BILL REQ. #:  H-1353.2 

READ FIRST TIME 02/03/09.   

     AN ACT Relating to increasing small business access to state contracting opportunities; amending RCW 39.29.006, 39.29.011, 39.29.018, 39.29.065, 43.19.1905, 43.19.1908, 43.78.110, 43.105.041, and 43.105.020; and creating a new section.

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

NEW SECTION.  Sec. 1   The legislature finds that state government procurement of goods and services is a largely untapped market for Washington state small businesses. The legislature further finds that small businesses generally lack awareness of state procurement opportunities and how such opportunities can be pursued. The legislature recognizes that up to forty percent of all state procurement is awarded with limited or no competition due to exceptions in law for contracts within certain dollar thresholds, and that between the years 2000 and 2006, state contracts with certified minority businesses dropped from five percent of total expenditures to less than one percent. The legislature believes that it is in the state's economic interest to increase small business awareness of and access to state contracting opportunities because: (1) Retaining and strengthening the private sector creates jobs, income, and revenues; and (2) increased competition for procurement awards will result in more competitive pricing of public contracts. The legislature is aware that state government has an internet-based common vendor registration and bid notification system, but its use by state agencies is voluntary and inconsistent. The legislature therefore intends to require state agencies to use the state's common vendor registration and bid notification system for publishing all procurement notices. The legislature also intends to direct the state's central services agencies to develop procurement policies, procedures, and materials that encourage and facilitate the purchase of products and services by state agencies from Washington small businesses.

Sec. 2   RCW 39.29.006 and 2002 c 354 s 235 are each amended to read as follows:
     As used in this chapter:
     (1) "Agency" means any state office or activity of the executive and judicial branches of state government, including state agencies, departments, offices, divisions, boards, commissions, and educational, correctional, and other types of institutions.
     (2) "Client services" means services provided directly to agency clients including, but not limited to, medical and dental services, employment and training programs, residential care, and subsidized housing.
     (3) "Common vendor registration and bid notification system" means the internet-based vendor registration and bid notification system maintained by and housed within the department of general administration. The requirements contained in chapter . . ., Laws of 2009 (this act) shall continue to apply to this system, regardless of future changes to its name or management structure.
     (4) "Competitive solicitation" means a documented formal process providing an equal and open opportunity to qualified parties and culminating in a selection based on criteria which may include such factors as the consultant's fees or costs, ability, capacity, experience, reputation, responsiveness to time limitations, responsiveness to solicitation requirements, quality of previous performance, and compliance with statutes and rules relating to contracts or services. "Competitive solicitation" includes posting of the contract opportunity on the state's common vendor registration and bid notification system.
     (((4))) (5) "Consultant" means an independent individual or firm contracting with an agency to perform a service or render an opinion or recommendation according to the consultant's methods and without being subject to the control of the agency except as to the result of the work. The agency monitors progress under the contract and authorizes payment.
     (((5))) (6) "Emergency" means a set of unforeseen circumstances beyond the control of the agency that either:
     (a) Present a real, immediate threat to the proper performance of essential functions; or
     (b) May result in material loss or damage to property, bodily injury, or loss of life if immediate action is not taken.
     (((6))) (7) "Evidence of competition" means documentation demonstrating that the agency has solicited responses from multiple firms in selecting a consultant. "Evidence of competition" includes documentation that the agency has posted the contract opportunity on the state's common vendor registration and bid notification system.
     (((7))) (8) "Personal service" means professional or technical expertise provided by a consultant to accomplish a specific study, project, task, or other work statement. This term does not include purchased services as defined under subsection (((9))) (10) of this section. This term does include client services.
     (((8))) (9) "Personal service contract" means an agreement, or any amendment thereto, with a consultant for the rendering of personal services to the state which is consistent with RCW 41.06.142.
     (((9))) (10) "Purchased services" means services provided by a vendor to accomplish routine, continuing and necessary functions. This term includes, but is not limited to, services acquired under RCW 43.19.190 or 43.105.041 for equipment maintenance and repair; operation of a physical plant; security; computer hardware and software maintenance; data entry; key punch services; and computer time-sharing, contract programming, and analysis.
     (((10))) (11) "Small business" means an in-state business that is independently owned and operated and together with affiliates, has fifty or fewer employees, and average annual gross receipts of ten million dollars or less over the previous three consecutive years. As used in this definition, "in-state business" means a business that has its principal office located in Washington and its officers domiciled in Washington.
     (12) "Sole source" means a consultant providing professional or technical expertise of such a unique nature that the consultant is clearly and justifiably the only practicable source to provide the service. The justification shall be based on either the uniqueness of the service or sole availability at the location required.

Sec. 3   RCW 39.29.011 and 1998 c 101 s 3 are each amended to read as follows:
     All personal service contracts shall be entered into pursuant to competitive solicitation, except for:
     (1) Emergency contracts;
     (2) Sole source contracts;
     (3) Contract amendments;
     (4) Contracts between a consultant and an agency of less than twenty thousand dollars. However, contracts of five thousand dollars or greater but less than twenty thousand dollars shall have documented evidence of competition, which must include agency posting of the contract opportunity on the state's common vendor registration and bid notification system. Agencies shall not structure contracts to evade these requirements; and
     (5) Other specific contracts or classes or groups of contracts exempted from the competitive solicitation process by the director of the office of financial management when it has been determined that a competitive solicitation process is not appropriate or cost-effective.

Sec. 4   RCW 39.29.018 and 1998 c 101 s 5 are each amended to read as follows:
     (1) Sole source contracts shall be filed with the office of financial management and made available for public inspection at least ten working days prior to the proposed starting date of the contract. Documented justification for sole source contracts shall be provided to the office of financial management when the contract is filed, and must include evidence that the agency posted the contract opportunity on the state's common vendor registration and bid notification system. For sole source contracts of twenty thousand dollars or more, documented justification shall also include evidence that the agency attempted to identify potential consultants by advertising through statewide or regional newspapers.
     (2) The office of financial management shall approve sole source contracts of twenty thousand dollars or more before any such contract becomes binding and before any services may be performed under the contract. These requirements shall also apply to sole source contracts of less than twenty thousand dollars if the total amount of such contracts between an agency and the same consultant is twenty thousand dollars or more within a fiscal year. Agencies shall ensure that the costs, fees, or rates negotiated in filed sole source contracts of twenty thousand dollars or more are reasonable.

Sec. 5   RCW 39.29.065 and 1998 c 101 s 9 are each amended to read as follows:
     To implement this chapter, the director of the office of financial management shall establish procedures for the competitive solicitation and award of personal service contracts, recordkeeping requirements, and procedures for the reporting and filing of contracts. The director shall develop procurement policies and procedures, such as unbundled contracting and subcontracting, that encourage and facilitate the purchase of products and services by state agencies and institutions from Washington small businesses to the maximum extent practicable and consistent with international trade agreement commitments. For reporting purposes, the director may establish categories for grouping of contracts. The procedures required under this section shall also include the criteria for amending personal service contracts. At the beginning of each biennium, the director may, by administrative policy, adjust the dollar thresholds prescribed in RCW 39.29.011, 39.29.018, and 39.29.040((, and 39.29.068)) to levels not to exceed the percentage increase in the implicit price deflator. Adjusted dollar thresholds shall be rounded to the nearest five hundred dollar increment.

Sec. 6   RCW 43.19.1905 and 2008 c 215 s 4 are each amended to read as follows:
     (1) The director of general administration shall establish overall state policy for compliance by all state agencies, including educational institutions, regarding the following purchasing and material control functions:
     (a) Development of a state commodity coding system, including common stock numbers for items maintained in stores for reissue;
     (b) Determination where consolidations, closures, or additions of stores operated by state agencies and educational institutions should be initiated;
     (c) Institution of standard criteria for determination of when and where an item in the state supply system should be stocked;
     (d) Establishment of stock levels to be maintained in state stores, and formulation of standards for replenishment of stock;
     (e) Formulation of an overall distribution and redistribution system for stock items which establishes sources of supply support for all agencies, including interagency supply support;
     (f) Determination of what function data processing equipment, including remote terminals, shall perform in statewide purchasing and material control for improvement of service and promotion of economy;
     (g) Standardization of records and forms used statewide for supply system activities involving purchasing, receiving, inspecting, storing, requisitioning, and issuing functions, including a standard notification form for state agencies to report cost-effective direct purchases, which shall at least identify the price of the goods as available through the division of purchasing, the price of the goods as available from the alternative source, the total savings, and the signature of the notifying agency's director or the director's designee;
     (h) Screening of supplies, material, and equipment excess to the requirements of one agency for overall state need before sale as surplus;
     (i) Establishment of warehouse operation and storage standards to achieve uniform, effective, and economical stores operations;
     (j) Establishment of time limit standards for the issuing of material in store and for processing requisitions requiring purchase;
     (k) Formulation of criteria for determining when centralized rather than decentralized purchasing shall be used to obtain maximum benefit of volume buying of identical or similar items, including procurement from federal supply sources;
     (l) Development of criteria for use of leased, rather than state owned, warehouse space based on relative cost and accessibility;
     (m) Institution of standard criteria for purchase and placement of state furnished materials, carpeting, furniture, fixtures, and nonfixed equipment, in newly constructed or renovated state buildings;
     (n) Determination of how transportation costs incurred by the state for materials, supplies, services, and equipment can be reduced by improved freight and traffic coordination and control;
     (o) Establishment of a formal certification program for state employees who are authorized to perform purchasing functions as agents for the state under the provisions of chapter 43.19 RCW;
     (p) Development of performance measures for the reduction of total overall expense for material, supplies, equipment, and services used each biennium by the state;
     (q) Establishment of a standard system for all state organizations to record and report dollar savings and cost avoidance which are attributable to the establishment and implementation of improved purchasing and material control procedures;
     (r) Development of procedures for mutual and voluntary cooperation between state agencies, including educational institutions, and political subdivisions for exchange of purchasing and material control services;
     (s) Resolution of all other purchasing and material matters which require the establishment of overall statewide policy for effective and economical supply management;
     (t) Development of guidelines and criteria for the purchase of vehicles, high gas mileage vehicles, alternate vehicle fuels and systems, equipment, and materials that reduce overall energy-related costs and energy use by the state, including investigations into all opportunities to aggregate the purchasing of clean technologies by state and local governments, and including the requirement that new passenger vehicles purchased by the state meet the minimum standards for passenger automobile fuel economy established by the United States secretary of transportation pursuant to the energy policy and conservation act (15 U.S.C. Sec. 2002);
     (u) Development of goals for state use of recycled or environmentally preferable products through specifications for products and services, processes for requests for proposals and requests for qualifications, contractor selection, and contract negotiations;
     (v) Development of procurement policies and procedures, such as unbundled contracting and subcontracting, that encourage and facilitate the purchase of products and services by state agencies and institutions from Washington small businesses to the maximum extent practicable and consistent with international trade agreement commitments;
     (w) Development of food procurement procedures and materials that encourage and facilitate the purchase of Washington grown food by state agencies and institutions to the maximum extent practicable and consistent with international trade agreement commitments; and
     (((w))) (x) Development of policies requiring all food contracts to include a plan to maximize to the extent practicable and consistent with international trade agreement commitments the availability of Washington grown food purchased through the contract.
     (2) ((As used in this section,)) The department of general administration shall convene a working group including representatives of the office of financial management, the department of information services, and the state printer. The purpose of the working group is to work collaboratively to develop common policies and procedures that encourage and facilitate state government purchases from Washington small businesses, as required in subsection (1)(v) of this section, and in RCW 39.29.065, 43.78.110, and 43.105.041(1)(j). By December 1, 2009, these central services agencies shall jointly provide a written progress report to the governor and legislature on actions taken and planned, barriers identified, and solutions recommended to reach this goal.
     (3) The definitions in this subsection apply throughout this section and RCW 43.19.1908.
     (a) "Common vendor registration and bid notification system" has the definition in RCW 39.29.006.
     (b) "Small business" has the definition in RCW 39.29.006.
     (c) "Washington grown" has the definition in RCW 15.64.060.

Sec. 7   RCW 43.19.1908 and 2006 c 363 s 2 are each amended to read as follows:
     Competitive bidding required by RCW 43.19.190 through 43.19.1939 shall be solicited by public notice, by posting of the contract opportunity on the state's common vendor registration and bid notification system, and through the sending of notices by mail, electronic transmission, or other means to bidders on the appropriate list of bidders who shall have qualified by application to the division of purchasing. Bids may be solicited by the purchasing division from any source thought to be of advantage to the state. All bids shall be in written or electronic form and conform to rules of the division of purchasing.

Sec. 8   RCW 43.78.110 and 1993 c 379 s 107 are each amended to read as follows:
     (1) Whenever in the judgment of the public printer certain printing, ruling, binding, or supplies can be secured from private sources more economically than by doing the work or preparing the supplies in the state printing plant, the public printer may obtain such work or supplies from such private sources. The solicitation for the contract opportunity must be posted on the state's common vendor registration and bid notification system. The public printer shall develop procurement policies and procedures, such as unbundled contracting and subcontracting, that encourage and facilitate the purchase of such services or supplies from Washington small businesses to the maximum extent practicable and consistent with international trade agreement commitments.
     (2) In event any work or supplies are secured on behalf of the state under this section the state printing plant shall be entitled to add up to five percent to the cost thereof to cover the handling of the orders which shall be added to the bills and charged to the respective authorities ordering the work or supplies. The five percent handling charge shall not apply to contracts with institutions of higher education.
     (3) The definitions in this subsection apply throughout this section.
     (a) "Common vendor registration and bid notification system" has the definition in RCW 39.29.006.
     (b) "Small business" has the definition in RCW 39.29.006.

Sec. 9   RCW 43.105.041 and 2003 c 18 s 3 are each amended to read as follows:
     (1) The board shall have the following powers and duties related to information services:
     (a) To develop standards and procedures governing the acquisition and disposition of equipment, proprietary software and purchased services, licensing of the radio spectrum by or on behalf of state agencies, and confidentiality of computerized data;
     (b) To purchase, lease, rent, or otherwise acquire, dispose of, and maintain equipment, proprietary software, and purchased services, or to delegate to other agencies and institutions of state government, under appropriate standards, the authority to purchase, lease, rent, or otherwise acquire, dispose of, and maintain equipment, proprietary software, and purchased services: PROVIDED, That, agencies and institutions of state government are expressly prohibited from acquiring or disposing of equipment, proprietary software, and purchased services without such delegation of authority. The acquisition and disposition of equipment, proprietary software, and purchased services is exempt from RCW 43.19.1919 and, as provided in RCW 43.19.1901, from the provisions of RCW 43.19.190 through 43.19.200, except that the board, the department, and state agencies, as delegated, must post notices of technology procurement bids on the state's common vendor registration and bid notification system. This subsection (1)(b) does not apply to the legislative branch;
     (c) To develop statewide or interagency technical policies, standards, and procedures;
     (d) To review and approve standards and common specifications for new or expanded telecommunications networks proposed by agencies, public postsecondary education institutions, educational service districts, or statewide or regional providers of K-12 information technology services, and to assure the cost-effective development and incremental implementation of a statewide video telecommunications system to serve: Public schools; educational service districts; vocational-technical institutes; community colleges; colleges and universities; state and local government; and the general public through public affairs programming;
     (e) To provide direction concerning strategic planning goals and objectives for the state. The board shall seek input from the legislature and the judiciary;
     (f) To develop and implement a process for the resolution of appeals by:
     (i) Vendors concerning the conduct of an acquisition process by an agency or the department; or
     (ii) A customer agency concerning the provision of services by the department or by other state agency providers;
     (g) To establish policies for the periodic review by the department of agency performance which may include but are not limited to analysis of:
     (i) Planning, management, control, and use of information services;
     (ii) Training and education; and
     (iii) Project management;
     (h) To set its meeting schedules and convene at scheduled times, or meet at the request of a majority of its members, the chair, or the director; ((and))
     (i) To review and approve that portion of the department's budget requests that provides for support to the board; and
     (j) To develop procurement policies and procedures, such as unbundled contracting and subcontracting, that encourage and facilitate the purchase of products and services by state agencies and institutions from Washington small businesses to the maximum extent practicable and consistent with international trade agreement commitments.
     (2) Statewide technical standards to promote and facilitate electronic information sharing and access are an essential component of acceptable and reliable public access service and complement content-related standards designed to meet those goals. The board shall:
     (a) Establish technical standards to facilitate electronic access to government information and interoperability of information systems, including wireless communications systems. Local governments are strongly encouraged to follow the standards established by the board; and
     (b) Require agencies to consider electronic public access needs when planning new information systems or major upgrades of systems.
     In developing these standards, the board is encouraged to include the state library, state archives, and appropriate representatives of state and local government.
     (3)(a) The board, in consultation with the K-20 board, has the duty to govern, operate, and oversee the technical design, implementation, and operation of the K-20 network including, but not limited to, the following duties: Establishment and implementation of K-20 network technical policy, including technical standards and conditions of use; review and approval of network design; procurement of shared network services and equipment; and resolving user/provider disputes concerning technical matters. The board shall delegate general operational and technical oversight to the K-20 network technical steering committee as appropriate.
     (b) The board has the authority to adopt rules under chapter 34.05 RCW to implement the provisions regarding the technical operations and conditions of use of the K-20 network.

Sec. 10   RCW 43.105.020 and 2003 c 18 s 2 are each amended to read as follows:
     As used in this chapter, unless the context indicates otherwise, the following definitions shall apply:
     (1) "Department" means the department of information services;
     (2) "Board" means the information services board;
     (3) "Committee" means the state interoperability executive committee;
     (4) "Local governments" includes all municipal and quasi municipal corporations and political subdivisions, and all agencies of such corporations and subdivisions authorized to contract separately;
     (5) "Director" means the director of the department;
     (6) "Purchased services" means services provided by a vendor to accomplish routine, continuing, and necessary functions. This term includes, but is not limited to, services acquired for equipment maintenance and repair, operation of a physical plant, security, computer hardware and software installation and maintenance, telecommunications installation and maintenance, data entry, keypunch services, programming services, and computer time-sharing;
     (7) "Backbone network" means the shared high-density portions of the state's telecommunications transmission facilities. It includes specially conditioned high-speed communications carrier lines, multiplexors, switches associated with such communications lines, and any equipment and software components necessary for management and control of the backbone network;
     (8) "Telecommunications" means the transmission of information by wire, radio, optical cable, electromagnetic, or other means;
     (9) "Information" includes, but is not limited to, data, text, voice, and video;
     (10) "Information processing" means the electronic capture, collection, storage, manipulation, transmission, retrieval, and presentation of information in the form of data, text, voice, or image and includes telecommunications and office automation functions;
     (11) "Information services" means data processing, telecommunications, office automation, and computerized information systems;
     (12) "Equipment" means the machines, devices, and transmission facilities used in information processing, such as computers, word processors, terminals, telephones, wireless communications system facilities, cables, and any physical facility necessary for the operation of such equipment;
     (13) "Information technology portfolio" or "portfolio" means a strategic management process documenting relationships between agency missions and information technology and telecommunications investments;
     (14) "Oversight" means a process of comprehensive risk analysis and management designed to ensure optimum use of information technology resources and telecommunications;
     (15) "Proprietary software" means that software offered for sale or license;
     (16) "Video telecommunications" means the electronic interconnection of two or more sites for the purpose of transmitting and/or receiving visual and associated audio information. Video telecommunications shall not include existing public television broadcast stations as currently designated by the department of community, trade, and economic development under chapter 43.330 RCW;
     (17) "K-20 educational network board" or "K-20 board" means the K-20 educational network board created in RCW 43.105.800;
     (18) "K-20 network technical steering committee" or "committee" means the K-20 network technical steering committee created in RCW 43.105.810;
     (19) "K-20 network" means the network established in RCW 43.105.820;
     (20) "Educational sectors" means those institutions of higher education, school districts, and educational service districts that use the network for distance education, data transmission, and other uses permitted by the K-20 board.
     (21) "Common vendor registration and bid notification system" has the definition in RCW 39.29.006.
     (22) "Small business" has the definition in RCW 39.29.006.