STAND. COM. REP. NO. 3731

Honolulu, Hawaii

RE: H.B. No. 2070

H.D. 1

S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Second State Legislature

Regular Session of 2024

State of Hawaii

Sir:

Your Committee on Commerce and Consumer Protection, to which was referred H.B. No. 2070, H.D. 1, S.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 require cash or protest bonds paid or filed by parties initiating an administrative appeal for protests of solicitations or award of contracts under the Hawaii Public Procurement Code to be returned to the initiating parties, minus administrative costs as determined by the Office of Administrative Hearings of the Department of Commerce and Consumer Affairs, except in cases where the party does not prevail and the Office of Administrative Hearings finds that the appeal was frivolous or made in bad faith.

Your Committee received testimony in support of this measure from the Hawaii Operating Engineers Industry Stabilization Fund Political Action Committee; General Contractors Association of Hawaii; Ralph S. Inouye Co., Ltd.; Koga Engineering & Construction, Inc.; S & M Sakamoto, Inc.; Jas. W. Glover, Ltd.; Healy Tibbitts Builders, Inc.; Moss & Associates, LLC; and Albert C. Kobayashi, Inc.

Your Committee finds that the primary purpose of the Hawaii Public Procurement Code is to ensure fair and ethical procurement while maximining the use of public funds, and provides a bid protestor with a reasonable opportunity to appeal. Your Committee also finds that under the existing Code, a party initiating an administrative appeal to protest certain solicitations or awards of contracts is required to pay a cash or protest bond in the amount of one percent of the estimated value of the contract to deter frivolous appeals. If the appealing party prevails, the cash or protest bond is returned to the initiating party; however, if the appealing party loses, the bond is forfeited in its entirety to the State's general fund. Your Committee finds that these requirements have a chilling effect, not just on frivolous appeals, but on all appeals, as the high cost and time-involvement of the appeals process coupled with the uncertainty of prevailing make it no longer fiscally prudent for many to initiate the process. Therefore, this measure addresses this issue while allowing the Office of Administrative Appeals to recover its administrative costs and continuing to deter frivolous appeals.

Your Committee has amended this measure by inserting an effective date of July 1, 2040, to encourage further discussion.

As affirmed by the record of votes of the members of your Committee on Commerce and Consumer Protection that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2070, H.D. 1, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 2070, H.D. 1, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Commerce and Consumer Protection,

________________________________

JARRETT KEOHOKALOLE, Chair