AN
ACT Relating to payment of retained percentages on public improvement contracts
using the general contractor/construction manager method; and amending RCW 60.28.011.
BE IT ENACTED BY THE
LEGISLATURE OF THE STATE OF WASHINGTON:
Sec.
1. RCW
60.28.011 and 1994 c 101 s 1 are each amended to read as follows:
(1)
Public improvement contracts shall provide, and public bodies shall reserve, a
contract retainage not to exceed five percent of the moneys earned by the
contractor as a trust fund for the protection and payment of: (a) The claims
of any person arising under the contract; and (b) the state with respect to
taxes imposed pursuant to Title 82 RCW which may be due from such contractor.
(2)
Every person performing labor or furnishing supplies toward the completion of a
public improvement contract shall have a lien upon moneys reserved by a public
body under the provisions of a public improvement contract. However, the
notice of the lien of the claimant shall be given within forty-five days of
completion of the contract work, and in the manner provided in RCW 39.08.030.
(3)
The contractor at any time may request the contract retainage be reduced to one
hundred percent of the value of the work remaining on the project.
(a)
After completion of all contract work other than landscaping, the contractor
may request that the public body release and pay in full the amounts retained
during the performance of the contract, and sixty days thereafter the public
body must release and pay in full the amounts retained (other than continuing
retention of five percent of the moneys earned for landscaping) subject to the
provisions of chapters 39.12 and 60.28 RCW.
(b)
Sixty days after completion of all contract work the public body must release
and pay in full the amounts retained during the performance of the contract
subject to the provisions of chapters 39.12 and 60.28 RCW.
(4)
The moneys reserved by a public body under the provisions of a public
improvement contract, at the option of the contractor, shall be:
(a)
Retained in a fund by the public body;
(b)
Deposited by the public body in an interest bearing account in a bank, mutual
savings bank, or savings and loan association. Interest on moneys reserved by
a public body under the provision of a public improvement contract shall be
paid to the contractor;
(c)
Placed in escrow with a bank or trust company by the public body. When the
moneys reserved are placed in escrow, the public body shall issue a check
representing the sum of the moneys reserved payable to the bank or trust
company and the contractor jointly. This check shall be converted into bonds
and securities chosen by the contractor and approved by the public body and the
bonds and securities shall be held in escrow. Interest on the bonds and
securities shall be paid to the contractor as the interest accrues.
(5)
The contractor or subcontractor may withhold payment of not more than five
percent from the moneys earned by any subcontractor or sub-subcontractor or
supplier contracted with by the contractor to provide labor, materials, or
equipment to the public project. Whenever the contractor or subcontractor
reserves funds earned by a subcontractor or sub-subcontractor or supplier, the
contractor or subcontractor shall pay interest to the subcontractor or
sub-subcontractor or supplier at a rate equal to that received by the
contractor or subcontractor from reserved funds.
(6)
A contractor may submit a bond for all or any portion of the contract retainage
in a form acceptable to the public body and from a bonding company meeting
standards established by the public body. The public body shall accept a bond
meeting these requirements unless the public body can demonstrate good cause
for refusing to accept it. This bond and any proceeds therefrom are subject to
all claims and liens and in the same manner and priority as set forth for
retained percentages in this chapter. The public body shall release the bonded
portion of the retained funds to the contractor within thirty days of accepting
the bond from the contractor. Whenever a public body accepts a bond in lieu of
retained funds from a contractor, the contractor shall accept like bonds from
any subcontractors or suppliers from which the contractor has retained funds.
The contractor shall then release the funds retained from the subcontractor or
supplier to the subcontractor or supplier within thirty days of accepting the
bond from the subcontractor or supplier.
(7)
If the public body administering a contract, after a substantial portion of the
work has been completed, finds that an unreasonable delay will occur in the
completion of the remaining portion of the contract for any reason not the
result of a breach thereof, it may, if the contractor agrees, delete from the
contract the remaining work and accept as final the improvement at the stage of
completion then attained and make payment in proportion to the amount of the
work accomplished and in this case any amounts retained and accumulated under
this section shall be held for a period of sixty days following the
completion. In the event that the work is terminated before final completion
as provided in this section, the public body may thereafter enter into a new
contract with the same contractor to perform the remaining work or improvement
for an amount equal to or less than the cost of the remaining work as was
provided for in the original contract without advertisement or bid. The
provisions of this chapter are exclusive and shall supersede all provisions and
regulations in conflict herewith.
(8)
Whenever the department of transportation has contracted for the construction
of two or more ferry vessels, sixty days after completion of all contract work
on each ferry vessel, the department must release and pay in full the amounts
retained in connection with the construction of the vessel subject to the provisions
of RCW 60.28.020 and chapter 39.12 RCW. However, the department of
transportation may at its discretion condition the release of funds retained in
connection with the completed ferry upon the contractor delivering a good and
sufficient bond with two or more sureties, or with a surety company, in the
amount of the retained funds to be released to the contractor, conditioned that
no taxes shall be certified or claims filed for work on the ferry after a
period of sixty days following completion of the ferry; and if taxes are
certified or claims filed, recovery may be had on the bond by the department of
revenue and the materialmen and laborers filing claims.
(9)
Except as provided in subsection (1) of this section, reservation by a public
body for any purpose from the moneys earned by a contractor by fulfilling its
responsibilities under public improvement contracts is prohibited.
(10)
Contracts on projects funded in whole or in part by farmers home administration
and subject to farmers home administration regulations are not subject to
subsections (1) through (9) of this section.
(11)
This subsection applies only to a public body that has contracted for the
construction of a facility using the general contractor/construction manager
procedure, as defined under RCW 39.10.060. If the work performed by a
subcontractor on the project has been completed within the first half of the
time provided in the general contractor/construction manager contract for
completing the work, the public body may accept the completion of the
subcontract. The public body must give public notice of this acceptance.
After a forty-five day period for giving notice of liens, and compliance with
the retainage release procedures in RCW 60.28.021, the public body may release
that portion of the retained funds associated with the subcontract. Claims
against the retained funds after the forty-five day period are not valid.
(12)
Unless the context clearly requires otherwise, the definitions in this
subsection apply throughout this section.
(a)
"Contract retainage" means an amount reserved by a public body from
the moneys earned by a person under a public improvement contract.
(b)
"Person" means a person or persons, mechanic, subcontractor, or
materialperson who performs labor or provides materials for a public
improvement contract, and any other person who supplies the person with
provisions or supplies for the carrying on of a public improvement contract.
(c)
"Public body" means the state, or a county, city, town, district,
board, or other public body.
(d) "Public improvement contract" means a contract for
public improvements or work, other than for professional services.
