Government Functions

Provides a process for identifying the functions of the state
government that are not inherently governmental functions.

THE SENATE                              S.B. NO.           1471
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1      SECTION 1.  The legislature finds that there is a need to
 2 increase government efficiency, particularly in the delivery of
 3 services to the public, in order to achieve greater budget
 4 savings and to rethink where best to spend limited resources.  In
 5 streamlining government functions to achieve greater cost-
 6 efficiency, government should look first to the private sector to
 7 provide the goods and services that the public needs.  Underlying
 8 this goal is the idea that certain functions related to the
 9 public interest are inherently governmental.  The government,
10 like the private sector, must focus on its "core competencies",
11 i.e., those services that are central to its mission and must,
12 for sound policy reasons, be performed by government employees.  
13      However, when activities are not clearly governmental
14 functions, the government should conduct a rigorous comparison of
15 private sector costs and in-house costs to ascertain which
16 entity--the public or private sector--would be the most
17 appropriate provider of that service.  The government should
18 competitively outsource those functions that are not among its
19 core competencies and for which performance by the private sector

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 1 represents the best value to the taxpayer.
 2      Accordingly, the purpose of this Act is to establish a
 3 process to identify those functions of the state government that
 4 are not inherently governmental functions, similar to the Federal
 5 Acquisition Inventory Reform Act of 1998.  The legislature finds
 6 that this Act will help to boost Hawaii's economy by helping to
 7 create new jobs in the private sector, particularly in small
 8 business; expand state and county tax bases as a result of
 9 private sector growth; and refocus government on its core
10 missions and those inherently governmental activities that only
11 government should perform.
12      SECTION 2.  The Hawaii Revised Statutes is amended by adding
13 a new chapter to be appropriately designated and to read as
14 follows:
15                             "CHAPTER
17         -1  Short title.  This chapter may be cited as the
18 "State Activities Inventory Reform Act".
19         -2  Definitions.  As used in this chapter, unless the
20 context clearly requires otherwise:
21      "Inherently governmental function" means a function that is
22 so intimately related to the public interest as to require
23 performance by state government employees.

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 1      The term includes activities that require either the
 2 exercise of discretion in applying state government authority or
 3 the making of value judgments in making decisions for the state
 4 government, including judgments relating to monetary transactions
 5 and entitlements.  An "inherently governmental function"
 6 involves, among other things:
 7      (1)  The interpretation and execution of the laws of the
 8           States so as to:
 9           (A)  Bind the State to take or not to take some action
10                by contract, policy, rule, authorization, order,
11                or otherwise;
12           (B)  Determine, protect, and advance state economic,
13                political, territorial, property, or other
14                interests by civil or criminal judicial
15                proceedings, contract management, or otherwise;
16           (C)  Significantly affect the life, liberty, or
17                property of private persons;
18           (D)  Commission, appoint, direct, or control officers
19                or employees of the State; or
20           (E)  Exert ultimate control over the acquisition, use,
21                or disposition of the property, real or personal,
22                tangible or intangible, of the State, including
23                the collection, control, or disbursement of

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 1                appropriated and other state funds.
 2      (2)  The term does not normally include:
 3           (A)  Gathering information for or providing advice,
 4                opinions, recommendations, or ideas to state
 5                government officials; or
 6           (B)  Any function that is primarily ministerial and
 7                internal in nature, including building security,
 8                operation of cafeterias, housekeeping, facilities
 9                operations and maintenance, warehouse operations,
10                motor vehicle fleet management operations, or
11                other routine electrical or mechanical services.
12      "State government source", with respect to performance of an
13 activity, means any organization within an executive agency that
14 uses state government employees to perform the activity.
15         -3  Annual lists of government activities not inherently
16 governmental in nature.(a)  Not later than the end of the third
17 quarter of each fiscal year, the head of each executive agency
18 shall submit to the auditor a list of activities performed by
19 state government sources for the executive agency that, in the
20 judgment of the head of the executive agency, are not inherently
21 governmental functions.  The entry for an activity on the list
22 shall include the following:
23      (1)  The fiscal year for which the activity first appeared

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 1           on a list prepared under this section;
 2      (2)  The number of full-time employees (or its equivalent)
 3           that are necessary for the performance of the activity
 4           by a state government source; and
 5      (3)  The name of a state government employee responsible for
 6           the activity from whom additional information about the
 7           activity may be obtained.
 8      (b)  The auditor shall review the executive agency's list
 9 for a fiscal year and consult with the head of the executive
10 agency regarding the content of the final list for that fiscal
11 year.
12      (c)  Public availability of lists.
13      (1)  Upon the completion of the review and consultation
14           regarding a list of an executive agency:
15           (A)  The head of the executive agency shall promptly
16                transmit a copy of the list to the legislature and
17                make the list available to the public; and
18           (B)  The auditor shall promptly publish in a newspaper
19                of general circulation in the State a notice that
20                the list is available to the public.
21      (2)  If the list changes after the publication of the notice
22           as a result of the resolution of a challenge under
23           section    -4, the head of the executive agency shall

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 1           promptly:
 2           (A)  Make each such change available to the public and
 3                transmit a copy of the change to the legislature;
 4                and
 5           (B)  Publish in a newspaper of general circulation in
 6                the State a notice that the change is available to
 7                the public.
 8      (d)  Within a reasonable time after the date on which a
 9 notice of the public availability of a list is published under
10 subsection (c), the head of the executive agency concerned shall
11 review the activities on the list.  Each time that the head of
12 the executive agency considers contracting with a private sector
13 source for the performance of such an activity, the head of the
14 executive agency shall use the competitive process established
15 pursuant to section 6 of Act 230, Session Laws of Hawaii 1998, to
16 select the source (except as may otherwise be provided in a law
17 other than this chapter, an executive order, rules, or any
18 executive branch circular setting forth requirements or guidance
19 that is issued by competent executive authority).  The auditor
20 shall issue guidance for the administration of this subsection.
21      (e)  For the purpose of determining whether to contract with
22 a source in the private sector for the performance of an
23 executive agency activity on the list on the basis of a

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 1 comparison of the costs of procuring services from such a source
 2 with the costs of performing that activity by the executive
 3 agency, the head of the executive agency shall ensure that all
 4 costs (including the costs of quality assurance, technical
 5 monitoring the performance of that function, liability insurance,
 6 employee retirement and disability benefits, and all other
 7 overhead costs) are considered and that the costs considered are
 8 realistic and fair.
 9         -4  Challenges to the list.(a)  An interested party
10 may submit to an executive agency a challenge of an omission of a
11 particular activity from, or an inclusion of a particular
12 activity on, a list for which a notice of public availability has
13 been published under section    -3.
14      (b)  For the purposes of this section, the term "interested
15 party", with respect to an activity referred to in subsection
16 (a), means the following:
17      (1)  A private sector source that:
18           (A)  Is an actual or prospective offeror for any
19                contract, or other form of agreement, to perform
20                the activity; and
21           (B)  Has a direct economic interest in performing the
22                activity that would be adversely affected by a
23                determination not to procure the performance of

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 1                the activity from a private sector source;
 2      (2)  A representative of any business or professional
 3           association that includes within its membership private
 4           sector sources referred to in paragraph (1);
 5      (3)  An officer or employee of an organization within an
 6           executive agency that is an actual or prospective
 7           offeror to perform the activity; or
 8      (4)  The head of any labor organization referred to in
 9           section 7103(a)(4) of title 5, United States Code, that
10           includes within its membership officers or employees of
11           an organization referred to in paragraph (3).
12      (c)  A challenge to a list shall be submitted to the
13 executive agency concerned within thirty days after the
14 publication of the notice of the public availability of the list
15 under section    -3.
16      (d)  Within twenty-eight days after an executive agency
17 receives a challenge, an official designated by the head of the
18 executive agency shall:
19      (1)  Decide the challenge; and
20      (2)  Transmit to the party submitting the challenge a
21           written notification of the decision together with a
22           discussion of the rationale for the decision and an
23           explanation of the party's right to appeal under

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 1           subsection (e).
 2      (e)  Appeal.
 3      (1)  An interested party may appeal an adverse decision of
 4           the official to the head of the executive agency within
 5           ten days after receiving a notification of the decision
 6           under subsection (d).
 7      (2)  Within ten days after the head of an executive agency
 8           receives an appeal of a decision under paragraph (1),
 9           the head of the executive agency shall decide the
10           appeal and transmit to the party submitting the appeal
11           a written notification of the decision together with a
12           discussion of the rationale for the decision."
13      SECTION 3.  This Act shall take effect upon its approval.
15                              INTRODUCED BY:______________________