RELATING TO PROCUREMENT.

HB723

HOUSE OF REPRESENTATIVES

H.B. NO.

723

THIRTY-THIRD LEGISLATURE, 2025

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 supporting
local businesses strengthens Hawaii's economy, creates jobs, reduces the carbon
footprint associated with importing goods and services, and promotes food and
resource security.
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Despite these
benefits, local businesses often face barriers to competing for large state
contracts due to their size and capacity.

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The
purpose of this Act is to amend the Hawaii public procurement code to:

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(1)
�
Mandate state agencies to prioritize
purchasing from local vendors whenever feasible;

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(2)
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Allow state agencies to split contracts
across multiple local vendors to enhance participation and competitiveness; and

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(3)
�
Specify when contracts may be awarded
to multiple vendors.

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SECTION
2.
�
Chapter 103D, Hawaii Revised
Statutes, is amended by adding a new section to be appropriately designated and
to read as follows:

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"
�103D-
�
Local vendors; preference; multiple awards.
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(a)
�
All state agencies, when expending public
funds for goods, services, or construction, shall give preference to local
vendors; provided that the goods, services, or construction meet the
specifications and standards required by the agency and are available at a
reasonable cost.
�
In evaluating bids,
agencies shall apply a fifteen per cent preference to bids submitted by local
vendors.

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(b)
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Agencies may split contracts
into smaller parcels to allow multiple local vendors to bid for and secure
portions of state procurement contracts; provided that:

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(1)
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Splitting contracts does not
significantly compromise project efficiency or increase costs beyond reason;

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(2)
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A procurement officer certifies that
splitting the contract aligns with the purpose of this section; and

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(3)
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Any split contract complies with
applicable legal and ethical standards.

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(c)
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Each state agency shall submit an annual report to the legislature, no
later than twenty days prior to the convening of each regular session,
detailing:

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(1)
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The percentage of goods, services,
or construction procured from local vendors;

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(2)
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Challenges encountered in
implementing this section; and

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(3)
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Recommendations for further
legislative action to enhance local procurement.

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(d)
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For purposes of this section, "reasonable
cost" means costs that do not exceed fifteen per cent more than the lowest
responsible bid from a non-local vendor, subject to review by the procurement
officer.
"

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SECTION
3.
�
Section 103D-104, Hawaii Revised
Statutes, is amended by adding a new definition to be appropriately inserted
and to read as follows:

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"
"Local
vendor" means a business that is headquartered in Hawaii and primarily
employs Hawaii residents.
"

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SECTION

4
.
�
Section
103D-302, Hawaii Revised Statutes, is amended by amending subsection (a) to
read as follows:

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"(a)
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Contracts shall be awarded by competitive
sealed bidding except as otherwise provided in [
section 103D-301.
]
this
chapter.
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Awards of contracts by
competitive sealed bidding may be made after single or multi-step bidding.
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Competitive sealed bidding does not include
negotiations with bidders after the receipt and opening of bids.
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Award is based on the criteria set forth in
the invitation for bids."

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SECTION

5
.
�
Section
103D-322, Hawaii Revised Statutes, is amended to read as follows:

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"
�103D-322
�

Multiple awards.
�
(a)
�
Contracts may be awarded to multiple vendors
if the procurement officer determines that the award:

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(1)
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Promotes efficiency and competition;

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(2)
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Expands opportunities for local
vendors; and

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(3)
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Supports the goals of this chapter
to ensure the best value for public funds.

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(b)
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The policy board [
may
]
shall

adopt rules authorizing the use and prescribing the manner in which goods,
services, or construction may be procured through multiple awards."

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SECTION
6.
�
The procurement policy board shall
adopt rules pursuant to chapter 91, Hawaii Revised Statutes, to implement this
Act.
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The rules shall include guidance on
contract splitting, vendor certification, and reporting requirements.

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SECTION
7.
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This Act shall not be applied so as
to impair any contract existing as of the effective date of this Act in a
manner violative of either the Constitution of the State of Hawaii or the
United States Constitution.

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SECTION
8.
�
Statutory material to be repealed is
bracketed and stricken.
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New statutory
material is underscored.

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SECTION
9.
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This Act shall take effect on July 1,
2025.

INTRODUCED BY:

_____________________________

Report Title:

Procurement;
Local Vendors; Preference; Multiple Awards

Description:

Mandates
state agencies to prioritize purchasing from local vendors whenever feasible.
�
Allows state agencies to split contracts
across multiple local vendors to enhance participation and competitiveness.
�
Specifies when contracts may be awarded to
multiple vendors.

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