|
Printer Friendly
Municipal Research News - Public Works Defined
Public Works Defined
Four sight-challenged finance officers came across a "project."
The first finance officer said, "Hmm. This feels like an equipment purchase, since all they are doing is installing a telephone system."
The second finance officer felt wires poked here and pulled there, felt holes cut in the walls, and sensed that a restroom had been converted to a telephone equipment room and said, "No, this feels like a public works
project."
The third finance officer said, "It can't be a public works project; there is no sales tax paid, and I don't smell any prevailing wages."
The fourth finance officer noted that the workers sounded like agency employees and said, "Hey, let's get real here. If our agency people are doing this, then it must be maintenance, because our board doesn't allow us to do public works projects over $10,000 with our own forces."
What Is a Public Works Project?
RCW 39.04.010 states that the term "public work shall include all work, construction, alteration, repair, or improvement other than ordinary maintenance, executed at the cost of the state or of any municipality, or which is by law a lien or charge on any property therein." Parks departments always seem to insist that they don't do public works projects, and that this RCW applies only to public works departments. And every agency seems to have a facilities manager who wants to push the bid limits and do things with his crews that should go out to
bid.
All public works projects, including maintenance when performed by contract, must comply with the provisions of RCW 39.12.020 (prevailing wages). But what is ordinary maintenance? What is the difference between ordinary maintenance and maintenance performed by contract? When can something be considered a service and not maintenance? And, here's a scary thought – just suppose public work bid limits also apply to maintenance contracts!
Public Works Definitions
RCW 39.04.010, as modified by SHB 2010 (2007), contains basic public works definitions:
- "Award" means the formal decision by the state or municipality notifying a responsible bidder with the lowest responsive bid of the state or municipality's acceptance of the bid and intent to enter into a contract with the bidder.
- "‘Municipality' means every city, county, town, district, or other public agency authorized by law to require the execution of public work," but not the various drainage, diking, and irrigation districts.
- "Contract" means a contract in writing for the execution of a public work for a fixed or determinable amount duly awarded after advertisement and competitive bid, or a contract awarded under the small works roster process in RCW 39.04.155.
- "Responsible bidder" means a contractor who meets the criteria in section 2 of this act (SHB 2010, Chapter 133, Laws of 2007).
- "'Public work' means all work, construction, alteration, repair, or improvement other than ordinary maintenance, executed at the cost of the state or of any municipality, (regardless of the source of funding) or which is by law a lien or charge on any property therein."(Includes LIDs and GO bond issue projects). "All public works, including maintenance when performed by contract shall comply with chapter 39.12 RCW (prevailing wages)."
Public Works, Contracted Maintenance, and Services
Note that the term "work" is very inclusive, especially in conjunction with "construction, alteration, repair, or improvement." Also note that this statutory definition of public work includes "work, construction, alteration, repair, or improvement other than ordinary maintenance."
What is "ordinary maintenance"? The statutes provide no definition; however, WAC 296-127-010(7) (b) (iii), (in the context of prevailing wages) defines it as:
- work not performed by contract that is performed on a regularly scheduled basis (e.g., daily, weekly, monthly, seasonally, semiannually, but not less frequently than once per year) to service, check, or replace items that are not broken; and
- work not performed by contract that is not regularly scheduled but is required to maintain the asset so that repair does not become necessary.
Ordinary maintenance performed by agency forces is not a public work and is not subject to either bid laws or prevailing wages. Contracted ordinary maintenance is a public work and is subject to both bid laws and prevailing wages. It should be noted that sometimes there is a fine line between things that are considered maintenance and things that are considered services, to which very few, if any, bid laws apply. See Tables 1 and 2.
Public Works Bid Limits
Public works bid laws were established to prevent fraud, collusion, and favoritism in the awarding of public contracts, to enable local governments to obtain the best work at the most reasonable prices, and to provide a fair forum for all bidders. Local governments could use competitive bidding (advertisement in designated legal newspapers, sealed bids, and formal bid openings, with competition open to all contractors) for each and every public works and maintenance contract. However, following competitive bidding procedures is often counterproductive and excessively time-consuming for smaller projects. Recognizing this problem, the state legislature has, over the years, established and modified dollar amounts (commonly referred to as bid limits) below which competitive bids are not required for public works projects, and it has provided exemptions and alternatives to the competitive bidding process.
The first consideration in applying public works bid laws is to estimate project costs. Estimated project costs are to include all construction-related work, but not engineering and/or architectural design fees. They are to include all phases of the project and not include donated labor, materials, supplies, etc. MRSC recommends that project cost estimates include applicable sales and use taxes and be based on a competitive bid basis (as opposed to what agency crews can do the work for), although the statutes do not directly address these two issues. If the estimated project cost is below the agency's bid limits (see tables 3 and 4), the agency may construct the project (subject to individual agency purchasing policies) by use of agency crews (counties have restrictions on day labor construction for road projects), by interlocal agreement with another agency, or by contract with a private contractor.
Reporting Requirements
Per the notes above, public agency work or day labor limits are set by the legislature as the amount of public works that can be accomplished using the agency's own work force or by hiring day laborers. Limits are expressed as specific dollar amounts for single or multiple craft projects and/or as percentages of the public works or road fund budgets. (Note: Day labor as used in the county road fund statutes refers specifically to the county's own forces.)
Note these two statutes:
RCW 39.04.070 - Whenever the state or any municipality shall execute any public work by any means or method other than by contract or small works roster, it shall cause to be kept and preserved a full, true and accurate account and record of the costs of executing such work in accordance with the budgeting, accounting, and reporting system provisions prescribed by law for the state agency or municipality.
RCW 43.09.205 - The state auditor shall prescribe a standard form with which the accounts and records of costs of all local governments shall be maintained as required under RCW 39.04.070.
Why are these statutes important? There are penalties for doing too much work with an agency's own forces.
For code cities under 20,000, RCW 35.23.352(4) says:
The form required by RCW 43.09.205 shall be to account and record costs of public works in excess of five thousand dollars that are not let by contract.
For code cities over 20,000, the first class city statute (RCW 35.22.620(2)) applies via RCW 35A.40.210(2). RCW 35.22.620(2) (excerpts) states:
If a first class city has public works performed by public employees in any budget period that are in excess of this ten percent limitation, the amount in excess of the permitted amount shall be reduced from the otherwise permitted amount of public works that may be performed by public employees for that city in its next budget period. Twenty percent of the motor vehicle fuel tax distributions to that city shall be withheld if two years after the year in which the excess amount of work occurred, the city has failed to so reduce the amount of public works that it has performed by public employees. The amount so withheld shall be distributed to the city when it has demonstrated in its reports to the state auditor that the amount of public works it has performed by public employees has been so reduced.
Whenever a first class city has had public works performed in any budget period up to the maximum permitted amount for that budget period, all remaining public works within that budget period shall be done by contract pursuant to public notice and call for competitive bids.
The state auditor shall report to the state treasurer any first class city that exceeds this amount and the extent to which the city has or has not reduced the amount of public works it has performed by public employees in subsequent years.
County road departments follow reporting procedures and forms prescribed by RCWs and WACs as administered by the County Road Administration Board (CRAB). Other county public works and maintenance activities must be reported, but there do not appear to be any statutory references as there are for cities. Consult the BARS Manual or contact the State Auditor's Office if you need this information.
Conclusions
- Public works projects are not exclusive to "public works departments"; public works bidding requirements apply to all departments of an agency.
- Maintenance performed by contract, whether "ordinary" or not, is subject to bid limits and prevailing wage requirements.
- Sometimes there is a thin line between things that are considered maintenance and things that are considered services, to which very few, if any, bid laws apply. When in doubt, contact your legal counsel or MRSC.
- Because there are penalties for doing too much work with an agency's own forces, agencies should be keenly aware of the day labor limits and reporting requirements in the statutes.
Resources
|
