Legislature(2003 - 2004)

03/04/2004 01:35 PM Senate TRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
               SB 358-ALASKA RAILROAD TRACK WORK                                                                            
The committee took up SB 358.                                                                                                   
CO-CHAIR COWDERY, as the bill's sponsor, provided the sponsor                                                                   
statement as follows:                                                                                                           
     Senate  Bill 358  amends the  procurement code  so that                                                                    
     the Department of  Transportation and Public Facilities                                                                    
     [DOT&PF]  can work  directly with  the Alaska  Railroad                                                                    
     Corporation  [ARRC] track  work through  a reimbursable                                                                    
     service  agreement  similar  to other  utilities,  like                                                                    
     power and water lines.                                                                                                     
     Prior  to  1996,  ARRC could  conduct  track  work  for                                                                    
     DOT&PF projects under utility  agreements.  After 1996,                                                                    
     the procurement  code was  amended requiring  DOT&PF to                                                                    
     contract  for  track  work under  the  competitive  bid                                                                    
     process.  For a time, contractors  bid - and won - such                                                                    
     work.   Recently, however, contractors have  shown less                                                                    
     interest in  bidding such  work.   They don't  have the                                                                    
     specialized, expensive  equipment to conduct  the work,                                                                    
     and  they  experience high  costs  trying  to meet  the                                                                    
     specifications required.                                                                                                   
     To  remedy this  situation and  ensure DOT&PF  projects                                                                    
     move forward,  SB 358 will allow  DOT&PF flexibility to                                                                    
     use  either  the competitive  bid  process  or to  work                                                                    
     directly with the Alaska Railroad.                                                                                         
     The  advantage  of  this   arrangement  for  DOT&PF  is                                                                    
     possible  lower  costs and  a  savings  of time.    The                                                                    
     advantage  for the  Alaska  Railroad  will be  enhanced                                                                    
     quality and assurance that industry standards are met.                                                                     
CO-CHAIR COWDERY  said that AGC [Associated  General Contractors]                                                               
is on board with this bill.                                                                                                     
MS.  WENDY  LINDSKOOG,  Director   of  External  Affairs,  Alaska                                                               
Railroad  Corporation  (ARRC), said  that  Eileen  Reilly, VP  of                                                               
projects, and Tom Brooks, Chief General Engineer were on-line.                                                                  
MR.  MARK  O'BRIEN, Chief  Contracts  Officer,  DOT&PF, said  the                                                               
department has been working with  the Railroad and the Associated                                                               
General Contractors on  this issue, and is supportive  of SB 358.                                                               
There have been  a number of occasions in  which contractors have                                                               
not been  able to successfully  complete work on  their projects,                                                               
and the  Railroad has  had to  complete projects  for them.   The                                                               
problem is that a number of  firms have gone out of business, and                                                               
primarily  one  firm from  the  Lower  '48  has been  doing  this                                                               
Railroad  work  when  it  has  been  bid  out.    Mobilizing  the                                                               
equipment for - especially smaller  jobs - is not cost-effective.                                                               
It  makes sense  to enter  into an  agreement with  the Railroad,                                                               
similarly  to how  agreements are  entered  into with  utilities,                                                               
since they have  the equipment and the workforce  available to do                                                               
the work, especially on the smaller projects.                                                                                   
MR. O'BRIEN said  there are larger projects that may  be bid out,                                                               
for example  projects that exceed  the capacity of  the Railroad,                                                               
such as  the Whittier  Tunnel Project,  since that  project would                                                               
have tied  up resources and manpower  over a number of  years. In                                                               
those cases, it's  worthwhile to mobilize contractors  to do that                                                               
work.   Entering into an agreement  with the Railroad will,  on a                                                               
number  of  occasions,  work  out  to the  benefit  of  both  the                                                               
department and the Railroad.                                                                                                    
CO-CHAIR COWDERY asked  for a description of some  of the smaller                                                               
MR.  O'BRIEN said  any time  there's  an intersection  area or  a                                                               
street improvement project where there  are railroad tracks on or                                                               
nearby,  it's not  cost-effective to  bring contractors  in.   He                                                               
said those types of rehabilitative  projects involving a railroad                                                               
crossing are fairly numerous.                                                                                                   
CO-CHAIR  COWDERY asked  if it  would be  put out  to bid  if the                                                               
railroad were to overpass the highway.                                                                                          
MR. O'BRIEN said this bill  would only affect track, meaning ties                                                               
and  ballast.    Up  through   sub-grade  and  all  of  the  work                                                               
associated with  getting that  crossing in  place would  still be                                                               
under contract  and would be  done by  a prime contractor.   They                                                               
would quit  at the point when  the railroad "would take  over and                                                               
do tracks, ties, and ballast."                                                                                                  
CO-CHAIR COWDERY said  he was mainly wondering if  in Willow, the                                                               
overpass  and Railroad,  or the  Parks Highway  would fall  under                                                               
this or would it come under competitive bid.                                                                                    
MR. O'BRIEN  said this  would likely be  competitively bid.   The                                                               
only  part  likely to  be  entered  into  an agreement  with  the                                                               
Railroad would  be the track alignment  and construction portion.                                                               
The remaining  superstructure and sub-base  for all of  that work                                                               
would be part of the competitively bid project.                                                                                 
SENATOR GEORGIANA LINCOLN asked if AGC  was on board with this as                                                               
well.  She  referred to "construction of rails,  ties, or ballast                                                               
for the  tracks, and DOT  may (not  shall) enter in  an agreement                                                               
with the  Railroad ... and  the railroad may (not  shall) perform                                                               
the work itself  without procuring a contractor"  saying that she                                                               
had no  problem with  any of  that.  She  read, "may  perform the                                                               
work  [itself]   without  procuring   a  contractor   to  provide                                                               
supplies,  services, professional  services"  and  asked if  this                                                               
includes construction  of rails and  ties, saying she  hoped that                                                               
Alaska businesses  and Alaskan labor  are utilized  for supplies,                                                               
services, and construction services.                                                                                            
MS. LINDSKOOG  replied this refers  to the fact that  often there                                                               
are stockpiles of  equipment and supplies that are  needed at the                                                               
Railroad  that  have  already  gone  out  under  the  procurement                                                               
process.  She said this refers  to a situation in which a project                                                               
was being  done for DOT&PF  and there  is already a  stockpile of                                                               
materials there.                                                                                                                
MS.  EILEEN RILEY,  Vice President  of Projects,  ARRC, confirmed                                                               
that if  materials were  available, those  could be  used without                                                               
delaying the project.                                                                                                           
SENATOR DONNY OLSON asked if  there was anybody besides AGC, from                                                               
the private sector, who had an opinion on SB 358.                                                                               
CO-CHAIR   WAGONER  said   his  understanding   was  that   these                                                               
subcontractors  are from  outside of  Alaska, and  no longer  are                                                               
available to do these construction projects.                                                                                    
MR.   O'BRIEN   confirmed   that  the   last   contractors,   and                                                               
subcontractors  for   the  rail   portion,  were  out   of  state                                                               
CO-CHAIR COWDERY  moved to  report SB 358  out of  committee with                                                               
individual recommendations  and zero  fiscal note, and  asked for                                                               
unanimous consent.                                                                                                              
CO-CHAIR WAGONER asked  if there was any objection.   There being                                                               
none, it was so ordered.                                                                                                        
1:49 p.m.                                                                                                                       
CO-CHAIR WAGONER called  for a brief at ease.   He announced that                                                               
Senator Therriault had joined the  meeting and the full committee                                                               
was in attendance.                                                                                                              

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