Source Selection and Contract Formation

HRS div. 1, tit. 9, ch. 103D, pt. III

in effect

HRS §103D-301 Methods of source selection

103D-301. Methods of source selection Unless otherwise authorized by law, all contracts shall be awarded pursuant to the following sections, as applicable: (1) Section 103D-302 (Competitive sealed bids); (2) Section 103D-303 (Competitive sealed proposals); (3) Section 103D-304 (Professional services procurement); (4) Section 103D-305 (Small purchases); (5) Section 103D-306 (Sole source procurement); and (6) Section 103D-307 (Emergency procurements). [L Sp 1993, c 8, pt of §2; am L 2013, c 239, §2]

HRS §103D-302 Competitive sealed bidding

103D-302. Competitive sealed bidding (a) Contracts shall be awarded by competitive sealed bidding except as otherwise provided in section 103D-301. Awards of contracts by competitive sealed bidding may be made after single or multi-step bidding. Competitive sealed bidding does not include negotiations with bidders after the receipt and opening of bids. Award is based on the criteria set forth in the invitation for bids. (b) An invitation for bids shall be issued, and shall include a purchase description and all contractual terms and conditions applicable to the procurement. If the invitation for bids is for construction, it shall specify that all bids include the name of each person or firm to be engaged by the bidder as a joint contractor or subcontractor in the performance of the contract and the nature and scope of the work to be performed by each. Construction bids that do not comply with this requirement may be accepted if acceptance is in the best interest of the State and the value of the work to be performed by the joint contractor or subcontractor is equal to or less than one per cent of the total bid amount. (c) Adequate public notice of the invitation for bids shall be given a reasonable time before the date set forth in the invitation for the opening of bids. The policy board shall adopt rules which specify: (1) The form that the notice is to take; (2) What constitutes a reasonable interim between publication and bid opening; and (3) How notice may be published, including publication in a newspaper of general circulation, notice by mail to all persons on any applicable bidders mailing list, publication by any public or private telecommunication information network, or any other method of publication it deems to be effective. (d) Bids shall be opened publicly in the presence of one or more witnesses, at the time and place designated in the invitation for bids. The amount of each bid and other relevant information specified by rule, together with the name of each bidder shall be recorded. The record and each bid shall be open to public inspection. (e) Bids shall be unconditionally accepted without alteration or correction, except as authorized in this chapter or by rules adopted by the policy board. (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, total or life cycle costs, and the bidder's past performance, if available. 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. (g) Correction or withdrawal of inadvertently erroneous bids before or after award, or cancellation of invitations for bids, awards, or contracts based on such bid mistakes, shall be permitted in accordance with rules adopted by the policy board. After bid opening no changes in bid prices or other provisions of bids prejudicial to the interest of the public or to fair competition shall be permitted. Except as otherwise provided by rule, all decisions to permit the correction or withdrawal of bids, or to cancel awards or contracts based on bid mistakes, shall be supported by a written determination made by the chief procurement officer or head of a purchasing agency. (h) The contract shall be awarded with reasonable promptness by written notice to the lowest responsible and responsive bidder whose bid meets the requirements and criteria set forth in the invitation for bids. In the event all bids exceed available funds as certified by the appropriate fiscal officer, the head of the purchasing agency responsible for the procurement in question is authorized in situations where time or economic considerations preclude resolicitation of work of a reduced scope to negotiate an adjustment of the bid price, including changes in the bid requirements, with the low responsible and responsive bidder, in order to bring the bid within the amount of available funds. (i) When it is not practicable to initially prepare a purchase description to support an award based on price, an invitation for bids, which requests the submission of unpriced offers to be followed by an invitation for bids limited to those bidders whose offers have been qualified under the criteria set forth in the first solicitation, may be used. If a multi-step sealed bidding process is used, the notice and the invitation for bids shall describe each step to be used in soliciting, evaluating, and selecting unpriced offers. [L Sp 1993, c 8, pt of §2; am L 1994, c 186, §9; am L 1995, c 178, §7; am L 1997, c 352, §23; am L 2021, c 188, §4]

HRS §103D-303 Competitive sealed proposals

103D-303. Competitive sealed proposals (a) Competitive sealed proposals may be used to procure goods, services, or construction that are either not practicable or not advantageous to the State to procure by competitive sealed bidding. (b) Proposals shall be solicited through a request for proposals. (c) Notice of the request for proposals shall be given in the same manner as provided in section 103D-302(c). (d) Proposals shall be opened so as to avoid disclosure of contents to competing offerors during the process of evaluation. A register of proposals shall be prepared and shall be open for public inspection after contract award. (e) The request for proposals shall include as an evaluation factor, past performance on projects of similar scope for public agencies or private industry, and shall state the relative importance of price, past performance, and other evaluation factors. (f) Discussions may be conducted with responsible offerors who submit proposals determined to be reasonably likely to be selected for a contract award for the purpose of clarification to assure full understanding of, and responsiveness to, the solicitation requirements. Offerors shall be accorded fair and equal treatment with respect to any opportunity for discussion and revision of proposals, and revisions may be permitted after submissions and prior to award for the purpose of obtaining best and final offers. In conducting discussions, there shall be no disclosure of any information derived from proposals submitted by competing offerors. (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. No other factors or criteria shall be used in the evaluation. The contract file shall contain the basis on which the award is made. (h) In cases of awards made under this section, non-selected offerors may submit a written request for debriefing to the procurement officer within three working days after the posting of the award of the contract. Thereafter, the procurement officer shall provide the non-selected offeror a prompt debriefing. Any protest by the non-selected offeror pursuant to section 103D-701 following debriefing shall be filed in writing with the procurement officer within five working days after the date upon which the debriefing is completed. (i) In addition to any other provisions of this section, construction projects may be solicited through a request for proposals to use the design-build method; provided that: (1) A request for proposals is issued to prequalify offerors to select a short list of no more than three responsible offerors, prior to the submittal of proposals; provided that the number of offerors to be selected for the short list shall be stated in the request for proposals and prompt notice is given to all offerors as to which offerors have been short-listed; (2) A conceptual design fee may be paid to non-selected offerors that submit a technically responsive proposal; provided that the cost of the entire project is greater than $1,000,000; (3) The criteria for pre-qualification of offerors, design requirements, development documents, proposal evaluation criteria, terms of the payment of a conceptual design fee, or any other pertinent information shall be stated in the request for proposals; and (4) Past performance on projects of similar scope for public agencies or private industries shall be an evaluation factor for the prequalification of offerors. [L Sp 1993, c 8, pt of §2; am L 1995, c 178, §§8, 9; am L 1997, c 352, §23; am L 2003, c 52, §4; am L 2011, c 211, §3; am L 2021, c 188, §5]

HRS §103D-303.5 Pre-bid conference

103D-303.5. Pre-bid conference (a) At least fifteen days prior to submission of bids pursuant to section 103D-302 for a construction or design-build project with a total estimated contract value of $500,000 or more, and at least fifteen days prior to submission of proposals pursuant to section 103D-303 for a construction or design-build project with a total estimated contract value of $100,000 or more, the head of the purchasing agency shall hold a pre-bid conference and shall invite all potential interested bidders, offerors, subcontractors, and union representatives to attend. (b) The procurement policy board shall adopt rules under chapter 91 to effectuate this section. [L 2003, c 52, §2]

HRS §103D-304 Procurement of professional services

103D-304. Procurement of professional services (a) Professional services shall be procured in accordance with sections 103D-302, 103D-303, 103D-305, 103D-306, or 103D-307, or this section; provided that design professional services furnished by licensees under chapter 464 shall be procured pursuant to this section or section 103D-307. Contracts for professional services shall be awarded on the basis of demonstrated competence and qualification for the type of services required, and at fair and reasonable prices. (b) At a minimum, before the beginning of each fiscal year, the head of each purchasing agency shall publish a notice inviting persons engaged in providing professional services that the agency anticipates needing in the next fiscal year, to submit current statements of qualifications and expressions of interest to the agency. Additional notices shall be given if: (1) The response to the initial notice is inadequate; (2) The response to the initial notice does not result in adequate representation of available sources; (3) New needs for professional services arise; or (4) Rules adopted by the policy board so specify. The chief procurement officer may specify a uniform format for statements of qualifications. Persons may amend these statements by filing a new statement prior to the date designated for submission. (c) The head of the purchasing agency shall designate a review committee consisting of a minimum of three persons with sufficient education, training, and licenses or credentials for each type of professional service that may be required. In designating the members of the review committee, the head of the purchasing agency shall ensure the impartiality and independence of committee members. The names of the members of the review committee established under this section shall be placed in the contract file. The committee shall review and evaluate all submissions and other pertinent information, including references and reports, and prepare a list of qualified persons to provide these services. Persons included on the list of qualified persons may amend their statements of qualifications as necessary or appropriate. Persons shall immediately inform the head of the purchasing agency of any change in information furnished that would disqualify the person from being considered for a contract award. (d) Whenever during the course of the fiscal year the agency needs a particular professional service, the head of the purchasing agency shall designate a selection committee to evaluate the statements of qualification and performance data of those persons on the list prepared pursuant to subsection (c) along with any other pertinent information, including references and reports. The selection committee shall be comprised of a minimum of three persons with sufficient education, training, and licenses or credentials in the area of the services required. In designating the members of the selection committee, the head of the purchasing agency shall ensure the impartiality and independence of committee members. The names of the members of a selection committee established under this section shall be placed in the contract file. (e) [Repeal and reenactment on June 30, 2028. L 2024, c 113, §7.] 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; (3) Capacity to accomplish the work in the required time; (4) For accounting services, whether the accounting service business is located in the State, with a preference for Hawaii accounting service businesses; provided that the Hawaii accounting service business shall provide a self-certification that: (A) Not less than eighty per cent of the labor for accounting services, with respect to time and expenses incurred, will be performed in the State by persons domiciled in the State; and (B) With respect to the size of the physical location, the commercial place of business is of sufficient capacity to accommodate every person performing accounting services under any contract subject to this chapter; and (5) 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. (f) The selection committee shall evaluate the submissions of persons on the list prepared pursuant to subsection (c) and any other pertinent information that may be available to the agency, against the selection criteria. The committee may conduct confidential discussions with any person who is included on the list prepared pursuant to subsection (c) regarding the services that are required and the services they are able to provide. In conducting discussions, there shall be no disclosure of any information derived from the competing professional service offerors. (g) The selection committee shall rank a minimum of three persons based on the selection criteria and send the ranking to the head of the purchasing agency. The contract file shall contain a copy of the summary of qualifications for the ranking of each of the persons provided to the head of the purchasing agency for contract negotiations. If more than one person holds the same qualifications under this section, the selection committee shall rank the persons in a manner that ensures equal distribution of contracts among the persons holding the same qualifications. The recommendations of the selection committee shall not be overturned without due cause. (h) The head of the purchasing agency or designee shall negotiate a contract with the first ranked person, including a rate of compensation that is fair and reasonable, established in writing, and based upon the estimated value, scope, complexity, and nature of the services to be rendered. If a satisfactory contract cannot be negotiated with the first ranked person, negotiations with that person shall be formally terminated and negotiations with the second ranked person on the list shall commence. The contract file shall include documentation from the head of the purchasing agency, or designee, to support selection of other than the first ranked or next ranked person. Failing accord with the second ranked person, negotiations with the next ranked person on the list shall commence. If a contract at a fair and reasonable price cannot be negotiated, the selection committee may be asked to submit a minimum of three additional persons for the head of the purchasing agency to resume negotiations in the same manner provided in this subsection. Negotiations shall be conducted confidentially. (i) If, after ten business days, fewer than three qualified persons respond to the additional notice of need posted pursuant to subsection (b), the purchasing agency may submit a request to the head of the purchasing agency, except as provided in paragraph (3), for approval to proceed under this subsection. Submissions shall be evaluated by the selection committee in accordance with subsection (e); provided that: (1) For two qualified persons, the selection committee shall rank the qualified persons based on the criteria in subsection (e). If both persons hold the same qualifications, the selection committee shall rank the persons in a manner that ensures equal distribution of contracts among persons holding the same qualifications. The ranking shall be provided to the head of the purchasing agency for negotiations conducted in the manner set forth in subsection (h). The rankings of the selection committee shall not be overturned without due cause; (2) For one qualified person, the selection committee shall first evaluate the person's qualifications and may then provide the name of the person to the head of the purchasing agency to negotiate a contract at a fair and reasonable price. If the head of the purchasing agency determines in writing that either the price of the offer received is not fair and reasonable, or that the qualifications of the offeror are not adequate to meet the procurement needs, the head of the purchasing agency may request approval from the chief procurement officer to proceed as if no person had responded; (3) If no qualified person responds, the head of the purchasing agency may determine in writing that the need for the service continues and that there is no time for resolicitation or that resolicitation would likely be futile; provided that when making this determination, consideration shall be given to time constraints and competition in the marketplace; provided further that: (A) In the event of this determination, the head of the purchasing agency shall submit a written request to the chief procurement officer for approval to engage in direct negotiations with a qualified person. The written request shall be made on a "Notice of No Interest" form provided by the chief procurement officer and shall include the following: (i) The date of the solicitation notice and the estimated dollar amount of the contract; and (ii) The names of persons on the list, including the situation in which no person responds; and (B) If the requirements of subparagraph (A) are met, negotiations may proceed; provided that: (i) The chief procurement officer shall post a copy of the request on an internet site accessible to the public for seven days; (ii) Any objections to the request shall be submitted in writing and received by the chief procurement officer within the seven-day public posting period; and (iii) The chief procurement officer has approved the request, after considering the circumstances of each individual case; and (4) The determinations required by this subsection shall be final and conclusive unless the determinations are clearly erroneous, arbitrary, capricious, or contrary to law. (j) Contracts awarded under this section for $5,000 or more shall be posted electronically within seven days of the contract award by the chief procurement officer or designee and shall remain posted for at least one year. Information to be posted shall include, but not be limited to: (1) The names of the persons submitted under subsection (g) or (i); (2) The name of the person or organization receiving the award; (3) The dollar amount of the contract; (4) The name of the head of the purchasing agency or designee making the selection; and (5) Any relationship of the principals to the official making the award. (k) Contracts for professional services of less than the limits in section 103D-305, may be negotiated by the head of the purchasing agency, or designee, with at least any two persons on the list of qualified persons established pursuant to subsection (c). Negotiations shall be conducted in the manner set forth in subsection (h), with ranking based on the selection criteria of subsection (e) as determined by the head of the agency. (l) In cases of awards made under this section, nonselected professional service providers may submit a written request for debriefing to the chief procurement officer or designee within three working days after the posting of the award of the contract. Thereafter, the head of the purchasing agency shall provide the requester a prompt debriefing in accordance with rules adopted by the policy board. Any protest by the requester pursuant to section 103D-701 following debriefing shall be filed in writing with the chief procurement officer or designee within five working days after the date that the debriefing is completed. [L Sp 1993, c 8, pt of §2; am L 1995, c 178, §10; am L 1997, c 21, §1 and c 352, §7; am L 2000, c 141, §1; am L 2003, c 52, §5; am L 2004, c 216, §1; am L 2023, c 188, §2; am L 2024, c 113, §4] Note L 1997, c 352, §23 purports to amend this section.

HRS §103D-305 Small purchases; prohibition against parceling

103D-305. Small purchases; prohibition against parceling (a) Procurements of less than $100,000 for goods or services, or $250,000 for construction shall be made in accordance with procedures set forth in rules adopted by the policy board that are designed to ensure administrative simplicity and as much competition as is practicable; provided that multiple expenditures shall not be created at the inception of a transaction or project so as to evade the requirements of this chapter; and provided further that procurement requirements shall not be artificially divided or parceled so as to constitute a small purchase under this section. (b) Procurements greater than $50,000 for construction under subsection (a) shall require security by performance and payment bonds, pursuant to section 103D-324, delivered to the procurement officer, that are: (1) In a form prescribed by the rules of the policy board; (2) Executed by a surety company authorized to do business in this State; and (3) In an amount equal to one hundred per cent of the price specified in the contract, or shall otherwise be secured by a performance bond in a manner satisfactory to the procurement officer. (c) Procurements of $25,000 to less than $250,000 shall be made in accordance with small purchase procedures; provided that such small purchase procurements through an electronic system shall be required. [L Sp 1993, c 8, pt of §2; am L 1994, c 186, §10; am L 1995, c 178, §11; am L 1997, c 352, §8; am L 2006, c 283, §2; am L 2009, c 175, §§2, 14(1); am L 2010, c 107, §1; am L 2012, c 173, §§2, 5]

HRS §103D-306 Sole source procurement

103D-306. Sole source procurement (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, and no objection is outstanding. The written determination, any objection, and a written summary of the disposition of any objection shall be included in the contract file. (b) The written determination shall contain such information as the rules of the policy board require. Persons may file written objections to the issuance of a contract pursuant to this section. Rules of the policy board shall provide for the disposition of objections, including a written summary of the disposition. (c) The rules of the policy board shall include a non-exhaustive list of procurements which constitute sole source procurements and criteria for determining when a particular procurement may be determined to be a sole source. The rules shall also prescribe when cost or pricing data must be considered and how they are to be used in establishing the price, terms, and conditions, if any, for a contract awarded pursuant to this section. [L Sp 1993, c 8, pt of §2; am L 1995, c 178, §12; am L 1997, c 352, §23]

HRS §103D-307 Emergency procurements

103D-307. Emergency procurements (a) The head of a purchasing agency may obtain a good, service, or construction essential to meet an emergency by means other than specified in this chapter when the following conditions exist: (1) A situation of an unusual or compelling urgency creates a threat to life, public health, welfare, or safety by reason of major natural disaster, epidemic, riot, fire, or such other reason as may be determined by the head of that purchasing agency; (2) The emergency condition generates an immediate and serious need for goods, services, or construction that cannot be met through normal procurement methods and the government would be seriously injured if the purchasing agency is not permitted to employ the means it proposes to use to obtain the goods, services, or construction; and (3) Without the needed good, service, or construction, the continued functioning of government, the preservation or protection of irreplaceable property, or the health and safety of any person will be seriously threatened. (b) The emergency procurement shall be made with such competition as is practicable under the circumstances and, where practicable, approval from the chief procurement officer shall be obtained prior to the procurement. A written determination of the basis for the emergency and for the selection of the particular contractor shall be included in the contract file. [L Sp 1993, c 8, pt of §2]

HRS §103D-308 Cancellation of invitations for bids or requests for proposals

103D-308. Cancellation of invitations for bids or requests for proposals An invitation for bids, a request for proposals, or other solicitation may be canceled, or any or all bids or proposals may be rejected in whole or in part as may be specified in the solicitation, when it is in the best interests of the governmental body that issued the invitation, request, or other solicitation, in accordance with rules adopted by the policy board. The reasons therefor shall be made part of the contract file and be publicly posted, for a minimum of ten business days, on a purchasing agency's website, government electronic notification system, or by any other means the procurement officer deems effective for publicizing the cancellation notice. [L Sp 1993, c 8, pt of §2; am L 1997, c 352, §9; am L 2022, c 175, §2]

HRS §103D-309 Contract not binding unless funds available

103D-309. Contract not binding unless funds available (a) Contracts awarded pursuant to section 103D-302, 103D-303, or 103D-306, shall neither be binding nor have any force and effect of law unless the comptroller, the director of finance of a county, or the respective chief financial officers of the department of education, the judiciary, or the legislative branches of the State or county, as the case may be, endorses thereon a certificate that there is an appropriation or balance of an appropriation over and above all outstanding contracts, sufficient to cover the amount required by the contract; provided that if the contract is a multi-term contract, the comptroller, director of finance, or chief financial officer shall only be required to certify that there is an appropriation or balance of an appropriation over and above all outstanding contracts, that is sufficient to cover the amount required to be paid under the contract during the fiscal year or remaining portion of the fiscal year of each term of the multi-year contract; provided further that the administrator of the state procurement office shall attest in writing to any recommendation or solicitations. This section shall not apply to any contract under which the total amount to be paid to the contractor cannot be accurately estimated at the time the contract is to be awarded, or to any contract for which consideration is in kind or forbearance, or to any contract awarded pursuant to section 103D-306 that is a one-time payment through a purchase order. (b) In any contract involving not only state or county funds but supplemental funds from the federal government, this section shall be applicable only to that portion of the contract price as is payable out of state or county funds. As to the portion of the contract price as is expressed in the contract to be payable out of federal funds, the contract shall be construed to be an agreement to pay the portion to the contractor, only out of federal funds to be received from the federal government. This subsection shall be liberally construed so as not to hinder or impede the State in contracting for any project involving financial aid from the federal government. (c) In any contract involving not only state or county funds but supplemental funds from a utility, this section shall be applicable to that portion of the contract price payable out of state or county funds as well as that portion of the contract price payable out of funds from a utility, or payable out of state or county funds paid to a utility. The State or county may certify that there are sufficient funds for the utility's portion of the contract price if the amounts that a utility is obligated to pay under a legal agreement between the utility and the State, or a county, are sufficient to pay that portion of the contract price and the legal agreement: (1) Includes a specific description of the utility's share of the payment and terms of that payment; (2) Allows the State, county, or utility to provide progress payments or final payment based on the actual cost after a project is completed; and (3) Provides that in the event the State, county, or utility is delinquent in payments under the legal agreement, the State, county, or utility shall be responsible for any and all additional costs attributable to such late payment. Any such legal agreement shall be executed prior to the execution of the state or county contract and shall not jeopardize any federal, state, or county funds. For the purposes of this subsection: "Legal agreement" includes a utility agreement, memorandum of understanding, or memorandum of agreement. "Utility" means a utility company or entity. [L Sp 1993, c 8, pt of §2; am L 1995, c 178, §13; am L 1999, c 149, §15; am L 2010, c 140, §1 and c 187, §§3, 12; am L 2012, c 70, §1, and c 175, §1]

HRS §103D-310 Responsibility of offerors

103D-310. Responsibility of offerors (a) Unless the policy board, by rules, specifies otherwise, before submitting an offer, a prospective offeror, not less than ten calendar days prior to the day designated for opening offers, shall give written notice of the intention to submit an offer to the procurement officer responsible for that particular procurement. (b) Whether or not an intention to bid is required, the procurement officer shall determine whether the prospective offeror has the financial ability, resources, skills, capability, and business integrity necessary to perform the work. For the purpose of making a responsibility determination, the procurement officer shall possess or obtain available information, including past performance, sufficient to be satisfied that a prospective offeror meets the applicable standards. The officer, in the officer's discretion, may 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. (c) All offerors, upon award of contract, shall comply with all laws governing entities doing business in the State, including chapters 237, 383, 386, 392, and 393. Offerors shall produce documents to the procuring officer to demonstrate compliance with this subsection. Any offeror making a false affirmation or certification under this subsection shall be suspended from further offerings or awards pursuant to section 103D-702. The procuring officer shall verify compliance with this subsection for all contracts awarded pursuant to sections 103D-302, 103D-303, 103D-304, and 103D-306, and for contracts and procurements of $2,500 or more awarded pursuant to section 103D-305; provided that the attorney general may waive the requirements of this subsection for contracts for legal services if the attorney general certifies in writing that comparable legal services are not available in this State. (d) Information furnished by an offeror pursuant to this section shall not be disclosed to any person except to law enforcement agencies as provided by chapter 92F. [L Sp 1993, c 8, pt of §2; am L 1997, c 352, §§10, 23; am L 2003, c 52, §6; am L 2004, c 216, §4; am L 2005, c 211, §1; am L 2011, c 190, §2; am L 2021, c 188, §7]

HRS §103D-311 Prequalification of suppliers

103D-311. Prequalification of suppliers (a) The policy board may adopt rules to prequalify prospective suppliers for particular types of goods, services, and construction or to limit a solicitation to prequalified vendors to meet statutory or licensing requirements applying to the solicitation or when the time necessary to verify vendor qualifications would jeopardize timely award of contracts. (b) A prospective supplier may be prequalified for a particular type of goods or services. Solicitation mailing lists of potential contractors shall include, but shall not be limited to, prequalified suppliers. [L Sp 1993, c 8, pt of §2; am L 1997, c 352, §23]

HRS §103D-312 Fair and reasonable pricing policy; cost or pricing data

103D-312. Fair and reasonable pricing policy; cost or pricing data (a) A procurement officer shall purchase goods, services, and construction from responsible sources at fair and reasonable prices. A procurement officer shall make a written determination whether a price is fair and reasonable for each contracting action, including change orders and contract modifications that adjust prices. In establishing whether a price is fair and reasonable, the procurement officer shall obtain: (1) Certified cost or pricing data for every contract to which subsection (c) applies; and (2) Other data as necessary to perform a cost or price analysis of the data and determine a fair and reasonable price, regardless of whether subsection (c) applies to the contract. (b) The policy board may adopt rules, pursuant to chapter 91, to establish an order of preference in the type of data required under subsection (a)(2). (c) A contractor, except as provided in subsection (e), shall submit cost or pricing data and shall certify that, to the best of the contractor's knowledge and belief, the cost or pricing data submitted is accurate, complete, and current as of a mutually determined specified date before the date of: (1) The pricing of any contract awarded by competitive sealed proposals or pursuant to the sole source procurement authority, where the total contract amount is expected to exceed an amount established by rules adopted by the policy board; or (2) The pricing of any change order or contract modification that is expected to exceed an amount established by rules adopted by the policy board. The requirement of this paragraph shall apply regardless of whether the original contract award did not require certified cost and pricing data. (d) Any contract, change order, or contract modification under which a certificate is required shall contain a provision that the price to the State, including profit or fee, shall be adjusted to exclude any significant sums by which the State finds that the price was increased because the contractor furnished cost or pricing data that was inaccurate, incomplete, or not current as of the date agreed upon between the parties. (e) The requirements of this section, except for the requirements of [subsection] (c)(2), shall not apply to original contract awards: (1) Where the original contract price is based on adequate price competition; (2) Where the original contract price is based on established catalog prices or market prices; (3) Where the original contract prices are set by law or rule; or (4) Where it is determined in writing in accordance with rules adopted by the policy board that the requirements of this section may be waived, and the reasons for the waiver are stated in writing; provided that the requirements for price and costing data required under subsection (a)(2) shall not be waived without the approval of the chief procurement officer; provided further that the chief procurement officer shall not delegate this authority. [L Sp 1993, c 8, pt of §2; am L 1997, c 352, §23; am L 2016, c 253, §4]

HRS §103D-313 Types of contracts

103D-313. Types of contracts (a) Subject to the limitations of this section, any type of contract that will promote the State's best interests may be used. (b) Cost-reimbursement and cost-plus-a-percentage-of-cost contracts may be used only when the chief procurement officer determines in writing that such a contract is likely to be less costly than any other type of contract or that it is impracticable to obtain the goods, services, or construction required except by means of such a contract. Cost-reimbursement and cost-plus-a-percentage-of-cost contracts shall not be used if their use would jeopardize the receipt of federal assistance moneys or reduce the amount of such assistance under any applicable federal statute or regulation. (c) In addition to the requirements of subsections (a) and (b), a cost-plus-a-percentage-of-cost contract may not be awarded unless: (1) Notice is given to the head of the compliance audit unit, president of the senate, speaker of the house of representatives, and the chairpersons of the senate ways and means and house finance committees; and (2) Notice is conspicuously posted in an area accessible to the public in the office of the chief procurement officer and available for public inspection during normal business hours. (d) The policy board shall adopt rules to implement this section. [L Sp 1993, c 8, pt of §2; am L 1997, c 352, §23]

HRS §103D-314 Approval of accounting system

103D-314. Approval of accounting system Except with respect to firm fixed-price contracts, no contract shall be used unless it has been determined in writing by the chief procurement officer, the head of a purchasing agency, or a designee of either officer that: (1) The proposed contractor's accounting system will permit timely development of all necessary cost data in the form required by the specific contract type contemplated; and (2) The proposed contractor's accounting system is adequate to allocate costs in accordance with generally accepted accounting principles. [L Sp 1993, c 8, pt of §2]

HRS §103D-315 Multi-term contracts

103D-315. Multi-term contracts (a) Unless otherwise provided by law, a contract for goods or services may be entered into for any period of time deemed to be in the best interests of the governmental body, provided the term of the contract and conditions of renewal or extension, if any, are included in the solicitation and funds are available for the first fiscal period at the time of contracting. Payment and performance obligations for succeeding fiscal periods shall be subject to the availability and appropriation of funds therefor. (b) Prior to the utilization of a multi-term contract, it shall be determined in writing: (1) That estimated requirements cover the period of the contract and are reasonably firm and continuing; (2) That such a contract will serve the best interests of the governmental body by encouraging effective competition or otherwise promoting economies in procurement; and (3) That sufficient funds to pay for the initial term of the contract are available and the funds necessary for the remaining terms of the contract are likely to be available from sources which are identified in writing. (c) When funds are not appropriated or otherwise made available to support continuation of performance in a subsequent fiscal period, the contract shall be cancelled and the contractor shall be reimbursed for the reasonable value of any nonrecurring costs incurred but not amortized in the price of goods or services delivered under the contract. The cost of cancellation may be paid from any appropriations available for such purposes. [L Sp 1993, c 8, pt of §2]

HRS §103D-316 Right to inspect plant

103D-316. Right to inspect plant The State, at reasonable times, may inspect the part of the plant or place of business of a contractor or any subcontractor that is related to the performance of a contract awarded or to be awarded by the State. [L Sp 1993, c 8, pt of §2]

HRS §103D-317 Right to audit records

103D-317. Right to audit records (a) The purchasing agency, at reasonable times and places, may audit the books and records of any person who has submitted cost or pricing data pursuant to section 103D-312 to the extent that such books and records relate to such cost or pricing data. Any person who receives a contract, change order, or contract modification for which cost or pricing data is required, shall maintain such books and records that relate to such cost or pricing data for three years from the date of final payment under the contract, unless another period is otherwise authorized in writing. (b) The purchasing agency shall be entitled to audit the books and records of a contractor or any subcontractor under any negotiated contract or subcontract other than a fixed-price contract to the extent that such books and records relate to the performance of such contract or subcontract. The books and records shall be maintained by the contractor for a period of three years from the date of final payment under the prime contract and by the subcontractor for a period of three years from the date of final payment under the subcontract, unless another period is otherwise authorized in writing. [L Sp 1993, c 8, pt of §2]

HRS §103D-318 Finality of determinations

103D-318. Finality of determinations The determinations required by sections 103D-302(g), 103D-303(a), 103D-303(g), 103D-306, 103D-307, 103D-310, 103D-312(e), 103D-313, and 103D-314 shall be final and conclusive unless they are clearly erroneous, arbitrary, capricious, or contrary to law. [L Sp 1993, c 8, pt of §2; am L 2016, c 253, §5]

HRS §103D-319 Reporting of anticompetitive practices

103D-319. Reporting of anticompetitive practices When for any reason collusion or other anticompetitive practices are suspected among any bidders or offerors, a notice of the relevant facts shall be transmitted to the attorney general. [L Sp 1993, c 8, pt of §2]

HRS §103D-320 Retention of procurement records; evaluations

103D-320. Retention of procurement records; evaluations All procurement records shall be retained and disposed of in accordance with chapter 94 and records retention guidelines and schedules approved by the comptroller. Written past performance evaluations for all procurements over the small purchase threshold shall be maintained in the processing department's procurement files and in the statewide past performance database. [L Sp 1993, c 8, pt of §2; am L 2021, c 188, §8]

HRS §103D-322 Multiple awards

103D-322. Multiple awards The policy board may adopt rules authorizing the use and prescribing the manner in which goods, services, or construction may be procured through multiple awards. [L Sp 1993, c 8, pt of §2; am L 1997, c 352, §23

HRS §103D-323 Bid security

103D-323. Bid security (a) Unless the policy board determines otherwise by rules, bid security shall be required only for construction contracts to be awarded pursuant to sections 103D-302 and 103D-303 and when the price of the contract is estimated by the procurement officer to exceed $25,000 or, if the contract is for goods or services, the purchasing agency secures the approval of the chief procurement officer. Bid security shall be a bond provided by a surety company authorized to do business in the State, or the equivalent in cash, or otherwise supplied in a form specified in rules. (b) Bid security shall be in an amount equal to at least five per cent of the amount of the bid. (c) Unless, pursuant to rules, it is determined that a failure to provide bid security is nonsubstantial, all bids required to be accompanied by bid security shall be rejected when not accompanied by the required bid security. (d) After the bids are opened, they shall be irrevocable for the period specified in the invitation for bids, except as provided in section 103D-302(g). If a bidder is permitted to withdraw its bid before award, no action shall be had against the bidder or the bid security. [L Sp 1993, c 8, pt of §2; am L 1994, c 186, §11; am L 1997, c 352, §23]

HRS §103D-324 Contract performance and payment bonds

103D-324. Contract performance and payment bonds (a) Unless the policy board determines otherwise by rules, the following bonds or security shall be delivered to the purchasing agency and shall become binding on the parties upon the execution of the contract if the contract which is awarded exceeds $25,000 and is for construction, or the purchasing agency secures the approval of the chief procurement officer: (1) A performance bond in a form prescribed by the rules of the policy board, executed by a surety company authorized to do business in this State or otherwise secured in a manner satisfactory to the purchasing agency, in an amount equal to one hundred per cent of the price specified in the contract; (2) A payment bond in a form prescribed by the rules of the policy board, executed by a surety company authorized to do business in this State or otherwise secured in a manner satisfactory to the purchasing agency, for the protection of all persons supplying labor and material to the contractor for the performance of the work provided for in the contract. The bond shall be in an amount equal to one hundred per cent of the price specified in the contract; or (3) A performance and payment bond which satisfies all of the requirements of paragraphs (1) and (2). (b) The policy board may adopt rules that authorize the head of a purchasing agency to reduce the amount of performance and payment bonds. (c) Nothing in this section shall be construed to limit the authority of the chief procurement officer to require a performance bond or other security in addition to those bonds, or in circumstances other than specified in subsection (a). (d) Every person who has furnished labor or material to the contractor for the work provided in the contract, in respect of which a payment bond or a performance and payment bond is furnished under this section, and who has not been paid amounts due therefor before the expiration of a period of ninety days after the day on which the last of the labor was done or performed or material was furnished or supplied, for which such a claim is made, may institute an action for the amount, or balance thereof, unpaid at the time of the institution of the action against the contractor and its sureties, on the payment bond or the performance and payment bond, and have their rights and claims adjudicated in the action, and judgment rendered thereon; subject to the State's priority on the bonds. If the full amount of the liability of the sureties on the payment bond is insufficient to pay the full amount of the claims, then, after paying the full amount due the State, the remainder shall be distributed pro rata among the claimants. As a condition precedent to any such suit, written notice shall be given to contractor and surety, within ninety days from the date on which the person did or performed the last labor or furnished or supplied the last of the material for which claim is made, stating with substantial accuracy the amount claimed and the name of the party to whom the material was furnished or supplied or for whom the labor was done or performed. The written notice shall be served by registered or certified mailing of the notice, to the contractor and surety, at any place they maintain an office or conduct their business, or in any manner authorized by law to serve summons. (e) Every suit instituted under subsection (d) shall be brought in the circuit court of the circuit in which the project is located, but no such suit shall be commenced after the expiration of one year after the day on which the last of the labor was performed or material was supplied for the work provided in the contract. The obligee named in the bond need not be joined as a party in any such suit. The terms "labor" and "material" have the same meanings in this section as the terms are used in section 507-41. [L Sp 1993, c 8, pt of §2; am L 1997, c 349, §2 and c 352, §23]

HRS §103D-325 Bond forms and copies

103D-325. Bond forms and copies (a) The policy board shall specify the form of the bonds required by this chapter by procurement directive. (b) Any person may request and obtain from the State a certified copy of a bond upon payment of the cost of reproduction of the bond and postage, if any. A certified copy of a bond shall be prima facie evidence of the contents, execution, and delivery of the original. [L Sp 1993, c 8, pt of §2; am L 1997, c 352, §12]

HRS §103D-326 Fiscal responsibility

103D-326. Fiscal responsibility Every contract modification, change order, or contract price adjustment under a contract shall be subject to prior written certification by the appropriate fiscal officer for funding the project or the contract, as to the effect of the contract modification, change order, or adjustment in contract price on the total project budget or the total contract budget. In the event that the certification of the fiscal officer discloses a resulting increase in the total project budget or the total contract budget, the procurement officer shall not execute or make such contract modification, change order, or adjustment in contract price unless sufficient funds are available therefor, or the scope of the project or contract is adjusted so as to permit the degree of completion that is feasible within the total project budget or total contract budget as it existed prior to the contract modification, change order, or adjustment in contract price under consideration; provided, that with respect to the validity, as to the contractor, of any executed contract modification, change order, or adjustment in contract price which the contractor has reasonably relied upon, it shall be presumed that there has been compliance with this section. [L Sp 1993, c 8, pt of §2]

HRS §103D-327 Safety and health programs for construction

103D-327. Safety and health programs for construction Contracts awarded for construction in excess of $100,000 shall comply with section 396-18. L 1995, c 199, §1

HRS §103D-328 Tax clearances; setoff for due and unpaid taxes

103D-328. Tax clearances; setoff for due and unpaid taxes (a) Unless the director of taxation determines that waiver of the Internal Revenue Service tax clearance requirement is necessary to expedite or facilitate the procurement process and is in the best interest of the State, and waives the Internal Revenue Service tax clearance requirement, no contract shall be binding or effective until the contractor secures and the purchasing agency receives a tax clearance from the director of taxation and the Internal Revenue Service to the effect that all tax returns due have been filed, and all taxes, interest, and penalties levied or accrued, under title 14 that are administered by the department of taxation and under the Internal Revenue Code, against the contractor have been paid. (b) During the term of a contract, if a lien is imposed against the contractor for a tax debt under section 231-33 or the contractor fails to timely file all tax returns and pay all taxes, interest, and penalties due to the Internal Revenue Service, the comptroller or respective county director of finance, upon request of the director of taxation, shall set off the amount of the tax debt against any payment due to the contractor until the tax debt is paid in full. (c) All state and county procurement officers or agents shall withhold final payment of a contract until the receipt of tax clearances from the director of taxation and the Internal Revenue Service. Notwithstanding sections 40-57 and 40-58, if a contractor fails to provide the requisite tax clearances within six months of the completion of the contract, the state or county procurement officer or agent shall first notify the department of taxation which in turn will notify the Internal Revenue Service, of amounts payable to the contractor on completed contracts. The department of taxation and the Internal Revenue Service, within thirty days, shall request the procurement officer or agent to set off the amount of taxes due against any payment due to the contractor until the tax debt is paid in full to the State or the Internal Revenue Service, or both. No final bill or invoice from the contractor shall be required as a condition to the setoff. Any remaining contract balance shall revert to the appropriation under which it was encumbered. (d) This section shall not apply to any contract of less than $25,000 or any contract entered into pursuant to section 103D-305 or 103D-307. (e) This section shall not apply to a contractor who the director of taxation certifies is: (1) Contesting the validity of a tax debt, or that any tax, penalty, or interest is due and owing the Internal Revenue Service in an administrative or judicial appeal; or (2) In good standing, having entered into a plan or plans in which the tax debt, or any tax, penalty, or interest due and owing the Internal Revenue Service is being paid to the department of taxation or the Internal Revenue Service. [L 1997, c 352, §1]

HRS §103D-329 Past performance database

103D-329. Past performance database (a) No later than December 31, 2023, the state procurement office shall implement and administer a past performance database with regard to state contractors. (b) The state procurement office shall adopt rules no later than December 31, 2023, pursuant to chapter 91 to establish: (1) Information required to be included in the past performance database; provided that the information shall include: (A) The name of the state contractor; (B) The date of the project; (C) The size of the project; (D) A brief description of the project; (E) The responsible managing employees for the project; (F) Whether or not the project was timely completed; (G) The project's authorized budget; and (H) The positive or negative difference between the final cost of the project and the project's authorized budget, including the reasons for the difference, if any; (2) Procedures to inform a contractor of the information contained in the past performance database about that contractor; and (3) Procedures for a contractor to correct or respond to the information contained in the past performance database about that contractor. [L 2021, c 188, §2]

Source: Hawaii State Legislature (capitol.hawaii.gov), via Internet Archive capturesURL: http://www.capitol.hawaii.gov/hrscurrent/Vol02_Ch0046-0115/HRS0103D/HRS_0103D-.htmFetched: 11/10/2026