AN ACT Relating to establishing preferences for in-state contractors in contracts for public works and for public purchase of goods; and adding a new chapter to Title 39 RCW.

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

NEW SECTION. Sec. 1. Unless the context requires otherwise, the definitions in this section apply throughout this chapter:

(1) "Department" means the department of general administration.

(2) "Public agency" means the state of Washington and all departments, commissions, agencies, and political subdivisions of the state as defined in RCW 39.04.010.

(3) "Public works" means all work as defined in RCW 39.04.010.

(4) "Goods" means supplies, equipment, materials, commodities, and specially manufactured products.

(5) "Washington made" means manufactured or produced in Washington state and made with the:

(a) Use of parts, materials, or supplies of which fifty percent or more were manufactured or produced in this state; or

(b) Employment of persons of whom fifty percent or more are bona fide residents of Washington for ninety days prior to employment.

(6) "Nonresident bidder" means a bidder whose residence is not in Washington, as determined in section 2 of this act.

(7) "Resident bidder" means a bidder whose residence is in Washington, as determined in section 2 of this act.

NEW SECTION. Sec. 2. (1) For the purposes of this section, the word "resident" shall include actual residence of an individual within this state for a period of more than one year immediately prior to bidding.

(2) In a partnership or an association, the majority of all partners or association members shall have been actual residents of the state of Washington for more than one year immediately prior to bidding.

(3) Domestic corporations organized under the laws of the state of Washington are prima facie eligible to bid as residents, but this qualification may be set aside and a successful bid disallowed when it is shown to the satisfaction of the board, commission, officer, or individual charged with the responsibility for the execution of the contract that the corporation is a wholly owned subsidiary of a foreign corporation or that the corporation was formed for circumventing the provisions relating to residence.

(4) Any bidder on a contract for the purchase of goods whose offered goods are Washington made is a resident for the purposes of this chapter notwithstanding the provisions of subsections (1), (2), and (3) of this section, whether an individual, partnership, or corporation, foreign or domestic and regardless of ownership thereof.

NEW SECTION. Sec. 3. (1) (a) To provide for an orderly administration of the business of the state of Washington in awarding public contracts for the purchase of goods and for public works, a public agency shall award:

(i) A public works contract to the lowest responsible resident bidder whose bid does not exceed the applicable percentage when compared to the lowest responsible nonresident bidder. The applicable percentage is the greater of:

(A) Three percent; or

(B) The percentage that applies to a resident bidder in the award of a public works contract in the nonresident bidder's state of residence as determined by the department under RCW 43.19.702.

(ii) A public contract for the purchase of goods, if the goods are comparable in quality and performance, to the lowest responsible resident bidder whose:

(A) Bid is not more than three percent higher than that of the lowest responsible nonresident bidder;

(B) Offered goods are Washington made and whose bid is not more than five percent higher than that of the lowest responsible nonresident bidder; or

(C) Offered goods are Washington made and whose bid is not more than three percent higher than that of the lowest responsible resident bidder whose offered goods are not Washington made.

(b) (i) If both subsections (1)(a)(ii)(B) and (1)(a)(ii)(C) of this section apply to bids for a contract, the contract must be awarded to the resident bidder whose offered goods are Washington made if the bid is:

(A) Not more than three percent higher than that of a resident bidder whose offered goods are not Washington made; and

(B) Not more than five percent higher than that of the nonresident bidder.

(ii) However, no combination of preferences under this subsection may exceed five percent.

(2) The preferences in this section apply:

(a) Whether the law requires advertisement for bids; and

(b) To contracts involving funds obtained from the federal government unless expressly prohibited by the laws of the United States or regulations enacted pursuant thereto.

NEW SECTION. Sec. 4. (1) The department shall determine whether certain contractors, registered under chapter 18.27 RCW, are residents of the state of Washington within the meaning of sections 2 and 3 of this act. Any public agency charged by law with the responsibility for the execution of any contract subject to the provisions of section 3 of this act may request that a determination of resident/nonresident status be made by the department. All requests must specify the name and address of the registered public contractor for whom a determination of resident/nonresident status is required.

(2) If a determination is made that a licensed public contractor is not a resident but the contractor thereafter qualifies as a resident, the contractor may apply to the department for a redetermination of residency. If, upon redetermination, the registered public contractor is found to qualify as a resident, the contractor shall be furnished a letter by the department attesting to resident status.

(3) The determination of the department that a registered public contractor is or is not a resident within the meaning of sections 2 and 3 of this act is prima facie evidence of that fact.

NEW SECTION. Sec. 5. Public agencies may not show any partiality or favoritism in making awards or contracts and must be absolutely fair and impartial. Where both the bids and the quality of the goods offered are the same, preference shall be given to articles of local and domestic production and manufacture, and where both the bids and the quality of the goods offered are the same, preference shall be given to resident bidders as defined in section 2 of this act over nonresident bidders.

NEW SECTION. Sec. 6. (1) Each contract awarded by a public agency must contain among its provisions a requirement that in all instances Washington made goods must be preferred for use in all projects if such goods are comparable in price and quality.

(2) It is the intent of sections 2 and 3 of this act and this section that, whenever possible, Washington made goods that are suitable substitutes for goods manufactured or produced outside the state and comparable in price, quality, and performance are preferred for use in all public works projects and in all public institutions.

(3) Failure to comply with this section disqualifies such contractor as a qualified bidder for future contracts with any public agency for a period of two years.

(4) The preference given to Washington made goods applies to contracts involving funds obtained from the federal government unless expressly prohibited by the laws of the United States or regulations adopted pursuant thereto.

NEW SECTION. Sec. 7. (1) A bidder on a public contract for goods who is claiming a preference under this chapter shall either have on file with or submit to the public agency with its bid an affidavit specifying in detail, as determined by the department, the basis on which the bidder claims the preference.

(2) If the public agency determines that the bidder has submitted a false affidavit under subsection (1) of this section, the bidder is disqualified as a bidder for future public contracts for goods with any public agency for a period of five years from the date of the determination.

NEW SECTION. Sec. 8. The department shall adopt rules necessary to administer this chapter. All public agencies are subject to this chapter.

NEW SECTION. Sec. 9. Sections 1 through 8 of this act shall constitute a new chapter in Title 39 RCW.