Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Conference on the disagreeing vote of the Senate to the amendments proposed by the House of Representatives in S.B. No. 1843, S.D. 1, H.D. 2, entitled:

having met, and after full and free discussion, has agreed to recommend and does recommend to the respective Houses the final passage of this bill in an amended form.

The purpose of this bill is to promote fairness in the long-term relationships between the government and contractors that provide construction design professional services (contractor) by:

Your Committee on Conference finds that the prevailing practice in state and county contracts is to require the contractor to indemnify, defend, and hold harmless the government in the event of negligence of the employees and agents of the government. Your Committee further finds that this contracting practice is against public policy on the basis that every party to a contract should be liable for that party's own conduct.

Your Committee on Conference further finds that indemnity clauses are the subject of frequent litigation involving their interpretation and the true intent of the parties. Your Committee learned that "duty to defend agreements" are insurable only when the policyholder is determined to be negligent. The insurance policy does not cover a public agency for the public agency's wrongdoing.

This measure is intended to resolve these difficulties and thereby to facilitate bidding on government contracts. In doing so, it will encourage economic growth and discourage costly and time-consuming litigation.

Your Committee on Conference has amended this measure by reverting to the S.D. 1 draft.

As affirmed by the record of votes of the managers of your Committee on Conference that is attached to this report, your Committee on Conference is in accord with the intent and purpose of S.B. No. 1843, S.D. 1, H.D. 2, as amended herein, and recommends that it pass Final Reading in the form attached hereto as S.B. No. 1843, S.D. 1, H.D. 2, C.D. 1.