Out-of-State Corporation Bids Before Licensure
A Nevada corporation has installed commercial roofing for four years and wants to bid a $310,000 re-roof of a Honolulu condominium. It has no Hawaii office, no Hawaii entity registration, and no Hawaii general excise tax license. Its owner, who is also its only licensed roofing qualifier, passed a Nevada roofing exam but has never taken a Hawaii contractor exam. The company submitted a Hawaii contractor license application with experience letters, a $50,000 financial statement, and the required fees. It also submitted a bid two days later, assuming the application would be approved before the bid opening. The condominium association is prepared to award the contract if the company is licensed by the award date. The association's deadline for bids is next week, and the company has not yet obtained a tax clearance.
1. What must the corporation complete before it can be licensed as a Hawaii roofing contractor, and can it rely on the Nevada exam?
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The corporation must first register as a foreign entity with the DCCA Business Registration Division and obtain a Hawaii general excise tax license. It must file the contractor license application with verified experience, financial statements, and fees. The owner must pass the Hawaii contractor trade examination for the roofing classification and the Hawaii business law examination. Hawaii does not automatically accept a Nevada trade exam; reciprocity, if any, must be confirmed and is limited. The owner can serve as the RME only if he is a full-time employee or officer actively engaged in the business and licensed in Hawaii. The financial statement must meet the board's requirements. Only after the license is issued may the corporation bid or contract as a roofing contractor.
2. Was it lawful to submit the bid while the application was pending? Explain.
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No. A contractor must hold a valid Hawaii license before submitting a bid or entering a contract. An application pending at bid opening does not cure the defect. The bid may be rejected as nonresponsive, and if the corporation is awarded the contract and performs without a license, it is engaged in unlicensed contracting. That exposes it to board discipline, fines, and possible criminal penalties, and it may be unable to sue to collect the contract price. The association should verify the license status before award. The corporation should withdraw the bid unless it can show a license was issued before the bid deadline.
3. What classification should the license be, and what role must the owner play?
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The license should be in the specialty roofing classification, because the work is roofing rather than general building or general engineering. The owner may be named as the RME if he is a full-time employee/officer and passes the Hawaii exams. If the owner is not full-time, the corporation must hire a full-time licensed RME. The RME is responsible for the company's operations and must be licensed in the same classification. The corporation must also maintain its Hawaii entity registration and tax license.