Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committees on Transportation, Military Affairs and Government Operations and Labor and Tourism and Intergovernmental Affairs, to which was referred H.B. No. 620, H.D. 2, entitled:

beg leave to report as follows:

The purposes of this measure as referred to your Committees were to establish a process of managed competition to allow the State and counties to determine whether services should be privately contracted or provided in-house, and to implement privatization of government services if managed competition is not fully implemented by December 31, 2002.

As originally introduced in the House of Representatives, this measure implemented privatization of government services without allowing for a system of managed competition.

Your Committees received testimony in support of this measure from the Honolulu Department of Human Resources, the Chair and three members of the Maui County Council, the General Contractors Association of Hawaii, and Government Efficiency Teams, Inc. Testimony in support of the original House measure was submitted by the Department of Accounting and General Services, the State Procurement Office, the Maui County Counsel, the National Federation of Independent Businesses, and the Hawaii Chamber of Commerce. Testimony in opposition was submitted by United Public Workers and Hawaii Government Employees Association.

Prior to the hearing on this measure, your Committees prepared a proposed S.D. 1 version that included House Bill No. 620, H.D. 2, and Senate Bill No. 749, S.D. 2, both in their entirety. Senate Bill No. 749, S.D. 2, defines the terms "state contractor" and "state resident" and increases the bid preference in the procurement law for state contractors.

Your Committees determined that the Senate companion measure to H.B. 620 is preferable. Therefore, your Committees amended this measure by replacing the managed competition and privatization portions with Senate Bill No. 1096, S.D. 1. Senate Bill No. 1096, S.D. 1, is substantially similar to House Bill No. 620 as originally introduced.

Your Committees retained the portions of the proposed S.D. 1 version increasing the preference for state contractors. Your Committees amended the definitions of "state resident" and "state contractor" to direct that the affidavits required under those definitions shall go to the head of the purchasing agency rather than the chief procurement officer. This amendment was recommended by the State Procurement Office.

Finally, your Committees amended this measure by amending its effective date to January 28, 2092, for the purpose of further discussion.

As affirmed by the records of votes of the members of your Committees on Transportation, Military Affairs and Government Operations and Labor and Tourism and Intergovernmental Affairs that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 620, H.D. 2, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 620, H.D. 2, S.D. 1, and be referred to the Committee on Ways and Means.