HOUSE BILL REPORT
HB 1967
As Reported by House Committee On:
Capital Budget
Title: An act relating to modifying bonding requirements in the design portion of design-build public works projects.
Brief Description: Modifying bonding requirements in the design portion of design-build public works projects.
Sponsors: Representatives Zahn, Griffey and Nance.
Brief History:
Committee Activity:
Capital Budget: 2/20/25, 2/26/25 [DPS].
Brief Summary of Substitute Bill
  • Provides that, for public works design-build projects, a performance and payment bond is not required for the portion of the design-build contract that includes design services.
HOUSE COMMITTEE ON CAPITAL BUDGET
Majority Report: The substitute bill be substituted therefor and the substitute bill do pass.Signed by 17 members:Representatives Tharinger, Chair; Callan, Vice Chair; Steele, Ranking Minority Member; McClintock, Assistant Ranking Minority Member; Barnard, Davis, Dye, Eslick, Fosse, Hill, Leavitt, Morgan, Rule, Salahuddin, Stearns, Waters and Zahn.
Minority Report: Without recommendation.Signed by 2 members:Representatives Abbarno, Assistant Ranking Minority Member; Walsh.
Staff: Robert Hatfield (786-7117).
Background:

Public Works Projects—Payment and Performance Bonds.

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 paying all taxes and penalties when required.

 

Public Works Projects—Alternative Contracting Procedures.

Certain public works contracts may be awarded through alternative contracting procedures in which the selection of a contractor is based on factors other than the lowest bid.  Design-build is one such alternative contracting method.  Under design-build, a public works contract is awarded to a single firm that agrees to both design and build a public facility that meets specific criteria.  

 

The firm awarded the contract must provide a performance and payment bond for the contracted amount of the overall project, including both the value of the design and the value of the construction.
Summary of Substitute Bill:

For design-build public works projects, the performance and payment bond must be in an amount not less than the dollar value of the contracted amount of the construction portion of the contract.  A performance and payment bond is not required for the portion of the design-build contract that includes design services, preconstruction services, and other services that are not public works construction.
Substitute Bill Compared to Original Bill:

The substitute adopted by the Capital Budget Committee modifies the scope of services for which a performance and payment bond is not required to remove references to finance services, maintenance services, operations services, or any other related services, and to instead refer to other services that are not public works construction. 
Appropriation: None.
Fiscal Note: Available.
Effective Date of Substitute Bill: The bill takes effect 90 days after adjournment of the session in which the bill is passed.
Staff Summary of Public Testimony:

(In support) There is a significant backlog of public works projects across the state.  Design services are covered by professional liability insurance, and so should not be part of the performance and payment bond for a design-build public works project.  The requirement for a performance and payment bond for the design portions of a contract adds cost to public works projects without any corresponding benefit.

 

Current state law requires the entire design-build contract to be subject to a performance and payment bond, which is costly and not really necessary for design services.  This bill would result in substantial savings to all design-build projects. 

 

(Opposed) None.
Persons Testifying:

Representative Janice Zahn, prime sponsor; and Richard Shaff, Energy Northwest.
Persons Signed In To Testify But Not Testifying: None.