Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committees on Media, Arts, Science, and Technology and Transportation and Government Operations, to which was referred S.B. No. 332, S.D. 1, entitled:

beg leave to report as follows:

The purpose of this measure is to exempt the High Technology Development Corporation and the Natural Energy Laboratory of Hawaii from the state procurement code.

Your Committees received testimony in support of this measure from the High Technology Development Corporation (HTDC); the Natural Energy Laboratory of Hawaii Authority (NELHA); UHV Engineering, Co.; HydraFLX Systems LLC; and one individual. Your Committees received testimony in opposition from the Department of Accounting and General Services. Your Committees also received comments on this measure from the State Procurement Office and one individual.

Your Committees find that the High Technology Development Corporation's 1983 enabling statute exempted HTDC from the law for competitive bidding, an exemption further clarified in 2000. Testimony from NELHA noted that the authority had been exempt from the procurement requirements since its inception thirty years ago. NELHA also noted that the authority has not had any negative findings in a financial audit during that period, while expending over $60,000,000 in state funds and nearly the same in federal funds.

Your Committees heard that despite such exemplary records, these agencies were included in blanket changes to the procurement code without due consideration of the nature of the agencies. HTDC and NELHA must have the ability to capitalize on ideas in a timely and responsive manner as an essential tool for economic success and survival in a global marketplace. Your Committees further find that the state procurement code does not offer sufficient flexibility and timely responses to meet these needs. Although future individually granted exemptions from the procurement code are available, your Committees believe that the response is not quick enough for time-critical processes of the High Technology Development Corporation and the Natural Energy Laboratory of Hawaii Authority.

Although your Committees understand the State's desire to standardize purchase requirements, exemptions are currently in effect for the Hawaii Tourism Authority, the Research Corporation of the University of Hawaii and the Hurricane Relief Fund. The mandates for innovative programs to aid Hawaii's economic expansion and diversification –- tasked to both HTDC and NELHA –- require at least equal procurement flexibility.

As affirmed by the records of votes of the members of your Committees on Media, Arts, Science, and Technology and Transportation and Government Operations that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 332, S.D. 1, and recommend that it be referred to the Committee on Ways and Means.