REPORT TITLE:
Procurement Code; Exemption


DESCRIPTION:
Exempts all capital improvement project contracts valued at
$200,000 or less from the public procurement code for a 2-year
period.  Provides for review by the auditor.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           208
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT
RELATING TO PROCUREMENT.



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

 1      SECTION 1.  The legislature finds that one way to revive
 
 2 Hawaii's stagnant economy is to cut red tape to enable the
 
 3 acceleration of public spending for a limited time period.  This
 
 4 Act seeks to achieve this objective by exempting all capital
 
 5 improvement project contracts valued at $200,000 or less from the
 
 6 public procurement code for a two-year period.
 
 7      The legislature finds that this emergency measure will help
 
 8 to relax regulatory processes as they apply to the award of state
 
 9 and county capital improvement project contracts, as well as
 
10 stimulate private sector spending.  Exempting these contracts
 
11 from the procurement code will also assist in reducing time and
 
12 manpower normally allotted to capital improvement project
 
13 contract award procedures, which should result in an increase in
 
14 the number of contracts let during the two fiscal years following
 
15 the enactment of this Act.  Coupled with a per contract value
 
16 ceiling of $200,000, this Act is anticipated to result in a quick
 
17 infusion of a significant volume of money into the economy.
 
18      However, in order to provide sufficient oversight and public
 
19 accountability, this Act requires the awarding agency to file a
 
20 copy of the proposed contract with the auditor before the
 

 
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 1 contract is awarded for the auditor's review, and further
 
 2 requires the auditor to prepare and submit cumulative reports to
 
 3 the legislature regarding all contracts awarded during the two-
 
 4 year period, including a general description of the work
 
 5 undertaken, contract value, and name of the person awarded the
 
 6 contract.
 
 7      The legislature finds that this Act will help Hawaii's
 
 8 ailing construction industry and organized labor, by helping to
 
 9 place a number of skilled wage workers to work in short order,
 
10 and will cut red tape to accelerate public works spending as a
 
11 means to stimulate private sector spending.
 
12      SECTION 2.  Public procurement code; exemption for capital
 
13 improvement project contracts; auditor's review.(a)
 
14 Notwithstanding any other law to the contrary, chapter 103D,
 
15 Hawaii Revised Statutes, shall not apply to any capital
 
16 improvement project contract entered into between July 1, 1999,
 
17 and July 1, 2001, that is valued in the aggregate at $200,000 or
 
18 less.
 
19      (b)  As used in this section, "capital improvement project"
 
20 includes:
 
21      (1)  The acquisition of land, including related fees and
 
22           costs;
 
23      (2)  Construction and other improvements, including
 

 
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                                     S.B. NO.           208
                                                        
                                                        


 1           architectural and other technical fees, installing
 
 2           built-in equipment, and fixtures, including:
 
 3           (A)  Site improvements;
 
 4           (B)  Construction of buildings and other major new
 
 5                permanent improvements;
 
 6           (C)  Landscaping and beautification;
 
 7           (D)  Additions or major improvements to, or conversions
 
 8                of, existing facilities;
 
 9      (3)  Allowable equipment purchases, including:
 
10           (A)  Built-in equipment;
 
11           (B)  Initial equipment and furnishings for new
 
12                buildings necessary for the proper functioning of
 
13                the building;
 
14           (C)  Absolutely essential, non-replaceable equipment
 
15                items required over and beyond any equipment
 
16                currently in use that can be transferred into a
 
17                new building;
 
18           (D)  Common use furniture and equipment only with
 
19                explicit written prior approval department
 
20                approval and in accordance with statewide capital
 
21                improvement project policy and criteria; and
 
22      (4)  Works of art in accordance with section 103-8.5, Hawaii
 
23           Revised Statutes.
 

 
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                                     S.B. NO.           208
                                                        
                                                        


 1      "Capital improvement project" does not include:
 
 2      (1)  Items normally included in the operating budget;
 
 3      (2)  Maintenance and repair projects which do not constitute
 
 4           conversion from one type of use to another;
 
 5      (3)  Non-allowable equipment purchases; and
 
 6      (4)  Operating costs as defined in section 37-62, Hawaii
 
 7           Revised Statutes, as recurring costs of operating,
 
 8           supporting, and maintaining authorized programs.
 
 9      (c)  All capital improvement project contracts that comply
 
10 with subsection (a) shall continue in force until their
 
11 termination, notwithstanding the fact that the termination date
 
12 is later than July 1, 2001.
 
13      (d)  The purchasing agency that awards a capital improvement
 
14 project contract under this section shall file a copy of the
 
15 proposed contract with the auditor for the auditor's review
 
16 before the contract is awarded.  The auditor shall submit
 
17 comments and suggested changes to the purchasing agency prior to
 
18 the execution of the contract.
 
19      (e)  The auditor shall prepare and submit cumulative reports
 
20 to the legislature no later than twenty days before the convening
 
21 of the regular sessions of 2000, 2001, and 2002 regarding all
 
22 contracts awarded during the two-year period, including a general
 
23 description of the work undertaken pursuant to each contract, the
 

 
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                                     S.B. NO.           208
                                                        
                                                        


 1 contract value, and the name of the person awarded the contract.
 
 2      SECTION 3.  This Act shall apply to contracts entered into
 
 3 on or after the effective date of this Act.
 
 4      SECTION 4.  This Act shall take effect on July 1, 1999, and
 
 5 shall be repealed on January 31, 2002.
 
 6 
 
 7                           INTRODUCED BY:  _______________________