SCR162.DOC

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 term "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 term "incidental and supplemental" appears to contradict the Hawaii Supreme Court's holdings in Okada; now, therefore,

BE IT RESOLVED by the Senate of the Twenty-fifth Legislature of the State of Hawaii, Regular Session of 2009, the House of Representatives concurring, that the Department of Commerce and Consumer Affairs is requested to convene a task force for the purpose of determining how the term "incidental and supplemental" should be interpreted and applied in the bidding process; and

BE IT FURTHER RESOLVED that the Legislature requests that the task force consist of seven members designated as follows:

(1) Three members appointed by the Governor;

(2) Two members appointed by the President of the Senate; and

(3) Two members appointed by the Speaker of the House of Representatives; and

BE IT FURTHER RESOLVED that the members of the task force are requested to select a chairperson from among themselves; and

BE IT FURTHER RESOLVED that the Department of Commerce and Consumer Affairs is requested to report the findings and recommendations of the task force, including any proposed legislation, to the Legislature not later than twenty 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 Governor, the Director of Commerce and Consumer Affairs, the President of the Senate, the Speaker of the House of Representatives, and the Chairperson of the Contractors License Board.

	OFFERED BY:	_____________________________

Report Title:

Contractors; Incidental and Supplemental Work; Task Force

THE SENATE	S.C.R. NO.	162
TWENTY-FIFTH LEGISLATURE, 2009
STATE OF HAWAII