HOUSE BILL REPORT

SSB 6284

BYSenate Committee on Ways & Means (originally sponsored by Senators Bender, West, Lee, Conner, Anderson, McMullen, Warnke, Smitherman, Saling and Johnson)

Establishing the office of capital projects.

House Committe on Trade & Economic Development

Majority Report:  Do pass.  (13)

      Signed by Representatives Vekich, Chair; Wineberry, Vice Chair; Amondson, Beck, Cantwell, Doty, Fox, Grant, Holm, McLean, Moyer, Rasmussen and Schoon.

House Staff:Stephen Hodes (786-7092)

AS REPORTED BY COMMITTEE ON TRADE & ECONOMIC DEVELOPMENT

FEBRUARY 24, 1988

BACKGROUND:

The construction of major capital projects, such as dams, bridges, and port facilities has become more open to international competition in recent years.  Growing conflict over access of U.S. firms to participation in such projects in developed nations, such as Japan, has become a factor in trade negotiations and ongoing congressional debate on international trade practices. Large capital projects are often undertaken by national or regional governments, which often contract with firms or groups of firms to construct such projects.  A variety of conditions, such as the required use of local materials or subcontractors or flexible financing terms are often elements in the process of bidding for these contracts.

While some large capital projects are financed by the nation in which the improvement is located, a large percentage are funded instead through international financial institutions, such as the World Bank or the Asian Development Bank.  These capital projects are large enough that the expertise and resources of a consortium of businesses is often required to undertake them.  Initial government involvement to assist in-state firms to develop such consortia is often provided for firms attempting to secure contracts for large-scale capital projects by national governments, and by state and Canadian provincial governments.

SUMMARY:

The Office of Capital Projects is established in the Department of Trade and Economic Development.  The office is required to: assist Washington State businesses in obtaining international and domestic capital projects; assisting Washington State businesses in the formation of consortia which have the range of skills and services to compete for capital projects;  assist consortia in Washington State to market their products and services in international markets; compile information on capital project opportunities for Washington state businesses; and provide initial assistance to consortia in securing capital project contracts.

The office may seek and receive funds from the public and private sectors, and may coordinate with other governmental agencies.  It may charge reasonable fees for the use of its services.  Contracts entered into by consortiums do not constitute a contract with the state of Washington or a lending of the state's credit.  The office is prohibited from entering into binding contracts with foreign governments.

The office is scheduled to terminate under the sunset process on June 30, 1993. An appropriation of $120,000 is provided to the Department of Trade and Economic Development from the General Fund for the office.

Appropriation:    $120,000 to the Department of Trade and Economic Development.

Fiscal Note:      Requested February 19, 1988.

House Committee ‑ Testified For:    Judy Bentley, Sen. Bender's office.

House Committee - Testified Against:      None Presented.

House Committee - Testimony For:    The size of international capital projects makes state assistance important if Washington firms are to participate in capital project consortia.  Program is modeled after successful Ontario program.

House Committee - Testimony Against:      None Presented.