REPORT TITLE:
Public Contracts; Payment


DESCRIPTION:
Requires the comptroller to adopt administrative rules as may be
necessary to implement the law relating to the prompt payment of
public contracts.  Specifies that the administrative rules
include a system of graduated penalties for violations.
Establishes penalties for failure of a contractor to pay a
subcontractor promptly.  Requires State contracts for the
procurement of services for group living facilities to contain
operational standards to be monitored by the contracting agency
and allows for an informational public hearing pursuant to
chapter 91 with the community in which the group living facility
is located.  (CD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        122
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 2
TWENTIETH LEGISLATURE, 1999                                S.D. 1
STATE OF HAWAII                                            C.D. 1
                                                        
                                                             
________________________________________________________________
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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 that there are no bona
 
13 fide 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)  Prior to the convening of the regular session of 2000,
 
20 the comptroller shall adopt rules pursuant to chapter 91 as may
 

 
Page 2                                                     122
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        C.D. 1
                                                        

 1 be necessary to implement this section.  The rules shall include
 
 2 a system of graduated penalties for succeeding violations,
 
 3 including monetary fines, payment of interest to the
 
 4 subcontractor, and debarment for noncomplying contractors."
 
 5                              PART II
 
 6      SECTION 2.  Many group living facilities are currently
 
 7 receiving funds as a result of contracts with the State under
 
 8 chapter 103F, Hawaii Revised Statutes.  Unfortunately,
 
 9 communities in which some of these group living facilities are
 
10 located are not allowed to voice their concerns with the
 
11 contracting agency  prior to a public contract being awarded.
 
12 Public hearings help ensure services provided to the public are
 
13 safe for all residents and the surrounding communities.  The
 
14 legislature finds that priority should be given to group living
 
15 facilities who hold a public hearing regarding those facilities.
 
16 Additionally, requiring group living facilities to adhere to
 
17 operational standards ensure services provided to the public are
 
18 safe for all residents and the surrounding communities.
 
19 Therefore, the legislature believes that the State should only
 
20 contract with group living facilities after a public hearing is
 
21 held pursuant to chapter 91, Hawaii Revised Statutes, and require
 
22 the public contracts for the procurement of such services to
 
23 contain operational standards to be monitored by the contracting
 

 
Page 3                                                     122
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        C.D. 1
                                                        

 1 agency.
 
 2      SECTION 3.  Chapter 103F, Hawaii Revised Statutes, is
 
 3 amended by adding a new section to part IV to be appropriately
 
 4 designated and to read as follows:
 
 5      "103F-      Procurement for group living facilities.  (a)
 
 6 Prior to the procurement of services for group living facilities,
 
 7 the State may hold a public informational hearing pursuant to
 
 8 chapter 91 with the community in which the group living facility
 
 9 is located.  Public contracts for the procurement of services for
 
10 group living facilities shall contain operational standards to be
 
11 monitored by the contracting agency.
 
12      (b)  As used in this section, "group living facilities"
 
13 means a facility that provides twenty-four-hour living
 
14 accommodations to adults unrelated to the family."
 
15                             PART III
 
16      SECTION 4.  If any provision of this Act, or the application
 
17 thereof to any person or circumstance is held invalid, the
 
18 invalidity does not affect other provisions or applications of
 
19 the Act which can be given effect without the invalid provision
 
20 or application, and to this end the provisions of this Act are
 
21 severable.
 
22      SECTION 5.  Statutory material to be repealed is bracketed.
 
23 New statutory material is underscored.
 

 
Page 4                                                     122
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        C.D. 1
                                                        

 1      SECTION 6.  This Act shall take effect upon its approval;
 
 2 provided that:
 
 3      (1)  Part I shall apply to all contracts executed after
 
 4           July 1, 1999; and
 
 5      (2)  Part II shall take effect on January 1, 2000.