HB889 SD1

SECTION 1. Hawaii is faced with limited, if not declining, government funding. This trend is expected to continue, increasing the importance of leveraging limited governmental resources and partnering with the private sector.

A public-private partnership is a contractual agreement between a public agency and a private entity that allows for a greater risk transfer to the private sector in the delivery and financing of a public project, creating greater value for the public than traditional delivery methods. In a public-private partnership project, the public agency retains ownership and substantial control of the project, but transfers certain responsibilities to the private partner under a single contract, which is often a long-term contract involving lifecycle cost risk. The aim of a public-private partnership is to provide the best value and performance in the delivery of assets and services for the benefit of the general public.

The purpose of this Act is to establish a public‑private partnership working group within the department of accounting and general services to help the State and counties undertake certain capital improvement projects in a more efficient and cost-effective manner by allowing more innovative project delivery methods.

SECTION 2. Chapter 103, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"PART . DEPARTMENT OF ACCOUNTING AND GENERAL SERVICES WORKING GROUP

§103- Public‑private partnership working group; established; state public-private partnership coordinator. There is established within the department of accounting and general services a public‑private partnership working group to support state and county agencies in the use of best practices in contracting for public-private partnership projects. The goal of public-private partnership projects shall be to deliver and finance public projects at a lower lifecycle cost and with more diversified risk than the traditional delivery process. The comptroller shall appoint a public-private partnership coordinator, exempt from chapter 76, who shall administer the public‑private partnership working group in accordance with this part.

§103- Duties. The public‑private partnership working group shall:

(1) Create a strategic plan for the provision of advisory services to state and county agencies that includes:

(A) Objectives and goals for the working group, including criteria to measure the objectives and goals;

(B) A website for maintaining the status of public-private projects and best practice resources that meet the working group's objectives and goals;

(C) A framework for retention of qualified legal, financial, and technical advisors that can assist in the delivery of services contemplated by this part; and

(D) The necessary funding to establish and operate the working group and fee structures for advisory services to maintain the working group;

(2) Coordinate collaboration among state and county agencies to analyze the value of potential public-private partnership delivery over other delivery methods authorized by chapter 103D, and other needs and goals of state and county agencies;

(3) Provide to the purchasing agency best practice processes for analysis of and contracting for public-private partnerships, including modeling the potential economic benefits, financial outcomes, and contract terms and conditions that will achieve those economic benefits and financial outcomes;

(4) Create and maintain an analysis report of the value of public-private partnership delivery over traditional delivery of each public-private partnership project that shall include:

(A) Proposed economic benefits;

(B) Potential financial outcomes;

(D) Social benefits;

(5) Develop, analyze, and implement plans for future public-private partnership projects, including objectives and criteria to measure the accomplishment of objectives, programs through which the objectives are to be attained, and financial requirements for public resources based on the needs and goals of the State;

(6) Assist state and county agencies, including their respective purchasing agencies, that have an interest in public-private partnership projects with the legal authority to:

(A) Coordinate activities that involve cross-agency responsibilities; and

(B) Encourage the timely and effective implementation and completion of project milestones and objectives among multiple governmental agencies;

(7) Develop educational and advisory programs that enhance the public-private partnership procurement process to continuously encourage best practice procurement of public-private partnership projects that will result in improved infrastructure and government services in the State;

(8) Assist state and county agencies in formulating specific program and procurement documents to solicit public private partnerships; and

(9) Undertake the program established in section 26‑6(b)(6) relating to centralized engineering and office leasing services, to facilitate facility agreements between the State and private investors for the sale of facilities, including operation and maintenance of public buildings.

§103- Annual report. The department of accounting and general services, in coordination with the public‑private partnership working group, shall submit a report to the legislature no later than twenty days prior to the convening of the regular sessions of 2020, 2021, 2022, 2023, 2024, and 2025. The annual report shall include but not be limited to:

(1) The process developed by the working group to support state and county agencies in the use of best practices in contracting for public-private partnerships;

(2) A detailed description of any public-private partnerships entered into, including a cost-benefit analysis of the public-private partnership compared to the traditional means of financing and delivering a similar public contract; and

(3) A detailed listing of any effects that the public-private partnership had on state or county agencies involved in the public-private partnership, including fiscal and personnel impacts."

SECTION 3. Section 103D-104, Hawaii Revised Statutes, is amended by adding three new definitions to be appropriately inserted and to read as follows:

""Independent peer reviewer services" means additional professional services provided to the purchasing agency in public-private partnership procurements to confirm that the key elements of the professional engineering and architectural design provided by the contractor conform to the applicable standard of care.

"Infrastructure facility" means a building or a structure, or a network of buildings, structures, pipes, controls, and equipment, that provide transportation, utilities, public education, or public safety services, including government office buildings; public schools; courthouses; jails; prisons; public hospitals; water treatment plants, distribution systems, and pumping stations; wastewater treatment plants, collection systems, and pumping stations; solid waste disposal plants, incinerators, landfills, and related facilities; public roads and streets; highways; public parking facilities; public transportation systems, terminals, and rolling stock; and rail, air, and water port structures, terminals, and equipment.

"Public-private partnership" means a project delivery method in which the purchasing agency enters into a single contract for any combination of design, build, financing, maintenance, or operation in addition to design-build of an infrastructure facility over a contractually-defined period."

SECTION 4. Section 103D-303, Hawaii Revised Statutes, is amended to read as follows:

"§103D-303 Competitive sealed proposals. (a) Competitive sealed proposals may be used to procure goods, services, or construction that are either not practicable or not advantageous to the State to procure by competitive sealed bidding.

(b) Proposals shall be solicited through a request for proposals.

(d) Proposals shall be opened so as to avoid disclosure of contents to competing offerors during the process of evaluation. A register of proposals shall be prepared and shall be open for public inspection after contract award.

(e) The request for proposals shall state the relative importance of price and other evaluation factors.

(f) Discussions may be conducted with responsible offerors who submit proposals determined to be reasonably likely to be selected for a contract award for the purpose of clarification to assure full understanding of, and responsiveness to, the solicitation requirements. Offerors shall be accorded fair and equal treatment with respect to any opportunity for discussion and revision of proposals, and revisions may be permitted after submissions and prior to award for the purpose of obtaining best and final offers. In conducting discussions, there shall be no disclosure of any information derived from proposals submitted by competing offerors.

(g) Award shall be made to the responsible offeror whose proposal is determined in writing to be the most advantageous, taking into consideration price and the evaluation factors set forth in the request for proposals. No other factors or criteria shall be used in the evaluation. The contract file shall contain the basis on which the award is made.

(h) In cases of awards made under this section, non-selected offerors may submit a written request for debriefing to the procurement officer within three working days after the posting of the award of the contract. Thereafter, the procurement officer shall provide the non-selected offeror a prompt debriefing. Any protest by the non-selected offeror pursuant to section 103D-701 following debriefing shall be filed in writing with the procurement officer within five working days after the date upon which the debriefing is completed.

(i) In addition to any other provisions of this section, construction projects may be solicited through a request for proposals to use any combination of the design-build [~~method;~~] or public-private partnership methods; provided that:

(1) A request for proposals is issued to prequalify offerors to select a short list of no more than three responsible offerors, prior to the submittal of proposals; provided that the number of offerors to be selected for the short list shall be stated in the request for proposals and prompt notice is given to all offerors as to which offerors have been short-listed;

(2) A conceptual design fee may be paid to non-selected offerors that submit a technically responsive proposal; provided that the cost of the entire project is greater than $1,000,000; [~~and~~]

(3) The criteria for pre-qualification of offerors, design requirements, development documents, proposal evaluation criteria, terms of the payment of a conceptual design fee, or any other pertinent information shall be stated in the request for proposals[.]; and

(4) Each request for proposals to use any combination of public-private partnership methods shall:

(A) State the relative importance of:

(i) Demonstrated compliance with the design requirements;

(ii) Financial capacity;

(iii) Project schedule;

(iv) Price or lifecycle price; and

(v) Other factors, if any; and

(B) Require each offeror:

(i) For a project with a contract price estimated to exceed $10,000,000;

(ii) For a project with a contract period of operations and maintenance of at least ten years; or

(iii) In other circumstances identified by the comptroller by rule;

to identify and include qualified and competent independent peer reviewer services, which shall be an additional evaluation factor in the award of the contract.

(j) The purchasing agency may engage in negotiations with the highest-ranked offeror in a public-private partnership procurement and may negotiate:

(1) The statement of work;

(2) The contract price as it is affected by negotiating the statement of work; and

(3) Any other terms and conditions reasonably related to those expressly authorized for negotiation in the solicitation of public-private partnership proposals.

Offerors shall not submit for negotiation, and the purchasing agency shall not accept, any terms and conditions that are not reasonably related to those expressly authorized for negotiation in the solicitation of public-private partnership proposals. In conducting negotiations, there shall be no disclosure of any information derived from proposals submitted by competing offerors.

(k) Notwithstanding any other provisions in this section to the contrary, a purchasing agency may terminate negotiations with an offeror of a public-private partnership if the negotiations are not successful, and a purchasing agency may commence negotiations with the next highest scoring offeror. A purchasing agency may continue this process until the public entity has determined to:

(1) Award the contract to the offeror with whom it is currently negotiating;

(2) Continue negotiations with the offerors; or

(3) Cancel the solicitation of the public-private partnership."

SECTION 5. Section 103D-323, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:

"(a) Unless the policy board determines otherwise by rules, bid security shall be required only for construction contracts to be awarded pursuant to sections 103D-302 and 103D-303 and when the price of the contract is estimated by the procurement officer to exceed $25,000 or, if the contract is for goods or services, the purchasing agency secures the approval of the chief procurement officer. Bid security shall be a bond provided by a surety company authorized to do business in the State, or the equivalent in cash, or otherwise supplied in a form specified in rules[.] and shall be in an amount equal to at least five per cent of the amount of the bid.

(b) [~~Bid security shall be in an amount equal to at least five per cent of the amount of the bid.~~] In addition to other requirements of this section, one or more of the following forms of security shall be required to assure the timely, faithful, and uninterrupted provision of operations or maintenance services as elements of public-private partnership procurements:

(1) Operations period surety bonds that secure the performance of the contractor's operations and maintenance obligations;

(2) Letters of credit in an amount appropriate to cover the cost to the purchasing agency of preventing infrastructure service interruptions for a period of up to twelve months; and

(3) Appropriate written guarantees from the contractor or the contractor's parent corporation to secure the recovery of re-procurement costs to the purchasing agency in the event of a default in performance by the contractor."

SECTION 6. 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 2019-2020 and the same sum or so much thereof as may be necessary for fiscal year 2020-2021 to:

(1) Establish and operate the department of accounting and general services working group; and

(2) Convert a vacant position in the public works division to the state public-private partnership coordinator position.

The sums appropriated shall be expended by the department of accounting and general services for the purposes of this Act.

SECTION 7. This Act is not intended to modify, and shall not be construed to expand or limit, any laws relating to the subject of this Act, unless expressly stated herein.

SECTION 8. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 9. This Act shall take effect on January 1, 2050; provided that section 2 of this Act shall be repealed on January 1, 2025.

HOUSE OF REPRESENTATIVES	H.B. NO.	889
THIRTIETH LEGISLATURE, 2019		H.D. 1
STATE OF HAWAII		S.D. 1