Report Title:

Procurement Code; Exemptions

 

Description:

Provides a procurement exemption for the natural energy laboratory of Hawaii authority, Hawaii strategic development corporation, high technology development corporation, and contracted services with a legislative agency to prepare studies or reports for legislative submittal.

 


HOUSE OF REPRESENTATIVES

H.B. NO.

422

TWENTY-FOURTH LEGISLATURE, 2007

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT


 

 

relating to procurement.

 

 

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

 


     SECTION 1.  The legislature finds that, while the Hawaii public procurement code promotes fair and equitable treatment, fosters broad-based competition, and increases public confidence, in a few, very limited instances, the procurement code restricts compliance with legislative intent.  The legislature notes that legislative agencies that are preparing studies and reports for submission to the legislature typically have only six to seven months to prepare, print, and submit the studies and reports in a timely manner.  If an agency finds it necessary to hire a contractor to complete the report, the requirements of the Hawaii public procurement code can delay the start of work on the project which, in turn, detracts from the agency's ability to comply promptly with the legislature's reporting requirement.  A procurement code exemption for these contracts would benefit all legislative agencies that need to submit studies or reports to the legislature.  Most of all, however, the legislature recognizes that this exemption is beneficial to the legislature itself.  The legislature wants and needs these studies and reports to be completed and submitted in a timely manner.  It is therefore appropriate for the legislature to help promote this result by removing a barrier to timely completion of reports.

     The legislature also notes that the Hawaii strategic development corporation was created to address the critical shortage of seed and venture capital resources in the State.  The legislature further finds that the nature of providing venture capital investment financing is not "procurement".  In addition, the corporation needs the flexibility to be able to respond quickly when funds come on the market; otherwise, it may be impeded from fulfilling its statutory purposes.  A procurement exemption for the Hawaii strategic development corporation will enable it to operate in a time-sensitive, market-driven environment and meet the demands of private-sector investors and entrepreneurs.

     The legislature also finds that Act 216, Session Laws of Hawaii 2004 (Act 216), repealed the Hawaii public procurement code exemptions for the high technology development corporation established by section 206M-3, Hawaii Revised Statutes, relating to general powers of the corporation, and section 206M‑42, Hawaii Revised Statutes, relating to special facility leases.  However, Act 216 did not amend section 206M-16(b), Hawaii Revised Statutes, which provides an exemption for project agreements, construction contracts, lease and sublease agreements, or other contracts, unless a project agreement so requires.

     The attorney general recommended, in testimony on October 24, 2005, that sections 206M‑3 and 206M‑42, Hawaii Revised Statutes, be amended to restore the exemptions that were repealed by Act 216 if the intent of the legislature is to confer a broad procurement code exemption to the corporation.  The existing exemption under section 206M‑16(b), Hawaii Revised Statutes, does not provide a broad exemption.

     Finally, the legislature finds that a procurement code exemption for the natural energy laboratory of Hawaii authority would make it more efficient in its procurement process and enable it to attract more competent service providers.  Because the authority is a unique agency that deals with various cutting-edge technology projects, it is sometimes not practical for it to go through the processes required by the procurement code to select the best services from competent contractors without long delays.  Federal funds earmarked to the authority are very difficult to pass through to contracted agencies under procurement code procedures.  Allowing the authority to procure goods and services without the necessity of a bid process would give it the opportunity to work with universities and laboratories conducting research on a continual contract basis, particularly when federal moneys are involved.  Further, the legislature notes that the natural energy laboratory of Hawaii authority is subject to periodic federal government audits in connection with the expenditure of federal funds.

     The purpose of this Act is to:

     (1)  Provide an exemption from the Hawaii public procurement code:

         (A)  For the services of contractors under contract with a legislative agency to prepare a study or report for the legislature;

         (B)  For the Hawaii strategic development corporation; and

         (C)  For the natural energy laboratory of Hawaii authority; and

     (2)  Restore the procurement code exemptions for the high technology development corporation.

SECTION 2.  Chapter 211G, part II, Hawaii Revised Statutes, is amended by adding a new section to read as follows:

     "§211G‑    Procurement exemption.  The corporation shall be exempt from the procurement code under chapter 103D."

     SECTION 3.  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 or subsidies as those terms are defined in section 42F-101, made by [the]:

              (i)  The State in accordance with standards provided by law as required by article VII, section 4, of the State Constitution; or by [the]

             (ii)  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] that 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] that 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)  Any other goods or services [which] that 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)  For services of contractors contracted by a legislative agency for the purpose of preparing a study or report for submission to the legislature; and

    [(5)  Which] (6)  That 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 4.  Section 206M‑3, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  The corporation shall be exempt from [chapter] chapters 102[.] and 103D."

     SECTION 5.  Section 206M‑42, Hawaii Revised Statutes, is amended to read as follows:

     "§206M-42  Powers.  In addition to any other powers granted to the development corporation by law, the development corporation may:

     (1)  Without compliance with chapter 103D, but with the approval of the governor[,] and without public bidding, enter into a special facility lease or an amendment or supplement thereto whereby the development corporation agrees to acquire, construct, improve, install, equip, and develop a special facility solely for the use by another party to a special facility lease;

     (2)  With the approval of the governor, issue special facility revenue bonds in principal amounts that may be necessary to yield the amount of the cost of any acquisition, construction, improvement, installation, equipping, and development of any special facility, including, subject to paragraph (6), the costs of acquisition of the site thereof; provided that the total principal amount of the special facility revenue bonds [which] that may be issued pursuant to the authorization of this section shall not exceed $100,000,000;

     (3)  With the approval of the governor, issue refunding special facility revenue bonds with which to provide for the payment of outstanding special facility revenue bonds (including any special facility revenue bonds theretofore issued for this refunding purpose) or any part thereof; provided any issuance of refunding special facility revenue bonds shall not reduce the principal amount of the bonds that may be issued as provided in paragraph (2);

     (4)  Perform and carry out the terms and provisions of any special facility lease;

     (5)  Notwithstanding section 103-7 or any other law to the contrary, acquire, construct, improve, install, equip, or develop any special facility[,] or accept the assignment of any contract therefor entered into by the other party to the special facility lease;

     (6)  Construct any special facility on land owned by the State; provided that no funds derived herein shall be expended for land acquisition; and

     (7)  Agree with the other party to the special facility lease whereby any acquisition, construction, improvement, installation, equipping, or development of the special facility and the expenditure of moneys therefor shall be undertaken or supervised by another person.  Any agreement under this paragraph shall not be subject to chapter 103D."

     SECTION 6.  Section 227D-7, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  The authority shall not be subject to [the requirements of chapter] chapters 103 and 103D for project agreements, construction contracts, retail concession or tour-related contracts, or other contracts, unless a project agreement with respect to a project or research and technology park shall require otherwise."

     SECTION 7.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 8.  This Act shall take effect upon its approval.

 

INTRODUCED BY:

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