Legislature(2003 - 2004)

04/27/2004 01:42 PM TRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
        SCR 25-STATE CONSTRUCTION/MAINTENANCE CONTRACTS                                                                     
                                                                                                                                
The committee took up SCR 25.                                                                                                   
                                                                                                                                
CO-CHAIR COWDERY, sponsor  of SCR 25, said SCR 25  was his effort                                                               
to address problems due to SB 40, and testified as follows:                                                                     
                                                                                                                                
     In order  to maintain transparency and  to make certain                                                                    
     public  funds are  spent efficiently,  statute requires                                                                    
     construction  and maintenance  contracts be  awarded on                                                                    
     the basis of a competitive bid.                                                                                            
                                                                                                                                
     In the  case of small  projects or repairs,  law allows                                                                    
     the state,  for the  purpose of  efficiency, to  fund a                                                                    
     project  in-house   through  what's  termed   a  'force                                                                    
     account.'   Ideally,  these  are  for projects  costing                                                                    
     $250,000 or less.                                                                                                          
                                                                                                                                
     The  purpose of  SCR 25  is to  encourage the  State of                                                                    
     Alaska  (primarily DOT&PF)  to use  day labor,  24-hour                                                                    
     call out contracts, competitively  bid, in the range of                                                                    
     $250,000  to $1,500,000.    Contractors employ  skilled                                                                    
     managers  and  maintain  an  inventory  of  specialized                                                                    
     equipment.   Therefore, construction  work done  in the                                                                    
     public  sector requires  similar  staffing  as well  as                                                                    
     inventory,  thus resulting  in  increased  cost to  the                                                                    
     ratepayer.                                                                                                                 
                                                                                                                                
     Day  labor  contracts  on 24-hour  call  would  be  all                                                                    
     encompassing, using the competitive  bid process to set                                                                    
     line  item  costs  for a  set  of  numerous  individual                                                                    
     tasks,  such as  replacing  a road  sign  to filling  a                                                                    
     pothole to grading a gravel  runway, and in some places                                                                    
     in rural  Alaska, boardwalks.   Contractors  on 24-hour                                                                    
     call would use pretty much local labor sources.                                                                            
                                                                                                                                
CO-CHAIR  COWDERY  questioned  if   force  accounts  ever  use  a                                                               
competitive  bid project  if  they run  into  problems that  they                                                               
don't have  the money for, and  use force accounts to  finish the                                                               
project.                                                                                                                        
                                                                                                                                
MR. MARK O'BRIEN,  Chief Contracts Officer for  DOT&PF, said yes.                                                               
In  a case  where there  is an  ongoing construction  project and                                                               
they run  into an unknown repair,  it is fairly typical  to use a                                                               
force  account to  conduct work  that was  not previously  called                                                               
for,  under the  low-bid competitive  bid  that was  put out  and                                                               
awarded under the contract.  That  needs to be accounted for in a                                                               
different manner.                                                                                                               
                                                                                                                                
CO-CHAIR  COWDERY asked  if the  force account  was used,  in the                                                               
original  conception  of  force  accounts for  the  purpose  just                                                               
referred to.                                                                                                                    
                                                                                                                                
MR. O'BRIEN  replied this  was probably the  most common  use for                                                               
force  account within  the  department; to  pick  up and  address                                                               
these issues that were not within  the scope of the original hard                                                               
money bid  that was put  out and awarded.   There are  other uses                                                               
for it too.                                                                                                                     
                                                                                                                                
CO-CHAIR COWDERY asked if the  estimated savings on calendar year                                                               
2002 force  account projects, between  $250,000 and  $1.5 million                                                               
was $905,000, or 38 percent.                                                                                                    
                                                                                                                                
MR. O'BRIEN confirmed this was correct.                                                                                         
                                                                                                                                
CO-CHAIR  COWDERY  said  assuming  the amount  of  force  account                                                               
projects  remains constant,  over  the next  six  years the  lost                                                               
savings would total $5.43 million.                                                                                              
                                                                                                                                
MR. O'BRIEN said this was correct.                                                                                              
                                                                                                                                
CO-CHAIR COWDERY  asked if this  referred to contracts  that were                                                               
competitively bid by engineers' estimates.                                                                                      
                                                                                                                                
MR.  O'BRIEN  said these  were  estimated  savings based  on  the                                                               
difference  between issuing  a competitive  sealed bid  and using                                                               
in-house force  account labor  to accomplish  the work.   Savings                                                               
are primarily the result of  the differential between Davis Bacon                                                               
wages and the wages paid by  the state, a profit that contractors                                                               
receive that  the state does  not charge  on a project.   Cheaper                                                               
materials are  a result  of stockpiling  materials in  advance of                                                               
the  project,  and a  number  of  factors  determine that  for  a                                                               
particular project  it was  'x' percent less  expensive to  do it                                                               
with  a  force   account.    The  representative   number  is  an                                                               
accumulation and average.                                                                                                       
                                                                                                                                
CO-CHAIR  COWDERY said  these were  never bid  out competitively.                                                               
He asked if this  was an estimate of what it would  be if it went                                                               
on the street.                                                                                                                  
                                                                                                                                
MR. O'BRIEN said that was correct.                                                                                              
                                                                                                                                
CO-CHAIR COWDERY, suggesting that  estimates are guesswork, asked                                                               
if engineers' estimates were always accurate.                                                                                   
                                                                                                                                
MR.  O'BRIEN  said  no,  occasionally  engineers'  estimates  are                                                               
considerably off from the price that comes in from contractors.                                                                 
                                                                                                                                
CO-CHAIR COWDERY said he has bid on  jobs where it was as high as                                                               
50 percent.   For example, bidding  on the Port of  Anchorage, he                                                               
came  in  very low  because  of  "having  a better  mousetrap  or                                                               
whatever." They did  the job but it was about  fifty percent less                                                               
than  the  engineer's estimate.    He  said  his point  was  that                                                               
there's no way  to be accurate until you have  a competitive bid.                                                               
He referred to  the St. Mary's project, and  mentioned that local                                                               
residents were  state employees.   He said  whether one  lives in                                                               
rural or  urban Alaska, the labor  force should be paid  the same                                                               
since people work  just as hard to finish the  project.  The wage                                                               
scale  should be  on  a par  with  the urban  wage  scale.   This                                                               
resolution assures that it's competitively  bid, that Davis Bacon                                                               
wages are followed, and so forth.   He said he doesn't agree with                                                               
the fiscal note showing a savings because it's all speculation.                                                                 
                                                                                                                                
MR.  O'BRIEN said  that some  projects are  based on  competitive                                                               
bid.   For instance,  in a  year when they  did resurfacing  in a                                                               
particular area  with a  contractor, they  knew what  those costs                                                               
were.   If they do a  force account project on  a similar stretch                                                               
of  road, they  have accumulated  both of  those costs  to verify                                                               
that  in  fact the  estimate  for  savings was  verified  through                                                               
actual bid results.                                                                                                             
                                                                                                                                
CO-CHAIR COWDERY said  he didn't understand if a job  was put out                                                               
to bid,  the contractor went to  the cost of bidding  it but then                                                               
it  went  to  the  force   account.    Until  one  actually  does                                                               
something,  all  one  has  is   an  educated  guess  which  isn't                                                               
accurate, he said.                                                                                                              
                                                                                                                                
MR.  O'BRIEN  said  he  meant  that if  there  are  two  separate                                                               
projects, one  accomplished by  a contractor  under low  bid, and                                                               
one accomplished by the state  under force account, and track the                                                               
cost for both  of those projects, it verifies  a cost-savings for                                                               
the state  to use force  account for  the re-surface job  that he                                                               
referred to earlier.   He clarified that it wasn't  that they did                                                               
the project and then told the  contractor that they were going to                                                               
do it with their own forces,  but rather that it was a comparison                                                               
of two similar  projects, one accomplished with  a contractor and                                                               
one with state forces.                                                                                                          
                                                                                                                                
CO-CHAIR COWDERY said, "Granted, the  state has equipment, but do                                                               
they pay  taxes like the  contractor does?   Have overhead?"   He                                                               
said  with the  St. Mary's  project, two  contractors spent  time                                                               
bidding on the job and then the bids were cancelled.                                                                            
                                                                                                                                
MR. O'BRIEN  said the department  did not  actually competitively                                                               
bid the St. Mary's project.                                                                                                     
                                                                                                                                
CO-CHAIR  COWDERY mentioned  that contractors  went there  to see                                                               
the job.                                                                                                                        
                                                                                                                                
MR. O'BRIEN responded that may be correct.                                                                                      
                                                                                                                                
SENATOR  OLSON acknowledged  that  the force  account system  has                                                               
done a  wonderful job in  rural Alaska for some  DOT&PF projects.                                                               
He said  a number of the  airports done under force  account have                                                               
been a positive  factor for those involved with the  project.  He                                                               
mentioned the  project in  Elim in  particular where  the village                                                               
and  the city  were  involved,  and the  project  was done  under                                                               
budget.   After the project  was completed, people took  pride in                                                               
it.   He said the force  account system has been  working well in                                                               
the  past,  and  asked  for   the  department's  opinion  of  the                                                               
resolution.                                                                                                                     
                                                                                                                                
MR. O'BRIEN  said some  concerns about  the resolution  have been                                                               
formulated.  The  resolution intends to encourage the  use of as-                                                               
needed  contracts,  which  are   commonly  referred  to  as  term                                                               
contracts where  one doesn't  have a specific  piece of  work but                                                               
has a contractor on board to  take on whatever next piece of work                                                               
comes  along.    He  said the  department  currently  uses  term-                                                               
contracts for various  pieces of work, but  is usually restricted                                                               
to  individual tasks  or  individual contracts.    He said  there                                                               
should be  a list  of examples  of term-contracts  the department                                                               
currently uses, provided in the packet.   He gave the examples of                                                               
construction inspection,  corrosion inspection,  cost estimating,                                                               
and  materials  testing.    Those  are  examples  of  "as-needed"                                                               
contracts that are kept on the maintenance and operation side.                                                                  
                                                                                                                                
MR. FRANK RICHARDS, State Maintenance  Engineer for Department of                                                               
Transportation   and  Public   Facilities  (DOT&PF),   said  that                                                               
included  in  the  committee  packet  is  an  extensive  list  of                                                               
contracts currently  under maintenance, including  specialty work                                                               
such  as   brush-cutting,  guard  rail   replacement,  electrical                                                               
repair,  and  the largest  one  likely  being  the snow  haul  in                                                               
Anchorage.  It's an as-needed,  on-call basis for contract repair                                                               
to remove the snow.  One of  the other large efforts is the rural                                                               
highways and  airport contracts.   There are about  170 contracts                                                               
essentially on an  as-needed basis, primarily to  remove the snow                                                               
on the runways and roads in  rural Alaska.  Those are worth about                                                               
$2 million per year, which is a fairly large number.                                                                            
                                                                                                                                
SENATOR OLSON said  he was talking about new  capital projects as                                                               
opposed to maintenance and operations projects.                                                                                 
                                                                                                                                
MR.  O'BRIEN responded  that  this ties  in  to the  construction                                                               
contracts  because statute  and  regulations require  all of  the                                                               
construction contracts,  absent those approved by  force account,                                                               
to be  done by competitive  sealed bid, to the  lowest responsive                                                               
and  responsible bidder.   That  is different  than the  way this                                                               
tool sets  that up.   If these as-needed contracts  were imposed,                                                               
there  is no  project for  the contractor  to bid  on when  he is                                                               
responding to the as-needed contract.   His only option is to bid                                                               
hourly  rates, equipment  costs, and  those kinds  of figures  so                                                               
they are sitting there when the  department is ready to turn on a                                                               
project.  In  this case, if an as-needed contract  were used, the                                                               
department would not have a contract  low bid price for this work                                                               
going  in; it  would  be  time and  materials.    Rarely has  the                                                               
department  seen a  low bid  come  in that  is going  to be  more                                                               
expensive  than the  time and  materials contract.   Locking  the                                                               
contractor in from day one  for the specific construction project                                                               
is the main concern.  If  the department used this vehicle to use                                                               
a contractor who  was not locked in, it may  result in additional                                                               
costs to the state.  That's the primary concern, he said.                                                                       
                                                                                                                                
CO-CHAIR  COWDERY said  once  when  he worked  for  the mayor  of                                                               
Anchorage, the  same problem arose  and he developed a  day labor                                                               
contract.  Everybody who bid on  it, including ABC, liked it.  He                                                               
said he thought that in years  past, he had given contract copies                                                               
of that to  DOT&PF.  It was put  out similar to a job  to build a                                                               
road  from Juneau  to Skagway,  that is,  anticipating everything                                                               
that's  needed,  whether  that be  guard  rails,  signage,  glass                                                               
culvert, or  asphalt per  ton per  mile.  It  started out  at $.5                                                               
million  dollars  with  the  city  of Anchorage  and  went  to  a                                                               
million; it  was very  competitively bid,  and it  was understood                                                               
that  "items that  you bid  may not  ever occur.   But  everybody                                                               
being on the  up and up, the size of  the contract was determined                                                               
by someone  to be a fair  expectation of the amount  of work that                                                               
was going to be  done in that year.  In  other words, it wouldn't                                                               
be said that it would be $10 million and then do $10."                                                                          
                                                                                                                                
2:58 p.m.                                                                                                                       
                                                                                                                                
CO-CHAIR  WAGONER   referred  to  Mr.  O'Brien's   comment  about                                                               
different  salaries  the state  pays  versus  Davis Bacon  wages,                                                               
saying he doesn't think one  could stick to those parameters when                                                               
figuring the  cost of jobs  because he has observed  that between                                                               
Kenai and Anchorage, a lot of guard  rail is lost every year.  He                                                               
said he  had the  chance to  observe private  contractors working                                                               
with two  to three people,  whereas the highway  department would                                                               
have a much larger crew doing that  type of work.  He said it was                                                               
really difficult  to estimate the  actual cost unless it  was bid                                                               
out, and then one takes that bid  and relates it to the state and                                                               
looks at the increase in the amount  of hours.  He said he wasn't                                                               
saying which  was right or  wrong, but intangibles  were involved                                                               
regarding figuring prices and jobs.                                                                                             
                                                                                                                                
CO-CHAIR  WAGONER  remarked  that  this  is  a  good  bill.    He                                                               
referenced 1996  when he  was running for  office and  going back                                                               
and forth between  Kenai and Anchorage every day.   The state was                                                               
doing a large seal coat job  on the highway, there was continuous                                                               
traffic  and it  was  all  state equipment,  state  workers.   He                                                               
didn't know how  many millions of dollars the job  was worth, but                                                               
it must not have  been a job that was bid out.   He said he would                                                               
much  rather  see  state employees  working  in  maintenance-type                                                               
efforts to  keep the  good quality  of the  roads up  than seeing                                                               
them  working  with  equipment that  costs  several  hundreds  of                                                               
thousands of dollars, doing construction  work.  He said this was                                                               
a major construction project that  he doesn't think was ever bid,                                                               
although the private sector is there  to do the work, and has the                                                               
equipment.   He  questioned whether  the state  should have  that                                                               
type of equipment, because "that's  a lot of money sitting around                                                               
in  inventory" although  he understands  in the  winter there  is                                                               
some use for sanding and other functions.                                                                                       
                                                                                                                                
CO-CHAIR  COWDERY questioned  whether  the state  could do  those                                                               
jobs for less.                                                                                                                  
                                                                                                                                
SENATOR OLSON  said he  wanted to  distinguish between  the force                                                               
account projects  on the road  system and  those not on  the road                                                               
system.   He said he  was more familiar  with the one  outside of                                                               
the Railbelt,  or road system  in Alaska.   He said he  knows the                                                               
state has  leased a  lot of  equipment and it  has cut  the price                                                               
down.   This was true  for the St.  Mary's and the  Elim project.                                                               
There  has been  an addition  to the  community as  opposed to  a                                                               
project that goes  on in the community, when  everybody comes and                                                               
then leaves, including a majority of  the labor capital.  He said                                                               
from a business perspective, he  has concerns regarding equipment                                                               
being  purchased or  depreciating,  and yet,  in  looking at  the                                                               
whole picture,  he sees  the positive  effects of  force accounts                                                               
where it  has been unfettered by  the numbers or the  size of the                                                               
project,  especially  in  construction.   From  a  public  policy                                                               
standpoint, he said  DOT&PF's force account system seems  to be a                                                               
positive factor,  despite some of  the negative  sentiments being                                                               
voiced.    He  reiterated  that there  should  be  a  distinction                                                               
between road and not-on-the-road force account projects.                                                                        
                                                                                                                                
CO-CHAIR  COWDERY asked  if the  marine highway  was on  the road                                                               
system.                                                                                                                         
                                                                                                                                
SENATOR OLSON said  this wasn't black or white, but  a grey area.                                                               
He said  somebody representing the  Marine Highway  System should                                                               
comment.                                                                                                                        
                                                                                                                                
CO-CHAIR COWDERY  commented that the purpose  of SCR 25 on  SB 40                                                               
would be to give some latitude  to the local people.  Having been                                                               
a  contractor involved  with making  money, he  said whenever  he                                                               
could, he hired  local people.  The local people  were anxious to                                                               
work,  were  good, creative  workers,  and  he paid  Davis  Bacon                                                               
wages.                                                                                                                          
                                                                                                                                
SENATOR LINCOLN said  she didn't find that SCR 25  would help the                                                               
villages, as Co-Chair  Cowdery was suggesting.  She  said she has                                                               
some misunderstanding  of the "as needed"  contractors and asked,                                                               
"In the force  account projects that you've had  in the villages,                                                               
how much  in 2003 would  have been  provided to force  account to                                                               
villages versus  competitive bidding  throughout Alaska,  or even                                                               
competitive bidding in the villages?"                                                                                           
                                                                                                                                
MR. O'BRIEN said he didn't have those numbers with him today.                                                                   
                                                                                                                                
SENATOR LINCOLN asked, regarding force  account, if he could give                                                               
a  percentage, such  as  50  or 80  percent  of  the projects  in                                                               
Alaska.                                                                                                                         
                                                                                                                                
MR.  O'BRIEN said  no, in  terms of  the total  highway [indisc.]                                                               
force accounts, for instance, in  2002, force account represented                                                               
2.23 percent of the department's funding.                                                                                       
                                                                                                                                
SENATOR LINCOLN  asked, of that  2.23 percent, were those  all in                                                               
rural, bush communities?                                                                                                        
                                                                                                                                
MR. O'BRIEN  said no  they weren't.   They reflect  two different                                                               
programs  -  maintenance  and  operation  programs  that  Senator                                                               
Wagoner discussed  - with road crews  doing jobs in an  area.  It                                                               
would also include projects such  as King Cove or Soldotna, where                                                               
there   were  individual   force   account   projects  in   those                                                               
communities.  He  said it's a mixture of both  and he didn't have                                                               
a breakdown for where those percentages were.                                                                                   
                                                                                                                                
SENATOR LINCOLN asked  if 97.75 percent of all  the projects were                                                               
done through competitive bidding.                                                                                               
                                                                                                                                
MR. O'BRIEN said this was correct.                                                                                              
                                                                                                                                
SENATOR LINCOLN asked for an  explanation of why 97.75 percent of                                                               
all the projects  in 2002 - and she expressed  interest in 2003 -                                                               
was a concern, when force accounting is 2.23 percent.                                                                           
                                                                                                                                
CO-CHAIR COWDERY  asked what  the largest  contract was  in 2002,                                                               
that  is,  "What's  the  dollar  value of  the  largest  and  the                                                               
smallest?"                                                                                                                      
                                                                                                                                
MR. O'BRIEN asked  if the question was the  largest dollar amount                                                               
of a force account project.                                                                                                     
                                                                                                                                
CO-CHAIR COWDERY  said no,  of a  project.   He reviewed  that in                                                               
2002, 2.23  percent was  in force account,  of all  the projects.                                                               
He asked  what the high  bid was  on whatever projects  that "you                                                               
made in to  this equation," what the low bid  was, and where they                                                               
were located?                                                                                                                   
                                                                                                                                
MR. O'BRIEN  answered that the  program for 2002 would  have been                                                               
roughly a $550 million total  program, of which the force account                                                               
approvals   represented  $11,242,000,   reflected  in   the  2.23                                                               
percent.                                                                                                                        
                                                                                                                                
CO-CHAIR  COWDERY asked  about there  being  hydrocarbons in  the                                                               
road, and whether  the force account would be used  to add to the                                                               
cost  of the  project, or  if the  project would  be stopped  and                                                               
there would be new funding.                                                                                                     
                                                                                                                                
MR.  O'BRIEN  responded  that  was  a  different  kind  of  force                                                               
account.  A  force account that occurs on  a construction project                                                               
is not a force account  that requires approval by statute because                                                               
the original  contract was  competitively bid.     The department                                                               
had a project  that required that kind of a  force account with a                                                               
contractor,  it's  not  found  in  these  numbers  and  it's  not                                                               
required for statutory approval.   Statutory approval is required                                                               
when  the  department  conducts  a force  account  with  its  own                                                               
employees and  does it from  the very  beginning, so there  is no                                                               
competitive bid for the work itself.                                                                                            
                                                                                                                                
SENATOR LINCOLN  stated that force  accounting is so  critical to                                                               
many small  communities.  She  mentioned the village  of Rampart,                                                               
where none  of the  employees were local  hires in  a competitive                                                               
bid.   Men and women  watched the  project, almost with  tears in                                                               
their  eyes.   She concurs  with Senator  Olson's comments  about                                                               
pride in projects done by  local hire versus projects where there                                                               
is no idea how it was put together.   She then asked for a review                                                               
of the handouts that were included in the committee packet.                                                                     
                                                                                                                                
MR. O'BRIEN referred to and  explained the three handouts, noting                                                               
that the department currently utilizes  as-needed contracts.  The                                                               
difference  between  those  contracts  and  the  contract  for  a                                                               
construction  bid is  what  is commonly  called,  a "hard  dollar                                                               
bid."  An as-needed contract,  for the purposes of a construction                                                               
project, is  not a  hard dollar bid.   There is  no amount.   The                                                               
amount comes along  after the contract is in place  with the term                                                               
contractor.   He gave the example  of winning a term  contract in                                                               
Anchorage, which entitles  one to do various repairs  on the road                                                               
surface.  DOT&PF has a  $1.5 million project involving changes at                                                               
an intersection.   That contract is already  acquired, before the                                                               
project comes  along, so he is  paid according to his  rates, not                                                               
on a hard dollar bid.  The state  doesn't have a bid for the $1.3                                                               
million  for that  job, but  has the  hourly rate,  cost for  the                                                               
equipment, overhead  profit; it is not  a hard dollar bid.   That                                                               
is primarily  the difference  between the  list of  contracts and                                                               
how the department normally contracts  for the competitive awards                                                               
for construction projects.                                                                                                      
                                                                                                                                
SENATOR LINCOLN  acknowledged that it was  probably difficult for                                                               
Mr. O'Brien to sit in the  hot seat and speak honestly about what                                                               
the effects of  this resolution might be, and a  reflection on SB
40 as  well.  She  asked if  he was representing  the department,                                                               
the administration.                                                                                                             
                                                                                                                                
MR. O'BRIEN said that was correct.                                                                                              
                                                                                                                                
MR.  RICHARDS   responded  to  Senator  Lincoln's   question  and                                                               
referred to  the three lists.   One was a list  of contracts that                                                               
Mr. O'Brien  mentioned and  the second  was an  identification of                                                               
projects that  would not  be completed,  based on  certain dollar                                                               
value limitations.  The third was  the fiscal note.  He addressed                                                               
DOT&PF's force account efforts  that Co-Chair Wagoner referenced,                                                               
and said  the benefit of  utilizing federal funds  for preventive                                                               
maintenance  type work  is it  allows  for a  continuity of  work                                                               
force.   The general  fund dollars  currently used  for operating                                                               
budgets  aren't sufficient  to keep  folks  employed year  round;                                                               
there would  be seasonal  lay-offs in  the summertime  to relieve                                                               
the workforce  of those labor  costs.   The second benefit  is of                                                               
the  equipment costs.   When  the department  is able  to utilize                                                               
snowplows,  tractors,   loaders,  and  sweepers   for  preventive                                                               
maintenance  contracts,  there  is  an  ability  to  charge  that                                                               
equipment cost onto the federal project.                                                                                        
                                                                                                                                
TAPE 04-20, SIDE A                                                                                                            
                                                                                                                              
MR. RICHARDS  continued that the preventive  maintenance programs                                                               
that have been put into  place have been beneficial in preserving                                                               
the life  of the assets  that the department is  constructing, by                                                               
utilizing federal highway and aviation  dollars.  It's not always                                                               
the best  practice to  have to reconstruct,  once a  pavement has                                                               
failed, and  if preventive measures  can be done up  front during                                                               
the life of  that pavement, there will be a  cost savings overall                                                               
to state and federal programs.                                                                                                  
                                                                                                                                
SENATOR LINCOLN asked if there  have been any major problems with                                                               
force accounting.                                                                                                               
                                                                                                                                
MR.  O'BRIEN  said  he  has  been with  the  department  in  this                                                               
capacity since  1998, and is  responsible for proving all  of the                                                               
force  account projects;  he  was not  aware  of any  significant                                                               
problems.                                                                                                                       
                                                                                                                                
CO-CHAIR  COWDERY said  this is  not  about force  accounts.   He                                                               
asked, without  SB 40, what  is the limit regarding  somebody who                                                               
had a finding saying this is in the best interest of the state.                                                                 
                                                                                                                                
MR. O'BRIEN  responded the requirement is  for cost effectiveness                                                               
of finding  on the individual  project and  there is no  limit on                                                               
the size of the [project].                                                                                                      
                                                                                                                                
CO-CHAIR COWDERY said  the purpose of this resolution  is to help                                                               
out rural Alaska, and it addresses SB 40.                                                                                       
                                                                                                                                
SENATOR  LINCOLN  read from  the  last  paragraph  of SCR  25  as                                                               
follows:                                                                                                                        
     Be  it  resolved  that  the  Alaska  State  Legislature                                                                    
     respectfully  requests   that  the   governor  consider                                                                    
     directing the  Department of Transportation  and Public                                                                    
     Facilities  and  other  state  agencies  to  use,  when                                                                    
     handling construction and  maintenance projects between                                                                    
     approximately  $250,000 and  $1,500,000 throughout  the                                                                    
     state,   an  approach   under  which   a  competitively                                                                    
     selected contractor agrees  to provide construction and                                                                    
     maintenance  services  on  an as-needed  basis  over  a                                                                    
     particular period  of time  to a  specific geographical                                                                    
     area and on a 24-hour response basis.                                                                                      
                                                                                                                                
She asked what this does to force accounting.                                                                                   
                                                                                                                                
MR. O'BRIEN replied that it  is difficult to answer that question                                                               
because "be  it resolved" is not  binding on the department.   It                                                               
requests that the governor consider it.   It is difficult to know                                                               
if  the  administration  would  go  forward  with  that  request.                                                               
Assuming they  did, projects that  fall within that  category for                                                               
all state  agencies, not  just DOT&PF, would  be required  to use                                                               
this approach whereby contractors  are identified up-front.  It's                                                               
difficult  to  say   for  certain  what  this  would   do.    The                                                               
department's  concern is  since these  are not  hard-dollar bids,                                                               
not competitive, there  could be an increase in  the overall cost                                                               
to  the state  for those  same groups  of projects.   That's  the                                                               
primary concern.                                                                                                                
                                                                                                                                
SENATOR LINCOLN asked  if the force accounting  would continue as                                                               
is, under that resolve.                                                                                                         
                                                                                                                                
MR.  O'BRIEN  said  projects  in excess  of  $1.5  million  would                                                               
continue under  the normal force  account process unless  the law                                                               
changes  as  a  result of  SB  40,  in  which  case it  would  be                                                               
restricted to $250,000.  The  department would be prohibited from                                                               
doing any project in excess of $250,000 by force account.                                                                       
                                                                                                                                
SENATOR  WAGONER moved  to report  SCR 25  out of  committee with                                                               
individual recommendations and the accompanying fiscal note.                                                                    
                                                                                                                                
SENATOR LINCOLN objected.                                                                                                       
                                                                                                                                
A roll  call vote was  taken.  Senators Therriault,  Wagoner, and                                                               
Cowdery voted in favor of  the motion; Senators Lincoln and Olson                                                               
voted  against it.    Therefore,  SCR 25  moved  from the  Senate                                                               
Transportation Standing Committee by a vote of 3 to 2.                                                                          

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