To provide authorities to, and impose requirements on, the Secretary of Defense in order to facilitate State enforcement of State tax, employment, and licensing laws against Federal construction contractors.

Amends Federal defense procurement law to require a bidder or offeror, to be considered a responsible bidder or offeror for the construction of a public building, facility, or work, to submit a tax clearance (a document stating that such entity is in compliance with all State tax laws) from the State in which the contract is to be performed. Requires the head of a Federal agency to withhold the final payment under such a contract until the contractor submits both a tax clearance and a certification of compliance with all State laws concerning payments to employees under such contract.

Authorizes an agency head to: (1) withhold from any contractor payments amounts necessary to pay any State tax liability due under such contract; and (2) pay such amount directly to such State.

Directs the Secretary of Defense to require a contractor to be licensed if the State in which a construction contract is to be performed requires such a license.

Requires revision of the Federal Acquisition Regulation to explain the general excise tax law of Hawaii.