New Contractor Reporting Requirements for Prefabricated Items

Contractor Requirements:  A new law passed by the Washington State Legislature in 2010 will require public works contractors to report information on the use of off-site, prefabricated, nonstandard, project specific items produced outside the State of Washington and used on a public works project within the State.  

Public Agency Requirements:  Engrossed House Bill 2805 will a) Require public agencies to include specific language on the reporting requirements in bidding and contract documents, and b) to verify with the Department of Labor and Industries as part of the mandatory bidder responsibility criteria that the contractor has not violated the reporting requirements of the new law.

Why Was This Law Passed?  The applicable prevailing wage rates for all off-site, prefabricated, nonstandard, project specific items are the wages in effect in the county in which the items were produced.  However, there is anecdotal information that some prefabricators have moved their businesses to Idaho and Oregon, just over the Washington State border in order to avoid paying prevailing wages, which do not apply for any work performed outside of the State boundaries.

Concerns have been expressed about the loss of tax revenue and jobs for Washington State.  The reporting requirements of the new law will enable policy makers to review actual data in order to develop long term strategies to address the concerns about practices relating to prefabrication outside of Washington's boundaries.

Here are the relevant details of the new law:

• Applicability:  Applicable for all public works projects estimated to cost over $1 million.

• Effective Dates:  Effective for public works projects entered into between September 1, 2010 and December 31, 2013.

• Contract Language:  All applicable projects must include contract language requiring the reporting.  The State Department of General Administration will develop this contract language, and make it available to all public agencies by posting it on their website.  Public agencies will need to add this language to their bidding and contract documents for any project that may be awarded between the effective dates noted above.

• Reporting Format:  The information required is to be reported by contractors and subcontractors on the Affidavit of Wages Paid form that will be revised by the Department of Labor and Industries.  The information is required to be completed only "by the contractor or subcontractor who directly contracted for the off-site, prefabricated, nonstandard, project specific items produced outside Washington."

• Data Collection:  The Department of Labor and Industries will report information collected from contractors to the Capital Projects Advisory Review Board (CPARB) for review.

• Report Content:  The data that must be reported by contractors and subcontractors includes the cost of the public works project; the name of the awarding agency; the title of the public works project; the contract value for the prefabricated items produced outside Washington State, including labor and materials; the name, address, and federal employer identification number of the contractor that produced the items.

• Exemptions:  The new law does not apply to public works projects of the Washington State Department of Transportation (WSDOT) or "local transportation public works projects."

• Definition:  "'Off-site, prefabricated, nonstandard, project specific items' means products or items that are: (a) Made primarily of architectural or structural precast concrete, fabricated steel, pipe and pipe systems, or sheet metal and sheet metal duct work; (b) produced specifically for the public work and not considered to be regularly available shelf items; (c) produced or manufactured by labor expended to assemble or modify standard items; and (d) produced at an off-site location."

• Consequences of Non-compliance with Reporting:  A new mandatory bidder responsibility criterion (RCW 39.04.350) and a subcontractor responsibility criterion (RCW 39.06.020) is added with this new law.  Any contractor or subcontractor that is determined by the Department of Labor and Industries to have violated the reporting requirements more than one time may not be awarded a public works project by a public agency or a subcontract by a contractor under the bidder responsibility criteria.  Presumably, although the legislation doesn't specify, the Department of Labor and Industries will publish the names of violators on their list of firms ineligible to be awarded public works contracts.

State Regulations:  Washington Administrative Code (WAC) 296-127-020 (3) requires payment of prevailing wages for the county in which the off-site, prefabricated, nonstandard, project specific items were produced.  

Court Case:  In 1983, there was a court case, Everett Concrete Products vs.the Department of Labor and Industries in which Everett Concrete Products was required to pay prevailing wages for I-90 concrete tunnel liners that were manufactured in Everett, off-site of the project site.