Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committees on Transportation and Government Operations and Ways and Means, to which was referred S.B. No. 668, S.D. 1, entitled:

beg leave to report as follows:

The purpose of this measure is to require the Procurement Policy Board to adopt rules effectuating set-asides for small businesses and imposing mandatory evaluation criteria designed to encourage the use of small businesses as subcontractors on large contracts.

Your Committees received testimony in support of this measure from the Department of Business, Economic Development, and Tourism, Department of Accounting and General Services, The Chamber of Commerce of Hawaii, Environet, Inc., HARK, Inc., and The Limtiaco Company.

The intent of this measure is to establish procurement preferences in government contracts to enhance competition by expanding the pool of available vendors and contractors. The result would promote the growth and development of small businesses.

Your Committees find that many small businesses feel that they are not effectively able to compete with larger local and mainland firms in competition for state contracts and purchases. This measure would require the Procurement Policy Board to develop detailed procedures needed to put in place a small business program, including set-asides. This would set guidelines for the procurement officers to determine which contracts to set aside for small business purchases. As an example of the effectiveness of this approach, the federal contracting programs provide that larger businesses prepare a "small subcontracting plan" as part of their bid.

As affirmed by the records of votes of the members of your Committees on Transportation and Government Operations and Ways and Means that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 668, S.D. 1, and recommend that it pass Third Reading.