Plan to Change Procurement Rejected in House Committee

Plan to Change Procurement Rejected in House Committee
Jimmy Hickey Jr.

An Arkansas legislative committee defeated an effort to emphasize pricing in the state procurement process Wednesday morning, siding with engineers, architects and attorneys who testified that the legislation was flawed and unnecessary.

In a voice vote at the state Capitol, the House Committee on State Agencies and Governmental Affairs rejected Senate Bill 521, championed by Sen. Jimmy Hickey, R-Texarkana, and Rep. Kim Hammer, R-Benton, which Hickey said had the goal of creating "a fair and independent process free from external influence" in choosing vendors for public work.

The bill, which had won approval in the Senate, would have required state agencies and political subdivisions to create lists of qualified vendors for providing certain professional services to the state, public schools and universities, and then have those businesses bid competitively. It also called for pricing to be weighted at 30 percent or more in the request-for-proposals bidding process, typically used for less technical services, except in certain exempted cases.

The legislation ran into a buzzsaw with professionals who favor the current procurement system, which relegates most professional services to a type of bid solicitation known as request for qualifications. The RFQ process lets government entities identify the best professional bidder and then negotiate pricing. If a price can't be agreed on, negotiations begin with the second-most-favored bidder.

Byron Hicks of McClelland Consulting Engineers Inc. of Little Rock summed up the professionals' main objection: "You don't want the cheapest engineer designing your bridge, or the cheapest attorney representing you in court. This is bad for the state, bad for cities and bad for owners because it encourages you to do things as cheaply as you can," regardless of consequences.

Likewise, Denise Hoggard of the Arkansas Bar Association put it this way: "You may not get the best price when you get the best attorney; you won't get the best lawyer at the lowest rate."

Other witnesses against the bill included engineer Dan Williams, president of Garver LLC of North Little Rock; Brooks Jackson, president of the State Board of Architects; John Wilkerson of the Arkansas Municipal League; and Tim Hawkins of the Springdale Water & Sewer Commission.

The witnesses said pricing is already a factor in professional services selections and argued that the bill's language was confusing. They were not mollified by an amendment Hickey added on the Senate floor to keep the procurement process for legal, engineering, architectural, land surveying and construction management services the same for two years while the Arkansas Legislative Council study best practices in meetings with professional groups and others.

"All that professionals have to sell is time," Jackson said when a lawmaker asked why he wasn't placated by the grace period. "We'll play our card today. We can spend two years discussing fees, but that's all that's left of us to give." 

Jackson called bidding for professional services unethical, and foreign to the 21 states he practices in. He testified that since architects are paid 6 percent on average for projects, and then have to hire mechanical, electrical and structural engineers, "the remaining architectural fee is 0.5 percent, if a project runs perfectly."

"There's also some confusion in this bill, if not in the way it is written, then in the way it's been interpreted," Jackson added.

Doubts about language were also cited by Wilkerson of the Municipal League, who said the bill listed political subdivisions under a legal subsection that doesn't apply to them. He was also unsure about whether selectors would have to pick the lowest bidder after going to the qualified vendor list. "We fear that litigation will be required to clarify the language of the bill."

Hammer said that experienced, expensive professionals are not necessarily better than newly minted architects, engineers and lawyers who are versed in the latest practices. He also urged legislators to ask themselves several questions. "Should we exclude anyone from this process? Who would you exclude? Why would you exclude that person? How many of us fully understand this procurement process? Would this create a fair environment for this over the next two years?"

The state's 40-year-old system of laws for choosing businesses to fulfill state contracts was drawn into the spotlight in late 2016 and early this year when several contracts met with legislative disapproval or unusual scrutiny.

Those included a contract for running several lock-up institutions for troubled youths, which was rejected by lawmakers, forcing Gov. Asa Hutchinson to order a state takeover of the facilities. 

Other contracts in the limelight included a $34 million advertising contract for promoting the state lottery, won by CRJW of Little Rock, and an advertising contract for the Arkansas Department of Parks & Tourism, the largest of its kind issued by the state. 

The tourism marketing contract was originally issued as an RFQ but was pulled back and reissued as an RFP (request for proposals), the state procurement method that already emphasizes competitively bid pricing. That contract has yet to be awarded, but 13 vendors are expected to be narrowed to three finalists soon.  

Engineers objected to the bill's RFQ requirements for another reason: Engineers don't always know the scope of work they'll be required to do until they are deep into planning with clients. 

"I don't even think I could abide by this law," Hicks said. "It requires me to submit a price when I submit my statement of qualifications. But clients hire me to help solve a problem. They know the problem but they may not know the solution. If I have to submit a price when I submit my qualifications, I won't have a scope to base that on."

Williams testified that nobody has identified deep flaws in the current professional procurement process. In a separate interview with Arkansas Business, said the bill would have placed new administrative burdens on the state. 

"The short answer is that the law we have in place for professional services, for engineers and architects, works very well," he said. "The changes would be detrimental to our business and to every state agency and subdivision."

Hickey argued that agency chiefs and others grow too comfortable with certain vendors they have worked with over time. 

"I'll be quite blunt. At the state level and in political subdivisions, we get fairly complacent with the firms we're using," he said. "The RFQ process says that pricing should not be a part of that, and if you have someone you're used to dealing with, a lot of times agency directors just get complacent. Since price is not a factor," they go with the vendors they are familiar with.

After the vote, Hickey said the legislation is dead "at this time."

"This is the way the process works, and we have to understand there's a huge amount of money there, and you'd have to expect those witnesses to come out," he said. "But I really don't know how we could have made it more fair, with a process to bring everybody to the table."

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