CSHB 151(JUD) - INDEMNITY CLAUSE IN PUBLIC CONTRACTS  CHAIR MCGUIRE announced the consideration of HB 151. [Before the committee was CSHB 151(JUD).] 1:13:21 PM TREVOR FULTON, Staff, to Representative Craig Johnson bill sponsor, introduced the bill to the committee. The bill would require uniform indemnification and hold harmless provisions in professional services contracts for all public agencies within the State of Alaska. The bill would close a loophole in contracts that has caused considerable problems for companies in the design profession. The loophole allows public agencies to write provisions allowing them to pass responsibility for negligence onto the consultant company they are contracting with. The bill language mirrors Department of Transportation and Public Facilities (DOTPF) contract language that has been in use for years. He said the majority of public agencies use the language contained in the bill, but this would make it standard statewide. SENATOR STEVENS asked why the bill should be passed. MR. FULTON replied that the bill would ensure fair business practices between the public and private sector. 1:16:25 PM DALE NELSON, Chair, Legislative Liaison Committee, Alaska Professional Design Council, Anchorage, said the purpose of the bill is to standardize indemnification requirements through all public agencies in Alaska, making each party responsible for their own liabilities, errors, and omissions. 1:19:37 PM BRAD THOMPSON, Director, Division of Risk Management, Department of Administration, Juneau, testified the reason to pass this bill is because professional design engineers or architects obtaining an errors and omissions (EO) policy have no contractual liability protection within an insurance policy. DOT contracts, from which the language in the bill was drawn, have always contained comparative fault allocation in the indemnity language. Some public entities go beyond the comparative fault allocation in their contracts which creates an uninsurable risk for the independent design professional. This legislation would obligate all public agencies as defined in the bill, to use a comparative fault allocation within their indemnity language when they contract with an independent professional. SENATOR STEVENS asked what happens if the bill does not pass. MR. THOMPSON answered there are public agencies that have entered stronger indemnity terms in contracts. An independent professional signing such a document to obtain the work is obligating themselves beyond their insurability. There is no effect on the State of Alaska. 1:22:21 PM SENATOR FRENCH said there is an impressive number of letters of support. He asked who opposes the bill. MR. FULTON answered that there was little opposition as the bill made its way through house committee reviews and the few disagreements that surfaced were resolved. SENATOR FRENCH asked if there was opposition from labor groups. MR. FULTON answered there was none that he knew of. 1:24:16 PM CHAIR MCGUIRE closed public testimony on HB 151. 1:25:36 PM SENATOR GREEN moved to report HB 151 from committee with individual recommendations and accompanying zero fiscal note. Hearing no objections, CSHB 151(JUD) moved from the Senate State Affairs committee.