STAND. COM. REP. NO. 3267

Honolulu, Hawaii

RE: H.B. No. 2496

H.D. 1

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Second State Legislature

Regular Session of 2024

State of Hawaii

Sir:

Your Committee on Government Operations, to which was referred H.B. No. 2496, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO PROCUREMENT,"

begs leave to report as follows:

The purpose and intent of this measure is to:

(1) Authorize an alternative procurement method when the federal government provides for or approves the method and the head of the purchasing agency makes a written determination that it is neither practicable nor advantageous to use the existing statutory procurement methods; and

(2) Amend the methods of source selection under section 103D-301, Hawaii Revised Statutes (HRS), to allow for alternative procurement methods.

Your Committee received comments on this measure from the Department of Transportation and State Procurement Office.

Your Committee finds that the Hawaii Public Procurement Code was created to promote competition, prevent favoritism and corruption, and increase transparency in government, among other things. Under existing law, all public contracts must be awarded in accordance with certain methods of source selection established under section 103D-301, HRS. However, your Committee recognizes that there are situations that may arise that make it impracticable or disadvantageous for the purchasing agency to utilize any of the established methods of procurement for construction. This measure will allow the use of alternative procurement methods to eliminate or reduce added costs from change orders or limit the amount of change orders during the administration of contracts for unique, complex, or schedule-critical construction projects, resulting in substantial cost savings and other benefits to the State.

Your Committee notes the concerns raised in testimony that, although section 103D-102(b)(4), HRS, provides for situations when it is not practicable or not advantageous for purchasing agencies to utilize one of the six methods of procurement under section 103D-301, HRS, the statute only provides for the procurement of goods and services.

Accordingly, your Committee has amended this measure by:

(1) Inserting language that exempts government contracts to procure certain construction projects from the Hawaii Public Procurement Code;

(2) Inserting an effective date of July 1, 2491, to encourage further discussion; and

(3) Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

As affirmed by the record of votes of the members of your Committee on Government Operations that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2496, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2496, H.D. 1, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Government Operations,

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ANGUS L.K. MCKELVEY, Chair