STAND. COM. REP. NO. 786

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 1438
                                        S.D. 1




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

Sir:

     Your Committee on Ways and Means, to which was referred S.B.
No. 1438, S.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO GOVERNMENT PROCUREMENT,"

begs leave to report as follows:

     The purpose of this bill is to define "state contractor" for
the purposes of providing a preference to state contracts and
increase the allowable margin for preferred contractors.

     The Defense Appropriations Act has, for many years, required
defense contracts in the State to employ Hawaii residents.  The
Federal Acquisition Regulations generally require the contracting
officers to follow local laws and practices whenever possible
within the contracting provisions.  Many of the federal contracts
in Hawaii have been awarded to out-of-state contractors who bring
in temporary workers residing in Hawaii for the duration of the
contract.  By defining "state contractor" and "state resident" in
the state procurement code the federal contractors will have
clear guidelines to evaluate the compliance of their contractors
under the Defense Appropriations Act.

     This measure also increases the allowable margin of
difference from seven per cent to fifteen per cent for preferred
state contractors.  The preference is provided to level the
playing field for local contractors who may have a higher

 
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                                   STAND. COM. REP. NO. 786
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overhead than some out-of-state contractors.  The increase from
seven to fifteen per cent for the allowable margin of difference
is more likely to provide a real preference to state contractors.
 
     Your Committee finds that taking these steps will strengthen
the construction industry in Hawaii and provide access to
additional opportunities for local contractors.

     As affirmed by the record of votes of the members of your
Committee on Ways and Means that is attached to this report, your
Committee is in accord with the intent and purpose of S.B. No.
1438, S.D. 1, and recommends that it pass Third Reading.

                                 Respectfully submitted on behalf
                                 of the members of the Committee
                                 on Ways and Means,



                                 ________________________________
                                 CAROL FUKUNAGA, Co-Chair



                                 ________________________________
                                 ANDREW LEVIN, Co-Chair

 
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