HOUSE OF REPRESENTATIVES	H.C.R. NO.	124
TWENTY-FIFTH LEGISLATURE, 2009		H.D. 1
STATE OF HAWAII

HOUSE CONCURRENT

RESOLUTION

REQUESTING A STUDY TO DETERMINE THE PROPER INTERPRETATION AND APPLICATION OF THE PHRASE "INCIDENTAL AND SUPPLEMENTAL" WITH REGARD TO THE CONTRACTING BUSINESS.

     WHEREAS, the Contractors License Board is vested with broad authority to issue licenses to contractors and to ensure that contractors are qualified to undertake the work for which they are licensed; and

     WHEREAS, the Contractors License Board classifies the types of licenses it issues as:

     (1)  General engineering contractor;

     (2)  General building contractor; and

     (3)  Specialty contractor;

and

     WHEREAS, the Hawaii Supreme Court in Okada Trucking Co., Ltd. v. Board of Water Supply, City and County of Honolulu and Inter Island Environmental Services, Inc., 97 Hawai‘i 450 (2002), made several significant holdings that clarified the treatment of bid proposals submitted by contractors on state and county projects; and

     WHEREAS, in Okada, the Hawaii Supreme Court held that a general contractor's bid for a Board of Water Supply booster station project was nonresponsive because it required work by a licensed plumbing (specialty) contractor, which was work that the general contractor was not authorized to perform under the general contracting licenses that it held; and
WHEREAS, in Okada, the Hawaii Supreme Court also held that a general engineering or building contractor is prohibited from undertaking any work, solely or as part of a larger project, that would require it to act as a specialty contractor in an area in which the general contractor was not licensed to operate; and

     WHEREAS, in Okada, the Hawaii Supreme Court noted that a specialty contractor, as opposed to a general contractor, is permitted to undertake work involving the use of crafts or trades for which the specialty contractor is not licensed, so long as the performance of the work in those crafts or trades is "incidental and supplemental" to the performance of work in the craft for which the specialty contractor is licensed; and

     WHEREAS, the phrase "incidental and supplemental" is defined as work in other trades directly related to and necessary for the completion of the project undertaken by a licensee pursuant to the scope of the licensee's license; and

     WHEREAS, in the years since the Okada opinion, the Contractors License Board has permitted contractors, on several occasions, to submit bid proposals that failed to identify specialty subcontractors that would be engaged, even in situations where the invitation for bids clearly indicated that the construction projects involved would require substantial amounts of specialty contracting work; and

     WHEREAS, in these cases, the Contractors License Board has ruled that the specialty contracting work required in these projects was merely "incidental and supplemental" to the licenses held by the bidding contractors; and

     WHEREAS, the Contractors License Board's application of the phrase "incidental and supplemental" appears to contradict the Hawaii Supreme Court's holdings in Okada; now, therefore,

     BE IT RESOLVED by the House of Representatives of the Twenty-fifth Legislature of the State of Hawaii, Regular Session of 2009, the Senate concurring, that the Legislative Reference Bureau is requested to conduct a study on how the phrase "incidental and supplemental" should be interpreted and applied in the bidding process; and
     BE IT FURTHER RESOLVED that the Legislative Reference Bureau determine the extent of work that can be performed by a specialty contractor when the specialty contractor is not licensed for that work, and consider the interests and protection of consumers in conducting the study; and

     BE IT FURTHER RESOLVED that the Legislative Reference Bureau is requested to report its findings and recommendations, including any proposed legislation, to the Legislature no later than 20 days prior to the convening of the Regular Session of 2010; and

     BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Director of the Legislative Reference Bureau and Chairperson of the Contractors License Board.

Report Title: 

Contractors; Incidental and Supplemental Work; Study