SB 2308: Procurement; Public Contracts; Small Purchases; Vendor Compliance

A BILL FOR AN ACT

RELATING TO PROCUREMENT.

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

     SECTION 1.  The legislature finds that under existing procurement law, any offeror awarded a state contract of $2,500 or more must demonstrate compliance with various state laws governing businesses, including tax and employment laws.  While ensuring legal compliance is important to uphold fairness and accountability in public contracting, the existing $2,500 compliance threshold is outdated and unduly low.  This threshold, which has remained unchanged for many years, forces even very small procurement awards to undergo the same compliance certification process as much larger contracts.  The additional paperwork and procedural hurdles for these minor contracts can deter potential vendors, especially small local businesses and out-of-state or foreign companies, from participating in state solicitations due to the time and expense of obtaining required clearances relative to the contract size.

     The legislature further finds that raising this compliance threshold will modernize the State's procurement practices and improve government efficiency.  The legislature believes that by increasing the dollar amount at which formal vendor compliance verification is required, state agencies will be able to expedite routine small purchases and reduce administrative burdens, freeing up resources to focus on larger contracts and other priorities.

     Accordingly, the purpose of this Act is to raise the contract award value that triggers required proof of vendor compliance from $2,500 to $5,000.

     SECTION 2.  Section 103D-310, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

     "(c)  All offerors, upon award of contract, shall comply with all laws governing entities doing business in the State, including chapters 237, 383, 386, 392, and 393.  Offerors shall produce documents to the procuring officer to demonstrate compliance with this subsection.  Any offeror making a false affirmation or certification under this subsection shall be suspended from further offerings or awards pursuant to section 103D-702.  The procuring officer shall verify compliance with this subsection for all contracts awarded pursuant to sections 103D-302, 103D-303, 103D-304, and 103D-306, and for contracts and procurements of [$2,500] $5,000 or more awarded pursuant to section 103D-305; provided that the attorney general may waive the requirements of this subsection for contracts for legal services if the attorney general certifies in writing that comparable legal services are not available in [this] the State."

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

     SECTION 4.  This Act shall take effect on July 1, 2525.

Report Title:

Procurement; Public Contracts; Small Purchases; Vendor Compliance

Description:

Increases the contract award value that triggers required proof of vendor compliance from $2,500 to $5,000.  Effective 7/1/2525.  (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.  The legislature finds that under existing procurement law, any offeror awarded a state contract of $2,500 or more must demonstrate compliance with various state laws governing businesses, including tax and employment laws.  While ensuring legal compliance is important to uphold fairness and accountability in public contracting, the existing $2,500 threshold triggering this requirement is outdated and unduly low.  This threshold, which has remained unchanged for many years, forces even very small procurement awards to undergo the same compliance certification process as much larger contracts.  The additional paperwork and procedural hurdles for these minor contracts can deter potential vendors, especially small local businesses and out-of-state or foreign companies, from participating in state solicitations due to the time and expense of obtaining required clearances relative to the contract size.

     The legislature further finds that raising this compliance threshold will modernize Hawaii's procurement practices and improve government efficiency.  By increasing the dollar amount at which formal vendor compliance verification is required, state agencies will be able to expedite routine small purchases and reduce administrative burdens, freeing up resources to focus on larger contracts and other priorities.

     Therefore, the purpose of this Act is to raise the contract award value that triggers required proof of vendor compliance from $2,500 to $6,000.

     SECTION 2.  Section 103D-310, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

     "(c)  All offerors, upon award of contract, shall comply with all laws governing entities doing business in the State, including chapters 237, 383, 386, 392, and 393.  Offerors shall produce documents to the procuring officer to demonstrate compliance with this subsection.  Any offeror making a false affirmation or certification under this subsection shall be suspended from further offerings or awards pursuant to section 103D-702.  The procuring officer shall verify compliance with this subsection for all contracts awarded pursuant to sections 103D-302, 103D-303, 103D-304, and 103D-306, and for contracts and procurements of [$2,500] $6,000 or more awarded pursuant to section 103D-305; provided that the attorney general may waive the requirements of this subsection for contracts for legal services if the attorney general certifies in writing that comparable legal services are not available in [this] the State."

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

     SECTION 4.  This Act shall take effect upon its approval.

Report Title:

Procurement; Public Contracts; Small Purchases; Vendor Compliance

Description:

Increases the contract award value that triggers required proof of vendor compliance from $2,500 to $6,000.

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. 2222

Honolulu, Hawaii

RE:     S.B. No. 2308

        S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Sir:

     Your Committee on Government Operations, to which was referred S.B. No. 2308 entitled:

"A BILL FOR AN ACT RELATING TO PROCUREMENT,"

begs leave to report as follows:

     The purpose and intent of this measure is to increase the contract award value that triggers required proof of vendor compliance from $2,500 to $6,000.

     Your Committee received testimony in support of this measure from the Department of Transportation, Department of Finance of the County of Kauaʻi, and Maui Chamber of Commerce.

     Your Committee received comments on this measure from the State Procurement Office and Hawaii State Public Library System.

     Your Committee finds that the existing compliance threshold under the State Public Procurement Code, where any offeror awarded a state contract worth at least $2,500 must demonstrate compliance with various state business laws, is outdated and unduly low, forcing even small awarded contracts to undergo the same certification process as much larger awarded contracts.  Your Committee believes that raising the compliance threshold could reduce administrative burdens for the government and vendors, expedite the procurement of contracted goods and services, and encourage greater participation and effective competition.  This measure will increase the compliance threshold to a level that is relevant to today's economy and advantageous for the State and private businesses.

     Your Committee notes the testimony offered by the State Procurement Office that increasing the compliance threshold to $5,000, rather than $6,000, would properly account for inflation and Hawaii's higher cost of goods and services, and is comparable to the threshold levels in other states.

     Accordingly, your Committee has amended this measure by:

     (1)  Reducing the contract award value that triggers required proof of vendor compliance from $6,000 to $5,000;

     (2)  Amending section 1 to reflect its amended purpose;

     (3)  Inserting an effective date of July 1, 2525, to encourage further discussion; and

     (4)  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 S.B. No. 2308, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2308, 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,