HB 1297: Procurement Code; Protests; Bonds

A BILL FOR AN ACT

RELATING TO PROCUREMENT.

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

     SECTION 1.  Section 103D-701, Hawaii Revised Statutes, is amended as follows:

     1.  By amending subsection (a) to read:

     "(a)  Any actual or prospective bidder, offeror, or contractor who is aggrieved in connection with the solicitation or award of a contract may protest to the chief procurement officer or a designee as specified in the solicitation.  Except as provided in sections 103D-303 and 103D-304, a protest shall be submitted in writing within five working days after the aggrieved person knows or should have known of the facts giving rise [thereto;] to the protest; provided that a protest of an award or proposed award shall in any event be submitted in writing within five working days after the posting of award of the contract under section 103D-302 or 103D-303, if no request for debriefing has been made, as applicable; provided further that no protest based upon the content of the solicitation shall be considered unless it is submitted in writing at least twenty‑four hours prior to the date and time set for the receipt of offers."

     2.  By amending subsection (c) to read:

     "(c)  The chief procurement officer or a designee shall resolve any protest as expeditiously as possible.  If the protest is not resolved by mutual agreement, the chief procurement officer or a designee shall issue a written decision to uphold or deny the protest.  The decision shall:

     (1)  State the reasons for the action taken; and

     (2)  Inform the protestor of the protestor's right to an administrative proceeding as provided in this part, if applicable.

If the protest of [a construction contract or airport] any contract that is awarded pursuant to section 103D-302 or 103D‑303 is not resolved by mutual agreement, the chief procurement officer or a designee shall issue a written decision to uphold or deny the protest within seventy-five calendar days of receipt of the protest; provided that the chief procurement officer or a designee may grant an extension based on written justification of the extenuating circumstances; provided further that the extension shall not exceed forty-five calendar days."

     SECTION 2.  Section 103D-709, Hawaii Revised Statutes, is amended by amending subsection (e) to read as follows:

     "(e)  The party initiating a proceeding falling within subsection (d) shall pay to the department of commerce and consumer affairs a cash or protest bond in the amount of one per cent of the estimated value of the contract[.]; provided that the amount of the bond shall not exceed $1,500,000.

     The cash or protest bond shall be returned to that party, minus administrative costs as determined by the office of administrative hearings of the department of commerce and consumer affairs; provided that full forfeiture of the cash or protest bond shall occur if the initiating party does not prevail in the administrative proceeding and the office of administrative hearings finds that the appeal was frivolous or made in bad faith, in which case the cash or protest bond shall be deposited into the general fund."

     SECTION 3.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

     SECTION 4.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 5.  This Act shall take effect on July 1, 3000.

Report Title:

Procurement Code; Protests; Bonds

Description:

Sets a time limit for submitting bid protests.  Makes the seventy-five-day limit for issuing a written decision on protests apply to any contract awarded by competitive sealed bid or competitive sealed proposal.  Caps the protest bond amount.  Effective 7/1/3000.  (SD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

RELATING TO PROCUREMENT.

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

     SECTION 1.  Section 103D-701, Hawaii Revised Statutes, is amended as follows:

     1.  By amending subsection (a) to read:

     "(a)  Any actual or prospective bidder, offeror, or contractor who is aggrieved in connection with the solicitation or award of a contract may protest to the chief procurement officer or a designee as specified in the solicitation.  Except as provided in sections 103D-303 and 103D-304, a protest shall be submitted in writing within five working days after the aggrieved person knows or should have known of the facts giving rise [thereto;] to the protest; provided that a protest of an award or proposed award shall in any event be submitted in writing within five working days after the posting of award of the contract under section 103D-302 or 103D-303, if no request for debriefing has been made, as applicable; provided further that no protest based upon the content of the solicitation shall be considered unless it is submitted in writing at least twenty‑four hours prior to the date and time set for the receipt of offers."

     2.  By amending subsection (c) to read:

     "(c)  The chief procurement officer or a designee shall resolve any protest as expeditiously as possible.  If the protest is not resolved by mutual agreement, the chief procurement officer or a designee shall issue a written decision to uphold or deny the protest.  The decision shall:

     (1)  State the reasons for the action taken; and

     (2)  Inform the protestor of the protestor's right to an administrative proceeding as provided in this part, if applicable.

If the protest of [a construction contract or airport] any contract that is awarded pursuant to section 103D-302 or 103D‑303 is not resolved by mutual agreement, the chief procurement officer or a designee shall issue a written decision to uphold or deny the protest within seventy-five calendar days of receipt of the protest; provided that the chief procurement officer or a designee may grant an extension based on written justification of the extenuating circumstances; provided further that the extension shall not exceed forty-five calendar days."

     SECTION 2.  Section 103D-709, Hawaii Revised Statutes, is amended by amending subsection (e) to read as follows:

     "(e)  The party initiating a proceeding falling within subsection (d) shall pay to the department of commerce and consumer affairs a cash or protest bond in the amount of one per cent of the estimated value of the contract[.]; provided that the amount of the bond shall not exceed $          .

     The cash or protest bond shall be returned to that party, minus administrative costs as determined by the office of administrative hearings of the department of commerce and consumer affairs; provided that full forfeiture of the cash or protest bond shall occur if the initiating party does not prevail in the administrative proceeding and [the office of administrative hearings finds that the appeal was frivolous or made in bad faith, in which case] the cash or protest bond shall be deposited into the general fund."

     SECTION 3.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 4.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

     SECTION 5.  This Act shall take effect on July 1, 3000.

Report Title:

Procurement Code; Protests; Bonds

Description:

Sets a time limit for submitting bid protests.  Makes the 75-day limit for written decision on protest apply to any contract awarded by competitive sealed bid or competitive sealed proposal.  Caps the protest bond amount.  Deletes the requirement of an administrative hearing office finding that an appeal is frivolous or in bad faith before the protest bond is forfeited to the State by the non-prevailing party.  Effective 7/1/3000.  (HD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

relating to procurement.

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

     SECTION 1.  Section 103D-701, Hawaii Revised Statutes, is amended as follows:

     1.   By amending subsection (a) to read:

     "(a)  Any actual or prospective bidder, offeror, or contractor who is aggrieved in connection with the solicitation or award of a contract may protest to the chief procurement officer or a designee as specified in the solicitation.  Except as provided in sections 103D-303 and 103D-304, a protest shall be submitted in writing within five working days after the aggrieved person knows or should have known of the facts giving rise [thereto;] to the protest; provided that a protest of an award or proposed award shall in any event be submitted in writing within five working days after the posting of award of the contract under section 103D-302 or 103D-303, if no request for debriefing has been made, as applicable; provided further that no protest based upon the content of the solicitation shall be considered unless it is submitted in writing at least twenty‑four hours prior to the date and time set for the receipt of offers."

     2.  By amending subsection (c) to read:

     "(c)  The chief procurement officer or a designee shall resolve any protest as expeditiously as possible.  If the protest is not resolved by mutual agreement, the chief procurement officer or a designee shall issue a written decision to uphold or deny the protest.  The decision shall:

     (1)  State the reasons for the action taken; and

     (2)  Inform the protestor of the protestor's right to an administrative proceeding as provided in this part, if applicable.

If the protest of [a construction contract or airport] any contract that is awarded pursuant to section 103D-302 or 103D‑303 is not resolved by mutual agreement, the chief procurement officer or a designee shall issue a written decision to uphold or deny the protest within seventy-five calendar days of receipt of the protest; provided that the chief procurement officer or a designee may grant an extension based on written justification of the extenuating circumstances; provided further that the extension shall not exceed forty-five calendar days."

     SECTION 2.  Section 103D-709, Hawaii Revised Statutes, is amended by amending subsection (e) to read as follows:

     "(e)  The party initiating a proceeding falling within subsection (d) shall pay to the department of commerce and consumer affairs a cash or protest bond in the amount of one per cent of the estimated value of the contract[.]; provided that the amount of the bond shall not exceed $          .

     The cash or protest bond shall be returned to that party, minus administrative costs as determined by the office of administrative hearings of the department of commerce and consumer affairs; provided that full forfeiture of the cash or protest bond shall occur if the initiating party does not prevail in the administrative proceeding and [the office of administrative hearings finds that the appeal was frivolous or made in bad faith, in which case] the cash or protest bond shall be deposited into the general fund."

     SECTION 3.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 4.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

     SECTION 5.  This Act shall take effect upon its approval.

Report Title:

Procurement Code; Protests; Bonds

Description:

Sets time limit for submitting bid protests.  Makes 75 day limit for written decision on protest apply to any contract awarded by competitive sealed bid or competitive sealed proposal.  Caps the protest bond amount.  Deletes the requirement of an administrative hearing office finding that an appeal is frivolous or in bad faith before the protest bond is forfeited to the State by the non-prevailing party.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

STAND. COM. REP. NO. 1702

Honolulu, Hawaii

RE:    H.B. No. 1297

       H.D. 1

       S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Sir:

     Your Committees on Ways and Means and Judiciary, to which was referred H.B. No. 1297, H.D. 1, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO PROCUREMENT,"

beg leave to report as follows:

     The purpose and intent of this measure is to clarify certain requirements of the Hawaii Public Procurement Code.

     More specifically, this measure:

     (1)  Sets a time limit for submitting bid protests;

     (2)  Applies the seventy-five-day limit for issuing a written decision on protests to any contract awarded by a competitive sealed bid or competitive sealed proposal; and

     (3)  Caps the protest bond amount.

     Your Committees received written comments in support of this measure from the Department of Transportation, State Procurement Office, and General Contractors Association of Hawaii.

     Your Committees received written comments in opposition to this measure from the Subcontractors Association of Hawaii.

     Your Committees received written comments on this measure from the Department of Accounting and General Services.

     Your Committees find that procurement challenges often lead to project delays, lapsing funds, and increased project costs.  Your Committees further find that a bid protest bond serves as a safeguard, providing a financial guarantee to deter frivolous protests and uphold the integrity of the procurement process.  Your Committees recognize that this measure will streamline the challenge process, clarify the timeframe for protests of all procurement contracts, and cap the amount of protest bonds, thereby improving efficiency, transparency, and accountability in the procurement process.

     As affirmed by the records of votes of the members of your Committees on Ways and Means and Judiciary that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 1297, H.D. 1, S.D. 1, and recommend that it pass Third Reading.

Respectfully submitted on behalf of the members of the Committees on Ways and Means and Judiciary,

STAND. COM. REP. NO. 1271

Honolulu, Hawaii

RE:    H.B. No. 1297

       H.D. 1

       S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Sir:

     Your Committee on Government Operations, to which was referred H.B. No. 1297, 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)  Set a time limit for submitting bid protests;

     (2)  Make the seventy-five-day limit for issuing a written decision on protests apply to any contract awarded by competitive sealed bid or competitive sealed proposal;

     (3)  Cap the protest bond amount; and

     (4)  Delete the requirement of the Office of Administrative Hearings finding that an appeal is frivolous or in bad faith before the protest bond is forfeited to the State by the non-prevailing party.

     Your Committee received testimony in support of this measure from the Department of Transportation, Department of Accounting and General Services, and State Procurement Office.

     Your Committee received testimony in opposition to this measure from the Subcontractors Association of Hawaii; King & Neel Pacific, Inc.; General Contractors Association of Hawaii; Building Industry Association of Hawaii; Road Builders Corporation; Jayar Construction, Inc.; S & M Sakamoto, Inc.; Ralph S. Inouye Co, Ltd.; Koga Engineering & Construction, Inc; and one individual.

     Your Committee finds that procurement challenges, while critical to the continual improvement of the procurement system, often cause project delays, lapsing funds, and cost increases.  Streamlining the challenge process with clear deadlines for protests and written decisions will improve efficiency, accountability, and transparency.  Protest bonds serve as an additional tool to promote integrity in procurement challenges but must be set at an amount fair to the purchasing agency and protesting parties.  This measure clarifies the timeframe for protests of all procurement contracts and caps the amount of a protest bond to improve efficiency in the procurement process.

     Your Committee notes that the requirements for the forfeiture of a protest bond were amended in 2024 in accordance with a consensus among stakeholders, bringing that segment of the State's procurement process into alignment with best practices employed by many other states.  Your Committee believes changing that process to no longer require an appeal to be found frivolous or in bad faith before a protest bond is forfeit would be counterproductive to the recent progress in improving the procurement process.  Therefore, this measure needs to be amended to address this issue.

     Accordingly, your Committee has amended this measure by:

     (1)  Inserting $1,500,000 for the capped amount of a protest bond;

     (2)  Restoring language in existing law that requires the Office of Administrative Hearings to find that an appeal was frivolous or made in bad faith before the full amount of a protest bond is forfeit to the State by the non-prevailing party; and

     (3)  Making a technical, nonsubstantive amendment 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. 1297, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1297, H.D. 1, S.D. 1, and be referred to your Committees on Ways and Means and Judiciary.

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

STAND. COM. REP. NO.  994

Honolulu, Hawaii

                , 2025

RE:   H.B. No. 1297

      H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Madame:

     Your Committee on Finance, to which was referred H.B. No. 1297 entitled:

"A BILL FOR AN ACT RELATING TO PROCUREMENT,"

begs leave to report as follows:

     The purpose of this measure is to amend the Procurement Code by:

     (1)  Setting a time limit for submitting bid protests;

     (2)  Making the seventy-five day limit for a written decision on a protest apply to any contract awarded by competitive sealed bid or competitive sealed proposal;

     (3)  Capping the protest bond amount; and

     (4)  Repealing the requirement that the administrative hearing office find that an appeal is frivolous or in bad faith before the protest bond is forfeited to the State by the non-prevailing party.

     Your Committee received testimony in support of this measure from the Department of Accounting and General Services.  Your Committee received testimony in opposition to this measure from the General Contractors Association of Hawaii.  Your Committee received comments on this measure from the Department of Transportation and State Procurement Office.

     Your Committee finds that procurement bid challenges often result in project delays, lapsing of funds, and project cost increases.  Protests frequently involve complex issues, and the strict statutory deadlines may cause government agencies to rush to resolve protests, which may cause errors.  Your Committee further finds that clarification to the existing procurement protest procedures is therefore needed to ensure timely resolution of disputes.  Accordingly, this measure establishes a clear timeframe for resolving protests and introduces a monetary cap on protest bond amounts, which will promote fairness while also discouraging frivolous claims.

     Your Committee has amended this measure by changing the effective date to July 1, 3000, to encourage further discussion.

     Your Committee notes the suggested amendments by the State Procurement Office and Department of Transportation, which request a bond cap amount of $1,000,000 and $1,500,000 respectively.

     As affirmed by the record of votes of the members of your Committee on Finance that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1297, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1297, H.D. 1, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committee on Finance,