The U.S. Department of Housing and Urban Development backs Gov. Linda Lingle’s contention that two state laws designed to steer public works contracts to local construction companies are putting federally funded projects here in jeopardy, Lingle said yesterday.

One of the laws (Act 68, 2010) requires that 80 percent of workers hired for state construction projects be Hawaii residents. The other (Act 17, 2009) gives preference to companies with apprenticeship programs that are registered with the state.

The Lingle administration lobbied against both laws, and the governor eventually vetoed them, only to have lawmakers override the vetoes.

Lingle cited yesterday a Sept. 16 memo from the local HUD field office director that said the laws violate HUD procurement regulations. In light of the memo, Lingle said she will ask for rulings as to whether the laws violate procurement laws of other federal agencies.

"I encourage the Legislature to take immediate steps to repeal these two laws since they place federally funded projects in Hawaii in jeopardy and could even subject the state to fines and penalties for violating federal procurement rules," Lingle said in a news release.

However, lawmakers said they anticipated such a scenario and specifically wrote Act 68 so that it would not apply to projects receiving federal funding.

"When the bill was drafted and heard, that concern was raised, and we included language to exempt federally funded projects," said Laura Figueira (D, North Shore-Wahiawa). "We were aware of a potential conflict."

A so-called "saving clause" added by lawmakers reads, "This chapter shall not apply if the application of this chapter is in conflict with any federal law, or if the application of this chapter will disqualify any state or county agency from receiving federal funds or aid."

However, there was no such clause included in Act 17, which gives a competitive edge to bidders that have apprenticeship agreements registered with the state Labor Department. The law instructs state and county agencies to reduce the amount of those bids by 5 percent when choosing the lowest bid.

Acting Honolulu Mayor Kirk Caldwell said that no city and county projects would be affected by Act 68, the law requiring 80 percent local worker participation.

"I don’t think it affects the city and county. If you look at the act, there is a section for conflict with federal law," he said.

The chief planner for the Hawaii Public Housing Authority said he has requested guidance from the state Attorney General’s office on how to proceed.

"We haven’t heard from the governor’s office, telling us not to do anything," said the HPHA’s Alan Sarhan.

"The state procurement office also will have to figure out how to write procedures and provide guidance to state agencies regarding what they see is the applicability of state law."

A union official who pushed for passage of the bills characterized Lingle’s latest challenge as a last-ditch attempt to thwart the intent of the Legislature.

"For them to suddenly have this problem makes you wonder whether caution has turned to obstructionism, and we believe they’ve crossed that line," said Nathaniel Kinney, director of business development for District Council 50 of the International Union of Painters and Allied Trades.