Through unanimous votes in the Washington State house and Senate, SB 5734 Small Business Bonding Relief Bill was passed, and signed into law by Governor Jay Inslee on April 20th. The purpose and intent of the bill is to bringing Washington state government contracting provisions into compliance with federal law as it relates to small works bonding requirements. This new laws will ease some of the bonding requirements, and increase dollar value thresholds on public projects for Washington State and other local entities. SB 5734 will go into effect on 7/23/2017.
The synopsis from the final report reads as follows:
Brief Description: Bringing Washington state government contracting provisions into compliance with federal law as it relates to small works bonding requirements.
Background: A state or local entity awarding a public works contract must require the contractor to execute a surety bond conditioned upon the contractor faithfully performing all the provisions of the contract, paying all labor, subcontractor, and material supplier costs, as well as payment of all taxes and penalties when required. The bond must be equal to the full contract price; cities and towns may set the amount of the bond for not less than 25 percent of the contract price.
For public works contracts up to $35,000, the contractor has the option to have the public entity retain 50 percent of the contract amount inlieu of the bond requirement. The retained payment is withheld until 30 days after final acceptance or upon the settlement of any liens,or any necessary releases by the Department of Revenue, Department of Labor and Industries, or the Employment Security Department. In addition, state and local entities may waive the bond requirement for contracts up to $35,000 when using a limited public works process for awarding contracts. For contracts up to $100,000, the contracting public entity may accept full payment and performance bond from an individual surety.
The recovery of unpaid wages and benefits is identified as the first priority for any claims filed against retainage held by a state agency or authorized local government.The threshold amount for contracts from which the public entity may accept full payment and performance bond from an individual surety is increased from $100,000 to $150,000
Summary: The contractor or general contractor/construction manager has the option to have the public entity retain 10percent, instead of 50 percent, of the contract amount in lieu of the bond requirement for public works contracts up to$150,000, instead of $35,000.
Sponsors: Senators Chase, Baumgartner, Miloscia, Saldaña, Keiser, Conway,Hasegawa,McCoy, Braun, Honeyford, Brown, Kuderer, Rivers and Warnick.
Senate Committee on State Government
House Committee on State Government, Elections & Information Technology
House Committee on Capital Budget
To read the full report click HERE.