RELATING TO PUBLIC PROCUREMENT.

Budget Small Business

Active

The official status still shows this bill as active or still awaiting another formal step.

Sponsor: ILAGAN, AMATO, EVSLIN, HUSSEY, KEOHOKAPU-LEE LOY, KILA, MARTEN, MATAYOSHI, MATSUMOTO, MIYAKE, MORIKAWA, MURAOKA, PERRUSO, PIERICK, REYES ODA, SHIMIZU, TAKAYAMA, TARNAS
Last action: 2026-02-19
Official status: Passed Second Reading as amended in HD 1 and referred to the committee(s) on FIN with none voting aye with reservations; none voting no (0) and none excused (0).
Effective date: Not listed

Plain English Breakdown

The bill summary does not provide specific details on enforcement mechanisms or penalties for non-compliance.

Supporting Local Businesses in Public Procurement

This bill requires state agencies to give a preference to Hawaii businesses when awarding contracts through competitive bidding or proposals, sets criteria for local business qualification, establishes tiered percentage preferences based on contract value, and outlines consequences if these requirements are not met.

What This Bill Does

Permanently establishes the Small Business Procurement Program within the State Procurement Office.
Requires state agencies to give a preference to Hawaii businesses when awarding contracts through competitive bidding or proposals.
Establishes criteria for Hawaii businesses to qualify for local preference, including maintaining their principal place of business in Hawaii and using at least 80% local labor.
Sets tiered percentage preferences based on the value of the contract awarded: from 10% for smaller contracts to no preference for larger ones over $10 million.
Establishes procedures for contract awardees who fail to meet or maintain the preference criteria.

Who It Names or Affects

State agencies and purchasing departments
Hawaii-based small businesses

Terms To Know

Local Preference: A preference given by state agencies to Hawaii businesses when awarding contracts.
Tiered Percentage Preferences: Different percentage preferences based on the value of the contract awarded, ranging from 10% for smaller contracts to no preference for larger ones over $10 million.

Limits and Unknowns

The bill does not specify how it will be enforced or what penalties there are for non-compliance.
It is unclear if the special fund established by the bill will have enough contributions from small businesses to achieve its intended purpose.
The effective date of July 1, 3000 appears to be a placeholder and needs clarification.

Amendments

These notes stay tied to the official amendment files and metadata from the legislature.

HD1

Hawaii published version HD1

Plain English: This amendment establishes a permanent small business procurement program within the state procurement office to support local businesses in Hawaii.

Permanently establishes and funds a small business procurement program within the state procurement office.
Requires purchasing agencies to give preference to Hawaii-based businesses when awarding contracts through competitive bidding or proposals.
Creates a special fund for small businesses and mandates contributions from contract awards starting January 1, 2029.

The amendment text is truncated at the end, so some details about data collection and reporting are missing.

Bill History

2026-02-19 H
Passed Second Reading as amended in HD 1 and referred to the committee(s) on FIN with none voting aye with reservations; none voting no (0) and none excused (0).
2026-02-19 H
Reported from ECD (Stand. Com. Rep. No. 508-26) as amended in HD 1, recommending passage on Second Reading and referral to FIN.
2026-02-11 H
The committee on ECD recommend that the measure be PASSED, WITH AMENDMENTS. The votes were as follows: 6 Ayes: Representative(s) Ilagan, Hussey, Tam, Templo, Yamashita, Gedeon; Ayes with reservations: none; Noes: none; and 1 Excused: Representative(s) Holt.
2026-02-06 H
Bill scheduled for decision making on Wednesday, 02-11-26 8:30AM in conference room 423 VIA VIDEOCONFERENCE.
2026-01-30 H
The committee(s) on ECD recommend(s) that the measure be deferred.
2026-01-26 H
Bill scheduled to be heard by ECD on Friday, 01-30-26 10:00AM in House conference room 423 VIA VIDEOCONFERENCE.
2026-01-26 H
Referred to ECD, FIN, referral sheet 1
2026-01-21 H
Introduced and Pass First Reading.
2026-01-16 H
Prefiled.

Official Summary Text

RELATING TO PUBLIC PROCUREMENT.
SPO; Small Business Procurement Program; Small Business Procurement Coordinator; Local Preference; Hawaii Businesses; Small Business Procurement Special Fund; Appropriation
Permanently establishes the Small Business Procurement Program and Small Business Procurement Coordinator position within the State Procurement Office. Requires purchasing agencies to apply a local preference to Hawaii businesses in evaluating contracts awarded by competitive sealed bidding or competitive sealed proposals. Establishes criteria for a Hawaii business to qualify for a local preference. Establishes procedures for contract awardees who fail to meet or maintain the preference criteria. Establishes a special fund and requires the Small Business Procurement Coordinator to establish rules and policies, effective 1/1/2029, requiring small businesses to commit to contributing 0.2 per cent of state contract awards to the special fund. Repeals the Small Business Assistance Initiative established in Act 168, SLH 2022. Appropriates funds for the Small Business Procurement Coordinator. Effective 7/1/3000. (HD1)

Current Bill Text

Read the full stored bill text

HB1607

HOUSE OF REPRESENTATIVES

H.B. NO.

1607

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

relating
to public procurement
.

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

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SECTION 1.
�
The
legislature finds that supporting local businesses strengthens the State's
economy by creating more local jobs, increasing local workforce and business
capacity, and enhancing economic and environmental sustainability.
�
The legislature further finds that allocation
of State funds to non‑local or out‑of‑state contractors or
entities do not foster the same benefits and may impede upon the success of
local businesses and the State's economy.
�

Local businesses often face barriers when competing for State contracts
due to the higher costs associated with doing business in an island state,
limited physical workforce capacity, and limited price competitiveness to
produce goods and services.

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The legislature believes that a preference
for local businesses in bidding for contracts from purchasing agencies of the
State and counties will help level the business playing field for local
contractors.
�
The legislature recognizes
that while a local preference may slightly raise the average cost for bid
contracts, this cost will be offset by the increases in State and county
revenues from additional local business activity, increased local employment,
and the long-term effects of keeping money within local businesses and the
local workforce.

����
Accordingly, the purpose of this Act is to require
purchasing agencies to apply a local preference to Hawaii businesses in
evaluating bids or proposals.

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SECTION 2.
�

Section 103D-1001, Hawaii Revised Statutes, is amended by adding a new
definition to be appropriately inserted and to read as follows:

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"
"Hawaii business" means
any person, agency, corporation, or other business entity with its principal
place of business located in the State.
"

����
SECTION
3.
�
Chapter 103D, Hawaii Revised
Statutes, is amended by adding a new section to part X to be appropriately
designated and to read as follows:

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"
�103D-
�
Hawaii businesses.
�
(a)
�
Notwithstanding any law to the
contrary, a purchasing agency shall apply a local preference to a Hawaii
business in evaluating bids or proposals under this part.

����
(b)
�
To qualify for a local
preference, a Hawaii business shall self-certify that:

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(1)
�
It will maintain its principal place
of business in the State throughout the performance of the contract; and

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(2)
�
Not less than eighty per cent of the
labor in the performance of the contract, with respect to time and expenses, will
be incurred from persons domiciled in the State.

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(c)
�
Where
a bid or proposal contains both Hawaii and non‑Hawaii businesses, for the
sole purpose of selecting the lowest bid or purchase price, the price or bid
offered by the Hawaii business shall be decreased by subtracting the applicable
local preference percentage pursuant to subsection (d); provided that the
contract amount of any contract awarded shall be the amount of the bid or price
offered, exclusive of the preferences.

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(d)
�
The local preference percentage shall be
applied as follows:

����
(1)
�
For contracts with a bid price of less
than $250,000, the preference shall be ten per cent;

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(2)
�
For contracts with a bid price of
$250,000 to $1,999,999.99, the preference shall be eight per cent;

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(3)
�
For contracts with a bid price of $2,000,000
to 4,999,999.99, the preference shall be six per cent;

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(4)
�
For contracts with a bid price of $5,000,000
to 7,999,999.99 the preference shall be four per cent;

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(5)
�
For contracts with a bid price of $8,000,000
to 9,999,999.99, the preference shall be two per cent; and

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(6)
�
For contracts with a bid price of
$10,000,000 or greater, there shall be no preference pursuant to this section.

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(e)
�
If a Hawaii business is awarded a contract
with the application of a local preference and is subsequently found to have
failed to meet or maintain the requirements of subsection (b), the Hawaii business
shall:

����
(1)
�
Perform the contract at the contract
price reduced by the amount of the local preference applied during bid or
proposal evaluation; and

����
(2)
�
Refund any overpayment to the
purchasing agency that awarded the contract.

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(f)

�
The policy board or any county may adopt
rules pursuant to chapter 91 or ordinances, respectively, necessary or
appropriate to implement this section.
"

����
SECTION
4.
�
New statutory material is
underscored.

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SECTION
5.
�
This Act shall take effect on July 1,
2026.

INTRODUCED BY:

_____________________________

Report Title:

Public
Procurement; Local Preference; Hawaii Businesses

Description:

Requires purchasing
agencies to apply a local preference to Hawaii businesses in evaluating bids or
proposals.
�
Establishes criteria for a
Hawaii business to qualify for a local preference.
�
Establishes tiered local preference
percentages to be applied based on bid price.
�

Establishes procedures for contract awardees who fail to meet or
maintain the preference criteria.

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