2008-01-AU Limited Scope Performance Audit Report Department of Public Works CIP Contract Change Orders and Supplements for FY 2006-2007

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CHAPTER 2 PROCUREMENT LAWS AND RULES State The State Procurement Office (SPO) serves as the central authority on procurement statutes and rules for all governmental bodies of the State and its counties. The State of Hawaii is decentralized in its procurement of goods, services, and construction, each jurisdiction having authority to purchase; however, the State Procurement Office remains the central source on matters of procurement policy. All Hawaii government procurements must comply with Hawaii Revised Statutes (HRS) chapter 103D, Hawaii Public Procurement Code, as further delineated in Hawaii Administrative Rules (HAR), title 3, Department of Accounting and General Services, subtitle 11, Procurement Policy Board, chapters 120 to 132. In addition, all public works contracts must comply with HRS chapter 103, Expenditure of Public Money and Public Contracts. County The County of Hawaii Finance Department's Purchasing Division provides a centralized purchasing function to procure services, supplies, materials and equipment in support of all County agencies and programs. The Purchasing Division conducts competitive bids and requests for proposals for all competitive purchases with the exception of Department of Public Works construction projects . 3 The Department of Public Works' procurement of professional services consultants and construction contractors for County capital improvement projects must comply with HRS chapters 103 and 103D and HAR chapters 3 -120 to 3 -132 as discussed above and with the County of Hawaii Department of Public Works — General Requirements and Covenants. Federally Funded Projects The federal government provided funding for certain professional services and construction contracts within the scope of this audit. In construction contracts for accessibility improvements, the County Office of Housing and Community Development (OHCD) obtained Community Development Block Grant (CDBG) funding, filed required federal reports and conducted overall project management; the Department of Parks and Recreation conducted project scoping and prepared plans and specifications; and DPW conducted contract procurement and administration, day -to -day project management and project inspection. In federal -aid highway projects, the State Department of Transportation (DOT) reviewed required project documentation (including site sampling reports, daily construction ledgers and change orders) and conducted project inspections. 2 Excerpted from the Hawaii State Procurement Office website hlW: / /www.SPO.hawaii.gov. s Source: Hawaii County FY 2007 -2008 Operating Budget Proposal, Part I, Volume II, Page 84. 7