SB1518 HD3

SECTION 1. The legislature finds that the department of education is the largest department in the State, with two hundred ninety-five schools and forty-two thousand salaried and part-time employees. As such, the department of education must procure numerous goods, services, and construction to run its operations. The legislature also finds that the Hawaii public procurement code mandates that the department of education comply with procurement laws for its purchases when triggered by certain threshold amounts. Exempting the department of education from certain small purchase procurement requirements will help the department to timely procure necessary goods, services, and construction.

The legislature further finds that the electronic procurement system, due to its complicated and onerous nature, places a heavy burden on school administrators seeking to address repair and maintenance backlogs and strains the already limited time and resources of these school administrators. Additionally, with the recent influx of federal funding and various conditions attached to that funding, including the maintenance of effort provisions within the Coronavirus Aid, Relief, and Economic Security Act, the department of education requires greater flexibility to expend federal funds in a timely manner.

The purpose of this Act is to:

(1) Provide, until June 30, 2025, procurement exemptions for the department of education in counties having a population of less than five hundred thousand; and

(2) Require the department of education to transition to the electronic procurement system maintained by the state procurement office no later than June 30, 2025.

SECTION 2. Chapter 302A, Hawaii Revised Statutes, is amended by adding a new section to part V to be appropriately designated and to read as follows:

"§302A- Procurement; educational goods and services; small purchases. (a) Notwithstanding section 103D-305(c) or any other law to the contrary, the department may procure goods and services of less than $ without using an electronic procurement system; provided that the procurement shall be subject to the rules governing procurements of less than $ ; provided further that, based on specifications and with adequate reasonable competition, a procurement of:

(1) At least $ but less than $ shall require at least three quotations; and

(2) At least $ but less than $ shall require at least three quotations in writing.

(b) This section shall only apply for the procurement of goods and services in a county having a population of less than five hundred thousand."

SECTION 3. Chapter 302A, Hawaii Revised Statutes, is amended by adding a new section to subpart A of part VI to be appropriately designated and to read as follows:

"§302A- Procurement; educational construction; small purchases. (a) Notwithstanding section 103D-305(c) or any other law to the contrary, the department may procure construction of less than $ without using an electronic procurement system; provided that the procurement shall be subject to the rules governing procurements of less than $ ; provided further that, based on specifications and with adequate reasonable competition, a procurement of:

(1) At least $ but less than $ shall require at least three quotations; and

(2) At least $ but less than $ shall require at least three quotations in writing.

(b) This section shall only apply for the procurement of construction in a county having a population of less than five hundred thousand."

SECTION 4. Section 103D-102, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Notwithstanding subsection (a), this chapter shall not apply to contracts by governmental bodies:

(1) Solicited or entered into before July 1, 1994, unless the parties agree to its application to a contract solicited or entered into prior to July 1, 1994;

(2) To disburse funds, irrespective of their source:

(A) For grants as defined in section 42F-101, made by the State in accordance with standards provided by law as required by article VII, section 4, of the state constitution; or by the counties pursuant to their respective charters or ordinances;

(B) To make payments to or on behalf of public officers and employees for salaries, fringe benefits, professional fees, or reimbursements;

(C) To satisfy obligations that the State is required to pay by law, including paying fees, permanent settlements, subsidies, or other claims, making refunds, and returning funds held by the State as trustee, custodian, or bailee;

(D) For entitlement programs, including public assistance, unemployment, and workers' compensation programs, established by state or federal law;

(E) For dues and fees of organizations of which the State or its officers and employees are members, including the National Association of Governors, the National Association of State and County Governments, and the Multi-State Tax Commission;

(F) For deposit, investment, or safekeeping, including expenses related to their deposit, investment, or safekeeping;

(G) To governmental bodies of the State;

(H) As loans, under loan programs administered by a governmental body; and

(I) For contracts awarded in accordance with chapter 103F;

(3) To procure goods, services, or construction from a governmental body other than the University of Hawaii bookstores, from the federal government, or from another state or its political subdivision;

(4) To procure the following goods or services which are available from multiple sources but for which procurement by competitive means is either not practicable or not advantageous to the State:

(A) Services of expert witnesses for potential and actual litigation of legal matters involving the State, its agencies, and its officers and employees, including administrative quasi‑judicial proceedings;

(B) Works of art for museum or public display;

(C) Research and reference materials including books, maps, periodicals, and pamphlets, which are published in print, video, audio, magnetic, or electronic form;

(D) Meats and foodstuffs for the Kalaupapa settlement;

(E) Opponents for athletic contests;

(F) Utility services whose rates or prices are fixed by regulatory processes or agencies;

(G) Performances, including entertainment, speeches, and cultural and artistic presentations;

(H) Goods and services for commercial resale by the State;

(I) Services of printers, rating agencies, support facilities, fiscal and paying agents, and registrars for the issuance and sale of the State's or counties' bonds;

(J) Services of attorneys employed or retained to advise, represent, or provide any other legal service to the State or any of its agencies, on matters arising under laws of another state or foreign country, or in an action brought in another state, federal, or foreign jurisdiction, when substantially all legal services are expected to be performed outside this State;

(K) Financing agreements under chapter 37D; [~~and~~]

(L) Educational materials including textbooks, supplies, implements, tools, machinery, computers, electronic devices, or other goods related to any education, training, or experience required for participation in an educational program; provided that this subparagraph shall apply only for procurements by the department of education in a county with a population of less than five hundred thousand; and

[~~(L)~~] (M) Any other goods or services which the policy board determines by rules or the chief procurement officer determines in writing is available from multiple sources but for which procurement by competitive means is either not practicable or not advantageous to the State; and

(5) Which are specific procurements expressly exempt from any or all of the requirements of this chapter by:

(A) References in state or federal law to provisions of this chapter or a section of this chapter, or references to a particular requirement of this chapter; and

(B) Trade agreements, including the Uruguay Round General Agreement on Tariffs and Trade (GATT) which require certain non-construction and non‑software development procurements by the comptroller to be conducted in accordance with its terms."

SECTION 5. No later than June 30, 2025, the department of education shall transition to the electronic procurement system maintained by the state procurement office.

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

SECTION 7. This Act shall take effect on June 30, 3000, and, except for section 5, shall be repealed on June 30, 2025; provided that section 103D‑102(b), Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day before the effective date of this Act.

THE SENATE	S.B. NO.	1518
THIRTY-SECOND LEGISLATURE, 2023		S.D. 2
STATE OF HAWAII		H.D. 3