HOUSE OF REPRESENTATIVES	H.B. NO.	1355
THIRTY-FIRST LEGISLATURE, 2021		H.D. 1
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO STATE PROCUREMENT REFORM.

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

SECTION 1. Chapter 103D, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:

"§103D-    Cost overruns; liability determination. In the event of construction cost overruns, a procurement officer shall create a report documenting the determination whether to pursue damages against a design professional or contractor. The report shall identify the factors used by the procurement officer in making the procurement officer's determination.

§103D-    Professional services; disqualified vendors. The chief procurement officer shall develop a list of all construction companies and design professionals who are in noncompliance with a provision of this chapter or have outstanding fines or other penalties incurred for violations of this chapter. This list shall be made publicly available on the state procurement office's website. Noncompliant construction companies and design professionals shall remain on the list for five years."

SECTION 2. Chapter 672B, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§672B-    Cost overrun. Construction cost overruns shall constitute a tort for the purposes of this chapter."

SECTION 3. Section 103D-302, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) An invitation for bids shall be issued, and shall include a purchase description [and], all contractual terms and conditions applicable to the procurement[.], and a liability contingency fund of      per cent of the project cost to avoid cost overruns. If the invitation for bids is for construction, it shall specify that all bids include the name of each person or firm to be engaged by the bidder as a joint contractor or subcontractor in the performance of the contract and the nature and scope of the work to be performed by each. Construction bids that do not comply with this requirement may be accepted if acceptance is in the best interest of the State and the value of the work to be performed by the joint contractor or subcontractor is equal to or less than one per cent of the total bid amount."

SECTION 4. Section 103D-110, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) The state procurement office, in cooperation with the department of human resources development, shall develop and maintain a procurement practices training and development program for procurement officers of the State and the several counties, to ensure that an agency's procurement practices are in compliance with the procurement code and that proper procurement decisions are made consistent with this chapter. The program shall include [a]:

(1) A mandatory fundamental training and development session; provided that this session shall include training on the procurement officer's duty to hold design professionals contractually liable for breaches of professional standards; and

(2) [follow-up] Follow-up training and development sessions."

SECTION 5. Section 103D-206, Hawaii Revised Statutes, is amended to read as follows:

"§103D-206 Additional duties of the administrator of the procurement office. In addition to the duties referred to in section 103D-205, the administrator shall:

(1) Perform periodic review of the procurement practices and procedures of all governmental bodies, in collaboration with the state procurement policy board, for compliance with the procurement code;

(2) Assist, advise, and guide governmental bodies in matters relating to procurement;

(3) Determine corrective actions; provided that if a procurement officer under the jurisdiction of the administrator of the state procurement office or a chief procurement officer of any of the other state entities under section 103D-203, fails to comply with any determination rendered by the administrator within thirty days from the date of the issuance of the determination, or longer if permitted by the administrator upon request by the procurement officer or a chief procurement officer, the procurement officer or chief procurement officer shall be subject to an administrative fine under section 103D-106, for every day of noncompliance;

(4) Develop and administer a statewide procurement orientation and training program[;], which shall include training on the use of contractors for program, project, construction, and liability management services, and which shall align with current federal practices;

(5) Develop, distribute, and maintain a procurement manual for all state procurement officials; and

(6) Develop, distribute, and maintain a procurement guide for vendors wishing to do business with the State and its counties."

SECTION 6. Section 672E-1, Hawaii Revised Statutes, is amended by amending the definition of "construction defect" to read as follows:

""Construction defect" means a deficiency in, or arising out of, the design, specifications, surveying, planning, construction, supervision, or observation of construction of a dwelling or premises. "Construction defect" includes construction cost overruns."

SECTION 7. The chief procurement officer shall adopt or amend rules pursuant to chapter 91, Hawaii Revised Statutes, to allow state procurement officers to request that cost or pricing data be certified upon the initial bid submission and not after the conclusion of contract negotiations.

SECTION 8. (a) There is established the procurement professional standards task force within the department of accounting and general services for administrative purposes. The task force shall be co-chaired by the comptroller and the chief procurement officer and consist of five other members to be invited by the state comptroller. The task force shall develop professional standards for non-state parties involved in the procurement process.

(b) The task force shall submit a report of its findings and recommendations, including any proposed legislation, to the legislature no later than twenty days prior to the convening of the regular session of 2022.

SECTION 9. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 10. This Act shall take effect on July 1, 2112.

Report Title:

State Procurement Code; Procurement Officers; Training; Design Professionals; Construction Cost Overruns; Task Force

Description:

Requires procurement officers to document whether to pursue a design professional or contractor for damages in the event of construction cost overruns. Requires the chief procurement officer to compile a public list of construction companies or design professionals that are in noncompliance with the procurement code or owe penalties. Makes construction cost overruns a tort for purposes of the design claim conciliation panel. Requires bids for a contract under the competitive sealed bidding process to include a liability contingency fund. Requires the state procurement office to include training on the duty of procurement officers to hold design professionals liable for breaches of professional standards. Makes cost overruns a construction defect for the purposes of the contractor repair act. Establishes a procurement professional standards task force. Effective 7/1/2112. (HD1)

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