SB 5176 was recently amended in Committee to include electronic funds transfer as a valid form of payment on public works projects. No further updates to the bill as introduced have been made.

The bill continues to travel through the Legislature with some potentially troubling implications for cities, such as the monitoring and enforcing interest charges related to late payments and allowing enough time for change orders to be fully negotiated before the bill’s deadlines.

To reduce the burdens imposed on public owners by the legislation, AWC is seeking an amendment that would start the clock on the 30-day payment period for final payments on a project once the city has received a Notice of Completion from the state.

Please contact staff with other recommended improvements to the bill.

Date to remember

SB 5176 is scheduled for a public hearing in the Senate Ways & Means Committee on Monday, February 24 at 1:30 pm.

Proposal to ensure “prompt pay” on public works projects returns, with updates from CPARB

January 13, 2025

A proposed modification to public works law would update requirements for payments made by public agencies to contractors and subcontractors on a public project.

SB 5176, from Sen. Javier Valdez (D–Seattle), requires cities to make payments on public works projects within 30 days of receipt of a properly completed invoice and specifies that public works contracts must include:

• Payment cutoff dates
• Invoice due dates
• Review time frames
• Notice procedures
• Payment timelines, which must include a payment release schedule with dates, if properly completed invoices are received
• Retainage withholding
• A payment release schedule, which must be included in any contracts made with subcontractors, at every tier, to ensure project payment release expectations are provided for the project.

The city’s payment is considered late when the payment is not made to a contractor in accordance with the above, unless a good faith dispute has been initiated. If the payment is late, the city must charge itself 1% interest per month on the amount due until payment is made, and it must provide the contractor with a payment recovery schedule.

If a prime contractor fails to pay a subcontractor within ten days of receiving payment from the city, the prime contractor must provide the subcontractor with a payment recovery schedule that includes the accrual of 1% interest per month on the amount due.

AWC requests city feedback on the bill prior to Friday’s hearing, particularly with specific examples of any unintended consequences or implementation challenges.

AWC requests city feedback on the bill prior to Friday’s hearing.

This year’s recommendations are the result of work done by the Capital Projects Advisory Review Board (CPARB) over the interim, at the direction of the Legislature. In 2024, the Legislature considered and adopted the original proposal, SB 6040, passing it to CPARB for further consideration and refinement. The outcome of CPARB’s review is SB 5176. Read AWC’s coverage of last year’s proposal to get caught up.

AWC will be working with the bill sponsor and other stakeholders to address the negative impacts of the proposal to cities.

Date to remember

SB 5176 is scheduled for public hearing in Senate State Government, Tribal Affairs & Elections on Friday, January 17 at 10:30 am.