SB 2970: Code of Ethics; Prohibited Contracts; Principal State Department; Relatives and Household Members; Responsibility; Violations

A BILL FOR AN ACT

RELATING TO STANDARDS OF CONDUCT.

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

     SECTION 1.  Section 84-15, Hawaii Revised Statutes, is amended to read as follows:

     "§84-15  Contracts.  (a)  A state agency shall not enter into any contract to procure or dispose of goods or services, or for construction, with a legislator, an employee, or a business in which a legislator or an employee has a controlling interest, [involving services or property of a value in excess of $10,000] unless:

     (1)  The contract is awarded by competitive sealed bidding pursuant to section 103D-302;

     (2)  The contract is awarded by competitive sealed proposal pursuant to section 103D-303; or

     (3)  The agency posts a notice of its intent to award the contract and files a copy of the notice with the state ethics commission at least ten days before the contract is awarded.

     (b)  A state agency shall not enter into a contract with any person or business [which] that is represented or assisted personally in the matter by a person who has been an employee of the agency within the preceding two years and who participated while in state office or employment in the matter with which the contract is directly concerned.  This subsection shall not apply to any contract that is awarded in accordance with subsection (a) with a person or business represented or assisted by a person who was a member of a task force or served as the designee or representative of a task force member.

     (c)  A state agency shall not enter into a contract to procure or dispose of goods or services, or for construction, with any business:

     (1)  That is owned or operated; or

     (2)  In which a controlling interest is held,

by a relative or household member of a department head or deputy director of a principal state department.

     (d)  The department head or acting department head of a principal state department, and any deputy director of the department, shall be responsible for ensuring that all contracts entered into by the department comply with this section.

     (e)  Any violation of this section may be assessed against the department head, acting department head, or deputy director of the department at the time the violation occurred, and against any employee who directly committed, participated in, or authorized the violation.

     (f)  As used in this section:

     "Department head" means the head of a principal state department regardless of specific title, including a director, chairperson, superintendent, comptroller, or other chief administrative officer.

     "Household member" means an individual who resides in the same dwelling unit as the department head or deputy director of a principal state department.

     "Principal state department" means a principal department of the executive branch listed in section 26-4.

     "Relative" means a department head's or deputy director's parent, grandparent, stepparent, child, grandchild, stepchild, foster child, adopted child, sibling, half-sibling, stepsibling, parent's sibling, first cousin, sibling's child, spouse, spouse's parent, child-in-law, or sibling-in-law, or any individual who has become a member of the department head's or deputy director's immediate family through the Hawaiian hanai custom."

     SECTION 2.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

     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, 3000.

Report Title:

Code of Ethics; Prohibited Contracts; Principal State Department; Relatives and Household Members; Responsibility; Violations

Description:

Repeals the $10,000 value threshold for certain prohibited contracts involving legislators or employees.  Prohibits state agencies from contracting to procure or dispose of goods or services, or for construction, with businesses owned, operated, or controlled by relatives or household members of department heads or deputy directors.  Requires department heads, acting department heads, and deputy directors of principal state departments to ensure compliance with the Code of Ethics provision governing contracts and provides for liability for violations.  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 STANDARDS OF CONDUCT.

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

     SECTION 1.  Chapter 84, Hawaii Revised Statutes, is amended by adding a new section to part I to be appropriately designated and to read as follows:

     "§84-    Contracts; directors; deputy directors.  (a)  A state agency shall not enter into a contract to procure or dispose of goods or services, or for construction, with any business:

     (1)  That is owned or operated; or

     (2)  In which a controlling interest is held,

by a relative or household member of a director or deputy director of a principal state department.

     (b)  As used in this section:

     "Household member" means an individual who resides in the same dwelling unit as the director or deputy director of a principal state department.

     "Principal state department" means a principal department of the executive branch listed in section 26-4.

     "Relative" means a director's or deputy director's parent, grandparent, stepparent, child, grandchild, stepchild, foster child, adopted child, sibling, half-sibling, stepsibling, parent's sibling, first cousin, sibling's child, spouse, spouse's parent, child-in-law, or sibling-in-law, or any individual who has become a member of the director's or deputy director's immediate family through the Hawaiian hanai custom."

     SECTION 2.  Section 84-15, Hawaii Revised Statutes, is amended to read as follows:

     "§84-15  Contracts.  (a)  A state agency shall not enter into any contract to procure or dispose of goods or services, or for construction, with a legislator, an employee, or a business in which a legislator or an employee has a controlling interest, involving services or property of a value in excess of $10,000 unless:

     (1)  The contract is awarded by competitive sealed bidding pursuant to section 103D-302;

     (2)  The contract is awarded by competitive sealed proposal pursuant to section 103D-303; or

     (3)  The agency posts a notice of its intent to award the contract and files a copy of the notice with the state ethics commission at least ten days before the contract is awarded.

     (b)  A state agency shall not enter into a contract with any person or business which is represented or assisted personally in the matter by a person who has been an employee of the agency within the preceding two years and who participated while in state office or employment in the matter with which the contract is directly concerned.  This subsection shall not apply to any contract that is awarded in accordance with subsection (a) with a person or business represented or assisted by a person who was a member of a task force or served as the designee or representative of a task force member.

     (c)  The director or acting director of a principal state department, and any deputy director of the department, shall be responsible for ensuring that all contracts entered into by the department comply with this section.

     (d)  Any violation of this section shall be assessed against the director, acting director, or deputy director of the department at the time the violation occurred."

     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.  New statutory material is underscored.

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

Report Title:

Code of Ethics; Compliance; Contracts; Principal State Department; Directors, Acting Directors, Deputy Directors; Responsibility; Violations; Disqualification; Relatives and Household Members

Description:

Prohibits a state agency from entering into any contract to procure or dispose of goods or services, or for construction, with any business that is owned or operated, or in which a controlling interest is held, by a relative or household member of a director or deputy director of a principal state department.  Requires directors, acting directors, and deputy directors of a principal state department to be responsible for ensuring that all contracts entered into by the department comply with a provision in the State's Code of Ethics governing conduct relating to contracts.  Requires any violation to be assessed against the director, acting director, or deputy director of the department at the time the violation occurred.  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 STANDARDS OF CONDUCT.

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

     SECTION 1.  Chapter 84, Hawaii Revised Statutes, is amended by adding a new section to part I to be appropriately designated and to read as follows:

     "§84-     Contracts; directors; deputy directors.  (a)  A state agency shall not enter into a contract to procure or dispose of goods or services, or for construction, with any business:

     (1)  That is owned or operated; or

     (2)  In which a controlling interest is held,

by a relative or household member of a director or deputy director of a principal state department.

     (b)  As used in this section:

     "Household member" means an individual who resides in the same dwelling unit as the director or deputy director.

     "Principal state department" means a principal department of the executive branch listed in section 26-4.

     "Relative" means a director's or deputy director's parent, grandparent, stepparent, child, grandchild, stepchild, foster child, adopted child, sibling, half-sibling, stepsibling, parent's sibling, first cousin, sibling's child, spouse, spouse's parent, child-in-law, or sibling-in-law, or any individual who has become a member of the director's or deputy director's immediate family through the Hawaiian hanai custom."

     SECTION 2.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

     SECTION 3.  New statutory material is underscored.

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

Report Title:

Ethics; Relatives and Household Members of Directors and Deputy Directors; Contracts; Disqualification

Description:

Prohibits a state agency from entering into any contract to procure or dispose of goods or services, or for construction, with any business that is owned or operated, or in which a controlling interest is held, by a relative or household member of a director or deputy director of a principal state department.

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. 2991

Honolulu, Hawaii

RE:     S.B. No. 2970

        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 Judiciary, to which was referred S.B. No. 2970, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO STANDARDS OF CONDUCT,"

begs leave to report as follows:

     The purpose and intent of this measure is to:

     (1)  Prohibit a state agency from entering into any contract to procure or dispose of goods or services, or for construction, with any business that is owned or operated, or in which a controlling interest is held, by a relative or household member of a director or deputy director of a principal state department;

     (2)  Require directors, acting directors, and deputy directors of a principal state department to be responsible for ensuring that all contracts entered into by the department comply with a provision in the State's Code of Ethics governing conduct relating to contracts; and

     (3)  Require any violation to be assessed against the director, acting director, or deputy director of the department at the time the violation occurred.

     Your Committee received testimony in support of this measure from the Hawaiʻi State Ethics Commission, Grassroot Institute of Hawaii, and one individual.

     Your Committee received comments on this measure from the State Procurement Office.

     Your Committee finds that government contracting should be based on merit, competitive pricing, and the public interest.  However, there is currently insufficient protection against impropriety in state contracts, as directors and deputy directors who oversee agency operations and budgets may have personal or family financial interests in businesses that pursue state contracts.  This measure will address these conflicts of interest and promote fairness, transparency, and public confidence in the State's procurement process.

     As affirmed by the record of votes of the members of your Committee on Judiciary that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2970, S.D. 1, and recommends that it pass Third Reading.

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

STAND. COM. REP. NO. 2527

Honolulu, Hawaii

RE:     S.B. No. 2970

        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. 2970 entitled:

"A BILL FOR AN ACT RELATING TO STANDARDS OF CONDUCT,"

begs leave to report as follows:

     The purpose and intent of this measure is to prohibit a state agency from entering into any contract to procure or dispose of goods or services, or for construction, with any business that is owned or operated, or in which a controlling interest is held, by a relative or household member of a director or deputy director of a principal state department.

     Your Committee received testimony in support of this measure from the State Procurement Office, Hawaiʻi State Ethics Commission, and Grassroot Institute of Hawaii.

     Your Committee finds that the Hawaii Public Procurement Code requires that public procurement be conducted with integrity, fairness, and independence.  Furthermore, the Procurement Code of Ethics within the Hawaii Administrative Rules also supports this by requiring all public employees involved in procurement to act ethically, comply with procurement laws and rules, and promote fair and open competition.  This measure expressly assigns the procurement responsibility to state department leaders and further reduces the risk and appearance of favoritism in state contracting.

     Your Committee also acknowledges the recommendation in testimony by the Hawaii State Ethics Commission that, because the State's code of ethics already has a provision, section 84-15, Hawaii Revised Statutes, that governs conduct related to contracts, it may be more appropriate to incorporate the language proposed in this measure in the same section, thereby keeping related provisions together.  Therefore, amendments to this measure are necessary to reflect this recommendation.

     Accordingly, your Committee has amended this measure by:

     (1)  Inserting language amending section 84-15, Hawaii Revised Statute, to include the following:

          (A)  The director or acting director of a principal state department, and any deputy director of the department, shall be responsible for ensuring that all contracts entered into by the department comply with this section; and

          (B)  Any violation of this section shall be assessed against the director, acting director, or deputy director of the department at the time the violation occurred.

     (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.

     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. 2970, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2970, S.D. 1, and be referred to your Committee on Judiciary.

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