STAND. COM. REP. NO.  952

Honolulu, Hawaii

                , 2015

RE:   S.B. No. 1064

      S.D. 1

      H.D. 1

Honorable Joseph M. Souki

Speaker, House of Representatives

Twenty-Eighth State Legislature

Regular Session of 2015

State of Hawaii

Sir:

     Your Committee on Economic Development & Business, to which was referred S.B. No. 1064, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO PROCUREMENT OF PROFESSIONAL SERVICES,"

begs leave to report as follows:

The purpose of this measure is to improve the efficiency and effectiveness of the procurement of professional services by state agencies.  Specifically, this bill authorizes a request to be submitted to the Chief Procurement Officer for an alternative procurement to be made in accordance with administrative rules adopted by the Procurement Policy Board in the event there are fewer than three qualified persons that can be sent to the head of a purchasing agency.

The State Procurement Office and a concerned individual testified in support of this measure.  The American Institute of Architects, American Council of Engineering Companies of Hawaii, American Society of Civil Engineers, and Kukulu, LLC, testified in opposition to this measure.

     The Procurement Policy Board has the authority and responsibility to adopt rules governing the procurement of professional services by state agencies.  In 2014, the Hawaii Supreme Court ruled that, under the current statutes, a selection committee must identify and rank a minimum of three qualified professional service providers in order for a state agency to proceed with procurement.  While many professional services in Hawaii have adequate numbers of qualified professionals to address this requirement, a number of highly specialized professional services do not.  According to the State Procurement Office, this has often resulted in the need to repeat solicitation of bids until bids from three qualified applicants were received.  This process is inefficient and is a detriment in both time and money to the State and qualified applicants.

     Your Committee understands the concerns raised by several industry groups that simply allowing for a request to be submitted to the Chief Procurement Officer for an alternative procurement for professional services to be made in accordance with administrative rules adopted by the Procurement Policy Board without identification and ranking by the selection committee does not serve the procurement code's purpose of ensuring that professional services are procured in a fair and equitable manner.  

     Upon further consideration, your Committee has amended this measure by deleting its substance and inserting the provisions of H.B. No. 895, H.D. 1, a similar bill that your Committee passed earlier this session.  As amended, this measure provides an effective procurement process for situations where a selection committee is not able to send a list of three qualified persons to provide professional services to the head of the purchasing agency.  Specifically, when there are fewer than three qualified persons on the list to provide professional services, the selection committee would be required to rank the qualified persons based on selection criteria and send the ranking to the Chief Procurement Officer, who may proceed in accordance to administrative rules adopted by the Procurement Policy Board.

     As affirmed by the record of votes of the members of your Committee on Economic Development & Business that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1064, S.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1064, S.D. 1, H.D. 1, and be referred to the Committee on Judiciary.

Respectfully submitted on behalf of the members of the Committee on Economic Development & Business,

____________________________

DEREK S.K. KAWAKAMI, Chair