WSR 04-07-092

PROPOSED RULES

DEPARTMENT OF TRANSPORTATION


[ Filed March 16, 2004, 10:46 a.m. ]

Original Notice.

Preproposal statement of inquiry was filed as WSR 04-03-011.

Title of Rule: WAC 468-310-020 Contents of standard prequalification questionnaire and financial statement and 468-310-050 Classification and capacity rating.

Purpose: To implement the statutory direction to revise the financial prequalification rules for Washington state ferries' (WSF) design/build partnership for the construction of new auto ferries.

Statutory Authority for Adoption: RCW 47.60.816.

Statute Being Implemented: RCW 47.60.816.

Summary: RCW 47.60.810 et seq. authorizes the Washington State Department of Transportation to procure new auto ferries under a modified request for proposals process. RCW 47.60.816 states, in part: "The department shall modify the financial prequalification rules in chapter 468-310 WAC in order to maximize competition among otherwise qualified proposers." The proposed rule revisions are intended to implement such statutory direction.

Reasons Supporting Proposal: To implement the rule revisions required by the governing project statute for the new auto ferries, RCW 47.60.816.

Name of Agency Personnel Responsible for Drafting, Implementation and Enforcement: Tim P. McGuigan, 2911 Second Avenue, Seattle, WA 98121-1012, (206) 515-3601.

Name of Proponent: Washington State Department of Transportation, Washington State Ferries, governmental.

Rule is not necessitated by federal law, federal or state court decision.

Explanation of Rule, its Purpose, and Anticipated Effects: Purpose: The purpose of the rule is to implement the authorizing statute's direction to modify the financial prequalification rules in chapter 468-310 WAC to maximize competition for the partnership to design/build new auto ferries.

Effect: The intended effect is to maximize competition among qualified proposers for the new auto ferries project.

No other effects are anticipated. The rule revision is project specific.

Proposal Changes the Following Existing Rules: The rule revision in WAC 468-310-020 is a short phrase that refers to the new exception in WAC 468-310-050(8). See below.

The rule revision in WAC 468-310-050(7) modifies the financial prequalification requirements for the new ferries project to maximize competition. The revised rules allow prequalification applicants to submit evidence (e.g., a letter from a bank or surety co.) that they will have the ability to obtain contract security in the amount of $13,000,000 if awarded the contract. This is less restrictive than the current prequalification rule which limits the prequalification capacity rating to ten times net worth subject to providing three years of audited financial statements.

The rule revision in WAC 468-310-050(8) reduces the number of audited financial statements required for project prequalification, from three years of audited financial statements (per WAC 468-310-020) to one year plus two annual financial statements (i.e., unaudited) for two more years in the past three years.

No small business economic impact statement has been prepared under chapter 19.85 RCW. The Washington State Ferries has reviewed RCW 19.85.030 and determined that the proposed rule does not impose more than minor costs on businesses in an industry. Only those businesses choosing to seek prequalification on the 2003 ferry procurement are covered by the proposed rule. The rule does not impose additional regulatory, reporting, recordkeeping, compliance, or additional professional services costs.

Further, the proposed rule will modify the financial prequalification criteria for the new auto ferries project only, making it less restrictive, and thus increase (not decrease) competition among qualified shipyards. There is no adverse impact or cost to the affected shipyards resulting from the proposed rule.

RCW 34.05.328 does not apply to this rule adoption. The proposed rule does not fit within the requirements of RCW 34.05.328.

Hearing Location: Henry M. Jackson Federal Building, 915 Second Avenue, 28th Floor, Olympic Room No. 2886, Seattle, WA, on April 27, 2004, at 10:00 a.m.

Assistance for Persons with Disabilities: Contact Washington State Ferries by April 26, 2004, TDD (206) 515-3600 or (206) 515-3601.

Submit Written Comments to: Tim P. McGuigan, Washington State Ferries' Director, Legal Services and Contracts, 2911 Second Avenue, Seattle, WA 98121-1012, fax (206) 515-3605, by April 26, 2004.

Date of Intended Adoption: April 27, 2004.

March 4, 2004

Mike Thorne

Director/CEO

Washington State Ferries

OTS-7017.1


AMENDATORY SECTION(Amending Order 189, filed 1/11/99, effective 2/11/99)

WAC 468-310-020   Contents of standard prequalification questionnaire and financial statement.   The standard prequalification questionnaire and financial statement shall be transmitted to the director of Washington state ferries. The contractor shall provide the following information:

(1) The name, address, phone number, contractor registration number and type of organization (corporation, copartnership, individual, etc.) of the contractor seeking prequalification.

(2) The contract size in dollars and the class or classes of work for which the contractor seeks prequalification (such as vessel dry-docking and hull repairs, vessel electrical repairs, etc.) as enumerated in WAC 468-310-050(6).

(3) Ownership of the contractor and if a corporation, the name of the parent corporation (if any) and any affiliated companies or subsidiaries.

(4) An accurate and complete record of the fifteen largest contracts in excess of ten thousand dollars performed by the contractor in whole or in part within the preceding three years both in Washington and elsewhere, including subcontracts, giving the contract amount, the date completed, the class of work, the name, address and phone number of the owner/agency representative, and any liquidated damages assessed against the contractor by an owner arising out of the performance of the contract.

(5) The principal officers and key employees showing the number of years each engaged in the class or classes of work for which the contractor seeks prequalification. The department may require resumes of such personnel as deemed proper for making its determination.

(6) Except as otherwise provided in WAC 468-310-050(8), a contractor requesting prequalification certification to perform work in excess of ten million dollars shall submit copies of its audited annual statements for the previous three years as audited by an independent certified public accountant which shall include comparative balance sheets and income statements, a statement of retained earnings, supporting schedules and notes attached thereto, and the opinion of the independent auditor. The financial statement shall not be more than twelve months old when submitted. Any wholly owned subsidiary corporation may file the latest consolidated financial statement of its parent corporation in lieu of a financial statement prepared solely for such subsidiary providing the financial statement otherwise meets the requirements of the preceding two sentences. If a consolidated financial statement is filed on behalf of a subsidiary corporation, a bid of the subsidiary corporation will be considered only if there is on file with the department a letter from the parent corporation guaranteeing performance by the subsidiary corporation of its contract with the department of transportation in an amount at least equal to the amount of the bid. A letter of guarantee by a parent corporation may cover a specific contract bid by its subsidiary or all contracts bid by its subsidiary within a stated period of time.

(7) A list of all major items of equipment to be used in those classes of work for which prequalification certification is requested including the original cost, age, location and condition of such equipment. The schedule shall show whether the equipment is owned, leased or rented. All major items of useful equipment should be listed even though fully depreciated but no obsolete or useless equipment should be included. In the event the contractor seeks prequalification certification to perform work on ferry vessels, the schedule shall also describe plant facilities of the contractor including shipyards, dry docks, repair facilities and other plant facilities.

(8) Such other information as may be required by the prequalification questionnaire.

[Statutory Authority: RCW 47.60.680 and 47.60.690. 99-03-025 (Order 189), 468-310-020, filed 1/11/99, effective 2/11/99. Statutory Authority: RCW 47.60.680. 88-19-040 (Order 114), 468-310-020, filed 9/14/88. Statutory Authority: 1983 c 133. 83-19-014 (Order 84), 468-310-020, filed 9/12/83.]


AMENDATORY SECTION(Amending Order 189, filed 1/11/99, effective 2/11/99)

WAC 468-310-050   Classification and capacity rating.   (1) Each contractor seeking prequalification under these rules will be classified for one or more of the classes of work listed in subsection 8 of this section and will be given a maximum capacity rating in accordance with its financial ability, the adequacy of its equipment and plant facilities to perform the class or classes of work for which it has sought prequalification, the extent of the contractor's experience in performing contracts of the class or classes for which prequalification is sought, and the adequacy of the experience and capability of the contractor's officers and key employees in performing contracts of the class or classes for which prequalification is sought. The maximum capacity rating will limit the quantity of uncompleted work which the contractor shall have under contract at any one time either as a prime contractor or a subcontractor.

(2) Except as provided in subsection (7) of this section, the maximum capacity rating for a contractor applying for a rating in excess of fifty thousand dollars will be ten times the contractor's net worth as set forth in the standard prequalification questionnaire and financial statement. A properly executed letter of credit from an acceptable financial institution may be considered as an asset increasing the contractor's maximum capacity rating by the amount of the credit, but without the use of a multiplier. The maximum capacity rating for a contractor not submitting an audited financial statement as provided in WAC 468-310-020(6) will be ten million dollars: Provided, That in all cases the contractor's maximum capacity rating may be reduced to an amount considered by the department to be within the contractor's actual capacity based upon its organization, personnel, equipment and plant, and experience.

(3) Consideration will be given to raising, by an amount not to exceed 50 percent, the maximum capacity rating of a contractor who qualifies with respect to actual capacity based upon organization, personnel, equipment and plant facilities, and experience, upon receipt of evidence of a current bonding capacity of such additional amount with a corporate surety. Such evidence shall be in the form of a letter of commitment executed by an officer of the surety who is authorized to bind the surety. Notwithstanding the provisions of this subsection, the maximum capacity rating for a contractor not submitting an audited financial statement as provided in WAC 468-310-020(6) will be ten million dollars.

(4) The certificate of prequalification issued by the department will establish a contractor's maximum capacity rating which will be subject to reduction by the total value of its current uncompleted work regardless of its location and with whom it may be contracted to determine the contractor's bidding capacity at the particular time.

(5) Notwithstanding the provisions of this section, a contractor will be allowed to submit a bid for an amount up to $50,000 on a class or classes of work for which it is prequalified without regard to any financial maximum capacity rating or financial current capacity rating: Provided, That the contractor's current capacity may be reduced to an amount considered by the department to be within the contractor's actual capacity based upon its organization, personnel, equipment and plant facilities, and experience.

(6)(a) Construction, repair and maintenance work on ferry vessels for which prequalification certification under these rules may be granted are classified as follows:


Class 81 Vessel construction and renovation;
Class 82 Dry-docking and hull repairs;
Class 83 Vessel metal fabrication repairs;
Class 84 Vessel electrical repairs;
Class 85 Vessel miscellaneous repairs;

(b) A contractor currently prequalified under RCW 47.28.070 to perform those classes of work required in the construction, improvement and repair of ferry terminal facilities will initially be deemed prequalified under these rules to perform such classes of work with the same capacity rating as approved by the department for highway related work.

(7) Notwithstanding the provisions of this section, proposers who wish to prequalify for the department's construction of new 130-auto ferries, pursuant to the department's 2003 request for proposals, must submit evidence of their ability, if awarded the contract, to obtain contract security in the amount of thirteen million dollars. The department estimates such amount to be adequate to protect one hundred percent of the department's estimated exposure to loss on the vessel construction contract, as calculated by the department prior to issuance of the request for proposals. Such amount shall be specified in the project request for proposals and is subject to modification by addendum during the request for proposals process. The actual contract security amount for the project construction contract will be a percentage of the successful proposer's total bid price. Such percentage shall be specified in the construction contract within the request for proposals. For the new 130-auto ferries contract, this provision applies in lieu of the maximum capacity rating formula specified in subsection (2) of this section.

(8) Notwithstanding the provisions of this section or WAC 468-310-020, proposers who wish to prequalify for the department's construction of new 130-auto ferries, pursuant to the department's 2003 request for proposals, shall, in addition to the evidence of contract security required in subsection (7) of this section, submit an audited financial statement for at least one year in the previous three years, plus annual financial statements for two additional years in the previous three years. The audited financial statement shall be performed by an independent certified public accountant which shall include comparative balance sheets and income statements, a statement of retained earnings, supporting schedules and notes attached thereto, and the opinion of the independent auditor. The form and quantity of financial statements shall be specified in the project request for proposals and is subject to modification by addendum during the request for proposals process. For the new 130-auto ferries contract, this provision applies in lieu of the quantity of audited financial statements specified in WAC 468-310-020.

[Statutory Authority: RCW 47.60.680 and 47.60.690. 99-03-025 (Order 189), 468-310-050, filed 1/11/99, effective 2/11/99. Statutory Authority: RCW 47.60.680. 88-19-040 (Order 114), 468-310-050, filed 9/14/88. Statutory Authority: 1983 c 133. 83-19-014 (Order 84), 468-310-050, filed 9/12/83.]

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