BILL REQ. #:  H-2426.1 

READ FIRST TIME 02/26/07.   

     AN ACT Relating to assistance for disadvantaged contractors; adding new sections to chapter 39.19 RCW; adding a new section to chapter 48.01 RCW; and providing an expiration date.

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

NEW SECTION.  Sec. 1   DEFINITIONS. The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Bond" includes a bid bond, payment bond, or performance bond.
     (2) "Director" means the director of the office of minority and women's business enterprises.
     (3) "Disadvantaged contractor" means a business that is: (a) Registered as a contractor under chapter 18.27 RCW or licensed as a contractor under chapter 19.28 RCW; and (b) designated by the director as a disadvantaged contractor in accordance with section 2 of this act.
     (4) "Fund" means the disadvantaged contractor bonding program fund created in section 5 of this act.
     (5) "Office" means the office of minority and women's business enterprises.
     (6) "Qualified disadvantaged contractor" means a disadvantaged contractor that is participating in the contractor assistance program established in section 3 of this act.
     (7) "Qualified small business contractor" means a small business contractor that is participating in the contractor assistance program established in section 3 of this act.
     (8) "Small business contractor" means a business that: (a) Is registered as a contractor under chapter 18.27 RCW or licensed as a contractor under chapter 19.28 RCW; and (b) does not exceed the size limitations for construction and electrical contractors as set forth in the current table of North American industry classification system (NAICS) codes and corresponding industry size standards.
     (9) "Surety company" means a company authorized by the insurance commissioner to issue bonds as surety.

NEW SECTION.  Sec. 2   DISADVANTAGED CONTRACTORS. The director shall determine whether a business that is registered as a contractor under chapter 18.27 RCW or licensed as a contractor under chapter 19.28 RCW is a disadvantaged contractor, and shall adopt rules establishing the criteria and procedures for making this determination. The business owner or owners shall be required to show both social and economic disadvantage based on the following:
     (1) The relative financial resources of the business as well as the personal wealth of the owner or owners of the business;
     (2) Social disadvantage based on any of the following:
     (a) Color, ethnic origin, gender, or physical disability;
     (b) Location in an area of high unemployment or a qualified census tract; or
     (c) Other factors not common to other small businesses; and
     (3) Economic disadvantage based on business size thresholds and eligibility criteria developed in rule that are designed to stimulate economic development through contract awards to businesses located in qualified census tracts.

NEW SECTION.  Sec. 3   CONTRACTOR ASSISTANCE PROGRAM. The director shall contract with nonprofit organizations to provide technical assistance to disadvantaged and small business contractors to become more competitive by developing or improving their business operations skills. During the 2007-2009 biennium, the director shall enter into two contracts to provide technical assistance to disadvantaged and small business contractors, with one contract for contractors located west of the crest of the Cascade mountains, and the other for contractors located east of the crest of the Cascade mountains. Up to fifty percent of the contractors that receive technical assistance may be small business contractors.

NEW SECTION.  Sec. 4   BOND GUARANTEE PROGRAM. (1) The director may guarantee bonds executed by sureties for qualified disadvantaged contractors or qualified small business contractors as principals on contracts that are estimated to cost five hundred thousand dollars or less and that are with the state, any political subdivision, or any person as the obligee. The director, as guarantor, may exercise all the rights and powers of a company authorized by the insurance commissioner to guarantee bonds under Title 48 RCW but otherwise is not subject to any laws related to a guaranty company under Title 48 RCW or to any rules of the insurance commissioner. Up to fifty percent of the guarantees may be for bonds executed by sureties for small business contractors.
     (2) The director shall adopt rules establishing procedures for submission, review, and approval of applications for bond guarantees under this section.
     (3) In accordance with rules adopted pursuant to this section, the director may guarantee up to ninety percent of the loss incurred and paid by sureties on bonds guaranteed under subsection (1) of this section.
     (4) The penal sum amounts of all outstanding guarantees made by the director under this section shall not exceed three times the amount of moneys in the fund.
     (5) The director may approve one application per fiscal year from each surety bond company for bond guarantees in an amount requested to support one fiscal year of that company's activity under this section. A surety bond company that applies for a bond guarantee under this subsection, whether or not the guarantee is approved, is not restricted from also applying for individual bond guarantees under subsection (1) of this section.
     (6) By December 1, 2008, the director shall submit a report to the appropriate committees of the legislature on the status and results of the bond guarantee program, including the number and dollar amount of claims against the state arising from bonds guaranteed under this section.

NEW SECTION.  Sec. 5   FUND. (1) The contractor assistance and bond guarantee program fund is created in the custody of the state treasurer. Only the director or the director's designee may authorize expenditures from the fund. The fund and all disbursements from the fund are subject to the allotment procedure under chapter 43.88 RCW, but an appropriation is not required for expenditures. Nothing in section 4 of this act grants or pledges to any obligee or other person any state moneys other than the moneys in the fund.
     (2) For the 2007-09 biennium, two million two hundred thousand dollars in receipts from the fines and penalties assessed by the office of the insurance commissioner under Title 48 RCW shall be deposited into the fund. Of that amount, up to two hundred thousand dollars may be expended from the fund only for the contractor assistance program created in section 3 of this act, and up to two million dollars may be expended from the fund only for claims against the state arising against a bond of the contractor.

NEW SECTION.  Sec. 6   A new section is added to chapter 48.01 RCW to read as follows:
     RECEIPTS FROM FINES AND PENALTIES. Except as otherwise provided in this title, for the 2007-09 biennium, the first two million two hundred thousand dollars in receipts from fines and penalties assessed by the office of the insurance commissioner under Title 48 RCW shall be deposited in the fund created in section 5 of this act.

NEW SECTION.  Sec. 7   EXPIRATION DATE. Sections 1 through 5 of this act expire July 1, 2009.

NEW SECTION.  Sec. 8   CODIFICATION. Sections 1 through 5 of this act are each added to chapter 39.19 RCW.