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 S.B. No. 1490 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 (DCCA) certificates, and Department of Labor and Industrial Relations (DLIR) 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, Hawaii County Finance Department, Kauai County Finance Department, and Legislative Information Services of Hawaii.

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 the bid. 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 and the State Procurement Office by repealing statutory material relating to requirements of incorporation or organization under the laws of Hawaii, being registered to do business in Hawaii, and being capable of fully performing the contract; and deleting the cross-reference to small purchases as being unnecessary.

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 S.B. No. 1490, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1490, S.D. 1, and be referred to the Committee on Ways and Means.