REPORT TITLE:
Privatization; State Parks


DESCRIPTION:
Provides for the privatization of state park services, including
operation, maintenance, administration, and management, through
competitive contracting between private companies, the department
of land and natural resources, and other governmental entities,
on a park-by-park basis.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                            1901        
HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO STATE PARKS.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  The legislature finds that increasing
 
 2 competition in government is one important way to increase
 
 3 government efficiency.  Competition improves performance and
 
 4 keeps costs down.  The time has come for the public to ask
 
 5 whether government is providing services that are, and should
 
 6 more appropriately be, provided by the private sector.  Private
 
 7 companies have been used effectively under competitive contracts
 
 8 to provide public services at lower costs and with lower annual
 
 9 cost increases in most states.
 
10      Competitive contracting brings more responsive government.
 
11 The public determines what services should be purchased and the
 
12 specifications that should apply to the service.  The competitive
 
13 market responds to the invitation of the government agency, and
 
14 one or more service providers are selected to provide a specific
 
15 service for a period of time.  Government retains policy control
 
16 and financial scrutiny over the service, while the competitive
 
17 market supplies the service.
 
18      The legislature finds that the operation and management of
 
19 the state parks by the department of land and natural resources
 

 
Page 2                                         1901        
                                     H.B. NO.           
                                                        
                                                        


 1 has become increasingly costly and inefficient, in part because
 
 2 of budget cutbacks.  The legislature further finds that the
 
 3 participation of the private sector through competitive
 
 4 contracting will help to provide comparable or better quality
 
 5 state park services for significantly less than what the State
 
 6 presently spends.
 
 7      Accordingly, the purpose of this Act is to allow the private
 
 8 sector or the department of land and natural resources, or both,
 
 9 to operate and manage the state parks in the most efficient and
 
10 cost-effective manner possible.  This Act further provides that
 
11 any private contractor that operates or manages a state park
 
12 under this Act assumes all liability arising under a contract
 
13 entered into pursuant to this Act.  The legislature finds that
 
14 competitive contracting of state park services will save the
 
15 State money, provide jobs to the public, expand the current tax
 
16 base, and provide better service to the public.
 
17      SECTION 2.  Section 26-15, Hawaii Revised Statutes, is
 
18 amended by amending subsection (b) to read as follows:
 
19      "(b)  The department shall manage and administer the public
 
20 lands of the State and minerals thereon and all water and coastal
 
21 areas of the State except the commercial harbor areas of the
 
22 State, including the soil conservation function, the forests and
 
23 forest reserves, aquatic life, wildlife resources, state parks,
 

 
Page 3                                         1901        
                                     H.B. NO.           
                                                        
                                                        


 1 including historic sites, and all activities thereon and therein
 
 2 including, but not limited to, boating, ocean recreation, and
 
 3 coastal areas programs[.]; provided that the management and
 
 4 administration of state parks shall be provided in accordance
 
 5 with the competitive contracting provisions under chapter 184,
 
 6 part    ."
 
 7      SECTION 3.  Section 27-32, Hawaii Revised Statutes, is
 
 8 amended to read as follows:
 
 9      "§27-32  Maintenance of state parks.  Notwithstanding any
 
10 law to the contrary, the governor may enter into contracts with
 
11 the several counties for their services in the repair,
 
12 maintenance, and operation of the buildings and grounds of state
 
13 parks and historical sites[.] in accordance with the competitive
 
14 contracting provisions under chapter 184, part    .  In addition
 
15 [thereto], the governor may transfer functions covered [herein,]
 
16 in this section, or any portion thereof, to the several counties;
 
17 provided that any transfer of functions made under this
 
18 authorization shall be temporary and shall be subject to the
 
19 express approval of the next succeeding legislature."
 
20      SECTION 4.  Section 171-3, Hawaii Revised Statutes, is
 
21 amended to read as follows:
 
22      "§171-3  Department of land and natural resources.  The
 
23 department of land and natural resources shall be headed by an
 

 
Page 4                                         1901        
                                     H.B. NO.           
                                                        
                                                        


 1 executive board to be known as the board of land and natural
 
 2 resources.  The department shall manage, administer, and exercise
 
 3 control over public lands, the water resources, ocean waters,
 
 4 navigable streams, coastal areas (excluding commercial harbor
 
 5 areas), and minerals and all other interests therein and exercise
 
 6 such powers of disposition thereof as may be authorized by law.
 
 7 The department shall also manage and administer the state parks,
 
 8 historical sites, forests, forest reserves, aquatic life, aquatic
 
 9 life sanctuaries, public fishing areas, boating, ocean
 
10 recreation, coastal programs, wildlife, wildlife sanctuaries,
 
11 game management areas, public hunting areas, natural area
 
12 reserves, and other functions assigned by law[.]; provided that
 
13 the management and administration of state parks shall be
 
14 provided in accordance with the competitive contracting
 
15 provisions under chapter 184, part    ."
 
16      SECTION 5.  Chapter 184, Hawaii Revised Statutes, is amended
 
17 by adding a new part to be appropriately designated and to read
 
18 as follows:
 
19     "PART .  COMPETITIVE CONTRACTING OF STATE PARK SERVICES
 
20      §184-A  Definitions.  The following terms, whenever used or
 
21 referred to in this part, shall have the following meanings,
 
22 unless the context clearly requires a different meaning:
 
23      "Attributable fully allocated cost" means the operating and
 

 
Page 5                                         1901        
                                     H.B. NO.           
                                                        
                                                        


 1 capital costs of public services including direct, indirect, and
 
 2 allocated costs minus the cost of any function not to be
 
 3 competitively contracted.
 
 4      "Department" means the department of land and natural
 
 5 resources.
 
 6      "Government entity" means the governments of the State or
 
 7 counties or any public body corporate and politic.
 
 8      "Make or buy analysis" means a periodic analysis in which
 
 9 the costs of providing a public good or service are compared to
 
10 the costs of producing it by a private vendor.  The process
 
11 assumes the true costs of publicly and privately providing
 
12 comparable public goods or services are compared.
 
13      "Petition of interest" means a good faith petition by a
 
14 private provider indicating an interest in providing a public
 
15 good or service under contract to a government entity at a cost
 
16 less than that if provided by the government entity.
 
17      "Public goods and services" means any product or service
 
18 produced by a government entity under its public authority and
 
19 any product or service supportive of or ancillary to the
 
20 functions of the government entity.  "Public services"
 
21 specifically includes the repair, operation, management,
 
22 administration, and maintenance of the buildings and grounds of
 
23 state parks, including historic sites, but does not include
 

 
Page 6                                         1901        
                                     H.B. NO.           
                                                        
                                                        


 1 conservation and resource enforcement under section 199-3.
 
 2      "State park" means any park or parkway in the state park
 
 3 system, as defined in section 184-1, including historic sites as
 
 4 applicable.
 
 5      §184-B  Competitive contracting.(a)  On an annual basis,
 
 6 the department shall perform a make or buy analysis covering
 
 7 public goods or services with respect to the state parks under
 
 8 its control.  The annual make or buy analysis shall be limited to
 
 9 public goods or services for state parks not currently provided
 
10 through make or buy analysis under this section.
 
11      (b)  In addition to the routine make or buy analysis
 
12 requirement in subsection (a), the department shall perform a
 
13 make or buy analysis covering any state park for which it has
 
14 received a qualifying petition of interest from a private company
 
15 pursuant to section 184-D.  No more than one make or buy analysis
 
16 shall be required for a particular state park within a one-year
 
17 period.
 
18      (c)  The department shall retain full control of service
 
19 quantities, service specifications, standards and any other
 
20 matters demonstrably related to the delivery of the particular
 
21 public good or service in a manner consistent with the public
 
22 interest.
 
23      (d)  The department shall fully comply with this section as
 

 
Page 7                                         1901        
                                     H.B. NO.           
                                                        
                                                        


 1 soon as practicable, but shall in any case be in full compliance
 
 2 with its provisions within one year of enactment.
 
 3      §184-C  Free enterprise participation process.(a)  The
 
 4 department shall establish a free enterprise participation
 
 5 process, including:
 
 6      (1)  Maintenance of a list of interested proposers, which
 
 7           shall include all organizations that have requested
 
 8           inclusion on the list.  The department shall advertise
 
 9           for additions to the list at least annually;
 
10      (2)  Distribution to companies on the mailing list of
 
11           notices specifying dates and deadlines with respect to
 
12           the routine make or buy analysis and annual deadlines
 
13           for submittal of petitions of interest from private
 
14           companies; and
 
15      (3)  A department appeal process covering petitions of
 
16           interest and requests for proposals.
 
17      (b)  The free enterprise participation process shall seek
 
18 the widest possible participation of interested private companies
 
19 in the production of public goods and services.
 
20      §184-D  Petitions of interest.(a)  Private companies
 
21 interested in providing public goods or services under this part
 
22 may file petitions of interest subject to the free enterprise
 
23 participation process of the department.
 

 
Page 8                                         1901        
                                     H.B. NO.           
                                                        
                                                        


 1      (b)  Petitions of interest shall include:
 
 2      (1)  A description of the public service that the private
 
 3           company would like to provide;
 
 4      (2)  A statement that the private company believes that it
 
 5           can provide the same public service, under contract to
 
 6           the department, for a lower cost than the present cost;
 
 7      (3)  A description of the private company's financial
 
 8           capacity to provide the public service; and
 
 9      (4)  A description of the private company's technical
 
10           ability to provide the public good or service,
 
11           especially evidenced by identical, similar, or relevant
 
12           services provided by the company, whether under public
 
13           sponsorship or not.
 
14      (c)  Within ninety days the department shall determine
 
15 whether there is sufficient reason to believe that the private
 
16 company has the financial and technical ability to provide the
 
17 public good or service.
 
18      (d)  The department shall make one of two findings with
 
19 respect to the petition of interest:
 
20      (1)  Certify the petition if the private company has
 
21           sufficient financial and technical ability to provide
 
22           the public good or service; or
 
23      (2)  Deny the petition if the private company has
 

 
Page 9                                         1901        
                                     H.B. NO.           
                                                        
                                                        


 1           insufficient financial or technical ability, or both,
 
 2           to provide the public good or service.
 
 3 The department shall state its justification for this finding.
 
 4 However, if the department has scheduled an immediate make or buy
 
 5 analysis for substantially the same public good or service
 
 6 specified in the petition of interest, it shall notify the
 
 7 petitioner that such an analysis has been scheduled, without
 
 8 making a finding on the petition.
 
 9      (e)  If the department certifies the petition, the
 
10 department shall undertake a make or buy analysis with respect to
 
11 the public good or service specified in the petition, at the
 
12 first possible opportunity within its schedule adopted under its
 
13 free enterprise participation process.
 
14      §184-E  Make or buy analysis and contracts.(a)  The make
 
15 or buy analysis shall be performed through the issuance and
 
16 evaluation of requests for proposals from private companies
 
17 solicited pursuant to chapter 103D, except as otherwise provided
 
18 in this part.
 
19      (b)  The department shall seek the widest reasonable
 
20 distribution of each request for proposals, and at a minimum
 
21 shall send each request for proposals to each organization on the
 
22 interested proposers list and to each additional organization
 
23 that requests the specific request for proposals.  The department
 

 
Page 10                                        1901        
                                     H.B. NO.           
                                                        
                                                        


 1 shall advertise each request for proposals within ten days of
 
 2 issuance.  Proposals submission shall be required no sooner than
 
 3 forty-five days after the request for proposals advertisement
 
 4 date.  A request for proposals shall clearly specify the public
 
 5 services to be procured and include a draft contract.  The
 
 6 department may submit its own proposal in response to the request
 
 7 for proposals, subject to the terms and conditions later
 
 8 specified.
 
 9      (c)  The department shall award the contract to the private
 
10 company or government entity whose proposal is responsive,
 
11 responsible, and offers the lowest cost.
 
12      (d)  Any public good or service operated under competitive
 
13 proposals on the effective date of this section or thereafter
 
14 shall be subject to a new competitive proposal at least every
 
15 five years.  Renewal options that extend a contract beyond five
 
16 years shall be prohibited.
 
17      (e)  In no case shall a public good or service operated
 
18 under a competitive proposal be returned to operation not subject
 
19 to a competitive proposal.
 
20      (f)  The department shall not establish or impose any
 
21 requirement relating to salaries, wages, benefits, or labor union
 
22 representation, staffing levels, work rules, or other conditions
 
23 of employment of private company employees.  All contractors
 

 
Page 11                                        1901        
                                     H.B. NO.           
                                                        
                                                        


 1 shall comply with applicable federal and state labor laws.
 
 2      (g)  The department shall make capital facilities and
 
 3 equipment available for operation under competitive proposals by
 
 4 private companies to the maximum extent feasible, subject to
 
 5 supervision of the department.  Capital facilities and equipment
 
 6 shall be denied use by private contractors only if they would
 
 7 similarly be denied use by the department itself if it were
 
 8 awarded the contract.
 
 9      (h)  All contract prices shall be competitively determined
 
10 through a request for proposals.  No change in contract payment
 
11 amount to a private contractor or government entity shall be made
 
12 except as specified in the contract.  Payment changes in a
 
13 contract shall be limited to indices, escalators, deflators,
 
14 changes in service level, and other expressly stated or
 
15 calculable amounts, consistent with the request for proposals and
 
16 the proposal of the private contractor or government entity
 
17 awarded the contract.
 
18      (i)  The department may execute interim standby competitive
 
19 contracts with one or more private contractors to provide any
 
20 public good or service on an interim basis in the event that the
 
21 department is required to do so by the public welfare.  Any
 
22 public good or service operated under a standby contract shall be
 
23 subject to competitive proposal within six months of the standby
 

 
Page 12                                        1901        
                                     H.B. NO.           
                                                        
                                                        


 1 contract service award.
 
 2      (j)  The department shall not make or be bound by any
 
 3 contract, agreement, or assurance that restricts its ability to
 
 4 comply with this part in any respect.
 
 5      §184-F  Internal government entity proposals.  A government
 
 6 entity may compete to provide the public good or service
 
 7 subjected to make or buy analysis by submitting its own proposal,
 
 8 provided that the government entity:
 
 9      (1)  Must submit a sealed proposal three days before the
 
10           advertised deadline for proposals and may not alter the
 
11           proposal after that deadline.  The proposal shall be
 
12           publicly opened and made public at the deadline;
 
13      (2)  With regard to any labor provision assumed in the
 
14           proposal, shall either specify the provision in
 
15           currently effective labor contracts or execute it
 
16           before the proposal deadline in a written and binding
 
17           agreement between the government entity and the
 
18           appropriate labor organization;
 
19      (3)  Shall take reasonable steps to ensure an objective and
 
20           fair evaluation process including prohibition of
 
21           proposal evaluation participation by personnel or
 
22           departments that were involved in preparing the
 
23           government entity's proposal;
 

 
Page 13                                        1901        
                                     H.B. NO.           
                                                        
                                                        


 1      (4)  Shall set its proposal price not less than its
 
 2           attributable fully allocated cost for the service, and
 
 3           shall not base its proposal price on part-time labor
 
 4           provisions or other less costly labor provisions to a
 
 5           greater percentage than those provisions are employed
 
 6           in comparable positions within the government entity.
 
 7           Its proposal price shall be consistent with currently
 
 8           adopted budgets and financial plans;
 
 9      (5)  Shall not make or be bound by any contract, agreement,
 
10           or assurance which creates or extends any form of
 
11           obligation for continued employment or employee
 
12           compensation, except for pensions, beyond the contract
 
13           expiration date under the request for proposals for
 
14           employees assigned to the service;
 
15      (6)  Shall be bound by the same terms, conditions, and
 
16           performance and other standards that would have applied
 
17           to a private provider awarded the contract under the
 
18           request for proposals; and
 
19      (7)  Shall not increase its costs at any point during the
 
20           contract period by an amount greater than that
 
21           specified for the corresponding period in the
 
22           government entity's proposal.  If the government
 
23           entity's cost performance is not in compliance with
 

 
Page 14                                        1901        
                                     H.B. NO.           
                                                        
                                                        


 1           this provision, the government entity shall issue a new
 
 2           request for proposals for the public good or service
 
 3           within ninety days.
 
 4      §184-G  Liability and sovereign immunity.(a)  The
 
 5 contractor shall assume all liability arising under a contract
 
 6 entered into pursuant to this part.
 
 7      (b)  The sovereign immunity of the State shall not extend to
 
 8 the contractor.  Neither the contractor nor the insurer of the
 
 9 contractor may plead the defense of sovereign immunity in any
 
10 action arising out of the performance of the contract.
 
11      (c)  Nothing in this part shall be construed to accord to
 
12 any private provider of public goods or services under this part
 
13 or to a member of the public third party beneficiary status.
 
14      §184-H  Insurance.(a)  The contractor shall provide an
 
15 adequate plan of insurance, as determined by an independent risk
 
16 management or actuarial firm with demonstrated experience in
 
17 public liability for state governments.  In determining the
 
18 adequacy of the plan, the firm shall determine whether the
 
19 insurance is adequate to:
 
20      (1)  Fully indemnify the State from actions by third parties
 
21           against the contractor or the State as a result of the
 
22           contract;
 
23      (2)  Assure the contractor's ability to fulfill its contract
 

 
Page 15                                        1901        
                                     H.B. NO.           
                                                        
                                                        


 1           in all respects and to assure that the contractor is
 
 2           not limited in this ability due to financial liability
 
 3           that results from judgments;
 
 4      (3)  Protect the State against claims arising as the result
 
 5           of any occurrence during the term of the contract on an
 
 6           occurrence basis; and
 
 7      (4)  Satisfy other requirements specified by the independent
 
 8           risk management or actuarial firm.
 
 9      §184-I  Termination of contract and resumption of control.
 
10 (a)  The department or contracting government entity, upon
 
11 demonstration that a breach of contract has occurred and that
 
12 after the passage of a reasonable period of time the breach has
 
13 not been cured, without penalty to the contracting government
 
14 entity, may cancel a contract to operate or manage any public
 
15 good or service under this part at any time upon giving a six-
 
16 month written notice.
 
17      (b)  Notwithstanding any other provision in this part to the
 
18 contrary, prior to entering into a contract for the provision of
 
19 any public good or service, a plan shall be developed by the
 
20 contractor and approved by the contracting governmental entity
 
21 establishing the method by which the state will resume control of
 
22 the public good or service upon contract termination.
 
23      (c)  Any contract entered into under this part shall provide
 

 
Page 16                                        1901        
                                     H.B. NO.           
                                                        
                                                        


 1 that upon declaration by executive order of the governor of any
 
 2 material breach of contract on the part of the private
 
 3 contractor, the department, if necessary, may assume immediate
 
 4 temporary control of the operation of the public good or service
 
 5 under this part.
 
 6      §184-J  Rulemaking authority.  The department shall adopt
 
 7 rules necessary to carry out this part."
 
 8      SECTION 6.  All contracts entered into under statutes or
 
 9 portions of statutes amended by this Act shall continue to be
 
10 honored until their termination.  The provisions of this Act
 
11 shall not be applied so as to impair any contract existing as of
 
12 the effective date of this Act or to otherwise be deemed to
 
13 violate either the Hawaii Constitution or Article I, section 10,
 
14 of the United States Constitution.
 
15      SECTION 7.  In codifying the new part added to chapter 184,
 
16 Hawaii Revised Statutes, by section 5 of this Act, the revisor of
 
17 statutes shall substitute appropriate section numbers for letters
 
18 used in the designation of new sections in that part.
 
19      SECTION 8.  Statutory material to be repealed is bracketed.
 
20 New statutory material is underscored.
 
21      SECTION 9.  This Act shall take effect upon its approval.
 
22 
 
23                              INTRODUCED BY:______________________
 

 
Page 17                                        1901        
                                     H.B. NO.           
                                                        
                                                        


 1