STAND. COM. REP. NO. 3006

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  H.B. No. 2088
                                        H.D. 1
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Government Operations and Housing, to
which was referred H.B. No. 2088, 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 ensure that contracts
awarded under Chapter 103D, Hawaii Revised Statutes, are those
that best serve the State.

     Specifically, the measure amends Chapter 103D, Hawaii
Revised Statutes, by:

     (1)  Requiring that when contracts are awarded in high
          capitalization industries and other industries where
          contract awards have a substantial effect on
          competition in the marketplace, the evaluation of bids
          must include consideration of the effect on costs,
          availability, and quality of the goods and services
          provided under the contract; and

     (2)  Allowing a contract to be awarded to an offeror other
          than the lowest bidder.

     Testimony in opposition to the measure as received by your
Committee was received from the Hawaii Construction Coalition and
a private citizen.


 
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     While your Committee believes that the purpose of the
measure is important, it also believes that preventing any
negative impacts from questionable contributions provided by
contractors competing for state contracts to specific political
offices requires more immediate attention.

     In light of this belief, your Committee has amended the
measure by deleting its substance and inserting therefor,
provisions of a proposed S.D.1 which prohibits persons who make
contributions to candidates for the office of the governor,
lieutenant governor, mayor, or the county council, or to a
political action committee or political party, from receiving
state contracts under Sections 103D-303 and 103D-304, Hawaii
Revised Statutes.

     Testimony in support of the proposed S.D.1 was received from
the Campaign Spending Commission, the Hawaii School Bus
Association, and Common Cause Hawaii.  The Department of
Accounting and General Services opposed the proposed S.D.1.

     Your Committee finds that disallowing persons who make
contributions to high ranking elected officials removes the
perceived taint of politics from the procurement process and
provides the general public with more reasons to trust their
elected officials, government, and the electoral process in
general.

     Your Committee has amended the proposed S.D.1 by clarifying
that:

     (1)  Persons who contribute to the governor, lieutenant
          governor, or any mayor, county council member, non-
          candidate committee, or political party shall be
          prohibited from receiving state contracts under
          sections 103D-303 and 103D-304, Hawaii Revised
          Statutes;

     (2)  Adding enforcement and penalty provisions for violating
          the provisions set forth in the proposed S.D.1.

     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. 2088, H.D. 1, as amended herein, and
recommends that it pass Second Reading in the form attached
hereto as H.B. No. 2088, H.D. 1, S.D. 1, and be referred to the
Committee on Ways and Means.


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



                                   ______________________________
                                   ROD TAM, Chair

 
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