STAND. COM. REP. NO. 2709

                                   Honolulu, Hawaii
                                                     , 2000

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




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Ways and Means, to which was referred S.B.
No. 2988, S.D. 1, entitled: 

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

begs leave to report as follows:

     The purpose of this bill is to impose penalties against
contractors who improperly withhold payment from a subcontractor
where the subcontractor has provided a bond acceptable as
prevailing industry practice to the contractor.

     Specifically, this bill imposes on the contractor a penalty
of one and one-half per cent per month on outstanding amounts due
to the subcontractor.  The penalty may be withheld from any
future payments due to the contractor.  Any form of collateral
acceptable to the contractor may be substituted for the trust
fund contribution bond.  This bill requires that the contractor's
name be referred to the Contractors License Board if a contractor
violates the law for failing to pay the subcontractor three or
more times within two years of the first violation.

     Upon further consideration, your Committee has amended this
bill by amending section 103-10.5, Hawaii Revised Statutes, to
insert the new language regarding penalties and referral to the
Contractors License Board, instead of amending section 103D-501,
Hawaii Revised Statutes.  This involves deleting all of section 2

 
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                                   STAND. COM. REP. NO. 2709
                                   Page 2


of the bill that amended section 103D-501, Hawaii Revised
Statutes, and replacing it with an appropriate amendment of
section 103-10.5, Hawaii Revised Statutes, instead.  Because of
this, the phrase "by the procurement agency" originally used in
amending section 103D-501, Hawaii Revised Statutes, has been
deleted.  In addition, the incorrect reference to "section
444-14" has been changed to "section 444-17(14)".  Consequently,
section 4 of the bill that repeals section 103-10.5, Hawaii
Revised Statutes, has been deleted.

     As affirmed by the record of votes of the members of your
Committee on Ways and Means that is attached to this report, your
Committee is in accord with the intent and purpose of S.B. No.
2988, S.D. 1, as amended herein, and recommends that it pass
Third Reading in the form attached hereto as S.B. No. 2988,
S.D. 2.

                                 Respectfully submitted on behalf
                                 of the members of the Committee
                                 on Ways and Means,



                                 ________________________________
                                 CAROL FUKUNAGA, Co-Chair



                                 ________________________________
                                 ANDREW LEVIN, Co-Chair

 
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