BP BHEAD INT S [atlas:bill]

AN ACT Relating to public projects; amending RCW 18.27.050; adding a new section to chapter 48.01 RCW; adding a new section to chapter 51.16 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 48.01 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 fifty 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 to transact insurance in this state may issue with the prior approval of the director 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 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 and the contractors and workers employed by the project sponsor 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 adequate protection to any other insurance agency or agent that demonstrates that without the protection the agency or agent will suffer losses that will constitute a threat to the continuation of the business of the agency or agent;

(e) 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)(e) continues until twelve months after substantial completion of the contractor's work;

(f) 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;

(g) 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;

(h) 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

(i) 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; and

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

The director shall work with the director of the department of labor and industries to coordinate projects seeking an insurance policy under this section and workers' compensation coverage under one certificate under section 2 of this act.

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

NEW SECTION. Sec. 2. A new section is added to chapter 51.16 RCW to read as follows:

(1) For the purposes of this section:

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

(2) The department shall create a program to allow a prime contractor for a project sponsor to secure payment of compensation under this title by extending certification to all entities performing any work or services under contract who are also covered by the insurance policy under section 1 of this act. The extension of certification invokes all duties and obligations as provided in this title.

(3) For purposes of this section, all employees performing work or services on the project for the group covered by the insurance policy provided under section 1 of this act are deemed employees of the prime contractor for workers' compensation coverage under this section. This section only applies to workers' compensation coverage for the project and shall not be deemed to create any employer-employee relationships for any other purpose.

(4) The certification and coverage extended under this section to employees of the prime contractor, contractors, and subcontractors under contract on the project shall be for the term of the contract and extend only to claims arising out of work or services performed under the contract.

(5) The director may adopt rules to implement this section. The director shall coordinate with the director of the department of general administration regarding projects seeking an insurance policy under section 1 of this act and workers' compensation coverage under one certificate under this section.

(6) No new workers' compensation coverage under this section may be issued after June 30, 2005.

Sec. 3. RCW 18.27.050 and 1987 c 303 s 1 are each amended to read as follows:

(1) At the time of registration and subsequent reregistration, the applicant shall furnish insurance or financial responsibility in the form of an assigned account in the amount of twenty thousand dollars for injury or damages to property, and fifty thousand dollars for injury or damage including death to any one person, and one hundred thousand dollars for injury or damage including death to more than one person or financial responsibility to satisfy these amounts.

(2) Failure to maintain insurance or financial responsibility relative to the contractor's activities shall be cause to suspend or deny the contractor his or her or their registration.

(3)(a) Proof of financial responsibility authorized in this section may be given by providing, in the amount required by subsection (1) of this section, an assigned account acceptable to the department. The assigned account shall be held by the department to satisfy any execution on a judgment issued against the contractor for damage to property or injury or death to any person occurring in the contractor's contracting operations, according to the provisions of the assigned account agreement. The department shall have no liability for payment in excess of the amount of the assigned account.

(b) The assigned account filed with the director as proof of financial responsibility shall be canceled at the expiration of three years after:

(i) The contractor's registration has expired or been revoked; or

(ii) The contractor has furnished proof of insurance as required by subsection (1) of this section;

if, in either case, no legal action has been instituted against the contractor or on the account at the expiration of the three-year period.

(c) If a contractor chooses to file an assigned account as authorized in this section, the contractor shall, on any contracting project, notify each person with whom the contractor enters into a contract or to whom the contractor submits a bid that the contractor has filed an assigned account in lieu of insurance and that recovery from the account for any claim against the contractor for property damage or personal injury or death occurring in the project requires the claimant to obtain a court judgment.

(4) This section does not apply to any contractor that has insurance coverage under section 1 of this act.

NEW SECTION. Sec. 4. 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 fifty million dollars as provided in section 1 of this act.