STAND. COM. REP. NO. 3099

Honolulu, Hawaii

RE: H.B. No. 1669

H.D. 1

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2018

State of Hawaii

Sir:

Your Committee on Government Operations, to which was referred H.B. No. 1669, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO CONCESSIONS ON PUBLIC PROPERTY,"

begs leave to report as follows:

The purpose and intent of this measure is to:

(1) Repeal the fifteen-year limit on the granting of concession contracts and repeal the exemption from the fifteen-year limitation for non-profits;

(2) Allow the granting of thirty-year contracts for concession space if certain conditions are met;

(3) Allow qualified offerors to submit proposals for concessions on public property;

(4) Specify advertising, submission, opening, and deposit or bond requirements for proposals for concessions on public property; and

(5) Require that the responsible officer award the contract to, and negotiate with, the offeror whose proposal is determined to be the most advantageous to the State.

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

Your Committee finds that concessions on public property benefit the public by providing goods and services and revenue to support the properties' operations. Under existing law, agreements for concession entered into by vendors and a government agency are awarded based on the highest responsible bid. However, this bid process does not necessarily consider each potential vendor's total potential benefit to the public. However, the "best value" process, or competitive sealed bid proposals, would allow a government agency to consider all potential benefits, such as a vendor's consistency, reliability, responsiveness, and overall ability to enhance customer experiences, in considering bid proposals.

However, your Committee finds that extending the maximum allowable time period for concession contracts to thirty years would not enhance the effectiveness of concession contracts. Your Committee has concerns that allowing a longer contract period would lessen government's effectiveness in providing quality concessions.

Moreover, your Committee finds that this measure's proposals relating to the awarding of concession contracts should be strengthened to ensure that procurement officers and others involved in the process act in adherence to the State's requirements of ethical public procurement. Further, your Committee finds that under the existing proposal in this measure the procurement officer charged with awarding concession contracts is afforded a wide range of authority which may lead to questions about the legitimacy and fairness of contract awards.

Accordingly, your Committee has amended this measure by:

(1) Re-establishing the existing fifteen-year limit for concession contracts;

(2) Requiring that concession contracts be awarded by a procurement officer based on the rankings of a committee of a minimum of three individuals designated by the procurement officer to review and evaluate proposals from offerors;

(3) Requiring that all persons involved in the review, evaluation, or awarding of concession contracts adhere to all requirements of ethical public procurement under section 103D-101, Hawaii Revised Statutes; and

(4) Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

As affirmed by the record of votes of the members of your Committee on Government Operations that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1669, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1669, H.D. 1, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Government Operations,

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DONNA MERCADO KIM, Chair