Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Transportation and Government Operations, to which was referred H.B. No. 1469, H.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to exempt small purchases from the verification requirements relating to tax clearance, Department of Commerce and Consumer Affairs certificates, and Department of Labor and Industrial Relations certificates.

Your Committee received testimony in support of this measure from the Department of Accounting and General Services (DAGS), Department of Budget and Finance, Department of Education, State Procurement Office, Mayor of Hawaii County, Hawaii County Finance Department, and Maui County Finance Department.

This measure is intended to reduce the burden on state and county agencies by eliminating the need to verify vendor and contractor compliance with all applicable Hawaii laws for purchases of less than $25,000. This process also causes undue delay. For example, the County of Kauai currently processes approximately 700 purchase orders per month, with an estimated turn around time of two to three working days. The process is typically extended to as much as 10 to 15 working days if the contractor needs to gather the clearances and certifications.

Your Committee finds that there is a significant burden on small businesses that must gather the necessary paper work when submitting bids. Your Committee views this measure as an encouraging development of small businesses by making it easier for them to be awarded government contracts. Many small businesses rely heavily upon government contracts. This measure will facilitate achieving that end.

Your Committee has amended this measure upon the recommendation of DAGS by amending the public procurement code regarding the responsibility of offerors in section 103D-310(c), Hawaii Revised Statutes, by repealing statutory material relating to requirements of incorporation or organization under the laws of Hawaii, and registration to do business in Hawaii as a separate branch or division that is capable of fully performing the contract. Your Committee finds that these statutory provisions are unnecessary if the conditions of section 103D-310(c) are met.

As affirmed by the record of votes of the members of your Committee on Transportation and Government Operations that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1469, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1469, H.D. 1, S.D. 1, and be referred to the Committee on Ways and Means.