MINUTES OF THE

      SENATE COMMITTEE ON FINANCE

 

      Sixty-seventh Session

      February 24, 1993

 

 

 

The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:00 a.m., on Wednesday, February 24, 1993, in Room 223 of the Legislative Building, Carson City, Nevada.  Exhibit A is the Meeting Agenda.  Exhibit B is the Attendance Roster.

 

COMMITTEE MEMBERS PRESENT:

 

Senator William J. Raggio, Chairman

Senator Raymond D. Rawson, Vice Chairman

Senator Lawrence E. Jacobsen

Senator Bob Coffin

Senator Diana Glomb

Senator William R. O'Donnell

Senator Matthew Q. Callister

 

STAFF MEMBERS PRESENT:

 

Dan Miles, Fiscal Analyst

Bob Guernsey, Principal Deputy Fiscal Analyst

Larry L. Peri, Program Analyst

Marion Entrekin, Committee Secretary

 

OTHERS PRESENT:

 

Donald Bailey, Sr., State Printer, State Printing and Micrographics    Division, Department of General Services

Ellen M. Townsend, Principal Budget Analyst, Budget Division,        Department of Administration

P. Forrest Thorne, Deputy Budget Administrator, Budget Division,     Department of Administration

Dennis Colling, Administrator, State Motor Pool, Department of       General Services

Lyn Callison, Accountant, State Motor Pool, Department of General    Services

Jeff Myers, Consultant, KPMG Peat Marwick

Tom Tatro, Acting Administrator, Purchasing Division, Department of    General Services

Terry D. Sullivan, Director, Department of General Services

Richard A. Cornish, Criminal Investigator, Internal Affairs Unit,    Department of Motor Vehicles and Public Safety

Jan Capaldi, Assistant to the Director, Department of Motor         Vehicles and Public Safety

Debra Meizel, Program Chief, Food Distribution Program, Purchasing   Division, Department of General Services

 

State Printing Office - Page 214

 

Donald Bailey, Sr., State Printer, State Printing and Micrographics Division, Department of General Services, began his testimony by reading a short opening statement concerning his budget, Exhibit C.

 

Starting with the Base budget, Mr. Bailey said direct sales to the agencies amounted to $3,511,676 the first year of the biennium and $3,593,796 the second year of the biennium.  These monies allow the division to operate for the biennium and to serve the agencies in an efficient manner. 

 

According to Mr. Bailey, the funding recommended by the Governor is suitable for the division to operate but he is hoping sales will continue to upgrade so that the budget cuts will not affect the division.  However, he has noticed some of the agencies have cut back some of their printing costs.

 

Mr. Bailey said personnel expenses amounted to $1,563,873 the first year of the biennium and $1,639,538 the second year of the biennium.  He pointed out these amounts are lower than reflected in the Agency Request category due to the budget office's recommendation to remove three accounting positions from the State Printing Office into the new accounting division.  Mr. Bailey was not sure what the title of this new division will be or if this move will be an actual physical move or just a monies move.  Also shown as personnel expenses is a reduction of one full-time position that was taken out of the printing budget.

 

Senator Raggio referred to the budget page and noted existing positions as 36.2 but in another area the figure 40.14 and asked Mr. Bailey how these numbers were arrived at.  He asked if his office was sharing some positions with other agencies.

 

Mr. Bailey replied they are not sharing, these are full-time positions.

 

Ellen M. Townsend, Principal Budget Analyst, Budget Division, Department of Administration, clarified the full-time position Mr. Bailey referred to that was eliminated from the budget is a .94 percent position, not a full 100 percent position which explains the fraction .14 in the figure 40.14.

 

In an attempt to clarify what transpired Senator Raggio asked, "Essentially three positions are transferred out of this budget but the positions are still maintained where?"

 

Ms. Townsend replied they were transferred to Budget Account 1371, the Administrative Services Division.

 

Referring to the Maintenance category, Mr. Bailey said the Budget Division has recommended $2,067 and $2,665 be increased in the division's budget for employee bond and automobile insurance.  Also $216 in each year of the biennium for the increase in utility rates.

 

Looking at the Performance Indicators Senator Raggio asked if the figures reflected were accurate.

 

Mr. Bailey replied in the Actual Year 1992 the only change would be in the Dollar Sales category. The figure should be $3,114,328. The division's performance indicators are based on historic figures started 2 years ago.

 

Senator Raggio questioned if the difference between the Projected amount of $3.8 million for sales and the Actual of $3.1 million was the result of the budget reduction and Mr. Bailey answered in the affirmative.

 

Senator Raggio asked Mr. Bailey, "As a result of the budget reduction what items were deleted from your program in the printing area?"

 

Mr. Bailey answered the only thing actually deleted was sales.  The agencies bought less or stopped buying some items altogether.

 

Senator Raggio then asked, "What did you not print?  What made up the difference in sales?"

 

Mr. Bailey said they have not stopped printing anything.

 

Senator Raggio said:

 

      I am confused.  If you anticipated sales of $3.8 million...there was a budget reduction that cut your authority and the other agencies did not have as much money to spend for printing... this resulted in your having $3.1 million.  Evidently there were certain printing programs or items that were not printed.  Are there any significant items that were not printed as a result of the budget reduction?

 

Mr. Bailey answered the largest cut involved the Department of Motor Vehicle and Public Safety's request for a driver's handbook.  This order was cut in half.  Also there were many small cuts within agencies who discontinued forms or cut the number of forms printed.  They are doing with less which will wash out forms they have not been using effectively.

 

Referring to his service to the legislature for printed matter, Senator Raggio asked Mr. Bailey if he anticipated problems in keeping up with the demand for legislative materials.

 

Mr. Bailey said the division is feeling confident they will continue to provide the outstanding service they always have.

He does not see any point where they might break down.  All the stock is on hand, and they have the proper equipment to provide printed data as necessary.

 

Senator Raggio commented:

 

      As you are aware there has been some ongoing concerns about the printing of the Nevada Revised Statutes (NRS).  There is a competitor in the field and some deadlines imposed by the Legislative Counsel Bureau about the printing of the NRS.  Are you going to have any problem working with the Legislative Counsel Bureau and meeting those deadlines?

 

Mr. Bailey said in previous sessions deadlines were imposed by the Legislative Counsel Bureau, and they were able to meet all of them.  He is certain they will meet any deadlines put on them this session, too.  As for their competitor, Mr. Bailey feels competition is healthy and will keep them operating efficiently.

 

Mr. Bailey feels the printing of the NRS done by the State Printing Office is outstanding.  He believes they do a remarkable job in a short period of time and he does not see that this service will change in any manner.

 

Printing Office Equipment Purchase - Page 218

 

Mr. Bailey remarked the funds for equipment purchase is basically  a balance forward and a transfer from the depreciation fund they started several sessions ago.  This allows them to build revenues in a fund that can be expended towards purchasing of equipment to allow them to perform their duties at the printing office.  The major reason for setting this fund up was to keep them from going before the legislature to ask for equipment money.

 

Senator Raggio asked if this fund is built upon a depreciation rate in every purchase to other agencies.

 

Mr. Bailey answered in the affirmative.  Each piece of equipment has a depreciation schedule.

 

Senator Raggio asked if they were looking towards the purchase of some pieces of special equipment this year.

 

Mr. Bailey replied:

 

      Yes, we are asking to purchase a bracket-chipper in the first year. This will insert a chipboard in between the documents.  In the past this was inserted by hand which involved a great deal of time and labor.  We are hoping to cut agency costs with this purchase...An infra-ray drawing system is also an addition of a piece of equipment requested.  This saves time in turning out documents printed on both sides and will be of particular value for printing the NRS. The third piece of equipment, the nonstop delivery system, allows an operator to fill one stack of paper going into a press while still using a stack which allows the press to be more usable creating less down time.

 

      The second year the film processor is a replacement of one of the old ones, if that is allowed.  The second item is the pile turner which turns a stack of paper, for example 5,000 sheets of paper...turns it over so that it can immediately be put back through the press.  Prior to this we did it by hand.  We are trying to streamline to get faster.

 

Senator Raggio asked what amount is being requested for the purchase of this equipment and Mr. Bailey said $32,500 in the first year and $38,000 in the second year.

 

Senator Raggio noted the division had requested the authority to purchase a two-color press for $105,000 and asked if that is a capability the printing office does not now have.

 

Mr. Bailey responded they do not have the capability at the present time.  This machine would allow the printing office to do large envelopes to color and perfect which means they could print the envelopes front and back.  Envelopes of this type must now be printed by outside vendors, and he feels they could be much more competitive than what the state is paying to an outside vendor.  The state is now paying an outside vendor approximately $300,000 for this service.  The division's request for $105,000 was denied by the budget office.

 

Senator Raggio said the committee would like to see an actual figure of what the division is spending outside for this purpose that cannot be done in-house without the expenditure of $105,000. He asked that the Budget Division confirm whatever figure is submitted. 

 

Mr. Bailey said he would provide this information and confirmation by the Budget Division.

 

Senator Jacobsen asked why the administration turned down the division's request for $105,000 for the purchase of the two-color press.

 

Mr. Bailey answered it was a cost savings in the general overall budget for the state and his office is trying to be cooperative with the Governor's request.  However, this purchase would definitely save the state money and without it they cannot be competitive with an outside vendor.

 

Records Management - Micrographic - Page 220

 

Mr. Bailey said this is a unit of printing and micrographics to provide microfilm services and technical advice on filing systems to state agencies.  The micrographic budget has also followed the Governor's recommendations finalizing the budget with a 7.7 percent decrease from the 1992-1993 budget.  The base revenue derived from sales to the state agencies was $220,546 in the first year of the biennium and $221,598 in the second year of the biennium. This amount will support the four people that are running the operation and providing services to the state agencies.

 

Personnel expenses for the first year of the biennium amounted to $141,729 and $142,781 in the second year of the biennium. 

 

According to Mr. Bailey, the operating expenses for records management are small.  The raw material includes film, sleeves, and inserting units needed to provide the agencies' retrieval systems.

 

Senator Raggio referred to module 701, Equipment Purchase, under Enhancements and asked for an explanation of $23,150 in fiscal year 1994 for the purchase of a high speed roll-film duplicator.

 

If they generate the revenue from sales, Mr. Bailey said they would ask that the division be allowed to purchase this piece of equipment.

 

Senator Raggio referred to the Performance Indicators on page 222 of this budget. He said staff had pointed out the projected revenue for fiscal year 1995 is approximately $241,000.  However, the Agency Request and Recommendation of the Governor is for only $221,000.

 

The $240,805 is an incorrect figure, Mr. Bailey replied, and has not yet been adjusted by the Budget Division.  The correct projection is $214,904.

 

P. Forrest Thorne, Deputy Budget Administrator, Budget Division, Department of Administration, said the number also includes a balance forward of $8,590.

 

Senator Raggio then asked if the equipment purchase will only be made if their revenue increases over their authorized amount by $23,150, and Mr. Bailey stated that is correct.

 

Senator Jacobsen remarked:

 

      Years ago we were hearing about the proliferation of printing equipment in agencies and departments and I believe at that time we gave you the authority to sanction that or disapprove it.  Is that still in effect?

 

Mr. Bailey answered in the affirmative but said the Employment Security Department and the Department of Education no longer have print shops.  Also the Department of Transportation is now down to two individuals in their print shop, but they are contemplating closing this soon.  The State Printing Office is starting a study at the Welfare Division to determine if their printing shop should also be closed.

 

Senator Raggio asked how many other states still maintain a government-operated printing office.

 

According to Mr. Bailey the State Printing Office performed a survey in the early part of 1992 through the National State Printing Association because they were concerned about public printing, particularly in the state sector.  Thirty-two states responded they have state operations, several of them have large numbers of state operations such as Nevada had in the early 1970s.  Many have centralized and are under one or two major shops depending on the size of the state.  Good results were received from the survey, and he estimates at this time about 40 states have in-house print shops.

 

Senator Raggio asked Mr. Bailey to share that compilation with the committee and Mr. Bailey then presented Exhibit D to the committee secretary for inclusion in the records.

 

Motor Pool - Page 228

 

Dennis Colling, Administrator, State Motor Pool, Department of General Services, introduced Lyn Callison, Accountant, State Motor Pool, Department of General Services.

 

There are three motor pool facilities in Nevada according to Mr. Colling.  These are located in Carson City and at the airports in Reno and Las Vegas run by 13 full-time and 2 part-time employees.  There are approximately 515 vehicles that are driven approximately 5.2 million miles per year on the average.

 

Mr. Colling referred to the Base budget and said there are two individuals in personnel that hold accounting positions and these positions will be moved for administrative purposes into the new Administrative Services Division. There has been a decrease in personnel expenses and corresponding with that reduction, there has been an increase in operating expenses that covers the two individuals.  Mr. Colling is not certain at this time if the individuals will be physically moved or stay within their current location and be managed by the new division.

 

Senator Rawson said he would like to discuss the overall philosophy

of the motor pool division.  He asked if Mr. Colling ever reviewed the services provided for the state and if so, whether that service is the best that can be employed to deal with such issues as transportation to and from the airport as well as long-term travel.

 

Mr. Colling said the motor pool has authority over less than 20 percent of the overall state vehicles in state government, but he believes they provide a very competitive service, especially at the airport.  He pointed out they do not service every individual request that they have at the airport and they never want to have enough vehicles to be able to meet every request.  They keep the number of vehicles under what may be needed and supplement their fleet through the use of the various rental car agencies in Reno and Las Vegas.  There is a budget line item that reflects that particular aspect. 

 

Senator Rawson explained since the legislature is reorganizing government this session this opens up the window-of-opportunity to review all of these issues and we should be asking if there is a better way of running a particular operation.

 

Mr. Colling felt if there will continue to be vehicles in state government there needs to be a central control of the policy, use and maintenance of those vehicles.  Every state that he is aware of has some type of motor vehicle operation owned by the state.  There are some states that have a motor pool division that include all of the vehicles in one area and there are other states that allow each agency to control the maintenance and operation of their own vehicles.  Most states, however, have an operation similar to Nevada's motor pool division. 

 

 

In the opinion of Mr. Colling, the most efficient use of motor vehicles is through the daily rental pool rather than a full-time assignment. He explained this tends to cut down the number of vehicles while increasing the usage of them.

 

Senator Rawson asked, "Is there anybody else in the state doing the same thing that you are?  In other words, do we have anyone else that is making daily vehicle use available?"

 

Mr. Colling replied:

 

      Not to other agencies.  The highway department does have pools in Carson City, Reno and Las Vegas, and their employees use those vehicles as long as they are available then use our vehicles when they are out.  No other agencies rent to a second agency to my knowledge.

 

Senator Raggio noted there has been a decrease indicated in the overall budget for motor pool and asked if they still anticipate a decrease in usage.

 

Mr. Colling replied when the budget cuts took place the motor pool's increase went up.  They ended up driving almost 5.5 million miles rather than the 5.2 million and 5.3 million projected previously.  He believes the increase was due to 50 additional vehicles that were authorized to increase the fleet used mainly by the Department of Parole and Probation.  However, he believes 5.2 million miles is a good projection for this and the next biennium.

 

Referring to the Maintenance category concerning the Americans with Disabilities Act (ADA) that provides for the renting and leasing of a vehicle with wheelchair access to meet the transportation requirements of the ADA, Senator Raggio asked Mr. Colling what he feels his needs are and what is actually required in this area.

 

Mr. Colling responded:

 

      The requirement is that the state provide transportation as needed for its employees.  My thoughts on this particular aspect is rather than purchase a number of different vehicles...that we will contract with those agencies public or private to provide that service on an individual basis.  The idea is that each individual that needs a wheelchair-access van may have different requirements...some of them can operate left-hand drive controls, some right-hand drive controls...different types of wheelchairs require different mechanisms to keep them immobile while they are driving.  There may be instances when we might have to provide a driver for the vehicle for individuals that are not able to drive themselves since we still have to provide that transportation. This is authority for that.  I conducted a survey of approximately 10,000 state employees that we are compiling now.  There are a small number of employees that require some type of enhancement to help them drive.

 

Senator Raggio asked if the $10,000 provided each year will be adequate to meet the requirements of the ADA.

 

Mr.Colling said he believes that it will be adequate, but he does not have prior experience in this area from which to gauge the costs.  However, he would not exceed the $10,000 without permission.

 

Turning to the Enhancements category pertaining to alternative- fueled vehicles, Senator Raggio said there is a new federal law not yet in effect that will require an increased level of purchase of alternative-fueled vehicles. He noted the motor pool made a request of $25,000 in each year of the 1993-1995 biennium to pursue the conversion of 10 vehicles in each fiscal year to alternative fuel and asked Mr. Colling to explain what the motor pool is doing insofar as planning for this requirement.

 

Mr. Colling replied the request is for funds to convert vehicles from operating on gasoline to running on alternative fuel.  In this case they had planned on having them operate on compressed natural gas.  At the time the budget was put together, they felt they had to convert these vehicles.  However, as a part of the Purchasing Division's general vehicle request they let a bid request for alternative fuel options for vehicles already equipped by the manufacturer.  Mr. Colling now feels rather than do conversions it would be better to purchase these vehicles through the manufacturer complete with warranties.  Through the purchasing process motor pool received a number of options that they can do with alternative fuels, and they have ordered six compressed natural gas vehicles that are due to be delivered next month for the state.

 

Mr. Colling said with the new office building in Las Vegas and the great number of employees it will have, there will be a need for a daily-use pool at the building itself.  They plan to have a small satellite pool in operation at that site and to use compressed natural gas vehicles at that satellite location. In 1995 they plan to request a part-time position in conjunction with the Buildings and Grounds Division to work as an on-site individual to oversee the vehicle operation and the building itself.

 

According to Mr. Colling, they do not anticipate there will be sedans available in natural gas until 1995.  They have ordered six vehicles but only full-size Dodge vans and three-quarter pickup trucks are available at this time.

 

Senator Raggio referred Mr. Colling to page 231 to the Enhancement category and motor pool's request for cellular phones and asked for an explanation.

 

Mr. Colling explained their request is for two cellular phones.  One would be used in their airport shuttle bus in Las Vegas to facilitate reaching the shuttle bus operator, and the other would be placed in their shop truck in the Las Vegas area to reach the driver for maintenance calls.  This request will increase efficiency in both areas.

 

Senator Coffin asked if they were planning to purchase hand-held cellular phones and Mr. Colling replied in the affirmative.

 

Senator Coffin then asked, "Do we have a contract through the Department of Administration that would permit you to operate on about a $440 per year cost?  What company do we have that can sell us that kind of service so cheaply?"

 

Mr. Colling said he did not have the name of the company but did a survey in Las Vegas to determine the costs and hoped his figures are accurate.

 

Senator Coffin asked if Mr. Colling had any ideas for restriction of the personal use of cellular phones, and how this would be controlled.

 

Mr. Colling replied, "There would be absolutely none.  There would be no personal use permitted at all...we would check the billings since everything is recorded."

 

Senator Coffin pointed out that the billings would not reflect other than long-distance telephone calls and Mr. Colling replied, "If they make personal calls and I find out they will be disciplined."

 

Senator Coffin asked if there were any VHF radios in the motor pool at the present time and Mr. Colling said they do not have this type of radio in use at this time.

 

According to Senator Coffin VHF radios probably cost as much on the front-end as the cellular, and they have virtually no operating costs other than routine maintenance.  He asked if the division had given any thought to installing VHF radios rather than cellular phones in these vehicles since there are many frequencies available throughout the state.

 

Mr. Colling will look into this and report his finding to the committee.

 

Senator Raggio asked if the new billing system for motor pool is in place and if so, how it will impact the in-house billing system.

 

Mr. Colling replied the new billing system is in place and operating efficiently.  If the two accountant positions mentioned earlier do move physically to the Administrative Services Division, they will take the billing system with them.  If they do not move, the system will stay with motor pool.  If the positions are moved to a separate location, it will delay their billing cycle by 2 to 4 days because of the necessity of taking the requisitions to another location.

 

Mr. Thorne stated this will be something that will have to be worked out by the new department since the physical location of the personnel may cause an impact on the turnaround time for billings.

 

Senator Raggio said, "I do not think you would want to tolerate that kind of a billing delay. I think you should visit with one another regarding this issue and then let the committee know what you believe will be the result."

 

Mr. Thorne commented that given the information from Mr. Colling there would be an impact; he expects the billing process would  continue to be operated from the present location.

 

Senator Raggio referred to the performance indicators and noted the base vehicle rental rates currently charged to state agencies is $18 per day and $200 per month for a sedan and asked if it would be feasible to reduce that cost.

 

Mr. Colling does not believe a reduction in rental costs would be possible and said even if no one drove, there still would be overhead costs with which to deal.  He said they are at the same rate for the next biennium as they are in this biennium and since 1985 they have had a consistent charge.  The rates charged by the motor pool seem to generate the correct funding to cover all of their costs.

 

Senator Callister said he is pleased to hear about the aggressive position motor pool has taken on implementing the use of alternative fuel and is especially pleased to hear about their plans to include a refueling station for alternative-fueled vehicles at the new state office complex in Las Vegas. 

 

Senator Rawson stated the committee has a capital improvement request for a car wash facility to be built at the Las Vegas Motor Pool.  They were also told there would be certain Environmental Protection Agency (EPA) regulations that must be followed in connection with this car wash facility.  He asked for Mr. Colling's comments regarding this project.

 

Mr. Colling said at the present time they use a bucket and hose to clean vehicles at the motor pool in Las Vegas but the EPA will not allow this to be done in the future. In the past they used contract services for vehicles but that has become very expensive.  He concedes the $200,000 cost of the new car wash is expensive but there are approximately 250 vehicles in Las Vegas so something has to be done to maintain them.

 

Senator Rawson asked if there would be a reduction in the number of employees in the Las Vegas motor pool as a result of the new car wash facility, and Mr. Colling said there would not be a reduction of the five full-time employees.  However, they do expect the outside agencies that have the monthly rentals involving approximately 175 vehicles to come to the motor pool to wash their vehicles.  They will also offer this car wash facility to other agencies for a small fee.

 

Senator Glomb asked for clarification regarding motor pool's budget request for conversion of vehicles to alternative fuel since she noted their request had been denied.

 

To clarify, Mr. Colling explained the money was requested for conversion but they will not be doing conversion of vehicles    after all.  They plan to purchase the vehicles already equipped with alternative fuel from the manufacturer, and that money will come out of the State Motor Pool Vehicle Purchasing budget rather than the State Motor Pool Operating budget.

 

Motor Pool Vehicle Purchase - Page 234

 

Mr. Colling anticipates they will request replacement of 29 vehicles in the first year of the biennium and 56 vehicles in the second year of the biennium.  He projects in the second year of the biennium and the 2 years beyond that they will see an increase in the number of vehicles being replaced since almost one-third of their fleet was purchased in 1988 or 1989 and will be due for replacement.

 

Senator Raggio inquired, "Are you anticipating in this biennium to purchase any vehicles equipped for alternative fuel usage and if so, how many?"

 

Mr. Colling responded they would like to replace anywhere from three to six vehicles in the first year and six to nine in the second year with vehicles that use alternative fuel.  It would depend on the type of vehicles available that are equipped with alternative fuel because if the manufacturers do have sedans available, he would like to purchase them rather than trucks.

 

Senator Raggio asked if there is an increased cost factor in purchasing this type of vehicle and Mr. Colling said there definitely is.  As an example, for a three-quarter ton pickup truck there is an additional cost (per vehicle) of approximately $3,000 to $4,000.

 

Purchasing Division - Page 236

 

Mr. Thorne introduced Jeff Myers from KPMG Peat Marwick and prior to discussion on this budget requested that the committee listen to an overview of the KPMG Peat Marwick purchasing review and recommendations for the Purchasing Division.

 

Senator Raggio invited Mr. Myers to speak before the committee.

 

Mr. Myers said he is a consultant with the firm of KPMG Peat  Marwick whose firm provided the Governor and the commission on the government reorganization in Nevada with assistance in staff work in conducting the reorganization review.  Testimony today will concern the findings and recommendations within their report on the Purchasing Division.

 

Mr. Myers testified:

 

      Purchasing within Nevada is centralized generally within the Purchasing Division for most state agencies and specifically for all purchases that exceed a threshold that is currently $7,500 as well as for a number of purchases that are less than that for some specific items.  In fact, some thresholds go down to as little as $499.  Additionally there are some open-term contracts for a variety of types of items that the Purchasing Division negotiates that the agencies are free to buy, although those orders must be purchased through the Purchasing Division.

 

      The overall focus of their report and their recommendations is something of a judgment and a recommendation that the control that is exercised by the Purchasing Division is probably a little higher than is exercised commonly in their experience and is a little closer and a more burdensome control than may be necessary.  We think there is more centralization here than we would prefer to see and some of the things I will describe specifically in terms of our recommendations...will give you a bit of a flavor as to what those items are specifically that we think create  more paperwork, perhaps delay things more and make things difficult for agencies to get some of the items they need without necessarily having a corresponding balancing benefit in terms of the added control and security of the purchasing process.

 

      Specifically we have eight recommendations in our report.  The first of them suggests that the level of delegation of purchasing authority to agencies of $7,500 be raised.  Essentially that is a philosophy of trying to decide where the balance should be, where the central purchasing should take effect and where the big guns and experts in the divisions be used and thorough practices be followed as opposed to what responsibilities the individual agencies should have.  We are going to suggest in concert with that in our second recommendation that more use be made of open-term contracts.  An open-term contract is used for any sort of item the state may use where over the course of the year the Purchasing Division negotiates and awards a contract to a single vendor for use statewide so that, for example, any agency in the state can purchase the quantity of office supplies they need through that contract.  The converse would be when it is a relatively unique item where it is an infrequent purchase and it is not either held in the warehouse or negotiated on an open-term contract but must be selected and purchased individually.

 

Senator Raggio referred Mr. Myers to his first recommendation suggesting the level of delegation of purchasing authority to agencies of $7,500 be raised, and asked what he is suggesting this amount be.

 

Mr. Myers said at the time they conducted their investigation the threshold was $5,000 and they suggested it be raised to at least $7,500.  After some reviews of comparable purchasing entities the Budget Division and Department of Administration suggested, and they concurred, this amount be raised to $10,000.  Mr. Myers emphasized this would be for only those items that are "unique" purchases on the part of the individual agency.  If it is an item that is purchased regularly, over and over again, they anticipate that an open-term contract would be negotiated and that the agency would be required to purchase through that open-term contract presuming that open-term contract is going to offer the best price.

 

Senator Raggio stated, "In other words on that type of an item if the agency was going to purchase $100,000 worth over a period of a year you would recommend an open-term contract be used without any central purchasing required?"

 

Mr. Myers replied:

 

      No, the central purchasing division would be the one we would expect to negotiate the open-term contract, and in terms of several of the recommendations that I will describe we would expect that the agency itself would be required to adhere to the open-term contract and use that vendor.  However, we expect also that the purchases made through open-term contracts need not necessarily have their paperwork processed by the Purchasing Division.

 

Senator Raggio asked, "What are you contemplating as the normal or average length of an open-term contract?"

 

Mr. Myers answered:

 

      I am anticipating annually although the Purchasing Division will tell you that typically for a commodity on an item that is volatile you want a shorter term.  If you have a long-term contract on something like gasoline the vendor who is not certain what is going to happen in 6 months will put the price high enough to insure they will not lose money.  If it is a stable item you take an annual or even a biennial contract.  Conversely if it is a fluctuating item you would want a short-term contract.

 

Continuing with his testimony, Mr. Myers stated:

 

      The third recommendation regards the state purchasing fund.  Essentially what they found is there exists something of a monopoly in Nevada in terms of the state Purchasing Division...on the state purchasing fund for items purchased on a unique basis there is a 5 percent surcharge added.  For items that are currently held within the state's warehouses that are requisitioned and money is transferred for their purchase from the warehouse...there is a 15 percent surcharge currently made.  What we found are that such funds are not used frequently these days and essentially the fact that the state agencies must purchase through the Purchasing Division except items from the warehouse...they are essentially a captive audience in terms of paying those surcharges.  They are not able to go out and look and consider other vendors.  We think for small-ticket items the advantages of that, both in terms of morale, responsiveness and competitiveness for the price of the item, will improve the ability for the agencies to operate and provide more incentive for the Purchasing Division to minimize its costs.  Hopefully with such incentives in place future increases in the surcharge will not be necessary.

 

      The fourth area where we have made a recommendation is within the pre-audit process.  The way the audit is working currently is that when an agency intends to purchase an item its requisition must first be approved by the Budget Division to determine it has been properly coded for the account and there is enough money in the budget account or bank for the agency to be able to purchase the item. Then it goes to the Purchasing Division who negotiates for and purchases the item or issues it from the warehouse.  The state controller, before a check is cut again, audits to be certain there is enough money in the account and that the budget coding is proper.  We are suggesting that the processes by the controller after the fact is sufficient and that the pre-audit process is probably not necessary.  At this point that may result in a number of rejections after the fact by the controller, but what we observed in our field work is there are currently a number of rejections made by the controller and that the pre-audit process has not substantially changed those as far as we can tell.

 

Senator Raggio asked who presently performs the pre-audit review, and Mr. Myers responded this is currently being done by the Budget Division.

 

Mr. Myers continued to state:

 

      The fifth recommendation is regarding the warehouse.  They found there is a high likelihood that vendors, especially for some of the items such as office supplies, are capable of providing both inventory control and management as well as distribution services.  In other words you do not necessarily need the warehouse when a vendor will be able and seems perfectly willing to  provide the materials and deliver them to the agencies that are ordering them.  If you managed to eliminate the warehouse or at least reduce its size to the extent that it is serving Purchasing Division needs, you would not only manage to reduce the staff costs and the costs of the warehouse building and space, but you would also manage to reduce the inventory carrying costs...the money you have basically tied up in the goods and materials that are in the warehouse.

 

Senator Raggio asked, "If that happens is it possible that the delivery time could be protracted?  Also, would the cost be more if the vendor has to warehouse the items?"

 

Mr. Myers responded:

 

      The cost we anticipate would be higher.  Let me clarify that.  One way you would bear the cost is by paying for your own warehouse operation, and the other way you would pare the cost is by paying a slightly larger price to the vendor.  Our perception is that the vendors are typically serving a much larger group and have a better economy of scale than the state warehouse because they are serving a number of commercial operations as well as the state operations.  The fact is also that in terms of inventory management by stockpiling things in your warehouse you are probably better able to set inventories at levels that will make sure you do not have a stock-out situation, but if you set inventory levels extremely high then you would have a correspondingly higher cost for the warehouse.  Typically items that are something extremely urgent in nature are going to be that way both for the public sector and the private sector, and there would likely be more on hand in the vendor's warehouses.  Secondly, in most divisions and agencies there is a little bit of stock that each agency keeps on hand.  Almost every agency you would care to visit would have a supply of notebook paper and pens and pencils and especially if it is an item that is critical. Agencies and managers that realize they cannot perform their responsibilities without an item would prefer to have a few on hand rather than to be entirely reliant on either the state warehouse or a vendor.

 

      The sixth issue is a substantially different one, and this is that in a few instances we identified cases where local governments had been taking advantage of state contracts, with the state's permission, to obtain a more advantageous price. In order to maintain vendor relationships we understand that the state essentially fronts the money to the vendors and pays for the item that the local government has ordered before the local government in fact reimburses the state.  Certainly that does not happen all the time and there is a varying length of time in the cases where it does happen but the state is out the money.  What we have suggested is there be an interest charge assessed or a surcharge assessed and set so that the local governments are not requiring the state to front money in the cases where that is happening.

 

      The seventh recommendation related to the United States Department of Agriculture's food commodity distribution programs and federal surplus property programs.  The issue we found is there are a number of staff positions, some related to warehousing and some related to distribution, that are funded through either state or local sources.  Some of those state sources may be the agency receiving some of the commodities or surplus property.  The local sources may be the counties or a nonprofit agency within Nevada.  We believe there is an opportunity for capture of the costs for those staff positions from the federal programs.  At this point it is not absolutely clear that is possible, but it seems likely to us. It is something where again some of the money may be saved by the state and some of the money may also be saved by entities within the state such as other governmental agencies or nonprofits as I suggested.  The extent of that is that there is approximately $347,000 worth of costs to those positions and currently approximately $76,000 is being claimed by the state in terms of reimbursement being requested from federal programs.

 

      The eighth and last area we are suggesting is recognizing there is a need for control to one extent or the other and the need for monitoring...and if the recommendations that we have made for some decentralization of purchasing and delegation of authority to the agencies are implemented, there needs to be a corresponding monitoring and accountability to make certain that those authorities are not abused.  We are suggesting that when the controller finds that the payment to cover the agencies purchase is rejected, either because the agency does not have enough funds in its budget account or a budget code is improper or for any other reason...when those rejections occur we suggest they be monitored and trends be identified.  If consistently one agency is making a mistake or it is something that seems to be an improper policy that is being implemented inappropriately, we think it is important to keep track of the problems that are occurring so that you will have the accountability that will balance out the need for decentralization and a little bit more autonomy within the agency.

 

      We are not suggesting that controls be relaxed entirely.  We think there is probably a little bit more paperwork in terms of the pre-audit process and the fact that the Purchasing Division has to process orders for open-term contracts.  We think generally that the controls that are currently there and the centralization within the Purchasing Division that is currently there probably would be relaxed reasonably and that would help improve and streamline government, improve the morale within the agencies and their ability to respond to their needs and the needs of their constituents, and generally bring the state more into line with the actions of other entities that are comparable.

 

Senator Coffin asked, "Did you find any potential breach of ethics in the purchasing operation, or do you find it compares well with other organizations, considering the pressures that are always placed upon purchasing people?"

 

Mr. Myers answered:

 

      The review was generally a high-level review focused on roughly the period of December 1992 and the first week of January 1993 to try to get something together that would assist the Budget Division with their budget submittal.  We did not review individual purchasing transactions or individual events so we did not look for specific events of fraud.  What I can say is that in terms of the policies in place they are very strong in trying to minimize the risk of fraud.  In fact, that is something that we are really concerned about here.  The policies are for a much stronger level of control and a much more centralized level of control which will help to minimize the likelihood of fraud...but what that essentially means is that some agencies that want to spend $500 to go out either remodel an office or purchase a piece of equipment have to go through the pre-audit process, have to have the Purchasing Division set the specifications, negotiate with the vendor and then approve payment.  What we have suggested is that the agencies themselves need to be held accountable in terms of the monitoring and the management....We hope that the expectations we understand are in place for an improved financial management system will further strengthen the ability to monitor and conduct effective financial management.  We think that despite the fact that having the very low threshold of, for example, $500 with furniture helps minimize the risk of fraud.  We think the costs and the burdens of that are probably inordinate so we suggested raising those limits.  We think the policies are excellent for minimizing fraud.  In fact we think they are probably too strong given the kind of counterbalance of efficiency.

 

Senator Jacobsen asked:

 

      Do you have a track record in any other state where you have made these kinds of recommendations or anything  that we can fall back on to see if it functions or not?  The reason for my question...many years ago we had a system such as you are recommending and it became a disaster.  It became a disaster because of the fraud aspects that were evident.  Certainly there were some benefits to the vendor and to the purchaser but it got so out-of-hand....

 

Mr. Myers said his firm just recently completed a similar review  in the State of North Carolina.  His personal experiences have been more at the county level which recently included the Portland, Oregon, metropolitan service district covering 1.5 million individuals in a three county area and the San Diego County School District for a number of school districts with a student population of 100,000 students or more. 

 

Mr. Myers stressed there needs to be managerial attention and approval within each agency of processes for the selection of items that are purchased.  For large-ticket items of $10,000 or more or when there is a particular concern about the risk of fraud, there should be a policy in place before the item is actually purchased for control and accountability.  Those items that are under $10,000 and/or purchased frequently should be on an open-term contract.  For open-term contract items, the Purchasing Division should select the vendor and negotiate the price, and the state agencies would purchase under that contract.

 

Senator Jacobsen asked how the state would sell or purchase surplus property if these recommendations were followed.

 

In response, Mr. Myers said the Purchasing Division would continue to exist for large-ticket items and to negotiate the open-term contracts.  He is not recommending that the Purchasing Division be eliminated.

 

Mr. Thorne intervened and clarified the excess property and surplus property operation will continue to be processed by the Purchasing Division following procedures currently in place. 

 

Senator Raggio asked if an individual agency buys various items, who would make the payments to the vendors.  He explained that one of the more frequent complaints he receives involves the delay in payment by the state to vendors.  He feels centralized payment controls would be desirable rather than have each agency determine when a payment to a vendor should be made.

 

Mr. Myers stated this would vary depending on the type of item and the threshold.  Currently for items that are purchased under the $10,000 threshold, the agency itself is responsible for receipt of the item and approving payment to be disbursed by the controller.

The change would be for open-ticket purchase orders, and the agencies would begin now to use the process they have used for small-ticket items.

 

Regarding payment to the vendors, Mr. Myers said he believes Senator Raggio is correct, and there will be some substantial risk of the individual agencies delaying payments.  He further stated:

 

      The vendors may not like it, and hopefully it will only last for a brief period of time...but the vendors will be holding the agencies accountable for a limited range of items that will include both the open-ticket and small-ticket items.  The agencies will find themselves cut off from the vendors if they do not make the payments.  It will cause some increase of potential concerns about vendor relations because the vendors will have to understand and treat each agency as a separate entity.  I am not certain that is a bad idea since each agency has different needs and different concerns to create an interest in buying separate types of items.  It seems somewhat reasonable that the vendors ought to recognize their differences and be able to provide the service and meet the needs of those agencies.  I think although there is some risk I do not think it is a bad idea...I think eventually if you stop playing the parent to these agencies they will grow up .

 

Tom Tatro, Acting Administrator, Purchasing Division, Department of General Services, explained he has 15 years experience in professional purchasing split equally between the public and private sector.  He has been with the Purchasing Division for 8 years and is a Certified Purchasing Manager.

 

Mr. Tatro stated in the past biennium a number of changes were instituted in the Purchasing Division.  They began offering training classes to the agencies and have had meetings with some of them to determine areas where improved service might be possible.  To date, they have met with the Department of Motor Vehicles and Public Safety, Department of Transportation, Employment Security Department, Department of Commerce and the Health Division.  He noted these agencies were generally satisfied with the services rendered by the Purchasing Division but admitted they all had complaints about delays they experience in the receipt of ordered items.  Mr. Tatro then distributed Exhibit E, a packet of information, and called the committee's attention to a memorandum dated June 9, 1992 from Phyllis Williams, former Administrator of the Purchasing Division, to John Compston of the Department of Motor Vehicles and Public Safety Investigations Division concerning a delay in receipt of six lap-top computers ordered on March 11, 1992.  The memorandum provided a summary of what took place from the time the order was submitted to the Purchasing Division to receipt of the computers on May 20, 1992.

 

Mr. Tatro said during the meetings they have had with the various agencies previously mentioned, they asked for input regarding the concept of discontinuing stocking office supply items in the warehouses in favor of obtaining a contract with a vendor so agencies could order directly from a vendor for immediate delivery.

The agencies favored continuance of the warehouse method.

 

Mr. Tatro stated over the course of the biennium the division developed a customer manual for the convenience of the agencies. They also developed a vendor manual to provide service to the agency to deal with vendors more efficiently.  These manuals are included as a part of Exhibit E.

 

According to Mr. Tatro the division was given permission from the legislature to increase their staffing from eight buyers to 10 buyers.  Currently, they are operating with only four buyers, and as a result of this, the division has operated at approximately $1 million under their budget authority for this fiscal year.  The division has also streamlined their internal procedures to accommodate for the reduction in staff and are utilizing cross-training as a method to increase the efficiency and knowledge of their employees.

 

Mr. Tatro said the Purchasing Division has been reviewing the possibility of removing office products from the warehouse.  They

believe this will not result in cost savings but will increase the level of service to the customer. 

 

One of the most positive things the division has worked on, Mr. Tatro said, is the Western States Contracting Alliance which is a organization of 17 states of which they are a member.  Through a grant fund obtained by the State of Washington from the [United States] Environmental Protection Agency they have increased their buying power, stimulated energy-efficient manufacturing processes and the manufacturing of products from recycled material.

 

Mr. Tatro commented that over the course of the biennium they have lost a number of key personnel including the previous administrator and two of their buyers.  They have also been audited by KPMG Peat Marwick and by the Audit Division of the Legislative Counsel Bureau (LCB). 

 

Senator Raggio asked for the status of the audit performed by the LCB, and Mr. Tatro stated that although the division was given the results of their findings at a recent meeting, the LCB has not yet presented a written report to the division.  However, there are areas in which the LCB suggested enhancement of internal controls.  The division will respond to the audit as soon as they receive the written report.

 

Mr. Tatro turned the attention of the committee to page 236 of the Governor's Executive Budget and continued with his presentation.

 

Senator Raggio asked if the division will still be making purchases available to local government, and Mr. Tatro answered they will develop contracts that can be used by state agencies and local government.

 

Senator Raggio then asked, "Will they pay an administrative charge?"

 

Mr. Tatro replied:

 

      No, sir.  Currently they [local government and state agencies] provide us with approximately 15 percent of our revenue.  These entities would benefit in that respect in that they will not have to provide any revenue in order to support the purchasing function.  However, they still would have the ability to use any contracts that we [the division] establish.

 

Senator Glomb then stated, "It would seem the agencies would each have to be responsible for their own purchasing...employee time... to carry out those functions and with the 15 percent revenue you received you were able to take care of this for them?"

 

Mr. Tatro replied to both parts of the question in the affirmative. 

Senator Glomb said if the agency performs their own purchasing directly from a vendor, would that agency then also have to perform all the leg work that may be necessary?"

 

Mr. Tatro said the division will be developing an on-line computer system that will enable the agency to look up the item, vendor name and contract price.  The agency would then complete their local agency purchase form to place the order with the vendor.  The agency would receive the product directly from the vendor, the vendor would bill the agency, and the agency would then prepare a journal voucher to send to the controller's office to generate a payment.

 

Senator Raggio asked the Budget Division, "Have you reduced the budgets for the various agencies for this previous administrative charge that will no longer be there?"

 

Mr. Thorne answered, "No, we have not.  The feeling on that was that given the budget reductions and the tightness of the budgets, particularly in the Equipment and Supplies area, that further reductions would not be effective."

 

Senator Raggio inquired, "What is the total dollar value of the deletion of the administrative charge which formerly was a revenue to this budget?

 

Mr. Tatro answered, "That would be what is represented as the savings to reorganization from the Purchasing Division reduction in our operating costs and salaries of approximately $1.2 million each year."

 

Senator Raggio stated, "You are looking at a reduction of $1.2 million or $2.4 million over the biennium?  That is the amount that will not be required to be charged to the various state agencies each year of the biennium as a result of this conversion?"

 

Mr. Tatro answered in the affirmative and added approximately 85 percent of that would have come from state agencies and about 15 percent from political subdivisions.

 

Terry D. Sullivan, Director, Department of General Services, said one of the questions was:

 

      Would the budgets be reduced because state agencies did not have to pay a service charge?  I hope to get into this after Mr. Tatro completes his budget presentation but it is my contention that budgets were not reduced by that amount of money because even with the agencies paying 5 percent for direct orders and 15 percent for the warehouse cost they were still buying it cheaper than they could on their own.  There was no money to reduce.  I feel I will be able to prove that to you when I make my presentation.

 

Senator Coffin inquired:

 

      I want to see how this budget was constructed.  What interaction did you have with the Budget Division?  What kind of feedback did you get regarding the Peat Marwick report?  Were you given an opportunity to respond to the question of whether or not your agency was doing a worthwhile job?

 

Mr. Tatro answered:

 

      In December [1992] a gentleman from Peat Marwick came to my office and spent a couple of hours asking questions about how our operation was established.  We also met earlier this week with a representative from Peat Marwick.

 

Senator Coffin stated, "You obviously did not get into great detail during that visit in December.  Did you have a feeling from the visit that the agency was doing a good job, or did you get the feeling that we want to try something new?"

 

Mr. Tatro replied:

 

      When the Peat Marwick representative telephoned to make an appointment to talk to us, he indicated at the time of the appointment the representative would review their recommendations with us.  However, when he arrived he

      indicated he was there to get an overview of our operation in order for them to develop their recommendations.

 

Senator Coffin then inquired:

 

      You knew the budget was in the works, and you had a feel for the budget, but you really did not know what the budget was until it came out, is that correct?  Did the Budget Division give you any clue as to what was going on based on the suggestions they might be receiving from the Peat Marwick people?

 

Mr. Thorne responded:

 

      The budget analyst was in contact with the accounting personnel in administration in the development of the budgets, and we did attempt to determine what positions were allocated to what and to tie the information back to the recommendations from KPMG Peat Marwick.  During the Governor's talks with the employees one of the areas that the Governor heard concerned state employee complaints about the purchasing process.  What we are dealing with is the process itself and how the process should work...and not dealing with the personnel in purchasing.  I know from my own experience we have some hard-working and dedicated people in purchasing but that is not the issue here.  What is the issue is that in the whole reorganization plan one of the basic perceptions was to streamline, make it more efficient, make the agencies more accountable for their action, measure them on the basis of output just as we are trying to do with performance indicators.  The changes that are being proposed have to do with making the agencies  accountable.  Much of the process that an agency goes through on a purchase now...they will go through very similar steps in the new proposal.  When we are looking at an open-term contract...whether the agency issues an order to a vendor for an item on an open-term contract or issues a request to the Purchasing Division...that step is the same...whether they make the voucher payment to the Purchasing Division or to the vendor that process is the same.

 

Senator Coffin wished to ask Mr. Tatro:

 

      I want to make it clear in my mind...how much thought went into this process as far as the reorganization....There is a significant change here.  You are cutting down from 33 to 15 people.  I would have to say it is more than just a question of process.  I am wondering if the administration had made suggestions in the past to you to streamline your operations before this was done or had you made your own suggestions for improving the process?

 

Mr.Tatro replied:

 

      I just became the acting administrator in October, 1992 so I did not have much knowledge or input to make recommendations outside of the division and I could not speak as to the kind of recommendations that were made in advance of that.  There was not much dialogue since October, 1992.

 

Mr. Sullivan said he would cover several of the items and questions being asked about the process and how the division went through it.  He will do so when Mr. Tatro completes his portion of testimony concerning the budget.

 

Continuing with the budget presentation, Mr. Tatro said the primary change in the Revenue portion is for an administration charge built into the agency's budget based on the amount of money available in the Equipment and Supply budgets determined by a formula developed in the Budget Division.  The other portion of revenue regarding warehouse sales will be eliminated after the first quarter of the 1994 fiscal year. 

 

Senator Raggio asked for clarification concerning the warehouse.  Specifically, he wished to know if there will be a total closure or if the process will be sized down.  He also wished to know what will happen to the warehouse employees.

 

Mr. Tatro said the next item on the budget pertains to personnel and stated:

 

      We currently have 36.5 positions in budget account 1358 that will be reduced to 11.  The positions that are being eliminated, with the exception of one warehouse driver, includes all warehouse and delivery staff and also includes the elimination of....

 

Senator Glomb interjected, "You will be down to just one out of how many positions at the warehouse?

 

Mr. Tatro said the division currently has eight positions in the Reno and Las Vegas warehouses and seven of the eight will be eliminated.  One of the positions is currently vacant and one position is reflected half in this budget and half in budget account 1367, Surplus Property.

 

Continuing, Mr. Tatro stated:

 

      Other positions that are eliminated include...we have Buyer I and Buyer II positions.  There will be three Buyer II positions remaining.  As I indicated there are nine positions between the Buyer I and Buyer II in the budget currently.

 

Senator Raggio asked how many Buyer positions will remain in the budget and Mr. Tatro answered there will be three Buyer II positions remaining in the budget.

 

Mr. Tatro continued his testimony:

 

      Purchasing Technicians handle the transactions, receiving the requisitions, handling payment of purchase orders, typing of purchase orders...all but three of those will be eliminated out of 11. There will be one Purchasing Technician III and two Purchasing Technician II positions remaining.

 

      In the Excess Property section of the budget, there will be the reduction of one Property Inventory Clerk and one Administrative Aide and the elimination of one Management Assistant I.  The position of Director of the Department of General Services was placed into this budget, and it will be eliminated.

 

Senator Raggio asked,  "Why was the director position placed into the budget and then eliminated?  Is that to show some artificial savings that really are not there?  What is the reasoning?"

 

Ms. Townsend replied:

 

      The general services director's budget was recommended for elimination although we had to obviously transfer the various expenditures and that position to a budget.  This seemed to be the reasonable place to put that position...in that purchasing budget.  There also is going to be a Director of the Department of Administration and that position was created in the budget for the Division of Administrative Service.

 

Senator Raggio asked, "Of the remaining personnel, who is going to be negotiating the open- and long-term contracts Mr. Myers referred to?"

 

Mr. Tatro answered, "Remaining in the budget will be three Buyer II positions and one Supervisory Buyer and that will be their function."

 

Senator Raggio asked, "Four employees are going to be able to process all the contracts for the various agencies?"

 

Mr. Tatro replied:

 

      The hope is that since we are not administering the contracts through the Purchasing Division and not handling those purchases that are under the $10,000 threshold that are not on contract...the work load will be reduced sufficiently to be able to have the three people obtain all the contracts that are needed.

 

Senator Raggio commented:

 

      Mr. Tatro, I do not think we are getting a firm answer.  We really need to know if a large part of the new procedure is going to be the open-term contracts that  Mr. Myers referred to where the agencies will be given the latitude through the open-term contracts to purchase frequently.... My understanding  is there will probably be a number of those open-term contracts for the various agencies.  I believe Mr. Myers said the Purchasing Division will continue to negotiate these contracts.  This committee would want assurance that the remaining personnel that you have identified will have the capability to perform that function.

 

Mr. Sullivan commented, "I am sure Mr. Tatro has a hard time answering your question.  His job is to support this budget."

 

Senator Raggio replied, "Our job is to budget for a 2-year period.  Our responsibility is to the people of the state and if there is this capability, tell us.  If not, we have the authority to make some adjustments.  Is there that capability?"

 

Mr. Sullivan answered:

 

      I believe that under the Budget Division and Peat Marwick's recommendation there will probably be enough personnel to do the job because there will be very little left for the Purchasing Division to do otherwise.  They will do the number of contracts that they can and that will be the amount of work that they will do.  In my opinion there is nowhere near enough buyers to do the job that the State of Nevada should be doing to protect its taxpayers.

 

Mr. Tatro added: 

 

      Today we are operating with four buyers and are handling the small purchase items.  However, we are stretched beyond where we should be at this time.  We are doing those items that we will no longer be responsible for.   We lost another buyer in January and lost one in September, and we have not replaced them yet.  Hopefully we will be able to replace at least one of them....What we will have to offer though is temporary employment so it may be difficult to attract qualified candidates.  We just got approval last week and will be going out to try to find a replacement for one of the positions.

 

Senator Raggio asked, "What is going to happen to the warehouse?  Is that to be closed fully or downsized?"

 

Mr. Tatro said:

 

      This budget anticipates closure of the Las Vegas warehouse completely leaving the Reno warehouse open.  The primary user of the Reno warehouse will be a commodity food program.  It will also be partly used by the Federal Surplus Property program and to some extent the state excess property disposal will be run through there, too.

 

Senator Raggio asked if the warehouses are on leased premises and what the administration plans to do with the Las Vegas facility.

 

Mr. Thorne said the state may sell the Las Vegas warehouse.  There will be a considerable amount of renovation required there as it is his understanding there is a heating and air-conditioning problem in that particular site.

 

Mr. Tatro said the current Las Vegas warehouse was scheduled for replacement.  He continued to say:

 

      [Department of] General Services performed a study of the Purchasing Division and did a comprehensive cost allocation by program within the Purchasing Division.  The results of that told us we had to raise our administrative charge on warehouse items from 10 to 15 percent.  They also indicated to us that the payback on the Las Vegas warehouse could not be supported by the level of operations that we were going to conduct through that facility so we discontinued that process.

 

Senator Raggio wished to ask a question for Mr. Myers or the Budget Division to answer.  He asked:

 

      Why are we looking to consolidation of services generally, for example in data processing, but for this one we are departing and doing a decentralization?  It seems inconsistent with the overall value that is  generally assigned to centralization.  As Senator Jacobsen indicated, we went this circle and now we are coming around to where we began.  What is the philosophy in this area that is not present in recommendations to centralize other functions of government?

 

Mr. Myers answered:

 

      I can tell you a little about data processing...but I believe some of the concerns about data processing relate to standards that currently are not implemented throughout the state.  There is a very critical issue.  If you are going to be able to share data...and it may be a question of sharing financial data between the controller and the Department of Administration and the individual agencies, or it may be a question of sharing taxpayer data between the Employment Security Department and the Department of Taxation or other revenue collecting agencies.  It is critical if you are going to share that data that you have systems that are compatible. In fact, with respect to data processing equipment such as personal computers, I would expect there would be some sort of open-term contract negotiated....In that instance it is very important to be able to have both the standardization and to be able to take advantage of large-scale purchasing discounts.  What I am suggesting about data processing is that there is a strong need to coordinate due to the nature of the function and equipment.  In purchasing, the primary benefits of centralization have to do with getting a good deal in terms of negotiating the price from the vendor...because of the volume it is easier to manufacture or distribute a whole pallet or truckload instead of a single piece. The primary focus that I think should be emphasized with that is, when you are buying a large number of items, you ought to try to get a good open-term contract to cover them; and you ought to try to figure out how many you are going to use and try to make certain you are getting something that will suit the needs of everybody...but nevertheless is something that is centrally negotiated. 

 

      With respect to the more unique items centralization we believe is not as necessary.  It is a question both in terms of processing and trying to make the flow be streamlined, so that you will not necessarily have the increased work load for the Purchasing Division of typing in the order and making the payment when the agency essentially has to duplicate that same effort as it requisitions the items and decides what it needs and makes the arrangements to request it of the warehouse.  You could just as easily make that request of the vendor using the vendor catalog rather than the Purchasing Division using the purchasing catalog.  The reasons for centralization, the economies of scale and the need to cooperate are not nearly as strong because you are buying a bunch of unique items.  If you are not buying a unique item, then you have got centralization in terms of a negotiated contract.  It really comes down to a question of looking at the specific function and thinking about what is the economy of centralization, what is the reason behind it....Do they apply?  Yes, in some cases where you are buying many items or where you are buying large- ticket items and you need the purchasing expertise but not necessarily so in the small-ticket items and for unique items.

 

Buildings and Grounds - Page 294

Mail Service - Page 224

Marlette Lake - Page 1597

Carson Water Treatment - Page 1600

 

Senator Raggio announced that due to the shortage of time these budgets will be heard by this committee commencing at 7:30 a.m. Friday, February 26, 1993.  He expressed his apologies to those wishing to testify for the inconvenience the rescheduling may have caused them. 

 

Senator Jacobsen stated:

 

      I need a basic question answered. I thought Peat Marwick was a study.  The testimony we just had implies this has already been implemented.  Is that correct?  Seems that some of the employees have already been discharged and we do not know how this system will function.

 

Mr. Thorne replied:

 

      No, sir.  There have been vacancies already existing in the Purchasing Division.  From the standpoint of the changes that have been made it is an evolutionary process.  As Mr. Tatro indicated the division was already taking a look at going to an office supply open-term contract with a prime vendor.  This is going further down that road. 

 

      Addressing the issue of centralization versus decentralization...in data processing you have centralization of common data dealing with common data structures and standards, but you have applications that are decentralized and used out in the various agencies...so you have a mix of processes that are central and processes that are decentralized.  If you look at the same kind of mix in the purchasing recommendations...focus on either strengthening or continuing centralization of the processes of negotiation of contracts....It makes the most sense to decentralize those procedures where it appears to be a duplication of where we can streamline the process.

 

Senator Raggio asked what will happen to the inventory in the warehouses after the closure takes place.

 

Mr. Thorne said the existing stock will be sold.

 

Senator Raggio then asked if the state will be able to recover the cost of the items that are sold.

 

Mr. Tatro said the warehouses would continue to be operated as long as possible but will stop replenishing stock in about July 1993.  They would attempt to sell the existing inventory to those vendors who receive the contracts to supply the same products.  The division will try to sell the items for their purchase price.

 

Mr. Myers stated:

 

      If the state or another entity has an ongoing relationship with the vendor, the vendor will generally accept returns especially if there is the propensity that the vendor will be able to then sell the materials to another customer or to the state again....Of course, this would be at a price that would be negotiated in the future. The return price is something that could be negotiated.  It may be the price the state paid, or it may be another price that is negotiated.

 

Senator Raggio remarked, "I hope I am not hearing you say we are going to sell it back to a vendor, and the vendor will sell it back to us."

 

Mr. Myers answered:

 

      It is possible that he would sell it back to you, but essentially it would be a question of you returning it to the vendor as if you were returning an item to a retail store.  Then as the agencies need the item if they select that same item they would then purchase it from the vendor...presumably the same vendor although that is not necessarily the case.  The contract may be negotiated with a separate vendor.

 

Senator Jacobsen asked:

 

      How will this merchandise be delivered?  For example if the honor camp in Jean, Nevada, orders merchandise that is in the warehouse in Las Vegas, who will pick the order up and deliver it to the conservation camp?  What if it is commodity food?

 

Mr. Tatro said once the merchandise is disposed of the agency that placed the order will be dependent on the vendor who obtained the contract to provide the products.  The Purchasing Division will still maintain commodity food deliveries.

 

Jan Capaldi, Assistant to the Director, Department of Motor Vehicles and Public Safety, wished to testify concerning some of the problems the department has had with the purchasing system as currently structured.  Her written testimony (Exhibit F) was read for the record.

 

Richard A. Cornish, Criminal Investigator, Internal Affairs Unit, Department of Motor Vehicles and Public Safety, gave some examples of problems he had encountered with the Purchasing Division and stated:

 

      About a year ago the department had some federal funding come available to provide televisions and video players for the purpose of playing surveillance tapes in the offices.  I was asked to check on pricing.  I went to Circuit City and the Good Guys in Reno and obtained prices for 25" RCA color television sets and RCA video players that could be controlled with one remote.  The amount quoted was under the amount allocated to us per set.  We ended up having to go through purchasing by contract.  I think  they had Sanyo television sets and Panasonic VCRs.  These turned out to be inferior products that cost more money than I was quoted from the retail stores.

 

Mr. Cornish related similar examples involving the purchase of camera equipment and film used by the department.  He stated most electronics equipment can be purchased cheaper from a retail store but the same equipment through the Purchasing Division would cost the state considerably more.

 

In casual conversation with a highway patrol officer, Mr. Cornish determined that the quality of training ammunition used in practice was inferior.  The officer said the quality of the ammunition would cause problems such as jamming one to two times on every cycle of fire.  This ammunition was purchased through the Purchasing Division under a state contract.  The highway patrol officer, in cooperation with the California Highway Patrol who have experienced similar problems, is in the process of bringing this matter to the attention of the proper state officials since he believes the use of inferior ammunition could result in serious injury or other problems.

 

Senator Raggio inquired:

 

      If these instances have been occurring where the Purchasing Division has not been able to deliver items on a timely basis and at a reasonable cost or a cost that is less than retail, why are we just now hearing about this?  Why have the agencies not brought this to the attention of the executive office or the legislature before this time?.  Did you ever try to discuss the problems with Mr. Sullivan?

 

Ms. Capaldi replied:

 

      I was just asked to come before you now.  We were never asked to come forward in the past.  The problems have been ongoing, and what the agency does is try to work within the system with purchasing to try to solve the problem.

 

      The problems the department had with pens was within the Driver's License Division.  I cannot tell you they actually spoke with Mr. Sullivan, but they did work with purchasing.  They discovered they could purchase pens locally for less than through purchasing and asked permission to purchase locally, and the permission was given.

 

Senator Coffin asked if there is anyone within the Investigation Division of the Department of Motor Vehicles and Public Safety who could order supplies and equipment, as well as audit purchases to verify correct charges were made, and ascertain that the items were delivered.  He noted that the budget does not account for additional people to do this work.

 

Mr. Cornish replied they do have an individual who could perform the purchasing function in addition to his daily assigned work load.

 

Senator Raggio announced at l0:40 a.m. the committee would be in recess until immediately following the floor session this morning.

 

The meeting reconvened at 11:45 a.m. at which time the chair recognized Mr. Sullivan and advised him the committee would take the time necessary for his presentation due to the importance of the issue involved.

 

Mr. Sullivan began his presentation before the committee by reading a prepared statement (Exhibit G) expressing his disagreement of the reorganization plan.

 

Mr. Sullivan continued his testimony, without the benefit of written text, and stated:

 

      I believe they are trying to fix something that is not broken.  I think purchasing can use some reorganization, and I believe in reorganization.  We found some things ourselves that we believe we ought to do.  Long before the study was performed by Peat Marwick we discussed making some changes as mentioned by Mr. Tatro.   

 

      They talk about the difficulty the agencies are having in purchasing supplies, material and equipment, but we think we have a very loose policy regarding purchasing.  We had met with several major agencies, and there were no major  complaints about purchasing.  The Department of Motor Vehicles [and Public Safety] was the exception in this, but as it turned out by the end of the meeting with them we determined it was their own in-house process that created the delay in purchasing.  James P. Weller [Director of the Department of Motor Vehicles and Public Safety] came up to me afterwards and thanked me for the information.  Jan Capaldi was not at that meeting, but the rest of their top administrators were.  We simply wanted to know what we could do to provide good service, and with limited funds due to budget restrictions, we felt it necessary to do whatever we could to make things better.

 

      We had also decided we should not be in the office supply business which takes much time in the warehouse and is costly.  We had agencies in and advised them of these plans but without exception all of the representatives present disagreed with our plan and advised us they wanted us to continue with the warehouse.

 

      When the Peat Marwick representative tells us that every agency they talked to said they had a problem with purchasing, I was surprised.  I could not get a name from him.  We had about a 20-minute meeting, but it occurred to me they were not interested in hearing about what we did.  What they wanted to do was change purchasing.  We have called businesses and other states and cannot find anyone that does not have central purchasing....The Bank of America has incredibly strong policy, and they are doing with office supplies what we proposed to do.

 

      We do need to do some reorganization in the warehouses but these warehouses work so well....For example, we drive 168,000 miles a year, but if we eliminate purchasing we are still going to go 124,000 miles a year because those trucks are still going to go to Elko whether they carry 100,000 pounds or 50,000 pounds.  They have to go there anyway...they have to go for food.  One of our considerations was to do the office supply contracts and who do these people want to service, Reno and Las Vegas.  They do not want to serve Caliente and Pioche and Owyhee and everywhere else that we go with these trucks.  We thought we could write the plan so they would deliver these products. 

 

Mr. Sullivan then showed the committee a catalog containing about 11,000 items and said the division only carries about 300 of the items listed.  He continued his testimony:

 

      We cannot compete with that.  This whole reorganization seems to be going towards what is convenient for the agencies, but I do not have a problem with that.  If it costs more money to do business and that is the way we think we ought to do it then we should.  I believe we could easily let these companies deliver in these metropolitan areas and then deliver everything else the state wants to the warehouse, and we could take these items out with our normal deliveries. We think that would work really well.  I have some experience with warehousing and purchasing.  I think I have more than these people that are speaking.

 

Mr. Sullivan presented the committee with a handout, Exhibit H, and explained this contains a list of items agencies can purchase directly from a vendor.  Continuing, Mr. Sullivan said:

 

      There are some low limits shown here...the $499 they were talking about. We raised these based on the complaints that we get or the need for agencies to have more purchasing authority.  We do not have much problem raising them if the need is out there.  In addition to this we authorize through special authorization to agencies that have unique items to purchase.  Motor vehicles was complaining about not being able to purchase ammunition....They could go down as many times as they want to buy ammunition.  It is not material to me.  What is material is we want to give them the flexibility to do their day-to-day purchases, but when they want to do a very large purchase of ammunition that they come to us so we can do a proper bid.  They mentioned pencils.  We have to carry a good pencil in the warehouse that almost everybody can use so we stock a good quality pencil or pen or whatever it happens to be.  Motor vehicles says they are too expensive so we told them to go downtown and buy whatever they want.  They bought them cheaper, but they did not buy the same kind cheaper.

 

      Of all the categories and material we buy...somebody here was talking about data processing...the proposal is that all of these bills will be paid by a central administrative service division.  It can work that way, but one of the ways we know what we need to buy is we see all of the requisitions and bills.  Data processing was a good example.  There were so many requests that came through the office for a special computer program that we decided we needed a contract for that.  We wrote a contract, and we saved 45 percent which amounted to $544,000 per year.  What the agency had to do to get that is send us a requisition, it is delivered to their door, they sign off receipt and they never have to do another thing.  That sounds simple to me.  I do not know how purchasing would know what they have to buy if we never see the invoices.  I am told we are supposed to get that information from the agencies, but that is very difficult.  We think we have a good system now.

 

      Office furniture...I know for a fact that the main contract we have gives us 57 percent off the retail price. My staff has shown a 33 percent savings and the reason my staff said it is a 33 percent savings instead of a 57 percent savings is that agencies in some cases can negotiate their own prices and get it cheaper so they automatically took a percentage off that.  One of the advantages of vendors doing business with purchasing is one-stop shopping for them, too.  They have one place to collect the money rather than having to collect from every agency in the state and every political subdivision.  This is not easy because agencies establish their own rules.

 

      We pay very, very promptly and that is one of the reasons vendors do business with us.  A good example is automobiles....To assess a political subdivision a service charge because we have carried them for 40 or 50 days...the taxpayer does not care since the dollar out of his pocket is the same.  The political subdivision using our contract makes our contract bigger, and this makes the price cheaper and everybody benefits.  They do pay us slower sometimes, but the state agencies pay us slower than anybody.  Some are impossible to collect from, but we work at that all the time.

 

      Senator Jacobsen asked, "What about the surplus and excess equipment?"

 

Mr. Sullivan answered:

 

      ....About the surplus and the excess...the warehouse would be cut back considerably.  I do not agree this has to be done.  There needs to be a way to handle the excess and surplus and I think we provide a good service when we get highway department equipment.  We reutilize that equipment throughout the political subdivisions.  Once again, the taxpayer is happy.

 

      I agree with closing the warehouse in Las Vegas because it will cost about $175,000 to repair it.  I do not know how much longer we will be down there,but the food program for one will have to rent space.  We developed some in-house plans for that.

 

      We do many open-term contracts now.  We do require the agencies to come through us with their requisition so that we can order but that is so we can account for what we are doing.  We did look at many of them.  After the Peat Marwick recommendations were made, we realized we are doing too much work.  Some of the open-term contracts are very labor intensive.  We agree with the recommendations.  We should just write the contract and let them do it...  but they are on real common things like tires and tubes and batteries.  We think we save probably half of what an agency would have to pay, but we do create paperwork on those particular kinds of contracts.  Maybe that is not necessary so we are looking at this process.

 

      We do not believe that the Peat Marwick representatives spent anywhere near enough time with us to really know what we do.  We also do not believe they were interested in hearing from us what we do.  We believe their minds were pretty well made up when they got to us.  I can take exception to many of the points in their report.

 

Senator Raggio referred to Exhibit I, "Assessment of Purchasing Activities" dated December 1992 from the firm KPMG Peat Marwick and asked,  "What about the recommendation to raise the level of delegated authority to $10,000.  Is that a problem?"

 

Mr.Sullivan replied:

 

      Raising the delegated authority to $10,000 for purchasing to put out formal bids is fine, but I think it is ludicrous to give the agencies $10,000 worth of purchasing authority.  I cannot find anybody that allows anywhere near that amount.  I am not going to tell you it will be wreaked with fraud....We have not had purchasing problems in Nevada.  We have an appeal process that the vendors use when they disagree with a bid.  Peat Marwick kept talking about negotiating bids.  We do not negotiate them. We do not negotiate contracts.  We bid contracts.  Everybody in Nevada gets an equal opportunity to bid, and I think that is important to the business community in Nevada.  We do not have an in-state preference because we do not believe in it, but we do everything we can to keep that business in Nevada.  That might have been the case of the television sets and motor vehicles....If we are

      to buy a television set, we are going to make sure there is some type of service available to take care of that set once we buy it. 

 

      I read the bill draft and it stated that no agency had to use the Purchasing Division for any purchase under $10,000, but then I was informally told by somebody in the Budget Division that on the contracts that we have, agencies can use the contracts or go downtown and see if they can find a better price.  That is a ludicrous thing to do.  That is not the way you conduct business in state government or anywhere.

 

Senator Raggio asked if the testimony presented by the Department of Motor Vehicles and Public Safety is the usual type of criticism the Purchasing Division receives from other agencies.

 

Mr. Sullivan answered:

 

      Periodically we do get that type of criticism, but we do address the particular problems.  In the case of motor vehicles...they do not always know what happens in their internal operation.  The gentleman today was from the investigations division...but they have an administrative office that sends the requisition to that person, and it does not come to us in the same form that originated from law enforcement.

 

Senator Raggio then asked if the division has had many complaints from agencies over the years.

 

Mr. Sullivan responded:

 

      Sure. We have not had many, but we do get some and that is why we started to conduct the meetings.  I can guarantee you that even with complaints we have had there is no agency that has lost time or programs because we did not get their merchandise to them on time.

 

Senator Raggio referred to page 6 of the Peat Marwick Report (Exhibit I) and stated it should be noted for the record this report contains the following paragraphs:

 

      In order to determine how well the Purchasing Division is providing support to state agencies and departments, we interviewed administrative officials from the Departments of Employment Security and Transportation.

 

      These officials expressed satisfaction with the responsiveness and services provided by the Purchasing Division.  They felt that the surcharge added to the cost of purchase requisitions and to warehouse issues was reasonable, and that the prices charged for warehouse items was competitive with prices that could be obtained elsewhere.

 

Mr. Sullivan commented, "I think they had a difficult time to get individuals to come today and testify against the Purchasing Division."

 

Senator Raggio stated the committee should take note of the fact that only one agency appeared today to testify against the services provided by the Purchasing Division.

 

Senator Raggio asked:

 

      You indicated the reorganization would result in an added cost to the state of $15 million.  Would you provide the committee with an analysis of this estimate?  In fairness to you and to justify your statement, which is one that could be of great consequence in our final determination, I will invite you to submit some analysis why you feel the additional cost will be incurred.

 

Mr. Sullivan agreed to submit this information as soon as possible.

 

Senator Jacobsen stated one of his concerns is to the  commodity-food program and asked if reorganization does take place, will the individuals that benefit from this program still be served.

 

Mr. Sullivan stated the division is doing all they can at the present time to minimize the impact in the Las Vegas area while trying to keep the cost of the commodities to a minimum as required by the federal government. He further stated the food program will only be affected by not having the purchasing process there to share in the cost of distributing the commodities.

 

Mr. Sullivan added:

 

      The Peat Marwick representatives have come up with some figures in this report [Exhibit I]...something like $200,000 or $300,000 they think can be collected from the government for the subsidy that purchasing provides them.  I totally disagree.  I do not know where they got their numbers.  We have given them ours.  The numbers we have put in the budget...there is $76,000 that the food program would pay purchasing for help...the food program would have to hire those people if those employees were not shared back and forth.  We do that very fairly.  We keep accurate time reports and prorate those charges.  We think we have done that very well, and Peat Marwick is the first group that has come along and told us we are not doing this right...purchasing is subsidizing the food program, and the federal government should pay us back.

 

Senator Jacobsen asked for a list of the customers the Purchasing Division delivers items to.  He explained this will enable him to check on delivery service rendered by the division.  Mr. Sullivan agreed to provide the list.

 

Senator Coffin stated:

 

      You have heard the questions I have asked today that have generally related to the prevention of fraud or the ways of persuasion that are used on purchasing people. There are ways of tempting individuals which results in higher costs to the taxpayer.  I would like to hear from the administration about the standards that will be placed on our state employees who are in the process... if this were to go through we would have many agencies doing this function.  Would they subscribe the same code of ethics that the Purchasing Division does currently?  Would they be able to insure that their key people will be insulated from the temptations that will occur in million dollar budgets for all the purchases? I hope that if we do make this shift we can be assured the administration will equally observe the same spirit of ethical behavior I know from personal experience now exists in the Purchasing Division.

 

Commodity Food Program - Page 241

 

Debra Meizel, Program Chief, Food Distribution Program, Purchasing Division, Department of General Services, provided the committee with a program description and budget narrative (Exhibit J) from which she read.

 

Senator Glomb asked, "If the warehouse is being closed, where will you store the food?"

 

Ms. Meizel answered the Reno warehouse will not be closed.  The Las Vegas warehouse will be closing but only dry-food commodities are kept in this facility.  Perishable commodities for the Las Vegas area have always been stored at a cold-storage warehouse in Las Vegas, and this procedure will continue.  The division is currently exploring options for storage of the dry-food commodities.

 

Senator Glomb asked if the budget includes funds for the cost of renting additional storage space in Las Vegas.

 

Ms. Meizel replied, "No, because the original intent was for the division to put all the food into the Reno warehouse since there is ample square footage in this facility.  However, that would mean more miles to relocate the food into Las Vegas and additional cost." 

 

Senator Glomb inquired, "If you do have to store the food in Reno, is there enough money in the budget to get this food from Reno to Las Vegas?"

 

Ms. Meizel responded there is not additional money.  The division is operating at the same fiscal year 1992 expenditure level.

 

Senator Rawson referred to Exhibit J and commented:

 

      It is costing 18 cents a pound and I am wondering if you should include that in your performance criteria.  It is impressive to say 8 million pounds, but we do not know what that means.  If we were to break that down to how much it costs us per pound or per ton it would give us a way of determining if you are becoming more or less efficient.  From our standpoint, we can look at the total dollars that your food program costs and the total amount of goods you distribute and determine how much that will

      cost the state. 

 

Purchasing - Equipment - Page 246

Surplus Property - Page 248

 

In the interest of time, Senator Raggio requested to hear only general statements concerning these budgets.

 

Mr. Tatro testified:

 

      Regarding the Purchasing - Equipment Budget we had a significantly reduced request from the original agency request.  In fiscal year 1994 we had several items included for warehouse operation that will not be needed and are eliminated from the budget. 

 

      In the second year of the biennium the Equipment budget reflects an allocation for the replacement of two printers and two calculators.

 

      The Surplus Property involves federal surplus property, and the only changes to this budget is in the area of personnel.  The division had one position split between the Surplus Property budget and the Purchasing Division.  The 50 percent share of this position was eliminated from the Purchasing Division budget.

 

Senator Raggio asked if there will be less procurement of federal surplus property.

 

Mr. Tatro replied:

 

      We have discussed internally the idea of focusing more on working with potential customers to determine what is available and to find out what the counties, cities and state agencies would like to be able to acquire...and taking screening trips....Rather than handle the product we will find out what is wanted and what will be available first.  We will try to increase our coordinating efforts with customers to find out exactly what it is they want; then we would go out and find it.

 

Senator Raggio appointed Senator Jacobsen, Senator O'Donnell, and Senator Coffin (with Senator Jacobsen as chairman) to serve on a subcommittee regarding purchasing and all of the aspects dealing with purchasing discussed at today's meeting.

 

Senator Raggio adjourned the meeting at 12:50 p.m.

 

                                        RESPECTFULLY SUBMITTED:

 

 

 

                                    

            Marion Entrekin,

            Committee Secretary

 

 

APPROVED BY:

 

 

 

                                   

Senator William J. Raggio, Chairman

 

 

DATE:                              

??

 

 

 

 

 

 

 

Senate Committee on Finance

February 24, 1993

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