SB 254: RELATING TO PROCUREMENT.

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 the existing provision in the Hawaii Public Procurement Code relating to small purchases is due for an adjustment to dollar thresholds with regard to inflation.  With the costs of goods, services, and construction continuously rising, the items that qualify as a small purchase continue to dwindle.  These dollar amount thresholds were last adjusted in 2012.

     Accordingly, the purpose of this Act is to adjust the dollar values of what qualifies as a small purchase procurement factoring in escalating costs and inflation to afford agencies the same purchasing power as originally intended.

     SECTION 2.  Section 103D-305, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  Procurements of less than [$100,000] $150,000 for goods or services, or [$250,000] $360,000 for construction shall be made in accordance with procedures set forth in rules adopted by the policy board that are designed to ensure administrative simplicity and as much competition as is practicable; provided that multiple expenditures shall not be created at the inception of a transaction or project so as to evade the requirements of this chapter; and provided further that procurement requirements shall not be artificially divided or parceled so as to constitute a small purchase under this section."

     SECTION 3.  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] $10,000 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 State."

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  Statutory material to be repealed is bracketed and stricken.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

     SECTION 5.  This Act shall take effect January 1, 2525.

Report Title:

Hawaii Council of Mayors Package; Public Procurement; Small Purchases

Description:

Increases the procurement thresholds for small purchases.  Effective 1/1/2525.  (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 the existing Hawaii Revised Statute relating to small purchases is due for an adjustment to dollar thresholds with regard to inflation.  With the costs of goods, services, and construction continuously rising, the items that qualify as a small purchase continue to dwindle.  These dollar amount thresholds were last adjusted in 1997.  Adjusting the dollar values of what qualifies as a small purchase with regard to inflation will afford agencies the same purchasing power as originally intended.

     SECTION 2.  Section 103D-305, Hawaii Revised Statutes, is amended as follows:

     1.  By amending subsection (a) to read:

     "(a)  Procurements of less than [$100,000] $150,000 for goods or services, or [$250,000] $360,000 for construction shall be made in accordance with procedures set forth in rules adopted by the policy board that are designed to ensure administrative simplicity and as much competition as is practicable; provided that multiple expenditures shall not be created at the inception of a transaction or project so as to evade the requirements of this chapter; and provided further that procurement requirements shall not be artificially divided or parceled so as to constitute a small purchase under this section."

     2.  By amending subsection (c) to read:

     "(c)  Procurements of [$25,000] $100,000 to less than [$250,000] $360,000 shall be made in accordance with small purchase procedures; provided that such small purchase procurements through an electronic system shall be required."

     SECTION 3.  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] $10,000 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 State."

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

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

Report Title:

Hawaii Council of Mayors Package; Procurement; Small Purchases

Description:

Increases the procurement thresholds for small purchases.

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. 184

Honolulu, Hawaii

RE:    S.B. No. 254

       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 S.B. No. 254 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 small purchase dollar threshold under the Hawaii Public Procurement Code.

     Your Committee received testimony in support of this measure from the Department of Transportation, Office of the Mayor of the City and County of Honolulu, Honolulu Police Department, one member of the Kauaʻi County Council, and Subcontractors Association of Hawaii.

     Your Committee received testimony in opposition to this measure from the State Procurement Office.

     Your Committee finds that the dollar thresholds for small purchases have not been adjusted since 2012.  After thirteen years, the intended purchasing power of these thresholds has been eroded by inflation, disqualifying many purchases from this category.  Your Committee finds that this measure is unique compared to other measures before your Committee as it seeks a nuanced path to provide critical real-world exemptions to reporting requirements through the increase of the small purchase dollar threshold, rather than simply suspending or exempting the code in its entirety.

     Your Committee has amended this measure by:

     (1)  Restoring language in existing law that requires procurements between $25,000 and $250,000 to be made in accordance with small purchase procedures through an electronic system, rather than the proposed range of $100,000 to $360,000;

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

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

     Your Committee notes the concerns expressed by the State Procurement Office that raising the threshold for manual procurement processes while leaving existing limits on electronic procurements intact may have unintended consequences on the utilization of these procurement methods.  Your Committee finds that this concern merits further consideration and respectfully requests subsequent Committees to which this measure is referred to examine this issue.

     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. 254, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 254, 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,