In general, contract terms are enforceable under law.  However, a contract term may be unenforceable if it contravenes public policy.  State law provides that certain types of contracts or contract terms are against public policy and are unenforceable.  For example, a provision in a public works contract with a county that requires actions arising out of the contract to be commenced in superior court of the county is against public policy and is void and unenforceable. 

Under current law, any clause in a construction contract that waives, releases, or extinguishes the rights of a contractor, subcontractor, or supplier to damages or equitable adjustment arising out of unreasonable delay in performance caused by acts or omissions of the contractee is against public policy and is void and unenforceable.

A construction contract is any contract or agreement for construction, alteration, repair, addition to, subtraction from, improvement to, or maintenance of, any building, highway, road, railroad, excavation, or other structure, project, development, or improvement attached to real estate, including moving and demolition. 

Any clause in a public works contract that waives, releases, or extinguishes the rights of a contractor, subcontractor, or supplier to damages or an equitable adjustment arising out of a delay in performance caused by the COVID-19 pandemic emergency proclamations is against public policy and void and unenforceable. 

The bill does not void any provision or contract where the parties have already agreed to contract modifications or have agreed to terms in which the COVID-19 pandemic emergency proclamations impact existing contract language.

The bill is limited to only public works contracts.  A provision is added that provides that the bill does not void any provision or contract where the parties have already agreed to contract modifications or have agreed to terms in which the COVID-19 pandemic emergency proclamations impact existing contract language.

The committee recommended a different version of the bill than what was heard.  PRO:  The conditions under which many contracts were agreed to have changed dramatically due to the pandemic.  The mandates requiring social distancing, additional cleaning, hand washing, and personal protection equipment have slowed down projects and increased costs.  Contractors are responsible for many of these increased costs.  The bill gives contractors a chance to make their case but does not require reimbursement.  If a public owner mandates changes, the public owner should shoulder the costs.  The bill will help compensate essential workers.  Government boilerplate contracts have hurt contractor's ability to recover any costs.
 
OTHER:  In the private sector, many adjustments were made cooperatively by both parties and there should be a compelling reason for the state to intervene in a private contract.  The bill should be limited to only public works.  Both sides have risk and assume costs of that risk, including the owner of the project.  Owners have treated contractors fairly and negotiated cost-sharing when they were not obligated to.  Washington State Department of Transportation compensated for direct costs and for implementing the safety plan.  There are still many ongoing negotiations and change orders and it is unclear how bill impacts them.  Force majeure provisions are already in contracts and are built into the costs of the contract.

PRO:  Contractors are invested to keep projects open safely.  In many, not all cases, settlements have been reached.  Construction industry and the labor industry support this bill.  During COVID, we had impacted contracts that had large impacts.  We suffered financial consequences.  This will allow the contractors to recover some impacts.  It does not eliminate the causation requirement the contractor has to prove.

CON:  The Governor shut down contracts to protect public lives.  We anticipate costs to have been an estimated $45 millionto date.  This will cost as much as $100 million in costs, in addition to the $45 million.  This bill shifts risks and costs from the contractor to the state and the taxpayer.  Both parties are aware of the risks at the time of the bid.  Each party is responsible for their assigned risk.  Risks are spelled out in the contracts signed.