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The Honolulu Advertiser
Posted on: Friday, April 21, 2006

Procurement loophole must be quickly shut

A massive hole in the rules by which the state buys services and deals with outside vendors has been identified in the wake of a controversy over the state's recent business promotion trip to China and South Korea.

The loophole is easy to fix, and soon should be, either by administrative fiat or by law.

Democratic lawmakers are asking whether the Lingle administration's non-bid and largely private relationship with two private entities to help run the trip and deal with some $268,000 in sponsorship contributions from local corporations violates the state's procurement law.

The answer: There was no violation of that law, according to a memo from Aaron Fujioka, administrator of the state Procurement Office.

Fujioka's reasoning: Because a detailed agreement which outlines specific roles and responsibilities and a formula for payment between the state and the two private entities is unsigned and does not bind anyone, it is not a "contract" covered by the procurement code.

But what we're left with, then, is a situation where in theory the state is free to cut any deal, receive any money and make any arrangements it wants with private operators as long as it doesn't do so through a signed contract.


Gov. Lingle should make it expressly clear that all future deals of this sort will go through the open procurement process. If not, the Legislature must act.

There was no need to short-cut the process. For months the state declined even to say which private companies had contributed. The explanation that the information was not public because private entities were handling the matter was thin, at best. The two private groups were under the direct supervision of the state.

Even though this arrangement may not have violated the letter of the procurement code, it clearly stepped around the spirit of the law. Fujioka, in his memo to Liu, acknowledged as much:

"The (Procurement Office) advocates having departments utilize the Procurement Code when obtaining vendors/contractors to provide goods, services or construction, to further enhance disclosure and open government practices," he wrote.


If the state won't do so on its own, then the Legislature should rewrite the law to make the rules crystal clear.