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Updated 05/2012

Purchasing and Bidding: Public Works Contracts

Contents

Introduction

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, (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, must comply with chapter 39.12 RCW (prevailing wages).

There are three perennial questions that arise in regard to public works projects:

  • Do we have to go out for competitive bids for this project?
    If the cost of a public works project exceeds applicable bid limits, (see the Purchasing and Bidding Chart for Local Agencies in Washington State a local government must use a competitive bid process, small works roster process or limited public works process for public works projects.
  • Is maintenance considered public works and is it subject to prevailing wages?
    Some agencies feel that the non-mention of maintenance in the main body of the definition, and the exclusion of ordinary maintenance means that maintenance is not a public works, even if prevailing wages are required for maintenance. See the discussion below.
  • Must we pay prevailing wages for everything?
    Prevailing wages must be paid on any public works project of any cost and upon maintenance projects when performed by contract. Prevailing wages must also be paid on some contracts which can be considered purchased services.

To Bid or Not to Bid?

As noted above, if the cost of a public works project exceeds applicable bid limits, a local government must use a competitive bid process, small works roster process or limited public works process for public works projects. To correctly apply bid limit dollar amounts in the Purchasing and Bidding Chart for Local Agencies in Washington State to determine the bidding process for a public works project, the total cost of each project or purchase must be estimated. The total construction cost - estimated as if the project were to be bid -is used to make that determination. To be included are materials, supplies, equipment, and labor on the construction of that project. Applicable sales and use taxes need not be part of the estimate. The value of volunteer labor, material, or equipment need not be included in the cost estimate for a public works project, as these are not a cost to the agency.

Note this table:

Public Works Bid Limit Summary
 Bid Advertisement RequiredFormal Public Bid Opening RequiredBidding Open To:
Bids: $300,000 and OverYesYesAll Registered Contractors
Informal Bids: Bid Limits to $300,000 (if SWR is used)NoNoRegisterd Contractors on SWR
Informal Bids: Below Bid LimitsNoNoSelected Registered Contractors

Requirements for All Public Works Contracts

  • Prevailing wages
  • Sales and use taxes as applicable
  • Contractor must meet mandatory bidder responsibility criteria
  • Meet any (optional)supplemental bidder responsibility criteria
  • Insurance (Not Statutorily, but ...)

Bid Advertisements and Openings for Public Works Contracts

Each type of agency has its own statutory requirements for advertising and bid openings for public works contracts. For example,

  • First class cities have no (statutory) advertising requirement for public works contracts.
  • Code cities and towns must call for sealed bids using a formal advertisement, but are not required to have a public bid opening
  • Counties must advertise in the official newspaper at least 13 days before the bid opening and publicly open and read the bids.

Publicly Advertised Bid Public Works Projects

  • Over $300,000 (but can be for smaller projects)
  • Formal Advertisement
  • Bid Bonds*
  • Sealed Written Bids
  • Public Bid Opening*
  • Formal Award by Council/Commission*
  • P/P Bonds Required
  • Retainage Required

* Not all agencies have statutory requirements for these items.

Small Public Works Roster Projects

  • Under $300,000
  • Request for Informal Bids to all interested contractors on SPWR or notify 5 and "equitably distribute"
  • No advertisement required, just notice to SPWR
  • Bid Bonds Optional
  • Electronic, Faxed, or Telephone Quotes Allowed
  • Informal Bid Opening(s)
  • Award Can Be Delegated
  • P/P Bonds Required
  • Retainage Required

Limited Public Works Projects (Less than $35K)

  • SPWR required
  • Must solicit at least 3 informal bids or notify all on roster
  • No advertisement required, just notice to SPWR
  • Bid Bonds Optional
  • Electronic, Faxed, or Telephone Quotes Allowed
  • Informal Bid Opening(s)
  • Award Can Be Delegated
  • P/P Bonds Can Be Waived
  • Retainage Can Be Waived

Public Works Projects Below Bid Limits

  • Three or more informal bids recommended
  • No SPWR Required
  • No advertisement required
  • Bid Bonds Optional
  • Electronic, Faxed, or Telephone Quotes Allowed
  • Informal Quote Opening(s)
  • Award Can Be Delegated
  • P/P Bonds Required
  • Retainage Required

Is Maintenance Public Works?

The definition of public work includes “all work, construction, alteration, repair, or improvement” but excludes ordinary maintenance. But what is "ordinary maintenance"? The statutes provide no definition. However, WAC 296-127-010(7)(b)(iii), which defines "ordinary maintenance" in the context of prevailing wages, can be used to craft a definition that distinguishes ordinary maintenance from a public work for bidding purposes:

[Ordinary maintenance is] defined as work not performed by contract and 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; or work not performed by contract that is not regularly scheduled but is required to maintain the asset so that repair does not become necessary.

(Emphasis added.)

For example, replacing a deteriorating bridge or roof would amount to a repair, or perhaps new construction, but not maintenance. Such a project would be considered to be a public work and subject to limits on the amount of such work that can be performed by agency employees. On the other hand, using agency employees to rod or clean a sewer or clean a roof is considered maintenance and, therefore, would not be a public work.. However, if instead of using city employees to perform the work, the city contracts out for the repair, the repair work is likely deemed a public work, both for bidding and for prevailing wage purposes. Other examples:

  • Although often part of an agency's ongoing maintenance program, sidewalk replacement is not ordinary maintenance because it is not done annually. The asset is being replaced, rather than "maintained."
  • Replacement of carpeting is not ordinary maintenance. Because carpeting is neither replaced annually nor used to maintain the asset, in this case the subflooring, it does not fall into the ordinary maintenance category.
  • Although tree trimming may not take place annually it is considered ordinary maintenance because it is necessary to prevent branches from interfering with wires and to prevent damage during windstorms.

As noted above, some agencies feel that the non-mention of maintenance in the main body of the definition of public works, and the exclusion of ordinary maintenance means that maintenance is not a public works, even if prevailing wages are required for maintenance. Why is this an issue? If maintenance when performed by contract is a public works, then ALL of the following apply:

  • Prevailing Wages
  • Bonds
  • Retainage
  • Bid Limits

If maintenance when performed by contract were NOT considered a public works, then ONLY prevailing wages would apply.

MRSC's position, conservatively, is that agencies treat maintenance contracts as public works contracts, subject to bid limits, bonds, retainage and prevailing wages.

Do Prevailing Wages Always "Prevail"?

Chapter 39.12 RCW applies to all public works and maintenance by contract, regardless of dollar amount. More detail on prevailing wages can be found on the MRSC webpage Purchasing and Bidding: Prevailing Wage Issues. However, legitimate questions arise in applying prevailing wages to service contracts and other arcane work items.

MRSC has prepared a Public Works vs. Prevailing Wages Worksheet in an attempt to sort out some of this confusion. Agencies should not rely on this document, however. In many cases, a determination as to whether prevailing wages are to be paid is very fact dependent and you should contact the Department of Labor & Industries directly for a determination.

Need more information?

Feel free to Ask MRSC. Washington cities, counties, and our contract partners can call or email MRSC for more information and advice - free of charge.