STAND. COM. REP. NO.356

Honolulu, Hawaii

, 2003

RE: S.B. No. 458

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Transportation, Military Affairs, and Government Operations, to which was referred S.B. No. 458 entitled:

"A BILL FOR AN ACT RELATING TO THE PROCUREMENT CODE,"

begs leave to report as follows:

The purpose of this measure is to increase the small purchase procurement exception dollar ceiling for construction projects to $250,000, and to establish a procurement preference for state resident contractors.

Your Committee received testimony in support of this measure from the Department of Accounting and General Services. The General Contractors Association submitted testimony in opposition, and the State Procurement Office provided comments.

With regard to the first purpose of this measure, to increase the small purchase procurement exception dollar ceiling for construction projects, your Committee finds that such an increase will help to facilitate important state projects, particularly school repair and maintenance projects. A large majority of the projects awarded pursuant to the temporary small purchase ceiling increase authorized by Act 5, Third Special Session 2001, were school repair and maintenance projects.

Your Committee also continues its strong support for the second purpose of this measure, to establish a procurement preference for contractors that primarily employ state residents. Since only state funds are expended for public projects, your Committee believes that local residents, whose taxes fund those projects, should have an advantage over out-of-state contractors who take our money to the mainland or elsewhere.

Your Committee has steadfastly fought for a state resident preference over the past several sessions, and is baffled by the resistance shown by the previous administration. The Attorney General (AG) has previously opined that a preference for a local company with a workforce comprised of at least 75% local residents is unconstitutional; however, the AG's office has never presented any legal authority on point to your Committee on this issue.

Nevertheless, your Committee wants to cooperate with all relevant parties to ensure that local residents are awarded state contracts as much as possible. Therefore, your Committee has amended this measure to delete the preference for contractors whose workforce consists of at least 75% state residents, and replaced it with language submitted by DAGS.

As amended, this measure provides a preference for contractors that are Hawaii domestic corporations, and that provide all the necessary documentation to the purchasing agency to demonstrate compliance with every applicable Hawaii law. According to DAGS' testimony, requiring submission of these documents will give local contractors every opportunity to compete fairly and on equal footing with out-of-state contractors.

As affirmed by the record of votes of the members of your Committee on Transportation, Military Affairs, and Government Operations that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 458, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 458, S.D. 1, and be referred to the Committee on Ways and Means.

 

Respectfully submitted on behalf of the members of the Committee on Transportation, Military Affairs, and Government Operations,

____________________________

CAL KAWAMOTO, Chair