S.B. NO.



















SECTION 1. The legislature finds that the unscrupulous practices of bid shopping and bid peddling still plague Hawaii's construction industry. The state of Washington prohibits bid shopping and bid peddling and affords subcontractors affected by those practices a legal means of redress. To further curb undesirable bid shopping and bid peddling practices in public works, the purpose of this Act is to incorporate the Washington state model into Hawaii law.

SECTION 2. Section 103D-302, Hawaii Revised Statutes, is amended to read as follows:

"103D-302 Competitive sealed bidding. (a) Contracts shall be awarded by competitive sealed bidding except as otherwise provided in section 103D-301. Awards of contracts by competitive sealed bidding may be made after single or multi-step bidding. Competitive sealed bidding does not include negotiations with bidders after the receipt and opening of bids. Award is based on the criteria set forth in the invitation for bids.

(b) An invitation for bids shall be issued, and shall include a purchase description and all contractual terms and conditions applicable to the procurement. If the invitation for bids is for construction, it shall specify that all bids include the name of each person or firm to be engaged by the bidder as a joint contractor or subcontractor in the performance of the contract and the nature and scope of the work to be performed by each. Construction bids that do not comply with this requirement may be accepted if acceptance is in the best interest of the State and the value of the work to be performed by the joint contractor or subcontractor is equal to or less than one per cent of the total bid amount.

(c) Adequate public notice of the invitation for bids shall be given a reasonable time before the date set forth in the invitation for the opening of bids. The policy board shall adopt rules which specify:

(1) The form that the notice is to take;

(2) What constitutes a reasonable interim between publication and bid opening; and

(3) How notice may be published, including publication in a newspaper of general circulation, notice by mail to all persons on any applicable bidders mailing list, publication by any public or private telecommunication information network, or any other method of publication it deems to be effective.

(d) Bids shall be opened publicly in the presence of one or more witnesses, at the time and place designated in the invitation for bids. The amount of each bid and other relevant information specified by rule, together with the name of each bidder shall be recorded. The record and each bid shall be open to public inspection.

(e) Bids shall be unconditionally accepted without alteration or correction, except as authorized in this chapter or by rules adopted by the policy board.

(f) Bids shall be evaluated based on the requirements set forth in the invitation for bids. These requirements may include criteria to determine acceptability such as inspection, testing, quality, workmanship, delivery, and suitability for a particular purpose. Those criteria that will affect the bid price and be considered in evaluation for award shall be objectively measurable, such as discounts, transportation costs, and total or life cycle costs. The invitation for bids shall set forth the evaluation criteria to be used. No criteria may be used in bid evaluation that are not set forth in the invitation for bids.

(g) Correction or withdrawal of inadvertently erroneous bids before or after award, or cancellation of invitations for bids, awards, or contracts based on such bid mistakes, shall be permitted in accordance with rules adopted by the policy board. After bid opening no changes in bid prices or other provisions of bids prejudicial to the interest of the public or to fair competition shall be permitted. Except as otherwise provided by rule, all decisions to permit the correction or withdrawal of bids, or to cancel awards or contracts based on bid mistakes, shall be supported by a written determination made by the chief procurement officer or head of a purchasing agency.

(h) The substitution of a listed subcontractor in furtherance of bid shopping or bid peddling before or after the award of the prime contract shall be prohibited, and the originally listed subcontractor may recover monetary damages from the prime contractor who executed a contract with the public entity and the substituted subcontractor, but not from the public entity inviting the bid. It is the prime contractor or substituted subcontractor's burden to prove by a preponderance of the evidence that bid shopping or bid peddling did not occur. Substitution of a listed subcontractor may be made by the prime contractor for the following reasons:

(1) Refusal of the listed subcontractor to sign a contract with the prime contractor;

(2) Bankruptcy or insolvency of the listed subcontractor;

(3) Inability of the listed subcontractor to perform the requirements of the proposed contract or the project;

(4) Inability of the listed subcontractor to obtain the necessary license, bonding, insurance, or other statutory requirements to perform the work detailed in the contract; or

(5) The listed subcontractor is barred from participating in the project as a result of a court order or summary judgment.

As used in this subsection:

"Bid peddling" means attempts by a subcontractor to undercut known bids submitted to the prime contractor to procure a job.

"Bid shopping" means the use of a low bid already received by the prime contractor to pressure other subcontractors into submitting even lower bids.

[(h)] (i) The contract shall be awarded with reasonable promptness by written notice to the lowest responsible and responsive bidder whose bid meets the requirements and criteria set forth in the invitation for bids. In the event all bids exceed available funds as certified by the appropriate fiscal officer, the head of the purchasing agency responsible for the procurement in question is authorized in situations where time or economic considerations preclude resolicitation of work of a reduced scope to negotiate an adjustment of the bid price, including changes in the bid requirements, with the low responsible and responsive bidder, in order to bring the bid within the amount of available funds.

[(i)] (j) When it is not practicable to initially prepare a purchase description to support an award based on price, an invitation for bids, which requests the submission of unpriced offers to be followed by an invitation for bids limited to those bidders whose offers have been qualified under the criteria set forth in the first solicitation, may be used. If a multi-step sealed bidding process is used, the notice and the invitation for bids shall describe each step to be used in soliciting, evaluating, and selecting unpriced offers."

SECTION 4. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect upon its approval.







Report Title:

Procurement; Bid Shopping; Bid Peddling



Prohibits bid shopping and bid peddling for the competitive sealed bidding process.




The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.