REPORT TITLE: 
Privatization
DESCRIPTION:
Permits state or county officials to contract with private
entities to provide goods, services, or construction to be
financed by public funds when they can be provided at lower costs
and in equivalent or better quality than that which could be
provided by a government entity.

 
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HOUSE OF REPRESENTATIVES                H.B. NO.1309       
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                     A BILL FOR AN ACT

RELATING TO PRIVATIZATION.



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


 1      SECTION 1.  The legislature recognizes the dynamic nature of
 
 2 social and economic conditions and the impossibility of
 
 3 foreseeing all present and future applications of legislation
 
 4 when it is enacted.  Consistent with this recognition, the
 
 5 legislature finds that the awareness and understanding of the
 
 6 concept of "privatization" was not adequate at the time the
 
 7 majority of Hawaii's civil service laws were enacted, and that
 
 8 the application of current laws to issues surrounding
 
 9 privatization does not necessarily reflect the public policy
 
10 appropriately established by the legislature.  As a result,
 
11 further action by the legislature is essential.
 
12      In carefully considering all competing interests on
 
13 privatization, the legislature finds that the predominant
 
14 interest must be providing Hawaii's citizens with the greatest
 
15 value for their tax dollars and that all other interests, however
 
16 worthy, are necessarily subordinate.  As custodians of the public
 
17 trust, we owe our citizens the highest quality of government-
 
18 provided goods, services, and construction at the lowest possible
 
19 costs.
 

 
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 1      The legislature finds that Hawaii's civil service law is
 
 2 intended to apply to the employment process within state and
 
 3 county governments and has no application to issues of
 
 4 privatization.  If sections 76-16 and 76-77, Hawaii Revised
 
 5 Statutes, are broadly interpreted to apply civil service law to
 
 6 anything other than employees of the State and counties, we
 
 7 create an untenable situation in which all goods, services, and
 
 8 construction for the public benefit must be evaluated on a case-
 
 9 by-case basis to determine, often arbitrarily and capriciously,
 
10 whether they are subject to civil service law.  To say that this
 
11 finding will subject the State to the "spoils system" makes a
 
12 mockery of the hard work the legislature has done in recent years
 
13 to amend Hawaii's procurement code.  The two ways government
 
14 provides goods, services, and construction to its citizens are
 
15 through civil service and procurement; and responsible
 
16 administration in both is the key to eliminating political
 
17 favoritism and inferior performance.
 
18      In establishing guidelines for privatization, the
 
19 legislature finds a lack of acceptable standards among those
 
20 commonly applied.  These include "customarily and historically
 
21 provided by civil servants", "new government programs performing
 
22 new functions", and "bad faith", all of which have little or no
 
23 relevance to properly determining whether functions and services
 

 
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 1 should be provided by the government or private sector.  This Act
 
 2 is intended to provide clear and simple guidelines for making
 
 3 such determinations.
 
 4      SECTION 2.  The Hawaii Revised Statutes is amended by adding
 
 5 a new chapter to be appropriately designated and to read as
 
 6 follows:
 
 7                             "CHAPTER
 
 8                           PRIVATIZATION
 
 9         -1  Scope and application.  This chapter is intended to
 
10 preempt and supersede all other state law with regard to
 
11 determining whether goods, services, or construction, funded by
 
12 the State or any of its counties should be provided by the
 
13 government or private sector.  After this determination is made
 
14 pursuant to this chapter, civil service and procurement laws
 
15 shall be applied, as appropriate, to implement the determination.
 
16         -2 Standards for determination.(a)  Notwithstanding
 
17 any law to the contrary, any state or county official in whom
 
18 appropriate authority is vested by law shall be allowed to
 
19 contract with a private entity to provide goods, services, or
 
20 construction to be financed by public funds when there is a
 
21 reasonable basis to believe that the goods, services, or
 
22 construction can be provided at lower costs and in equivalent or
 
23 better quality than that which could be provided by a government
 

 
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 1 entity.
 
 2      (b)  In the determination made pursuant to this section, the
 
 3 state or county official shall consider whether contracting with
 
 4 the private entity will jeopardize the government's ability to
 
 5 provide the goods, services, or construction in the event that
 
 6 the contract becomes unprofitable or impossible for a private
 
 7 entity to perform.
 
 8      (c)  For purposes of this chapter, a "private entity" is any
 
 9 individual, company, or organization that is not an employee or
 
10 agency within the federal, state, or county government.
 
11      (d)  Except as provided in this chapter, and notwithstanding
 
12 any other law to the contrary, nothing, including chapters 46,
 
13 76, and 77, and customary or historical past practices, shall be
 
14 deemed to prevent, restrict, diminish, condition, limit, or
 
15 otherwise qualify the authority of the State or a county to enter
 
16 into a contract with a private entity for the provision of goods,
 
17 services, or construction that were customarily and historically
 
18 performed by persons or positions in the civil service, or
 
19 functionally attributed to a government agency or program;
 
20 provided that any public employee displaced herein shall be
 
21 protected by chapters 76 and 77."
 
22      SECTION 3.  If any provision of this Act or the application
 
23 thereof to any person or circumstance is held invalid, the
 
24 invalidity does not affect other provisions or applications of
 
25 the Act which can be given effect without the invalid provision
 

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 1 or application, and to this end the provisions of this Act are
 
 2 severable.
 
 3      SECTION 4.  This Act shall take effect upon its approval.
 
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