2020 Legislative Outcomes for Procurement and Contracting

Several bills passed in 2020, each with an effective date of June 11, 2020, that impact procurement and contracting in Washington.

E2SHB 1521: Increasing Accountability in Government Contracting

E2SHB 1521 pertains to state agencies and institutes of higher education only. Additions and revisions to chapter 39.26 RCW and RCW 41.06.142 address accountability and transparency where contracted work could displace employees.

ESB 6239: Expanding Use of Apprenticeship Programs

ESB 6239 impacts RCW 39.04.310 and RCW 39.04.350 by adding definitions and compliance requirements pertaining to apprenticeship utilization plans. This would apply to agencies who have statutory requirements to include apprenticeship programs (RCW 39.04.320) and those agencies who elect to include apprenticeship programs.

ESB 5457: Requiring Subcontractor Lists for Large Projects

ESB 5457 amends RCW 39.30.060 by implementing a change in the practice of requiring a list of subcontractors when a public works project exceeds $1 million dollars.

Here are the revisions to RCW 39.30.060, Section 1, in the session law version of ESB 5457:

(1) Every invitation to bid on a prime contract that is expected to cost one million dollars or more for the construction, alteration, or repair of any public building or public work of the state or a state agency or municipality as defined under RCW 39.04.010 or an institution of higher education as defined under RCW 28B.10.016 shall require each prime contract bidder to submit ((as part of the bid, or within)):

• (a) Within one hour after the published bid submittal time, the names of the subcontractors with whom the bidder, if awarded the contract, will subcontract for performance of the work of: HVAC (heating, ventilation, and air conditioning); plumbing as described in chapter 18.106 RCW; and electrical as described in chapter 19.28 RCW, or to name  itself for the work; or
• (b) Within forty-eight hours after the published bid submittal time, the names of the subcontractors with whom the bidder, if awarded the contract, will subcontract for the performance of the work of structural steel installation and rebar installation.

And here are the revisions to Section 4 of RCW 39.30.060:

(4) The requirement of this section to name the prime contract bidder's proposed ((HVAC, plumbing, and electrical)) subcontractors applies only to proposed HVAC, plumbing, ((and)) electrical, structural steel installation, and rebar installation subcontractors who will contract directly with the prime contract bidder submitting the bid to the public entity.

The inclusion of the word “or” between Section (1)(a) and (1)(b) suggests that either HVAC, plumbing and electrical subcontractor lists is required within 1 hour after bids are due or a steel and rebar subcontractors list is required within 48 hours after bids are due. Section 4 specifically includes all five industry types in clarifying that the list is for those subcontractors who contract directly with the prime contractor.

This bill originated in 2019, at which time sponsors were pursuing the requirement to have all subcontractors listed for projects over $1 million. A review of the recorded hearings and related testimony confirms this intent. Opposition to the bill was largely based on the burden this would place on contractors (e.g., to verify a list of potentially 60-plus subcontractors), resulting in unintended consequences. 

A compromise to the 2019 bill is next recorded in the Capital Budget Committee Meetings of February and March 2020. The year-long process that led up to this compromise is not certain, but recordings of these meetings demonstrate that the bill’s sponsors and opponents mutually supported naming steel and rebar subcontractors in the bill. Additionally, the Capital Project Advisory Review Board (CPARB) is tasked with a review of the current subcontractor listing policies in order to make a recommendation on the expansion of subcontractors that should be listed through a report due to the legislature by November 2020.

It seems obvious that steel and rebar subcontractors were intended to be included in the listing requirement of RCW 39.30.060. Less obvious is whether the Washington State Legislature, by using the word “or” in the bill, intended to require steel and rebar subcontractors be listed only when HVAC, electrical, and plumbing contractors are not required. It seems counterintuitive to the original bill that less than all five subcontractor types be solicited. However, MRSC recommends considering the plain language of a statute before trying to add, subtract, or change the language.

How to stay in compliance with ESB 5457

When agencies are obligated to insert this new requirement into a large public works project bid, they will need to determine:

• Whether to ask for the HVAC, plumbing, and electrical subcontractor lists or the steel and rebar subcontractors list; and, subsequently,
• How will they decide which list to require?

Can an agency ask for both lists? That may be a useful alternative and might be managed through supplemental criteria, something that is always available to an agency if it is justifiable and relevant to the project. Be sure your subcontractor list bid form is updated and has clear instructions for completion.

Eventually, this will be resolved through a CPARB review of subcontractor listing policies and the recommendations that follow. However, agencies will want to raise this discussion with their legal counsel for guidance in the period prior to the next legislative session.