Tuesday, May 24, 2011

Washington State Adopts Bid Preference Law

Under the terms of legislation approved by the Washington State Legislature and signed into law on May 12, 2011 by Governor Chris Gregoire, Washington joins a number of states and local jurisdictions across the country in providing a bid preference for resident contractors on public works projects.

2SSB 5662, which will become effective on July 22, 2011, has the following provisions:
  • Survey:  Requires the State Department of General Administration (GA) to conduct and survey of other states with bidding preferences on public works projects.
  • Report to Legislature:  Requires GA to report to the Legislature on the results of the survey and their recommendations to implement a bid preference for Washington contractors.
  • Reciprocity:  Requires GA to adopt rules to implement procedures to implement reciprocity provisions for public agencies in the state.  Under the terms of the reciprocity concept, if "a bid is received from a nonresident contractor from a state that provides a percentage bidding preference, a comparable percentage disadvantage must be applied to the bid of that nonresident contractor." 
  • Effective Date:  The reciprocity bid preference will not take effect until GA issues rules or procedures to implement it.
  • Resident Contractors:  The distinction between a resident vs. non-resident contractor is whether the contractor has "a physical office located in Washington."
  • Federal Requirements:  If the bid preferences required by the new law conflict with federal requirements that are part of federal grants, the terms of the federal provisions will apply instead of the reciprocity requirements.
Mike Purdy's Public Contracting Blog 
© 2011 by Michael E. Purdy Associates, LLC 


Fred Siegel said...

Most of the law makes sense to me being that it appears to be reciprocal on the surface. The part I would take issue with is, the provision of having a physical location in the state as the qualifier for resident company status. With so many virtual offices and small shared facilities, it would be next to no expense for a company to claim "resident" status. There should be a guidelines to prevent abuse of this such as time in business within the state or filing of a state income tax return.

Anonymous said...

I'm curious how this will work out between July 22, 2011 when the law goes into effect, and the "end of the year" when the GA's report is due. How will the % be determined within that time? The reciprocal % is no problem, but the % "awarded" to a local firm may be in flux before the report is out.

Mike Purdy said...

While the law will go into effect on July 22, 2011, the law specifically notes that the application of the bid preferences on specific projects "does not take effect until the department of general administration has adopted the rules and procedures for reciprocity...or announced that it will not be issuing rules or procedures..." Thus, as I understand it, until GA comes up with regulations, public agencies should not be applying preferences.