REPORT TITLE:
Procurement


DESCRIPTION:
Imposes penalties on contractors for failing to properly pay
amounts owed to subcontractors.  (SD2)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2988
THE SENATE                              S.B. NO.           S.D. 2
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO PUBLIC CONTRACTS AND PROCUREMENT.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  The weakness of the State's economy emphasizes
 
 2 the need for subcontractors to pay their employees in a timely
 
 3 manner.  This need is circumvented by contractors who improperly
 
 4 withhold payment from their subcontractors.
 
 5      The purpose of this Act is to impose penalties against
 
 6 contractors who improperly withhold payment from their
 
 7 subcontractors.
 
 8      SECTION 2.  Section 103-10.5, Hawaii Revised Statutes, is
 
 9 amended to read as follows:
 
10      "[[]�103-10.5[]]  Prompt payment[.]; penalty.  (a)  Any
 
11 money, other than retainage, paid to a contractor shall be
 
12 dispersed to subcontractors within ten days after receipt of the
 
13 money in accordance with the terms of the subcontract, provided
 
14 that the subcontractor has met all the terms and conditions of
 
15 the subcontract and there are no bona fide disputes.  Upon final
 
16 payment to the contractor, full payment to the subcontractor,
 
17 including retainage, shall be made within ten days after receipt
 
18 of the money, provided there are no bona fide disputes over the
 
19 subcontractor's performance under the subcontract.
 

 
Page 2                                                     2988
                                     S.B. NO.           S.D. 2
                                                        
                                                        

 
 1      (b)  Where a subcontractor has provided a bond acceptable as
 
 2 prevailing industry practice to the contractor, and the
 
 3 contractor fails to pay in accordance with this section, there
 
 4 shall be imposed a penalty of one and one-half per cent a month
 
 5 on the amounts outstanding due to the subcontractor.  The penalty
 
 6 may be withheld from any future payments due to the contractor.
 
 7 Any form of collateral acceptable to the contractors may be
 
 8 substituted for the trust fund contribution bond.
 
 9      (c)  Where a contractor has violated subsection (b) three or
 
10 more times within two years of the first violation, the
 
11 contractor's name shall be referred to the contractors license
 
12 board for action under section 444-17(14)."
 
13      SECTION 3.  Statutory material to be repealed is bracketed.
 
14 New statutory material is underscored.
 
15      SECTION 4.  This Act shall take effect on July 1, 2000, and
 
16 shall apply to all public contracts entered into after June 30,
 
17 2000.