SB2659.DOC

SECTION 1. Chapter 103D, Hawaii Revised Statutes, is amended by adding to part X a new section to be appropriately designed and to read as follows:

"§103D- Preference for recycled oil products. (a) Notwithstanding any law to the contrary, any procurement officer that purchases lubricating oil and industrial oil may purchase the oil from the seller who certifies the oil product containing the greatest percentage of recycled oil. The procurement officer may purchase an oil product containing a lower percentage of recycled oil if the specific oil product containing recycled oil is:

(1) Not available within a reasonable period of time or in quantities necessary to meet an agency's needs;

(2) Not able to meet the performance requirements or standards recommended by the equipment or vehicle manufacturer, including any warranty requirements;

(3) Available only at a cost greater than the cost of comparable virgin oil products; or

(4) Likely to breach an existing warranty that requires the purchase of virgin oil products for exclusive use in vehicles or equipment whose warranties expressly prohibit the use of products containing recycled oil.

(b) Each chief procurement officer may establish and maintain an affirmative program for procuring oils containing the maximum content of recycled oil. An affirmative program shall include:

(1) Placement of descriptions of the preference of recycled oil products in publications used to solicit bids from suppliers or vendors;

(2) Descriptions of the recycled oil procurement program at the bidders' conferences;

(3) Discussion of the preference program in lubricating oil and industrial oil procurement solicitations, invitations for bids, requests for proposals, or other solicitations for offers under this chapter; and

(4) Efforts to inform trade associations about the preference program."

SECTION 2. Section 103D-102, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Notwithstanding subsection (a), this chapter shall not apply to contracts by governmental bodies:

(1) Solicited or entered into before July 1, 1994, unless the parties agree to its application to a contract solicited or entered into prior to July 1, 1994;

(2) To disburse funds, irrespective of their source:

(A) For grants or subsidies as those terms are defined in section 42F-101, made by the State in accordance with standards provided by law as required by article VII, section 4, of the State Constitution; or by the counties pursuant to their respective charters or ordinances;

(B) To make payments to or on behalf of public officers and employees for salaries, fringe benefits, professional fees, or reimbursements;

(C) To satisfy obligations that the State is required to pay by law, including paying fees, permanent settlements, subsidies, or other claims, making refunds, and returning funds held by the State as trustee, custodian, or bailee;

(D) For entitlement programs, including public assistance, unemployment, and workers' compensation programs, established by state or federal law;

(E) For dues and fees of organizations of which the State or its officers and employees are members, including the National Association of Governors, the National Association of State and County Governments, and the Multi-State Tax Commission;

(F) For deposit, investment, or safekeeping, including expenses related to their deposit, investment, or safekeeping;

(G) To governmental bodies of the State;

(H) As loans, under loan programs administered by a governmental body; and

(I) For contracts awarded in accordance with chapter 103F;

(3) To procure goods, services, or construction from a governmental body other than the University of Hawaii bookstores, from the federal government, or from another state or its political subdivision;

(4) To procure the following goods or services which are available from multiple sources but for which procurement by competitive means is either not practicable or not advantageous to the State:

(A) Services of expert witnesses for potential and actual litigation of legal matters involving the State, its agencies, and its officers and employees, including administrative quasi-judicial proceedings;

(B) Works of art for museum or public display;

(C) Research and reference materials including books, maps, periodicals, and pamphlets, which are published in print, video, audio, magnetic, or electronic form;

(D) Meats and foodstuffs for the Kalaupapa settlement;

(E) Opponents for athletic contests;

(F) Utility services whose rates or prices are fixed by regulatory processes or agencies;

(G) Performances, including entertainment, speeches, and cultural and artistic presentations;

(H) Goods and [~~services~~] for commercial resale by the State;

(I) Services of printers, rating agencies, support facilities, fiscal and paying agents, and registrars for the issuance and sale of the State's or counties' bonds;

(J) Services of attorneys employed or retained to advise, represent, or provide any other legal service to the State or any of its agencies, on matters arising under laws of another state or foreign country, or in an action brought in another state, federal, or foreign jurisdiction, when substantially all legal services are expected to be performed outside this State;

(K) Financing agreements under chapter 37D; and

(L) Any other goods or services which the policy board determines by rules or the chief procurement officer determines in writing is available from multiple sources but for which procurement by competitive means is either not practicable or not advantageous to the State;

(5) Which are specific procurements expressly exempt from any or all of the requirements of this chapter by:

(A) References in state or federal law to provisions of this chapter or a section of this chapter, or references to a particular requirement of this chapter; and

(B) Trade agreements, including the Uruguay Round General Agreement on Tariffs and Trade (GATT) which require certain non-construction and non-software development procurements by the comptroller to be conducted in accordance with its terms; and

(6) With a bidder or offeror who is a United States General Services Administration-approved sole source vendor, who shall be exempt from complying with section 103D-302, 103D-303, or 103D-304, as applicable, in any procurement funded by state and federal matching funds, if the bidder or offeror was responsible for obtaining and was the recipient of the federal funds."

SECTION 3. Section 103D-103, Hawaii Revised Statutes, is amended to read as follows:

"[[]§103D-103[]] Retention of written determinations. Written determinations required by this chapter shall be retained in the appropriate official files of the chief procurement officer or in the case of delegated authority, in the files of [~~that purchasing agency.~~] the procurement officer."

SECTION 4. Section 103D-104, Hawaii Revised Statutes, is amended as follows:

(1) By adding a new definition to be appropriately inserted and to read as follows:

""Subcontractor" means any person who enters into an agreement with the contractor to perform a portion of the work for the contractor."

(2) By amending the definitions of "contractor" and "procurement officer" to read as follows:

""Contractor" means any [~~person~~] individual, partnership, firm, corporation, joint venture, or other legal entity having a contract with a governmental body[.] to undertake the execution of the work under the terms of the contract with the State, and acting directly or through its agents or employees.

"Procurement officer" means [~~any~~] a person [~~authorized~~] delegated in writing the authority to enter into and administer contracts and make written determinations with respect thereto. The term also includes an authorized representative acting within the limits of authority."

(3) By repealing the definition of "purchasing agency".

[""Purchasing agency" means any governmental body which is authorized by this chapter or its implementing rules and procedures, or by way of delegation, to enter into contracts for the procurement of goods, services, or construction."]

SECTION 5. Section 103D-110, Hawaii Revised Statutes, is amended by amending subsections (c), (d), and (e) to read as follows:

"(c) Each [~~state~~] procurement officer of a department of the executive branch shall attend a mandatory fundamental training and development session within sixty days of being appointed or named to the position of procurement officer.

(d) Each [~~state~~] procurement officer of a department of the executive branch whom the state procurement office determines is in need of further training and development based upon:

(1) The history of procurement compliance to this chapter by the agency to which the particular procurement officer is attached; or

(2) Any other need for training and development, shall attend follow-up training and development sessions.

(e) Attendance by [~~state~~] procurement officers at the follow-up training and development sessions, other than as required under subsection (d), and by county procurement [~~officials~~] officers at the fundamental and follow-up training and development sessions is optional, though encouraged."

SECTION 6. Section 103D-207, Hawaii Revised Statutes, is amended to read as follows:

"[[]§103D-207[]] Centralization of procurement authority. Except as otherwise provided in [~~sections~~] section 103D-208, [~~103D-209,~~ ~~and 103D-210,~~] all rights, powers, duties, and authority relating to the procurement of goods, services, and construction, and the management, control, warehousing, sale, and disposal of goods, services, and construction now vested in, or exercised by, the governmental bodies of the State and counties are hereby transferred to the respective chief procurement officers."

SECTION 7. Section 103D-301, Hawaii Revised Statutes, is amended to read as follows:

"[[]§103D-301[]] Methods of source selection. [~~Unless otherwise authorized by law, all contracts shall be awarded by competitive sealed bidding pursuant to section 103D-302, except~~] Contracts shall be awarded as provided in:

(1) Section 103D-302 (Competitive sealed bidding);

[~~(1)~~] (2) Section 103D-303 (Competitive sealed proposals);

[~~(2)~~] (3) Section 103D-304 (Professional services

procurement);

[~~(3)~~] (4) Section 103D-305 (Small purchases);

[~~(4)~~] (5) Section 103D-306 (Sole source procurement); and

[~~(5)~~] (6) Section 103D-307 (Emergency procurements)."

SECTION 8. Section 103D-302, Hawaii Revised Statutes, is amended as follows:

(1) By amending subsection (a) to read as follows:

"(a) [~~Contracts shall be awarded by competitive sealed bidding except as otherwise provided in section 103D-301.~~] Awards [~~of contracts by competitive sealed bidding~~] may be made after single or multi-step bidding. Competitive sealed bidding does not include negotiations with bidders after the receipt and opening of bids. Award is based on the criteria set forth in the invitation for bids."

(2) By amending subsections (c) and (d) to read as follows:

"(c) Adequate public notice of the invitation for bids shall be given a reasonable time before the due date set forth in the invitation for [~~the opening of~~] bids. The policy board shall adopt rules which specify:

(1) The form that the notice is to take;

(2) [~~What constitutes a reasonable interim~~] Minimum period between [~~publication~~] notice and bid [~~opening~~] due date; and

(3) How notice may be [~~published~~] provided, including publication in a newspaper of general circulation, notice by mail to all persons on any applicable bidders mailing list, [~~publication~~] notice by any public or private telecommunication information network, or any other method of [~~publication~~] notice it deems to be effective.

(d) [~~Bids~~] Except for invitation for bids conducted on an electronic procurement system, bids shall be opened publicly in the presence of one or more witnesses, at the time and place designated in the invitation for bids. The amount of each bid and other relevant information specified by rule, together with the name of each bidder shall be recorded[. ~~The record~~] and [~~each bid~~] shall be open to public inspection. Bid results for procurements conducted on an electronic procurement system shall be available on the system."

(3) By amending subsections (f) and (g) to read as follows:

"(f) Bids shall be evaluated based on the requirements set forth in the invitation for bids. These requirements may include criteria to determine acceptability such as inspection, testing, quality, workmanship, delivery, and suitability for a particular purpose. Those criteria that will affect the bid price and be considered in evaluation for award shall be stated in the invitation for bid and objectively measurable, such as discounts, transportation costs, and total or life cycle costs. [~~The invitation for bids shall set forth the evaluation criteria to be used.~~] No criteria may be used in bid evaluation that are not set forth in the invitation for bids.

(g) Correction or withdrawal of inadvertently erroneous bids before or after award, or cancellation of invitations for bids, awards, or contracts based on such bid mistakes, shall be permitted in accordance with rules adopted by the policy board. After bid [~~opening~~] due date no changes in bid prices or other provisions of bids prejudicial to the interest of the public or to fair competition shall be permitted. Except as otherwise provided by rule, all decisions to permit the correction or withdrawal of bids, or to cancel awards or contracts based on bid mistakes, shall be supported by a written determination made by the chief procurement officer or head of a purchasing agency."

SECTION 9. Section 103D-303, Hawaii Revised Statutes, is amended as follows:

(1) By amending subsection (a) to read as follows:

"(a) Competitive sealed proposals may be utilized to procure goods, services, or construction [~~designated in rules adopted by the procurement policy board as goods, services, or construction~~] which are either not practicable or not advantageous to the State to procure by competitive sealed bidding. [Competitive sealed proposals may also be utilized when the head of a purchasing agency determines in writing that the use of competitive sealed bidding is either not practicable or not advantageous to the State.]"

(2) By amending subsection (d) to read as follows:

"(d) Proposals shall be opened so as to avoid disclosure of contents to competing offerors during the evaluation process [~~of negotiation~~]. A register of proposals shall be prepared [~~in accordance with rules adopted by the policy board~~] and shall be open for public inspection after contract award."

(3) By amending subsection (h) to read as follows:

"(h) In cases of awards made under this section, nonselected offerors may submit a written request for debriefing to the [~~chief~~] procurement officer [~~or designee]~~ within three working days after the posting of the award of the contract. Thereafter, the [~~head of the purchasing agency]~~ procurement officer shall provide the [~~requester]~~ nonselected offeror a prompt debriefing [~~in accordance with rules adopted by the policy board~~]. Any protest by the [~~requester~~] nonselected offeror pursuant to section 103D-701 following debriefing shall be filed in writing with the [~~chief~~] procurement officer [~~or designee~~] within five working days after the date that the debriefing is completed."

SECTION 10. Section 103D-303.5, Hawaii Revised Statutes, is amended to read as follows:

"[[]§103D-303.5[]] Pre-bid conference. [~~(a)~~] At least fifteen days prior to submission of bids pursuant to section 103D-302 for a construction or design-build project [~~with a total estimated contract value of $500,000 or more,~~] and [~~at least fifteen days~~] prior to submission of proposals pursuant to section 103D-303 for a construction or design-build project [~~with a total estimated contract value of $100,000 or more]~~, the [~~head of the purchasing agency shall hold~~] procurement officer may conduct a pre-bid conference [~~and shall invite~~] for all potential interested bidders, offerors, subcontractors, and union representatives to attend.

[~~(b) The procurement policy board shall adopt rules under chapter 91 to effectuate this section.~~]"

SECTION 11. Section 103D-305, Hawaii Revised Statutes, is amended to read as follows:

"§103D-305 Small purchases; prohibition against parceling. (a) Procurements of less than $100,000 for goods or services, or $250,000 for construction shall be made in accordance with procedures set forth in rules adopted by the policy board that are designed to ensure administrative simplicity and as much competition as is practicable; provided that multiple expenditures shall not be created at the inception of a transaction or project so as to evade the requirements of this chapter; and provided further that procurement requirements shall not be artificially divided or parceled so as to constitute a small purchase under this section.

(b) Procurements of greater than $50,000 for construction under subsection (a) shall require security by a performance bond delivered to the purchasing agency that is:

(1) In a form prescribed by the rules of the policy board;

(2) Executed by a surety company authorized to do business in this State; and

(3) In an amount equal to one hundred per cent of the price specified in the contract,

or shall otherwise be secured by a performance bond in a manner satisfactory to the purchasing agency.

(c) Procurements of $25,000 to less than $100,000 shall be made in accordance with small purchase procedures; provided that small purchase procurements through an electronic system shall be required [~~after the policy board has adopted rules for electronic procurement and provided training to the affected agency~~]."

SECTION 12. Section 103D-312, Hawaii Revised Statutes, is amended to read as follows:

"§103D-312 Cost or pricing data. (a) [A contractor, except as provided in subsection (c), shall submit cost or pricing data and shall certify that, to the best of the contractor's knowledge and belief, the cost or pricing data submitted is accurate, complete, and current as of a mutually determined specified date prior to the date of:

(1) The pricing of any contract awarded by competitive sealed proposals or pursuant to the sole source procurement authority, where the total contract amount is expected to exceed an amount established by rules adopted by the policy board; or

~~(2) The pricing of any change order or contract modification that is expected to exceed an amount established by rules adopted by the policy board.~~] The

procurement officer may request data or factual information reasonably available to the offeror to substantiate that the price offered is reasonable. Submission of data is limited to that normally kept by the offeror and shall not require extensive effort to gather data not reasonably available.

(b) Any contract, change order, or contract modification [~~under which a certificate is required~~] shall contain a provision that the price to the State, including profit or fee, shall be adjusted to exclude any significant sums by which the State finds that the price was increased because the contractor furnished cost or pricing data that was inaccurate, incomplete, or not current as of the date agreed upon between the parties.

(1) Where the contract price is based on adequate price competition;

(2) Where the contract price is based on established catalog prices or market prices;

(3) Where the contract prices are set by law or rule; or

(4) Where it is determined in writing in accordance with rules adopted by the policy board that the requirements of this section may be waived, and the reasons for the waiver are stated in writing."

SECTION 13. Section 103D-313, Hawaii Revised Statutes, is amended to read as follows:

"§103D-313 Types of contracts. (a) Subject to the limitations of this section, any type of contract that will promote the State's best interests may be used.

(b) Cost-reimbursement and cost-plus-a-percentage-of-cost contracts may be used only when the chief procurement officer determines in writing that such a contract is likely to be less costly than any other type of contract or that it is impracticable to obtain the goods, services, or construction required except by means of such a contract. Cost-reimbursement and cost-plus-a-percentage-of-cost contracts shall not be used if their use would jeopardize the receipt of federal assistance moneys or reduce the amount of such assistance under any applicable federal statute or regulation.

[~~(c) In addition to the requirements of subsections (a) and (b), a cost-plus-a-percentage-of-cost contract may not be awarded unless:~~

~~(1)~~ Notice is given to the head of the compliance audit unit, president of the senate, speaker of the house of representatives, and the chairpersons of the senate ways and means and house finance committees; and

~~(2)~~ ~~Notice is conspicuously posted in an area accessible to the public in the office of the chief procurement officer and available for public inspection during normal business hours.~~

~~(d) The policy board shall adopt rules to implement this section.~~]"

SECTION 14. Section 103D-316, Hawaii Revised Statutes, is amended to read as follows:

"[[]§103D-316[]] Right to inspect plant. The [~~State,~~] procurement officer, at reasonable times, may inspect the part of the plant or place of business of a contractor or any subcontractor that is related to the performance of a contract awarded or to be awarded by the State."

SECTION 15. Section 103D-317, Hawaii Revised Statutes, is amended to read as follows:

"[[]§103D-317[]] Right to audit records. (a) The [~~purchasing agency,~~] procurement officer, at reasonable times and places, may audit the books and records of any person who has submitted cost or pricing data pursuant to section 103D-312 to the extent that such books and records relate to such cost or pricing data. Any person who receives a contract, change order, or contract modification for which cost or pricing data is required, shall maintain such books and records that relate to such cost or pricing data for three years from the date of final payment under the contract, unless another period is otherwise authorized in writing.

(b) The [~~purchasing agency~~] procurement officer shall be entitled to audit the books and records of a contractor or any subcontractor under any negotiated contract or subcontract other than a fixed-price contract to the extent that such books and records relate to the performance of such contract or subcontract. The books and records shall be maintained by the contractor for a period of three years from the date of final payment under the prime contract and by the subcontractor for a period of three years from the date of final payment under the subcontract, unless another period is otherwise authorized in writing."

SECTION 16. Section 103D-320, Hawaii Revised Statutes, is amended to read as follows:

"[[]§103D-320[]] Retention of procurement records. All procurement records shall be retained and disposed of in accordance with chapter 94 and records retention guidelines and schedules approved by the comptroller[.] or similar authority of procuring governmental bodies not subject to the record retention jurisdiction of the comptroller."

SECTION 17. Section 103D-323, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Unless the policy board determines otherwise by rules, bid security shall be required [~~only~~] for construction contracts to be awarded pursuant to sections 103D-302 and 103D-303 and when the price of the contract is estimated [~~by the procurement officer~~] to exceed [~~$25,000~~] $50,000 or, if the contract is for goods or services, the [~~purchasing agency secures the approval of the chief~~] procurement officer[.] includes a requirement for bid security in the solicitation. Bid security shall be a bond provided by a surety company authorized to do business in the State, or the equivalent in cash, or [~~otherwise supplied~~] in a form [~~specified in rules.~~] pursuant to section 103D-325."

SECTION 18. Section 103D-324, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Unless the policy board determines otherwise by rules, the following bonds or security shall be delivered to the [~~purchasing agency~~] procurement officer and shall become binding on the parties upon the execution of the contract if the contract which is awarded exceeds [~~$25,000~~] $50,000 and is for construction, or the [~~purchasing agency secures the approval of the chief~~] procurement officer[:] includes a requirement for such bonds in the solicitation:

(1) A performance bond in a form [~~prescribed by the rules of the policy board,~~] pursuant to section 103D-325, executed by a surety company authorized to do business in this State or otherwise secured in a manner satisfactory to the [~~purchasing agency,~~] procurement officer, in an amount equal to one hundred per cent of the price specified in the contract;

(2) A payment bond in a form [~~prescribed by the rules of~~ ~~the policy board,~~] pursuant to section 103D-325, executed by a surety company authorized to do business in this State or otherwise secured in a manner satisfactory to the [~~purchasing agency,~~] procurement officer, for the protection of all persons supplying labor and material to the contractor for the performance of the work provided for in the contract. The bond shall be in an amount equal to one hundred per cent of the price specified in the contract; or

(3) A performance and payment bond which satisfies all of the requirements of paragraphs (1) and (2)."

SECTION 19. Section 103D-406, Hawaii Revised Statutes, is amended to read as follows:

"[[]§103D-406[]] Specifications prepared by [~~architects and engineers.~~] persons other than governmental personnel. The requirements of this part regarding the purposes and nonrestrictiveness of specifications shall apply to all specifications, including, but not limited to, those prepared by [~~architects, engineers, designers, and drafting~~] professionals, consultants, and any other individual for public contracts."

SECTION 20. Section 103D-410, Hawaii Revised Statutes, is amended by amending subsections (b) and (c) to read as follows:

"(b) In implementing life-cycle costing, the purchasing agency shall be guided by energy efficiency standards and policies for purchasing various items developed and promulgated by the United States Department of Energy and other federal agencies, and nationally recognized trade associations, including but not limited to the National Association of State Purchasing Officials, the National Institute of Governmental Purchasing, Inc., the National Association of Purchasing Management, and the Air Conditioning and Refrigeration Institute. The [~~purchasing agency~~] procurement officer shall notify bidders of information, procedures, and forms required in implementing energy efficiency standards and policies. The information required shall include purchasing standards and policies developed by federal agencies and by nationally recognized agencies and associations, as well as energy consumption and life-cycle cost data.

(c) The [~~purchasing agency~~] procurement officer shall consider purchasing via the life-cycle costing method those classes of items for which nationally recognized energy efficiency data have been developed. These items shall include but not be limited to automobiles and air conditioning systems. The watt-saving variety of common-sized fluorescent lamps shall be purchased except where standard wattage of those lamps is specifically required by the using agency."

SECTION 21. Section 103D-701, Hawaii Revised Statutes, is amended by amending subsection (f) to read as follows:

"(f) In the event of a timely protest under subsection (a), no further action shall be taken on the solicitation or the award of the contract until the chief procurement officer makes a written determination that the award of the contract without delay is necessary to protect substantial interests of the State. Notwithstanding section 103D-709 and any law to the contrary, a decision under this subsection shall be final, conclusive, and not subject to appeal."

SECTION 22. Section 103D-1001, Hawaii Revised Statutes, is amended as follows:

(1) By adding seven new definitions to be appropriately inserted and to read as follows:

""Biodiesel" means a vegetable oil-based fuel that meets ASTM International standard D6751, "Standard Specification for Biodiesel (B100) Fuel Blend Stock for Distillate Fuels", as amended.

"Biofuel" means fuel from non-petroleum plant or animal based sources that can be used for the generation of heat or power.

"Industrial oil" means any compressor, turbine, or bearing oil, hydraulic oil, metal working oil or refrigeration oil.

"Lubricating oil" means any oil intended for use in an internal combustion crankcase, transmission, gearbox or differential or an automobile, bus, truck, vessel, plane, train, heavy equipment, or machinery powered by an internal combustion engine.

"Recycled oil" means used oil that has been prepared for reuse as a petroleum product by refining, reclaiming, reprocessing or other means provided that the preparation or use is operationally safe, environmentally sound and complies with all laws, rules, and regulations.

"Soil enhancement product" means any nonchemical soil preparation, conditioner, or compost mixture designed to supplement aeration or add organic, green waste, or decaying matter to the soil; provided that the term does not include any plant fertilizer intended to stimulate or induce plant growth through chemical means.

"Virgin oil" means oil that has been refined from crude oil and that has not been used or contaminated with impurities."

(1) By repealing the definitions of "Hawaii software development business", "printed material", and "software development".

[""Hawaii software development business" means any person, agency, corporation, or other business entity with its principal place of business or ancillary headquarters located in the State and that proposes to obtain eighty per cent of the labor for software development from persons domiciled in Hawaii.

"Printed material" includes business forms, stationery, business cards, brochures, reports, publications, advertising and promotional collateral, and other related materials, including reports, publications, and related materials commissioned as part of any professional services contract.

"Software development" means any work related to feasibility studies, system requirements analysis, system design alternatives analysis, system external specifications, system internal specifications, programming, testing, debugging, or implementation for an electronic data processing system.]

SECTION 23. Section 103D-1005, Hawaii Revised Statutes, is amended as follows:

(1) By amending subsections (a) and (b) to read as follows:

"(a) To encourage the use of recycled products, contracts [~~shall~~] may be awarded to the lowest responsible and responsive bidders, with preference being given to the products containing recycled material. The policy board [~~shall adopt rules in accordance with chapter 91 governing preference for recycled products. The~~] rules shall establish percentages of preference and the method of determining the contents of recycled material to qualify various products for preference.

(b) The state procurement office, with the assistance of the office of solid waste management in the department of health as provided in section 342G-42, shall develop a recycled product procurement program that shall require state [~~purchasing agencies~~] procurement officers and urge county [~~purchasing agencies~~] procurement officers to:

(1) Apply preference to the purchase of products with recycled content before purchasing products without any recycled content;

(2) Be consistent with applicable federal specification standards incorporated in Executive Order No. 12873, signed by the President of the United States on October 20, 1993, and any subsequent amendments to that order; and

(3) Ensure, to the maximum extent economically feasible, the purchase of materials that may be recycled or reused when discarded, and to avoid the purchase of products deemed environmentally harmful."

(2) By amending subsection (e) to read as follows:

"(e) When purchasing office paper and printed material, state [~~purchasing agencies~~] procurement officers shall, and county [~~purchasing agencies~~] procurement officers are urged to, purchase only office paper and printed material with recycled content, except when statutory, regulatory, or contractual requirements preclude the purchase of office paper or printed material with recycled contents of the same type and quantity as the office paper or printed material without recycled content."

SECTION 24. Section 103D-1010, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) The [~~purchasing agency~~] procurement officer shall:

(1) Receive and review proposals submitted by qualified community rehabilitation programs to provide goods or services and determine if they are suitable for purchase by the agency;

(2) Negotiate the conditions and terms for the purchase, including the price of the offer, between the agency and the qualified community rehabilitation program; provided that the price of the offer shall not exceed the fair market price and there is assurance that the qualified community rehabilitation program proposal is in compliance with all administrative rules related to purchasing; and

(3) Ensure that any goods or service purchased from a qualified community rehabilitation program shall not be placed on the Hawaii products list under section 103D-1002."

SECTION 25. Section 103D-1011, Hawaii Revised Statutes, is amended to read as follows:

"[[]§103D-1011[]] Qualified community rehabilitation program; proposal to provide goods and services. A qualified community rehabilitation program shall be allowed to sell only goods or services, also to include building custodial and grounds maintenance services, to a governmental body. A proposal shall be submitted to the [~~purchasing agency~~] procurement officer containing the following information:

(1) A description of the goods or service;

(2) The price of the goods or service; and

(3) Documents and information necessary to qualify as a qualified community rehabilitation program under section 103D-1001."

SECTION 26. Section 103D-1012, Hawaii Revised Statutes, is amended to read as follows:

"[[]§103D-1012[]] Biofuel preference. (a) Notwithstanding any other law to the contrary, contracts for the purchase of diesel fuel or boiler fuel [~~shall~~] may be awarded to the lowest responsible and responsive bidders, with preference given to bids for biofuels or blends of biofuel and petroleum fuel.

(b) When purchasing fuel for use in diesel engines, the preference shall be five cents per gallon of one hundred per cent biodiesel. For blends containing both biodiesel and petroleum-based diesel, the preference shall be applied only to the biodiesel portion of the blend.

(c) When purchasing fuel for use in boilers, the preference shall be five cents per gallon of one hundred per cent biofuel. For blends containing both biofuel and petroleum-based boiler fuel, the preference shall be applied only to the biofuel portion of the blend.

[(d) As used in this section, "biodiesel" means a vegetable oil-based fuel that meets ASTM International standard D6751, "Standard Specification for Biodiesel (B100) Fuel Blend Stock for Distillate Fuels", as amended.

~~(e) As used in this section, "biofuel" means fuel from non-petroleum plant or animal based sources that can be used for the generation of heat or power.~~]"

SECTION 27. Section 103D-209, Hawaii Revised Statutes, is repealed.

["~~§103D-209 Authority to contract for certain services.~~ Except as provided in section 28-8.3 with respect to agencies of the State of Hawaii, any governmental body of this State may act as a purchasing agency and contract on its own behalf for professional services subject to this chapter and rules adopted by the policy board. The purchasing agency may consult with the chief procurement officer or the officer's designee when procuring these services."]

SECTION 28. Section 103D-403, Hawaii Revised Statutes, is repealed.

["[~~§103D-403] Exempted items.~~ Specifications for goods, services, or construction items procured under section 103D-209, or those exempted pursuant to section 103D-210 may be prepared by a purchasing agency in accordance with this chapter and rules adopted hereunder."]

SECTION 29. Section 103D-1003, Hawaii Revised Statutes, is repealed.

["~~§103D-1003 Printing, binding, and stationery work.~~ (a) All bids submitted for a printing, binding, or stationery section 103D-302 contract in which all work will be performed in-state, including all preparatory work, presswork, bindery work, and any other production-related work, to include storage and shipping costs, shall receive a fifteen per cent preference for purposes of bid evaluation.

(b) Where bids are for work performed in-state and out-of-state, then for the purpose of selecting the lowest bid submitted only, the amount bid for work performed out-of-state shall be increased by fifteen per cent. The lowest total bid, taking the preference into consideration, shall be awarded the contract unless the solicitation provides for additional award criteria. The contract amount awarded, however, shall be the amount of the price offered, exclusive of the preference."]

SECTION 30. Section 103D-1006, Hawaii Revised Statutes, is repealed.

["~~§103D-1006 Software development businesses.~~ (a) In any expenditure of public funds for software development, the use of Hawaii software development businesses shall be preferred. Where a package bid or response to a request for proposal contains both Hawaii and non-Hawaii software development businesses, then for the purpose of selecting the lowest bid or purchase price only, the bid or offer by a non-Hawaii software development business shall be increased by a preference percentage pursuant to rules adopted by the policy board.

~~(b) This section shall not apply when precluded by federal requirements for competitive bidding.~~"]

SECTION 31. Chapter 103D, part XIII, Hawaii Revised

Statutes, is repealed.

SECTION 32. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 33. This Act shall take effect on January 1, 2011; provided that amendments made to sections 103D-102(b) and 103D-305, Hawaii Revised Statutes, by this Act shall not be repealed when sections 103D-102 and 103D-305, Hawaii Revised Statutes, are reenacted pursuant to section 14(1) of Act 175, Session Laws of Hawaii 2009.

INTRODUCED BY:

_____________________________

By Request

THE SENATE	S.B. NO.	2659
TWENTY-FIFTH LEGISLATURE, 2010
STATE OF HAWAII