STAND. COM. REP. NO. 3470

Honolulu, Hawaii

RE: S.C.R. No. 178

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Sir:

Your Committees on Government Operations and Energy and Intergovernmental Affairs, to which was referred S.C.R. No. 178 entitled:

"SENATE CONCURRENT RESOLUTION URGING ALL STATE AND COUNTY AGENCIES INVOLVED IN CONSTRUCTION PROCUREMENT TO IMPLEMENT PROMPT PAYMENT TRANSPARENCY MEASURES AND EXPRESSING APPRECIATION TO THE PUBLIC WORKS DIVISION OF THE DEPARTMENT OF ACCOUNTING AND GENERAL SERVICES FOR ITS EFFORTS,"

beg leave to report as follows:

The purpose and intent of this measure is to:

(1) Urge all state and county agencies involved in construction procurement to implement prompt payment transparency measures; and

(2) Express appreciation to the Public Works Division of the Department of Accounting and General Services for its efforts in promoting prompt payment transparency.

Your Committees received testimony in support of this measure from Sheet Metal Contractors Association; Master Sheet Metal, Inc.; Plumbing and Mechanical Contractors Association of Hawaii; Subcontractors Association of Hawaii; Electrical Contractor's Association of Hawaiʻi, NECA Hawaiʻi Chapter; Tile Contractors Association of Hawaii; Hawaii Architectural Glass & Metals Association; Hawaiʻi Wall & Ceiling Industry Association; International Brotherhood of Electrical Workers, Local Union 1186, AFL-CIO; and Hawaii Electricians Market Enhancement Program.

Your Committees received comments on this measure from the Department of Accounting and General Services.

Your Committees find that prompt and timely payment in public construction projects is an essential management practice that promotes efficiency and fairness. Your Committees further find that while retainage, which is the withholding of a percentage of construction funds to ensure proper and timely completion of work, is a common practice, delays in releasing retainage and progress payments unduly harm the finances of contractors, including subjecting them to cash flow challenges that may affect their ability to meet payroll obligations, procure materials, and sustain ongoing operations to successfully complete their projects. The Legislature has taken action to improve payment practices and increase protection for contractors through the enactment of Act 291, Session Laws of Hawaii 2006, which instigated the establishment by the Public Works Division of the Department of Accounting and General Services of a contractor payment website providing transparency on job progress and the status of payments. By urging other procuring agencies to adopt similar mechanisms, this measure will improve efficiency, accountability, and fairness in construction procurement statewide.

As affirmed by the records of votes of the members of your Committees on Government Operations and Energy and Intergovernmental Affairs that are attached to this report, your Committees concur with the intent and purpose of S.C.R. No. 178 and recommend its adoption.

Respectfully submitted on behalf of the members of the Committees on Government Operations and Energy and Intergovernmental Affairs,

________________________________ GLENN WAKAI, Chair

________________________________ ANGUS L.K. MCKELVEY, Chair