Establishes the types of programs or projects, and the procedure by which the programs or projects, may be privatized by the state or county government, including services, by grants, subsidies, and purchases of services pursuant to chapter 42D, and incidental to purchases of goods and construction of facilties awarded under chapters 103 and 103D, which have been customarily allowed in the past and currently existing. Provides that services previously contracted under law, charter or ordinance, or under chapter 42D and chapters 103 and 103D may be certified if the contract were executed in good faith and would have been qualified and authorized under this Act.

A BILL FOR AN ACT

Relating to government.

SECTION 1. Findings and purpose. There is firmly established a heritage of public-private partnerships to provide services to the people of Hawaii to ensure that their needs are met. The State and its counties have partnered with the private sector to achieve savings and provide a variety of services to members of the general public.

The legislature has authorized numerous government contracts for services from the private sector. Without reference to the civil service laws, the legislature has provided that the several counties may establish and maintain volunteer fire stations subject to the full authority and control of each county's fire chief but staffed by uncompensated volunteers. In addition, the legislature has enacted statutes which rely on contracts with the private sector to provide public services in areas including airport concessions, minor repairs and maintenance of school facilities, and acquisition of school facilities on terms determined by the department of education and department of accounting and general services. The legislature has also authorized Government to enter public-private partnerships for community-based management of schools, and for cleaning of classrooms and the State's affordable housing projects, its federally assisted rental housing projects, its business and economic development programs, and its developer-constructed schools.

This historical backdrop of reliance on public-private partnerships to provide needed services to the public notwithstanding, the State's long-standing and continuous commitment to a civil service governed by the merit system and complemented by a vigorous collective bargaining system must also be reaffirmed.

The Hawaii Supreme Court's decision in Konno v. County of Hawaii, "emphasize[d] that nothing in this opinion should be interpreted as passing judgment, one way or the other, on the wisdom of privatization," and acknowledged that "[w]hether or not, as a policy matter, private entities should be allowed to provide public services entails a judgment ordinarily consigned to the legislature." Finding that "the civil service encompasses those services that have been customarily and historically provided by civil servants," the court concluded that absent legislative authority to obtain services from other sources, civil servants must provide these services.

The scope of public services which must in all cases be provided by civil servants is now in question because of the Konno decision. On the one hand, proponents of privatization argue that where privatization will improve efficiency and reduce the cost of government for the public good, government agencies should be able to privatize the service. On the other hand, opponents of privatization of public services argue that privatization is nothing more than a means to circumvent the rights of public employees and return to the spoils system.

The purpose of this Act is to establish a reasonable balance to accommodate the purposes of privatization without undermining merit principles. This Act recognizes that the legislature has specifically established programs or projects that can be privatized, and that many services by grants, subsidies, and purchases of services pursuant to chapter 42D, and incidental to purchase of goods, real property, and construction of facilities awarded pursuant to chapters 103 and 103D or any other law, charter or ordinance have been customrily allowed in the past and are currently existing.

This Act specifically provides that those services which are found to have been contracted out pursuant to law, charter or ordinance, or previously by custom and practice pursuant to chapter 42D, or temporary and incidental to the purchase of goods and construction of facilities pursuant to chapters 103 and 103D, may be certified if the contract was executed in good faith and would have been qualified and authorized pursuant to this Act.

SECTION 2. Chapter 103, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§103- Contract with private provider for services. Nothing in chatpers 76 and 77, and section 46-33, including the merit principles, the classification system or historical past practices shall be deemed to prevent restrict, diminish, condition, limit or otherwise qualify the authority of a department or agency of the State or a county to enter into a contract with a private provider to obtain services historically performed by persons or positions in the civil service, or functionally attributed to a government agency or program, including contracts:

SECTION 3. A department or agency of the State or a county may certify that the services obtained from a current or prior contract were obtained in good faith, prior to the effective date of this Act, under one or more of the circumstances specified in the amendment to Hawaii Revised Statutes chapter 103 made in Section 2 of this Act.

SECTION 4. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval.