S-2053

AN ACT Relating to alternative public works contracting procedures; amending RCW 39.10.010, 39.10.020, 39.10.050, 39.10.110, 39.10.115, and 39.10.902; amending 2000 c 138 s 106 (uncodified); reenacting and amending RCW 39.10.060 and 39.10.120; providing an effective date; and declaring an emergency.

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

Sec. 1. RCW 39.10.010 and 1994 c 132 s 1 are each amended to read as follows:

The legislature finds that the traditional process of awarding public works contracts in lump sum to the lowest responsible bidder is a fair and objective method of selecting a contractor. However, under certain circumstances, alternative public works contracting procedures may best serve the public interest if such procedures are implemented in an open and fair process based on objective and equitable criteria. The purpose of this chapter is to authorize the use of certain supplemental alternative public works contracting procedures by state agencies and ((~~large~~)) municipalities under limited circumstances, to prescribe appropriate requirements to ensure that such contracting procedures serve the public interest, and to establish a process for evaluation of such contracting procedures.

Sec. 2. RCW 39.10.020 and 2000 c 209 s 1 are each amended to read as follows:

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

(1) "Alternative public works contracting procedure" means the design-build and the general contractor/construction manager contracting procedures authorized in RCW 39.10.050 and 39.10.060, respectively.

(2) "Public body" means the state department of general administration; the University of Washington; Washington State University; Central Washington University; Eastern Washington University; Western Washington University; The Evergreen State College; every city with a population greater than ((~~one hundred fifty~~)) seventy thousand; ((~~every city authorized to use the design-build procedure for a water system demonstration project under RCW 39.10.065(3);~~)) every county with a population greater than ((~~four~~)) three hundred ((~~fifty~~)) thousand; every port district with ((~~a population~~)) total revenues greater than ((~~five hundred thousand~~)) fifteen million dollars per year; every public utility district with revenues from energy sales greater than sixty-five million dollars per year; and those school districts proposing projects that are considered and approved by the school district project review board under RCW 39.10.115.

(3) "Public works project" means any work for a public body within the definition of the term public work in RCW 39.04.010.

Sec. 3. RCW 39.10.050 and 1997 c 376 s 3 are each amended to read as follows:

(1) Notwithstanding any other provision of law, and after complying with RCW 39.10.030, the following public bodies may utilize the design-build procedure of public works contracting for public works projects authorized under this section: The state department of general administration; the University of Washington; Washington State University; Central Washington University; Eastern Washington University; Western Washington University; The Evergreen State College; every city with a population greater than ((~~one hundred fifty~~)) seventy thousand; every county with a population greater than ((~~four~~)) three hundred ((~~fifty~~)) thousand; ((~~and~~)) every port district with ((~~a population~~)) total revenues greater than ((~~five hundred thousand~~)) fifteen million dollars per year; and every public utility district with revenues from energy sales greater than sixty-five million dollars per year. The authority granted to port districts in this section is in addition to and does not affect existing contracting authority under RCW 53.08.120 and 53.08.130. The authority granted to public utility districts in this section and in RCW 39.10.060 is in addition to and does not affect existing contracting authority under chapter 54.04 RCW. For the purposes of this section, "design-build procedure" means a contract between a public body and another party in which the party agrees to both design and build the facility, portion of the facility, or other item specified in the contract.

(2) Public bodies authorized under this section may utilize the design-build procedure for public works projects valued over ten million dollars where:

(a) The construction activities or technologies to be used are highly specialized and a design-build approach is critical in developing the construction methodology or implementing the proposed technology; or

(b) The project design is repetitive in nature and is an incidental part of the installation or construction; or

(c) Regular interaction with and feedback from facilities users and operators during design is not critical to an effective facility design.

(3) Public bodies authorized under this section may also use the design-build procedure for the following projects that meet the criteria in subsection (2)(b) and (c) of this section:

(a) The construction or erection of preengineered metal buildings or prefabricated modular buildings, regardless of cost; or

(b) The construction of new student housing projects valued over five million dollars.

(4) Contracts for design-build services shall be awarded through a competitive process utilizing public solicitation of proposals for design-build services. The public body shall publish at least once in a legal newspaper of general circulation published in or as near as possible to that part of the county in which the public work will be done, a notice of its request for proposals for design-build services and the availability and location of the request for proposal documents. The request for proposal documents shall include:

(a) A detailed description of the project including programmatic, performance, and technical requirements and specifications, functional and operational elements, minimum and maximum net and gross areas of any building, and, at the discretion of the public body, preliminary engineering and architectural drawings;

(b) The reasons for using the design-build procedure;

(c) A description of the qualifications to be required of the proposer including, but not limited to, submission of the proposer's accident prevention program;

(d) A description of the process the public body will use to evaluate qualifications and proposals, including evaluation factors and the relative weight of factors. Evaluation factors shall include, but not be limited to: Proposal price; ability of professional personnel; past performance on similar projects; ability to meet time and budget requirements; ability to provide a performance and payment bond for the project; recent, current, and projected work loads of the firm; location; and the concept of the proposal;

(e) The form of the contract to be awarded;

(f) The maximum allowable construction cost and minority and women enterprise total project goals;

(g) The amount to be paid to finalists submitting best and final proposals who are not awarded a design-build contract; and

(h) Other information relevant to the project.

(5) The public body shall establish a committee to evaluate the proposals based on the factors, weighting, and process identified in the request for proposals. Based on its evaluation, the public body shall select not fewer than three nor more than five finalists to submit best and final proposals. The public body may, in its sole discretion, reject all proposals. Design-build contracts shall be awarded using the procedures in (a) or (b) of this subsection.

(a) Best and final proposals shall be evaluated and scored based on the factors, weighting, and process identified in the initial request for proposals. The public body may score the proposals using a system that measures the quality and technical merits of the proposal on a unit price basis. Final proposals may not be considered if the proposal cost is greater than the maximum allowable construction cost identified in the initial request for proposals. The public body shall initiate negotiations with the firm submitting the highest scored best and final proposal. If the public body is unable to execute a contract with the firm submitting the highest scored best and final proposal, negotiations with that firm may be suspended or terminated and the public body may proceed to negotiate with the next highest scored firm. Public bodies shall continue in accordance with this procedure until a contract agreement is reached or the selection process is terminated.

(b) If the public body determines that all finalists are capable of producing plans and specifications that adequately meet project requirements, the public body may award the contract to the firm that submits the responsive best and final proposal with the lowest price.

(6) The firm awarded the contract shall provide a performance and payment bond for the contracted amount. The public body shall provide appropriate honorarium payments to finalists submitting best and final proposals who are not awarded a design-build contract. Honorarium payments shall be sufficient to generate meaningful competition among potential proposers on design-build projects.

Sec. 4. RCW 39.10.060 and 2000 c 209 s 2 and 2000 c 194 s 1 are each reenacted and amended to read as follows:

(1) Notwithstanding any other provision of law, and after complying with RCW 39.10.030, ((~~the following~~)) a public ((~~bodies~~)) body may utilize the general contractor/construction manager procedure of public works contracting for public works projects authorized under subsection (2) of this section((: The state department of general administration; the University of Washington; Washington State University; every city with a population greater than one hundred fifty thousand; every county with a population greater than four hundred fifty thousand; every port district with a population greater than five hundred thousand; and those school districts proposing projects that are considered and approved by the school district project review board under RCW 39.10.115)). For the purposes of this section, "general contractor/construction manager" means a firm with which a public body has selected and negotiated a maximum allowable construction cost to be guaranteed by the firm, after competitive selection through formal advertisement and competitive bids, to provide services during the design phase that may include life-cycle cost design considerations, value engineering, scheduling, cost estimating, constructability, alternative construction options for cost savings, and sequencing of work, and to act as the construction manager and general contractor during the construction phase.

(2) Except those school districts proposing projects that are considered and approved by the school district project review board, public bodies authorized under this section may utilize the general contractor/construction manager procedure for public works projects valued over ten million dollars where:

(a) Implementation of the project involves complex scheduling requirements; or

(b) The project involves construction at an existing facility which must continue to operate during construction; or

(c) The involvement of the general contractor/construction manager during the design stage is critical to the success of the project.

(3) Public bodies should select general contractor/construction managers early in the life of public works projects, and in most situations no later than the completion of schematic design.

(4) Contracts for the services of a general contractor/construction manager under this section shall be awarded through a competitive process requiring the public solicitation of proposals for general contractor/construction manager services. The public solicitation of proposals shall include: A description of the project, including programmatic, performance, and technical requirements and specifications when available; the reasons for using the general contractor/construction manager procedure; a description of the qualifications to be required of the proposer, including submission of the proposer's accident prevention program; a description of the process the public body will use to evaluate qualifications and proposals, including evaluation factors and the relative weight of factors; the form of the contract to be awarded; the estimated maximum allowable construction cost; minority and women business enterprise total project goals, where applicable; and the bid instructions to be used by the general contractor/construction manager finalists. Evaluation factors shall include, but not be limited to: Ability of professional personnel, past performance in negotiated and complex projects, and ability to meet time and budget requirements; the scope of work the general contractor/construction manager proposes to self-perform and its ability to perform it; location; recent, current, and projected work loads of the firm; and the concept of their proposal. A public body shall establish a committee to evaluate the proposals. After the committee has selected the most qualified finalists, these finalists shall submit final proposals, including sealed bids for the percent fee, which is the percentage amount to be earned by the general contractor/construction manager as overhead and profit, on the estimated maximum allowable construction cost and the fixed amount for the detailed specified general conditions work. The public body shall select the firm submitting the highest scored final proposal using the evaluation factors and the relative weight of factors published in the public solicitation of proposals.

(5) The maximum allowable construction cost may be negotiated between the public body and the selected firm after the scope of the project is adequately determined to establish a guaranteed contract cost for which the general contractor/construction manager will provide a performance and payment bond. The guaranteed contract cost includes the fixed amount for the detailed specified general conditions work, the negotiated maximum allowable construction cost, the percent fee on the negotiated maximum allowable construction cost, and sales tax. If the public body is unable to negotiate a satisfactory maximum allowable construction cost with the firm selected that the public body determines to be fair, reasonable, and within the available funds, negotiations with that firm shall be formally terminated and the public body shall negotiate with the next highest scored firm and continue until an agreement is reached or the process is terminated. If the maximum allowable construction cost varies more than fifteen percent from the bid estimated maximum allowable construction cost due to requested and approved changes in the scope by the public body, the percent fee shall be renegotiated.

(6) All subcontract work shall be competitively bid with public bid openings. Subcontract work shall not be issued for bid until the public body has approved, in consultation with the office of minority and women's business enterprises or the equivalent local agency, a plan prepared by the general contractor/construction manager for attaining applicable minority and women business enterprise total project goals that equitably spreads women and minority enterprise opportunities to as many firms in as many bid packages as is practicable. When critical to the successful completion of a subcontractor bid package and after publication of notice of intent to determine bidder eligibility in a legal newspaper of general circulation published in or as near as possible to that part of the county in which the public work will be done at least twenty days before requesting qualifications from interested subcontract bidders, the owner and general contractor/construction manager may ((~~evaluate for~~)) determine subcontractor bidding eligibility ((~~a subcontractor's ability, time, budget, and specification requirements based on the subcontractor's performance of those items on previous projects~~)) using the following evaluation criteria:

(a) Adequate financial resources or the ability to secure such resources;

(b) History of successful completion of a contract of similar type and scope;

(c) Project management and project supervision personnel with experience on similar projects and the availability of such personnel for the project;

(d) Current and projected workload and the impact the project will have on the subcontractor's current and projected workload;

(e) Ability to accurately estimate the subcontract bid package scope of work;

(f) Ability to meet subcontract bid package shop drawing and other coordination procedures;

(g) Eligibility to receive an award under applicable laws and regulations; and

(h) Ability to meet subcontract bid package scheduling requirements.

The owner and general contractor/construction manager shall weigh the evaluation criteria and determine a minimum acceptable score to be considered an eligible subcontract bidder.

After publication of notice of intent to determine bidder eligibility, subcontractors requesting eligibility shall be provided the evaluation criteria and weighting to be used by the owner and general contractor/construction manager to determine eligible subcontract bidders. After the owner and general contractor/construction manager determine eligible subcontract bidders, subcontractors requesting eligibility shall be provided the results and scoring of the subcontract bidder eligibility determination.

Subcontract bid packages shall be awarded to the responsible bidder submitting the low responsive bid. The requirements of RCW 39.30.060 apply to each subcontract bid package. All subcontractors who bid work over three hundred thousand dollars shall post a bid bond and all subcontractors who are awarded a contract over three hundred thousand dollars shall provide a performance and payment bond for their contract amount. All other subcontractors shall provide a performance and payment bond if required by the general contractor/construction manager. A low bidder who claims error and fails to enter into a contract is prohibited from bidding on the same project if a second or subsequent call for bids is made for the project. Except as provided for under subsection (7) of this section, bidding on subcontract work by the general contractor/construction manager or its subsidiaries is prohibited. The general contractor/construction manager may negotiate with the low-responsive bidder in accordance with RCW 39.10.080 or, if unsuccessful in such negotiations, rebid.

(7) The general contractor/construction manager, or its subsidiaries, may bid on subcontract work if:

(a) The work within the subcontract bid package is customarily performed by the general contractor/construction manager;

(b) The bid opening is managed by the public body; and

(c) Notification of the general contractor/construction manager's intention to bid is included in the public solicitation of bids for the bid package.

In no event may the value of subcontract work performed by the general contractor/construction manager exceed thirty percent of the negotiated maximum allowable construction cost.

(8) A public body may include an incentive clause in any contract awarded under this section for savings of either time or cost or both from that originally negotiated. No incentives granted may exceed five percent of the maximum allowable construction cost. If the project is completed for less than the agreed upon maximum allowable construction cost, any savings not otherwise negotiated as part of an incentive clause shall accrue to the public body. If the project is completed for more than the agreed upon maximum allowable construction cost, excepting increases due to any contract change orders approved by the public body, the additional cost shall be the responsibility of the general contractor/construction manager.

Sec. 5. RCW 39.10.110 and 1997 c 376 s 6 are each amended to read as follows:

(1) There is established a ((~~temporary independent oversight~~)) public works procurement committee to review the utilization of the alternative public works contracting procedures authorized under this chapter, to evaluate potential future utilization of other alternative contracting procedures, including, but not limited to, contractor prequalification, and, if desired by the committee, to review traditional public works contracting procedures used by state agencies and municipalities. The committee shall also pursue the development of a mentoring program for expansion of the authorities in this chapter to other public bodies. The membership of the committee shall include: Two members of the house of representatives, one from each major caucus, appointed by the speaker of the house of representatives; two members of the senate, one from each major caucus, appointed by the president of the senate; representatives from the appropriate segments of the construction, contracting, subcontracting, and design industries, appointed by the governor; representatives from appropriate labor organizations, appointed by the governor; representatives from public bodies authorized to use the alternative public works contracting procedures under this chapter, appointed by the governor; a representative from the office of minority and women's business enterprises, appointed by the governor; and a representative from the office of financial management, appointed by the governor. The governor shall maintain a balance between representatives from public agencies and the private sector when appointing members to the committee, and shall consider the recommendations of the established organizations representing the construction, contracting, subcontracting, and design industries and organized labor in making the industry and labor appointments.

(2) ((~~The committee shall meet beginning after July 1, 1994.~~)) A chair or cochairs shall be selected from among the committee's membership. Staff support for the committee shall be provided by the agencies and organizations represented on the committee.

(3) Public bodies utilizing the alternative contracting procedures authorized under this chapter shall provide any requested information concerning implementation of projects under this chapter to the committee in a timely manner, excepting any trade secrets or proprietary information.

(4) The committee shall report to the appropriate standing committees of the legislature by December ((~~10, 2000,~~)) 10th of each year concerning its findings and recommendations.

Sec. 6. 2000 c 138 s 106 (uncodified) is amended to read as follows:

A report on the use of the small works roster shall be made to the ((~~independent oversight~~)) public works procurement committee established under RCW 39.10.110 prior to the 2003 legislative session.

Sec. 7. RCW 39.10.115 and 2000 c 209 s 4 are each amended to read as follows:

(1) The school district project review board is established to review school district proposals submitted by school districts to use alternative public works contracting procedures. The board shall select and approve qualified projects based upon an evaluation of the information submitted by the school district under subsection (2) of this section. The membership of the board shall be selected by the ((~~independent oversight~~)) public works procurement committee as established under RCW 39.10.110 and shall include the following representatives, each having experience with public works or commercial construction: One representative from the office of the superintendent of public instruction; one representative from the office of financial management; two representatives from the construction industry, one of whom works for a construction company with gross annual revenues of twenty million dollars or less; one representative from the specialty contracting industry; one representative from organized labor; one representative from the design industry; one representative from a public body previously authorized under this chapter to use an alternative public works contracting procedure who has experience using such alternative contracting procedures; one representative from school districts with ten thousand or more annual average full-time equivalent pupils; and one representative from school districts with fewer than ten thousand average full-time equivalent pupils. Each member shall be appointed for a term of three years, with the first three-year term commencing after June 8, 2000. Any member of the school district project review board who is directly affiliated with any applicant before the board must recuse him or herself from consideration of the application.

(2) A school district seeking to use alternative contracting procedures authorized under this chapter shall file an application with the school district project review board. The application form shall require the district to submit a detailed statement of the proposed project, including the school district's name; student population based upon October full-time equivalents; the current projected total budget for the project, including the estimated construction costs, costs for professional services, equipment and furnishing costs, off-site costs, contract administration costs, and other related project costs; the anticipated project design and construction schedule; a summary of the school district's construction activity for the preceding six years; and an explanation of why the school district believes the use of an alternative contracting procedure is in the public interest and why the school district is qualified to use an alternative contracting procedure, including a summary of the relevant experience of the school district's management team. The applicant shall also provide in a timely manner any other information concerning implementation of projects under this chapter requested by the school district project review board to assist in its consideration.

(3) Any school district whose application is approved by the school district project review board shall comply with the public notification and review requirements in RCW 39.10.030.

(4) Any school district whose application is approved by the school district project review board shall not use as an evaluation factor whether a contractor submitting a bid for the approved project has had prior general contractor/construction manager procedure experience.

(5) The school district project review board shall prepare and issue a report reviewing the use of the alternative public works contracting procedures by school districts. The board shall report to the ((~~independent oversight~~)) public works procurement committee at least sixty days before the ((~~oversight~~)) committee is required to report to the legislature under RCW 39.10.110(4).

Sec. 8. RCW 39.10.120 and 1997 c 376 s 7 and 1997 c 220 s 404 are each reenacted and amended to read as follows:

(1) Except as provided in subsections (2) and (3) of this section, the alternative public works contracting procedures authorized under this chapter are limited to public works contracts signed before July 1, ((~~2001~~)) 2007. Methods of public works contracting authorized by RCW 39.10.050 and 39.10.060 shall remain in full force and effect until completion of contracts signed before July 1, ((~~2001~~)) 2007.

(2) For the purposes of a baseball stadium as defined in RCW 82.14.0485, the design-build contracting procedures under RCW 39.10.050 shall remain in full force and effect until completion of contracts signed before December 31, 1997.

(3) For the purposes of a stadium and exhibition center, as defined in RCW 36.102.010, the design-build contracting procedures under RCW 39.10.050 shall remain in full force and effect until completion of contracts signed before December 31, 2002.

Sec. 9. RCW 39.10.902 and 1997 c 376 s 8 are each amended to read as follows:

The following acts or parts of acts, as now existing or hereafter amended, are each repealed, effective July 1, ((~~2001~~)) 2007:

(1) RCW 39.10.010 and section 1 of this act & 1994 c 132 s 1;

(2) RCW 39.10.020 and section 2 of this act, 2000 c 209 s 1, 1997 c 376 s 1, & 1994 c 132 s 2;

(3) RCW 39.10.030 and 1997 c 376 s 2 & 1994 c 132 s 3;

(4) RCW 39.10.040 and 1994 c 132 s 4;

(5) RCW 39.10.050 and section 3 of this act, 1997 c 376 s 3, & 1994 c 132 s 5;

(6) RCW 39.10.060 and section 4 of this act, 2000 c 209 s 2, 2000 c 194 s 1, 1997 c 376 s 4, 1996 c 18 s 6, & 1994 c 132 s 6;

(7) RCW 39.10.065 and 1997 c 376 s 5;

(8) RCW 39.10.067 and 2000 c 209 s 3;

(9) RCW 39.10.070 and 1994 c 132 s 7;

((~~(9)~~)) (10) RCW 39.10.080 and 1994 c 132 s 8;

((~~(10)~~)) (11) RCW 39.10.090 and 1994 c 132 s 9;

((~~(11)~~)) (12) RCW 39.10.100 and 1994 c 132 s 10;

((~~(12)~~)) (13) RCW 39.10.110 and section 5 of this act, 1997 c 376 s 6, & 1994 c 132 s 11;

((~~(13)~~)) (14) RCW 39.10.115 and section 7 of this act & 2000 c 209 s 4;

(15) RCW 39.10.900 and 1994 c 132 s 13; and

((~~(14)~~)) (16) RCW 39.10.901 and 1994 c 132 s 14((~~; and~~

~~(15) RCW 39.10.902 and 1994 c 132 s 15~~)).

NEW SECTION. Sec. 10. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect July 1, 2001.