STAND. COM. REP. NO. 1036-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: S.B. No. 2988
                                     S.D. 2
                                     H.D. 1




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

Sir:

     Your Committees on Economic Development and Business
Concerns and Labor and Public Employment, to which was referred
S.B. No. 2988, S.D. 2, entitled: 

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

beg leave to report as follows:

     The purpose of this bill is to ensure prompt payment on
state projects by contractors to subcontractors by penalties on
contractors failing to properly pay amounts to contractors.

     The Hawaii Construction Industry Association, Plumbing and
Mechanical Contractors Association of Hawaii, Subcontractors
Association of Hawaii, Building Industry Association of Hawaii,
Construction Industry Legislative Organization, Inc., General
Contractors Association of Hawaii, and Hidano Construction, Inc.
testified in support of this measure.  The Department of
Accounting and General Services testified in support of the
intent of this measure.  The State Procurement Office submitted
comments on this measure.

     Your Committees note that this bill is similar to H.B. No.
2878, H.D. 2, which passed the House of Representatives earlier
this session after public hearings before this Committee, your
Committee on Labor, and your Committee on Finance.


 
 
 
                                 STAND. COM. REP. NO. 1036-00
                                 Page 2

 
     Your Committees have amended this bill by deleting its
contents and inserting the substantive provisions of H.B. No.
2878, H.D. 2.  As amended, this bill:

     (1)  Specifies that subcontractors provide evidence to
          contractors of a valid union trust fund benefit payment
          bond, performance/payment bond, other bond, or another
          mutually-agreeable form of collateral;

     (2)  Imposes penalties on contractors for failing to
          properly pay amounts owed to subcontractors; and

     (3)  Requires the Procurement Policy Board to adopt rules on
          prompt payment and retainage.

     As affirmed by the records of votes of the members of your
Committees on Economic Development and Business Concerns and
Labor and Public Employment that are attached to this report,
your Committees are in accord with the intent and purpose of S.B.
No. 2988, S.D. 2, as amended herein, and recommend that it pass
Second Reading in the form attached hereto as S.B. No. 2988, S.D.
2, H.D. 1, and be referred to the Committee on Finance.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committees on Economic
                                   Development and Business
                                   Concerns and Labor and Public
                                   Employment,

                                   
                                   
                                   
                                   
______________________________     ______________________________
TERRY NUI YOSHINAGA, Chair         ROBERT N. HERKES, Chair