SB 358-ALASKA RAILROAD TRACK WORK  CHAIR CON BUNDE announced SB 358 to be up for consideration and that it is a work in progress and he didn't plan to move it today. MR. RICHARD SCHMITZ, staff to Senator John Cowdery, explained that until recently the Department of Transportation (DOTPF) would treat the railroad the same way it would treat a utility or power company when crossing a highway by putting the work out to bid. Over the last few years, there have not been bids put on some of this work and the railroad itself has come in and done it because they have the equipment to do it. So, the purpose of the bill is to basically go back and allow DOT to have the choice of either putting the work out to competitive bid or just allowing the railroad to do the work under a utility type agreement.... MS. WENDY LINDSKOOG, Director, External Affairs, said that Eileen Riley, Vice President of Projects, Engineering Signals and Technology, ARRC, would help her answer questions. She supported Mr. Schmitz' statements elaborating that SB 358 retains the DOTPF's ability to work with the private sector under the competitive bid process for the DOT projects that include track construction, like a crossing over a road. In addition, SB 358 amends the state procurement code so that DOT can also work directly with the ARRC on track work through a reimbursable service agreement similar to other utilities. Prior to 1996, the Alaska Railroad could conduct work with DOT projects under the utility agreement arrangement. The railroad work was treated just as a utility relocation with cost reimbursed in the same manner as the relocation of any other utilities similar to a power line or a water line. The utility agreements include cost estimates that are reviewed and approved by DOT in advance of the work. After 1996, due to private sector interest in the track work part of these projects, the state procurement code was amended requiring DOT to contract track work under the competitive bid process. Over the years, contractors have bid and won the track construction work from DOT. Today, however, some of the specific railroad work does require highly specialized equipment that is not cost effective for the private sector to support or maintain in Alaska. This has affected the level of interest on certain DOT projects and it also has contributed to some recent work that was not completed to railroad industry standards. For an example, in the past year, the railroad has had to redo some projects including a mainline crossing at C Street in Anchorage and in Talkeetna along the spur road. These factors led to support for SB 358 from the Alaska Railroad, DOT and the Associated General Contractors. The goal of the bill is to ensure that DOT projects involving rail construction can move forward by giving DOT the flexibility to use either the competitive bid process or to work directly with the railroad. And more specifically, SB 358 would allow basic track construction work to be done by the private sector and, I say basic track construction work, but it would also allow the highly specialized work like a mainline crossing to be constructed by the railroad at the discretion of DOT. Either way, Alaska laborers are constructing the project. Finally, we believe that there are advantages to working with the railroad directly on certain projects and the advantages for DOT would include some lower costs and savings of time. There are a couple of reasons for some cost savings. For starters, the railroad does buy railroad materials in quantity and we're able to pass those savings along. We own the specialized equipment; it's very expensive and we also have the skilled labor force who know how to work the equipment and work around track issues. So, therefore, cost savings are realized because the railroad does not have to mobilize the specialized equipment out of state. We already have it here in Alaska. Excessive contractor premiums will be avoided for the small specialty market and the railroad provides federally required inspection and coordination for road projects. DOT must pay the railroad for these services even under the competitive bid process. An example would be flagging, so that everybody who is working around the track is protected from moving trains. The advantage of this bill for the Alaska Railroad, in our opinion, would be enhanced quality and assurance that our industry standards are being met. The Railroad, the DOTPF and Associated General Contractors do support SB 358. CHAIR BUNDE noted that there were concerns from the private sector and asked if those had been addressed. MS. LINDSKOOG replied that they had not heard any opposition after a couple of hearings, but last week received word from some companies that were concerned. Local 341 Laborers were being used for this work. Other facts have come forward, but their concern over quality issues hasn't changed on certain parts of the rail projects that are highly specialized. One of the companies may even be new to the scene. The bill has been drafted in a manner as to allow DOT the flexibility to use either method to get the work done. CHAIR BUNDE asked her to work with DOT and the contractors to see if there is some middle ground. SENATOR HOLLIS FRENCH asked if this bill just applies to railroads where they cross roads. MS. LINDSKOOG answered that the bill amends the state procurement code. When DOT has a road project, sometimes it might be over a rail crossing or maybe straightening out the highway like along Turnagain Arm where the railroad track has to be moved. DOT is funding and managing the work, so it can mean more than a crossing. MS. NONA WILSON, Legislative Liaison, Department of Transportation and Public Facilities (DOTPF), said Mark O'Brien, Chief Contracting Officer, is out of town and had been working closely with Ms. Lindskoog who has already hit all the major points. She offered to answer questions. CHAIR BUNDE said he would delay action on the bill until Mr. O'Brien could testify. MR. J.R. WOOD, owner, Railway Support Services, said he is concerned that the bill would limit the procurement of the Alaska Railroad from the DOT to just railroad crossing per se. For instance, the job he just bid on in Wasilla is approximately 4,000 ft. adjacent to the highway. Our major concern here is that we feel there are quality contractors here available that can do the work. In fact, I have worked with one of them that I bid against this year. We do work in the transit industry where the standards are much higher than they are in the freight industry and we manage to maintain those standards, which are nationwide.... MR. WOOD said that he has hired and trained more than 80 personnel including personnel with the local laborers union who are exceptional workers and could compete with any railroad laborer in the country. Some of the specifications we follow up here are not nearly as tight as they are in the states. I feel that probably our abilities to perform the work and our efficiency because we do work as 'hungry contractors,' would be much greater. MR. MARK CONDON, President, Condon Railroad Construction, said he had been working on projects in Alaska for the last four years and planned on continuing bidding on projects, but said, "If they go through with this, it would pretty much put us out of business." MR. JOHN LANDERFELT, Laborers Local 341, opposed SB 358 as it has potential to work harm against contractors who are now engaged in this kind of rail work and, therefore, his membership. He felt that the problems could easily be resolved through the bidding process. He suggested holding the bill until all the parties concerned could come to the table and work things out. CHAIR BUNDE said that was his recommendation as well - to see if they could come to some compromise and bring that back to the committee. There being no further business to come before the committee, he adjourned the meeting at 2:52 p.m.