Legislature(2009 - 2010)HOUSE FINANCE 519
03/11/2010 09:00 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB342 | |
| HB225 |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 225 | TELECONFERENCED | |
| + | HJR 45 | TELECONFERENCED | |
| + | HB 342 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 11, 2010
9:07 a.m.
9:07:30 AM
CALL TO ORDER
Co-Chair Stoltze called the House Finance Committee meeting
to order at 9:07 a.m.
MEMBERS PRESENT
Representative Mike Hawker, Co-Chair
Representative Bill Stoltze, Co-Chair
Representative Bill Thomas Jr., Vice-Chair
Representative Allan Austerman
Representative Mike Doogan
Representative Anna Fairclough
Representative Neal Foster
Representative Les Gara
Representative Reggie Joule
Representative Mike Kelly
Representative Woodie Salmon
MEMBERS ABSENT
None
ALSO PRESENT
Representative Tammie Wilson; Pat Davidson, Legislative
Auditor, Legislative Audit Division, Legislative Affairs
Agency; Jennifer Strickler, Director, Division of
Occupational Licensing, Department of Commerce, Community
and Economic Development; Vern Jones, Chief Procurement
Officer, Department of Administration; Adam Blomfield,
Owner, The Blomfield Company Crystal Koeneman, Staff,
Representative Fairclough
PRESENT VIA TELECONFERENCE
Butch Olmstead, Vice Chairman, Alaska Appraisal Board
SUMMARY
HB 342 EXTEND BOARD OF REAL ESTATE APPRAISERS
HB 342 was REPORTED out of Committee with a "do
pass" recommendation and with a previously
published fiscal note: FN1
HB 225 STATE PROCUREMENT CODE
CSHB 225 (FIN) was HEARD and HELD in Committee
for further consideration.
HJR 45 OPPOSE FEDERAL CAP AND TRADE LEGISLATION
HJR 45 was SCHEDULED but not HEARD.
9:07:36 AM
Co-Chair Stoltze brought the meeting to order and listed
the bills to be heard.
9:08:39 AM
HOUSE BILL NO. 342
"An Act extending the termination date of the Board of
Certified Real Estate Appraisers; and providing for an
effective date."
REPRESENTATIVE TAMMIE WILSON presented an overview of her
bill to extend the Board of Certified Real Estate
Appraisers to June 30, 2014. She reported that the Board of
Certified Real Estate Appraisers (BCREA) is comprised of a
five member board to establish: (1) examination
specifications for certification as a real estate
appraiser; (2) rules of professional conduct to establish
and maintain a high standard of integrity in the real
estate appraisal profession; and (3) regulations necessary
to carry out the purposes of the statutes. The conclusion
of the Legislative Audit is a recommendation to extend the
BCREA's termination date by four years rather than eight
due to the deficiencies identified by the appraisal
subcommittee. The deficiencies have or are being addressed
by the board. The board is funded by the RSS fund through
receipts from licensing fees. She stressed that no new
funds will be required to implement the bill.
9:10:32 AM
PAT DAVIDSON, LEGISLATIVE AUDITOR, LEGISLATIVE AUDIT
DIVISION, LEGISLATIVE AFFAIRS AGENCY, recommended a four
year extension for the board instead of eight years. There
was concern the board failed to act in following up on
issues identified during their federal review. She added
that there were also administrative deficiencies in
financial accounting and reporting by the board. She noted
that there have been extended vacancies on the board this
year as the governor's office failed to make timely
appointments. There are recommendations to the governor's
office to address more timely appointments of board members
and a recommendation to the department to improve its
administrative support to the board. Ms. Davidson stressed
that these boards are self supporting and maintaining a fee
level appropriate for their expenses. In FY2009, they
substantially dropped their fees.
9:12:32 AM
Representative Doogan inquired about the fiscal note. Ms.
Davidson replied that she could not speak to the fiscal
note.
Representative Austerman asked for the reason to extend the
board for four years rather than eight. Ms. Davidson
replied that it was primarily due to the lack of board
responsiveness and follow up to the federal review. The
board is required to certify real estate appraisers, and
then state residents could participate in federal loan
programs. There is a federal agency that does periodic
reviews of the activities of the board and that agency
found that the board and department were not being
sufficiently responsive to address the identified
shortcomings.
Representative Austerman asked if the board will be
reviewed again within the four years. Ms. Davidson
responded that there is currently a federal review in draft
form that should be finalized soon, but legislative audit
will not be going back to look at the board for the next
four years. Representative Austerman maintained it does not
make sense to wait four years if they are having a problem,
but should be reviewed again in one year. Ms. Davidson
reminded the committee that at any point in time the
legislature can ask Legislative Audit to conduct an audit.
There can also be a request to see if the problems have
been resolved. Representative Austerman asked if there
would be an automatic follow up due to the problems. Ms.
Davidson indicated that if the legislature extends the
board for four years, then Legislative Audit will follow up
in four years.
9:16:04 AM
Representative Fairclough referred to page 11 of the report
under "Findings and Recommendations" where the second
bullet point states that the board does not have enough
authority to carry out its functions under TITLE XI.
Representative Fairclough asked Ms. Davidson to speak to
this finding (Alaska State Legislature, Legislative Budget
and Audit Committee, Division of Legislative Audit,
December 7, 2009, Pat Davidson, Legislative Auditor, copy
on file).
Ms. Davidson responded that the bullet points state that if
the federal agency came in and found that the board did not
meet these criteria, but it does not specifically indicate
that they do not have enough authority. These are set out
as criteria, not as findings.
Representative Fairclough inquired if the state needs to
act to provide additional authority to the board so they
can carry out their mission under TITLE XI. Ms. Davison
reported that they did a review of the federal report
before it became final. The recommendations in the audit
are minor housekeeping and statutory cleanups, but nothing
substantial.
9:18:23 AM
Representative Austerman asked if the statement that it was
only minor problems was why the department was recommending
the four years. Ms. Davidson responded that there were
operational and statutory issues. The operational issues
had to do with how well the applications were being
reviewed and the follow up when the board really needs to
take immediate action. In the draft report, federal level
changes were made in some laws, statutes and regulations
changes sometime get behind. They do not have the final
report yet, but when reviewing the draft the problems
appeared to be minor clean up that needed to be addressed.
9:20:06 AM
JENNIFER STRICKLER, OPERATIONS MANAGER, DIVISION OF
OCCUPATIONAL LICENSING, DEPARTMENT OF COMMERCE, COMMUNITY
AND ECONOMIC DEVELOPMENT, answered some of the questions.
The division went through difficulties with unqualified
staff, but these individuals have moved on and new people
hired. The issues in the audit regarding the board as not
being in compliance with the appraisal subcommittee
findings were related to three licensed individuals. These
individuals lacked some submissions of work logs in their
licensing files. The department took action to contact
these individuals to have them submit their work logs; one
complied, two did not. The department fell short on not
being more assertive with the board to take disciplinary
action against the two licensees who continue to hold their
license. It has been brought to the attention of the board
and the boar referred those two individuals over to the
investigative until to start disciplinary proceedings.////
9:22:37 AM
Representative Doogan inquired again about the fiscal note.
Ms. Strickler related that personal services are made up of
licensing staff, management staff, and investigative staff.
Licensing staff operates on a positive timekeeping basis
because of the receipt supported services funding so the
only time attributed to this board is recorded and charged.
She continued that travel, consisting of transportation and
per dieum is for the board and staff to meet at least two
times a year. The contractual costs are high because in
2008 there were litigations and hearing costs which tend to
drive expenses up. Representative Doogan asked what the
contractual are being paid for. Ms. Strickler noted that
the division has an investigation unit comprised of twenty
investigators. They are assigned to this program so their
salary is paid by the department as they are state
employees.
Representative Doogan asked if this was charged back from
other agencies. Ms. Strickler replied yes.
9:25:04 AM
Co-Chair Stoltze asked about a consistent failure to fill
the board seats. He inquired if this problem had been fixed
over the past several months. Ms. Strickler stated there
have been a lot of appointments to various boards, but she
was unable to say if it has been a problem.
Co-Chair Stoltze questioned if there was any improvement.
Ms. Strickler contended that she could not say.
9:26:27 AM
BUTCH OLMSTEAD, VICE CHAIRMAN, ALASKA APPRAISAL BOARD (via
teleconference), talked about the two recent vacancies on
the board and believed there were two new appointees ready
to fill those vacancies. In the past it was noticed that
open seats on the board were vacant for a long period,
therefore in that regard there has been an improvement. He
referred to some of the housekeeping matters and problems
from the audit and acknowledged that they have been
addressed.
Co-Chair Stoltze closed public testimony.
9:28:26 AM
Co-Chair Hawker commented that he has noticed consistently
that every single sunset audit has involved criticisms of
the support services provided to the department or agency.
He has asked for all the past reports on audit problems
with plans to insist on a more consistent follow up by
them.
Co-Chair Stoltze responded that he preferred shorter
sunsets when there are concerns.
Vice-Chair Thomas MOVED to report HB 342 out of Committee
with individual recommendations and the accompanying fiscal
note. There being No Objection, it was so ordered.
HB 342 was REPORTED out of Committee with "do pass"
recommendation and with a previously published fiscal note:
FN1
9:31:05 AM
HOUSE BILL NO. 225
"An Act relating to the State Procurement Code;
relating to the procurement of supplies, services,
professional services, construction services, state
fisheries products, state agricultural products, state
timber, and state lumber; relating to procurement
preferences; relating to procurement by the office of
the ombudsman, the Alaska Industrial Development and
Export Authority, the Alaska Energy Authority, and
other state agencies and public corporations; and
providing for an effective date."
Representative Fairclough welcomed her staff.
She noted it would change from inside the.
Co-Chair Hawker MOVED to ADOPT CS for House Bill 225(FIN),
26\LS079\S, Bannister, 2/16/10.
Co-Chair Stoltze OBJECTED for the purpose of discussion.
Representative Fairclough asked for a sectional analysis.
9:32:28 AM
VERN JONES, CHIEF PROCUREMENT OFFICER, DEPARTMENT OF
ADMINISTRATION, reviewed the forty six sections in the
Sectional Analysis (copy on file).
CSHB 225 (FIN)
Sectional Analysis
* Section 1: Amends AS 24.55.275
Updates a citation to reflect the renumbering of
a preference.
* Section 2: Amends AS 36.15.050(a)
Amends the local agricultural preference to grant
a seven percent cost preference to the qualifying
bid rather than to the low bid, making this
preference consistent with other procurement
preferences.
* Section 3: Amends AS 36.15.050(b)
Amends the local fisheries preference to grant a
seven percent cost preference to the qualifying
bid rather than to the low bid, making this
preference consistent with other procurement
preferences.
* Section 4: Amends AS 36.15.050 by adding a new
subsection (h)
Amends the local agricultural and fisheries
preferences to disallow a bidder from being
granted both a local agricultural/fisheries
preference and an Alaska product preference under
another statute.
* Section 5: Amends AS 36.30.015(e)
Updates a citation to reflect the renumbering of
a preference.
* Section 6: Amends AS 36.30.015(f)
Adds the Alaska Industrial Development Authority
and the Alaska Energy Authority to a list of
agencies exempt from the procurement code and
updates a citation to reflect the renumbering of
a preference.
* Section 7: Amends AS 36.30.015(h)
Updates a citation to reflect the renumbering of
a preference.
* Section 8: Amends AS 36.30.020
Updates a citation to reflect the renumbering of
a preference.
* Section 9: Amends AS 36.30.030
Updates a citation to reflect the renumbering of
a preference.
* Section 10: Amends AS 36.30.080(f)
Increases the threshold limit for small
procurements of leased space from 3,000 square
feet to 7,000 square feet, consistent with
section 24.
* Section 11: Amends AS 36.30.110(b)
Clarifies Alaska business license requirements
for competitive sealed bids and qualification for
the Alaska bidder preference. Change would
require bidders to show proof of their Alaska
Business License prior to award, but would
require the license at the time of bid submission
in order to qualify for the Alaska bidder
preference.
Mr. Jones interjected that this change was suggested and
recommended by Legislative Audit. It was to address a
problem where bidders were disqualified for technical
reasons on high dollar procurements because they failed to
get a business license in time. Also some bidders were
disqualified if they changed their business name or merged
their business and failed to change this on their business
license.
* Section 12: Amends AS 36.30.130(a)
Eliminates reference to a procurement officer's
use of vendor lists, reflecting the repeal of the
statute establishing the vendor lists.
Mr. Jones noted that the state has taken its business
online for the past ten years, but the statute makes the
state keep vendor lists even though they are seldom used.
There are those on the vendor list with a false expectation
that they will be notified when bidding occurs. All
notification now is done online.
* Section 13: Amends AS 36.30.170
Updates a citation to reflect the renumbering of
the Alaska bidder preference.
* Section 14: Amends AS 36.30 by adding a new section
36.30.195
Adds a new section to the procurement code that
allows for multi-step revised sealed bidding, a
new process that will allow a procurement officer
to use successive steps of sealed bidding to
obtain the best and final bid price for purposes
of award. Excludes construction contracts from
this provision.
* Section 15: Amends AS 36.30.200(b)
Minor modification to language regarding
construction procurements.
* Section 16: Amends AS 36.30.210(b)
Clarifies construction contractor registration
requirements, now explicitly requiring
registration before award of a contract.
9:39:10 AM
* Section 17: Amends AS 36.30.210(e)
Clarifies Alaska business license requirements
for competitive sealed proposals and
qualification for the Alaska bidder preference
using language consistent with that used in
Section 11.
* Section 18: Amends AS 36.30 by adding a new section
36.30.245
Adds a new section to the procurement code that
allows for multi-step negotiations. This has
essentially the same effect as Section 14, but it
applies to the competitive sealed proposal
process. A procurement officer will be able to
gain the best and final proposal for purposes of
award through successive steps of negotiation and
proposal submission. Excludes construction
contracts from this provision
* Section 19: Amends AS 36.30.250(a)
Updates a citation to reflect the renumbering of
a preference.
* Section 20: Amends AS 36.30 by adding a new section
36.30.255
Directs procurement officers to consider only the
preferences listed in statute when applying
preferences under a competitive sealed proposal
process, and instructs them to apply the
preferences only to the price portion of a
proposal. This effectively eliminates the Alaska
offeror's preference contained in regulation at 2
AAC 12.260(e), and which has no basis in statute.
* Section 21: Amends AS 36.30 by adding a new section
36.30.290
Adds a new section allowing an agency to accept
electronic bids and proposals.
* Section 22: Amends AS 36.30.310
Revises the statute relating to emergency
procurements, clarifying that the commissioner of
administration shall adopt regulations defining
emergency conditions and who shall be responsible
for written determinations of the basis for an
emergency procurement.
* Section 23: Amends AS 36.30.320(a)
Increases the threshold under which a state
agency may use informal procurement process to
$100,000 for goods and professional services, to
$200,000 for construction, and 7,000 square feet
for lease of space.
9:43:32 AM
* Section 24: Amends AS 36.30 by adding a new section
36.30.321
Adds a new section consolidating the Alaska
bidder and related preferences formerly at AS
36.30.170(b). This section also simplifies the
qualification for the disability and employment
program preferences, eliminates the seldom used
employers of people with disabilities preference,
and establishes the Alaska veteran preference and
its qualifications.
* Section 25: Amends AS 36.30.322(a)
Modifies the use of local forest products statute
to grant a seven percent cost preference to the
qualifying bid rather than to the low bid, making
this preference consistent with other
preferences.
* Section 26: Amends AS 36.30.336 by repealing and
reenacting
Clarifies which preferences are cumulative and
which may not be combined. (example: bidders
cannot claim both an employment program
preference and disabled bidder preference)
* Section 27: Amends AS 36.30 by adding a new section
36.30.364
Adds a new section allowing the chief procurement
officer to renegotiate a contract without an
additional competitive process, subject to
several conditions ensuring that the renegotiated
contract is at least as favorable to the state as
the original contract and that the additional
period of performance does not exceed five years.
* Section 28: Amends AS 36.30.560
Clarifies the timeframe within with a protest
must be filed.
* Section 29: Amends AS 36.30.565(b)
Clarifies the meaning of "good cause" requiring
that a protestor show why they could not file a
protest before the deadline, allowing a
procurement officer to better determine whether
to consider a filed protest that is not timely.
* Section 30: Amends AS 36.30 by adding a new section
36.30.567
Adds new sections relating to protests, requiring
a protest filing to be accompanied by a
refundable $250 filing fee.
9:48:18 AM
* Section 31: Amends AS 36.30 by adding a new section
36.30.572
Adds a new section to allow a procurement officer
to temporarily delay award of a contract in order
to address a protest, rather than issue a stay of
award.
* Section 32: Amends AS 36.30.655
Eliminates reference to the removal of debarred
or suspended persons from vendor lists,
reflecting the repeal of a law establishing the
vendor lists.
* Section 33: Amends AS 36.30.700
Adds language to the cooperative purchasing
section that allows the state to more effectively
use contracts established by other public
procurement units.
* Section 34: Amends AS 36.30.700 by adding a new
subsection (b)
Adds a new section explicitly authorizing the
state to participate in cooperative procurements
with other governments and waiving procurement
preferences that otherwise prevent other public
purchasing units from participating in
cooperative purchase agreements sponsored or
conducted by the state.
* Section 35: Amends AS 36.30.850(b) by adding new
paragraphs
Adds new exemptions for; contracts for lease
space located outside the state; for contracts
for investigative services entered into by the
department for the Alaska personnel board, the
office of public advocacy, and the Alaska Public
Offices Commission; for commodities used in the
prisoner employment program; and for professional
training.
* Section 36: Amends AS 36.30.900(1)
Adds the exemption for the Alaska Industrial
Development and Export Authority and the Alaska
Energy Authority.
* Section 37: Amends AS 36.30.900 by adding new paragraphs
Moves the definition for "Alaska bidder"
(formerly contained in 36.30.170(b)), and adds
new definitions for "electronic signature," "in
writing," "signature," and "written."
9:49:49 AM
* Section 38: Amends AS 36.90.049(a)
Updates a citation to reflect the renumbering of
a preference.
* Section 39: Amends AS 38.35.017(a)
Updates a citation to reflect the renumbering of
a preference.
* Section 40: Amends AS 44.62.310(d)
Adds language to clarify that the Administrative
Procedure Act does not apply to meetings with
offerors under the multi-step negotiation process
contained in section 18 or to renegotiation of
contracts in section 28.
* Section 41: Amends AS 44.88.085(a)
Technical change regarding application of the
Administrative Procedure Act to AIDEA.
* Section 42: Repeals statutes establishing the vendor
list and relationships to other preferences.
* Section 43: Amends the uncodified law of the State of
Alaska
Clarifies the application of the procurement act
to pending solicitations during transition
period.
* Section 44: Amends the uncodified law of the State of
Alaska
Adds in transition language stating that the
Dept. of Administration shall include in the two
successive biennial reports after the effective
date of this Act information on the savings that
have been achieved by Sections 14 and 28 of this
Act.
* Section 45: Amends the uncodified law of the State of
Alaska
Changes the catch line of 36.30.360 from
"Determination of responsibility" to
Determination of nonresponsibility."
* Section 46: Effective Date
Language making the procurement act effective
immediately.
9:51:01 AM
Representative Austerman mentioned his confusion regarding
Section 11 and asked for some clarification.
Mr. Jones replied that there are two issues at play. He
noted that at present to be considered one must have an
Alaskan Business License at the time a bid is submitted.
This change would require an Alaska Business License prior
to receiving an award.
Representative Austerman noted the electronic bidding in
Section 21 and inquired how this would be monitored for
rural areas that often have internet problems.
Mr. Jones replied that it would require systems and
protocols to be put into place that were unavailable right
now, but this section would just allow them to receive
electronic bids and proposals. It would not require an
electronic submission, but would allow it instead of
requiring a signature on paper. Representative Austerman
stressed that he did not want those without access to
electronic bidding to be penalized. Mr. Jones agreed that
was not anticipated.
Representative Austerman asked the time frame difference
between a temporary delay rather than a "stay" of an award
in Section 31. Mr. Jones explained that right now the only
tool to delay an award is to "stay" an award. When an award
is stayed, that means that the stay remains in place
throughout the protest. This gives the procurement officer
time to postpone an award with time to review the
situation. He added this is happening right now, but there
is no official permission in statute to do it.
9:55:18 AM
Representative Austerman asked if there are issues ofn
frivolous protests. Mr. Jones replied that there are some
frivolous protests, but this section would not necessarily
be aimed at those. This section gives a tool to take time
and not make an award immediately if there are unsure facts
or more investigating is necessary to see if the protestor
has a reasonable case.
9:56:09 AM
Representative Gara noted he was happy to give bidders
preference to those who work in various industries, but
concerned that if it is not carefully done, then state
money will be given away and more expensive. He referred to
page 16, lines 20-28 of the bill. He noted that the only
requirement to get an Alaska bidder preference is to be
qualified to do business in the state, have an Alaskan
business license and maintain a place of business within
the state staffed at least six months of the year. He
expressed concern that an expensive bidders preference
could be given to outside companies with a shell office
here in the state. He asked if the bill could read "a
principle place of business."
Mr. Jones remarked that was a good observation. He noted
that this does not change from existing statute. The
problem with requiring a principle place of business is
that it is difficult to track and define. He added there
are some businesses here, even though it is not their
primary place of business, may employ more people here than
a smaller Alaskan firm. Representative Gara reiterated that
it was a big concern.
9:59:12 AM
9:59:44 AM
ADAM BLOMFIELD, OWNER, THE BLOMFIELD COMPANY, testified
that Section 25, page 9 which would add the new section AS
36.30.321 eliminates the employers of people with
disabilities preference. He also referred to Section 25,
page 10, letter J eliminating the preferences for lease
contracts. Mr. Blomfield related the history of his
company. He added that removing this preference for hiring
people with disabilities would be detrimental to his
company. His only employee is his disabled sister, although
he has also hired others. This preference allows disabled
people to have a better chance of being hired to work in a
company. Mr. Blomfield's second concern is removing all
preferences for lease contracts. It is his belief that this
would affect all Alaskans. He explained that once when
bidding on a contact, he was the only Alaskan bidder and
came in sixth in a pool of six bidders.
10:06:08 AM RECESSED
2:11:47 PM RECONVENED
Co-Chair Stoltze called the meeting back to order.
Representative Fairclough remarked that Mr. Blomfield's
business is directly impacted by removing the lease
provision therefore she inquired why the department is
recommending the change.
Mr. Jones replied that in regards to Section 24 there are
several changes to the section with two affecting Mr.
Blomfield's business. One change would eliminate the seldom
used employers of the disabled preference. He mentioned
that there are three businesses currently enjoying this
preference. The sponsor's bill would also eliminate the
leases from applications of preferences in procurement. The
thought when the legislature passed this several years ago
is that it would not be applied to leases. There are many
things that are looked at when looking for office real
estate; price, location, condition, and environment. They
are not concerned with the residence of the owners because
it is a building in Alaska regardless of who owns it.
2:16:21 PM
Representative Fairclough asked for an estimate on the
additional costs that have been paid on lease spaces to
those employers hiring disabled Alaskans. She questioned if
this was a big or small issue.
Mr. Jones replied that the current procurement system is
not automated and there is no means on collecting the data
on the cost of this or any other preference. He stressed
that General Services is the only branch with this
preference and only two or three employees would be
affected. In a few instances it has made a difference in
who received the award when the preference was put into
practice.
Co-Chair Stoltze inquired if Mr. Jones could project a
ballpark figure or percentage. Mr. Jones guessed that it
would be several hundred thousand dollars, but he had no
direct information.
2:19:49 PM
Representative Gara agreed that removing the lease
preference sounded reasonable, but wanted to make sure that
other disability preferences were not affected. Mr. Jones
replied that the Blind Vendor program still remains in the
Department of Labor. He added that there were also two
other disability related preferences that will not be
affected.
2:21:12 PM
Representative Fairclough asked how many square feet are
affected under the employer preference. Mr. Jones replied
he did not know.
Mr. Blomfield replied that zero has been affected. There
are three other companies under the same ownership with one
disabled employee. He spoke of eight year litigation with
the state over this preference and thought his company
might be caught in the middle of this.
Representative Fairclough inquired how this affects Mr.
Blomfield's company if they had not won any awards. Mr.
Blomfield replied he had bid two contracts with this
preference and came very close. For his company to take on
a giant company, it would be difficult for him to compete.
Representative Fairclough remarked that this would not
negatively affect Mr. Blomfield's company if he had never
won an award. She elaborated that it may reduce
opportunities in the future to win a contract, but there
has been no negative impact at this time. Mr. Blomfield
agreed that it has not affected him or his company right
now, but it could in the future.
Representative Fairclough asked if Mr. Blomfield's company
won any contracts with the employment provision. Mr.
Blomfield replied yes he had. Representative Fairclough
asked how many square feet has been affected. Mr. Blomfield
responded that the awards were not for lease contracts,
they were supply contracts. Representative Fairclough asked
how he would be affected. She inquired if Mr. Jones knew
the dollar value for the committee to consider on how many
supply contracts have been won. She understood that some
under small procurement would not even be affected by what
the legislature is doing.
Mr. Jones replied that the preference does apply to small
procurements. He clarified that there have been leases
awarded where this preference was the determining factor.
2:25:40 PM
Representative Fairclough asked if that was to the
Fairbanks contractor. Mr. Jones replied yes.
2:25:53 PM
Representative Gara reiterated the deletion of the employer
preference for hiring employees with disabilities and
wondered how many employees a company must have to get this
preference.
Mr. Jones replied that there is no number, but the law
states that fifty percent of a company's workforce must be
disabled.
Representative Gara asked how those companies hiring
individuals with disabilities would be helped with the
Employment Training preference. Mr. Jones responded that
there are two other disabilities preferences; the disabled
bidder preference and the employment program preference.
Representative Gara asked Mr. Blomfield if he received this
preference because of hiring one family member with
disabilities. Mr. Blomfield replied that he has one
employee who is disabled, making this 100 percent in his
company.
2:28:22 PM
Co-Chair Stoltze questioned the work load of the second
employee who only works a few hours per month. He
emphasized that it strikes him as a loophole. He asked if
there was any requirement for the activity of the employee.
Mr. Jones replied that he does not believe having one
employee who qualifies is what the original drafters had in
mind.
2:29:24 PM
Representative Gara asked Mr. Blomfield if he would hire
his sister even if there was not a bidder preference.
Mr. Blomfield stressed that he would like to hire her, but
not sure how this would impact his business. He commented
that without the preference, outside companies would bring
in their own employees and may not use Alaskans.
Representative Gara referred to page 9, line 21, listing a
preference that allows the company to charge five percent
more if it is an insurance related contract. Mr. Jones
replied that this is not connected with the preference.
This just states that an insurance company with that
qualification can substitute for having an Alaska business
license and still qualify to submit a bid. Representative
Gara asked if an insurance company can charge five percent
more. Mr. Jones responded no.
2:32:25 PM
Representative Fairclough asked what percentage of work Mr.
Blomfield's disabled sister does for his company on a
weekly basis. Mr. Jones elaborated that she is a full time
secretary working at least 40 hours a week.
2:33:17 PM
Mr. Jones commented that the Committee Substitute before
the committee makes certain changes to exempt construction
from new innovative types of procurement. The change was
never intended for construction and the Department of
Transportation had never intended to use this type of
procurements and they had no objection to exempting
themselves.
Co-Chair Hawker closed public testimony.
2:36:01 PM
Representative Doogan inquired if Section 23, page 9, line
5, updates the amount of money the agency can spend without
going to a formal bidding procedure. Mr. Jones agreed that
was the intent. Representative Doogan asked why that should
be done. Mr. Jones replied that the intent was to simplify
a larger number of procurements. This is a more simplified
form of competition to get quotes instead of issuing a
formal invitation to bid and having a twenty one day
circulation period. His noted that his agency only does
high dollar procurements, not small ones. He believed this
would free up the number of procurements under the small
procurement threshold.
2:38:15 PM
Representative Doogan questioned why this would be wanted.
He did not feel it was a compelling argument to just make
life easier in agencies at the expense of the protections
of a formal procurement process to everyone else. Mr. Jones
responded that he would not characterize it in this manner.
He stressed that it was a response to many things, but
would primarily allows the agency staff to concentrate
their time on doing more of the high dollar procurements.
Representative Doogan remarked why the square footage was
increasing. If square footage gets more expensive and there
is a concern about some level payment, then the square
footage should be decreased rather than doubling.
Mr. Jones remarked that right now the small procurement
threshold for leases is 3000 square feet. He contended that
this is a very small piece of real estate that requires a
lengthy and expensive process. He believed that 7000 square
feet would be a better fit for the moment to free up the
time for the more complex and larger procurements.
Representative Doogan voiced his concern that this was
being suggested as a method to free up people's time. He
noted that procurement codes were necessary due to the long
history of government contracting to some companies for
reasons other than their ability to do the job. He believed
there was something more at play than how difficult for
staff to do the job.
2:42:47 PM
Representative Fairclough responded that she believed this
to be a policy call. She inquired if Mr. Jones could
provide the committee with additional information on the
average square footage the state of Alaska leases. She
asked if it was above the 3000 or 7000 square feet. Mr.
Jones responded that he does not have exact figures, but
the majority of the leases are over the 7000 square foot
amount. He added that only contracting agents in
contracting services of the executive branch have the
authority to do leases. This is completed by five
contracting officers and not a delegation of lease
procurements.
Representative Fairclough voiced a concern that someone
will receive bids or awards and not have to go through the
process. She wanted to make sure the state is receiving
benefit and that there is fair competition. She also asked
about the cost of living adjustments and wondered when
these numbers were looked at last and what legislative body
put them in place. Mr. Jones responded that last change was
in the mid-1990s when it was increased from $25,000 to
$50,000 per non-construction procurement. Mr. Jones added
it would be a minority of procurements that would fall
under the 7000 square foot limits. Representative
Fairclough reiterated that this is a policy decision. She
emphasized that the ceilings were determined almost twenty
years ago and the average amount of square footage the
state tries to procure is larger than the 3000 square foot
number.
2:47:30 PM
Representative Doogan referred to page 13, under the
protest filing fee, and he noted that if there is a
complaint one has to pay a $250 filing fee. He continued
that if the company wins the protest, then the money is
returned, but if they lose, the money is forfeited. Mr.
Jones responded that was correct. Representative Doogan
questioned how that amount was arrived at and wondered if,
since there was no fee before, this just seemed like a fair
number. Mr. Jones replied that was correct. Representative
Doogan inquired on page 14, section 33, on cooperative
purchasing agreements and wondered if he was correct that
in all cases the cooperating entities would be state
agencies. Mr. Jones replied that would be the typical
situation, but any qualifying governmental entity would
also qualify. Representative Doogan asked if the purpose
was to drive down the cost. Mr. Jones replied that was
correct.
2:49:52 PM
Representative Fairclough asked for Mr. Jones if in the
procurement process they are procuring at the dollar amount
or at 7000 square feet. She wondered under the current
statute what happens to those procurements fewer than 3000
square feet. Mr. Jones replied that small procurements put
the notice on line at the public notice website, take all
qualified offers, and proceed to an evaluation process. He
noted that the issue is a little less formal with fewer
days getting the information out. He added that up to $5000
there is reasonable competition; from $5000 to $25,000
there is a minimum of three quotes or informal proposals.
Over $25,000 up to the cap, the rule is three written
quotes or informal proposals.
2:52:10 PM
Co-Chair Hawker targeted Section 24, the new section for
preferences section under public contracts. He inquired if
there is a current preference in these areas. Mr. Jones
responded that there are a number of differently worded
preferences in different sections of the statutes that will
have to be tracked down that are worded differently. In
this bill they have tried to take all the preferences,
revise the wording so that they all work and act the same
so people can understand them, and put them all in one
place.
Co-Chair Hawker noted if there is going to be a new
amalgamating section of code then look in the "repealer"
section of the bill to see what is being repealed. He
voiced that he was having a hard time finding how much of
the existing preference process has been determined by
regulation rather than by pure statute. Mr. Jones said all
the procurement preferences that exist now, except one, are
statutorily based and that one would be eliminated with
this bill in Section 24.
Co-Chair Hawker noted that the only place he found
references to this is AS 36.30.170 and he does not see it
being deleted. Mr. Jones responded that there are a number
of sections that updates section, AS 36.30.015 and moves
it.
2:57:21 PM
CRYSTAL KOENEMAN, STAFF, REPRESENTATIVE FAIRCLOUGH,
interjected that in Section 13, page 6 of the bill, AS
36.30.170 states that it "is repealed and reenacted to
read."
Mr. Jones elaborated that other preferences relating
procurement are being drawn in. Co-Chair Hawker remarked
that was the link he was determining to find, but added
that some points in the language were confusing. He
referred to the issue of domestic insurers in Section 25,
subsection (a) that establishes the general rule if the
"offeror is an Alaska bidder, a preference of five percent
shall be applied to the price in the bid or proposal." He
agreed this was very clear. He noted that in (c) "If a
bidder or offeror qualifies as an Alaska bidder and is an
Alaska domestic insurer, and if the procurement is for an
insurance-related contract, a five percent preference shall
be applied to the price in the bid or the proposal." He
asked if Alaska domestic insurers are not included under
subsection (a). Mr. Jones replied this is not a change to
this existing language. The difficulty is that some
insurance companies are not required to have a business
license; therefore they would not otherwise qualify for a
preference.
Co-Chair Hawker questioned if an Alaskan domestic insurer
is being disqualified under subsection (a). Mr. Jones
replied that was true. Co-Chair Hawker continued that this
was difficult to read and figure out. He preferred to have
bills written more simply. He wondered if the bill writers
were aware of how difficult this would be for the average
person to understand. Mr. Jones agreed that it could be
worded better, but pointed out that this section would not
change any existing language. Co-Chair Hawker reiterated
that there are lots of complaints regarding the
interpretation of the procurement code.
3:03:07 PM
Representative Gara stressed that if the only requirement
would be to the have an Alaska Business license and an
office for six months, then the person would receive the
five percent preference. He believed this to be ripe for
abuse and an extra expense for the state. He emphasized
that he does not want to spend five percent more for
insurance just because the company has an office in Alaska.
Representative Gara wondered if there was an exemption for
health insurance, lawyers and doctors. Mr. Jones remarked
that there are specific procurements that are exempt from
the procurement code, such as physicians, doctors,
dentists, and psychiatrists. The state does procure third
party administrator health care for its employees that are
not exempt. He added that insurance services are not exempt
from the procurement code. Representative Gara asked if
that means they get the bidders preference. Mr. Jones
responded that the procurement code applies and preferences
would apply. He added that in order to qualify for the
preference if you are in the insurance business, then it
must qualify as a domestic insurer through the division.
Representative Gara inquired if one just has to file with
the Division of Insurance. Mr. Jones answered that he is
not sure of the requirements.
3:07:14 PM
Co-Chair Stoltze declared that the bill needed to be held
over to clarify some existing questions.
Representative Fairclough agreed that procurement is very
complicated.
Co-Chair Stoltze WITHDREW his OBJECTION. There being NO
further OBJECTION, CS for HB 225(FIN), 26\LS079\S,
Bannister, 2/16/10, was ADOPTED as a working document.
CSHB 225 (FIN) was HEARD and HELD in Committee for further
consideration.
Representative Fairclough asked committee members to please
address any concerns about the bill to her office.
HOUSE JOINT RESOLUTION NO. 45
Urging the United States Congress not to enact Cap and
Trade legislation.
HJR 45 was SCHEDULED but not HEARD.
ADJOURNMENT
The meeting was adjourned at 3:09 PM.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 01 HB0225A.pdf |
HFIN 3/11/2010 9:00:00 AM HSTA 4/14/2009 8:00:00 AM |
HB 225 |
| 02 HB 225 Sponsor Statement.doc |
HFIN 2/8/2010 1:30:00 PM HFIN 3/11/2010 9:00:00 AM HSTA 4/14/2009 8:00:00 AM |
HB 225 |
| 05 HB225-DOC-OC-04-13-09.pdf |
HFIN 3/11/2010 9:00:00 AM HSTA 4/14/2009 8:00:00 AM |
HB 225 |
| HB 225 Sponsor Statement - Electronic.doc |
HFIN 4/16/2009 8:30:00 AM HFIN 3/11/2010 9:00:00 AM |
HB 225 |
| CSHJR45(ENE)-LEG-COU-3-8-10 NEW.pdf |
HFIN 3/11/2010 9:00:00 AM |
HJR 45 |
| Gov Letter.pdf |
HFIN 3/11/2010 9:00:00 AM |
HJR 45 |
| HB342 Legislative Audit Report.pdf |
HFIN 3/11/2010 9:00:00 AM |
HB 342 |
| HB342 Legislative Audit Summary.pdf |
HFIN 3/11/2010 9:00:00 AM |
HB 342 |
| HB342 Sponsor Statement ver A.pdf |
HFIN 3/11/2010 9:00:00 AM |
HB 342 |
| CS for HB 225 WORK DRAFT Version 26 LSO791 P 0309.pdf |
HFIN 3/11/2010 9:00:00 AM |
HB 225 |
| CSHB225 Explanation of Changes HFIN Version P UPDATED 0309.doc |
HFIN 3/11/2010 9:00:00 AM |
HB 225 |
| CSHB 225FIN Sectional Analysis - 0309 UPDATED.doc |
HFIN 3/11/2010 9:00:00 AM |
HB 225 |
| HB225CS-DOA-DGS-03-09-10 (2).pdf |
HFIN 3/11/2010 9:00:00 AM |
HB 225 |
| HB 225 Blomfield Letter.pdf |
HFIN 3/11/2010 9:00:00 AM |
HB 225 |