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HB808
HOUSE OF REPRESENTATIVES
H.B. NO.
808
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII
A BILL FOR AN ACT
relating
to the procurement code
.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
����
SECTION
1
.
�
Section
103D-324, Hawaii Revised Statutes, is amended to read as follows:
����
"
�103D-324
�
Contract performance [
and
]
,
payment bonds[
.
]
, and insurance.
�
(a)
�
Unless the policy board determines otherwise by rules, the following
bonds [
or
]
,
security
, and proof of insurance
shall be
delivered to the purchasing agency and shall become binding on the parties upon
the execution of the contract if the contract [
which is
] awarded exceeds
$25,000 and is for construction, or the purchasing agency secures the approval
of the chief procurement officer:
����
(1)
�
A [
performance
]
:
���������
(A)
�
Performance
bond in a form prescribed by the rules of the policy board, executed by a
surety company authorized to do business in this State or otherwise secured in
a manner satisfactory to the purchasing agency, in an amount equal to one
hundred per cent of the price specified in the contract;
���
[
(2)
�
A payment
]
���������
(B)
�
Payment
bond in a form prescribed by the rules of the policy board, executed by a
surety company authorized to do business in this State or otherwise secured in
a manner satisfactory to the purchasing agency, for the protection of all
persons supplying labor and material to the contractor for the performance of
the work provided for in the contract.
�
The bond shall be in an amount equal to one hundred per cent of the
price specified in the contract; or
���
[
(3)
�
A performance
]
���������
(C)
�
Performance
and payment bond [
which
]
that
satisfies all of the requirements
of [
paragraphs (1)
]
subparagraphs (A)
and [
(2).
]
(B);
and
����
(2)
�
Proof of
insurance that meets the requirements of the policy board, through a company
authorized to do business in this State, for at least half of the project's
construction costs to the State to provide funds for curing construction
defects discovered no later than ten years after the completion of the
contract; provided that insurance shall not be required to cover the costs of
repairs due solely to normal wear and tear.
����
(b)
�
The policy board may adopt rules that authorize the head of a purchasing
agency to reduce the amount of performance and payment bonds[
.
]
and
insurance required by subsection (a).
����
(c)
�
Nothing in this section shall be construed to limit the authority of the
chief procurement officer to require a performance bond or other security in
addition to those bonds,
or additional insurance,
or in circumstances
other than specified in subsection (a).
����
(d)
�
Every person who has furnished labor or material to the contractor for
the work provided in the contract, [
in respect of
]
for
which a
payment bond or a performance and payment bond is furnished under this section,
and who has not been paid amounts due [
therefor
] before the expiration
of a period of ninety days after the day on which the last of the labor was
done or performed or material was furnished or supplied, for which [
such a
]
the
claim is made, may institute an action for the amount, or balance thereof,
unpaid at the time of the institution of the action against the contractor and
its sureties, on the payment bond or the performance and payment bond, and have
their rights and claims adjudicated in the action, and judgment rendered
thereon; subject to the State's priority on the bonds.
�
If the full amount of the liability of the
sureties on the payment bond is insufficient to pay the full amount of the
claims, then, after paying the full amount due the State, the remainder shall
be distributed pro rata among the claimants.
����
As a condition precedent to any such
suit, written notice shall be given to contractor and surety, within ninety
days from the date on which the person did or performed the last labor or
furnished or supplied the last of the material for which claim is made, stating
with substantial accuracy the amount claimed and the name of the party to whom
the material was furnished or supplied or for whom the labor was done or
performed.
����
The written notice shall be served
by registered or certified mailing of the notice, to the contractor and surety,
at any place they maintain an office or conduct their business, or in any
manner authorized by law to serve summons.
����
(e)
�
If the State discovers a construction defect
no later than ten years after the completion of the contract, the State may
institute an action against the contractor for the costs of curing the construction
defect, have its rights and claims adjudicated in the action, and have judgment
rendered thereon.
����
[
(e)
]
(f)
�
Every suit instituted under subsection (d)
shall be brought in the circuit court of the circuit in which the project is
located, but no such suit shall be commenced after the expiration of one year
after the day on which the last of the labor was performed or material was
supplied for the work provided in the contract.
�
The obligee named in the bond need not be joined as a party in any such
suit.
����
(g)
�
Every suit instituted under subsection (e)
shall be brought in the circuit court of the circuit in which the project is
located; provided that the suit shall be commenced no later than ten years
after the date of contract completion.
����
(h)
�
The terms "labor" and "material" have the
same meanings in this section as the terms are used in section 507‑41."
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SECTION
2.
�
This Act does not affect rights and
duties that matured, penalties that were incurred, and proceedings that were
begun before its effective date.
����
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.
INTRODUCED BY:
_____________________________
Report Title:
Procurement
Code; Construction; Insurance; Construction Defects
Description:
Requires
public contractors to obtain insurance to cover at least half of a project's construction
costs to the State to provide funds for curing construction defects discovered
within ten years after the completion of the contract.
�
Authorizes the State to institute an action
against the contractor for the total costs of curing those defects.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.