Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Transportation, Military Affairs and Government Operations, to which was referred S.B. No. 558 entitled:

begs leave to report as follows:

The purpose of this measure is to allow two-step design-build proposals to be submitted as part of the competitive sealed proposal procurement process for construction projects.

Your Committee received testimony in support of this measure from the Department of Accounting and General Services, the State Procurement Office, the American Public Works Association, the American Institute of Architects, and Associated Builders and Contractors, Inc. HSI Mechanical submitted testimony opposing this measure.

Your Committee finds that the two-step design-build process, combining design professional and construction contract services into a single contract, will often be the most efficient manner in which to approach a construction project.

For unique projects that require an innovative approach, there may be a reduced likelihood of receiving competitive sealed proposals for the design and construction phases separately. The design-build process will enable design professionals and contractors to coordinate their efforts and develop a unified plan.

Your Committee amended this measure to insert a section requiring purchasing agencies to consider many factors in evaluating offers, and to select the offer that provides the best overall value to the State.

Your Committee also amended the provisions of this measure regarding payment to unsuccessful offerors. As amended, this measure will require the purchasing agency to compensate all unsuccessful offerors who qualify as state contractors at the rate of $5,000 plus one-half per cent of the contract price. The term "state contractor" is defined within that section. Your Committee also included a provision authorizing compensation only for offerors bidding on projects with estimated construction costs of $25,000,000 or more, and set a $500,000 limit on compensation to unsuccessful offerors.

While many firms will incur sizeable expenses in preparing proposals, your Committee finds that mandating such a high rate of compensation would overburden the purchasing agencies. In cases where compensation is given, the unsuccessful offeror will still be required to allow the State to use submitted designs. In addition, since only "state contractors" will be compensated, the State will receive tangential benefits of encouraging employment of residents, and related taxes.

As affirmed by the record of votes of the members of your Committee on Transportation, Military Affairs and Government Operations that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 558, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 558, S.D. 1, and be referred to the Committee on Ways and Means.