Construction Industry

Clarifies the definition of "contractor" in chapter 444, HRS.
Defines "state resident" to be used by federal contracting
officers in enforcing employment preferences for state residents
that are provided in federal law.  (HB139 CD1)

HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 1999                                S.D. 2
STATE OF HAWAII                                            C.D. 1

                   A  BILL  FOR  AN  ACT



 1                              PART I
 2      SECTION 1.  (a)  Beginning with section 8078 of the United
 3 States Defense Appropriations Act of 1986, all subsequent Defense
 4 Appropriations Acts require the contractor on a military
 5 construction or services project to employ Hawaii residents when
 6 Hawaii's unemployment rate exceeds the national average.  The
 7 unemployment rate in Hawaii has been above the national average
 8 since 1994, but the federal law has not been strictly enforced.
 9 Many defense construction and service contracts have been awarded
10 to out-of-state contractors that hire individuals that move to
11 Hawaii just to work on these particular federal contracts.  This
12 apparently is within the scope of the law, though clearly not the
13 intent of section 8078.  One reason given for the failure to
14 strictly enforce the requirement to employ Hawaii residents is
15 that the term "state resident" is not defined in section 8078, in
16 its related provisions, or in the Federal Acquisition
17 Regulations.
18      The purpose of this part is to establish a definition of
19 "state resident" that will provide a clear, objective, measurable

Page 2                                                     139
                                     H.B. NO.           H.D. 1
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                                                        C.D. 1

 1 standard that can be easily followed, copied, and enforced by
 2 federal contracting officers in enforcing the preference
 3 provisions in federal law.  A clear definition of "state
 4 resident" will help keep profits and wages from military
 5 construction projects in the State.
 6      (b)  For purposes of the employment preference provided in
 7 federal law in favor of state residents, "state resident" means
 8 an individual who:
 9      (1)  Resides in the State at least two hundred days of the
10           year;
11      (2)  Has filed a Hawaii resident income tax return in the
12           taxable year immediately preceding a bid for a federal
13           contract by the individual's employer or business that
14           is a state contractor and has paid all amounts owing on
15           that tax return; provided that an individual who was a
16           state resident, left the State to attend school or
17           serve in the armed forces of the United States of
18           America, and returned to the State to work for a state
19           contractor is a state resident, even though the
20           individual has not yet resided in the State for at
21           least two hundred days or filed a Hawaii resident
22           income tax return or paid all amounts owing on that tax
23           return; and

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

 1      (3)  In the case of a business entity:
 2           (A)  Is licensed as a contractor pursuant to
 3                chapter 444;
 4           (B)  Is licensed to conduct business in this State
 5                pursuant to section 237-9;
 6           (C)  Submits a bid under the name appearing on the
 7                person's current contracting or business license;
 8           (D)  Is a domestic corporation, partnership, or
 9                business organized or formed under the laws of the
10                State;
11           (E)  Has maintained its principal place of business
12                within the State for at least two-hundred
13                consecutive days prior to the submission of a bid;
14           (F)  Has filed a Hawaii resident income tax and all
15                other applicable tax returns for the preceding tax
16                year and has paid all amounts owing on those tax
17                returns;
18           (G)  Has complied with all applicable Hawaii
19                employment, insurance, and worker's compensation
20                laws;
21           (H)  If an employer with one or more employees, eighty-
22                five per cent of its employees are state
23                residents; and

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                                     H.B. NO.           H.D. 1
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                                                        C.D. 1

 1           (I)  If a joint venture, is composed of entities that a
 2                majority of which qualify under paragraphs (A) to
 3                (H) and eighty-five per cent of all the employees
 4                of the joint venture are state residents.
 5                              PART II
 6      SECTION 2.  The purpose of this part is to clarify that the
 7 definition of contractors in chapter 444, Hawaii Revised
 8 Statutes, includes all contractors working in the State directly
 9 or indirectly for the federal government to the extent allowed
10 under federal law.  Therefore, those contractors, including
11 out-of-state contractors, are subject to the licensing and other
12 provisions of chapter 444, Hawaii Revised Statutes.
13      SECTION 3.  Section 444-1, Hawaii Revised Statutes, is
14 amended by amending the definition of "contractor" to read as
15 follows:
16      ""Contractor" means any person who by oneself or through
17 others offers to undertake, or holds oneself out as being able to
18 undertake, or does undertake to alter, add to, subtract from,
19 improve, enhance, or beautify any realty or construct, alter,
20 repair, add to, subtract from, improve, move, wreck, or demolish
21 any building, highway, road, railroad, excavation, or other
22 structure, project, development, or improvement, or do any part

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                                     H.B. NO.           H.D. 1
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 1 thereof, including the erection of scaffolding or other
 2 structures or works in connection therewith.
 3      "Contractor", to the extent allowed under federal law
 4 includes a subcontractor, a specialty contractor, and any person,
 5 general engineering, general building, or specialty contractor
 6 who performs any of the activities listed in the previous
 7 paragraph directly or indirectly for the federal government."
 8                             PART III
 9      SECTION 4.  If any provision of this Act, or the application
10 thereof to any person or circumstance is held invalid, the
11 invalidity does not affect other provisions of applications of
12 the Act, which can be given effect without the invalid provision
13 or application, and to this end the provisions of this Act are
14 severable.
15      SECTION 5.  This Act does not affect rights and duties that
16 matured, penalties that were incurred, and proceedings that were
17 begun, before its effective date.
18      SECTION 6.  Statutory material to be repealed is bracketed.
19 New statutory material is underscored.
20      SECTION 7.  This Act shall take effect on July 1, 2000.