STAND. COM. REP. NO 356

Honolulu, Hawaii

RE:    S.B. No. 1236

       S.D. 1

Honorable Donna Mercado Kim

President of the Senate

Twenty-Eighth State Legislature

Regular Session of 2015

State of Hawaii

Madam:

     Your Committees on Hawaiian Affairs and Government Operations, to which was referred S.B. No. 1236 entitled:

"A BILL FOR AN ACT RELATING TO THE HAWAII PUBLIC PROCUREMENT CODE,"

beg leave to report as follows:

     The purpose and intent of this measure is to require state agencies to award not less than twenty percent of the total value of their procurement contracts to native Hawaiian organizations.

     Your Committees received testimony in support of this measure from Ko‘olaupoko Hawaiian Civic Club, Ko‘olau Foundation, and Native Hawaiian Chamber of Commerce.  Your Committees received testimony in opposition to this measure from the State Procurement Office, Honolulu Department of Budget and Fiscal Services, and Center for Hawaiian Sovereignty Studies.  Your Committees received comments on this measure from the Office of Hawaiian Affairs.

     Your Committees finds that it should be a goal of the State to support programs that promote and support native Hawaiian businesses and organizations.  In its testimony, this sentiment is shared by the State Procurement Office; however, the State Procurement Office has represented to your Committees that while it supports the intent of this measure, it nevertheless must oppose its passage.  According to the State Procurement Office, the State already has a small business set-aside law; however, to date, that program has been ineffective due to the inability to adopt rules for its implementation.  Under the new state administration, there is a renewed effort by the State Procurement Office to implement the small business set-aside law.  To that end, the current State Procurement Office administration has been engaging stakeholders for their input so that the problems that caused past failures can be avoided.  The State Procurement Office has requested that rather than passing the current version of this measure, that your Committees support their efforts to effectuate the existing small business set-aside law.  Once done, the small business set-aside law would serve as an appropriate platform to support individual programs for specific groups of small business such as native Hawaiians, women, veterans, and the disabled.  Upon further discussion, your Committees find that they should support the State Procurement Office's efforts to effectuate the small business set-aside law so that ultimately, programs for native Hawaiian organizations and other groups can be developed and successfully implemented.

     Your Committees have amended this measure by:

     (1)  Deleting the contents of the original measure;

     (2)  Inserting language submitted by the State Procurement Office calling for the Small Business Regulatory Review Board to issue rules to define a "small business" under chapters 103D and 201M, Hawaii Revised Statutes, including rules to promote the growth and development of small business and set asides for small businesses in appropriate classifications, including Native Hawaiian organizations and veteran-owned organizations;

     (3)  Inserting language to establish the Small Business Office and state small business program within the Department of Business, Economic Development, and Tourism; and

     (4)  Amending the effective date to be upon approval.

     As affirmed by the records of votes of the members of your Committees on Hawaiian Affairs and Government Operations that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 1236, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 1236, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committees on Hawaiian Affairs and Government Operations,

____________________________ DONOVAN M. DELA CRUZ, Chair

____________________________ MAILE S.L. SHIMABUKURO, Chair