Off-Site Prefabrication Data Collection Legislation

HB 1836 would require public agencies in the State of Washington to include in public works specifications requirements for reporting relating to the production of off-site, prefabricated, nonstandard, project-specific items produced for a public works project.

The bill would require contractors, subcontractors, lower-tier subcontractors, and employers "who are not required to register as contractors in the state" to submit, prior to final acceptance by the public agency, a list of the specific items produced, the name of the business who produced it, and other information. The requirement for submission would not apply to a business required to submit a Statement of Intent to Pay Prevailing Wages.

The bill would also require public agencies to include a provision in bidding documents and contracts requiring submission of certified payroll reports for the off-site work upon request by a third party. The payrolls would be sent to the public agency and the State Department of Labor and Industries. It would apply to contractors, subcontractors of any tier and employers responsible for producing such off-site items. It would not apply to those firms required to submit a Statement of Intent to Pay Prevailing Wages.

The legislation appears to have at least one internal conflict. One the one hand, it requires the submission of the lists prior to final acceptance by the public agency. On the other hand, it states that failure to submit the lists will not delay release of retainage by the public agency. However, without final acceptance, the 45 day countdown for release of retainage under chapter 60.28 RCW does not begin.

Practically, the bill would require someone in each public agency to make a determination prior to final acceptance whether such lists of prefabricated items are applicable and must be submitted. The addition of this requirement has the potential to further delay final acceptance of projects. Such delays have a cost to contractors when they do not receive their retainage in a timely manner. The public ends up paying for these inefficiencies in the form of higher bids by contractors.

This subject has long been a concern of labor unions in Washington State. They assert that out of state firms, often just across Washington borders, are producing off-site items for Washington public works projects without having to pay Washington prevailing wages. Under the Everett Concrete Products case that went to the Washington State Supreme Court, the Court held that prevailing wages for such off-site, non-standard items must be paid based on the wages in effect for the county where the items were produced. Please contact me if you'd like me to send you a copy of this court decision. But if the items are produced out of state, Washington prevailing wage laws have no jurisdiction. Labor unions contend that such practices are putting Washington businesses in border cities at a competitive disadvantage and that the State is also losing tax revenue.

The bill is an attempt to collect data to help evaluate the nature of the problems. The legislation would sunset on December 31, 2011.