“Bid shopping” is the practice of disclosing a subcontractor’s bids to its competitors to negotiate a better deal. On public works projects, when bids are shopped after the general contractor’s proposals are submitted to the owner, the windfall from the cost-cutting is enjoyed by the general contractor.
Washington’s public works statutes restrict the general contractor’s ability to bid shop on public works. Under RCW 39.30.060, the general contractor must identify the name of its HVAC, plumbing, and electrical subcontractors (or name itself) within one (1) hour after the published bid submittal time for public works that are expected to cost one million dollars ($1,000,000) or more.
Until recently, general contractors performing public works were not required to disclose structural steel and rebar installation subcontractors. Effective June 11, 2020, RCW 39.30.060 added a disclosure requirement with respect to “structural steel installation” and “rebar installation.” RCW 39.30.060 now states as follows:
(1) Every invitation to bid on a prime contract that is expected to cost one million dollars or more for the construction, alteration, or repair of any public building or public work of the state or a state agency or municipality as defined under RCW 39.04.010 or an institution of higher education as defined under RCW 28B.10.016 shall require each prime contract bidder to submit (as part of the bid, or within):
(a) Within one hour after the published bid submittal time, the names of the subcontractors with whom the bidder, if awarded the contract, will subcontract for performance of the work of: HVAC (heating, ventilation, and air conditioning); plumbing as described in chapter 18.106 RCW; and electrical as described in chapter 19.28 RCW, or to name itself for the work; or
(b) Within forty-eight hours after the published bid submittal time, the names of the subcontractors with whom the bidder, if awarded the contract, will subcontract for the performance of the work of structural steel installation and rebar installation.
(4) The requirement of this section to name the prime contract bidder’s proposed subcontractors applies only to proposed HVAC, plumbing, electrical, structural steel installation, and rebar installation subcontractors who will contract directly with the prime contract bidder submitting the bid to the public entity.
Legislative history indicates that this revised disclosure requirement was a compromise reached after the original bill sponsors sought to require bidders to disclose all subcontractors on public works projects over $1 million. The inclusion of “or” between RCW 39.30.060(1)(a) and (b) indicates that bidder need only disclose EITHER the three traditional subcontractors (HVAC, plumbing, and electrical) OR the two newly added subcontractors (structural steel and rebar installers). This either/or paradigm is in tension with RCW 39.30.060(4), which indicates that it applies to all five subcontractors and the presumed intent of the legislation to expand the subcontractor a bidder is required to disclose. It is possible that the use of “or” is a drafting error and the Legislature actually intended to use “and” between RCW 39.30.060(1)(a) and (b).
Due to the potential ambiguity of the newly revised RCW 39.30.060 disclosure requirements, we recommend that bid documents require bidders to disclose all five subcontractors within the timeframes set forth in RCW 39.30.060. By requiring disclosure of all five subcontractors, an owner ensures minimum compliance with RCW 39.30.060 regardless of the Legislature’s intent and an owner is free to require disclosure of more subcontractors than required by RCW 39.30.060. A sample bid requirement could read as follows:
Each Bidder must designate in its bid, or within one (1) hour after the published bid submittal time, the names of the Subcontractors with whom the Bidder, if awarded the Contract, will subcontract for performance of the work for (i) HVAC (heating, ventilation, and air conditioning), (ii) plumbing as described in chapter 18.106 RCW, and (iii) electrical as described in chapter 19.28 RCW, or name itself for such work. Additionally, each Bidder must designate in its bid, or within forty-eight (48) hours after the published bid submittal time, the names of the Subcontractors with whom the Bidder, if awarded the Contract, will subcontract for performance of the work for (i) structural steel installation and (ii) rebar installation, or name itself for such work. The Bidder shall not list more than one (1) subcontractor for each category of work identified, unless subcontractors vary with bid alternates, in which case the Bidder must indicate which Subcontractor will be used for which alternate. Failure to name such Subcontractors (or to name itself to perform such work) or the naming of two or more Subcontractors to perform the same work shall render the Bidder’s bid non-responsive and cause it to be rejected.
A report prepared by the Capital Project Advisory Review Board (CPARB) will recommended expansion to the number of subcontractors that may be listed by November 1, 2020. This report may provide clarify on the legislature’s intent.
Please contact us with any questions.