Legislature(2021 - 2022)BUTROVICH 205

04/27/2021 03:30 PM Senate STATE AFFAIRS

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          SB 117-PROCUREMENT; CONSTRUCTION; CONTRACTS                                                                       
3:40:33 PM                                                                                                                    
CHAIR SHOWER announced  the consideration of SENATE  BILL NO. 117                                                               
"An Act relating to the  state procurement code; establishing the                                                               
construction manager  general contractor procurement  method; and                                                               
providing for an effective date."                                                                                               
He listed the invited testifiers.                                                                                               
3:41:11 PM                                                                                                                    
MIKE LESMANN,  Legislative Liaison, Department  of Transportation                                                               
and Public  Facilities (DOT&PF), Juneau, Alaska,  stated that the                                                               
purpose of the  bill is to grant the department  the authority to                                                               
write  regulations for  the existing  process between  DOT&PF and                                                               
its contractors.  SB 117 seeks  to amend the  state's procurement                                                               
code  under  AS  36.30  by  codifying  the  department's  current                                                               
practice  of using  the construction  manager general  contractor                                                               
(CMGC) construction contracting method.                                                                                         
MR. LESSMANN  explained that  the CMGC  contracting method  has a                                                               
two-phase  contract that  allows the  same contractor  to provide                                                               
construction  related services  during  both preconstruction  and                                                               
the construction  phase of  a project.  While the  existing state                                                               
procurement  law does  not  offer this  procurement  method as  a                                                               
specific option,  the department  has been  using CMGC  under the                                                               
innovative procurement guidelines in AS 36.30.308.                                                                              
MR. LESSMANN  reported that CMGC  has been  used for the  last 15                                                               
years  in  Alaska  for  public  facility  projects,  federal  aid                                                               
highway and  bridge projects, and  new vessel  construction. This                                                               
contracting  method   is  recognized   in  the   Federal  Highway                                                               
Administration regulations  and is  a commonly  accepted practice                                                               
in the  construction industry. DOT&PF's  experience is  that CMGC                                                               
can  decrease contractor  change orders,  decrease administrative                                                               
delays,    and   leverage    resources   to    improve   Alaska's                                                               
MR. LESSMANN advised that should  this become law, the department                                                               
will  collaborate  with  stakeholders to  adopt  the  regulations                                                               
needed  to further  refine and  standardize the  CMGC contracting                                                               
method in Alaska.                                                                                                               
3:45:27 PM                                                                                                                    
SENATOR  KAWASAKI  highlighted  that  the  fiscal  note  analysis                                                               
indicates  that the  CMCG contracting  method has  been used  for                                                               
just 20  projects over  the past  15 years. He  asked why  it had                                                               
been  used for  so few  projects and  how the  department expects                                                               
that to change should the bill pass.                                                                                            
MR. LESMANN answered that it is  not right for every project, but                                                               
it  is a  tool for  the department  to use.  He deferred  further                                                               
comment  to   Mr.  Lund  who   has  experience  using   the  CMGC                                                               
contracting method.                                                                                                             
3:46:58 PM                                                                                                                    
MIKE LUND, Construction Engineer,  Northern Region, Department of                                                               
Transportation and Public  Facilities (DOTPF), Fairbanks, Alaska,                                                               
explained  that  CMGC  is  a procurement  tool  that  involves  a                                                               
contractor, prior to  committing to costs, giving  input into the                                                               
phasing of  a project. This  is not  needed on all  projects that                                                               
are done on  a regular basis, but sometimes it  is to the state's                                                               
advantage and  the public interest  to do so. The  department has                                                               
been successful  in using CMGC  under the  innovative procurement                                                               
CHAIR SHOWER asked for examples of projects that would use CMGC.                                                                
MR. LUND  explained that this  method is generally used  for more                                                               
complex projects.  He cited University  Avenue in  Fairbanks that                                                               
involved  complex  phasing  and   staging  with  underground  and                                                               
overhead  utilities, and  the Kivalina  School  site access  road                                                               
that  involved  complex  logistics  to get  materials  and  heavy                                                               
equipment to rural Alaska. He said  it is heavily used and useful                                                               
in the vertical construction industry.  Using the CMGC process on                                                               
the UAF engineering building allowed  flexibility for the project                                                               
to  shut down  when  there were  fiscal  constraints and  restart                                                               
without contract closure and a lengthy claims process.                                                                          
SENATOR  KAWASAKI  summarized  that DOT&PF  uses  the  innovative                                                               
procurement   code  to   get  a   construction  manager   general                                                               
contractor. He asked  why the CMGC method has not  been used more                                                               
frequently  since  it has  been  available  under the  innovative                                                               
procurement statute.                                                                                                            
MR. LUND agreed with the  summary. Responding to the question, he                                                               
explained  that the  innovative  procurement statute  effectively                                                               
allows  the department  to use  CMGC  to partner  with the  local                                                               
contracting  community, but  it  is on  an ad  hoc  basis. It  is                                                               
difficult to  develop regulations  and adopt  overriding policies                                                               
without codifying the process.                                                                                                  
SENATOR KAWASAKI asked  how the department would  select the best                                                               
MR. LUND  answered that while there  is a price component  to the                                                               
process, the contractor is selected based on qualifications                                                                     
CHAIR SHOWER asked for the sectional analysis.                                                                                  
3:55:02 PM                                                                                                                    
MR. LESMANN paraphrased the following sectional analysis for SB
117 [original punctuation provided]:                                                                                            
     Section  1.  AS 36.30.200(c)  is  amended  to add  CMGC                                                                  
     (Construction    Manager/General   Contractor).    This                                                                    
     section  ensures  that  the Department  only  uses  the                                                                    
     contracting   method   on   appropriate   projects   by                                                                    
     requiring that  the Commissioner of  Transportation and                                                                    
     Public  Facilities first  determine  that  doing so  is                                                                    
     advantageous to the State.                                                                                                 
     Section  2.   AS  36.30.250  is  amended   to  add  the                                                                  
     Department may  exclude price criteria when  awarding a                                                                    
     preconstruction  services   contract  under   the  CMGC                                                                    
     contracting method.                                                                                                        
     Section 3. AS 36.30 is amended  to add a new section AS                                                                  
     36.30.309. This  section is the operative  provision of                                                                    
     the  CMGC  bill.  It  identifies  the  CMGC  method  as                                                                    
     requiring  a  two-phase   contract:  one  contract  for                                                                    
     preconstruction services  and another  for construction                                                                    
     services.  The   Department  awards   the  construction                                                                    
     services  contract only  if the  parties  can reach  an                                                                    
     agreed price  for construction services for  a specific                                                                    
     project  scope  and  schedule. If  the  parties  cannot                                                                    
     reach  an agreed  price,  the  Department may  contract                                                                    
     with  another   contractor  for  construction   of  the                                                                    
     project using  any other  contracting method  under the                                                                    
     procurement code.                                                                                                          
     Section  4.   AS  36.30.990  is  amended   to  add  the                                                                  
     definition for "preconstruction services".                                                                                 
     Section   5.  Authorizes   the   Department  to   adopt                                                                  
     regulations that further implement the Act.                                                                                
     Section 6. This section  specifies that Section 5 takes                                                                  
     effect immediately.                                                                                                        
3:57:30 PM                                                                                                                    
CHAIR SHOWER found no questions and opened public testimony on                                                                  
SB 117.                                                                                                                         
3:57:50 PM                                                                                                                    
CHARLES  MCKEE, representing  self, Anchorage,  Alaska, testified                                                               
off topic during the hearing on SB 117.                                                                                         
CHAIR SHOWER asked if he supported or opposed SB 117.                                                                           
MR. MCKEE  said he supported it  and then asked the  committee to                                                               
understand that there was no statute of limitations for slander.                                                                
4:01:44 PM                                                                                                                    
ALICIA SIIRA,  Associative General  Contractors of  Alaska (AGC),                                                               
Anchorage, Alaska,  stated that  AGC supports  having CMGC  as an                                                               
alternative project delivery method for  DOT&PF. It has been used                                                               
in Alaska  for decades.  AGC believes  that CMGC  can be  a great                                                               
tool  when properly  used and  prepared. However,  it is  not the                                                               
only tool  and when it  is used there  should be ample  review to                                                               
ensure the best value for the  state. She offered her belief that                                                               
codifying  the   CMGC  procurement   process  will   benefit  the                                                               
construction  industry   and  the  state.  It   would  allow  the                                                               
department to  use the CMGC  process without having to  submit an                                                               
innovative  procurement request  to  multiple  agencies for  each                                                               
project. She  said SB  117 will  modernize, clarify,  and improve                                                               
the  state's  procurement  process  and  align  Alaska  with  the                                                               
majority of  other states.  It will  also allow  the construction                                                               
industry to  have a voice  in developing regulations,  which will                                                               
remedy concerns  about consistency in  the use of  CMGC projects.                                                               
She asked  that AGC be given  a seat at the  table throughout the                                                               
regulatory process.  She said  AGC looks  forward to  sharing the                                                               
list of best practices it has compiled.                                                                                         
CHAIR SHOWER  asked if AGC would  like to see any  changes to the                                                               
MS.  SIIRA  replied  they have  suggested  language  changes  but                                                               
nothing substantial.                                                                                                            
CHAIR   SHOWER   suggested   she    send   the   suggestions   to                                                               
4:05:04 PM                                                                                                                    
SARAH  LEFEBVRE,  representing  self, Fairbanks,  Alaska,  stated                                                               
that  she  has  worked  in the  construction  industry  in  civil                                                               
contracting for  23 years. She  agreed with Ms.  Sirra's comments                                                               
and said  the bill  will ensure  that CMGC  will be  applied more                                                               
consistently across  the three DOT  regions. She noted  that this                                                               
has  been  a  concern  to   the  contracting  community  on  past                                                               
projects. She referenced Senator  Kawasaki's question and offered                                                               
her experience  that each CMGC has  progressed in a silo  and the                                                               
lessons learned  have not necessarily been  applied in subsequent                                                               
projects  and procurements.  She offered  her belief  that having                                                               
the CMGC procurement  method in statute allows  the department to                                                               
establish   clear   regulations   and  eventually   implement   a                                                               
consistent CMGC  handbook. She said  that industry  partners look                                                               
forward  to participating  in this  process to  help improve  the                                                               
application of CMGC  in Alaska. She suggested that  the CARES Act                                                               
and  federal infrastructure  packages  offer  an opportunity  for                                                               
DOT&PF to  get future year  projects onto the street.  CMGC could                                                               
be a  valuable tool to fill  the gap left by  accelerated project                                                               
funding.  She said  she is  an ADC  member, and  her company  has                                                               
minor edits for the bill that  she would submit to this committee                                                               
and the  Transportation Committee. She  noted that the  edits had                                                               
been vetted by department staff.                                                                                                
CHAIR SHOWER said he would appreciate receiving the documents.                                                                  
4:07:43 PM                                                                                                                    
CHAIR SHOWER closed  public testimony on SB 117  and advised that                                                               
written comments would be accepted at ssta@akleg.gov.                                                                           
4:08:21 PM                                                                                                                    
CHAIR SHOWER held SB 117 in committee.                                                                                          

Document Name Date/Time Subjects
SB 117 Bill v.A.A SSTA 4/27/2021 3:30:00 PM
SB 117
SB 117 fiscal note.pdf SSTA 4/27/2021 3:30:00 PM
SB 117
SB 117 Sectional Analysis 3.31.2021.pdf SSTA 4/27/2021 3:30:00 PM
SB 117
SB 117 Sponsor Statement.pdf SSTA 4/27/2021 3:30:00 PM
SB 117
SB 91 Version 32 GS1576 I.PDF SSTA 4/27/2021 3:30:00 PM
SB 91
SB 91 Transmittal Letter.pdf SSTA 4/27/2021 3:30:00 PM
SB 91
SB 91 Summary of Changes- 32 GS1576 I .pdf SSTA 4/27/2021 3:30:00 PM
SB 91
SB 91 Sectional Analysis Version 32 GS1576 I .pdf SSTA 4/27/2021 3:30:00 PM
SB 91
SB 91 Fiscal Note DPS.pdf SSTA 4/27/2021 3:30:00 PM
SB 91
SB 91 Fiscal Note DHS.pdf SSTA 4/27/2021 3:30:00 PM
SB 91
SB 91 Fiscal Note COR.pdf SSTA 4/27/2021 3:30:00 PM
SB 91
SB 92 Sectional Analysis v. A 04.07.21.pdf SSTA 4/27/2021 3:30:00 PM
SB 92
SB 92 Sponsor Statement 04.07.21.pdf SSTA 4/27/2021 3:30:00 PM
SB 92
SB 92 HSS Fiscal Note 04.07.21.pdf SSTA 4/27/2021 3:30:00 PM
SB 92
SB 92 DPS Presentation 04.27.21.pdf SSTA 4/27/2021 3:30:00 PM
SB 92
SB 92 DPS Fiscal Note 04.07.21.pdf SSTA 4/27/2021 3:30:00 PM
SB 92
SB 92 Additional Statistics.pdf SSTA 4/27/2021 3:30:00 PM
SB 92
SB 31 - Sectional Analysis.pdf SSTA 4/27/2021 3:30:00 PM
SB 31
SB 31 - Sponsor Statement.pdf SSTA 4/27/2021 3:30:00 PM
SB 31
SB 31 Bill v.A.A SSTA 4/27/2021 3:30:00 PM
SB 31
SB 92 DPS Presentation REVISED.pdf SSTA 4/27/2021 3:30:00 PM
SB 92