AN ACT Relating to prompt pay by state agencies; adding a new chapter to Title 43 RCW; and declaring an emergency.

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

NEW SECTION. Sec. 1. This chapter may be cited as the prompt pay act.

NEW SECTION. Sec. 2. It is the policy of this state that all bills owed by state departments, institutions, and agencies shall be paid promptly. No state department, institution, agency, or project supported in whole or in part by state funds, shall be exempt from the provisions of this chapter.

NEW SECTION. Sec. 3. (1) All bills shall be paid within thirty calendar days of receipt of invoice, except as provided in subsection (2) of this section.

(2) Where the state, or a project sponsored by state funds, purchases meat and meat products, fish and shellfish, edible fresh or frozen poultry, poultry meat food products, fresh eggs and perishable egg products, bills should be paid within seven calendar days. Payments for other groceries, vegetables, fresh fruit, and other perishables shall be made within ten calendar days. For other industries with customary payment practices of less than thirty calendar days, the state shall comply with industry terms.

(3) All proper deliveries and completed services shall be received or accepted promptly and proper receiving and acceptance reports shall be forwarded to payment offices within three days of delivery of goods or completion of services.

(4) Payment shall be due on the date on which the agency actually receives the invoice or receives the goods or services, whichever is later. The thirty, ten, and seven calendar day periods shall be considered as "grace periods" during which all proper invoices shall be paid.

(5) Partial payment shall be made on partial deliveries. Each complete item or service must be paid for within thirty calendar days or in accordance with subsection (2) of this section.

(6) State agencies making purchases for projects using federal funds shall make no purchases without final assurance of federal funds to cover costs of purchases. Where the date of payment to vendors is contingent on the receipt of federal funds or federal approval, the solicitation of bids for contracts and any contracts awarded shall clearly state that payment is contingent on such conditions.

(7) This chapter shall in no way be construed to prohibit the state from making advanced payments, or progress payments, or from prepaying where circumstances make such payments appropriate. All such payments shall be made promptly and are subject to interest penalties when payment is late. Where construction, repair, and remodeling payments are subject to retainage, interest penalties shall accrue on retained amounts beginning thirty calendar days after work is completed by the contractor(s) unless otherwise provided by the contract.

NEW SECTION. Sec. 4. (1) Interest penalties, at the rate of twelve percent per annum, shall be paid automatically when bills become overdue. It shall be up to each state agency, and each project administering state funds, to calculate and pay interest on the principal. Interest payments shall accompany payment of the net amount due for goods and services. Agencies shall not require companies to petition, invoice, bill, or wait any additional days to receive interest due.

(2) Interest shall be paid from funds already appropriated to the offending department, institution, or agency or granted to the state supported project. If more than one department, institution, or agency has caused a late payment, each shall bear a proportional share of the interest penalty. No interest shall be charged directly back to the state's general fund.

NEW SECTION. Sec. 5. Each January, the governor shall submit a report to the state legislature summarizing the state's payment record for the preceding year. Included in the report shall be:

(1) The number and dollar amount of late payments by department, institution, and agency;

(2) The amounts of interest paid;

(3) The percentages of subsections (1) and (2) of this section are of the total number of purchases and the total dollars spent on procurement of all goods and services; and

(4) The specific steps being taken to reduce the incidence of late payments.

NEW SECTION. Sec. 6. 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.

NEW SECTION. Sec. 7. Sections 1 through 5 of this act shall constitute a new chapter in Title 43 RCW.

NEW SECTION. Sec. 8. This act is necessary for the immediate preservation of the public peace, health, and safety, the support of the state government and its existing public institutions, and shall take effect immediately.