Report Title:

Procurement Code

Description:

Raises small purchases limit from $25,000 to $50,000; requires small purchases to be transacted over the Internet; requires selection of bidders from pre-qualified lists of vendors. Restores procurement code exemption for special purpose revenue bonds. Prohibits provisions in governmental procurement contracts that require the contractor to defend the governmental body. (SB2897 HD1)

THE SENATE

S.B. NO.

2897

TWENTY-THIRD LEGISLATURE, 2006

S.D. 2

STATE OF HAWAII

H.D. 1

 

A BILL FOR AN ACT

 

RELATING TO PROCUREMENT.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

PART I

SECTION 1. The purpose of this part is to raise the small purchases ceiling from $25,000 to $50,000, to correspond to the reality of the costs of goods, services, and construction.

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

"§103D-305 Small purchases; prohibition against parceling. (a) Procurements of less than [$25,000] $50,000 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 expenditures shall not be created at the inception of a transaction or project so as to evade the requirements of this chapter; and provided further that procurement requirements shall not be artificially divided or parceled so as to constitute a small purchase under this section.

(b) Procurements under this section shall:

(1) Be solicited and transacted electronically over the Internet; and

(2) Be made using pre-qualified lists of vendors from whom bids or offers are solicited randomly."

PART II

SECTION 3. The purpose of this part is to restore or add the exemption from the State's procurement code for special purpose revenue bonds for health care facilities, manufacturing enterprises, processing enterprises, industrial enterprises, energy projects, early childhood education and care facilities serving the general public and private nonsectarian and sectarian elementary schools, secondary schools, colleges, and universities serving the general public, on the basis that no public moneys are involved in issuing special purpose revenue bonds.

SECTION 4. Section 39A-32, Hawaii Revised Statutes, is amended to read as follows:

"§39A-32 Department powers as to health care facilities. In addition to powers [which] that it may now have, the department shall have all powers necessary or convenient to accomplish the purposes of this part. The powers of the department include but are not limited to the following:

(1) Notwithstanding and without compliance with section 103-7[,] and chapter 103D, but with the approval of the governor, to:

(A) Enter into and carry out a project agreement, or an amendment or supplement to an existing project agreement, with a project party; and

(B) Enter into and carry out any agreement, whereby the obligation of a project party under a project agreement will be unconditionally guaranteed by a person other than a project party;

(2) To issue special purpose revenue bonds pursuant to and in accordance with this part;

(3) To lend the proceeds of the special purpose revenue bonds issued for a project to the project party for use and application by the project party for the acquisition, purchase, construction, reconstruction, improvement, betterment, extension, or refinancing of outstanding obligations related to a project;

(4) As security for the payment of the principal of, premium, if any, and interest of the special purpose revenue bonds issued for this project, to:

(A) Pledge, assign, hypothecate, or otherwise encumber all or any part of the revenues and receipts derived or to be derived by the department under the project agreement for the project for which [such] the special purpose revenue bonds are issued;

(B) Pledge and assign the interest and rights of the department under the project agreement or other agreement with respect to [such] the project or [such] the special purpose revenue bonds;

(C) Pledge and assign any bond, debenture, note, or other evidence of indebtedness received by the department with respect to [such] the project; or

(D) Any combination of the foregoing;

(5) To extend or renew any project agreement or any other agreement related thereto; provided that any [such] renewal or extension shall be subject to the approval of the governor unless made in accordance with provisions for [such] the extension or renewal contained in a project agreement or related agreement theretofore approved by the governor; and

(6) To do any and all things necessary or convenient to carry out its purposes and exercise the powers given and granted in this part.

When the department finances or refinances a project by the issuance of special purpose revenue bonds as contemplated by this part, the State shall not exercise the power of eminent domain to acquire a project or any part thereof for lease or transfer to a project party, nor shall the State operate a project on behalf of a project party."

SECTION 5. Section 39A-72, Hawaii Revised Statutes, is amended to read as follows:

"§39A-72 Department powers as to manufacturing enterprises. In addition to powers [which] that it may now have, the department shall have all powers necessary or convenient to accomplish the purposes of this part. The powers of the department include but are not limited to the following:

(1) Notwithstanding and without compliance with section 103-7[,] and chapter 103D, but with the approval of the governor, to:

(A) Enter into and carry out a project agreement, or an amendment or supplement to an existing project agreement, with a project party; and

(B) Enter into and carry out any agreement, whereby the obligation of a project party under a project agreement will be unconditionally guaranteed by a person other than a project party;

(2) To issue special purpose revenue bonds pursuant to and in accordance with this part;

(3) To lend the proceeds of the special purpose revenue bonds issued for a project to the project party for use and application by the project party for the acquisition, purchase, construction, reconstruction, improvement, betterment, extension, or maintenance of a project;

(4) As security for the payment of the principal of, premium, if any, and interest of the special purpose revenue bonds issued for a project, to:

(A) Pledge, assign, hypothecate, or otherwise encumber all or any part of the revenues and receipts derived or to be derived by the department under the project agreement for the project for which [such] the special purpose revenue bonds are issued;

(B) Pledge and assign the interest and rights of the department under the project agreement or other agreement with respect to [such] the project or [such] the special purpose revenue bonds;

(C) Pledge and assign any bond, debenture, note, or other evidence of indebtedness received by the department with respect to [such] the project; or

(D) Any combination of the foregoing;

(5) To extend or renew any project agreement or any other agreement related thereto; provided that any [such] renewal or extension shall be subject to the approval of the governor unless made in accordance with provisions for [such] the extension or renewal contained in a project agreement or related agreement theretofore approved by the governor; and

(6) To do any and all things necessary or convenient to carry out its purposes and exercise the powers given and granted in this part."

SECTION 6. Section 39A-112, Hawaii Revised Statutes, is amended to read as follows:

"§39A-112 Department powers as to processing enterprises. In addition to powers [which] that it may now have, the department shall have all powers necessary or convenient to accomplish the purposes of this part. The powers of the department include but are not limited to the following:

(1) Notwithstanding and without compliance with section 103-7[,] and chapter 103D, but with the approval of the governor, to:

(A) Enter into and carry out a project agreement, or an amendment or supplement to an existing project agreement, with a project party; and

(B) Enter into and carry out any agreement, whereby the obligation of a project party under a project agreement will be unconditionally guaranteed by a person other than a project party;

(2) To issue special purpose revenue bonds pursuant to and in accordance with this part;

(3) To lend the proceeds of the special purpose revenue bonds issued for a project to the project party for use and application by the project party for the acquisition, purchase, construction, reconstruction, improvement, betterment, extension, or maintenance of a project;

(4) As security for the payment of the principal of, premium, if any, and interest of the special purpose revenue bonds issued for a project, to:

(A) Pledge, assign, hypothecate, or otherwise encumber all or any part of the revenues and receipts derived or to be derived by the department under the project agreement for the project for which [such] the special purpose revenue bonds are issued;

(B) Pledge and assign the interest and rights of the department under the project agreement or other agreement with respect to [such] the project or [such] the special purpose revenue bonds;

(C) Pledge and assign any bond, debenture, note, or other evidence of indebtedness received by the department with respect to [such] the project; or

(D) Any combination of the foregoing;

(5) To extend or renew any project agreement or any other agreement related thereto; provided that any [such] renewal or extension shall be subject to the approval of the governor unless made in accordance with provisions for [such] the extension or renewal contained in a project agreement or related agreement theretofore approved by the governor; and

(6) To do any and all things necessary or convenient to carry out its purposes and exercise the powers given and granted in this part."

SECTION 7. Section 39A-152, Hawaii Revised Statutes, is amended to read as follows:

"§39A-152 Department powers as to industrial enterprises. In addition to powers [which] that it may now have, the department shall have all powers necessary or convenient to accomplish the purposes of this part. The powers of the department include but are not limited to the following:

(1) Notwithstanding and without compliance with section 103-7[,] and chapter 103D, but with the approval of the governor, to:

(A) Enter into and carry out a project agreement, or an amendment or supplement to an existing project agreement, with a project party; and

(B) Enter into and carry out any agreement, whereby the obligation of a project party under a project agreement will be unconditionally guaranteed by a person other than a project party;

(2) To issue special purpose revenue bonds pursuant to and in accordance with this part;

(3) To lend the proceeds of the special purpose revenue bonds issued for a project to the project party for use and application by the project party for the acquisition, purchase, construction, reconstruction, improvement, betterment, extension, or maintenance of a project;

(4) As security for the payment of the principal of, premium, if any, and interest of the special purpose revenue bonds issued for a project, to:

(A) Pledge, assign, hypothecate, or otherwise encumber all or any part of the revenues and receipts derived or to be derived by the department under the project agreement for the project for which [such] the special purpose revenue bonds are issued;

(B) Pledge and assign the interest and rights of the department under the project agreement or other agreement with respect to [such] the project or [such] the special purpose revenue bonds;

(C) Pledge and assign any bond, debenture, note, or other evidence of indebtedness received by the department with respect to [such] the project; or

(D) Any combination of the foregoing;

(5) To extend or renew any project agreement or any other agreement related thereto; provided that any [such] renewal or extension shall be subject to the approval of the governor unless made in accordance with provisions for [such] the extension or renewal contained in a project agreement or related agreement theretofore approved by the governor; and

(6) To do any and all things necessary or convenient to carry out its purposes and exercise the powers given and granted in this part."

SECTION 8. Section 39A-192, Hawaii Revised Statutes, is amended to read as follows:

"§39A-192 Department powers as to energy projects. In addition to powers [which] that it may now have, the department shall have all powers necessary or convenient to accomplish the purposes of this part. The powers of the department include but are not limited to the following:

(1) Notwithstanding and without compliance with section 103-7[,] and chapter 103D, but with the approval of the governor, to:

(A) Enter into and carry out a project agreement, or an amendment or supplement to an existing project agreement, with a project party; and

(B) Enter into and carry out any agreement, whereby the obligation of a project party under a project agreement will be unconditionally guaranteed by a person other than a project party;

(2) To issue special purpose revenue bonds pursuant to and in accordance with this part;

(3) To lend the proceeds of the special purpose revenue bonds issued for an energy project to the project party for use and application by the project party for the acquisition, purchase, construction, reconstruction, improvement, betterment, or extension of an energy project;

(4) As security for the payment of the principal of and interest on the special purpose revenue bonds issued for an energy project, to:

(A) Pledge, assign, hypothecate, or otherwise encumber all or any part of the revenues and receipts derived or to be derived by the department under the project agreement for the energy project for which [such] the special purpose revenue bonds are issued;

(B) Pledge and assign the interest and rights of the department under the project agreement or other agreement with respect to [such] the project or [such] the special purpose revenue bonds;

(C) Pledge and assign any bond, debenture, note, or other evidence of indebtedness received by the department with respect to [such] the energy project; or

(D) Any combination of the foregoing;

(5) To extend or renew any project agreement or any other agreement related thereto; provided that any [such] renewal or extension shall be subject to the approval of the governor unless made in accordance with provisions for [such] the extension or renewal contained in a project agreement or related agreement theretofore approved by the governor; and

(6) To do any and all things necessary or convenient to carry out its purposes and exercise the powers given and granted in this part.

When the department finances an energy project by the issuance of special purpose revenue bonds as contemplated by this part, the State shall not exercise the power of eminent domain to acquire an energy project or any part thereof for lease or transfer to a project party, nor shall the State operate a project on behalf of a project party."

SECTION 9. Section 39A-222, Hawaii Revised Statutes, is amended to read as follows:

"[[]§39A-222[]] Department powers as to early childhood education and care facilities. In addition to powers [which] that it may now have, the department shall have all powers necessary or convenient to accomplish the purposes of this part. The powers of the department include[,] but are not limited to[,] the following:

(1) Notwithstanding and without compliance with section 103-7[,] and chapter 103D, but with the approval of the governor, to enter into and carry out a project agreement, or an amendment or supplement to an existing project agreement, with a project party, and to enter into and carry out any agreement, whereby the obligation of a project party under a project agreement will be unconditionally guaranteed by a person other than a project party[.];

(2) To issue special purpose revenue bonds pursuant to and in accordance with this part[.];

(3) To lend the proceeds of the special purpose revenue bonds issued for a project to the project party for use and application by the project party for the acquisition, purchase, construction, reconstruction, improvement, betterment, extension, or refinancing of outstanding obligations related to a project[.];

(4) As security for the payment of the principal of, premium, if any, and interest of the special purpose revenue bonds issued for this project, to [pledge,]:

(A) Pledge, assign, hypothecate, or otherwise encumber all or any part of the revenues and receipts derived or to be derived by the department under the project agreement for the project for which [such] the special purpose revenue bonds are issued; [to pledge]

(B) Pledge and assign the interest and rights of the department under the project agreement or other agreement with respect to [such] the project or [such] the special purpose revenue bonds; [and to pledge]

(C) Pledge and assign any bond, debenture, note, or other evidence of indebtedness received by the department with respect to [such] the project; or [any]

(D) Any combination of the foregoing[.];

(5) To extend or renew any project agreement or any other agreement related thereto; provided that any [such] renewal or extension shall be subject to the approval of the governor unless made in accordance with provisions for [such] the extension or renewal contained in a project agreement or related agreement theretofore approved by the governor[.]; and

(6) To do any and all things necessary or convenient to carry out its purposes and exercise the powers given and granted in this part.

When the department finances or refinances a project by the issuance of special purpose revenue bonds as contemplated by this part, the State shall not exercise the power of eminent domain to acquire a project or any part thereof for lease or transfer to a project party, nor shall the State operate a project on behalf of a project party."

SECTION 10. Section 39A-252, Hawaii Revised Statutes, is amended to read as follows:

"[[]§39A-252[]] Department powers as to private nonsectarian and sectarian elementary schools, secondary schools, colleges, and universities. In addition to powers that it may now have, the department shall have all powers necessary or convenient to accomplish the purposes of this part. The powers of the department include but are not limited to the following:

(1) Notwithstanding and without compliance with section 103-7[,] and chapter 103D, but with the approval of the governor, to:

(A) Enter into and carry out a project agreement or an amendment or supplement to an existing project agreement with a project party; and

(B) Enter into and carry out any agreement, whereby the obligation of a project party under a project agreement will be unconditionally guaranteed by a person other than a project party;

(2) To issue special purpose revenue bonds pursuant to and in accordance with this part;

(3) To lend the proceeds of the special purpose revenue bonds issued for a project to the project party for use and application by the project party for the acquisition, purchase, construction, reconstruction, improvement, betterment, extension, or refinancing of outstanding obligations related to a project;

(4) As security for the payment of the principal, premium, if any, and interest of the special purpose revenue bonds issued for this project, to [pledge,]:

(A) Pledge, assign, hypothecate, or otherwise encumber all or any part of the revenues and receipts derived or to be derived by the department under the project agreement for the project for which [such] the special purpose revenue bonds are issued; [to pledge]

(B) Pledge and assign the interest and rights of the department under the project agreement or other agreement with respect to the project or the special purpose revenue bonds; [and to pledge]

(C) Pledge and assign any bond, debenture, note, or other evidence of indebtedness received by the department with respect to the project; or [any]

(D) Any combination of the foregoing;

(5) To extend or renew any project agreement or any other agreement related to the project agreement; provided that any [such] renewal or extension shall be subject to the approval of the governor unless made in accordance with provisions for [such] the extension or renewal contained in a project agreement or related agreement theretofore approved by the governor; and

(6) To do any and all things necessary or convenient to carry out its purposes and exercise the powers given and granted in this part.

When the department finances or refinances a project by the issuance of special purpose revenue bonds as contemplated by this part, the State shall not exercise the power of eminent domain to acquire a project or any part of the project for lease or transfer to a project party, nor shall the State operate a project on behalf of a project party."

PART III

SECTION 11. The purpose of this part is to prohibit certain governmental procurement contracts from requiring contractors to defend the governmental body.

SECTION 12. Chapter 103D, Hawaii Revised Statutes, is amended by adding a new section to part VII to be appropriately designated and to read as follows:

"§103D-   Defense of a governmental body. Any provision in a government contract in which professional services are to be performed by one or more construction design professionals, that purports to require the construction design professionals or their business to defend, indemnify, or hold harmless the governmental body or its officers, employees and agents from negligent acts, errors or omissions committed by the government body or its officers, employees and agents, is void as against public policy."

PART IV

SECTION 13. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 14. This Act shall take effect upon its approval.