BILL REQ. #:  H-0154.1 

Read first time 01/19/11.   Referred to Committee on State Government & Tribal Affairs.

     AN ACT Relating to providing bidding preferences for Washington businesses in state purchasing; amending RCW 28B.10.029, 43.19.1901, and 43.19.1905; adding a new section to chapter 43.19 RCW; adding a new section to chapter 39.04 RCW; adding a new section to chapter 39.29 RCW; and creating a new section.

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

NEW SECTION.  Sec. 1   The legislature finds that private sector businesses in this state are the foundation of the state's economy through their power to generate jobs for state citizens and revenues in support of state programs. The legislature further finds that the state's private sector is the best means for keeping the state's revenues working to enhance both state and global economic development. Therefore, when the state participates in the market through state purchasing, it is vital to the state and serves a public purpose to promote the fullest possible participation of the state's private sector businesses in that procurement process.

NEW SECTION.  Sec. 2   A new section is added to chapter 43.19 RCW to read as follows:
     (1) The state purchasing and material control director, under the powers granted by RCW 43.19.190 through 43.19.1939, and all state purchasing agencies, including educational institutions, operating under delegated authority granted under RCW 43.19.190 or 28B.10.029 must, in the award of procurement contracts, apply a three percent bidding preference to the bids of in-state businesses as required in this section.
     (2) The percent bidding preference provided for under this section:
     (a) Applies to contracts that are:
     (i) Awarded on or after January 1, 2012;
     (ii) For less than one million dollars; and
     (iii) For state purchases of goods or services or state public works projects;
     (b) May not be awarded to a noncompliant bidder and may not be used to achieve any applicable minimum bidding requirement;
     (c) Applies to the maximum extent consistent with international trade agreement commitments and with applicable requirements of federal law. If the state purchasing and material control director determines that compliance with this section may conflict with international trade agreement commitments or with federal requirements that are a prescribed condition to the allocation of federal funds to the state or if such compliance would otherwise conflict with federal law, the purchasing agency shall not apply the bidding preference granted under this section only to the extent necessary to eliminate the conflict. A finding by the director with regard to one purchasing agency does not affect the application of this section to purchases by another purchasing agency or in another circumstance; and
     (d) As authorized by the state purchasing and material control director, may be determined to be inapplicable to purchases made through a multistate contracting consortium, but only if such action is not taken solely to avoid applying the bidding preference required under this section.
     (3) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.
     (a) "In-state business" means a business that has its principal office located in this state and the majority of its officers domiciled in this state.
     (b) "Percent bidding preference" means the percent by which an in-state business's responsive bid may exceed the lowest responsive bid submitted by a responsible bidder who is not an in-state business and have the in-state business be awarded the contract.
     (4) Any purchasing agency adopting rules to implement this section must consult with and coordinate the rules with other purchasing agencies' rules with the goal of harmonizing the adopted rules. Rules adopted under this section must meet federal requirements that are a necessary condition to the receipt of federal funds by the state.
     (5)(a) Each July 31st, beginning July 31, 2013, the department of general administration shall publish on its web site information about the bidding preference program provided for under this section, including the number of businesses awarded state contracts under the bidding preference program, the number and amounts of contracts awarded under the bidding preference program and the percentage of awards this represents statewide, and the number of employment positions in Washington reported by the businesses that were awarded state contracts under the bidding preference program.
     (b) Subject to the availability of amounts appropriated for this specific purpose, the office of financial management must, by December 1, 2012, submit a report to the legislature and the governor with an analysis and recommendations for reducing barriers to participation in state procurement by in-state businesses with fifty or fewer employees. At a minimum, the analysis and recommendations must address:
     (i) The technical assistance needed by small businesses, including assistance with addressing barriers that result from experience requirements related to a contract;
     (ii) Alternative methods for meeting any inventory level requirements related to a contract; and
     (iii) Other qualifications for bidders that in-state small businesses identify as imposing barriers to participation in state procurement.

Sec. 3   RCW 28B.10.029 and 2010 c 61 s 1 are each amended to read as follows:
     (1)(a) An institution of higher education may exercise independently those powers otherwise granted to the director of general administration in chapter 43.19 RCW in connection with the purchase and disposition of all material, supplies, services, and equipment needed for the support, maintenance, and use of the respective institution of higher education.
     (b) Property disposition policies followed by institutions of higher education shall be consistent with policies followed by the department of general administration.
     (c) Purchasing policies and procedures followed by institutions of higher education shall be in compliance with chapters 39.19, 39.29, and 43.03 RCW, and RCW 43.19.1901, section 2 of this act, 43.19.1906, 43.19.1911, 43.19.1917, 43.19.1937, 43.19.534, 43.19.685, 43.19.700 through 43.19.704, and 43.19.560 through 43.19.637.
     (d) Purchases under chapter 39.29, 43.19, or 43.105 RCW by institutions of higher education may be made by using contracts for materials, supplies, services, or equipment negotiated or entered into by, for, or through group purchasing organizations.
     (e) The community and technical colleges shall comply with RCW 43.19.450.
     (f) Except for the University of Washington, institutions of higher education shall comply with RCW 43.41.310, 43.41.290, and 43.41.350.
     (g) If an institution of higher education can satisfactorily demonstrate to the director of the office of financial management that the cost of compliance is greater than the value of benefits from any of the following statutes, then it shall be exempt from them: RCW 43.19.685, 43.19.534, and 43.19.637.
     (h) Any institution of higher education that chooses to exercise independent purchasing authority for a commodity or group of commodities shall notify the director of general administration. Thereafter the director of general administration shall not be required to provide those services for that institution for the duration of the general administration contract term for that commodity or group of commodities.
     (2) The council of presidents and the state board for community and technical colleges shall convene its correctional industries business development advisory committee, and work collaboratively with correctional industries, to:
     (a) Reaffirm purchasing criteria and ensure that quality, service, and timely delivery result in the best value for expenditure of state dollars;
     (b) Update the approved list of correctional industries products from which higher education shall purchase; and
     (c) Develop recommendations on ways to continue to build correctional industries' business with institutions of higher education.
     (3) Higher education and correctional industries shall develop a plan to build higher education business with correctional industries to increase higher education purchases of correctional industries products, based upon the criteria established in subsection (2) of this section. The plan shall include the correctional industries' production and sales goals for higher education and an approved list of products from which higher education institutions shall purchase, based on the criteria established in subsection (2) of this section. Higher education and correctional industries shall report to the legislature regarding the plan and its implementation no later than January 30, 2005.
     (4) Institutions of higher education shall set as a target to contract, beginning not later than June 30, 2006, to purchase one percent of the total goods and services required by the institutions each year produced or provided in whole or in part from class II inmate work programs operated by the department of corrections. Institutions of higher education shall set as a target to contract, beginning not later than June 30, 2008, to purchase two percent of the total goods and services required by the institutions each year produced or provided in whole or in part from class II inmate work programs operated by the department of corrections.
     (5) An institution of higher education may exercise independently those powers otherwise granted to the public printer in chapter 43.78 RCW in connection with the production or purchase of any printing and binding needed by the respective institution of higher education. Purchasing policies and procedures followed by institutions of higher education shall be in compliance with chapter 39.19 RCW. Any institution of higher education that chooses to exercise independent printing production or purchasing authority shall notify the public printer. Thereafter the public printer shall not be required to provide those services for that institution.

NEW SECTION.  Sec. 4   A new section is added to chapter 39.04 RCW to read as follows:
     All contracts awarded under this chapter by the state are subject to the requirements established under section 2 of this act.

NEW SECTION.  Sec. 5   A new section is added to chapter 39.29 RCW to read as follows:
     All contracts awarded under this chapter are subject to the requirements established under section 2 of this act.

Sec. 6   RCW 43.19.1901 and 1987 c 434 s 23 are each amended to read as follows:
     The term "purchase" as used in RCW 43.19.190 through 43.19.200, and as they may hereafter be amended, shall include leasing or renting((: PROVIDED, That)). However, the purchasing, leasing, or renting of electronic data processing equipment shall not be included in the term "purchasing" if and when such transactions are otherwise expressly provided for by law, except that such purchasing, leasing, or renting is subject to section 2 of this act.
     ((The acquisition of job services and all other services for the family independence program under chapter 74.21 RCW shall not be included in the term "purchasing" under this chapter.))

Sec. 7   RCW 43.19.1905 and 2009 c 486 s 10 are each amended to read as follows:
     (1) The director of general administration shall establish overall state policy for compliance by all state agencies, including educational institutions, regarding the following purchasing and material control functions:
     (a) Development of a state commodity coding system, including common stock numbers for items maintained in stores for reissue;
     (b) Determination where consolidations, closures, or additions of stores operated by state agencies and educational institutions should be initiated;
     (c) Institution of standard criteria for determination of when and where an item in the state supply system should be stocked;
     (d) Establishment of stock levels to be maintained in state stores, and formulation of standards for replenishment of stock;
     (e) Formulation of an overall distribution and redistribution system for stock items which establishes sources of supply support for all agencies, including interagency supply support;
     (f) Determination of what function data processing equipment, including remote terminals, shall perform in statewide purchasing and material control for improvement of service and promotion of economy;
     (g) Standardization of records and forms used statewide for supply system activities involving purchasing, receiving, inspecting, storing, requisitioning, and issuing functions, including a standard notification form for state agencies to report cost-effective direct purchases, which shall at least identify the price of the goods as available through the division of purchasing, the price of the goods as available from the alternative source, the total savings, and the signature of the notifying agency's director or the director's designee;
     (h) Screening of supplies, material, and equipment excess to the requirements of one agency for overall state need before sale as surplus;
     (i) Establishment of warehouse operation and storage standards to achieve uniform, effective, and economical stores operations;
     (j) Establishment of time limit standards for the issuing of material in store and for processing requisitions requiring purchase;
     (k) Formulation of criteria for determining when centralized rather than decentralized purchasing shall be used to obtain maximum benefit of volume buying of identical or similar items, including procurement from federal supply sources;
     (l) Development of criteria for use of leased, rather than state owned, warehouse space based on relative cost and accessibility;
     (m) Institution of standard criteria for purchase and placement of state furnished materials, carpeting, furniture, fixtures, and nonfixed equipment, in newly constructed or renovated state buildings;
     (n) Determination of how transportation costs incurred by the state for materials, supplies, services, and equipment can be reduced by improved freight and traffic coordination and control;
     (o) Establishment of a formal certification program for state employees who are authorized to perform purchasing functions as agents for the state under the provisions of chapter 43.19 RCW;
     (p) Development of performance measures for the reduction of total overall expense for material, supplies, equipment, and services used each biennium by the state;
     (q) Establishment of a standard system for all state organizations to record and report dollar savings and cost avoidance which are attributable to the establishment and implementation of improved purchasing and material control procedures;
     (r) Development of procedures for mutual and voluntary cooperation between state agencies, including educational institutions, and political subdivisions for exchange of purchasing and material control services;
     (s) Resolution of all other purchasing and material matters which require the establishment of overall statewide policy for effective and economical supply management;
     (t) Development of guidelines and criteria for the purchase of vehicles, high gas mileage vehicles, alternate vehicle fuels and systems, equipment, and materials that reduce overall energy-related costs and energy use by the state, including investigations into all opportunities to aggregate the purchasing of clean technologies by state and local governments, and including the requirement that new passenger vehicles purchased by the state meet the minimum standards for passenger automobile fuel economy established by the United States secretary of transportation pursuant to the energy policy and conservation act (15 U.S.C. Sec. 2002);
     (u) Development of goals for state use of recycled or environmentally preferable products through specifications for products and services, processes for requests for proposals and requests for qualifications, contractor selection, and contract negotiations;
     (v) Development of procedures and policies implementing the bidding preference program provided for in section 2 of this act, with model bidding application documents that include, at a minimum, a request that bidders provide the location of the bidder's principal place of business, the residential addresses of its officers, and the number of its employment positions in Washington;
     (w) Development of procurement policies and procedures, such as unbundled contracting and subcontracting, that encourage and facilitate the purchase of products and services by state agencies and institutions from Washington small businesses to the maximum extent practicable and consistent with international trade agreement commitments;
     (((w))) (x) Development of food procurement procedures and materials that encourage and facilitate the purchase of Washington grown food by state agencies and institutions to the maximum extent practicable and consistent with international trade agreement commitments; and
     (((x))) (y) Development of policies requiring all food contracts to include a plan to maximize to the extent practicable and consistent with international trade agreement commitments the availability of Washington grown food purchased through the contract.
     (2) The department of general administration shall convene a working group including representatives of the office of financial management, the department of information services, and the state printer. The purpose of the working group is to work collaboratively to develop common policies and procedures that encourage and facilitate state government purchases from Washington small businesses, as required in subsection (1)(((v))) (w) of this section, and in RCW 39.29.065, 43.78.110, and 43.105.041(1)(j). By December 1, 2009, these central services agencies shall jointly provide a written progress report to the governor and legislature on actions taken and planned, barriers identified, and solutions recommended to reach this goal.
     (3) The definitions in this subsection apply throughout this section and RCW 43.19.1908.
     (a) "Common vendor registration and bid notification system" has the definition in RCW 39.29.006.
     (b) "Small business" has the definition in RCW 39.29.006.
     (c) "Washington grown" has the definition in RCW 15.64.060.

NEW SECTION.  Sec. 8   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.