BP BHEAD INT S

AN ACT Relating to networks for assisting businesses; amending RCW 43.330.010 and 43.330.060; adding new sections to chapter 43.330 RCW; creating a new section; making an appropriation; and providing an effective date.

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

NEW SECTION. Sec. 1. The legislature finds that most net job growth in Washington in the past decade came from small firms which grew rapidly, and the vitality of the state's economy is becoming increasingly dependent on them. Continued success of these firms depends on their ability to quickly adapt to customers' changing needs. Smaller businesses, however, often lack the resources necessary to keep pace with rapid changes in the global marketplace. Linkages between firms can allow groups of firms to work together to accomplish commonly needed tasks, solve common problems, or exploit common opportunities. The formation of flexible networks allows smaller firms to maintain their inherent freedom and flexibility, yet enjoy the economies of scale that are achieved by pooling resources, facilities, and services. Flexible networks can enhance the competitiveness of small businesses in the global marketplace. Flexible networks can also enhance state economic development efforts by allowing agencies to deliver an integrated package of services to entire groups of firms with similar needs and leverage limited economic development resources.

The legislature further finds that many flexible networks that have developed were spontaneous and reflective of the needs of the participating firms. Moreover, the sustainability of a flexible network depends on the commitment of the member firms. However, lack of a cooperative tradition among firms and lack of awareness of the benefits of flexible networks are obstacles to the development of flexible networks.

The legislature further finds that public sector technical assistance and financial support is often needed to overcome obstacles to network formation. The department of community development and the department of trade and economic development have assisted networks in the defense contractor and secondary wood products industries through technical assistance and grants. Additional network support of the same types may be needed in these sectors or other targeted sectors such as biotechnology, software, environmental management, and recycling, and in other sectors of the economy where interest in networks develops.

It is the intent of the legislature that the state fulfill a needed role in stimulating the formation of flexible networks and in assisting firms with overcoming their resistance to cooperating with competitors. It is not the intent of the legislature to encourage or assist in the creation of joint business ventures which engage in anticompetitive behavior.

Sec. 2. RCW 43.330.010 and 1993 c 280 s 3 are each amended to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Associate development organization" means a local economic development nonprofit corporation that is broadly representative of community interests.

(2) "Department" means the department of community, trade, and economic development.

(3) "Director" means the director of the department of community, trade, and economic development.

(4) "Flexible network" means a group of private sector firms that works cooperatively to manufacture, sell, or market products or services, develop technology, or create or disseminate information.

NEW SECTION. Sec. 3. A new section is added to chapter 43.330 RCW to read as follows:

(1) For the purposes of this section:

(a) "Flexible network broker" means a person who is trained to assist private sector firms to form flexible networks and make other similar efforts to provide for joint manufacturing, marketing, technology development, information dissemination, and other activities.

(b) "Industrial service center" means a nonprofit organization providing services to an entire industry or sector in a defined geographic region.

(2) The department shall develop appropriate measures to promote and make more widely known the opportunities that flexible networks offer to improve the competitiveness of small businesses.

(3) The department shall direct federal economic development funds and grant awards to directly assist groups of firms to form flexible networks. The department shall:

(a) Make competitive grants, not to exceed twenty thousand dollars each, to groups of at least five firms for specific network activities or projects. Grant awards may not exceed seventy-five percent of the entire amount of the actual expenditure on the funded activity or project; and

(b) Assist in seeking and applying for other sources of funding or in-kind assistance.

The department may also require that, to be eligible for direct assistance, the flexible network collect from firms that participate in a flexible network membership dues or user participation fees to help defray the costs of the project. The department shall continue to pursue funding from federal and private resources to continue the direct assistance necessary to execute this section.

NEW SECTION. Sec. 4. A new section is added to chapter 43.330 RCW to read as follows:

The department shall promote and assist in the formation of flexible networks by associate development organizations, as defined in RCW 43.330.010, and local governments. The department's activity shall include, but not be limited to, the establishment and administration of a competitive grant program for the support of associate development organization and local governmental flexible network activities. The department shall award grants of not greater than seventy-five thousand dollars to associate development organizations and local governments for the purpose of organizing and developing multiple flexible networks or industrial service centers. The department shall also award grants of not greater than twenty thousand dollars to associate development organizations and local governments for the purpose of supporting specific flexible network activities or projects. The department may require that associate development organizations and local governments, to be eligible for grants, require the commitment of resources by the members of the flexible network in the form of user participation fees or membership dues.

Sec. 5. RCW 43.330.060 and 1993 c 280 s 9 are each amended to read as follows:

(1) The department shall assist in expanding the state's role as an international center of trade, culture, and finance. The department shall promote and market the state's products and services internationally in close cooperation with other private and public international trade efforts and act as a centralized location for the assimilation and distribution of trade information.

(2) The department shall identify and work with Washington businesses that can use local, state, and federal assistance to increase domestic and foreign exports of goods and services.

(3) The department shall work generally with small businesses and other employers to facilitate resolution of siting, regulatory, expansion, and retention problems. This assistance shall include but not be limited to assisting in work force training and infrastructure needs, identifying and locating suitable business sites, and resolving problems with government licensing and regulatory requirements. The department shall facilitate the development of flexible networks or consortia in which small businesses can identify common needs and opportunities. The department shall identify gaps in needed services and develop steps to address them including private sector support and purchase of these services.

(4) The department shall work to increase the availability of capital to small businesses by developing new and flexible investment tools and by assisting in targeting and improving the efficiency of existing investment mechanisms.

(5) The department shall assist women and minority-owned businesses in overcoming barriers to increased investment and employment and becoming full participants in Washington's traded sector economy.

NEW SECTION. Sec. 6. The sum of one hundred fifty thousand dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1995, from the general fund to the department of community, trade, and economic development for the purposes of section 3 of this act.

NEW SECTION. Sec. 7. This act shall take effect July 1, 1994.