SB 5418 — Concerning local government procurement modernization and efficiency.

RCW 35.23.352 and 2018 c 74 s 2 are each amended to read as follows:(1) Any second-class city or any town may construct any public works, as defined in RCW 39.04.010, by contract or day labor without calling for bids therefor whenever the estimated cost of the work or improvement, including cost of materials, supplies and equipment will not exceed the sum of ((sixty-five thousand))one hundred sixteen thousand one hundred fifty-five dollars if more than one craft or trade is involved with the public works, or ((forty thousand))seventy-five thousand five hundred dollars if a single craft or trade is involved with the public works or the public works project is street signalization or street lighting.

A public works project means a complete project.

The restrictions in this subsection do not permit the division of the project into units of work or classes of work to avoid the restriction on work that may be performed by day labor on a single project.Whenever the cost of the public work or improvement, including materials, supplies and equipment, will exceed these figures, the same shall be done by contract.

All such contracts shall be let at public bidding upon publication of notice calling for sealed bids upon the work.

The notice shall be published in the official newspaper, or a newspaper of general circulation most likely to bring responsive bids, at least thirteen days prior to the last date upon which bids will be received.

The notice shall generally state the nature of the work to be done that plans and specifications therefor shall then be on file in the city or town hall for public inspections, and require that bids be sealed and filed with the council or commission within the time specified therein.

Each bid shall be accompanied by a bid proposal deposit in the form of a cashier's check, postal money order, or surety bond to the council or commission for a sum of not less than five percent of the amount of the bid, and no bid shall be considered unless accompanied by such bid proposal deposit.

The council or commission of the city or town shall let the contract to the lowest responsible bidder or shall have power by resolution to reject any or all bids and to make further calls for bids in the same manner as the original call.When the contract is let then all bid proposal deposits shall be returned to the bidders except that of the successful bidder which shall be retained until a contract is entered into and a bond to perform the work furnished, with surety satisfactory to the council or commission, in accordance with RCW 39.08.030.

If the bidder fails to enter into the contract in accordance with his or her bid and furnish a bond within ten days from the date at which he or she is notified that he or she is the successful bidder, the check or postal money order and the amount thereof shall be forfeited to the council or commission or the council or commission shall recover the amount of the surety bond.

A low bidder who claims error and fails to enter into a contract is prohibited from bidding on the same project if a second or subsequent call for bids is made for the project.If no bid is received on the first call the council or commission may readvertise and make a second call, or may enter into a contract without any further call or may purchase the supplies, material or equipment and perform the work or improvement by day labor.(2) Until July 28, 2022, for the purposes of this section, "lowest responsible bidder" means a bid that meets the criteria under RCW 39.04.350;

and has the lowest bid, or has a bid that is within five percent of the lowest bid and meets the following supplemental criteria:(a) The bidder has delivered at least one project of similar size and scope within the last five years for the city on time, within budget, and according to required specifications;

and(b) The bidder has not delivered a project to the city within the last five years that was late, over budget, or did not meet specifications.(3) The allocation of public works projects to be performed by city or town employees shall not be subject to a collective bargaining agreement.(((3)))(4) In lieu of the procedures of subsection (1) of this section, a second-class city or a town may let contracts using the small works roster process provided in RCW 39.04.155.Whenever possible, the city or town shall invite at least one proposal from a minority or woman contractor who shall otherwise qualify under this section.(((4)))(5) The form required by RCW 43.09.205 shall be to account and record costs of public works in excess of five thousand dollars that are not let by contract.(((5)))(6) The cost of a separate public works project shall be the costs of the materials, equipment, supplies, and labor on that construction project.(((6)))(7) Any purchase of supplies, material, or equipment, except for public work or improvement, where the cost thereof exceeds seven thousand five hundred dollars shall be made upon call for bids.(((7)))(8) Bids shall be called annually and at a time and in the manner prescribed by ordinance for the publication in a newspaper of general circulation in the city or town of all notices or newspaper publications required by law.

The contract shall be awarded to the lowest responsible bidder.(((8)))(9) For advertisement and formal sealed bidding to be dispensed with as to purchases with an estimated value of fifteen thousand dollars or less, the council or commission must authorize by resolution, use of the uniform procedure provided in RCW 39.04.190.(((9)))(10) The city or town legislative authority may waive the competitive bidding requirements of this section pursuant to RCW 39.04.280 if an exemption contained within that section applies to the purchase or public work.(((10)))(11) This section does not apply to performance-based contracts, as defined in RCW 39.35A.020(4), that are negotiated under chapter 39.35A RCW.(((11)))(12) Nothing in this section shall prohibit any second class city or any town from allowing for preferential purchase of products made from recycled materials or products that may be recycled or reused.(((12)))(13)(a) Any second-class city or any town may procure public works with a unit priced contract under this section for the purpose of completing anticipated types of work based on hourly rates or unit pricing for one or more categories of work or trades.(b) For the purposes of this section, "unit priced contract" means a competitively bid contract in which public works are anticipated on a recurring basis to meet the business or operational needs of the city or town, under which the contractor agrees to a fixed period indefinite quantity delivery of work, at a defined unit price for each category of work.(c) Unit priced contracts must be executed for an initial contract term not to exceed three years, with the city or town having the option of extending or renewing the unit priced contract for one additional year.(d) Invitations for unit price bids shall include, for purposes of the bid evaluation, estimated quantities of the anticipated types of work or trades, and specify how the city or town will issue or release work assignments, work orders, or task authorizations pursuant to a unit priced contract for projects, tasks, or other work based on the hourly rates or unit prices bid by the contractor.

Contracts must be awarded to the lowest responsible bidder as per RCW 39.04.010.

Whenever possible, the city or town must invite at least one proposal from a minority or woman contractor who otherwise qualifies under this section.(e) Unit price contractors shall pay prevailing wages for all work that would otherwise be subject to the requirements of chapter 39.12 RCW.

Prevailing wages for all work performed pursuant to each work order must be the prevailing wage rates in effect at the beginning date for each contract year.

Unit priced contracts must have prevailing wage rates updated annually.

Intents and affidavits for prevailing wages paid must be submitted annually for all work completed within the previous twelve-month period of the unit priced contract.Sec.

6.

RCW 35.22.620 and 2018 c 74 s 1 are each amended to read as follows:(1) As used in this section, the term "public works" means as defined in RCW 39.04.010.(2) A first-class city may have public works performed by contract pursuant to public notice and call for competitive bids.

As limited by subsection (3) of this section, a first-class city may have public works performed by city employees in any annual or biennial budget period equal to a dollar value not exceeding ten percent of the public works construction budget, including any amount in a supplemental public works construction budget, over the budget period.

The amount of public works that a first-class city has a county perform for it under RCW 35.77.020 shall be included within this ten percent limitation.If a first-class city has public works performed by public employees in any budget period that are in excess of this ten percent limitation, the amount in excess of the permitted amount shall be reduced from the otherwise permitted amount of public works that may be performed by public employees for that city in its next budget period.

Twenty percent of the motor vehicle fuel tax distributions to that city shall be withheld if two years after the year in which the excess amount of work occurred, the city has failed to so reduce the amount of public works that it has performed by public employees.

The amount so withheld shall be distributed to the city when it has demonstrated in its reports to the state auditor that the amount of public works it has performed by public employees has been so reduced.Whenever a first-class city has had public works performed in any budget period up to the maximum permitted amount for that budget period, all remaining public works within that budget period shall be done by contract pursuant to public notice and call for competitive bids.The state auditor shall report to the state treasurer any first-class city that exceeds this amount and the extent to which the city has or has not reduced the amount of public works it has performed by public employees in subsequent years.(3) In addition to the percentage limitation provided in subsection (2) of this section, a first-class city shall not have public employees perform a public works project in excess of ((ninety))one hundred sixteen thousand one hundred fifty-five thousand dollars if more than a single craft or trade is involved with the public works project, or a public works project in excess of ((forty-five thousand))seventy-five thousand five hundred dollars if only a single craft or trade is involved with the public works project or the public works project is street signalization or street lighting.

A public works project means a complete project.

The restrictions in this subsection do not permit the division of the project into units of work or classes of work to avoid the restriction on work that may be performed by day labor on a single project.(4) In addition to the accounting and recordkeeping requirements contained in RCW 39.04.070, every first-class city annually may prepare a report for the state auditor indicating the total public works construction budget and supplemental public works construction budget for that year, the total construction costs of public works performed by public employees for that year, and the amount of public works that is performed by public employees above or below ten percent of the total construction budget.

However, if a city budgets on a biennial basis, this annual report may indicate the amount of public works that is performed by public employees within the current biennial period that is above or below ten percent of the total biennial construction budget.Each first-class city with a population of one hundred fifty thousand or less shall use the form required by RCW 43.09.205 to account and record costs of public works in excess of five thousand dollars that are not let by contract.(5) The cost of a separate public works project shall be the costs of materials, supplies, equipment, and labor on the construction of that project.

The value of the public works budget shall be the value of all the separate public works projects within the budget.(6) The competitive bidding requirements of this section may be waived by the city legislative authority pursuant to RCW 39.04.280 if an exemption contained within that section applies to the work or contract.(7) In lieu of the procedures of subsections (2) and (6) of this section, a first-class city may let contracts using the small works roster process in RCW 39.04.155.Whenever possible, the city shall invite at least one proposal from a minority or woman contractor who shall otherwise qualify under this section.(8) The allocation of public works projects to be performed by city employees shall not be subject to a collective bargaining agreement.(9) This section does not apply to performance-based contracts, as defined in RCW 39.35A.020(4), that are negotiated under chapter 39.35A RCW.(10) Nothing in this section shall prohibit any first-class city from allowing for preferential purchase of products made from recycled materials or products that may be recycled or reused.(11)(a) Any first-class city may procure public works with a unit priced contract under this section for the purpose of completing anticipated types of work based on hourly rates or unit pricing for one or more categories of work or trades.(b) For the purposes of this section, "unit priced contract" means a competitively bid contract in which public works are anticipated on a recurring basis to meet the business or operational needs of the city, under which the contractor agrees to a fixed period indefinite quantity delivery of work, at a defined unit price for each category of work.(c) Unit priced contracts must be executed for an initial contract term not to exceed three years, with the city having the option of extending or renewing the unit priced contract for one additional year.(d) Invitations for unit price bids shall include, for purposes of the bid evaluation, estimated quantities of the anticipated types of work or trades, and specify how the city will issue or release work assignments, work orders, or task authorizations pursuant to a unit priced contract for projects, tasks, or other work based on the hourly rates or unit prices bid by the contractor.

Contracts must be awarded to the lowest responsible bidder as per RCW 39.04.010.

Whenever possible, the city must invite at least one proposal from a minority or woman contractor who otherwise qualifies under this section.(e) Unit price contractors shall pay prevailing wages for all work that would otherwise be subject to the requirements of chapter 39.12 RCW.

Prevailing wages for all work performed pursuant to each work order must be the prevailing wage rates in effect at the beginning date for each contract year.

Unit priced contracts must have prevailing wage rates updated annually.

Intents and affidavits for prevailing wages paid must be submitted annually for all work completed within the previous twelve-month period of the unit priced contract.Sec.

7.

RCW 52.14.110 and 2009 c 229 s 9 are each amended to read as follows:Insofar as practicable, purchases and any public works by the district shall be based on competitive bids.

A formal sealed bid procedure shall be used as standard procedure for purchases and contracts for purchases executed by the board of commissioners.

Formal sealed bidding shall not be required for:(1) The purchase of any materials, supplies, or equipment if the cost will not exceed the sum of ((ten))forty thousand dollars.

However, whenever the estimated cost does not exceed ((fifty))seventy-five thousand dollars, the commissioners may by resolution use the process provided in RCW 39.04.190 to award contracts;(2) Contracting for work to be done involving the construction or improvement of a fire station or other buildings where the estimated cost will not exceed the sum of ((twenty))thirty thousand dollars, which includes the costs of labor, material, and equipment;(3) Contracts using the small works roster process under RCW 39.04.155;

and(4) Any contract for purchases or public work pursuant to RCW 39.04.280 if an exemption contained within that section applies to the purchase or public work.Sec.

8.

RCW 39.04.105 and 2003 c 300 s 1 are each amended to read as follows:(1) Within two business days of the opening of the bid period on a public works project that is the subject of competitive bids, the municipality shall provide all bidders with copies of the bids the municipality received for the project.

The municipality shall then allow at least two full business days after providing bidders with copies of all bids before executing a contract for the project.

Intermediate Saturdays, Sundays, and legal holidays are not counted.(2) When a ((municipality receives))bidder submits a written protest ((from))to a ((bidder))municipality for a public works project ((which))that is the subject of competitive bids within two business days of the municipality providing all of the bidders with copies of the bids the municipality received for the project, the municipality shall not execute a contract for the project with anyone other than the protesting bidder without first providing at least two full business days' written notice of the municipality's intent to execute a contract for the project((;

provided that the protesting bidder submits notice in writing of its protest no later than two full business days following bid opening)).

Intermediate Saturdays, Sundays, and legal holidays are not counted.

A protesting bidder must submit notice of its protest within the applicable period.NEW SECTION.  Sec.

9.

(1) The joint legislative audit and review committee must review the public works contracting processes for local governments, including the small works roster and limited public works processes provided in RCW 39.04.155, and report to the governor and appropriate committees of the legislature by December 1, 2020.

The report must include the following:(a) Identification of the most common contracting procedures used by local governments;(b) Identification of the dollar amounts set for local government public works contracting processes;(c) Analysis of whether the dollar amounts identified in (b) of this subsection comport with estimated project costs within the relevant industries;(d) An analysis of the potential application of an inflation-based increaser to the dollar amounts identified in (b) of this subsection, for example, applying the implicit price deflator for state and local government purchases of goods and services for the United States as published by the bureau of economic analysis of the federal department of commerce;(e) Recommendations to increase uniformity and efficiency for local government public works contracting processes;(f) Progress in the rates of participation of certain groups including, qualified minority and women-owned and controlled businesses, minibusinesses, and microbusinesses in the small works roster and limited public works contracting processes;

and(g) Barriers to improving the participation rate of qualified minority and women-owned and controlled businesses and the growth of minibusinesses and microbusinesses in the small works roster and limited public works contracting processes.(2) For purposes of this section, "local governments" refers to all counties, cities, towns, other political subdivisions, and special purpose districts.--- END ---