HB 24-PROCUREMENT PREFERENCE FOR VETERANS 9:42:11 AM CHAIR LYNN announced that the last order of business was HOUSE BILL NO. 24, "An Act relating to a public procurement preference for Alaska veterans." [Before the committee was CSHB 24(MLV).] 9:42:23 AM CRYSTAL KOENEMAN, Staff, Representative Anna Fairclough, Alaska State Legislature, presented HB 24 on behalf of Representative Fairclough, co-prime sponsor. She stated that currently in statute, [bidder] preference is given to Alaska bidders, local agriculture and fisheries, Alaska product preference, recycled products, employment programs, Alaskans with disabilities, and employers of people with disabilities. She indicated there is a preference for Alaska officers in Alaska Administrative Code. MS. KOENEMAN said the co-prime sponsors feel that because of what veterans give, the state should give back to them what it can. She said HB 24 is a step in that direction; it would give a 5 percent [bidder] preference to Alaska veteran business, up to $5,000. 9:44:13 AM MS. KOENEMAN, in response to Representative Gatto, noted that the definition of an Alaska veteran is found in Section 2 of HJR 24, and the change in statute would be permanent. In response to a follow-up question, she cited the language on page 2, lines 7-8, which read: (b) A preference under this section is in addition to any other preference for which the bidder qualifies. 9:45:36 AM MS. KOENEMAN, in response to Chair Lynn, said the bill does not address the issue of disability; however, it can be "attached to the Alaskans With Disabilities preference." CHAIR LYNN asked, "And so, this and the disability would go together then?" MS. KOENEMAN answered that's correct. 9:46:20 AM REPRESENTATIVE GATTO noted that language on page 1 sets a $5,000 limit, while language on page 2 states that the preference is "in addition to any other preference for which the bidder qualifies." He questioned whether that might be conflicting. 9:47:28 AM VERN JONES, Chief Procurement Officer, Division of General Services, Department of Administration, responded that the $5,000 cap is for a particular preference; it has no impact on the value of any other preference for which a veteran-owned business would qualify. In response to Representative Johnson, he confirmed, "This preference would be in addition to any other preference that that business or individual otherwise qualified for." He told Representative Johnson that there are some federal preferences that do not involve the state. 9:49:47 AM REPRESENTATIVE GRUENBERG directed attention to language beginning on page 2, line 11, which read: "or the bidder must have sold supplies of the general nature solicited to other state agencies, governments, or the general public." REPRESENTATIVE GRUENBERG suggested that would discriminate against someone who is new in business. MR. JONES drew attention to the first part of the sentence, which states that value must be added "by the bidder itself actually performing, controlling, managing, and supervising a significant part of the services provided". He pointed out that the word in between those two parts of the sentence is "or". REPRESENTATIVE GRUENBERG noted that the first part of the conjunctive sentence does not deal with goods - only services. The second part of that sentence refers to supplies. He said there may be a bidder who is not dealing with services or supplies, but rather is dealing vehicles, which is not a supply, unless it is included somewhere in the language within a definition of supply. MR. JONES said this language is what is currently used in disability statute and "we" suggested it be used in HJR 24. He stated the intent is to prevent a person from "shopping their preferences around their status as a disabled bidder or, in this case, an Alaska vendor, and actually being a front person and bidding on jobs and not actually performing them and skimming off the preference." He said "we" have interpreted this language to mean that the bidder would actually have to perform, do the work, or have been in business performing this kind of business in the past. REPRESENTATIVE GRUENBERG emphasized that that is not the way he reads the language; he opined that it is very misleading. He expressed concern that the language would not aide a start-up business. He said he supports the legislation but thinks it needs some work. CHAIR LYNN suggested Representative Gruenberg might consider addressing these concerns via an amendment. 9:53:48 AM REPRESENTATIVE GRUENBERG noted that the House State Affairs Standing Committee is the only committee of referral. He remarked that there may be a bidder who provides services but will not be supervising; therefore, he recommended changing the "and" to an "or" in the previously provided language from page 2, line 10. REPRESENTATIVE GRUENBERG directed attention to the language on page 2, lines 3-6, which read as follows: (3) limited liability company organized under AS 10.50 if a majority of the members are Alaska veterans; or (4) corporation that is wholly owned by individuals and a majority of the individuals are Alaska veterans. REPRESENTATIVE GRUENBERG said companies differ in the amount of people involved and the amount of shares controlled. He offered an example. He said, "What you're doing is inviting somebody who doesn't qualify to get nine of her buddies who do qualify, give them 1 percent of the stock, and lo and behold they get the break and get the bid." He said he thinks "the opposite is true," but said he cannot think of a hypothetical example at present. He recommended that language be "tightened up." 9:55:56 AM REPRESENTATIVE JOHNSON said he wants this legislation to benefit Alaskans, not a veteran who moves up to Alaska and becomes a resident in 30 days. He asked if the words "at time of discharge" could be added following "resident of this state" on page 2, line 14, without running afoul of the constitution. 9:57:06 AM REPRESENTATIVE SEATON directed attention to the aforementioned language on page 2, beginning on line 9. He asked if the leasing of an office building to the state would be covered under supplies or service. MR. JONES responded that leases are defined in statute as a supply. 9:57:47 AM RICHARD DAVIDGE, Member, Board of Directors, Alaska Veterans Business Alliance;, President, State Council, Vietnam Veterans of America, stated that when people volunteer to protect America, they "disadvantage themselves from staying home and being involved in the development of all the other things that we do in our community." He spoke of giving veterans a little bit of an advantage once they return home, so that they can be competitive even though they have been disadvantaged by their service and, most often, separation from the state. MR. DAVIDGE congratulated [Representatives Gruenberg and Johnson] for "their technical observations," and said he looks forward to working with their staff in an effort to solve those problems. He stated that "we" do not want veterans to "hire a vet" to qualify a company. He said "we" support the changes that were made to HB 24 in the House Special Committee on Military and Veterans' Affairs. 10:00:02 AM CHAIR LYNN, after ascertaining that there was no one else to testify, closed public testimony. 10:00:10 AM REPRESENTATIVE GRUENBERG, in response to Chair Lynn, said he is not prepared to propose any amendments at this time. 10:00:24 AM MS. KOENEMAN stated: In order to qualify for the veterans' preference, they have to qualify as an Alaska bidder, and under current statute ... I don't believe that it qualifies for a start-up company initially. So, that would be dealing with the entire procurement code, instead of this bill itself. CHAIR LYNN said the House State Affairs Standing Committee is the last committee of referral. He relayed that he would not be opposed to having amendments made on the House floor. He asked Representative Gruenberg if he would prefer to hold the bill in committee. The committee took an at-ease from 10:01:21 AM to 10:01:44 AM. 10:01:50 AM CHAIR LYNN said Representative Gruenberg's suggestions should be addressed. He suggested that Representative Gruenberg work with the bill sponsors and have some new language ready to consider at the next committee meeting. [HB 24 was held over.]