HB1105 HD1

relating to procurement.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The purpose of this Act is to amend chapter 103F, Hawaii Revised Statutes, purchases of health and human services, to add remedies comparable to those provided in chapter 103D, Hawaii Revised Statutes, the Hawaii public procurement code.

SECTION 2. Chapter 103F, Hawaii Revised Statutes, is amended as follows:

1. By adding eight new sections to part V to be appropriately designated and to read:

"§103F-A Solicitations or awards in violation of law. The provisions of sections 103F-B and 103F‑C apply where it is determined by the chief procurement officer or a designee under section 103F-502 or 103F-F, or administratively under section 103F-D, or upon judicial review under section 103F-E or judicial action under section 103F-G, that a solicitation or award of a contract is in violation of the law.

§103F-B Remedies prior to an award. If prior to an award of contract it is determined that a solicitation or proposed award is in violation of law, then the solicitation or proposed award shall be:

(1) Cancelled; or

(2) Revised to comply with the law.

§103F-C Remedies after an award. If after an award of a contract it is determined that a solicitation or award is in violation of law, then:

(1) If the person awarded the contract has not acted fraudulently or in bad faith:

(A) The contract may be ratified and affirmed, or modified; provided it is determined that doing so is in the best interests of the State; or

(B) The contract may be terminated and the person awarded the contract shall be compensated for the actual expenses, other than attorney's fees, reasonably incurred under the contract, plus a reasonable profit; provided that the expenses and profit shall be determined as of the date of termination;

and

(2) If the person awarded the contract has acted fraudulently or in bad faith:

(A) The contract may be declared null and void; or

(B) The contract may be ratified and affirmed, or modified, if the action is in the best interests of the State, without prejudice to the State's rights to such damages as may be appropriate.

§103F-D Administrative proceedings for review. (a) Any hearings officer appointed pursuant to section 26-9(f) shall have jurisdiction to review and determine de novo any request for reconsideration under section 103F-502.

(b) Hearings to review and determine any request made pursuant to subsection (a) shall commence within twenty-one calendar days of receipt of the request. The hearings officer shall have power to issue subpoenas, administer oaths, hear testimony, find facts, make conclusions of law, and issue a written decision which shall be final and conclusive unless a party adversely affected by the decision commences an appeal in the circuit court pursuant to section 103F-E.

(c) The party initiating the proceeding shall have the burden of proof, including the burden of producing evidence as well as the burden of persuasion. The degree or quantum of proof shall be a preponderance of the evidence. All parties to the proceeding shall be afforded an opportunity to present oral or documentary evidence, conduct cross-examination as may be required, and argument on all issues involved. The rules of evidence shall apply.

(d) The hearings officers shall ensure that a record of each proceeding which includes the following is compiled:

(1) All pleadings, motions, intermediate rulings;

(2) Evidence received or considered, including oral testimony, exhibits, and a statement of matters officially noticed;

(3) Offers of proof and rulings thereon;

(4) Proposed findings of fact; and

(5) A recording of the proceeding which may be transcribed if judicial review of the written decision is sought under section 103F-E.

(e) No action shall be taken on a solicitation or an award of a contract while a proceeding is pending, if the procurement was previously stayed under section 103F-503.

(f) The hearings officer shall decide whether the determinations of the chief procurement officer or the chief procurement officer's designee were in accordance with law, and the terms and conditions of the solicitation or contract, and shall order such relief as may be appropriate in accordance with this part.

(g) The policy board shall adopt such other rules as may be necessary to ensure that the proceedings conducted pursuant to this section afford all parties an opportunity to be heard.

§103F-E Judicial review. (a) Only parties to proceedings under section 103F-D who are aggrieved by a final decision of a hearings officer may apply for judicial review of the decision. The proceedings for review shall be instituted in the circuit court of the circuit where the case or controversy arose.

(b) An application for judicial review shall not operate as a stay of the decision rendered under section 103F-D.

(c) Within twenty calendar days of the filing of an application for judicial review, the hearings officer shall transmit the record of the administrative proceedings to the circuit court.

(d) The review shall be scheduled as expeditiously as practicable. It shall be conducted on the record of the administrative proceedings, and briefs and oral argument. No new evidence shall be introduced, except that the circuit court may, if evidence is offered which is clearly newly discovered evidence and material to the just decision of the appeal, admit the same.

(e) Upon review of the record the circuit court may affirm the decision of the hearings officer issued pursuant to section 103F-D or remand the case with instructions for further proceedings; or it may reverse or modify the decision and order if substantial rights may have been prejudiced because the administrative findings, conclusions, decisions, or orders are:

(1) In violation of constitutional or statutory provisions;

(2) In excess of the statutory authority or jurisdiction of the chief procurement officer or head of the purchasing agency;

(3) Made upon unlawful procedure;

(4) Affected by other error of law;

(5) Clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record; or

(6) Arbitrary, or capricious, or characterized by abuse of discretion or clearly unwarranted exercise of discretion.

(f) Any party aggrieved by the decision of the circuit court may appeal in accordance with part I of chapter 641 and the appeal shall be given priority.

§103F-F Authority to resolve contract and breach of contract controversies. (a) This section applies to controversies between an agency and a contractor which arise under, or by virtue of, a contract between them, including, without limitation, controversies based upon breach of contract, mistake, misrepresentation, or other cause for contract modification or rescission.

(b) The chief procurement officer or a designee is authorized, prior to commencement of an action in a court brought pursuant to section 103F-G, to settle and resolve a controversy described in subsection (a). This authority shall be exercised in accordance with rules adopted by the policy board.

(c) If such a controversy is not resolved by mutual agreement, the chief procurement officer or a designee shall promptly issue a decision in writing. The decision shall:

(1) State the reasons for the action taken; and

(2) Inform the contractor of the contractor's right to initiate a judicial action as provided in this part.

(d) A copy of the decision under subsection (c) shall be mailed or otherwise furnished immediately to the contractor.

(e) The decision under subsection (c) shall be final and conclusive unless the contractor commences a judicial action in accordance with section 103F-G.

(f) If the chief procurement officer or a designee does not issue the written decision required under subsection (c) within ninety days after written request for a final decision, or within such longer period as may be agreed upon by the parties, then the contractor may proceed as if an adverse decision had been received.

§103F-G Judicial action. (a) Only parties to the contract aggrieved by a decision issued pursuant to section 103F-F by a state chief procurement officer or a designee may initiate an action under section 661-1.

(b) A person aggrieved by a decision issued pursuant to section 103F-F by a county chief procurement officer or a designee may initiate an action under, or by virtue of, the contract in controversy in the circuit court.

(c) An agency aggrieved by a decision issued pursuant to section 103F-F by a chief procurement officer or a designee may initiate an action under, or by virtue of, the contract in controversy in the circuit court.

(d) To the extent the remedies provided in this part, including provisions for interest, differ from the remedies available against the State under chapter 661, the remedies shall be as provided in this part. Only the attorney general may settle and resolve a matter filed in the courts against the State pursuant to this section.

§103F-H Time limitations on actions. (a) Requests for administrative review under section 103F-D shall be made directly to the office of administrative hearings of the department of commerce and consumer affairs within seven calendar days of the issuance of a written determination under section 103F-502.

(b) Requests for judicial review under section 103F-E shall be filed in the circuit court of the circuit where the case or controversy arose within ten calendar days after the issuance of a written decision by the hearings officer under section 103F-D.

(c) Complaints to initiate judicial actions under section 103F-G shall be filed in the circuit court within six months of the issuance of a written determination under section 103F-F."

2. By amending the title of part V to read:

"Part V. [~~Protests~~] Legal and Contractual Remedies"

SECTION 3. Section 103F-102, Hawaii Revised Statutes, is amended by adding two new definitions to be appropriately inserted and to read as follows:

""Contractor" means any person having a contract with an agency.

"Policy board" means the procurement policy board created in section 103D-201."

SECTION 4. Section 103F-502, Hawaii Revised Statutes, is amended as follows:

"[[]§103F-502[]] Right to request reconsideration. (a) A request for reconsideration of a decision of the head of the purchasing agency under section 103F-501 shall be submitted to the chief procurement officer not later than five working days after the receipt of the written decision, and shall contain a specific statement of the factual and legal grounds upon which reversal or modification is sought.

(b) A request for reconsideration may be made only to correct a purchasing agency's failure to comply with section 103F-402 or 103F-403, rules adopted to implement the sections, or a request for proposal, if applicable.

(c) The chief procurement officer may uphold the previous decision of the head of the purchasing agency or reopen the protest as deemed appropriate.

[~~(d) A decision under subsection (c) shall be final and conclusive.~~]"

SECTION 5. Section 103F-504, Hawaii Revised Statutes, is amended as follows:

"[[]§103F-504[]] Exclusivity of remedies. The procedures and remedies provided for in this part, and the rules adopted by the policy board, shall be the exclusive means available for persons aggrieved in connection with the solicitation or award of a contract, or in connection with a contract controversy, to resolve their [~~concerns~~] claims or differences. The contested case proceedings set out in chapter 91 shall not apply to protested solicitations and awards, or the resolution of contract controversies."

SECTION 6. In codifying the new sections added by section 3 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 8. This Act shall take effect on July 1, 2007.

HOUSE OF REPRESENTATIVES	H.B. NO.	1105
TWENTY-FOURTH LEGISLATURE, 2007		H.D. 1
STATE OF HAWAII