Construction Prompt Payment Requirement

Starting July 1, 2007: New Procedures to enable prompt payment to general contractors, subcontractors, and material suppliers.

Act 291, SLH 2006, the Prompt Payment Act, went into effect July 1 , 2007 for contracts that are executed on or after July 1, 2007. The act enables prompt payment for government work of general contractors, subcontractors, and material suppliers. It achieves a reasonable balance between incentive for prompt payment and protecting the interests of general contractors, subcontractors, material suppliers, and government agencies. All government agencies are responsible for implementation.


  1. Provides for prompt payment by the government procurement officer to the general
    contractor and by the general contractor to the subcontractor for work satisfactorily
    completed under the subcontract.
  2. Clarifies requirements for bonding, documentation, and conditions that must be fulfilled by the subcontractor to receive prompt payment.
  3. Specifies penalties that shall be imposed on the government agency or general
    contractor for failing to pay in accordance with the requirements of the section.
  4. Enables payment of subcontractors including retainage when their work is done even if it is long before the total project is completed.
  5. Allows for a “release of retainage bond” and adoption of Federal Prompt Payment Act documentation requirements for payments.



  1. Requires that any retainage provided for in HRS section 103-32.1, be held by the
    government procurement officer. This provides assurance that general contractors cannot withhold payment for their use at the expense of the subcontractor.
  2. Protects the right of the contractors and subcontractors to negotiate other conditions in their subcontracts.
  3. Adopts documentation requirements from the Federal Prompt Payment Act.



  1. Provides for prompt payment for change orders.
  2. Provides for a force account method of cost determination when the government and general contractor cannot agree on change order costs