STAND. COM. REP. NO. 394

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 1438
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committees on Government Operations and Housing and
Labor and Environment and Transportation and Intergovernmental
Affairs, to which was referred S.B. No. 1438 entitled: 

     "A BILL FOR AN ACT RELATING TO GOVERNMENT PROCUREMENT,"

beg leave to report as follows:

     The purpose of this measure is to establish a definition of
"state resident" within the preference provision of the state
procurement code and to raise the percentage preference to
bidders on state agency contracts to fifteen percent.

     Testimony in favor of this measure was received from the
Hawaii Electricians Market Enhancement Program Fund, Hawaii
Operating Engineers Industry Stabilization Fund, Industry
Management Consultants, Incorporated, and Maui Construction
Association.  Testimony in favor of the intent of this measure
was received from the Department of Transportation, the General
Contractors Association of Hawaii, and the Hawaii Government
Employees Association.  Testimony opposed to this measure was
received from the State Procurement Office, Associated Builders
and Contractors, Inc., and Construction Industry Legislative
Organization, Inc.

     Your Committees find that all too often, out-of-state
construction contractors employ out-of-state workers to work on
federal projects in Hawaii.  This leads to profits and tax
revenues not being re-circulated in Hawaii's economy, and hinders

 
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                                   STAND. COM. REP. NO. 394
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employment opportunities for Hawaii residents, particularly in
this time of economic doldrums.

     Your Committees find that a definition of "state resident"
is needed in the state procurement code that will provide a
clear, objective, measurable standard that can be easily enforced
by federal contracting officers in determining eligibility for
preferences under the Federal Acquisition Regulations.

     Your Committees find that raising the bid preference
percentage will create more business and employment opportunities
for Hawaii's struggling construction industry.

     Your Committees amended the measure by:

     (1)  Clarifying the application of the definition of "state
          contractor" or "state subcontractor" to various
          business entities and moving the definition to section
          2 of the measure which amends the definitions section
          in the procurement code (HRS 103D-1001);

     (2)  Exempting from the two hundred day residency
          requirement in the definition of "state resident",
          those residents who leave the State to attend school or
          serve in the armed forces of the United States; and

     (3)  Making technical, nonsubstantive changes for clarity
          purposes to the section that sets forth a state
          contractor's eligibility for a full or portioned
          preference.

     Your Committees note this measure is being passed based
primarily on its concept, rather than the specifics of the
measure, as the fifteen percent preference is still open for
discussion and review.  Your Committees encourage all parties
involved with this measure to continue to participate in the
legislative process as this measure moves to the next Committee.

     As affirmed by the records of votes of the members of your
Committees on Government Operations and Housing and Labor and
Environment and Transportation and Intergovernmental Affairs that
are attached to this report, your Committees are in accord with
the intent and purpose of S.B. No. 1438, as amended herein, and
recommend that it pass Second Reading in the form attached hereto
as S.B. No. 1438, S.D. 1, and be referred to the Committee on
Ways and Means.


 
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                                   STAND. COM. REP. NO. 394
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                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committees on Government
                                   Operations and Housing and
                                   Labor and Environment and
                                   Transportation and
                                   Intergovernmental Affairs



____________________________       ______________________________
BOB NAKATA, Chair                  ROD TAM, Chair



____________________________
CAL KAWAMOTO, Chair

 
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