STAND. COM. REP. NO. 1137

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: S.B. No. 59
                                     S.D. 1
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Economic Development and Business
Concerns, to which was referred S.B. No. 59, S.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 add penalties to the existing
law that prohibits contractors from withholding more than five
percent of the subcontractor's contract price.

     Testimony in support of this bill was submitted by the
Plumbing and Mechanical Contractors Association of Hawaii and the
Subcontractors Association of Hawaii.  The Department of
Accounting and General Services testified in support of the
intent of the bill.  Testimony in opposition to this bill was
submitted by James W. Glover, Ltd. and Hidano Construction, Inc.
The Contractors' Association of Kaua'i commented on this measure.

     Your Committee has amended this bill by deleting its
substance and inserting the substance of H.B. No. 1338, H.D. 1.
As amended, this bill does not include penalties for failing to
comply with the provisions of the bill and language relating to
the withholding of money when there is a bona fide dispute over a
subcontractor's performance under the subcontract.  Your
Committee has further amended this bill by making a technical,
nonsubstantive amendment for clarity and style.


 
 
 
                                 STAND. COM. REP. NO. 1137
                                 Page 2

 
     As affirmed by the record of votes of the members of your
Committee on Economic Development and Business Concerns that is
attached to this report, your Committee is in accord with the
intent and purpose of S.B. No. 59, S.D. 1, as amended herein, and
recommends that it pass Second Reading in the form attached
hereto as S.B. No. 59, S.D. 1, H.D. 1, and be referred to the
Committee on Finance.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Economic
                                   Development and Business
                                   Concerns,



                                   ______________________________
                                   ROBERT N. HERKES, Chair