BILL REQ. #:  S-1777.1 

READ FIRST TIME 02/21/11.   

     AN ACT Relating to establishing a preference for resident contractors on public works; amending RCW 39.04.010; adding a new section to chapter 39.04 RCW; creating new sections; and prescribing penalties.

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

Sec. 1   RCW 39.04.010 and 2008 c 130 s 16 are each amended to read as follows:
     The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Award" means the formal decision by the state or municipality notifying a responsible bidder with the lowest responsive bid of the state's or municipality's acceptance of the bid and intent to enter into a contract with the bidder.
     (2) "Contract" means a contract in writing for the execution of public work for a fixed or determinable amount duly awarded after advertisement and competitive bid, or a contract awarded under the small works roster process in RCW 39.04.155.
     (3) "Municipality" means every city, county, town, port district, district, or other public agency authorized by law to require the execution of public work, except drainage districts, diking districts, diking and drainage improvement districts, drainage improvement districts, diking improvement districts, consolidated diking and drainage improvement districts, consolidated drainage improvement districts, consolidated diking improvement districts, irrigation districts, or other districts authorized by law for the reclamation or development of waste or undeveloped lands.
     (4) "Public work" means all work, construction, alteration, repair, or improvement other than ordinary maintenance, executed at the cost of the state or of any municipality, or which is by law a lien or charge on any property therein. All public works, including maintenance when performed by contract shall comply with chapter 39.12 RCW. "Public work" does not include work, construction, alteration, repair, or improvement performed under contracts entered into under RCW 36.102.060(4) or under development agreements entered into under RCW 36.102.060(7) or leases entered into under RCW 36.102.060(8).
     (5) "Resident contractor" means a contractor registered under chapter 18.27 RCW or licensed as an electrical contractor under chapter 19.28 RCW and certified by the department of general administration as meeting the criteria specified in either (a) or (b) of this subsection.
     (a) A registered contractor or licensed electrical contractor can be certified as a resident contractor by providing the department of general administration with evidence sufficient to demonstrate that the contractor:
     (i) Maintained a place of business within the state staffed by the contractor or an employee of the contractor for a period of six months immediately preceding the date of initial application for certification as a resident contractor, and for the six-month period immediately preceding the date of the bid on which the contractor desires to be given a preference; and
     (ii)(A) Incorporated or qualified to do business under Title 25 RCW;
     (B) Is a sole proprietorship and the proprietor is a resident of the state;
     (C) Is a limited liability company organized under chapter 25.15 RCW and all members are residents of the state;
     (D) Is a partnership under chapter 25.05 or 25.10 RCW and all partners are residents of the state; or
     (E) Is a joint venture, composed entirely of ventures that qualify under (b) of this subsection.
     (b) A registered contractor or licensed electrical contractor can be certified as a resident contractor by providing the department of general administration with evidence sufficient to demonstrate that the contractor, at the time of application for certification as a resident contractor, is:
     (i) Paying residents of the state at least eighty-five percent of its payroll, in dollar volume, on public work being performed for the state or any municipality; or
     (ii) Employing residents of the state as at least eighty-five percent of its employees on public work being performed for the state or any municipality.
     (c) A contractor certified as a resident contractor under this subsection must continue to meet the payroll or employment threshold through the period of certification.
     (6) "Responsible bidder" means a contractor who meets the criteria in RCW 39.04.350.
     (((6))) (7) "State" means the state of Washington and all departments, supervisors, commissioners, and agencies of the state.

NEW SECTION.  Sec. 2   A new section is added to chapter 39.04 RCW to read as follows:
     (1) The state or municipality shall award a contract to the responsible bidder with the lowest responsive bid after a resident contractor preference of five percent has been applied.
     (2) A contractor shall be considered a resident contractor only if the contractor is certified as a resident contractor by the department. The procedure for application and certification is as follows:
     (a) The department shall prepare an application form for certification as a resident contractor, and require such information and proof as the department deems necessary to certify the applicant as a resident contractor;
     (b) The contractor seeking certification as a resident contractor shall complete the application form and submit it to the department prior to the submission of a bid on which the contractor desires to be given a preference;
     (c) The department shall examine the application and may seek additional information or proof if necessary;
     (d) The department shall issue the contractor a certification number which shall be valid until revoked and which, when used on a bid for a contract, entitles the contractor to be considered as a resident contractor; and
     (e) The department shall revoke the certification number issued to a contractor upon making a determination that the contractor no longer meets the definition of resident contractor in RCW 39.04.010.
     (3)(a) A contractor that receives the resident contractor preference provided for in this section based on false information, whether that information was provided or withheld, and which by reason of the information has been awarded a contract to which it would not otherwise have been entitled:
     (i) Must pay the state an assessment equal to the difference between the contract amount and what the state's cost would have been if the contract had been properly awarded;
     (ii) In addition to the amount specified in this subsection (3)(a) and except as provided in (b) of this subsection, must pay a civil penalty of ten percent of the amount of the contract involved or one thousand dollars, whichever is less; and
     (iii) Is ineligible to directly or indirectly transact any business with the state or any municipality for a period of not less than six months and not more than three years, as determined by the director of the department. This ineligibility applies to the principals of the business and any subsequent businesses formed by those principals.
     (b) In addition to being subject to the penalties under (a)(i) and (iii) of this subsection, a contractor that knowingly and with intent to defraud makes a false statement or fails to provide or conceals, or attempts to conceal, material information for the purpose of obtaining, or aiding another in obtaining, a preference under this section is subject to a civil penalty of ten percent of the amount of the contract involved or ten thousand dollars, whichever is greater.
     (c)(i) A contractor subject to sanction under this subsection may request, within thirty days of the date of issuance of the notice of sanction, a hearing conducted pursuant to chapter 34.05 RCW.
     (ii) If a contractor fails to pay an assessment or civil penalty after it has become final and not subject to further appeal, or after the court has entered final judgment in favor of the state, the attorney general may recover the assessment or penalty by action in the appropriate superior court. In such action, the validity and appropriateness of the final order imposing the assessment or penalty is not subject to review.
     (4) For the purposes of this section, "department" means the department of general administration.

NEW SECTION.  Sec. 3   All contracts entered into under this chapter on or after the effective date of this section are subject to the requirements established under section 2 of this act.

NEW SECTION.  Sec. 4   If any part of this act is found to be in conflict with federal requirements that are a prescribed condition to the allocation of federal funds to the state, the conflicting part of this act is inoperative solely to the extent of the conflict and with respect to the agencies directly affected, and this finding does not affect the operation of the remainder of this act in its application to the agencies concerned. Rules adopted under this act must meet federal requirements that are a necessary condition to the receipt of federal funds by the state.

NEW SECTION.  Sec. 5   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.