STAND. COM. REP. NO. 20

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: H.B. No. 122
                                     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 H.B. No. 122 entitled: 

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

begs leave to report as follows:

     The purpose of this bill is to require the Comptroller to
adopt administrative rules to implement the law relating to the
prompt payment of subcontractors.

     The Hawaii Operating Engineers Industry Stabilization Fund,
the Subcontractors Association of Hawaii, and Les' Carpet &
Drapery Installation, Inc., submitted testimony in support of the
bill.  The Department of Accounting and General Services, the
American Institute of Architects Hawaii State Council, and the
General Contractors Association of Hawaii submitted testimony in
opposition to the bill.

     Your Committee recognizes that the intent of this bill is to
enforce the prompt payment of contracts.  This will be served by
providing appropriate incentives and penalties for failing to
comply with this requirement.

     Your Committee has amended this bill by:

     (1)  Specifying that the Comptroller adopt administrative
          rules including a system of graduated penalties for
          violations;
 

 
 
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     (2)  Clarifying that each nonpayment to a subcontractor by a
          contractor constitutes a separate violation;

     (3)  Having the effective date apply to all contracts
          executed after July 1, 1999; and

     (4)  Making technical, nonsubstantive amendments for
          purposes of clarity and style.

     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 H.B. No. 122, as amended herein, and
recommends that it pass Second Reading in the form attached
hereto as H.B. No. 122, 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