THE SENATE	S.B. NO.	462
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII

A BILL FOR AN ACT

Relating to Procurement Contracts.

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

SECTION 1. Section 103D-313, Hawaii Revised Statutes, is amended to read as follows:

"§103D-313 Types of contracts. (a) Subject to the limitations of this section, any type of contract that will promote the State's best interests may be used.

(b) Cost-reimbursement and cost-plus-a-percentage-of-cost contracts may be used only when the chief procurement officer determines in writing that such a contract is likely to be less costly than any other type of contract or that it is impracticable to obtain the goods, services, or construction required except by means of such a contract. Cost-reimbursement and cost-plus-a-percentage-of-cost contracts shall not be used if their use would jeopardize the receipt of federal assistance moneys or reduce the amount of such assistance under any applicable federal statute or regulation.

(c) In addition to the requirements of subsections (a) and (b), a cost-plus-a-percentage-of-cost contract may not be awarded unless:

(1) Notice is given to the head of the compliance audit unit, president of the senate, speaker of the house of representatives, and the chairpersons of the senate ways and means and house finance committees; and

(2) Notice is conspicuously posted in an area accessible to the public in the office of the chief procurement officer and available for public inspection during normal business hours.

(d) The policy board shall adopt rules to implement this section.

(e) All performance incentive contracts shall specify a pricing basis, performance goals, and a formula in calculating the contractor's profit, fee, or price decrease, if the specified performance goals are exceeded or not met. Any moneys remaining in the contract budget upon completion of the project may be divided between the contractor and State in accordance with the ratio specified in the contract; provided that the contractor has met or exceeded all performance goals specified in the contract, as determined by the chief procurement officer."

SECTION 2. New statutory material is underscored.

SECTION 3. This Act shall take effect upon its approval.

INTRODUCED BY:

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Report Title:

Procurement; Contract; Performance Incentive Contracts

Description:

Requires all performance incentive contracts to specify a pricing basis, performance goals, and a formula in calculating the contractor's profit, fees, or price decrease if the specified performance goals are exceeded or not met. Allows moneys remaining in the contract budget after project completion to be divided between the State and contractor if the contractor has met or exceeded all performance goals specified in the contract.

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