Legislature(2005 - 2006)BUTROVICH 205
03/17/2005 01:30 PM Senate TRANSPORTATION
| Audio | Topic |
|---|---|
| Start | |
| Overview Presentation: Department of Transportation | |
| Overview Presentation: Geotechnical Drilling | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
SENATE TRANSPORTATION STANDING COMMITTEE
March 17, 2005
1:36 p.m.
MEMBERS PRESENT
Senator Charlie Huggins, Chair
Senator John Cowdery, Vice Chair
Senator Hollis French
MEMBERS ABSENT
Senator Gene Therriault
Senator Albert Kookesh
COMMITTEE CALENDAR
Overview Presentation: Department of Transportation/Public
Facilities - Briefing on Construction Force Accounts, Leasing
and Purchasing of Equipment Compared to Private Sector
Overview Presentation: Geotechnical Drilling
PREVIOUS COMMITTEE ACTION
No previous action to record.
WITNESS REGISTER
Ms. Nona Wilson, Legislative Liaison
Department of Transportation & Public Facilities
3132 Channel Dr.
Juneau, AK 99801-7898
POSITION STATEMENT: Commented on the overview presentation
Mr. Frank Richards, Engineer
Department of Transportation & Public Facilities
3132 Channel Dr.
Juneau, AK 99801-7898
POSITION STATEMENT: Delivered the overview presentation
Mr. Mark O'Brien, Contract Officer
Department of Transportation & Public Facilities
3132 Channel Dr.
Juneau, AK 99801-7898
POSITION STATEMENT: Commented on the overview presentation
Mr. Howard Thies, Director
Department of Transportation & Public Facilities
3132 Channel Dr.
Juneau, AK 99801-7898
POSITION STATEMENT: Commented on the overview presentation
Mr. Gary Hogins, Engineer
Department of Transportation & Public Facilities
3132 Channel Dr.
Juneau, AK 99801-7898
POSITION STATEMENT: Commented on the overview presentation
Mr. Dave Stanley, Geologist
Department of Transportation & Public Facilities
3132 Channel Dr.
Juneau, AK 99801-7898
POSITION STATEMENT: Commented on the overview presentation
Mr. Kyle Brown
Discovery Drilling
1134 Olive Lane
Anchorage, AK
POSITION STATEMENT: Commented on the overview presentation
Mr. Brian Wille
Alaska Water Well Association
13161 Shelburne Rd
Anchorage, AK
POSITION STATEMENT: Commented on the overview presentation
Mr. David Harper
Alpine Drilling
PO Box 110496
Anchorage, AK 99511
POSITION STATEMENT: Commented on the overview presentation
Mr. Hal Ingalls
Denali Drilling
6780 Lauden Circle
Anchorage, AK
POSITION STATEMENT: Commented on the overview presentation
Mr. Jay Johnson
JJC
9180 Wolfram
Juneau, AK 99801
POSITION STATEMENT: Commented on the overview presentation
Mr. Dick Cavanaugh
No address provided
POSITION STATEMENT: Commented on the overview presentation
Mr. Mike Miller
No address provided
POSITION STATEMENT: Commented on the overview presentation
ACTION NARRATIVE
CHAIR CHARLIE HUGGINS called the Senate Transportation Standing
Committee meeting to order at 1:36:04 PM. Present were Senators
John Cowdery, Hollis French, and Chair Charlie Huggins.
1:37:03 PM
MS. NONA WILSON, legislative liaison, Department of
Transportation and Public Facilities (DOT/PF), introduced the
overview.
^Overview Presentation: Department of Transportation
1:38:01 PM
MR. FRANK RICHARDS, chief maintenance and operations engineer,
DOT/PF, briefed the committee on Force Account Construction and
Geotechnical Drilling.
1:38:58 PM
Maintenance & Operations Mission
Operate, maintain, safeguard and control the state's
infrastructure system of highways, airports and harbors.
Regional boundaries
Highway/Road Mileage:
Central Region - 1707 CL miles
Northern Region - 3415 CL miles
Southeast Region - 490 CL miles
DOT&PF Maintenance Stations
84 stations statewide
National Highway System
2113 center line miles
Alaska Highway System
1508 center line miles
DOT&PF Airports
258 State-owned Airports
1:41:05 PM
What is Force Account Construction?
Definition: 23 CFR 635.201 Subpart B
The term force account shall mean the direct
performance of highway construction work by a State
highway agency, a county, a railroad, or a public
utility company by use of labor, equipment, materials,
and supplies furnished by them and used under their
direct control.
1:42:06 PM
SENATOR FRENCH asked Mr. Richards whether force accounting was
using state or federal money to do work on a state project.
MR. RICHARDS answered yes. The federal dollars prescribe certain
cost analysis. It is using capital dollars to cover state
salaries and equipment costs. It also includes the cost of
materials and leased equipment through private vendors.
SENATOR COWDERY asked whether the DOT/PF considers unknown costs
when bidding jobs.
MR. RICHARDS responded conceptually yes.
1:44:33 PM
MR. MARK O'BRIEN, chief contract officer, DOT/PF, clarified
there are two different kinds of force accounts. One force
account refers to a time and materials contract, which is done
under an existing contract where DOT encounters unknown
expenses. The contractor gives those expenses to the DOT. The
other force account is where DOT uses state forces to accomplish
the entire project.
SENATOR FRENCH said it sounds like force accounting and
privatization are on two different sides of the ledger.
MR. RICHARDS responded contracting is on the other side of the
ledger.
CHAIR HUGGINS asked Mr. Richards to clarify public interest
findings.
MR. RICHARDS informed the committee a public interest findings
is a cost determination of what it would take to perform the
work. DOT compares what it would cost to hire out a contractor
as opposed to doing the work using state employees.
1:46:45 PM
MR. RICHARDS explained if a project would be less costly using
state resources they opt to go with a force account approach.
CHAIR HUGGINS asked Mr. Richards to describe the minimum
essential elements that cause the project to go to a private
contract.
MR. RICHARDS explained it would be a typical design project that
utilized plans and specifications that defined the work to be
accomplished. Contractors bid based on that information. If it
is cost effective to use a contractor, DOT will opt for that
measure.
CHAIR HUGGINS asked whether a public interest finding determines
whether it will be force account work or a private contract.
MR. O'BRIEN indicated yes.
CHAIR HUGGINS asked Mr. O'Brien how much discretion the DOT has
when making the decision.
MR. O'BRIEN responded if the public interest finding failed then
DOT could not conduct the work using state forces.
CHAIR HUGGINS further inquired whether there was a percentage
factor involved.
MR. O'BRIEN advised there was a 28 percent savings factor.
MR. RICHARDS reminded the committee the type of work they are
talking about is a maintenance or preventative type activity.
1:50:42 PM
SENATOR COWDERY inquired if DOT pays the same wages on force
accounts as a contractor would pay.
MR. RICHARDS answered state employees are paid the bargaining
contract.
SENATOR COWDERY stated a contractor has to pay Davis-Bacon wage
determinations.
MR. HAL INGALLS, Denali Drilling, interrupted to say he cannot
believe the DOT can save 28 percent by doing construction work
themselves. He said if that is true then the State of Alaska
should do all the construction work in the state. The private
sector cannot compete.
1:53:12 PM
SENATOR COWDERY asked Mr. O'Brien whether the DOT maintains a
contingency fund for oversight.
MR. O'BRIEN replied there are no contingencies. The state does
not have a line item for that.
MR. RICHARDS said under the State Transportation Improvement
Program (STIP), the DOT estimates the dollar amount to perform
the work without contingency. He added a legislative audit was
completed on public interest findings. The audit indicates the
processes and methodologies used by the DOT appear to be
straightforward.
1:55:44 PM
MR. KYLE BROWN, Discovery Drilling, testified he does not
understand how the DOT can make a savings determination when
there has not been a bid process on a job. Contractors do not
have access to bids.
MR. RICHARDS responded the public interest findings are public
record. To make that determination, the DOT compares like work.
For example, if the job is a chip seal in Ketchikan, they
compare the cost for the state to do the work with actual
contract bids.
MR. BROWN asserted contractors and DOT workloads vary month-to-
month and year-to-year.
SENATOR COWDERY commented three years ago the DOT performed chip
seal work on the Seward Highway, which didn't go to bid. It was
an experimental project where chips were hauled on state
equipment from Fairbanks. He stated he does not believe a cost
analysis was done for that project.
MR. RICHARDS agreed. He clarified the project was done in 1997
on the Seward Highway. The DOT learns from input from the public
and from the Legislature.
MR. RICHARDS resumed the Powerpoint presentation:
1:59:38 PM
Brief History on Force Account Issues
FHWA shift from Build Out to Maintenance
Preventative Maintenance
Growth of Deferred Maintenance
Contractor vs. State Forces
2:01:46 PM
FHWA Preventative Maintenance and Pavement Rehabilitation
Funding
2:03:46 PM
Where is DOT&PF using Force Account
Central region
Southeast region
Northern region
2:05:33 PM
MR. RICHARDS explained DOT uses chip seal in the Southeast
region because they do not have access to hot mix due to lack of
availability of hot plants. DOT can get hot mix in the Central
region. Chip seal and hot mix are essentially the same cost to
the state.
2:07:11 PM
SENATOR COWDERY asked Mr. Richard to explain recycled asphalt.
MR. RICHARDS explained recycled asphalt is ground used asphalt
mixed with oil.
2:08:29 PM
SENATOR COWDERY stated the cost of recycled asphalt was low.
MR. RICHARDS agreed and said recycled asphalt is a commodity and
a benefit to state.
2:09:17 PM
REPRESENTATIVE CARL GATTO asked whether used asphalt that was
not recycled was waste material.
MR. HOWARD THIES, director, DOT/PF, reported some people buy
used asphalt from the DOT. They try not to waste it because it
does have value.
MR. RICHARDS resumed the Powerpoint presentation:
2:10:02 PM
Rental Equipment Requested by Northern Region
2:11:34 PM
CHAIR HUGGINS stated a private contractor could look at the cost
of the equipment and wonder how the DOT could determine that
force would be the right method.
MR. INGALLS interrupted to claim the list provided was enough
equipment to declare the State of Alaska a major construction
company. He said if the state wants to be in the construction
business the private sector will fight to keep them out.
2:13:12 PM
MR. BROWN asked whether the people who operate the equipment are
state workers. He inquired as to their level of expertise.
MR. THIES responded they were a maintenance crew. They are not
building construction roads. They are using the equipment to
patch holes and do minor repair work. It is not the intention of
the DOT to put contractors out of work.
CHAIR HUGGINS asked Mr. Thies to explain the use of the John
Deere 550 Dozer.
MR. THIES said it was on the Dalton Highway for use for
patching. It is a 60-day rental from the private sector at a
cost of approximately $1,500-2,000 a month.
2:16:43 PM
MR. RICHARDS said the Governor challenged the DOT to reduce
costs and so they surplused equipment that was not being used.
So far they have surplused 250 pieces of equipment.
2:17:56 PM
SENATOR COWDERY asked for a list of equipment the DOT owns.
MR. RICHARDS said he would provide one before the next meeting.
2:18:38 PM
MR. RICHARDS resumed the Powerpoint presentation:
Maintenance and Operations
General Fund Authorizations
Historic Construction Expenditures
AMHS, Highways and Aviation
2:20:55 PM
Highway and Aviation Programs
2:21:58 PM
Example of Force Account Highway Project
End of Powerpoint presentation
2:23:54 PM
Question and Answer session
SENATOR COWDERY asked for a reasonable limit on the use of force
accounts.
MR. RICHARDS gave the Northern region as an example. He stated
DOT was at their limit without adding personnel. They are doing
an 8 million dollar project from Dalton Highway to Cordova.
SENATOR COWDERY reiterated he would like the DOT to define for
the committee a reasonable amount to place as a limit on the use
of a force account.
MR. RICHARDS stated the DOT would like to have the flexibility
to not have a defined upper limit. Flexibility allows them to
better manage their money.
^Overview Presentation: Geotechnical Drilling
2:27:44 PM
DAVE STANLEY, chief geologist, DOT gave a Powerpoint
presentation titled Geotechnical Drilling.
Geotechnical Drilling Explained
Program Status
Program Cost Control
2:29:47 PM
SENATOR COWDERY asked whether there are engineering companies
available in Alaska that certifies the public findings.
MR. STANLEY answered yes. The DOT contracts out 50 percent of
the design work.
2:31:09 PM
CHAIR HUGGINS asked why the State of Alaska has to do the other
50 percent of the work.
MR. STANLEY stated several reasons. The DOT has been drilling
for 50 years. It is part of their core function. Geologists,
foundation engineers, project managers and project designers all
work as team to provide the design for geotechnical work. The
expertise developed over the years, and the equipment makes the
DOT well suited. The DOT is also cheaper than the private
sector. In 2002 and 2003 cost studies showed the DOT could do
the work for $100 an hour cheaper than the private sector.
2:32:59 PM
SENATOR COWDERY asked whether retirements and PERS were
calculated in the study.
MR. STANLEY admitted he could not answer the question. He added
the DOT does not look at costs in the same way the private
sector does.
2:33:53 PM
MR. BROWN asked for a copy of the cost analysis.
MR. STANLEY implied he would get one for the committee members.
2:35:30 PM
MR. STANLEY resumed the Powerpoint presentation:
Program status.
10 drill rigs located throughout the state
Drilling staff
Typical crew size
Contract drilling
Cost comparison
SENATOR COWDERY asked the lifetime of a drilling rig.
MR. STANLEY responded 15 years.
2:37:48 PM
REPRESENTATIVE GATTO inquired whether they used a timing device
to collect the number of hours the drill is in operation.
MR. STANLEY responded yes.
REPRESENTATIVE GATTO asked whether a private operation would
have used a drilling rig more often that the state over a course
of 10 years.
MR. STANLEY said he did not know. He resumed the Powerpoint
presentation.
2:39:13 PM
Program cost control
Managing drill rigs to meet demand and reduce cost
Surplus old drill rigs
HEWCF credits already accrued
Make fleet more versatile and cost effective
Managing staff level to meet demand
2:41:27 PM
CHAIR HUGGINS asked how much a track unit costs.
MR. STANLEY responded they were a minimum of $250,000.
2:43:04 PM
CHAIR HUGGINS inquired about the salary of a crew lead operator.
MR. STANLEY advised it was around $23 an hour.
2:45:14 PM
MR. KYLE BROWN, Discovery Drilling, testified construction is
not the role of government. He claimed state equipment
utilization in the past has been marginal to poor.
2:48:08 PM
MR. BROWN voiced there were major inefficiencies of equipment
usage within the DOT and gave several examples.
2:51:19 PM
MR. BROWN alleged state employees have no motivation to excel
because of restrictions on their union contracts. He expressed
frustration that taxpayer money is used to buy expensive
equipment that the government is using to take work away from
the private sector.
2:52:11 PM
MR. STANLEY advised the committee the DOT has drafted
specifications for the state equipment fleet. Also the state
does not do environmental drilling due to lack of training as
well as liability issues.
2:53:47 PM
MR. DAVID HARPER, Alpine Drilling, asserted state government
should only be involved in providing services and labor for the
people when the private sector cannot.
2:56:50 PM
MR. BRIAN WILLE, Arrow Pump and Well Service/Alaska Water Well
Association, agreed with the other contractor's concerns and
added a personal experience.
2:57:50 PM
MR. INGALLS pointed out force accounting should not be used
without bidding jobs. He asserted each year things change that
could affect a job bid. He maintained the state does not take
into consideration unknown costs, therefore the end total cost
of the job is never justified.
3:06:10 PM
MR. DICK CAVANAUGH alleged the DOT was using voodoo accounting.
MR. MIKE MILLER contended contractors never see the public
interest findings. He asked whether they could be put on the
website along procurements. He disputed DOT's claim of a 28
percent savings when state workers perform the work.
3:11:54 PM
CHAIR HUGGINS announced the committee was out of time. There
will be a follow up meeting in the future. He commented the
public interest findings seem to be a weak link and asked the
DOT representatives to work on making it easier for the public
to see.
There being no further business to come before the committee,
Chair Huggins adjourned the meeting at 3:15:28 PM.
| Document Name | Date/Time | Subjects |
|---|