CERTIFICATION OF ENROLLMENT
SUBSTITUTE SENATE BILL 5499
Chapter 473, Laws of 2009
(partial veto)
61st Legislature
2009 Regular Session
HIGHWAY CONSTRUCTION CONTRACTS--BOND AMOUNTS
EFFECTIVE DATE: 07/26/09
Passed by the Senate April 26, 2009
YEAS 38 NAYS 9
BRAD OWEN
________________________________________
President of the Senate
Passed by the House April 25, 2009
YEAS 92 NAYS 2
FRANK CHOPP
________________________________________
Speaker of the House of Representatives
| | CERTIFICATE
I, Thomas Hoemann, Secretary of the
Senate of the State of Washington,
do hereby certify that the attached
is SUBSTITUTE SENATE BILL 5499 as
passed by the Senate and the House
of Representatives on the dates
hereon set forth.
THOMAS HOEMANN
________________________________________
Secretary |
Approved May 13, 2009, 4:38 p.m., with
the exception of Section 2 which is
vetoed.
CHRISTINE GREGOIRE
________________________________________
Governor of the State of Washington | | FILED
May 18, 2009
Secretary of State
State of Washington |
_____________________________________________
SUBSTITUTE SENATE BILL 5499
_____________________________________________
AS AMENDED BY THE HOUSE
Passed Legislature - 2009 Regular Session| State of Washington | 61st Legislature | 2009 Regular Session |
By Senate Transportation (originally sponsored by Senators Jarrett,
Swecker, Haugen, Marr, and Shin; by request of Department of
Transportation)READ FIRST TIME 02/19/09.
AN ACT Relating to bond amounts for department of transportation
highway contracts; amending RCW 39.08.030; adding a new section to
chapter 39.08 RCW; and providing an expiration date.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec. 1 RCW 39.08.030 and 2007 c 218 s 89 are each amended to read
as follows:
(1) The bond mentioned in RCW 39.08.010 shall be in an amount equal
to the full contract price agreed to be paid for such work or
improvement, except under subsections (2) and (3) of this section, and
shall be to the state of Washington, except as otherwise provided in
RCW 39.08.100, and except in cases of cities and towns, in which cases
such municipalities may by general ordinance fix and determine the
amount of such bond and to whom such bond shall run: PROVIDED, The
same shall not be for a less amount than twenty-five percent of the
contract price of any such improvement, and may designate that the same
shall be payable to such city, and not to the state of Washington, and
all such persons mentioned in RCW 39.08.010 shall have a right of
action in his, her, or their own name or names on such bond for work
done by such laborers or mechanics, and for materials furnished or
provisions and goods supplied and furnished in the prosecution of such
work, or the making of such improvements: PROVIDED, That such persons
shall not have any right of action on such bond for any sum whatever,
unless within thirty days from and after the completion of the contract
with an acceptance of the work by the affirmative action of the board,
council, commission, trustees, officer, or body acting for the state,
county or municipality, or other public body, city, town or district,
the laborer, mechanic or subcontractor, or material supplier, or person
claiming to have supplied materials, provisions or goods for the
prosecution of such work, or the making of such improvement, shall
present to and file with such board, council, commission, trustees or
body acting for the state, county or municipality, or other public
body, city, town or district, a notice in writing in substance as
follows:
Such notice shall be signed by the person or corporation making the
claim or giving the notice, and said notice, after being presented and
filed, shall be a public record open to inspection by any person, and
in any suit or action brought against such surety or sureties by any
such person or corporation to recover for any of the items hereinbefore
specified, the claimant shall be entitled to recover in addition to all
other costs, attorney's fees in such sum as the court shall adjudge
reasonable: PROVIDED, HOWEVER, That no attorney's fees shall be
allowed in any suit or action brought or instituted before the
expiration of thirty days following the date of filing of the notice
hereinbefore mentioned: PROVIDED FURTHER, That any city may avail
itself of the provisions of RCW 39.08.010 through 39.08.030,
notwithstanding any charter provisions in conflict herewith: AND
PROVIDED FURTHER, That any city or town may impose any other or further
conditions and obligations in such bond as may be deemed necessary for
its proper protection in the fulfillment of the terms of the contract
secured thereby, and not in conflict herewith.
(2) Under the job order contracting procedure described in RCW
((39.10.130)) 39.10.420, bonds will be in an amount not less than the
dollar value of all open work orders.
(3)(a) On highway construction contracts administered by the
department of transportation with an estimated contract price of two
hundred fifty million dollars or more, the department may authorize
bonds in an amount less than the full contract price of the project.
If a bond less than the full contract price is authorized by the
department, the bond must be in the form of a performance bond and a
separate payment bond. The department shall fix the amount of the
performance bond on a contract-by-contract basis to adequately protect
one hundred percent of the state's exposure to loss. The amount of the
performance bond must not be less than two hundred fifty million
dollars. The payment bond must be in an amount fixed by the department
but must not be less than the amount of the performance bond. The
secretary of transportation must approve each performance bond and
payment bond authorized to be less than the full contract price of a
project. Before the secretary may approve any bond authorized to be
less than the full contract price of a project, the office of financial
management shall review and approve the analysis supporting the amount
of the bond set by the department to ensure that one hundred percent of
the state's exposure to loss is adequately protected. All the
requirements of this chapter apply respectively to the individual
performance and payment bonds. The performance bond is solely for the
protection of the department. The payment bond is solely for the
protection of laborers, mechanics, subcontractors, and suppliers
mentioned in RCW 39.08.010.
(b) The department shall develop risk assessment guidelines and
gain approval of these guidelines from the office of financial
management before implementing (a) of this subsection. The guidelines
must include a clear process for how the department measures the
state's exposure to loss and how the performance bond amount,
determined under (a) of this subsection, adequately protects one
hundred percent of the state's exposure to loss.
(c) The department shall report to the house of representatives and
senate transportation committees by December 1, 2012: Each project
where the department authorized bonds that were less than the full
contract price; the difference between the project amount and the bond
requirements; the number of bidders on the project; and other
information that documents the effects of the reduced bond amounts on
the project.
*NEW SECTION. Sec. 2 A new section is added to chapter 39.08 RCW
to read as follows:
In consultation with the director of the office of financial
management and the secretary of the department of transportation, the
governor shall approve any contract and bond amount authorized with
respect to contracts in which the department intends to authorize bonds
under RCW 39.08.030 in an amount less than the full contract price of
the contract.
*Sec. 2 was vetoed. See message at end of chapter.
NEW SECTION. Sec. 3 This act expires June 30, 2016.
Passed by the Senate April 26, 2009.
Passed by the House April 25, 2009.
Approved by the Governor May 13, 2009, with the exception of certain
items that were vetoed.
Filed in Office of Secretary of State May 18, 2009.
Note: Governor's explanation of partial veto is as follows:
"I am returning, without my approval as to Section 2, Substitute Senate
Bill 5499 entitled:
"AN ACT Relating to bond amounts for department of transportation
highway contracts."
Section 2 of this bill requires the Governor to approve any contracts in
which the Washington State Department of Transportation intends to
authorize bonds in an amount less than the full contract price of the
contract.
Section 1 of the bill requires the Office of Financial Management to
approve risk guidelines developed by the Department of Transportation
prior to authorizing bonds in an amount less than the full price of the
contract. Section 1 also requires the Office of Financial Management to
review and approve the decision of the Secretary of Transportation to
authorize a bond in an amount less than the full price of the contract
prior to proceeding with the contract. Approval from the Office of
Financial Management of the risk guidelines, as well as review of
pending contracts constitutes sufficient oversight by the Governor's
office of highway contract decisions. Requiring subsequent approval
from the Governor is redundant and is not a necessary statutory
requirement.
For these reasons, I have vetoed Section 2 of Substitute Senate Bill
5499.
With the exception of Section 2, Substitute Senate Bill 5499 is
approved."