HB1180.DOC

HOUSE OF REPRESENTATIVES	H.B. NO.	1180
TWENTY-NINTH LEGISLATURE, 2017
STATE OF HAWAII

A BILL FOR AN ACT

Relating to procurement.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that the integrity of the state procurement process can be undermined by subcontractors who have engaged in unethical conduct on previous jobs.

The purpose of this Act is to ensure that subcontractors who work on public works projects are held to the same standards as contractors by:

(1) Amending the definition of contractor in chapter 103D, Hawaii Revised Statutes, to include subcontractors; and

(2) Applying the same sanctions to subcontractors for unethical conduct.

SECTION 2. Section 103D-104, Hawaii Revised Statutes, is amended by amending the definition of "contractor" to read:

""Contractor" means any person having a contract with a governmental body[.] and includes subcontractors."

SECTION 3. Section 103D-702, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (c) to read:

"(c) The existence of a cause for debarment does not necessarily require that a contractor be debarred. The seriousness of a contractor's or subcontractor's acts or omissions and any remedial measure or mitigating factors shall be considered in making any debarment decision. Before arriving at any debarment decision, the chief procurement officer shall consider factors such as the following:

(1) Whether the contractor or subcontractor had effective standards of conduct and internal control systems in place at the time of the activity constituting cause for debarment or had adopted those procedures prior to any government investigation of the activity cited as the cause for debarment;

(2) Whether the contractor or subcontractor brought the activity cited as the cause for debarment to the attention of the appropriate government agency in a timely manner;

(3) Whether the contractor or subcontractor fully investigated the circumstances surrounding the cause for debarment and made the result of the investigation available to the chief procurement officer;

(4) Whether the contractor or subcontractor cooperated fully with government agencies during the investigation and any court or administrative action;

(5) Whether the contractor or subcontractor has paid or has agreed to pay all criminal, civil, and administrative liability for improper activity, including any investigative or administrative costs incurred by the governmental body, and has made or has agreed to make full restitution;

(6) Whether the contractor or subcontractor has taken appropriate disciplinary action against the individuals responsible for the activity constituting the cause for debarment;

(7) Whether the contractor or subcontractor has implemented or agreed to implement remedial measures, including any identified by the governmental body or the chief procurement officer;

(8) Whether the contractor or subcontractor has instituted or agreed to institute new or revised review and control procedures and ethics training programs;

(9) Whether the contractor or subcontractor has had adequate time to eliminate the circumstances within the contractor's or subcontractor's organization that led to the cause for debarment; and

(10) Whether the contractor's or subcontractor's management recognizes and understands the seriousness of the misconduct giving rise to the cause for debarment and has implemented programs to prevent its recurrence.

The existence or nonexistence of any mitigating factors or remedial measures such as those set forth in this subsection shall not necessarily be determinative of a contractor's present responsibility. If a cause for debarment exists, the contractor or subcontractor has the burden of demonstrating to the satisfaction of the chief procurement officer the contractor's or subcontractor's present responsibility and that debarment is not necessary."
2. By amending subsection (f) to read:

"(f) The chief procurement officer shall transmit a copy of the decision to debar or suspend a contractor or subcontractor to the state procurement office, which shall distribute a list to all governmental bodies containing the names of persons or firms debarred or suspended from consideration for award of all public contracts and from performance on any public contract."

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

SECTION 5. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________