SB2582 HD1.DOC

SECTION 1. The legislature finds that current difficult economic conditions warrant the use of incentives to help create job growth and stimulate the State's economy. The legislature also finds that the process for procuring state contracts is often cumbersome. The legislature further finds that incentives in the procurement process would lead to more companies bidding for state contracts. This would give the State a broader network of contractors to choose from and would possibly expedite the progress of rebuilding Hawaii's economy and workforce by having a number of companies working on various state projects.

The purpose of this Act is to create price preferences for bids and proposals submitted to procuring agencies by Hawaii small businesses, veterans, and service-disabled veterans.

SECTION 2. Section 103D-903, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) In carrying out this part, the chief procurement officer may:

(1) Give special publicity to procurement procedures and issue special publications designed to assist small businesses in learning how to do business with the State;

(2) Compile, maintain, and make available source lists of small businesses for the purpose of encouraging procurement from small business;

(3) Include small businesses on solicitation mailing lists;

(4) Develop and conduct training programs to assist small businesses;

(5) Reduce the level or change the types of bonding normally required or accept alternative forms of security;

(6) Make special provisions for progress payments;

(7) Establish the goal that twenty per cent of the State's annual purchasing expenditure be awarded to small business; [~~and~~]

(8) Impose mandatory evaluation criteria designed to encourage the use of small business as subcontractors on large contracts not susceptible to performance by small business[.]; and

(9) Establish the goal that at least three per cent of the State's annual purchasing expenditures shall be awarded to veteran-owned businesses that are eligible for the preferences established by section 103D-906(a)(2) and (3)."

SECTION 3. Section 103D-906, Hawaii Revised Statutes, is amended to read as follows:

"[[]§103D-906[]] Preference for Hawaii small businesses[~~; set-asides; use as subcontractors~~]. (a) The policy board shall adopt rules to promote the growth and development of Hawaii small businesses that shall include:

[(1) ~~Set-asides for small businesses in appropriate classifications of requirements suitable to performance by small businesses; and~~

~~(2)~~ ~~Criteria designed to encourage the use of small businesses as subcontractors on large contracts.~~]

(1) A five per cent price preference for Hawaii small businesses other than those described in paragraphs (2) and (3);

(2) A seven per cent price preference for businesses owned by veterans; and

(3) A nine per cent price preference for businesses owned by service-disabled veterans;

provided that for the purposes of this section, a business shall be owned by a veteran or service-disabled veteran if the veteran or service-disabled veteran directly owns at least a fifty-one per cent interest in the business.

The rules adopted pursuant to this section shall include rules for verifying the status and eligibility of veterans and service-disabled veterans.

(b) As used in this section:

"Hawaii small business" means a small business as defined in section 103D-901, that:

(1) Has its principal place of business or ancillary headquarters located within the State;

(2) Employs a work force consisting of not less than thirty-five per cent of employees who reside within the State; and

(3) Employs fewer than fifty employees.

"Service-disabled veteran" means a veteran who has a service-connected disability compensable under title 38 United States Code section 1110 or 1131 and who meets any other applicable qualifications established by rule.

"Veteran" means any person who has served in any of the armed services of the United States in any war or campaign in which the United States was engaged, whose service has been verified by the:

(1) United States Department of Veterans Affairs;

(2) United States Department of Defense;

(3) United States Coast Guard; or

(4) National Guard,

and who meets any other applicable qualifications established by rule."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect on July 1, 2112.

THE SENATE	S.B. NO.	2582
TWENTY-SIXTH LEGISLATURE, 2012		S.D. 2
STATE OF HAWAII		H.D. 1