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Alaska gas line authority violates contracting rules
Larry Persily Petroleum News Government Affairs Editor
While lawmakers consider legislation to exempt the Alaska Natural Gas Development Authority from the state procurement code, the Department of Revenue has acknowledged the authority twice violated contracting rules soon after setting up shop.
Revenue’s Administrative Services Division sent a memorandum to the state’s chief procurement officer Feb. 13, reporting the authority hired two engineering consultants in August without a valid contract for either consultant. The work continued for more than four months before the authority issued valid contracts.
“Being unfamiliar with the state procurement code and acting on his own, the CEO negotiated and entered into verbal agreements,” the memo said. “The department finds this violation was an avoidable administrative error that will best be resolved within the department.”
The Department of Revenue said it has taken steps to ensure that all future gas authority contracts follow state purchasing rules. Work done in ‘good faith’ “Services performed under these contracts were done in good faith,” the department said in self-reporting the violations.
The engineering review contracts, for up to $25,000 each, went to Richard Odsather of Fairbanks and Timothy Bridgman of Anchorage. Chief Executive Officer Harold Heinze reported to the board Feb. 9 that the authority had paid $6,300 to Bridgman, whose work is completed, with $7,300 to Odsather, whose work is continuing.
The authority’s board of directors several months ago asked for legislation to exempt the operation from competitive bidding requirements and other rules under the state procurement code. Board members said the rules could cause unreasonable delays if the authority needs to move quickly to negotiate deals for a state-owned natural gas development project. In lieu of following the procurement code, the authority would adopt its own set of rules.
In response to the board’s request, two legislators introduced bills for the exemption. House committee approves exemption The House Labor and Commerce Committee Feb. 16 approved House Bill 386, sponsored by Rep. Eric Croft, D-Anchorage, to exempt the authority from the state procurement code. The measure moves next to House Oil and Gas.
An identical measure, Senate Bill 253, sponsored by Senate President Gene Therriault, R-North Pole, had not been scheduled for its first hearing as of Feb. 17.
The authority’s only other professional services contract was issued last month to Anchorage-based Northern Economics for a benefits analysis of the authority’s proposed pipeline project.
Although the authority sought competitive proposals for the $50,000 contract, Northern Economics was the only bidder. The authority sent out its bid requests Jan. 2-6, with proposals due Jan. 9 and the first work product due seven weeks later.
Northern Economics was already familiar with the project, having responded to Heinze’s request for a similar proposal last fall before the board formally decided to go ahead with the work.
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