BP BHEAD INT H

AN ACT Relating to procurement by state agencies and municipalities of public works that are unique due to cost, complexity, or public interest; and adding a new chapter to Title 39 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. DECLARATION OF POLICIES AND PURPOSES. (1) The legislature recognizes that the development of certain public projects may present complex technical, design, or environmental problems or may be subject to conditions so unique that conventional procurement procedures likely may limit a public body's ability to secure the highest quality in public works projects for a reasonable price and in the most timely manner. It is hereby declared to be the public policy of the state of Washington that state agencies and municipalities should be authorized to utilize the procurement procedures provided in this chapter to contract for such public works projects where such procedures are in the public interest for a specific project or procurement and the director of an agency or the legislative or governing body of a municipality specifically authorizes their use consistent with the policies and purposes of this chapter. This chapter is not intended to be utilized for conventional public works projects such as roads and streets and basic utilities. Competitive bidding should continue to be utilized for most public construction projects as otherwise provided by state law.

(2) The legislature finds that the public interest of the citizens of the state will be advanced by authorizing state agencies and municipalities to utilize the most current methods of contracting for public works projects qualifying under this chapter, provided that all such procedures are conducted in a fair and impartial manner, and provided further that all qualified vendors, contractors, and suppliers have access to public business and that no offer or proposal is arbitrarily or capriciously excluded or evaluated.

(3) The legislative intent of this chapter is to supplement, not to limit, the current contracting powers and procurement practices of state agencies and municipalities.

(4) This chapter shall not be deemed to affect or in any way modify the current statutory, regulatory, or charter powers of state agencies or municipalities except to the extent that a procedure authorized by this chapter is adopted by a public body for application to a particular project or procurement. In that event, the normal contracting or procurement limits or requirements of a state agency or municipality as imposed by statute, ordinance, resolution, or regulation shall be deemed waived or amended to the extent necessary to accommodate such procedures only for the particular project or procurement.

(5) Notwithstanding the possible qualification of a project or procurement under section 3 of this act, this chapter shall not apply to cities and towns having a population less than one thousand five hundred.

(6) This chapter may also apply to joint projects between private profit or not-for-profit organizations and state agencies and municipalities, and joint projects between such public bodies, to the extent such projects are otherwise lawful.

(7) The procedures provided in this chapter may be implemented by ordinances, resolutions, regulations, motions, or other lawful actions consistent with this chapter adopted or promulgated by any public body empowered by law to undertake the activities described in this chapter. Any such public body may act by and through its duly designated or authorized officers or employees.

NEW SECTION. Sec. 2. DEFINITIONS. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Alternative dispute resolution" means collaborative problem solving between a public body and a contractor to identify and resolve potential disputes prior to litigation and includes but is not limited to partnering, mediation, and arbitration.

(2) "Construction" means building, altering, repairing, improving, renovating, or demolishing any structure, building, or facility, and any related draining, dredging, excavation, grading, or similar work upon real property.

(3) "Construction management/multiple prime contract" means contracts between a public body and several parties in which one party agrees to both coordinate and administer contracts for construction or procurement entered into between the public body and other contractors.

(4) "Construction manager/general contractor contract" means a contract in which a party is retained by a public body to coordinate and administer contracts for construction services for the benefit of the public body, and may also include, if provided in the contract, both construction as a general contractor by the party so retained and services that may include life-cycle cost design considerations, value engineering, scheduling, cost estimating, constructibility, alternative construction options for cost savings and sequencing of work, all of which may be subject to a maximum allowable construction cost guaranteed by the contractor.

(5) "Contractor" means a contractor, vendor, or supplier acting as an individual, association, partnership, firm, company, corporation, or combination thereof, including joint venturers, who is offering to enter into an agreement with a public body to provide public works.

(6) "Design-build contract" means a contract between a public body and another party in which the party contracting with the public body agrees to both design and build the structure, facility, or other item specified in the contract.

(7) "Municipality" means any municipality as defined in RCW 39.04.010.

(8) "Public body" means any state agency or municipality with a population of over one thousand five hundred people except school districts, and any legislative, executive, or judicial body, agency, office, department, authority, post, commission, committee, institution, board, or political subdivision created by law to exercise some sovereign power or to perform some governmental duty for such state agency or municipality, and empowered by law to undertake the activities described in this chapter.

(9) "Public works project" means any work for a public body within the definition of the term public work in RCW 39.04.010.

(10) "Responsible bidder or proposer" means a contractor who, in the opinion of the public body, has demonstrated that it and its principal subcontractors and partners have, at a minimum:

(a) Adequate financial resources to perform the contract;

(b) Sufficient resources and experience to comply with the required or proposed delivery or performance schedule, taking into consideration all of its commitments;

(d) A satisfactory record of business integrity and reliability;

(e) Adequate organizational and operational experience and technical skills; and

(f) Necessary production, construction, and technical equipment and facilities.

(11) "Responsive bid" means a submitted bid that conforms in all material respects to the invitation to bid.

(12) "State agency" means an office, department, division, bureau, board, commission, or other agency of this state, including community college districts and public colleges and universities.

NEW SECTION. Sec. 3. IMPLEMENTATION. (1) The alternative procurement procedures authorized by section 5 of this act may be utilized by a public body whenever a public works project qualifies under one or more of the criteria set forth in this subsection. In order to utilize such procedures, a public works project must have an estimated construction cost of at least two million dollars. Any such project or procurement must also be characterized by one or more of the following criteria:

(a) Technical complexity or unique character;

(b) The qualifications, experience, or capability of contractors are a major factor in the success of the project;

(c) Design or environmental complexity where the contribution of contractors or of the community to the configuration or location of the project may contribute to the success of the project; or

(d) Unique scheduling requirements or urgent public need to secure procurement where time or budget constraints make utilization of the public body's normal procurement process infeasible or where such process would result in a delay presenting the risk of a serious financial or other injury to the public.

(2) The process under which a public body makes the determination to utilize the alternative procurement procedures provided in this chapter shall provide for notice to and opportunity to comment on the determination by the major associations representing design professionals, the construction industry, and organized labor.

NEW SECTION. Sec. 4. PROJECT MANAGEMENT REQUIREMENTS. (1) Whenever a public body determines to utilize the procedures authorized by section 5 of this act, the budget and planning for the project or procurement shall provide for:

(a) The preparation of reasonably complete and coordinated design documents consistent with the procurement procedure utilized;

(b) To the extent reasonable and appropriate, an independent review of the contract documents through value engineering or constructibility studies performed by persons or firms independent of the design team prior to bid or solicitation;

(d) To the extent reasonable and appropriate, on-site architectural or engineering representatives during major construction or installation phases.

(2) In order for a public body to utilize the procedures authorized by section 5 of this act, the public body shall employ staff or contract with consultants with expertise and prior experience in the management of projects reasonably comparable to the one for which such procedures are proposed to be utilized.

(3) The contract documents for all such projects and procurements shall include requirements for alternative dispute resolution procedures to be attempted prior to the initiation of litigation.

(4) The contract documents for any project utilizing the procedures authorized by this chapter may provide for incentive payments to the contractor for early completion, cost savings, or other goals identified in advance of contract award. The amounts of any such incentive payments to be made for contractor performance on any particular project shall be determined pursuant to criteria incorporated in project contract documents.

NEW SECTION. Sec. 5. ALTERNATIVE PROCUREMENT PROCEDURES. (1) Notwithstanding any other provision of law, if a public body determines that a public works project or procurement qualifies under section 3 of this act, such public body may utilize such alternative procurement procedures as design‑build, construction manager/general contractor, or construction manager/multiple prime contracts, or combinations thereof, for such project or procurement pursuant to the procedures provided in this section.

(2) In determining that a public works project or procurement qualifies under section 3 of this act for use of an alternative procurement method authorized in this chapter and for utilizing a chosen method or methods, the public body shall:

(a) Identify with reasonable specificity the basis for its determination that a public works project or procurement qualifies under section 3 of this act for use of an alternative procurement method.

(b) Authorize the issuance of a written request for qualifications and proposals consistent with the alternative procurement method to be utilized that includes:

(i) Any particular qualifications to be required of the contractor;

(ii) A general description of the process the public body will use to evaluate qualifications or proposals in contemplation of the award of a contract;

(iii) The factors the public body will use in evaluating qualifications, including but not limited to those factors identified in section 6(2) of this act, and the relative weight to be accorded such factors in the evaluation process;

(iv) The factors the public body will use in evaluating and rating proposals and the relative weight to be accorded such factors in the proposal evaluation process;

(v) A basic description of the form of the contract sought to be awarded; and

(vi) Other information relevant to the project.

(c) Provide public notice of its determination that a public works project or procurement qualifies for use of an alternative procurement method and of the availability of its requests for qualifications and proposals in such place or places or manner such public body customarily provides such notice.

(d) Advertise its determination that a public works project or procurement qualifies for use of an alternative procurement method and of the availability of its requests for qualifications and proposals in the manner in which such public body customarily advertises for bidders for public works.

(3) The public body may request that qualifications and proposals be submitted at the same time.

(4) Qualifications submitted at the request of the public body shall be evaluated pursuant to the factors, weighting, and process identified in the initial request for qualifications. Based on the information submitted or developed by the public body through its process, not fewer than two or no more than five finalists deemed by the public body most qualified for the project or procurement shall be requested to submit proposals or bids.

(5) Proposals submitted at the request of the public body shall be evaluated pursuant to the factors, weighting, and process identified in the initial request for proposals. Such factors may include price. The process may include negotiations with two or more finalists commencing with the firm submitting the highest scored proposal. If the public body is unable to execute a contract with that firm, negotiations with that firm may be suspended or terminated and the public body may proceed to negotiate with the next highest scored firm and continue in accordance with this procedure until a contract agreement is reached or the selection process is terminated. The public body may, in its sole discretion, reject all proposals.

(6) Utilization of the design‑build alternative procurement method shall be subject to the following additional requirements:

(a) The request for proposals shall also include:

(i) A description of the major program requirements for the project or procurement including matters such as the minimum and maximum net and gross areas of any building; and

(ii) A project budget including reasonable contingencies totaling not less than five percent of the anticipated contract value;

(b) Prior to issuing its request for proposals, the public body shall determine whether to authorize appropriate payments to finalists who are not awarded a design‑build contract, provided that, if authorized, such payments shall be no less than fifteen one-hundredths of one percent of the anticipated contract value.

(7) Combinations of the procedures provided under this section and section 6 of this act may be utilized by a public body for qualified projects and procurements and combinations of projects and procurements under this chapter.

(8) Notwithstanding any other provision of law, a contract utilizing the procedures under this section or section 6 of this act may include provisions that promote cooperation and motivate contractors to improve the project quality or function, to reduce the cost, or to save time in construction or delivery and installation by using such methods as shared savings for value engineering, incentive payments, reimbursement for proposal or bid preparation expenses and preconstruction planning, and partnering.

NEW SECTION. Sec. 6. PREQUALIFICATION. (1) To assist a public body in determining whether a bidder or proposer is a responsible bidder or proposer, prospective contractors and their principal subcontractors may be prequalified for particular projects or procurements, and the consideration of bids or proposals may be limited to such prequalified contractors or subcontractors when their qualifications and experience are deemed by the public body to be critical to the success of the project due to its technical, design, or environmental complexities.

(2) Prequalification procedures shall clearly specify the relative weight of each factor to be used in making the prequalification determination. The factors may reflect unique project requirements and any other experience, performance, or capability requirement that will have a significant effect on the final procurement decision. However, the factors shall include the following:

(a) Experience by the contractor or subcontractor in construction and management of construction similar in size and complexity to the proposed project;

(b) Commitment to supervision and management of the project by principal officers and employees of the contractor or subcontractor with appropriate experience on projects of similar size and complexity, including proposed job titles and descriptions;

(c) With respect to projects for which conventional bonding is inappropriate or inadequate, specified evidence of sufficient financial capability to perform the project or procurement such as by communications from banks, auditing firms, or other financial references, financial statements, and similar reports consistent with the size and complexity of the project;

(d) Evidence of appropriate licensing and registrations necessary to perform the project or procurement;

(e) Safety record on projects of comparable size and complexity; and

(f) Information on any public contracts or projects of similar size and complexity on which the contractor, subcontractor, or any business or corporate affiliate has been terminated for cause, including information on the ultimate disposition of any such terminations.

(3) A public body may prequalify specific types of subcontractors when their qualifications and experience are deemed by the public body to be a major factor in the success of the project due to its technical, design, or environmental complexity. Whenever feasible, a public body shall prequalify not fewer than three subcontractors for any major component of such a project pursuant to the procedures provided in this section. The public body may require proposers or bidders to utilize a subcontractor from among those prequalified for the component of such a project.

(4) In the event a contractor or subcontractor is not deemed qualified, the public body shall provide a written explanation to the contractor or subcontractor of the reasons for the determination. The prequalification procedures shall provide bidders or proposers with a reasonable opportunity to protest or challenge the determination to utilize prequalification, the prequalification criteria, and the prequalification determination. Notice and advertisement of the request for prequalifications shall conform to the requirements of section 5 of this act.

(5) Following selection of prequalified contractors or subcontractors, the public body may award a contract to a prequalified contractor submitting the lowest responsive bid pursuant to competitive sealed bidding or may do so pursuant to a process described in its initial request for prequalification consistent with the requirements of section 5 of this act.

NEW SECTION. Sec. 7. DIRECTOR, LEGISLATIVE, OR GOVERNING AUTHORITY AUTHORIZATION. The determination to use any of the procurement procedures authorized by this chapter shall be made by a state agency director or by the legislative or governing authority of a municipality or the office or authority of a public body otherwise authorized to make procurement decisions for the public body following a public process that ensures that the recommendations and reasons for utilizing the procedures are summarized in writing and that there is an opportunity for public comment on such reasons and recommendations and on the proposed determination. The determination shall be subject to appeal to superior court within seven days of the determination by the public body.

NEW SECTION. Sec. 8. PUBLIC INSPECTION OF CERTAIN RECORDS. (1) Except as provided in this section, all proceedings, records, contracts, and other public records relating to procurement transactions authorized under this chapter shall be open to the inspection of any citizen, or any interested person, firm, or corporation in accordance with the Washington public disclosure act, chapter 42.17 RCW, subject to the additional limits set forth in subsection (2) of this section.

(2) Trade secrets or proprietary information submitted by a bidder, offeror, or contractor in connection with a procurement transaction shall not be subject to public disclosure under the Washington public disclosure act, chapter 42.17 RCW if the bidder, offeror, or contractor invokes the protections of this section prior to or upon submission of the data or other materials, and must identify the data or other materials to be protected and state the reasons why protection is necessary.

NEW SECTION. Sec. 9. NEGOTIATION WITH LOWEST RESPONSIBLE BIDDER OR PROPOSER. Notwithstanding the provisions of RCW 39.04.015 or any other provision of law, a public body is authorized to negotiate an adjustment to the lowest bid or proposal price under consideration for award for a project or procurement qualifying under the terms of this chapter based upon agreed changes to the contract plans and specifications under the following conditions:

(1) All responsive bids or proposal prices exceed the available funds, as certified by an appropriate fiscal officer;

(2) The apparent low responsive bid or proposal does not exceed the available funds by two hundred fifty thousand dollars or two percent for projects valued over five million dollars, whichever is greater; and

(3) The negotiated adjustment will bring the bid or proposal price within the amount of available funds.

NEW SECTION. Sec. 10. COMPLIANCE WITH CONDITIONS ON FEDERAL GRANTS OR CONTRACTS. Where a procurement transaction implemented under this chapter involves the expenditure of federal grant assistance or contract funds, the receipt of which is conditioned upon compliance with mandatory requirements in federal laws or regulations not in conformance with this chapter or state or local laws, charter provisions, and regulations, a public body may comply with such federal requirements, notwithstanding the provisions of such laws, charters, regulations, or this chapter if acceptance of the grant or contract funds under the applicable conditions is in the public interest.

NEW SECTION. Sec. 11. LIBERAL CONSTRUCTION. The rule of strict construction shall have no application to this chapter, but this chapter shall be liberally construed in all respects to carry out the purposes and objects for which this chapter is intended.

NEW SECTION. Sec. 12. APPLICATION. This act shall apply prospectively only and not retroactively; provided, however, that this act shall not be deemed to imply that any use of the procurement procedures identified in this act by state agencies and municipalities prior to the effective date of this act were utilized without legal authority or that such state agencies or municipalities lacked power to take such actions.

NEW SECTION. Sec. 13. MANDATORY REVIEW. The governor shall establish an independent oversight advisory committee with representatives of interest groups with an interest in this subject area, including municipalities with experience in utilizing the procedures authorized in this chapter, and the private sector to review experience with such procedures. The oversight advisory committee shall report its findings to the legislature prior to the session which convenes in January 2001.

NEW SECTION. Sec. 14. SHORT TITLE. This chapter may be known and cited as the Washington alternative public procurement procedures act.

NEW SECTION. Sec. 15. CAPTIONS. Captions as used in this act do not constitute any part of the law.

NEW SECTION. Sec. 16. SEVERABILITY. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 17. Sections 1 through 16 of this act shall constitute a new chapter in Title 39 RCW.