Marketing Through State Procurements

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Marketing Through State Procurements

• Elizabeth Haws Connally, Esq.
• Alston Hunt Floyd Ing
• March 9, 2009

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State Government Buyer of Ag Products

• Schools
• Prisons
• Hospitals
• State has strong buying power to support
  purchasing local products

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Hawaii Procurement Process

• Most purchases of goods and services by
  government entities are controlled by the terms
  and conditions of HRS Chapter 103D.

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Current Statutory Preferences for Hawaii
Products

• Under HRS 103D-1001 Government agencies are to
  apply a preference of 3-5 to purchases of
  Hawaii products.

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Current Statutory Preferences for Hawaii
Products

• HRS 103D-1001 defines Hawaii products as
  products mined excavated, produced, manufactured,
  raised, or grown in the state where the input
  constitutes no less than 25 of the manufactured
  cost provided that
• Where the value of the input constitutes 25 or
  more, but less than 50, of the manufactured
  cost, class I product
• Where the value of the input constitutes 50 cent
  or more, but less than 75, of the manufactured
  cost, class II product and
• Where the value of the input constitutes 75 or
  more of the manufactured cost, class III product.

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Why Are Hawaii Products Not Receiving Preference?

• Administrative Rule HAR 3-120-4(b) Exempts
  purchases of fresh meats, produce, plants and
  animals from HRS Chapter 103D.

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What Does It Mean to be Exempt from HRS 103D?

• Procurement rules do not apply to purchases -
  including the statutory preference provisions for
  Hawaii products.
• Agencies can ignore the preferences and
  protections of HRS Chapter 103D.

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What Does It Mean to be Exempt from HRS 103D?

• Agencies dont have to openly advertise request
  for proposal.
• Even if a Hawaii Farmer or Rancher is listed with
  the State Procurement Office as a producer of
  local products, agencies have no obligation to
  give a preference for their products due to HAR
  3-120-4(b).

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Exemption Also Denies Hawaii Farmers Other
Benefits

• HAR 3-120-4(b) also prevents products from
  Hawaiis Farmers and Ranchers from receiving the
  benefits of the small business set-aside program
  
• HRS 103D-906 permits government agencies to
  set-aside contracts for purchases from small
  businesses.
• HAR 3-124-73 provides that government
  procurement officers shall set-aside such
  contracts which are suitable for performance by
  small business.

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Movement To Provide Benefits Of Preference And
Other Protections Under HRS Chapter 103D

• HB 988 and SB 506 moving through Legislature
• Purpose
• Removes HAR exemptions - procurement code will
  apply to government purchases of Hawaii products.
• Streamlines administration Hawaii Farmer or
  Rancher self-certifies the product meets the
  minimum specifications to receive the preference.
• Provides 10-15 preference for Hawaii products.
• Also permits Hawaii Farmer or Rancher to benefit
  from small business set-aside contracts.

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Hawaii Small Business Preference Program

• Using the States Buying Power to Nurture Small
  Businesses

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When Did The Small Business Preference Program
Start?

• In 2005, the Legislature passed the Small
  Business Preference Bill and the Governor signed
  into law Act 50

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What Is The Small Business Preference Program?

• The program provides procedures to use the
  States buying power to
• Promote economic growth
• Enhance the ability of small businesses to win
  and successfully perform federal, state and local
  government contracts
• Develop competitiveness for commercial contracts
• Increase employment opportunities for local
  workers

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Specifics of the Small Business Preference Rules

• Administrative Rules Implement Act 50
• HAR 3-124-70 Purpose
• Strengthen and nurture emerging Hawaii
  industries
• Increase competition by broadening the local
  small business contractor base
• Develop and enhance the ability of local small
  businesses to win and successfully perform
  federal, state, and local government contracts
• Provide increased employment opportunities for
  local workers in high-skill trades and technical
  fields and
• Ensure the Small Business Preference program is
  implemented so as to maximize competition and
  obtain quality goods, services, and construction
  at reasonable prices.

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How Does This Work?

• HAR 3-124-71 Small Business Utilization Council
  
• Council established to provide recommendations to
  the Procurement Policy Board to
• Set annual small business utilization goals
• Identify emerging industries, geographic areas
  within the State, and under-utilized workforce
  resources where small business preference
  purchases will promote State goals
• Coordinate with purchasing agencies to encourage
  set-asides for small businesses.

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How Does This Work?

• HAR 3-124-73.1 Implementation of Small Business
  Preference by Heads of Agencies
• Rule provides steps for agencies to implement
  small business preference in purchases
• Step 1 Identify small business size standard for
  each procurement.
• Step 2 Identify procurements for small business
  set-asides.
• Step 3 Insert small business set-aside
  provisions into solicitation.
• Step 4 If procurement is not likely to be
  performed by a small business, insert in
  solicitation small business subcontracting
  incentive clause.
• Step 5 Agency required to use competitive source
  selection for all procurements including small
  business set-asides.

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What Can The Program Accomplish?

• Small Business Preference program allows the
  State to harness its purchasing power to benefit
  the people of Hawaii
• Program has endless potential for Hawaiis small
  businesses
• FY2009/2010 State Budget - 10 billion
• These expenditures are opportunities for small
  businesses

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Small Businesses Are the Very Foundation of
Hawaiis Economy

• Program will use States purchasing power to
• Strengthen Hawaiis economic foundation Small
  Business
• Advance Hawaiis sustainment goals
• Improve job opportunities
• Promote and nurture potential growth industries
• Agricultural
• High tech
• Environmental

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Questions ?

• Thank You
• Elizabeth Haws ConnallyAlston Hunt Floyd
  Ing808-524-1800Ehaws_at_AHFI.com