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A million dollar 'hit'
State puts out a contract on DOT budget
Privatize purchasing and save money--that was the idea behind a state procurement experiment launched a year and a half ago.
Turns out it was a bonbon solution. Privatizing sure tasted good to some legislators but, in the end, it really  did nothing but make the government budget fatter. At least a million dollars fatter in 2005.
So, now that we know this, what are we poised to do? Well, some legislators want to order more bonbons. Both the Senate and the House have passed legislation that extends a private sector program that costs more than what it cost when state employees did the work. The House wanted another year's worth of bonbons. The Senate wanted another four years worth of bonbons. They're still trying to resolve the bonbon differences.
Here's the brief history. In 2003, the legislature passed a bill that launched a 'test' to demonstrate budget savings by replacing state procurement professionals with private sector contract professionals. The guinea pig agency was the Southeast Region of the Department of Transportation and Public Facilities (DOTPF). That agency's state procurement workers were dumped and supplanted by private sector employees hired by an Anchorage-based private company named Alaska Supply Chain Integrators (ASCI). Under the 'test' contract, ASCI also was released from the fairness requirements of the state procurement code.
An Anchorage audit firm compared procurement records in the year prior to the ASCI takeover with ASCI purchases in the next year. The auditors reviewed purchases ranging from chapstick to Gojo handcleaner to welding wire.
These private-sector, non-involved auditors found, after reviewing tens of thousands of procurements, that there was an average 9 percent increase in per unit costs under the ASCI system. ASCI spent a million dollars more than state employees at 9 percent. Even more startling, in those instances when units and quantities purchased were exactly the same, ASCI paid almost 16 percent more than did the state employees a year before.
I don't think this is what some of the test proponents expected. They freed the private sector contractor from the constraints of the state's procurement code and costs ballooned by 9 percent. Factor in inflation and they still outspent state workers by more than 6.5 percent.
Costs blossomed under this procurement test. And so did risk. By cutting ASCI free of the state procurement code we've let the contractor do no-bid purchases for up to $150,000. If ASCI staff wants to go no-bid over $150,000 they apparently just have to ask a manager. They don't have to give preference to Alaska vendors so state money will stay in the state. They don't have to jump through all the hoops that prevent conflicts of interest.
And some of the private sector purchase practices are downright scary. ASCI sometimes enters a zero cost  for a procurement and then just enters the real amount when an invoice is delivered. So much for bargain shopping.
The ASCI owner told the Anchorage Daily News this week the audit is flawed. Well, maybe. But the auditor has a great reputation and did work with the state and ASCI on methodology and testing procedures. Guess I'd go with the independent analysis instead of with the opinion of someone making a ton of money doing what state employees used to do more cheaply and more diligently.
Seems to me this procurement test failed. Seems to me it's time to cancel the ASCI contract instead of laying legislative groundwork to extend it. Seems to me the oatmeal approach of the state employees is less fattening than the bonbon approach of ASCI.
Flurry of numbers
blurs ferry debate
Somehow, in the flurry of numbers about the fast ferries tossed out by the administration, some of the most  important statistics were ignored.
In newspaper op/eds and legislative testimony, the message from Robin Taylor has been downbeat about the ferry system. Taylor, the former Wrangell senator who now helms the marine highway system, is especially focused on the costs of the fast ferries. High fuel and labor costs for the flexible fast ferries, he says, add a lot of expense to the system.
Here's what they don't say. High fuel costs and labor costs affect all the vessels. We can't control the fuel costs--global  markets do. The Murkowski administration does control the labor costs--and they negotiated the labor contracts.
So, let's take a closer look at fuel costs. The fast ferry Fairweather burns about 20.5 gallons per mile while the mainline ferries burn in the neighborhood of 15 gallons per mile. But the Fairweather gets someplace twice as fast as the older, slower vessels (better for passengers, right?) and has less staff.
Here are more numbers the administration doesn't like to reflect upon as they put the fast ferries in the crosshairs: the Fairweather was the #1 passenger carrying vessel in the fleet last year with 53,507 passengers; and the Fairweather missed a scheduled run just once because of weather and zero times due to a mechanical last year. High use, reliable, faster, more convenient--who 'da guessed?
Seems to me, as one sportscaster famously noted, some folks use their statistics like a drunk uses a lamppost--more for support than illumination.
Phone: (907) 465-4947
Fax: (907) 465-2108
Mail: Sen. Elton, State Capitol
Juneau, AK 99801
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Capitol Undercurrents
 To err is lawyerly--The Department of Law sent out its colorful annual report two weeks ago. At 24 pages with a glossy cover and many four-color photos, the 200 copies cost just under $2,700, or more than $13 a copy. But the Department of Law forgot to print the per copy cost and purpose as required by statute. It was a minor oversight but they did put a range 21 special assistant to the AG to work on correction labels for the report.
Librarians with quick hands--The 4th Street entrance to the SOB  showcases pics of all 60 legislators in the window of the state library. I'm told a local wag printed out a photo of me in my Maytag uniform (from the last newsletter) and pasted it over my official photo. I'm also told state library staff had it taken down within two hours and tucked, with the newsletter, into the historical collection.
Choose words carefully--The Legislative Affairs Agency's SPAM filter caught a majority email that outlined bills moved the previous day. The filter may have focused on words like "lewd", "pseudoephedrine", and "violate". All these words were descriptive of the bills but are alert words for our filters.
 The bard from Arkansas--A medical doctor from Arkansas sent a poem to my office, encouraging me to push for its adoption as our state poem. It starts: "With youth I dream/I wish upon fallen stars/I pray upon a broken pillar/I pray to pale women and desolate mountain tops/I pray Alaska/I dream Alaska, naked. . ." Where's Robert Service when we need him?
Bad odds--Governing Magazine reports the odds of an American currently being a state legislator are 1 in 40,343. That's six times more likely than being struck by lightning. I don't know what hurts most.
Outnumbered--The New York Times reports that, in most state capitals, lobbyists outnumber lawmakers by an average of five to one. Albany leads the nation with 18 lobbyists for every legislator. Only Maine and New Hampshire have fewer lobbyists than legislators. In Alaska, there are 89 registered lobbyists to work with 60 lawmakers this year. That's down from 141 in 2004--just before the majority and the governor weakened the standards for who has to register as a lobbyist.
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