How to sell to Hawaii counties

Hawaii has four county governments: the City and County of Honolulu, and Hawaii, Maui and Kauai counties. Kalawao County is administered by the state. Unlike most states, Hawaii puts its counties under the same procurement code as state agencies: the Hawaii Public Procurement Code, HRS chapter 103D, applies to all governmental bodies, including "the several counties of the State" (HRS 103D-102, 103D-104). Rules from the state Procurement Policy Board (Hawaii Administrative Rules, HAR) fill in the details. HRS chapters 103 and 104 add payment and prevailing wage rules.

At a glance

Who buys

Each county has an elected mayor and county council. Purchasing authority sits with chief procurement officers (CPOs) named in HRS 103D-203(b):

• Executive branch: each county's finance director.
• County council: the council chair.
• Boards or departments of water supply: their managers.
• Semi-autonomous transit agency: its director.

According to the State Procurement Office list, the executive-branch CPOs are the finance directors of Hawaii, Kauai and Maui counties (Maui's is acting) and Honolulu's Director of Budget and Fiscal Services.

Goods and services

Small purchases follow Procurement Policy Board rules, and splitting a purchase to stay under a limit is not allowed (HRS 103D-305). The number of quotes required at each tier was not confirmed; check the solicitation. Above the limits, counties use an invitation for bids (HRS 103D-302) or a request for proposals (HRS 103D-303).

Construction and public works

Construction under $250,000 may use small purchase procedures; above that, bidding is formal (HRS 103D-305). Construction bids must list joint contractors and subcontractors. A bid that leaves one out may still be accepted if the omitted work is 1% or less of the bid (HRS 103D-302). No separate road or bridge threshold was found.

Bonds. Construction contracts over $25,000 need a performance bond and a payment bond, each for 100% of the contract price; Policy Board rules may allow lower amounts (HRS 103D-324). The small purchase section requires 100% bonds on construction small purchases over $50,000 (HRS 103D-305). The two figures differ, so check which one the solicitation applies.

Bid security. HRS 103D-323 covers bid security, but we could not read its text. Check the solicitation for the amount.

Notice and award

Notice must be adequate and given a reasonable time before opening. It may run in a newspaper, go to bidders' lists or be posted on an electronic network (HRS 103D-302). Minimum periods under HAR 3-122-16.02 (rule text dated 2008):

Where to find bids. Counties with their own CPO don't all use the state eProcurement system, HIePRO. Bidding on HIePRO is free; an awarded vendor pays 0.75% of the award, capped at $5,000 (SPO FAQs).

Award. Sealed bids go to the lowest responsible and responsive bidder, judged only on criteria stated in the invitation (HRS 103D-302).

Prevailing wage

Hawaii's prevailing wage law applies to every public works construction contract over $2,000 by the State or any political subdivision, including the counties (HRS 104-2(c)). The Attorney General applied it to a Hawaii County project in AG Op. 06-1. The US Department of Labor also lists Hawaii's threshold as $2,000.

Getting paid

Prompt payment. Any state or county agency must pay within 30 calendar days after a proper invoice or satisfactory delivery, whichever is later. Late interest is prime plus 2%, set quarterly. Bona fide disputes and similar delays are excepted (HRS 103-10). A separate section on paying construction subcontractors (HRS 103-10.5) was not reviewed.

Retainage. HRS 103-32.1 (retainage) and 103-32.2 (substitution of retainage) exist, but we did not confirm their terms. Check the contract for the retainage percentage and release.

Cooperative purchasing and state contracts

A public procurement unit, including a county, may join cooperative purchasing agreements with other public, external or nonprofit procurement units for goods, services or construction, under Policy Board rules. These agreements may be exempt from the Part X preferences (HRS 103D-802). Purchases from another governmental body, the federal government, or another state or its subdivisions are exempt from chapter 103D (HRS 103D-102(b)(3)). The State Procurement Office uses NASPO ValuePoint contracts through a lead-state model (SPO FAQs).

Preferences and required certifications

• Hawaii products: a 10% (class I) or 15% (class II) evaluation discount on qualifying agricultural goods, value-added products and commodities. It does not apply to public works construction (HRS 103D-1002). The section speaks of "purchasing agencies"; county use was not confirmed.
• Reciprocal preference: the CPO may apply a penalty against bidders from states that favor their own residents (HRS 103D-1004).
• Other preferences in chapter 103D cover printing, recycled products, software businesses, taxpayers, community rehabilitation programs and biofuel (HRS 103D-1003 to -1012, section titles).
• Hawaii Compliance Express: vendors show tax and labor compliance before award and before final payment with a Certificate of Vendor Compliance, for $12 a year (HRS 103D-310(c); HAR 3-122-112; SPO FAQs).

No Israel boycott, E-Verify or foreign-adversary sections appear among the chapter 103D section titles; we did not confirm beyond the titles. Check the solicitation.

Architects and engineers

Design professionals are chosen by qualifications-based selection, and the rule applies to counties through chapter 103D (HRS 103D-304):

• The purchasing agency invites statements of qualifications each fiscal year.
• A review committee of 3 or more builds a qualified list.
• A selection committee ranks at least 3 firms on experience, past performance and capacity.
• The agency negotiates fees with the top-ranked firm, then the next if that fails.
• Below the small purchase limits, the agency may negotiate with at least 2 firms on the qualified list.

Practical tips for Hawaii

• Get a Hawaii Compliance Express certificate before you bid; you need it for award and final payment.
• Find out which system each county uses. Not every county posts on HIePRO, and small purchases from $25,000 must be electronic.
• Submit statements of qualifications each fiscal year if you are an architect or engineer.
• Line up 100% bonds for construction over $25,000 and price prevailing wages on any public works over $2,000.
• Check Hawaii counties for each county's bid platform, contacts and agendas.