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.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
HOUSE OF REPRESENTATIVES                H.B. NO.           
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, the legislature must provide our citizens the highest
 
18 quality of government-provided goods, services, and construction
 
19 at the lowest possible 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, and other applicable civil service laws are broadly
 
 6 interpreted to apply civil service law to anything other than
 
 7 employees of the State and counties, the legislature creates an
 
 8 untenable situation in which all goods, services, and
 
 9 construction for the public benefit must be evaluated on a case-
 
10 by-case basis to determine, often arbitrarily and capriciously,
 
11 whether they are subject to civil service law.  To say that this
 
12 finding will subject the State to the "spoils system" makes a
 
13 mockery of the hard work the legislature has done in recent years
 
14 to amend Hawaii's procurement code.  The two ways government
 
15 provides goods, services, and construction to its citizens are
 
16 through civil service and procurement; and responsible
 
17 administration in both is the key to eliminating political
 
18 favoritism and inferior performance.
 
19      In establishing guidelines for privatization, the
 
20 legislature finds a lack of acceptable standards among those
 
21 commonly applied.  These include "customarily and historically
 
22 provided by civil servants", "new government programs performing
 
23 new functions", and "bad faith", all of which have little or no
 

 
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 1 relevance to properly determining whether functions and services
 
 2 should be provided by the government or private sector.  This Act
 
 3 is intended to provide clear and simple guidelines for making
 
 4 such determinations.
 
 5      SECTION 2.  The Hawaii Revised Statutes is amended by adding
 
 6 a new chapter to be appropriately designated and to read as
 
 7 follows:
 
 8                             "CHAPTER
 
 9                           PRIVATIZATION
 
10      �   -1  Scope and application.  This chapter is intended to
 
11 preempt and supersede all other state law with regard to
 
12 determining whether goods, services, or construction, funded by
 
13 the State or any of its counties should be provided by the
 
14 government or private sector.  After this determination is made
 
15 pursuant to this chapter, procurement laws shall be applied, as
 
16 appropriate, to implement the determination.
 
17      �   -2 Standards for determination.(a)  Notwithstanding
 
18 any law to the contrary, including chapters 46, 76, 77, and 89,
 
19 any state or county official in whom appropriate authority is
 
20 vested by law shall be allowed to contract with a private entity
 
21 to provide goods, services, or construction to be financed by
 
22 public funds when there is a reasonable basis to believe that the
 
23 goods, services, or construction can be provided at lower costs
 

 
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 1 and in equivalent or better quality than that which could be
 
 2 provided by a government entity.
 
 3      (b)  In the determination made pursuant to this section, the
 
 4 state or county official shall consider whether contracting with
 
 5 the private entity will jeopardize the government's ability to
 
 6 provide the goods, services, or construction in the event that
 
 7 the contract becomes unprofitable or impossible for a private
 
 8 entity to perform.
 
 9      (c)  For purposes of this chapter, a "private entity" is any
 
10 individual, company, or organization that is not an employee or
 
11 agency within the federal, state, or county government.
 
12      (d)  Except as provided in this chapter, and notwithstanding
 
13 any other law to the contrary, nothing, including chapters 46,
 
14 76, 77, 89, and other applicable civil service law, and customary
 
15 or historical past practices, shall be deemed to prevent,
 
16 restrict, diminish, condition, limit, or otherwise qualify the
 
17 authority of the State or a county to enter into a contract with
 
18 a private entity for the provision of goods, services, or
 
19 construction that were customarily and historically performed by
 
20 persons or positions in the civil service, or functionally
 
21 attributed to a government agency or program."
 
22      SECTION 3.  The provisions of the chapter added to the
 
23 Hawaii Revised Statutes by section 2 of this Act shall apply to
 

 
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 1 contracts in effect on the effective date of this Act, or entered
 
 2 on or after the effective date of this Act.
 
 3      SECTION 4.  If any provision of this Act or the application
 
 4 thereof to any person or circumstance is held invalid, the
 
 5 invalidity does not affect other provisions or applications of
 
 6 the Act which can be given effect without the invalid provision
 
 7 or application, and to this end the provisions of this Act are
 
 8 severable.
 
 9      SECTION 5.  This Act shall take effect upon its approval.
 
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11                           INTRODUCED BY:  _______________________
 
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