Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 1626
                                        S.D. 1

Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii


     Your Committee on Government Operations and Housing, to
which was referred S.B. No. 1626 entitled: 


begs leave to report as follows:

     The purpose of this measure is to place restrictions on the
award of public contracts to persons who made political campaign
contributions to anyone involved in the contract selection

     Testimony in support of the intent of this measure was
received from the Department of Accounting and General Services,
the State Procurement Office, and the Campaign Spending

     Your Committee finds that courts have determined that
campaign contributions are considered free speech.

     Your Committee finds that in Hawaii, there has been a
longstanding practice of candidates sending books of fundraiser
tickets to government nonbid contractors which pressures
individuals or firms to make unwilling contributions and creates
the appearance of impropriety.

     Your Committee finds that a balance must be made between
free speech and ensuring a fair procurement process.

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                                   STAND. COM. REP. NO. 226
                                   Page 2

     Currently, section 11-205.5, Hawaii Revised Statutes,
requires persons receiving government contracts of more than
$50,000 to file disclosure forms identifying all contributions
made within twelve months of the contract.  However, your
Committee finds that enforcement of this statute has been
difficult and the disclosures are necessarily incomplete.  

     Therefore, your Committee is in favor of a more direct and
forceful approach to prevent the appearance of or actual
impropriety that can occur when campaign contributions are
received from anyone involved in the contract selection process.

     The amendment to this measure changes the time period during
which a person may receive campaign contributions by prohibiting
contributions between contract negotiations and contract
performance or termination of contract negotiations, whichever
occurs last.

     As affirmed by the record of votes of the members of your
Committee on Government Operations and Housing that is attached
to this report, your Committee is in accord with the intent and
purpose of S.B. No. 1626, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as S.B.
No. 1626, S.D. 1, and be referred to the Committee on Judiciary.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Government
                                   Operations and Housing,

                                   ROD TAM, Chair

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