REPORT TITLE:
Contractor Select.; Penalties


DESCRIPTION:
Clarifies selection process for contractors for public contracts
for less than $25,000; sets penalties for contractors who
retaliate against subcontractors in the event of a complaint; and
sets penalties for contractors who fail to adequately address
complaints.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           2387
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO PROCUREMENT. 


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

 1      SECTION 1.  The legislature finds that the State needs to
 
 2 ensure the competency of subcontractors bidding on State
 
 3 construction projects.  In order to accomplish this, the State
 
 4 must implement screening measures for all state construction
 
 5 projects, projects for less than $25,000 in particular.
 
 6      The legislature also finds that there is a need for
 
 7 additional, competent subcontractors available to bid on State
 
 8 construction projects.  In order to accomplish this, the State
 
 9 must protect subcontractors from retaliation in the event of a
 
10 complaint against the general contractor and further that the
 
11 general contractor will rectify the situation.
 
12      The purpose of this Act is to ensure the quality and depth
 
13 of the State's subcontractor population by implementing
 
14 appropriate screening and protective measures.
 
15      SECTION 2.  Section 103D-305, Hawaii Revised Statutes, is
 
16 amended to read as follows:
 
17      "§103D-305  Small purchases; prohibition against parceling.
 
18 (a)  Procurements of less than $25,000 for goods, services, or
 
19 construction shall be made in accordance with procedures set
 

 
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 1 forth in rules adopted by the policy board that are designed to
 
 2 ensure administrative simplicity and as much competition as is
 
 3 practicable[; provided that multiple]
 
 4      (b)  For procurements of construction amounting to at least
 
 5 $4,000 but less than $25,000:
 
 6      (1)  No fewer than three quotations shall be solicited for
 
 7           each project;
 
 8      (2)  Quotations shall be evaluated based on criteria
 
 9           established for each project including, but not limited
 
10           to, quality, artisanship, and suitability;
 
11      (3)  Contractor qualifications shall be based on the
 
12           contractor's current resume which shall be included
 
13           with the quotation;
 
14      (4)  The contract shall be awarded to the qualified
 
15           contractor submitting the lowest quotation; and
 
16      (5)  Contractors shall be limited to two contracts per year;
 
17           and
 
18 Procurements for construction estimated at less than $4,000 shall
 
19 be awarded pursuant to procedures established by each chief
 
20 procurement officer.
 
21      (c)  Multiple expenditures shall not be created at the
 
22 inception of a transaction or project so as to evade the
 
23 requirements of this chapter; and provided further that
 

 
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 1 procurement requirements shall not be artificially divided or
 
 2 parceled so as to constitute a small purchase under this
 
 3 section."
 
 4      SECTION 3.  Section 444-17, Hawaii Revised Statutes, is
 
 5 amended to read as follows:
 
 6      "§444-17  Revocation, suspension, and renewal of licenses.
 
 7 In addition to any other actions authorized by law, the board may
 
 8 revoke any license issued pursuant to this section, or suspend
 
 9 the right of a licensee to use a license, or refuse to renew a
 
10 license for any cause authorized by law, including but not
 
11 limited to the following:
 
12      (1)  Any dishonest, fraudulent, or deceitful act as a
 
13           contractor that causes substantial damage to another;
 
14      (2)  Engaging in any unfair or deceptive act or practice as
 
15           prohibited by section 480-2;
 
16      (3)  Abandonment of any construction project or operation
 
17           without reasonable or legal excuse;
 
18      (4)  Wilful diversion of funds or property received for
 
19           prosecution or completion of a specific construction
 
20           project or operation, or for a specified purpose in the
 
21           prosecution or completion of any construction project
 
22           or operation, and the use thereof for any other
 
23           purpose;
 

 
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 1      (5)  Wilful departure from, or wilful disregard of plans or
 
 2           specifications in any material respect without consent
 
 3           of the owner or the owner's duly authorized
 
 4           representative, that is prejudicial to a person
 
 5           entitled to have the construction project or operation
 
 6           completed in accordance with those plans and
 
 7           specifications;
 
 8      (6)  Wilful violation of any law of the State, or any
 
 9           county, relating to building, including any violation
 
10           of any applicable rule of the department of health, or
 
11           of any applicable safety or labor law;
 
12      (7)  Failure to make and keep records showing all contracts,
 
13           documents, records, receipts, and disbursements by a
 
14           licensee of all the licensee's transactions as a
 
15           contractor for a period of not less than three years
 
16           after completion of any construction project or
 
17           operation to which the records refer or to permit
 
18           inspection of those records by the board;
 
19      (8)  When the licensee being a partnership or a joint
 
20           venture permits any partner, member, or employee of the
 
21           partnership or joint venture who does not hold a
 
22           license to have the direct management of the
 
23           contracting business thereof;
 

 
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 1      (9)  When the licensee being a corporation permits any
 
 2           officer or employee of the corporation who does not
 
 3           hold a license to have the direct management of the
 
 4           contracting business thereof;
 
 5     (10)  Misrepresentation of a material fact by an applicant in
 
 6           obtaining a license;
 
 7     (11)  Failure of a licensee to complete in a material respect
 
 8           any construction project or operation for the agreed
 
 9           price if the failure is without legal excuse;
 
10     (12)  Wilful failure in any material respect to comply with
 
11           this chapter or the rules adopted pursuant thereto;
 
12     (13)  Wilful failure or refusal to prosecute a project or
 
13           operation to completion with reasonable diligence;
 
14     (14)  Wilful failure to pay when due a debt incurred for
 
15           services or materials rendered or purchased in
 
16           connection with the licensee's operations as a
 
17           contractor when the licensee has the ability to pay or
 
18           when the licensee has received sufficient funds
 
19           therefor as payment for the particular operation for
 
20           which the services or materials were rendered or
 
21           purchased;
 
22     (15)  The false denial of any debt due or the validity of the
 
23           claim therefor with intent to secure for a licensee,
 

 
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 1           the licensee's employer, or other person, any discount
 
 2           of the debt or with intent to hinder, delay, or defraud
 
 3           the person to whom the debt is due;
 
 4     (16)  Failure to secure or maintain workers' compensation
 
 5           insurance, unless the licensee is authorized to act as
 
 6           a self-insurer under chapter 386 or is excluded from
 
 7           the requirements of chapter 386;
 
 8     (17)  Entering into a contract with an unlicensed contractor
 
 9           involving work or activity for the performance of which
 
10           licensing is required under this chapter;
 
11     (18)  Performing service on a residential or commercial air
 
12           conditioner, utilizing CFCs, without using refrigerant
 
13           recovery and recycling equipment;
 
14     (19)  Performing service on any air conditioner [after
 
15           January 1, 1994,] without successful completion of an
 
16           appropriate training course in the recovery and
 
17           recycling of CFC and HCFC refrigerants, which included
 
18           instruction in the proper use of refrigerant recovery
 
19           and recycling equipment that is certified by
 
20           Underwriters Laboratories, Incorporated;
 
21     (20)  Violating chapter 342C; [and]
 
22     (21)  Failure to pay delinquent taxes, interest, and
 
23           penalties assessed under chapter 237 that relate to the
 

 
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 1           business of contracting, or to comply with the terms of
 
 2           a conditional payment plan with the department of
 
 3           taxation for the payment of such delinquent taxes,
 
 4           interest, and penalties[.];
 
 5     (22)  Failure of a licensee to respond in writing to
 
 6           complaints issued to the department or the board; and
 
 7     (23)  Failure of a licensee to diligently address the source
 
 8           of any complaints issued to the department or board."
 
 9      SECTION 4.  Section 444-23, Hawaii Revised Statutes, is
 
10 amended by amending subsection (d) to read as follows:
 
11      "(d)  Any licensee who violates, or whose employee violates,
 
12 section 444-17(18), 444-17(19), [or] 444-17(20), 444-17(22) or
 
13 444-17(23), shall be fined $75 for the first offense, $150 for
 
14 the second offense, and not less than $300 or more than $1,000
 
15 for each subsequent offense; provided that each unit serviced in
 
16 violation of section 444-17(18) or 444-17(19) and each instance
 
17 of releasing CFCs in violation of section 444-17(20) shall
 
18 constitute a separate offense."
 
19      SECTION 5.  Statutory material to be repealed is bracketed.
 
20 New statutory material is underscored.
 
21      SECTION 6.  This Act shall take effect on July 1, 2000.
 
22 
 
23                           INTRODUCED BY:  _______________________