THIRTIETH LEGISLATURE, 2019
STATE OF HAWAII
A BILL FOR AN ACT
RELATING TO PROCUREMENT.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that the procurement process is in need of clear legislative direction to award state contracts to responsible bidders or offerors, increase accountability with performance on state contracts, and more efficiently utilize taxpayer dollars. Some state contracts may currently be awarded to the lowest bidder through the invitation for bid process without regard to poor past performance. Such bidders may be considered qualified despite poor performance on state, federal, or private contracts in the past, which may result in repeated inefficiencies and substandard work.
The purpose of this part is to:
(1) Require that past performance be considered in future bid selection of contractors for sole source contracts and any competitive sealed bid or proposal contracts that exceeds the small purchase threshold;
(2) Require procurement officers to consider specific factors, including past performance, when making a determination of offeror responsibility; and
(3) Require procurement officers to conduct past performance evaluations at least annually and at the time the work under a contract or order is completed, and maintain the evaluations in the department's files.
SECTION 2. Section 103D-302, Hawaii Revised Statutes, is amended by amending subsection (f) to read as follows:
"(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. Past performance shall be evaluated in all bids expected to meet or exceed the small purchase threshold. 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."
SECTION 3. Section 103D-303, Hawaii Revised Statutes, is amended by amending subsection (e) to read as follows:
"(e) The request for proposals shall state the relative importance of price and other evaluation factors. Past performance shall be evaluated in all solicitations expected to meet or exceed the small purchase threshold."
SECTION 4. Section 103D-306, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) A contract may be awarded for goods, services, or construction without competition when the head of a purchasing agency determines in writing that there is only one source for the required good, service, or construction, the determination is reviewed and approved by the chief procurement officer, the written determination is posted in the manner described in rules adopted by the policy board, a review of past performance has been conducted, and no objection is outstanding. The written determination, any objection, past performance evaluations relied upon, and a written summary of the disposition of any objection shall be included in the contract file."
SECTION 5. Section 103D-310, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:
Unless the policy board, by rules,
specifies otherwise, before submitting an offer, a prospective offeror, not
less than ten calendar days prior to the day designated for opening offers,
shall give written notice of the intention to submit an offer to the
procurement officer responsible for that particular procurement.] Purchases
shall be made from, and contracts shall be awarded to, responsible prospective
Whether or not an intention to bid is
required, the] The procurement officer shall determine whether the
prospective offeror has the financial ability, satisfactory past
performance, resources, skills, capability, and business integrity
necessary to perform the work. For this
purpose, the officer, in the officer's discretion, may require any prospective
offeror to submit answers, under oath, to questions contained in a standard
form of questionnaire to be prepared by the policy board. Whenever it appears from answers to the
questionnaire or otherwise, that the prospective offeror is not fully qualified
and able to perform the intended work, a written determination of
nonresponsibility of an offeror shall be made by the head of the purchasing
agency, in accordance with rules adopted by the policy board. The unreasonable failure of an offeror to
promptly supply information in connection with an inquiry with respect to
responsibility may be grounds for a determination of nonresponsibility with
respect to [ such] the offeror.
The decision of the head of the purchasing agency shall be final unless
the offeror applies for administrative review pursuant to section
SECTION 6. Section 103D-320, Hawaii Revised Statutes, is amended to read as follows:
§103D-320[ ]] Retention of procurement records[ .];
evaluations. All procurement
records shall be retained and disposed of in accordance with chapter 94 and
records retention guidelines and schedules approved by the comptroller. Written past performance evaluations for
all procurements over the small purchase threshold shall be conducted at least
annually and at the time the work under a contract or order is completed. The past performance evaluations shall be maintained
in the department's procurement files and in the statewide past performance
SECTION 7. The purpose of this part is to form an initial procurement working group.
SECTION 8. (a) There is established the initial procurement working group, which shall be made up of procurement representatives from the state and county. The working group shall:
(1) Identify issues relating to existing procurement methods and collect data to determine the magnitude of the problem;
(2) Document existing practices and processes, including but not limited to procurement methods; preparation of solicitation documents; evaluation and basis of award, including the consideration of past performance when deemed appropriate; post award contract administration; suspension; and debarment;
(3) Identify lessons learned from case studies of projects identified as having bad contractors or subcontractors;
(4) Identify shortfalls, needs, gaps, or challenges in laws and rules, processes, knowledge, and resources;
(5) Find potential methods or mechanisms available to address the problems identified, including but not limited to the use of a past performance database, by:
(A) Examining the pros and cons of each potential method or mechanism;
(B) Determining the most promising methods or mechanisms to determine requirements for implementation, including but not limited to time, costs, and resources;
(C) Obtaining industry feedback; and
(D) Prioritizing for purposes of recommendations; and
(6) Recommend specific objective criteria to be used to evaluate the past performance of bidders in a competitive sealed bid procurement.
(b) The initial procurement working group will consist of the following members or their designees:
(1) State procurement administrator, who shall serve as chair;
(3) Attorney General;
(4) Chief information officer;
(5) University of Hawaii chief procurement officer;
(6) Department of education chief procurement officer;
(7) Director of transportation;
(8) County of Hawaii chief procurement officer;
(9) County of Maui chief procurement officer;
(10) County of Kauai chief procurement officer; and
(11) City and county of Honolulu chief procurement officer.
(c) The initial procurement working group shall submit a report of its findings and recommendations, including any proposed legislation, to the legislature no later than November 1, 2020; provided that the working group shall bring together leaders and organizations from the construction and information technology industry to review and discuss any gaps or problems with the proposed recommendations prior to finalization of the working group's recommendations to the legislature.
SECTION 9. There is appropriated out of the general revenues of the State of Hawaii the sum of $250,000 or so much thereof as may be necessary for fiscal year 2019-2020 and the same sum or so much thereof as may be necessary for fiscal year 2020-2021 for the purposes of implementing this Act; provided that the sums shall be allocated as follows:
(1) $50,000 to develop and create a statewide past performance database; and
(2) $200,000 for the outsourcing of two full-time equivalent (2.0 FTE) positions to assist with developing rules, including facilitating community and government meetings, and benchmarking analysis in determining the most fair, objective, and descriptive procedures for the State.
The sums appropriated shall be expended by the state procurement office for the purposes of this Act.
SECTION 10. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.
SECTION 11. 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 the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.
SECTION 12. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 13. This Act shall take effect on July 1, 2050; provided that sections 2, 3, and 4 shall take effect on January 1, 2050.
Procurement; Past Performance; Criteria; Source Selection; Evaluation; Initial Procurement Working Group; Appropriation
Requires procurement officers to complete past performance evaluations of contractors. Requires past performance to be considered in all sole source procurement and any competitive contracts that exceeds the small purchase threshold. Requires the development and implementation of a statewide past performance database. Requires the establishment of an initial procurement working group that will evaluate and make recommendations to the legislature about the effectiveness of existing procurement methods. Appropriates funds. Effective 7/1/2050. Requires consideration of past performance evaluations in certain procurements beginning 1/1/2050. (SD2)
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