STAND. COM. REP. NO.3416

Honolulu, Hawaii

, 2002

RE: S.C.R. No. 103

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.C.R. No. 103, S.D. 1, entitled:

"SENATE CONCURRENT RESOLUTION REQUESTING THE AUDITOR TO REVIEW PRIVATIZATION CONTRACTS ENTERED INTO BY CERTAIN STATE AND COUNTY AGENCIES,"

begs leave to report as follows:

The purpose of this measure is to request the Auditor to review privatization contracts entered into by certain state and county agencies since the enactment of Act 90, Session Laws of Hawaii 2001.

In addition, this measure requests the Auditor to include a review of contract requirements and how well or poorly the contractor has fulfilled those requirements; the total indirect and direct costs of the contract; whether the contracted service is appropriate for continued privatization; and legislation enacted by state and local governments in other jurisdictions with similar privatization laws, to determine whether another approach might be applicable to Hawaii.

This measure also requests the Auditor to report findings and recommendations, including proposed legislation and recommended criteria for privatization contracts, to the Legislature before the 2003 Regular Session. Contracting agencies are requested to review outstanding contracts to determine whether they meet the criteria established by Act 90, and to hold public hearings before executing future privatization contracts.

Your Committee finds that Act 90 was enacted in part to resolve uncertainty generated by the Hawaii Supreme Court's decision in Konno v. County of Hawaii, 85 Haw. 61 (1997), regarding the government's ability to rely upon the private sector for services government needs or is required to provide.

Part II of Act 90 allowed certain state and county officials in whom procurement authority is vested by law to enter into contracts financed by public funds with private entities to obtain services from those entities, "when there is reasonable basis to believe that the service of equivalent or better quality than that which could be provided by a government agency can be provided at lower cost".

However, your Committee finds that concerns have been raised that under certain privatization contracts entered into pursuant to Act 90, private contractors have not been providing services of "equivalent or better quality" than the public agency could have provided at a lower cost. Your Committee agrees that there is a need for the Auditor to review these contracts to ensure that the State and counties are obtaining services of equivalent or better quality than that which was previously provided by state and county employees.

Your Committee requests that the subject matter committee chair or chairs hold an information briefing after the report is submitted to the Legislature. Your Committee expressed concerns that studies and audits are often reported but discussion is lacking on the issues and findings. Your Committee finds that issues related to this resolution can be fully discussed if subject matter chairs hold informational briefings.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee concurs with the intent and purpose of S.C.R. No. 103, S.D. 1, and recommends its adoption.

 

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

____________________________

BRIAN T. TANIGUCHI, Chair