Effective Date of Rule: June 2, 2020.
Due to the COVID-19 global pandemic, contractors are having a difficult time getting their financial statements prepared and audited. The federal government has extended the tax filing deadline by a quarter from April 15, 2020, to July 15, 2020. Until a contractor has filed their taxes, they cannot provide the financial statement required by subsection (8) of WAC 468-16-090. Additionally, we are hearing that there are strains on some accounting firms that contractors use to prepare or audit their financial statement which is causing delays even for contractors that can file taxes early.
Therefore we are proposing to extend the duration of a contractor's qualifications to the remainder of the applicant's fiscal year plus three quarters, or a total of seven quarters from the ending date of the applicant's financial statement.
Citation of Rules Affected by this Order: Amending WAC 468-16-090.
Reasons for this Finding: An overwhelming majority of WSDOT contractors expire on June 30, based on the December 31 end date of their financial statement. If we do not take action to extend the qualifications, most WSDOT contractors will expire and many will be unable to renew their qualifications, significantly reducing the number of contractors available to bid or construct public works highway construction projects. To complicate matters more, this would occur at the time WSDOT will be bidding most work for the year. Typically, work is bid earlier but this year we are dealing with delays in bidding work due to both the passage of I-976 as well as the COVID-19 global pandemic. Many of these projects are vital, address public safety or legal requirements such as fish barrier corrections or have critical work windows that must be met.
Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 1, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.
Number of Sections Adopted at the Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.
Number of Sections Adopted on the Agency's own Initiative: New 0, Amended 1, Repealed 0.
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.
Number of Sections Adopted using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 0, Repealed 0.
Date Adopted: April 29, 2020.
The standard questionnaire and financial statement shall be prepared and transmitted to the secretary, Attn: Contract advertisement and award office. The questionnaire shall include the following information:
(1) The contractor's name, address, phone number, facsimile number, email address, and type of organization (corporation, partnership, sole proprietorship, etc.).
(2) A list of the classes of work for which the contractor seeks qualification.
(3) A statement of the ownership of the firm and, if a corporation, the name of the parent corporation, if any, and the names of any affiliated or subsidiary companies.
(4) A certificate of authority from the office of the secretary of state to do business in Washington state if the applicant is an out-of-state corporation.
(5) A list of officials within the applicant firm who are also affiliated with other firms involved in construction work as a contractor, subcontractor, supplier, or consultant; including the name of the firm and their relationship with the affiliate firm.
(6) A complete list of the highest valued contracts or subcontracts performed in whole or in part within the immediate three years preceding application. The contract amount, contract number, date of completion, class of work; and the name, mailing address, email address, and phone number of the project owner or agency representative must be provided for those projects listed. Only that work completed by the contractor's own organization under its own supervision will be considered for prequalification purposes. A minimum of five completed projects must be listed.
(7) Personnel requirements.
(a) A listing of the principal officers and key employees indicating their years of experience in the classes of work for which prequalification is sought. For qualification in a class of work based on newly acquired personnel rather than the firm's past contract experience, the newly acquired personnel must be available for future employment for the full year for which qualification is sought unless replacement personnel have been approved. The loss of such personnel during the year of qualification, will result in revocation of qualification for the class of work granted pursuant to their acquisition. The department may require resumes of such personnel as deemed proper for making its determination. The firm's performance on department contracts must be currently rated standard or better to be used for qualification purposes.
(b) A firm must have, within its own organization, qualified permanent, full time personnel having the skills and experience including, if applicable, technical or specialty licenses, for each work class for which prequalification is sought. Those firms seeking qualification for electrical work (classes 9 and 16) must provide photocopies of current Washington state electrical licenses. The skills and experience must be substantiated by education and practical experience on completed construction projects.
(c) "Its own organization" shall be construed to include only the contractor's permanent, full time employed office and site supervisory personnel as shown on the most recently submitted or amended prequalification questionnaire. Workers of the organization shall be employed and paid directly by the prime contractor. The term "its own organization," shall also include the equipment owned or rented by the contractor with or without equipment operators. Such term does not include employees or equipment of another contractor, subcontractor, assignee, or agent of the applicant contractor although they are placed on the applicant contractor's payroll.
(8) A financial statement.
For a firm showing a net worth in excess of one hundred thousand dollars, the applicant must provide, with the questionnaire, a copy of its financial statement as audited or reviewed for its last fiscal year, prepared in accordance with the standards of the American Institute of Certified Public Accountants. The statement must be prepared by an independent certified public accountant registered and licensed under the laws of any state. Balance sheets, income statements, a statement of retained earnings, supporting schedules and notes, and the opinion of the independent auditor must accompany the financial statement.
(9) A wholly owned subsidiary firm may file the latest consolidated financial statement of its parent corporation in lieu of a financial statement prepared solely for the subsidiary. When a consolidated financial statement is submitted, the requirements of subsection (8) of this section and WAC 468-16-140 (2)(b) must be fulfilled.
(10) The applicant shall list the following occurrences within the previous three years:
(a) Instances of having been denied qualification, or a license, or instances of having been deemed other than responsible by any public agency.
(b) Convictions for felonies listed in WAC 468-16-050.
(c) Failure to complete a contract.
(11) The standard questionnaire shall be processed as follows:
(a) The application for qualification shall be prepared on a standard questionnaire provided by the department and sworn to before a notary public or other person authorized to take oaths.
(b) A standard questionnaire will be reviewed and a written notice provided to the applicant, within thirty days of its receipt, stating whether the applicant has been prequalified or qualification has been denied. The applicant will be advised of lack of receipt of data corroborating project completion and errors or omissions in the questionnaire and a request made for additional information necessary to complete evaluation of the applicant. If the information is not provided within twenty calendar days of the request, the application will be processed, if possible, with the information available or it will be returned to the applicant without further action.
(c) When qualification is denied, the applicant shall be advised in writing by certified mail (return receipt requested) of the reasons for the denial and of the right to a hearing upon written request.
(d) Applicants not satisfied with the qualification granted may request in writing, a review of their questionnaire and qualification ratings. The request must be filed within thirty calendar days of the date of receipt of the notice of qualification and must specifically state the basis for the request.
(e) The secretary or designee shall advise the applicant of his or her decision on the reconsideration within thirty calendar days of receipt of the request.
(12) Criteria for initial qualification, renewal, and submission of supplemental data:
(a) Qualification may be established in any calendar quarter and must be renewed annually. Information submitted in the questionnaire will be used as a basis for the contractor's initial prequalification, work class ratings, and maximum capacity ratings. Qualification will be valid for the remainder of the applicant's fiscal year plus ((two))three calendar quarters as established by the date of the year-end financial statement. Prequalification will be renewed annually thereafter or at other times as designated by the department.
(b) A standard questionnaire from a contractor, not previously qualified under this chapter, must have been received no less than fifteen calendar days and prequalification must be granted by the department prior to the scheduled bid opening to receive consideration for issuance of a bidding proposal for that bid opening unless the contract is under one hundred thousand dollars, in which case the department may waive the fifteen-day requirement.
(c) The department may, during the period for which the contractor has been prequalified, require the submission of a new standard questionnaire. If the questionnaire is not provided within thirty calendar days of the date of request, the notice of qualification held by the contractor will be declared invalid and the contractor will not be permitted to bid with the department until the contractor is again prequalified.
(d) A supplemental questionnaire shall be submitted when a significant change in the structure of the firm occurs, e.g., incorporation, officers, ownership, etc., or when required by the department.
(e) If prequalification has lapsed for more than six months, the applicant will again be required to submit a fully executed standard questionnaire and financial statement.
(f) The applicant shall authorize the department to request and receive such additional information from any sources deemed necessary for the completion of the qualification process.
(g) Inquiries will be made and investigations, if necessary, will be conducted to verify the applicant's statements and to determine eligibility for qualification.
(h) The department may, upon request, require a list of all major items of equipment used to perform those classes of work for which prequalification is sought. The description, quantity, condition, present location, and age of such equipment must be shown. The schedule must show whether the equipment is owned, leased, or rented.
(i) The department may require a personal interview with a principal or principals of the contracting firm when considering its qualification.
(j) Qualified contractors in good standing shall be notified of impending expiration of their qualification and will be provided the necessary questionnaire forms for renewal at least forty-five days before the expiration date.
(13) Financial information supplied by, or on behalf of, a contractor for the purpose of qualification under RCW
47.28.070 shall not be made available for public inspection and copying, pursuant to RCW
42.56.270. The foregoing restriction shall not prohibit the department's providing such information in evidence or in pretrial discovery in any court action or administrative hearing involving the department and a contractor. Insofar as permitted by public disclosure statutes, qualification ratings shall be treated as confidential information.
(14) Qualified contractors will be provided with notices which list projects currently being advertised.