Prompt pay/capital projects

AN ACT Relating to implementing prompt pay recommendations from 1
the capital projects advisory review board; amending RCW 39.04.250 2
and 39.76.011; and repealing RCW 39.04.360. 3
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:4
Sec. 1. RCW 39.04.250 and 1992 c 223 s 5 are each amended to 5
read as follows: 6
(1) The state or municipality must make payments on public works 7
projects within 30 days of receipt of a properly completed invoice in 8
accordance with RCW 39.76.011. Contract documents must include 9
instructions for properly completing an invoice. Contracts must 10
include:11
(a) Payment cutoff dates;12
(b) Invoice due dates;13
(c) Review time frames;14
(d) Notice procedures;15
(e) Payment timelines, which must include a payment release 16
schedule with dates, if properly completed invoices are received;17
(f) Retainage withholding; and18
(g) A payment release schedule, which must be included in any 19
contracts made with subcontractors, at every tier, to ensure project 20
payment release expectations are provided for the project.21
S-0486.1
SENATE BILL 5176
State of Washington 69th Legislature 2025 Regular Session
By Senators Valdez, J. Wilson, Conway, Hasegawa, and Nobles
Prefiled 01/08/25. Read first time 01/13/25. Referred to Committee
on State Government, Tribal Affairs & Elections.
p. 1 SB 5176
(2) When payment is received by a contractor or subcontractor for 1
work performed on a public work, the contractor or subcontractor 2
shall pay to any subcontractor not later than ((ten)) 10 days after 3
the receipt of the payment, amounts allowed the contractor on account 4
of the work performed by the subcontractor, to the extent of each 5
subcontractor's interest therein. If a payment does not adhere to the 6
requirements in subsection (1) of this section, payment is late and 7
the public agency must provide a payment recovery schedule that 8
includes interest in accordance with RCW 39.76.011, unless notice of 9
a good faith dispute has been provided. If the prime contractor does 10
not provide payment to a lower-tier subcontractor within 10 days of 11
being paid by the public agency, payment is late and the contractor 12
must provide a payment recovery schedule that includes one percent 13
interest per month accruing on past due amounts owed to every 14
subcontractor as of the date of the late invoice payment.15
(((2))) (3) In the event of a good faith dispute over all or any 16
portion of the amount due on a payment from the state or a 17
municipality to the prime contractor, or from the prime contractor or 18
subcontractor to a subcontractor, then the state or the municipality, 19
or the prime contractor or subcontractor, may withhold no more than 20
((one hundred fifty)) 100 percent of the disputed amount. Those not a 21
party to a dispute are entitled to full and prompt payment of their 22
portion of a draw, progress payment, final payment, or released 23
retainage. 24
(((3))) (4) In addition to all other remedies, any person from 25
whom funds have been withheld in violation of this section ((shall be 26
entitled to receive from )) must be paid by the person wrongfully 27
withholding the funds, one percent per month interest accrued for 28
every month ((and)) or portion thereof that payment including 29
retainage is not made ((, interest at the highest rate allowed under 30
RCW 19.52.025)). In any action for the collection of funds wrongfully 31
withheld, the prevailing party ((shall be )) is entitled to dispute 32
costs ((of suit)) and reasonable attorneys' fees. 33
(5) No later than 30 days after satisfactory completion of any 34
additional work or portion of any additional work by a contractor, 35
subcontractor, or supplier on a public works project or private 36
construction project, except private residential projects of 12 units 37
or less, and receipt by the owner, state, or municipality of a 38
request from the contractor for issuance of a change order to the 39
contract, the owner, state, or municipality shall issue a change 40
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order to the contract for the full dollar amount of the work not in 1
dispute to the contractor. Within 10 days of receipt of a change 2
order from the owner, state, municipality, or upper-tier contractor, 3
the contractor or subcontractor must issue change orders to lower-4
tier subcontractors impacted by the change. If the owner, state, or 5
municipality does not issue such a change order within the 30 days, 6
or the contractor or upper-tier subcontractor does not issue a change 7
order to lower-tier subcontractors within 10 days after receipt of 8
the approved change order, interest accrues on the dollar amount of 9
the additional work satisfactorily completed and not in dispute until 10
a change order is issued. The owner, contractor, subcontractor, 11
state, or municipality shall pay their proportionate share of the 12
interest at a rate of one percent per month. 13
(6) No later than 30 days after the commencement of any 14
additional authorization by the owner, state, or municipality and a 15
request by a subcontractor or supplier, the contractor must request a 16
change order from the owner, state, or municipality. A lower-tier 17
subcontractor or supplier must request a change order from the upper-18
tier contractor 30 days after the commencement of the additional work 19
and a request from the lower-tier subcontractor. If a contractor or 20
subcontractor has requested the change order from the owner, upper-21
tier contractor, state, or municipality within 30 days of the request 22
from the subcontractor or supplier, the contractor or subcontractor 23
is not liable for any interest on the unpaid dollar amount for any 24
additional work satisfactorily completed and not in dispute if the 25
owner, upper-tier contractor, state, or municipality has not issued 26
the requested change order. This section does not provide any rights 27
to a contractor, subcontractor, or supplier against a party with whom 28
they are not a party to a written contract.29
(7) An aggrieved party may bring a civil action for violations of 30
this section in a court of competent jurisdiction for appropriate 31
relief, including interest and reasonable attorneys' fees and costs.32
(8) For the purposes of this section, as it pertains to 33
obligations of an owner, state, or municipality, "additional work" is 34
work beyond the scope defined in the contract between the contractor 35
and the owner, state, or municipality.36
Sec. 2. RCW 39.76.011 and 1992 c 223 s 1 are each amended to 37
read as follows: 38
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(1) Except as provided in RCW 39.76.020, every state agency, 1
county, city, town, school district, board, commission, or any other 2
public body shall pay interest at a rate of one percent per month, 3
but at least one dollar per month, on amounts due on written 4
contracts for public works, personal services, goods and services, 5
equipment, and travel, whenever the public body fails to make timely 6
payment. 7
(2) For purposes of this section, payment shall be timely if:8
(a) Except as provided otherwise in this subsection, a check or 9
warrant is mailed or is available on the date specified for the 10
amount specified in the applicable contract documents but not later 11
than ((thirty)) 30 days of receipt of a properly completed invoice or 12
receipt of goods or services, whichever is later. If a contract is 13
funded by grant or federal money, the public body shall pay the prime 14
contractor for satisfactory performance within ((thirty)) 30 calendar 15
days of the date the public body receives a payment request that 16
complies with the contract or within ((thirty)) 30 calendar days of 17
the date the public body actually receives the grant or federal 18
money, whichever is later. 19
(b) On written contracts for public works, when part or all of a 20
payment is going to be withheld for unsatisfactory performance or if 21
the payment request made does not comply with the requirements of the 22
contract, the public body shall notify the prime contractor in 23
writing within eight working days after receipt of the payment 24
request stating specifically why part or all of the payment is being 25
withheld and what remedial actions must be taken by the prime 26
contractor to receive the withheld amount. Payments for work where 27
there is no disagreement in work or quantity must not be withheld and 28
must follow the payment schedule outlined above. If payments are 29
withheld due to the public body, interest accrues as outlined in 30
subsection (1) of this section.31
(c) If the notification by the public body required by (b) of 32
this subsection does not comply with the notice contents required 33
under (b) of this subsection, the public body shall pay the interest 34
under subsection (1) of this section from the ninth working day after 35
receipt of the initial payment request until the contractor receives 36
notice that does comply with the notice contents required under (b) 37
of this subsection. 38
(d) If part or all of a payment is withheld under (b) of this 39
subsection, the public body shall pay the withheld amount within 40
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((thirty)) 30 calendar days after the prime contractor satisfactorily 1
completes the remedial actions identified in the notice. If the 2
withheld amount is not paid within the ((thirty)) 30 calendar days, 3
the public body shall pay interest under subsection (1) of this 4
section from the ((thirty-first)) 31st calendar day until the date 5
paid. 6
(e)(i) If the prime contractor on a public works contract, after 7
making a request for payment to the public body but before paying a 8
subcontractor for the subcontractor's performance covered by the 9
payment request, discovers that part or all of the payment otherwise 10
due to the subcontractor is subject to withholding from the 11
subcontractor under the subcontract for unsatisfactory performance, 12
the prime contractor may withhold the amount as allowed under the 13
subcontract. If the prime contractor withholds an amount under this 14
subsection, the prime contractor shall: 15
(A) Give the subcontractor notice of the remedial actions that 16
must be taken as soon as practicable after determining the cause for 17
the withholding but before the due date for the subcontractor 18
payment; 19
(B) Give the contracting officer of the public body a copy of the 20
notice furnished to the subcontractor under (e)(i)(A) of this 21
subsection; and 22
(C) Pay the subcontractor within eight working days after the 23
subcontractor satisfactorily completes the remedial action identified 24
in the notice. 25
(ii) If the prime contractor does not comply with the notice and 26
payment requirements of (e)(i) of this subsection, the contractor 27
shall pay the subcontractor interest on the withheld amount from the 28
eighth working day at an interest rate that is equal to the amount 29
set forth in subsection (1) of this section. 30
(3) For the purposes of this section: 31
(a) A payment is considered to be made when mailed or personally 32
delivered to the party being paid. 33
(b) An invoice is considered to be received when it is date-34
stamped or otherwise marked as delivered. If the invoice is not date-35
stamped or otherwise marked as delivered, the date of the invoice is 36
considered to be the date when the invoice is received.37
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NEW SECTION. Sec. 3. RCW 39.04.360 (Payment of undisputed 1
claims— Change orders— Civil actions for violations) and 2024 c 199 s 2
1 & 2009 c 193 s 1 are each repealed.3
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