Hawaii Resident Bidder Preference

Revised August 14, 2024

Hawaii Revised Statutes

Division 1. Government

Title 9. Public Property, Purchasing, and Contracting

Chapter 103D. Hawaii Public Procurement Code

Part X. Preferences

§ 103D – 1001. Definitions

As used in this part, unless the context clearly requires otherwise:

“Hawaii input" means the part of the cost of a product that is attributable to production, manufacturing, or other expenses arising within the State. "Hawaii input" includes but is not limited to:

(1) The cost to mine, excavate, produce, manufacture, raise, grow, assemble, or fabricate the materials in Hawaii;

(2) The added value of that portion of the cost of imported materials that is incurred after landing in Hawaii, including but not limited to other articles, materials, and supplies, added to the imported materials;

(3) The cost of labor, variable overhead, utilities, and services, incurred in the production and manufacturing of materials or products in Hawaii; and

(4) Fixed overhead cost and amortization or depreciation cost, if any, for buildings, tools, and equipment, situated and located in Hawaii and used in the production or manufacturing of a product.

"Hawaii products" means products that are mined, excavated, produced, manufactured, raised, or grown in the State and where the cost of the Hawaii input towards the product exceeds fifty per cent of the total cost of the product; provided that:

(1) Where the value of the input exceeds fifty per cent of the total cost, the product shall be classified as class I; and

(2) Where any agricultural, aquacultural, horticultural, silvicultural, floricultural, or livestock product is raised, grown, or harvested in the State, the product shall be classified as class II.

“Hawaii software development business” means any person, agency, corporation, or other business entity with its principal place of business or ancillary headquarters located in the State and that proposes to obtain eighty per cent of the labor for software development from persons domiciled in Hawaii.

“Software development” means any work related to feasibility studies, system requirements analysis, system design alternatives analysis, system external specifications, system internal specifications, programming, testing, debugging, or implementation for an electronic data processing system.

§ 103D – 1002< . Hawaii Products

(a) This section shall only apply to bids and proposals for agricultural goods, value-added products, and commodities. A purchasing agency shall review all specifications in a bid or proposal for purchase of Hawaii products where these products are available and where the procurement of these products will promote the State’s goal of increasing agricultural production and sustainability.

(b) All invitations for bids and requests for proposals to which this section applies shall:

(1) Include a description of the products that are listed in the Hawaii products list established pursuant to this section, which may be used to complete the scope of work specified in the invitation for bids or request for proposals; or

(2) Allow as part of the offer, self-certification that the Hawaii products qualify for preference;

provided that the offer may be evaluated along with any other published criteria in the solicitation, including but not limited to considerations such as specific nutritional content or its equivalent, timing of delivery, quality or freshness, and past performance, if applicable. All Hawaii products in any bid or request for proposal shall be made available for inspection, or additional information may be requested to verify that the Hawaii product meets the minimum specifications.

(c) All persons submitting bids or proposals to claim a Hawaii products preference shall designate in their bids which individual product and its price is to be supplied as a Hawaii product.

(d) Where a bid or proposal contains both Hawaii and non-Hawaii products, then for the purpose of selecting the lowest bid or purchase price only, the price or bid offered for a Hawaii product item shall be decreased by subtracting ten per cent for class I Hawaii product items bid or offered, or fifteen per cent for class II Hawaii product items bid or offered. The lowest total bid or proposal, taking the preference into consideration, shall be awarded the contract unless the bid or offer provides for additional award criteria. The contract amount of any contract awarded, however, shall be the amount of the bid or price offered, exclusive of the preferences.

(e) Upon receipt and approval of application for Hawaii products preference, the administrator shall include within the Hawaii products list, the names of producers and manufacturers in the State who are authorized to supply locally manufactured soil enhancement products to state agencies under subsection (l). The administrator of the state procurement office shall maintain and distribute copies of the list to the purchasing agencies of the various governmental agencies.

(f) Any person not on the Hawaii products list desiring a preference pursuant to this section shall certify the Hawaii product when submitting a response to a solicitation; provided that the person certifies under penalty of sanctions that the offered Hawaii products meet the requirements for the preference. The procurement officer may request additional information deemed necessary to qualify a product and shall have sole discretion in determining qualification for the preference. Any offeror whose product is deemed not qualified for the preference may appeal by filing a written request for reexamination of facts to the procurement officer. Upon determining that the offeror is qualified for the preference, the procurement officer shall notify the administrator and the administrator shall place the offeror on the Hawaii products list.

(g) Solicitations shall contain a provision notifying offerors who request application of the preference that in the event of any change that materially alters the offeror's ability to supply Hawaii products, the offeror shall immediately notify the chief procurement officer in writing and the parties shall enter into discussions for the purposes of revising the contract or terminating the contract for convenience.

(h) Nothing in this section shall limit, restrict, or preclude a Hawaii product from any preferences, set-asides, or criteria that may be applied under section 103D-906, and this section shall operate instead to mutually enhance the purpose of this section and section 103D-906.

(i) This section shall not apply when at least one of the following conditions is met:

1) Its application will disqualify any governmental agency from receiving federal funds or aid; or

2) The solicitation is for public works construction.

(j) Any purchase made or any contract awarded or executed in violation of this section shall be void and no payment shall be made by any purchasing agency on account of the purchase or contract.

(k) The department of accounting and general services shall provide written notice to all vendors of construction products who are registered on the Hawaii products list with the state procurement office regarding any amendments to this section, including effective dates and dates of repeal.

(l) For the purposes of this section, "soil enhancement product" means any nonchemical soil preparation, conditioner, or compost mixture designed to supplement aeration or add organic, green waste, or decaying matter to the soil. "Soil enhancement product" does not include any plant fertilizer intended to stimulate or induce plant growth through chemical means. All state agencies shall include in their solicitations, when required, the soil enhancement products identified on the Hawaii products list pursuant to subsection (e).

§ 103D – 1003 . Printing, binding, and stationery work

(a) All bids submitted for a printing, binding, or stationery section 103D-302 contract in which all work will be performed in-state, including all preparatory work, presswork, bindery work, and any other production-related work, to include storage and shipping costs, shall receive a fifteen per cent preference for purposes of bid evaluation.

(b) Where bids are for work performed in-state and out-of-state, then for the purpose of selecting the lowest bid submitted only, the amount bid for work performed out-of-state shall be increased by fifteen per cent. The lowest total bid, taking the preference into consideration, shall be awarded the contract unless the solicitation provides for additional award criteria. The contract amount awarded, however, shall be the amount of the price offered, exclusive of the preference.

§ 103D – 1004 . Reciprocity

(a) To ensure fair and open competition for Hawaii businesses engaged in contracting with other states, the chief procurement officer may impose a reciprocal preference against bidders from those states which apply preferences. The amount of the reciprocal preference shall be equal to the amount by which the non-resident preference exceeds any preference applied by this State.

In determining whether a bidder qualifies as a resident bidder, the definition used by the other state in applying a preference shall apply.

(b) The policy board shall adopt rules to implement this section.

§ 103D – 1006 . Software development businesses

(a) In any expenditure of public funds for software development, the use of Hawaii software development businesses shall be preferred. Where a package bid or response to a request for proposal contains both Hawaii and non-Hawaii software development businesses, then for the purpose of selecting the lowest bid or purchase price only, the bid or offer by a non-Hawaii software development business shall be increased by a preference percentage pursuant to rules adopted by the policy board.

(b) This section shall not apply when precluded by federal requirements for competitive bidding.

Hawaii Revised Statutes

Division 1. Government

Title 13. Planning and Economic Development

Chapter 201. Department of Business, Economic Development, and Tourism

Part I. Research and Economic Development

§ 201-4 . Contracts

(a) The department of business, economic development, and tourism may contract with qualified private and public agencies, associations, firms, or individuals within or without the State in pursuance of its duties and functions; provided that preference shall be given to contractors within the State; provided further that preference shall be given to qualified parties who agree to match department funds in whole or in part with funds, equipment, materials, or services; provided further that funds to assist associations of producers, processors, or distributors of industrial products to introduce products which are new or inadequately known to consumers shall be matched by funds equal to at least forty per cent of the funds contracted for by the department or expenses incurred by the department in behalf of the associations; provided further that in instances where the promotion program will benefit one or more of the commodity groups as a whole or where a new or fragile commodity association or industry has the potential for growth but is unable to contribute its full matching share, the department may waive matching fund requirements for the first three years of any contract, but shall require twenty per cent matching funds for the fourth year of any such contract, and at least forty per cent matching funds for the fifth and all subsequent years of any such contract. The contracts shall be approved in writing by the department and shall specify the name of the contractor, the nature of the work to be performed, the manner in which funds may be expended, and such data as the state comptroller may require.

(b) When necessary to effectuate the purposes of this part, funds to state agencies may authorize expenditures for the purchase of machinery and equipment and the erection and conversion of structures, laboratories, and buildings within the State, which facilities shall be and remain under the jurisdiction of the agencies. Private agencies, associations, firms, or individuals shall provide all structures and equipment necessary to effectuate the purposes of funds made to them, in which cases the value which may be attributed to the use of the facilities shall be considered as matching funds. The department shall retain under its own jurisdiction only such furniture, office equipment, and other equipment as is necessary for administration purposes.

(c) The director of business, economic development, and tourism may prescribe rules, pursuant to chapter 91, to carry out provisions of this section relating to the manner in which associations of producers, processors, or distributors may be assisted. The rules may prescribe the qualifications for eligibility of associations for assistance under this section, the preferences and priorities in determining eligibility for such assistance, and the conditions, consistent with the purpose of this chapter, for the granting or the continuance of assistance to such associations.

Hawaii Administrative Code

Title 3. Department of Accounting and General Services

Subtitle 11. Procurement Policy Board

Chapter 124. Preferences

Subchapter 1. Hawaii Products

§ 3-124-5 . Evaluation procedure and contract award

(a) An application submitted with the offer shall be accepted by the procurement officer for determination review as prescribed in section 3-124-3.

(b) For evaluation purposes, no preference shall be considered when only registered Hawaii products are offered.

determining the lowest evaluated offer, the offer for the Hawaii product shall be decreased by its applicable ten per cent or fifteen per cent classification preference.

(d) The contract amount shall be the amount of the price offered, exclusive of any preference.

(e) Should more than one preference allowed by statute apply, the evaluated price shall be based on

application of applicable preferences in the order specified below. The preferences (1) through (7) in

this subsection shall be applied to the original prices. The sum of the preferences, where applicable,

shall be added to the original price, except that preferences (1) and (4) shall be subtracted from the

Hawaii products or recycled products price.

(1) Hawaii products list, pursuant to section 103D-1002, HRS;

(2) Tax adjustment for tax exempt offerors, pursuant to section 103D-1008, HRS;

(3) Preferred use of Hawaii software development businesses, pursuant to section 103D-1006, HRS;

(4) Recycled products, pursuant to section 103D-1005, HRS;

(5) Reciprocal preference, pursuant to section 103D-1004, HRS;

(6) Printing, binding, and stationery work within the State, pursuant to section 103D-1003, HRS;

(7) Preference for persons with disabilities, pursuant to section 103D-1009, HRS.

(f) Should the price comparison for bids submitted pursuant to section 103D-302, HRS, after taking into consideration all applicable preferences, result in identical total prices, award shall be made to the offeror offering a registered Hawaii product in preference to a non-Hawaii product.

(g) For proposals submitted pursuant to section 103D-303, HRS, and after taking into consideration all

applicable preferences, the procurement officer shall award the contract pursuant to section 3-122-57.

Hawaii Administrative Code

Title 3. Department of Accounting and General Services

Subtitle 11. Procurement Policy Board

Chapter 124. Preferences

Subchapter 2. Printing, Binding, and Stationery Work

§ 3-124-12 Evaluation procedure and contract award

(a) If the in-state price is low, award shall be made to the bidder offering to perform the work in Hawaii.

(b) If an out-of-state price is low, the following applies in determining the lowest evaluated price:

(1) The amount bid for work performed out-of-state shall be increased by fifteen per cent.

(2) The lowest total bid, taking the preference into consideration, shall be awarded the contract unless the solicitation provides for additional award criteria.

(d) Should more than one preference allowed by statute apply, the evaluated price shall be based on application of applicable preferences in the order specified below. The preferences (1) through (7) in this subsection shall be applied to the original prices. The sum of the preferences, where applicable, shall be added to the original price, except that preferences (1) and (4) shall be subtracted from the Hawaii products or recycled products price.

(1) Hawaii products list, pursuant to section 103D-1002, HRS;

(2) Tax adjustment for tax exempt offerors, pursuant to section 103D-1008, HRS;

(3) Preferred use of Hawaii software development businesses, pursuant to section 103D-1006, HRS;

(4) Recycled products, pursuant to section 103D-1005, HRS;

(5) Reciprocal preference, pursuant to section 103D-1004, HRS;

(6) Printing, binding, and stationery work within the State, pursuant to section 103D-1003, HRS;

(7) Preference for persons with disabilities, pursuant to section 103D-1009, HRS.

(e) Should the price comparison for bids submitted pursuant to section 103D-302, HRS, after taking into consideration all applicable preferences, result in identical total prices, award shall be made pursuant to section 3-122-34.

Hawaii Administrative Code

Title 3. Department of Accounting and General Services

Subtitle 11. Procurement Policy Board

Chapter 124. Preferences

Subchapter 3. Reciprocal

§ 3-124-17 . Applicability

(a) The chief procurement officer may impose a reciprocal against bidders from states which apply preferences.

(b) When applied to solicitations made pursuant to section 103D-302, HRS, a resident bidder of the State of Hawaii may be given a reciprocal preference equal to the preference the out-of-state bidder would be given in their own state. If the out-of-state bidder's state has a preference comparable to a Hawaii preference, the reciprocal preference shall be equal to the amount the out-of-state preference exceeds the Hawaii preference.

(c) At least annually, the administrator of the state procurement office shall make available a list of preference laws of all states to the chief procurement officers.

(d) These rules shall not apply to any transaction if the provisions of these rules conflict with any federal laws.

§ 3-124-18 Evaluation procedure and contract award

(a) When applied, the amount of the reciprocal preference as specified in section 3-124-17 shall be added for evaluation purposes to the out-of-state bidder's price.

(b) Pursuant to section 103D-302, HRS, the responsible and responsive bidder submitting the lowest

evaluated bid, taking into consideration all applicable preferences, shall be awarded the contract.

(d) Should more than one preference allowed by statute apply, the evaluated price shall be based on

application of applicable preferences in the order specified below. The preferences (1) through (7) in

this subsection shall be applied to the original prices. The sum of the preferences, where applicable,

shall be added to the original price, except that preferences (1) and (4) shall be subtracted from the Hawaii products or recycled products price.

(1) Hawaii products list, pursuant to section 103D-1002, HRS;

(2) Tax adjustment for tax exempt offerors, pursuant to section 103D-1008, HRS;

(3) Preferred use of Hawaii software development businesses, pursuant to section 103D-1006, HRS;

(4) Recycled products, pursuant to section 103D-1005, HRS;

(5) Reciprocal preference, pursuant to section 103D-1004, HRS;

(6) Printing, binding, and stationery work within the State, pursuant to section 103D-1003, HRS;

(7) Preference for persons with disabilities, pursuant to section 103D-1009, HRS.

Hawaii Administrative Code

Title 3. Department of Accounting and General Services

Subtitle 11. Procurement Policy Board

Chapter 124. Preferences

Subchapter 5. Software Development Businesses

§ 3-124-34 Solicitation procedure

(a) Solicitations issued by a state purchasing agency shall contain a notice stating that a price preference will be given to Hawaii software development businesses. This price preference will be ten per cent of the

price, and will be used for evaluation.

(b) All state purchasing agencies shall provide an appropriate space for offerors to indicate whether the bidder is requesting the Hawaii software development business preference.

(c) When a solicitation specifies that because of federal requirements, the Hawaii software development business preference will not be considered, the price preference shall not apply.

(d) Offerors requesting a preference shall submit a completed certification form, as required by section 3-124-33, with each offer. Previous certifications shall not apply unless allowed by the solicitation.

(e) Any offeror who fails to indicate that it is a Hawaii software development business will be presumed to be a non-Hawaii software development business and the offeror's offer will be increased by ten per cent for purposes of evaluation.

§ 3-124-35 Evaluation procedure and contract award

(a) In any expenditure of public funds for software development where offers received contain both Hawaii and non-Hawaii software development businesses, for the purpose of selecting the lowest offer only, the offer by a non-Hawaii software development business shall be increased by ten per cent.

(b) Should more than one preference allowed by statute apply, the evaluated price shall be based on application of applicable preferences in the order specified herein. The preferences (1) through (7) in this subsection shall be applied to the original prices. The sum of the preferences, where applicable, shall be added to the original price, except that preferences (1) and (4) shall be subtracted from the Hawaii products or recycled products price.

(1) Hawaii products list, pursuant to section 103D-1002, HRS;

(2) Tax adjustment for tax exempt offerors, pursuant to section 103D-1008, HRS;

(3) Preferred use of Hawaii software development businesses, pursuant to section 103D-1006, HRS;

(4) Recycled products, pursuant to section 103D-1005, HRS;

(5) Reciprocal preference, pursuant to section 103D-1004, HRS; and

(6) Printing, binding, and stationery work within the State, pursuant to section 103D-1003, HRS;

(7) Preference for persons with disabilities, pursuant to section 103D-1009, HRS.

(c) The responsible and responsive offeror submitting the lowest evaluated offer(s) pursuant to section 103D-302, HRS, taking into consideration all applicable preferences shall be awarded the contract.

(d) The contract amount shall be the original price offered, exclusive of any preference.

(e) Should the price comparison for bids submitted pursuant to section 103D-302, HRS, after taking into consideration all applicable preferences, result in identical evaluated prices for Hawaii software development projects, the procurement officer shall award the contract resulting from an invitation for bids pursuant to section 3-122-34.

(f) For proposals submitted pursuant to section 103D-303, HRS, and after taking into consideration all applicable preferences, the procurement officer shall award the contract pursuant to section 3-122-57.

Hawaii Administrative Code

Title 3. Department of Accounting and General Services

Subtitle 11. Procurement Policy Board

Chapter 124. Preferences

Subchapter 7. Tax Preference

§ 3-124-55 Evaluation procedure and contract award

(a) As applicable, the price submitted by the tax exempt bidder shall be increased by the applicable retail rate of the Hawaii general excise tax and applicable use tax to determine the evaluated price for award purposes.

(b) The contract amount shall be the original price bid, exclusive of any preferences used in evaluating the bid.

(c) Should more than one preference allowed by statute apply, the evaluated price shall be based on application of applicable preferences in the order specified herein. The preferences (1) through (7) in this subsection shall be applied to the original prices. The sum of the preferences, where applicable, shall be added to the original price, except that preferences (1) and (4) shall be subtracted from the Hawaii products or recycled products price.

(1) Hawaii products list, if applicable, pursuant to section 103D-1002, HRS;

(2) Tax adjustment for tax exempt bidders, pursuant to section 103D-1008, HRS;

(3) Preferred use of Hawaii software development businesses, pursuant to section 103D-1006, HRS;

(4) Recycled products, pursuant to section 103D-1005, HRS;

(5) Reciprocal preference, pursuant to section 103D-1004, HRS; and

(6) Printing, binding, and stationery work within the State, pursuant to section 103D-1003, HRS;

(7) Preference for persons with disabilities, pursuant to section 103D-1009, HRS.

(d) Should the price comparison, after taking into consideration all applicable preferences, result in identical evaluated prices, the procurement officer shall award the contract pursuant to section 3-122-34.

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