HB1974 HD1

SECTION 1. The legislature finds that small businesses are the lifeblood of the State's economy. Act 50, Session Laws of Hawaii 2005, was enacted to promote the growth and development of small businesses in Hawaii through the establishment of a small business preference program as part of the procurement process. Additionally, Act 213, Session Laws of Hawaii 2007, approved the funding for a full-time position in the state procurement office with the purpose of implementing part IX of the Hawaii Public Procurement Code, relating to assistance to small businesses. Unfortunately, due to funding and staffing cuts in 2008, this position was never filled and was eliminated from the state procurement office. Although section 3-124-73, Hawaii Administrative Rules, and related interim small business preference rules went into effect in 2007, there was no dedicated position to carry out those rules. Unfortunately, in the absence of this dedicated position or a small business office, these interim rules failed to help the small business community and expired in 2011. Act 42, Session Laws of Hawaii 2017, created a small business initiative; however, the initiative did not receive funding and the enabling legislation sunset in 2020.

The legislature also finds that small businesses owned by veterans, Native Hawaiians, and women are the most vulnerable and disadvantaged businesses within the State. The legislature further finds that an initiative is needed to identify, quantify, and address the needs of these small businesses and measure and track their present participation in state small business contracts.

The legislature finds that the State must create, develop, and implement strategies to ensure that small businesses, including businesses owned by veterans, Native Hawaiians, and women, are able to effectively participate in small business contracting opportunities within our State.

The legislature notes that previously developed administrative rules with respect to the development of small business contracts with the State were not effective because of a lack of appropriate business metrics and data available to provide relevant information necessary for the creation of those rules.

The legislature finds that any solution to address small business concerns in the State must be attempted incrementally. The legislature also notes that the state procurement office is now ready to address part IX of the Hawaii Public Procurement Code and assist self-identified small businesses in obtaining state contracts. The legislature intends to facilitate this process by creating a small business assistance initiative to collect and develop relevant data and information necessary for small businesses to compete for and obtain small business contracts and identify and resolve issues that must be addressed to develop an effective small business state contracting program within the state procurement process.

The purpose of this Act is to establish the small business assistance initiative and provide staffing for the implementation of part IX of the Hawaii Public Procurement Code, relating to assistance to small businesses.

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

"§103D- Small business assistance initiative; coordinator; small business office; established. (a) There is established within the state procurement office a small business assistance initiative to facilitate the collection and development of relevant data and information to assist small businesses.

(b) The small business assistance initiative shall consist of a small business procurement coordinator and small business office.

(c) There is established the position of small business procurement coordinator within the state procurement office, which shall be exempt from chapter 76. The small business procurement coordinator, with the assistance of the small business office, shall be responsible for the collection and maintenance of data from the state small business database, the provision of this data and metrics to the chief procurement officer, and the daily operations of the small business assistance initiative established in subsection (a). The small business procurement coordinator shall also be responsible for implementing programs and procedures to carry out the intent of this part to assist small businesses, including:

(1) Establishing and maintaining a statewide small business database;

(2) Establishing and managing a small business registration, certification, and identification process;

(3) Drafting policies and rules to assist in the implementation of this part;

(4) Producing, publishing, and disseminating training materials designed to inform procurement staff and self-identified small business vendors of all small business programs and opportunities;

(5) Conducting surveys of, and collecting feedback from, procurement staff and self-identified small business vendors to be presented to the chief procurement officer of the State; and

(6) Producing an annual report of small business participation metrics and data to be submitted to the chief procurement officer.

(d) There is established, as part of the initiative under subsection (a) and within the state procurement office, a small business office. A contract to hire a firm to perform the operations and maintenance of the small business office for the initiative shall be executed. The contract shall be awarded to an existing Hawaii-based small business advocacy group with experience in helping small businesses obtain state and federal contracts. The awardee shall be a small business owned by a Native Hawaiian, veteran, or female, and shall have an understanding of the small business community to be able to meet the requirements of the small business initiative. The small business office shall be responsible for:

(1) Providing timely training and reports relating to key developments in the small business community;

(2) Establishing communications with self-identified vendors that may include developing and implementing a newsletter and electronic mail campaign to keep vendors informed of current small business events;

(3) Producing and publicizing outreach campaigns related to the small business initiative and other small business programs and opportunities as may be developed or discovered;

(4) Creating, developing, advertising, and encouraging vendor participation in workshops, seminars, and training designed to promote and enhance small business participation in state contracts;

(5) Establishing mechanisms and implementing procedures for conducting audits, handling disputes, and investigating allegations of fraud and other misappropriations of the small business initiative and its benefits to small businesses;

(6) Aggregating all small business resources and materials from around the State and presenting them in an easily accessible and understandable online format by potential vendor participants;

(7) Coordinating with small business advocates in the public and private sectors to create a small business network that can be easily accessed by all small businesses;

(8) Answering small business vendors' electronic mail and questions about the State's existing small business programs; and

(9) Collecting data on existing and future small business vendor disputes, problems, difficulties, successes, recommendations, and any other metrics deemed important to the initiative by the state procurement office or legislature."

SECTION 3. 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 2022-2023 for the small business assistance initiative established pursuant to this Act; provided that the sum appropriated shall be used:

(1) For the establishment of one full-time equivalent (1.00 FTE) small business procurement coordinator position exempt from chapter 76, Hawaii Revised Statutes, in the state procurement office; and

(2) For the hiring of a local small business to serve as a consultant to develop a business model, assist in the development of administrative rules, and provide guidance on initializing and maintaining the small business assistance initiative.

The sum appropriated shall be expended by the state procurement office for the purposes of this Act.

SECTION 4. New statutory material is underscored.

SECTION 5. This Act shall take effect on July 1, 2112; provided that section 3 shall take effect on July 1, 2022.

HOUSE OF REPRESENTATIVES	H.B. NO.	1974
THIRTY-FIRST LEGISLATURE, 2022		H.D. 1
STATE OF HAWAII