Despite federal law requiring out-of-state firms to pay local prevailing wages on construction work, they are outbidding their Hawaii counterparts on key projects, critics say.
Hawaii construction industry representatives and union officials called for legislation to level the playing field, as they put it, at a hearing by U.S. Reps. Patsy Mink and Neil Abercrombie in Honolulu yesterday.
"We estimate that more than 5,000 jobs on federal projects have been lost to mainland contractors and mainland labor over the last decade," said Walter Kupau, financial secretary for the Hawaii Carpenters Union. He said the loss translates into $277 million in wages, taxes and family spending.
Federal construction makes up roughly 10 percent of Hawaii's construction industry. Kupau said that of the 205 contracts of $1 million or more awarded since 1987, 121 have gone to local contractors. But mainland contractors have won roughly 75 percent of the contracts that exceed $10 million, he said.
A new state law allowing local contractors to bid up to 15 percent more than mainland firms does not apply to federal projects.
State Tax Director Ray Kamikawa said many firms are in and out of the state so quickly, they skirt local tax laws with no consequences.
Since 1989, when the state first began keeping track, $7.1 million in taxes have been assessed against out-of-state contractors but less than $1.4 million has been collected, Kamikawa said.
Last fall, Gov. Ben Cayetano formed a task force to examine the issue of out-of-state contractors' compliance with state law. The panel includes the four members of Hawaii's congressional delegation.
Lorraine Akiba, director of the state Department of Labor and Industrial Relations, suggested federal law be amended to prohibit payments to contractors until they show proof they are in compliance with all applicable state tax and employment laws.
Additional complaints were aired at the 31/2-hour hearing.
Glenn Nohara, president of the General Contractors Association of Hawaii, said the practice of "bundling" - awarding a single large contract for several smaller projects - puts local firms at a disadvantage to large mainland contractors.
Robert Griffin, director of contracts management for the Naval Facilities Engineering Command, said the Navy has moved toward combining projects to improve oversight but now may be moving in the opposite direction.
Mink said she will present the findings of the hearing to U.S. Rep. Ron Dellums, ranking Democrat on the House National Security Committee, who she said is interested in pursuing a nationwide investigation of military construction contracts.
"Hawaii is not unusual," she said. "Talking to some of my fellow members of Congress, they're all going through the same agony."