SB 12-PUBLIC PROCUREMENT  8:35:55 AM CHAIR LYNN announced that the final order of business was SENATE BILL NO. 12, "An Act relating to state and public entity procurement, including the State Procurement Code, procurement preferences, contract awards, the use of small procurement provisions for certain amounts of leased space, the Alaska business license requirement for Alaska bidder and other procurement preferences, the proof of registration of construction contract bidders and offerors, the establishment and maintenance of lists of persons who want to provide supplies or services to the state, state agencies, and state instrumentalities, electronic bids and proposals, the chief procurement officer, small procurements, and writings; relating to the meaning of 'Alaska bidder'; and providing for an effective date." 8:36:01 AM SENATOR ANNA FAIRCLOUGH, Alaska State Legislature, as sponsor, presented SB 12. She indicated that this is the third attempt to pass through this legislation through both bodies of the Alaska State Legislature. She said SB 12 is an effort to streamline Alaska's procurement code, by modifying small procurement to provide opportunity for rural and urban Alaskans alike to participate in leases in goods and services or construction that the state has available. She said the proposed legislation would clarify when an Alaska business license is needed and "how that will be counted during the procurement process." Senator Fairclough noted some of the changes proposed under SB 12 [which are listed in the upcoming Sectional Analysis]. 8:38:32 AM REPRESENTATIVE MILLETT expressed gratitude to the bill sponsor for her third effort in proposing this legislation. She said she thinks the whole process needs to be streamlined. 8:39:13 AM REPRESENTATIVE HUGHES thanked the sponsor for her perseverance. She expressed specific gratitude for the portion of SB 12 that would allow veterans to use their status, as designated by the Veterans Administration, thereby avoiding extra expense. She directed attention to Section 19, on page 7, line [17], which references a 15 percent preference for employment programs. She noted that that is higher than "what we're seeing throughout," and she asked for an example of an employment program. 8:40:40 AM VERN JONES, Chief Procurement Officer, Central Office, Division of General Services, Department of Administration, in response to Representative Hughes, explained that employment programs used to be called "sheltered workshops" and refer to organizations that employ developmentally disabled individuals. He said the 15 percent preference is not a proposed change; that is the amount currently in statute. 8:41:29 AM LAURA PIERRE, Staff, Senator Anna Fairclough, Alaska State Legislature, on behalf of Senator Fairclough, sponsor, presented the sectional analysis for SB 12, beginning with Sections 1-13, which read as follows [original punctuation provided]: * 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 36.30.010 Amends the salary of the Chief Procurement Officer from range 27 to range 25 due to changes made to the position, which will no longer serve as Director of the Division of General Services. * Section 6: Amends AS 36.30.015(e) Updates a citation to reflect the renumbering of a preference. * Section 7: Amends AS 36.30.015(f) Updates a citation to reflect the renumbering of a preference. * Section 8: Amends AS 36.30.015(h) Updates a citation to reflect the renumbering of a preference. * Section 9: Amends AS 36.30.020 Updates a citation to reflect the renumbering of a preference. * Section 10: Amends AS 36.30.030 Updates a citation to reflect the renumbering of a preference. * Section 11: 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 18. * Section 12: Amends AS 36.30.110(b) Clarifies Alaska business license requirements for competitive sealed bids and qualification for the Alaska bidder preference. This change requires bidders to show proof of their Alaska Business License prior to award, but requires the license at the time of bid submission in order to qualify for the Alaska bidder preference. * Section 13: 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, consistent with section 33. 8:43:58 AM CHAIR LYNN returned attention to Section [11, on page 5, lines 12-16], which read as follows [original punctuation provided]: *Sec. 11. AS 36.30.080(f) is amended to read: (f) When the department is acquiring leased space of 7,000 [3,000] square feet or less, the department may procure the leased space using the procedures for small procurements under AS 36.30.320, providing public notice is given to prospective offerors in the market area. CHAIR LYNN asked for the rationale behind the increase from 3,000 to 7,000. SENATOR FAIRCLOUGH responded that the state procurement code was last modified between the late 1980s and early 1990s, which is when the threshold amendments were set. She said she does not know why the amount of 3,000 was originally chosen, but related the 7000 mark and above is where the administration indicated it has to "take a hard look." She said people in rural communities were not offering lease spaces within the 3,000 to 7,000 square foot range, because they did not want to go through the large procurement process. Changing the number to 7,000 would allow more people to place properties for rent to the State of Alaska more easily. 8:45:04 AM MS. PIERRE reiterated the changes that would be made in Section 13, then presented Sections 14-18 of the Sectional Analysis, which read as follows [original punctuation provided]: * Section 14: Amends AS 36.30.170 by repealing and reenacting Updates a citation to reflect the renumbering of the Alaska bidder preference. * Section 15: Amends AS 36.30.210(b) Clarifies construction contractor registration requirements, now explicitly requiring registration before award of a contract. * Section 16: 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 12. * Section 17: 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 18: 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. 8:46:39 AM REPRESENTATIVE MILLETT returned to Section 17 and asked what the form of confirmation is for receiving an electronic bid. 8:47:17 AM MR. JONES answered that statute does not dictate a form of proof; however, the department is currently in the process of developing an automated procurement system, called the Integrated Resource Information System (IRIS), which will have well-documented protocols in place. REPRESENTATIVE MILLETT explained that she does not want the State of Alaska to end up in a law suit because it did not receive a facsimile or electronic transmission. SENATOR FAIRCLOUGH presented Section 19 of the Sectional Analysis, which read as follows [original punctuation provided]: * Section 19: Amends AS 36.30 by adding a new section 36.30.321 Adds a new section consolidating the Alaska bidder preference, Alaska veterans' preference, and other 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 excludes real estate leases from application of procurement preferences. 8:48:50 AM MS. PIERRE presented Sections 20-23 of the Sectional Analysis, which read as follows [original punctuation provided]: * Section 20: 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 21: 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 a disabled bidder preference) * Section 22: Amends AS 36.30.655 Eliminates reference to the removal of debarred or suspended persons from vendor lists, reflecting the repeal of the statute establishing the vendor lists, consistent with section 33. * Section 23: Amends AS 36.30.990 by adding a new paragraph Moves the definition for "Alaska bidder" (formerly contained in 36.30.170(b)) and adds new definitions for "in writing" and "written" to include information in electronic form. 8:50:06 AM REPRESENTATIVE MILLETT asked if a person who lapses from his/her Alaska bidder's license is removed from the bidders' list. SENATOR FAIRCLOUGH responded, "We're eliminating the bidders' list." 8:50:28 AM MS. PIERRE presented Sections 24-28 - the remainder of the Sectional Analysis - which read as follows [original punctuation provided]: * Section 24: Amends AS 36.90.049(a) Updates a citation to reflect the renumbering of a preference. * Section 25: Amends AS 38.35.017(a) Updates a citation to reflect the renumbering of a preference. * Section 26: Repeals AS 36.30.050, which established the vendor lists, repeals AS 36.30.175, which established the veteran preference, because it has been relocated to AS 36.30.321(f), repeals AS 36.30.250(b), because competitive sealed proposals preference application language is now included in section 19 (AS 36.30.321), and repeals AS 36.30.335 because language outlining application of certain preferences is now included in section 21 (AS 36.30.336). * Section 27: Amends the uncodified law of the State of Alaska Clarifies the application of this bill to pending solicitations during the transition period. * Section 28: Effective Date This bill is effective immediately MS. PIERRE, while addressing Section 27, offered her understanding that "the legislation allows them to communicate with the department and ... come to an agreement on whether they would like to stick with what they signed as an original contract before this bill goes into effect or have the option to take advantage of some of the preferences under this." 8:52:06 AM REPRESENTATIVE KELLER, regarding the issue of preferences that may or may not be cumulative, said he would like to "get a feel for the kind of dynamics that are going on there." 8:52:44 AM SENATOR FAIRCLOUGH noted that the University of Alaska, the Alaska Municipal League (AML), and the Alaska State Chamber, and others groups, are supportive of the changes in SB 12. She said no one has testified or contacted her office in opposition to SB 12. She relayed that in the first year, she carried the bill, she tried to eliminate an "offers preference," which existed in regulation, and there was public outcry against that elimination. She said she still believes it should be eliminated, but it has not been included in "this package." She continued as follows: The only other person who has contacted us saying anything negative about anything contained in all six years had to do with the lease space rental, where the administration advised us that the employers of people with disabilities credit was being used differently than the legislature had intended, and that only one or two people were benefiting inside a family environment versus what ... the legislature had actually hoped to accomplish, and that was employing many people with disabilities. SENATOR FAIRCLOUGH deferred to Mr. Jones to discuss how credit can be combined, how that may have been a challenge in the past, and how the intent of the proposed legislation is to explicitly outline this issue in statute. 8:54:29 AM MR. JONES said the proposed legislation clarifies that preferences cannot be duplicated. For example, a fisheries or agricultural product preference and an Alaska product preference cannot be duplicated, because "those two preferences are intended to benefit the same group of products." CHAIR LYNN said, "So, you choose your preferences." MR. JONES said that is correct. 8:55:26 AM CHAIR LYNN, after ascertaining there was no one else who wished to testify, closed public testimony. 8:55:41 AM REPRESENTATIVE MILLETT said SB 12 is "five years in coming," and she cannot wait to pass it. 8:55:50 AM REPRESENTATIVE ISAACSON indicated support of the proposed legislation. He recollected working in municipal government in the past, and trying to effect changes in the procurement codes. He indicated that the proposed legislation would "peel back" state overreach and provide more opportunity for Alaskans. He spoke of the help "our constitution" gives in creating balances, which make market economics work, and he said he thinks the proposed legislation "goes into that line of thinking" by "equalizing things so that Alaskans have opportunity." 8:57:23 AM REPRESENTATIVE GATTIS stated, "This is one of the reasons that we came to Juneau, to make less legislation and make it better." She stated her support of SB 12. She said many of her constituents are veterans, and she referred to the language in the bill, previously mentioned by [Representative Hughes], which addresses veterans. 8:58:17 AM REPRESENTATIVE KELLER moved to report SB 12 out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, SB 12 was reported out of the House State Affairs Standing Committee.