BP BHEAD INT H [atlas:bill]

AN ACT Relating to prompt payment for goods and services provided to the state of Washington; amending RCW 39.76.011; and adding new sections to chapter 39.76 RCW.

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

NEW SECTION. Sec. 1. A new section is added to chapter 39.76 RCW to read as follows:

(1) The legislature finds that:

(a) Firms and organizations that do business with the state expect and deserve to be paid in a prompt and timely manner; and

(b) Unjustified delays in paying vendors, construction contractors, and providers of service may discourage these firms and organizations, in particular small and medium-sized firms and women and minority-owned business enterprises, from doing business with the state, and may ultimately increase the costs to the state government of: (i) Purchasing materials, equipment, and supplies; (ii) undertaking construction and reconstruction projects; and (iii) obtaining a wide variety of professional and other specialized services, including those that are provided to persons in need.

(2) It is the purpose of this chapter to set standards for the payment of bills incurred by state agencies within specified periods of time and to require interest payments in situations where contract payments do not conform to these standards. It is also the intent of this chapter, consistent with accepted business practices and with sound principles of fiscal management: (a) To encourage state agencies in all branches of state government to make payments at least as expeditiously as they currently do; (b) to reduce existing payment processing times whenever feasible, while at the same time permitting the state agencies to perform proper and reasonable financial oversight activities designed to ensure that the state government receives the quality of goods and services to which it is entitled; and (c) to ensure that public funds are spent in a prudent and responsible manner.

NEW SECTION. Sec. 2. A new section is added to chapter 39.76 RCW to read as follows:

(1) Except as provided in subsection (2) of this section, in the event that an interest payment is made by a contractor in the course of transacting business with any entity other than a state agency, the interest shall not be an obligation of the state, and the state shall not reimburse the contractor for the interest, nor shall any moneys expended for interest payments be counted toward any matching requirement applicable to grants or payments of state funds unless expressly permitted by state law.

(2) If a contractor incurs an interest obligation or charge as a direct result of the state agency's failure to make a payment in accordance with the provisions of this chapter, then the state agency must reimburse the contractor for the amount of the interest obligation or charge.

NEW SECTION. Sec. 3. A new section is added to chapter 39.76 RCW to read as follows:

No contract entered into between a state agency and a contractor after July 1, 2000, shall contain any provision requiring the payment of interest in a manner inconsistent with this chapter, and any provision contained in a contract which waives the right to the payment of interest is hereby declared to be contrary to public policy and wholly void.

Sec. 4. RCW 39.76.011 and 1992 c 223 s 1 are each amended to read as follows:

(1) Except as provided in RCW 39.76.020, every state agency, county, city, town, school district, board, commission, or any other public body shall pay interest at a rate of one percent per month, but at least one dollar per month, on amounts due on written contracts for public works, personal services, goods and services, equipment, and travel, whenever the public body fails to make timely payment.

(2) For purposes of this section, payment shall be timely if:

(a) Except as provided otherwise in this subsection, a check or warrant is mailed or is available on the date specified for the amount specified in the applicable contract documents but not later than thirty days of receipt of a properly completed invoice or receipt of goods or services, whichever is later. If a contract is funded by grant or federal money, the public body shall pay the prime contractor for satisfactory performance within thirty calendar days of the date the public body receives a payment request that complies with the contract or within thirty calendar days of the date the public body actually receives the grant or federal money, whichever is later.

(b) On written contracts for public works, when part or all of a payment is going to be withheld for unsatisfactory performance or if the payment request made does not comply with the requirements of the contract, the public body shall notify the prime contractor in writing within eight working days after receipt of the payment request stating specifically why part or all of the payment is being withheld and what remedial actions must be taken by the prime contractor to receive the withheld amount.

(c) If the notification by the public body required by (b) of this subsection does not comply with the notice contents required under (b) of this subsection, the public body shall pay the interest under subsection (1) of this section from the ninth working day after receipt of the initial payment request until the contractor receives notice that does comply with the notice contents required under (b) of this subsection.

(d) If part or all of a payment is withheld under (b) of this subsection, the public body shall pay the withheld amount within thirty calendar days after the prime contractor satisfactorily completes the remedial actions identified in the notice. If the withheld amount is not paid within the thirty calendar days, the public body shall pay interest under subsection (1) of this section from the thirty-first calendar day until the date paid.

(e)(i) If the prime contractor on a public works contract, after making a request for payment to the public body but before paying a subcontractor for the subcontractor's performance covered by the payment request, discovers that part or all of the payment otherwise due to the subcontractor is subject to withholding from the subcontractor under the subcontract for unsatisfactory performance, the prime contractor may withhold the amount as allowed under the subcontract. If the prime contractor withholds an amount under this subsection, the prime contractor shall:

(A) Give the subcontractor notice of the remedial actions that must be taken as soon as practicable after determining the cause for the withholding but before the due date for the subcontractor payment;

(B) Give the contracting officer of the public body a copy of the notice furnished to the subcontractor under (e)(i)(A) of this subsection; and

(C) Pay the subcontractor within eight working days after the subcontractor satisfactorily completes the remedial action identified in the notice.

(ii) If the prime contractor does not comply with the notice and payment requirements of (e)(i) of this subsection, the contractor shall pay the subcontractor interest on the withheld amount from the eighth working day at an interest rate that is equal to the amount set forth in subsection (1) of this section.

(3) Except as provided in subsection (2)(e) of this section, a prime contractor on a public works project shall pay a subcontractor on the date specified in the applicable contract document or, if no date is specified, within thirty days of receipt of a properly completed invoice or receipt of goods or services. If the prime contractor does not comply with the time limits in this subsection, the prime contractor shall pay the subcontractor interest on the amount due from the day the amount was due at an interest rate that is equal to the amount set forth in subsection (1) of this section.

(4) For the purposes of this section:

(a) A payment is considered to be made when mailed or personally delivered to the party being paid.

(b) An invoice is considered to be received when it is date-stamped or otherwise marked as delivered. If the invoice is not date-stamped or otherwise marked as delivered, the date of the invoice is considered to be the date when the invoice is received.