Introduction to The State Procurement Office: Procurement Wizard

SECTION ONE: INTRODUCTION

Welcome to the State of Hawaii Procurement Wizard (Procurement Manual). The Procurement Wizard is the official guide to the procurement process for goods, services, and construction. The State’s primary procurement resources include the Procurement Wizard, Hawaii Revised Statutes (HRS), and the Hawaii Administrative Rules (HAR).

1.1 UPDATES

The Procurement Wizard is updated to reflect the specific revisions provided in a Procurement Circular. The Procurement Wizard is maintained in accordance with the State of Hawaii’s record retention requirements. Relevant Procurement Circulars have been incorporated into the Procurement Wizard. Revision History will be maintained as part of the Procurement Wizard.

1.2 PURPOSE AND APPLICATION

To aid the State’s Procurement personnel, the Procurement Wizard describes standard procedures and sound business practices that implement statutory requirements regarding purchasing Executive Branch goods, services and construction and health and human services.

The Procurement Wizard demonstrates the ongoing commitment of the State Procurement Office (SPO) to standardize state procurement practices and procedures by:

  • Establishing best practices to clarify the law governing procurement in the State of Hawaii;
  • Providing for the continued development of standardized procurement policies and practices;
  • Ensuring consistency in procurement practices among Executive Branch agencies;
  • Providing for increased transparency and public confidence in the procurement procedures followed by Hawaii governmental agencies;
  • Ensuring the fair and equal treatment of everyone who deals with Hawaii procurement processes and systems;
  • Providing increased economy in state procurement activities by maximizing the purchasing value of public funds and obtaining the commodities and services required by governmental agencies in a cost-effective and responsive manner;
  • Fostering effective, broad-based competition in the marketplace; and
  • Maintaining ethics, quality and integrity in Hawaii public procurement.

In addition to detailing procurement processes and practices, the Procurement Wizard presents a roadmap of the procurement process to guide agencies from start to finish through the various stages of the full procurement lifecycle.

The guidance provided in this document governs all Executive Branch agencies subject to the Chief Procurement Officer’s authority pursuant to HRS 103D-203, unless specifically exempted by statute.

Other statutory Chief Procurement Officer jurisdictions governed by Hawaii statutes, but not subject to the authority of the Administrator of the State Procurement Office, are encouraged to leverage this guide as a best practice.

The Wizard does not refer to every section and paragraph of the Hawaii procurement statutes and rules. It is a general guide. When procuring, please ensure the relevant statutes and regulations are also reviewed. Resources tabs are located at the top of each section page.

1.3 Procurement Fundamentals

1.3.1 What is Procurement?

“Procurement” means buying, purchasing, renting, leasing, or otherwise acquiring any good, service, or construction.  The term also includes all functions that pertain to the obtaining of any good, service, or construction, including description of requirements, selection and solicitation of sources, preparation and award of contracts, and all phases of contract administration, HRS 103D-104. Ultimately, it is the act of putting the people’s money to work in a way that upholds the people’s trust.

The Hawaii Procurement Lifecycle, illustrated below, organizes the procurement process into a series of steps from the time the state entity first identifies a needed good, service, or construction through contract award, contract administration and contract closeout.

The Hawaii Procurement Lifecycle

Procurement Lifecyle

1.3.2 Hawaii’s Procurement Structure

Public procurement in the State of Hawaii is primarily authorized and governed by HRS 103D, HRS 103F and HAR Title 3. Additional authority and guidance for procurement in the State of Hawaii reside in the following sources. Note the list below is not exhaustive and procurement personnel are advised to include any agency specific requirements and/or applicable State, Federal and other law

Hawaii Revised Statutes (HRS)

  • Chapter 103D – Hawaii Public Procurement Code
  • Chapter 103F – Purchases of Health and Human Services
  • Chapter 103 – Expenditure of Public Money and Public Contracts
  • Chapter 103B – Construction Procurement Contracts
  • Chapter 92F – Uniform Information Practices Act
  • Chapter 84 – Standards of Conduct
  • Chapter 104 – Wages and Hours of Employees on Public Works

Hawaii Administrative Rules (HAR)

  • HAR Title 3 – Department of Accounting and General Services

Other Sources of Procurement Guidance include, but are not limited to:

Procurement authority for the Executive Branch agencies in Hawaii is conveyed by statute to the Administrator of the State Procurement Office (SPO) through HRS 103D-203(a)(8). In accordance with HRS 103D-208, the Administrator, as Chief Procurement Officer (CPO) for the Executive Branch, may further delegate the authority to procure goods, services, and construction, with restrictions, to designees, including, but not limited to, executive department heads within the CPO’s jurisdiction.  HRS 103D-203 establishes twenty-one CPO jurisdictions for the following state agencies:

  1. The judiciary–the administrative director of the courts;
  2. The senate–the president of the senate;
  3. The house of representatives–the speaker of the house of representatives;
  4. The office of Hawaiian affairs–the chairperson of the board;
  5. The University of Hawaii–the president of the University of Hawaii; provided that, except as specified in section 304A-2672(2), for contracts for construction and professional services furnished by licensees under chapter 464, the administrator of the state procurement office of the department of accounting and general services shall serve as the Chief Procurement Officer;
  6. The department of education, excluding the Hawaii public library system–the superintendent of education;
  7. The Hawaii health systems corporation–the chief executive officer of the Hawaii health systems corporation; and
  8. The remaining departments of the executive branch of the State and all governmental bodies administratively attached to them–the administrator of the state procurement office of the department of accounting and general services.

The Chief Procurement Officers for each of the several counties are:

  1. The executive branch–the respective finance directors of the several counties, except as provided in paragraphs (3), (4), and (5);
  2. The legislative branch–the respective chairpersons of the councils of the several counties;
  3. The Honolulu, Kauai, and Maui boards or departments of water supply–the managers and chief engineers of the respective boards or departments of water supply as designated by county charter;
  4. The Hawaii board of water supply–the manager of the board of water supply as designated by county charter; and
  5. The semi-autonomous public transit agency–the director of the agency as designated by county charter.

In the Wizard, generally references to the CPO means the Administrator of the State Procurement Office in the capacity as CPO for the Executive Branch unless otherwise indicated.

In accordance with HRS 103D-104, “Procurement officer” means any person authorized to enter into and administer contracts and make written determinations with respect thereto.  The term also includes an authorized representative acting within the limits of authority.

1.3.3  Ethical and Professional Conduct

State of Hawaii personnel involved in the procurement of goods, services, and construction have the responsibility to uphold Hawaii procurement laws and act in good faith to serve the best interests of the State of Hawaii and its taxpayers.

The Code of Ethics for public officers and state employees in the conduct of procurement activities is detailed in HRS 103D-101(a) and further detailed in HAR 3-131-1.02, with penalties for violation prescribed in HRS 103D-106 and HAR 3-131-4. All public officers and state employees, not just procurement professionals, are expected to read and understand these key statutes prescribing proper conduct.

HRS 103D-101(a) states:

“All public employees shall conduct and participate in public procurement in an ethical manner. In conducting and participating in procurement, public employees shall:

  • Act as a fiduciary and trustee of public moneys;
  • Remain independent from any actual or prospective bidder, offeror, contractor, or business;
  • Act only in the public interest;
  • Abide by the statutes and administrative rules relating to public procurement;
  • Identify and maximize efficiencies in the public procurement process;
  • Encourage economic competition by ensuring that all persons are afforded an equal opportunity to compete in a fair and open environment and researching innovative goods and services to meet the public’s needs;
  • Avoid the intent and appearance of unethical behavior;
  • Avoid social interactions with any actual or prospective bidder, offeror, contractor, business, or other interested parties during the procurement process;
  • Maintain confidentiality in a manner that ensures a fair procurement process;
  • Remain impartial in dealings with any actual or prospective bidder, offeror, contractor, business, or other interested parties; and
  • Identify and eliminate any conflicts of interest.”

Specific requirements applicable to all persons engaged in the procurement process are detailed in HAR 3-131-1.02, Procurement Code of Ethics. The provisions found in HAR 131 set forth the minimum requirements for ethical procurement, proscribe specific actions, such as parceling or “after-the-fact procurements” and set forth penalties for failure to comply.

In addition, all State of Hawaii public officers and employees are governed by the State of Hawaii Code of Ethics as enforced by the State Ethics Commission. The laws setting out the Code of Ethics are contained in HRS 84.

1.3.4  What is a Contract?

A legally enforceable agreement, or contract, consists of the following elements:

  1. OFFER: A willingness to enter into a contract based on certain terms. When a state agency receives acceptable bids or proposals as part of a procurement, these qualify as an offer.
  2. ACCEPTANCE: A willingness to be bound by the terms and conditions of the offer. This includes the terms and conditions set forth in the procurement issued by a state agency that have become part of the offer, plus additions such as pricing and delivery terms. The State award of a contract would qualify as acceptance.
  3. CONSIDERATION: Anything of value promised to another in exchange for fulfillment of the offer. Typically, the state promises money in exchange for goods, services, or construction.
  4. LAWFUL PURPOSE: A valid contract must have a legal purpose. For example, a “contract” to murder someone would be not be enforceable in court.
  5. CAPACITY: A party to a contract must have the ability to enter into a legal contract. In general, there are three classes of persons that lack capacity to be bound by contractual promises – minors, intoxicated persons and mentally incompetent persons.

1.3.5  Procurement Training and Delegation of Authority

In accordance with HRS 103D-206, the State Procurement Office has implemented a training and development program to ensure that agency personnel involved in the procurement process are knowledgeable of the laws, regulations, and policies that govern public procurement in Hawaii.

Prior to engaging in any procurement activities agency personnel are required to receive training and obtain delegation of authority to procure by the Head of the Purchasing Agency (HOPA). Agency personnel that are directly involved in the development of a solicitation, the execution of a procurement action, or the management of an ensuing contract are required to complete the appropriate training. Details of mandatory and recommended workshops are provided in the Procurement Training Requirements Table located on the SPO website.

Most training is provided in an on-demand format to ensure agency personnel are able to access the training they require in a timely manner. Training workshops can be accessed from the ‘Training’ resources tab of each section and on the SPO On-Demand Training page on the SPO website.

1.3.6  Procurement Forms

Throughout the Procurement Wizard, various forms are referenced for use in the procurement process specifically by the Executive Branch. SPO maintains a list of forms needed to conduct and document a procurement on the Forms tab of the SPO website. Additionally, the website maintains the latest version of each form and should be accessed before initiating a new procurement to ensure that the most current form is used and to avoid a disruption in the process. Forms may be located in the Templates tab of each section.

1.4 Hawaii Procurement Lifecycle

The organization of the Procurement Wizard is based on the Hawaii Procurement Lifecycle, outlined below, with individual sections dedicated to each of the five stages of the lifecycle.

Procurement Life Cyle Detail

Each Section in the Wizard begins with a Key Information subsection that provides a general overview of the tasks associated with that lifecycle phase and provides links to tools and templates identified in the section. Following this overview, each section provides guidance and direction on how to properly execute the tasks associated with that phase of the lifecycle and continue workflow through the remaining phases.

All references to purchases of Health and Human Services will be highlighted throughout this manual.
Procurement Process Comp

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