HOUSE OF REPRESENTATIVES

                      Olympia, Washington

Bill Analysis      Bill No.  HB 1074

Regulating job order contracting for Hearing Date:  1/26/99

public works

Brief Title

Reps.  D. Schmidt and Romero              Staff:  Steve Lundin

Sponsor(s)                          State Government Committee

                                              Phone:  786-7127

BACKGROUND:

Differing procedures are established for state agencies and various local governments to award contracts for public works projects.

Frequently, three different sets of procedural requirements have been established for state agencies and local governments to award public works contracts, depending on the estimated cost of the project and with varying requirements, as follows:

     oAn agency or local government may award contracts for public works projects of a relatively small estimated cost in any manner it chooses.

     oAn agency or local government may award contracts using a small works roster bidding process to award contracts on projects of up to a medium estimated cost.  Under this process a limited number of contractors are contacted and asked to submit bids.  The contract is awarded to the lowest responsible bidder.

oAn agency or local government may award contracts using a formal competitive bidding process normally to award contracts of a higher estimated value, where a notice is published requesting sealed bids and the sealed bids are opened at a designated time and place.  The contract is awarded to the lowest responsible bidder.

In addition, several different state agencies and local governments have been authorized to use alternative public works contracting procedures to award contracts on certain public works contracts of a very large dollar value.  One alternative procedure is the Adesign-build@ procedure.  Another alternative procedure is the Ageneral contractor/construction manager@ procedure.  Authority to use these alternative procedures terminates on July 1, 2001.  The Department of General Administration, University of Washington, Washington State University, every county with a population of greater than 450,000 (King, Pierce, and Snohomish Counties), every city with a population in excess of 150,000 (Seattle, Tacoma, and Spokane), and any port district with a population in excess of 500,000 (Port of Seattle, and Port of Tacoma) may use the alternative public works contracting procedures.

SUMMARY:

Public bodies authorized to use the alternative public works contracting procedures may award contracts using a new procedure called a job order contract for public works.  The authority to use job order contracts terminates on July 1, 2004.

A job order contract is a contract where a contractor agrees to perform an indefinite quantity of public works over a fixed period of time on the basis of definite work orders where charges for the definite work that is ordered are based upon prices contained in a unit price book.  Unit price books contain specific prices based on generally accepted industry standards and information, where available, for various items of work to be performed, and may include costs for materials, labor, equipment, overhead, and bonds.

1. Agencies that may use job order contracting.

The Department of General Administration, University of Washington, Washington State University, every county with a population of greater than 450,000 (King, Pierce, and Snohomish Counties), every city with a population in excess of 150,000 (Seattle, Tacoma, and Spokane), and port districts with a population in excess of 500,000 (Port of Seattle, and Port of Tacoma) are authorized to use job order contracting.

2. Restrictions on job order contracting:

Job order contracts are subject to the following restrictions:

oA job order contract may not be executed for an initial contract term of more than two years, but may be renewed or extended for an additional year.

oAll job order contracts must be executed before July 1, 2001, but an existing job order contract may be extended or renewed after that date.

oA public entity may not have more than two job order contracts in effect at any one time.

oThe maximum total dollar amount that is awarded under a job order contract may not exceed $3 million in the first year, $5 million over the first two years, or $8 million over the three year period if the contract is renewed or extended.

oA work order for a single project may not exceed $200,000.

oPublic bodies [a public body?] may not issue more than two work orders [under the same job order contract?] equal to or greater than $150,000 in a 12-month period.

oNo more than 20% of the dollar value of the work order may consist of items that are not included in the unit price book.

oAt least 80% of the job order contract must be subcontracted to entities other than the job order contractor.

oA new permanent, enclosed building space that is constructed under this process may not exceed 2000 square feet.

oIf the public entity fails to order a minimum amount of work indicated in its request for proposals, the public body must pay the contractor an amount equal to the difference between the minimum amount of work that is indicated in the request for proposals, less the amount of work actually done, multiplied times an appropriate percentage for overhead and profit contained in the general conditions for Washington State facility construction.  No other remedy shall exist.

Requirements for performance bonds and interest that is paid on public contracts apply to each work order rather than the job order contract.  Retainage requirements do not apply to either the job order contract or a work order made under a job order contract.

The requirement that subcontractors performing 10% or more of the total contract amount be listed by the general contractor within one hour after the general contractor submits its bid on a project does not apply to job order contracts.

Job order contractors are required to pay prevailing wages for all work that otherwise would be subject to those requirements.

3. Process to award a job order contract.

Prior to using job order contracting, a public entity must determine that the use of unit price books and work orders will eliminate time-consuming and costly aspects of traditional public works contracting.  Once this determination is made, a job order contract is awarded using a competitive bidding process involving the following steps:

oNotice for a request for proposals is published describing a number of details, including a description of the scope of job order contracts, identification of the specific unit price book that will be used, and the minimum contracted amount committed to the selected job order contractor.

oThe public body establishes a committee that evaluates proposals and selects the most qualified finalists.

oThe most qualified finalists submit final proposals, including sealed bids based upon the identified unit price book.

oThe public body awards the contract to the firm submitting the highest scored final proposal using evaluation factors and the relative weight of factors published in the public request for proposals.

A protest period of 10 days is allowed following the announcement of the apparent successful proposal to allow a protester to file a detailed statement of grounds for the protest.  The public body promptly determines the merits of the protest and provides a written determination.

A job order contract may not be executed until at least two business days following the decision on the protest.  Work orders may not be issued until the public body approves a plan the job order contractor prepares for attaining applicable minority and women business enterprise total job order contract goals that equitably spreads subcontracting opportunities among certified women and minority business enterprises.

FISCAL NOTE:  Not requested.

EFFECTIVE DATE:  Ninety days after adjournment of session in which bill is passed.