Joint Performance Review (JPR)
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- October 2, 2026
Good morning everyone. If I get people in their seats we'll get started here. Well that didn't work I'd like to call
Speaker 7
3:46
this meeting to order good morning again ' d like to thank everyone for being here
I am representative Bruce Cozzart and my colleague Senator Rice would you like to have his nametu this morning all right we're going to get right into the meat of things like I said a while ago if you needed to sign in the sign in sheet was outside it's getting ready to get pulled or has been pulled so we hope you got your name on it if you want to talk all right consideration to approve the September 9th meetings
minute meeting of the minutes do I have a motion a motion second have a second all in favor sayy aye any opposed meanings are approved all right we're here today the first item we're gonna talk about is discussion on
broadband equity access and deployment the bead program and we have another one after that that we will see how far we get into that to see if we have to postpone for a break for y'all or if we could just continue on through but
we'll see how far we get hopefully we can
get all this done before we go take a break all right
Speaker 14
5:23
Howardorner are you here they built together
Speaker 17
5:33
You you want is it russ Miss Russell ok come on in
that's fine I wasn't sure if y'all were together or separate but that's fine. Once you get seated if you would key in your mic there get a green light and introduce yourself and who you're with please doesn't matter who
just whenever you get a green m might go. it's
got to be green all right there we go there we go
Howard Gorder
Unverified
6:06
all right thank you to the co-chairs and the committee for the invitation opportunity to be here this morning my name is Howardorder with Palmetto Engineering and consulting in North LittleRock. we also have offices in South Carolina and Texas and we have approximately 165 employees focused primarily on doing broadband engineering we engineer over 2500 miles of fiber broadband construction each year and we've been
heavily involved in grants and broadband activity in the last six years that includes over500 million in grants that were awarded in the last six years been involved with over 200 state and federal grant applications including more than 25 specifically in the beat program that we're we're here to talk about this morning and that's that's over 10 states as well so more than just the state of Arkansas I'm a licensed professional engineer in Arkansas and a number of other states been in the industry,
been licensed since 2009, been in the industry since 2002 and so I've been and I've been heavily involved in these grant applications and at the appropriate time if it's acceptable to the coach chairrs I'd like to make an
Speaker 23
7:19
opening statement as well. I will let's get
Senator Jane English
Unverified
7:24
everybody introduced good morning. thank you very much for inviting us to be here today. Um, I'm Denise Russell. I am the director of regulatory affairs
Speaker 28
7:31
at northern Arkansastelephone Company. thank you. I have40 years of experience in the telecommunications industry. I
started out as a consultant a telecommunications consultant at Ernst and Young and went to work for northern Arkansas as their director of regulatory affairs. my primary responsibilities are to do all of our federal communication filings, um, Arkansasublic service Commission filings, budgeting cost forecasting, rates setting making sure we're in compliance with all the rules and following all the developments that of changes of rules the FCC likes to change the rules a lot and so in determining how those
impact us since 2010 we've been heavily involved in filing for grants for our service area because it's a very highcot service area. we got a a BIp grant which is a broadband infrastructure program back in 2010 and I've been the lead on all of our grants so the broadband infrastructure program, um, RUS slashSdA reconnect programme5 rounds of that community connect program through the rural
utilityervice slash USDA the Arkansasnect grants and now bead and we've been following bead for three years now and I've been the lead on all of those and so have a lot of experience in all the different kinds of grants
Speaker 29
8:54
at different levels of government and entities. thank you for letting us be here
Speaker 31
8:59
today thank you for the invitation today my name is
Speaker 33
9:04
Steven Sanders. I'm the general manager of northern Arkansas telephone Company and I have been since 2009 I've been with the company
for35 years this year and next year is actually the company's seventyfifth anniversary I've had general oversight over all of the grants that we have worked with as Denise mentioned in addition to several rural utility service part of USDA loans that we have had in order to build fiber facilities in a service in our service area so
all right Mroldder you're welcome to make your statement or presentation whatever you have yes
Howard Gorder
Unverified
9:54
thank you to the co-chairs I I guess just briefly the the beat program is the broadband equity and access deployment program it was it was passed as part of the infrastructure actc approximately November of 2021. so we're about four years into the program and and so far no doll's been spent on on broadband deployment there's a lot of reasons for that we'll probably talk more about the the
beat program generally in this meeting the the it was pushed down to the states to to run the process and determine who the awardees are going to be within the state so the state of Arkansas has a broadband office that went through that process the culmination of that process a couple of months ago they had an open comment period for a week so I submitted a a couple of comments multiple comments in that program but I wanted to go through specifically one of my comments that I submitted related to
hometownet which was the the number one a ward ee based on dollars in the state of Arkansas. and so specifically this was in opposition to the hometown award which is $88 million worth of grant so hometownet's been in operation for approximately5 years has used several names but has never submitted a broadband data collection reports broadband data collection is the is the system the process that the FCC uses to track broadband availability as well as
subscriptions and so it forms the the basis for the national broadband map so if you've ever looked at the FCC broadban d map that is based on the BdC reporting it's a requirement for internet service providers to do that to do that report and so during this time hometownet has has never filed a report with the FCC. so unless a hometown doesn't have a network they're out of compliance with the FCC and would be subject to FCc enforcement actions ISps that are not in good standing with those FCC requirements are not eligible
for beat awards so allowing a provider that's in violation with those reports would set a dangerous precedent and and undermine the integrity of the the broadband programs early Arkansas rural nect awards providers were required to have at least500 subscribers hometown internet either doesn't have those subscribers or is is out of compliance with the reporting a few years ago hometown Internet was awarded7.4 million dollars by the state in the in
the state Arkansas rural nect grant program and the third round those projects were applied for in October of22 and pro work began in 2023 after two years of work they've only been at 15% completion that's been reported to ARC which is the lowest of of all the awards in round three by a significant amount in the last couple of months they have increased that to31% reporting but most other projects in the state are at least60 or70%.
manyy are at 100% completion at this time in the field we really see very little progress of hometownet's work they have a sign in the building they've got a little a little bit of progress out in the field but there's been a lot of issues with some of the work there a lot of complaints from the county judge and from others as well they were able to the broadband office allowed them to remove locations in round three which was something that they said they were not willing to do and at this point there's a lot of question of how that
project could be completed by the end of next year December of cember31 of26. umc according to public documents hometownet's been rated high risk throughout this process by the state broadband office evaluators and yet they've been announced to receive the largest ward at 88 million dollars. their award is proposing 2,168 miles of fiber across at least6 counties and completion of the project in two years by December 15 of2027.
these areas are some of the most difficult terrain in the state of Arkansas, including almost all of Newton County where nothing happens very quickly. Newton County is probably the most rugged county in the state of Arkansas also one of the most beautiful but it's very difficult to construct in in addition there's a lot of federal lands involved with had the Buffalo river uhBull Shoalslake and a lot of other things that are very difficult to cross. so that's greater than 1000 miles of construction per year facing some of the most difficult challenges that a
project can face and attaching to poles that hometown internet also does not own this is gonna supposed to cover 16,000 locations which is also a lot so the hometownet award has a has a density of approximately7.4 locations per mile in broadband networks we often look at how many locations or passings per mile there is because that indicates how
how profitable the project can be or whether it can fund itself or it can sustain itself and theirs is at7.4 which seems overly generous for the area by comparison Petigylectric and Petigene fiber which are slightly east of the project area have only4.8 meters per mile and those include populated areas of oflin and Fairfield Bay so it's really unlikely that Newton County and these other areas have a higher density than Van Buren County and Cearcy County what I'm really saying is that I don't think there's enough miles in the project
to complete the project other comparisons the the northern portion of Boone County outside Harrison where Nacko serves has a has a density of approximately5.8 locations per mile so it's nearly impossible that this 2,168 miles is enough mileage to serve that many locations across six counties now the awardee would ultimately be responsible for building what's necessary for the project however if there's cost overruns of 10 or 20
million or even 26 million it could easily double the amount of match that hometownet's required to to make as part of this award now by comparison ettagen fiber for example built3000 a little over3,000 miles in three years also for a cost of approximately 114 million which is the total of hometowns award well the grant award plus their match is about 114 million but petay fiber owns the poles. they own the they have the right of way in easements they've got a staff with experience and
knowledge to serve them hometownet does not have any of those and those are significant things when building a project of this size so granting hometown internet $88 million in bead money is not only highly risky for the state of Arkansas but it's it's very likely to be a serious compliance in public relations problem so far hometownet has not demonstrated the ability to construct a network operate a network or submit the required FCC filings they haven't even met basic milestones on the
project they've already been awarded by the state so this award has the potential to put Arkansas in the news for all the wrong reasons and keep the residents of these areas unconnected so until hometown comes into compliance with these obligations and demonstrates the ability to to complete a project here and provide that kind of evidence I I strongly urge the decision makers to reject this preliminary award and that's all I ever seen. thank you
Miss Russell, would you like to make a statement? you're good ok we all right thank you. do we have any questions right let
me let me get started here. we get the right
Senator John Payton
Unverified
18:01
payton hitchers again I think you're wrong thank you Mr Chair. just curiosity if you mentioned it I missed it but where is Hometown Internet located? Where's their offices we're actually I don't even know that we're sure exactly where their
Howard Gorder
Unverified
18:23
home offices are but they're based out oferryville and so the the project covers the six counties that are part of the project are Newton County
Speaker 52
18:33
Boone, Marion, Circei, Carroll County, and Benton
Senator Jane English
Unverified
18:42
County. thank you Um, I will add that what we can tell hometown is a wireless internet provider in the Berryville area we haven't been able to
Speaker 28
18:51
estimate how many customers they have but we think between 100 to300 customers currently of wireless customers they don't have any fiber customers right now.
Speaker 58
19:10
Represented brown thank you Mr Cha and and senator actually kind of had my question of have any of y'all ever seen a physical office for this place because when you punched their name in the Secretary of State, it comes back to the registered agent or registered office I'm sorry it's just some brick house out in the middle of the woods you know I mean their website's godaddy.com. I mean the whole thing smells like a scam to me just looking at it not knowing anything about this. iss there do they have actual brick and mortar office
Speaker 28
19:40
from our we've investigated as well and looked it up and and looked at their website and to see if we could order service from it and that kind of thing their number on their website is a cellphone number and we believe the main office in Berryville is a house like where he lives the owner follow it Mr chair and and I think y'all said this in your
Speaker 58
20:01
testimon just to make sure I'm clear to y'all's knowledge, these people or this company it does not own a single pole or easement or anything
anywhere. is that correct? Because I mean as we all know you can't to my knowledge you cannot iminent domain rights away for fiber. So I mean I don't understand where they're going to run these fiber if they got this money if they don't have any right away that's correct yeah they as far
Howard Gorder
Unverified
20:24
as we know they do not own a pole do not they may have attached to a few in the last little bit working on their grant project but that's correct they do not on a pole and I can go into the the attachment process more but it is it's a it's a very lengthy and expensive process to attach
to to poles for electric you know electric company and so that's something that they'd have to go through for this whole project which would cause it to take longer and cost more much different than the owner of the polls constructing the network themselves. thank you Mr Cha. Senator English you recognized think is
Senator Jane English
Unverified
21:10
is there anybody here from the broadband office? at all
kind of would like to hear how we got to this situation I know there's been a lot of work done for the last 5 or6 years on this whole broadband issue and with mead which we don't have an answer yet from the feds but how we can proceed but I think this is an interesting situation and we really need somebody from the broadband office to be able to talk to us about how we got this far absent somebody being here I
will say that give you an update on where we are
Speaker 28
21:51
in the process. we've been working for the past since 2022, the state has been working and working hard. I mean they've had a lot a huge job in front of them and we've been through three rounds of of bids to determine who
Senator Jane English
Unverified
22:06
was going to have the awards in the state and then in June of this year NTIA which runs the program national I had to look up the telecommunications and infrastructuredministration
they came out with a ruling that changed the rules not 180 degrees but close to it and gave
Speaker 28
22:28
all the state offices 90 days to do a bargain round bid. So what they were saying is lowest bid wins we don't care what technology it is because prior to that for the last three years we've been operating under the assumption that fiber is a preferred technology and I you know would
argue that that is the best futureproof network for anybody in Arkansas the life of the assets and the service that it can provide for future needs for any of their citizens. but then the new NTIA department said we have 90 days to the states to do a bargain round and wireless satellite hybrid technology cable technology fiber technology all had the same plane fielded
and so obviously a fiber build is going to be more expensive than a satellite build for example. but it also had to meet certain parameters of you know was there any latency on the usage, um, could it be expandable in the future? was it scalable which I think some of the satellite has trouble with that they get it gets full and you can't add so many users so September4th was the date for all the states to submit their
final proposals that's what they're calling it tontIA. and in here they said these are the companies that were recommending for the awards whether it was satellite or wireless or fiber companies. these are the amounts and out of the states and territories that were eligible to bid on these or get the money there was36 states that provided the information on September4th in 20 states that got an extension because they
weren't quite done. The90 days, I mean hats off to the state that was not an easy task and there was a lot of information and a lot of stuff that you had to redo, it it was not a good position to be in and I know the state did not want to have to redo because we literally had just finished the last round of bidding and they gave the last awards and we had to start over I mean us being the industry and the state so right now we are in the
review stage at NTIA they have various reviews at NTIA where it was reviewed and now it's in committee. I guess it was in committee the last update we got and they have committed to have their review done by December4th. they've given themselves 90 days for all the states to be reviewed at that point it has to go through a cybersecurity kind of review and then it comes back to you guys the full legislature to approve an Arkansas So I think if there was any changes that
you saw that needed to be made now would be the time to do it as opposed to in December when NTAA has finished all their reviews and hands it back to the state for final stamp of approval. so that's where we're at with the process and so by December everything should be done they anticipate approval by the legislature and then awardeees will be signing the subgrantee agreements with hopefully environmental issues,
um, taken care of in the first quarter and construction started by you know when the weather gets a little bit nicer in
Senator Jane English
Unverified
26:08
like March. so the the first proposals was his hometown in that first proposal where they also in the second proposal and I know that one of the main things that the administration wanted was a reduction in cost so we went down a whole lot of what it was going to cost to put the internet in across the board
across the state so were the same people then in that second round or second proposal and had they reduced their their cost there was measurably like other people have
done there was a preregistration process where people companies could submit information and then you were approved to
Speaker 28
26:51
bid or not bid and there was49 companies that signed up to bid in Arkansas and the first three rounds as you've mentioned, there was33 companies
that let me double check my notes um44 of the49 had submitted bids in the first three rounds and only33 providers had filed bids in the bargain round that we did this summer I can't answer your question because the state never told us. we were in this cone of silence confidentiality rules that we didn't know who got the awards
we knew that somebody won a certain area. um, originally the the blo the bidding areas where census block groups and you could bid one census block group in Arkansas there was 1,521 census blocks that had unserved customers in them, meaning they didn't have good broadband speeds. there we never knew who won. We know somebody won but we were never told who won. We knew which ones we might have won, but we
weren't allowed to talk about it with other companies so I don't know who won those other awards. we did ask the state several times if we would know who the bidders were or who won to help us in forming our bids you know because it's competitive so that would kind of give you an idea. We also asked if they would tell us who won before we entered the bargain round even though those results are now void, um, but we we didn't find out who that was so we don't know. We're assuming
that the same companies were probably winners in the other tranches but I know we had won some awards in the prior tranches where we did not win in the final round. but then we won some that we had also won in the first round so so I've just guess
Senator Jane English
Unverified
28:50
I'm just confused about how these people got in stayed in they had the how do we know that that they're they've gotten that contract again. or they would get that be part of that bargaining thing. Oh because they did announce the
bargain round on August 13th they announced the winners for the
Speaker 28
29:10
bargain round and so we did know that but we didn't know we can assume who won may be in the prior rounds. and it's hard when you're only going on the price that it's going to cost and the companies could choose to match more because we're required to match 25 % of the cost. So like in hometownn's case, their total project cost is 114 million
they're getting 88 million from the state so they're going to have to come up with 26 million of their own money in order to build this project assuming it's not under bid like Howard has indicated they didn't underbid the project. If it comes in at 150 million and they bid 114, they're gonna have to cover the difference because it's still going to have to be bu built they have the responsibility to build it so we have the list of who all was got the awards in the state on August 13th and then that was
submitted to NTIA for approval on September4th. I think
Senator Jane English
Unverified
30:13
I still think we need somebody from the broadband office here
Speaker 80
30:21
senator russ thank you miss Russell what
Senator Terry Rice
Unverified
30:32
you just said I'm trying to gather from
my past experience which is limited are
you saying that fiber is not required now you
Senator Jane English
Unverified
30:48
can win in the bargain round without building fiber, yes in the prior rounds it
Speaker 28
30:53
was the preferred technology but now and you got points extra points if you had a fiber build versus a wireless build, but now let's say on a scale of 10 fiber got 10 wireless got 10 satellite
got 10 it was all treated evenly so whoever bids the lowest price
Senator Terry Rice
Unverified
31:16
won. in the and I don't remember
the definitions but in the initial broadband money that first pot we called it was much looser than what this was supposed
to be and now it's got loose again yeah I mean Arkansas
Senator Jane English
Unverified
31:32
was awarded a little over a billion dollars and after the first three rounds of
Speaker 28
31:42
the with the old rules they were set to pay out about450 million so they still had another550 million left on the table so to speak. under the old rules that was supposed to go the state could then use it for nondeployment projects like getting computers in people's hands teaching them how to use the internet digital equity kind of stuff. I would have argued had those same rules stayed that
we would do a better service to the citizens if we use that money for all fiber builds then you know using it for other builds but that's here and there because that's moot now that doesn't matter but so the bargain round resulted in the state using3.500 million of their money and so we're it's up in the air still what's going to happen to the extra700 million if treasury's going to take it back, if the states are going to get it for digital equity.
there's been lawsuits filed on people saying we shouldn't lost our digital equity money. I definitely don't think we're going to see the 1 billion that's for sure
Senator Terry Rice
Unverified
32:56
in our state again some of this come to light and
and I go back to my my former co-chair when I cochaired legislative council the entire Arkansas legislative council when contracts weren't complete at times they allowed the co-chairs
to do the final sign off on them rather than the body so the body said we're fine with it y'all can sign it off. I questioned some with at that time adc in in broadband office because said this doesn't smell right somebodybody made the comment a while ago this didn't sound like it smells right either had a company that didn't get more than 100 participants but spent millions of dollars supposedly and I kept
punching the button warning them and and after the fight there was investigation not with the broadband office they don't they don't do that but the people that were supposed to be checking on that that we had hired to check those deals evidently didn't have enough parameters that they needed to be checking on because I googled a name that I was given and found out of state charges zone
is the one that got the grant now I'm not saying this hometown is that I'm saying something similar to somebody that didn't look like they should have gotten it and what we got I thought at that time was gonna be fiber didn't get fiber bought supplies lots of things got bought and it's still out there and I hope being investigated I don't want that to happen anymore. I've made that clear to the broadband office in in the glen
and I understand he has to work within the rules he does but what y'all brought here today to me is major how do we get this in front of lawmakers if you're saying this is gonna come back
Speaker 28
35:05
to legislative council? Yes for final approval. When after NTAA approves it and I'm not sure if it's legislative counsel, the whole body or like your group or the legislatures in session
Senator Terry Rice
Unverified
35:15
we could hear it but we're I mean
we're not scheduled to be anything session until April is this still have to be completed by the end of 2026?
Speaker 28
35:29
they will want the approval this December is when they will want it so it's because they they've been in the broadband office when does
Senator Terry Rice
Unverified
35:35
the construction have to be finished at two years from
Speaker 28
35:38
when it starts so the soonest that well people could say how long it's
Senator Jane English
Unverified
35:42
going to take and you've got extra points if it was less than two years and so I haven't seen any applications that were less
than 2 years. So hometownn said they could finish this $114 million project in two years. So if it starts January, if it starts March depends on when the agreements out
Senator Terry Rice
Unverified
36:01
well I I too think we need the broadband office here in in in I would be
fine with hometown or home what is it? Hometown or hometown to be able to answer any question and and this is what frustrates me I see in government we all work within our parameters that we're given
and I'm not saying the broadband office hadn't done that but you got to to look at the whole thing if it doesn't make sense if they don't have polls and they don't have right of ways and they've they've underbid to make that budget round it's not going to work and I've seen them come back and ask the legislature for more money but we're already committed we've got to come up with more money to try and do that to prison right now get started on a prison then y'all can't back out No, tell me what it's gonna cost on the front end
that's what we need to hear here so I appreciate y'all being here hope some other people's got some concerns like I have on this thank you thank you RepresentativeRay lights thank you
Representative David Ray
Unverified
37:08
Mr. Chairman. So I think it's evident from Senator English and Senator Rice's questions that it doesn't sound like the anyone from the state broadband office is here to answer questions so my my question is were they invited to be here today
far as I know we did not ask them to come we were just really trying to hear from information but we did not get it we did get a a a response from the bead program they could not be here today the ones that take care of the bead program and I don't have that name in front of me right now but they were out of state at a meeting so ok so the
Speaker 107
37:45
the committee specifically invited somebody from the bead program we did we don't know who that was I
can get that for you in a minute I do I don't have, I don't have that in
Representative David Ray
Unverified
38:00
front of me on my papers. OK. I I mean a lot of the stuff that we're hearing is very
concerning and merits a response from from the from the department that just it seems like a lot of this discussion is futile if we don't have anybody that we can sort of ask questions of on their end. Senator
Senator Steve Crowell
Unverified
38:32
Thank you. I guess I'm kind of on with MrRay, you know, I wish they would be here to answer the questions because apparently the due diligence was lacking could you speak to that just a little bit let's see that's that's actually
Speaker 33
38:51
been one of the frustrating things for us has been and it kind of goes to the question of how did we get here
we you know have have done a lot of the federal and state programs in the past and we're used to being heavily vetted for what the project is gonna look like they you know we have engineering plans RS goes in and they they really look at the plants to make sure it's feasible make sure it's reasonable we have to do financial projections we have to submit several years of audited financials and then projections on how we're going to maintain it because one
of the one of the features of doing broadband in Arkansas is not just the upfront capital investment but it's expensive to maintain the networks you have to have technicians that go through a lot of rural areas but but we're used to being vetted on our plans from an engineering perspective we're used to having a lot of difficult questions about how we're going to be able to make it work financially and how we're going to spend the money
and in cases like this where you have awards where you have a a copay in this case it's a a minimum of 25% they want to know how you're gonna be able to afford to pay the 25% and not get into a situation where your you're granted some funds and then you're not able to execute the plan and then those funds essentially you know are wasted and and a lot of cases you can't pick pick up the pieces and start over because like in our case we have an existing network all of our engineering plans
for the bids that we put in and the areas we we bid to serve are all based on where our existing facilities are so if if you have a company like that and they're not able to perform the design the way that it started is all you know engineered one way somebody can't just come in and pick it up and and go from there so we we had been expected to the originally I believe they called it a prequalification to be able to bid it it turned into what they called a
preapplication phase where we had to provide some information and you have to click and certify you know make some certifications that you can do something but we were waiting for the big ok how are you gonna do it? show us we're gonna ask you questions on how you do it is your desi is Howard said you know looking at the design is it reasonable how much cable you have in here can you afford to and and those those questions never came and so all of a sudden you know there were awards and we kind of did the same thing you know how did we get here we thought we
thought there was going to be a process to really understand who should be bidding and and who shouldn't be bidding. follow up please so this is that
Senator Steve Crowell
Unverified
41:52
was a new occurrence in the process. it used to be better than this and this is a new occurrence. is that what I'm understanding? no not no not really when we when
Speaker 116
42:02
we first went into the program and we knew we were gonna have to they were gonna
Speaker 33
42:07
try to come up with a list of of bidders who were gonna
participate they called it like a pre pre qualification and then at some point it became preapplication qualification implying that they were going to try to vet potential bidders on the front end to see if they're able to you know should be able to do it and you know I guess it's I guess it would be sort of like when you get a loan when you want to get a loan on a on a home and you go to a bank and you get a preapproval and they say ok based on your financials based on you know who you are and what you've done in the past you're gonna be
qualified to get a loan up to you know $100,000 we thought that that's how the process wasn't gonna go was going to go when they were calling it a pre qualification they changed it to preapplication and there was not really any questions or any vetting done after that I think
Senator Jane English
Unverified
43:02
what you're referring to though when you said the program
Speaker 28
43:05
used to be like that Sttephen is comparing and contrasting our experience with other federal grant programs and the kind of
information the absolutely onerous and huge amounts of information that we had to provide for USDA grants the reconnect grants I don't know if you've heard of those have been a lot in the state that have gotten those. That was the other so we were used to that side of the coin and so we were like we got to do the forecast, we got to get our 10 year forecast going and and we never got asked for that and it was surprising because a lot of the prequalification was do you certify that you have the money
do you certify that you can technically do this do you certify that you can make the copay and there was never any proof. We didn't have to prove it. The only financial information the state ever got was one audit and it ours is a comparative audit just because that's how our auditors do it but they only really required one year the most recent financial year which happened to be 23 so we hadn't submitted any other financial information since 23 to
Senator Jane English
Unverified
44:14
see how a company is going and
if hometownet had gotten a $10 million award you know it probably wouldn't be an issue but the fact that they got 88 million dollars. well the project cost is 114 I think that's what raises the comes back to look
Speaker 28
44:32
at the prequalification and the state did issue when they submitted their final proposal on September4th, the same day we got a letter from them saying now we're going to do a comprehensive review I'm like thinking shouldn't you have done that before you submitted the final proposal. but there was
a deadline they could have got an extension but we're now we're gonna do a comprehensive proposal and we want you to submit the couple things that we had to submit were how many other awards do you have and we had to all the companies had to list if they had any other awards other grants like so hometownet would have had to list the award that they have that they're working on right now the7.4 million now the 88 million to complicate
matters they also got a47 million dollars award in Missouri that was after our final proposal had been released it was announced in the middle of September so they are now on the hook for $182 million between Arkansas and Missouri so they will have to disclose that then they also required a pro forma of how you're going to show that you're going to be sustainable in the future for three years after the build is complete That to me should have been
completed before they submitted the final proposal and then they could have maybe drawn back a little bit on hometowns award to what they could have afforded not just go ahead and go forward and then after the fact ask for a pro forma because that's in thenTA notice of funding opportunity rules that they needed to ask that and we brought that up in our comments that we filed uh, in the public comments that were never public. so I would think at this point if
Senator Jane English
Unverified
46:24
the state got this information we said to submitted on Friday they could look at that and see is hometownet
Speaker 28
46:32
really capable of doing $182 million worth of construction do they have the finances that support that the copay alone for them a 25% of that you know is just horrendously huge and you know Howard made the point earlier that if it was a company like AT&t or Windstream, who got
very few dollars in the program. and if they were under bid they could cover it. that's their problem. you know they're going to have to come up with the money somewhere we don't know how hometownet will come up with the money someplace else and it's our subscribers that we've served for se5 years that are going to be suffering because they're not going to get the fiber broadband service that was promised to them. and I would add I
Speaker 49
47:19
think where the state broadband office did do a good job was was having this prequalification process in
Howard Gorder
Unverified
47:26
advance of the bidding I think we're where it really fell down was in financially vetting companies for the the amount of projects or the size of projects that they would be bidding on and this pro performer was always it was always part of the process from from the federal legislation on down it was always part of the process it's just that now it's being provided after the fact so there may be you know through that evaluation they may come to the conclusion that that we've come to but we don't really know at this point but you know the key is the these are these are
infrastructure projects that involve a lot of dollars and it requires a lot of cash flow to complete them even before you get the grant money and there is tranche's that that that comes through but this company you know you're looking at a company that's not well capitalized has no real existing assets you know telecom assets to leverage you know they could easily go broke just from a cash flow standpoint in the middle of this project.
Senator Kim Hammer
Unverified
48:28
Senatorhammy recognized a quick question or two number one did y'all file an official protest when the award was made or where are we in that or I was trying to catch up on
Howard Gorder
Unverified
48:44
what you're saying. so they well they had the public comment period which was approximately a week right around Labor Day before the the deadline of September4th and so I I had filed two separate comments the one was was on hometownet uhAtcode
Speaker 128
48:54
had filed a comment and there was a couple others as well
Senator Kim Hammer
Unverified
49:00
and then the second thing and and I remember discussions years you know from years ago when we all got the COVId money and we everything Senator Rice was talking about and you made a comment a while ago is is under this contract is line of sight or the towers or the satellite is that going to be permissible under the award
Howard Gorder
Unverified
49:25
of this money yeah so yeah so so the hometownet proposal is
is is a 100% fiber so so there's not a line of sight concerns specifically with that award there are other awards that are fixed wireless and there's also satellite awards for both SpaceX and amazon that were a line of sight is a factor yes right because that
Senator Kim Hammer
Unverified
49:45
was one of the big discussions back when that was going on about the quality of you know the fiber versus the line of sight and that's what I was trying to clarify is does this particular contract that y'all are here talking about today it is strictly fiber only correct yeah there's not a line
Speaker 123
50:02
of sight issue with this this specific one OK
Speaker 33
50:06
thank you our our comments that we filed were extremely descriptive and when they made it to the final proposal that went to NTIA the federal agency they were toned down considerably so I don't think that the meaning and descriptiveness that we had
Speaker 31
50:24
included was past passed along we do have someone coming from
the broadband office they'll be here shortly so we still have plenty of people to
testify here or to ask questions senator uhpresentative Vaut you Mr Chair. So
Representative DeAnn Vaught
Unverified
50:44
I've got a couple of questions for youa. One, I think the same company that senator Rice was speaking about a minute ago also scammed a little over $2 million out of one of my counties. so my question is are
we prosecuting those people who are who who have scammed Arkansas out of broadband monies and if not what are we doing to recoup some of that money
in which they stole from the state or from the federal government for that matter. I I'm not sure that we can answer
Speaker 49
51:23
that. I don't think the broadband office hopefully hopefully we get that question from someone else I'm not sure they can answer that good question though wooten
Representative Jim Wooten
Unverified
51:35
thank you Mr Chairman. let me understand for sure that I've got this right and Rfp was sent out and49 people responded to it or did49 people meet the qualification to bid fort44 method
Speaker 128
51:58
qualification to bid yeah. that's 9 companies were
Senator Jane English
Unverified
52:07
prequalified so they could bid but there was no limit on the number of
Representative Jim Wooten
Unverified
52:12
awards they could get444 responded that that they would bid and then33 bidded is that correct?44 bid in the first
Senator Jane English
Unverified
52:21
three rounds where we had the old
Speaker 28
52:23
rules if you think about June being the introduction of the new rules and so the same49 companies were qualified to bid in the new round this summer and only33
providers bid in this the final round that we just went through in
Representative Jim Wooten
Unverified
52:43
the past. and and of that I'm trying to get to the bargaining part of the 100 of the of the thirty3 that bid one was selected and the award was 114 million with them putting in 26 million before they got any of the money is that
Speaker 28
53:03
correct there was there was other companies they the 114
million award was 29% of the total award. the total award was305 million for the state and the second highest award was for Aristotle and they had a total award of $89 million so those are the top two and the the actual support that they would get is 88 million and they would have to come up with 26 million. you're exactly right on that amount and it's up to the companies to bid what they thought they could
Senator Jane English
Unverified
53:42
afford. Now you could still have $100 million project but maybe you were going to contribute more than 25%.
Speaker 28
53:48
so maybe you said we have the financial capability we're going to put in50 million dollars and ask the state for50 million so that we have a better chance of winning the bid because whatever the lowest price was as long as you could meet the technical standard s , um, then you one. in the last round. so how how
Representative Jim Wooten
Unverified
54:12
did we end up in a bargaining if it was for a request for proposals and for a bid you mean and this is the first time've heard of the second there was a second offer, a second bid that was considered
Senator Jane English
Unverified
54:27
under the NTIA rules when the the first when the law was passed as Howard said in 21, NTIA
Speaker 28
54:33
set out a set of rules that all the states had to follow when they did their bid process when the new administration came
in they had a new head ofntIA and the new head said we're going to change the rules since no dollars have been awarded yet to any of the states. I mean no you know everybody was finishing up their rounds so when I say the prior rounds it was like old rules and now new rules and so the new rules were dictated to all the states from NTIA and so it's like we
Speaker 29
55:06
had kind of a change of course in the whole process and so that was something they really couldn't control
Howard Gorder
Unverified
55:16
I don't know if that's answering your question well it just got more confusing he had welcome to the benefit of the bargain that that process was driven by the NTIA from from the federal level so that
Representative Jim Wooten
Unverified
55:32
that was outside of the state broadband office here we are again with the federal program that's come back and said they wanted to reevaluate it or do it a different way that's correct y
And they have to come up with at least 25% of what you're saying that they may bid more it may be30% in hopes that they get the bid because it reduces the investment well we're still what what is the bargaining stage about what how many people are we bargaining and when you say bargaining who are you talking about is it the state office this bargaining Mr chairirman, I
may, I may have to ask them but who who who heads up the bargaining portion I think
Howard Gorder
Unverified
56:24
the idea of the bargain was to save the the taxpayers' money the federal taxpayers' money to reduce the expenditure from the42 billion down to a lower amount I think that's what the the benefit of the bargain intents how many how many people are
Representative Jim Wooten
Unverified
56:37
considered in the bargaining s are all33 I mean everyone was able to submit a bid in
Howard Gorder
Unverified
56:42
the benefit of the bargain round but the the costs were driven down
there was additional parameters that were placed on it it was also the the the playing field was leveled between fiber and wireless and satellite fiber is the most expensive so that ' s you know it's more more challenging for a fiber project to compete with the fixed wireless or satellite but you only do fiber and fixed wireless as well I means and that's whatAO has proposed too
Speaker 143
57:08
yeah all right thank you Mr Chairman. thank you for your indulgence. Thank you. we have someone here from Broadband I believe Glenn
Howley's here. I'm gonna go ahead and bring him up and we
still have3 in the queue to speak if you have a question for Missyri, you can ask him if not you have a question for the other ones you can ask them so would you please
introduce yourself and who you're with please le n n howie state broadband director. right so if you had a question about the broadband to for Mr. Howley would you go
ahead and cue back in and I'm gonna go ahead and continue on with our other
questions, and and we'll then we'll get back to you so just everybody sit tight senator dismay my question's on
Senator Jonathan Dismang
Unverified
57:56
the prequalification process and where we came into play as far as legislative members some members were asked repeatedly to
sign on the letters to companies we've never heard of to do work in our districts and was kind of explained to us if you don't sign on to a letter then it hampers the ability to get broadband put into your area it's very strange process because I know nothing about
broadband or fiber or satellites or you name it but yet we're being asked to sign on for companies did that play a role at all in this prequalification process where where is that
Speaker 28
58:34
component in the process that was part of the rules of the original rounds under the old NTIA rules. You got additional points for scoring your application if you had support from school board members
representatives, um, people in your area that would support you as providing the broadband service in your area it was just strictly a metric for additional points. um, and it was part of the NTIA rules that allowed companies to get those extra points but now since the benefit of the bargain round changed all the rules in um, June. those no longer were considered. they're basically did this have any impact for
Senator Jonathan Dismang
Unverified
59:22
instance on what's the name of the company ?
Speaker 89
59:28
Hometown Hometownet I don't know maybe Glen
Senator Jane English
Unverified
59:31
could say I don't know if they got a lot of recommendation letters. you were limited to5 per application and they each counted for a half of a point. So
Speaker 28
59:42
I mean total points out of 102.5 so it wasn't a huge waiting but you know and that was part of the NTA
Speaker 54
59:50
rules in the state then implemented that.
Senator Jonathan Dismang
Unverified
59:53
that way all right thank you very much and we may circle back then at some point with the broadband office. I mean I I'd be curious to know who all received letters from who again I don't know how tight the scoring is but I mean we had how many
Speaker 173
1:00:12
applicants did we say or in the old round the
Senator Jonathan Dismang
Unverified
1:00:15
round and 2.5 points across44 may have been a difference and I'd just be curious to know if that were
the case that never made sense to me I'm glad it's no longer part of the process but we appreciate your letters I mean again, I mean even if we were asking to write one for y'all I think it was inappropriate. none of us know anything about any of you more than you sitting in front of us its it's not a dig that was just that was silliness to to think the legislators or a school board member or someone else could vet a broadband company but again I I think what I'd like to do is get a list of all
letters that were sent for all companies so we can kind of see and and make sure see what was happening there I'd be curious
Senator Terry Rice
Unverified
1:01:05
senator russ thank you Mr chairir. Mr Hayy I appreciate you making yourself available and coming on
quick notice and just piggyback because thats I'm gonna catch you up a little bit with my statements and with some of the testimony we've had you just stated that and I
agree with can't expect legislators to really know what's going on with this I've tried what little knowledge I have but I've learned if what I've been
testimony in this meeting that I didn't know is come back with a bargain round after we had public meetings saying there's going to be fiber everywhere I went to Mount Ida I went toina. I went to Waldron I I think I miss Yale County but I
told you let them know I was vastly interested they already had their internet iss that one I want to see if that testimony is right it's not all going to be fiber since the federal government's backed up one of the most important things that I've written down here it says that hometown I don't know hometown don't know anything about them not gonna make any accusations or whatever else it has been stated they lacked filing broadband data collection report with the FCC.
are you aware of that Thank you senator. first I'm
Speaker 180
1:02:37
glad to be here in front of you to help explain anything that you need explaining any questions you may have. I apologize for not having a tie on. I did not know this meeting was taking place this morning. so on the the question directly to filing that is something that we're looking at currently and I think it's good for that answer to be put into context, OK? So
throughout this process OK the preliminary the prequalification process that took place the preliminary selections throughout the the process that we ran before June6th and then after June6th we come out with this final proposal as as as as it's called it is essentially preliminary selections OK? so the selections that we have made to date and have sent up to NTIA have met the minimum qualifications for
at this point in the process, OK? I think the idea that the preliminary selections as they stand today are concrete and that everyone who has been preliminarily selected will automatically sign a grant agreement with our office at the end is not the case. There are qualifications that are met through each step of the process, OK? so to prequalify you had to meet certain qualifications as established by the federal government. OK? to be selected
before June6th, certain qualifications to be selected in the post June6th benefit of the bargain round had to meet certain qualifications and we're still doing this Friday was a deadline just this past Friday for more information to come into our office that we're still evaluating OK? so this is a rolling process throughout and if we come to you hopefully after December4th when TIA does their piece and we come to you with a list of folks at at some point before
ier and before ALc on the Friday, OK? That means that those folks will have met the requirements up to that point, OK? Then there's a whole another set of requirements that we have to work through before we would even sign a grant agreement with someone, OK? so that's what I want to put out there. this is a rolling process with qualifications that happen throughout different parts of the process, OK? and it's not over and we'll see that in this this filing question that's at the heart of your question right now, Senator Rice. we're looking at that right now actually. the other statement that's been
Senator Terry Rice
Unverified
1:05:04
made is up until recently this company on the round one had only completed 15% but it's now up
to31% of completion with when the rest of Arkansas is up and around the60% completion.
Speaker 180
1:05:20
would you agree with that yeah so you're the round three capital projects won CPF grant that this particular preliminary selectee has ongoing I think the latest update is about32% completion per our dashboard system that is not the
lowest. there are other companies actually with a lower percentage than that at the current time. those have to be completed by the end of next year, OK? and to date they are making progress as they should on that
Senator Terry Rice
Unverified
1:05:49
particular project OK and and then the other fact that that I thought was important enough to write down and again I'm not I'm not pushing for one person other but I I do know this the
current they talking about etty Jean Electric owns poles and has
rideaways in my area it's the wave Arkansas Valley that has done a bunch of work and as you know I've talked to you numerous times about there's a section from angygy company that doesn't plan on doing anything and I've got a number of my constituents that's worried about they're going to get left out because nobody claims them and and that I had that one more thing to catch you uppresentative Vault and I both brought up this past
deal from this initial pot of money is what I call it when we had a company that came in that was very questionable that didn't have financial backing but they got a bunch of money and spend it on stuff that's still being questioned and hopefully investigated and and I realize your office is not the one that investigates but you you help push that to it the problem is they didn't they weren't substitute but substantive enough to do it and we had the
entity as I was co-chair of council at that time and the council gave us a sign off authority and our contacted as I told you the the ADC office at that time and they they were signed off on when I did an internet search on a name and found chart federal charges on the person that got the grant and they still got the grant so it wasn't hard to look them up
again not ss besmirging this other company we're talking about today but that's the stuff in our mind we need to know about is is I don't what I want to hear from you I guess I'm not telling you what to say I don't want the federal government to push you into this bargain round of of stuff and just get whoever you can get and then we get down the road
and it doesn't get finished can you understand my concerns
Speaker 177
1:08:11
no look with the history of the program, I completely understand your concerns. you know
Speaker 180
1:08:16
before my arrival, OK, into the office the particular grant recipient and project that you're referring to right a couple of differences one that particular project was funded all upfront. right all the money was sent out the door before the project started. OK that that's one thing. 2, you know our
subcontracting help at that time prior to my arrival has been replaced. with a new entity that's that's true.3, the particular project you're referencing, our team and the department of commerce has referred that particular I'm not sure what I can say, referred that particular subgrantee and project to the Arkansas office of inspector general and the FBI. I appreciate that I
Senator Terry Rice
Unverified
1:09:08
just don't get in into that process again
Speaker 180
1:09:12
and think well I can I didn't want to follow up to that because I understand how the process used to work, right? This bead program , especially Arkansas's bead programme has been built and designed to one save taxpayer dollars, OK? not to the detriment of service to the folks but how we ran our process was completely competitive and marketdriven and two to protect taxpayer dollars. So in the past when projects were fully funded upfront the bead program is different, OK? The beat program
is going to be a fixed amount subaward contract and payments will be dispersed upon completion of milestones, OK? So people will only get paid when they actually perform the work. it so let's hypothetically speaking you have a million dollars grant OK'm using too much time last thing what I don't want
Senator Terry Rice
Unverified
1:09:58
to get into is where we're warding man and again centre Hieckey I think is the one that
brought it up first about how we were paying you know and maybe the federal maybe he just mentioned it in federal
government came up with it I I appreciate it the way contractors get paid but you can still put a bunch of money in a project and a company declare bankruptcy and who's going to who's going to come up finishing this that's what we're trying to
Speaker 180
1:10:31
avoid sure when the fixed amount civilward process, right they're not getting paid unless they're completing the work OK so it's different from before there's a letter of credit or performance bond requirement for the 1st 10% of the project and then beyond that once they
actually build to homes and get people hooked up that's when folks get paid. so when it comes time for the grant the disbursement schedule and you know they've spent500,000 dollars so far but they haven't hooked people up yet well they're
Speaker 195
1:11:00
not getting paid OK so we are protecting taxpayer dollars by doing it the right
Speaker 28
1:11:07
way. I would add though in with the milestone approach if you have a company that's under capitalized and they've built half of the project and they may get paid
for half of the project. maybe the potentially don't have the cash to finish the rest of the project so you have the risk of maybe you still have got 10% done or 15% done but getting to 100% if they're an undercapitalized company and they can't manage the
Speaker 29
1:11:35
cash flow it would be a serious risk to the state in our opinion. Ripent along
Speaker 13
1:11:50
you still there you good? all right let's go to
Representative Stan Berry
Unverified
1:11:58
Representativeerry Thank you Mr Chairman and first of all thank thank you for seeing or answering questions that you some of them you didn't even know anything about and Mr. Howy thanks for being here Interstate40 and Interstate30 is full of contractors on both sides of the interstate
obviously they have negotiated right away with our own highway department can you tell me and there's been a lot of questions about contractors obviously they have a contract becau and obviously they're putting in fiber because of all the induct that you see up and down the interstate can you tell me how they received and were awarded a
contract to do what they're doing up and down the interstate right now putting in putting in the fiber optic yeahpresentative it
Speaker 178
1:13:02
would depend on the particular project. so it it's pretty simple to see what those
Representative Stan Berry
Unverified
1:13:07
projects are I mean they're just putting in introduct right now and I mean give me an example of what they're
Speaker 202
1:13:15
doing and how they received their contract Sure so it could be for that particular
Speaker 177
1:13:20
company right it could be the
result of one of our state grants that is funded that it
Speaker 180
1:13:26
could be a separate federal grant remember to date of the 400 well with the beat program of the420,000 locations across the state that are getting built to right? Only about 200,000 of those are through our office so there are other federal grants that have funded over 200,000 locations and different projects throughout the state that we're not responsible for so it's either if you're seeing someone building whether it's on the side of an interstate and do putting induct there or in a
town or where have you it's either funded through one of our grants funded through a different federal grant that's actually larger program s than we have or it's their own private capital investment so without knowing the particulars it would be hard to to walk through that but it could be any one of those
Representative Stan Berry
Unverified
1:14:10
combinations well what you're saying if I may Mr Mr Chairman what you're saying is that we don't have the state doesn't have a control over all of the fiber projects that that are going on in the state right now that's correct
Speaker 180
1:14:27
so that our office has oversight over the grants that we have issued OK? it's we do not have oversight into projects that the federal government has funded separately. OK? and we also do not have oversight over projects that are privately funded through that particular company itself. so we have our scope which is the projects that the state
Representative Stan Berry
Unverified
1:14:47
office has funded the state knows nothing about the contractors that are going up and down the interstate you know nothing about the construction that's going on if
Speaker 180
1:14:58
it's a federal project not if it's if it's not one of our projects that is not within the the bounds of my office Now if that's something that the legislature would like to to put within the bounds of our office moving forward we can do that but that's not currently the scope of what our office
Howard Gorder
Unverified
1:15:16
does. I think what you're what you're seeing along Interstate40 now is is privately funded transport projects. I I believe I don't know the details of it but it's very likely a hyper scale project that's actually to connect data centers and so that's why they're building all that des so it's being done with
private funds the contractor should have a contractor's license with the state of Arkansas they would have also gotten a permit from the through Arkansas DOT to Department of Transportation to to be on Mr
Representative Stan Berry
Unverified
1:15:44
Howie do you know do you know every project that's going on that both federal and Arkansas pertaining to the well again the construction that's not our authority right so I don't have authority
Speaker 207
1:15:53
over those projects who does if it's a federal grant so if it
Speaker 180
1:16:01
it the federal agency responsible for that grant right so if the federalalcomunications Commission at the federal level or FCC has funded a particular project they have oversight and administrative authority. if it's one of the state grants then our office would so it just depends on the particular grant. again so if it's a federally funded project directly through the other federal agency or a private build our office does not have authority over that project.
Senator Dan Sullivan
Unverified
1:16:33
Senator Sullivan just like some clarification from the department you earlier made a statement in reference to hometown I think it was they're making progress as they should so how do you determine
Speaker 207
1:16:51
as they should so we have a a subcontractor Michael Baker International who is responsible for on site visits, OK? so let me let me shorten the question. I don't want
Senator Dan Sullivan
Unverified
1:16:57
to spend a lot of time so is it based on merit? as they should based on merit yes we have on site visits that
Speaker 178
1:17:05
take place and an engineering firm goes on site and checks benchmarks and the other statement you made
Senator Dan Sullivan
Unverified
1:17:09
was that they weren't the worst that there are people
worse than them so how are they compared to the best? don't know if I said worse we go back
Speaker 180
1:17:18
and play the tape on that one. There are they're currently a32% complete on their particular project and I was making the point that we have several depending on the size and scope of the project they compare to the best we have several projects that are 100%
built out at the moment. We have some that are some of
Senator Dan Sullivan
Unverified
1:17:39
100% so how do they compare with the best they're30% of that you know you have they lower quarer tile the higher mid quaretile where they in in achieving the best result. Sure
Speaker 180
1:17:51
and look, I don't necessarily want to get hypotheticals of comparing someone against another because every project is different different projects start times different terrain, different types of build out different locations etc. different numbers of locations what I can do is
measure the progress for that particular project and as of today there are about32% complete with over a year ago is that a good thing or a mediocre thing how are
Senator Dan Sullivan
Unverified
1:18:13
they doing? I would say is today they're projected to finish
Speaker 180
1:18:16
their project on time. OK thank you thank you Mr Chair. Senator dismay thank you and I just kind of want
Senator Jonathan Dismang
Unverified
1:18:28
to make sure that I'm following along. I walked in just a little bit late
so I may have missed a couple of things the main thing we're
talking about is the process and we're concerned that some entities are not capitalized enough to be able to fully you know build out and complete their project is that the main concern is to head nod it's good with me all right and so one entity that we've talked about so far is hometown Inet. and and again I so I want to go back to the broadband office in a minute that but that's one entity are there other entities
that y'all are concerned about that we need to talk about specifically or just hometownet?
Speaker 49
1:19:09
I had submitted some comments really to Aristotle as well I think the if I would summarize the issues there I
Speaker 128
1:19:14
don't feel like there's enough funds there to construct the project However I I do know that Aristotle has rural digital opportunity funds as well that may cover a portion of that I don't know but I I had some concerns about their total award as well so we're talking about two companies Aristotle and
Senator Jonathan Dismang
Unverified
1:19:29
homemetown Internet and we're concerned that even though they've been awarded a project that they do not have the funds
or the the capital I guess to borrow to complete to do whatever it may be in addi and then we're also concerned I think just to make sure I'm following through that they have intentionally underbid and they're responsible for anything that's in excess of their bid and they're not to have the ability to do that is that correct the the capital issue is really
Speaker 128
1:19:57
the biggest concern for me and and potentially when I look at the total cost of construction based on what I know around the state of Arkansas and other projects just the ability to construct it for what their bid is place
Senator Jonathan Dismang
Unverified
1:20:10
and then so then just to go back to the broadband office again I mean much like us submitting letters which again is silly and unhelpful to the process I mean there are bits and pieces of this that the federal government required as we score as we do as with the process all of those things and so my my question is and so Aristotle now and hometownternet was there any I mean do we have concerns with him
completing the project do we have concerns about their capital structure
I mean with where everything is right now what do you see happening? Yeah
Speaker 180
1:20:54
thank you senator . Look, I you know we cannot ever guarantee 100% completion for any project whether it'sATco whether it's hometownn whether it's Aristotle AT or whoever right you know I I cannot in good
faith sit here and say I'm100% certain that every project is gonna go 100% completion, right? Obviously that's what we want and that's what we strive for. What I can do is defend the process, OK? and the process that we have run has been fair it has been transparent it's been market driven and I think and it's just a misnomer for the folks is you know, I don't want to have it framed as as they've the folks have received an award to
date right? We call it sort of selections throughout the process so to date there's been preliminarily selected OK and as I said before there's different phases of how we're working through and I know sometimes the public they can get a little confusing when we say final proposal people think you know, final hard and done which is not necessarily the case they meet qualifications as they go and like I said last week we asked for more information and we're evaluating that likely with more to come the NTiaA has put out a lengthy document around everything that
has to be qualified to be able to sign a grant agreement. right and we're not that far yet right so I'm here to defend the process. The process has been in my opinion, second to none. and we continue to work through it
Senator Jonathan Dismang
Unverified
1:22:29
OK and so you feel as though whatever vetting needs to be you know to happen as we complete
the full process and we actually achieve awarding you think that those procedures checks and balances are in place. yeah honestly I do. I think
Speaker 180
1:22:46
again built to to save taxpayer dollars I think the conversation today is honestly a little bit premature because we're not there yet. OK? and there there are barriers as we continue to move forward on this process. OK and it do y'all
Senator Jonathan Dismang
Unverified
1:23:00
have the ability then to so it's 10% has to
be bonded or whatever it is that can that be increased or is that a federally driven component? I mean are there other some other safeguards we could maybe put in place sure there there's you know the the 10%
Speaker 180
1:23:20
requirement is a first of all it was a way for us to get more interest from investors from providers we had of the the49 that originally preregistered in our process, you know,29 were from instate,19 were from out of state. one of the highest kind of per capita numbers in the country and that was on purpose we designed it that way purposefully. the providers will have the option to seek a 10% either letter of credit or performance bond security for their project and that opens up the ability to do the milestone reimburse reimbursement process which
we've talked about helps to protect taxpayer dollars to be honest I would have to check with
Speaker 234
1:23:57
the feds to see if we could look at increasing that and then and
Senator Jonathan Dismang
Unverified
1:24:00
here's my last and then I'm going to be done I think on this subject my my can you get us a detailed list of how this process is carried out and some of those safeguards so that everybody fully understands where we are in the process because maybe that would be helpful to us because the one thing I don't want to do is create legislative bias in a
process I think we need to be careful about that and so I just to your point I just want to make sure it's fair I want to make sure everybody's on the Spa page is what we're talking about and and where we are you know in the process so if you could get that to staff and maybe the members then maybe that will help us all understand you know are we at you know from A to Z or we at M or or we at why I don't know and and maybe that would help give a little bit of or alleviate some of the concern yeah a very fair
Speaker 238
1:24:59
sense thanks. p re s ent ative Evans thank you Mr Chair. Mr Hley, thank you for running over at at the call you had stated that you had
Representative Brian S. Evans
Unverified
1:25:09
no knowledge of of this meeting was going to take place today so I appreciate you coming on over and answering questions you made a comment earlier about the level of authority that that that your office has
and it seems to me from the testimony if you didn't know this meeting was happening then I'm sure you weren't sitting over in your office watching the testimony but I would encourage you to find some time and go back and listen to the testimony that's been provided by Mr. Gordder and Miss Russell and their team it seems to me the big question right now that that that we're faced with is currently the next phase and and that is this $88 million total of $114 million
contract or award or grant or that that's out there does your office have the authority to determine who who received that or to not allow someone to move forward in that process yeah so our our
Speaker 207
1:26:10
office as the authority to if a particular current preliminary selectee
Speaker 180
1:26:16
right does not meet the requirements for the particular where we are in the process right if we get to whether it's
before we come back to ier and Alc maybe January or so or we get to the point where it's granite grant ex grant agreement execution time you know if if federally mandated requirements are not met for the next piece our office has the authority to not move forward with that particular provider that's correct so you have provided a list
Representative Brian S. Evans
Unverified
1:26:45
based upon those qualifications you have provided a list of potential awardees to NTI is that correct?'s correct and as of today that list that has been
submitted has not been given final approval by NTI is that correct? So between today and the time that they give final approval does your office have the authority to contact NTIA and say we need, we we need to send
Speaker 178
1:27:13
you another list if it's if there is
Speaker 180
1:27:17
something that impacts the federal requirements of the program OK? then yes . OK. You mentioned Michaelbaker
Representative Brian S. Evans
Unverified
1:27:28
and associates that they do they are doing risk assessments for you they were doing project completion follow up for you did they do a risk assessment upon the list that you provided to NTIA. the the there's been a
Speaker 180
1:27:47
prequalification process that we went through and I'm sure our our friends at the table have talked about this is constantly evaluated right we have folks helping our team go
through this stuff. it's it's a lot there's a lot of as you can imagine there's a lot of things involved in the process but yes we have professional
Speaker 178
1:28:09
subcontracting teams that help us through this vetting process so a lot
Speaker 238
1:28:13
of different factors could determine the risk assessment of of one of the folks trying to to get this contract is that correct? do you know how this hometown internet
Speaker 242
1:28:23
whoever they are do you know what the risk assessment was on them. Yeah we'll have to
Speaker 177
1:28:31
go back and look particularly there's not a you
Speaker 180
1:28:35
know as of today this particular applicant right or provider is let's say highris or mediumri or lowri really risk ratings would come in a little bit later in the process as of today it's has any applicant met the qualifications right I think that's that's a distinct difference there there's not a report out
Representative Brian S. Evans
Unverified
1:28:54
there right now that shows a risk assessment on hometownet.
Speaker 180
1:29:02
what we have to date is records of meeting qualifications to date or not right and the folks that in the application process and the 20 that we
Speaker 178
1:29:13
have sent up so far have met the qualifications to date I had
Representative Brian S. Evans
Unverified
1:29:18
seen a report, I'm I'm not sure exactly what all went into that assessment what qualifications were asked for that assessment but in that report they were given a highri for for this program if
Speaker 180
1:29:33
I could can I interject real quick? Yeah, probably what you're referring to is the risk assessment report that we have actively ongoing for our current projects that are underway right and so they're and I know the report you're exactly talking about it lists out the risk of like not completing the project on time right as as and there's many factors in that and again some of those being highri
Representative Brian S. Evans
Unverified
1:30:04
in that report that is on the ongoing projects and you stating that your office has the authority to not submit an applicant to NTIA why did we submit them on for a project that is over 10 times the size of what they're already messing up Again, I don't know that it would qualified it as quantified
Speaker 178
1:30:27
as is messing up I would say that as of today
Speaker 180
1:30:36
there are32% complete on the current project as the last site visit that our team went. another site visit is I think scheduled pretty soon because they have selfreported being above that percentage now we have to go in the field and certify and check that. you know and to say that again32% complete on track to be completed I would leave it there. Could you reach out to NTI today and send a revised list?
Speaker 178
1:31:10
I I don't know that that that case. I would say because
Speaker 180
1:31:14
I know there's there's a there's a large concern I feel amongst statewide stakeholders including members of this body right around wanting to get fiber to as many people as possible I think that's an important has been told to me as an important aspect of what the general assembly is looking for right I would note75% of hometowns preliminary selections right the only other
applicant for75% of those locations is a satellite provider. right and so again thinking about where that goes I think the conversations today knowing the process is not complete right we need to continue to move forward continue to vet on additional requirements that at each stage of the process happen and let the process play out well thank thank you for answering those questions you
Speaker 238
1:32:12
know Mr Hley I I can't imagine the weight that's on your shoulders right now you've
Representative Brian S. Evans
Unverified
1:32:17
got one of the most important jobs in the history of the state of Arkansas right now laying on your desk it affects every citizen across our state we've passed legislation over the last several sessions for the betterment of every Arkansan it affects maternal health, mental health rural health education public safety criminal justice municipal
funding and I could go on the list and every one of those has a common denominator and that's high speed broadband connectivity. it's a game changer for our state it's everything about the future of economic development of our state the people in our rural areas are the ones who are going to be the most negatively impacted by this on so much of the policy that we've passed if we fumble and based upon what I've heard in testimony today
we have the we we're looking right in the face of a major failure of an $88 million contract from someone who seems to have no qualifications whatsoever and whether you have the authority or not to fix that I hope that through this meeting today there's brought a lot of awareness to problems in this system and in the process I'm not saying that your office has not done the very best of your ability that you've not follow that you said the process has been spot on
you can only follow the guidelines that are given you but we need to take a real hard look at where we are in this process this is too big of a deal for the state of Arkansas for us to mess up and I feel like we're right on the edge of messing up with with this applicant in this big of a of a project
Representative Zack Gramlich
Unverified
1:34:06
that's going to affect six counties in the state of Arkansas who need this the most. thank you for being here thank you Mr chairir. thank you senator
Senator John Payton
Unverified
1:34:19
Thank you Mr chairir and I definitely wanna thank Speaker Evans for his comments I don't think he overstated that at all. It is very important and if we took everything we heard here today at face value we should be chasing down that paperwork and getting it back in our hands and and everything but I'm concerned as to why we don't have the other side of the story here today you're saying you didn't even know this meeting was going on.taff or or Mr chairir did anybody contact hometown to afford them an opportunity to
be here to to speak to this do
they even know if it's going on so like I said taking everything at face value do what ? I believe we
Speaker 254
1:35:02
were just trying to find out the facts.
Senator John Payton
Unverified
1:35:05
OK well facts are a funny thing if when you hear both sides of the issue taking everything at face value I think it merits us being extremely alerted red flag chased down paperwork but I wouldn't want to do any of
that without hearing the other side of the of the argument here and so I don't know when we can be afforded an opportunity to question the stakeholders in hometownet let them defend themselves or or get more thorough vetting of of their capitalization and and status but but like Speaker Evans said I mean this is too important to fumble and we may need to be chasing down the paperwork and stopping the grant but
I think we ought to put forth a a serious effort here to let the other side defend themselves thank you that's why we're here
today to kind of get the facts out and get the questions and knowledge to everyone that does not know anything about this and I believe that if there's no grants that have been awarded yet then there's nothing to bring hometown in because they're not awarded yet I think we just need to know the facts on what
they can do and if they can do the project if that's the one that
is awarded so go to
Representative Jim Wooten
Unverified
1:36:34
uhpresentative Woootton again thank you Mr Chairman. I totally agree with uhpresentative Evans and Senator Rice and and senatoreyton this is too big and I've had this fear and concern about the process that we're using
can you tell us this is for the department can you tell us who's in control of that office is it you or the federal government?
Speaker 177
1:37:08
thank you representative so yes as the state broadband director I'm in charge of the office,
Speaker 180
1:37:13
OK? but we are subject to the authority of the funding federal agency so when we run this program everything that we do, OK?
from an administrative oversight, OK? is through NTIA it's a subagency of the US Department of Commerce OK? so as an example before June6th when we had the application process before June6th, the federal government said75% of your scoring criteria what you're going to judge people on. We are self we are defining for you you have no say in and we're going to allow you to decide what the other 25%.
of the scoring looks like and that's where ive points from or 2.5 points from letters of support came from that was our office trying to find a way to allow government officials to have a say in the process OK? An example post June6th for example and and how we're judging these applications NTIA has said with some caveats around what's priority and what's not lowest price wins
and that's from NTIA now there's certain things in there that we can try to do you can you can say for instance there's a certain type of project meet a priority definition to be given sort of first look, OK? and we worked through that we had 256 or 255 different geographic areas that people could apply for we had over700 applications come in and we looked at the every
application for every project area and went through and said does this particular application meet a priority or not? do we look at it first or look at it second basically. and outside of that lowest cost per location wins and that's from NTIA that's an example of me not having the authority to do anything different than that OK now and in this process we we end up you go through that process we had 90 days to run it the federal government saidmember as many of you know,
I've been talking to you guys about the beat program for years now right and working through the process and planning for years my first day on the job August 1st of 22. we were planning for the beat program years of planning we get the June6th the feds say nope you gotta redo it and you got to do it in 90 days. OK? with the restrictions of how I've just described on how you look at projects and that's what we did and so that being said with a 90 dayy timeline we can't look at everything in 90 days as far as
all the qualifications that have to do through the whole thing. that's why through the different phases of the process there are different qualifications that you evaluate as we move forward right one of which is capitalization
Representative Jim Wooten
Unverified
1:40:17
my question was who makes the final decision is it you or the federal government and what's the is the75% in a card with what the federal government wants and you have a
25% is that what you're saying
Speaker 180
1:40:36
the old way before they changed everything the old way was that the federal government defined75% of the scoring criteria and the state was able to define 25% of the scoring criteria, OK when they made the change in the program June6th all that went away. gone. and they were very prescriptive and said this is how you're going to do it from a judging applications perspective and evaluating applications perspective you say the change came place by the new
Representative Jim Wooten
Unverified
1:41:05
administration on June6th they released a new policy notice
that changed the program. Mr Chairman this this is just as confusing as it can be to who has the authority over that money and it and it's bottom line being is that the federal government that has the final say and if and if my question is this if the lowest bidder is the
one that successful and has been vetted then while the bargaining aspect to get a lower price if we're taking the lower bid if if if the federal agency requires you to take the lowest bid then what is the bargaining process in what and who does that is this your office the federal government or is it both? I
think I think you can try to answer the question, OK?
Speaker 178
1:42:08
this is this is not me sitting in a chair deciding who wins and who loses and who gets a
Representative Jim Wooten
Unverified
1:42:18
grant and who doesn't and a minute I don't need a long dissertation again. I ask a simple question who, who sets the parameters for the bargaining and why is it necessary to bargain if you're taking in your opinion the the lowest bid
based on whatever the evaluation is by your people and you're taking the lowest bid what what is the bargaining process about when you when you say bargaining what do you what do you mean I'm referring to what Miss Russell's kept telling us that we were in
Speaker 259
1:42:59
the bargaining stage right now. I think that's a misnomer. it's called the bargain round to get a bargain for the taxpayers why do we have a bargaining
round because the new NTAA re released new rules on June6 that said we're going to go one last bid round and let companies have the lowest price possible to get a bargain for the taxpayers the state doesn't have any need to bargain with these companies or allowances to bargain with these companies it's just kind of like the term thatnTAA called this round of bids the the bargain round so we
Speaker 29
1:43:41
can get a bargain for the taxpayers. I understand
Representative Jim Wooten
Unverified
1:43:45
what you're saying so in reality it's the federal government and not the state is that correct because they call
it the bargaining round. so the the federal government
Speaker 180
1:44:01
set the parameters of the program and then my office executes the program at the state level and runs
Speaker 29
1:44:13
they just happen to call it the benefit of the bargain round like we were going shopping and getting the best bargain possible
Representative Jim Wooten
Unverified
1:44:23
shopping I'm familiar with that I'm I'm all in favor of saving the taxpayers' money. let me
be very clear I'm in favor of that but what I don't want to see is someone knocked out of the bidding process because someone in the federal level says we don't want that done that way we
Speaker 13
1:44:44
think this group is the one that should have it thank you thank you Mrirrison
Representative Johnny Rye
Unverified
1:44:53
andye you thank you Mr Chairman let me ask you this from the get go we've passed laws and then on those laws that were passed I'm sure you had some kind of federal overreach or something in this but what I would like to ask you is this there's got to be a certain amount of work a certain amount of
equipment that fall within a certain stage ok each stage should be a block of money to a company based on the progression that they have made and I just wondering if you guys are operating it that way or you're just paying out as the federal government you know since funding down here to you are are we actually getting this
work done for each one of those companies that are drawing funds sure and
Speaker 180
1:45:55
the program has changed over time right originally and speaking again to the project that Senator Rice referenced earlier in the the first couple of rounds of this program the funds were all sent out upfront right
Speaker 178
1:46:07
herere's your lump sum check and now go build it, OK? then the
Speaker 180
1:46:11
state pivoted and changed and said we're going to do a reimbursement program. So as providers or or grantees
awardees spend money on their project and and are building out they have to show invoices and they have to show proof of payment. to the state that's the process we're running now in round three the the the round before this one we're talking about now the projects that are ongoing and getting built out now are on a reimbursement basis. so they are reimbursed as their expenses are incurred and proven to the state. OK. Moving forward into the beat program we're going to pivot again and we're gonna pay out based on
performance irregardless of how much is spent so as you perform you get paid follow up place is this the way
Representative Johnny Rye
Unverified
1:47:02
that you're operating now? in the beat program will
Speaker 180
1:47:06
operate that way in the current round we look round the current projects are reimbursementba as expenses are incurred and submitted to the state so they they submit their invoice that they paid they
submit their proof of payment like a check or an ACH payment so forth and we go through and verify those and then reimburse the provider for their expenses that's how it operates right
Representative Johnny Rye
Unverified
1:47:32
now yes sir and that that sounds ok but what I would like to know is is we're looking for this state to get tied together on the broadband now do we deliver money to these folks after we know that that work has been completed in each
stage or do we just do it as a federal government sends money to us.
Speaker 178
1:47:55
No, it's as as we verify either expense in the current version of the program verifying their expenses that's when we reimburse
Speaker 180
1:48:01
in the next one that we're talking about today the bead program we will disperse funding as construction is built out.
Representative Johnny Rye
Unverified
1:48:10
yes sir but that's still not what I'm looking for you you say that you're doing this on their expenses but what about the actual job itself that's what I'm for every one of these folks
Speaker 180
1:48:25
mentioned earlier that we have a a team that goes out and does site visits and goes to the project and checks it and visualizes the the progress and takes pictures and documents it and then certifies that to our office that's a part
Senator Kim Hammer
Unverified
1:48:46
of the process, yes. Senator Hammer thank you I'm gonna direct
this to you Glenn. the the company
Speaker 270
1:48:54
in question in the hometown internet. they're currently doing work in the state is that right? they're currently
Speaker 186
1:49:01
building out a a project yes what's the value of that project I want to say it's around $8
Speaker 270
1:49:07
million I think yeah7.48 ok and the and the contract under the question now is 88 million. is that right? bundled because there's several projects in that but altogether yes OK and as far as what you
Senator Kim Hammer
Unverified
1:49:22
did to that whether they are financially fiscally responsible to be able to take on that did they meet the criteria that you laid out or was that criteria laid
Speaker 180
1:49:33
out by the feds or both yeah so to date they have as all of them all 20 preliminary sects have met the federal
Senator Kim Hammer
Unverified
1:49:40
requirements as of today. OK. because it seems like the question listening to all the debate is the to that are at the table are questioning whether or not they are fiscally able to meet the
expectations of getting the work done where we won't get stuck with a bad provider. so do you have any response to that if I've not mischaracterized what we're hearing today now look,
Speaker 180
1:50:03
I would say you know, generally the capitalization and being able to complete a project right is one of the things that we have to account for , OK? now folks are not building out the whole thing at once, OK? some providers go out and get extra equity investors that are added to their their their portfolio of owners right
and help capitalize things. some folks go out and some combination of that plus additional loans plus additional credit that happens all the time and again capitalization is something that we're evaluating and down the road another barrier to this to executing grant agreements right with any of the preliminary selectees no matter who they are is being able to demonstrate right their financial capabilities but on this particular one have
Senator Kim Hammer
Unverified
1:50:56
they demonstrated to you is it a matter of hey here's how we're going to capitalize or as a matter of hey we promise that
Speaker 177
1:51:04
we will capitalize. Yeah, to date they have they have met to date they have met the federal requirement to be at this stage of the
Speaker 28
1:51:12
process would like to add though as I said earlier the federal requirements are to certify that you have the financial capabilities in fact that was just part of the certifications of the additional information that Glenn was talking about that we did on Friday. We had to
check a box that said we certify that we have the funds we check a box that said we certify that we have the financial capabilities. Again, the only financial information we've submitted to the state was an audit from 2 3 . We did submit on Friday a threeyear pro forma showing the sustainability of the operations after that but the state the the federal rules do say the company certified but in our experience with other grants you need to prove that you have the money. I
mean we literally have to show bank statements with cash in our accounts for the copay amounts for the USDA grants and I don't know how you can approve somebody for an $88 million grant or $114 million build and have them scurrying around and getting the financing as they're proceeding through the project we need to know upfront and you know we brought these points up to the state in our public comments that we filed on august twentyninth and yet they
still went forward and filed the final proposal even though they're looking into the broadband data, um, mapping absence they do not have follow other FCC rules by having broadband labels on their website.hink about a nutrition label on the back of a food package supposed to have the same thing for broadband on your website they don't have that why did we not look at that before we submitted the final proposal instead of now we're ongoing and no we can't send an
extra list to um, NTAA with a revised list of people. I don't know how it gets fixed if you chose to revise your list. it's not it's very unclear in the NTIA procedures we seemed focused on and I will absolutely say it was a very hard job and then the June6 pivot was just crushing for everybody. the office and all the the companies in the state but there was 20 companies that asked for an extension to
further review and do their due diligence before they submitted their final award. We went ahead and submitted it. then we said on the exact same date we're doing a comprehensive review. why do we not do that before we submitted the final awards because I don't know how you back it up now. right and let me close just by asking this cause I want want
Senator Kim Hammer
Unverified
1:53:49
to hear your answer to it and I'll direct it to you ma'am, because you've been doing a lot of
the talking are you here because you're a company that has sour grapes because you didn't get the contract or you're here because
you have genuine concerns about the process by which it's going to be awarded that even if you don't get the bid you'd be ok with that but you just have real concerns about the process by which the award has come down.
Senator Jane English
Unverified
1:54:15
realal concerns about the process the way
Speaker 28
1:54:17
the bid has come down and our experience with other grants and I will let Sttephen speak because he's the president of our company these are our citizens that we have worked with for75 years and we are very concerned that they get lost in the dust so to speak of the broadband
improvements right, I'm gonna take my last
Speaker 46
1:54:39
one which is Senatoreyton thank you Mr Chair. I'll make
Senator John Payton
Unverified
1:54:44
it real easy. it's just that one of the facts that has come out I've misunderstood it at one point it's changed the7.4 million dollar project that hometown is currently working at3132% of do they receive that7.4 million
on the front end or is it paid out in the reimbursement scheme that you explained it's it's paid out via
Speaker 178
1:55:11
the reimbursement process. OK thank you thank you
Mrir. right looks like that's gonna end this part of our discussion today I thank
you for being here sorry we're late getting you in it wasn't an early request to have you here but it kind of got closer to today I didn't realize we left you off so but thank you and thank all of you for showing up and put some valuable
discussion into what we were doing I believe you brought a lot of light to
the discussion today and wish we'll go to stage two at some point and see what we want if we want to go any
Speaker 49
1:55:50
further or just let the process take over Mr Chairman I if I have a
Howard Gorder
Unverified
1:55:55
couple of questions if I may if that's thinking of the these capitalization questions here are the companies evaluated or
Speaker 132
1:56:01
maybe a better question is how will they be evaluated for capital capability to to construct these projects we
Speaker 275
1:56:10
allowed to askt don't think you're allowed to ask that to him. No, you're not. sorry can't cross examine back there do think
Speaker 279
1:56:15
that's an important question well we'll we'll see what we
could come up with on that I think each one of you if y'all have anything I'm gonna have to hurry because we've got another group that's coming in and've been waiting all morning so if you have anything you're welcome to respond to senator Rice or myself with anything you have after that also I thinkblr's tracking what I'm supposed to go back
Speaker 234
1:56:33
and and get right? OK thank you all right thank you all thank y'all for being here
thank you for your time so colleagues at this time we're
gonna move to round two we're gonna not we're gonna go through round two without having lunch you can have lunch later you got all afternoon free for all aqua concerned as soon as we can get this other one finished up we're gonna bring in some more discussion about something going on that we've had a lot of interest in and across our state and that's about our federal surplus property program it's been a been a pretty good concern for a lot of people so at this time I'm gonna ask
Colonel Hager to come up and talk to us for just a little bit I'm
gonna let Colonel Hager have his presentation and after that we
will call up Mr Barnes to do a presentation on if you would please recognize yourself and who you are and who you're with
Mike Hager
Unverified
1:57:46
good morning Mr chairman members my name's Mike Hager I'm secretary department ofublic Safety and director of state police. I'marren Perry chief
Speaker 285
1:57:54
fiscal officer with Department of Public Safety. right I think what we're looking for
is just an explanation of what's been happening over the years what has happened recently with this program and what the future is for it yes sir I'll try to keep this as
Mike Hager
Unverified
1:58:09
generic kind of30,000 foot overview as possible if you do want to get in the weeds that's why Karin's here she's gonna have to do that
Speaker 290
1:58:19
basically about three years ago the federal government changed the way they started liquidating their property I and even on that one I can't get into you know a great deal of specifics but you know generically they started taking a lot of their plo or property and putting it on deals I think it's govdeals.com maybe and they're able to sell that property turn around and put it back into their agencies. so you know just for instance if the Department of Interior had a bulldozer instead of liquidating
it and in the old way making that available to the or the state federal surplus programs instead they sold it themselves and or they sell it themselves now and they put it back into that program honestly it's more efficient as a federal taxpayer I'm glad they're being better stewards of our tax dollars but unfortunately when they made that change that had a direct impact on the federal surplus program that is run under adam so about
three years ago we were making or up to about three years ago we were making enough money at the program to pay the bills pay the overhead and basically have had the ability to put about720,000 dollars in the bank or in the program so once that that change was made that institutional change on the federal government side and we started losing money and depleting those that balance
so in you know again approximates Karin can talk about specifics if you'd like
Mike Hager
Unverified
1:59:58
it but approximately in 23 we lost300,000 dollars in24 we lost300,000 dollars and in 25 we lost our own pace
Speaker 290
2:00:06
to lose about another300,000 dollars so in and and I'm guessing but about late June early July somewhere in there we notified the governor's office that you know we have bouts through the middle ofoctober ironically that
we've got the funds in place that we can continue to make payroll and pay the bills pay our leases pay our utilities things like that and after that the money's gone so I should have already said for those that don't know the federal surplus programme is not receive any general revenue or special revenue so it's one of the few entities within state government that has to sustain itself so it's you know it honestly it wasn't a decision to be made at
leasts you know not on our part. you either have the money to pay the bills or you don't and unfortunately we didn't so we consulted with the governor's office we talked with OPm and DFNA or I'm sorry OPm and TSs and the decision was made to begin the liquidation process and and shut it down there's two processes that are currently in place that are work are going concurrent with one another and that's the federal government's process through GSA and what they require in closing
the program out and then also of course our riff process and riff policy under the the state and so we're in kind of in the middle of doing those two things at the same time so the it was talked about that we had I think at least twice in the last couple three decades I believe once in the B administration and maybe once in the Huuckabee administration there was one time money that was used to kind of build the program out and get it back on
solid footing unfortunately if you look back my understanding of those those they were dips where there had been a a lull in the ability to get some of the items that it's capable of sustaining the program but it was not a sustained loss the way it is now so the if again knowing that it is just the program has just changed it it is what it is it's unfortunate but right now the type of inventory that
we can get the simplest way I know to put it is we're spending thousands to make hundreds so and it's just simply not sustainable so beyond that it becomes a ideological issue on you know, do we use state money to sustain the program and keep it open or not and that I guess thankfully is above my pay grade so but the fact of the matter is as
it stands today it's simply cannot support itself so you know there there are there was no decision to be made there I mean we we had to close it down and I hope that's enough to at least ok so
I guess I'm I'm gonna have a question first and we already have some people lining up on to ask questions but so the products of what you're saying some of those products are not available they're going to gov.com so the big ticket items I hate to use
Speaker 290
2:03:25
this analogy it's silly but you know my understanding
Mike Hager
Unverified
2:03:29
the way if you've ever seen the the TV show Storage Wars where we would have units or lots or whatever the case may be that we become va available for the program to bid on compete for whatever and it's kind of like you're buying that storage
Speaker 290
2:03:42
locker and they opened the door and you look in there and you see nothing but junk but you're hoping there's that one or two big ticket item in there that's going to pay for the overhead and your expense of buying all that junk having to get rid of that junk and that one or two you know thing is going to be
able to pay for it unfortunately we're kind of in the same boat on this and even though it's not junk and it is absolutely beneficial to our local partners and our you know fire departments sheriff's departments you know all that it's absolutely beneficial to them but it's not there's no big ticket items in there that are sustaining the program you know so the days of us getting the rogue graders bulldozers, fire trucks and all that they're
they're gone also might want to point out that you know it's been talked about that we're the only program that's actually shutting down I'd argue that we're the first program that shut down because we're self funded the other states that we're aware of are they're funded by some form of general revenue so theyre taking losses as well but they're funded they're
Mike Hager
Unverified
2:04:52
not you know they're not set up the way we are and we were contacted by Ohio I think last week that said hey we're gonna have to close down too we
Speaker 290
2:05:02
need to know what this process looks like I mean they're they're all in the same boat it's just the way
Speaker 294
2:05:13
came to fruition quicker OK you ready for questions? yes sir I think Senatoreyton,
Senator John Payton
Unverified
2:05:18
you're up first. Thank you Mr Chair. So my I mean obviously I've I've been in business all my life and you can't operate a negative cash flow situation but you know sometimes within an entity you have certain modules that operate at a negative
because they benefit the other modules that operating a positive and so when we look at city and county and state government I see different modules and and when you say that this program has absolutely benefited the fire departments the sheriff's departments the city police and and those programs that qualified for it they were able to purchase equipment through your
entity at greatly reduced prices which if they could not have purchased would they have had to to buy it at retail in other words were those were those purchases necessities or luxuries because if they were necessities then at some level state taxpayer dollars are now going to be paying retail for those necessities.
instead of being able to have a program that lets it flow through at a
greatly reduced price so while the how much did you say600,000? what
Mike Hager
Unverified
2:06:48
what was your depleted about720,000 over
Senator John Payton
Unverified
2:06:50
three years OKok so let's just say3 years720 , 000 that's $200,000 a year $250,000 a year how much is it benefited us that all of those
government agencies at at the city or county level we're able to save budget money or do you just think it was a luxury that they that they didn't actually have to have those products that they were purchasing through you. I'd like for you to comment on that overall yeah
Mike Hager
Unverified
2:07:26
no I absolutely don't think it was a luxury and I absolutely think that the items that they can get now are still beneficial the difference is what it has to be pointed out is the items that they got in the past so the
ability for a role of sheriff's department to purchase a dump truck or I'm sorry a police car truck or whatever equipment it was or a county judge's office to buy a dump truck or whatever that's that was incredibly beneficial but that all changed three years ago for the most part I mean there may be once in a blue moon that you're still going to be able to find something like that but for the most part that all changed three years ago on the part of the federal government so the if it was if all that was still available the way it was three years ago then I think that we
Speaker 290
2:08:12
should fight tooth and nail to save it. The problem is now is I can't make that same argument is it beneficial of course it is I mean if they can buy folding chairs and you know and the miscellaneous type items that they can get there now is it's beneficial but you know again truthfully it becomes more of an an ideological issue of is it
Mike Hager
Unverified
2:08:37
worth several $100,000 to taxpayer dollars to
maintain this ability for them to be able to buy folding chairs
Speaker 290
2:08:47
and and tables and things like that now if it was the ability for them to buy dump trucks and police cars and all that absolutely I
Mike Hager
Unverified
2:08:56
don't think anybody would argue that but now it's it's just the type of inventory that we can get and put out on just
Speaker 289
2:09:03
a black and white you know business up Mr chair that's what I'm asking
Senator John Payton
Unverified
2:09:09
for I'm asking for your going forward not in the past
do you see adams that they can obtain through this program that are necessities that would save them more than $250,000 a year as a state because I mean we could cut our nose off to spite our face here and we're gonna save $250,000 and then we're gonna be issuing grants to every fire department and every sheriff's department to go pay retail for those tables and chairs and and office furniture and such and that's gonna cost us way more than
$250,000 a year so I need your professional opinion going forward not in the past are the products there that would be necessities and would we be able to save a significant amount of money by by coming through this program instead of pur having to purchase
some retail from what I've seen in the last three years and look at the
Speaker 290
2:10:10
numbers my opinion is no it's not and again that I have I have no way of knowing but you know
Mike Hager
Unverified
2:10:18
what I see inventory that's available now and what we're getting and like the last one that we did not take it was basically jumped from TSA
Speaker 290
2:10:26
at the Denver airport that's what we're going to be allowed to get they don't bring that to us we've got to send a crew and tractor trailers to go and get it and bring it back and again we're so now we're spending thousands to to make hundreds and if you look at the inventory that you're actually getting now once you know I'm not at all gonna suggest that once
every six months or a year that you may get something that would really be beneficial to an agency but if you look at the records and you look
Mike Hager
Unverified
2:10:56
at what they're spending over the last three years compared to two years before that it tells me that they're not really getting anything of any value there and appreciate
Senator John Payton
Unverified
2:11:04
your that's what I asked for and it means a lot to me but you did bring up one other question in the absence of this program will there be a source that can be accessed by those local sheriffs and fire departments
Mike Hager
Unverified
2:11:19
through theovexx.com or whatever yes sir they can still compete for thatd and think I don't know for sure but I know one problem
Speaker 290
2:11:27
the federal surplus program had is that we can't sell to the public if we could sell that inventory even in what we have right now we could probably sustain the program but we can't. you have
Mike Hager
Unverified
2:11:36
to have a a government Id or be a better known business or something like that the govdeals.com I'm not 100% sure if the public can bid on those items or if it's only federal government I'm not or I'm sorry only state government the way it is for us
but not gonna pretend like you'll be able to get the same deals that you could if you were able to get it through a federal surplus program probably still well no doubt much less than retail probably you know less than wholesale but it probably won't be as good of a deal but the all that all that inventory is still available it's just not available to the federal surplus programs anymore it's going to be on deals.gov now OK thank you thank you thank you for the question Reps inwardlaw you recognize
Representative Jeff Wardlaw
Unverified
2:12:20
thank you I'm off follow Senatoreyton's guidelines a little bit but first I want to establish a timeline so when did y'all
make the decision to start the rift process and close the federal surplus you can give me a month you don't have to give me an exact date I was gonna
Speaker 311
2:12:38
say that'd be my guess was July I think. So prior to July and and I get this messed up and you got to
Representative Jeff Wardlaw
Unverified
2:12:44
remember I'm just a poor old dirt farmer as you can tell by looking at me and so I'm a little slow
but are they called gleaners or screeners what are those people called that actually sit in front of that computer screen and
Speaker 289
2:13:05
find these deals I know who you're talking about I don't
Representative Jeff Wardlaw
Unverified
2:13:08
know if they've got we'll call them screeners for our purposes, OK?
Were those people placed in any kind of handcuffs prior to July from your agency or from financial wherever they get their approval
Speaker 290
2:13:21
from before July first. as far as what they could and could not buy I don't believe so because the decision at that point had not been made
Representative Jeff Wardlaw
Unverified
2:13:33
yet. OK? so my understanding was and and I may have the dates wrong again. farmer works7 days a week. I don't really care if Monday through Sunday wass it September or August they found a pretty good think it was hummmers involved and some other items involved
that they were able to screen or glean again we've agreed to call it screening and then they were told they couldn't go get it because the decision had been made to stop am I right about
that? sir think so those items would we call those items a big ticket item or would we say that because under testimony I heard you say to Senatoreyton a while
ago those items were not available anymore so we've proven that they are still available . I guess the question is are those items available in enough
revenue savings to the entities that would have purchased them that would equal or greater than the300,000 dollars that's needed to fill the gap because it's my understanding of all the meetings I've sit in it's about300,000 dollars a year that they've lost for the last couple of years so are the are those the big
ticket items that would fill that gap? Yeah well like I told Senator Peyton, I'm not going
Speaker 290
2:14:45
to suggest that they're they won't ever come available. The question
Representative Jeff Wardlaw
Unverified
2:14:47
was were those items available after we made the decision that we couldn't screen anymore from July
Gail Choate
Unverified
2:14:56
if that was in august then yes it was after the decision we were closing down so they would not have been able
Representative Jeff Wardlaw
Unverified
2:15:03
to go pick them up so we haven't picked anything up since that decision
Gail Choate
Unverified
2:15:07
was made in July. We finished picking up in Texas where
Representative Jeff Wardlaw
Unverified
2:15:10
we had already started but we but we haven't picked up anything new since July not to my knowledge thank you I'll yield to later in the board Mr Chair Repsonmcgrew thank you chairman thank you
Representative Richard McGrew
Unverified
2:15:27
Colloel Hager for the job you're doing for the
state. also thank you I know me and you visited on this for quite a while. we'll express some of my concerns if we and I come from a business point of view also understand we can't keep going if there's no money to go but we had a a huge access a few years ago and we're we're losing money every year and nobody ever said anything and we just ran to the money ran out
and I think it's been stated that things could have been run more efficiently than the way that they were doing so that's a huge concern of mine that why it almost seemed like it was determined we were going to spend all the money and then close it. Why wasn't there notice given to us a year ago or two years ago there's it's my understanding there's over 900 agencies that have access to these funds and so I'm concerned that there was no notice and no seems like
attempts to save this also understand it's been passed between several agencies and that there was a commission over it and I think got changed underhutchinson. so I am concerned of all of that but the biggest concerns the one that's already been kind of put forth the money that these agencies save I understand that it would cost us as as you're stating 2 to300 $1000 a year budget to keep this open but how much are we saving those other government agencies that
are benefiting from this and I understand there's a big question is to what we can get and what we can't get and I'm not sure that's fully been determined and is it even with the reduced amount is it still how much has it been benefiting he said we have two questions one why was there no notice given ahead of time and two has there been a study done to see how much this has benefiting the other agencies in the state
of Arkansas and see if it's more than that300,000 so
Speaker 290
2:17:39
the reason for the notice is honestly because we didn't have it either and there's kind of a long backstory on that but when when the transformation occurred shared services were all consolidated among agenc so Department of Public Safety we had5 or have5 agencies that are part of DPS adam is one of those ANcs the federal surplus
program falls under adam so they were the one agency that did not consolidate shared services and the simplest explanation for that is that they received a portion of federal funding that requires
Speaker 292
2:18:18
them to do that job function and that in that function only so as a result everything that came over to DPS and shared service like fiscal, IThR all that that did not come over with adam we had a fiscal section at adam that once I started
anderry came in as the CFfo we had a continuing problem with communication issues honestly and we had a continuing problem meeting some deadlines for committee and things like that carry and recognized that her andrector Gary talked about it made the decision to bring that group to DPS headquarters that all happened about the end of 24. the beginning of 25 Kan's team started doing a forensic audit and they started going through and they started looking at all the programs within DPS where we were good, where we were lacking you know things
like that where we could save money, whatever the case may be. Now keep in mind that was during the legislative session so to say that we're all kind of preoccupied with that and caring as well so that all these things kind of got put on the back burner and the first thing that they were looking at were general revenue lines, the ANcs the special revenues things like that things that could be impact ed within the legislative session at some point about June I guess or somewhere in there she came to me and said that we have made it down to basically the federal surplus
program and we've got a problem she said they're in the red there have been in the red for the last three years and this is by how much our surplus is depleted it's gone now but our our balance is depleted and we can make payroll and pay the bills, pay the leases looks like through aboutoctober. so we notified the governor's office this is the situation that we're in and started trying to figure out why you know trying to understand why that was why that was the case so we found out then by
talking torector Gary and uhri that runs the FSP program that there was a change on the federal side on the way that they were liquidating their property and the the items that had always sustained the program are very rarely available anymore and so the items that we're getting now are again more the you know I hate to say trivial and I'm not saying that it's not beneficial to the agencies there's absolutely no doubt that they are but it's not enough to sustain them so if you go back and you look at the financial records over the last three
years the purchases now instead of being for sixfigure amounts obviously for large equipment and things like that I think the
Speaker 290
2:20:45
average was like700 dollars so is that life changing to an agency it could be depending on how you're funded but you know truly it gets back down to the point now where you know is that the best use of taxpayer dollars I mean we've only got so
Speaker 292
2:20:59
many again I'm I'm thankful that that's really not my job to determine that I've got a budget I have to run an agency and that's that's the end
Speaker 290
2:21:10
of the day for me so at some point that I mean it's a conversation that everybody's point or everybody's talking point I I don't disagree with is is it beneficial for the state to you know to a certain extent to keep a program running even though it's a bad business model and it's not going to be sustainable you know we we do that on in other areas you know that are service agencies you know state police did not turn a profit but I promise you know this body spends a lot of money on state police so you know it
it gets down to it's just a question of there's so many dollars to go around what's the
Mike Hager
Unverified
2:21:46
best way to spend them and you know once again that's kind of above my pay my pay grade but
Speaker 290
2:21:51
as a whole all I can do is answer the question when asking me is is it sustainable and even if we clean it up and make some efficiencies Karen found some places that she felt like that we could save money we did that we implemented those changes and truthfully it was too little too
late at that point. but I think once again you're talking about saving hundreds maybe thousands when you need hundreds of thousands it's where there's there's not enough meat on the bone that can be trimmed there to to make the program sustainable so again now it's a bigger question of is it worth it is it worth it to the smaller agencies for the top of equipment they can get now now what they used to get but what they're able to get now so I mean that's
Speaker 292
2:22:36
that's kind of the million dollar question for300,000 dollars question I guess I should say well thank
Representative Richard McGrew
Unverified
2:22:44
you and that's appreciate that I guess this has been such a good program that served served the state and many agencies and and volunteer fire departments involved for years I just hate to see the haste and you know it if they're not sending this stuff now with the federal government that could change, you know, and so I hate to see it shut down so quickly. do you believe there's that it be be worth a second effort since we
don't know what it's really saved we've never done a study to know what is saved all these other agencies it may have saved them, you know, a million dollars in this last year and but we don't know that you think it would be worth taking a shot at this for a year and funding it to see exactly what it could do if it was run
Speaker 290
2:23:39
efficiently and again honestly just my personal opinion is no. from the inventory that I've seen that
Speaker 292
2:23:45
had had become available in the last three years and from our financial records that show what these institutions were were buying it I don't it would be I would be hard pressed to make the argument that it would be just completely detrimental to their operations to not have access to FSP anymore based on what they were buying at FSp over the last three years. so again that's not to say that what they were getting is not beneficial but I I don't I doubt many would have to close
the doors based on not being able to do and again that's that's a business answer that's not a you know an ideological answers yes sir thank you r f son ladyman you're recognized thank you Mr Chairman I'm well we're
Representative Jack Ladyman
Unverified
2:24:33
in the corner I don't know whether it's a question or more of a comment but there's been a lot of discussion senatoreyton talked about this a while ago many years ago I was a mayor. every time we came
to a municipal league meeting we would go by and look at what equipment they had at this site we would buy things there so one year we we needed a backup generate diesel generator for one of our sewage pumps and we're gonna have to buy one we went by there they had a military unit that we bought50% of what it would cost us which was thousands of dollars which was a great deal for the city now what I saw when we would leave the municipal league
meetings and go out there it was mostly small towns the big towns had enough money to buy the cattle the new Cadillacs we didn't we had to buy a used Ford right? So so those small towns and I don't know about the counties they might have had the same situation but but it was a good deal for small cities and you know I think they had dump trucks they had you know back hose and things like that that were really good for small cities now whether the cities could have
afforded that another way I don't know but it was a really positive impact on our budget and I'm sure it was on a lot of other city budgets and we would also buy some trivial stuff I don't know what the term you use but they used to get these big pallainers of radios and telephones and things where they got them only God knows but I would buy a pallet of those and we would give them away at our4th on the river celebration and I got them they're cheap but I didn't need those
I mean that was not that didn't really benefit the city it was good but these are the smaller items that you were talking about. So that was our situation so it was it was I believe it was a good thing for the cities we could have probably come up with the money some other way without asking the state to do that but it would have cost us now my question is is that still the case today as it was back then as
it's still a small cities, small counties and I I see the municipal league in the audience out there. I don't see anybody from the county but if you guys don't mind could they come to the table that s the municipal league and see if the current situation is similar to what I just
talked about I would be ok and
Senator Terry Rice
Unverified
2:27:12
chairman cozart comes back and if he's ok we'll be next
so can they come up to the table now well we've got other people signed up ok after yeah that'd be will let them come up with the with the others right thank you Mr chairman Representative Rye you're recognized about a month and a half ago
Representative Johnny Rye
Unverified
2:27:50
I got a call from Doy hillis which is the director of drainage district number7 which includes Harrisburg markree Lapanto, Toronza and so forth and he was really worried about this program and this you know this not company but where you work with this entity he said that there's a lot of items a lot of items their
budget there in Marre is about300,000 dollars a year they don't have any money for big ticket items colonel and he told me a couple of years ago that they actually bought a piece of equipment that would have been close to $100,000 for about3,000 dollars and that's just how important that it is to him and I told him I said Do I did not know that this was being dissolved I hadn't heard anything at all but I do know that you guys are very very important
and I hope that you could do something to get this back on the road again because this is taking care of a lot of towns especially in towns like Markree and Toronto which man back in the depression when they had the big flood hadn't been for the levees this thing would have been in real trouble Colonel
Hager so boy I think we're here to help you ok yes sir and
Speaker 290
2:29:13
we appreciate that you know, again, the only thing that I would say to that is that I I'm concerned that the program that
so many people are are have so emotionally expressed to me and I literally I have talked to more legislators, more county judges, sheriffs chiefs volunteer fire department chiefs over this issue than anything else that I've dealt with in three years and and I hear them and I get it and I don't blame them and but there's almost like this an emotional want or need to save a program that truthfully changed three years ago it's come to fruition now but it changed three years ago when the
federal government changed the way that they liquidate their property so if the program if the legislature and the governor's office decided to to say give general revenue to keep the program afloat you know I would just hope that people would realize that even if that happened they're still not gonna see the type of items that they used to have available. the type of items that for me like in my personal life would
Speaker 292
2:30:14
be life changing I'm assuming for them it's not gonna be a life changing. is it going to be
Speaker 290
2:30:24
convenience and you know to to get a few things here and there possibly but that's the only thing that I would offer on that is that you know I just I hope people realize that the program they're fighting is so hard to save honestly that that died three years ago. I mean it's just there's
Speaker 292
2:30:39
just that stuff is not there anymore not as a general rule not saying it's not ever or not ever will be but when you do have that big ticket item that hits then you're gonna have you know several states that are
also trying to pounce if that makes sense Well colonel
Representative Johnny Rye
Unverified
2:30:57
and the thing of it is we didn't know I mean I had not heard of this at all and that occurred about a month and a half ago and it meant a lot to him Colonel Hacker and it I mean we're here to help you know I think that that's our job is to make sure that people are safe and that we don't flood and things like that so if you can do whatever you can do we I for one I'll guarantee you
I'll back you up and anything that you might want to try to do
to keep it going OK? thank you sir
Senator Terry Rice
Unverified
2:31:32
Colonel Hager appeared to desk cut to the chase on this your secret for public safety you're
appointed by the governor correct sir governor approved the shutting this down correct sir you didn't you didn't get any input from any of the entities that receive benefit from this correct
Speaker 290
2:31:57
I wouldn't say that necessarily we talked no Director Gary almost immediately and again believe me we wish we would have had more cc or more heads up on this as well the reason why we didn't is what I explained earlier about the fiscal issues but once
Mike Hager
Unverified
2:32:13
we found out about it, herector Gary was actually in an office of emergency Man conference and he notified those parties the next
Speaker 290
2:32:21
week he had a a meeting with the county judges notified them and then I met with the
sheriff's chief, sent them an email, told them of the issue so as granted it wasn't good notice but as we got the notice we we started making that information available but at the same time I'm sorry the decision had already been made from the
Speaker 346
2:32:43
executive branch to shut it down correct? I don't know if that
Mike Hager
Unverified
2:32:50
is there was about we provided the financial information to the governor's office and there
Speaker 290
2:32:55
was a period of a few weeks there
that they were analyzing that information . Karen and I had met with the FSp director and or the program manager whatever title is and had talked to him about basically trying to get plans together like
Mike Hager
Unverified
2:33:14
if you have 11 employees can you do it with5 if you you know, can we, you know, cancel this contract? Can we do this different? so there we had a short period of time there that we were exploring other options and of course keeping
the governor's office informed of that but unfortunately by the time that we knew about this and we knew how dire the situation was we had about 2 to3 months before
Speaker 290
2:33:41
the money is gone there is no more to keep it going and we had to make the decision to either start the GSA process for closing out and the riff process both of which take a little bit of time GSA much more than the rf but cau because we had to make those notifications so there was a
decision made quickly but there was there was at least I would say a few week window that we're kind of grasping at straws trying to find other options at what point did you contact the legislature? I did not now I began getting contacted in fact, I believe you called me probably one of the quickest out of the gate because as soon as we contacted the county judges and all the entities or and we advise them that obviously they you know were concerned talked to legislators and and started
fielding phone calls immediately but as far as that decision
Senator Terry Rice
Unverified
2:34:35
had been made then it already I think by the
Senator Terry Rice
Unverified
2:34:40
had bottom line does your agency the department of Public Safety have a enough money and a fund that they could fund this for another year. no sir as far as I can go I have no idea do you know I'm I'm supposing that the governor's not told you with money she has discretion that can be used because this you could even tie in with emergency stuff
and she informed you at all that she would consider funding
Speaker 346
2:35:11
this for another year we've not had that conversation no sir you don't expect her to? No sir,
Senator Terry Rice
Unverified
2:35:16
I don't expect you to what I'm trying to get to for our committee the
only other way I know of is for the legislature to appropriate money and we can't do that until april physical session do you know of another way we could do that within the
Speaker 290
2:35:32
means ofdPS no sir. that's and again I'm glad our
CFfo is here she she knows the dollars and cents you know to the minute better than I do but
Senator Terry Rice
Unverified
2:35:44
no sir, I'm not aware of any this we're gonna have more testimony after you and I I don't know if they've got information on
we're missing out getting some stuff you and I had the conversation I understand that I have to make
decisions in my business and I have uh've I've cut out some lines drastically changed our our gross but it didn't change the net much. I just got rid of some headaches and less people and sometimes you have to do
that I don't know that that's right in this case I'm listening to both sides but if we have testimony that some states are getting more stuff than we're saying's available out there that's gonna be concerning if we're not doing something right to get it and I would be open open to appropriating funding for it. I don't know if the governor's gonna fight us on that or not with some of the stuff going on but this is a think it's been
shown this is a a benefit to many entities across the state of Arkansas and it did work for a long time and if there's a way to make it work I'd sure be open to doing it but you're saying your agency can't do it no
Speaker 13
2:36:58
sir we can't do it internally thank you thank you
Representative Jimmy Gazaway
Unverified
2:37:01
Representative Gaswayer recognized thank you Mr chairman and thank you Colonel Hager for being here to address this issue I was contacted by a constituent of mine about this who is the band director at the Brooklyn
school district he sent me an email and said that the Brooklyn school district had saved well over $10,000 just in the past few years from using this program and of course that's one small band program in the state and I can speak from personal experience when I was prosecutor in Poinsett County. remember one day the Poinsett countunty administration told us that we were going to get new office furniture they loaded up some dump trucks and went to the
surplus and came back and I got a really nice desk and whole office was furnished and it was like probably less than500 dollars for the whole office and so when I think about that and those types of savings it mean it's it's along the lines of all the other concerns that have been raised here already the point is this program has resulted in substantial savings to school districts counties municipalities
all the other state agencies ba banned programs you name it that take advantage of take advantage of the savings that this program offers and it just kind of seems to me it's6 one half dozen of the other we're you we can either fund this program or we can set aside some additional money to pay for all of these needs that are alt they're going to arise I mean you to think about what Representativeladyman mentioned
about a backup generator Humve that I think representativeordlaw mentioned the piece of equipment the $100,000 piece of equipmentpresentative Rye mentioned that they got for3,000 dollars. understanding that the program may have changed to some extent but the point is it all is gonna have to be paid for one way or the other so whether or not we fund this program and we allow those savings to flow through to the those other governmental entities or whether we set aside a chunk of money so that they can pay for those it's gonna have to happen one
way or the other so I just like to know your thoughts on that and I guess how how that you know given that being the case how
Speaker 290
2:39:30
that factors into the decision to shut down this program well again at some point they're truly was not a decision to be made on our part. I mean it it's it's either it finds itself it sustains itself or it's not so we're you know again to
Speaker 292
2:39:48
senatorRoss's point, I don't have a kind of a you know a balance somewhere sitting in another pot of money that I can I've got the discretion to say well I'm gonna go ahead and build the FSp out for another year I don't have that all I can do is you know report the information and and go from there
Speaker 290
2:40:05
I mean that's so again I don't I'm sorry you'll just follow up at the at the appropriate time you can yes
Representative Jimmy Gazaway
Unverified
2:40:18
sir no go ahead well I I think my point is is that you say the decision didn't have to be or there wasn't a decision to be made I mean well clearly there was a decision made by someone because I start getting emails from my constituents saying that they were upset they weren't going to be able to make take advantage of this program I certainly didn't make that decision I don't think anybody else sitting in this room made that decision so there was a decision made at the question is and maybe this decision has been put on us now are we going to fund the program so that it continues so
that these savings can flow through and people can take advantage of it or are we going to set aside a pot of money of300,000 dollars and say if you're a county municipality state aency school district and you need new furniture or you need a new dump truck or you need a new backup generator or whatever we've got a pot of300,000 dollars sitting here for you to to pay for it because it's gonna have to be one of those two things at least the way I see it. Any response to that Now again the only thing that
Speaker 290
2:41:22
I just would want to make sure that the body knew that before the money was committed of what the that the program is fundamentally different now and has been for three years it's just so you know I again I I can't speak to you know if some of those items that were so important and impactful to those agencies if they would be available again if it would be hit and miss over years if they'd be available again. it but it has
significantly changed when you go through the financial records and you look at what agencies and entities were buying five years ago versus what they were buying in the last three years it is significantly different senatoreyton Thank you Mr Chair. I
Senator John Payton
Unverified
2:42:14
guess I'd like to talk about the cash flow for just a minute. So these products do you purchase them
in order to bring them or do you just nab them whenever they're up for grabs . no they're free to us so the product is free to you how do you establish a value that the other entities pay for it. GSA sets a
Speaker 364
2:42:41
rate and from there that's the rate that we use when you say a rate you're talking about a percentage of
Senator John Payton
Unverified
2:42:46
value? that's probably going to be a little bit over my head doesSA
actually put a dollar value on each item or a dollar value on each item. OK so they're giving you the item and telling you what you can sell it for OK you said that you provided financials to the governor's office. can we get those? so if you don't mind Mr Chair, I'm requesting that the committee be be sent the financials that were provided to the governor's office so how many different entities which I
didn't realize schools were part of this but fire departments sheriff's departments counties cities schools what's the
Speaker 364
2:43:37
number of entities 292 entities purchased last
Senator John Payton
Unverified
2:43:40
fiscal year you know you've heard of Sam's Club and they charge a fee to be a member in order to buy the product have you ever considered charging those entities
Speaker 367
2:43:56
as far as I know no but GSA has to agree for us
Senator John Payton
Unverified
2:44:00
to allow that charge. thank you. Well I'm just exploring things that help the cash flow so you have
Speaker 368
2:44:06
no I was just gonna say that's another frustration with the program
Speaker 290
2:44:10
is that we're responsible for it but we're not in full operational control of it either we're under GSA and the federal government they lay out and have so many guidelines that have to be met that again for instance the fact that we can't
Mike Hager
Unverified
2:44:26
sell to indivi or to the public is huge M andR and state version of FSp them selling to the public is huge they could we would go in there and they could pick that warehouse clean today but we're not allowed to do that because the federal government. We would do that we have all kinds
Speaker 289
2:44:39
of things we like to do let's not worry about what we can't do let's talk about
Senator John Payton
Unverified
2:44:44
what we can do. So so how many dollars worth of product did we sell? last year
Gail Choate
Unverified
2:44:57
Last fiscal year we sold 906,000 so what would
Senator John Payton
Unverified
2:45:00
be your estimate that let's say you've got $10,000 item that would be worth 10,000 on the open market fair market values 10,000 What would I expect to pay for that as a sheriff's department or something coming in there to buy that item from from your entity don't know would it be3000 I mean I'm just trying to establish a percentage here if we had
$906,000 worth of sales and that's 10% then that's $9 million worth of product that flowed to these agencies in Arkansas for for the300,000 dollars loss And and from what I'm hearing from the entities that contacted me and from my colleagues is that it's like a 90% savings what they pay for a product versus what it's worth act you know market value so if a market values 10,000 and
a and a sheriff's department's getting it for 1000 we did that 900 times I mean that's That's $9 million worth of savings to Arkansas and is my math wrong? No, I don't think your math your math's not wrong
Speaker 286
2:46:19
but I think what the issue is is those items are not available any longer so you said the last fiscal year and Colonel Hager's been saying
Senator John Payton
Unverified
2:46:29
for the last three years the program changed. so
has it changed in the last six months 12 months again or or was the change three years ago. Well, the change has been happening over the past three
Speaker 286
2:46:42
years gradually yes all right thank you thank you Mr
Speaker 46
2:46:47
chair Repsonwarddlaw So I don't remember who asked the
Representative Jeff Wardlaw
Unverified
2:46:54
question a while ago I think it was Senatoreyton again but they
asked you about notification and who you notified and you kind of walked through the folks that were notified and the director Gary had notified county judges when you guys told us that in council a couple of weeks ago, I asked that question in council . I called my county judge when I walked out of that meeting. I said, hey, do you remember getting federal surplus shutdown. he goes, no. He said they told us there was an issue but they didn't tell us it was shutting down. and then also asked you that day, did you notify leadership
of the legislature and your answer was no . At10% if my math's wrong figure it real quick so I can make sure my math is correct We walked away from hundreds of millions of dollars off a 900,000 dollarsx 10
I just don't understand why we couldn't have had a meeting and said hey, here's what we're looking at because you know we don't haveri here. he's a director, correct? sir you knowri is a guy we should have at the table right now because he's the guy that runs a program knows that the program and all that but I'm telling you if you if you restrict or handcuff whatever word you want to use and earlier in my question I used the word handcuff. If you restrict what he can screen you're absolutely going to be in the hole
and my understanding and I've had some conversations indirectly withri lately. he was very much restricted way before July on what he could screen. and maybe that was a good thing. I don't know by who it wasn't by us and that's what I was asking that question a while ago is who who is doing that? Was itrector Gary's office Directorary and see his head not know but right and I don't mean this like but I
Speaker 290
2:49:01
could tell you without even looking at Director Gary that he's got a lot more on his plate to worry about without tellingri
how to screen property it's it's a federal surplus program so I can tell you that while we did restrict him after this all came about about we we can't pick up more because we're we're gonna have to liquidate this. it's going to cost us money to get to move a lot of this you know so we certainly don't want to gain more he was not under any kind of restriction, not from any anybody
Mike Hager
Unverified
2:49:31
at DPS leadership or director Gary because it was underrector rey directly before now correct?till
Speaker 375
2:49:40
is and still is indirectly through you that's right Mr
Representative Jeff Wardlaw
Unverified
2:49:43
chairir, I guess my question to you and the staff and I've heard some other members ask for some information they've agreed to get. Is there any way to put this on the agenda for next month and inviteri orspinari, however that process works to make sure we getris here to testify before the committee I think both chairs
are good with that we'll see what we can get that scheduled thank you
Speaker 332
2:50:11
Represented ladyman Misscheer Mr Secretary I've got another question based on all the
Representative Jack Ladyman
Unverified
2:50:17
discussion here about what really happened three years ago because even going back to when I was buying things, I could order stuff on dotgov if I wanted to and send somebody to Oklahoma City the airbase and go get it or I could get it from you guys probably maybe even a little bit cheaper and then I'd have to go
get it. I mean, but that was always available through this webpage so
so what really changed three years ago my understanding
Speaker 299
2:50:52
the ability man my understanding is the
Speaker 290
2:50:55
ability for those agencies to liquidate their own property and bring it back within their agencies. I think before it was something more similar to what the state does for instance, I wish that the state state police was able to liquidate our cars and recoup
Speaker 292
2:51:13
that expense and bring it back into our budget line to offset our operational expenses regarding fleet but we don't do that because the way the state liquidates property we wring the life out of it and we send it to M andR and then M andR sells it for whatever they can get my understanding is and again I don't know and I can't speak in great detail about that but my understanding is generically the federal government was allowed to do that they were allowed to sell their larger ticket items through more valuable items
and put that back into their call center or their agency instead of like just putting it out to general fines that's the generic explanation I was given so the way
Representative Jack Ladyman
Unverified
2:51:55
these federal agencies made stuff available was changed's what's changed because they were getting no money for that now they may be
getting money for that truthfully it they they
Speaker 290
2:52:06
got more efficient with their tax dollars which we're that's great but it negatively impacted this program just like if we
looked at it from a state's standpoint and said that it's it's not a good business model for the state to spend good taxpayer dollars after bad that's something that's not sustainable but again unfortunately then the cities and the counties and these other entities now they're gonna feel that so the the problem is that why I certainly don't want to pass that issue onto our local partners and our more
Speaker 292
2:52:34
rural partners especially you know to all of your points the ones that are funded the least the problem is again it just it doesn't need to be lost that
they the the types of items that they used to be able to get that were so critical and biodle or vital they're not available anymore. I mean they're just very few and far between. I'm not saying it's not ever gonna happen that but they're they're just not available anymore so you know in
Speaker 350
2:53:03
a nutshell it's that's that's the dilemma thank you for that one more question Mr chairman
Representative Jack Ladyman
Unverified
2:53:09
hurry up we're we're running way now it was said that we could not do
anything until session. I assume we could do it in the fiscal session as far as funding of this program putting money aside for that but I believe and this may be staff instead of you but I believe money could be moved from another line item their budgetary changes could be made we do that all the time we move money from one line to another I I think that could be done to cover the cost of this program
if this legislative body wanted to do that I guess that's a question for staff is that that we can't do that here
today I can tell you that nom'm not saying that's something I mean it's it's going to take a lot of things to get involved in that that's something we can discuss
but yes all right all right thank you thanks each one for your testimony and thank thank you for your testimony and I think we've questioned out on your side and we're gonna release y'all we're gonna
bring up the other side and let them come in and talk and if you have time to stay you might want to listen to this. OK. I'm gonna bring up now
Mr. Bill Barnes and Mr Sammy Angel. if both of y'all want to come on up I believe both of you are signed up to testify Gentleson I I believe you know
the process but once you sit down punch your green mic there
get it green and then announce who you are and who
Speaker 384
2:55:26
you're with thank you Mr chairman committee members uhammmy Angel Lake Village Arkansas Chico County Alderman, former legislator, fire chief and chair of a hospital board of a rural hospital. I've never done this before so
Bill Barnes
Unverified
2:55:41
I'm learning you're there Do I hold it down? OK. my name is Bill Barnes and I'm from Montgomery County, chief of the Joplin olunteer Fire Department,
one of nine volunteer departments in our county and chief of the department that is47 years old and that has
used the federal surplus property programme over 40 years OK we're glad to have you all here today you've heard
the testimony from the previous group and you are welcome to give what you would like to discuss or like to talk about we'll let you put that out just proceed and and you know you're welcome to work back and forth between yourself we know
Speaker 390
2:56:22
who you are now thank you thank you Mr Chairman and to those of you that are
Bill Barnes
Unverified
2:56:28
here thank you very much for being patient and working through lunch and allowing us to talk like I said I've never done this before so I'm learning so y'all be patient with me for a minute but I want to start by just asking all of you this if you're from urban or from rural Arkansas or if you have family in rural Arkansas if there's an emergency, if there is a 911 call if there is
a car wreck or a medical or something like that in almost all of our state who shows up volunteers volunteer fire departments those are the people there are about 1000 fire departments in the state of Arkansas and they're about50 paid so that leaves about 950 departments as in my county which has 9 that are volunteer none of them have much funding
Most of them work contributions only or a little bit of state a little bit of city funding or county funding. this program that was formed in 1949 in the state of Arkansas that has existed every year since then and even to today has not cost the state of Arkansas a penny because it's paid its own way has gotten into financial trouble now like many of you I'm a
businessman and you can get into financial trouble for a lot of different reasons. Overstaffing poor management, lack of inventory, all kinds of things like that but a lot of the testimony about the program has changed or not changed in the last three years it's a variance of what the program used to be the program hasn't changed. all of the property that comes into the state of Arkansas all of the
property that has always come into the state of Arkansas is free. none of it ever has been purchased the state transports it in catalogs it in and then markets it and distributes it the general rule of of thumb over all the years that I've worked with the property is that they take the federal acquisition cost and they try to mark it up about 10%. Now that
varies with the value of the property. Sometimes it's more than that sometimes it's less than that but it's about 10%. so over the course of all these years from large items to small items the savings to the citizens of our state to the organizations of our state has been about 90% of federal acquisition costs less depreciation because it's almost all used
how can you put a value though on that truck that can run to go save a life at a wreck. How can you put a value on something as small as a hand axe that if that's used to enter a structure where there's a fire and it costs $15 because it could be purchased as opposed to50 or75 for for a new one how can you put a value to that the savings to our state is
really two tiers the savings to the organizations that provide all the services to the to the people of Arkansas. Water districts sewer districts nursing homes, daycare centers SBA approved veterans businesses like the gentleman on the farm that he got his tractor and stuff through the property that he otherwise could not have had. how do you put a value not only to the property but to the services rendered to our citizens
our state's government is here to protect and defend and support the people of our state and there is no better vehicle for that than the federal surplus property program that provides goods to over there are 900 plus registered entities approved to use federal surplus. Now that's not people that's entities from daycare centers to hospitals to fire departments to counties
to cities it's it's everyone water districts this last year 25 there were700 right at740 entities that visited the state there were from all over the state 9 there were 968 transactions from306 organizations 92% ladies and gentlemen of
Arkansas's counties were at the federal property warehouse this year now are there fewer big ticket items yes actually the federal government started auctioning a bunch of stuff back many many many years ago it wasn't3 years ago. but
there are fewer big ticket items but the big ticket items folks a dump truck a
backhoe, a road grater, a bulldozer, those items
are not what serves the vast majority of the organizations that use this program it isn't the job and volunteer fire department doesn't need a bulldozer. Montgomery County did and they got one through FSP. but we need the little things our training room is heated and cooled by an air conditioner system through federal surplus property. all of our tables and chairs in our training room are from there the standby generators that we use in the
fire department are from there. we're one of the disaster areas for Montgomery County. The cots the medical gear, the ability to sustain people the blankets those things that's all federal surplus property we couldn't do it we could not honor those requests and answer those calls if we didn't have the federal surplus property program an entity that has been in
existence and has been cash positive since its inception in49. I sat and Sammy sat on the the the advisory committee for the federal surplus property programme for a number of years until it was disbanded under Governor Hutchison every year, ladies and gentlemen, there was at least a million dollars surplus at least there were a couple of times when the federal government said
they would curtail allocations if the rev if the if the balance was not reduced so the warehouse where this is done was reroofed remodeled all those kinds of things were done to honor the request of the federal government Colonel Hager says that it started losing money three years ago but they didn't discover it until this year. It is unfortunate that something wasn't noticed three years ago
now the federal property people don't make the bank deposits they don't do that but a question that I have you can't do business without inventory you can't provide a service and attract people without inventory and I believe that there were at least encouragements back early summer
to not screen as much stuff and I know after the decision was made they were told you may not screen anything else now the comment is made only this much revenue has been brought in well, if inventoryies started reducing in June or July or August if there was no more product coming in after that then how can you continue to do business how can you attract
people whether you're looking for an engine for a fire truck or chains to put on your fire trucks or your county equipment or light poles to light a town. how can you do that and what attraction is there to us the customers if there is no
more product it's it it's a two edged sword they were always cash flow positive
the big ticket items were always a tiny tiny now it may have amounted to 15,200,000 in revenue but as far as serving the people of our state those were always utilized by a very tiny percentage of the customers we relied on the property program for everything from generators to towels to band aids to face
masks those are the items that serve the people of Arkansas and provide the ability for little volunteer fire departments like mine to respond and honor the calls could we continue to do that yes, would we have the resources we have now no because we don't have and virtually all of the volunteer fire departments don't have the revenue the money
to buy any of this other than through federal surplus property. a mayor called me from a little town and I I just want to give an example and I'll get off this and she said, Bill, the desk and chair in my office came from federal property our council room is completely furnished from federal surplus property the pickup I drive is from federal surplus property. that goes on over and over and ladies and gentlemen, yes, the big stuff maybe there's not as much of it
but it is still out there. Humvees were screened and told they couldn't get them. there is that kind of property and I want to make this point the folks at federal surplus property were specialists in what they did and you all know every one of you regardless of your walk of life relationships are very important. GsA allocates the amount of property to go to a stateba generally on
population. So Arkansas was at a disadvantage because of our wonderful little state but the screeners because of their relationships with the federal folks at the various depots and areas where they get it the GSA folks they always got our fair share plus more our organization Arkansas Federal surplus property was one of the most highly awarded organizations in the United
States for securing transporting and distributing property to our people generally 20 million to30 million dollars worth of property a year at a cost to the people of Arkansas of about 900 to1.3 million dollars a year that's the value. The value is in every little piece from a blanket to a bulldozer sandby
generator to a cot and everything in between that's the value it isn't just the big stuff. I I would urge you all because this decision this decision was made the pipeline was cut off the people were laid off Nobody knew what was coming. Not one customer was asked what's the value and to my understanding not one legislator was made aware of it
this affects thousands and thousands and thousands of people in our state ladies and gentlemen from Kid stole folks and everybody in between and if it was losing300,000 dollars a year I think , I think it ought to be I think it ought to be reinstated, brought back online the folks that are there and hopefully some will come back that have been laid off are allowed to do their jobs certainly with a look
at efficiencies and give them three years to prove they can come back and be a positive cash flow item they can't do it in a year. you know, if if I close down my business or any of us closed down our business for six months or a year we couldn't come right back so they've got to be given time because the entire federal surplus property program has been damaged dramatically because of the way it was shut down
and the reason and the fact that nobody, not one person was asked is there value in this 30000 $0 loss over 3 years,600,000 and I want to remind you that no additional revenue the rest of this year maybe it wouldn't lose that much at the end of the year if it had been left alone those are numbers that are about July numbers but my goodness with the amount
of money that this state spends to care for its people 30000 $0 to fund it, give them three years to prove that they can get it back up and running without encumbrances put on them from trucks that have a million miles on them that cost a gazillion dollars to maintain instead of taking a less expensive approach it's I can't express to you in my little county
what the federal property program means to our little towns like Norman to our our nine volunteer fire departments to the city of Mount Ida. So I could go on and on but I just I I thank you I honestly don't believe the program was ever looked at and given a chance. thank you Mr Chair Mr Angel, you have a statement yes sir Mr Chairman committee members, I'll
Speaker 384
3:12:08
be very brief considering the time that we
spent here today if I was standing in Colonel Hager's shoes and I was looking at the numbers I would probably have the same opinion that his agency and himself does of the program but once upon a time when I was sitting on the other side of this table fiscal impact statement was done on everything we did and I don't know that we've taken a deep dive into the impact that closing this program is going to have on the citizens of this
state and I think if we do that we'll we we would look at the300,000 dollars deficit as decimal dust and I understand that it is a self-funded program and I understand that it's difficult to go find things to patch it up but management has played a real hard part in federal surplus property it's been kicked around like a stepchild from workforce
education to adam into public safety and I think that we have lacked management and I think that goes from the top to the bottom obviously there's could've been things done different. I mean Dillard's department store has merchandisers that go out and look and they know what they're looking for and as Mr. Barnes says inventory is is is what your market is if if no cities no towns no fire departments desire
anything that you have in that building then you're going to fail but I don't know that federal surplus property has had guidance as they have in the past and I will agree as everyone has said here today that big ticket items are few and far between don't know that they're going on gov deals but I think a lot of them are going on irron planet which is another onlinebas auction company and and I realize that but I
think this program is worth a look to look a little deeper and a little longer to try to save it because the entire state or at least the rural small communities are going to suffer from its closure. thank you sir . all rightribsonwood Thank you
Representative Jeff Wardlaw
Unverified
3:14:30
Mr Chair I'm not a member of this committee but this is a request of you could you get with the bureau leadership and work on that impact study financial impact study for the following meeting
that we will haveri at please we will
Senator Terry Rice
Unverified
3:14:53
do that thank you ir ir Russ thank you thank you all
for being here today Mr barnes and I have discussed this quite a bit and Mr I appreciate your passion on it too you know I think it's been clarified here today that the program has much more value than what on the surface it looks like
and it's going back and looking at five years which is something I was able to do and I hope we can get something to the committee there's value. here's what I do as a business man I live in the now today I have companies deal with it things change we all do and we don't know what I want to know if and if you know please let us know now and if not I hope we we can find out
just what is actually available and and Mr. barnes I appreciate you covering because that was gonna be something I wanted the committee to know is how Arkansas gets that they get a percentage in that showed that on some of the data that I saw in and the fact is those relationships you can get in business I get calls and offered deals from my companies just because I've had a relationship with them some of them for 3040 years and they're usually not people around that long but
even if I've had it five years they'll call and offer me something that they don't put out to the whole dealer network that's what Mr. Barnes is talking about that has value so I'd like if we can substantiate what's really out there and you've done a good job explaining it but I I I think we if we're going to sell this to more legislators we've got to let them know they're still value in this and it's going to take some money and we keep kicking around
this300,000 because that was the loss each year for the last couple of years or maybe3 if this goes the same this year that may not be the figure we need to to appropriate and put in there it may be a half million I don't know I don't know what that figure is like Representativeladydyman said we appropriate money all the time it's you've got to get enough legislators to do that and I'm gonna have to find out even after been here as long as
I have how you can get that done
midterm. I I do not know especially when the executive branch has said shut it down they've given their blessing and shut it down.aronel Hager works under the executive branch authority so I understand where he's at he received this agency is my understanding is that right Mr Barnes the public public safety or the the the secretary of public safety
inherited this and didn't always have it correct that
Bill Barnes
Unverified
3:17:56
is correct it was workforce education for most of its life then went to adam and I think under additional real my understanding this may be wrong but my understanding is then under additional reorganization adam went under public safety so and under adam I think
Senator Terry Rice
Unverified
3:18:12
is where I'm gonna say it flourished because we've got a lot of people that's going back a few
years in the past and I think it was the program was more robust and and people received a lot of benefit from it. that's what we need to be able to get to a broader section of legislators what the value is currently what's possible and and and let us know and I know both of y'all are working towards that and I'm open to that I I support what you're trying to do but it's got to make sense and we're gonna have to get some more people on board to get funding for it
but it is still available correct we just have to kind of rebuild is
Speaker 384
3:19:01
that what both of you understand? ir I think that would be determined by the screeners. they they they searched that material obviously I don't have access to any of that information but the screeners would most likely be the best source of what's available out there for a small ticket, large ticket items. I think there's an organization
that also represents federal surplus properties across the country and that may be another source as well thank you all Mr chairir a
Bill Barnes
Unverified
3:19:33
couple of things if I may. yes you may 1st Senator Rice, I think your approach is absolutely right on here the issues just a couple. The screeners have been released they've been laid off so there's nobody in the
organization. Now there are people that know how to get on a computer but there are only4 out there and they were told the program was going to close and when it did they would lose their jobs there's no morale . The screeners themselves are gone all those relationships are gone Sammy's point there is an association of state surplus property agencies and they I'm sure could tell us roughly what kinds of property are still out there but as far as being able
to quantify what Arkha Arkansas could screen right now we've lost that resource completely and it would have to be rebuilt. Another cost that hasn't been discussed at all under the federal regulations Arkansas can't just decide it's going to quit doing this. it has millions of dollars of federal property that it has to account for. there's equipment out there that is inspected every year by Arkansas by federal surplus
property compliance inspectors that has to be inventoried every year. So shutting this program down is not going to be a we'll just save the state300,000 dollars if all the reserve is gone then y'all are going to have to fund Colonel Hager is going to have to fund someone's going to have to find the money to go through the shutdown process which could very easily take a year to year and a half
years which is money thrown away when the program could continue and all of that could be negated. Colonel Hager has written a letter to the federal government telling them that the program's being discontinued in Arkansas. That letter needs to be rescinded . The feds need to be told that we're thinking about this and we need to figure out how to give them a threeear window to try to prove
without encumbrances cause y'all know how management can affect things without encumbrances on how it's done and I just want to leave leave y'all with just three thoughts one man's junk is another man's treasure. Colonel Hager's statement that the federal government can't buy there at all is incorrect. After property is held at the warehouse a certain length of time and I think it's a year but
it may not be that long. it goes into a reserved area for GsA sale and that is auction to the general public so things that the that the warehouse doesn't can't move within about a year goes into GSA there and is available to purchase by the general public and I think half of that auction
proceed goes back to federal property warehouse so that's how that really happens and that's just I I just wanted to share those items we I'm done I could talk all day thank you very much a couple more than one I'm I'm gonna
limit it to these two. I have two that have lights on I'm gonna limited to those two represent maddoxx your first.
Representative John Maddox
Unverified
3:23:33
I just want to thank you Mr. Barnes for all of your work. You and I've had numerous conversations on this and you've given so much information but if any members want to get more information offline from Mr. Barnes. he has a list of every entity that's used this program, I think you stated 92% of every county in the state of Arkansas has used this program just in the past year. my concerns are numerous. I'm just now starting to hear from mayors and small
towns fire departments they're just now hearing about this. I promise you they don't know yet but they're gonna know and when they do we're all gonna hear about it so I want to take a real close look at this and look at what we might can do to salvage it and Mr. Barnes actually took what I was going to say when we talk about a reference was made that this was junk. Well, what he talked about that's not junk to fire departments in my community. that's not junk to senior citizen centers that's not junk that's how they sustain themselves and survive
and the notes I wrote down said $9 million in property over the past year they just over the past year $9 million and we're talking about losing300,000. Now I know we all say this and I'm gonna say it too I'm also a small business person but I'm gonna go further and say that's a net benefit to the state. we're not losing money. that is a net benefit if there's $9 million in property and it cost us300,000 dollars and I know we can't do anything in this committee today but I'm
asking the legislature to look at any way we might can remedy this problem. So thank you
Mr. Barnes thank you Mr Angel. We do studies that cost more than300,000 dollars all the time that's what's really
Representative Jim Wooten
Unverified
3:25:22
crazy uhpresentativeooton you're recognized thank you Mr Chairman and I agree with the the witness relative to the cost to the state is infinitesimal as as it relates to the total good of the
program and and so far as it being tossed back and forth and back and forth to agencies when I was at DFfa like Representative Gassaway my desk came from when I was director of DFfa my desk came from federal surplus andpresentative Angel you know exactly the benefit to the school districts it's greatly in the same thing and here's the
problem that I see one we've asked the state police director to be in charge or have control of the federal surplus program he's a state trooper. I was a state trooper. He doesn't have the time that it takes to be involved. Neither did Mister Garyry. it's a program that's good to the state and we've talked about300,000 dollars. how much
did it cost for us to have to go outside the state we don't have a number outside of the federal program to be able to be beneficial to state agencies as well as school boards counties cities individuals so we need to take a long hard look at this and we we talk about I don't know4 or510 employees being laid off my gosh we added 1000 to the
state rolls last year. so what what's what does this amount to I I think someone above the colonel has made a decision that impacts the whole state but they do not care to be exposed and they don't want their name out there but it's time that we stood up and did something for the good of our volunteer fire
departments and others and police departments and I'm from White County and we've got several several volunteer departments that depend upon this this agency to be able to secure what they need and I realize it's limited or maybe a scope has changed but it's still beneficial as was pointed out by the speaker thank you thank you, Mr Chairman.
thank you and we will be getting some information together and from at a
future date hopefully this next month we'll try to put something together I know November's a really busy time for everybody but we'll as soon as we can get information that will kind of tell us when we can have another meeting and if at all available then we'll notify the ones that we'd like to have come back and speak again and if you have anybody else or if y'all have any information that you'd like to get to us and get to our
bureau then we would appreciate that too so I think we're done today we've held a long meeting this morning and I appreciate everybody staying around and I appreciate y'all coming and colonel Hager and appreciate y'all coming also and all the ones before I think everybody's gone that we had here earlier but I appreciate everybody hanging around. thank y'all and we'll be seeing you soon we are adjourned thank you chairman
Agenda
A. Call to Order
B. Consideration to Approve September 9, 2025, Meeting Minutes [Exhibit B]
C. Discussion of Arkansas Broadband Equity, Access, and Deployment (BEAD) Program
D. Discussion of Arkansas Federal Surplus Property Program
E. Other Business
F. Adjournment
Documents
| Title | Type | Pages | Source |
|---|---|---|---|
| Agenda — JOINT PERFORMANCE REVIEW (JPR), Oct 27, 2025 | Agenda | 1 | Official source ↗ |
| Exhibit B-JPR Draft Minutes 09-09-2025 | Exhibit | 1 | Official source ↗ |
Speakers
Representative Bruce Cozart Chair
Unverified
Speaker 7
Speaker 12
Speaker 14
Speaker 17
Howard Gorder
Unverified
Speaker 23
Senator Jane English
Unverified
Speaker 28
Speaker 29
Speaker 31
Speaker 33
Senator John Payton
Unverified
Speaker 52
Speaker 58
Speaker 80
Senator Terry Rice
Unverified
Representative David Ray
Unverified
Speaker 107
Senator Steve Crowell
Unverified
Speaker 116
Speaker 49
Senator Kim Hammer
Unverified
Speaker 128
Speaker 123
Representative DeAnn Vaught
Unverified
Representative Jim Wooten
Unverified
Speaker 143
Senator Jonathan Dismang
Unverified
Speaker 89
Speaker 54
Speaker 173
Speaker 180
Speaker 177
Speaker 195
Speaker 13
Representative Stan Berry
Unverified
Speaker 178
Speaker 202
Speaker 207
Senator Dan Sullivan
Unverified
Speaker 234
Speaker 238
Representative Brian S. Evans
Unverified
Speaker 242
Representative Zack Gramlich
Unverified
Speaker 254
Speaker 259
Representative Johnny Rye
Unverified
Speaker 270
Speaker 186
Speaker 46
Speaker 132
Speaker 275
Speaker 279
Mike Hager
Unverified
Speaker 285
Speaker 290
Speaker 293
Speaker 294
Speaker 289
Representative Jeff Wardlaw
Unverified
Speaker 311
Gail Choate
Unverified
Representative Richard McGrew
Unverified
Speaker 292
Representative Jack Ladyman
Unverified
Speaker 346
Speaker 349
Representative Jimmy Gazaway
Unverified
Speaker 364
Speaker 367
Speaker 368
Speaker 286
Speaker 375
Speaker 332
Speaker 299
Speaker 350
Speaker 384
Bill Barnes
Unverified
Speaker 390
Speaker 113
Representative John Maddox
Unverified