State expects savings online

By Johnny Brannon
Advertiser Staff Writer

The state will start buying furniture, building supplies, vehicles and many other goods and services over the Internet if lawmakers approve a new plan by the Department of Accounting and General Services.

The idea is to save money by promoting more open competition, and to speed up procurement by eliminating paperwork, officials say.

"The interest is there and the time is right for more technology in how we do contracting," said state procurement office administrator Aaron Fujioka.

The plan would allow suppliers to bid against each other in a "reverse auction" designed to drive prices down rather than up, he said. The proposal would cover contracts worth up to $100,000.

The state also wants to start requesting quoted prices for products electronically in a nonauction format for smaller purchases.

Currently, officials must contact at least three bidders for purchases up to $25,000. By requesting quotes over the Internet, the state hopes to maximize competition.

"We hope that rather than simply getting three quotes, we get as many as 10," Fujioka said.

Some states have begun experimenting with such systems, he said.

The proposals are included in a package of bills that Gov. Linda Lingle's administration introduced to the Legislature this week.

Rep. Roy Takumi introduced a similar bill last week that does not specify a dollar amount. He said he had been unaware of the administration's plan until Lingle mentioned it in her State of the State speech Tuesday.

Takumi said the idea merited a close look but cautioned that there could be some pitfalls if increased competition means Hawai'i businesses are threatened by Mainland firms.

"The main purpose is to save taxpayers' money, not put local companies out of business," said Takumi, D-36th (Pearl City, Palisades). "That's something we have to be sensitive about."

Others said online contracting could be a challenge for some small businesses that don't have modern computer equipment, and for older firms that haven't kept up with technology.

"I think the older generation contractors are going to need a lot of help," said Karen Nakamura, executive vice president of the Building Industry Association of Hawai'i.

But electronic innovations are inevitable in today's business environment, she said, and companies that take advantage could do well.

"Hopefully, the process will allow a more open system so that more people can have access to the information, Nakamura said.

Fujioka said about half of state contracts handled by his office are for less than $100,000, so handling them electronically could eliminate a lot of tedious paperwork.

The system could be financed in a variety of ways. The state could pay for it all in advance, it could split the cost with a vendor, or the system could be fee-based and self-supporting, Fujioka said. All options are being considered.

"Conceptually, it's very simple, but design and implementation is quite technical," he said. "We're hoping to be careful and do it right."

Reach Johnny Brannon at jbrannon@honoluluadvertiser.com or 525-8070.