REPORT TITLE:
Procurement code


DESCRIPTION:
Provides changes to the procurement code to clarify the
provisions for protests and related available remedies.  (HB989
HD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        986
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO REMEDIES OF PART VII, CHAPTER 103D, HAWAII REVISED
   STATUTES. 



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

 1      SECTION 1.  Section 103D-701, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "[[]103D-701[]]  Authority to resolve protested
 
 4 solicitations and awards.(a)  Any actual or prospective bidder,
 
 5 offeror, or contractor who is aggrieved in connection with the
 
 6 solicitation or award of a contract may protest to the chief
 
 7 procurement officer or [the head of a purchasing agency. The] a
 
 8 designee as specified in the solicitation.  A protest shall be
 
 9 submitted in writing within five working days after the aggrieved
 
10 person knows or should have known of the facts giving rise
 
11 thereto[.]; provided that a protest of an award or proposed award
 
12 shall in any event be submitted in writing within five working
 
13 days after the posting of award of the contract either under
 
14 section 103D-302 or section 103D-303, as applicable; provided
 
15 further that no protest based upon the content of the
 
16 solicitation shall be considered unless it is submitted in
 
17 writing prior to the date set for the receipt of offers.
 

 
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 1      (b)  The chief procurement officer[, the head of a
 
 2 purchasing agency,] or a designee [of either officer], prior to
 
 3 the commencement of an administrative proceeding under section
 
 4 103D-709 or an action in court [concerning the controversy,]
 
 5 pursuant to section 103D-710, may settle and resolve a protest
 
 6 [of an aggrieved bidder, offeror, or contractor, actual or
 
 7 prospective,] concerning the solicitation or award of a contract.
 
 8 This authority shall be exercised in accordance with rules
 
 9 adopted by the policy board.
 
10      (c)  If the protest is not resolved by mutual agreement, the
 
11 chief procurement officer[, the head of a purchasing agency,] or
 
12 a designee [of either officer] shall promptly issue a decision in
 
13 writing[.] to uphold or deny the protest.  The decision shall:
 
14      (1)  State the reasons for the action taken; and
 
15      (2)  Inform the protestor of the protestor's right to
 
16           [review] an administrative proceeding as provided in
 
17           this part[.], if applicable.
 
18      (d)  A copy of the decision under subsection (c) shall be
 
19 mailed or otherwise furnished immediately to the protestor and
 
20 any other party intervening.
 

 
 
 
 
 
 
 
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 1      (e)  A decision under subsection (c) shall be final and
 
 2 conclusive, unless [fraudulent, or] any person adversely affected
 
 3 by the decision commences an administrative proceeding under
 
 4 section 103D-709.
 
 5      (f)  In the event of a timely protest under subsection (a),
 
 6 no further action shall be taken on the solicitation or the award
 
 7 of the contract until the chief procurement officer[, after
 
 8 consultation with the head of the using agency, or the head of
 
 9 the purchasing agency,] makes a written determination that the
 
10 award of the contract without delay is necessary to protect
 
11 substantial interests of the State.
 
12      (g)  In addition to any other relief, when a protest is
 
13 sustained and the [protesting bidder or offeror] protestor should
 
14 have been awarded the contract under the solicitation but is not,
 
15 then the [protesting bidder or offeror] protestor shall be
 
16 entitled to the [reasonable] actual costs reasonably incurred in
 
17 connection with the solicitation, including bid or proposal
 
18 preparation costs [other than] but not attorney's fees."
 
19      SECTION 2.  Section 103D-702, Hawaii Revised Statutes, is
 
20 amended to read as follows:
 
21      "[[]103D-702[]]  Authority to debar or suspend.(a) After
 
22 reasonable notice to the person involved and reasonable
 

 
 
 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 opportunity for that person to be heard, the chief procurement
 
 2 officer [or the head of the purchasing agency], after
 
 3 consultation with the using agency and the [department of]
 
 4 attorney general[,] or corporation counsel, may debar a person
 
 5 for cause from consideration for award of all public contracts[.]
 
 6 and from performance on any public contract.  The debarment
 
 7 period shall not [be for a period of more than] exceed three
 
 8 years.  The same officer, after consultation with the using
 
 9 agency and the [department of the] attorney general[,] or
 
10 corporation counsel, may suspend a person from consideration for
 
11 award of all public contracts and from performance on any public
 
12 contract if there is probable cause for debarment.  The
 
13 suspension period shall not [be for a period exceeding] exceed
 
14 three months.  The authority to debar or suspend shall be
 
15 exercised in accordance with the procedures prescribed by rules
 
16 adopted by the policy board.
 
17      (b)  The causes for debarment or suspension include the
 
18 following:
 
19      (1)  Conviction for commission of a criminal offense as an
 
20           incident to obtaining or attempting to obtain a public
 
21           or private contract or subcontract, or in the
 
22           performance of the contract or subcontract;
 

 
 
 
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 1      (2)  Conviction under state or federal statutes relating to
 
 2           embezzlement, theft, forgery, bribery, falsification or
 
 3           destruction of records, receiving stolen property, or
 
 4           any other offense indicating a lack of business
 
 5           integrity or business honesty which currently,
 
 6           seriously, and directly affects responsibility as a
 
 7           contractor;
 
 8      (3)  Conviction under state or federal antitrust statutes
 
 9           arising out of the submission of bids or proposals;
 
10      (4)  Violation of contract provisions, as set forth below,
 
11           of a character which is regarded by the chief
 
12           procurement officer [or the head of a purchasing
 
13           agency] to be so serious as to justify debarment
 
14           action:
 
15           (A)  Deliberate failure without good cause to perform
 
16                in accordance with the specifications or within
 
17                the time limit provided in the contract; or
 
18           (B)  A recent record of failure to perform or of
 
19                unsatisfactory performance in accordance with the
 
20                terms of one or more contracts; provided that
 
21                failure to perform or unsatisfactory performance
 
22                caused by acts beyond the control of the
 

 
 
 
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 1                contractor shall not be considered to be a basis
 
 2                for debarment;
 
 3      (5)  Any other cause the chief procurement officer [or the
 
 4           head of a purchasing agency] determines to be so
 
 5           serious and compelling as to affect responsibility as a
 
 6           contractor, including debarment by another governmental
 
 7           entity for any cause listed in the rules of the policy
 
 8           board; and
 
 9      (6)  Violation of the ethical standards set forth in chapter
 
10           84 and its implementing rules, or the charters and
 
11           ordinances of the several counties and their
 
12           implementing rules.
 
13      (c)  The chief procurement officer [or the head of a
 
14 purchasing agency] shall issue a written decision to debar or
 
15 suspend.  The decision shall:
 
16      (1)  State the reasons for the action taken; and
 
17      (2)  Inform the debarred or suspended person involved of
 
18           [its] the person's rights to review as provided in this
 
19           part.
 
20      (d)  A copy of the decision under subsection (c) shall be
 
21 mailed or otherwise furnished immediately to the debarred or
 
22 suspended person and any other party intervening.
 

 
 
 
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 1      (e)  The chief procurement officer shall transmit a copy of
 
 2 the decision to debar or suspend a contractor to the state
 
 3 procurement office, which shall distribute a list to all
 
 4 governmental bodies containing the names of persons or firms
 
 5 debarred or suspended from consideration for award of all public
 
 6 contracts [by the State.] and from performance on any public
 
 7 contract.
 
 8      (f)  Upon written notification under subsection (e), the
 
 9 chief procurement officer shall make a written determination
 
10 whether to allow the debarred or suspended person or firm to
 
11 continue performance on any contract awarded prior to the
 
12 effective date of the debarment or suspension.
 
13      [(f)] (g)  A decision under subsection (c) shall be final
 
14 and conclusive, unless [fraudulent, or] the debarred or suspended
 
15 person commences an administrative proceeding under section
 
16 103D-709."
 
17      SECTION 3.  Section 103D-703, Hawaii Revised Statutes, is
 
18 amended to read as follows:
 
19      "[[]103D-703[]]  Authority to resolve contract and breach
 
20 of contract controversies.(a)  This section applies to
 
21 controversies between a governmental body and a contractor which
 
22 arise under, or by virtue of, a contract between them, including,
 

 
 
 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 without limitation, controversies based upon breach of contract,
 
 2 mistake, misrepresentation, or other cause for contract
 
 3 modification or rescission.
 
 4      (b)  The chief procurement officer[, the head of a
 
 5 purchasing agency,] or a designee [of either officer] is
 
 6 authorized, prior to commencement of an action in a court
 
 7 [concerning the controversy,] brought pursuant to section 103D-
 
 8 711, to settle and resolve a controversy described in subsection
 
 9 (a).  This authority shall be exercised in accordance with rules
 
10 adopted by the policy board.
 
11      (c)  If such a controversy is not resolved by mutual
 
12 agreement, the chief procurement officer[, the head of a
 
13 purchasing agency,] or [the] a designee [of either officer] shall
 
14 promptly issue a decision in writing.  The decision shall:
 
15      (1)  State the reasons for the action taken; and
 
16      (2)  Inform the contractor of [its] the contractor's right
 
17           to initiate a judicial action as provided in this part.
 
18      (d)  A copy of the decision under subsection (c) shall be
 
19 mailed or otherwise furnished immediately to the contractor.
 
20      (e)  The decision under subsection (c) shall be final and
 
21 conclusive unless [fraudulent, or] the contractor commences a
 
22 judicial action in accordance with section 103D-711.
 

 
 
 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      (f)  If the chief procurement officer[, the head of the
 
 2 purchasing agency,] or [the] a designee [of either officer] does
 
 3 not issue the written decision required under subsection (c)
 
 4 within ninety days after written request for a final decision, or
 
 5 within such longer period as may be agreed upon by the parties,
 
 6 then the contractor may proceed as if an adverse decision had
 
 7 been received."
 
 8      SECTION 4.  Section 103D-705, Hawaii Revised Statutes, is
 
 9 amended to read as follows:
 
10      "[[]103D-705[]]  Solicitations or awards in violation of
 
11 law.  The provisions of section 103D-706 and section 103D-707
 
12 apply where it is determined [administratively] by the chief
 
13 procurement officer or a designee under [sections] section 103D-
 
14 701[,] or 103D-703[, and] or where it is determined
 
15 administratively under section 103D-709, or upon judicial review
 
16 [or action] under [sections] section 103D-710 [and] or judicial
 
17 action under section 103D-711, that a solicitation or award of a
 
18 contract is in violation of the law."
 
19      SECTION 5.  Section 103D-707, Hawaii Revised Statutes, is
 
20 amended to read as follows:
 
21      "[[]103D-707[]]  Remedies after an award.  If, after an
 
22 award it is determined that a solicitation or award of a contract
 
23 is in violation of law, then:
 

 
Page 10                                                    986
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      (1)  If the person awarded the contract has not acted
 
 2           fraudulently or in bad faith:
 
 3           (A)  The contract may be ratified and affirmed, or
 
 4                modified; provided it is determined that doing so
 
 5                is in the best interests of the State; or
 
 6           (B)  The contract may be terminated and the person
 
 7                awarded the contract shall be compensated for the
 
 8                actual expenses, other than attorney's fees,
 
 9                reasonably incurred under the contract, plus a
 
10                reasonable profit, [prior to the] with such
 
11                expenses and profit calculated not for the entire
 
12                term of the contract but only to the point of
 
13                termination;
 
14      (2)  If the person awarded the contract has acted
 
15           fraudulently or in bad faith:
 
16           (A)  The contract may be declared null and void; or
 
17           (B)  The contract may be ratified and affirmed, or
 
18                modified, if the action is in the best interests
 
19                of the State, without prejudice to the State's
 
20                rights to such damages as may be appropriate."
 
21      SECTION 6.  Section 103D-708, Hawaii Revised Statutes, is
 
22 amended to read as follows:
 

 
 
 
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 1      "[[]103D-708[]]  Interest.  Interest on amounts ultimately
 
 2 determined to be due to a contractor or the [State] agency shall
 
 3 be payable at the statutory rate applicable to judgments against
 
 4 the State under chapter 662 from the date the agency receives
 
 5 notice of the written claim [arose] through the date of decision
 
 6 or judgment, whichever is later[.]except that if an action is
 
 7 initiated in circuit court pursuant to section 103D-711, interest
 
 8 under this section shall only be calculated until the time such
 
 9 action is initiated."
 
10      SECTION 7.  Section 103D-709, Hawaii Revised Statutes, is
 
11 amended by amending subsection (c) to read as follows:
 
12      "(c)  Only parties to the protest made and decided pursuant
 
13 to section 103D-701 may initiate a proceeding under this section.
 
14 The party initiating the proceeding shall have the burden of
 
15 proof, including the burden of producing evidence as well as the
 
16 burden of persuasion.  The degrees or quantum of proof shall be a
 
17 preponderance of the evidence.  All parties to the proceeding
 
18 shall be afforded an opportunity to present oral or documentary
 
19 evidence, conduct cross-examination as may be required, and
 
20 argument on all issues involved.  The rules of evidence shall [be
 
21 strictly adhered to.] apply."
 

 
 
 
 
 
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 1      SECTION 8.  Section 103D-709, Hawaii Revised Statutes, is
 
 2 amended by amending subsection (f) to read as follows:
 
 3      "(f)  [Hearings officers] The hearings officer shall decide
 
 4 whether the determinations of the chief procurement officer or
 
 5 the [head of the purchasing agency, or their respective
 
 6 designees] chief procurement officer's designee were in
 
 7 accordance with the Constitution, statutes, [regulations,] rules,
 
 8 and the terms and conditions of the solicitation or contract[.],
 
 9 and shall order such relief as may be appropriate in accordance
 
10 with the provisions of this chapter."
 
11      SECTION 9.  Section 103D-710, Hawaii Revised Statutes, is
 
12 amended by amending subsection (a) to read as follows:
 
13      "(a)  [Any person or governmental body] Only parties to
 
14 proceedings under section 103D-709 who are aggrieved by a final
 
15 decision of a hearings officer under that section [103D-709] may
 
16 apply for judicial review of that decision.  The proceedings for
 
17 review shall be instituted in the supreme court."
 
18      SECTION 10.  Section 103D-711, Hawaii Revised Statutes, is
 
19 amended by amending subsections (a), (b), and (c) to read as
 
20 follows:
 
21      "(a)  [A person] Only parties to the contract aggrieved by a
 
22 decision issued pursuant to section 103D-703 by a state chief
 

 
 
 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 procurement officer or [head of a purchasing agency] a designee
 
 2 may initiate an action under section 661-1.
 
 3      (b)  A person aggrieved by a decision issued pursuant to
 
 4 section 103D-703 by a county chief procurement officer or [head
 
 5 of a purchasing agency] a designee may initiate an action under,
 
 6 or by virtue of, the contract in controversy in the circuit
 
 7 court.
 
 8      (c)  A governmental body aggrieved by a decision issued
 
 9 pursuant to section 103D-703 by a state or county chief
 
10 procurement officer or [head of a purchasing agency] a designee
 
11 may initiate an action under, or by virtue of, the contract in
 
12 controversy in the circuit court."
 
13      SECTION 11.  Section 103D-712, Hawaii Revised Statutes, is
 
14 amended by amending subsection (a) to read as follows:
 
15      "(a)  Requests for administrative review under section
 
16 103D-709 shall be made directly to the office of administrative
 
17 hearing of the department of commerce and consumer affairs within
 
18 seven calendar days of the issuance of a written determination
 
19 under [sections] section 103D-310, 103D-701, or 103D-702."
 
20      SECTION 12.  Statutory material to be repealed is bracketed.
 
21 New statutory material is underscored.
 
22      SECTION 13.  This Act shall take effect on July 1, 1999.