SECTION 1. The legislature finds that the procurement process is in need of clear legislative direction to award state contracts to responsible bidders or offerors through the state procurement process, to increase accountability with performance on state contracts, and to more efficiently utilize taxpayer dollars. Some state contracts may currently be awarded to the lowest bidder through invitation for bid process without regard to poor past performance, which may result in repeated inefficiencies and substandard work, and be considered qualified despite poor performance on state contracts in the past.

The purpose of this Act is to:

(1) Require past performance to be considered in future bid selection of a contractor including a review of delays, number of contract change orders, contract extensions, cost overruns, and corrective actions; and

(2) Require departments to consider available assessments of previous performance on relevant and recent government contracts when making contract awards.

SECTION 2. Section 103D-104, Hawaii Revised Statutes, is amended as follows:

1. By adding a new definition to be appropriately inserted and to read:

""Past performance" means available recent and relevant performance by the contractor on state, federal, or private contracts to be considered as a responsibility determination within the relevance of the current solicitation."

2. By amending the definition of "responsible bidder or offeror" to read:

""Responsible bidder or offeror" means a person who has the capability in all respects to perform fully the contract requirements, and the integrity and reliability [~~which~~] that will assure good faith performance[.], pursuant to the responsibility determination standards adopted by the policy board."

SECTION 3. Section 103D-302, Hawaii Revised Statutes, is amended by amending subsection (f) to read as follows:

"(f) Bids shall be evaluated based on the requirements set forth in the invitation for bids. These requirements may include criteria to determine acceptability such as inspection, testing, quality, workmanship, delivery, and suitability for a particular purpose. Those criteria that will affect the bid price and be considered in evaluation for award shall be as objectively measurable[,] as possible, such as discounts, transportation costs, [~~and~~] total or life cycle costs[.], and the bidder's past performance on projects of similar scope for public agencies, including delays, number of contract change orders, contract extensions, cost overruns, corrective actions, responses to notices of deficiencies, and assessments of the bidder's prior work. The invitation for bids shall set forth the evaluation criteria to be used. No criteria may be used in bid evaluation that are not set forth in the invitation for bids."

SECTION 4. Section 103D-303, Hawaii Revised Statutes, is amended by amending subsection (g) to read as follows:

"(g) Award shall be made to the responsible offeror whose proposal is determined in writing to be the most advantageous, taking into consideration price and the evaluation factors set forth in the request for proposals[.], which shall include the offeror's past performance on projects of similar scope for public agencies, including delays, number of contract change orders, contract extensions, cost overruns, corrective actions, responses to notices of deficiencies, and assessments of the offeror's prior work. No [~~other factors or~~] criteria [~~shall~~] may be used in the evaluation[.] that are not set forth in the request for proposals. The contract file shall contain the basis on which the award is made."

SECTION 5. Section 103D-304, Hawaii Revised Statutes, is amended by amending subsection (e) to read as follows:

"(e) The selection criteria employed in descending order of importance shall be:

(1) Experience and professional qualifications relevant to the project type;

(2) Past performance on projects of similar scope for public agencies or private industry, including corrective actions [~~and other~~], responses to notices of deficiencies[;], and assessments of prior work;

(3) Capacity to accomplish the work in the required time; and

(4) Any additional criteria determined in writing by the selection committee to be relevant to the purchasing agency's needs or necessary and appropriate to ensure full, open, and fair competition for professional services contracts."

SECTION 6. Section 103D-306, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) A contract may be awarded for goods, services, or construction without competition when the head of a purchasing agency determines in writing that there is only one source for the required good, service, or construction, the determination is reviewed and approved by the chief procurement officer, the written determination is posted in the manner described in rules adopted by the policy board, a review of past performance has been conducted, and no objection is outstanding. The written determination, any objection, past performance evaluations relied upon, and a written summary of the disposition of any objection shall be included in the contract file."

SECTION 7. Section 103D-310, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Whether or not an intention to bid is required, the procurement officer shall [~~determine~~] make a responsibility determination for any awardee, pursuant to rules adopted by the policy board, including whether the prospective offeror has the financial ability, resources, skills, capability, and business integrity necessary to perform the work. For [~~this~~] the purpose[~~, the~~] of responsibility determination, the procurement officer shall possess or obtain available information sufficient to be satisfied that a prospective offeror meets the applicable standards set forth by the policy board. The procurement officer shall consider past performance of the offeror as it applies to a responsibility determination for the current solicitation. The officer, in the officer's discretion, may also require any prospective offeror to submit answers, under oath, to questions contained in a standard form of questionnaire to be prepared by the policy board. Whenever it appears from answers to the questionnaire or otherwise, that the prospective offeror is not fully qualified and able to perform the intended work, a written determination of nonresponsibility of an offeror shall be made by the head of the purchasing agency, in accordance with rules adopted by the policy board. The unreasonable failure of an offeror to promptly supply information in connection with an inquiry with respect to responsibility may be grounds for a determination of nonresponsibility with respect to such offeror. The decision of the head of the purchasing agency shall be final unless the offeror applies for administrative review pursuant to section 103D-709."

SECTION 8. There is appropriated out of the general revenues of the State of Hawaii the sum of $500,000 or so much thereof as may be necessary for fiscal year 2015-2016 and the same sum or so much thereof as may be necessary for fiscal year 2016-2017 for the purposes of implementing this Act.

The sums appropriated shall be expended by the state procurement office for the purposes of this Act.

SECTION 9. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 10. If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 11. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 12. This Act shall take effect on January 1, 2016; provided that section 8 shall take effect on July 1, 2015.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	495
TWENTY-EIGHTH LEGISLATURE, 2015
STATE OF HAWAII