Public Contracts

Prohibits contractors on a public contract who do not pay a
subcontractor within 3 days of job completion from bidding on
future public contracts for five years and fines $1,000. 

THE SENATE                              S.B. NO.           1005
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1      SECTION 1.  The legislature finds that too often contractors
 2 performing on government contracts fail to pay subcontractors on
 3 a timely basis.  Currently, there are no penalties for a
 4 contractor who does not disburse moneys in accordance with the
 5 terms of the subcontract.  The legislature further finds that
 6 prompt payment to contractors and subcontractors performing on a
 7 government contract stimulates economic growth. 
 8      The purpose of this Act is to shorten the time in which to
 9 pay a subcontractor and to add penalties to the existing law that
10 requires contractors to pay subcontractors on a timely basis.     
11      SECTION 2.  Section 103-10.5, Hawaii Revised Statutes, is
12 amended to read as follows:
13      "[[]103-10.5[]]  Prompt payment.  (a)  Any money, other
14 than retainage, paid to a contractor shall be dispersed to
15 subcontractors within [ten] three working days after receipt of
16 the money in accordance with the terms of the subcontract[,];
17 provided that the subcontractor has met all the terms and
18 conditions of the subcontract and there are no bona fide
19 disputes.  Upon final payment to the contractor, full payment to

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                                     S.B. NO.           1005

 1 the subcontractor, including retainage, shall be made within
 2 [ten] three working days after receipt of the money[,]; provided
 3 there are no bona fide disputes over the subcontractor's
 4 performance under the subcontract[.], pursuant to rules adopted
 5 by the comptroller.
 6      (b)  Failure of a contractor to pay a subcontractor in
 7 accordance with this section shall render the contractor
 8 ineligible to bid on future public contracts for five years and
 9 subject to a $1,000 fine; provided that a contractor that fails
10 to pay a subcontractor in accordance with this section may be
11 permitted to submit bids on public contracts by submitting and
12 complying with a subcontractor payment plan to be approved by the
13 comptroller prior to submitting a bid.  The comptroller shall
14 adopt rules pursuant to chapter 91 that may be necessary to
15 implement this section."
16      SECTION 3.  Statutory material to be repealed is bracketed.
17 New statutory material is underscored.
18      SECTION 4.  This Act shall take effect upon its approval.
20                           INTRODUCED BY:  _______________________