STAND. COM. REP. NO.792

Honolulu, Hawaii

, 2003

RE: S.B. No. 327

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Transportation, Military Affairs, and Government Operations, to which was referred S.B. No. 327 entitled:

"A BILL FOR AN ACT RELATING TO THE STATE PROCUREMENT OFFICE,"

begs leave to report as follows:

The purpose of this measure is to invalidate Procurement Circular No. 2002-02, relating to authorized purchases from Grainger Industrial Supply (Grainger), until the State Procurement Office (SPO) holds public hearings to gather public input on the contract.

Your Committee received testimony in support of this measure from the Hawaii Business League, the National Federation of Independent Business, Hawaii Pest Control Association, and thirteen small business owners. The SPO and Grainger submitted testimony in opposition to this measure.

Your Committee finds that as a member of the Western State Contracting Alliance, Hawaii state agencies are authorized to make secondary purchases through Grainger, if the agency's primary contractor is unable to meet the terms of the primary contract. Such a policy is reasonable to make the procurement process more efficient, particularly in light of the large number of products in the Grainger catalog.

Your Committee is concerned, however, that some state agencies are bypassing their primary contractor, and using Grainger as their first source of goods. This practice, aside from being unlawful, has several additional detrimental effects, including undermining the integrity of the procurement process and harming local businesses.

Therefore, your Committee fully supports this measure, and believes that the SPO must accept public input before any further contracts with Grainger may be executed.

Your Committee amended this measure to specify that all state purchases under the Western State Contracting Alliance's contract with Grainger are suspended until the Legislature takes further action. Your Committee intends that the Legislature will revisit this issue next session after the SPO has held its hearings and submitted its report to the Legislature.

As affirmed by the record of votes of the members of your Committee on Transportation, Military Affairs, and Government Operations that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 327, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 327, S.D. 1, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committee on Transportation, Military Affairs, and Government Operations,

____________________________

CAL KAWAMOTO, Chair