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Mark Kolterman

Sen. Mark Kolterman

District 24

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​C​ooperation and goodwill are essential elements to achieve progress in Nebraska. That positive spirit has enabled sensible steps in recent years to help the Omaha Public Schools to begin addressing the huge challenges it faces in meeting its unfunded liabilities for OPS employee pensions.​​

An unexpected effort last week by Gov. Pete Ricketts to kill a current proposal involving the OPS pension fund violates that constructive spirit and needlessly threatens continued progress. The administration is raising a false claim — that Nebraskans statewide will be at risk of taking on the OPS financial liabilities if management of the OPS fund is transferred to the state.

Such a misleading claim is contradicted by the entire history of this issue. For years, every time the State of Nebraska has taken any action in regard to the OPS pension system, lawmakers in committee and in floor debate have been unanimous in stating, clearly and emphatically, that Nebraskans statewide must not take on any of the OPS pension liabilities. That is a crucial, common-sense stance the Legislature has rightly adopted throughout the past five years.

State senators emphasized that point in 2016 when the Legislature voted overwhelmingly to transfer investment authority from the OPS pension board to the state investment council. The governor signed the measure into state law.

In 2019, State Sen. Mark Kolterman of Seward, chairman of the Legislature’s Retirement Systems Committee, worked with stakeholders to consider a follow-up. The state gave the go-ahead for a study (paid for by OPS, a $140,000 cost) to examine the feasibility of transferring management of the OPS pension fund to the state. The projected long-term cost savings would be about $250,000 a year.

Such a transfer would end all of OPS’s management duties in regard to the pension system. The district would then have one remaining, all-important obligation: bearing the full burden of meeting the system’s financial liabilities. State law, in fact, now requires OPS to meet its actuarily required annual payment for long-term pension stability, and the district has been exceeding that amount the past several years.

The Legislature voted 47-0 in 2019 for the study to be done, and the governor signed the legislation. Since then, a wide variety of stakeholders have cooperated for the management transfer to occur. OPS agreed from the get-go to cover the upfront costs of around $4 million for new computer technology to enable the management change.

It’s baffling, then, that after so much complicated work and cooperation, the Ricketts administration would indulge in an eleventh-hour effort to sabotage the initiative.

Undermining an effort involving OPS might be good politics in the view of some, but it would be terrible public policy. The Legislature should move forward with this initiative and, if necessary, override a gubernatorial veto. The public interest, and not scaremongering by the governor, must prevail on this issue.

​I​f opportunity – in the form of the Department of Defense — knocks, we hope Nebraska is ready to answer the door.

The University of Nebraska Medical Center hopes to embark on a $2.6 billion public-private partnership called NExT, or the Nebraska Transformational Project.

​​NExT would build from the ground up a state-of-the-art academic medical facility and an all-hazard disaster response facility operated as a military and civilian partnership.

The Department of Defense will look at several possible sites before selecting where it wants to put the program. But one factor in their decision will be the local commitment of financial resources to the project.

To that end, we endorse LB1084, introduced by Sen. Mark Kolterman, which sets in motion a $300 million state investment over six years if funding from the federal government and the private sector gets kicked in.

The benefits of NExT are enormous and, as the name implies, “transformational.” Between construction and permanent medical staff, nearly 42,000 jobs could be created. For the state’s $300 million investment – spent only if the other money comes through – it could add $1.3 billion to the state’s economy annually by the time the facility is fully operational in 2030.

NexT would build one or two towers in the northwest corner of the current medical center campus in midtown Omaha, towers being optimal for potential quarantine situations and for maximizing land use.

Sweetening the deal for the state and potential contributors and investors are the commercial opportunities quite literally surrounding the project – hotels, restaurants, other office space. A center for training and treatment draws far more than patients, and they need places to eat and stay.

The project would be designed to treat military and civilian victims – lots of them – affected by trauma or biologic, chemical or natural disasters.

With the coronavirus making headlines and a plane of evacuees arriving Friday for 14 days of quarantine at Camp Ashland, the need for this capability is obvious. Less obvious is the minimal risk to the population at large posed by such a facility. UNMC Chancellor Jeff Gold cited their successful treatment of Ebola virus patients in 2014 and 2015. With top-notch facilities and training as well as experienced personnel, a more robust treatment and research center makes us safer than were it not here.

LB1084 deserves approval. The state’s share, $50 million annually for six years of construction, would mark an investment in our state’s economy, worldwide health and our future.

When vendors have been unable to meet the terms of the state contracts, the resulting cancellations have cost Nebraska millions in recent years.

If the state were able to nip potentially problematic contracts in the bud, before they cost taxpayers too much or resulted in embarrassing failures, it should presumably save money. Fiscal prudence benefits all Nebraskans.

Sen. Mark Kolterman has proposed creating an appeals process for companies that believe agencies have awarded contracts in error. He believes – as does the Journal Star editorial board – the addition of judicial review to state contracts exceeding $5 million will provide another layer of security to ensure Nebraskans’ tax dollars are spent wisely.

The Journal Star’s Chris Dunker detailed shortcomings in Nebraska’s existing procurement laws and how single-source contracts and the lack of a judicial review process have been problematic. A company that felt it should have been able to bid on a 2017 Department of Labor contract awarded without a bid, for instance, had no formal avenue to protest when the deal was awarded to another vendor.

At the time, business attorneys and state senators worried the lack of such recourse – which most states have in some fashion – hurt Nebraska’s reputation. Driving away bidders and deterring competition, they surmised, costs us all.

Then, consider a pair of technology upgrades that Nebraska formally canceled last December, for instance. The projects cost the state – and its taxpayers – about $6 million apiece before new administrators pulled the plug following a reviewing of the progress.

Nebraska got little more than heartburn for that $12 million. State officials decided to make do for the time being with one system while pursuing an update through a different vendor for the other. A transition to streamline payroll and personnel operations was estimated by the Department of Administrative Services to run $12 million over budget before it was canceled.

We applaud these officials for cutting their losses – which are all of ours, too – before additional cost overruns. We believe that Kolterman’s proposal decreases the likelihood the state finds itself in this type of fiscal pickle going forward.

The Seward senator expressed a willingness to craft “a process everyone can live with.” That process will need to be designed to address such matters expediently, calming state officials’ concern over an appeals process they fear could delay projects.

But cost-effectiveness by and confidence in state government must drive this idea. As Labor Commissioner John Albin told the Journal Star about the 2017 contract: “I’d rather suffer a little bit of embarrassment being late than a lot of embarrassment in a failure.”

As would all Nebraskans, we presume. Hence, extra protection against a failure makes sense for the state’s procurement process.

​​Nebraska needs to do far more to incentivize state agencies to hold to a high standard in managing contracts. The state could have much greater success in attracting additional qualified companies to bid on major projects if it remedied the shortcomings in its procurement process, including the handling of appeals by unsuccessful bidders.

A 2017 article for the Nebraska state bar bluntly described problems, saying the state’s current appeals procedures “fail to account for the potential that agencies awarding state contracts sometimes make mistakes or fail to follow applicable agency rules, laws, official guidance or the term of the RFP at issue.”

The appeals process for unsuccessful bidders contains “no discernible standards of any kind, nor any limits on (the deciding agency’s) discretion,” the article stated. Nebraska could greatly boost the competition for bids if it remedied such problems, the article said.

Several years ago, the stat​​e needed to create a large-scale replacement of its Medicaid eligibility software. The state chose a small Arizona company for a $50 million contract over a Fortune 100 company with extensiv​​e experience in such software. The Arizona company ultimately failed at its duties, and the state pulled the plug midway through the contract — after $7 million in state tax dollars had been spent, for naught.

A similar failure involved another terminated computer project, with $5 million in state losses. Including federal dollars, the losses on the two projects totaled $60 million.

The Nebraska official who terminated the Medicaid software contract was Kerry Winterer. Last month Winterer, a former head of the Nebraska Department of Health and Human Services, testified before a legislative committee to voice strong support for legislation to address flaws in the state’s procurement process.

Legislative Bill 21, by State Sen. Mark Kolterman of Seward, would insist that the state follow a sounder appeals process. Unsuccessful bidders on projects exceeding $5 million would have a clearer, formalized process to present evidence and advocate their cause to the state.

An unsuccessful bidder would be able to appeal to District Court. More than half the states, including Iowa, Missouri and Colorado, use such an approach. Having an independent agent, a judge, scrutinize the state’s procurement process would go far to spur state agencies to adhere to rigorous professional standards for contracts, Kolterman and other testifiers told the committee.

Opponents say that allowing a court appeal would cause delays and increase costs. The fiscal note for LB 21 is about $200,000 annually for handling appeals.

But the state is already experiencing delays — an example is the on-again, off-again status of state contracting for child welfare in the Omaha area. And the current system already can have high costs, as shown by the $12 million in state funds in wasted spending on the computer contracts.

The committee should forward LB 21 to the full Legislature so state senators can debate the pros and cons on this important issue. Nebraska state contracting deserves such scrutiny by the Legislature. LB 21 provides an important opportunity to understand the current problems and decide whether Kolterman’s proposal is the best solution.

Sen. Mark Kolterman

District 24
Room 1101
P.O. Box 94604
Lincoln, NE 68509
(402) 471-2756
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