STAND. COM. REP. NO. 739-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: H.B. No. 2877
                                     H.D. 2




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Finance, to which was referred H.B. No.
2877, H.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO PUBLIC CONTRACTS,"

begs leave to report as follows:

     The purpose of this bill is to address concerns regarding
the practice of prime contractors to withhold a portion of the
payment due to subcontractors while engaged in state projects.
While this practice is intended to ensure that subcontractors
complete their work, it also poses a cash-flow problem for
subcontractors.

     This bill requires that the retention rate imposed upon
subcontractors be equal to the retention rate imposed upon their
prime contractors by the State, provided that the subcontractor
possesses a performance and payment bond or another type of bond
acceptable to the prime contractor.

     The Building Industry Association of Hawaii, the
Subcontractors Association of Hawaii, the Hawaii Surety
Association, the Plumbing and Mechanical Contractors Association
of Hawaii, and Hidano Construction, Inc., testified in support of
this bill.

     Your Committee has amended this bill to correct technical
drafting errors.


 
 
 
                                 STAND. COM. REP. NO. 739-00
                                 Page 2

 
     As affirmed by the record of votes of the members of your
Committee on Finance that is attached to this report, your
Committee is in accord with the intent and purpose of H.B. No.
2877, H.D. 1, as amended herein, and recommends that it pass
Third Reading in the form attached hereto as H.B. No. 2877, H.D.
2.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Finance,



                                   ______________________________
                                   DWIGHT Y. TAKAMINE, Chair