Public Procurement

Describes purposes and policies of the Hawaii Procurement Code.
Defines "good faith" and "Subcontractor". Amends criteria for
award of contracts.  Adopts provisions relating to the listing of
subcontractors on bids.  Increases the time limit for protesting
the solicitation or award of a contract from five to fifteen

HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1      SECTION 1.  Chapter 103D, Hawaii Revised Statutes, is
 2 amended by adding a new section to be appropriately designated
 3 and to read as follows:
 4      "103D-   Purposes and Policies.  The underlying purposes
 5 and policies of this chapter are to:
 6      (1)  Provide increased economy in state procurement
 7           activities and to maximize to the fullest extent
 8           practicable the purchasing values of funds while
 9           ensuring that procurements are the most advantageous to
10           the State and in compliance with the provisions of this
11           chapter;
12      (2)  Foster effective broad-based competition for public
13           procurement within the free enterprise system;
14      (3)  Develop procurement capability responsive to
15           appropriate user needs;
16      (4)  Consolidate, clarify, and modernize the law governing
17           procurement in this State and permit the continued
18           development of explicit and thoroughly considered
19           procurement policies and practices;

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 1      (5)  Adopt competitive procurement laws and practices which
 2           disallow bid shopping and other non-competitive
 3           practices;
 4      (6)  Ensure fair and equitable treatment of all persons who
 5           deal with the procurement system which will promote
 6           increased public confidence in the procedures followed
 7           in public procurement;
 8      (7)  Provide safeguards for the maintenance of a procurement
 9           system of quality and integrity with clearly defined
10           rules for ethical behavior on the part of all persons
11           engaged in the public procurement process; and
12      (8)  Develop an efficient and effective means of delegating
13           roles and responsibilities to the various government
14           procurement officers."
15      SECTION 2.  Section 103D-104, Hawaii Revised Statutes, is
16 amended:
17      1.  By adding a new definition to be appropriately inserted
18 and to read as follows:
19      ""Good faith" means honesty in fact in the conduct or
20 transaction concerned and the observance of reasonable commercial
21 standards of fair dealing."
22      2.  By adding a new definition to be appropriately inserted
23 and to read as follows:

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 1      ""Subcontractor" means any person having a contract to
 2 perform work or render service to a contractor as part of the
 3 contractor's agreement with the governmental body and who was
 4 listed as a subcontractor on the contractor's bid pursuant to
 5 section 103D-302, unless replaced pursuant to section 103D-302." 
 6      SECTION 3.  Section 103D-302, Hawaii Revised Statutes, is
 7 amended by amending subsection (b) to read as follows:
 8      "(b)  An invitation for bids shall be issued, and shall
 9 include a purchase description and all contractual terms and
10 conditions applicable to the procurement.
11      [If the invitation for bids is for construction, it shall
12 specify that all bids include the name of each person or firm to
13 be engaged by the bidder as a joint contractor or subcontractor
14 in the performance of the contract and the nature and scope of
15 the work to be performed by each.  Construction bids that do not
16 comply with this requirement may be accepted if acceptance is in
17 the best interest of the State and the value of the work to be
18 performed by the joint contractor or subcontractor is equal to or
19 less than one per cent of the total bid amount.]  With respect to
20 all bids for construction:
21      (1)  The bidder shall identify by specialty all
22           subcontractors who, based on the submission of a

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 1           subcontractor's bid, are expected to perform work for
 2           the bidder when those subcontractors' subcontracts are
 3           each expected to exceed one per cent of the bidder's
 4           total base bid.  If the bidder determines to use the
 5           bidder's employees to perform any portion of the work
 6           for which the bidder would otherwise be required to
 7           list a subcontractor, and if the bidder is qualified to
 8           perform such work under the terms of the invitations
 9           for bids, the bidder shall be listed in the appropriate
10           place in the bid and not subcontract any of that work
11           except pursuant to the provisions of this section;
12      (2)  Failure to list all subcontractors renders the bidder's
13           bid unresponsive;
14      (3)  No contractor whose bid is accepted shall substitute
15           any person as subcontractor in place of the
16           subcontractor listed in the original bid, nor
17           subcontract any work where the contractor has been
18           listed to perform work, except for one or more of the
19           following reasons:
20           (A)  Upon a showing satisfactory to the using agency by
21                the contractor that:
22                (i)  A subcontractor who was listed is not
23                     financially responsible;

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 1               (ii)  The scope of work bid by a listed
 2                     subcontractor did not include a portion of
 3                     the work required in the plans and
 4                     specification, and the exclusion is not
 5                     clearly set forth in the listed
 6                     subcontractor's original bid;
 7              (iii)  Within four working days of the bid opening,
 8                     the subcontractor was listed as a result of
 9                     an inadvertent clerical error;
10               (iv)  The listed subcontractor failed or refused to
11                     submit a performance and payment bond when
12                     requested by the contractor after the
13                     subcontractor had represented to the
14                     contractor that the subcontractor could
15                     obtain a performance and payment bond; or
16                (v)  The listed subcontractor is required to be
17                     licensed and did not have the license by the
18                     time it was required by law;
19           (B)  When the listed subcontractor fails or refuses to
20                perform the subcontract;
21           (C)  When the work of the listed subcontractor is found
22                by the using agency to be substantially
23                unsatisfactory; or

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 1           (D)  With the consent of the using agency for good
 2                cause shown;
 3           and
 4      (4)  A request for substitution of subcontractors must be
 5           made to the using agency in writing.
 6 Where substitution is allowed, the contractor, before obtaining
 7 prices from any other subcontractor, must attempt in good faith
 8 to negotiate a subcontract with at least one subcontractor whose
 9 bid was received prior to the submission of the contractor's bid.
10 Nothing in this section affects a contractor's ability to request
11 withdrawal of a bid in accordance with the provisions of this
12 chapter and the regulations promulgated under it."
13      SECTION 4.  Section 103D-303, Hawaii Revised Statutes, is
14 amended by amending subsection (g) to read as follows:
15      "(g)  Award shall be made to the responsible offeror whose
16 proposal is determined in writing to be the most advantageous
17 taking into consideration price and the evaluation factors set
18 forth in the request for proposals.  Evaluation factors must be
19 stated in the request for proposals, or no award shall be made.
20 No other factors or criteria shall be used in the evaluation.
21 The award must be made on the basis of the evaluation factors
22 stated in the request for proposals.  The contract file shall
23 contain the basis on which the award is made."

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 1      SECTION 5.  Section 103D-701, Hawaii Revised Statutes, is
 2 amended by amending subsection (a) to read as follows:
 3      "(a)  Any actual or prospective bidder, offeror, or
 4 contractor who is aggrieved in connection with the solicitation
 5 or award of a contract may protest to the chief procurement
 6 officer or the head of a purchasing agency.  The protest shall be
 7 submitted in writing within [five] fifteen working days after the
 8 aggrieved person knows or should have known of the facts giving
 9 rise thereto."
10      SECTION 6.  Statutory material to be repealed is bracketed.
11 New statutory material is underscored.
12      SECTION 7.  This Act shall take effect upon its approval.
14                           INTRODUCED BY:  _______________________