STAND. COM. REP. 480

Honolulu, Hawaii

, 2003

RE: H.B. No. 1103

H.D. 1

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Consumer Protection and Commerce, to which was referred H.B. No. 1103 entitled:

"A BILL FOR AN ACT RELATING TO PROCUREMENT,"

begs leave to report as follows:

The purpose of this bill is to ensure fairness and openness in the procurement process by:

(1) Requiring the Procurement Policy Board to support small businesses through set-asides and the establishment of large contract evaluation criteria that encourage the use of small business subcontractors;

(2) Mandating the establishment of a Hawaii Procurement Institute in cooperation with the University of Hawaii law school, to among other things, improve the procurement laws and provide education and training for Hawaii's contractors;

(3) Repealing the requirement that a competitive sealed bid on construction be disqualified for being in noncompliance if it omits a subcontractor performing work that is more than one percent of the contract price, and giving the agency the discretion to accept these bids;

(4) Providing the purchasing agency greater flexibility in designating members of:

(A) The review committee that reviews qualifications of persons desiring to be listed for professional services contracts; and

(B) The screening committee, renamed the selection committee, that selects three finalists for professional services contracts;

(5) Authorizing the selection committee rather than the head of the purchasing agency to rank the three applicants selected, and thus select the first person to be offered the contract;

(6) Requiring that only those professional contracts in excess of $25,000 be posted electronically for a year;

(7) Providing that unsuccessful applicants for competitive sealed proposals and professional services contracts may request a debriefing from the chief procurement officer and file a protest within three days after the debriefing;

(8) Adding contracts for construction valued at less than $500,000 to the types of contracts that an agency may enter into with a qualified community rehabilitation program (QRP) without advertising or calling for bids; and

(9) Authorizing a preference for QRPs that submit a proposal to provide construction valued at less than $500,000.

Testimony in support of this bill was provided by the Department of Accounting and General Services (DAGS) and American Society of Civil Engineers. American Council of Engineering Companies of Hawaii supported the intent of this bill.

Testimony in opposition to the bill was provided by the Iron Workers Stabilization Fund. Testimony in opposition to section 4 of the bill was submitted by Plumbers and Fitters Local 675, Plumbing and Mechanical Contractors Association of Hawaii, and Sheet Metal Contractors Association.

Comments were received from the State Procurement Office, American Public Works Association, Hawaii Construction Industry Association, Associated Builders and Contractors, Hawaii Chapter, Inc., Subcontractors Association of Hawaii, American Institute of Architects, Iron Workers Union, Local 625, and Pacific Resource Partnership and Pacific Structural Consultants, Inc.

Your Committee finds that the amendments made by this bill, including the set asides and preferences for small business and qualified rehabilitation programs, have the potential to improve government's procurement practices. However, your Committee finds that it is unclear what groups will be positively or negatively affected by the small business set-asides and preferences under the bill's small business provisions. In addition, your Committee questions whether other, similar groups should be extended a preference under the Procurement Code (Code) if one is provided for QRPs.

Accordingly, your Committee has amended this bill by:

(1) Removing the sections concerning small business and QRPs. Instead, the bill requires a study by DAGS in cooperation with the State Procurement Office and Procurement Policy Board, and with the participation of representatives of business, county procurement agencies, QRPs, and other similar groups potentially suitable for and interested in being provided preferences under the Code. The study is to, among other things:

(A) Define "small business" and "preference";

(B) Determine whether groups in addition to QRPs, including but not limited to native Hawaiians, women-owned businesses, veterans and minority-owned businesses, should be included in any preference under the Code;

(C) Determine the impact of any proposed preference or set-aside on other potential Code contractors; and

(D) Result in the development of proposed legislation to be submitted to the Legislature prior to the Regular Session of 2004.

(2) Removing section 4 of the bill, which would have repealed the requirement that a competitive sealed bid on construction be disqualified if it omits a subcontractor performing more than one percent of the value of the contract;

(3) Adding a second part to this bill, consisting of the substance of H.B. No. 703, 2003, which:

(A) Removes architects, landscape architects, professional engineers, and land surveyors from the definition of "professional services" under the Code, designating them instead, "design professional services"; and

(B) Establishes procurement procedures for design professional services that meet national procurement standards for these services;

(4) Allowing non-selected professional services providers to request a debriefing;

(5) Changing the bill's effective date to July 1, 2050, to allow further discussion of the bill; and

(6) Making technical, nonsubstantive amendments for clarity, consistency, and style.

As affirmed by the record of votes of the members of your Committee on Consumer Protection and Commerce that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1103, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1103, H.D. 1, and be referred to the Committee on Finance.

Respectfully submitted on behalf of the members of the Committee on Consumer Protection and Commerce,

 

____________________________

KENNETH T. HIRAKI, Chair