A Review of 2018 Legislative Outcomes Related to Public Works

The 2018 legislative session made some additions and some changes affecting public works contracting. This blog recaps the rulings and highlights some of the impacts.

ESSB 6143: Unit Price Contracts for Cities

One of the more anticipated outcomes of the 2018 legislative session was the authority for cities to use unit price contracting. In the previous year, this authority had been uniquely granted to public utility districts (PUD). Subsequently, similar authority was successfully sought for cities through ESSB 6143 and became effective June 7, 2018.

The statutory authorizations can be found in RCW 35.22.620 for first class cities and RCW 35.23.352 for second class cities and towns (code cities also follow this statute as directed via RCW 35A.40.210).

Unit price contracts, commonly referred to as on-call contracts, are defined in statute as:

A competitively bid contract in which public works are anticipated on a recurring basis to meet the business or operational needs of the [agency], under which the contractor agrees to a fixed-period, indefinite-quantity delivery of work, at a defined unit price for each category of work.

Procedures established in the statutes include the requirement that such contracts are to be competitively bid, which appears to be necessary regardless of the estimated contract amount. An invitation to bid is to include estimated quantities of work and should identify how work assignments, work orders, or task authorizations will be released. The agency must also invite at least one proposal from a minority- or woman-owned contracting firm whenever possible.

Contracts must be awarded to the lowest responsible bidder, and the initial term may not exceed three years, although the agency will have the option to renew the contract for one additional year.

Prevailing wages must be paid for all work normally subject to RCW 39.12. Rates must be updated annually, using the rates in effect at the beginning of each contract year (not calendar year), and intents and affidavits must be submitted annually for all work completed during the previous 12 months.

This is a distinction between the authorization granted to cities vs. the PUD-enabling statue of RCW 54.04.070 (7), which requires each work order include an intent and affidavit and the date of the work order as the effective date for the required prevailing wage rate. For more information, visit our webpage on Unit Priced (On-Call) Public Works Contracts.

When this law took effect, there were questions about how to handle closeout of the contract, particularly retainage. Closeout would follow the same procedure applied to other multiyear contracts in which the Washington State Department of Labor & Industries (L&I) has stated that retainage could be released on an annual basis or at the end of the contract. Annual closeout on a multiyear contract would be accepted at L&I with the following conditions:

1. The public entity is required to conduct the complete closeout process each year. This includes submission and approval of affidavits.
2. Release must be obtained from all three required agencies annually if the amount is over $35,000.
3. Complete closeout is to include the other provisions of RCW 60.28 (recognition of claims from material suppliers and laborers, etc).
4.  Also, the public body should include in the Description of the Contract field of the Notice of Completion form (if applicable), a designation for the year of the contract (“Year 1”, “Year 2”, etc).

Unit Price Contracts and Minimum Bid Limits for Ports

The passing of ESSB 6329 provided ports the authorization for unit price contracts identical to the authorization for cities as described above. It became effective June 7, 2018, and the enabling statue is RCW 53.08.120. A minimum bid limit was also established in the statute where previously none had existed. Ports now have explicit authority to contract without calling for bids on work that is under $40,000.

Unit Price Contracts for Other Agencies

What about unit price contracting for other agencies? The auditor’s office has taken the following position where unit price contracting is not authorized:

Since on-call contracts are not authorized by state law, we recommend a local government establish policies, procedures, and internal controls to ensure their contracting process is in compliance with public works contracting statutes (RCW Chapters 39.04, 39.06, 39.08 and 60.28) as well as prevailing wage statutes (RCW 39.12).

HB 1673: Addition to Responsible Bidder Criteria

The requirements for bidder responsibility currently listed in RCW 39.04.350 will be amended by HB 1673 with an effective date of July 1, 2019. At that time bidders must also have received training relating to the requirements associated with public works and prevailing wage from L&I or training by a provider whose curriculum is approved by L&I. Bidders who have completed three or more public works projects and have had a valid Washington business license for three or more years are exempt. The bidder must designate a person or persons to be trained.

L&I must keep records of entities that have satisfied the training requirements (or are exempt) and must post the records on its website where agencies will be able to verify if bidders have met this new requirement. L&I has already begun to offer training programs that include this subject to prepare for the 2019 effective date.

SSB 5493: Collective Bargaining Agreements to Establish Prevailing Wage Rates

Effective June 7, 2018, SSB 5493 directed L&I to revise the method for calculating prevailing wages. The new process requires establishing the prevailing rate of wage by adopting the hourly wage, usual benefits, and overtime paid for the geographic jurisdiction established in collective bargaining agreements for those trades and occupations that have collective bargaining agreements. For trades and occupations with more than one collective bargaining agreement in the county, the higher rate will prevail. For trades and occupations in which there are no collective bargaining agreements in the county, the industrial statistician must establish the prevailing rate of wage by conducting wage and hour surveys.

The first occasion to implement the new procedure was for wage updates published August 1, 2018, which took effect 30 days later, resulting in a significant increase in the wages for landscape laborers. Various counties saw an increase of anywhere from $23—31/hour.

L&I is working with public policy advocacy groups to try and find out more information and what they can do to address this dramatic change to the prevailing wage rate category. There was quite an effort to compile collective bargaining agreement data and L&I is carefully following the direction of the law. It is anticipated that any following changes would not result in such a sharp variance. 

Questions? Comments?

If you have questions about this topic or other local government issues, please use our Ask MRSC form or call us at (206) 625-1300 or (800) 933-6772. If you have comments about this blog post or other topics you would like us to write about, please email me at jisaac@mrsc.org.

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