SB 95 - COMPETITIVE BIDDING FOR BALLOT PREP  9:39:22 AM CHAIR MCGUIRE announced the consideration of SB 95. SENATOR BUNDE, sponsor of SB 95, said this is a bill by request from a vendor who was not allowed to bid for a ballot printing contract. He said the State of Alaska does a lot of business with small and large businesses in Alaska, and state spending is a huge factor in the state's economy. The state utilizes competitive bidding in many areas, but surprisingly does not do so for printing state ballots. He believes the process ought to be open to competitive bidding. SB 95 allows for competitive bidding for printing ballots. It is clear that because the integrity of ballots is critical to the election process, their printing does not necessarily have to go through the Procurement Code. However, the Division of Elections could develop its own regulations for competitive bidding so its unique specifications could be met to insure integrity. It seems difficult to believe that only one printer in the State of Alaska could meet the criteria. 9:42:19 AM WHITNEY BREWSTER, Director, Division of Elections, said while she understands Senator Bunde's position, the most important aspect of the election is the ballot. It is extremely important for the division to have some sort of certainty that the ballots are being prepared correctly; including correctly placed timing marks, proper paper, and correct fold locations so that the oval will be read on an optical scan unit. MS. BREWSTER said certainty is important in an environment where there are challenges to the ballot. She reminded the committee that a court order in 2004 required the ballots be reprinted. It is important that the division have a vendor who will stick by it in difficult times. In that case, the printer worked around the clock to get the second batch of ballots printed in time to be tested and distributed to the regional offices. She said rapport and trust are very important in considering who ultimately prints the ballots. After hearing Senator Bunde's intent that the division creates its own procurement process some of her concerns are relieved. However, the process would need to be started two or three months prior to an election to accommodate all the other deadlines the division faces. MS. BREWSTER said she is unclear whether the bidding would be open to any vendor who owns an Alaska business license. If this is the case, a job could potentially go to an out-of-state vendor who holds an Alaskan business license. Then the division may have to deal with the possibility of ballots being damaged, which has occurred when out-of-state vendors have been used in the past. It could be difficult to get that kind of problem corrected very close to election time. 9:47:15 AM MS. BREWSTER also said the law indicates absentee ballots are to be sent out as soon as they are ready for distribution. The division currently has a vendor who prints the ballot and hand delivers them to each election office, except Nome, where they get mailed. This allows the division to get them ready for distribution almost immediately, increasing the chance that they will get absentee ballots to the voter and back in time to be counted for an election. This is especially important to military and overseas voters. In all practicality the mail service sometimes does not deliver the ballot in time to be counted in an election. Additionally, when dealing with an out- of-state vendor, Alaska may fall low on the priority list. A vendor may be printing millions of ballots for Los Angeles, for instance. The division has faced this problem in other areas. She said the Division of Elections goes through the procurement process on everything except ballot printing and transportation. Her opinion is the process now works very well and she wants it kept as is. SENATOR BUNDE said he does not believe the division has to go through the procurement process to have competitive bidding. He thinks the division can develop its own criteria and a legal opinion suggests he is correct. He said that everything that Ms. Brewster mentioned could be addressed with another printer. Another printer would not be selected if it couldn't do the job. There is the argument of convenience, but all state departments would like the convenience of single sourcing. The division could write in a preference for in-state contractors as is done in the procurement process and the transportation issue could be addressed in the bid criteria. Bid criterion could take care of a lot of the division's concerns. 9:51:42 AM SENATOR STEVENS asked how the division arrives at a price and is assured the state is getting a good deal when working with one printer. MS. BREWSTER replied that the ballot cost for the special election was $120,000. For the 2006 primary it was roughly $190,000. The division looked at the cost comparison of Sequoia, the printer used before 2002, and Printworks, the current printer. At the time Printworks was the only Diebold certified printer in the State and that was a determining factor for selecting them. From that point there have been nominal changes. The ballot price has increased one cent per ballot since that time. SENATOR STEVENS asked if she has done a comparison of other printers since then. MS. BREWSTER replied no. 9:53:52 AM PATRICK FOSTER, A.T. Publishing, Anchorage, said he has worked in the print industry in Alaska for nearly 30 years and supports SB 95. He said Alaska has several companies capable of printing the ballots. The state uses Diebold electronic ballot leaders to tally results for elections and Diebold must certify ballots destined for their machines. At the time Alaska started using ballot leaders, no Alaskan company was certified. Shortly thereafter, one shop was certified and has been handed the jobs ever since, despite the desire of other companies to be included in the bid process. MR. FOSTER said A.T. Publishing became a Diebold certified printer in 2003. The division likely has a comfort level working with the same printer, but Mr. Foster makes a living trying to provide his clients with the same level of comfort. He recently won the ballot-printing contract with the Municipality of Anchorage, after the contract was put out for competitive bid. The municipal clerk was initially concerned about an open bid, but then found that the transition was easy and the city saved money. Some claim the complexity of Alaska ballots is reason enough to keep things as they are and could be daunting for some small shops, but there are many companies in Alaska capable of handling the volume of work in the time required. Competitive bidding for ballot printing would probably save the state money and allow more companies to upgrade their facilities and improve their standing in the industry. 9:57:55 AM SENATOR BUNDE noted for the record a potential conflict because Mr. Foster resides in his district. CHAIR MCGUIRE acknowledged the potential conflict. SENATOR STEVENS asked if Alaskan printers would have an advantage or disadvantage competing with out-of-state vendors. MR. FOSTER said he competes with many lower-48 businesses. The Alaska product preference rules level the playing field. He noted that the City of Anchorage was using Diebold directly, for five years, and when the contract went out for bid, shipping proved to be a disadvantage for out of state printers. He surmised that half a dozen to a dozen companies statewide can effectively compete. CHAIR MCGUIRE commented that Alaska product preference rules could be included in the division's procurement process. She also maintained it would be constitutionally upheld to require the bid stay in Alaska. Shipping and timing make a clear argument for that and more points could be given in these areas. 10:01:11 AM JASON HOOLEY, Office of Lieutenant Governor, said his office does not oppose the legislation but echoes the concerns raised by Ms. Brewster. He said the provision has been on the books since 1960 and has served the division, voters, and vendors well. However, the division's primary loyalty is to the voters rather than to a particular vendor. He noted that Alaska is not the only jurisdiction with a closed- bid process. Three other states have a closed bid process and some counties in other states use sole-source bidding. 10:03:38 AM CHAIR MCGUIRE asked how many of the 46 open bid states follow the proposed procedure. SENATOR BUNDE added that the state has used a variety of vendors since 1960 despite the fact that the closed bid provision has been on the books. MR. HOOLEY agreed. MS. BREWSTER replied each state is different. In Alaska, state and federal elections are conducted by the State Division of Elections, whereas in other states individual counties conduct state and federal elections. The 46 states mentioned earlier are not necessarily using open bidding statewide for their ballot printing. Within a state, one county may sole-source while another may have an open bidding process. CHAIR MCGUIRE asked if the states conduct their own state elections. MS. BREWSTER replied no. 10:06:37 AM SENATOR STEVENS asked for clarification on Alaska product preference rules. MS. BREWSTER said she is not an expert on the procurement code and declined to answer. ONNIE KENDALL, Manager, Service Business Printing, Anchorage, said he supports the bill because the current situation is not good for the state or the printing community. Since the project is currently sole sourced the state is not receiving a price balanced by the competitive process. 10:07:57 AM CHAIR MCGUIRE asked if Mr. Kendall's company is different from Mr. Foster's and if it can bid on something like this. MR. KENDALL answered yes to both. CHAIR MCGUIRE closed public testimony on SB 95. CHAIR MCGUIRE noted Amendment 1 from Senator Bunde, labeled 25- LS0638\A.1, as follows: Page 1, line 1: Delete "a requirement for competitive bidding on" Insert "the State Procurement Code and" Page 2, lines 1 - 2: Delete "for the preparation of ballots by [WITHOUT] obtaining competitive bids" Insert "under AS 36.30 (State Procurement Code) for the preparation of ballots [WITHOUT OBTAINING COMPETITIVE BIDS]" Page 4, following line 1: Insert new bill sections to read:  "* Sec. 2. AS 36.30.850(b)(7) is amended to read:  (7) contracts for the [PREPARATION AND] transportation of ballots under AS 15;  * Sec. 3. The uncodified law of the State of Alaska is amended by adding a new section to read: APPLICABILITY. This Act applies to contracts for the preparation of ballots for elections conducted on or after January 1, 2008." SENATOR BUNDE said the amendment was written in case the committee felt it was needed, but he didn't believe it was necessary or advisable to require the division to go through the full procurement process. CHAIR MCGUIRE agreed. 10:09:21 AM SENATOR GREEN said it sounds like the Anchorage put its bid out for multiple years. She asked if that was the intention of this bill or would there be a new bid for every election. SENATOR BUNDE said that isn't his intention but he would leave that decision to the Division of Elections to make it work best for them. He suspects a multiple year bid would be more economical. 10:10:09 AM CHAIR MCGUIRE said Mr. Foster recommended each bid be awarded for an election cycle with a performance option for a second cycle and the bill gives the division that kind of discretion. CHAIR MCGUIRE anticipates the division will look at vendors without being preferential. She would like to encourage the Alaska bidding preference. SENATOR STEVENS asked if a requirement for an Alaskan preference should be considered to address the division's concerns about the problems with shipping and timing. SENATOR BUNDE said he is no expert on procurement code, but has a legal opinion stating this bill would not have to go under that code. He believes that after hearing Ms. Brewster's testimony the division would include an Alaskan preference. 10:12:45 AM CHAIR MCGUIRE asked Ms. Brewster if conceptual language should be added for an Alaskan preference in the competitive bid process. MS. BREWSTER said she didn't think it was necessary. SENATOR GREEN said Amendment 1 has applicability language and the legislation does not. She asked if an applicability date should be added. 10:14:37 AM MS. BREWSTER answered it would be advantageous to have an applicability date. SENATOR BUNDE asked if it would be feasible to apply these provisions to the next general election to give a year and half lead time. MS. BREWSTER answered it would be preferable to apply this to both a primary and general so the division is dealing with the same vendor for both elections. SENATOR BUNDE clarified that he is referring to the next general election cycle. 10:16:21 AM SENATOR BUNDE moved to adopt a conceptual amendment "that the date of application would be the next statewide general election cycle, or whatever the proper terms would be." CHAIR MCGUIRE said the conceptual amendment would be a new section 2, an applicability clause. SENATOR BUNDE restated the conceptual amendment as "ballot procurement would apply to the next general election cycle, January 1, 2008, perhaps." MS. BREWSTER said that date would work. 10:18:01 AM SENATOR GREEN asked when the contract with the current vendor ends. MS. BREWSTER replied that contracts go from election to election. CHAIR MCGUIRE announced there were no further objections so conceptual Amendment 2 was adopted. 10:19:29 AM SENATOR BUNDE said none of this should be interpreted as a criticism of the Division of Elections. This is an issue of fairness and he reminded the committee that the current vendor may be the successful applicant in the future. SENATOR BUNDE moved to report SB 95 as amended from committee with individual recommendations and attached fiscal note. There being no objection, CSSB 95(STA) moved from the Senate State Affairs Committee.