SB 131: RELATING TO PROCUREMENT.

A BILL FOR AN ACT

RELATING TO PROCUREMENT.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  Chapter 103D, Hawaii Revised Statutes, is amended by adding a new section to part VII to be appropriately designated and to read as follows:

     "§103D-     Penalties for non-performance or major delay.  (a)  Notwithstanding section 103D-501(c) or any other provision of this chapter to the contrary, the policy board shall adopt rules requiring each contract to include clauses that:

     (1)  Provide for the imposition of mandatory fines on the contractor, termination of the contract for default, or both, if:

          (A)  The contractor fails to perform the contractor's duties under the contract; or

          (B)  There is a major delay in the delivery of a deliverable as provided in paragraph (2)(C);

     (2)  For the purpose of paragraph (1)(B), establish:

          (A)  A list of specific deliverables;

          (B)  The dates those deliverables are due; and

          (C)  What would constitute a major delay under which a mandatory fine or contract termination would result under paragraph (1); and

     (3)  Create a schedule of mandatory fines to be imposed pursuant to paragraph (1), and specify the circumstances when these fines, rather than liquidated damages as provided under section 103D-501, would apply.

     (b)  The mandatory fine amounts shall be set by the policy board by rule.  The policy board may establish different ranges of mandatory fine amounts for different ranges of contract values.

     (c)  All fines collected under this section shall be deposited into the general fund.

     (d)  The contract clauses required by this section shall not apply to:

     (1)  Delays or nonperformance under section 103D-501(c)(2);

     (2)  Contracts under section 103D-305 or 103D-307; or

     (3)  Other circumstances or types of contracts as provided by the policy board by rule; provided that the policy board determines that the exemption is in the best interest of the State.

     (e)  The penalties described in this section shall be in addition to any other penalties authorized by a contract, other provisions of this chapter, or any other law."

     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.  New statutory material is underscored.

     SECTION 4.  This Act shall take effect on January 1, 2026.

Report Title:

Procurement; Procurement Policy Board; Penalties for Non‑Performance or Major Delay

Description:

Requires the Procurement Policy Board to adopt rules requiring contracts to impose mandatory fines or provide for termination of a contract for default if a contractor fails to perform the contractor's duties or if there is a major delay in a deliverable.  Requires each contract to establish a schedule of deliverables and to specify what constitutes a "major delay".

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.