REPORT TITLE:
Privatization


DESCRIPTION:
Permits state or county officials to contract with private
entities to provide goods, services, or construction to be
financed by public funds when they can be provided at lower costs
and in equivalent or better quality than that which could be
provided by a government entity.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           725
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO PRIVATIZATION.



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

 1      SECTION 1.  The legislature recognizes the dynamic nature of
 
 2 social and economic conditions and the impossibility of
 
 3 foreseeing all present and future applications of legislation
 
 4 when it is enacted.  Consistent with this recognition, the
 
 5 legislature finds that the awareness and understanding of the
 
 6 concept of "privatization" was not adequate at the time the
 
 7 majority of Hawaii's civil service laws were enacted and
 
 8 application of current laws to issues surrounding privatization
 
 9 will not necessarily reflect the public policy appropriately
 
10 established by the legislature.  As a result, further action by
 
11 the legislature is essential.
 
12      In carefully considering all competing interests on
 
13 privatization, the legislature finds that the predominant
 
14 interest must be providing Hawaii's citizens with the greatest
 
15 value for their tax dollars and that all other interests, however
 
16 worthy, are necessarily subordinate.  As custodians of the public
 
17 trust, we owe our citizens the highest quality of government-
 
18 provided goods, services, and construction at the lowest possible
 
19 costs.
 

 
Page 2                                                     
                                     S.B. NO.           725
                                                        
                                                        

 
 1      The legislature finds that Hawaii's civil service law is
 
 2 intended to apply to the employment process within state and
 
 3 county governments and has no application to issues of
 
 4 privatization.  If sections 76-16 and 76-77, Hawaii Revised
 
 5 Statutes, are broadly interpreted to apply civil service law to
 
 6 anything other than employees of the State and counties, we
 
 7 create an untenable situation in which all goods, services, and
 
 8 construction for the public benefit must be evaluated on a case-
 
 9 by-case basis to determine, often arbitrarily and capriciously,
 
10 whether they are subject to civil service law.  To say that this
 
11 finding will subject the State to the "spoils system" makes a
 
12 mockery of the hard work this legislature has done in recent
 
13 years to amend Hawaii's procurement code.  The two ways
 
14 government provides goods, services, and construction to its
 
15 citizens are through civil service and procurement; and
 
16 responsible administration in both is the key to eliminating
 
17 political favoritism and inferior performance.
 
18      In establishing guidelines for privatization, the
 
19 legislature finds a lack of acceptable standards among those
 
20 commonly applied.  These include "customarily and historically
 
21 provided by civil servants", "new government programs performing
 
22 new functions", and "bad faith", all of which have little or no
 
23 relevance to properly determining whether functions and services
 

 
Page 3                                                     
                                     S.B. NO.           725
                                                        
                                                        

 
 1 should be provided by the government or private sector.  This Act
 
 2 is intended to provide clear and simple guidelines for making
 
 3 such determinations.
 
 4      SECTION 2.  The Hawaii Revised Statutes is amended by adding
 
 5 a new chapter to be appropriately designated and to read as
 
 6 follows:
 
 7                             "CHAPTER
 
 8                           PRIVATIZATION
 
 9      §   -1 Scope and application.  This chapter is intended to
 
10 preempt and supersede all other state law with regard to
 
11 determining whether goods, services, or construction, funded by
 
12 the State or any of its counties, should be provided by the
 
13 government or private sector.  After this determination is made
 
14 pursuant to this chapter, civil service and procurement laws
 
15 shall be applied, as appropriate, to implement the determination.
 
16      §   -2 Standards for determination.(a)  Notwithstanding
 
17 any law to the contrary, any state or county official in whom
 
18 appropriate authority is vested by law shall be allowed to
 
19 contract with a private entity to provide goods, services, or
 
20 construction to be financed by public funds when there is a
 
21 reasonable basis to believe that the goods, services, or
 
22 construction can be provided at lower costs and in equivalent or
 
23 better quality than what could be provided by a government
 

 
Page 4                                                     
                                     S.B. NO.           725
                                                        
                                                        

 
 1 entity.
 
 2      (b)  In the determination made pursuant to this section, the
 
 3 state or county official shall consider whether contracting with
 
 4 the private entity will jeopardize the government's ability to
 
 5 provide the goods, services, or construction in the event that
 
 6 the contract becomes unprofitable or impossible for a private
 
 7 entity to perform.
 
 8      (c)  For purposes of this chapter, a "private entity" means
 
 9 any individual, company, or organization that is not an employee
 
10 or agency within the federal, state, or county government."
 
11      SECTION 3.  This Act shall take effect upon its approval.
 
12 
 
13                           INTRODUCED BY:  _______________________
 
14