Transportation, Technology & Legislative Affairs - Senate

Go ahead, sir. All right, I'm Jimmy Hickey, Arkansas Senate members, I'm here to present Senate Bill 202. Basically what this is doing is we have some archaic language in the statute. So what we're doing is we're taking that out. If you, if you look, it says talks about penal bonds and things like that, really that's old language, so uh basically what we're doing is taking that out and then what we're doing also is basically what the uh Current process is with the highway department and also what the legislature would want that we make sure that any work that's been done is Fully, fully covered and So that the state does not have any, any exposure. Thank you, Senator Hickey. Any questions, Johnson? Thank you, Mr. Chairman. Senator Hickey, so we're going from 25% to Perhaps a 100% requirement on a bond. Is that kind of what I'm reading process is we kind of looked at it and knew this was why that we needed to do it. I mean, it says that an amount equal to 25% the current process is though with the highway department that it would be fully covered now. So really we're kind of cleaning that up just to make sure that there's no confusion and somebody says, well, it is just 25% because again, they want to make, we want to make sure that we're fully covered anyway, and that's their current process. OK. Um, I think. I pay more attention to this since the issues we had, and I'm looking at Ms. Davenport, the issues in Saline County with the Director Wiley is also nodding. I used to not think a lot about that, but now I think a lot about it was, did we get, did we go after a bond on any of that work or partial or anything. That's something I can't answer as far as this bill, uh, You're going to have them to come down just to ask or we can if you want to. It's up to you. It's your bill or we can stick with the bill. I mean, it's Senator Johnson won't say in here or I'll, I think it's an important issue, Mr. Chairman. I don't think we'll have to belabor this point, but I would like to get an answer to that question. I have no problem with that OK, Mr. Davenport, thanks. Please introduce yourself to the for the record. Good afternoon. My name is Michelle Davenport, and I'm the chief legal counsel for the Arkansas Department of Transportation. Thank you, Senator Johnson, for your question and that is correct. We had a full performance bond as well as a full payment bond on the County job. So we were able to get the work completed without having to call those bonds, but the state was fully protected in the event we did have to make that decision. OK, that answers my question. Thank you, ma'am, as always. Thank you, Mr. Chair. Thank you. Any other questions? Central Love. I'm, I'm sorry, I just, I just missed that conversation because Senator Des was over here. No, uh, but I guess I'm, I'm, I'm, I am concerned. I think I share the same concerns, but so. We're going from 25% or a quarter of the of the project. How much so what is your average cost of a highway project right now? I would not be able to give the full dollar amounts, but they are easily in the millions, even for some of the smallest of our contracts. OK, but just say if if we were talking about um the 4:30 the I-30 piece, right? If if you were talking about that was, that's a, that was more than a billion dollars, and you're saying that they have a have a bond for a billion dollars. That's correct. It's a performance bond. Yes sir, we have a performance bond and a bond to ensure that there's subcontractors are paid for the services they deliver in the materials that they provide. I get that, but you're saying a lot a billion dollars. How much is a fund for a billion dollars costs? Well, I think that's calculated through the bonding company itself, and as you can tell, like we also added on line 26, surety bond or bonds so in case you had to get multiple bonding agencies to cover one of those large projects you'd be able to do that. I don't, I haven't dealt with this in a while, so I'm not for sure about what percentage is, is kind of customary, uh, just, just as a thing, you know, back whenever I was at the bank with the, uh, when we do what our credits and that we would normally charge like a 2%, so I would, I would estimate, pure speculation. 1%, 2%, but again it's a negotiated type instrument. So 1% of a billion dollars. Uh, I'm, here's my concern with this bill. Don't hold me to that. I'm speculating, OK. But here, here's my concern with this bill is that are we, are we now making it to where only the big boys can. Can, can, because if you have to have this bond, especially if you're going after a larger project. we now making it where only the big boys can play. Because they're the only ones that might be able to afford a larger bond. No, sir. Anybody, anybody that's bidding on it will understand that that's included, so they'll just, it's just the cost of doing business that I believe most of them understand, and again, is that not been our current practice for years, and that was the reason we wanted to get the language cleared up is it's standard language in almost all 50 states. This is how the surety bonding companies work with all general contractors, and this is penal bonds are no longer what are expected in the industry. That's actually a penalty bond. And so this actually puts it back to a performance bond standard, which means as the job gets completed, those amounts that are going to be required to complete the job also go down. So if you start out with a $100 million project, then their performance bond if they defaulted at the very beginning, would be $100 million loss for the surety. However, as that job completes and if they get down and they finished 95% of the work, you're only going be looking at a performance bond on that last 5% of that job. And this is the standard for the contracting industry as well as the surety industry on how this, but no, sir, it does allow smaller, uh, opportunities for the cost of doing business because they're going to have other requirements that they're going to have to be able to meet to ensure that happens. Do they have to have a bond. OK, so you, you make the bed. Is that, is Is that usually a part of the bed, the price of the bond I believe it'd be in the RFP. So in the RFP whenever they were or, or y'all do RFP RFQs on those we do our construction bonds a little bit differently, and if it's a design professional, it's going to go through that RFQ or RFP process, however, for our large construction projects, those are published, there's many times that we have multiple contractors who may work together to For my company to perform that work, but that is our general process. Everything's announced with our pre-bid documents, you have to be qualified prior to being able to even bid on the job that's that's the problem though, because Because you can't go to, you can't, so say for instance, you are Smaller than some of the big boys, and you want, you want to be it for you to get a bond that's a billion dollars, you may not be able to get, you may not be able to get a bond for a billion dollars. Is that not correct? I'm sure there are limitations, however, it's the job of the department to ensure that whoever does acquire that contract is able to fully perform that contract and complete it within the terms that are there, and that's why we have moved to the performance bond and the payment bond which covers those, like I said, subcontractors and other things of that nature to ensure the job can be built as it is, um. Staged and put the plans out for bid. So I, I understand your question, but the reason we do that is to ensure that the taxpayer dollars are being spent and being able to complete the project within the time frames that are given there. OK, uh, I, I, I get what we're doing, but OK, Thank you, Mr. Chair. Just for clarity, what did something happen with a past bid situation that caused maybe the the the need for this change that we can reference to to what we're fixing unless you say say something, no, we're just as kind of a normal course, you know, we'll see technical corrections or find archaic language and Miss Davenport was going through there and found it and we were just discussing it one day and I said, well, no, we need to get it fixed. And then also the 25%, although it had that, and again it says amount equal to, you know, probably should say a minimum of But again, their practice is and has been that that which again I, I maybe I misspoke. I, I assume it was the uh what the General Assembly and Everyone else would just want to make sure that We were fully covered and not exposed to any liabilities. Mr. Chair, a motion at the proper time. I'll take that motion in just a minute. We have anyone in the audience here to speak for or against the bill, saying none. We have a motion by Senator Dees. We're closed. Thank you. Thank you. Now we have a motion by Senator for these we have a Senator Johnson. Any discussion. Senator Johnson did. I'll just go ahead. Um, I, I, I think I've realized what we're doing here. I think though that the unintended consequence, I mean, unless somebody can tell me any different that sometimes when you you when you have and it's not necessarily you have a smaller company, you just have a company that is not as large as some of the big boys, then they can't get the bonds and they can't bid on these projects. That's not to say that they can't complete them. They just can't. And so, But by making a measure like this, what you're really doing is you're just really assuring that there's only so many, there's only so many people that are going to be able to play, especially for those big projects. That is just the, that is the fundamental thing I'm telling you that it's going to happen and whether or not we want to acknowledge that that's going to happen. Because there's just some companies that will not be able to, that will not be able to get these bonds, and that is, I mean, that is for sure, and so we're really picking winners and losers when we begin, and I'm not saying that was, that's your intent of the bill. I'm just saying the unintended consequence of that is that you're picking winners and losers, and there are some companies that are just not going to be able to bid on it, even if they can do the work and so for that I would I would say no. Well, I'm happy that this discussion so I'd be happy to respond to that. We may come back to you. Cry Johnson. Thank you, Mr. Chairman. Uh, just kind of in response to Senator Love's comment, and he's absolutely right, of course, uh, bonding is about capacity. I don't, I'm not an expert in it. I used to share office space with CPA who did nothing but contractor work like this, many for road contractors and it has to do with both the assets and even some cases cash that A contractor has, and I know these projects have gotten very big and I I would think Mr. Davenport, I know there were 2 contractors that went into the joint venture to do the 30 crossing. Two big, big out of state contractors did Massman was one and the other, I can't remember the name of it, but even one company couldn't buy that because it's about your financial capacity and, you know, if you're you're a little contractor, you can do little jobs or medium size. You can do big, but in a mega one like that, it took 2 big ones to do it. So yes, it does work against the little guy. On the other hand, little guys don't have the assets to back it up and pray that, pay that bond fee and all that to make sure the people are protected, so that's sadly I think we need to do this because it does protect the people on any kind of project. Any other discussion Go ahead. Yeah, I'll just echo what Senator Johnson said. You know, if you're if you're doing a $50 million job and you can do it like it was like it was your job and you go to reach for a $200 million project. You better have some pause, and when you go to your bonding agent and they rate you, and they're going to look at your assets, your abilities, and that they'll obviously negotiate a price whether or not you can do that and then you're going to reflect that price in your bid, and that could be something that the department looks at and say, well, you know, we're paying more for your bond than we are for somebody else that does sit like $200 million is their normal job, just like the 200 million is going to reach for a billion. He's going to have those same risks and variances, so I think the department Doing wise by making sure that we have qualified candidates that can not only do the job based on paper but can do their job with their fiscal and financial responsibility as well, so I'll be supportive of this. Thank you, sir. Any other discussion? What's the will of the committee? Yeah, we, we do have a have a motion in a second, all over the paper say a no same sign. I have it enter your bill passed. I appreciate the committee. Thank you. Thank you. There are these Please induce yourself for the record, Senator Tyler Dees, District 35. You may present your bill. Thank you, Mr. Chairman. Thank you, members. Uh, this is a good bill. I had the chance to work with um uh Representative Torres on and excited to bring it to you. The purpose of the bill is to enable Arkansas residents to voluntarily display their blood type on their driver's license or their state issued ID identification cards. I love this because it's, it's an opt-in situation, citizens can apply to do that and if you, if you don't mind, I'd love to bring Representative also to the table as well. You may, sir. Introduce yourself. Please introduce yourself for the record. Thank you, Randy Torres, Representative District 17. Thank you and members, I would love for Representative Torres we both get the joy to represent Silent Springs up in northwest Arkansas. It's both of our hometowns and Representative Torres has done a fabulous job with this bill, and Representative Torres, if you wouldn't mind sharing about the constituent that brought this to our attention. Sure, thank you. Yes, I, um, local veteran came and left a letter on my desk at the bank and mentioned the fact that he had just concluded his second blood drive in the community and found that a majority of the donors didn't know their blood type, and he thought, you know, how do we create a way to help people want to start understanding what their blood. type is and so he recommended that we add blood type onto the driver's license. Because in the army, I'm sorry came up all the stairs so I'm kind of out of here, but did you work at a bank, so he said, you know, in the army they had their blood type added to their dog tags in case they ever needed an infusion in case of a crisis and thought, gosh, we should lead out as a state and provide the same for our Arkansans. And so that's where the idea came from and uh yeah, so it's it's a wonderful constituent led bill that We're excited to work on no fiscal impact, like we said, it's an opt in citizens get to apply for this to bring their blood type to be added to the license. If you look at your own license today on the back of it, there's already a spot for medical code to move in there. So with that we stand ready for any questions, Senator Johnson. Uh, probably more of a comment than question, Mr. Chairman, uh, Senator and Representative, I think this is a great bill. I more years ago than I shuddered to think how long ago it was. I used to race cars and one of the requirements is on the back of our helmet we had to have our blood type and the date of our last tetanus booster. Now I'm not saying add the tetanus booster, but the point is that, you know, if you're in an emergency situation, someone might need to know really quickly. what your blood type is, so, uh, this is a great idea and I'm surprised it take 50 years or more for that work to work its way in the license, but I think it's a great bill. Thank you, motion at the proper time. Thank you, Senator Johnson. Any other questions? Seeing now is there anyone from the audience to speak for or gets the bill? Seeing none. Oh Pop in. Thank you, Mr. I'm just here nor there, it's made it this far, but the cost of $52,000 for the programming. of Ardias and the system to the department indicate to not have a contract really available that does these programming modifications and changes or they got to go get a subcontractor to Do that type of work or you know, Senator Bryant, they didn't really specify what and where that cost came from, but that was actually before I recognized the fact that the medical code that Senator Days just mentioned a few minutes ago is actually on the backside of the driver's license, so I really feel like the process will be simple, and I think it'll also be it'll have a lot of cost savings as well. More than what they know. OK, so we're not having to look for an appropriation for this. This is the department will use. Inside their own budget. That's my understanding, right, thank you. And I will say if I can, uh, the I spoke with the Arkansas EMT Association, and they thought that this is a really fabulous idea, specifically for the rural areas of our state where they, you know, have ambulances or helicopters with a certain blood supply, and they may not have time to get someone to a hospital to get tested for an accurate blood type for an infusion because it typically takes an hour. That's my understanding, so. really huge advocates of this bill. They think any other. Washington no, we have a motion of Senator Johnson. And had a 2nd senator D's. All those in favor say aye holds the same sign. Senator Des, Representative Torres. Your bill passed. Thank you, Mr. Chair. We are adjourned.