REPORT TITLE:
Procurement Code


DESCRIPTION:
Requires the procurement policy office to adopt rules for a
managed procurement process that evaluates the efficiency,
effectiveness, and economy of the purchase using uniform
accounting standards.  (SD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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THE SENATE                              S.B. NO.           S.D. 1
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO THE HAWAII PUBLIC PROCUREMENT CODE.



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

 1      SECTION 1.  The State of Hawaii has experienced a broad
 
 2 range of responses from the procurement of private enterprise to
 
 3 provide or manage previously public agency tasks.  Both
 
 4 proponents and opponents of these contracts provide data that
 
 5 support their positions.  Reports have indicated that sending
 
 6 prisoners to private facilities have been a savings to the State.
 
 7 Other positions advocate the construction of new correctional
 
 8 facilities in the State, including the possibility of private
 
 9 ownership of that facility.
 
10      One element of a successful enterprise is the ability to
 
11 evaluate proposals and options.  Good decisions are based on fair
 
12 and accurate information.  The State of Hawaii uses the
 
13 procurement code to ensure that state purchases meet certain
 
14 standards, but it has thus far not required any type of
 
15 determination that the procurement of certain services or goods
 
16 is the most effective, efficient, and economical path to take.
 
17 The current economic situation requires the State to have a
 
18 managed process for procurement and to adopt standard methods for
 
19 evaluation to ensure the effective, efficient, and economical
 

 
Page 2                                                     1117
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 procurement of services.
 
 2      SECTION 2.  Chapter 103D, Hawaii Revised Statutes, is
 
 3 amended by adding a new section to be appropriately designated
 
 4 and to read as follows:
 
 5      "�103D-     Managed process for procurement of private
 
 6 enterprise.  The policy office shall adopt rules to implement any
 
 7 public-private competition for government services through the
 
 8 managed process that determines whether a particular service can
 
 9 be provided more efficiently, effectively, and economically by a
 
10 public agency or a private enterprise.  The managed process shall
 
11 consider all relevant costs, identify the types of contracts
 
12 which may be exempt from the managed process, establish
 
13 protections for the affected state and county employees, and
 
14 ensure that civil service laws, merit principles, and collective
 
15 bargaining laws are not violated.  The managed process shall
 
16 require any analysis to use uniform accounting standards in
 
17 determining whether a service can be provided more efficiently,
 
18 effectively, and economically by either a public agency or a
 
19 private enterprise.
 
20      For the purposes of this chapter, "uniform accounting
 
21 standards" means a system of accounting for costs and expenses
 
22 which applies accepted accounting practices and customs,
 
23 including those limited to specific industries, to provide a fair
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 and complete total of the direct and indirect costs and expense
 
 2 of or reasonably allocable to any activity, including:
 
 3      (1)  Direct and indirect labor costs and compensatory
 
 4           benefits;
 
 5      (2)  Direct material costs;
 
 6      (3)  Other allocable indirect costs, including indirect
 
 7           manufacturing or operational costs such as costs of
 
 8           utilities, parts and supplies, insurance and
 
 9           depreciation on plant and equipment;
 
10      (4)  Selling, general, and administrative expenses; and
 
11      (5)  The imputed cost that represents the fair and complete
 
12           total of the federal, state, and local tax obligations,
 
13           from which the activity is exempt in whole or in part,
 
14           to the extend of such exemption."
 
15      SECTION 3.  New statutory material is underscored.
 
16      SECTION 4.  This Act shall take effect upon its approval.