House Bill Analysis — 2SSB 5268, Public Works Procurement (Washington, Hearing 3/14/23)

Summary

House Bill Analysis of 2SSB 5268, addressing equity and efficiencies in public works procurement including modifying small works roster requirements, by the Office of Program Research for the Innovation, Community & Economic Development, & Veterans Committee, with a hearing date of 3/14/23 and Cassie Jones listed as staff. The brief summary states that the bill requires the Department of Commerce to create a statewide small-works roster by June 30, 2024, and requires the Office of Minority and Women's Business Enterprises to adopt rules governing a public works small business certification program. It states that Sections 31 and 35 contain an emergency clause and take effect July 1, 2023, with the remainder taking effect July 1, 2024.

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Washington State BILL
House of Representatives
Office of Program Research ANALYSIS
Innovation, Community & Economic
Development, & Veterans Committee
2SSB 5268
Brief Description: Addressing equity and efficiencies in public works procurement including
modifying small works roster requirements.

Sponsors: Senate Committee on Ways & Means (originally sponsored by Senators Hasegawa,
Warnick, Hunt, Keiser, Kuderer, Nguyen, Nobles, Saldaña, Valdez, Wagoner and Wilson,
C.).

Brief Summary of Second Substitute Bill
• Modifies small-works roster procedures.
• Requires the Department of Commerce to create a statewide small-works
roster by June 30, 2024.
• Requires the Office of Minority and Women's Business Enterprises to
adopt rules governing a public works small business certification
program.
• Requires the Capital Projects Advisory Review Board to periodically
review construction cost escalation data, roster utilization, and other
appropriate data and metrics, and make recommendations to the
Legislature on adjustments to contracting thresholds.
• Requires the Department of Enterprise Services to develop and make
available on its public-facing website templates for bid invitations,
bidding, and contracting.

Hearing Date: 3/14/23

Staff: Cassie Jones (786-7303).

This analysis was prepared by non-partisan legislative staff for the use of legislative
members in their deliberations. This analysis is not part of the legislation nor does it
constitute a statement of legislative intent.

House Bill Analysis -1- 2SSB 5268
Background:

Small-Works Roster and the Limited Public-Works Process.

Public works includes all work, construction, alteration, and repair or improvement, other than
ordinary maintenance, that is a cost to the state or a local government. All public works must
comply with the public works prevailing wage requirements.

Small-Works Roster.

For public-works projects estimated to cost $350,000 or less, state agencies and authorized local
governments (agencies) may use the small-works roster process to award contracts. A small-
works roster includes any responsible contractor who requests to be on the roster, which may be
a single general list or lists for specialties or categories of work. Agencies must publicly
advertise the roster at least once per year in a newspaper of general circulation within the
jurisdiction, soliciting the names of eligible contractors.

Agencies must adopt procedures to secure quotations from contractors on the roster to assure that
a competitive price is established and to award contracts to the lowest responsible bidder. A
contract awarded from a small-works roster need not be advertised. Quotations may be invited
from all appropriate contractors on the appropriate small-works roster. As an alternative,
quotations may be invited from at least five contractors on the small-works roster in a manner
that will equitably distribute the opportunity among contractors on the roster. If the estimated
cost of the work is from $250,000 to $350,000, an agency that chooses to solicit bids from less
than all the appropriate contractors must also notify the remaining contractors on the appropriate
small-works roster that quotations on the work are being sought.

For projects awarded under the small-works roster process, the agency may waive certain
retainage requirements and assume liability for the contractor's nonpayment of taxes and of
laborers, subcontractors, mechanics, material persons, and suppliers. The agency retains the
right of recovery against the contractor for any payments made on the contractor's behalf.
Recovery of unpaid wages and benefits must be the first priority of actions filed against the
retainage.

Limited Public-Works Process.

For public-works projects estimated to cost less than $50,000, agencies may use the limited
public-works process to award contracts. Under the limited public-works process, the agency
solicits bids from at least three contractors from the appropriate small-works roster and awards
the contract to the lowest responsible bidder. The agency must equitably distribute opportunities
for limited public-works projects among contractors wiling to perform in the geographic work
area.

An agency must maintain a list of the contractors contacted and awarded during the previous 24

House Bill Analysis -2- 2SSB 5268
months under the limited public-works process, including the name of the contractor, the
contractor's registration number, the amount of the contract, a brief description of the type of
work performed, and the date the contract was awarded. For limited public-works projects, the
agency may waive payment, performance bond, and retainage requirements, thereby assuming
the liability for the contractor's nonpayment of laborers, mechanics, subcontractors, material
persons, suppliers, and taxes, increases, and penalties. The agency retains the right of recovery
against the contractor for any payments made on the contractor's behalf.

Retainage.

Retainage refers to a portion of the contractor's payment that is withheld by the contracting
agency until the project is complete, and the portion is limited to 5 percent of the payment
amount. The retainage is used to satisfy claims that a person, such as a laborer or supplier, may
have under the contract and to pay any taxes or penalties that may be due from the contractor.

Capital Projects Advisory Review Board.

The Capital Projects Advisory Review Board (CPARB), in the Department of Enterprise
Services (DES), was created to provide evaluation of public capital projects construction
processes, including the impact of contracting methods on project outcomes, and to advise the
Legislature on policies related to public-works delivery methods and alternative public-works
contracting procedures. The CPARB members are required to be knowledgeable or have
experience in state and federal laws, rules, and best practices concerning public contracting for
minority-, women-, and veteran-owned businesses and small businesses. The CPARB must
reflect the gender, racial, ethnic, and geographic diversity of the state, including the interests of
persons with disabilities.

In addition to evaluating public-works contract procedures, CPARB appoints members to the
Project Review Committee to certify public bodies to use alternative contracting procedures,
such as design-build (DB), general contractor/construction manager (GC/CM), or both, and to
approve the use of DB or GC/CM procedures on a project-by-project basis.

The CPARB has a duty to develop and recommend policies to encourage competition and to
further enhance the quality, efficiency, and accountability of and equitable participation by
disadvantaged business enterprises and make recommendations regarding best practices,
expansion, continuation, elimination, or modification of the alternative public-works contracting
methods, including specific recommendations for reducing barriers for and increasing
participation by disadvantaged business enterprises.

Department of Enterprise Services.

The DES manages procurement of goods and services for state agencies. The DES is, in part,
responsible for developing procurement policies and procedures that encourage and facilitate the
purchase of goods and services from Washington small businesses, microbusinesses,

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minibusinesses, and minority- and women-owned businesses to the maximum extent practicable.

Office of Minority and Women's Business Enterprises.

The Office of Minority and Women's Business Enterprises (OMWBE) was created to provide
minority- and women-owned and controlled businesses with the maximum practicable
opportunity for increased participation in public-works contracts and public contracts for goods
and services. The OMWBE is the sole authority in Washington for certifying minority- and
women-owned business enterprises. Certified business enterprises are listed in the OMWBE
database. Cities, counties, state agencies, transportation, and educational institutions use the
database to source small and diverse firms for potential contracting opportunities. Among other
duties, the OMWBE must identify barriers to equal participation by qualified businesses in all
state agency and educational contracts, and the OMWBE must establish annual participation
goals by qualified businesses for each state agency and educational institution.

Summary of Bill:

An agency may utilize a statewide small-works roster or create and maintain one or more small-
works rosters for different categories of anticipated work. The agency must require contractors
desiring to be placed on the small-works roster to indicate if they meet the definition of women-
and minority-owned businesses, veteran-owned businesses, or small businesses. At least once
per year, the agency must provide the OMWBE directory of certified firms a notice of the
existence of the roster and solicit contractors for the roster. The contractors must agree and be
able to receive notifications via email.

Agencies must document good faith efforts annually implementing the following:
• After an award is made, the bid quotations obtained must be recorded, publicly available,
and available by request.
• An agency must publish a list of small-works contracts awarded and contractors contacted
for direct negotiation.

An agency contracting through a small-works roster must invite bids notifying all contractors on
the applicable roster that have indicated interest in performing work in the applicable
geographical area.

For small public works with an estimated cost of less than $150,000, an agency is encouraged to
and may direct contract with small businesses before direct contracting with other contractors on
the appropriate small-works roster without a competitive process under specified rules:
• If there are six or more contractors meeting the definition of small business on the
applicable roster, the state agency must direct contract with one of those small businesses
on the applicable roster that have indicated interest in performing work in the applicable
geographical area.
• If there are five or less contractors meeting the definition of small business on the

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applicable roster, the state agency or authorized local government may direct contract with
any contractor on the applicable roster.

Each agency engaging in direct contracting must establish a women-, minority-, and veteran-
owned business and small business utilization plan. An agency engaging in direct contracting
may not favor certain contractors on the appropriate small-works roster by repeatedly awarding
contracts without documented attempts to direct contract with other contractors on the
appropriate small-works roster.

For small public-works contracts under $5,000, there is no requirement for retainage or
performance bonds.

Statewide Small-Works Roster.

The Department of Commerce (Commerce), through the Municipal Research and Services
Center (MRSC), must develop a statewide small-works roster by June 30, 2024. The MRSC
must develop criteria for the statewide roster with collaboration from affected state and local
agencies. The roster must have features to filter the roster by different specialties, categories of
anticipated work, or geographic areas served by contractors. The roster must also indicate
whether the contractor is designated as a small business. Commerce must provide funding to the
MRSC as appropriated to maintain and publicize a small-works roster, and work with MRSC to
notify state and local governments authorized to use small-works rosters of the statewide roster
authority and provide guidance on how to use the authority. State agencies and authorized local
governments using small-works rosters must establish procedures for implementation.

Capital Projects Advisory Review Board.

Beginning in 2025 and every five years thereafter, the CPARB must review construction cost
escalation data for Washington state, readily available in industry publications, roster utilization,
and other appropriate data and metrics, and make recommendations to the appropriate
committees of the Legislature on adjustments to contracting thresholds.

Department of Enterprise Services.

The DES must develop and make available on its public-facing website templates for bid
invitations, bidding, and contracting that may be used by state agencies, authorized local
governments, and contractors. A provision is eliminated that required the DES to conduct a
survey and compile the results into a list of which states provide a bidding preference on public-
works contracts for their resident contractors.

Office of Minority and Women's Business Enterprises.

The OMWBE must adopt rules governing the development and maintenance of a public-works
small business certification program.

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Other Provisions.

"Small business" is defined as a business meeting the certification criteria for size, ownership,
control, and personal net worth adopted by the OMWBE. References to disadvantaged
businesses enterprise are replaced with small, women-, minority-, or veteran-owned businesses
throughout statutes relating to the CPARB and alternative public-works contracting. For port
districts and irrigation districts, the limit for small-works contracting is increased from $300,000
to $350,000.

Appropriation: None.

Fiscal Note: Available.

Effective Date: Sections 31 and 35 of the bill contain an emergency clause and take effect July
1, 2023. The remainder of the bill takes effect on July 1, 2024.

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