Legislature(1995 - 1996)
03/18/1996 03:12 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 482 - STATE PROCUREMENT PRACTICES & PROCEDURES CHAIRMAN KOTT announced the first order of business would be HB 482, "An Act relating to state procurement practices and procedures; and providing for an effective date." Number 083 DUGAN PETTY, Director, Division of General Services, Department of Commerce and Economic Development, came before the committee to address HB 482. He explained that at the conclusion of the last legislative session, Commissioner Boyer gave him a packet of information which was the 1994 Federal Acquisition Streamlining Act. He was asked to review the information and note things that we could do in our state procurement practices to make them more efficient and a more results oriented process. He was also asked to incorporate some of the reform measures that have taken place in the 1994 Act. Mr. Petty informed the commissioner that HB 116 had just passed through the legislature which removed the Alaska Seafood Marketing Institute (ASME) from the procurement code. In each committee the bill went through somebody raised a concern as to whether or not ASME should be removed from the procurement code or whether something should be done to reform and make the procurement code more streamlined and responsive. Mr. Petty explained he told the commissioner that he believed this was a good time to look at reform in the procurement code. He said he also told the commissioner we are fortunate to have a relatively new procurement law which is based on the model procurement code, and many of the changes the federal government had to make, we didn't have to do because we enjoy the benefit of a more straight forward and simpler process. Mr. Petty pointed out that we live in complex times and the market is changing. We live in a rapidly evolving market with electronic interconnects which really changed our procurement process in many ways. He said he believes we need to look at our processes and how we do them to make them responsive to today's changing market. We also need to look at the resources we have available to see what can be done to bring about a more effective procurement given the resources we have and given the fact that we are not likely to get more resources in the future. MR. PETTY said in an effort to bring about those efficiencies, Commissioner Boyer began a streamline initiative during the summer. One of the major impetuses of that initiative was to form a procurement advisory council. This council is made up of stakeholders, procurement practitioners within and outside of state government, people from ARCO, vendors and representatives of small business advocacy groups. He said they started looking at practices from their regulations, from statute, from policy as well as nonresponsive procurement processes and see if they couldn't situationally re-engineer those to be more responsible to today's state procurement needs. He said the council has met a number of times and came forward with a list of about 34 recommendations to Commissioner Perkins and Commissioner Boyer. They reviewed the recommendations. They took some out and they made some suggestions. What the committee has before it is suggested changes by the procurement advisory council and the two commissioners, which is advanced to try and build a foundation for beginning to streamline our procurement process. Number 384 MR. PETTY said he would review changes by hitting the significant sections. He said this is not inclusive of all sections; however, there are a number of the changes in statutes that move one section of existing statute to another location or, because of changes that are proposed, affect other sections. MR. PETTY referred to Section 3 and Section 38 and said they simply permit the commissioner of the Department of Administration to delete names of vendors that are suspended or debarred. If they are suspended or debarred, which is currently provided for in statute, this eliminates an inconsistency in statute. MR. PETTY said Section 4 would allow the department to acquire small leased office space, which would be identified as 5,000 square feet or less, under small procurement rules. This means you could get three proposals and award to the low responsive responsible bidder, taking into account Alaska bidder preferences. MR. PETTY explained Section 5 would authorize extensions of leases up to ten years in return for rent concessions. He said this may seem similar to a bill that passed the legislature a couple of years ago. There was about an 18 month window where the department was authorized to extend leases for five years in return for rent concessions of up to 10 percent. That proved to be very successful in driving down the costs of the leasing budget. The bill would ask to basically do the same thing on a permanent basis in statute, but give the department the ability to go up to ten years rather than five. Mr. Petty pointed out that many lessors have said five years didn't offer them the opportunity to refinance. They felt they could drive better prices by refinancing on a longer term and the state might take advantage of better savings. MR. PETTY referred to Sections 6 and 7 and said they would allow for the lease/purchase acquisition of real property when the annual payments did not exceed $500,000 or the total value of the lease/purchase agreement does not exceed $2.5 million. Currently, any acquisition of real property through a lease financing arrangement requires notice to the legislature and the enactment of the law. Number 553 MR. PETTY explained Sections 8 and 12 would allow bidders for services and supply contracts to not list their subcontractors within five days of bid opening and would give them more flexibility to change subcontractors. He said he would note that the provision, as it relates to current construction contracts, would not change. This would only change the subcontractor notice requirement for services and supplies. MR. PETTY said Section 9 would permit the procurement officer issuing a request for proposal (RFP) or a bid to shorten the circulation period. The statute requires a 21 day notice. It may currently be shortened under a determination by the chief procurement officer. This would empower the person who is actually issuing the bid or proposal to make the decision as to what adequate circulation is for notice and they would have to do a determination that it is advantageous to the state and adequate competition is anticipated. MR. PETTY explained Section 10 is an amendment of a section that actually had it genesis in this committee last year. Representative James had a bill extending the procurement preference to certain entities. As the bill came through the House Labor and Commerce Committee, there was some discussion about a trend in (indisc.) bidder preferences. The department actually worked with the sponsor on a committee substitute to try and ensure that the bidder, if they were to receive the bidder preference, had maintained a place of business for six months of the bid selling the kind of product and service for which the state was issuing the bid for. This provision is intended to resolve a current issue that they have with brokering of the bidders preference. It is effectively the same provision that was amended in HB 288 last year in the House Labor and Commerce Committee. Number 695 MR. PETTY explained Section 11 would make the use of RFPs an easier threshold to meet. Currently, the chief procurement officer must make the determination if the use of competitive sealed proposals is appropriate. This would allow the commissioner of the Department of Transportation and Public Facilities to make that determination for construction and would allow the procurement officer to make a determination when the RFP process is most advantageous to the state. Mr. Petty explained this is one of the ways current reform trend in public procurement seeks to try and include past vender performance as a criteria in making an award and also seeks to make awards best value procurement rather than low bid procurement. MR. PETTY referred to Section 14 and said when a RFP is cancelled prior to notice of intent, the state would maintain a list of proposals received, but would return the proposals to the bidder. Currently, when an RFP is cancelled, those bids and proposals must remain with the procurement officer, which after the procurement is cancelled, becomes public information. Bidders can get this information and then view another bidders proposal. He said they would want, if an RFP is cancelled, to return the proposals back to the bidders. MR. PETTY explained Section 16 would make the term "sole source requirement" more flexible. There has been circumstances with a relatively rigid requirement where there must be clear and convincing evidence that only one source exists where agencies will spend a tremendous amount of time and effort documenting that there is only one source that appears reasonable because the other source is out of state or is out of the country and it is much more expensive. That doesn't meet the test as it currently exists in statute. He said they have had situations where they'll spend a lot of time and effort trying to document it, not meet it, go out to bid and wind up doing business with the one bidder that they assumed they'd be doing business with. This seeks to free that up and would allow you to enter into a single source after there was a determination that it was not practical to go through the normal competitive bid process in a determination that a single source contract would be in the state's best interest. Mr. Petty said it also permits the chief procurement officer to delegate this to other procurement officers. MR. PETTY said Section 17 would allow the chief procurement officer to delegate the limited competition requirement as a method of source selection when it is contrary to the state's best interest to enter into a contract under the normal procurement process. The chief procurement officer may determine that a limited competition situation exists. This would allow the chief procurement officer to delegate it. Mr. Petty pointed out another feature of Section 17 is that for legal services contracts, the attorney general would be named as the person determining when it was appropriate to enter into a legal source for just legal services contracts. Number 909 MR. PETTY referred to Section 19 and said it would create another method of source selection which is called the innovative procurement method. There is a recognition that in today's rapidly evolving procurement environment in the marketplace that the invitation to bid process, which has been the mainstay of public procurement for 100 years or better, and the RFP process doesn't always work. We need to have innovative thinking to figure out better ways of getting the job done. This would establish an innovative procurement track which would challenge procurement officials in the state to do some "outside the box thinking." He said they would have to have the procurement plan reviewed, as to form, by the Department of Law. They would have to have the chief procurement officer determine that it is advantageous to the state to use an innovative procurement process. Mr. Petty said the idea is if we can document some successful uses that innovate procurement processes, we could come back and institutional it. Public procurement throughout the United States is struggling with trying to make the procurement process responsive. This is one way that we could build innovation into the system, but it is controlled and they would be expected to report on it to compile those successes and failures as well. Number 985 MR. PETTY said Section 22 would expand the requirement of independently examining material facts when determining that a limited competition procurement or a sole source for emergency competition procurement is required. He said Section 22 fits with Section 16 and 17. If we're going to give procurement officers more empowerment and authority under 16 and 17, then 22 also makes them accountable for the independent verification of the material facts and also would extend the penalties of a class A misdemeanor to those state officials who might make that determination and not just the chief procurement officer. MR. PETTY explained Section 23 would increase the threshold requirements for use of the small procurement process, which is a simplified process compared to the invitation to bid (ITB) and RFP process. Currently, ITBs and RFPs must be used if the material, construction or service is to be over $25,000. This would expand, for services and supplies, the requirement to use an ITB or RFP when it trips $50,000, and for construction when it trips $100,000. He said that is the threshold that has been established under the 1994 Federal Streamlining Act. Theirs, if you use electronic commerce, would go higher than those thresholds. Number 1072 MR. PETTY said Section 29 allows the commissioner of the Department of Administration to establish, by regulation, a simplified procurement process. Currently, we have a two tiered process which brings the initial protest to the contracting officer with the ability to appeal that decision to the commissioner of Administration as a second tier. The third tier would be to appeal the commissioner's decision to the court. That process takes time and effort not only by the state but also by the contractors that use it. It is the only process we have in statute even if it's a small procurement that is being protested. He said they would want to establish a more streamline simplified protest process that would be consistent with whatever the threshold would be set in statute for the use of small procurement. MR. PETTY informed the committee that Section 30 would require that an invitation that is a protest for solicitation of an RFP or an ITB be brought to the state within ten days before bid opening. He said that is currently a practice of what is done in regulation. Mr. Petty said they want to require bidders to make sure they read it and bring that forward at an early stage where something can be done with the bids to make changes without causing a delay such as extending the bid opening because it was a late protest. Those delays not only affect the state, but they affect the vendors that are submitting bids on it as well. Number 1196 MR. PETTY said Sections 31, 32, 34 and 35 all have to do with the protest process. Currently, we have sort of nonstandard time frames for responses for when the protest report has to be submitted by either the procurement officer or the protester. This seeks to make them more standard with a 10-15-30 day scenario. It is more consistent with court rules and it would be easier for the procurement officials as well as the vendors who are involved in the protest to follow. There is no advantage gained one way or the other with that. It is just a matter of trying to standardize these rules. MR. PETTY explained Sections 36 and 37 would require a contract claim to be brought against the state under a contract controversy within 30 days from the date that the contractor becomes aware of it or the date that they should have become aware of it. Currently, under their contract controversies, there is no statute of limitations for bringing a claim against the state. Mr. Petty said there are lessors who have brought claims as much three years after the award of the lease which makes it difficult for the state to protect its interests. Number 1268 MR. PETTY said Section 33 would limit the protestors' damages to reasonable bid preparation costs or proposal preparation costs. That has been consistent with court settlements for a number of years. He noted they have been advised that was a bit different and the Department of Law has recommended that we protect ourselves by including this in the statute. MR. PETTY informed the committee that Section 39 would exempt the operation, protection and disposal of assets acquired from the agricultural revolving loan fund that go to the Department of Natural Resources. Mr. Petty said an example he is aware of is Matanuska Maid which is operating under a foreclosure. Arguably, it could be said that the operation should be under the procurement law and any disposal of that would be under the procurement process the way the law currently reads. MR. PETTY explained Section 40 exempts lobbying public relations and advertising contracts by the Office of the Governor. That is a recognition that there are times when it is necessary to get people that can be effective in lobbying, either in Washington, D.C., or advertising in local markets, where the RFP or ITB process simply breaks down and doesn't work. He noted this would not extend to line agencies of government. Mr. Petty said another part of Section 40 exempts the acquisition of livestock by Alaska Correctional Industries. The Mount McKinley meat packing plant in the Matanuska Valley, operated by Alaska Correctional Industries, has an obligation to buy livestock that farmers bring into them. It is not possible for them to put out an invitation to bid or quotes for that livestock coming in. It is a barter type situation. This would try to rectify that inaccuracy. Number 1370 MR. PETTY explained Section 41 clarifies that it is specifically permissible to use general services' administration supply schedules for purchases. In the Federal Acquisition Streamlining Act of 1994, the federal government made available for the first time, under their cooperative purchases, the use of federal GSA supply schedules by state and local governments. Mr. Petty said many state and local governments aren't particularly excited about that if they are big and do a lot of high volume purchasing because they can drive pretty good pricing if they have the resources. He said the state needs to take a look at that because we don't have the volume purchasing that a lot of the larger states have. These prices could actually be better prices than what we get on our term contracts. Mr. Petty said he would see that working in such a way that we would be gatekeeper for those contracts. Where we have existing term contracts in place for the items, we wouldn't use those contracts. But where we don't and we go out to bid, we'd like to be able to use those contracts as benchmarks and say, "Here is what the GSA pricing schedule is and if you can't beat that price, we'd want to go with the GSA pricing schedule." Mr. Petty said he would be happy to answer questions. Number 1444 REPRESENTATIVE BRIAN PORTER referred to the lease/purchase change and said he was under the impression that the legislature had to approve lease/purchases over $10 million. He asked if it is something different for those under that amount. MR. PETTY explained that there has been a number of changes to statute over the past five or six years in that area. If it is simply an operational lease, the legislature has to approve it if it is over $500,000 a year or $2.5 million over the term of the lease. He said that information is provided in their budget process. The statute says that approval of the budget covers that. Mr. Petty said on the lease/purchase agreement side, where the lessor would go out and issue certificates for participation or if there is some method of lease financing, the difference at the end is we would have an ownership interest in it. Currently, the threshold is zero. If we are to do any lease/purchase of real estate, it requires notice to legislature and a law to be passed authorizing it. Number 1528 REPRESENTATIVE NORMAN ROKEBERG asked Mr. Petty for the citation of the statue as it relates to the legislative approval for any operating lease. MR. PETTY responded it is 36.30.080. REPRESENTATIVE ROKEBERG questioned what the rationale was about being exempt from legislative approval if there is a $2.5 million lease/purchase agreement. MR. PETTY explained that they need the ability, if there is a lease that they are into that can be converted to a lease/purchase agreement and it makes sense to purchase and is good business for the state, there needs to be some ability to seize those opportunities. REPRESENTATIVE ROKEBERG said, "Seize on the opportunity - I mean these things are -- these windows are to me very narrow. I don't think that is necessarily the case. I'm not sure why you can't go through the existing statutory procedure. If there is a good enough deal you can bring it to the LBA Committee and ask them for authority to proceed - can you not? MR. PETTY indicated it requires a law and LB&A wouldn't meet the requirement to actually pass the law. Number 1615 REPRESENTATIVE ROKEBERG said, "In Section 5 on page 2 you have the lease extension authorization. I'm really concerned about this entire clause. Number 1, the maximum extension of ten years and then these thresholds of savings of only 5 and 10 percent. I mean I think these are really not the proper numbers frankly, based on my experience in the commercial real estate.... The 10 percent is not, you know, in the real world is relatively a marginal savings and I can see this being abused or has a possibility of abuse, cause there doesn't seem to be a deep enough discount (indisc.) the reason for an extension. Plus the other thing about the ten year extension is that if you are in a falling marketplace, as we are now, if you go in and tie up a leasehold interest for ten years, you're not going to be in a position to benefit from any other reductions that may be coming in the future. The converse obviously is true for the business sense and it is very unusual for the state of Alaska -- in the state of Alaska even for commercial enterprises to enter into a ten year leasehold interest unless it is build-to-suit type situation. Very very unusual. At this point I'm going to be very outspokenly against this particular section. Also, you mentioned Section 36. You said that the -- 30 days the claim must be filed within 30 days. It's on page 14. You said that -- you brought up an example about lessees or leasehold interests here again where there would be claims. Would this be like for the claim on the part of a landlord for escalation adjustments for utilities and things like that. Or what were you referring to? Do you know?" Number 1715 MR. PETTY said what he was referring to in a three year issue, although he believes it probably could cover Representative Rokeberg's issues, was it is just a claim where the contractor came in and said, "You owed me more money because I built this building this way instead of that way in response to your lease." Mr. Petty said it's not that they don't believe that they should be addressed but they should be addressed timely. REPRESENTATIVE ROKEBERG said there could be a dispute about the specifications and sometimes that doesn't come to light until the project is significantly underway. He said 30 days seems like an awfully short period of time. MR. PETTY said he believes it could be extended. The point is to have some statute of limitations. He said as they read the bill, an argument could be made that the contractor should be aware of that claim, at least within the contract period. They would have a right during that contract period or as much as 30 days after the exploration of the contract to bring it. He said what they are trying to prevent is a situation where a contractor brings a claim two or three years after the contractual relationship ended. Number 1911 MR. PETTY said he would address Representative Rokeberg's earlier concern about the lease extension. He said they were able to use the flexibility they had in the lease extension for the 18 month window effectively. Mr. Petty pointed out they did not, in all cases, agree to extend the lease for five years for a 10 percent reduction. In some cases they said, "Ten percent doesn't work for you, Mr. Lessor, because the market dictates a stronger savings than that," and negotiated higher savings. He said they have applied this in a way that it has to make good business sense. Just because it meets the requirements of the law and doesn't make good business sense, doesn't mean that they ought to enter into it. He said he believes the department has been responsible on how they dealt with this in the past and he wouldn't see that changing even though the bill would allow them to enter into agreements. Number 1958 REPRESENTATIVE KIM ELTON said he made an assumption that may have been an erroneous assumption and that is that a lot of the real property leases that the department may enter into are for three year periods with the possibility of additional one year extensions. He said he didn't read this in terms of signing a ten year real property lease. He asked if a ten year real property lease is common or is it more common to have a real property lease of three or five years with the possibility of one year extensions. MR. PETTY said ten years ago they would say that three years and five years is about as long as they would go. The fact of the matter is that if they bid on those short turnaround basis today, the moving, cabling and loss of productivity costs would simply eat them alive. He said particularly in the office lease area we have to try and go for longer term leases to prevent the costs of the moves which are becoming more and more expensive. Years ago it used to be relatively cheap to box up stuff and move. That is not the case today. Mr. Petty referred to a decline in market and said while that is true, we can drive good prices on long term leases. He said the average is probably five years for a lease, but if they were going out for a 20,000 square foot lease in today's market, he would look for at least a ten year lease agreement. Number 2045 REPRESENTATIVE ELTON said Section 4 allows for the use of a small procurement process for leases of 5,000 square feet and said he would have expected that the standard would be cost and not necessarily the number of square feet. If you are doing a ten year lease, the cost could be considerable even though you've got 5,000 or less. He asked for an explanation of why the size of the foot print of the real property is the standard rather than the cost. MR. PETTY said if you define leases in terms of size, they are hoping that keeps the size down on leases and is an easier way to deal them. The cost issue escalates up if we're saying that small leases of a certain size makes sense to do in an expedited procurement process regardless of the relative values going up or down over the years. He said this is the threshold the department has proposed. There may be a threshold that makes better sense to the committee. There ought to be a more streamline approach to acquiring small offices. Mr. Petty said he believes that the department does an excellent job at what they do and it tends to be a very contentious environment. He said this will go a long way to give them the flexibility to get the job done with the resources they have available to use. Number 2129 REPRESENTATIVE ROKEBERG referred to Section 5 and said the impact of the marketplace is very substantial particularly if there is a leasehold interest coming through a natural expiration. To use this particular thing and put it in statute on an ongoing basis would have a very devastating impact on the nature of the marketplace within an area like Anchorage. He said this is like granting yourself a renewal option in statute. Renewal option are 100 percent in favor of the tenant. He said he will be adamantly opposed to this. Representative Rokeberg said he thinks these types of clauses are good when conditions are such that the state can take advantage of them, but he believes they should be limited in scope and only for a short period of time. The lease should come to the end of its natural expiration and (indisc.) marketplace and let competition and other landlords and building owners bid on it. MR. PETTY said he wishes they had the staff resources to be replacing all their leases timely when they expire. REPRESENTATIVE ROKEBERG suggest lengthening the leases. He said there is a lot of things they could do. MR. PETTY explained the statute does not permit them to extend a lease beyond its expiration. He said he believes Representative Rokeberg has valid points and that he understands the real estate and the commercial leasing market. Mr. Petty said one of the problems they have when there is an expiring lease is most lessees enjoy the benefit of being able to go back and negotiate with the current lessor to gain rent concessions rather than to go back out in the marketplace. He explained there is a significant cost to go back out into the marketplace. Mr. Petty said the state could be caught in a situation when they go back out in the marketplace, lose a lot of productivity and spend a lot of money to move down the street for a small savings. If they could effectively negotiate a better deal than what they believe the market would yield, they ought to be able to do that. Under the current statute, it is not possible. Number 2263 CHAIRMAN KOTT said in a rising market this would give Mr. Petty the opportunity to extend that lease at a 5 or 10 percent savings depending on the case. He said in response to Representative Rokeberg's comment, the operative word if "may." There is no guarantee that the state won't try to go out there and enter into a 10 percent savings if there is a (indisc.) drop in the real estate market. REPRESENTATIVE ROKEBERG referred to Section 30, relating to the protest of ten days and said he has concerns with the way it is drafted where if there are an improprieties you have to give ten days notice. As a practical matter, it is difficult. He said he understands the reasoning for the clause. One of the major concerns and problems with the procurement code is how disruptive it gets when you have certain vendors who specialize in state (indisc.) because they know the (indisc.) and they delight in things that can hold up the process or slow it down if it doesn't go their way. He said he doesn't understand the use of "alleged improprieties." MR. PETTY said that language, in his view, means that if the bidder believes that we've done something wrong in the bid document or in the process or if there is an ambiguity in the solicitation that they would bring that within ten days before the bid opening. It distinguishes between the protest award. They would clearly have the right to protest the award afterwards because it was a separate issue. If there is something wrong with a bid or an RFP, they certainly have the right to protest it. They are just trying to get them to bring it forward within ten days of the bid opening. Number 2299 REPRESENTATIVE ROKEBERG questioned how the new additional language is consistent with the existing language. He asked if they are exclusive. MR. PETTY said they are not exclusive. He referred to the current language and said they have to protest that award within ten days after the notice of intent to award. The current statute doesn't address the time frame for bringing a protest, a solicitation or the document itself. This attempts to use that same ten day standard. CHAIRMAN KOTT referred to Section 30 and said the ten day requirement is something that is currently being practiced based on regulations. MR. PETTY confirmed they currently do have that in their regulations. Number 2411 REPRESENTATIVE ELTON questioned the time period is between the request for a proposal and the time a proposal must be submitted. MR. PETTY said, "That is a 21 day period by statute from the time that the proposal is put out on the street or the ITB is awarded or put out on the street, the time we open the bid or the due date on the submission of the proposal is 21 days. To shorten that, currently the law requires a determination by the chief procurement officer to reduce that period." [END OF TAPE] TAPE 96-23, SIDE B Number 036 CHAIRMAN KOTT referred to wording in Section 43, "If the procurement officer determine in writing that a shorter notice period is advantageous." He said that 21 day period could be cut down to something less if adequate competition is anticipated. He asked if there would ever be a case where that period of time could be shortened to 11 days and affect Section 30 where it says we must have a filing within ten days. MR. PETTY said that issue was raised in the Senate State Affairs Committee. He explained the department's inclination to deal with that is to have that ten day rule only when the pool solicitation notice is in effect, but if there has been a shortened circulation period simply to require a protest of solicitation to be brought before the bid opening. It would simply have to be brought before the bid opening. That would seem to give somebody as much opportunity as possible to protest the solicitation in advance and give the department a chance to delay the process. Number 093 REPRESENTATIVE PORTER asked if in some cases do they pre-bid conferences that all bidders go to. MR. PETTY said that is a practice used primarily for more complex or high dollar volume term contracts or bids. He said they do use the proposal of the pre-bid conference process. REPRESENTATIVE PORTER referred to Section 30 and said if this conference were scheduled more than ten days after the bid had been let, they would not be precluded from trying to square away ambiguities. That is what that conference is for. MR. PETTY said that is true; however, what they typically find is the shortened circulation bids are usually for the off-the-shelf less controversial type items. If there is a proposal or pre-bid conference, it would be unusual that it would be a short circulation type situation. He said Section 30, as it is written, would apply to any bidder proposal. Usually those more complicated ones have a longer period. REPRESENTATIVE PORTER said Section 30 says that if you have a concern about ambiguity that you must file that ten days before the due date. He asked if the statute would preclude the ability to clear up an ambiguity at a pre-bid conference that was something less than ten days. MR. PETTY said he doesn't believe it would because if that came out in a pre-bid conference at a mark less than ten days, it would be knowledge that the contracting officer would have and it would be hard for them to ignore that knowledge and not act on it. He explained that his reading of the Cliff Berg decision is that the contracting officer must act on the knowledge he has. He said he doesn't think that would be any kind of a basis to not deal with the protest on its merit. He said if that was an issue the committee wanted to address, he is sure they could look at amending this to have a pre-bid conference exception to that rule. REPRESENTATIVE PORTER indicated that would be helpful to him. Number 201 REPRESENTATIVE ROKEBERG told Mr. Petty he thinks the department is doing a good job in terms of trying to come to grips with the procurement code. The vendors and business people of the state hate it. He explained his concern is with the innovative procurement idea and asked Mr. Petty to give an example. MR. PETTY said, "I can give you an example. The two live examples that it is my understanding that the Procurement Advisory Council would be addressed by this. One of them is the Exxon Valdez oil spill procurements that have taken place for their research and project studies. We met with a group of procurement officers several years back to try and figure out, within the state procurement laws, a way that we could go out and competitively acquire, in accordance with 36.30, these unique requirements that they had for studies. And we couldn't figure out a way that satisfied the Exxon Valdez Trustee Oil Spill Council because they wanted, at one point, before awarding and before completing the evaluation on the RFPs, to make the proposals public. Our procurement process, for a good reason prevents that. It prevent that because if we disclose a proposal to another proposer before we have had a discussion stage, that would give them an unfair advantage. So it's appropriate that it should prevent that from happening. But in this case, we could not figure out a way to acquire what they needed and meet the requirements. In the end, the federal contracting officers wound up buying those studies under a federal procurement practice known as a broad agency announcement which allowed them to do what they needed to get the job accomplished and still had a (indisc.) procurement process. I felt, frankly, frustrated because one of our goals is to help agencies get their job done in accordance with the law and we just simply weren't able to make that happen. That is a case where we could have developed an innovative procurement process that would have accomplished the end result. We wouldn't have heard, `Well the procurement law won't let us do it,' and had the accountability and the competition that we believe the law intended to have. MR. PETTY said, "Another case and point that I have been advised of is that the actual procurement of the new ferry was exempted by the legislature some years back would have actually fit under this innovative procurement process but couldn't technically have been done under the ITB or the RFP rules in the procurement process." MR. PETTY said he wouldn't suggest that this should be used all the time, but it is an avenue where procurement professionals can figure out a better approach to getting the job done. He said in state government, we need to encourage some innovative thought processes when we can, yet maintain the controls and the accountability. He said it allows them, when there is a unique requirement or when there is a value that can be achieved, to employ that kind of process. He said he would not think they would undertake this lightly. Number 357 REPRESENTATIVE ELTON said the purpose is to permit latitudes that allow professions to do their jobs. He said he thinks when you try to apply a cookie cutter recipe to each of the individual situations that a procurement officer is going to face, that is very very difficult. While there may be individual parts that can be fine tuned on this bill, the purpose of the bill is really noble. He said this does allow the professionals in the field latitude to accomplish some things that are very difficult to otherwise achieve with a cookie cutter approach. He said he would also note that the latitude always comes with danger and the danger, in this instance, would be legislative audits and other things that may sway legislative opinion on the way an agency (indisc.). Representative Elton said professional latitude gets right to the heart of this. Number 438 CHAIRMAN KOTT said HB 482 would be held until Wednesday.