MINUTES OF THE SENATE COMMITTEE ON GOVERNMENT AFFAIRS Sixty-eighth Session January 30, 1995 The Senate Committee on Government Affairs was called to order by Chairman Ann O'Connell, at 2:06 p.m., on Monday, January 30, 1995, in Room 227 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Senator Ann O'Connell, Chairman Senator Randolph J. Townsend, Vice Chairman Senator Jon C. Porter Senator William J. Raggio Senator William R. O'Donnell Senator Dina Titus Senator Raymond C. Shaffer STAFF MEMBERS PRESENT: Dana Bennett, Senior Research Analyst DeLynn Gillentine, Committee Secretary Teri J. Spraggins, Committee Secretary OTHERS PRESENT: Robert Gagnier, Executive Director, State of Nevada Employees Association Norman Starrett, Vice Chairperson for the Public Purchasing Study Commission Brooke Nielsen, Assistant Attorney General Jonathan Andrews, Chief Deputy, Civil Division, Office of the Attorney General Dean Heller, Secretary of State Tom Wright, Owner, T & C Construction John Anderson, Owner, John Anderson Construction, Inc. Pam Miller, Government Affairs Director, Nevada Associated General Contractors Dallas Coonrod, Las Vegas Associated General Contractors Margaret Cavin, Vice President Elect, Nevada Associated General Contractors Bill Draft Request 23-324 Allow classified state employees opportunity to select shifts and days off based on seniority. Robert Gagnier, Executive Director, State of Nevada Employees Association, stated this bill was considered by the 1991 session in the Assembly Government Affairs Committee and was determined by that committee that it more appropriately belonged under the collective bargaining process. He explained since a collective bargaining bill was being passed, they would not further consider this bill. Mr. Gagnier stated because the collective bargaining bill was vetoed, SNEA needed to report this bill back to the Legislature. Mr. Gagnier explained under current state law and regulations, the employer determines the shift assignments and days off for all personnel. The employee has no say in the matter. However, they can request shifts and days off. He stated that it is management's prerogative, and the employee has no right to grieve the process if it is changed. The employee has no way to address the process. Mr. Gagnier stated this bill, if it were passed, would provide employees at agencies (with twenty-four hour coverage, such as institutions and prisons) the option to choose shifts and days off based on seniority. He stated that management could reject their request based upon security need, however, then the employee could grieve that issue, which they cannot under the current law. SENATOR O'DONNELL MOVED TO INTRODUCE BDR 23-324. SENATOR TOWNSEND SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. ***** BILL DRAFT REQUEST 28-524 Remove limitation on solicitation of bids. Norman Starrett, Vice Chairperson, Public Purchasing Study Commission gave a brief review of BDR 28-254. He stated currently on projects between $25,000 and $100,000 there is a provision that no more than three bidders are contacted. Mr. Starrett explained this severely restricts competition on public works projects, particularly for smaller contracting firms. He stated BDR 28-524 would remove the restriction of only three bidders. SENATOR O'DONNELL MOVED TO INTRODUCE BDR 28-524. SENATOR SHAFFER SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. ***** SENATE BILL 83: Eliminates fees for copying certain documents. SENATOR O'DONNELL MOVED TO RECONSIDER THE BILL. SENATOR TOWNSEND SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. ***** Brooke Nielsen, Assistant Attorney General, read a prepared statement to the Senate Committee on Government Affairs. (Exhibit C.) Senator O'Connell requested clarification from Ms. Nielsen regarding the interpretation of the N.R.S. statutes listed in her prepared document. Ms. Nielsen stated that these are the N.R.S. statutes which deal with legal conflicts or where the Attorney General is disqualified from acting. Senator O'Connell inquired who determined how the Attorney General was disqualified from acting. Ms. Nielsen stated a client could ask for it, the Attorney General could request it, or it could be based on a disagreement between the client and the Attorney General. She stated ultimately the decision is made by the Board of Examiners. Ms. Nielsen stated this had occurred on a number of occasions and appropriate outside counsel was obtained. She offered examples of when this would occur. She stated other than a conflict of interest, outside legal counsel should not be obtained. She felt this was not in the best interest of the state, that it would not provide consistent legal advice, and would not keep the costs of legal counsel down for the state. Senator O'Connell stated that she was sorry that Frankie Sue Del Papa, State Attorney General, was unable to attend, as she had several questions for her. Senator O'Connell stated that Ms. Del Papa set a precedence when she was the Secretary of State and she created a division in the Securities Division of the Secretary of State's Office where they are allowed to seek outside legal counsel. Senator O'Connell questioned Ms. Del Papa's reasons for doing it then, but not feeling it is appropriate here. Ms. Nielsen stated the statute was reviewed. She stated that act was adopted from the model legislation that was nationwide at the time. Ms. Nielsen continued by saying the language, form and sense came from the model act. She stated at the time there was a sense that securities law requires such a specialized level of expertise that may have been a need for outside counsel. Also they did not know how many securities cases there would be in the state. She stated the provision has never been used and feels it is not necessary, based upon the experience they have had in securities in that area. Senator Porter asked Ms. Nielsen to provide a listing of other agencies who use outside counsel and the logic in using outside counsel. Ms. Nielsen apologized that she did not have a prepared list of other agencies, but stated that SIIS, the university system, the public service commission and less than ten boards and commissions who use outside counsel. She stated she does not know the exact history of how each of these obtained the right. She said the Attorney General had made efforts to move legal services into the Attorney General's Office during the last four sessions of the Legislature. She stated they are trying to consolidate the legal services. She felt this was more consistent and cost effective. Senator Porter asked if she knew constitutional officers who took advantage of the law to seek outside counsel. Ms. Nielsen stated that currently no provisions are allowing that. She stated the Governor has an attorney on his staff, but that is not a position identified in the budget as counsel. She stated that she did not believe anyone else has done that. She continued by saying the concern is that SB83 will be broadening the use of outside counsel when it is legally in the best interest of the state to reduce that. Senator Raggio asked Ms. Nielsen if the Secretary of State feels there is a conflict and the Attorney General feels there is not a conflict in a legal matter, under the section she cited, would the Secretary of State be allowed to seek outside legal counsel. Ms. Nielsen stated the design of the government would give the Attorney General the prevailing right to render that opinion under the constitutional structure of the State of Nevada. She continued by stating that clients have disagreed with the Attorney General's Office and have obtained outside legal counsel in spite of the opinion from Attorney General that no conflict exists. She stated when they do so, they do it at a risk. Senator Raggio stated under the law, the client does not even have that right. Ms. Nielsen stated they do have the right. The law states if they do not cooperate with the Attorney General and use the Attorney General as their counsel, they may ultimately be personally responsible if a judgement is rendered against them. Ms. Nielsen stated they have had at least one experience in the last couple of years where a client did decide to obtain outside legal counsel. Senator Raggio asked if the Attorney General's office considered it good practice for a constitutional officer to be represented by the Attorney General's office when that officer clearly feels there is a conflict. Ms. Nielsen stated she was not sure that law was clear on that point, although the Attorney General renders the opinion and their experience has been, although the client is reluctant to be represented by the Attorney General, ultimately, the clients have agreed. She stated they have not had a negative experience where an argument has made it impossible to go forward. Senator Raggio asked if the law should be changed to allow constitutional officers to seek outside legal counsel when they perceive a conflict of interest with the Attorney General's Office. Ms. Nielsen stated no, the law should not be changed, it would allow the very dangers she was addressing. Senator Raggio restated his question to her, "If they perceive a conflict of interest, should that be the option of the Attorney General or that officer, rather than it is now resting alone with the Attorney General?" Ms. Nielsen stated the courts can resolve this conflict and that might be a better route rather than opening an exception. Senator Raggio asked how this would get into court. Ms. Nielsen stated that one or the other of the parties would have to sue. She stated she felt this would be preferable to giving one party the option of outside counsel. Senator Titus wondered how often in the last 130 years that the Secretary of State or another constitutional officer has some kind of partisan, personal or political conflict and wanted to go out and hire their own lawyers. She asked if this is a problem and does the Legislature need to address this. Ms. Nielsen stated that she was aware of two instances in the fifteen years she had worked for the Attorney General's office. She stated that she and Secretary of State, Dean Heller, discussed the 21-21 split in the Assembly which was very controversial and perceived to be partisan, although they did not feel the advice given by the Attorney General's office was affected by that situation. She stated that Secretary of State Heller agreed with the advice rendered to him. She stated the other situation was the Governor's term limit provision. She stated both these instances were resolved without major conflict. She asserted that Secretary of State Heller and herself agreed on the legal interpretation of the statute. The other instance was taken to the Nevada Supreme Court by another party and it was resolved. Senator O'Donnell proposed the scenario where the Secretary of State and the Attorney General were in a dispute with one another; the Secretary of State being represented by the Attorney General's office, and the Attorney General being represented by staff at the Attorney General's office. He wanted to know if this would be the correct interpretation of this law. Ms. Nielsen stated that under the provisions of the current law that the Secretary of State could hire independent counsel. Senator O'Donnell asked if it were not true, under the provisions of the law, that the Secretary of State would have to sue to obtain the right to hire independent counsel. He wanted to know who would represent the Secretary of State if they had to sue for that privilege. Ms. Nielsen stated she saw that as a situation where the Secretary of State would need to seek independent counsel. She explained any employee, officer, or agency who does not wish to use the Attorney General's office, can seek outside counsel, but they must understand the risk associated with such an action. Senator O'Donnell asked if a one-time pre-emptory challenge of the Attorney General's representation, on a case- by-case basis, could be established. Ms. Nielsen stated emphatically conflicts, such as this, rarely occur and the statutes in place are used. She stated the Board of Examiners or the Interim Committee could approve the use of funds to hire independent counsel. Senator O'Donnell asked Ms. Nielsen if she had a problem with changing the law for constitutional officers. If they hired outside counsel for those specific areas of conflict or concern, would they be accorded the same privileges as the Attorney General's staff and, therefore, be under the same umbrella of protection as the Attorney General? He stated that constitutional staffs do not have this protection at this current time. Ms. Nielsen stated the protection is advice and counsel representation of the Attorney General's office. She stated that this is the job they do every day for 14,000 state employees. They endeavor to remain as consistent and up to date in their research as possible. She felt they delivered a good product in a cost efficient manner. She stated to change the law because of perceived conflicts of interest was not warranted. Secretary of State, Dean Heller, reiterated to the committee that the testimony sounded like he was trying to fire the Attorney General and that was not true. He stated that they are asking for a provision in the law that would allow them under certain conditions to seek outside counsel. He stated they had testified before the committee before and had provided examples of why it was felt this was necessary. In SNEA vs. Lau on the term limits dispute, when the Attorney General's office was petitioned to allow for private counsel, the Attorney General would not allow private counsel. The only way SNEA could do it was to get public sentiment on their side and go to the press and it was in the press for several days before she relented. When the Attorney General relented, she refused to pay for the counsel and had to find private counsel for $1. Mr. Heller wanted to know where liability lies when private counsel can be obtained for $1.00. Secretary of State Heller stated his office was appearing at this hearing because of some changes in the law in 1993. He is the first Secretary of State who has the opportunity to come before the Legislature because of the provisions changed in the 1993 and to be able to say "we need this option to seek private counsel." He stated in 1993, the Senate Committee on Government Affairs added new language to the statutes. He quoted from NRS 293.247 subsection 3. "The secretary of state may provide interpretation and take other actions necessary for the effective administration of the statutes and regulations governing the conduct of primary, general, special and district elections in this state." He stated the Secretary of State's office is given the authority to interpret the law and under certain circumstances they want the opportunity to have the ability do something under the same circumstances. He repeated this language is in their Securities Division. Senator Raggio if this option would be limited to cases of interpretation of election. Mr. Heller replied the Secretary of State's office gets into heated debates in the election divisions and in the interpretations, whether it is SNEA vs. Lau or whether it was the 21-21 split. Regarding the 21-21 split, Mr. Heller stated the current Attorney General told him that if he went against her advice she would not defend the Secretary of State in court. He asked the committee "What am I supposed to do, as the Chief Elections Officer in this state, when I have to turn and look over my shoulders every time I makes a decision to see if the Attorney General willing to defend me in court?" He asked how this makes his position independent and nonpartisan. Senator Porter suggested to the committee that in all fairness to the Secretary of State's office, the committee should be examining the NRS codes quoted to them by the Attorney General's office and the Secretary of State's office before they reconsider action on S.B. 83. Senator Raggio requested Ms. Nielsen to give further testimony. He stated, "It is disturbing to me, if the Secretary of State interprets a provision in his or her capacity on an election law as the Chief Elections Officer and then the Attorney General states `Well, if you follow that, we're not going to represent you.' That is disturbing. How would you respond to that?" Ms. Nielsen stated on the issue Secretary of State Heller referred to, they agreed on the issue. She was not aware of the context in which that statement was made. She stated she was not present. Senator Raggio continued by asking Ms. Nielsen if the Secretary of State as Chief Elections officer, interprets a provision or something in connection with an election, and that is his prerogative as the holder of that office, what does the Attorney General's office do when the Attorney General would say something to the effect "Well, if that's going to be your interpretation, your position, we're not going to defend you." He wanted to know how a situation such as this would be resolved. Ms. Nielsen stated that fortunately it never came to that, although she admitted hypothetically it could. She stated that the Attorney General's office works closely with the Secretary of State's office in election matters. Ms. Neilsen stated the law is quite clear. The Secretary of State interprets, is the constitutional officer who enforces, and has authority over election laws. She said they work with him to that end. When requested, they conduct research and provide legal advice on elections matters and really have not had these types of difficulties and hopes it would not come to that situation. She stated that S.B. 83 is trying to fix something that is not broken. Senator Raggio restated to Ms. Nielsen the Secretary of State's assertion that this situation did occur where Mr. Heller was told if he insisted on his interpretation, that he would not be represented by the Attorney General's Office. He wanted to know should not the Legislature provide at least in that kind of situation, in the elections process, authority to hire counsel. Ms. Nielsen insisted she felt it was not necessary. She felt the laws we have address the situation. She stated all constitutional officers and state employees have the right to be defended by the Attorney General's office for anything done in the course and scope of employment. She stated if it is a question of interpretation of election laws, which is clearly within the scope of the Secretary of State's position. If sued for that type of interpretation, he has the right under Chapter 41 to be defended by the Attorney General's Office. She continued by saying it is only when a determination is made that he has gone beyond the scope of his authority that he would not be defended. She stated that it is not, if they disagree with legal advice, where the Attorney General's Office would not say "We will not defend you." She stated they may disagree with what he does and he may disagree with them. However, in a suit for his interpretation of election laws, the Attorney General is required to defend him since that interpretation is within his scope of authority as a constitutional officer. She stated she cannot envision a situation involving a decision of that kind where he would not be represented by the Attorney General's office. Senator Shaffer stated that he was not seeing the entire picture. He asked Ms. Nielsen if the Attorney General disagrees with the decision or the determination of the Secretary of State, how can the Attorney General defend the Secretary of State? Ms. Nielsen stated she doesn't know how it happens, but sometimes their clients disagree with the advice given them. The Attorney General's staff must defend the client when they are acting within the scope of their authority. Senator Porter requested further testimony from Secretary of State, Dean Heller. He asked Mr. Heller how much it would cost for independent legal counsel. Mr. Heller stated that this situation has arisen twice in the last nine months. He stated under the provisions of the budget act, he could contract for legal advice which costs less than $750. He would need authorization from the Budget Office for expenditures between $750- 1999. He stated that Board of Examiners authorization would be needed for expenditures more than $2,000. He felt his budget would be sufficient to meet these needs without having to expand the scope of the budget at this point to handle something like this. Senator O'Connell closed the hearing on S.B. 83. SENATE BILL 21: Removes preference for local contractors in awarding contracts for public works projects. Norman Starrett, Vice Chairman, Public Purchasing Study Commission, stated S.B. 21 is a request to modify by deletion, the preference clause in N.R.S. 338, the public works act. He stated because a lot of out of state contractors were taking work away from Nevada contractors, one of the previous Legislatures established what was intended to be an in-state preference for Nevada contractors on the basis that they paid taxes in the State of Nevada. Mr. Starrett stated the present 5 percent preference is not actually an in-state preference, it is an experience preference. He explained that California contractors who have done enough work in Nevada may qualify for the preference because they have paid $5,000 in sales tax and $5,000 in motor vehicle privilege taxes for each twelve months period for the previous 60 consecutive months prior to the bid opening. Mr. Starrett stated one of the problems they have in administering the preference is that there are actually no grounds as to the proof required that the conditions of the preference have been met. Some agencies require copies of 60 months of invoices from the contractor; some agencies require an affidavit from the accountant for the contractor assuring that the invoices are available for examination. He stated this is extra work for the contractor. He stated that some Nevada contractors can use it against one another. If a contractor checks the bid list and sees that no out of state contractor has bid, then he may not list the preference, when another contractor will list the preference, because they have claimed preference before and understand how to do so. Mr. Starrett explained that the preference discriminates against contractors who have less than five years experience because they do not have the track record in paying the taxes and motor vehicle privilege tax. He stated it discriminated against smaller contractors who are perfectly capable of public service contracts but who do not meet the tax or motor vehicle tax requirements. He said sometimes the preference works in its intended mode, and sometimes it does not. He stated a bid opening last summer for $2 million for the North Valley Waste Water Treatment Plant resulted in the two lowest bids from California contractors and the high bidder was from Reno and all three bidders rightfully claimed the 5 percent preference. He explained that the statute does not explain if they are to add 5 percent to the low bidder's cost or subtract 5 percent from the second low bidder's cost if he pays the preference. He restated that it is not workable, discriminates against contractors it was designed to help, the commission is asking for the deletion of the 5 percent preference in the public works act. Senator Shaffer asked Mr. Starrett how to protect the contractors if the 5 percent preference were removed. Mr. Starrett stated a reciprocal preference would work. He explained that if a Nevada contractor bids a job in Arizona, and an Arizona claims a preference, then if an Arizona contractor comes to Nevada, Nevada will claim the same amount of preference that Arizona claimed in the prior public works project. Senator Titus asked if there was a way to fix the problem other than eliminating the preference. She asked if the 5 percent preference came back in other taxes and employment for the state. Mr. Starrett stated contractors use subcontractors who are usually local people and the money does not all go out of state. Senator Titus asked what surrounding states were doing regarding this issue. Mr. Starrett stated he could not address that, but he felt a reciprocal preference was more just than a percentage preference. He stated the preference does not work well and the Legislature keeps tinkering with it. Senator Townsend asked if Mr. Starrett had discussed this legislation with the parties that have been affected or would be affected by this. Mr. Starrett replied no that the commission had not. He stated they were looking at it from a public purchasing function and trying to administer the bid process fairly and uniformly. Senator Shaffer asked if the experience factor was used often, and did not it take precedent over everything else. He further questioned did not the commission try to use contractors who had a proven track record. Mr. Starrett stated they are required to go with the contractor who submits the lowest responsible and responsive bid and will consider any claim for preference. Senator O'Donnell questioned whether experience was a factor in awarding bids. Mr. Starrett stated that by statute they may consider experience. Tom Wright, Owner of T & C Construction, testified before the committee. He stated he was a general contractor who has owned his own business for a year and a half. However, he has 20 years of experience in the contractor business. He stated this law puts a 5 percent bid disadvantage to businesses who have not been established for five years. He felt the experience rating because a business has paid taxes does not mean the business getting the bid is a better contractor. He stated he would like to see a local preference. Senator O'Connell asked Tom Wright if he would feel comfortable bidding a contract in Las Vegas. Mr. Wright stated no he would not, however he felt that a Las Vegas contractor who came to the Reno area would not feel as comfortable bidding a Reno contract as Mr. Wright would. John Anderson, owner of John Anderson Construction, Incorporated, testified for S.B. 21. Mr. Anderson stated he had lived in Carson City for four years and was a licensed general contractor in California for eight years. He stated he has current licenses in both states. He stated he has twelve years experience in large construction trades (multimillion dollar projects). He stated he employs 16 people, is a member of the local development authority, a member of the builder's association, a member of local school board, a member of Chamber of Commerce, and very active in the Boys and Girls Club. He stated he has donated his labor and materials to the Brewery Arts Center renovation project, the Amuseum (children's museum), and the Boys and Girls Club project. He continued by saying however he is not a preferred contractor. He stated something is wrong in the system and it needs to be changed to reflect residency of a qualified employee in this state. It should have nothing to do with him paying taxes in Nevada for the past five years. Senator O'Connell asked Mr. Anderson if he had any suggestion how to change the law. Mr. Anderson stated a qualified employee of whoever is bidding in Nevada should show proof of paying either property tax or other taxes in this state which show some kind of permanent residency. He explained that he was concerned about competing against non-local, non-Nevada contractors. He has questions about contractors (who have offices in the major cities in the U.S.) who come in to bid a $20 million project in Carson City and get the bid. He felt a contractor who can build that kind of project and has residency in Nevada should have to claim a 5 percent preference. He stated 5 percent on a $20 million project is $1 million which is more than the profit on a project. He stated when you have that big a project, you are talking about a 1.5 percent profit margin. He stated the 5 percent was unrealistic. He stated the 5 percent preference eliminates a large part of the local market that pays taxes in Nevada. He stated he does not have all the answers. Nevertheless, is against restraining a trade for someone who lives and works in Nevada and provides work for people in Nevada. He stated he has a problem when he is paying substantial payroll taxes through his office, but cannot provide work for his employees because the preference allows another contractor to get the bid. He stated he was not against preference contracting for contractors in Nevada which will keep the work in Nevada and done by Nevada contractors. He continued by saying there is something wrong in the system that allows out-of- state contractors to claim the preference and take the work away from Nevada contractors. Pam Miller, Government Affairs Director for the Nevada Associated General Contractors, opposed S.B. 21. She gave a brief history of the 5 percent preference. She stated in 1985 there was a reciprocal bidder's preference which did not adequately protect contractors in Nevada. In 1987 it was changed to a 5 percent bidder's preference. Since 1987, the bill has been amended during each Legislative Session to make it more fair and equitable. She stated that Mr. Starrett, Mr. Wright and Mr. Anderson addressed areas that are of concern to contractors, but she assured the committee that since the current bill came into effect in 1993, there has been less litigation regarding this issue. She felt the association continually addressed the legal aspects of how to define what a local contractor is. She stated that the current bill is the most equitable way and has kept the association out of court. She addressed two points made by Mr. Starrett: extra work for the contractors and how to apply the 5 percent preference. She stated any general counsel will tell Mr. Starrett how the bill is to be interpreted regarding the 5 percent. She assured the committee there is not a Nevada contractor versus a Nevada contractor regarding the 5 percent preference, because no bidder's preference exists in this situation. She stated one thing they have discovered in using the 5 percent preference is that sometimes out-of-state contractors will not bid on a project. Ms. Miller stated if Mr. Starrett's general counsel had questions she would be glad to have him talk to their attorney. Margaret Cavin, Vice President Elect, Nevada Associated General Contractors and owner of J & J Mechanical, stated that a review of her company's records indicated that 92 percent of their work over the past five years has been public works projects. Ms. Cavin stated her experience with out-of-state contractors was they brought in their own out-of- state subcontractors and generally brought in their own out-of-state materials. She said these factors affected the job market and the materials market in Nevada. She stated she has never done a public works project for an out-of-state contractor. She has, in the past, on specific projects been listed by every general contractor bidding the project, except out-of-state contractors. She stated that when an out-of-state contractor gets a bid, the local subcontractors and the local material suppliers lose because the out-of-state contractor generally brings in his own out-of-state subcontractors and out-of-state materials. She continued by saying there is no way in the local bidder's preference to help subcontractors which are building the majority of these jobs. She thinks it is imperative to keep the statute in place to protect the general contractor bidding the job. Senator Porter asked for the logic behind using sales and use tax and vehicle tax as the determining factors for the 5 percent preference. Ms. Miller stated this methodology was used because every other type of tax they had used to tie to some basis of residency had been challenged in court. These two are the only two mechanisms consistently used in construction. Senator Porter asked how were the dollar figures determined? Mr. Coonrod stated the $5,000 was an arbitrary figure. He said it does not take a large contractor to meet the $5,000 requirement. He felt you are not a large contractor if you are only paying $5,000 in motor vehicle tax or purchasing materials. Senator Porter asked if that was $5,000 times twelve months which equaled $60,000. Mr. Coonrod stated no, it was $5,000 per year. Ms. Miller stated a contractor can also use a combination so that a contractor can have part of the $5,000 in materials and part of it in motor vehicle tax to qualify. Ms. Miller stated this figure was set so that anyone who was doing consistent work would meet this minimal requirement. Senator Porter apologized that he was reading the bill as $5,000 times twelve months which would equal $60,000 and he felt perhaps there were contractors who were reading it this way also. Senator Raggio stated that he had worked with this law over several legislative sessions, but had not looked at how it would affect a small contractor such as Mr. Wright. He stated when this started it was an attempt to give a preference to in-state contractors and had to define what constituted an in-state contractor. He stated this is how some of these arbitrary thresholds came about, as a means to decide who was in fact a bonafide in-state contractor. He stated at the time he does not feel the committee anticipated someone like Mr. Wright, who has been in business for two years and is a legitimate in-state contractor, who would be adversely affected by this legislation. He stated that he is not sure that the 5 year period is a valid measurement. His questioned if that change should be considered. Ms. Miller addressed that, stating the industry had discussed this often. She stated the current president of AGC, Fred Toible, had worked for years for two large Nevada construction companies, and developed his own construction company two years ago. She stated that under current regulations, even he does not qualify for the 5 year period covered in the statute. Senator Raggio asked what was so necessary for the 5 year period in the statute. Ms. Miller stated the time frame range in other state's statutes is 3 to 7 years. Nevada therefore felt that 5 years was an average range. Senator Titus wanted to know the effects of lowering the range from 5 years to 3 years. Ms. Miller stated she would personally disagree with doing so. Ms. Miller stated that when someone does not qualify for a preference because of the 5 year period, the committee needed to consider that $20 million project referenced earlier. She stated she felt it hard to believe that a general contractor with less than five years of business would be bidding a $20 million project. She felt the projects would be smaller for a smaller contracting company or for a new company. She feels this is an unfortunate fact of business. She said if smaller companies wanted to bid the smaller public works projects, they might find that they were very competitive even without the 5 percent preference, but there will not be an abundance of general contractors coming to bid a $20 million project. She stated $20 million projects were rare, even in the public works scenario. She stated that every general contractor has a bonding company. She felt it would also be a short list of general contractors who could get a $20 million labor and performance bond on the project. Senator Porter questioned if the bonding company was also on the line, should the five years of experience be a problem? Ms. Miller said that was correct. Senator O'Connell closed the hearing on S.B. 21. SENATE BILL 22: Revises provisions concerning list of subcontractors that must be included in bid for public works projects. Mr. Starrett stated S.B. 22 is another amendment to N.R. S. 338, the Public Works Act. He stated the purpose for this bill is to eliminate the provision that provides two hours after bid opening that general contractors have to submit the names of subcontractors whose portion of the contract is $50,000 or 5 percent, whichever is greater. He stated the 5 percent of a $10 million project is $500,000. He stated he did not understand why the general contractor should be allowed an extra couple hours to come up with the names of his subcontractors for $500,000 of a project. Margaret Cavin testified against S.B. 22. She stated unless someone had been in a general contractor's office on bid opening day, they could not imagine how much chaos and havoc it is. She said she cannot understand how a general contractor even gets a bid put together and submitted on time because she knows what she goes through on bid day. She gave the example of the $22 million Supreme Court Building. In the case of the Supreme Court Building, listing the subcontractors down to 1% of the bid means the sum of $220,000. She explained a sum such as $220,000 in a $22 million project could be the subcontractor who supplies the clocks and the chalkboards. She stated this is the least of a general contractor's concerns at that moment. In cases such as this, the general contractor would be concerned with someone who has a $2 million subcontracting bid for mechanical things. 1 percent for a general contractor to be asked to list at bid time is asking too much. She said it would result in mistakes which would render the bids non-responsive for a minor technicality. She stated the two hour time limit is still pressuring the general contractor to get that information, especially in large public works projects. As far as analyzing a bid, she stated it takes a lot of time to analyze bids, especially when they are coming in all day. Pam Miller stated the Associated General Contractors are opposed to S.B. 22 because of the concern that it would make the general contractor's bid non-responsive. She stated this law was put on the books last session to protect the subcontractors. She stated the subcontractors were satisfied with the current law. She felt removing this provision would not be doing the subcontractors or the contractors any good. She stated the AGC has requested a bill draft resolution for mandatory bonding for the subcontractors on public works projects. She felt this bill draft resolution would more adequately solve the problem of subcontractors. Mr. Coonrod stated the existing piece of legislation, without change, is the result of a compromise between north and south general contractors, subcontractors, and general suppliers. The two hour time frame was workable for the general contractor community. He stated this was a compromise for the entire industry. He stated that a general contractor might have to list as many as fifty subcontractors on one bid and the subcontractor's bid and their license number. He stated that sometimes they don't get their final subcontractor bids until 30 minutes before the actual bid opening. He stated to shorten that time was horrendous. Senator Raggio asked what occurred after the bid opening where the three lowest contractors supplied the list of their subcontractors. He wanted to know what happened with the list which is provided. Ms. Miller said a listing of the subcontractors over 5 percent is provided in the bid. The general contractor then provides the list of under 5 percent or $50,000 subcontractors two hours later to the Public Works Board entity to confirm that the subcontractors they will use are licensed properly, which is also a part of the general contractors responsibility. Senator Raggio asked Ms. Miller if the board looks at the list of the subcontractors, are they rejecting any of the subcontractors. Ms. Miller stated the board cannot object if everyone listed is a licensed contractor. Ms. Miller stated one of the reasons for requesting this language in the current legislation was because of previous difficulties in public works projects where the subcontractor was accepted on the bid, but did not actually have a Nevada license at the time of the bid. Senator Porter asked if the general contractor was ultimately responsible for his subcontractors. Ms. Miller, Mr. Coonrod and Ms. Cavin all responded yes. Ms. Miller stated that if there will be a problem with a bid, those problems generally surface in the bid process when the bids are opened and the list of subcontractors is studied. Senator O'Donnell asked if a subcontractor was listed who was not licensed in Nevada, was the bid challenged. Ms. Miller stated that prior to 1993, the biggest difficulty faced was in public works project who were accepting non-licensed contractors in an effort to keep the low bid. As it was not protecting the subcontractors, the bill was changed. Mr. Starrett reiterated his position that bid submittals require a price on the bid for each of his subcontractors, whether he has the name of a subcontractor to go with the price or not. He was not sure of the benefit of the extra two hours. He stated if the general contractor does not have a price for every task or trade in that bid, it is not a responsive bid. Senator O'Donnell stated that perhaps Mr. Starrett could not understand the need for the two hours from a purchaser's point of view, but from a contractor's point of view, that two hour disclosure is important when reviewing the subcontractor's who have put in a work bid. Mr. Starrett stated the dollar amount arrived at the that two hour time period does not ultimately change the dollar amount of the bid. Senator O'Donnell gave an example to the committee, "Let's just give a small scenario. You have a building about this size. The framers are different, but the fee is the same, the stucco is the different, but the amounts are the same. Everything is the same right down the line. Then when you get to this one subcontractor who has now bid both general contractors and all of a sudden you find out that this one subcontractor bid low here and high here, you want to know who that is, because you don't want to use him next time in your bid process; because he made you lose this bid. That's the point." Mr. Starrett reiterated that the bid is submitted with the price, and he didn't see any reason why the subcontractor names could not be submitted down to 1 percent of the contract. Senator O'Connell explained to Mr. Starrett the people who testified against S.B. 21 and S.B. 22 were people that he would have to work with. She suggested that he might want to meet with these contractors prior to submitting bill draft resolutions so he would not be going through the groundwork for all of this without input from the people it affected. She suggested that perhaps all of them could come to an agreement before the bills reach the committee. SENATE BILL 124: Prohibits deduction from salaries of state employees for service as volunteer emergency medical technicians during work hours. Robert Hatfield, Executive Director of the Nevada Association of Counties, stated he was appearing before the committee on behalf of White Pine County where this situation exists. He explained S.B. 124 would allow another protocol to be used when emergency volunteers (E.M.T.s specifically) are used. He stated upon occasion at the prison where the ambulance has been unable to respond to a call at the prison because the protocol is the driver is a sheriff's deputy, and they use two emergency E.M.T.s that come from Ely and McGill to man the ambulance. He stated they were asking for the ability of the prison to provide an E.M.T. at the prison site to provide additional help to respond. The prison employee would act as an E.M.T. on the ambulance and be allowed to be used in the transport of the prisoner from the prison to the local hospital for medical treatment which could not be handled at the prison facility itself. This new protocol would not mandate that the prison do this, frankly, it would be a matter of cooperation between the prison and the local government. He stated this bill would allow those personnel at the prison, should they be needed in an emergency, and assist the county in responding to that emergency, and receive their pay when assisting. He stated this would benefit the county when they have been unable to get volunteers to respond. He stated there is a volunteer pool to man the ambulance, but there are times when they cannot always guarantee personnel to meet requests at the prison. Senator O'Connell questioned the wording of the bill. She stated she read it as anyone who was involved with a volunteer fire department, not state agencies. Mr. Hatfield stated is was in the N.R.S. for the fire department. He stated it changes nothing in regard to the fire department, all it did was change and add emergency medical technicians to the current state law to include them with firemen for purposes of pay should they provide that service. Senator O'Connell asked about line six where it added the word volunteer. Mr. Hatfield stated this was because the word volunteer was deleted from line five and they needed to do that because they added a second section to the bill. He stated it changed nothing, it merely added E.M.T.s , and makes it possible for the warden (should he chose to do so) to use prison personnel in that capacity. Senator Mike McGinness, Central Senatorial District, stated White Pine County asked him to introduce this bill because their pool of E.M.T.s is rather small and basically the staff is getting burned out. He stated this puts E.M.T.s in the same category as volunteer firemen. He stated in Fallon a lot of volunteer firemen work for cities and counties and are able to leave. He continued by stating this would allow E.M.T.s who work for the state to leave and to not lose salary. He stated this is strictly voluntary and the E.M.T. is not under obligation to do so. Tom Grady, Executive Director, Nevada League of Cities, stated in rural Nevada volunteers can be the "life blood" of the emergency medical profession. He stated that cities, counties and the private sectors supported this work and it was felt that it should become policy of the state. He said the state had assisted the local area by bringing the prison to the Ely area, but did not realize that problems such as this would arise. He felt in the spirit of cooperation Legislature could cooperate with this and mentioned such a situation might occur in Lovelock with the opening of the Lovelock facility. He stated with this bill, both facilities could be addressed at the same time. The meeting adjourned at 3:55 p.m. RESPECTFULLY SUBMITTED: Teri J. Spraggins, Committee Secretary APPROVED BY: Senator Ann O'Connell, Chairman DATE: Senate Committee on Government Affairs January 30, 1995 Page