Procurement Code

Requires the procurement policy office, in consultation with the
department of budget and finance, to adopt rules for a managed
procurement process that evaluates the efficiency, effectiveness,
and economy of the purchase using uniform accounting standards.
Exempts contracts for legal services outside Hawaii from the
requirements of the state procurement code. (SB1117 HD1)

THE SENATE                              S.B. NO.           S.D. 1
TWENTIETH LEGISLATURE, 1999                                H.D. 1
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-     Managed process for procurement of private
 5 enterprise.  The policy office, in consultation with the
 6 department of budget and finance, shall adopt rules to implement
 7 any public-private competition for government services through
 8 the managed process that determines whether a particular service
 9 can be provided more efficiently, effectively, and economically
10 by a public agency or a private enterprise.  The managed process
11 shall consider all relevant costs, identify the types of
12 contracts which may be exempt from the managed process, establish
13 protections for the affected state and county employees, and
14 ensure that civil service laws, merit principles, and collective
15 bargaining laws are not violated.  The managed process shall
16 require any analysis to use uniform accounting standards in
17 determining whether a service can be provided more efficiently,
18 effectively, and economically by either a public agency or a
19 private enterprise.

Page 2                                                     1117
                                     S.B. NO.           S.D. 1
                                                        H.D. 1

 1      For the purposes of this chapter, "uniform accounting
 2 standards" means a system of accounting for costs and expenses
 3 which applies accepted accounting practices and customs,
 4 including those limited to specific industries, to provide a fair
 5 and complete total of the direct and indirect costs and expense
 6 of or reasonably allocable to any activity, including:
 7      (1)  Direct and indirect labor costs and compensatory
 8           benefits;
 9      (2)  Direct material costs;
10      (3)  Other allocable indirect costs, including indirect
11           manufacturing or operational costs such as costs of
12           utilities, parts and supplies, insurance and
13           depreciation on plant and equipment;
14      (4)  Selling, general, and administrative expenses; and
15      (5)  The imputed cost that represents the fair and complete
16           total of the federal, state, and county tax
17           obligations, from which the activity is exempt in whole
18           or in part, to the extent of such exemption."
19      SECTION 2.  Section 103D-102, Hawaii Revised Statutes, is
20 amended by amending subsection (b) to read as follows:
21      "(b)  Notwithstanding subsection (a), this chapter shall not
22 apply to contracts by governmental bodies:

Page 3                                                     1117
                                     S.B. NO.           S.D. 1
                                                        H.D. 1

 1      (1)  Solicited or entered into before July 1, 1994, unless
 2           the parties agree to its application to a contract
 3           solicited or entered into prior to July 1, 1994;
 4      (2)  To disburse funds, irrespective of their source:
 5           (A)  For grant[,] or subsidies[, or purchases of
 6                services] as those terms are defined in section
 7                [42D-1,] 42F-101 made by the State in accordance
 8                with standards provided by law as required by
 9                article VII, section 4, of the State Constitution;
10                or by the counties pursuant to their respective
11                charters or ordinances;
12           (B)  To make payments to or on behalf of public
13                officers and employees for salaries, fringe
14                benefits, professional fees, or reimbursements;
15           (C)  To satisfy obligations that the State is required
16                to pay by law, including paying fees, permanent
17                settlements, subsidies, or other claims, making
18                refunds, and returning funds held by the State as
19                trustee, custodian, or bailee;
20           (D)  For entitlement programs, including public
21                assistance, unemployment, and workers'
22                compensation programs, established by state or
23                federal law;

Page 4                                                     1117
                                     S.B. NO.           S.D. 1
                                                        H.D. 1

 1           (E)  For dues and fees of organizations of which the
 2                State or its officers and employees are members,
 3                including the National Association of Governors,
 4                the National Association of State and County
 5                Governments, and the Multi-State Tax Commission;
 6           (F)  For deposit, investment, or safekeeping, including
 7                expenses related to their deposit, investment, or
 8                safekeeping;
 9           (G)  To governmental bodies of the State; [and]
10           (H)  As loans, under loan programs administered by a
11                governmental body; and
12           (I)  For contracts awarded in accordance with the
13                provisions of chapter 103F;
14      (3)  To procure goods, services, or construction from a
15           governmental body other than the University of Hawaii
16           bookstores, from the federal government, or from
17           another state or its political subdivision; provided
18           that University of Hawaii departments and programs,
19           without regard to this chapter, may procure goods and
20           services from the University of Hawaii bookstores that
21           are routinely stocked and marketed and not specially
22           ordered;

Page 5                                                     1117
                                     S.B. NO.           S.D. 1
                                                        H.D. 1

 1      (4)  To procure goods or services for the office of
 2           intercollegiate athletics of the University of Hawaii
 3           at Manoa with moneys from the University of Hawaii at
 4           Manoa intercollegiate athletics revolving fund;
 5      (5)  To procure goods or services, including the following:
 6           (A)  Services of expert witnesses for potential and
 7                actual litigation of legal matters involving the
 8                State, its agencies, and its officers and
 9                employees, including administrative quasi-judicial
10                proceedings;
11           (B)  Works of art for museum or public display;
12           (C)  Research and reference materials including books,
13                maps, periodicals, [and] or pamphlets, which are
14                published in print, video, audio, magnetic, or
15                electronic form;
16           (D)  Meats and foodstuffs for the Kalaupapa settlement;
17           (E)  Opponents for athletic contests;
18           (F)  Utility services whose rates or prices are fixed
19                by regulatory processes or agencies;
20           (G)  Performances, including entertainment, speeches,
21                and cultural and artistic presentations;
22           (H)  Goods and services for commercial resale by the
23                State;

Page 6                                                     1117
                                     S.B. NO.           S.D. 1
                                                        H.D. 1

 1           (I)  Services of printers, rating agencies, support
 2                facilities, fiscal and paying agents, and
 3                registrars for the issuance and sale of the
 4                State's or counties' bonds; [and]
 5           (J)  Travel arrangements purchased by the University of
 6                Hawaii for its intercollegiate athletic programs;
 7                and
 8           (K)  Services of attorneys employed or retained to
 9                advise, represent, or provide any other legal
10                service to the State or any of its agencies, on
11                matters arising under laws of another state or
12                foreign country, or in an action brought in such
13                jurisdictions, when substantially all legal
14                services are expected to be performed outside this
15                state; and
16           which the policy office determines by rule or the chief
17           procurement officer determines in writing is available
18           from multiple sources but for which procurement by
19           competitive means is either not practicable or not
20           advantageous to the State; and
21      (6)  Which are specific procurements expressly exempt from
22           any or all of the requirements of this chapter by:

Page 7                                                     1117
                                     S.B. NO.           S.D. 1
                                                        H.D. 1

 1           (A)  References in state or federal law to provisions
 2                of this chapter or a section of this chapter, or
 3                references to a particular requirement of this
 4                chapter;
 5           (B)  Trade agreements, including the Uruguay Round
 6                General Agreement on Tariffs and Trade (GATT),
 7                which require certain non-construction and non-
 8                software development procurements by the
 9                comptroller to be conducted in accordance with its
10                terms."
11      SECTION 3.  Statutory material to be repealed is bracketed.
12 New statutory material is underscored.
13      SECTION 4.  This Act shall take effect on July 30, 2001.