RELATING TO PROCUREMENT.

HB1772

HOUSE OF REPRESENTATIVES

H.B. NO.

1772

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

Relating
to Procurement
.

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

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SECTION
1
.
�
The legislature finds that small businesses
are the lifeblood of the State's economy.
�

Act 50, Session Laws of Hawaii 2005, was enacted to promote the growth
and development of small businesses in Hawaii through the establishment of a
small business preference program as part of the procurement process.
�
Additionally, Act 213, Session Laws of Hawaii
2007, approved funding for a full-time position in the state procurement office
with the purpose of implementing part IX of the Hawaii public procurement code,
relating to assistance to small businesses.
�

Unfortunately, due to funding and staffing cuts in 2008, the position
was never filled and later eliminated.
�

Therefore, although subchapter 9 of 3-124, Hawaii Administrative Rules, the
interim rules establishing the procedures to implement the Hawaii small
business preference program went into effect in 2007, there was no dedicated
position to carry out those rules.
�
In
the absence of this dedicated position or a small business office, the interim
rules failed to aid the small business community and expired in 2011.
�
Act 42, Session Laws of Hawaii 2017, then
attempted to address this critical need by creating a small business assistance
initiative.
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However, the three-year initiative
did not receive funding in its second and third years and the enabling
legislation sunset in 2020.

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The legislature further finds that Act 168,
Session Laws of Hawaii 2022, established a five-year small business assistance initiative
within the state procurement office to identify, quantify, and address the
needs of small businesses and measure and track their participation in state
small business contracts.
�
The initiative
consisted of a small business procurement coordinator and small business
office, funded through an appropriation.
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The intent of the initiative was to create, develop, and implement
strategies to ensure that small businesses, including businesses owned by
veterans, Native Hawaiians, and women, were able to effectively participate in
small business contracting opportunities within the State.

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A contract with the small business office
was executed in 2023 and the position of small business procurement coordinator
was filled in 2025.
�
Since then, a
statewide small business database has been established and is currently being
expanded; a Hawaii small business office website was created to provide crucial
information and tools for small businesses; and two statewide surveys were
conducted to collect data from small business and procurement staff.
�
The initiative has also conducted training
workshops and outreach activities to foster direct engagement and educate small
business owners on navigating state procurement processes.
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The initiative is currently developing draft
administrative rules for small business assistance.

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The legislature notes that previously
drafted administrative rules relating to the development of small business
contracts with the State were not effective due to insufficient business
metrics and data to inform the creation of the rules.

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The legislature further finds that as part
of the state's incremental initiatives to assist small businesses in the state
procurement process, the state procurement office is now addressing part IX of
the Hawaii public procurement code and assisting self-identified small businesses
to obtain state contracts.
�
The
legislature recognizes the importance of continuing this progress by expanding
the small business assistance initiative into a permanent procurement program
to collect and develop relevant data and information necessary for small businesses
to compete for and obtain small business contracts and identify and resolve
issues that must be addressed to develop an effective small business state
contracting program within the state procurement process.

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Accordingly, the purpose of this Act is to
permanently establish and appropriate funds for the small business procurement
program and small business procurement coordinator position within the state
procurement office.

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SECTION
2.
�
Chapter 103D, Hawaii Revised
Statutes, is amended by adding
two
new section
s

to part IX to be appropriately designated and to read as follows:

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"
�103D-

�
Small business procurement program
; establishment.
�
(a)
�
There is established within the state procurement office a small business
procurement program
to e
nsure that small businesses, including
businesses owned by veterans, Native Hawaiians, and women, are able to
effectively participate in small business contracting opportunities in the
State
.

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(b)
�
The
small business procurement program
shall be administered by the small business
procurement coordinator.

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�103D-

�
Small
business procurement coordinator; appointment; duties.
�
(a)
�
The administrator
of the state procurement office shall appoint a small business coordinator for
the
proper administration, enforcement, and facilitation of this part.
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The appointment shall be made without regard
to chapter 76; provided that the coordinator shall be eligible for participation
in state employee benefit plans.
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Notwithstanding
section 76-16(b)(17), this exemption from chapter 76 shall not expire.

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(b)
�
The
coordinator shall implement and administer programs and procedures necessary to
assist small businesses to effectively participate in the State's public
procurement processes.
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The coordinator
shall:

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(1)
�
A
dminister
the d
aily operations of the small business
procurement program;

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(2)
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Establish
and maintain a
statewide s
mall
business data
base;

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(3)
�
Establish processes
for the registration, certification, and identification of small business in
the State;

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(4)
�
Develop and implement outreach,
engagement, and education initiatives, including:

���������
(A)
�
Serving as a liaison and advocate
for small business interests within the state procurement system;

���������
(B)
�
Participating in outreach and
engagement activities, including networking events, trade association meetings,
local business expositions, and collaborating with organizations that support
entrepreneurs, with a special focus on supporting underserved communities;

���������
(C)
�
Developing and disseminating
outreach campaigns to promote small business initiatives and opportunities,
including newsletters and electronic mail communications; and

���������
(D)
�
Creating, developing, advertising,
and encouraging vendor participation in workshops, seminars, and trainings
designed to promote and enhance small business participation in state
contracts;

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(5)
�
Aggregate resources and advance accessibility,
including by:

���������
(A)
�
Aggregating all small business
resources and materials from around the State and presenting them in an easily
accessible and understandable online format for potential vendor participants;
and

���������
(B)
�
Coordinating with small business
advocates in the public and private sectors to create a small business network
that can be easily accessed by all small businesses;

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(6)
�
Develop policy, oversight, and
training, including:

���������
(A)
�
Drafting policies and rules to
support the implementation of this part;

���������
(B)
�
Producing, publishing, and
disseminating training materials designed to inform procurement staff and small
business vendors of policies and rules;

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(C)
�
Collaborating with state agencies to
identify and promote contracting opportunities suitable for small businesses,
including identifying potential contracts for set-asides or preferences; and

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(D)
�
Establishing mechanisms and
implementing procedures for handling disputes and investigating allegations of
fraud and other misappropriations of the small business procurement program and
its benefits to small businesses; and

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(7)
�
Perform data collection and
reporting, including by:

���������
(A)
�
Establishing a system for collecting
and analyzing data on small business participation in state contracts,
including data on contract awards aggregated by industry, agency, and business
demographic;

���������
(B)
�
Collecting data on existing and
future small business vendor disputes, problems, difficulties, successes,
recommendations, and any other metrics deemed important to the program by the
state procurement office or legislature; and

���������
(C)
�
Producing an annual report of small
business participation data and metrics to be submitted to the administrator of
the state procurement office.
"

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SECTION

3
.
�
Section
103D-902, Hawaii Revised Statutes, is amended to read as follows:

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"
�103D-902
�

Small business assistance.
�
[
(a)
]
�
The policy board shall adopt rules to assist
small businesses in learning how to do business with the State.

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[
(b)
�

The state procurement office shall establish a small business initiative
program consistent with this chapter to ensure that small businesses, including
businesses owned by veterans, Native Hawaiians, and women, are able to
effectively participate in small business contracting opportunities in the
State
.
]"

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SECTION

4
.
�
Act 168, Session Laws of Hawaii 2022, is
amended by amending section
6
to read as follows:

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"
SECTION
6.
�
This Act shall take effect upon its
approval; provided that section 4 shall take effect on July 1, 2022
[
.
]
;
provided further that section 3 shall be repealed on June 30, 2026.
"

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SECTION
5.
�
There is appropriated out of the
general revenues of the State of Hawaii the sum of $126,000 or so much thereof
as may be necessary for fiscal year 2026-2027 to establish one permanent
full-time equivalent (1.0 FTE) small business procurement coordinator position
within the state procurement office.

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

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SECTION

6
.
�
Statutory
material to be repealed is bracketed and stricken.
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New statutory material is underscored.

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SECTION
7.
�
This Act shall take effect upon its
approval; provided that sections 2, 3, and 5 shall take effect on July 1, 2026.

INTRODUCED BY:

_____________________________

Report Title:

SPO;
Small Business Procurement Program; Small Business Procurement Coordinator;
Appropriation

Description:

Establishes
the Small Business Procurement Program and Small Business Procurement
Coordinator position permanently in the State Procurement Office.
�
Repeals the Small Business Assistance
Initiative established in Act 168, Session Laws of Hawaii 2022.
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Appropriates funds.

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