PWAA remains untouched, Legislature looks closely at prompt pay practices in public works

The 60-day legislative session was a relatively quiet one for public works and infrastructure issues. Nevertheless, cities should be aware of a few key changes that took place.

This session, lawmakers took considerable interest in prompt payment practices in public works projects. Beginning with SB 6040, this bill directs the Capital Projects Advisory Review Board (CPARB) to review current statute governing prompt payment and to determine whether the needs of small businesses, particularly small, women- and minority-owned businesses, are being met. In addition to reviewing current statute, CPARB must also review and make recommendations on the following:

• Requirements that state and local entities pay the prime contractor within 30 days for work satisfactorily completed or materials delivered by a subcontractor of any tier that is a small business or women- or minority-owned business.
• Requirements that within ten days of payment, the prime contractor and each higher tier subcontractor must make payment to its subcontractor until the small business or women- or minority-owned business has received payment.

CPARB must complete this review and make recommendations to the Legislature no later than November 1, 2024.

SB 6192 also focuses on prompt payment in public works contracts, updating requirements for when a change order must be paid to subcontractors and suppliers. Specifically, for any additional work by a contractor, subcontractor, or supplier not in dispute, a change order must be issued within 30 days after receipt from the contractor for issuance of a change order. Within ten days of receipt of a change order from the city or upper-tier contractor, the contractor or subcontractor must issue change orders to lower-tier subcontractors impacted by the change. The owner, contractor, subcontractor, or municipality must pay their proportionate share of any interest owed for the non-issuance of a change order. The legislation is scheduled to take effect June 6, 2024.

During the interim, AWC will be working with the Department of Labor and Industries (L&I), as directed by SB 6089, to assist cities that issue electrical permits and perform electrical inspections in identifying additional pathways to qualify individuals as electrical inspectors. L&I must submit recommendations to the Legislature no later than December 15,2024. AWC will also be closely monitoring a study conducted by the Municipal Research and Services Center evaluating the application of public works requirements, including prevailing wage and apprentice utilization, on publicly funded projects, including those funded through mechanisms such as tax deferral programs or reimbursements, loans, grants, or other state supported funding.

While most cities rely on federal funding to support local transportation, public works, or economic development projects, it can be extremely burdensome to apply for federal funding. Many cities lack the staff or resources to navigate the complex and often opaque federal grant application process. HB 1870 directs the Department of Commerce to provide technical assistance and training on federal grant applications to local communities.

Finally, AWC is pleased to report that, while the Public Works Assistance Account (PWAA) did not see a significant increase in funding, it also did not fall victim to new diversions as it has in the recent past.