SB 160-STATE PROCUREMENT ELECTRONIC TOOLS  CHAIR BUNDE announced CSSB 160(L&C) to be up for consideration and that it contains the Alaska bidder preference. PATTY ADY, Supply Technician, Sitka Pioneer Home, opposed SB 160. She said: The state is nine months into a two-year pilot project. There is insufficient data to know what the long-term outcome will be. A private contractor is in business to make money, not to provide for all the different needs of Alaskans. These companies are more concerned with their profit margins than with the quality of the products used by frail elders. Our resident needs are different than the needs of other areas of the state that could suffer by the decisions made by people who do not have the experience to deal with these frail elders.... Our state will lose approximately 200 jobs, which we can ill afford to be lost. 1:45:32 PM SENATOR ELLIS joined the committee. 1:46:05 PM BRUCE LUDWIG, Business Manager, Alaska Public Employees Association (APEA), American Federation of Teachers, said he is also Secretary-Treasurer of the Alaska State AFL-CIO. He said the pilot program was rushed through in the final days of the 2003 session. There were no measurements of success included nor benchmarks for comparison. He said the bill title is also misleading. Alaska Supply Chain Integrators (ASCI) was the only responsive bidder. MR. LUDWIG said: Since the pilot project began, only one quarter of the work has been audited. The second quarter is in the process of the audit and the third quarter is just over and we can presume that that's going to be started soon. The pilot has until June 30, 2006 until it expires. As the Department of Administration testified last week, the jury is still out on the project. It's too early to extend it. The bill should be held over while a sufficient record is established to be able to make a decision on whether or not it's a success. MR. LUDWIG said he has heard many negative things about the experience. He heard that the purchasing of goods has resulted in a 20 percent increase in the cost. If that is extended over the life of the project, it will actually cost the state $2.5 million more for the same goods that would have been purchased through the state purchasing procedure. He has heard that 1,500 invoices haven't been paid because they don't match up with the purchase orders. That's Alaska firms that aren't getting paid. It's going to affect the state's reputation with its vendors and it's going to affect those firms that aren't getting their money timely. 1:49:00 PM He related how the M/V Kennicott had an engine overhaul and seven orders were placed for engine parts. Six of the orders were shipped to Juneau, but the ship was in dry-dock in Portland and all the heavy parts had to be shipped there. Of the original $250,000 projected savings, about half was from eliminating the warehouse, but that has been reinstated. ASCI employees are working overtime now and the remaining savings might be nonexistent. In addition, since ASCI does not follow the procurement code, their procedures do not meet the minimum requirements for federal purchasing, which are very strict. Overhead, contract oversight and other things were not budgeted for. "In summary, it's too early to extend the project...." 1:51:19 PM CHAIR BUNDE asked him about conflict of interest concerns. MR. LUDWIG explained he had heard about a conflict of interest between a state official and someone connected with ASCI, but he didn't find any connection and the issue should be dropped. 1:52:33 PM SENATOR SEEKINS moved to pass CSSB 160(L&C) from committee with individual recommendations and fiscal note. SENATOR ELLIS objected to ask someone to discuss the audit report. VERN JONES, Chief Procurement Officer, Department of Administration, said the initial audit was done at a time of lots of transitions and he felt there wasn't a large enough sample to draw conclusions for the audit. SENATOR ELLIS asked when the next audit would be available. MR. JONES replied at the end of this week and he hoped to conclude the third quarter's audit by end of session. SENATOR ELLIS again noted the memo from Mr. Barton that has comparisons. MR. JONES said memo is technically correct, but he believes through talking to professionals at the Division of Legislative Audit that the actual sample was so small, they couldn't extrapolate any findings that would hold up. 2:00:36 PM SENATOR DAVIS noted that the bill doesn't have any other referrals and asked what the hurry is. CHAIR BUNDE replied that he wanted the bill to move through the process. 2:01:30 PM SENATOR ELLIS also asked what's the hurry. They are barely eight months into the pilot program. CHAIR BUNDE said he thought progress was being made towards better service to the state, but the full body makes that decision. 2:02:56 PM SENATOR ELLIS said state employees could do a better job if they were to be provided with the modern tools and techniques that private industry has. He also appreciated the attention to detail and urged people who erroneously made references to conflicts of interest to correct their comments in an expeditious manner. CHAIR BUNDE said that had been done. A roll call vote was taken. Senators Ben Stevens, Seekins, and Chair Bunde voted yea; Senators Davis and Ellis voted nay; and CSSB 160(L&C) moved from committee.