BP BHEAD INT S [atlas:bill]

AN ACT Relating to public projects; amending RCW 48.30.270; adding a new section to chapter 48.18 RCW; and adding a new section to chapter 43.19 RCW.

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

NEW SECTION. Sec. 1. A new section is added to chapter 48.18 RCW to read as follows:

(1) For the purposes of this section:

(a) "Project" means a construction project, a plant expansion, or improvements within Washington with an aggregate construction value in excess of one hundred million dollars that is to be completed within any five-year period. "Project" does not mean a series of unrelated construction projects artificially aggregated to satisfy the fifty million-dollar requirement.

(b) "Project sponsor" means public bodies undertaking to construct a project in excess of fifty million dollars.

(c) "Public body" means a state agency, department, or instrumentality of the state, the state board for community and technical colleges, any state institution of higher education, any county, city, town, school district, special district, or other municipal or quasi-municipal corporation.

(d) "Director" means the director of the department of general administration.

(2) An insurer approved or eligible under chapter 48.15 RCW to transact insurance in this state may issue with the prior approval of the director, in consultation with the insurance commissioner, a policy of insurance covering and insuring the project sponsor, the prime contractor under a contract for the construction of a project, any contractors or subcontractors with whom the prime contractor may enter into contracts for the purpose of fulfilling its contractual obligations in the construction of the project and any other contractors engaged by a project sponsor to provide architectural or other design services, engineering services, construction management services, other consulting services relating to the design and construction of the project, or any combination thereof.

(3) The director, upon application of any insurer, may approve the insurance policy to any grouping of the entities described in subsection (2) of this section if:

(a) The grouping was formed for the purpose of performing a contract or a series of related contracts for the design and construction of a project for the project sponsor;

(b) The project sponsor or prime contractor can reasonably demonstrate that the formation and operation of the grouping will substantially improve accident prevention and claims handling to the benefit of the project sponsor or prime contractor and the contractors and workers employed by the project sponsor or prime contractor on construction related projects;

(c) The established rating and auditing standards required by authorized advisory organizations and rating organizations are adhered to;

(d) The insurer for the grouping guarantees insurance coverage of the classes of insurance issued to the grouping to any contractor who, because of participation in the group, has been unable to maintain the contractor's normal coverage. The insurer's obligation under this subsection (3)(d) continues until twelve months after substantial completion of the contractor's work;

(e) By permitting this grouping for a project sponsor, greater opportunities will be made available for minority and women-owned enterprises to bid on this project;

(f) The project insurers agree to provide not less than sixty days' notice to all insured parties of the cancellation of any material reduction in coverage for the project;

(g) The insurance coverage for the grouping contains a severability of interest clause with respect to liability claims between individuals insured under the group policy and includes contractual liability coverage that applies to the various contracts and subcontracts entered into in connection with this project; and

(h) The insurer enters into an escrow agreement with the state treasurer creating an escrow account and the insurer places into the escrow account twenty-five thousand dollars per fifty million dollars of construction project value, or an amount prescribed by rule by the director, whichever is greater. The escrow agreement shall provide that the money in the account may be invested by the state treasurer and earn interest. The escrow agreement shall contain the purpose of the escrow account, conditions for the release of money from the escrow account, and other terms and conditions determined by the director.

(4) This section does not apply to industrial insurance under Title 51 RCW.

(5) This section does not apply to performance bonds described in chapter 39.04 RCW, bid bonds, or other surety bonds required as a condition of a certificate of registration described in RCW 18.27.040.

(6) The director may adopt rules to implement or administer this section, including rules:

(a) Stating the necessary attributes that a construction project of a project sponsor and the participants in the project must have in order to qualify for the grouping permitted under this section. The rules may include matters regarding an appropriate trust agreement for the special deposit and adjustment of the construction project value according to an appropriate cost index;

(b) Establishing a process for a public body agency to evaluate the purchase of insurance authorized by this section, or any related agreements; and

(c) Encouraging local governments to involve the department early in the process of obtaining an insurance policy under this section.

(7) The insurance commissioner shall assist the director in administering this section, particularly subsection (3)(c) of this section.

(8) No new insurance policy may be issued under this section after June 30, 2005.

Sec. 2. RCW 48.30.270 and 1983 2nd ex.s. c 1 s 6 are each amended to read as follows:

(1) No officer or employee of this state, or of any public agency, public authority or public corporation except a public corporation or public authority created pursuant to agreement or compact with another state, and no person acting or purporting to act on behalf of such officer or employee, or public agency or public authority or public corporation, shall, with respect to any public building or construction contract which is about to be, or which has been competitively bid, require the bidder to make application to, or to furnish financial data to, or to obtain or procure, any of the surety bonds or contracts of insurance specified in connection with such contract, or specified by any law, general, special or local, from a particular insurer or agent or broker.

(2) No such officer or employee or any person, acting or purporting to act on behalf of such officer or employee shall negotiate, make application for, obtain or procure any of such surety bonds or contracts of insurance, except contracts of insurance for builder's risk or owner's protective liability, which can be obtained or procured by the bidder, contractor or subcontractor.

(3) This section shall not be construed to prevent the exercise by such officer or employee on behalf of the state or such public agency, public authority, or public corporation of its right to approve the form, sufficiency or manner or execution of the surety bonds or contracts of insurance furnished by the insurer selected by the bidder to underwrite such bonds, or contracts of insurance.

(4) Any provisions in any invitation for bids, or in any of the contract documents, in conflict with this section are declared to be contrary to the public policy of this state.

(5) A violation of this section shall be subject to the penalties provided by RCW 48.01.080.

(6) This section shall not apply to the public nonprofit corporation authorized under RCW 67.40.020, or to insurance policies under section 1 of this act.

NEW SECTION. Sec. 3. A new section is added to chapter 43.19 RCW to read as follows:

The director of general administration may approve an insurance policy that covers or wraps up all the entities involved in a public project in excess of one hundred million dollars as provided in section 1 of this act.