference is not
entirely based on cost, but also on other factors. For RFP's
there is an additional preference in regulation that is called
the Alaska Offerers Preference, which provides for a 10 percent
preference.
CHAIR DYSON asked if that preference includes contracts for
personal services.
MR. JONES said that is what it is intended for.
MS. PIERRE continued with the sectional analysis. She said
Section 3 amends the local fisheries preference to grant a seven
percent cost preference to the qualifying bid, rather than to
the low bid. Section 4 would not allow someone to receive an
agricultural or fisheries preference in addition to the Alaska
products preference. Section 5 amends the salary of the Chief
Procurement Officer. Sections 6 - 10 are renumbering sections.
She explained that Section 11 increases the threshold limit for
small procurements for leased space from 3,000 square feet to
7,000 square feet.
CHAIR DYSON asked if any committee members have any questions on
a specific section.
9:23:26 AM
SENATOR GIESSEL asked about the fiscal note. She inquired since
the employee category is reduced, would the cost to the state be
reduced. She suggested it would be a negative fiscal note.
MR. JONES replied that it is very difficult to gage the value
and the cost to the state of these preferences. The state does
not have an automated procurement system to track costs.
SENATOR GIESSEL asked about the reduction in salary for the
Procurement Officer.
MR. JONES explained that prior to 2002 the Division of General
Services had two positions, a Director and a Chief Procurement
Officer. These positions have since been combined. The bill adds
back the Director position using funds currently budgeted so
there is no additional cost or savings.
CHAIR DYSON said it eliminates a conflict of interest.
9:25:33 AM
SENATOR WIELECHOWSKI recalled that preference revisions have
been controversial in the past. He complimented Senator
Fairclough for eliminating many of the concerns. He asked if
anyone opposes SB 12.
SENATOR FAIRCLOUGH stated support by the Alaska State Chamber of
Commerce and others. Only the two people whose preferences are
eliminated are opposed. She thought that, in the past, confusion
over the revisions caused some concern. She emphasized that the
preferences are not changing; however, the bill now clarifies
how the preferences are stacked and how to better calculate the
preferences.
SENATOR COGHILL asked about if the immediate effective date can
be accomplished.
SENATOR FAIRCLOUGH replied that there is transition language in
Section 13, page 29.
SENATOR COGHILL requested more information about the date for
new qualifiers. He wondered if the Alaska preference requires
regulation changes.
9:28:24 AM
MR. JONES did not think there would be an issue with regulation
changes. The statute can be implemented right away. Some
regulations will need to be adjusted or clarified later on. For
example, the threshold for small, informal procurements has been
doubled. The different levels of competition required under that
small procurement threshold are contained in regulations and
will need to be adjusted upwards.
9:29:40 AM
SCOTT THORSON, representing himself, testified in support of SB
12. He believed that the bill will help residents work more
effectively with agencies because it has clarified the rules of
bidding. He commended Senator Fairclough and Mr. Jones for their
work.
CHAIR DYSON asked which preference Mr. Thorson qualifies for.
MR. THORSON said the Alaska bidder preference.
9:31:48 AM
CHAIR DYSON commented that this bill is the kind of legislation
that the legislature should be dealing with. He said additions
to existing laws are often inserted in illogical ways. He
commended Senator Fairclough and Mr. Jones for their efforts.
SENATOR GIESSEL moved to report SB 12, labeled 28-LS0222\N, from
committee with individual recommendations and the attached zero
fiscal note. There being no objection, SB 12 was reported from
Senate State Affairs Standing Committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 12 Sponsor Statement.pdf |
SSTA 2/5/2013 9:00:00 AM |
SB 12 |
| SB 12.pdf |
SSTA 2/5/2013 9:00:00 AM |
SB 12 |
| SB 12 Sectional Analysis.pdf |
SSTA 2/5/2013 9:00:00 AM |
SB 12 |
| SB 12 State Chamber Letter of Support.pdf |
SSTA 2/5/2013 9:00:00 AM |
SB 12 |
| SB 12 Witness List.pdf |
SSTA 2/5/2013 9:00:00 AM |
SB 12 |
| SB 12 Fiscal Note SB012-DOA-PUR-1-23-13.pdf |
SSTA 2/5/2013 9:00:00 AM |
SB 12 |