Verification of Subcontractor Responsibility

As many of you know, in 2007, the Washington State Legislature approved a new law dealing with bidder responsibility (RCW 39.04.350).

Mandatory and Supplemental Responsibility Criteria: That law establishes certain mandatory criteria that a low bidder on a public works project must meet prior to a public agency awarding a contract to them. The law also enables a pubic agency to establish relevant supplemental bidder responsibility criteria that are applicable to a project. It is up to the public agency to verify that the low bidder meets both the mandatory bidder responsibility criteria and any of the optional supplemental bidder responsibility criteria that the agency may have established for a project before award of the contract.

Subcontractor Responsibility: What is less well known is that the 2007 legislation also established subcontractor responsibility criteria that the contractor is responsible for verifying prior to execution of a subcontract. If a subcontractor hires lower tier subcontractors, they are responsible for verifying that their lower tier subcontractors meet the subcontractor responsibility criteria.

In addition, RCW 39.06.020 requires that every subcontract contain language including the subcontractor responsibility criteria and the requirement to verify the compliance of the subcontractor. From my recent reviews of a couple of subcontracts from fairly large and well-known general contractors, I've noted that they have not included this language in their subcontracts, even more than two years after the effective date of the new law.

The Capital Projects Advisory Review Board (CPARB) has published Suggested Guidelines for Bidder Responsibility for public agencies and contractors on how to comply with the responsibility laws. It includes suggested language that contractors can include in their subcontracts, and that subcontractors can include in their lower tier subcontracts. To view the entire guidelines, go to CPARB's website and click on Suggested Guidelines for Bidder Responsibility.

The following is the language in CPARB's guidelines:

A. The Contractor shall include the language of this section in each of its first tier subcontracts, and shall require each of its subcontractors to include the same language of this section in each of their subcontracts, adjusting only as necessary the terms used for the contracting parties. Upon request of the Owner, the Contractor shall promptly provide documentation to the Owner demonstrating that the subcontractor meets the subcontractor responsibility criteria below. The requirements of this section apply to all subcontractors regardless of tier.

B. At the time of subcontract execution, the Contractor shall verify that each of its first tier subcontractors meets the following bidder responsibility criteria:

1. Have a current certificate of registration in compliance with chapter 18.27 RCW, which must have been in effect at the time of subcontract bid submittal;

2. Have a current Washington Unified Business Identifier (UBI) number;

3. If applicable, have:
a. Have Industrial Insurance (workers’ compensation) coverage for the subcontractor’s employees working in Washington, as required in Title 51 RCW;

b. A Washington Employment Security Department number, as required in Title 50 RCW;

c. A Washington Department of Revenue state excise tax registration number, as required in Title 82 RCW;

d. An electrical contractor license, if required by Chapter 19.28 RCW;

e. An elevator contractor license, if required by Chapter 70.87 RCW.

4. Not be disqualified from bidding on any public works contract under RCW 39.06.010 or 39.12.065 (3).

Follow-up: If you are a public agency, you might want to check with your contractors and subcontractors about whether they are in compliance. You may also want to do some educational training with your contractors and subcontractors about this requirement. If you are a contractor or subcontractor, review your subcontracts to make sure they are in compliance with the law.

If you need any assistance, or would like me to conduct training on subcontractor responsibility as well as the mandatory and supplemental bidder responsibility criteria, please contact me.