MINUTES OF THE ASSEMBLY COMMITTEE ON COMMERCE Sixty-eighth Session March 1, 1995 The Committee on Commerce was called to order at 3:35 p.m., on Wednesday, March 1, 1995, by the presiding Chairman, Sandra Tiffany, in Room 332 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda, Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Mr. Larry L. Spitler, Chairman Ms. Sandra Tiffany, Chairman Ms. Maureen E. Brower, Vice Chairman Mr. Richard Perkins, Vice Chairman Mr. Dennis L. Allard Mr. Morse Arberry, Jr. Absent/Excused Ms. Barbara E. Buckley Mr. Thomas A. Fettic Ms. Chris Giunchigliani Late/Excused Mr. Lynn Hettrick Late/Excused Mr. David E. Humke Mr. Michael A. (Mike) Schneider STAFF MEMBERS PRESENT: Paul Mouritsen, Research Analyst OTHERS PRESENT: Margi Grein, State Contractors' Board Tom Wright, T & C Construction Rodger Rakow, Sunrise Backhoe Service James Barber, Clark County General Services Department Carl Scarbrough, Clark County Department of Aviation Jesse Paulk, Tab Contractors, Inc. Norm Starrett, Purchasing Agent, Douglas County Jack Jeffries, Representative of the Southern Nevada Trades Council Ande Engleman, Nevada Press Association Pam Miller, Association of General Contractors Following roll call, Chairman Tiffany opened the hearing on A.B. 121. ASSEMBLY BILL 121 - Makes various changes concerning bidding and awarding of contracts for public works. The main proponents of the bill, Jim Barber, Clark County General Services Department, and Carl Scarbrough, Legislative Coordinator for the Department of Aviation, came forward to explain the bill. Mr. Barber stated there were two parts to A.B. 121, and he would address the first part which discussed the awards of public works construction contracts between $25,000 and $100,000 (Exhibit C). The second part of the bill, to be addressed by Mr. Scarbrough, dealt with the bid preference law (Exhibit D). Mr. Barber proceeded to a review and explanation of his testimony as shown in Exhibit C. After disclosing that he was a contractor, Mr. Allard asked if Mr. Barber was proposing to just consider the lowest of all the bids. In answer, Mr. Barber said they would do it exactly as they were now doing it. Because they were using written quotations in the dollar range of $25,000 to $100,000, they were not required to advertise the bid, but rather, could pick and choose from an established list when they were quoting. Thus, it could be skewed more toward encouraging minority and small business. In response to Mr. Allard's question, Mr. Barber said they would draw from the bid list for qualified firms they now had. As for criteria to be used, Mr. Barber said it would be awarded to the lowest responsive responsible bidder on the quote. Mr. Scarbrough said his remarks would be directed to Section 3, and that he would primarily be testifying on how the bill pertained to McCarran Airport. He then reviewed his submitted testimony (Exhibit D). Summarizing their position, Mr. Scarbrough said they believed whenever possible, Nevada contractors should be awarded a given contract. Referring to the list of established contractors, Ms. Giunchigliani questioned whether the list would be created from the contractors with which they had done business in the past. Mr. Barber said the list they were now using and the one they would use in the future, was the existing list they had for all construction contracts. Ms. Giunchigliani then asked if they publicly noticed a bid was available. Mr. Barber replied they would not notice the bid if the contract amount was under $100,000 because they were not required to do a formal advertised bid until they reached the threshold of $100,000. Ms. Giunchigliani was still not certain how this worked towards encouraging minority owned businesses and contractors to possibly get a given contract. Mr. Barber said they were trying to actively recruit minority and small contractors for their pool, whatever their license limit would allow. When asked how a business qualified for the list, Mr. Barber said any contractor could go on the list simply by filling out a bid list application. Ms. Giunchigliani suggested they come up with something which would better inform the committee on how the selection would be made. Tom Wright, owner of T and C Construction Company, said he generally supported A.B. 121, but wished to add another provision to the proposed amendment. This would state that if a preferential bidder elected to exercise his status, then he had to do the job for the same price as the low bidder. He also wanted to see all Nevadans included as preferential bidders. Mr. Wright's letter which had been sent earlier to each committee member, was entered for the record as Exhibit E. Roger Rakow, a small backhoe contractor, echoed Mr. Wright's remarks and indicated while he basically supported the bill, he believed amendments were needed. He noted the 5 percent bid process now appeared to work against the small, and/or minority contractor. Mr. Rakow also believed a higher threshold should be added. When Mr. Allard asked Mr. Wright or Mr. Rakow to provide what they considered to be acceptable amending language, Mr. Wright suggested the language should specify a $1 million threshold for preferential bidder status. This left an open playing field for everything below that and gave everyone a chance to compete evenly. Alternatively, he suggested, a residency statement should be added to the provisions on page 4, lines 1 through 8, dealing with the sales tax and highway use tax. Mr. Allard wondered how merely raising the threshold would benefit Nevada contractors. Mr. Wright answered that out-of- state contractors were not as likely to bid against the smaller projects. The preferential status would keep them out of the large jobs, and he believed the small contractors could keep them out of the small contracts. Norm Starrett told the committee he was the Purchasing Agent for Douglas County and Vice Chairman of the Public Purchasing Study Commission. This Commission, he said, had been created under NRS 332, and was the local government Purchasing Act to advise the legislature on matters relating to purchasing. He then referred to Mr. Barber's earlier testimony, and informed the audience that Bill Draft Request (BDR) 28-814 would increase the threshold to $500,000 and still retain the prohibition against more than three bidders. Opposition to the bill was offered by Pam Miller, Government Affairs Director for the Associated General Contractors Nevada Chapter, who told the committee she had been involved in the early legislation which had attempted to give emerging and minority contractors the opportunity to bid on public works projects. Thus, the $25,000 to $100,000 threshold without a bid having to be advertised had been adopted. Deleting paragraph 2 on page 1 would lead to abuses in that public entities would want to do all their own work on projects costing less than $100,000. Ms. Miller expressed additional concerns regarding the language on page 4, lines 14 through 17. She opined the language would lead to "bid shopping" on most projects. She said they were willing to talk to the different people regarding their problems, but the Associated General Contractors were adamantly opposed to the implementation of the language on page 4. Mr. Hettrick reminded Ms. Miller they had disagreed during the 1993 Session with the issue of "threshold." Ms. Miller pointed out they were in the process of negotiating with agencies regarding some monetary threshold under which bidders' preference would not apply. This would give the emerging minority contractor the opportunity to still compete in public works projects, but on a more equal footing. Mr. Hettrick pointed out the language dealing with the $5,000 tax provision, suggested the bill was not aimed truly at an emerging contractor. Rather, this would have to be someone who had been in business for five years in the state of Nevada, before he could qualify for the bid preference. Mr. Hettrick maintained this was a problem which needed more work. He suggested amending the language on page 4, line 16, "...at the same price and terms as those set forth in the lowest responsive and responsible bid submitted to the public body." He asked if there was any amending language Ms. Miller could suggest. She responded, no, she could see no way to work out the language so there was an opportunity for compromise. Ms. Giunchigliani asked for an explanation of "bid shopping" and how a bid was solicited. Discussion followed. The Nevada Press Association, represented by Ande Engleman, said they had been in agreement, when A.B. 121 was raised, to $100,000 for advertising for bids on public works projects. This, of course, brought the newspapers revenue. She stated they would be opposed to raising the threshold to $300,000 because at $300,000 there would be no project in the rural areas which would ever be large enough to go to bid. She said the Nevada Press Association counsel had advised that if the language on page 1, lines 11 through 21, was deleted the newspapers would truly reap a profit because everything would have to be advertised; however, the Press Association still did not endorse that amendment. The present level of $100,000 to place an advertised bid was appropriate, she opined. Also testifying in opposition, Jesse Paulk, President of Tab Contractors, Inc., and a board member of the Las Vegas Chapter of the Associated General Contractors (AGC), said they concurred with the Nevada AGC's opposition to the bill. The statute had been derived after careful study and should therefore not be changed, he maintained. Referring to previous questions, Mr. Paulk stressed that a great deal of expense, work, equipment investment and research went into a bid project. To say the state would then want to lower its standards by allowing someone to change the bid they had developed, was objectionable. As for specific opposition, Mr. Paulk said if the language on page 1, lines 11 through 21 was deleted it would not accomplish the intent of the bill. When Mr. Fettic questioned the language on page 4, lines 14 and 15, it was concluded by both Mr. Paulk and Mr. Fettic that the bill had been badly crafted. Jack Jeffries, representing the Southern Nevada Building and Construction Trades Council, said they were primarily opposed to the "bidders preference" portion of A.B. 121. Filling in background information, Mr. Jeffries noted he had been very involved when the legislation was first drafted. At that time, they had sought to draft the bill for a preference for local contractors using local workers, which echoed the desires of the present opponents. Trouble had arisen when similar pieces of legislation throughout the United States had been tossed out of court. While not a contractor, Mr. Jeffries acknowledged the time, expense, equipment and research which went into the process of developing a bid. To allow a bid shopper to take five days to shop for bids would be unfair to the good faith of the original contractor. Representing the Nevada State Contractors' Board, Margi Grein told the committee the Board had taken no official position on A.B. 121. However, they had received a great many calls from small Nevada contractors saying they were in opposition to the bill in that it did not provide them a level playing field. Also, she said, they were concerned with Section 2 of NRS 338.143, in that the language no longer referred to "properly licensed." The only reference was to "responsible contractor." The Contractors' Board wanted it to specifically state the contractors involved were properly licensed in Nevada. Returning to testify, and in an effort to clarify the question of advertising costs referred to by Ms. Engleman, Mr. Barber said it was not their intent to change the advertising threshold in any way. Additionally, Mr. Scarbrough said, the management at McCarren Airport was very interested in supporting local contractors, and it was not their intent for A.B. 121 to do otherwise. They did, of course, wish to get the most for their money. From time to time it had cost them many dollars to give preference to a local contractor. Discussion continued. Mr. Spitler told committee members he had had a telephone conversation with Ron Holcomb, a small contractor from Reno who could not be in attendance. Mr. Holcomb requested his opposition to A.B. 121 be noted. Chairman Tiffany suggested the Clark County proponents needed to do more work on the bill. No vote would be taken until the following week, she announced, and also indicated the Co-Chairs would be looking at related bills from the Senate and the Assembly. With no further testimony on A.B. 121, Chairman Tiffany opened the hearing on A.B. 167. ASSEMBLY BILL 167 - Makes various changes relating to state contractors' board. Representing the City of Las Vegas, Marvin Leavitt, reported that A.B. 167 had been introduced at the request of the city. Explaining the background, Mr. Leavitt said they had received increasing complaints from those who had business licenses where the people felt they had been defrauded by contractors who performed work for them. The bill was an attempt to correct some of those situations. A task force was formed which included representatives from industrial groups, the Contractors' Board and others. In meetings and conferences, the group found there were technical problems with the bill, as well as the fact it did not accomplish what they desired. At the same time, they found that a Senate bill introduced at the request of the Contractors' Board, did solve those problems, and in its present form did what had been attempted in A.B. 167. Since A.B. 167 would have to be reworked, Mr. Leavitt asked the committee to Indefinitely Postpone the bill. ASSEMBLYWOMAN GIUNCHIGLIANI MOVED TO INDEFINITELY POSTPONE A.B. 167. ASSEMBLYMAN ALLARD SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. ASSEMBLY BILL 41 - Revises applicability of provisions governing exemption from licensure as contractor for sale or installation of certain finished products, materials or articles of merchandise. Chairman Tiffany explained the sponsor of A.B. 41 had requested the bill be withdrawn. ASSEMBLYMAN PERKINS MOVED TO INDEFINITELY POSTPONE A.B. 41. ASSEMBLYMAN BROWER SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. ASSEMBLY BILL 64 - Increases monetary threshold at which awarding authority is required to advertise for bids for public works projects. The sponsor of A.B. 64, Assemblyman Carpenter, Assembly District 33, had requested this bill be withdrawn, Chairman Tiffany commented. ASSEMBLYMAN HETTRICK MOVED TO INDEFINITELY POSTPONE A.B. 64. ASSEMBLYMAN ALLARD SECONDED THE MOTION THE MOTION CARRIED UNANIMOUSLY. Chairman Tiffany called for committee introduction of a bill draft request from the Las Vegas Commission authority. The intent of the proposed bill was: "The use of a government agency that originates, acquires or maintains photographs or state of the art images of events, people or sites for purposes of promoting travel or tourism to Nevada or portraying historical events, people or sites related to Nevada." ASSEMBLYMAN SPITLER MOVED TO REQUEST A BILL DRAFT. ASSEMBLYMAN PERKINS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. Another request had been submitted by Assemblyman Joan Lambert, Assembly District 29, Chairman Tiffany remarked. This was for a Naturopathic Medical Practice Act. Ms. Giunchigliani explained the constituent who had requested this from Mrs. Lambert had also explained to her that she was a new Naturopathy practitioner in Reno, and wished the bill to be introduced to discuss whether to create a Board to review their practices, licensure, etc., since they did not fall within the parameters of any other governing board. ASSEMBLYMAN SPITLER MOVED TO REQUEST A BILL DRAFT. ASSEMBLYWOMAN GIUNCHIGLIANI SECONDED THE MOTION. THE MOTION CARRIED. (ASSEMBLYMEN ALLARD, BROWER, HETTRICK, SCHNEIDER AND TIFFANY VOTED NO, ASSEMBLYMAN ARBERRY WAS ABSENT FOR THE VOTE AND ALL OTHERS VOTED YES.) Chairman Tiffany explained that two bill drafts had inadvertently escaped committee introduction before being introduced in General Assembly. She asked the committee to forgive her oversight and vote on committee introduction of BDR 52-933 (subsequently made A.B. 191) and BDR 54-912 (subsequently made A.B. 192). ASSEMBLYWOMAN GIUNCHIGLIANI MADE A MOTION TO INTRODUCE BILL DRAFT REQUEST 52-933. ASSEMBLYMAN BROWER SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. ************************* ASSEMBLYWOMAN GIUNCHIGLIANI MADE A MOTION TO INTRODUCE BILL DRAFT REQUEST 54-912. ASSEMBLYMAN HETTRICK SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. There being no further testimony or business to be addressed, Chairman Tiffany adjourned the meeting at 4:35 p.m. RESPECTFULLY SUBMITTED: Iris Bellinger, Committee Secretary APPROVED: ________________________________ Chairman, Larry L. Spitler ________________________________ Chairman, Sandra Tiffany Assembly Committee on Commerce March 1, 1995 Page