2023 Legislative Session Outcomes for Procurement and Contracting, Part 2

Part 1 of this series focused on legislation that impacted programs and training offered by MRSC to local government, as well as addressing SB 5268, which modifies small works roster requirements, and HB 1050, which expands apprenticeship utilization to municipalities. This blog will focus on five additional pieces of legislation that impact procurement and contracting.

HB 1086: Increased Project Limits for Community Service Organization Contracts

HB 1086 raises and clarifies project limits in RCW 35.21.278, allowing counties, cities, towns, port districts, school districts, metropolitan park districts, and park and recreation districts (or park and recreation service areas) to contract with community service organizations for a public improvement (public works) project without competitive bidding.

The following items will be effective July 23, 2023:

• The per-year limit for community organization contracts will be increased from $25,000 to $75,000 (See section 2).
• This limit of $75,000 applies to all contracts entered into by a local government under RCW 35.21.278 in any one year. The limit is not intended to be interpreted to apply on a per-contract basis in any one year. The limit applies to the annual total not to the amount allowed per project. (See section 1).
• The benefit received by a local government is reduced from three times the amount to two times the amount of the payment to the community service organization.
• The definitions of 'improvements' and 'maintenance' that can be provided by a community service organization have been expanded (See section 2).
• It is now a requirement that community service organization volunteers not receive wage or salary compensation (See section 2).

HB 1621: Increased/Standardized Limits for Procurement Contracts

HB 1621 standardizes procurement rules for first-class cities (RCW 35.22.620), second-class cities and towns (RCW 35.23.352), public utility districts (RCW 54.04.070), water-sewer districts (RCW 57.08.050), and fire protection districts (RCW 52.14.110).

Key updates are listed below in order of effective date.

Effective July 23, 2023, the Capital Projects Advisory Board (CPARB) is tasked with reviewing the changes from this legislation and making recommendations to the appropriate legislative committees by December 31, 2023.

The following will be effective June 30, 2024:

• For public utility districts (See section 1) and water sewer districts (See section 4), the amount for which any public work ordered must be by contract is increased from $50,000 to $150,000 if more than a single craft or trade is involved or to $75,500 if only a single craft or trade is involved.
• The ability for a second-class city or town to pursue public works by contract or day labor without calling for bids is increased from $116,155 to $150,000 if more than a single craft or trade is involved or $75,500 if only a single craft or trade is involved (See section 2).
• If a second-class city or town needs to purchase supplies, material, or equipment not related to a public work, this purchase will no longer require competitive bidding if the cost exceeds $7,500. Any purchase of supplies, material, or equipment not related to a public work with an estimated cost of more than $40,000 shall be by contract. If the estimated purchase is between $40,000 to $50,000, purchases shall be made using the vendor list process in RCW 39.04.190. (See section 2).
• For fire protection districts, the limit where formal sealed bidding is not required for materials supplies or equipment not related to a public work has been increased from $40,000 to $75,500. If the estimated purchase is between $75,500 to $150,000, purchases shall be made using the vendor list process in RCW 39.04.190. (See section 5).
• For fire protection districts, the amount for which any public works ordered must be by contract is increased from $30,000 to $150,000 if more than a single craft or trade is involved or to $75,500 if only a single craft or trade is involved. (See section 5)
• A standard definition of 'lowest responsible bidder' has been added for public utility districts (See section 1), first-class cities (See section 3), water-sewer districts (See section 4), and fire protection districts (See section 5).
• Current employees of first-class cities (See section 3), second-class cities or towns (See section 2), water-sewer districts (See section 4), and fire protection districts (See section 5) are allowed to perform work under $300,000 in value without a contract if doing so is accepted industry practice.

HB 1777: Performance-Based Contracts for Energy Services and Equipment

HB 1777 amends sections of RCW 39.35A and RCW 39.35C, which provide state and local governments the authority to pursue performance-based contracts for water and energy conservation, solid waste reduction, and energy equipment.

Key updates effective July 23, 2023:

• Additional language is added to define a 'performance-based contract' in RCW 39.35A.020 (See section 2) and RCW 39.35C.010 (See section 3).
• RCW 39.35C.010 is amended to add definition for 'energy as a service'. ‘Energy as a service’ is a performance-based contract in which a state agency, public school district, public university, or municipality makes service payments to a third party or entity for energy services, which may include the provision of energy equipment that is owned and operated by a third party or entity. (See section 3)
• RCW 39.35C.050 is amended to authorize state agencies, public school districts, public universities, and municipalities to enter into an ‘energy as a service’ contract by acting independently or through the Department of Enterprise Services (DES) (See section 4).
• RCW 39.35C.060 is revised to include public school districts, public universities, and municipalities as defined in RCW 39.04.010. These entities now have the ability to use financing contracts in addition to performance-based contracts for energy conservation projects. DES was tasked with developing model financing contracts by December 31, 2023 (See section 5).

SB 5088: Expanded Contractor Registration Requirements

SB 5088 adds plumbing, elevator, and electrical contractors to the responsible bidder criteria for public works contracts and the debarment statutes for public works contracts.

Key updates effective July 23, 2023:

• Bidder responsibility criteria amended in RCW 39.04.350 now includes licensing requirements for plumbing, elevator, and electrical contractors (See section 1).
• Contractor verification for subcontractor responsibility criteria in RCW 39.06.020 is amended to include verification of a plumbing contractor license (See section 2).
• The prohibition on bidding on future contact provisions in RCW 39.12.050 is expanded to include plumbing contractors as being subject to potential sanctions if provisions of subsection (1) of this RCW are violated (See section 3).
• Prohibition on bidding on future contact provisions in RCW 39.12.055 is expanded to include plumbing, elevator, and electrical contractors. A contractor in these groups will not be allowed to bid on any public works contract for one year from the date of a final determination if they have committed any combination of two violations or infractions within a five-year period, as noted in RCW 39.12.055 (See section 4).
• Independent contractor criteria in RCW 39.12.100 now requires plumbing and elevator contractors to have a valid contractor license registration on the effective date of a public works contract. (See section 4)

SB 5342: Interlocal Agreement Exemptions for Transit

SB 5342 establishes an exemption to certain requirements for transit agencies when using cooperative purchasing for rolling stock and related equipment.

RCW 39.34.030 authorizes joint and cooperative purchasing for local governments and includes requirements that transit agencies follow to purchase rolling stock and related equipment. These requirements for all local governments were related to duration of the agreement; precise organization; and the composition and nature of any separate legal or administrative entity created, purposed, financed, and budgeted; as well as an additional requirement to form a joint board if a separate legal entity is not created. Effective July 23, 2023, an exemption exists so that transit agencies no longer need to follow these requirements when using cooperative purchasing for rolling stock and related equipment (See section 1).