HOUSE BILL REPORT

HB 1379

BYRepresentatives H. Sommers, Sayan, Silver, Brekke, Fuhrman, Holland, May, Winsley, Betrozoff, Wolfe, Schoon, Miller, Horn, Phillips and Ballard; by request of Legislative Budget Committee

Authorizing adjustment of bid prices.

House Committe on Capital Facilities & Financing

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  (12)

      Signed by Representatives H. Sommers, Chair; Rasmussen, Vice Chair; Schoon, Ranking Republican Member; Betrozoff, Bowman, Braddock, Bristow, Fraser, Jacobsen, Peery, Wang and Winsley.

House Staff:Bill Robinson (786-7136)

AS REPORTED BY COMMITTEE ON CAPITAL FACILITIES & FINANCING

FEBRUARY 16, 1989

BACKGROUND:

Under current state law, if the lowest bid received on a public works project is in excess of the funds available, the project must be redesigned and rebid.  This rebidding process can be a costly and time consuming process.

This problem was highlighted in the Legislative Budget Committee's report, which examined the design and construction management process.  One of the recommendations in the report called for a change in the public works law to allow the contracting authority to negotiate with the lowest responsive bidder if the low bid is 5 percent or less in excess of available funds.

SUMMARY:

SUBSTITUTE BILL:  In the event all bids for a building construction project exceed the funds available, the state is authorized to negotiate an adjustment to the bid.  The negotiated bid authorization is allowed only with the low responsive bidder and only if the low responsive bid is no more than a predetermined amount above the available funds.  The negotiated adjustment with the low bidder may include changes in the bid requirements in order to bring the bid within the amount of funds available.

SUBSTITUTE BILL COMPARED TO ORIGINAL:  The substitute bill makes three changes to the original bill:  (1) Restricts bid negotiations to state public works projects; (2) Restricts bid negotiations to contracts for state buildings and related utilities; and (3) Establishes a decreasing scale, based upon the value of a construction project, that the low bidder may exceed the funds available before authorizing negotiations.

Fiscal Note:      No Impact.

House Committee ‑ Testified For:    Bert Hoff, Legislative Budget Committee; Jack Brown, Department of General Administration.

House Committee - Testified Against:      Duke Schaub, Association of General Contractors; Dick Ducharme, Utility Contractors Association.

House Committee - Testimony For:    Allowing negotiated bids would save a significant amount of time and expense required to repeat the bidding process when bids exceed the available funds by small amounts.

House Committee - Testimony Against:      Allowing negotiated bids when the lowest bid exceeds the available funds by 5 percent is too large of an amount on multi-million dollar projects.