H.B. NO.














relating to procurement.





SECTION 1. The legislature finds that governmental procurement contracts for the services of engineers, architects, surveyors, and landscape architects often require design professionals to indemnify and defend governmental entities when the design professional is not negligent or at fault.

The legislature further finds that such contract terms are detrimental to the State in the long term, and negatively affect procurement, project costs and quality, and innovation. Also, such contract terms are uninsurable through professional liability insurance required by governmental entities, limiting the recovery available to the government.

The legislature further finds that, while some state agencies recognize the negative implications and have removed these terms, inconsistency between agencies and departments slows the procurement process and creates a climate of unreasonable risk and uncertainty for Hawaii's design professionals.

The purpose of this Act is to prohibit indemnification clauses in governmental procurement contracts that are exclusively for the services of engineers, architects, surveyors, or landscape architects, unless the liability arises from the contractor's own negligence or fault.

SECTION 2. Chapter 103D-713, Hawaii Revised Statutes, is amended to read as follows:

"[[]103D-713[]]  Defense of a governmental body. (a) [No] On or after the effective date of this Act, no contract [of less than $1,000,000] that is entered into [on or after July 1, 2007,] by any governmental body, and is exclusively for services that may only lawfully be provided by a person licensed under chapter 464, may require the contractor to defend the governmental body, or its officers, employees, or agents, from any liability, damage, loss, or claim, action, or proceeding arising out of the contractor's performance under the contract.

(b) Subsection (a) notwithstanding, the contract may require the contractor providing the services to indemnify and hold harmless the governmental body and its officers, employees, and agents from and against any liability, damage, loss, cost, and expense, including reasonable attorneys' fees, and all claims, suits, and demands therefor arising out of or resulting from the negligent, reckless, intentional, or wrongful acts, errors, or omissions of the contractor, the contractor's employees, officers, agents, or subcontractors in the performance of the contract or the contractor's professional services, and the provisions may remain in full force and effect notwithstanding the expiration or early termination of the contract.

(c) No person licensed under chapter 464 that has agreed in any contract to defend a governmental body, including those contracts of less than $1,000,000 entered into before or after July 1, 2007, shall be required to defend the governmental body in a lawsuit filed more than ten years beyond the substantial completion of the project, except that this subsection shall not apply to any lawsuit that has been filed prior to July 1, 2007.

(d) As used in this section, "person" means any person, partnership, corporation, or other entity conducting business in the State.

(e) As used in this section, "governmental body" means this State and all agencies thereof, any public body corporate within this State and all agencies thereof, and any non-incorporated public body within this State of whatever nature and all agencies thereof. "Governmental body" includes but is not limited to cities, counties, school districts, authorities, universities and community colleges, and their employees and agents, including but not limited to other business entities retained by or contracting with the public entity to manage or administer the contract for the public entity."

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.






















Report Title:

Procurement Contracts; Liability



Prohibits governmental procurement contracts of any amount that are exclusively for the services of engineers, architects, surveyors, or landscape architects, from requiring the contractor to indemnify the governmental body against liability not arising from the contractor's own negligence or fault.




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