STAND. COM. REP. NO. 1603

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  H.B. No. 985
                                        H.D. 1
                                        S.D. 2




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

Sir:

     Your Committee on Ways and Means, to which was referred H.B.
No. 985, H.D. 1, S.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 Statues
(HRS), into chapter 103D, HRS.

     In addition, this measure deletes unnecessary or incorrect
provisions and makes other housekeeping amendments to improve the
efficiency of the procurement process.  This measure also: 

     (1)  Provides that pursuant to county charter, the managers
          or chief engineers of the respective county water
          supply authorities are the designated chief procurement
          officers;

     (2)  Repeals the language from the public contract retainage
          section stating, "after fifty per cent of the contract
          is completed and progress is satisfactory, no
          additional sum shall be withheld"; 

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

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

     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 the procurement code
currently precludes community rehabilitation programs in
construction projects.  Your Committee has considerable concerns
with this language and finds that further discussion and
clarification is needed on this issue in order to ensure that the
procurement code complies with federal law.  

     Your Committee has amended this measure by incorporating the
suggestions of the State Procurement Office.  More specifically,
the amendments:

     (1)  Delete the repeal of the language in the public
          contract retainage section stating, "after fifty per
          cent of the contract is completed and progress is
          satisfactory, no additional sum shall be withheld"; 

     (2)  Delete the elimination of the position of the
          Administrator of the State Procurement Office and
          transfer of duties to the Procurement Policy Board; 

     (3)  Delete the provision that changes the contract amount
          that is subject to wage, hour, and working conditions
          requirements; 

     (4)  Delete the language from the qualified community
          rehabilitation program for goods and services stating,
          "this section shall not apply to the procurement of
          construction, as defined in 103D-104", and replaces it
          with language that limits a qualified community
          rehabilitation program to "sell only goods or services,
          including building custodial and grounds maintenance
          services, to a governmental body"; and

     (5)  Make technical, nonsubstantive changes for clarity and
          style.

     Your Committee, at the hearing, expressed concern over the
provision in the measure that deletes the section of the
procurement code on conflicts of interest.  Subsequently,
however, your Committee was apprised that section 84-15, Hawaii
Revised Statutes, adequately addresses this issue.  Therefore,

 
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the provision being deleted is an unnecessary, duplicative
provision in the procurement code.

     As affirmed by the record of votes of the members of your
Committee on Ways and Means that is attached to this report, your
Committee is in accord with the intent and purpose of H.B.
No. 985, H.D. 1, S.D. 1, as amended herein, and recommends that
it pass Third Reading in the form attached hereto as H.B.
No. 985, H.D. 1, S.D. 2.

                                 Respectfully submitted on behalf
                                 of the members of the Committee
                                 on Ways and Means,



                                 ________________________________
                                 CAROL FUKUNAGA, Co-Chair



                                 ________________________________
                                 ANDREW LEVIN, Co-Chair

 
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