Bid Form Signature Block

This is a follow-up to my recent blog posting about the new Washington state law adding compliance with the state's minimum wage laws as a mandatory bidder responsibility criterion.

Bidder's Place of Signing Bid Form:  I noted that that one option for obtaining the documentation of the bidder's compliance is to include a statement on the bid form.  The bidder would then just sign one document.  Such a signature must be accompanied by a statement that the bidder is signing the bid form under the penalty of perjury.  The revision to RCW 39.04.350 requires compliance with RCW 9A.72.085 which, in addition to the perjury statement requires that the signature block must note the place of signing by the bidder.

Sample Signature Block:  I've included below a signature block that I've used in the past that includes both the perjury statement and place of signing.

Consult With Your Attorney:  Review your bid form and check with your attorney to ensure that your bid form is in compliance with state law, especially if you are including the sworn statement for compliance with minimum wage laws on your bid form.

Mike Purdy's Public Contracting Blog
© 2017 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

New Mandatory Public Works Bidder Responsibility Criteria Effective July 23, 2017

The Washington Legislature adopted a new law (Senate Bill 5301) that adds an additional criterion to the list of mandatory bidder responsibility criteria that public agencies must verify and document before awarding any public works project, regardless of cost.  

Effective Date:  The new law became effective on July 23, 2017.  This means that public agencies must ensure that the required sworn statement is obtained prior to award of the public works project. 

Minimum Wage Compliance by Bidder:  The new law establishes a new criterion relating to the contractor's compliance with the state's minimum wage laws.  It also dictates that, prior to award, the contractor must sign a statement that they have not violated the law within a three year period.

• Criterion:  Here's the language from the law: "Within the three-year period immediately preceding the date of the bid solicitation, not have been determined by a final and binding citation and notice of assessment issued by the department of labor and industries or through a civil judgment entered by a court of limited or general jurisdiction to have willfully violated, as defined in RCW 49.48.082, any provision of chapter 49.46, 49.48, or 49.52 RCW."

• Documentation:  Here's the language from the law on what is required for documentation: "Before award of a public works contract, a bidder shall submit to the contracting agency a signed statement in accordance with RCW 9A.72.085 verifying under penalty of perjury that the bidder is in compliance with the responsible bidder criteria requirement of subsection (1)(g) of this section.  A contracting agency may award a contract in reasonable reliance upon such a sworn statement." The reference to subsection (1)(g) refers to the "criterion" paragraph above.

Methods for Verifying Bidder's Compliance:  There are a number of options, some better than others, for how a public agency can obtain the required sworn statement from the bidder whose bid is under consideration by the public agency for award. I recommend use of the first option listed below.

  Include Sworn Statement on Bid Form:  This option is the easiest administrative method and least risky option.  I recommend use of this option.  Under this option, a public agency would include the following statement as part of the Bid Form:  "The undersigned Bidder hereby certifies that, within the three-year period immediately preceding the bid solicitation date for this Project, the bidder is not a “willful” violator, as defined in RCW 49.48.082, of any provision of chapters 49.46, 49.48, or 49.52 RCW, as determined by a final and binding citation and notice of assessment issued by the Department of Labor and Industries or through a civil judgment entered by a court of limited or general jurisdiction."  In addition, the following language would need to be part of the signature block for the Bid Form: "I certify (or declare) under penalty of perjury under the laws of the State of Washington that the foregoing is true and correct."  This statement is necessary to comply with the provisions of the new law that dictates that the sworn statement must be in compliance with RCW 9A.72.085.

  Request Sworn Statement from Low Bidder:  Under this option, after bid opening, the public agency would request the low bidder submit the sworn statement after bid opening.  The Municipal Research and Services Center (MRSC) has developed a sworn statement for this purpose.  Click here to visit MRSC's website where you can click on the link for "model certification form."  This is an additional step for the public agency that can be eliminated by including the sworn statement on the Bid Form (see option above). While I don't recommend this option because it is an additional step, there is nothing inherently wrong with this option.

  Include Sample Sworn Statement in Bid Documents:  Under this option, a public agency would include MRSC's model certification form as a sample in the bid documents.  The public agency would still be required to obtain the signed form from the low bidder prior to award, which represents an additional step like the option immediately above. It could be confusing for bidders whether they are required to submit the sample with the bid or after bid opening.  I do not recommend this option.

  Require Separate Sworn Statement be Submitted with the Bid:  Using MRSC's model certification form, under this option, the bid documents would require that the signed sworn statement be submitted with the bid.  This is not a good option, as it increases the risk that a bidder (the low bidder) will fail to submit the sworn statement with the bid, thereby rendering the entire bid non-responsive and unable to be considered further.  Using best practices for public works bidding, public agencies should limit the number of documents submitted with the bid to the Bid Form, bid guaranty, subcontractors list if the project is estimated to cost $1 million or more, and any documents required by federal or state grant provisions. I strongly recommend that public agencies not use this option. 

Other Mandatory Bidder Responsibility Criteria:  The new law adds compliance with minimum wage laws to the existing list of mandatory bidder responsibility criteria that public agencies must verify and document prior to award of any public works project.  The other criteria may be found in RCW 39.04.350.  Review your agency's practices to ensure that you have a process to verify and document the mandatory bidder responsibility criteria for all public works projects. 

Other New Public Works Laws:  See my blog from April 17, 2017 for a description of five new public works laws that do the following:

• Increases the dollar threshold for when a payment/performance bond may be waived
• Grants subcontractors additional rights to have retainage released early through a retainage bond
• Adds an additional criterion to the list of mandatory bidder responsibility criteria
• Authorizes Public Utility Districts to contract for on-call public works projects
• Authorizes transit agencies (public transportation benefit area authorities) to use Job Order Contracting

Presidential History Blog:  Check out my Presidential History Blog at PresidentialHistory.com and sign up for a free email subscription to it.

 

Mike Purdy's Public Contracting Blog
© 2017 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

5 New Public Works Bills Passed by Washington Legislature

As part of preparing for a two day class on Public Works Bidding and Contracting that I recently taught, I noted that the Washington State Legislature recently approved five public works related bills that do the following:

• Increase the dollar threshold for when a payment/performance bond may be waived
• Grant subcontractors additional rights to have retainage released early through a retainage bond
• Add an additional criterion to the list of mandatory bidder responsibility criteria
• Authorize Public Utility Districts to contract for on-call public works projects
• Authorize transit agencies (public transportation benefit area authorities) to use Job Order Contracting

Waiver of Payment/Performance Bond:  For public works projects of $35,000 or less, RCW 39.08.010 currently provides that "at the option of the contractor," a public agency "may, in lieu of the bond, retain fifty percent of the contract amount..."  In order to bring Washington law in compliance with federal small works bonding requirements, Senate Bill 5734, which passed both the House and Senate unanimously, addresses the following:

• Changes
• Project Amount:  Increases the $35,000 threshold to $150,000.  Unlike the payment/performance bond waiver provision applicable only for Limited Public Works Projects (Small Works Roster projects less than $35,000), this provision in RCW 39.08.010 does not require that the project less than $35,000 be bid through the Small Works Roster process.

• Retainage Amount:  Decreases the 50% retainage to 10% retainage in order to waive the payment/performance bond.

• Individual Sureties:  Allows a public agency to accept a payment/performance bond from an individual surety or sureties for projects of $150,000 or less, increased from $100,000.  All other sureties must be from an actual bonding company.

• Prevailing Wage Priority:  Reiterates the already existing requirement of RCW 60.28.040 (5) that unpaid prevailing wages and benefits are the first place priority in the event of multiple competing claims against the retainage.

• GC/CM:  Adds that this provision for withholding 10% retainage in lieu of obtaining a payment/performance bond on projects of $150,000 or less also applies to a General Contractor/Construction Manager (GC/CM).  This is a curious provision as all GC/CM projects are more than $150,000 and are multi-million dollar projects.  This addition doesn't appear to accomplish anything.

• Comments
• Agency Discretion?  Is a public agency required to accept the 10% retainage in lieu of obtaining the payment/performance bond?  The language of the law (both current and new) suggests that it is up to the contractor to make the request, and that the public agency "may" retain the 10% retainage in lieu of a bond.  It appears to provide the public agency with discretion whether to accept the request.  Consult with your attorney regarding how to interpret this issue.

• Time Period for Releasing Retainage:  Senate Bill 5734 fails to correct an error in RCW 39.08.010 that states that the retainage is held for 30 days "after the date of final acceptance."  Because a subcontractor, supplier, or worker can file a claim against the retainage up to 45 days following final acceptance, an agency that releases the retainage before 45 days following final acceptance is at risk for paying court ordered claims filed between day 31 and 45 following final acceptance.  If an agency intends to use this waiver of the bond/increase of retainage provision, I recommend not releasing the retainage until a minimum of 45 days following final acceptance.  

• No State Releases for Projects Less than $35,000:  Public agencies should recognize that for projects of $35,000 or less, the three state agencies (Revenue, Employment Security, and Labor and Industries) will not issue a release even though RCW 39.08.010 suggests they will.  See RCW 60.28.

Subcontractors and Retainage Bonds:  Current law (RCW 60.28.011 (6)) allows a contractor to submit a retainage bond to a public agency in lieu of retainage being withheld.  It also provides that if a contractor has submitted such a bond to a public agency, the contractor must, upon request of a subcontractor, accept a retainage bond from them in lieu of withholding retainage.  House Bill 1538 gives subcontractors additional rights to force a contractor to submit a retainage bond to a public agency:

• Changes
• Subcontractor Request:  A subcontractor may request the contractor to submit a retainage bond to the public agency for the portion of the subcontractor's retainage.  Currently, the subcontractor must wait for the contractor to take this action.

• Subcontractor Pays Bond Premium:  The contractor may withhold the subcontractor's portion of the bond premium.

• Deadline for Contractor to Submit Bond:  Within 30 days after the subcontractor's request, the contractor must submit the retainage bond to the public agency, unless "the bond is not commercially available, or the subcontractor refuses to pay the subcontractor's portion of the bond premium and to provide the contractor with a like bond."

• Public Agency Discretion:  The public agency shall accept such a retainage bond that meets its requirements for the content of the bond and from an acceptable bonding company, "unless the public body can demonstrate good cause for refusing to accept it."

Additional Mandatory Bidder Responsibility Criterion:  Senate Bill 5301 adds to the list of mandatory bidder responsibility criteria in RCW 39.04.350 that public agencies must check on and validate prior to awarding any public works project.  The new criterion relates to the contractor's compliance with the state's minimum wage laws.

• Changes
• New Responsibility Criterion:  The new mandatory bidder responsibility criterion reads as follows: "Within the three-year period immediately preceding the date of the bid solicitation, not have been determined by a final and binding citation and notice of assessment issued by the department of labor and industries or through a civil judgment entered by a court of limited or general jurisdiction to have willfully violated, as defined in RCW 49.48.082, any provision of chapter 49.46, 49.48, or 49.52 RCW."  This language should be added to bid documents of public agencies in addition to the currently existing mandatory bidder responsibility criteria.  Language for bid documents is included in the Suggested Guidelines for Bidder Responsibility published by the Capital Projects Advisory Review Board (CPARB).  CPARB will need to revise the Guidelines to add this new criterion.

• Documentation of Compliance:  Documentation to demonstrate a bidder's compliance with this new criterion is also included in SB 5301: "Before award of a public works contract, a bidder shall submit to the contracting agency a signed statement in accordance with RCW 9A.72.085 verifying under penalty of perjury that the bidder is in compliance with the responsible bidder criteria requirement of subsection (1)(g) of this section.  A contracting agency may award a contract in reasonable reliance upon such a sworn statement."  The reference to "subsection (1)(g)" will need to be adapted by public agencies to refer to the section of the bid documents that describes the actual criterion.

• Comments
• Standard Sworn Statement:  Rather than have each public agency develop their own sworn statement as required in the new law, hopefully either the State Department of Enterprise Services (DES) or the Municipal Research and Services Center (MRSC) will develop a standard that all agencies can give to the low bidder to complete as part of verifying their compliance with this additional mandatory bidder responsibility criterion.

On-Call Public Works Contracts Authorized for Public Utility Districts:  For the last five years, there has been considerable controversy in the state about whether public agencies may utilize on-call public works contracts that do not have a specific project scope.  The State Auditor's Office has noted that these contracts are not specifically authorized in state law, and they have begun issuing management letters as part of their review process.  Public Utility Districts (PUDs), under the provisions of Senate Bill 5036, are now authorized to bid and contract for on-call public works contracts.  This new law provides a possible framework for other types of public agencies obtaining the important and necessary authorization for on-call public works contracting. The bill passed the Senate unanimously and almost unanimously in the House with only one opposing vote.

Transit Agencies Authorized to Use Job Order Contracting:  House bill 1395, which passed the Senate unanimously and the House with only two opposing votes, adds "every public transportation benefit area authority as defined under RCW 36.57A.010" to the list of agencies and agency types authorized to use Job Order Contracting, one of three alternative public works contracting methods authorized in RCW 39.10.

Effective Date:  As of the most recent information, none of the bills have yet been signed by the governor, but it is anticipated he will sign them.  The new laws will be effective sometime in June or July.  This website may be used to obtain up to date information about the bills.

Mike Purdy in the News:  I was recently interviewed by and quoted in the following publications:

• Piggybacking:  Fast Company, "Why Taser Changed Its Name and Offered Every Cop a Body Camera," by Alex Pasternack, April 6, 2017

• Presidential History and Politics:  The Huffington Post, "Unaswered Questions About Russia Erode Faith in Democracy," by Cody Lyon, April 4, 2017
  

Mike Purdy's Public Contracting Blog
© 2017 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Seminar: Alternative Project Delivery

Seminar:  Alternative Project Delivery

When:  Friday, March 13, 2015 (all day) 

Where:  Bellevue, WA (Red Lion Inn) 

Agenda:  In the last few years there have been significant changes to the General Contractor/Construction Manager delivery method to include Heavy Civil Construction projects, and to the Design-Build delivery method to include Progressive Design-Build.  This seminar will have presentations from owners, contractors, and consultants on how they select and manager Alternative Project Delivery, and the risks and benefits associated with these delivery methods.

Sponsored by:  Pacific Northwest Chapter of CMAA (Construction Management Association of America

Presidential History:

• Presidential History Blog:   While I will discontinue writing this Public Contracting Blog on March 5, 2015, you can sign up for a free email subscription to my Presidential History Blog at www.PresidentialHistory.com.  On a case-by-case basis, I will only be accepting limited consulting and training opportunities after March 5, 2015.

• Presidential History News:  Be sure to watch my 6 minute video at www.PresidentialHistory.com in which I report "live" on the election returns for the 1916 presidential election between Woodrow Wilson and Charles Evans Hughes.
  
  
• Twitter and Facebook:  Follow me on Twitter @PresHistory and "Like" my Facebook page at https://www.facebook.com/mikepurdypresidentialhistory.

Mike Purdy's Public Contracting Blog
© 2015 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

New California Law Unifies Approach to Design-Build

On September 30, 2014, California Governor Jerry Brown signed SB 785, clarifying and consolidating various Design-Build laws for public construction contracts throughout the state.

Use by state and local agencies:  Specifically, the new law provides for uniform Design-Build processes for certain state agencies, cities, counties, and other local contracting districts for projects over $1 million. The law defines a number of common terms, and outlines a standard Design-Build procurement process that includes either selection based on a low bid or a best value approach.  Click here for the legislative analysis of the bill that provides insight into the rationale for SB 785.

Who supported and opposed the bill?  The bill was supported by the AGC of California, some public owners, and the Western Pacific Region of the Design-Build Institute of America. It was opposed by some non-union contractor and subcontractor trade associations.

 

What is Design-Build? Design-Build is a project delivery method that places design and construction services under one contract with a single point of responsibility. Its advantages include reduced project costs, expedited project completion, and better quality due to the integration of design and construction through one firm.  The Design-Build Institute of America (DBIA) has written a Design-Build Done Right Primer that explains key concepts of this project delivery method.

Design-Build nationwide: Rules for use of Design-Build vary from state to state. The Design-Build Institute of America has published a 2013 State Statute Report outlining Design-Build laws in various states.

Managing Design-Build contracts:   Design-Build can be an effective tool for some projects, but it is very important that a public agency selects the right Design-Build partner for the project.  Here are some key guidelines related to the selection process:

• Think through the selection process carefully up front, including evaluating likely proposers and how the process and point allocation may impact the end result. 

• Based on the particular project, evaluate the appropriate allocation of points between qualifications/technical merit and price. 

• Don’t change the selection process mid-stream through the procurement. This can lead to protests and delays for the project. 

• If the agency does not have personnel with specific Design-Build experience, obtain the services of a qualified consultant to guide the agency though the project.

Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Will Public Agencies Be Required to Accept Retainage Bonds?

In Washington state, a contractor may submit a bond to a public agency in lieu of the agency holding 5% retainage from every progress payment.

Current state law:  The current state law (RCW 60.28.011) requires that a public agency must accept a retainage bond from the contractor, "unless the public body can demonstrate good cause for refusing to accept it."  It has always been somewhat unclear exactly what this exception means.  I have often stated that the one condition that may be "good cause" for not accepting a retainage bond is if a surety refused to previously honor claims against a retainage bond on a different project.

Agency practices:  Some public agencies have made it a practice to not accept any retainage bonds, regardless of whether they have determined "good cause" for not accepting such bonds.  This has become a matter of concern for contractors and bonding companies, and led to the introduction of new legislation.

Proposed legislation:  Substitute Senate Bill 6110, which unanimously passed the Senate on February 12, 2014 would remove the discretion that public agencies currently enjoy in deciding whether to accept a retainage bond or not. The bill did not, however, come up to a vote in the House, presumably because it ran out of time to be considered.

Impact of SSB 6110:  SSB 6110 would do two things:

• Require acceptance of retainage bonds:  The current "good cause" discretion public agencies have would be repealed and agencies would be required to accept any retainage bond as long as the surety has an A.M. Best rating of "A-" or higher.

• Remove agency discretion on Payment and Performance Bonds:  The proposed legislation would also require public agencies to accept Payment and Performance Bonds from sureties without some of the review that currently is part of the process, such as relating to the A.M. Best rating of the surety and other conditions.

2015 legislative session:  Presumably, SSB 6110 will be reintroduced in the 2015 legislative session.  Given its unanimous approval in the Senate in 2014, there is a high likelihood that the bill may be approved and become law in 2015.

Is SSB 6110 a good idea?  In my opinion, SSB 6110 is a short-sighted solution that does not address some of the real issues surrounding retainage and bonding on public works projects.  In addition, it strongly favors the interests of contractors and sureties, without taking into account the interests of public agencies (and the public) subcontractors, and suppliers.

• Eliminates options and protections:  Without some ability on the part of public agencies to refuse to accept a retainage bond from a surety who has not faithfully paid claims on previous retainage bonds, SSB 6110 has the impact of eliminating the rights of subcontractors and suppliers from collecting payment from the retainage (and state agencies on USDOT funded projects where no retainage may be withheld). Thus, the statement in RCW 60.28.011 that retainage is a "trust fund" for protected parties becomes an empty shell.   

• Eliminates protections for the public:  The amendments to RCW 48.28.010 in SSB 6110 eliminates discretion by public agencies in assessing whether a surety is financially secure to post a Payment and Performance Bond or Retainage Bond.  This shift of balance in favor of sureties over public agencies and the protection of the public is not good public policy.

A contractor's view:  Seattle attorney Matt Paxton of Ahlers and Cressman has written a blog posting on SSB 6110, noting that from a contractor's perspective the bill would be beneficial.  Mr. Paxton's definition of a retainage bond, however, is really more the definition of a warranty bond.  A retainage bond does not guarantee "that the contractor will carry out all necessary work to correct defects discovered after completion of the contract, even if full payment has been made."  Rather, a retainage bond guarantees that the surety will pay subcontractors, suppliers, and workers who have not been paid by the contractor.  Click here to read Mr. Paxton's blog.

What will happen in 2015?  Without public agency opposition to SSB 6110, this bill has a good chance of becoming law.  Public agencies that are concerned about it should work with their lobbyists and associations to discuss the impacts of the bill further.

Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

NJ Prohibits Financial Statements in Bid/Proposal Processes

The New Jersey legislature has approved a bill that would prohibit public agencies from requiring bidders and proposers from submitting a financial statement if a bid guaranty (bid bond, cashier's check, certified check) is submitted. A bid guaranty is a measure of protection for the public on the financial viability of the bidder/proposer.

Unanimous support:  A-1794 passed both the New Jersey Senate and Assembly unanimously in June 2014.  

Purpose of bill:  The bill was promoted as a means to encourage small businesses to participate in public contracting, and not impose on businesses an often onerous, costly, and time-consuming process of obtaining and providing a financial statement to demonstrate financial viability.

Exception:  The bill includes an exception for any federally funded project that requires submission of a financial statement by bidders or proposers as a condition of a public agency receiving a grant.

Public records:  Prohibiting submission of financial statements also eliminates the situation in which confidential information must sometimes be disclosed under public records laws.

Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

New Law Exempts Some Contractors From Paying for an Affidavit of Wages Paid Form

The Washington State Legislature approved a new law that waives the fee for filing an Affidavit of Wages Paid for contractors on public works projects who are exempt from the requirement to pay prevailing wages. 

Who is exempt from prevailing wages?  According to WAC 296-127-026 the prevailing wage requirements of chapter 39.12 RCW do not apply to certain individuals:

1. Sole owners and their spouses
2. Any partner who owns at least 30% of a partnership
3. The president, vice-president, and treasurer of a corporation if each one owns at least 30% of the corporation

If one of the above-mentioned entities has employees, those employees must still be paid the applicable prevailing wages.

Filing Intents and Affidavits:  Even though some individuals, as noted above, are exempt from the prevailing wage requirements, the contractor must still file Statement of Intent to Pay Prevailing Wages and Affidavit of Wages Paid forms with the Department of Labor and Industries for approval.  Public agencies must have a copy of the approved Intent for the contractor and all subcontractors prior to making payment to the contractor, and must have the approved Affidavit from the contractor and all subcontractors prior to release of retainage. 

New law makes some Affidavits free:  Under the provisions of Substitute House Bill 1254 that was approved during the 2014 legislative session, and is now included in RCW 39.12.070, individuals who are exempt from paying themselves prevailing wages (see above) must still file the Intent and Affidavit, and pay the $40 for each Intent, but the $40 fee for the Affidavit will not be charged by Labor and Industries.  The new law became effective on June 12, 2014.

More information:  Click here to read a Question and Answer page developed by the Department of Labor and Industries.

Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Training: "Call Before You Dig Law"

Changes to Washington state's "Underground Utility Damage Prevention Act" (RCW 19.122) went into effect on January 1, 2013.  

Training:  This training and certification process will identify companies and field personnel who have taken the time to go through safe digging practice training and understand local and national laws relative to pipeline and underground utility preservation and safety. 

When and where (8:30 am to 2:00 pm):

• May 1, 2014 (Yakima)
• May 6, 2014 (Spokane Valley)
• May 13, 2014 (Fife)
• May 27, 2014 (Walla Walla)
• June 3, 2014 (Arlington)
• June 19, 2014 (Camas)

Who should attend:

• Public works employees
• Contractors
• Excavators
• Landscapers

Bid documents:  According to RCW 19.122.040, project owners must "indicate in bid or contract documents the existence of underground facilities known by the project owner to be located within the proposed area of excavation."
 
Cost:

• $90 - NUCA members
• $110 - non-NUCA members
  

Sponsored by:

• NUCA of Washington (National Utility Contractors Association)
• APWA Washington State Chapter (American Public Works Association)
• MRSC (Municipal Research and Services Center)

2 year certification:  Upon completion of the five hour training, attendees will receive a two year certification in this "Dig-Safe Certification Program."

Information and registration:  Click here.

Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Electronic Bidding on Public Works Projects Approved for State Agencies in Washington

The Washington State Legislature approved Substitute House Bill 1841 that authorizes state agencies to conduct public works competitive bidding processes electronically and accept electronic signatures in such processes.

State agencies only:  The new law, which is effective on June 12, 2014, does not apply to local governments such as cities, counties, school districts, port districts, etc., but only to state agencies and departments.  Most laws that apply to local agencies require the submission of "sealed bids" for public works projects, and thus electronic bidding is not permitted for local agencies. 

Electronic signatures:  The bill defines an electronic signature as "a signature in electronic form attached to or logically associated with an electronic record." 

Standards and policies:  The state is required to develop standards and policies for electronic submision of public works bids.

Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

New Legislation Requires Training on Public Records and Open Public Meetings Laws

The Washington State Legislature and Governor Inslee have approved Engrossed Senate Bill 5964 requiring that state and local government officials attend training and regular refresher courses on the requirements of the Public Records Act (RCW 42.56) and the Open Public Meetings Act (RCW 42.30).

Purpose of the training:  The new law, which becomes effective on July 1, 2014, states the following purpose for the law:

Rights of citizens:  The legislature finds that the rights of citizens to observe the actions of their public officials and to have timely access to public records are the underpinnings of democracy and are essential for meaningful citizen participation in the democratic process.  Violations of laws denies citizen rights:  All too often, however, violations of the requirements of the public records act and the open public meetings act by public officials and agencies result in citizens being denied this important information and materials to which they are legally entitled.  Violations due to error or ignorance:  Such violations are often the result of inadvertent error or a lack of knowledge on the part of officials and agencies regarding their legal duties to the public pursuant to these acts.  Violations costly to public agencies:  Also, whether due to error or ignorance, violations of the public records act and open public meetings act are very costly for state and local governments, both in terms of litigation expenses and administrative costs.  Training will help ensure compliance:  The legislature also finds that the implementation of simple, cost-effective training programs will greatly increase the likelihood that public officials and agencies will better serve the public by improving citizen access to public records and encouraging public participation in governmental deliberations.  Compliance will enhance public perception of government and save money:  Such improvements in public service will, in turn, enhance the public's trust in its government and result in significant cost savings by reducing the number of violations of the public records act and open public meetings act.

Applicability of training:  The training applies to members of governing bodies of public agencies and local and statewide elected officials.  Public records officers must also complete training related to the Public Records Act.  Make sure your agency's leadership is aware of the requirements of this new law.

Other systematic training is important:  While the new law addresses systematic and deliberate training on the Public Records Act and Open Public Meetings Act, it is also important for public agencies to regularly provide training their employees on other topics such as:

• Public Works Bidding and Contracting Requirements
• Managing and Developing RFPs and RFQs for Selection of Consultants and Service Providers
• Avoiding Ethical Violations

I regularly provide training in these three areas to public agencies to help ensure a common base of knowledge and keep public employees up to date on the latest requirements and best practices.  If you are interested in having me provide training for your agency on public works, RFPs/RFQs, or ethics, please contact me.

Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Bill Requiring Certified Payroll Reports Not Approved by Legislature

The Washington State Legislature did not approve a bill (HB 2331) that would have required public agencies to withhold payment to contractors until receipt of weekly certified payroll reports from the contractor and all subcontractors.  It passed the House, but did not come to a vote in the Senate.

Responsibilities and liabilities:  While the bill stated that public agencies would have no liability for the accuracy of the payrolls, testimony by representatives from labor unions in support of the bill indicated an assumption that public agencies would be reviewing the payrolls for accuracy of worker classifications.  The bill is unclear about what the responsibilities and liabilities public agencies would have under the proposed legislation.

Previous blog:  Click here to read my summary of the bill in my blog from February 23, 2014.
 
Senate hearing:  Click here to watch and listen to testimony pro and con on HB 2331 before the Senate Commerce and Labor Committee on February 21, 2014.

Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Bill Requiring Certified Payrolls on Public Works Passes Washington State House of Representatives

On February 13, 2014, the Washington State House of Representatives approved (on a 54 - 44 vote) HB 2331 that would require all public agencies in the state to obtain certified payroll reports from the contractor and every subcontractors before making any payment on a public works project. 

Bill may increase cost of public works projects:  There is currently no state law that requires submission of payroll reports to public agencies, and HB 2331 imposes a major new requirement.  The bill will delay payments to contractors (and subcontractors), discourage contractors from bidding public works projects, and potentially result in increased bid prices to public agencies due to:

• Less competition:  A more limited pool of contractors bidding public works projects

• Cost of managing new requirement:  Contractors bidding more to manage the collection and submission of the payroll reports

• Cost of delayed payments:  Contractors bidding more to compensate for delayed payments from public agencies. 

Payrolls already required for federally funded projects:  Only if a project is federally funded are certified payrolls required.  Public agencies already have the contractual right to withhold payment in the event that payrolls have not been submitted on a federally funded project.  A new law that applies to all public works projects regardless of funding represents a major new requirement for public works contracting. 

Payroll submission already required by regulations:  WAC 296-127-320 already provides the option for Labor and Industries or an interested party to request certified payrolls on a public works project.  Mandating that certified payrolls be submitted on all public works projects by all contractors and subcontractors is not necessary and complicates public works bidding and contract administration.

What must a public agency do with the payrolls?  Interestingly, HB 2331 does not say that a public agency must do anything with the payroll reports other than collect them prior to making payment to the contractor.  In fact, the bill implies that a public agency's only role is to collect the payroll reports: "The awarding agency shall be held harmless and is not liable for the currency, completeness, or accuracy of certified payroll records submitted under this section."

Managing confidential information:  Because the payroll reports will become a matter of public record once received by the public agency, anyone may request the documents through a public records request (further increasing the workload of public agencies).  There is nothing in the bill that protects disclosure of confidential information (Social Security number, address, etc) on the certified payrolls to outside parties.

Impact on small businesses:  HB 2331 will have an especially negative impact on small contractors and subcontractors that do not have the administrative support systems in place to comply with this proposed new requirement.  

Status of the bill:  There was a public hearing on the bill on Friday, February 21, 2014 in the Senate Committee on Commerce & Labor.

Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Legislation Would Require Public Agencies to Accept Retainage Bonds

A newly introduced bill to the Washington State Legislature would eliminate the current flexibility of public agencies in deciding whether to accept a retainage bond on public works projects.  The legislation would also appear to eliminate the ability of a public agency to establish financial stability ratings for a surety providing Payment and Performance bonds on public works projects.

Current law:  Under the current requirements of RCW 60.28.011, a public body must accept a bond in lieu of withholding retainage:

• Meet agency standards:  Provided the bonding company meets standards established by the public body, the bond must be accept.

• Good cause refusal to accept:  The retainage bond must be accepted by the public agency, unless they "can demonstrate good cause for refusing to accept" the bond.

Proposed legislation:  Senate Bill 6110 would eliminate any discretion on the part of a public body in whether to accept a retainage bond.  

• Elimination of local standards:  The current requirement that the bonding company must meet "standards established by the public body" would be deleted, eliminating a public agency's ability to require a specific financial stability rating for the surety.  

• Elimination of "good cause" refusal to accept:  The current flexibility to refuse to accept a retainage bond for "good cause" (a phrase that has always been subject to some interpretation) would be deleted and replaced with a requirement to comply with RCW 48.28.010 (which would also be amended by this bill).

• RCW 48.28.010:  Here's what this law states with the underlined language reflecting the proposed addition as part of SB 6110.  

"Whenever by law or by rule of any court, public official, or public body, any surety bond, recognizance, obligation, stipulation or undertaking is required or is permitted to be given, any such bond, recognizance, obligation, stipulation, or undertaking which is otherwise proper and the conditions of which are guaranteed by an authorized surety insurer, or by any unauthorized surety insurer as a surplus line pursuant to chapter 48.15 RCW of this code, shall be approved and accepted and shall be deemed to fulfill all requirements as to number of sureties, residence or status of sureties, and other similar requirements, and no justification by such surety shall be necessary.  This section applies to any and all surety bonds executed, filed, posted, furnished, or otherwise given as security pursuant to any statute of this state or any law or ordinance of any public body."

Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

More Public Contracting Bills Introduced in Washington Legislature

In addition to the bills I commented on in my previous blog from January 21, 2014, the following additional bills impacting public contracting in the State of Washington have been introduced to the Legislature:

Exempt Proposals from Public Records Disclosure:  A bill (House Bill 2578) introduced to the Washington State Legislature would exempt from public records disclosure the proposals submitted by contractors for alternative public works delivery methods (Design-Build, GC/CM, and Job Order Contracting) and related evaluation documents until after a contract is executed or the selection process is terminated. 

Expand Prevailing Wages to Public-Private Partnerships:  Substitute House Bill 1025S would create a new definition of a "subsidized public works" project and would require that prevailing wages be paid on such projects.  Similar bills have been introduced in past years, but have not been successful.  Adoption of this bill would have the impact of limiting the number of public-private partnership projects constructed.  See my previous blog on legislation introduced in earlier years. 

Expand Apprenticeship Utilization Requirements:  House Bill 2526 would establish penalties for contractors failing to comply with the apprenticeship utilization requirements of RCW 39.04.320 for public works projects of the State Department of Enterprise Services, the State Department of Transportation, institutions of higher education, and all school districts.  The bill would also significantly expand requirements for use of apprentices on all public works projects of the state and all municipalities.  Here is a summary of the provisions of this bill:

• Debarment:  HB 2526 would add to the list of reasons for contractor debarment the failure of the contractor to comply with the apprenticeship utilization percentages required by RCW 39.04.320.

• Bidder Responsibility:  HB 2526 would also add to the list of mandatory bidder responsibility criteria in RCW 39.04.350 the failure of the contractor to meet apprenticeship percentage utilization requirements under RCW 39.04.320.

• State Monitoring of Compliance:  The State Department of Enterprise Services would be required to maintain on its website a list of contractors that failed to meet apprenticeship percentage utilization requirements on public works projects.

• Bid Preference for Contractors with Apprenticeship Programs: HB 2526 would provide a 5% bid preference to be used in bid evaluation for contractors with a registered apprenticeship training program approved by the Department of Labor and Industries for trades to be used on the public works project.

• Expand Apprenticeship Utilization Requirements for all Public Agencies: HB 2526 would require that "the bidder must be a party to an apprenticeship agreement for each trade it is employing that has a registered apprenticeship training program" if the "bidder will employ more than one trade on the public work."  This provision appears to have the impact of requiring apprentice utilization for all municipalities, and not just those agencies named in RCW 39.04.320.

Permit Electronic Public Works Bidding for State Agencies:  Substitute House Bill 1841 would permit state agencies to conduct competitive bidding for public works projects electronically or accept electronic signatures as part of the bidding process.

Permit Fire Districts to Perform Public Works Without Bidding:  House Bill 2266 would permit a fire department or regional fire authority to "use fire service personnel, either employed or volunteer, to perform" public works projects less than $20,000 without obtaining competitive bids.

Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Proposed Bills Affecting Public Contracting in Washington State

The following bills affecting public contracting have been introduced into the Washington State Legislature this session: 

Allow local agencies to waive prevailing wages:  House Bill 2299 would allow "a county, municipality, or political subdivision of the state" to waive prevailing wage requirements for public works contracts estimated to cost less than $5 million dollars.  The waiver could also apply for public building service maintenance contracts (janitorial, shampooer, window washer, waxer).  In order to opt out of the prevailing wage requirements of Chapter 39.12 RCW, the governing body of the public agency would need to approve such a waiver by a majority vote.  The legislation specifically would permit public agencies to subdivide public works projects in order to come in under the $5 million threshold.  

Require certified payrolls prior to paying contractors:  House Bill 2331 would require a public agency to obtain certified payroll records from the contractor and all subcontractors prior to making any payment to the contractor, and would also require the payrolls prior to final payment and release of retainage to the contractor. 

Relax various prevailing wage requirements:  Senate Bill 6186 would do the following:

• Apprentice use on WSDOT projects:  Reduce apprenticeship percentages required on WSDOT projects from 15% to 13% and increase the threshold of which projects apprenticeship applies to from $2 million to $4 million.

• Electronic surveys:  Require the Department of Labor and Industries to provide contractors with the option of completing prevailing wage surveys electronically.

• On-Site work only:  Restrict the applicability of prevailing wages only to workers "employed directly on the site of work," eliminating the impact of court decisions requiring prevailing wages for off-site prefabrication of work performed specifically for a public works project.

Change methodology for establishing prevailing wages:  The following three bills address how the Department of Labor and Industries should establish the prevailing wage rates:

• Statistical analysis vs. wage surveys:  House Bill 2210 would require the Department of Labor and Industries to use a "stratified random sampling methodology," instead of the "wage surveys" currently conducted to establish prevailing wages.  It would also exempt data collected by Labor and Industries through this process from disclosure under the state's public records laws.

• Survey only non-public works projects:  House Bill 2209 would restrict prevailing wage surveys conducted by the Department of Labor and Industries to only "nonpublic work" projects.  Behind this bill is the assertion that public works projects, on which prevailing wage must already be paid, artificially inflate prevailing wage rates.  The bill would also exempt data collected by Labor and Industries through wage surveys from disclosure under the state's public records laws.

• Use only union wage rates to establish prevailing rates:  House Bill 2527 would require the Department of Labor and Industries to establish prevailing wages based on collective bargaining agreements, instead of through conducting wage surveys.  For trades where there are no collective bargaining agreements, L&I would be required to conduct wage surveys or use "other appropriate methods" to establish the prevailing wage rates.

Civil construction on GC/CM projects:  House Bill 2208 would define a "heavy civil construction project" for GC/CM (General Contractor/Construction Manager) projects and permit the GC/CM to self-perform as a negotiated amount up to 50% of the cost of the work, and to bid on other portions of the work agreed to with the public body, provided that at least 30% of the work is competitively bid.  The current law requires that a GC/CM must bid to self-perform any of the work and such self-performed work is limited to 30% of the construction cost.

Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Have You Changed Your Indemnification Clause in Your Contracts?

It's been more than a year since the Washington State Legislature amended the provisions for what is permitted in contracts regarding indemnification.  Has your agency updated the indemnification clause in your contracts?  This blog posting is a repeat of one from April 24, 2012 with only minor changes.

With strong backing and support from the professional design community, the Washington State Legislature approved in 2012 (with only one dissenting vote) Substitute House Bill 1559 related to indemnification provisions in public contracts. Then Governor Christine Gregoire signed the bill. 

Previous Law:  The purpose of the previous law in RCW 4.24.115 was to establish a standard of concurrent negligence in indemnification clauses.  In other words, a public agency may not require a contractor to indemnify the public agency against liability for damages "caused by or resulting from the sole negligence" of the public agency.  Instead, the previous law established that indemnification is valid and enforceable only to the extent of the concurrent negligence of the contractor and public agency. 

3 Changes in Law in 2012:  SHB 1559 amended RCW 4.24.115 in the following three areas:

• Clarification of covered parties:  The previous law stated that it applied to a contract "relative to the construction, alteration, repair, addition to, subtraction from, improvement to, or maintenance of, any building, highway, road, railroad, excavation, or other structure, project, development, or improvement attached to real estate, including moving and demolition in connection..."  [emphasis added]  Many agencies interpreted the phrase "relative to" to include contracts for architectural, engineering, landscape architectural, and land surveying services, even though the language was not explicit.  SHB 1559 specifically added contracts for these four disciplines to the protections provided for in the law.

• No duty to defend:  One of the regular sticking points in negotiating contracts with designers relates to whether the indemnification provided by the designer covers their duty to defend the public agency in the event of a claim.  SHB 1559 explicitly prohibits language in public contracts that includes the duty to defend and the cost of such defense.

• Extent of indemnification:  The previous concurrent negligence standard was only applicable to liability for damages related to bodily injury and property damage.  Thus, for any other type of liability, a public agency could apply a sole negligence standard.  SHB 1559 changed this.  The concurrent negligence framework expanded to cover any liability arising out of any services performed on the contract.

Have you changed your contracts?  SHB 1559, approved in 2012, became effective on June 7, 2012.  Has your agency reviewed and changed indemnification language included in both construction contracts and contracts for architectural, engineering, landscape architectural, and land surveying services?

Talk with your attorney:  Indemnification is a complicated area and attorneys are best suited to sort through and develop appropriate contract language.  If you have not already done so, public agencies should consult with their attorneys for what language may need to change in their contracts. 

More Information:  Two Seattle area law firms have written helpful articles about SHB 1559 that may help in understanding this 2012 legislation:

• April 5, 2012 article by Stan Beck and Grant Degginger from Lane Powell PC in the Seattle Daily Journal of Commerce: Design professionals win big in revised anti-indemnity statute.

• April 17, 2012 blog by John P. Ahlers of Ahlers & Cressman PLLC: Washington's Anti-Indemnification Statute (RCW 4.24.115) is Amended to Include Design Professionals and Contractors Receive a "Kiss"

Mike Purdy's Public Contracting Blog 
© 2013 by Michael E. Purdy Associates, LLC 
http://PublicContracting.blogspot.com