Legislature(1995 - 1996)

03/12/1996 03:32 PM Senate STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
       SB 275 STATE PROCUREMENT PRACTICES & PROCEDURES                       
 Number 090                                                                    
 SENATOR SHARP brought up SB 275 as the next order of business                 
 before the Senate State Affairs Committee and called the first                
 witness.  He noted that the legislation was introduced at the                 
 request of the governor.                                                      
 Number 099                                                                    
 DUGAN PETTY, Director - Division of General Services, Department of           
 Administration, representing the governor, prime sponsor of SB 275,           
 stated that the State of Alaska reviewed the federal Acquisitions             
 Streamlining Act of 1994 to find things that would be applicable to           
 state procurement procedures.  The State of Alaska is fortunate in            
 that the existing procurement law is relatively new, and is based             
 on the model procurement code.  Many of the complexities that the             
 federal government suffers from are not suffered by the State of              
 Alaska.  However, the procurement practices that used to work,                
 don't work as well as they used to, and need to change with the               
 times and the business environment.  The state also cannot afford             
 to continue to conduct business in the manner in which it has been            
 previously conducted.  We need to look for innovative and effective           
 ways of conducting business.  We are beginning to make inroads in             
 that area, and SB 275 represents that.  To that end, Commissioner             
 Boyer of the Department of Administration initiated the Procurement           
 Advisory Council.  He charged that council with the responsibility            
 of looking at the statutes, regulations, and policies and making              
 changes to bring about efficiencies in the operation of state                 
 procurement practices.                                                        
 Number 145                                                                    
 MR. PETTY stated that the other duty of the Procurement Advisory              
 Council was to look at individual, non-functional or non-responsive           
 procurement practices and see if a better approach to doing                   
 business couldn't be engineered.  SB 275 is a result of about                 
 thirty of the recommendations of the council.  The Procurement                
 Advisory Council was made up of state practitioners, customers of             
 state government, officials from the University of Alaska,                    
 procurement officials from outside state government, vendors, and             
 representatives from Buy Alaska.                                              
 Number 160                                                                    
 MR. PETTY stated he would like to briefly review the changes.  He             
 won't cover every section; in members' bill packets is a matrix               
 which addresses the significant changes to the law.                           
 SENATOR LEMAN asked Mr. Petty to identify the section as he reads             
 the matrix.  [The bill sections are identified in the matrix.]                
 MR. PETTY reviewed the matrix submitted to the committee from the             
                        MATRIX TO SB 275                                       
 Procurement Procedures:                                                       
  Raises the threshold for state's use of simplified small                     
 procurement procedures from $25,000.000 to $50,000.000. (Section              
  Raises the threshold for construction simplified small                       
 procurement procedures from $25,000.00 to $100,000.00. (Section 23)           
  Permits a streamlined simplified protest process for small                   
 procurements. (Section 29)                                                    
  Small office leases of up to 5,000 s.f. acquired through                     
 simplified small procurement procedures. (Sections 4 and 23)                  
  Bidders for other than construction contracts will no longer                 
 be required to list sub-contractors within five days of award.                
 (Sections 8 and 12)                                                           
  Bidders for other than construction contracts are given more                 
 latitude to replace sub-contractors. (Sections 8 and 12)                      
  Proposals will be returned to proposers when an RFP is                       
 cancelled to prevent disclosure to competitors. (Section 14)                  
 Procurement Officers:                                                         
  A procurement officer may shorten the notice of period for a                 
 purchase if adequate competition is anticipated. (Section 9)                  
  Permits greater use of RFPs when advantageous as determined by               
 the procurement officer. (Section 11)                                         
  Decreases restrictions on entering into a sole-source contract               
 by providing greater discretion to contract with a single source              
 when in the state's best interest and award through a formal bid or           
 RFP is not practical. (Section 16)                                            
  Grants discretion to the Chief Procurement Officer to permit                 
 other procurement officers to make determinations to enter into               
 single-source and limited-competition procurements. (Section 16 and           
  Expands requirement to independently verify material facts in                
 a determination to any state official completing the determination            
 of a single source, limited competition, or emergency contract.               
 (Section 22)                                                                  
  Expands penalty for a knowing false statement to any state                   
 official making a false statement in an alternate procurement                 
 determination. (Section 22)                                                   
  Permits the attorney general to determine when a legal                       
 services contract meets the requirements for a limited competition            
 procurement. (Section 17)                                                     
 Contracts & Practices:                                                        
  Prevents brokering of bidder preferences. (Section 10)                       
  Protects the state from protest damages beyond reasonable bid                
 preparation costs. (Section 33)                                               
  Removes debarred and suspended bidders from the bidders' list.               
 (Sections 3 and 38)                                                           
  Protects the state from untimely contract controversy claims.                
 (Sections 36 and 37)                                                          
 Procurement Practices:                                                        
  Permits a streamlined and simplified protest process for small               
 procurements. (Section 29)                                                    
  Exempts the operation and disposal of assets acquired through                
 foreclosure of agricultural loans from the complexities of the                
 state procurement process. (Section 39)                                       
  Permits purchase of lobbying, public relations, and                          
 advertising contracts by the Governor's Office and livestock by               
 Alaska Correctional Industries outside the requirements of the                
 procurement code. (Section 40)                                                
  Makes protest time deadlines more uniform and consistent with                
 court rules.(Sections 31, 32, 34, and 35)                                     
  Places all preference requirements in one part of statute for                
 ease of reference by procurement officers. (Sections 24-26, and 45)           
  Restricts disclosure of proposals until notice of intent to                  
 award is issued. (Section 13)                                                 
 Innovation & Better Value:                                                    
  Provides for an innovative method of procurement for new,                    
 unique requirements, new technology, or to acquisition best value             
 when advantageous to the state. (Section 19)                                  
  Encourages the use of RFPs when appropriate to achieve best                  
 value. (Section 11)                                                           
  Allows for economical and convenient purchases from federal                  
 supply schedules as authorized by the Federal Acquisition                     
 Streamlining Act of 1994. (Section 41)                                        
 Reductions in Operating Costs:                                                
  Lease rent concessions of at least 10% may be received in                    
 return for extensions of existing leases up to 10 years. (sec. 5)             
  Lease purchases of real property not exceeding $500,000.00                   
 per year or $2,500,000.00 for full-term may be entered into without           
 legislative approval or law. (Sections 6 and 7)                               
 Number 205                                                                    
 SENATOR RANDY PHILLIPS stated he has a problem with Sections 16,              
 22, 40, 6, and 7.                                                             
 MR. PETTY asked the committee to support the efforts of the                   
 Procurement Advisory Council.                                                 
 CHAIRMAN SHARP stated he would like to take testimony from other              
 people before taking questions from committee members.                        
 Number 275                                                                    
 RALPH WINTERROWD, Owner - Winter Telecom, Inc., testifying from               
 Anchorage, stated he is a probably a procurement expert, and SB 275           
 is not going to fix the problems of the state procurement code.  SB
 275 will make absolutely, positively sure that there will never be            
 any bids, at least in the telecommunications systems area.  He                
 wished that he had been invited to help write the legislation, and            
 stated SB 275 is anti-American.  There needs to be the ability to             
 bid on best product at best price.  He stated his company submitted           
 a bid to the Department of Fish & Game and beat the competitors on            
 bid and on points.  He stated his company has won bids, which it              
 has then lost because of sole-source awarding of contracts.  His              
 company currently has a case in court where the judge stated that             
 the Alaska Court System is not in compliance with the Alaska                  
 Statutes, Winter Telecom has been irreparably damaged, but the                
 judge will vote against him.  Mr. Winterrowd listed other examples            
 of problems he has had in bidding on procurement contracts.  He               
 stated that everyone should have an equal and fair footing from               
 which to bid.  If SB 275 is adopted, it will close out all                    
 competitive bidding in the State of Alaska.  He would be willing to           
 work with the committee on new procurement procedures.  He stated             
 that the federal government has some excellent guidelines.  He has            
 bid on some federal contracts, and you can win on those: they write           
 a reasonably fair bid.  Mr. Winterrowd stated he can back up his              
 testimony with documented facts.  All he is asking for is the                 
 opportunity to bid fairly and equally for state contracts.                    
 Number 360                                                                    
 SENATOR LEMAN stated that a number of Mr. Winterrowd's statements             
 were rather aggressive.  He would like to see the documentation to            
 which Mr. Winterrowd referred.  He asked Mr. Winterrowd to provide            
 that documentation to the committee.                                          
 MR. WINTERROWD responded he can do that.                                      
 SENATOR LEMAN stated what he wants to know, is how SB 275 would do            
 damage to the competitive process, and what the legislature can do            
 to enhance the competitive process.                                           
 MR. WINTERROWD replied he would work on that.                                 
 Number 387                                                                    
 SENATOR RANDY PHILLIPS informed Mr. Winterrowd that his best bet              
 would be to submit suggestions regarding procurement in general.              
 He also suggested sending information about the federal procurement           
 MR. WINTERROWD responded it is rather lengthy, but he can give a              
 brief overview of the federal process.  The main reason the federal           
 bidding process is fair, is that they don't try to slant the bid              
 toward a particular brand or try to disqualify other bidders: they            
 write a fair bid.                                                             
 CHAIRMAN SHARP encouraged Mr. Winterrowd to work with the committee           
 on the procurement process.  SB 275 is also referred to the Senate            
 Judiciary and Finance Committees.                                             
 SENATOR RANDY PHILLIPS asked Mr. Winterrowd to get his information            
 to the committee as soon as possible.                                         
 MR. WINTERROWD responded he would work on putting some information            
 together this weekend.                                                        
 CHAIRMAN SHARP asked committee members to identify areas of concern           
 so they can be worked on at a later date.                                     
 Number 425                                                                    
 SENATOR RANDY PHILLIPS stated he is concerned with Sections 6 and             
 7, which he would refer to as "condo-izing" a building.  He would             
 rather leave the law the way it is now, than do that.  He is                  
 concerned with Sections 16, 22, and 40.                                       
 CHAIRMAN SHARP is also concerned with those sections.  There will             
 be a subcommittee on SB 275, and Senator Phillips will be chairman            
 of that subcommittee.  Chairman Sharp stated he has a problem with            
 Section 9, because he thinks it could be in conflict with Section             
 30.  Section 9 states days of notice can be shortened to less than            
 21, but Section 30 states, "A protest based upon alleged                      
 improprieties or ambiguities in a solicitation must be filed at               
 least 10 days before the due date of the bid or proposal as stated            
 in the solicitation."  If it is shortened much before 21 days,                
 there would be no chance to protest.  The other area with which the           
 chairman is concerned with Section 10.  He would like to see "six             
 months" extended to "twelve months".                                          
 SENATOR RANDY PHILLIPS asked if he was picked for chairman of the             
 subcommittee on SB 275 because "the spouting whale gets the                   
 CHAIRMAN SHARP replied that Senator Phillips was chosen because he            
 appeared to have significant ideas on how to improve the                      
 legislation.  The subcommittee will consist of Senator Phillips as            
 chairman, and Senators Leman and Donley as the other members of the           
 SENATOR LEMAN asked Mr. Petty if he would be available to work on             
 SB 275 with the subcommittee.                                                 
 MR. PETTY responded he would.                                                 
 CHAIRMAN SHARP stated the committee would move on to the next bill.           

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