STAND. COM. REP. NO. 1185

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  H.B. No. 985
                                        H.D. 1
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Government Operations and Housing, to
which was referred H.B. No. 985, H.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO PROCUREMENT,"

begs leave to report as follows:

     The purpose of this measure is to clarify and streamline the
Hawaii public procurement laws and process and to consolidate
procurement legislation in chapter 103, Hawaii Revised Statutes
(HRS), into chapter 103D, HRS.

     In addition, the measure deletes unnecessary or incorrect
provisions and makes other housekeeping amendments to improve the
efficiency of the procurement process.  This measure also
transfers sections 103-82 and 103-83, HRS, to chapter 103D, HRS,
relating to qualified community rehabilitation programs for
consolidation and clarity purposes.

     Testimony in support of this measure was received from
Goodwill Industries Hawaii.  Testimony in support with amendments
was received from the State Procurement Office, and Kona Krafts.
Testimony opposed to the deletion of sections 103-82 and 103-83,
HRS, relating to the Community Rehabilitation Programs was
received from Ka Lima O Maui and Research Center of Hawaii.
Testimony opposed to the section on construction and repair of
school facilities and the section on public building handicapped
accessibility was received from the Commission on Persons with
Disabilities.

 
a                                                     HB985 SD1
                                   STAND. COM. REP. NO. 1185
                                   Page 2


     Your Committee finds that the Hawaii procurement code needs
improvement and refining and that this measure will make the
State procurement process more efficient and cost-effective.

     Your Committee further finds that competitive bidding is not
implemented when a public agency procures from nonprofit
rehabilitation facilities.  This procurement process needs to be
changed with relationship to construction projects because of the
high skill level and expertise that is needed to effectively and
efficiently complete the contract.  Many rehabilitation
facilities do not have the resources to complete construction
contracts, resulting in increased costs and construction delays.

     Your Committee further finds that the Administrator of the
State Procurement Office is given the power in the procurement
code to delegate all contracting authority to procurement
officers, which in essence eliminates the need to have this
Administrator position.  Your Committee finds that the
Administrator's duties could be performed by the State
Procurement Policy Board.

     Your Committee has amended this measure, as received, by
replacing the contents with S.B. No. 1100, which is the Senate
companion measure to H.B. No. 985, with the following additional
amendments:

     (1)  Exempting the qualified community rehabilitation
          programs from the procurement of construction projects;
 
     (2)  Deleting the language from the public contract
          retainage section, "after fifty per cent of the
          contract is completed and progress is satisfactory, no
          additional sum shall be withheld"; 

     (3)  Eliminating the position of the Administrator of the
          State Procurement Office and transferring duties to the
          Procurement Policy Board; 

     (4)  Changing the contract amount that is subject to wage,
          hour, and working conditions requirements; and 

     (4)  Making technical, nonsubstantive changes for the
          purposes of clarity and style.

     Your Committee has reservations about the sections on
contract retainage and eliminating the Administrator of the State
Procurement Office.  However, this measure is being passed for
the purpose of further discussion.


 
a                                                     HB985 SD1
                                   STAND. COM. REP. NO. 1185
                                   Page 3


     As affirmed by the record of votes of the members of your
Committee on Government Operations and Housing that is attached
to this report, your Committee is in accord with the intent and
purpose of H.B. No. 985, H.D. 1, as amended herein, and
recommends that it pass Second Reading in the form attached
hereto as H.B. No. 985, H.D. 1, S.D. 1, and be referred to the
Committee on Ways and Means.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Government
                                   Operations and Housing,



                                   ______________________________
                                   ROD TAM, Chair

 
a                                                     HB985 SD1