Interim Joint Committee on Transportation

 

Minutes of the<MeetNo1> 2nd Meeting

of the 2014 Interim

 

<MeetMDY1> July 1, 2014

 

Call to Order and Roll Call

The<MeetNo2> 2nd meeting of the Interim Joint Committee on Transportation was held on<Day> Tuesday,<MeetMDY2> July 1, 2014, at<MeetTime> 1:00 PM, in<Room> Room 171 of the Capitol Annex. Senator Ernie Harris, Chair, called the meeting to order, and the secretary called the roll. The minutes from the June 3, 2014 Interim Joint Committee on Transportation meeting were approved.

 

Present were:

 

Members:<Members> Senator Ernie Harris, Co-Chair; Representative Hubert Collins, Co-Chair; Senators Jimmy Higdon, Morgan McGarvey, Albert Robinson, John Schickel, Brandon Smith, Johnny Ray Turner, and Whitney Westerfield; Representatives Kevin D. Bratcher, Denver Butler, Tim Couch, Jim DeCesare, David Floyd, Keith Hall, Toby Herald, Kenny Imes, Jimmie Lee, Donna Mayfield, Charles Miller, Terry Mills, Rick G. Nelson, Marie Rader, Steve Riggs, Sal Santoro, John Short, Arnold Simpson, Diane St. Onge, John Will Stacy, Fitz Steele, Jim Stewart III, Tommy Turner, and Addia Wuchner. Senator Dorsey Ridley was approved to attend the meeting via videoconference; however, due to technical difficulties, the videoconference could not be conducted.

 

Guests: Mike Hancock, Secretary, Kentucky Transportation Cabinet (KYTC); Heather Stout, Kentucky Automated Vehicle Information System (KAVIS) Project Manager; Rodney Kuhl, Commissioner, Department of Vehicle Regulation, KYTC; Paul Mauer, Director of Motor Vehicle Licensing, Katrina Fitzgerald, Meade County Clerk, President, Kentucky County Clerks’ Association (KCCA); Don Blevins, Fayette County Clerk, Chair, KCCA Transportation Committee; William May, Executive Director, KCCA; Tom Underwood, Kentucky State Director, National Federation of Independent Business, also representing the Kentucky Auto Dealers Association (KADA); Gay Williams, Executive Director, KADA

 

LRC Staff: John Snyder, Brandon White, Dana Fugazzi, and Christina Williams.

 

Update from KYTC: development of KAVIS motor vehicle information system; relationship with contractor

Mike Hancock, Secretary, KYTC, and Heather Stout, KAVIS Project Manager testified about the new motor vehicle information system (KAVIS), and the relationship with 3M, the former contractor for the project. Secretary Hancock stated although the KAVIS project is at a standstill, the cabinet is committed to seeing the project through, and has a strong technical team lead by Heather Stout that will contribute to the ongoing preparation of KAVIS and its implementation.

 

Ms. Stout stated various issues that the cabinet has experienced in developing KAVIS has consisted of poor quality of deliverables being received from the vendor (3M), and a request for additional funding by 3M, both issues of which the cabinet was unable to overcome, resulting in the cabinet electing to end the contractual relationship with 3M, effective May 14th, 2014. The cabinet is currently in negotiations to obtain the source code to be able to complete the KAVIS project. Even though the decision to end the contractual relationship with 3M will affect the implementation date, the cabinet’s focus was and is to deliver a quality project to the stakeholders, primarily county clerks, the Department of Motor Vehicle Licensing and the Department of Revenue.

 

Ms. Stout stated there are three possible routes that the cabinet could pursue in order to continue to construct KAVIS. In preferred order, the first option is to obtain the source code and complete the project as planned, using the cabinet staff to complete the project. The second option, if the source code is not obtained, is to utilize the existing analysis that the cabinet has gathered throughout the project, and the stakeholders will assist the cabinet in developing a solution to meet the KAVIS needs. Finally, the third option would be to enhance the existing AVIS application.

 

In response to a question asked by Chairman Collins concerning the third option of enhancing AVIS, Ms. Stout stated the cabinet would consider ways to keep the mainframe application in place, but build a front end solution to better enable processes within the county clerks offices, and also build online services for citizens that would utilize the mainframe as it exists, essentially making AVIS enclosed in the final KAVIS project.

 

In response to a question asked by Chairman Collins, Ms. Stout stated in her opinion the main cause of the issues that have occurred with 3M and the cabinet in halting the KAVIS project, has been funding related. Idaho and Kansas are in the same situation with 3M. She believes that, when considering the initial bid on the KAVIS project, 3M made some assumptions that were incorrect. After purchasing Archon, within a two year time frame, 3M grew from approximately 50 employees to approximately 300 employees. Because of that growth, 3M bid on Kentucky, as well as a few other states. Although the increase in resources sounded promising, that increase lead to lack of experience in newer employees, while the more experienced employees are spread thin over several state projects. The company did not have processes in place to accommodate the increase in resources, which resulted in a large amount of turnover, and people being moved from various projects, and also pulled off of KAVIS. The core resources that were on the KAVIS project initially were Archon resources and were very knowledgeable of the project, but were eventually changed out to resources that were very unknowledgeable about the project, causing a delay, which in turn caused the need for more funding.

 

Ms. Stout stated there are some project activities ongoing during the period of indecision in an effort not to waste time. The cabinet is identifying areas for correction in AVIS to improve the data quality, they are also constructing a print on demand decal (PODD) and scanning analysis for early implementation with AVIS for county clerks, that would automatically print a decal with the registration transaction rather than the county clerks having to have separate books of decals. The scanning analysis would allow the county clerks to scan documents in house for early implementation with AVIS. The cabinet has been identifying gaps in analysis and beginning assignment of resources to gather the missing requirements. The cabinet has also been reviewing third party components to enhance the KAVIS product.

 

Ms. Stout stated KYTC is trying to maintain a relationship with the stakeholders of KAVIS. The amount of time and effort the stakeholders have put into the project is certainly recognized, specifically the county clerks, as they have traveled to several parts of the state, and brought in several resources to help the cabinet test the system components. The cabinet tries to keep the clerks and other stakeholders involved and provide them with as much information as possible. Several stakeholders are concerned that if the cabinet is unable to obtain the source code that this project could be suspended. Ms. Stout reiterated that the KYTC is dedicated to finishing the project, regardless of which option it must choose to move forward.

 

In response to a question asked by Chairman Harris, Ms. Stout stated county clerks, automobile dealers, the Motor Vehicle Licensing Department, the Department of Revenue, and the public are all stakeholders in the KAVIS project. The cabinet has tried to stay in touch with the Kentucky Automobile Dealers Association (KADA) and the Motor Vehicle Commission throughout the process. There are a few other stakeholders that are referred to as secondary stakeholders in KAVIS.

 

In response to a question asked by Chairman Harris, Ms. Stout stated she is hopeful that a final agreement will be made in a few upcoming weeks if the cabinet will be able to obtain the source code, but there is no definitive date.

 

In response to a question asked by Representative DeCesare concerning the transfer process, KAVIS and the concerns that KADA has had with that part of the project, Ms. Stout stated the KAVIS project and any proposed changes to the vehicle transaction form are separate issues. There are some long-term future changes and enhancements that the cabinet has for the vehicle transfer process in KAVIS and that the cabinet worked with KADA, other dealers, and the Motor Vehicle Commission, to design them. When KAVIS is implemented, those enhancements will be included.

 

Representative DeCesare stated the dealers want to make sure the project is done correctly and that it will not be detrimental to consumers by taking longer for vehicles to be titled.

 

In response to a question asked by Representative DeCesare concerning the cost of the printers that county clerk offices will be required to have, Ms. Stout stated that KYTC established a service based contract that was awarded to Xerox. Xerox owns the printer equipment and the cabinet pays them per print. If the print includes a decal, that print is a certain price. If the print is plain paper with no decal, it is a different price. The money that KYTC pays for prints goes toward paying for the printers, the maintenance of the printers, and the ink. The cost of buying the paper would be an additional expense to the county clerk as it is not covered under the price per print funds.

 

In response to a question asked by Representative Imes, Ms. Stout stated the cabinet has only paid 3M for the deliverables that they received, adding that the original contract was for $10.2 million, the additional change request was approximately $2.8 million, and the cabinet has only paid 3M $4,135,000 to date.

 

Representative Imes questioned if 3M breached the contract by not delivering what was expected of them in the contract and fulfilling the contractual obligation. Ms. Stout stated that question is currently in negotiations. Secretary Hancock added the cabinet has elected not to renew or extend 3M’s contract, and the only thing that is being negotiated is the separation details.

 

In response to a question asked by Representative Wuchner concerning exploring negotiations with other vendors, Ms. Stout stated KYTC is looking at other vendors for specific components of the application, but not to complete the whole project. For example, the cabinet is not fond of the correspondence piece that has been developed for KAVIS, and if they can obtain the source code, they may seek a vendor for that specific component of the system. The cabinet wants a system that meets the needs of all stakeholders, so it may search for vendors that can do specific pieces of the application.

 

In response to a question asked by Representative Wuchner, Ms. Stout stated the source code is 3M’s intellectual property. The contract was designed, and the system was implemented so that the cabinet would maintain ownership of the source code and have it in possession so that it would be available to use, and any modifications or enhancements the cabinet made to the code would be owned by the cabinet.

 

In response to a question asked by Chairman Collins concerning the print on demand decals (PODD), Ms. Stout stated citizens receive a rectangular piece of paper to place in the vehicle, and attached to that is the decal to be placed on the car. Print on demand decals would be an 8 ˝ x 11 piece of paper with the registration renewal on it, and the decal to be placed on the vehicle would be imbedded in that.

 

In response to a question asked by Chairman Collins concerning the quality of the decal, Ms. Stout stated within the request for proposal that was issued for the PODD vendor, there were several specifications for testing of quality and verification that the decal would not peel off easily. There is a specific vendor that is utilized throughout the industry for the decals.

 

In response to a question asked by Chairman Collins, Ms. Stout stated that, if the cabinet is forced to enhance AVIS, it would stop the process of initiating the Plate 2 Customer application due to the fact that AVIS is a very plate to vehicle application, and it would be very difficult to transition that system to a plate to customer system. This does not mean that it cannot be done, but it would be a very difficult task to undertake.

 

In response to a question asked by Senator Westerfield concerning the setback if the source code is not obtained, Ms. Stout stated the KYTC would be starting development from scratch but that all of the analysis that has been gathered would still be utilized, making a large piece of the project ahead of schedule.

 

            In response to a question asked by Chairman Harris, Ms. Stout stated the initial proposed completion date for the KAVIS project was December 2012.

 

In response to a question asked by Senator Higdon, Ms. Stout stated if the cabinet had to start over in the development stage, it would start in the Plate 2 Customer application.

 

Discussion of changes in vehicle transfer form processes and temporary license tags

Rodney Kuhl, Commissioner, Department of Vehicle Regulation, KYTC; Paul Mauer, Director of Motor Vehicle Licensing, KYTC; Katrina Fitzgerald, Meade County Clerk, President, Kentucky County Clerks’ Association (KCCA); Don Blevins, Fayette County Clerk, Chair, KCCA Transportation Committee; and William May, Executive Director, KCCA, discussed changes in vehicle transfer form processes and temporary license tags.

 

Commissioner Kuhl stated the department has started analyzing what they can do and the steps to take to offer vehicle transaction (VTR) forms online to citizens, dealers, and county clerks. The department has made a VTR form available online that may be used, but it is still accepting the three part VTR forms that are currently being used through the County Clerks as well.

 

In response to a question asked by Chairman Harris concerning changes in the printing of temporary tags, Commissioner Kuhl stated the department is now printing temporary tags in-house. There was legislation that changed for temporary tag security; therefore, the tags are now being printed in-house. The printing change has also saved money for the state.

 

In response to a question asked by Chairman Collins concerning temporary tags, Mr. Mauer stated the previous temporary tags were printed through Kentucky Correctional Industries (KCI). The security strip that was provided by the American Association of Motor Vehicle Administrators (AAMVA) was used and there were several occasions where the availability of those security strips was limited, which meant that the cabinet was sometimes unable to provide county clerks and dealers with temporary tags. The change from a holographic security measure to a pantographic security measure was addressed in a regulation change. “Pantographic security measures” mean that if someone tried to copy a temporary tag, it would read void across it. The previous tags did not have that feature, therefore, it was more subject to fraud. With the pantographic system being put into place, the department modified the texture of the temporary tags slightly to accommodate the pantographic security measures.

 

Chairman Collins questioned why anyone would want to create a duplicate tag. Mr. Mauer stated the handwritten expiration date is often modified by citizens to extend that date, and until a regulation is put into place that would preclude a handwritten expiration date, it will always be an issue.

 

Chairman Collins expressed his disappointment in the quality of the recent temporary tags that are being issued. He produced a temporary tag that had been severely worn due to exposure to the elements. The temporary tag was issued on April 17, 2014, had been on the vehicle for less than one month, and had completely faded to the point of being illegible. Chairman Collins questioned why the tags are being printed in-house if the tags are of such poor quality.

 

Mr. Mauer stated the issue of durability of the temporary tags is not related to them being printed in-house or through a vendor. When Chairman Collins questioned why the new temporary tags that are being printed in-house are so vulnerable to water and the elements, Mr. Mauer stated he is unable to speculate due to not knowing what the specific presented tag had been exposed to.

 

Chairman Collins stated the former temporary tags that were printed in LaGrange at KCI withstood elements with a better quality result and questioned why the department would want to change from a better quality product to a lower quality product. Mr. Mauer said the state saves an estimated $70,000 a year in printing costs by no longer using KCI as its printing source for the temporary tags.

 

Chairman Collins stated that with the new temporary tag, it would be easy to change the dates on as well, maybe even easier than the former temporary tags, due to the weathering of the numbers and the numbers being illegible after the tag is exposed to the elements.

 

In a question asked by Chairman Collins, Mr. Mauer stated that permanent license plates are made by KCI, and there are no immediate plans for that to change.

 

In response to a question asked by Chairman Collins, Mr. Mauer stated if KCI printed the new temporary tags with the stock that is now used, the printing of the temporary tags through KCI would not be cheaper than in-house printing, thus one of the reasons for the switch in printing locations.

 

Mr. Mauer stated the department looked at the possibility of switching to a more slick and durable stock to replace the stock that is being used now for printing, and still accommodate the security measures that are required by the regulation, but switching to that stock would take the printing costs from approximately $50,000 a year to $300,000 a year for the difference in material.

 

Chairman Collins expressed his dissatisfaction with the quality of the temporary tags. Mr. Mauer stated some dealers across the Commonwealth are using plastic sleeves to shield the tags from weathering at a cost of $0.09 per sleeve.

 

Regarding the proposed changes in the VTR forms, Chairman Collins cited KRS 186.240(1), which states it shall be the duty of the cabinet to carry out the provisions of KRS Chapter 186, prepare and furnish to the clerks in each county a sufficient supply of all forms and blanks provided in that KRS. Mr. Mauer stated the availability of the forms electronically as opposed to being provided by the department, meets the KRS qualification. Chairman Collins reiterated the department is not providing the dealers the forms, they are requiring them to print them off of the computer, which could cause a problem for any dealers that do not have computers.

 

Commissioner Kuhl stated the department does not have any immediate plans to cancel the use of the three part VTR forms and the dealers could still use them. Chairman Collins questioned the August 1, 2014 date that was stated in a memorandum to county clerks as the date that the use of the three part VTR forms would be suspended. Commissioner Kuhl stated August 1, 2014 was initially the date for the use of the current VTR forms to be suspended, but that date has since been rescinded and that idea is not in play at this time.

 

Chairman Collins and Chairman Harris asked for staff to draft a resolution to set forth the will of the committee regarding the issue of the forms being provided to all necessary entities by the department as stated in the KRS and to keep that process the same. The resolution will be drafted and distributed to the committee for discussion at the next meeting.

 

In response to a question asked by Representative DeCesare concerning a new form implementation date rather than August 1, 2014, Mr. Mauer stated there is a plan to have a new date for the form usage to be switched, but the department is observing the scanning solution of the KAVIS system which precludes several additional copies being made, and if that part of the system were to be implemented, additional copies may not be required to be made. If that is the case, the form switch to online only would be considered.

 

Representative DeCesare stated the testimony packet distributed by KADA requests the department work with the dealers, clerks, and other affected parties when making changes to the forms and processes as directed by the KRS that when the process truly becomes electronic as part of the anticipated KAVIS implementation, those forms can be sent to the county clerks with an epayment solution, and that would be the time to implement the change. Mr. Mauer stated he is in agreement with working with the dealers, clerks, and other affected parties as requested.

 

In response to a question asked by Representative DeCesare, Mr. Mauer stated the August 1, 2014 online form date was communicated to the clerks, but that the decision to rescind that date has been made within the last few days, and the department is in the process of getting that information out to the clerks.

 

In response to a question asked by Representative Floyd, Mr. Mauer stated the forms should be able to be printed without a special printer or software.

 

In response to a question asked by Senator Robinson, Mr. Mauer stated temporary tags are valid for 60 days. He added that Plate 2 Customer has a 30 day limit instead of 60 days, but because of KAVIS not being implemented at this time, the department is still honoring the 60 day limit. Senator Robinson echoed Chairman Collins’ disappointment in the quality of the temporary tag.

 

Representative Lee stated throughout the years the committee has discussed several ways to save money in the process of transferring vehicles. He said he was extremely disappointed to still not be any further along in that venture. He stressed the possibility of going to a near paperless transfer in the future through the KAVIS project. There is no reason to spend millions of dollars to send paper titles to citizens as long as the cabinet has them electronically.

 

In response to a question asked by Senator Higdon, Mr. Mauer stated that switching the printing of temporary tags to in-house versus being printed by KCI saves money by having existing employees print them, rather than inmates, who require additional staff and administrative costs to oversee the operation. There is no additional employee cost to the State to switch to the new printing process.

 

In response to a question asked by Chairman Collins, Commissioner Kuhl stated the Kentucky Certificates of Title are printed through American Bank Note in Tennessee, as it is one of the most secure printing agencies in the United States. Chairman Collins asked if it was possible to save money on printing those in house as well instead of through American Bank Note.

 

William May, Executive Director, KCCA Katrina Fitzgerald, Meade County Clerk, President, Kentucky County Clerks’ Association (KCCA); Don Blevins, Fayette County Clerk, Chair, KCCA Transportation Committee addressed the issues from the county clerk perspective.

 

Mr. Blevins stated he appreciates the efforts of the KYTC and their hard work and dedication to constructing a quality solution to the issues. He added that saving money is a driving force in implementing the new system as it should be, however, the practical impact sometimes extends beyond the cabinet.

 

Mr. Blevins stated the quality of the cardstock of the temporary tags is very problematic as they are falling apart very quickly, as was mentioned. The plastic sleeve solution that was mentioned has pushed the cost of covering those sleeves to the county clerks or the dealers. Mr. Blevins encouraged KYTC to reconsider the temporary tag quality. More money may need to be spent to provide a quality product.

 

Mr. Blevins addressed the VTR form issue by stating that slight changes have been made that appear to be insignificant, but in reality, some of the forms are intended to align a printer and existing software for both the dealers and the clerks. If changed, they do not align, resulting in a reversion back to a manual process. In short, the cabinet has the best intentions while making these changes, however, the entities in the field are forced to deal with the implications of the changes.

 

Mr. Blevins called attention to KRS 186A.060 which asks the cabinet to work in consultation with all the entities and stakeholders in developing and maintaining the motor vehicle information system. He suggested KRS 186A.060 needs to be strengthened or a standing committee established that forces this to occur, if the problem is not addressed.

 

In response to a question asked by Representative Riggs regarding the regulation requirements, Mr. Blevins stated there were no meetings held between the county clerks’ leadership and the cabinet for managing the VTR form change. Representative Riggs stated if that was the case, then the cabinet violated the statute.

 

Tom Underwood, Kentucky State Director, National Federation of Independent Business, also representing the Kentucky Auto Dealers Association (KADA) along with Gay Williams, Executive Director, KADA, indicated the particular temporary tag that was sourced to the committee was on a vehicle and exposed for only two weeks. Mr. Underwood stated the tag was provided by a dealer in Jefferson Co.

 

Mr. Underwood addressed the question that was previously asked concerning consultation with the auto dealers and the clerks. Mr. Underwood stated the first the KADA had heard about the changes in the forms was from the email dated May 30, 2014. He stated the dealers were given 60 days to be in compliance and reprogram their processes.

 

Mr. Underwood also stated the first that KADA has been informed about the repeal of the August 1, 2014 form change implementation date was at today’s meeting, and they are delighted that is being reconsidered and look forward to working with the cabinet to find a solution to the problem.

 

Mr. Underwood also stated that a regulation from KYTC limits the number of temporary tags that can be issued to one per vehicle, therefore when the customer comes back in with an illegible tag, the dealers are forced to violate the regulation to give them another temporary tag while waiting on their title and plates to be processed and delivered. The plastic sleeves for the temporary tag do not work particularly well.

 

In response to a question asked by Representative Floyd concerning special software or licensing of software to print the forms, Mr. Underwood stated, much like the testimony of the KCCA, several dealers use proprietary dealer management software that is designed to line up with the current forms. The new forms will require reprogramming of the software by the software providers to accommodate the new form changes. Mr. Underwood added that KADA did not have any input on the changes of those forms.

 

Consideration of proposed Administrative Regulation 600 KAR 6:040 and 601 KAR 1:230, regarding prequalification of contractors for engineering services

The committee reviewed Administrative Regulation 600 KAR 6:040 and 601 KAR 1:230, regarding prequalification of contractors for engineering services.

 

With no further business before the Committee, Chairman Harris adjourned the committee at 2:17 P.M.