Legislature(2015 - 2016)CAPITOL 106

03/29/2016 08:00 AM House STATE AFFAIRS

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         HB 24-PROF. SERVICES IN STATE-FUNDED CONTRACTS                                                                     
9:09:29 AM                                                                                                                    
CHAIR LYNN  announced that the  final order of business  would be                                                               
HOUSE  BILL  NO. 24,  "An  Act  relating  to the  procurement  of                                                               
architectural,  engineering,  or  land surveying  services  under                                                               
state-funded contracts."                                                                                                        
9:09:49 AM                                                                                                                    
REPRESENTATIVE SAM  KITO, Alaska State Legislature,  presented HB
24,  as prime  sponsor.   He stated  that HB  24 would  require a                                                               
municipality  that  receives  state funding  for  a  construction                                                               
project  to  utilize   Qualifications-Based  Selection  (QBS)  in                                                               
selecting a design  professional for the design  component of the                                                               
CHAIR  LYNN asked  Representative Kito  to define  Qualification-                                                               
Based Selection.                                                                                                                
REPRESENTATIVE KITO responded that there  are already quite a few                                                               
municipalities that  require Qualifications-Based Selection.   He                                                               
explained  that   Qualifications-Based  Selection  of   a  design                                                               
professional means that when hiring  an architect, an engineer, a                                                               
lands surveyor, or a landscape  architect, the contracting person                                                               
must  issue   a  request   for  proposal   (RFP)  based   on  the                                                               
individual's or  firm's qualifications,  as opposed to  the price                                                               
of the  services.  He  explained that  one of the  key components                                                               
driving  QBS  is the  Brooks  Act  [Selection of  Architects  and                                                               
Engineers statute, a  U.S. federal law passed  in 1972] requiring                                                               
that  federal   procurement  for  design   professionals  utilize                                                               
Qualifications-Based  Selection.    He said  that  the  State  of                                                               
Alaska has  a "mini" Brooks  Act requiring  state-funded projects                                                               
use Qualifications-Based  Selection, which is already  being used                                                               
with Department  of Transportation  & Public  Facilities (DOT&PF)                                                               
construction projects in the state.                                                                                             
CHAIR  LYNN  asked  for clarification  that  Qualifications-Based                                                               
Selection   refers   to   the   consideration   of   professional                                                               
qualifications for procurement as opposed to price only.                                                                        
REPRESENTATIVE   KITO  responded   that  HB   24  requires   that                                                               
qualifications be  the selection  factor for design  services for                                                               
projects  that are  funded  by  the State  of  Alaska.   He  gave                                                               
himself as  an example:  As  a civil engineer whose  expertise is                                                               
in coastal and  transportation engineering, if he  were to submit                                                               
a  proposal  for  a  building   foundation,  even  though  he  is                                                               
technically qualified to  do the work, his  skills and experience                                                               
would not make  him the most efficient.   He went on  to say that                                                               
HB  24 would  require  that  if the  state  provides  money to  a                                                               
municipality for  a capital project, the  contracting person must                                                               
look at the qualifications of  the individuals that are proposing                                                               
the design of the project.                                                                                                      
9:13:58 AM                                                                                                                    
CHAIR LYNN asked, "Would not  the RFP specify the requirement for                                                               
qualification  in a  certain  type of  construction,  as well  as                                                               
REPRESENTATIVE  KITO  responded,  "Not necessarily,  although  it                                                               
does  happen  at  times."    He   said  that  an  owner,  with  a                                                               
construction budget  of $100 million  for a project,  budgets for                                                               
the design, which is typically four  to eight percent of the cost                                                               
of the  project.  He  said that design  costs could be  higher if                                                               
the project is a very complex structure.   He went on to say that                                                               
after  selection of  the designer  with the  best qualifications,                                                               
the owner  then starts  negotiating the price.   If  the designer                                                               
comes back  asking for a  design cost that  is 20 percent  of the                                                               
cost  of   the  project,   then  the   owner  has   to  reassess.                                                               
Representative Kito maintained that  the owner still has complete                                                               
control over the design cost of  the project.  He said the design                                                               
cost could  range as high as  ten or 12 percent  depending on the                                                               
complexity of the project.                                                                                                      
9:15:57 AM                                                                                                                    
CHAIR  LYNN  mentioned  that he  remembered  Representative  Kito                                                               
discussing  this  concept  with him  before  Representative  Kito                                                               
became a representative.                                                                                                        
REPRESENTATIVE KITO  agreed that  he has  worked actively  with a                                                               
group  called  the  Alaska Professional  Design  Council  through                                                               
which  various  design  entities  collaborate and  lobby  to  the                                                               
legislature on various issues that are important to them.                                                                       
9:16:40 AM                                                                                                                    
REPRESENTATIVE KELLER asked  if HB 24 was a  risk management tool                                                               
and, if so, what risk would be managed.                                                                                         
REPRESENTATIVE  KITO   voiced  his   belief  that   the  proposed                                                               
legislation would  offer a management tool  for municipalities in                                                               
their attempt to spend public  money most efficiently in the face                                                               
of a  declining budget.   He added that the  proposed legislation                                                               
would ensure  that appropriate qualified professionals  are being                                                               
utilized  for  projects paid  for  with  public funds,  therefore                                                               
decreasing the overall construction cost of a project.                                                                          
REPRESENTATIVE KELLER  repeated Representative Kito's  claim that                                                               
the proposed legislation  was not so much a  risk management tool                                                               
as a  tool to promote efficiency.   He asked what  the efficiency                                                               
would be and  mentioned specifically the effect HB  24 might have                                                               
on nonprofits that  receive state money but operate  on a limited                                                               
REPRESENTATIVE  KITO  stated  his   expectation  that  an  entity                                                               
soliciting  for the  design of  a project  funded by  state money                                                               
would select the  most qualified architect, who  is accustomed to                                                               
working  on   smaller  commercial  buildings  and   can  be  more                                                               
efficient  than another  who doesn't  have that  experience.   He                                                               
said that HB 24  would also be a risk management  tool in that an                                                               
appropriately  qualified  designer  poses   less  risk  for  that                                                               
project to go over budget or to be constructed incorrectly.                                                                     
9:20:07 AM                                                                                                                    
REPRESENTATIVE  KELLER  opined  that  if procurement  is  in  the                                                               
position to  define qualifications,  then the scope  of qualified                                                               
professionals becomes  narrower.   He stated that  he appreciated                                                               
the  concern  for qualified  professionals  but  wondered if  the                                                               
competition would be diminished.                                                                                                
REPRESENTATIVE KITO stated his belief  that competition would not                                                               
be  diminished under  HB  24.   He  opined  that most  engineers,                                                               
architects, and  land surveyors are  accustomed to  competing for                                                               
work,  and  competition creates  a  healthy  environment for  the                                                               
profession.    He  added  that HB  24  would  keep  professionals                                                               
engaged in their field, resulting  in greater efficiency in their                                                               
design work.   He  added that in  the engineering  profession, of                                                               
which  he is  familiar,  a new  engineer is  mentored  by a  more                                                               
experienced engineer  to gain experience and,  ultimately, brings                                                               
that experience to his/her proposals.                                                                                           
9:23:15 AM                                                                                                                    
REPRESENTATIVE TALERICO referred to page  2, line 18-21, which he                                                               
claimed would use price as an  added factor in awarding bids, and                                                               
read as follows:                                                                                                                
     In order  for the  contracting person to  include price                                                                    
     as a  factor in  selection, a  majority of  the persons                                                                    
     involved  by the  contracting person  in evaluation  of                                                                    
     the  proposals  shall be  registered  in  the state  to                                                                    
     perform architectural,  engineering, or  land surveying                                                                    
REPRESENTATIVE TALERICO  stated his concern for  school districts                                                               
and  municipalities  in  rural  locations,  where  the  selection                                                               
process  is generally  done by  committee  or city  council.   He                                                               
opined  that he  is  not  sure how  many  professionals would  be                                                               
available to serve on a  selection committee, making it difficult                                                               
to select based on qualifications.                                                                                              
9:25:32 AM                                                                                                                    
REPRESENTATIVE  KITO gave  a  two-part  answer to  Representative                                                               
Talerico's question.   He  explained that  cost selection  can be                                                               
used for services that are  repetitive in nature, like structural                                                               
inspections  or  surveys,  and  the language  in  HB  24  follows                                                               
language  from   the  Department   of  Transportation   &  Public                                                               
Facilities  (DOT&PF) procurement  regulations, which  require the                                                               
appropriate design professional on the selection team.                                                                          
REPRESENTATIVE KITO  cited the example of  school construction in                                                               
the second  part of  his answer to  Representative Talerico.   He                                                               
said  that  there  is  current  law  requiring  school  districts                                                               
utilize  Qualification-Based   Selection,  and   the  appropriate                                                               
professionals  are  invited  to   participate  in  the  selection                                                               
process.  He  added that typically schools are not  looking for a                                                               
cost-type procurement where they  are soliciting for a repetitive                                                               
service,  but  they  would  be  using  QBS.    The  statutes  and                                                               
regulations  also  provide that  for  schools  wanting to  do  an                                                               
alternative  procurement -  that is,  design-build, construction-                                                               
manger,  general contractor,  or some  combination of  design and                                                               
construction  together  -  the department  can  engage  with  the                                                               
school  district  to make  sure  the  technical aspects  of  that                                                               
procurement are being done appropriately.                                                                                       
9:27:59 AM                                                                                                                    
REPRESENTATIVE  VAZQUEZ asked  what  this bill  tries to  prevent                                                               
that is a current problem.                                                                                                      
REPRESENTATIVE KITO stated that the  concern that prompted him to                                                               
introduce the bill  is the concern that any state  money put into                                                               
public  projects  would  serve  the purpose  of  the  project  as                                                               
efficiently and  inexpensively as  possible and avoid  design and                                                               
construction failures.                                                                                                          
9:29:18 AM                                                                                                                    
REPRESENTATIVE VAZQUEZ referred to AS  36.90.110, in Section 1 of                                                               
HB  24, and  the existing  statute AS  36.90.100, which  mentions                                                               
landscaping,  and asked  why  landscaping architectural  services                                                               
are omitted from HB 24.                                                                                                         
REPRESENTATIVE  KITO responded  that  he didn't  know why  except                                                               
that state-funded projects for  municipalities were typically not                                                               
landscaping projects but building and infrastructure projects.                                                                  
9:30:39 AM                                                                                                                    
REPRESENTATIVE  VAZQUEZ  asked   Representative  Kito  to  define                                                               
landscape architectural services.                                                                                               
REPRESENTATIVE  KITO  explained  that  landscape  architects  are                                                               
individuals who  work on the  grounds around facilities  and open                                                               
spaces within  infrastructure projects.  He  added that landscape                                                               
projects include vegetation and retaining walls.                                                                                
9:31:36 AM                                                                                                                    
REPRESENTATIVE VAZQUEZ  reiterated that the  proposed legislation                                                               
omits landscape architectural  services and asked if  there was a                                                               
reason or if that was an oversight.                                                                                             
REPRESENTATIVE KITO  said he was not  sure if it was  omitted but                                                               
claimed that there  are very few grants from the  State of Alaska                                                               
awarded specifically for landscaping.                                                                                           
REPRESENTATIVE  VAZQUEZ  opined  that  landscaping  architectural                                                               
services would be an important inclusion.                                                                                       
REPRESENTATIVE KITO  agreed and related  his experience as  a new                                                               
engineer   trying  to   find  landscaping   components  for   the                                                               
embankment  of  a  roadway  and   to  determine  which  types  of                                                               
vegetation were best suited based on  a variety of variables.  He                                                               
maintained  that landscape  architects typically  work for  other                                                               
design professionals within larger projects  and would not be the                                                               
primary applicant for a project.                                                                                                
REPRESENTATIVE VAZQUEZ  asked if it  made sense to  add landscape                                                               
architecture to the proposed legislation.                                                                                       
REPRESENTATIVE KITO agreed to consider doing that.                                                                              
9:34:14 AM                                                                                                                    
REPRESENTATIVE VAZQUEZ said  that the concept [of  HB 24] appears                                                               
valid but  asked how "sideboards"  could be incorporated  so that                                                               
one doesn't get carried away and not look at the price tag.                                                                     
REPRESENTATIVE KITO  stated the  most important  consideration is                                                               
understanding the budget  starting out and trying  to contain it.                                                               
He maintained that it is important  to budget the amount of money                                                               
available  to complete  the design  and to  pay attention  to the                                                               
work so that  the budget is not  exceeded.  He added  that if the                                                               
budget  is exceeded,  then  it  is important  to  know  why.   He                                                               
claimed that project management  includes paying attention to the                                                               
overall process to keep costs down.                                                                                             
REPRESENTATIVE VAZQUEZ  reiterated that she liked  the concept of                                                               
HB 24  but was uneasy with  the lack of sideboards  assuring that                                                               
the price tag is not disregarded.                                                                                               
9:36:06 AM                                                                                                                    
REPRESENTATIVE  STUTES asked  Representative Kito  to expound  on                                                               
the mentoring programs offered by architectural firms.                                                                          
REPRESENTATIVE KITO  responded that  he could  speak specifically                                                               
to his profession.   He said a graduate with  a civil engineering                                                               
degree does  not have the  ability to "hang  out a shingle."   He                                                               
relayed  that  in  order  to  become  licensed  in  Alaska  as  a                                                               
professional engineer, a person would  need to demonstrate to the                                                               
licensing  board that  he/she has  had four  years of  increasing                                                               
levels of responsible charge under a licensed engineer.                                                                         
9:37:56 AM                                                                                                                    
REPRESENTATIVE KELLER referred to page  2, line 30, and mentioned                                                               
that  HB   24  discusses  contracting  with   regional  education                                                               
attendance areas (REAA) and asked if REAAs offer contracts.                                                                     
REPRESENTATIVE  KITO  responded yes,  on  a  regular basis.    He                                                               
stated that  from his experience  working with the  Department of                                                               
Education  &  Early  Development  (DEED), the  REAAs,  or  school                                                               
districts,  will hire  an architect  or engineer  to do  specific                                                               
school projects.   He added that the REAA board  would review the                                                               
proposals and hire the architect or engineer for the project.                                                                   
9:38:51 AM                                                                                                                    
DALE   NELSON,  Alaska   Professional   Design  Council   (APDC),                                                               
testified  in  support  of HB  24.    He  relayed  that he  is  a                                                               
registered  professional  civil  engineer and  has  practiced  in                                                               
Alaska since  1967.   He declared that  he represents  the Alaska                                                               
Professional Design Council, as  chair of the Legislative Liaison                                                               
Committee, and is  testifying in support of HB 24.   He said APDC                                                               
is a nonprofit  organization, started in the  1970s, and includes                                                               
a  number  of  member organizations  representing  many  licensed                                                               
engineers.     He  noted  APDC   has  been  very   involved  with                                                               
communities,  the University  of  Alaska, and  with the  Science,                                                               
Technology, Engineering  and Mathematics (STEM)  teaching program                                                               
in schools.                                                                                                                     
MR. NELSON  asserted that  HB 24  is needed.   He said  that APDC                                                               
works with  communities who are responding  to pricing-first RFPs                                                               
and assists with  the selection process.  He  emphasized that QBS                                                               
has real value.   He cited the four supporting  principles of the                                                               
American Public Works  Association (APWA) are to:   lower overall                                                               
cost,  promote technical  innovation and  quality, benefit  small                                                               
firms,  and satisfy  project owners.    He stated  that the  main                                                               
advantage  of QBS  is  that it  promotes  a collaborative  spirit                                                               
between the design professional and  the client in maximizing the                                                               
quality, value,  cost-effectiveness, and usefulness of  the final                                                               
product.   He maintained that the  mandate for managers is  to be                                                               
good  stewards of  the funding  provided to  the communities  for                                                               
development.    He  stated  that  as  a  registered  professional                                                               
engineer, his oath is to  support the health, safety, and welfare                                                               
of the public.  He asked for the committee's support of HB 24.                                                                  
9:44:25 AM                                                                                                                    
CHAIR  LYNN asked  why,  if Mr.  Nelson and  the  APDC have  been                                                               
promoting  the concept  behind HB  24 for  several years,  it has                                                               
never passed.                                                                                                                   
MR. NELSON  responded that education  is needed and  ongoing and,                                                               
as in  the present  hearing in the  House State  Affairs Standing                                                               
Committee,  APDC   strives  to   promote  understanding   of  the                                                               
requirements of  the state  procurement code  and what  QBS would                                                               
9:45:28 AM                                                                                                                    
REPRESENTATIVE  KELLER asked  if APDC  has standard  designs that                                                               
can  be used  across the  state, citing  the reuse  of previously                                                               
approved designs  in the Matanuska-Susitna School  District as an                                                               
example, and  if reusing designs is  in the scope and  mission of                                                               
APDC to cut costs.                                                                                                              
9:46:21 AM                                                                                                                    
MS. NELSON  replied no, that  APDC's scope does not  include that                                                               
level of involvement  in design recommendations.   He stated that                                                               
APDC's role is in understanding  the process and value of looking                                                               
for a  qualified designer.  He  said that for a  school district,                                                               
the designer would  be an architect, as the lead,  and would have                                                               
the  support of  structural, civil,  mechanical, electrical,  and                                                               
landscaping  architects.    He  added  that  once  the  qualified                                                               
architect  is identified,  he/she  collaborates  with the  school                                                               
district to define  the scope, and together they  work toward the                                                               
9:47:36 AM                                                                                                                    
REPRESENTATIVE SPOHNHOLZ asked and  received clarification on the                                                               
four criteria by which the APDC supports the QBS process.                                                                       
9:48:19 AM                                                                                                                    
CATHERINE FRITZ,  Architect, Alaska Professional  Design Council,                                                               
testified  in support  of HB  24.   She  relayed that  she was  a                                                               
practicing  architect   in  Juneau  who  began   working  in  the                                                               
architectural field  in 1983  and has  been licensed  since 1990.                                                               
She  reiterated Representative  Kito's  claim about  the time  it                                                               
takes  to  become  a  licensed design  professional.    She  made                                                               
reference to  her letter  in the committee  packet.   She pointed                                                               
out  that  there  is  an   existing  statute  on  Qualified-Based                                                               
Selection,  and  the  proposed legislation  is  similar  to  that                                                               
statute but  would ensure that  the provisions  already practiced                                                               
in the state  are carried down to the municipal  levels and local                                                               
units who  use state funds.   She contested that  implementing HB
24 is an issue of fairness  in procurement.  She related that the                                                               
goal of any  government procurement process is  to have extensive                                                               
competition  that is  open, fair,  rigorous, and  appropriate for                                                               
the  project, and  she opined  that this  should be  true at  all                                                               
levels of government.                                                                                                           
MS. FRITZ  said that  she has recently  been working  on projects                                                               
for  the Federal  Aviation Administration  (FAA) and  stated that                                                               
the  FAA, along  with  most federal  agencies,  requires QBS  for                                                               
selecting  design teams.    She said  that HB  24  would close  a                                                               
loophole.  She maintained  that design  is not  like construction                                                               
but is more  a service than a  commodity.  She offered  that if a                                                               
project is  clearly defined,  then a  price can  be appropriately                                                               
associated with  the project.   She claimed that  a pricing-first                                                               
selection  process attracts  a bid  without  a scope,  so that  a                                                               
facility, built  using the cheapest  bid, will reflect  less time                                                               
spent with the design team,  less opportunity for innovation, and                                                               
less consideration for efficiency in ongoing maintenance.                                                                       
MS.  FRITZ  asserted  that the  Quality-Based  Selection  process                                                               
offers  an opportunity  for collaboration  between the  owner and                                                               
the  design   team.    She   said  that  after   identifying  the                                                               
qualifications  that are  important for  a project  and selecting                                                               
the best  design team for the  project, an owner can  negotiate a                                                               
price with  the design team.   She  maintained that if  the owner                                                               
and design team cannot decide on  a price, then the owner can use                                                               
the second choice  team.  She added that a  contract for services                                                               
would  not be  written until  the negotiation  is complete.   She                                                               
described  QBS   as  a  two-step  process,   resulting  in  clear                                                               
expectations, collaboration, relationship  building, and a design                                                               
team that understands the owner's personal goals.                                                                               
[HB 24 was held over.]                                                                                                          

Document Name Date/Time Subjects
01 Blank CS HB 368 v.W 2-26-2016.pdf HSTA 3/29/2016 8:00:00 AM
HB 368
02 HB 368 v.A.PDF HSTA 3/29/2016 8:00:00 AM
HB 368
03 Sponsor Statement HB 368 ver W 3-1-2016 (002).pdf HSTA 3/29/2016 8:00:00 AM
HB 368
04 Section Analysis HB 368 ver W 3-1-2016 (002).pdf HSTA 3/29/2016 8:00:00 AM
HB 368
05 HB 368 ver W Description of Changes 3-25-2016.pdf HSTA 3/29/2016 8:00:00 AM
HB 368
06 HB 368 Fiscal Note - DOA 3-25-2016.pdf HSTA 3/29/2016 8:00:00 AM
HB 368
01 HB 24 ver A.pdf HSTA 3/29/2016 8:00:00 AM
HB 24
02 HB 24 Sponsor Statement.pdf HSTA 3/29/2016 8:00:00 AM
HB 24
03 HB 24 Sectional Analysis.pdf HSTA 3/29/2016 8:00:00 AM
HB 24
04 HB 24 Supporting Documents-Leg Research Report.pdf HSTA 3/29/2016 8:00:00 AM
HB 24
05 HB 24-DOA-DGS-02-05-16.pdf HSTA 3/29/2016 8:00:00 AM
HB 24
06 HB 24 ACEC qbs_matrix 2013.pdf HSTA 3/29/2016 8:00:00 AM
HB 24
07 HB 24 Supporting Documents-Presentation ACEC Aug 2011-.pdf HSTA 3/29/2016 8:00:00 AM
HB 24