Legislature(2021 - 2022)BELTZ 105 (TSBldg)

05/13/2021 01:30 PM TRANSPORTATION

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ SB 117 PROCUREMENT; CONSTRUCTION; CONTRACTS TELECONFERENCED
Moved SB 117 Out of Committee
(HB 160 Companion Bill)
-- Invited & Public Testimony --
+ HB 34 NAMING VIETNAM HELI. PILOTS' MEM. BRIDGE TELECONFERENCED
Moved HB 34 Out of Committee
-- Invited & Public Testimony --
+ Bills Previously Heard/Scheduled: TELECONFERENCED
+= HB 63 ALASKA MARINE HIGHWAY OPERATIONS BOARD TELECONFERENCED
Heard & Held
          SB 117-PROCUREMENT; CONSTRUCTION; CONTRACTS                                                                       
                                                                                                                                
2:10:39 PM                                                                                                                    
CHAIR MYERS  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."                                                                                               
                                                                                                                                
2:10:50 PM                                                                                                                    
ANDY MILLS,  Special Assistant  to the  Commissioner; Legislative                                                               
Liaison,  Department  of  Transportation  and  Public  Facilities                                                               
(DOTPF), Juneau, Alaska, on behalf  of the administration, stated                                                               
that SB  117 was in response  to the department's desire  to work                                                               
directly with  the contracting community.  SB 117 would  amend AS                                                               
36.30,   the  state's   procurement   code,   by  codifying   the                                                               
department's   current   use   of    the   CM/GC   or   construct                                                               
manager/general contractor contracting  method. He explained that                                                               
the CM/GC method would provide  a two-phase contract for both the                                                               
preconstruction and  construction phases  of a  project. Although                                                               
this method was  not an option under current  procurement law for                                                               
competitive  sealed bidding,  the department  has used  the CM/GC                                                               
contracting  methodology under  the  state's existing  innovative                                                               
procurement  statute for  over fifteen  years.  He recalled  that                                                               
this  process was  used on  over  20 complex  projects. CM/GC  is                                                               
included  in Federal  Highway  Administrative regulations,  other                                                               
states' regulations and is a  common and accepted practice in the                                                               
construction industry,  he said. In the  department's experience,                                                               
CM/GC   contracts  could   decrease  contractor   change  orders,                                                               
administrative delays and leverage department resources.                                                                        
                                                                                                                                
2:12:33 PM                                                                                                                    
MR. MILLS  said this process  could allow the department  and its                                                               
contractors  to  improve Alaska's  transportation  infrastructure                                                               
faster, which is  its mission. Once the  CM/CG contracting method                                                               
is adopted in statute, the  department would collaborate with the                                                               
Associated  General   Contractors  of  Alaska  (AGC)   and  other                                                               
stakeholders   to   adopt   regulations,  policy   and   guidance                                                               
materials,   which   would   further   refine   this   innovative                                                               
contracting method for use in Alaska.                                                                                           
                                                                                                                                
2:13:23 PM                                                                                                                    
ALICIA SIIRA, Executive  Director, Associated General Contractors                                                               
of  Alaska (AGC),  Anchorage, Alaska,  stated  that AGC  supports                                                               
having  the CM/CG  tool as  an alternative  project delivery  for                                                               
DOTPF.  She stated  that AGC  is a  statewide construction  trade                                                               
association  representing   contractors,  specialty  contractors,                                                               
suppliers   and  manufacturers   in   Alaska.   AGC  unites   the                                                               
construction  industry to  focus on  balance and  work to  foster                                                               
constructive   legislation,   regulation    and   standards.   As                                                               
previously stated, CM/CG has been used  in Alaska for more than a                                                               
decade.  SB  117  will  benefit   the  construction  industry  by                                                               
modifying procurement  statutes to  codify the  CM/CG procurement                                                               
process,  she said.  It  would  allow DOTPF  to  use the  process                                                               
without  having to  submit an  innovative procurement  request to                                                               
the  Department of  Law and  the  Federal Highway  Administration                                                               
(FHWA)  for  each  project.  This  will  modernize,  clarify  and                                                               
improve  the state's  procurement process  and align  Alaska with                                                               
the majority of other states.                                                                                                   
                                                                                                                                
MS.  SIIRA  said  passage  of  this bill  will  also  provide  an                                                               
opportunity for  the industry to  participate in  the development                                                               
of regulations  that would remedy  concerns about  consistency in                                                               
CM/CG  projects. SB  117 would  allow  DOTPF to  add clarity  and                                                               
consistency  for  CM/CG  use  across  all  regions,  which  is  a                                                               
priority for the construction industry.  In closing, she said AGC                                                               
supports  this  bill  and  looks forward  to  being  included  in                                                               
further enhancing the CM/CG process.                                                                                            
                                                                                                                                
2:15:48 PM                                                                                                                    
SENATOR KIEHL  asked how broadly  this process would be  used. He                                                               
related  his understanding  that it  was not  appropriate to  use                                                               
this process in lots of projects.                                                                                               
                                                                                                                                
MR.  MILLS agreed  with Senator  Kiehl.  He stated  that low  bid                                                               
process   was   predominately   used  by   the   department   for                                                               
administrative ease. Given the nature  of many DOTPF projects, it                                                               
wasn't necessary  to use CM/GC  to add efficiency or  to complete                                                               
the process, he said.                                                                                                           
                                                                                                                                
2:17:10 PM                                                                                                                    
CHARLIE  DEININGER,  Chief  Procurement  Officer,  Department  of                                                               
Transportation  and Public  Facilities  (DOTPF), Juneau,  Alaska,                                                               
responded that DOTPF has typically used  CM/GC on one to three of                                                               
the 100 to  120 total DOTPF projects per year.  He explained that                                                               
the  department would  develop criteria  in regulation  for CM/CG                                                               
contracting.  Further,   it  would  require   the  commissioner's                                                               
approval on whether to use the CM/CG process.                                                                                   
                                                                                                                                
2:18:48 PM                                                                                                                    
SENATOR SHOWER stated that this  bill was previously heard in the                                                               
State  Affairs Committee,  which he  chairs, so  he was  familiar                                                               
with it.  He pointed  out that the  administration made  it clear                                                               
that the  department would work  with smaller contractors  on the                                                               
process. He suggested the committee  may wish to consider a small                                                               
amendment to  require the administration  to conduct  outreach to                                                               
inform contractors about  this process and provide  them with any                                                               
assistance needed,  even though CM/CG would  generally be limited                                                               
to larger, more complex projects.                                                                                               
                                                                                                                                
2:20:32 PM                                                                                                                    
SENATOR  KIEHL recalled  slides during  a presentation  discussed                                                               
using an  independent cost estimator.  He characterized it  as an                                                               
important part  of the process but  he did not see  any provision                                                               
for an independent cost estimator in the bill.                                                                                  
                                                                                                                                
MR. MILLS  related his understanding  that many aspects  would be                                                               
included in  regulations for CM/CG.  He assured members  that the                                                               
independent cost estimator would be part of the process.                                                                        
                                                                                                                                
SENATOR KIEHL said the independent  cost estimator was a critical                                                               
safeguard for the owner so he wants to be sure it is addressed.                                                                 
                                                                                                                                
2:22:30 PM                                                                                                                    
CHAIR MYERS opened public testimony on SB 117.                                                                                  
                                                                                                                                
2:22:51 PM                                                                                                                    
SARAH LEFEBVRE, Office  Manager/Contract Administrator, Exclusive                                                               
Paving,  Fairbanks,  Alaska, spoke  in  support  of SB  117.  She                                                               
provided  her  background,  such  that  she  has  worked  in  the                                                               
construction  industry for  over 20  years. She  said she  agreed                                                               
with AGC's testimony.                                                                                                           
                                                                                                                                
MS. LEFEBVRE spoke to her  experience with the CM/CG process. She                                                               
said that  each proposal is  different depending on  whether best                                                               
practices   are   incorporated   into  the   proposal.   From   a                                                               
contractor's  perspective, she  expected that  the largest  CM/CG                                                               
project  her  company was  involved  in  would provide  the  best                                                               
experience. However,  that was not  the case. She  predicted that                                                               
the inconsistencies  and flaws within the  process would continue                                                               
unless legislation  were passed. Other  than the steps  the state                                                               
uses  to  obtain  the  authority to  use  the  CM/CG  procurement                                                               
method, the state does not  have any defined processes, she said.                                                               
She said  CM/CG was  being used as  a procurement  concept. After                                                               
that,  how it  was  used  depended on  the  specific DOTPF  staff                                                               
involved. If the CM/CG projects  from 2012 to 2021 were compared,                                                               
the  results  would  show  the  process  varied  widely  and  the                                                               
sequence of changes did not  track for developing or implementing                                                               
best practices. Placing  CM/CG in statute would  create a pathway                                                               
to  develop  regulations  and  clear  guidelines  to  define  the                                                               
process and ensure that the  best value was truly being described                                                               
and sought  on behalf of the  state. She said this  is crucial to                                                               
achieve the best competitive environment.                                                                                       
                                                                                                                                
MS.  LEFEBVRE explained  that contractors  must make  significant                                                               
investments for  CM/CG projects. In her  experience, the internal                                                               
costs  ranged  from  $30,000  to  $100,000  for  her  company  to                                                               
participate  in  the  process.   She  suggested  that  the  small                                                               
business amendment  would be better  addressed by  regulation. In                                                               
closing,  she urged  members  not  to delay  passing  SB 117  for                                                               
another    year.   With    forthcoming   federal    funds   state                                                               
infrastructure  projects will  increase,  she  said. The  CM/CG's                                                               
procurement method will  provide an opportunity for  the state to                                                               
ensure that Alaska can maximize  the opportunities to use federal                                                               
funding. She  cautioned that it may  take a year to  complete the                                                               
regulation  process  after  passage  of  SB  117.  She  said  the                                                               
construction  industry is  prepared  to  actively participate  in                                                               
drafting regulations  to ensure that  Alaska is a  sound platform                                                               
for which to build future CM/CG Request for Proposals (RFPs).                                                                   
                                                                                                                                
2:25:45 PM                                                                                                                    
CHAIR MYERS,  after first determining  no one wished  to testify,                                                               
closed public testimony on SB 117.                                                                                              
                                                                                                                                
2:26:00 PM                                                                                                                    
SENATOR SHOWER  offered to  work with the  Chair on  an amendment                                                               
for small businesses.                                                                                                           
                                                                                                                                
2:27:02 PM                                                                                                                    
SENATOR MICCICHE stated his desire for SB 117 to pass this year.                                                                
                                                                                                                                
SENATOR SHOWER offered to make a conceptual amendment.                                                                          
                                                                                                                                
MR. MILLS  interjected that  an amendment  was not  necessary for                                                               
public  outreach.  He offered  to  commit  to initiate  a  public                                                               
information campaign. Further, he  said he already discussed with                                                               
Mr. Deininger  ways to  supplement the  process to  better inform                                                               
contractors.                                                                                                                    
                                                                                                                                
SENATOR SHOWER indicated that he  was comfortable with Mr. Mill's                                                               
commitment.                                                                                                                     
                                                                                                                                
CHAIR  MYERS informed  members that  HB 160,  the companion  bill                                                               
passed  the  house.  He  wondered   about  the  process  for  the                                                               
companion bill.                                                                                                                 
                                                                                                                                
SENATOR MICCICHE explained that if SB  117 were to pass, it would                                                               
meet up with  HB 160 in Senate Rules. He  expressed concern about                                                               
any potential delays by holding SB 117 in committee.                                                                            
                                                                                                                                
CHAIR MYERS said he was comfortable moving SB 117.                                                                              
                                                                                                                                
SENATOR SHOWER stated that he was comfortable moving SB 117.                                                                    
                                                                                                                                
2:30:41 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
2:31:15 PM                                                                                                                    
CHAIR MYERS reconvened the meeting.                                                                                             
                                                                                                                                
2:31:23 PM                                                                                                                    
SENATOR SHOWER  moved to  report SB  117, work  order 32-GS1579\A                                                               
from  committee  with  individual  recommendations  and  attached                                                               
fiscal note(s).                                                                                                                 
                                                                                                                                
CHAIR MEYERS found no objection and  SB 117 was reported from the                                                               
Senate Transportation Standing Committee.                                                                                       

Document Name Date/Time Subjects
HB34 Sponsor Statement 2.25.2021.pdf STRA 5/13/2021 1:30:00 PM
HB 34
HB34 Bridge Images 2.7.2020.pdf STRA 5/13/2021 1:30:00 PM
HB 34
HB34 Additional Info - Vietnam Helicopter Memorial - Time Magazine 2.7.2020.pdf STRA 5/13/2021 1:30:00 PM
HB 34
HB34 Additional Info - VHPA Honored 2.7.2020.pdf STRA 5/13/2021 1:30:00 PM
HB 34
HB34 Additional Info - Helicopters in Vietnam 2.7.2020.pdf STRA 5/13/2021 1:30:00 PM
HB 34
HB34 Additional Info - Air & Space Magazine Article 2.7.2020.pdf STRA 5/13/2021 1:30:00 PM
HB 34
HB34 Additional Info - VHPA Website 2.7.2020.pdf STRA 5/13/2021 1:30:00 PM
HB 34
SB 117 Sponsor Statement.pdf STRA 5/13/2021 1:30:00 PM
SB 117
SB 117 Sectional Analysis 3.31.2021.pdf STRA 5/13/2021 1:30:00 PM
SB 117
CMGC Award Process - Flow Chart STEP 2.pdf STRA 5/13/2021 1:30:00 PM
SB 117
CMGC Award Process - Flow Chart STEP 1.pdf STRA 5/13/2021 1:30:00 PM
SB 117