I

106TH CONGRESS

1ST SESSION H. R. 474

To provide authorities to, and impose requirements on, the Secretary of

Defense in order to facilitate State enforcement of State tax, employment, and licensing laws against Federal construction contractors.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 2, 1999

Mrs. MINK of Hawaii introduced the following bill; which was referred to the

Committee on Armed Services

A BILL

To provide authorities to, and impose requirements on, the

Secretary of Defense in order to facilitate State enforcement of State tax, employment, and licensing laws

against Federal construction contractors.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. ENHANCEMENT OF STATE ENFORCEMENT OF

4 STATE TAX, EMPLOYMENT, AND LICENSING

5 LAWS AGAINST DEFENSE CONSTRUCTION

6 CONTRACTORS.

7 (a) REQUIREMENT FOR STATE TAX CLEARANCE

8 FROM POTENTIAL CONSTRUCTION CONTRACTORS.—Sec-
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1 tion 2305(b) of title 10, United States Code, is amended

2 by adding at the end the following new paragraph:

3 ‘‘(10) In order to be considered a responsible bidder

4 or offeror for a contract for the construction of a public

5 building, facility, or work, a bidder or offeror shall submit

6 with the bid or offer a tax clearance from the State in

7 which the contract is to be performed. For purposes of

8 this paragraph, a tax clearance is a document from an

9 appropriate State agency indicating that the bidder or of10 feror is in compliance with all the tax laws of the State

11 in which the contract is to be performed.’’.

12 (b) REQUIREMENT TO WITHHOLD FINAL CONTRACT

13 PAYMENT UNTIL RECEIPT OF STATE TAX CLEARANCE

14 AND CERTIFICATION OF COMPLIANCE WITH EMPLOY15 MENT LAWS FROM CONTRACTOR.—Section 2307 of title

16 10, United States Code, is amended by adding at the end

17 the following new subsection:

18 ‘‘(j) REQUIREMENT TO WITHHOLD FINAL PAY19 MENT.—(1) The head of an agency shall withhold final

20 payment under a contract for the construction of a public

21 building, facility, or work until the contractor submits to

22 the agency both of the following:

23 ‘‘(A) A tax clearance from the State in which

24 the contract is or was performed.
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1 ‘‘(B) A certification stating that the contractor

2 is in compliance (or was in compliance during the

3 performance of the contract) with all applicable

4 State laws that require employers to make payments

5 to or for the benefit of employees, including laws re6 lating to unemployment insurance, workers com7 pensation, health insurance, and disability insurance.

8 ‘‘(2) For purposes of this subsection, a tax clearance

9 is a document from an appropriate State agency indicating

10 that the contractor is or was in compliance with all the

11 tax laws of the State in which the contract is or was per12 formed.’’.

13 (c) AUTHORITY TO WITHHOLD PAYMENT TO CON14 TRACTOR OF AMOUNTS NECESSARY TO MEET STATE TAX

15 OBLIGATIONS.—Section 2307 of such title is further

16 amended by adding at the end the following new sub17 section:

18 ‘‘(k) AUTHORITY TO WITHHOLD PAYMENT TO MEET

19 STATE TAX OBLIGATIONS.—The head of an agency may

20 withhold, from any payment due to a contractor under a

21 contract made by the agency for the construction of a pub22 lic building, facility, or work, an amount considered nec23 essary by the head of the agency to pay to the State in

24 which the contract is being performed the amount of the

25 contractor’s State tax liability that is attributable to the
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1 contract. The head of the agency that so withholds a pay2 ment may, upon request of the State in which the contract

3 is being performed and with such documentation as the

4 head of the agency considers necessary, pay such tax li5 ability amount directly to the State from the withheld pay6 ment. Any amount of a withheld payment that exceeds the

7 actual State tax liability amount shall be paid to the con8 tractor.’’.

9 (d) REQUIREMENT FOR CONSTRUCTION CONTRAC10 TORS TO OBTAIN APPLICABLE STATE LICENSES.—(1)

11 Chapter 141 of title 10, United States Code, is amended

12 by adding at the end the following new section:

13 ‘‘§ 2410n. Construction contracts: requirement to ob14 tain applicable State licenses

15 ‘‘The Secretary of Defense shall require, in any con16 tract entered into by the Secretary for the construction

17 of a public building, facility, or work which is to be per18 formed in a State that requires persons performing the

19 type of work to be performed under the contract to be

20 licensed, that the contractor be so licensed.’’.

21 (2) The table of sections at the beginning of such

22 chapter is amended by adding at the end the following

23 new item:

‘‘2410n. Construction contracts: requirement to obtain applicable State licenses.’’.
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1 (e) REQUIREMENT TO EXPLAIN HAWAII EXCISE TAX

2 IN FEDERAL ACQUISITION REGULATION.—The Federal

3 Acquisition Regulation shall be revised to contain provi4 sions explaining the general excise tax law of the State

5 of Hawaii.

6 (f) EFFECTIVE DATE.—The amendments made by

7 this Act shall apply with respect to contracts entered into

8 after the date of the enactment of this Act.

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