Amends the public procurement code to require certain small purchases with an estimated total cost that is at least $5,000 but less than $25,000 to be advertised on an internet website. Allows bidders to submit bids for each such project by e-mail to the purchasing agency.

A BILL FOR AN ACT

SECTION 1. The legislature finds that there is a need to reform the public procurement of small purchases.

The legislature finds that the public procurement code currently provides that procurements of less than $25,000 for goods, services, or construction are to be made in accordance with procedures set forth in rules adopted by the procurement policy board that are designed to ensure administrative simplicity and as much competition as is practicable.

Pursuant to rules adopted by the policy board, sections 3-122-75 and 3-122-76, Hawaii Administrative Rules, the procurement of small purchases is generally divided into the following three categories:

For categories (2) and (3), construction projects are awarded to the vendor submitting the lowest quotation, while goods and services contracts are awarded to the vendor with the most advantageous quotation, considering all factors including quality, warranty, and delivery.

The problem is that there are no procedures that require agencies to contact all eligible vendors to submit quotations for small purchases. There are also no procedures requiring agencies to maintain bidders lists to inform potential bidders of upcoming projects.

While the publication of notices for small purchases may be cumbersome and may defeat the very purpose of small purchases, the legislature finds that there could be great unfairness if the purchasing agency does not rotate who it calls to obtain quotations. Consequently, many small vendors are left out of the bidding process because they do not have a fair chance to provide services on small projects, simply because the agency may not be familiar with particular vendors. The legislature further finds that this is a matter of concern to state and county agencies that are not assured of obtaining the best possible price for construction, goods, or services.

In order to establish a more level playing field for small vendors to bid on small purchases without resorting to a more cumbersome bidding process, the purpose of this Act is to require purchasing agencies to advertise on their internet websites, or on an alternate website if the agency does not have a website, those expenditures with an estimated total cost that is at least $5,000 but less than $25,000, and to invite bidders to submit bids for each such project by e-mail to the purchasing agency. This will give small vendors notice of upcoming small purchases, and allow them to submit bids, without resorting to a full-blown bidding process.

SECTION 2. Section 103D-305, Hawaii Revised Statutes, is amended to read as follows:

"§103D-305 Small purchases; prohibition against parceling[.]; advertisement of projects on the internet. Procurements of less than $25,000 for goods, services, or construction shall be made in accordance with procedures set forth in rules adopted by the policy board that are designed to ensure administrative simplicity and as much competition as is practicable; provided that [multiple]:

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval.