HB1168.DOC

SECTION 1. The legislature finds that the State is in need of increased transparency and accountability in government contracts, and there is currently neither a method for statewide data collection, nor clear authority of the centralized state procurement office to mandate collection for proper reporting and analysis of important metrics of procurement across the various procurement jurisdictions across the State.

The purpose of this Act is to improve the State's procurement process with increased transparency and accountability by strengthening the centralized state procurement office's oversight of all government contracts in the State for information collection and retrieval processes necessary for policy guidance, training, legislative reporting, and general oversight of procurement across the State by:

(1) Mandating that the state procurement office establish a statewide procurement database for data collection that shall receive meaningful data on all state procurements from all government entities and that is accessible by all government entities;

(2) Clarifying the centralized role and authority of the state procurement office across the State's procurement jurisdictions to receive contracting information for data collection, review, and policy analysis; and

(3) Mandating statewide procurement oversight and legislative reporting from the state procurement office.

SECTION 2. Section 103D-107, Hawaii Revised Statues, is amended to read as follows:

"[[]§103D-107[]] Compliance audit unit; establishment and purpose. (a) There is established a compliance audit unit within the [~~office of the auditor.~~] state procurement office. The purpose of this unit shall be to:

(1) Periodically review and audit procurement practices within government to ensure compliance with this chapter and all applicable rules; and

(2) Advocate competition, fairness, and accountability in the procurement process.

Reports made by this unit shall be a matter of public record. This unit shall utilize as part of the review process, a review of records and activities specifically for trends and patterns of occurrence.

(b) The office of the auditor shall periodically audit the compliance audit unit, to ensure compliance with this chapter."

SECTION 3. Section 103D-108, Hawaii Revised Statutes, is amended to read as follows:

"§103D-108 Compliance audit unit; duties and responsibilities. The compliance audit unit shall:

(1) Review and assess applicable innovations in procurement methods or processes in other governmental jurisdictions or as described in national or regional publications;

(2) Review current or proposed statutes and rules to determine whether they promote fairness, efficiency, and accountability in the procurement process;

(3) Review selected contracts awarded pursuant to section 103D-304;

(4) Conduct studies, research, and analyses, and make reports and recommendations with respect to existing and new methods of procurement and other matters within the jurisdiction of the policy board;

(5) Establish and maintain a procurement library;

(6) Establish and maintain an electronic database of meaningful statewide procurement contract data; provided that all data on the database shall be made accessible to each governmental entity and selective non-confidential data may be made accessible to the general public to further transparency and accountability, as determined appropriate by the administrator;

[~~(6)~~] (7) Report to the appropriate agency and the chief procurement officer stating the areas of noncompliance and recommendations for remedial action; and

[~~(7)~~] (8) [~~Be present at~~] Participate in legislative hearings and policy board meetings to present the findings of the unit."

SECTION 4. Section 103D-109, Hawaii Revised Statues, is amended to read as follows:

"[[]§103D-109[]] Compliance audit unit; government officers and employees to cooperate. The officers and employees of the State and of each county shall cooperate with this unit and furnish to them such information related to procurement activities as may be called for in connection with the information gathering and research activities of this unit[.], including by reporting contract data pursuant to requirements and procedures established by the administrator, for inclusion in the database established under subsection 103D-108(6). The information shall be provided in a timely manner pursuant to procedures established by the administrator and shall be free of charge."

SECTION 5. Section 103D-205, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"§103D-205 Authority and duties of the chief procurement officer. (a) For their respective jurisdictions and unless otherwise specifically provided in this chapter, each chief procurement officer shall serve as the central procurement officer for the officer's respective jurisdiction and:

(1) Procure or supervise the procurement of all goods, services, and construction;

(2) Exercise general supervision and control over all inventories of goods;

(3) Sell, trade, or otherwise dispose of surplus goods;

(4) Establish and maintain programs for the inspection, testing, and acceptance of goods, services, and construction;

(5) Coordinate with the administrator regarding procurement policies, opportunities for statewide innovation implementation, and concerns;

(6) Report procurement contract data pursuant to requirements established by the administrator, in the form and manner prescribed by the state procurement office[;], for inclusion in the database established under subsection 103D-108(6); and

(7) Assist and cooperate with the administrator regarding any compliance review by the administrator pursuant to section 103D-206."

SECTION 6. Section 103D-206, Hawaii Revised Statues, is amended to read as follows:

"§103D-206 Additional duties of the administrator of the procurement office. In addition to the duties referred to in section 103D-205, the administrator shall:

(1) Perform periodic review of the procurement practices and procedures of all governmental bodies, in collaboration with the state procurement policy board, for compliance with the procurement code;

(2) Assist, advise, and guide governmental bodies in matters relating to procurement[;], including development and coordination of policies for procurement innovation, transparency, and accountability;

(3) Determine corrective actions; provided that if a procurement officer under the jurisdiction of the administrator of the state procurement office or a chief procurement officer of any of the other state entities under section 103D-203, fails to comply with any determination rendered by the administrator within thirty days from the date of the issuance of the determination, or longer if permitted by the administrator upon request by the procurement officer or a chief procurement officer, the procurement officer or chief procurement officer shall be subject to an administrative fine under section 103D-106, for every day of noncompliance;

(4) Develop and administer a statewide procurement orientation and training program;

(5) Develop, distribute, and maintain a procurement manual for all state procurement officials; [~~and~~]

(6) Develop, distribute, and maintain a procurement guide for vendors wishing to do business with the State and its counties[.]; and

(7) Coordinate and serve as a liaison to the policy board and chief procurement officers on policy matters, including reporting of procurement metrics across the State for all rulemaking and legislative initiatives relating to procurement policy."

SECTION 7. Section 103D-207, Hawaii Revised Statues, is amended to read as follows:

"[[]§103D-207[]] Centralization of procurement authority. Except as otherwise provided in sections 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[.], who shall coordinate with the administrator for statewide data collection, training, and policy initiatives."

SECTION 8. Section 103D-212, Hawaii Revised Statues, is amended to read as follows:

"[[]§103D-212[]] Collection of data concerning public procurement. The chief procurement officer and the heads of all purchasing agencies shall cooperate in the preparation of statistical data concerning the procurement, usage, and disposition of all goods, services, and construction, and employ such trained personnel as may be necessary to carry out this function. All using agencies shall furnish such reports as the chief procurement officer and state procurement office may require concerning usage, needs, and stocks on hand, and the chief procurement officer or state procurement office may prescribe forms to be used by the using agencies in requisitioning, ordering, and reporting of goods, services, and construction."

SECTION 9. Section 103D-326, Hawaii Revised Statutes, is amended to read as follows:

"[[]§103D-326[]] Fiscal responsibility. (a) Every contract modification, change order, or contract price adjustment under a contract shall be subject to prior written certification by the appropriate fiscal officer for funding the project or the contract, as to the effect of the contract modification, change order, or adjustment in contract price on the total project budget or the total contract budget. In the event that the certification of the fiscal officer discloses a resulting increase in the total project budget or the total contract budget, the procurement officer shall not execute or make such contract modification, change order, or adjustment in contract price unless sufficient funds are available therefor, or the scope of the project or contract is adjusted so as to permit the degree of completion that is feasible within the total project budget or total contract budget as it existed prior to the contract modification, change order, or adjustment in contract price under consideration; provided, that with respect to the validity, as to the contractor, of any executed contract modification, change order, or adjustment in contract price which the contractor has reasonably relied upon, it shall be presumed that there has been compliance with this section.

(b) Any contract modification, change order, or adjustment in contract price that would result in the lesser of either:

(1) A fifty per cent increase of the initial contract price, or

(2) An increase in excess of $1,000,000 above the initial contract price,

shall be submitted with associative cost and pricing analysis to

the chief procurement officer for approval, then shall be submitted to the administrator for notification."

SECTION 10. Section 103D-809, Hawaii Revised Statutes, is amended to read as follows:

"[[]§103D-809[]] Review of procurement requirements. The [~~chief procurement officer may~~] administrator shall collect information concerning the type, cost, quality, and quantity of commonly used goods, services, or construction being procured or used by state public procurement units[.], in coordination with the chief procurement officer. The chief procurement officer may also collect and report this information from local public procurement units. The [~~chief procurement officer may~~] state procurement office shall make available all such available information to any public procurement unit upon request."

SECTION 11. This Act does not affect the rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 12. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2016-2017 and the same sum or so much thereof as may be necessary for fiscal year 2017-2018 for the state procurement office to establish the statewide electronic procurement database and establish necessary positions pursuant to this Act.

SECTION 13. All appropriations, records, equipment, machines, files, supplies, contracts, books, papers, documents, maps, and other personal property heretofore made, used, acquired, or held by the office of the auditor relating to the functions transferred to the state procurement agency shall be transferred with the functions to which they relate.

The sums appropriated shall be expended by the state procurement office for the purposes of this Act.

SECTION 14. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 15. This Act shall take effect on July 1, 2017.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	1168
TWENTY-NINTH LEGISLATURE, 2017
STATE OF HAWAII