Worksession re AO 2026-40(S-1), amending Anchorage Municipal Code Section 7.10.010...

Invitation to bid context, when you're evaluating bids, you would give a 5% bid preference not to exceed $50,000. Likewise, in the request for proposal context, you would then give a 5% preference on the available evaluation points when that's plausible. So what, what are these things? We're going to remind ourselves about this. Invitations to bid.

ITBs. Typically, it is for commodities or nonprofessional services where the cost is more than $50,000, and we are awarding based solely on price to the lowest responsible, responsive bidder. You win on price, and what the municipality ultimately gets really shouldn't depend on whoever won. So let's make that even a little bit more concrete. Although I guess that's close to a pun.

Here we're talking about the commodities side. Here's an example of a commodities invitation to bid. Here the Muni wanted to buy some sand and winter aggregate for delivery to two places in the northern part of the community. And as you'll see there, what the Muni says is, "Someone sell us 7,000 tons of sand and winter aggregate they'll deliver to Highland Yard. It's got to have this cumulative percentage passing by weight." These are the rocks that we want.

Who can sell us the rocks? And then we want this amount of tonnage. And then all of the potential bidders are saying, I can deliver you those kinds of rocks at this unit price for this total price. In the construction side of things, the invitation to bid process works similarly. This was a recent example of Forest Park.

We said we want people to resurface Forest Park, put in a bunch of sidewalks, curbs and gutters, signing and stripping. The neighborhood greenway enhancements, and all of that is detailed in the drawing specifications. Build us exactly this. So in these two contexts, you see it when it comes to the assembly on the material side. We tell you, we asked to buy this amount of gravel.

We got two bids. Northern Gravel and Western both bid on price. And here we go, the cheapest one wins. Northern Gravel sells us the gravel at $290,000. On the construction side, we had a whole lot of firms who were going to build out Forest Park for us, and here again, 7 bids.

Here are all the bidders. Cheapest one wins.

By contrast, the Request for Proposal process, or the RFP process, is typically used for professional services, lawyers, accountants, etc., or when we can't define the parameters of the thing we want so precisely that we can use the ITB process. Again, that's triggered when the cost is more than $50,000, and there we're not awarding just on the cheapest. We're outlining in each of those Request for Proposal packages a matrix of numerical evaluation factors. We'll give you some examples there, and we ultimately award to whoever scored the highest, not on price alone. And there, what the municipality gets very well may depend on the identity of the contractor.

It's possible that any architectural firm would similarly design the lights on 4th Avenue. Maybe, maybe not. It's possible that the lawyer you would hire to testify in front of the RCA would provide equally capable testimony. Maybe, maybe not. If you're hiring a website vendor, you would get a different product depending on who you are picking.

So what do we use RFPs for? Just again, to make this a little bit more concrete, we do it when we're hiring the Harry McDonald Center, and this is like the operations of the Harry McDonald Center, and this underscores that it's not always that you want the cheapest, like whoever comes out of the says, "I'll run that thing for you for a dollar," may not actually be the best fit for the municipality. We do it a lot in the architectural and engineering space for design services. We've done it a lot in the homelessness context where we have food shelters, food shelter master planning efforts where we've had folks testifying from the RCA for AWU. We did it with Terminal 1 construction at the port.

The website example is real. That's an IT example that we are in the midst of now. And likewise, we do the RFP process to procure professional services like bond counsel. And I'll pause right there very briefly just to say Members Scott and Silver joined us at 1:05, Scott in person, Silver's on the phone, and Member Park at 1:08. And then I do have one very quick clarifying question, and then again, just flag me down or text me to be in the queue.

Is there a set cost preference or cost component with muni procurement? And I ask because in my old life I did a lot of state— responding to state RFPs, and typically cost was a it was either 20% or 40% as a default into the kind of scoring for RFPs. So I'm curious, does the Muni have something like that? To the Chair, I would say the closest we have is sort of the rule of thumb, which is a— I like to make these things concrete and tangible, so here is an example of where we actually procured AWU Expert Financial Services to testify in front of the RCA, and there you'll see the evaluation matrix was what are your qualifications, what's your experience, who's your project manager, what's your availability, what's your overall approach, and cost, is 20 points on this matrix. And I would say, just my experience, that's typical.

It's not hardwired anywhere. I think the only place where there is a hardwiring is that there is a state statute that says you're not supposed to hire architectural and engineering services on cost. And I think that means that there's no cost proposal piece of that RFP, and we've mirrored that in local law. So I think the best answer I have for you is that, as a matter of practice, a lot of the RFPs I've seen have had cost be somewhere between 20 and 40 points, but it really is kind of ultimately dependent on what the valuation committee thinks is the right mix of factors. Okay, thanks.

And I'll just briefly note as well, our purchasing director, Mr. Hunter, was nodding in the back, and I think if there are detailed questions, we could have him come up later as well. But please proceed. Okay, and then again, just making this more concrete and tangible, here was the evaluation criteria for the website services that we put together. There again, cost was 20, bond counsel Services again, cost was 20 again, and I did highlight the one on the left because there are oftentimes where the cost piece of the RFP scoring factor is quantitative, meaning that you don't give a qualitative sense of the overall cost proposal, which can happen when people are bidding not straight on price, but rather they're selling you a mix of services at various rates, and you kind of have to get a gestalt feeling of what this is overall going to cost, but for sum, we were able to do a quantitative factor where we can rank apples to apples to apples, and we say the cheapest gets the maximum points, the next cheapest gets a reduced factor as a result of that. Okay, and then I think this is maybe too many examples, another example of the Merrill Field RFP.

Okay, so we are gonna merge from that background saying we've reminded ourselves that the invitation to bid process is that we are awarding on price, and no matter who wins, we're supposed to get the exact same thing. On the RFP side, we may get very different things, and we're awarding not on price, but overall on best fit. So now that we have those in our minds, let's talk about how the bidding preferences work. The 5% preference in bid price would function like this in an ITB context. So imagine that we're again procuring the resurfacing of Forest Park Drive, We got our 7 bids, and Spurnack is the cheapest.

So absent a preference, Spurnack wins. In this example, let's imagine that Spurnack is not a veteran or locally owned, so qualifies for no preference, but South Central is veteran-owned. And I will say as an aside, I have no idea if any of these firms are veteran-owned. In this case, South Central qualifies for the 5% preference. Its bid price was $875,000.

The 5% preference is 5% of that bid price, so it gets a $43,000 bump. Its effective bid price is now $831,000 in the evaluation. $831,000 Is cheaper than Spurnack, so South Central wins. And that underscores that— then the Muni actually pays South Central's unadjusted bid price. So the way the preference works is that we're awarding it to someone who wouldn't have won on price right away, We have capped the amount of that preference.

In this scenario, we end up paying approximately $43,000 more for Forest Park Drive. In the RFP context, here's a toy model that I built from the recent website example. The vendors who are providing different websites, different content management systems, different pricing arrangements, they all come in. The committee has scored them all. Website Vendor 1 has a total score of 362.12.

Website Vendor 2 is just behind it at 360. In this one, it was really won by Revise, and they were actually a little bit higher than 362, so I had to shave them off to make this example work, but it— something like this would happen. Imagine that Website Vendor 2 is veteran-owned and Website Vendor 1 is not. Their total score ranked by the committee is 360. but they get a 5% preference, so 18 points are added to their score. They have leapfrogged over Website Vendor 1.

Website Vendor 2's effective score beats Vendor 1. Vendor 2 wins, and the Muni doesn't get the website that it thought was best, but it gets a website which was second best, and we gave it to the company that had the veteran credentials. And—. Okay, wait, go ahead. Sorry, question from Member Hanlon.

Can you go back? I can't—. Once, one more slide.

So on here you've got it listed as the cost to the MOA for the preference. Wouldn't it not be the $43,000 but the difference between the next highest bidder, not the total 5% preference there? Absolutely, you're 100% correct. That is a mistake on my part. It should be the difference between what we paid and what the first place person bid.

You saw me choke a little bit when I said it's about 43, because I think I realized I made that mistake too. So you're right, it was less than 43, but we can do that math real quickly. We're paying $875 instead of $847, so we're at just— we're at 28th, so there we go. Thank you for that correction. That is correct.

Okay, and so we've made it through our two scenarios where we've actually applied a preference. So I think that all means that we have a juicy policy question for the Assembly right now, which is, I think the way this framework presents is, when we give any kind of preference, a local preference, a veterans preference, other communities have disadvantaged business entity preferences, disabled preferences, you are willing to pay more in the ITB context to advance that policy goal. In the RFP context, you're willing to go with not your preferred best option, but to the second or third place option, depending on who gets the preference, again, to advance that policy goal. That is an interesting legislative choice to make. That is, I think, the choice that you're being presented with now.

What we have on the books now is only one kind of preference. We have only a local preference for invitations to bid only. And right now, it is based on a sliding scale. We give a 5% bid preference capped at $5,000 on purchases up to $166,000. We go to 3% if you're not to exceed $10,000 on purchases in the next rung, and then finally it caps out at a 2% preference not to exceed $20,000 on purchases over half a million.

We went back. We've had that on the book since 1995 as a chumming the waters for the assembly consideration. If you just wanted to adjust those purchase— those figures for inflation, we would be a little bit more than double of those. Oh, sorry. I was supposed to step through the sliding scale with my handy-dandy animated underlines, and I just jumped right on it.

Okay. So what we would like to do is then tee up a number of considerations for the Assembly to think about as potential changes to the S-1 version. The first is related to Alaska veterans. Next is about prioritizing new businesses. The third is about the cost of preference and the stacking.

Fourth, joint ventures, applications, RFP, and finally reporting and accountability. And I will step through each of those a little bit more slowly. The first is, we talked about in the Assembly Chambers, the way the current drafts before the S2 version are written, the veterans preference is tied solely to veteran status and not connected to Alaska at all. So if in the earlier scenario South Central Foundation, or whatever that company was, South Central Construction, was owned by someone who had served in Virginia Beach and had never been to Alaska before, they would get a preference. Uh, in the RFP context, they would get a preference where no local person gets a preference.

That is not how it works in state law. In state law, the state procurement is that you get a 5% bid preference capped at $5,000, 10 times less than the $50,000 that's being proposed in the current versions, and it only goes to veterans who reside in Alaska or partnerships, LLCs, corporations that are majority Alaska-owned. As we crashed into this conversation, that approach made more sense to us. Um, it is— in a world of plenty, it would be lovely to award preferences to folks regardless of a local Alaska connection, but I think in a world of scarcity particularly, it makes more sense for there to be an Alaska hook on the Alaska— on the veteran services. So This I'm not gonna read through, but this for chapter and verse, here's the state statute that we were looking at as a point of comparison.

If the goals are to encourage veterans to remain in the Anchorage area and to stimulate growth within the community, we think it is better calibrated to mirror that state approach and say, "You served in Alaska, we're trying to keep you here." So we are proposing in the S2 version to include a definition of veteran that includes a definition of service members with general under honorable conditions and that better matches our Title III veterans hiring preference, and that would then require you to have this Alaska connection. I will cheat and say I looked ahead at some of the slides that you'll see in a moment. I think we did unintentionally include a category of discharge that we would agree we didn't mean to include, so that's one that we'll have to resolve before we get all the way to the goal line here. Second, new businesses. The current version doesn't have any kind of phase-out after the preference has achieved its aim.

So if the veteran business stays in Alaska and is well established in Alaska, you continue to get that preference in perpetuity. And as we understood it, the mission was to get folks to stay here and get them up and running. And so we've proposed a mechanism that would target new businesses and help them get established, and then ultimately have a lifetime cap so that you can get a preference where we're paying $500,000 more in services that your company is rendering, but after that, everyone's sort of competing on the, the same footing. Um, we approach this because a significant challenge with any kind of government incentive program is paying for outcomes that would have occurred anyway. We talk about that in our tax abatement contexts.

And I mentioned earlier in our example, we have no idea now which of our usual contractors are already veteran-owned. So as we look at the list of usual suspects that you see all the time on every assembly agenda— QAP, Granite, Mass, South Central, Spurnack— it doesn't seem like the preference, if applied to those companies, is helping people stay in the Anchorage area or spurring economic growth. That would seem to operate more just as a transfer where we're paying more for services that we're otherwise just going to receive. So we tried an approach to get around that problem and say we're looking for folks that have recently discharged and ultimately have a lifetime cap on the total amount of preference that we're offering. On the magnitude of the preference, the current version takes the local and veteran-owned preference to a— from a max of 20 for local which is the top of the sliding scale that's in our code now, and nothing for veterans, just because you don't have anything for veterans now, to $50,000 each, and it lets them stack.

So the total preference a person could get, the total amount the community might pay to rebuild Forest Park Drive for a veteran local business could be $100,000 more than otherwise would have paid. We had started in our conversation by saying, well, why don't we just apply the sliding scale for local businesses to the veterans' side of the equation as well. I will candidly confess that in the one meeting that we had with the two sponsors, we completely misread the sliding scale and thought, oh, wait a minute, it's way out of date, we need to update it. We looked at it again, we realized that was not correct. So we're back to where we were.

We're going to propose for you that it should be good for the goose, good for the gander, and we think that they should probably stack as kind of 1.5. And, and the reason that we're proposing that is our current sliding scale is already very generous as compared to the state, and this will cost the municipality money. So we're trying to be mindful of how to, how to balance these goals of both being fiscally responsible and encouraging this kind of activity that we want to have. So at least we'll start the bidding here at— why not do the local preference on the veteran side as well? Okay, number 3, I think I'm up to.

The S1 version allows businesses, associations to claim a fractional portion portion of the percentage in relationship to the ownership interest of the veteran. So if members Voland, Brawley, and Scout have created an LLC and member Scout has recently discharged or has ever discharged from the service, she's got a third percent of the, of the overall company, you would qualify for one-third of 5%. Um, the S-1 version doesn't really address how the preference should be applied if the ownership interests change other than to say that you have to continue to maintain your status as a veteran-owned business throughout the course of the contract, but as we thought through the practicalities of this, it's— it is difficult once a contract has been awarded to change any of the pricing terms, and it would be difficult once a contract is awarded to just scuttle the contract because, uh, Member Scout sold out of her LLC and now the business is not veteran-owned at all. We think we actually just kind of need a dumber bright line here, and so the S2 version does two things. One, it says we want to know that you're a qualifying entity at the moment we actually issue the contract or when we ever issue an option.

And then we again copied the state law model where we just said if you're a majority veteran, you get it. And that's what you have to be at the time of contract execution or option exercise. I think it becomes administratively a lot more challenging for us if the membership is 12.76% veteran-owned and then we're giving 12.76% of a 5% preference. So maybe that's too simple, but at least that's a slightly simpler proposal that we wanted to put on the table. I mentioned this one already.

The S-1 version says you got to have— you got to meet the definition of an eligible joint venture for the duration of the term of the contract, but we actually don't know what happens if a company changes and no longer qualifies in the middle of selling us gravel. We're not able to make them change the price that we're buying it, and we probably at that point don't want to say, "Ah, website project is canceled. We're not actually proceeding anymore." this project. So having the Brightline trigger at the beginning, I think, is going to be more operationally useful for us. And then this is one that we talked a little bit about in assembly chambers, where the— our S2 version mirrors the local preference approach and limits it to invitations to bid and not to RFPs.

And, and that is because I do think that we understand and can appreciate the desire to say we are willing to pay a little bit more to get the same thing to achieve our policy aims. But it does seem like a bigger bite to say we are willing to not get the thing that we think is best for the municipality because of veteran status or any other kind of status. And I really do have some tangible examples where I think through even our website project where I, I think we picked the best fit for the municipality. And I think if we had instead said because of the application of a preference, we have to go with second or third, I'm not sure that serves us best in the long run. But that is the juicy policy question, and it is certainly the case that other jurisdictions have applied preferences to the RFP context.

At present, we take the best financial expert to send to the RCA for AWU and the bond counsel that we think will serve us the best, whether they're local or in Seattle. And we could change that, but I do think that is a, a big bite to take. And finally, this is one that we hadn't really candidly thought about when we met previously, but we ought to— we ought to see if this is working and what it costs us, right? So the S2 version also says we ought to have a way of answering how often are we using a veteran's preference and what does it cost to us so we can assess if it's working. And so the idea is that we would have— well, actually, I'm not sure we admit— and this made it into our final draft, but we would be amenable to sending the Assembly every time we have an AM whether a preference changed the outcome and what it actually cost us, and we'll do the calculation right instead of wrong like I did on the slide.

And then also do an annual report where at the end of the year we would turn around backwards and say, we applied a preference this many times to these contractors and it was this cost to the Muni so that we know whether we are— what we're buying and how much we're paying. That's where I got for the group, and I know Member Gerker and Baldwin-Day have some slides they'd like to show you as well. Thanks. Yeah, before we move to the other slide deck, just checking if there's any other questions for Mr. Paulsey.

Okay. Oh, Mr. Hurt, go ahead.

Thank you. Through the Chair, Matthew Hurt, Legislative Counsel. Addressing the issue with maintaining veteran status throughout the duration of the contract, Why couldn't you, when you award the contract based on veteran status, put a provision in the contract that says if you fail to maintain veteran status, the price goes down? Is that not legally feasible? Well, that's an interesting question.

So could we— I guess in theory the answer is yes. So again, let's make that concrete and talk about two examples. In the ITB context, let's imagine that we have awarded our contract for gravel and who won. We got— where's my slide where the guy would— I guess the example I used was Forest Park. So we've awarded our contract to South Central and then halfway through the construction season they say our veterans sold out, we're no longer veteran.

The choices I guess are we stop construction, which you don't like. Your alternative is to say why not at the moment of bidding, we say, if ever you sell out, then the muni is only ever obligated to pay you spurnax price? Or whatever the adjusted bid price was, right? I mean, you can contract for anything as long as you do it up front, right? I, I guess the answer is potentially yes.

I don't know if it's going to end up being commercially reasonable, but in the sense that South Central then will, then will be in a position of saying, I can deliver this work and make a reasonable profit at $875. And we would say, okay, we will do that for you, but if your veteran leaves you, then we are only paying you $847. And I guess there are some circumstances where they would go, okay, we could have bid it at $847, so we'll do the work for $847 if that comes to pass. But it might be the case that they go, no, we actually can't perform the work, we will lose money at $847, so there's no way we would ever agree to that. Provision.

All of which is to say, at a minimum, I think it's complicated. And I guess in the ITB context, we don't normally have a contract negotiation. It's like, sell us this, and we go, you're the cheapest, you win. So we would be introducing a new step to the process where we would be creating this kind of new back and forth where we're trying to paper up what happens if you stop qualifying. And I guess I'm thinking through that in real time in part, but I don't know a great way of ensuring that we could always award to South Central in a way that will work.

And then likewise, on the RFP side, I guess that maybe you could more— I guess that— well, on the RFP side, it just doesn't work at all because— so on the RFP side, we have awarded OCON a contract for a website, and we have said, "Revise, build us a website," and in the middle of Revise building us a website, they say, "We no longer qualify." Well, there's no bid price adjustment. We just didn't give it to the higher-scoring vendor, so we couldn't at that point say, "That's it. Civic Plus or Granicus or somebody else is now going to take the website over the line from here." Yeah, I'm— Go ahead. Sorry. Yeah, I guess the question is, though, like, once you award that RFP, when you're in the contract negotiation phase, you build in a penalty for failing to maintain veteran status.

You just say upfront, this was awarded to you based off of meeting the criteria for veteran-owned business. If you fail to maintain it for the duration of the contract, X penalties will kick in. That's true. It'd be difficult to figure out what a standard metric yardstick for what those penalties should be, because again, the— this is not awarded solely on price. Price is 20% of the overall factor.

So Revize is halfway through building us a website, they're no longer veteran-owned, we go, that's it, you must pay a penalty. But they might have been cheaper than the website we wanted, so what is the penalty? I don't know, maybe we just have some kind of liquidated damages where we just pull the number out of the air and say, that's not how we wanted this to go. So, but again, that's a whole different new negotiation. And I don't— and in the circumstances where the preference was finely calibrated to the actual ownership, so if you're a— I mean, I don't even know how this works in some circumstances, but if you move from 16% veteran-owned to 15% veteran-owned, I don't know how we negotiate a contract penalty for that 1% difference because we gave you 16% of 5% instead of 15% of 5%.

I don't know. Okay, and Ms. Scout, go ahead. Mr. Mr. Then Mr. McCormick. Thanks, um, through the chair, I think building off that conversation, I could see a— maybe I'm oversimplifying this, but I could see a fairly straightforward penalty that's just reflective of the preference, right?

Like inverse Um, and I'd be open to that. My question though is around the veterans definition. Um, I'm curious whether in this S2 version you had conversations and how— can give me any insight into why the veteran would need to be a current resident of Alaska versus having ever been a resident of Alaska. I think this is a highly mobile population, and I'll just speak from my own experience in my own family. Both of my grandfathers are veterans.

One was stationed here. My dad was born here, then got moved around as part of that and moved back, and I think this could— yeah, I'm curious whether you weighed the difference between current versus ever resident. I think that's a great question, and I think the retracing of the conversation was you don't have to have any Alaska connection. We said, why don't you mirror state law and say you must be Alaska connection? And they—.

We are—. We just didn't come to— yeah, on that. But I think that third way is not a crazy place to land either, which is that you've got to be a veteran that either lives here or has served here, and we're trying to woo you back. Yeah, I like the idea of drawing people back here. Yeah.

Okay, thanks. Mr. McCormick, then Ms. Park. Thank you. Yeah, I had a question on, uh, also defining, uh, what a veteran is. And I think you mentioned it earlier, like maybe putting a classification of discharge that you maybe didn't mean to, but I appreciate putting in perspective that this preference is, um, saying that we're willing to pay more for certain services.

So if we're saying we're willing to pay more for certain services, why are we trying to grasp the widest range of discharges instead of saying like we value honorable discharges. Um, as someone that served, received an honorable discharge, I'm not seeing why we're going down to general under other than honorable circumstances. People who have had like significant punitive issues, um, we value honorable service and we're willing to pay a little extra for that. But, um, yeah, I guess that's the question. I think it's a great question.

I bet this is going to be one that is going to be easy to resolve. Because I think the order of operations here was the first version said you had to be discharged under honorable conditions. One of our local internal veterans said, well, there's another category which is not an honorable discharge, which general under honorable conditions, you should include that too. And then we drafted one that I think accidentally went too far and grabbed another category which we didn't mean to grab. So I think these slides show 5 statuses, and we probably all agree that we want 3 of them.

And I'm going to suggest maybe general under honorable and up. And so just maybe come back to the topic because I think that's in Mr. Gerker's presentation as well. So, uh, Ms. Park. Thank you.

Excuse me. Would it be too punitive to say that, that if they, um, if they suddenly had no veterans, uh, present to qualify for the preference, that that would put them in breach of the contract and it would go back out to bid? Would that be too much of a problem? Or would that be an incentive for them to retain that veteran until the project was done? To Member Park, I think you could certainly do that.

I think that probably hurts the muni as much as it hurts anybody else. So if we're in the middle of winter snow season and our snow hauling contractor goes, "Sorry, we're no longer a veteran-owned business," and we go, "Okay, well, we get to recompete it," well, that's not a win for us because we have no one hauling snow. And so That is why I think it is a challenging circumstance for us to think about what happens if it changes. As to whether a single muni contract creates an incentive that will incentivize a business to keep their veterans on the ownership rolls, maybe. Some of our contracts are large, maybe they could sway a big business, but I suspect that's a business and personal decision that we're a marginal input to.

Thank you. Okay, so we have just a little bit less than half of our time, so why don't we switch gears to the other presentation from Mr. Gerker. So I see the cord is transmitting right now, or transferring. So we'll go through the slides, and I think some of the topics that came up we will come back to in those slides as well. So I will turn it to Mr. Gerker.

Just thinking about it.

I think I just plugged it in. It worked. It's really thinking. Okay, we'll give it a second. Do some deadpan in the meantime.

How's everybody doing? Having a good time? Trump's in the news lately. Uh, is it, uh Uh, no, let me try. Try that again.

Circle, let's promise. There we go.

Is yours animated or anything, or could you go ahead and do this? Yeah, here we go. Do you want to—. I didn't know nothing else popped up on the actual screen, so Here you go. You want to click on next?

I've got notes on your mind. Thanks. And I will also note, just for the record, if folks are looking for these presentations, I believe they are on the website and in our emails as well. So it looks like we got it going. Okay.

Alrighty. Well, thank you everybody for this topic. I know it's something we talked about a couple weeks ago. The S-1 is— was born out of conversations that we had after introducing the original member Baldwin Day and I had conversations with the administration. They brought forward quite a few of the stuff that we just saw, and we ran through it, and we found some of it to be persuasive, so we included it in an S1.

Others we found to be less persuasive. So I'm going to talk a little bit about, about what we're looking at here today. We're going to go through the definitions of veterans, the preferences under the intent-to-bid process, and the preferences under the RFP process. P process, we are going to go ahead and talk about the definition of a veteran first. Um, there's, uh, there's a few differences, like I said, um, between their version and our version.

Our version says that as a person who has served in the United States Army, Navy, Marine Corps, Air Force, Space Force, Coast Guard, or in the Alaska Territorial Guard, Army National Guard, or Air National Guard, or Naval Militia, and was discharged and separated under honorable conditions. You see that under there, we talked a little bit, it sounds like maybe that was a little bit broader than you intended to go because that was something we absolutely intended to dive into, which is that under a condition that was other than dishonorable or other than honorable could actually end up resulting in people who had significant issues. So under the phrases under honorable conditions, we have three categories or there are two categories here. There's administrative, which is the honorable general, and then the general under honorable conditions. And then there's the punitive.

You did something bad, you're getting out because you're— you could be getting court-martialed. Go to the next slide, please. Sorry, it's not quite perfectly lined up over here. Is that where you want to be? Yeah, I think so.

Okay. And then under honorable, But like I said, I mean, I mean, like Bill said though, it sounds like they recognize maybe they went a little bit too far and they were trying to meet us back to where we were at. So I don't really want to spend too much more time here, so I will bump down a few more slides. The honorable characterization, that's dishonorable. Like I said, we covered that.

Okay. All right. We can just honestly keep this sliding down. Yeah. Get rid of all that.

All right. The next difference that we want to talk about is the 5 years preceding the dates or bids that the proposals are due. We do think— go to the next slide, please. We do think that the 5-year window creates too narrow of a gap for veteran-owned businesses to be established, and more importantly, it includes or it excludes a significant portion of the veteran population. You know, an ITB advertised today could, You could only offer the preference to a business owned by a veteran who was discharged on or before May 28th, 2021.

And for some context, uh, if you can go to the next slide, please. Uh, the withdrawal from Afghanistan occurred in August of 2021 and the last combat troops left Iraq in December of 2021. And as I don't know if we have any history buffs in the room, but, uh, prior to that, uh, those, those dates, if you next slide, there is a significant amount of fighting that happened in those countries. Uh, and so the 5-year, the 5-year thing could exclude combat veterans. And as time goes on, it would actually exclude combat veterans, uh, which is not at all, I think, uh, the goal here.

Now let's talk about the ITB process. Under an ITB, there are 2 key differences, I think, between the S1 and the S2. The S2 actually keeps the sliding scale already in code, and the stacking preference is significantly more limited in the S2 version. Let's talk about the sliding scale first. Approximately two-thirds of the ITBs that we would have had under— this year so far would be excluded under the S2 version versus what we would be trying to do with the S-1.

So it reduces the preference for a substantial portion of the bids. Go to the next slide, please. Of the 45 intent-to-bids closed in 2026, 14 received responsive bids below the $166,000 mark, which is about a third. The average successful bid so far is $517,000. That does exclude an anomaly, one little contract out there.

Meaning the full value of the preference is denied almost two-thirds of the ITBs. Next slide, please. So, for example, the average bid for 2026, like I said, is $517,000. Under the S-1, a bid of $500,000 would receive the 5% preference, or $25,000, meaning that it would be evaluated as $475,000. Under the S2, a bid of $500,000 would receive a 3% preference or $15,000 capped at $10,000, meaning it would be evaluated as $490,000.

So the S2 would reduce the preference by 60% for veterans.

The second issue is whether the preferences can be stacked. So under the S1— go to the next slide, please. Thank you. Under the, under the S-1, veteran and local preferences can work together. We do think that this actually creates a good setup.

I go to the next slide. So the S-1 not only provides a meaningful advantage to both veteran-owned and local businesses, but it does incentivize veteran entrepreneurs to remain in Anchorage and create jobs. Now, I do want to quickly address one point of sticking point, I think, between the S-1 and the S-2. Which is the Alaska veteran, we have a local preference and we have a veteran preference. Stack them together, if you're a local veteran, you're in business, great.

If you are a local and you are— and you have somebody who's bidding who's just a local and you have somebody who's bidding who's not local but is a veteran, their preferences cancel each other out. If you have somebody that's— that two people that are bidding that are both out of state and one happens to be a veteran, that is the only scenario where somebody out of state is is getting a preference over somebody local to Alaska. So I think that is an important distinction to make. And so I know that under state statute it says Alaska veteran. I think that's maybe where it's a little bit semantics at this point to be in practicality though.

All right, let's discuss the RFP process. This is, I think, where we saw the most amount of I think the sticking point. The administration's concern, if I could characterize, and please shake your head if I'm characterizing it correctly, is that the veteran preference may fit awkwardly within an RFP process because RFPs evaluate more than price alone.

So unlike in ITB, like I said, they're not just looking for the lowest price. They are looking for— Sorry, these slides are all a little mixed up. Um, yeah, the next one. Okay. Yeah, thank you.

So yeah, this is perfect. Um, in every RFP, the municipality is essentially defining that, um, defining a problem that we need solved, and they are publicly soliciting firms to tell us how they're going to solve it. And then they're outlining the factors to be used in evaluating proposed solutions and how important we find them to be. There—. These are two RFPs that were recently closed but provide, I think, a good example of the process.

The number of factors vary based on the problem to be solved. The weight of the factors varies on the problem to be solved. And the proposed language in the S-1 is simply the assembly making the policy statement that as a municipality, we find a veteran service to be an important factor to be considered in any proposal. The administration remains free to structure the remaining 95 points however it sees fit.

And the formula on the screen is the standard method used to convert price into points, and the lowest-cost proposal receives the maximum number of points available for the cost category. So every other proposal receives proportionally fewer points based on how much higher their cost is. So what this means is that price remains a major consideration throughout the evaluation process. A proposal that is substantially more expensive immediately begins losing points in the cost category, and that really is the key here. The administration's argument is that, is that a 5-point veteran preference would override the rest of the scoring system, but that's not really how an RFP works.

A veteran-owned business still has to compete on price and all the other factors that the administration determines are important qualifications. It still has to compete on qualifications. It still has to compete on experience, methodology, reference, and every other factor included in the solicitation. The preference simply adds 5 points to recognize veteran ownership as one of the values the municipality wishes to encourage. If two proposals are relatively close, a 5-point preference could absolutely influence the outcome.

That is the purpose of a preference. But if one proposal is dramatically more expensive than another, the cost scoring formula imposes a substantial penalty to that bidder. The mathematics of the RFP process simply do not support the claim that a 5-point preference is going to routinely drive contract costs up. Next one. Yeah, like I said, this is simply us making a policy statement that as a municipality, we find veteran service to be an important factor.

No, you're good.

So like I said, that seems to be where I think the main sticking point is between the S-1 and the S-2 around the RFP. I think that the premise that it's going to dramatically drive up cost or it's unruly or unmanageable, that is one that the sponsor— my cosponsor and I did consider, and we did ultimately reject.

Also, it's worth noting, applying a veteran-owned business to the RFP process is neither unheard of nor unworkable. Many places do it. Washington, DC, San Antonio, Miami-Dade County all provide for veterans preference in their process. Um, and actually DC provides for 9 different preferences in, in its RFP, uh, process, which is leave it to DC, right? Um, these municipalities do not concur, or, uh, these, these municipalities do not concur with, I think, the thesis that it's unworkable or it's perfectly applied to a veteran status.

Um, the— and also the empirical data, I, I think, also doesn't really support that premise. Um, unsurprising, uh, the VA has more veterans preference programs and contracts with more veteran-owned businesses than any other department of the federal government. Yet historical analysis of these programs created significant impact within the target demographic while incurring negligible, if any, adverse effects on the organization.

Also worth mentioning, veteran-owned businesses tend to perform as well or better than their civilian counterparts while also stimulating the local economy. And so, the next slide, please. That's it. Questions, comments, concerns, slight applause? Okay, Mr. Handlin, we'll start.

Yeah, so I mean, just kind of initially a comment. And with the RFP process, I'm familiar with it kind of on the federal side. I know they have the 8 kind of preference for some of that, and so the idea that we don't have that in any capacity and stuff, I mean, there are certainly— and then I guess my question is, did you guys at all look at that as maybe as a potential work of, hey, how does that work if a business who is qualified under a small business all of a sudden becomes too large or doesn't while they're under contract and maybe trying to model something like that with your guys's proposal?

We had a brief discussion about the 8 program and about how in practice there's ways that constantly creating new subsidiaries creates some difficult implementation challenges, but we didn't get much further than it— than that, to be totally candid. Okay, other questions?

Okay, yeah, go ahead, Mr. Cooper. There's also— I mean, it's worth mentioning there's, I think, a couple things that the S2 raised that I don't think we'd initially discussed that I do find interesting. And so I want to talk to my co-sponsor a little bit more, but there might be a couple things that we might look at pulling in. We might do an S3, guys. This might get crazy, but we might just go for it.

I don't know. So, okay, um, I— sorry, yeah, go ahead, Mr. Thank you. Um, so earlier Member Parks had asked about potentially terminating a contract, and I think that is in the S2 version. Um, where did I just see that?

Okay, for— so in on page 5, line 6, Am I looking at the S-1? Hold on. Let me make sure I'm looking at the right— no, I'm looking at the S-2. Okay. So for contracts exceeding 2 years, including any options, purchasing officer shall verify no more than 120 days prior.

So is that before the end of the second year of the contract?

If the veteran-owned business is no longer eligible, the purchasing officer may terminate the contract for convenience if doing so is in the best interest of the municipality. So is that kind of what getting, getting out what Member Parks is asking? Yeah, that's very similar to what Member Park was mentioning. It's a, it's a little bit of a papering up of what a lot of our contracts have anyway. I mean, a lot of our contracts will have a termination for convenience clause with some period of notice.

Um, so here we are attempting to hardwire that, yes, if we can get out of this arrangement because you have no longer had a veteran on your own ownership roles, then we would have the ability to do that. In practice, though, the operational challenge still may be, yikes, we're stuck where we don't have a backup plan if that's what we have to do.

I have one— well, actually two questions. One is substantive, the other procedural. And I know we just have a few minutes left. In the comment as well that I know most of our contracts do essentially say they can be canceled by the mayor. I think that's a general— not in all circumstances, but having been a contractor, I remember seeing that in there.

My question is really for the— I guess both for the sponsor, but probably the second one, Mr. Fawzy, as well. One is, to Mr. Fawzy's point that there's a limited number of bidders often on specifically things like road projects or big construction projects, are you— did you guys look at or are you aware of specific firms in the municipality municipality that would qualify under this. And I know the municipality didn't. I wonder if you have those, any of those individual names. Did I look at specific bidders or vendors who might fall under this?

No, I did not. Thanks. And then more procedural question. I think if you can just give a quick preview, it sounds like more work happening. There's this S2.

I know you guys are going to work that out, but do you have I guess sounds like the expectation is to have something ready by the 9th that we would potentially be debating. Yeah, that's, that's absolutely my, my intention, that we have this, uh, ready to roll by the 9th and we can get this thing passed hopefully and, uh, get some, get some preference for veterans. That'd be a great thing.

Uh, yeah, I believe right now we have the S-1 on the floor, but there are procedural moves that we can make obviously to So we'll deal with that when we get there. So, okay, well, I think if there's no other questions, thanks everybody for being here. Thanks to our presenters. And this is AO 2026-40, one of X number of S versions, and it is going to be on our agenda under unfinished business, and we will take it up at that time. So, and again, if you have amendments, please work with Council, work with, you know, whoever, whoever you might find those amendments compelling and make sure to get those in as well.

So thank you very much. And I think that's our only meeting for today. So have a great weekend. We'll be adjourned.