Hawaii Administrative Rules › Title 3 - DEPARTMENT OF ACCOUNTING AND GENERAL SERVICES › State Procurement Office › Hawaii Public Procurement Code › Chapter 125 - MODIFICATIONS AND TERMINATIONS OF CONTRACTS › Section 3-125-23 - Prompt payment by contractors to subcontractors

Current through June, 2024
The following paragraph, or similar statement expressing
					 the same intent, shall be included in all contracts:
"Prompt Payment Clause
(1)
Generally
Any
				  money paid to a contractor shall be disbursed to subcontractors within ten days
				  after receipt of the money in accordance with the terms of the subcontract;
				  provided that the subcontractor has met all the terms and conditions of the
				  subcontract and there are no bona fide disputes on which the procurement agency
				  has withheld payment.
(2)
Final payment.
Upon final payment to the contractor,
				  full payment to the subcontractor, including retainage, shall be made within
				  ten days after receipt of the money; provided that there are no bona fide
				  disputes over the subcontractor' s performance under the subcontract.
(3)
Penalty.
The
				  procurement officer or the contractor, as applicable, will be subject to a
				  penalty of one and one-half per cent per month upon outstanding amounts due
				  that were not timely paid by the responsible party under the following
				  conditions. Where a subcontractor has provided evidence to the contractor of
				  satisfactorily completing all work under their subcontract and has provided a
				  properly documented final payment request as described in paragraph (4), and:
(A) Has provided to the contractor an
				  acceptable performance and payment bond for the project executed by a surety
				  company authorized to do business in the State, as provided in section
				  103-32.1,
				  HRS; or
(B) The following has
				  occurred:
(i) A period of ninety days after
				  the day on which the last of the labor was done or performed and the last of
				  the material was furnished or supplied has elapsed without written notice of a
				  claim given to contractor and the surety, as provided for in section
				  103D-324,
				  HRS; and
(ii) The subcontractor has
				  provided to the contractor, an acceptable release of retainage bond, executed
				  by a surety company authorized to do business in the State, in an amount of not
				  more than two times the amount being retained or withheld by the contractor;
				  any other bond acceptable to the contractor; or any other form of mutually
				  acceptable collateral, then, all sums retained or withheld from a subcontractor
				  and otherwise due to the subcontractor for satisfactory performance under the
				  subcontract shall be paid by the procurement officer to the contractor and
				  subsequently, upon receipt from the procurement officer, by the contractor to
				  the subcontractor within the applicable time periods specified in paragraph (2)
				  and section
				  103-10,
				  HRS. The penalty may be withheld from future payment due to the contractor, if
				  the contractor was the responsible party. If a contractor has violated
				  paragraph (2) three or more times within two years of the first violation, the
				  contractor shall be referred by the procurement officer to the contractors
				  license board for action under section
				  444-17(14),
				  HRS.