SENATE BILL NO. 285 "An Act relating to state procurement practices." KRISTIE TIBBLES, STAFF, SENATOR DRUE PEARCE, explained that when highway improvements are needed, a project is designed, a request for bids is advertised, and a construction contract is then competitively awarded by the Department of Transportation and Public Facilities (DOT&PF). When the highway that needs the work involves the Alaska Railroad, the work involving the Railroad property is not included in that bid. When such a situation occurs, the Department negotiates a force-account contract with the Alaska Railroad. That arrangement reduces the amount of work which the private industry can participate in and keeps the Department public fund expenditure from going through a competitive bid arrangement. Ms. Tibbles reported that SB 285 would reintroduce competition for construction of DOT&PF highway projects which involve the Alaska Railroad. SB 285 will establish a fair and effective manner by which to award construction contracts for those projects and will require the Alaska Railroad Corporation to utilize a competitive bidding process, openly advertised when managing projects. JOHN ENG, (TESTIFIED VIA TELECONFERENCE), ASSOCIATED GENERAL CONTRACTORS, ANCHORAGE, testified in support of the bill before the Committee. He stated that taxpayer dollars should be used for improvements to other properties included in the bidding process. He urged passage of the legislation. Representative G. Davis inquired if the bill had been created to address a specific problem. Mr. Eng replied that in recent years, the Department of Transportation has negotiated account contracts with the Alaska Railroad, project paid for with tax dollars. Consequently, general contractors have not had the opportunity to bid on that work. The Alaska Railroad could participate by working for contractors that bid on those projects. The Railroad would not be able to bid or sign a contract on a force-account contract. Representative G. Davis questioned the legal authority of those people working within the Alaska Railroad right-of- way. Mr. Eng replied that the right-of-way is property which belongs to the Alaska Railroad, and that DOT&PF works together with them to address highway improvements which occur within that area. Representative J. Davies asked if there would be a problem separating the roadwork from the signaling and control work. Mr. Eng replied that would not create a problem. TOM BROOKS, (TESTIFIED VIA TELECONFERENCE), CHIEF ENGINEER, ALASKA RAILROAD CORPORATION, ANCHORAGE, commented that in the existing system, DOT&PF treats the Alaska Railroad as a utility. If one of their projects impacts the Alaska Railroad, they come to the Railroad to provide funding needed to accommodate the changes required. He continued, that work is generally done with a railroad work force, however, from time to time, there has been a request from the Department to pursue a construction contract. When that work is done, the Railroad employees 100% Alaskans. He continued, if the work were bid, there are a limited number of qualified contractors in the State. Mr. Brooks emphasized that if the work were competitively bid, there is no guarantee that it would stay in Alaska. Mr. Brooks stressed that there is valid concern when addressing the safety of the trains. He added, if the bill is separated, it is important that signaling and flag protection continues to be part of the Alaska Railroad effort. He reiterated that the signaling work is a specialty contract situation and that railroad flag protection is a matter of safety. BILL HUPPRICH, (TESTIFIED VIA TELECONFERENCE), ASSOCIATE GENERAL COUNSEL, ALASKA RAILROAD CORPORATION, ANCHORAGE, remarked that if the proposed legislation is enacted, it could cause problems in Union agreements by restricting the Railroads authority to contract or subcontract out the work. He warned that the legislation could place the Alaska Railroad in the middle of a Department project. If the work were not done with railroad people, it would be best to have the Department contract directly with the bidder, which would solve the Union contract problem. Mr. Hupprich advised that the Alaska Railroad is opposed to passage of the bill. He spoke to Amendment #1. [Copy on File]. He recommended that if the legislation is to pass that "construction work" must exclude signal work and rail flagging. Mr. Hupprich pointed out that Amendment #1 proposes to amend Section 1.36.30.015(a), on the fifth line, placing a period after "Public Facilities" and deleting the remainder of the underlined portion of the amendment. Co-Chair Therriault clarified that if the money were coming from the Department, they would then be the ones handling the entire project. BILL SHEFFIELD, (TESTIFIED VIA TELECONFERENCE), PRESIDENT, ALASKA RAILROAD CORPORATION, ANCHORAGE, reiterated that the concern with the legislation is a matter of safety, particularly, signaling and flagging. Governor Sheffield explained that the Alaska Railroad Corporation is a specialist in railroad construction and that most DOT&PF jobs are done from standard plans, generally not charging for the engineering and/or site inspection. He reiterated that the Alaska Railroad is in opposition to the legislation. In response to a concern by Representative Foster, Mr. Brooks explained that the Alaska Railroad occasionally receives grant money from the federal government that passes through DOT&PF. The intent is that funding not be a part of the proposed legislation. Representative G. Davis asked if DOT&PF would have the legal authority to dictate control of the project. Governor Sheffield replied that the Alaska Railroad does have control of its own right-of-way where it crosses a highway belonging to the Department. If the Department is to improve the road or reconstruction is done, there must be coordination of the project so that it is done safely. Representative Martin suggested that DOT&PF could be a better facilitator of cooperation. Governor Sheffield reiterated the need that the Alaska Railroad is in charge of the signalization. Co-Chair Hanley advised that his preference is to allow the competitive bidding process, then whom ever meets the qualifications and the lowest bid should be able to do the work. He asked if that language was included would there continue to be a Union contract problem for the Alaska Railroad. Mr. Hupprich replied it could work if the language of the amendment was deleted. Co-Chair Hanley asked if the Department bids out the job through an open competitive process, the Railroad then bids as one of the contractors, would there continue to be a problem. Mr. Hupprich replied there wouldn't and that the Alaska Railroad could support that language. SB 285 was HELD in Committee for further consideration.