REPORT TITLE:
Public contracts; payment


DESCRIPTION:
Establishes penalties for failure of a contractor to pay a
subcontractor promptly.  Prohibits the State from procuring with
unlicensed privately-operated group living facilities. (SD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 2
TWENTIETH LEGISLATURE, 1999                                S.D. 1
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO PUBLIC CONTRACTS.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1                              PART I.
 
 2      SECTION 1.  Section 103-10.5, Hawaii Revised Statutes, is
 
 3 amended to read as follows:
 
 4      "[[]§103-10.5[]]  Prompt payment.  (a)  Any money, other
 
 5 than retainage, paid to a contractor shall be dispersed to
 
 6 subcontractors within ten days after receipt of the money in
 
 7 accordance with the terms of the subcontract[,]; provided that
 
 8 the subcontractor has met all the terms and conditions of the
 
 9 subcontract and there are no bona fide disputes.
 
10      Upon final payment to the contractor, full payment to the
 
11 subcontractor, including retainage, shall be made within ten days
 
12 after receipt of the money[,]; provided there are no bona fide
 
13 disputes over the subcontractor's performance under the
 
14 subcontract.
 
15      (b)  Failure of a contractor to pay a subcontractor in
 
16 accordance with this section shall result in a violation.  Each
 
17 nonpayment to a subcontractor shall constitute a separate
 
18 violation.
 
19      (c)  The failure of a contractor to comply with this section
 

 
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 1 shall render the contractor subject to a:
 
 2      (1)  $1,000 fine or ten per cent of the contract value,
 
 3           whichever is greater, for the first offense;
 
 4      (2)  $5,000 fine or ten per cent of the contract value,
 
 5           whichever is greater, for the second offense; and
 
 6      (3)  $10,000 or ten per cent of the contract value,
 
 7           whichever is greater, and suspension for bidding on
 
 8           public contracts for three years for the third offense.
 
 9 If a contractor fails to be in accordance with this section the
 
10 contractor may be permitted to submit bids on public contracts by
 
11 submitting and complying with a subcontractor payment plan to be
 
12 approved by the comptroller prior to submitting a bid; provided
 
13 there are no bona fide disputes over the subcontractor's
 
14 performance under the subcontract.
 
15      (d)  The comptroller shall adopt rules pursuant to
 
16 chapter 91 as may be necessary to implement this section."
 
17                             PART II.
 
18      SECTION 2.  Many group living facilities are currently
 
19 receiving funds as a result of contracts with the State under
 
20 chapter 103F, Hawaii Revised Statutes.  Unfortunately, some of
 
21 these group living facilities are not licensed by the Department
 
22 of Health.  Licensed group living facilities ensure services
 
23 provided to the public are safe for all residents and the
 

 
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                                     H.B. NO.           H.D. 2
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 1 surrounding communities.  Therefore, the legislature believes
 
 2 that the State should only procure with group living facilities
 
 3 that are licensed by the State.
 
 4      SECTION 3.  Chapter 103F, Hawaii Revised Statutes, is
 
 5 amended by adding a new section to part IV to be appropriately
 
 6 designated and to read as follows:
 
 7      "§103F    Procurement for group living facilities.  (a)  The
 
 8 State shall procure, pursuant to this chapter, only with state
 
 9 licensed group living facilities, including, but not limited to
 
10 facilities for domestic abuse, alcohol abuse, and halfway houses.
 
11      (b)  As used in this section, "state licensed group living
 
12 facilities" means a group living facility licensed by the State
 
13 to provide twenty-four hour living accommodations and
 
14 rehabilitation health and human services to adults unrelated to
 
15 the family."
 
16      SECTION 4.  Statutory material to be repealed is bracketed.
 
17 New statutory material is underscored.
 
18      SECTION 5.  This Act shall take effect upon its approval;
 
19 provided that Part I shall apply to all contracts executed after
 
20 July 1, 1999.