READ FIRST TIME 03/01/13.   

     AN ACT Relating to public contracts for transportation improvement projects; amending RCW 60.28.011, 39.08.030, 39.08.030, 39.12.040, 47.04.082, and 47.28.140; reenacting and amending RCW 39.08.010; adding a new section to chapter 47.28 RCW; providing an effective date; and providing an expiration date.

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

Sec. 1   RCW 60.28.011 and 2011 c 231 s 2 are each amended to read as follows:
     (1)(a) Except as provided in (b) of this subsection, public improvement contracts ((shall)) must provide, and public bodies ((shall)) must reserve, a contract retainage not to exceed five percent of the moneys earned by the contractor as a trust fund for the protection and payment of: (i) The claims of any person arising under the contract; and (ii) the state with respect to taxes, increases, and penalties imposed pursuant to Titles 50, 51, and 82 RCW which may be due from such contractor.
     (b) Public improvement contracts ((involving the construction, alteration, repair, or improvement of any highway, road, or street)) funded in whole or in part by federal transportation funds ((shall)) must rely upon the contract bond as referred to in chapter 39.08 RCW for the protection and payment of: (i) The claims of any person or persons arising under the contract to the extent such claims are provided for in RCW 39.08.010; and (ii) the state with respect to taxes ((imposed pursuant to)), increases, and penalties incurred on the public improvement project under Titles 50, 51, and 82 RCW which may be due. The contract bond must remain in full force and effect until, at a minimum, all claims filed in compliance with chapter 39.08 RCW are resolved.
     (2) Every person performing labor or furnishing supplies toward the completion of a public improvement contract ((shall have)) has a lien upon moneys reserved by a public body under the provisions of a public improvement contract. However, the notice of the lien of the claimant ((shall)) must be given within forty-five days of completion of the contract work, and in the manner provided in RCW 39.08.030.
     (3) The contractor at any time may request the contract retainage be reduced to one hundred percent of the value of the work remaining on the project.
     (a) After completion of all contract work other than landscaping, the contractor may request that the public body release and pay in full the amounts retained during the performance of the contract, and sixty days thereafter the public body must release and pay in full the amounts retained (other than continuing retention of five percent of the moneys earned for landscaping) subject to the provisions of chapters 39.12 and 60.28 RCW.
     (b) Sixty days after completion of all contract work the public body must release and pay in full the amounts retained during the performance of the contract subject to the provisions of chapters 39.12 and 60.28 RCW.
     (4) The moneys reserved by a public body under the provisions of a public improvement contract, at the option of the contractor, ((shall)) must be:
     (a) Retained in a fund by the public body;
     (b) Deposited by the public body in an interest bearing account in a bank, mutual savings bank, or savings and loan association. Interest on moneys reserved by a public body under the provision of a public improvement contract ((shall)) must be paid to the contractor;
     (c) Placed in escrow with a bank or trust company by the public body. When the moneys reserved are placed in escrow, the public body ((shall)) must issue a check representing the sum of the moneys reserved payable to the bank or trust company and the contractor jointly. This check ((shall)) must be converted into bonds and securities chosen by the contractor and approved by the public body and the bonds and securities ((shall)) must be held in escrow. Interest on the bonds and securities ((shall)) must be paid to the contractor as the interest accrues.
     (5) The contractor or subcontractor may withhold payment of not more than five percent from the moneys earned by any subcontractor or sub-subcontractor or supplier contracted with by the contractor to provide labor, materials, or equipment to the public project. Whenever the contractor or subcontractor reserves funds earned by a subcontractor or sub-subcontractor or supplier, the contractor or subcontractor ((shall)) must pay interest to the subcontractor or sub-subcontractor or supplier at a rate equal to that received by the contractor or subcontractor from reserved funds.
     (6) A contractor may submit a bond for all or any portion of the contract retainage in a form acceptable to the public body and from a bonding company meeting standards established by the public body. The public body ((shall)) must accept a bond meeting these requirements unless the public body can demonstrate good cause for refusing to accept it. This bond and any proceeds therefrom are subject to all claims and liens and in the same manner and priority as set forth for retained percentages in this chapter. The public body ((shall)) must release the bonded portion of the retained funds to the contractor within thirty days of accepting the bond from the contractor. Whenever a public body accepts a bond in lieu of retained funds from a contractor, the contractor ((shall)) must accept like bonds from any subcontractors or suppliers from which the contractor has retained funds. The contractor ((shall)) must then release the funds retained from the subcontractor or supplier to the subcontractor or supplier within thirty days of accepting the bond from the subcontractor or supplier.
     (7) If the public body administering a contract, after a substantial portion of the work has been completed, finds that an unreasonable delay will occur in the completion of the remaining portion of the contract for any reason not the result of a breach thereof, it may, if the contractor agrees, delete from the contract the remaining work and accept as final the improvement at the stage of completion then attained and make payment in proportion to the amount of the work accomplished and in this case any amounts retained and accumulated under this section ((shall)) must be held for a period of sixty days following the completion. In the event that the work is terminated before final completion as provided in this section, the public body may thereafter enter into a new contract with the same contractor to perform the remaining work or improvement for an amount equal to or less than the cost of the remaining work as was provided for in the original contract without advertisement or bid. The provisions of this chapter are exclusive and ((shall)) supersede all provisions and regulations in conflict herewith.
     (8) Whenever the department of transportation has contracted for the construction of two or more ferry vessels, sixty days after completion of all contract work on each ferry vessel, the department must release and pay in full the amounts retained in connection with the construction of the vessel subject to the provisions of RCW 60.28.021 and chapter 39.12 RCW. However, the department of transportation may at its discretion condition the release of funds retained in connection with the completed ferry upon the contractor delivering a good and sufficient bond with two or more sureties, or with a surety company, in the amount of the retained funds to be released to the contractor, conditioned that no taxes ((shall)) may be certified or claims filed for work on the ferry after a period of sixty days following completion of the ferry; and if taxes are certified or claims filed, recovery may be had on the bond by the department of revenue, the employment security department, the department of labor and industries, and the material suppliers and laborers filing claims.
     (9) Except as provided in subsection (1) of this section, reservation by a public body for any purpose from the moneys earned by a contractor by fulfilling its responsibilities under public improvement contracts is prohibited.
     (10) Contracts on projects funded in whole or in part by farmers home administration and subject to farmers home administration regulations are not subject to subsections (1) through (9) of this section.
     (11) This subsection applies only to a public body that has contracted for the construction of a facility using the general contractor/construction manager procedure, as defined under RCW 39.10.210. If the work performed by a subcontractor on the project has been completed within the first half of the time provided in the general contractor/construction manager contract for completing the work, the public body may accept the completion of the subcontract. The public body must give public notice of this acceptance. After a forty-five day period for giving notice of liens, and compliance with the retainage release procedures in RCW 60.28.021, the public body may release that portion of the retained funds associated with the subcontract. Claims against the retained funds after the forty-five day period are not valid.
     (12) ((Unless the context clearly requires otherwise,)) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.
     (a) "Contract retainage" means an amount reserved by a public body from the moneys earned by a person under a public improvement contract.
     (b) "Person" means a person or persons, mechanic, subcontractor, or materialperson who performs labor or provides materials for a public improvement contract, and any other person who supplies the person with provisions or supplies for the carrying on of a public improvement contract.
     (c) "Public body" means the state, or a county, city, town, district, board, or other public body.
     (d) "Public improvement contract" means a contract for public improvements or work, other than for professional services, or a work order as defined in RCW 39.10.210.

Sec. 2   RCW 39.08.010 and 2007 c 218 s 88 and 2007 c 210 s 3 are each reenacted and amended to read as follows:
     (1)(a) Whenever any board, council, commission, trustees, or body acting for the state or any county or municipality or any public body ((shall)) must contract with any person or corporation to do any work for the state, county, or municipality, or other public body, city, town, or district, such board, council, commission, trustees, or body ((shall)) must require the person or persons with whom such contract is made to make, execute, and deliver to such board, council, commission, trustees, or body a good and sufficient bond, with a surety company as surety, conditioned that such person or persons ((shall)) must:
     (i) Faithfully perform all the provisions of such contract ((and));
     (ii) Pay all laborers, mechanics, and subcontractors and material suppliers, and all persons who supply such person or persons, or subcontractors, with provisions and supplies for the carrying on of such work((, which)); and
     (iii) Pay the taxes, increases, and penalties incurred on the project under Titles 50, 51, and 82 RCW on: (A) Projects referred to in RCW 60.28.011(1)(b); and/or (B) projects for which the bond is conditioned on the payment of such taxes, increases, and penalties.
     (b) The bond, in cases of cities and towns, ((shall)) must be filed with the clerk or comptroller thereof, and any person or persons performing such services or furnishing material to any subcontractor ((shall have)) has the same right under the provisions of such bond as if such work, services, or material was furnished to the original contractor((: PROVIDED, HOWEVER, That)).
     (2) The provisions of RCW 39.08.010 through 39.08.030 ((shall)) do not apply to any money loaned or advanced to any such contractor, subcontractor, or other person in the performance of any such work((: PROVIDED FURTHER, That)).
     (3) On contracts of thirty-five thousand dollars or less, at the option of the contractor the respective public entity may, in lieu of the bond, retain fifty percent of the contract amount for a period of thirty days after date of final acceptance, or until receipt of all necessary releases from the department of revenue, the employment security department, and the department of labor and industries and settlement of any liens filed under chapter 60.28 RCW, whichever is later((: PROVIDED FURTHER, That)).
     (4) For contracts of one hundred thousand dollars or less, the public entity may accept a full payment and performance bond from an individual surety or sureties((: AND PROVIDED FURTHER, That)).
     (5) The surety must agree to be bound by the laws of the state of Washington and subjected to the jurisdiction of the state of Washington.

Sec. 3   RCW 39.08.030 and 2009 c 473 s 1 are each amended to read as follows:
     (1)(a) The bond mentioned in RCW 39.08.010 ((shall)) must 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)) must 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,)) runs. However, the same ((shall)) may 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)) is 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, and the state has a right of action for the collection of taxes, increases, and penalties specified in RCW 39.08.010: PROVIDED, That, except for the state with respect to claims for taxes, increases, and penalties specified in RCW 39.08.010, such persons ((shall)) do 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)) must 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:

Sec. 4   RCW 39.08.030 and 2007 c 218 s 89 are each amended to read as follows:
     (1)(a) The bond mentioned in RCW 39.08.010 ((shall)) must be in an amount equal to the full contract price agreed to be paid for such work or improvement, except under subsection (2) of this section, and ((shall)) must 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,)) runs. However, the same ((shall)) may 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)) must 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, and the state has a right of action for the collection of taxes, increases, and penalties specified in RCW 39.08.010: PROVIDED, That, except for the state with respect to claims for taxes, increases, and penalties specified in RCW 39.08.010, such persons ((shall)) do 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)) must 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:

Sec. 5   RCW 39.12.040 and 2012 c 129 s 1 are each amended to read as follows:
     (1)(a) Except as provided in subsection (2) of this section, before payment is made by or on behalf of the state, or any county, municipality, or political subdivision created by its laws, of any sum or sums due on account of a public works contract, it ((shall be)) is the duty of the officer or person charged with the custody and disbursement of public funds to require the contractor and each and every subcontractor from the contractor or a subcontractor to submit to such officer a "Statement of Intent to Pay Prevailing Wages". For a contract in excess of ten thousand dollars, the statement of intent to pay prevailing wages ((shall)) must include:
     (((a))) (i) The contractor's registration certificate number; and
     (((b))) (ii) The prevailing rate of wage for each classification of workers entitled to prevailing wages under RCW 39.12.020 and the estimated number of workers in each classification.
     (b) Each statement of intent to pay prevailing wages must be approved by the industrial statistician of the department of labor and industries before it is submitted to the disbursing officer. Unless otherwise authorized by the department of labor and industries, each voucher claim submitted by a contractor for payment on a project estimate ((shall)) must state that the prevailing wages have been paid in accordance with the prefiled statement or statements of intent to pay prevailing wages on file with the public agency. Following the final acceptance of a public works project, it ((shall be)) is the duty of the officer charged with the disbursement of public funds, to require the contractor and each and every subcontractor from the contractor or a subcontractor to submit to such officer an ((")) affidavit of wages paid((")) before the funds retained according to the provisions of RCW 60.28.011 are released to the contractor. On a public works project where no retainage is withheld pursuant to RCW 60.28.011(1)(b), the affidavit of wages paid must be submitted to the state, county, municipality, or other public body charged with the duty of disbursing or authorizing disbursement of public funds prior to final acceptance of the public works project. If a subcontractor performing work on a public works project fails to submit an (("))affidavit of wages paid((")) form, the contractor or subcontractor with whom the subcontractor had a contractual relationship for the project may file the forms on behalf of the nonresponsive subcontractor. Affidavit forms may only be filed on behalf of a nonresponsive subcontractor who has ceased operations or failed to file as required by this section. ((Filings made on behalf of a subcontractor may not be accepted sooner than thirty-one days after the acceptance date of the public works project and)) The contractor filing the affidavit must accept responsibility for payment of prevailing wages unpaid by the subcontractor on the project pursuant to RCW 39.12.020 and 39.12.065. Intentionally filing a false affidavit on behalf of a subcontractor subjects the filer to the same penalties as are provided in RCW 39.12.050. Each affidavit of wages paid must be certified by the industrial statistician of the department of labor and industries before it is submitted to the disbursing officer.
     (2) As an alternate to the procedures provided for in subsection (1) of this section, for public works projects of two thousand five hundred dollars or less and for projects where the limited public works process under RCW 39.04.155(3) is followed:
     (a) An awarding agency may authorize the contractor or subcontractor to submit the statement of intent to pay prevailing wages directly to the officer or person charged with the custody or disbursement of public funds in the awarding agency without approval by the industrial statistician of the department of labor and industries. The awarding agency ((shall)) must retain such statement of intent to pay prevailing wages for a period of not less than three years.
     (b) Upon final acceptance of the public works project, the awarding agency ((shall)) must require the contractor or subcontractor to submit an affidavit of wages paid. Upon receipt of the affidavit of wages paid, the awarding agency may pay the contractor or subcontractor in full, including funds that would otherwise be retained according to the provisions of RCW 60.28.011. Within thirty days of receipt of the affidavit of wages paid, the awarding agency ((shall)) must submit the affidavit of wages paid to the industrial statistician of the department of labor and industries for approval.
     (c) A statement of intent to pay prevailing wages and an affidavit of wages paid ((shall)) must be on forms approved by the department of labor and industries.
     (d) In the event of a wage claim and a finding for the claimant by the department of labor and industries where the awarding agency has used the alternative process provided for in this subsection (2) ((of this section)), the awarding agency ((shall)) must pay the wages due directly to the claimant. If the contractor or subcontractor did not pay the wages stated in the affidavit of wages paid, the awarding agency may take action at law to seek reimbursement from the contractor or subcontractor of wages paid to the claimant, and may prohibit the contractor or subcontractor from bidding on any public works contract of the awarding agency for up to one year.
     (e) Nothing in this section ((shall)) may be interpreted to allow an awarding agency to subdivide any public works project of more than two thousand five hundred dollars for the purpose of circumventing the procedures required by subsection (1) of this section.

Sec. 6   RCW 47.04.082 and 1967 c 108 s 1 are each amended to read as follows:
     As used in ((this act the term)) chapter 108, Laws of 1967, "urban public transportation system" ((shall)) means a system for the public transportation of persons or property by buses, streetcars, trains, electric trolley coaches, other public transit vehicles, or any combination thereof operating in or through predominantly urban areas and owned and operated by the state, any public agency, any city or county or any municipal corporation of the state, including all structures, facilities, vehicles and other property rights and interest forming a part of such a system.

Sec. 7   RCW 47.28.140 and 1991 c 322 s 29 are each amended to read as follows:
     When in the opinion of the governing authorities representing the department and any public agency, instrumentality, municipal corporation, or political subdivision of the state of Washington, any highway, road, ((or)) street, or urban public transportation system will be benefited or improved by constructing, reconstructing, locating, relocating, laying out, repairing, surveying, altering, improving, or maintaining, or by the establishment adjacent to, under, upon, within, or above any portion of any such highway, road, ((or)) street ((of an)), or urban public transportation system, by either the department or any public agency, instrumentality, municipal corporation, or political subdivision of the state, and it is in the public interest to do so, the authorities may enter into cooperative agreements wherein either agrees to perform the work and furnish the materials necessary and pay the cost thereof, including necessary engineering assistance, which costs and expenses ((shall)) must be reimbursed by the party whose responsibility it was to do or perform the work or improvement in the first instance. The work may be done by either day labor or contract, and the cooperative agreement between the parties ((shall)) must provide for the method of reimbursement. In the case of some special benefit or improvement to a state highway derived from any project that assists in preventing or minimizing flood damages as defined in RCW 86.16.120 or from the construction of any public works project, including any urban public transportation system, the department may contribute to the cost thereof by making direct payment to the particular state department, agency, instrumentality, municipal corporation, or political subdivision on the basis of benefits received, but such payment ((shall)) may be made only after a cooperative agreement has been entered into for a specified amount or on an actual cost basis prior to the commencement of the particular public works project.

NEW SECTION.  Sec. 8   A new section is added to chapter 47.28 RCW to read as follows:
     When the department plans to administer a contract to engineer or construct a project; or oversee or perform work for another public agency, instrumentality, municipal corporation, or political subdivision; and the public agency, instrumentality, municipal corporation, or political subdivision plans to administer a contract to engineer or construct a project; or oversee or perform work, for the department, the department may waive application of its indirect costs by entering into a reciprocal agreement with the public agency, instrumentality, municipal corporation, or political subdivision in which each party agrees to waive indirect costs related to a project or work that will be performed by the party for the other party's benefit. The reciprocal agreement must specify the project or work to be performed by each party and may be for a maximum term of ten years, unless amended by the parties. Each party's obligation for reimbursement of indirect costs under RCW 47.28.140, 39.34.130, and 43.09.210 is deemed to be satisfied by the execution of a reciprocal agreement.

NEW SECTION.  Sec. 9   Section 3 of this act expires June 30, 2016.

NEW SECTION.  Sec. 10   Section 4 of this act takes effect June 30, 2016.