HOUSE BILL REPORT

SB 5832

BYSenator Bender

Establishing the office of capital projects.

House Committe on Trade & Economic Development

Majority Report:  Do pass.  (11)

      Signed by Representatives Vekich, Chair; Wineberry, Vice Chair; Cantwell, Grant, Hargrove, Holm, Kremen, McLean, Moyer, Rasmussen and J. Williams.

Minority Report:  Do not pass.  (4)

      Signed by Representatives Amondson, Beck, Belcher and Doty.

House Staff:Stephen Hodes (786-7092)

AS REPORTED BY COMMITTEE ON TRADE & ECONOMIC DEVELOPMENT

MARCH 27, 1987

BACKGROUND:

In the past fifteen years, the construction of major capital projects, such as dams, bridges, and port facilities has become more open to international competition.  In current practice, nations often contract with firms or groups of firms to construct such capital projects.  A variety of conditions, such as the required use of local materials or subcontractors or flexible financing terms are often elements in the process of bidding for these contracts.

Some of the projects are financed by the nation in which the improvement is located.  A large percentage of the projects are funded instead through international financial institutions, such as the World Bank or the Asian Development Bank.  These capital projects are large enough that the expertise and resources of a consortium of businesses is often required to undertake them.  Initial government involvement is often advantageous for businesses attempting to secure contracts for large-scale capital projects.  Such involvement is common at the national level, and is becoming a more widespread function in other states and in Canadian provinces.

SUMMARY:

The Office of Capital Projects is established as a pilot project within the Department of Trade and Economic Development.  The office is required to:

o Assist Washington state businesses in the development of consortia to bid on and construct major international capital projects;

o Assist consortia in Washington state to market their products and services in international markets;

o Compile information on capital project opportunities for Washington state businesses; and

o Provide initial assistance to consortia in securing capital project contracts.

The Office of Capital Projects is required to have a minimum of one full-time employee to administer the office's activities.  The office may seek and receive funds from the public and private sectors, and may coordinate with other governmental agencies.  It may charge reasonable fees for the use of its services.  Contracts entered into by consortiums do not constitute a contract with the state of Washington or a lending of the state's credit.  The office is prohibited from entering into binding contracts with foreign governments.

The director of the Department of Trade and Economic Development is required to report annually to the legislature on the impact of the office on the state's economy.  The initial report is required to include a short and long-term strategic plan for the office.

Appropriation:    $90,000 is appropriated to the Department of Trade & Economic Development.

Fiscal Note:      Attached.

House Committee ‑ Testified For:    Beth Willis and Frank Densmore, A.I.A.

House Committee - Testified Against:      None Presented.

House Committee - Testimony For:    Many Washington firms which could be competitive in this field lack the capacity to pursue large-scale international projects without government support.  Funding would permit preparation of materials such as are available from Canadian provinces.  Materials would advertise Washington state architectural, engineering and construction services which are available for involvement in large capital projects.

House Committee - Testimony Against:      None Presented.