HB881

SECTION 1. During challenging economic times, it is necessary for the State to investigate and employ new and innovative ways of maintaining and improving state services and infrastructure, while ensuring the prudent and cost-effective expenditure of public moneys.

The purpose of this Act is to authorize the administrator of the state procurement office to develop and administer a procurement automation system across the executive branch and state agencies.

The following shall be incorporated in order to fulfill the above purpose:

(1) Authorize the administrator of the state procurement office to develop and administer a procurement automation system and authorize the administrator of the state procurement to charge and collect an administrative fee to cover system costs;

(2) Establish a procurement automation system special fund; and

(3) Authorize the administrator of the state procurement office to establish procedures for issuing the final decision on any procurement practice, procurement policy and procedures, and compliance investigation conducted by the state procurement office, pursuant to section 103D-206, Hawaii Revised Statutes.

The state procurement office is responsible for the solicitation, award, and administration of hundreds of individual multi-agency contracts and agreements, processing alternate procurement requests submitted by customer agencies, advising customer agencies on procurement-related matters, and providing statewide procurement training to the State's decentralized procurement staff.

The statewide, multi-agency contracts administered by the state procurement office staff take advantage of the State's aggregated purchasing power to leverage better pricing and value for not only State of Hawaii executive branch agencies, but also legislative and judicial branch agencies, the University of Hawaii, the department of education, and the counties.

In fiscal year 2018-2019, these contracts saved the State of Hawaii and its political subdivisions approximately $19,000,000 in goods and services, plus savings in personnel, purchasing, and subject matter expert hours, compared to what these agencies would have likely paid without these contracts in place.

A significant and growing number of statewide purchasing offices in other states, such as Utah, Virginia, Missouri, Washington, New Mexico, Texas, and Minnesota, operate using a self-funded model derived from a small percentage administrative fee included as part of statewide contracts.

Research shows that administrative fees range from 0.75 per cent to 2 per cent.

Based on the state procurement office's past contract usage and the funding needed to implement and operate the statewide automation project, the state procurement office proposes the implementation of less than a one per cent (1%) administrative fee beginning in fiscal year 2021-2022. This fee will be implemented in large statewide cooperative agreements and will be used to pay for management of the automation system to include but not limited to implementation, legacy transition, maintenance, system training, and system configuration.

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

"§103D- State procurement automation system special fund; administrative fee. (a) There shall be established in the state treasury the state procurement automation system special fund for the project management of the procurement automation system.

(b) All revenues collected by the state procurement office shall be deposited in the state procurement automation system special fund and expended by the state procurement administrator to fund the project management of the procurement automation system to achieve the state procurement mission for digital transformation and streamlining."

SECTION 3. 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[;] and establish procedures for final review decision on procurement practices, policy and compliance investigations, except that such procedures shall not apply to the protest process as set forth in sections 103D-701 and 103D-709 and provided that the administrator shall submit an annual report of these reviews along with final resolution of reviews, and other statistical data to the procurement policy board on a quarterly basis;

(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;

(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[.]; and

(7) Charge and collect an administrative fee to cover procurement automation system costs."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________BY REQUEST

HOUSE OF REPRESENTATIVES	H.B. NO.	881
THIRTY-FIRST LEGISLATURE, 2021
STATE OF HAWAII