STAND. COM. REP. NO.  191

Honolulu, Hawaii

                , 2009

RE:   H.B. No. 1280

      H.D. 1

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Fifth State Legislature

Regular Session of 2009

State of Hawaii

Sir:

     Your Committee on Labor & Public Employment, to which was referred H.B. No. 1280 entitled:

"A BILL FOR AN ACT RELATING TO PROCUREMENT,"

begs leave to report as follows:

     The purpose of this bill is to ensure fairness in awarding public contracts and improve the public procurement process while working to improve Hawaii's economy by:

(1)  Requiring a thorough examination of a prospective contractor's record of compliance with the state labor laws, including proof of this compliance, prior to the contractor being awarded a construction contract;

(2)  Requiring a contractor or subcontractor to:

(A)  Be appropriately licensed;

(B)  Maintain and participate in a bona fide apprenticeship training program approved by the Department of Labor and Industrial Relations;

(C)  Comply with Hawaii's labor laws, including prevailing wage laws and workers' compensation insurance requirements;

(D)  Commit to hiring Hawaii residents to compose not less than 80 percent of the workforce on the project, with certain exceptions; and

(E)  Provide a fair and neutral process for resolving work-related issues to its employees;

(3)  Establishing requirements for compliance duration; and

(4)  Establishing penalties for non-compliance.

     The Ironworkers Stabilization Fund Local 625; International Brotherhood of Electrical Workers; International Brotherhood of Electrical Workers Local Union 1186; Laborers' International Union of North America Local 368; ILWU Local 142; Hawaii Building and Construction Trades Council, AFL-CIO; International Union of Elevator Constructors Local 126; and Hawaii State AFL-CIO testified in support of this bill.  The Department of Accounting and General Services, General Contractors Association of Hawaii, Building Industry Association of Hawaii, Metzler Contracting Company, LLC, Associated Builders and Contractors of Hawaii, Mokulua Woodworking, Ltd., and a concerned individual testified in opposition to this measure.

     The economic downturn currently being faced across the nation, including in Hawaii, has resulted in both state and federal governments looking to public works projects as a near term means of stimulating the economy.  Hawaii is expected to receive its fair share of economic revitalization monies from the federal government for various construction projects and the state is already looking at fast-tracking a number of construction projects to jump-start the economy.  With the expected increase in construction bid projects, contractors with no history of working in Hawaii may seek to bid for these projects.  Some of these contractors may be unscrupulous and may have less than stellar records with regard to compliance with labor laws.  These businesses should receive greater scrutiny from the State before being awarded public works contracts.

     Your Committee has amended this bill by:

     (1)  Specifying that contractors or subcontractors that satisfy the requirement to commit to hiring Hawaii residents to comprise not less than 80 percent of the workforce on the project shall be entitled to a five percent adjustment in their bid amount;

     (2)  Clarifying that the fair and neutral process for resolving work-related issues shall not include processes that require an employee to waive any remedies or rights currently afforded by statute; and

     (3)  Making technical, nonsubstantive amendments for clarity, consistency, and style.

     As affirmed by the record of votes of the members of your Committee on Labor & Public Employment that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1280, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1280, H.D. 1, and be referred to the Committee on Economic Revitalization, Business, & Military Affairs.

Respectfully submitted on behalf of the members of the Committee on Labor & Public Employment,

____________________________

KARL RHOADS, Chair