STAND. COM. REP. NO. 1042

 

Honolulu, Hawaii

 

RE: H.B. No. 114

H.D. 3

S.D. 1

 

 

 

Honorable Donna Mercado Kim

President of the Senate

Twenty-Seventh State Legislature

Regular Session of 2013

State of Hawaii

 

Madam:

 

Your Committees on Higher Education and Economic Development, Government Operations and Housing, to which was referred H.B. No. 114, H.D. 3, entitled:

 

"A BILL FOR AN ACT RELATING TO HIGHER EDUCATION,"

 

beg leave to report as follows:

 

The purpose and intent of this measure is to:

 

(1) Require the Administrator of the State Procurement Office, rather than the President of the University of Hawaii System, to serve as the chief procurement officer for the University of Hawaii for construction contracts and professional services related to construction contracts; and

 

(2) Establish the Independent Audit Committee within the Board of Regents of the University of Hawaii.

 

Your Committees received testimony in opposition to this measure from the University of Hawaii System. Your Committees received comments on this measure from the State Procurement Office and the University of Hawaii Office of Internal Audit.

 

Your Committees find that there are concerns with oversight of the University of Hawaii's construction projects under its current chief procurement officer, the University President. In 2010, when the University of Hawaii was provided an exemption from certain parts of the procurement code, construction projects went from a design-bid method to a design-assist method. With that change came the opportunity to allow individuals to choose which firms would be part of the design teams. Your Committees believe this process led to the appearance that certain companies may have received favorable selection.

 

Your Committees further find that there are concerns about the Board of Regents' role in the oversight, accountability, and transparency of the University of Hawaii's fiscal and operational administration, including enterprise risk management. This measure will assist the Board of Regents in discharging its constitutional duties to ensure the responsible use of fiscal resources by the University through the establishment of an Independent Audit Committee within the Board of Regents.

 

Your Committees have amended this measure by:

 

(1) Deleting language requiring the Administrator of the State Procurement Office, rather than the President of the University of Hawaii System, to serve as chief procurement officer for the University of Hawaii for construction contracts and professional services related to construction contracts;

 

(2) Deleting language removing the Board of Regents' authority to develop internal policies and procedures for the procurement of contracts for construction and professional services furnished by licensees under chapter 464, Hawaii Revised Statutes;

 

(3) Adding language requiring that until July 1, 2015, all procurements of the University of Hawaii for construction, including consultant services necessary for construction, shall be subject to the control of, and be performed by, the Department of Accounting and General Services on behalf of the University, subject to certain limitations;

 

(4) Removing language exempting the Independent Audit Committee of the Board of Regents from chapter 91, Hawaii Revised Statutes, and part I of chapter 92, Hawaii Revised Statutes;

 

(5) Adding language requiring the Administrator of the State Procurement Office to report to the Legislature findings or recommendations, including any proposed legislation, relating to the transparency, efficiency, and compliance of the University of Hawaii for procurement of construction contracts and construction-related consultant services contracts pursuant to chapter 103D, Hawaii Revised Statutes, and improvement, if any, in adhering to the requirements of paragraph (3); and

 

(6) Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

 

As affirmed by the records of votes of the members of your Committees on Higher Education and Economic Development, Government Operations and Housing that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 114, H.D. 3, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 114, H.D. 3, S.D. 1, and be referred to the Committee on Ways and Means.

 

Respectfully submitted on behalf of the members of the Committees on Higher Education and Economic Development, Government Operations and Housing,

 

____________________________

DONOVAN M. DELA CRUZ, Chair

 

____________________________

BRIAN T. TANIGUCHI, Chair