STAND. COM. REP. NO. 3523

Honolulu, Hawaii

RE:    H.B. No. 2060

       H.D. 1

       S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Eighth State Legislature

Regular Session of 2016

State of Hawaii

Sir:

     Your Committee on Ways and Means, to which was referred H.B. No. 2060, H.D. 1, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO PROCUREMENT,"

begs leave to report as follows:

     The purpose and intent of this measure is to protect the public's interest in the procurement process.

     Specifically, this measure:

     (1)  Establishes a fair and reasonable pricing policy for every contract action;

     (2)  Clarifies that contractors are required to submit cost or pricing data and a certification of the accuracy of the data for certain change orders and contract modifications, even if the original contract award did not require cost and pricing data; and

     (3)  Clarifies that the State Procurement Administrator has the authority to perform periodic compliance reviews of the procurement practices and procedures of all governmental bodies, in collaboration with the State Procurement Board.

     Your Committee received written comments in support of this measure from the State Procurement Office.

     Your Committee finds that a 2015 Auditor's report highlighted an example of a procurement contract award that was renegotiated and amended three times.  The Auditor found that the final contract amount was six hundred eleven per cent higher than the original bid, even though there was a reduction in the scope of work provided and a one-year extension of the performance deadline.  Your Committee believes that procurement reform is needed to prevent procurement mismanagement and abuse such as that described in the Auditor's report.  Accordingly, your Committee believes that this measure will provide for greater transparency and oversight of procurement practices and help to preserve the integrity of the procurement process.

     Your Committee notes that it intends to insert an appropriation of $54,000 in general funds into the Senate's draft of the Supplemental Appropriations Act of 2016 for the State Procurement Office for cost and pricing analysis.

     Your Committee has amended this measure by changing the effective date to July 1, 2016.

     As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2060, H.D. 1, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 2060, H.D. 1, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

________________________________

JILL N. TOKUDA, Chair