STAND. COM. REP. NO.  67

 

Honolulu, Hawaii

                , 2015

 

RE:   H.B. No. 895

      H.D. 1

 

 

 

 

Honorable Joseph M. Souki

Speaker, House of Representatives

Twenty-Eighth State Legislature

Regular Session of 2015

State of Hawaii

 

Sir:

 

     Your Committee on Economic Development & Business, to which was referred H.B. No. 895 entitled:

 

"A BILL FOR AN ACT RELATING TO PROCUREMENT OF PROFESSIONAL SERVICES,"

 

begs leave to report as follows:

 

     The purpose of this measure is to improve the efficiency and effectiveness of the procurement of professional services by state agencies.  Specifically, this bill:

 

(1)  Requires the selection committee for the procurement of professional services to evaluate, rather than rank, potential contractors based on specific selection criteria and send the names of those persons to the head of the purchasing agency for consideration; and

 

(2)  Allows the head of a purchasing agency to proceed with the procurement process for professional services when there are less than three qualified potential contractors in accordance with rules adopted by the Procurement Policy Board.

 

     The State Procurement Office testified in support of this bill.  The Department of Transportation supported the intent of this measure.  The American Institute of Architects Hawaii State Council and American Council of Engineering Companies of Hawaii testified in opposition to this bill.

 

     The Procurement Policy Board has the authority and responsibility to adopt rules governing the procurement of professional services by state agencies.  In 2014, the Hawaii Supreme Court ruled that, under the current statutes, a selection committee must identify and rank a minimum of three qualified professional service providers in order for a state agency to proceed with procurement.  While many professional services in Hawaii have adequate numbers of qualified professionals to address this requirement, a number of highly specialized professional services do not.  According to the State Procurement Office, this has often resulted in the need to repeat solicitation of bids until bids from three qualified applicants were received.  This process is inefficient and is a detriment in both time and money to the State and qualified applicants.

 

     Your Committee understands the concerns raised by several industry groups that allowing for the head of a state agency to select individuals to provide services without identification and ranking by the selection committee does not serve the procurement code's purpose of ensuring that professional services are procured in a fair and equitable manner.  Accordingly, your Committee has amended this measure by including language that reflects agreement among industry groups and state procurement regulators.  The amended measure:

 

     (1)  Removes language requiring the selection committee to evaluate, rather than rank, potential contractors based on specific selection criteria;

 

     (2)  Clarifies that, in cases where there are less than three qualified potential contractors, the selection committee shall rank them based on specified criteria and forward the ranking to the Chief Procurement Officer; and

 

     (3)  Allows the Chief Procurement Officer, rather than the head of the purchasing agency, to proceed with the procurement of the service pursuant to rules adopted by the Procurement Policy Board.

 

     Technical, nonsubstantive amendments were also made for clarity, consistency, and style.

 

     As affirmed by the record of votes of the members of your Committee on Economic Development & Business that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 895, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 895, H.D. 1, and be referred to the Committee on Finance.

 

Respectfully submitted on behalf of the members of the Committee on Economic Development & Business,

 

 

 

 

____________________________

DEREK S.K. KAWAKAMI, Chair