Report Title:

Procurement Code

Description:

Removes small purchase contracts under $25,000 from the procurement certification process. Authorizes the heads of purchasing agencies to waive certain contract certification requirements when in the best interest of the State or county.

THE SENATE

S.B. NO.

2833

TWENTY-SECOND LEGISLATURE, 2004

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO THE PROCUREMENT CODE

 

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

SECTION 1. In 2003, section 103D-310, Hawaii Revised Statutes, entitled "responsibility of offerors," was amended to require state contractors to be incorporated or organized under the laws of the State or registered to do business in the State as a separate branch or division, and to comply with all of the laws governing entities doing business in Hawaii.

The amendments were made to put all who seek public contracts for goods, services, and construction on equal footing. Experience under the new regime suggests that two amendments need to be made to make the law's implementation more efficient, and ensure that in evening out the playing field for those interested in selling goods, services and construction to the State, the law does not work against the best interest of the State.

In several instances, the new law has had the unanticipated effect of limiting the ability of state agencies that rely on service providers from beyond Hawaii's borders, to readily secure goods or the expertise they need to protect the State's interests. Some out-of-state businesses are not presently registered or interested in registering to do business in Hawaii. For these providers, securing the State's business is not enough incentive for them to set up and staff a branch office locally, or to open unemployment insurance accounts or purchase workers compensation, temporary disability, and prepaid health insurance coverage for employees who at most would work in the state for only a few days.

As a consequence, agencies may be left with the choice of going without the needed good or service, or resorting to the only other alternative available – securing an exception from the procurement code from the chief procurement officer so that section 103D-310(c) does not apply to the procurement.

To make the certification process more efficient and effective, section 103D-310(c) is amended to except small purchase contracts for goods, services and construction procured under section 103D-305, Hawaii Revised Statutes from the requirements of section 103D-310(c).

To ensure that the legislature's effort to level the playing field does not do more harm than good, the heads of purchasing agencies are authorized by this Act to waive the requirements of section 103D-310(c), Hawaii Revised Statutes, to protect the best interest of the State or a county.

SECTION 2. Section 103D-310, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) All offerors, upon award of contract, shall comply with all laws governing entities doing business in the State, including chapters 237, 383, 386, 392, and 393, and shall:

(1) Be incorporated or organized under the laws of the State; or

(2) Be registered to do business in the State as a separate branch or division that is capable of fully performing under the contract.

Offerors shall produce documents to the procuring officer to demonstrate compliance with this subsection. Any offeror making a false affirmation or certification under this subsection shall be suspended from further offerings or awards pursuant to section 103D-702. The requirements of this subsection shall not apply to procurements made pursuant to section 103D-305, and to contracts for services when the head of the purchasing agency certifies in writing to the chief procuring officer that waiving the requirements of the subsection is necessary to retain the most qualified service provider and is in the best interest of the State or county."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________

BY REQUEST