STAND. COM. REP. NO. 711

Honolulu, Hawaii

RE:    S.B. No. 1068

       S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2017

State of Hawaii

Sir:

     Your Committees on Government Operations and Commerce, Consumer Protection, and Health, to which was referred S.B. No. 1068 entitled:

"A BILL FOR AN ACT RELATING TO PROCUREMENT,"

beg leave to report as follows:

     The purpose and intent of this measure is to authorize procurement officers to consider a subcontractor's license as valid if the subcontractor was licensed to perform the scope of work indicated at the time of the award.

     Your Committees received testimony in support of this measure from the Subcontractors Association of Hawaii; Electrical Contractor's Association of Hawai‘i; General Contractors Association of Hawaii; S & M Sakamoto, Inc.; Hawaiian Dredging Construction Company, Inc.; Healy Tibbitts Builders, Inc.; Nordic PCL Construction, Inc.; LYZ, Inc.; Ralph S. Inouye Co, Ltd; Hawaii Plumbing Group, LLC; Tomco Corp.; and Jayar Construction, Inc.  Your Committees received testimony in opposition to this measure from the Department of Transportation, Ironworkers Stabilization Fund, Plumbing & Mechanical Contractors Association of Hawaii, and one individual.  Your Committees received comments on this measure from the State Procurement Office, Department of Commerce and Consumer Affairs, and Contractors License Board.

     Your Committees find that the competitive sealed bidding process can be improved by clarifying that under certain conditions a subcontractor's licensing status should not result in bid disqualification or rejection.  Your Committees note that this measure still requires all listed subcontractors to be properly licensed at the time of the award.  Your Committees further find that exempting bids from disqualification or rejection in limited circumstances may minimize bid challenges, costs, and delays of public works projects while maintaining the integrity of the bid process.

     Your Committees have amended this measure by:

     (1)  Removing the provision allowing a procurement officer to consider a listed subcontractor's license as valid if the subcontractor was licensed to perform the scope of work indicated at the time of award;

     (2)  Inserting a provision that if a procurement officer determines that a subcontractor's license is not valid at the time of the bid due to a lapse in continuous insurance and bond coverage, the bid may not be disqualified or rejected if the subcontractor meets certain conditions;

     (3)  Inserting a requirement that the procurement officer report any unlicensed activity at the time of the bid to the Contractors License Board; and

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

     As affirmed by the records of votes of the members of your Committees on Government Operations and Commerce, Consumer Protection, and Health that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 1068, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 1068, S.D. 1, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committees on Government Operations and Commerce, Consumer Protection, and Health,

________________________________ ROSALYN H. BAKER, Chair

________________________________ DONNA MERCADO KIM, Chair