RELATING TO GOVERNMENT ACCOUNTABILITY.

SB2662

THE SENATE

S.B. NO.

2662

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO GOVERNMENT ACCOUNTABILITY
.

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

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SECTION 1.
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The
legislature finds that there is a pressing need to reduce the reliance on
external consultants for work that can or should be performed by qualified
government employees.
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Excessive
outsourcing of government functions often leads to increased costs, diminished
accountability, and a loss of institutional knowledge within public
agencies.
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By prioritizing the use of
in-house expertise, the State can foster greater transparency in its
operations, ensuring that decisions about the allocation of public funds are clear,
justifiable, and aligned with the best interests of taxpayers.
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Moreover, reducing dependence on external
consultants will promote cost efficiency, enabling government agencies to
allocate resources more effectively while building and retaining institutional
capacity.
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Strengthening the role of
public employees in performing core government functions will also enhance the
long‑term sustainability and independence of state operations.
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Through these efforts, the legislature seeks
to ensure that public agencies are equipped to meet the evolving needs of the
State in a manner that is both responsible and effective.

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Accordingly, the purpose of this Act is to
reduce reliance on external consultants for work that can be performed by
qualified government employees and ensure transparency, cost efficiency, and
the development of in-house expertise within government agencies by:

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(1)
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Requiring each purchasing agency to provide
justification for hiring external consultants;

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(2)
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Capping the amount each agency can spend on
external consultants;

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(3)
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Requiring each agency to seek approval from
the legislature for consulting contracts exceeding a certain dollar amount;

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(4)
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Requiring each agency to disclose all new contracts
with external consultants;

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(5)
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Requiring each agency to submit annual reports
to the legislature;

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(6)
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Requiring the compliance audit unit within the
office of the auditor to conduct regular audits of agency consultant contracts
to assess cost‑effectiveness and compliance; and

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(7)
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Requiring each chief procurement officer to
ensure that inherent government functions are not delegated to a contractor.

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

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"
�103D-
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External consultants; justification;
spending caps; reporting requirements; audits.
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(a)
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Notwithstanding section 103D‑301, each purchasing agency shall:

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(1)
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Provide detailed justification for
hiring external consultants by:

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(A)
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Demonstrating the lack of in-house
capacity or expertise;

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(B)
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Conducting a cost-benefit analysis
that compares consultant costs with the expenses of hiring or training state
employees; and

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(C)
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Publishing justification reports for
public and legislative review;

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(2)
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Spend not more than
per cent of the purchasing agency's budget on
consulting services;

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(3)
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Seek approval from the legislature
for any contract

for consulting services exceeding
$ ;

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(4)
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Disclose all contracts the
purchasing agency awards to external consultants after the effective date of
this Act, including:

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(A)
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The total costs of each contract,
broken down by service and duration;

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(B)
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The names of consultants and firms;
and

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(C)
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The work scope and deliverables; and

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(5)
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Submit an annual report to the
legislature no later than twenty days prior to the convening of each regular
session on its contracts with external consultants, which shall include:

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(A)
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The number of external consultants
used; and

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(B)
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The percentage of the purchasing
agency's budget spent on consulting.

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(b)
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The compliance audit unit shall conduct
regular audits of each purchasing agency's external consultant contracts to
assess the cost-effectiveness of the contracts and compliance with this
section.

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(c)
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This section shall not apply to the
contracting of external consultants for:

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(1)
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Highly technical or niche expertise
unavailable in the State; and

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(2)
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Short-term emergency needs,
including disaster response or urgent technical projects.
"

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SECTION
3
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Section 103D-205, Hawaii Revised Statutes, is
amended by amending subsection (a) to read as follows:

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"(a)
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For their respective jurisdictions and unless otherwise specifically
provided in this chapter, each chief procurement officer shall serve as the
central procurement officer for the officer's respective jurisdiction and:

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(1)
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Procure or supervise the procurement of
all goods, services, and construction;

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(2)
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Exercise general supervision and
control over all inventories of goods;

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(3)
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Sell, trade, or otherwise dispose of
surplus goods;

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(4)
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Establish and maintain programs for the
inspection, testing, and acceptance of goods, services, and construction;

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(5)
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Coordinate with the administrator
regarding procurement policies, opportunities for statewide innovation
implementation, and concerns;

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(6)
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Report procurement contract data
pursuant to requirements established by the administrator, in the form and
manner prescribed by the state procurement office; [
and
]

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(7)
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Assist and cooperate with the
administrator regarding any compliance review by the administrator pursuant to
section 103D-206[
.
]
; and

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(8)
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Ensure that inherent government
functions are not delegated to a contractor.
"

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SECTION 4.
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Statutory material to be repealed is bracketed and stricken.
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New statutory material is underscored.

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SECTION 5.
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This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________

Report Title:

Auditor; External
Consultants; Purchasing Agencies; Disclosure Requirements; Spending Caps;
Audit; Exceptions; Reports

Description:

Requires
each purchasing agency to provide justification for hiring external
consultants.
�
Caps the amount each agency
can spend on external consultants.
�

Requires each agency to seek approval from the Legislature for
consulting contracts exceeding a certain dollar amount.
�
Requires each agency to disclose new
contracts with external consultants.
�

Requires annual reports to the Legislature.
�
Requires the Compliance Audit Unit within the
Office of the Auditor to conduct regular audits of agency consultant contracts
to assess cost-effectiveness and compliance.
�

Establishes exceptions.
�
Requires
each chief procurement officer to ensure that inherent government functions are
not delegated to a contractor.
�

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