Creates the Washington competition council as an advisory council within the office of financial management.

Directs the Washington competition council, in consultation with the office of financial management, to: (1) Conduct an examination of the commercial activities that are being performed by state employees at state agencies to ensure such activities are being accomplished in the most cost-efficient and effective manner;

(2) Review the practices of state agencies that may constitute inappropriate competition with private enterprise; and

(3) Develop proposals for preserving the traditional role of private enterprise and encouraging the expansion of existing, and the creation of new, private enterprise.

Provides that, upon determination by the Washington competition council that outsourcing a commercial activity may result in reduced costs or otherwise provide a measurable benefit to the state and to assure the activity is being accomplished in the most cost-efficient and effective manner, the governor shall direct the appropriate agency to pursue a contract using the competitive contracting process available in RCW 41.06.142.

Requires the director of the office of financial management to determine the amount of the existing appropriation no longer needed by a state agency where all or a portion of the agency's function has been privatized in accordance with the recommendations of the Washington competition council, and reduce allotments accordingly.