Report Title:

Procurement

Description:

Mandates the establishment of a Hawaii procurement institute to develop a acquisition workforce, improve the procurement laws, and provide contractor education and training; allows greater flexibility in designating members of the review and selection committees for professional services applicants and contracts; allows the selection committee to rank applicants and thus select the person offered the contract; allows only professional contracts exceeding $25,000 to be posted electronically for a year; requires DAGS to study preferences and set-asides for small business and other groups and draft proposed legislation for the 2004 regular session; provides for procurement of design professional services through procedures that meet national standards. (HB1103 HD1)

HOUSE OF REPRESENTATIVES

H.B. NO.

1103

TWENTY-SECOND LEGISLATURE, 2003

H.D. 1

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO PROCUREMENT

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

PART I

SECTION 1. The purpose of this part is to establish procurement policies and procedures that:

(1) Promote public confidence in the integrity of the procurement process;

(2) Increase openness in the evaluation of proposals and other non-sealed bid procurements; and

(3) Enhance procurement education in the Pacific by creating a Hawaii procurement institute;

SECTION 2. Section 103D-206, Hawaii Revised Statutes, is amended to read as follows:

"§103D-206 Additional duties of the administrator of the procurement office. In addition to the duties referred to in section 103D-205, the administrator shall:

(1) Perform periodic review of the procurement practices of all governmental bodies;

(2) Assist, advise, and guide governmental bodies in matters relating to procurement;

(3) Develop and administer a statewide procurement orientation and training program;

(4) Develop, distribute, and maintain a procurement manual for all state procurement officials; [and]

(5) Develop, distribute, and maintain a procurement guide for vendors wishing to do business with the State and its counties[.]; and

(6) Establish and maintain a Hawaii procurement institute, in cooperation with the William S. Richardson school of law and other public and private entities or persons, to promote and develop a professional acquisition workforce and to improve and enhance the State of Hawaii's contractor industrial base through education and training. The Hawaii procurement institute may:

(A) Conduct and participate in procurement education and training for entry level and higher qualified state employees and others, including persons not employed by the State;

(B) Conduct and promote research, conferences, and studies to improve the procurement process, laws, policies, methods, regulations, procedures, and forms relating to state and local government procurement;

(C) Report on and make recommendations regarding goals, guidelines, innovations, and evaluation of state and local government procurement initiatives; and

(D) Establish and maintain a procurement library."

SECTION 3. Section 103D-304, Hawaii Revised Statutes, is amended by amending subsections (b) through (g) as follows:

"(b) At a minimum, before the beginning of each fiscal year, the head of each purchasing agency shall publish a notice inviting persons engaged in providing professional services which the agency anticipates needing in the next fiscal year, to submit current statements of qualifications and expressions of interest to the agency. Additional notices [may] shall be given if:

(1) The response to the initial notice is inadequate;

(2) The response to the initial notice does not result in adequate representation of available sources; [or]

(3) [Previously unanticipated] New needs for professional services arise[.]; or

(4) Rules adopted by the policy board so specify.

The chief procurement officer may specify a uniform format for statements of qualifications. Persons may amend these statements by filing a new statement prior to the date designated for submission.

(c) The head of the purchasing agency shall designate a review committee consisting of a minimum of three [employees from the agency or from another governmental body,] persons with sufficient education, training, and licenses or credentials for each type of professional service which may be required. In designating the members of the review committee, the head of the purchasing agency shall ensure the impartiality and independence of committee members. The names of the members of the review committee established under this action shall be placed in the contract file. The committee shall review and evaluate all submissions and other pertinent information, including references and reports, and prepare a list of qualified persons to provide these services. Persons included on the list of qualified persons may amend their statements of qualifications as necessary or appropriate. Persons shall immediately inform the head of the purchasing agency of any change in information furnished which would disqualify the person from being considered for a contract award.

(d) Whenever during the course of the fiscal year the agency needs a particular professional service, the head of the purchasing agency shall designate a [screening] selection committee to evaluate the statements of qualification and performance data of those persons on the list prepared pursuant to subsection (c) along with any other pertinent information, including references and reports. The [screening] selection committee shall be comprised of a minimum of three [employees of the purchasing agency] persons with sufficient education, training, and licenses or credentials in the area of the services required. [If the purchasing agency and using agency are different, the committee shall include at least one qualified employee from the using agency. When the committee includes an employee from the using agency, the employee shall be appointed by the head of the using agency. If qualified employees are not available from these agencies, the officers may designate employees of other governmental bodies.] In designating the members of the selection committee, the head of the purchasing agency shall ensure the impartiality and independence of committee members. The names of the members of a selection committee established under this section shall be placed in the contract file.

(e) The [primary] selection criteria employed [by the screening committee] in descending order of importance shall [include but not] be [limited to]:

(1) Experience and professional qualifications [of the staff to be assigned] relevant to the project[;] type;

(2) Past performance on projects of similar scope for public agencies or private industry[; and], including responses and corrective actions to notices of deficiencies;

(3) Capacity to accomplish the work in the required time[.]; and

(4) Any additional criteria determined in writing by the selection committee to be relevant to the purchasing agency's needs or necessary and appropriate to ensure full, open, and fair competition for professional services contracts.

(f) The [screening] selection committee shall evaluate the submissions of persons on the list prepared pursuant to subsection (c) and any other pertinent information which may be available to the agency, against the selection criteria. The committee may conduct confidential discussions with any person who is included on the list prepared pursuant to subsection (c) regarding the services which are required and the services they are able to provide. In conducting discussions, there shall be no disclosure of any information derived from [proposals submitted by competing offerors. The committee shall provide the head of the purchasing agency with the names of a minimum of three persons who the committee concludes are the most qualified to provide the services required, with a summary of each of their qualifications.] the competing professional service offerors.

(g) The selection committee shall rank a minimum of three persons based on the selection criteria and send the ranking to the head of the purchasing agency. The contract file shall contain a copy of [the criteria established for the selection and] the [committee's] summary of qualifications for the ranking of each of the persons provided to the head of the purchasing agency [by the committee.] for contract negotiations.

[(e) The head of the purchasing agency shall evaluate the summary of qualifications for each of the persons provided by the screening committee and may conduct additional discussions with any of them. The head of the purchasing agency shall then rank the persons based on the selection criteria.]

(h) The head of the purchasing agency or designee shall negotiate a contract with the first ranked person, including a rate of compensation which is fair and reasonable, established in writing, and based upon the estimated value, scope, complexity, and nature of the services to be rendered. If a satisfactory contract cannot be negotiated with the first ranked person, negotiations with that person shall be formally terminated and negotiations with the second ranked person on the list shall commence. Failing accord with the second ranked person, negotiations with the next ranked person on the list shall commence. If a contract at a fair and reasonable price cannot be negotiated, the [screening] selection committee may be asked to submit a minimum of three additional persons for the head of the purchasing agency to [rank, and] resume negotiations in the same manner provided in this subsection. Negotiations shall be conducted confidentially.

[(f)] (i) Contracts awarded under this section in excess of the limits in section 103D-305 shall be posted electronically within seven days of the contract award by the chief procurement officer or designee and shall remain posted for at least one year. Information to be posted shall include[:] but not be limited to:

(1) The names of the [top five] persons submitted under subsection [(d) or, if the list submitted under subsection (d) is less than five, all of the persons submitted;] (g);

(2) The name of the person or organization receiving the award;

(3) The dollar amount of the contract;

(4) The name of the head of the purchasing agency [head] or designee making the selection; and

(5) Any relationship of the principals to the official making the award.

[(g)] (j) Contracts for professional services of less than [$25,000] the limits in section 103D-305 may be negotiated by the head of the purchasing agency, with at least any two persons [who appear] on the list of qualified persons established pursuant to subsection (c). [Negotiations shall be conducted in the manner set forth in subsection (e), but without establishing any order of preference.]"

SECTION 4. Section 103D-701, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Any actual or prospective bidder, offeror, or contractor who is aggrieved in connection with the solicitation or award of a contract may protest to the chief procurement officer or a designee as specified in the solicitation. A protest shall be submitted in writing within five working days after the aggrieved person knows or should have known of the facts giving rise thereto; provided that a protest of an award or proposed award shall in any event be submitted in writing within five working days after the posting of award of the contract either under section 103D-302 or 103D-303, as applicable; provided further that no protest based upon the content of the solicitation shall be considered unless it is submitted in writing prior to the date set for the receipt of offers.

In cases of awards made under the procedures of section 103D-303, 103D-304, and 103D- , unsuccessful offerors and non-selected professional service providers may submit a written request for debriefing to the chief procurement officer or designee within three working days after the posting of the award of the contract. Thereafter, the head of the purchasing agency shall provide the requester a prompt debriefing in accordance with rules adopted by the policy board. Any protest by the requester following debriefing shall be submitted in writing within three working days after the date of the debriefing."

SECTION 5. (a) The department of accounting and general services in cooperation with the state procurement office and the procurement policy board, shall conduct a study of the small business and qualified rehabilitation program provisions in sections 2, 7, and 8 of H.B. No. 1103, (2003). In conducting the study and drafting proposed legislation, the department shall allow for and encourage the participation of representatives of:

(1) County procurement agencies;

(2) Small and large businesses that provide goods, services, and construction routinely purchased by government from the private sector;

(3) Qualified rehabilitation programs; and

(4) The Hawaii State Commission on the Status of Women, groups representing native Hawaiians, and other similar groups potentially suitable for, and interested in being provided with preferences under the procurement code.

(b) With regard to the small business provisions of H.B. No. 1103, the study shall be conducted to:

(1) Define "small business;"

(2) Identify types of contracts susceptible and not susceptible to performance by small businesses; and

(3) Identify types of mandatory evaluation criteria designed to encourage the use of small businesses as subcontractors on large contracts.

(c) With regard to the qualified rehabilitation program provisions of H.B. No. 1103, the study shall be conducted to:

(1) Examine the appropriateness of the $500,000 cutoff;

(2) Clearly specify the preference that will be provided; and

(3) Determine whether and what groups in addition to qualified rehabilitation programs should be included in any preference. The groups shall include but not be limited to native Hawaiians, as defined in section 201(a) of the Hawaiian Homes Commission Act, women-owned businesses, veterans, and minority-owned businesses.

(d) In conducting the study, the department shall consider the impact of proposed amendments to the procurement code on each type of procurement under chapter 103D, Hawaii Revised Statutes, that will be affected, and shall also determine the impact that the proposed amendments would have on potential procurement code contractors.

(e) The department shall report its findings and recommendations, including proposed implementing legislation, to the legislature no later than twenty days before the convening of the regular session of 2004.

PART II

SECTION 6. The purpose of this part is to amend the public procurement code to change Hawaii's procurement of design professional services to meet national standards used by the federal government and forty-three other states.

The legislature finds that the quality of design services is the single most important factor in determining overall construction costs and life-cycle costs of a project. Because design professional services represent only a small percentage of the initial construction budget, it is in the best interest of the taxpayer to ensure that the most qualified professionals are selected for public projects.

Recognizing the need for qualifications-based selection, the United States Congress established as federal law in 1972 the requirement that engineers and architects be selected for projects on the basis of their professional qualifications subject to negotiation of fair and reasonable compensation. Three decades of federal project experience have left the 1972 law essentially intact.

The legislature finds that this change in Hawaii's procurement of design professional services will increase transparency and accountability at a time when public confidence in the awarding of government contracts is low. This Act will increase the authority of selection committees and prioritize selection criteria as public policy and information.

SECTION 7. Chapter 103D, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§103D- Procurement of design professional services. (a) Design professional services furnished by licensees under chapter 464 shall be procured pursuant to this section or section 103D-307. Contracts for design professional services shall be awarded on the basis of demonstrated competence and qualification for the type of services required, and at fair and reasonable prices.

(b) At a minimum, before the beginning of each fiscal year, the head of each purchasing agency shall publish a notice inviting persons engaged in providing design professional services that the agency anticipates needing in the next fiscal year, to submit current statements of qualifications and expressions of interest to the agency. Additional notices shall be given if:

(1) The response to the initial notice is inadequate;

(2) The response to the initial notice does not result in adequate representation of available sources; or

(3) New needs for design professional services arise.

The chief procurement officer may specify a uniform format for statements of qualifications. Persons may amend these statements by filing a new statement prior to the date designated for submission.

(c) The head of the purchasing agency shall designate a review committee consisting of a minimum of three persons from the agency or from another governmental body, with sufficient education, training, and licenses or credentials for each type of design professional service that may be required. The names and qualifications of the members of the review committee established under this subsection shall be public information.

The committee shall review and evaluate all submissions and other pertinent information, including references and reports, and prepare a list of qualified persons to provide these services. Persons included on the list of qualified persons may amend their statements of qualifications as necessary or appropriate. Persons shall immediately inform the head of the purchasing agency of any change in information furnished that would disqualify the person from being considered for a contract award.

(d) Whenever during the course of the fiscal year the agency needs a particular design professional service, the head of the agency shall designate a selection committee to evaluate the statements of qualification and performance data of those persons on the list prepared pursuant to subsection (c), along with any other pertinent information, including references and reports.

(e) The selection committee shall be comprised of three employees of the agency and a minimum of two public members, all with sufficient education, training, and licenses or credentials in the area of the services required. The names and qualifications of the members of a selection committee established under this subsection shall be public information. If the purchasing agency and using agency are different, the committee shall include at least one qualified employee from the using agency. When the committee includes an employee from a using agency, the employee shall be appointed by the head of the using agency. If qualified employees are not available from these agencies, the officers may designate employees of other governmental bodies.

(f) The primary selection criteria employed in descending order of importance shall be:

(1) Experience and design professional qualifications of the staff to be assigned to the project type, as defined by the agency;

(2) Past performance on projects of similar scope for public agencies or private industry; and

(3) Capacity to accomplish the work in the required time.

The selection committee may add a secondary selection criteria of volume of work previously awarded to that person, to promote an equitable distribution of contracts and increase the availability of design professional services in the State.

(g) The selection committee:

(1) Shall evaluate the submissions of persons on the list prepared pursuant to subsection (c) and any other pertinent information that may be available to the agency, against the selection criteria;

(2) May conduct confidential discussions with any person who is included on the list prepared pursuant to subsection (c) regarding the services that are required and the services they are able to provide. In conducting discussions, there shall be no disclosure of any information derived from proposals submitted by competing offerors; and

(3) Shall then rank at least three persons based on the selection criteria and send the ranking to the head of the agency.

(h) The head of the agency shall:

(1) Either ratify the ranking of the selection committee or revise the committee's ranking, based on interpretation of the selection criteria, of persons deemed to be the most qualified to provide the service required. The contract file shall contain a copy of the summary of qualifications for the ranking of each of the persons provided to the head of the agency for contract negotiations;

(2) Negotiate a contract with the first-ranked person, including a rate of compensation that is fair and reasonable, established in writing, and based upon the estimated value, scope, complexity, and nature of the services to be rendered;

(3) If a satisfactory contract cannot be negotiated with the first ranked person, terminate negotiations with the first ranked person and commence negotiations with the second ranked person on the list shall commence. Failing accord with the second ranked person, negotiations with the next ranked person on the list shall commence; and

(4) If a contract at a fair and reasonable price cannot be negotiated, the selection committee shall be asked to submit a minimum of three additional persons for the head of the agency to resume negotiations in the same manner provided in this subsection.

Negotiations shall be conducted confidentially.

(i) Contracts awarded under subsection (h) in excess of the limits in section 103D-305 shall be posted electronically within seven days of the contract award by the chief procurement officer or a designee and shall remain posted for at least one year. Information to be posted shall include:

(1) The names of the persons submitted under subsection (d);

(2) The name of the person or organization receiving the award;

(3) The dollar amount of the contract;

(4) The agency head or designee making the selection; and

(5) Any relationship of the principals to the official making the award.

(j) The head of an agency may negotiate contracts for design professional services of less than the limit specified in section 103D-305 with any persons who appear on the list of qualified persons established pursuant to subsection (c). Negotiations shall be conducted in the manner set forth in subsection (h), with ranking based on the selection criteria of subsection (f) as determined by the head of the agency."

SECTION 8. Section 103D-104, Hawaii Revised Statutes, is amended as follows:

1. By adding a new definition to be appropriately inserted and to read:

""Design professional services" means those services within the scope of practice of an architect, landscape architect, professional engineer, or surveyor or land surveyor, as those terms are defined in section 464-1."

2. By amending the definition of "professional services" to read:

""Professional services" means those services within the scope of the practice of [architecture, landscape architecture, professional engineering, land surveying,] real property appraisal, law, medicine, accounting, dentistry, public finance bond underwriting, public finance bond investment banking, or any other practice defined as professional by the laws of this State or the professional and scientific occupation series contained in the United States Office of Personnel Management's Qualifications Standards Handbook."

SECTION 9. Section 103D-301, Hawaii Revised Statutes, is amended to read as follows:

"[[]§103D-301[]] Methods of source selection. Unless otherwise authorized by law, all contracts shall be awarded by competitive sealed bidding pursuant to section 103D-302, except as provided in:

(1) Section 103D-303 (Competitive sealed proposals);

(2) Section 103D-304 (Professional services procurement);

(3) Section 103D-305 (Small purchases);

(4) Section 103D-306 (Sole source procurement); [and]

(5) Section 103D-307 (Emergency procurements)[.] and

(6) Section 103D- (Design professional services)."

SECTION 10. If any provision of this Act, or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of this Act which can be given effect without the invalid provision or application, and to that extent the provisions of this Act are severable.

SECTION 11. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 12. This Act shall take effect on July 1, 2050.