Legislature(2005 - 2006)Anch LIO Conf Rm
06/09/2005 10:00 AM Senate TRANSPORTATION
| Audio | Topic |
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| Start | |
| Worksession: Force Account Projects Presentation and Briefing - Privatization of Transportation Services | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
JOINT WORKSESSION
SENATE TRANSPORTATION STANDING COMMITTEE
HOUSE TRANSPORTATION STANDING COMMITTEE
June 9, 2005
10:01 a.m.
MEMBERS PRESENT
SENATE TRANSPORTATION
Senator Charlie Huggins, Chair
Senator John Cowdery, Vice Chair
Senator Gene Therriault
HOUSE TRANSPORTATION
Representative Jim Elkins, Co-Chair
Representative Carl Gatto, Co-Chair
Representative Bill Thomas
Representative Woodie Salmon
Representative Mark Neuman
MEMBERS ABSENT
SENATE TRANSPORTATION
Senator Albert Kookesh
Senator Hollis French
HOUSE TRANSPORTATION
Representative Vic Kohring
Representative Mary Kapsner
COMMITTEE CALENDAR
OVERVIEW:
Force Account Projects Briefing by Pat Davidson, Division of
Legislative Audit
Privatization of Transportation Services in British Columbia
Public Testimony by General Contractors, Builders and Others
Force Account Projects Presentation by DOT/PF
WITNESS REGISTER
PAT DAVIDSON
Division of Legislative Audit
PO Box 113300
Juneau AK 99811-3300
POSITION STATEMENT: Presented force account briefing.
TERRY FIKE, President
Alaska General Contractors Alaska, Inc. (AGC)
800 Schoon Street, Suite 100
Anchorage AK 99518
POSITION STATEMENT: Commented on privatization.
MARK O'BRIEN, Chief Contracts Officer
Department of Transportation &
Public Facilities
3132 Channel Dr.
Juneau, AK 99801-7898
POSITION STATEMENT: Presented force account briefing.
TONY JOHANSON
Great Northwest Inc.
Fairbanks AK
POSITION STATEMENT: Commented on privatization.
ROXANNA MARSHAL
Acme Fence Co.
Anchorage AK
POSITION STATEMENT: Commented on privatization.
DEBRA MASON
Thomas, Head and Greisen
Fairbanks AK
POSITION STATEMENT: Commented on privatization.
DENISE MICHAELS, Mayor
Nome AK
POSITION STATEMENT: Commented on privatization.
KYLE BROWN
Discovery Drilling
Anchorage AK
POSITION STATEMENT: Commented on privatization.
HAL INGALLS
Denali Drilling
Anchorage AK
POSITION STATEMENT: Commented on privatization.
DICK CATTANAUCH, Executive Director
Associated General Contractors of Alaska, Inc. (AGC)
8005 Schoon Street, Suite 100
Anchorage AK 99518
POSITION STATEMENT: Commented on privatization.
FRANK RICHARDS, State Maintenance Engineer
Department of Transportation &
Public Facilities
3132 Channel Dr.
Juneau, AK 99801-7898
POSITION STATEMENT: Commented on privatization.
WALTON SMITH
St. Mary's AK
POSITION STATEMENT: Commented on privatization.
DAVE TRANTHAM, City Councilman
Bethel AK
POSITION STATEMENT: Commented on privatization.
DAN SALMON
Iliamna Lake Contractors
Anchorage AK
POSITION STATEMENT: Commented on privatization.
JOHN PERSELL, City Manager
St. Mary's AK
POSITION STATEMENT: Commented on privatization.
TED POPELY, Senate Majority Counsel
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Commented on privatization.
DAN DOYLE, Deputy Minister
Department of Transportation
British Columbia, Canada
POSITION STATEMENT: Commented on force accounts.
ACTION NARRATIVE
^WORKSESSION: Force Account Projects Presentation and Briefing -
Privatization of Transportation Services
CHAIR CHARLIE HUGGINS called the joint meeting of the Senate and
House Transportation Standing Committees to order at 10:01:56
AM. Present were Senators Cowdery, Therriault and Chair Huggins,
Representatives Thomas, Holm, Salmon, Co-Chairs Gatto and
Elkins.
10:18:32 AM
PAT DAVIDSON, Division of Legislative Audit, said the
Legislative Budget and Audit Committee requested an audit of the
Department of Transportation and Public Facilities' (DOTPF)
Force Account Projects. The objectives of the audit were to
identify force account projects in excess of $100,000 and to
review Department of Transportation and Public Facilities'
(DOTPF) policies and procedures regarding force accounts and
determine if they conform to the state's procurement and hiring
laws and goals, determine if the wages paid on force account
jobs are equivalent to Davis Bacon wages, determine if the DOT's
use of equipment and materials conform to the state's
procurement requirements, and confirm that the public interest
findings on force account jobs over $100,000 have been approved
by the chief contracts officers and that they have been
sufficiently and adequately documented.
10:20:01 AM
MS. DAVIDSON said she determined that the force account projects
are in compliance with state and federal laws and regulations
governing force account work. They are also in compliance with
the procurement requirements for the purchase of materials and
the rental of equipment. A sample of state employee wages and
benefits was compared to prevailing wages, typically referred to
as Davis Bacon wages and she found that individual positions do
vary, but overall the state pay and prevailing wages are
generally equivalent.
10:21:31 AM
MS. DAVIDSON continued to brief the committee on the audit
labeled "Department of Transportation and Public Facilities
Force Account Projects, March 3, 2005, Audit Control Number 25-
30019-05."
10:36:33 AM
TERRY FIKE, President, Associated General Contractors Alaska
(AGC), said when a contractor bids a job, he includes the cost
of office and field overheads and those costs were missing from
the state's cost in the audit. Those need to be added in to the
costs of doing business.
MARK O'BRIEN, Chief Contracts Officer, Department of
Transportation and Public Facilities (DOTPF), said home office
costs are difficult for the state to determine and to allocate
to this program.
10:39:07 AM
MR. FIKE said that contracts put in anywhere from 2 to 3 percent
for the home office.
MR. O'BRIEN commented that it's just not enough to make a
difference in terms of the total savings.
10:41:41 AM
SENATOR COWDERY asked if engineers' estimates were ever off.
MR. O'BRIEN replied that engineers' estimates have a range of
error compared to the actual cost of the job. Some jobs will be
15 to 20 percent under the engineer's estimate especially for
one that has a lot of competition.
MR. FIKE commented that engineer's estimates are sometimes done
as much as a year in advance and market factors change.
10:44:29 AM
TONY JOHANSON, Great Northwest Inc., Fairbanks said his overhead
runs six to seven percent because he doesn't do much
subcontracting. Engineers' estimates are generally based on
historical figures and the state's estimates don't take into
consideration job-specific concerns. He also said that state
force accounts result in a large amount of overtime.
10:49:05 AM
MR. O'BRIEN said he supports the audit recommendation to look at
actuals at the end of the project and he will implement that
immediately.
10:50:24 AM
REPRESENTATIVE ELKINS remarked that the recommendations impact
small contractors more than the larger ones.
ROXANNA MARSHAL, Acme Fence Co., said she is a small company
that makes guardrails and her overhead is more like 18 percent.
She has a foreman and a yard to maintain. The state often buys
guardrail from her and she has to add in overhead, which the
state doesn't do even though it has to pick up the material and
store it. The state also doesn't have to show a profit and that
is unfair to her.
10:55:02 AM
REPRESENTATIVE THOMAS asked how many jobs they are talking about
over a five-year period.
10:56:12 AM
MS. DAVIDSON replied that the force account they were looking at
is a very small piece of DOTPF's overall transportation programs
and it didn't appear that the state hired extra people to do the
work.
11:01:05 AM
SENATOR HUGGINS said he thought some common factors needed to be
identified for an accurate comparison.
11:02:07 AM
SENATOR COWDERY commented that the state is about $6 million in
the hole from retirement funds and that private industry is more
efficient.
11:07:53 AM
REPRESENTATIVE ELKINS asked if force accounts favor large
companies versus smaller ones.
11:09:22 AM
MR. O'BRIEN answered that it depends on a company's bonding
capacity. If the entire force account program for the northern
region were put out as one package, it would not favor the
smaller contractors. It probably comes down to how the work is
packaged. For the smaller discreet items of work, the smaller
contractors are affected.
11:09:55 AM
MR. FIKE said he doesn't want to be in competition with the
state.
11:13:37 AM
SENATOR HUGGINS said the Legislature put hefty bucks into
projects this year.
11:14:19 AM
REPRESENTATIVE THOMAS said the Community of Haines needed to
have force accounts to keep people working year-round. Rural
needs are different than urban.
11:19:53 AM
DEBRA MASON, Thomas, Head and Greisen, said the concern is that
this analysis and its numbers can't be used to buy the
department more equipment and justify hiring more people to do
force account work, because they don't contain the full cost.
11:20:13 AM
DENISE MICHAELS, Mayor of Nome, said she is also Vice President
of Community Services of Kougarok and would testify for it
first.
We feel, here at Kougarok, that local force account
construction works the best in our region. We just
hope that the Senate Transportation Committee
continues to support local force account construction
in the State of Alaska and that Kougarok also works
with the Northern Region Officer here on projects
where we provide a match to the STIP - realizing that
some projects can be done locally and some do have to
be contracted out.
MS. MICHAELS said the City of Nome also uses local force account
construction with its utilities and the City of Nome Public
Works. It has a collective bargaining agreement with the
Teamsters, which works really well. Their wages are very
comparable.
SENATOR HUGGINS asked if she was talking about local work or
state work.
MS. MICHAELS replied both.
11:25:05 AM Recess 11:39:38 AM
11:48:56 AM
KYLE BROWN, Discovery Drilling, Anchorage, said he thought
progress was being made on drilling issues. He also thought the
role of government should be police protection and education,
not contracting.
11:59:58 AM
HAL INGALLS, Denali Drilling, said both the State Chamber of
Commerce and the Miners Association support privatization.
Unions are also concerned about government doing construction
jobs.
12:06:42 PM
REPRESENTATIVE THOMAS asked if the smaller jobs are combined, at
what point does the job become too large for smaller contractors
to bid on it.
MR. INGALLS answered that the projects could total probably
around $5 million, but the bond market goes up and down.
REPRESENTATIVE THOMAS commented that the Haines DOT has to have
year-round work in order to maintain its crew.
12:11:04 PM
REPRESENTATIVE COWDERY commented that in his experience,
obtaining bonding merely takes a lot of convincing and backing.
12:13:02 PM
DICK CATTANAUCH, Executive Director, Associated General
Contractors (AGC), said privatization has been a priority for
the last 10 years. He referenced comparison figures on page 32
of the audit and said, "If the state could do it that much
cheaper, then they should be doing it all." He suggested that
maybe the comparisons didn't really compare the same things. For
a private company fixed costs continue, but the variables need
to be looked at. A contractor has to cover his salary and all
the benefits, as well.
12:20:14 PM
SENATOR COWDERY said when he worked with crews, they worked for
eight or nine months a year and the key people stuck around for
the rest of the year getting ready for next year.
12:20:56 PM
FRANK RICHARDS, State Maintenance Engineer, DOTPF, referenced a
document called "The Briefing on Force Account Construction and
Geotechnical Drilling" for some of his testimony. Last year, he
said the Governor challenged the department to look at its
equipment fleet and determine what is the right amount of
vehicles to have as a state government. It was determined that
the fleet needs to be reduced by 10 percent.
12:22:25 PM
SENATOR COWDERY asked if that referred to value or number of
vehicles.
MR. RICHARDS replied number and snow removal equipment is
exempted. He talked about renting equipment when needed.
12:24:23 PM
CHAIR HUGGINS said he needed to make sure that renting the
equipment is reasonable if the rental company won't rent the
equipment without an operator.
MR. RICHARDS said the department is concerned about the use of
overtime and has put parameters in place so that it is limited.
12:26:23 PM
CHAIR HUGGINS asked if the state can't give comp time, but must
pay overtime.
MR. RICHARDS replied that it has to do with the bargaining
contract one is working under. Under the operators contract,
Local 71, work done in overtime must be paid at the overtime
rate. About 10 percent of their operating budget is contracted
out for routine activities. In many instances they are small
contracts.
MR. RICHARDS said that maintenance of newly built DOTPF
facilities is placing a burden on the department and force
account practices with federal highway funds allow the state to
fill the gap by contracting to a great extent. He uses state
forces for small jobs where it's beneficial to provide for a
safe transportation system and good drainage. The force accounts
are just small slivers of the department's projected $800
million 2005 budget - about two percent of its total capital
program.
12:32:46 PM
MR. RICHARDS said he let a contract for roadwork on the Alaska
Highway between Northway and the border to compare private and
public sector on like work. Originally, it was going to be done
by the state that estimated it at $1.2 million. The bids were
received yesterday; there was one contractor, Great Northwest,
and it came in at $1.43 million.
12:33:49 PM
SENATOR COWDERY asked if he would have to comply with the
bonding requirement.
MR. RICHARDSON replied yes. He also reiterated that accountants
have been brought in to distinguish cost details between AGC and
the department, because they work so closely.
12:38:14 PM
WALTON SMITH, former City Manager for St. Mary's, said he is
currently working in Anchorage for a for-profit private
contractor. He was very supportive of force account work in the
Bush. He related how he advocated for a force account road at
St. Mary's for two years before the decision was made to do it.
He said the project was successful and he can demonstrate that
it had a horrendously good impact on the local economy. The
previous three years of fishing had been poor and when a
majority of the work was done, there were no commercial fishing
openings. At the same time that other villages were complaining
about no money and no revenues, etc. more sales taxes were paid
than ever before. People who had gotten delinquent paid off
their bills for water and sewer. The alternative to doing that
would have been laying off people, reducing services and
probably the city being delinquent in bill paying.
MR. SMITH said that a $300,000 boardwalk job, if it had been
contracted out, would have cost $500,000 to $600,000. It's not a
matter of efficiency, but rather the extra costs associated with
mobilization and demobilization, especially in rural areas. He
really felt that the efficiencies they are talking about are
quite different. Bush Alaska is analogous to development in a
third world country. He also mentioned that he trained a lot of
people in the trades who were able to move on to private jobs
and this is one of the entry points for development of the
Alaska workforce that will work on the next development push. He
was discouraged because he couldn't match the pay his workers
could get in the private sector.
He summarized that they can eventually find out that one system
works better than the other or maybe that they are equal, but he
thought it was a nickel dime-issue. Philosophically, in the Bush
economy, they are talking about economic development, the
ability to train people, to raise the standard of living, to
export people into the urban market and probably to increase the
quantity and quality of the workforce in Alaska. He said he did
it at a lower cost and thought it could continue to be done at a
lower cost. He also thought that limiting contracts to above
$200,000 could make development in the Bush become prohibitively
expensive. He related that DOTPF had special training funds that
he used when he was city manager to train people.
12:52:14 PM
DAVE TRANTHAM, Bethel City Council, asked the Legislature to
continue supporting force accounting. It helps build local
economy, provides training and education and builds a workforce
for the future in the Bush.
12:57:29 PM
DAN SALMON, Iliamna Lake Contractors, had great concern with the
fact the number of force accounts is very insignificant and he
questioned whether the state had an equivalent level of bonding
and productivity compared to the private sector. He realized
that the state has different policies that somehow have to be
factored into comparisons.
He described the Pile Bay Road incident, which turned into a
disaster when a sole source contract was farmed out to the
largest company in the state, but it was 40 miles away from
Iliamna. The project didn't provide any jobs for Iliamna
residents who had terrible fishing year. Many of the people who
worked on the project were from out of state. He was told to not
worry about it because it was only a $250,000 project, but he
found out later that ran well over $1 million.
It's difficult to get Denali training funds, get a
workforce, have local people involved when you can't
even bid on a contract. Now I understand that possible
improvements to that road may be being considered to
be done force account by state employees. If that
happens, and it's determined that we're rural... we
might not be included on that bidding, as well, and we
may sit, again, in the Iliamna region unable to
contract. When I was able to bid on a project, I beat
out four other contractors and rebuilt the BLM
airstrip in Anchorage....
He suggested using an on-line auction to get rid of state
equipment.
1:04:25 PM
JOHN PERSELL, City Manager, City of St. Mary's, supported Walton
Smith's testimony in support of continued use of force account
projects. He also fully agreed with Mr. Salmon's comments
saying, "In many ways force accounting is the life blood for
economic development and improvement of the economic base of
rural Alaska Bush communities."
1:10:11 PM
MR. SALMON asked what mechanism the DOTPF would use to decide if
a project is rural or not. He urged the committee to make sure
the private sector isn't excluded by whatever process is decided
upon.
1:14:38 PM Recess 1:30:45 PM
SENATOR COWDERY and TED POPELY, Senate Majority Counsel,
discussed privatization in Canada. Civil liability issues would
have to be looked at closely.
1:37:23 PM
DAN DOYLE, Deputy Minister of Transportation for the Canadian
Province of British Columbia (BC). He said British Columbia had
over 8,000 employees in its Ministry of Transportation when he
first started and today there are around 1,100. He uses lump sum
contracts that are performance based.
SENATOR COWDERY asked him what his biggest obstacle was and how
did the unions feel about it.
MR. DOYLE replied that the unions objected at first and had a
two-week strike, but since then, because the employees who went
over to the contractors kept their union, it hasn't been much of
an issue. Some contractors deunionized and they have been
successful, as well. The first contracts that were let were for
three years in 1988 and about a year ago another contract was
let for 10 years. That is so the investment in equipment could
be amortized and the province gets a much better value over the
long-term on that.
MR. CATTANAUCH asked if the 10-year contract has any adjustments
for inflation or if the contractor is totally at risk for cost
overruns.
MR. DOYLE replied that they have a COLA clause, which is based
on something like the non-residential construction index for the
greater Vancouver area.
MR. CATTANAUCH asked if a contractor's risk is related to the
amount of snow in the winter and maintenance in the off-season.
MR. DOYLE replied that is right and added that road conditions
must be kept to a certain standard.
MR. CATTANAUCH asked if resurfacing the roads is his
responsibility or is that contracted.
MR. DOYLE replied that the department kept that responsibility,
but didn't guarantee the contractor that they would keep to any
schedule since that depends on voter approval and legislative
appropriation.
MR. CATTANAUCH said Alaska has problem with signing long-term
contracts that commit the state to a certain amount of money
over a period of time and asked if he has anything similar to
that in BC.
MR. DOYLE replied that the government looked long and hard at
the 10-year proposals, but it made economic sense and they made
a substantial savings by going to longer-term contracts.
MR. CATTANAUCH asked if there was a lot of competition.
MR. DOYLE replied that since 1988, they have had three or four
rebids and have found that there is a huge change out in which
contractor has which area. The province is divided up into 26
areas. The competition comes from that rather than from new
entrants into the field. They haven't been that successful at
promoting competition.
MR. CATTANAUCH asked how many contractors are doing the work.
MR. DOYLE replied about 15 contractors. Any one contractor can
have up to four areas.
REPRESENTATIVE ELKINS wanted to know more about the Canadian
ferry system.
1:45:23 PM
MR. DOYLE explained there are two ferry systems in British
Columbia - one is an inland system that runs across lakes and
rivers in the Interior and the other is the British Columbia
Ferry system that is a corporation that runs along the coastal
routes. About two years ago the government wanted it run like a
private business. The challenge that corporation had over time
was that every time the fares needed to be increased it became a
government decision. It is now a regulated business operated by
the private sector. Right now the government has the only share
in the company, but it operates with a private sector board of
directors. Significant changes were made including in its
procurement policy. It is now procuring on the basis of
worldwide competition, which caused a lot of problems to begin
with from local shipyards, but now they are sharpening their
pencils and becoming more competitive. The service levels have
been great.
REPRESENTATIVE GATTO asked how non-performance is handled.
MR. DOYLE replied that warning systems are built into their
contracts ranging from going out to do the work themselves to
dismissing the contractor. Since 1988, four contractors were
replaced in the middle of winter and still the roads were still
kept open. They have survived each and every one of those
situations by having contingency plans and well-bonded
contractors.
1:48:22 PM
SENATOR HUGGINS asked how his initial analysis of cost savings
compared to how it actually turned out.
MR. DOYLE replied that he wasn't part of the government when the
decision to privatize was implemented. There was a general
sense, without a lot of due diligence, that it would save money.
The government in 1991 changed to anti-privatization and its
analysis showed that it would cost more. But it is doing very
well now and enough competition has been engendered to keep
prices reasonable.
SENATOR HUGGINS asked if there were categories where it was
thought money could be saved, but it didn't work out that way.
MR. DOYLE answered that privatizing part of their electrical
system - streetlights and traffic lights - didn't work out that
well. A better model was determined through financial due
diligence and that system is now back in the private sector and
doing well.
SENATOR HUGGINS asked what happens when a contractor is
dismissed.
MR. DOYLE replied that at first the government kept the
equipment it already owned and leased it to the contractors who
were obliged to take the lease on it. After realizing that the
process was working well, they let the contractors buy their own
equipment. If a contractor is "turffed" in the middle of a
contract because of financial difficulties, he is willing to
sign a deal with the person who is taking over. The person who
is taking over generally gets a good deal, because the other
contractor needs the money. For perspective he said his province
does $350 million to $400 million CA per year in this business.
SENATOR HUGGINS asked how he dealt with government cycles in
terms of one regime supporting privatization and the next not.
MR. DOYLE replied that to some extent they dealt with that by
not having contracts at election time. The regime that didn't
believe in it at first has said it is staying with the
privatized model after examining it.
1:53:41 PM
MR. RICHARDS asked if the contractor's level of service has
increased as they gain experience.
MR. DOYLE replied, in his opinion, roads are in much better
shape. Finally they have maintenance standards and programs that
insure roads are rehabilitated at the right times. Contractors
have been very good about meeting the standards. Another
important policy that was established in 1988 said the employees
had to go with the contractors, because it was their view that
the employees were the ones who knew how to maintain the roads.
That's one of the wisest things they have done.
MR. RICHARDS said other provinces and other countries that are
migrating towards privatization are coming up with various
levels of cost savings. He asked what savings the BC model
projected.
MR. DOYLE replied the only empirical data he had was from the
1991 administration and the lawyer for the union that opposed
the privatization became the commissioner to examine the issue.
They are back to 1996 prices without reducing the standards. The
10-year contracts helped that.
MR. RICHARDS said other governments have said it's important to
know what assets you have and their condition so you're not
going to ask the contractor to perform at a higher level of
service than money is buying now.
MR. DOYLE responded that is really good advice. He did not want
to build a contract without enough money to perform and that has
been achieved.
2:00:04 PM
SENATOR HUGGINS asked him to describe how their design work and
quality control changed when they privatized.
MR. DOYLE explained that the department had been moving toward
private design work for the highway system since the 1980s. For
a long time, it was quasi-private in the sense that their
engineers lived with the consultants and took most of the
responsibility for whatever was happening. The consultants
didn't have to pay for their errors, but in 1988 they moved to a
quality management system. That was a major change. Every
consultant gets evaluated at the end of his design assignment.
If they don't do well, they drop on the list or get taken off.
2:01:40 PM
SENATOR COWDERY asked if his engineers went to the private
sector when BC privatized.
MR. DOYLE replied that the privatization of design happened
slowly enough that people were able to go back and forth. A lot
of road bridge managers went to work for the private companies
in 1988, which is another reason it was successful. The
government also allowed for employee-owned companies to operate.
Ten out of the 26 areas are run by employee-owned companies that
were given a five-percent advantage over everybody else in the
bidding process. That helped with the transition. All those
companies are still operating and have been on an equal basis
with other companies in the private sector since 1991.
2:02:59 PM
MR. BROWN, Discovery Drilling, asked if BC was a leader in
Canada in terms of privatization in other provinces.
MR. DOYLE replied that BC has been a leader. Alberta moved to
unit price contracts, but the vast majority of provinces still
do their own road maintenance.
SENATOR COWDERY asked if lump sum snow removal included design
and engineering of new projects year round.
MR. DOYLE replied that they let a year-round contract for the
maintenance, but it doesn't have all the design.
REPRESENTATIVE THOMAS asked if they use all-inclusive
contracting.
MR. DOYLE replied that they hadn't gone that far, yet. He wanted
to learn from other jurisdictions that had done it first.
MR. THOMAS if they have separate contracts for landslides.
MR. DOYLE replied that contractors are responsible for keeping
culverts clean so the roads don't wash out, but they are not
expected to take care of the big landslides and washouts. The
ministry has carefully considered this matter so it gets the
best value for its money overall.
2:08:04 PM
REPRESENTATIVE GATTO asked if their funding is dependent on
federal dollars.
MR. DOYLE replied that the federal government gives them money
for maintenance and rehabilitation.
2:08:38 PM
CHAIR HUGGINS asked if the ministry has to reallocate monies
when avalanches occur.
MR. DOYLE answered that the department goes into each year with
a contingency fund of $10 million to $20 million. If more
funding is needed, that would come out of their capital
projects.
MR. CATTANAUCH asked what functions of design and maintenance do
the department's 1,100 employees have.
MR. DOYLE replied quality assurance and control of products.
Other than looking after the highway system, they are
responsible for transportation policy from ports to airlines and
trucking. The vast majority are involved in quality control.
MR. CATTANAUCH asked if most of their design work is done in the
private sector.
2:11:01 PM
MR. DOYLE replied that it's close to 90 percent.
SENATOR COWDERY asked if the big seaports and airports are under
DOT.
MR. DOYLE replied that the big seaports are under the
jurisdiction of Ottawa and airports have largely been
privatized. The department also has a substantial capital
program of $10 billion over 10 years and that requires a lot of
management.
2:12:53 PM
SENATOR THERRIAULT asked if snow removal contractors have
secondary insurance to handle an excessively heavy snow year.
MR. DOYLE replied that they don't get extra insurance. The
people in this business are very experienced at it and seem to
do just fine.
2:13:50 PM
SENATOR THERRIAULT asked if it is up to the contractors to
secure snow dumps.
MR. DOYLE replied that they let the contractors do that.
2:14:24 PM
SENATOR COWDERY asked how big Prince George is.
MR. DOYLE replied that the contracts are generally in the 2,000
to 3,500 lineal miles of road.
SENATOR COWDERY asked where the BC funding for roads comes from.
MR. DOYLE replied that BC has a dedicated fuel tax that goes
straight into the department's coffers and about $700 million is
collected annually.
MR. POPELY said that critics of privatization in highway
maintenance facilities often point to other areas where it
hasn't been as successful as in BC. He asked what his general
advice to the committee is on major pitfalls to avoid in moving
Alaska towards privatization of its highway contracts.
2:17:11 PM
MR. DOYLE replied that early on there was a philosophical
disagreement with a lot of citizens over the concept of a
government service being provided by the private sector. The one
thing they guaranteed to the citizens was the quality and level
of service. They spent a lot of energy early on clarifying and
enforcing it. They made sure that the contractors knew that they
would be the front desk for citizens' concerns so they could
follow up. The ministry would be checking in the background.
Secondly, they were very careful early on to show citizens they
were getting quality roads based on the premise that you have to
prove that it works by showing people the facts. He thought
having "before and after" business cases would help in that
regard. He said the road service is markedly better now than it
was before privatization.
2:19:26 PM
SENATOR COWDERY asked how the election went after privatization.
MR. DOYLE replied that it wasn't an issue in the election.
2:20:01 PM
SENATOR HUGGINS thanked him and others for their testimony and
adjourned the meeting at 2:28:36 PM.
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