THE SENATE	S.B. NO.	2838
THIRTIETH LEGISLATURE, 2020
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 purpose of this Act is to amend the procurement laws relating to the purchase of health and human services to promote procurement efficiency, program success, and government accountability. It would do so by (1) authorizing the procurement policy board to adopt administrative rules to provide an expedited method for purchasing agencies to competitively procure health and human services small purchases, (2)# increasing efficiency and short-term treatment purchase of services, (3) promoting fair and reasonable prices through government transparency and accountability, and (4) streamlining membership requirements for the procurement policy board.

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

"§103F- Fair and reasonable pricing policy; cost or pricing data.

(a) For each contracting action under this chapter including any change orders or contract modifications that increase the original contract amount, the procuring agency shall make a written determination that the amount of the contracting action is fair and reasonable.

(b) In determining whether the amount of the contracting action is fair and reasonable, the procuring agency shall obtain the following:

(1) Cost or pricing data, certified by the contractor pursuant to subsection (c), supporting the amount of the contracting actions, and

(2) Other data necessary to perform a cost or price analysis to determine that the amount of the contracting action is a fair and reasonable price.

(c) Contractor shall submit to the procuring agency cost or pricing data supporting the amount of the contracting action and shall certify that the submitted data is accurate, complete, and current when the contractor submits the offer or, if the contracting action is a change order or contract modification increasing the total contract amount, prior to the execution of such change order or contract modification.

(d) If the procuring agency finds that the contractor furnished cost or pricing data that was inaccurate, incomplete, or not current, the procuring agency may adjust the amount of the contract, change order, or contract modification to reflect an amount that is supported by accurate, complete, and current cost or pricing data obtained by the procuring agency.

(e) Subsection (b)(1) shall not apply to:

(1) Contract awards based on adequate price competition;

(2) Contract awards where the contract price is based upon established catalog or market prices;

(3) Contract awards where the contract price is set by law or administrative rule;

(4) Contract awards for small purchases pursuant to section 103F-403, except for change orders and change modifications that increase an original small purchase contract to an amount beyond the threshold amount set forth in section 103F-403; and

(5) Contracting actions that, in accordance with rules adopted by the procurement policy board, may be waived by the chief procurement officer from the requirements of this section; provided that the reasons for such waiver are in writing; and provided further that the chief procurement officer shall not delegate this authority."

SECTION 3. Section 103D-201, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) The policy board shall consist of [seven] six members. Notwithstanding the limitations of section 78-4, the members of the board shall include:

(1) The comptroller;

(2) A county employee with significant high-level procurement experience; and

(3) [Five] Four persons who shall not otherwise be full- time employees of the State or any county; provided that at least one member shall be a [certified] professional in the field of procurement, at least one member shall have significant high-level, federal procurement experience, and at least [two members] one member shall have significant experience in the field of health and human services.

Each appointed member shall have demonstrated sufficient business or professional experience to discharge the functions of the policy board. The initial and subsequent members of the policy board, other than the comptroller, shall be appointed by the governor from a list of [three] two individuals for each vacant position, submitted by a nominating committee composed of [four] three individuals chosen as follows: [two persons] one person appointed by the governor; one person appointed by the president of the senate; and one person appointed by the speaker of the house. Except as provided in this section, the selection and terms of the policy board members shall be subject to the requirements of section 26-34. No member of the policy board shall act concurrently as a chief procurement officer. The members of the policy board shall devote such time to their duties as may be necessary for the proper discharge thereof."

SECTION 4. Section 103F-404, Hawaii Revised Statutes, is amended to read as follows:

"[[]§103F-404[]] Treatment purchase of services. (a) Treatment services may be purchased in accordance with this section if [either or both of] the following circumstances are applicable:

[(1) Such services may become necessary from time to time, but cannot be anticipated accurately on an annual or biennial basis; and

(2) When deferring treatment until solicitation, provider selection, and contract formation can be completed, the problem needing treatment would be rendered worse than at the time of diagnosis or assessment.

Contracts for treatment services shall be awarded on the basis of demonstrated competence and qualification for the type of service required, and at fair and reasonable prices.]

(1) The need for treatment services is unanticipated and arises from time to time;

(2) The required services are for a one-time purchase for not more than $100,000 and no longer than one year;

(3) The services are industry standard services, that is, the services are generally accepted practices by the industry or profession; and

(4) The award of a contract is based on demonstrated competence and qualification for the type of service required and at fair and reasonable prices.

(b) [At a minimum, before the beginning of each fiscal year, the administrator shall publish a notice describing the types of treatment services that may be needed throughout the year on a periodic basis and inviting providers engaged in providing these treatment services to submit current statements of qualification and expressions of interest to the office. The chief procurement officer may specify a uniform format for statements of qualifications.] The head of the purchasing agency shall, at a minimum, publish a notice describing the types of treatment services that may be needed throughout the year on an as-needed basis and inviting providers engaged in providing these treatment services to submit current statements of qualification and expressions of interest to the purchasing agency. Providers may amend these statements by filing an amended or new statement prior to the date designated for submission.

(c) The [administrator] head of the purchasing agency shall form an initial review committee for each profession, consisting of a minimum of three employees from a state agency or agencies with sufficient education, training, and licenses or credentials to evaluate the statements of qualifications which the [administrator] head of the purchasing agency receives in response to the notice published pursuant to subsection (b). The committee shall review and evaluate the submissions and other pertinent information, including references and reports, and prepare a list of qualified providers to provide treatment services during the fiscal year. Providers included on the list of qualified treatment providers may amend their statements of qualifications as necessary or appropriate. Providers shall immediately inform the [administrator] head of the purchasing agency of any changes in information furnished [which] that would disqualify the provider from being considered for a contract award.

(d) When the need to purchase treatment arises, the head of a purchasing agency shall select the provider most qualified to provide the needed treatment from the list of qualified providers.

(e) The head of the purchasing agency, or a designee, shall negotiate a contract, including a rate of compensation [which] that is fair and reasonable, established in writing, and based upon the estimated value, scope, nature, and complexity of the treatment services to be rendered, or use the rate established by the [administrator,] head of the purchasing agency, if any. If negotiations fail, upon written notice of an impasse to the provider selected under subsection (d), the head of the purchasing agency shall choose another provider from the list of qualified providers, and conduct further negotiations. Negotiations shall be conducted confidentially.

(f) Contracts for treatment services in excess of $100,000 or that last for more than one year shall [be procured using section 103F-402, competitive purchase of services, unless a waiver of this subsection is approved by the chief procurement officer.] utilize an alternative applicable method of procurement."

SECTION 5. Section 103F-405, Hawaii Revised Statutes, is amended to read as follows:

"[[]§103F-405[]] Small purchases. Purchases of health and human services of less than [$25,000] $100,000 are small purchases, and shall be made in accordance with [section 103D-305 and] rules adopted by the policy board to implement [that] this section."

SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 7. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________
	BY REQUEST

Report Title:

Procurement; Price or Cost Data; Procurement Policy Board; Treatment Purchase of Services; Small Purchase of Service

Description:

Requires cost or pricing analysis for health and human services purchasing. Changes membership of the Procurement Policy Board. Authorizes purchasing agency heads to issue requests for statement of qualifications and to establish lists of qualified providers for treatment purchase of services. Increases the small purchase threshold for health and human services.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.