STAND. COM. REP. NO. 1545

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  H.B. No. 122
                                        H.D. 2
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Government Operations and Housing, to
which was referred H.B. No. 122, H.D. 2, entitled: 

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

begs leave to report as follows:

     The purpose of this measure is to enforce the prompt payment
of contracts by providing for penalties for the failure of a
contractor to promptly pay a subcontractor.

     Prior to the hearing, your Committee circulated a proposed
Senate draft.  Testimony was received on this proposed H.B.
No. 122, H.D. 2, S.D. 1.

     The proposed H.B. No. 122, H.D. 2, S.D. 1, added to the
measure as received, language that requires privately-operated
group living facilities who have a contract, pursuant to chapter
103F, Hawaii Revised Statutes, for the purchase of health and
human services to be licensed with the Department of Health.  
          
     Testimony in support of the proposed Senate draft was
received from the Plumbing and Mechanical Contractors Association
of Hawaii, Subcontractors Association of Hawaii, JR Electric,
Tile, Marble and Terrazzo Contractors Association of Hawaii, R.W.
Almonte Enterprises, Inc., Zack's Flooring, Alii Flooring, Inc.,
B&J Insulation Co., Inc., Bay Harbor Company, Kauai Floors, Inc.,
Audissey, Structural Pest Control, Inc., Bug Man Termite & Pest
Control Inc., Skylights of Hawaii, Dorvin D. Leis Co., Inc.,

 
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Aluminum Shake Roofing, Inc., T. Taketa Sheet Metal, Inc., Son-
Light Electric, Inc., and International Brotherhood of Electrical
Workers, Local Union 1186.  Testimony with amendments was
received from Kanoelehua Industrial Area Association, Inc.  

     Testimony in opposition to this measure was received from
Building Industry Association of Hawaii, T. Iida Contracting,
Ltd., Armstrong Builders, Ltd., Thurston Pacific, Inc., Willocks
Construction Corporation, Allied Builders System, Reef
Development of Hawaii, Inc., Fletcher Pacific, Universal
Construction, Inc., Kaikor Construction Associates, Inc., Jayar
Construction, Inc., Graham Builders, Inc., Hawaiian Dredging
Construction Company, BKA Builders Inc., Hallmark Construction
Corporation, QMC Corp., Teval Corp., Walter Y. Arakaki General
Contractor, Inc., and Robert M. Kaya Builders, Inc.

Prompt Payment of Contracts

     Your Committee recognizes that the intent of this provision
is to enforce the prompt payment of contracts which is required
under section 103-10.5, Hawaii Revised Statutes.  This will be
served by providing appropriate incentives and penalties for
failing to comply with this requirement.

Licensing of Group Living Facilities

     Your Committee finds that pursuant to 103F, Hawaii Revised
Statutes, the State may procure for the purchase of health and
human services from group living facilities.  

     Some group living facilities, however, are not licensed by
the Department of Health.  Your Committee finds that licensed
group living facilities ensure services provided to the public
are safe for all residents and surrounding communities.  

     This provision will prohibit the State from procuring with
unlicensed group living facilities, including, but not limited to
domestic abuse shelters, halfway houses, and other private
residences used for the purpose of providing health services or
human services.  

     Your Committee has amended this measure, as received, by
replacing its contents with the contents of the proposed Senate
draft with the following changes:
 
     (1)  Deleting the reference instructing the comptroller to
          adopt a system of graduated penalties and replacing it
          with specific penalties for violation of the prompt
          payment provision; and

 
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     (2)  Prohibiting the State from procuring services from
          unlicensed group living facilities for the purpose of
          providing health and human services.

     As affirmed by the record of votes of the members of your
Committee on Government Operations and Housing that is attached
to this report, your Committee is in accord with the intent and
purpose of H.B. No. 122, H.D. 2, as amended herein, and
recommends that it pass Second Reading in the form attached
hereto as H.B. No. 122, H.D. 2, S.D. 1, and be placed on the
calendar for Third Reading.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Government
                                   Operations and Housing,



                                   ______________________________
                                   ROD TAM, Chair

 
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