INTRODUCTION OF THE FAIRNESS TO LOCAL CONTRACTORS ACT
(Extensions of Remarks - December 09, 2003)

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[Extensions of Remarks]
[Page E2530]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         INTRODUCTION OF THE FAIRNESS TO LOCAL CONTRACTORS ACT

                                 ______
                                 

                              HON. ED CASE

                               of hawaii

                    in the house of representatives

                        Monday, December 8, 2003

  Mr. CASE. Mr. Speaker, I rise today to introduce legislation to 
ensure that out-of-state Federal contractors doing business in the 
various States fully comply with local State laws.
  For years, my home State of Hawaii has struggled to force out-of-
state Federal contractors to pay local taxes. This issue became so 
serious in the mid-1990s that the State of Hawaii sued out-of-state 
Federal contractors for failing to pay State taxes, penalties, and 
interest ranging from $191,000 to $324,000. Noncompliance with State 
laws has become such an acute problem that the Hawaii Department of 
Taxation has joined with other State departments and members of the 
Hawai `i congressional delegation to devise ways to make Federal 
contractors comply with State tax laws.
  The bill I introduce today will solve this problem by requiring the 
Federal government to withhold from any Federal contractor doing 
business in any State the amount necessary to pay the State tax 
liability due under its contract, with the amount withheld paid 
directly to the State where the work is performed. The bill would also 
direct the Federal government to require a contractor to be licensed in 
the State in which a construction contract is to be performed.
  Besides assuring prompt and full payment of State taxes, these 
requirements will also help ensure that out-of-state contractors follow 
the same set of rules and compete on equal footing for Federal 
contracts with local contractors. Ignoring State laws gives out-of-
state contractors an unfair and illegal advantage over local 
contractors, who routinely face much stricter scrutiny to comply with 
their local laws and much stricter penalties for failing to do so.
  This bill is modeled after legislation introduced by my predecessor, 
the late Congresswoman Patsy T. Mink, who understood that out-of-state 
contractors must fulfill their legal responsibilities wherever they 
conduct their business. By reintroducing an expanded and refined 
version of her earlier bill, I will continue her fight to help State 
governments police unethical contractors. I urge my colleagues to 
support this bill.

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