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. 749 entitled:

begs leave to report as follows:

The purpose of this measure is to provide a preference in the procurement code for state residents and state contractors bidding on state contracts, and to define those terms.

Your Committee received testimony in support of this measure from the Department of Transportation, the Department of Accounting and General Services, and seven private contracting companies. The State Procurement Office submitted written testimony expressing reservations on the measure, but at the hearing, the office orally deferred to the favorable position taken by the Department of Accounting and General Services. The Associated Builders and Contractors, Inc., submitted testimony in opposition.

Your Committee agrees that state construction projects should be awarded to state residents and companies that employ primarily state residents. By using local residents for public projects whenever possible, the economy of the State will benefit in many ways.

The Department of Accounting and General Services and the State Procurement Office each expressed concern over the administrative burden of checking the residence of each offeror's employees.

Based on that concern, your Committee amended this measure to insert into the definitions of "state resident" and "state contractor" a requirement that the person submit an affidavit, under penalty of perjury, attesting that the person meets the residence criteria. Perjury is a class C felony.

Your Committee also inserted a provision prohibiting contractors who do not comply with this measure from bidding on a state public contract for a period of five years. Your Committee intends that the construction industry will take an active role in policing its members, and will assist the procurement office in enforcing the provisions of this measure.

Your Committee also amended the provision requiring the comptroller to submit a report to the legislature regarding this preference structure. As amended, the comptroller shall report prior to the 2007 session, rather than the 2003 session.

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. 749, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 749, S.D. 1, and be referred to the Committee on Ways and Means.