SB2600

SECTION 1. The legislature finds that the delivery and award of public works construction projects can be hindered by bid challenges resulting in a lapse of funding and other procurement issues. The legislature further finds that the execution and completion of public works projects are often delayed due to bid protests by non-lowest bidders challenging technical mistakes in the lowest bidder's proposal. As a result of bid protests, projects are delayed, funding lapses, and awards to non-low bidders increase final project costs.

Specifically, section 103D-302, Hawaii Revised Statutes, requires that all subcontractors or joint contractors to be used on a public works project, along with their scope of work, be listed on the bid proposal submitted to any state or county agency subject to the procurement code. The legislature further finds that many recent bid protests have been based on subcontractor listing and licensing issues, including where a bidder has failed to list a required subcontractor or when a listed subcontractor, unbeknownst to the general contractor, did not possess the appropriate license and was not qualified to perform the work.

The legislature further finds that time constraints between the time a bidder receives all subcontractor bids and the bid submission deadline can cause inadvertent failure to list a required subcontractor or listing of an improperly licensed subcontractor in a bid, resulting in a bid protest. Often, inadvertent errors occur due to the complexity of the laws regarding contractor licenses under chapter 444, Hawaii Revised Statutes; title 16, Hawaii Administrative Rules; and judicial, quasi-judicial, and agency interpretations of these laws and rules. The contractors license board currently recognizes over one hundred different specialty contractor licenses that a prime bidder must sort through to determine the appropriate subcontractor specialty to be listed on a bid. Hence, bidders and subcontractors sometimes misunderstand the licensing requirements.

In comparison, the federal government does not require the listing of subcontractors on any bid proposal. In fact, the federal government does not require a general contractor's license to bid on or perform construction work, nor do over twenty states. The legislature further recognizes that the 2000 American Bar Association's Model Procurement Code, the model for Hawaii's procurement code, does not include such a subcontractor listing requirement.

Therefore, the legislature finds that it is necessary to clarify the State's procurement code to reduce the number of subcontractors that must be listed in a bid proposal, thereby reducing the number of opportunities to challenge bids on the basis of subcontractor listing errors. However, the legislature also finds that clarifying the State's procurement code should not in any way change the statutory requirement to use licensed subcontractors under chapter 444, Hawaii Revised Statutes.

Accordingly, the purpose of this Act is to:

(1) Require the listing of all joint contractors and subcontractors for construction contracts subject to the procurement code where the estimated contract value is more than $5,000,000; and

(2) Require the listing of the joint contractors and subcontractors representing what are known as the five sacred trades, electrical, plumbing, asbestos, elevators, and boilermaker, for construction contracts subject to the procurement code where the estimated contract value is less than $5,000,000.

SECTION 2. Section 103D-302, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) An invitation for bids shall be issued, and shall include a purchase description and all contractual terms and conditions applicable to the procurement. If the invitation for bids is for construction[,] with a total estimated contract value of $5,000,000 or higher, it shall specify that all bids include the name of each person or firm to be engaged by the bidder as a joint contractor or subcontractor in the performance of the contract and the nature and scope of the work to be performed by each. If the invitation for bids is for construction with a total estimated contract value of less than $5,000,000, it shall specify that all bids include the name of each person or firm to be engaged by the bidder as a joint contractor or subcontractor in the performance of the contract and the nature and scope of the work if the joint contractor or subcontractor work involves any of the following trades: electrical, plumbing, asbestos, elevators, or boilermaker. Construction bids that do not comply with this requirement may be accepted if acceptance is in the best interest of the State and the value of the work to be performed by the joint contractor or subcontractor is equal to or less than one per cent of the total bid amount."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	2600
TWENTY-NINTH LEGISLATURE, 2018
STATE OF HAWAII