RESOLUTION

WHEREAS, trade missions to China and Korea in 2005 were pursued by the Department of Business, Economic Development, and Tourism to encourage economic and tourism-related partnerships with these two countries and thus are considered to be state-related business; and

WHEREAS, the state procurement laws are intended to ensure that the State receives the best value for its money through a competitive selection process with vendors, even if these vendors will not be paid directly by the State; and

WHEREAS, according to an article dated February 12, 2006 in the Honolulu Advertiser, the Department of Business, Economic Development, and Tourism may have violated state procurement laws when the department selected a nonprofit organization to handle the finances for the Governor's trade mission to China and Korea in 2005; and

WHEREAS, the department hired the nonprofit organization, the Pacific and Asian Affairs Council, to run the Governor's China trade mission without a competitive selection process under the procurement code for the $268,637 project, and the Pacific and Asian Affairs Council in turn hired several other companies as subcontractors without a competitive selection process; and

WHEREAS, the Pacific and Asian Affairs Council claims that all the decisions concerning the subcontractors, the planning and organization of the mission, and the money were made by the department; and

WHEREAS, the department hired and used the Pacific and Asian Affairs Council to organize the trade mission despite warnings from the Department of the Attorney General and the State Procurement Office; and

WHEREAS, the department received a letter dated April 5, 2005 from the Department of the Attorney General warning that if the director or someone from the department was assisting in making decisions about how money is spent at the nonprofit in charge of organizing the state trade mission, the department may be violating procurement law; and

WHEREAS, the department also received a letter dated March 8, 2005 from the State Procurement Office notifying the department that it could not hire Events International to help organize the trade mission without going through the competitive selection process because there was a potential for a contractor to derive benefits as a result of receiving the trade mission contract; and

WHEREAS, the department still received services from Events International because the Pacific and Asian Affairs Council hired the company to assist in the planning of the trade mission without soliciting bids or proposals; and

WHEREAS, in 1997, the Office of the Auditor performed a procurement code audit of the department and recommended that the department develop a procurement manual for use by all operating units and ensure that all project managers are properly trained in contracting policies and procedures; now, therefore,

BE IT RESOLVED by the Senate of the Twenty-third Legislature of the State of Hawaii, Regular Session of 2006, the House of Representatives concurring, that the Attorney General is requested to investigate possible procurement code violations committed by the Department of Business, Economic Development, and Tourism; and

BE IT FURTHER RESOLVED that the Attorney General is requested to report findings and recommendations to the Legislature twenty days before the convening of the Regular Session of 2007; and

BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Attorney General, the Director of Business, Economic Development, and Tourism, the Chief Procurement Officer, and the Auditor.

Report Title:

Procurement Code, Department of Business, Economic Development, and Tourism.