State resources/fraud, waste

AN ACT Relating to strengthening transparency measures to prevent 1
the fraudulent, wasteful, or improper use of state resources; 2
amending RCW 39.26.180, 42.40.020, 42.40.070, 43.09.050, 43.09.055, 3
and 43.09.185; and adding a new section to chapter 42.40 RCW.4
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:5
Sec. 1. RCW 39.26.180 and 2020 c 269 s 4 are each amended to 6
read as follows: 7
(1) The department must adopt uniform policies and procedures for 8
the effective and efficient management of contracts by all state 9
agencies. The policies and procedures must, at a minimum, include:10
(a) Precontract procedures for selecting potential contractors 11
based on their qualifications and ability to perform, including 12
procedures to ensure compliance with chapter 39.19 RCW, and providing 13
for participation of minority and women-owned businesses;14
(b) Model complaint and protest procedures; 15
(c) Alternative dispute resolution processes; 16
(d) Incorporation of performance measures and measurable 17
benchmarks in contracts; 18
(e) Model contract terms to ensure contract performance and 19
compliance with state and federal standards, including terms to 20
facilitate recovery of the costs of employee staff time that must be 21
S-3857.1
SENATE BILL 6126
State of Washington 69th Legislature 2026 Regular Session
By Senators Gildon, Christian, and J. Wilson
Read first time 01/14/26. Referred to Committee on State Government,
Tribal Affairs & Elections.
p. 1 SB 6126
expended to bring a contract into substantial compliance, ((and)) 1
terms required under RCW 41.06.142, and terms with procedures for the 2
contractor to report improper governmental actions as defined under 3
RCW 42.40.020; 4
(f) Executing contracts using electronic signatures;5
(g) Criteria for contract amendments; 6
(h) Postcontract procedures; 7
(i) Procedures and criteria for terminating contracts for cause 8
or otherwise, including procedures and criteria for terminating 9
performance-based contracts that are not achieving performance 10
standards; 11
(j) A requirement that agencies, departments, and institutions of 12
higher education monitor performance-based contracts, including 13
contracts awarded pursuant to RCW 41.06.142, to ensure that all 14
aspects of the contract are being properly performed and that 15
performance standards are being achieved; and 16
(k) Any other subject related to effective and efficient contract 17
management. 18
(2) An agency may not enter into a contract under which the 19
contractor could charge additional costs to the agency, the 20
department, the joint legislative audit and review committee, or the 21
state auditor for access to data generated under the contract. A 22
contractor under such a contract must provide access to data 23
generated under the contract to the contracting agency, the joint 24
legislative audit and review committee, and the state auditor.25
(3) To the extent practicable, agencies should enter into 26
performance-based contracts. Performance -based contracts identify 27
expected deliverables and performance measures or outcomes. 28
Performance-based contracts also use appropriate techniques, which 29
may include but are not limited to, either consequences or incentives 30
or both to ensure that agreed upon value to the state is received. 31
Payment for goods and services under performance -based contracts 32
should be contingent on the contractor achieving performance 33
outcomes. 34
(4) An agency and contractor may execute a contract using 35
electronic signatures. 36
(5) As used in subsection (2) of this section, "data" includes 37
all information that supports the findings, conclusions, and 38
recommendations of the contractor's reports, including computer 39
models and the methodology for those models. 40
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Sec. 2. RCW 42.40.020 and 2017 c 44 s 2 are each amended to read 1
as follows: 2
As used in this chapter, the terms defined in this section shall 3
have the meanings indicated unless the context clearly requires 4
otherwise. 5
(1) "Auditor" means the office of the state auditor.6
(2) "Employee" means any individual employed or holding office in 7
any department or agency of state government. 8
(3) "Good faith" means the individual providing the information 9
or report of improper governmental activity has a reasonable basis in 10
fact for reporting or providing the information. An individual who 11
knowingly provides or reports, or who reasonably ought to know he or 12
she is providing or reporting, malicious, false, or frivolous 13
information, or information that is provided with reckless disregard 14
for the truth, or who knowingly omits relevant information is not 15
acting in good faith. 16
(4) "Gross mismanagement" means the exercise of management 17
responsibilities in a manner grossly deviating from the standard of 18
care or competence that a reasonable person would observe in the same 19
situation. 20
(5) "Gross waste of funds" means to spend or use funds or to 21
allow funds to be used without valuable result in a manner grossly 22
deviating from the standard of care or competence that a reasonable 23
person would observe in the same situation. 24
(6)(a) "Improper governmental action" means any action by an 25
employee undertaken in the performance of the employee's official 26
duties: 27
(i) Which is a gross waste of public funds or resources as 28
defined in this section; 29
(ii) Which is in violation of federal or state law or rule, if 30
the violation is not merely technical or of a minimum nature;31
(iii) Which is of substantial and specific danger to the public 32
health or safety; 33
(iv) Which is gross mismanagement; 34
(v) Which prevents the dissemination of scientific opinion or 35
alters technical findings without scientifically valid justification, 36
unless state law or a common law privilege prohibits disclosure. This 37
provision is not meant to preclude the discretion of agency 38
management to adopt a particular scientific opinion or technical 39
finding from among differing opinions or technical findings to the 40
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exclusion of other scientific opinions or technical findings. Nothing 1
in this subsection prevents or impairs a state agency's or public 2
official's ability to manage its public resources or its employees in 3
the performance of their official job duties. This subsection does 4
not apply to de minimis, technical disagreements that are not 5
relevant for otherwise improper governmental activity. Nothing in 6
this provision requires the auditor to contract or consult with 7
external experts regarding the scientific validity, invalidity, or 8
justification of a finding or opinion; or 9
(vi) Which violates the administrative procedure act or analogous 10
provisions of law that prohibit ex parte communication regarding 11
cases or matters pending in which an agency is party between the 12
agency's employee and a presiding officer, hearing officer, or an 13
administrative law judge. The availability of other avenues for 14
addressing ex parte communication by agency employees does not bar an 15
investigation by the auditor. 16
(b) "Improper governmental action" does not include personnel 17
actions, for which other remedies exist, including but not limited to 18
employee grievances, complaints, appointments, promotions, transfers, 19
assignments, reassignments, reinstatements, restorations, 20
reemployments, performance evaluations, reductions in pay, 21
dismissals, suspensions, demotions, violations of the state civil 22
service law, alleged labor agreement violations, reprimands, claims 23
of discriminatory treatment, or any action which may be taken under 24
chapter 41.06 RCW, or other disciplinary action except as provided in 25
RCW 42.40.030. 26
(7) "Public official" means the attorney general's designee or 27
designees; the director, or equivalent thereof in the agency where 28
the employee works; ((an appropriate number of )) individuals 29
designated to receive whistleblower reports by the head of each 30
agency under section 3 of this act; or the executive ethics board.31
(8) "Substantial and specific danger" means a risk of serious 32
injury, illness, peril, or loss, to which the exposure of the public 33
is a gross deviation from the standard of care or competence which a 34
reasonable person would observe in the same situation.35
(9) "Use of official authority or influence" includes 36
threatening, taking, directing others to take, recommending, 37
processing, or approving any personnel action such as an appointment, 38
promotion, transfer, assignment including but not limited to duties 39
and office location, reassignment, reinstatement, restoration, 40
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reemployment, performance evaluation, determining any material 1
changes in pay, provision of training or benefits, tolerance of a 2
hostile work environment, or any adverse action under chapter 41.06 3
RCW, or other disciplinary action. 4
(10)(a) "Whistleblower" means: 5
(i) An employee who in good faith reports alleged improper 6
governmental action to the auditor or other public official, as 7
defined in subsection (7) of this section; or 8
(ii) An employee who is perceived by the employer as reporting, 9
whether they did or not, alleged improper governmental action to the 10
auditor or other public official, as defined in subsection (7) of 11
this section. 12
(b) For purposes of the provisions of this chapter and chapter 13
49.60 RCW relating to reprisals and retaliatory action, the term 14
"whistleblower" also means: 15
(i) An employee who in good faith provides information to the 16
auditor or other public official, as defined in subsection (7) of 17
this section, and an employee who is believed to have reported 18
asserted improper governmental action to the auditor or other public 19
official, as defined in subsection (7) of this section, or to have 20
provided information to the auditor or other public official, as 21
defined in subsection (7) of this section, but who, in fact, has not 22
reported such action or provided such information; or23
(ii) An employee who in good faith identifies rules warranting 24
review or provides information to the rules review committee, and an 25
employee who is believed to have identified rules warranting review 26
or provided information to the rules review committee but who, in 27
fact, has not done so. 28
NEW SECTION. Sec. 3. A new section is added to chapter 42.40 29
RCW to read as follows: 30
The head of each agency shall designate an appropriate number of 31
individuals to receive whistleblower reports. The agency must provide 32
each individual designated under this section with information 33
regarding the deadline to report an assertion of improper 34
governmental action to the auditor under RCW 42.40.040(1) and the 35
nondisclosure provisions of this chapter. 36
Sec. 4. RCW 42.40.070 and 2008 c 266 s 5 are each amended to 37
read as follows: 38
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A written summary of this chapter and procedures for reporting 1
improper governmental actions established by the auditor's office 2
shall be made available by each department or agency of state 3
government to each employee upon entering public employment. Such 4
notices may be in agency internal newsletters, included with 5
paychecks or stubs, sent via ((electronic mail )) email to all 6
employees, or sent by other means that are cost -effective and reach 7
all employees of the government level, division, or subdivision. 8
Employees shall be notified by each department or agency of state 9
government each year of the procedures and protections under this 10
chapter. The annual notices shall include a list of public officials, 11
as defined in RCW 42.40.020, including individuals employed by the 12
agency and designated by the head of the agency under section 3 of 13
this act, authorized to receive whistleblower reports. The list of 14
public officials authorized to receive whistleblower reports shall 15
also be prominently displayed in all agency offices.16
Sec. 5. RCW 43.09.050 and 1992 c 118 s 6 are each amended to 17
read as follows: 18
The auditor shall: 19
(1) Except as otherwise specifically provided by law, audit the 20
accounts of all collectors of the revenue and other holders of public 21
money required by law to pay the same into the treasury;22
(2) In his or her discretion, inspect the books of any person 23
charged with the receipt, safekeeping, and disbursement of public 24
moneys; 25
(3) Investigate improper governmental activity under chapter 26
42.40 RCW; 27
(4) Inform the attorney general in writing of the necessity for 28
the attorney general to direct prosecutions in the name of the state 29
for all official delinquencies in relation to the assessment, 30
collection, and payment of the revenue, against all persons who, by 31
any means, become possessed of public money or property, and fail to 32
pay over or deliver the same, and against all debtors of the state;33
(5) Give information in writing to the legislature, whenever 34
required, upon any subject relating to the financial affairs of the 35
state, or touching any duties of his or her office;36
(6) Report to the director of financial management in writing the 37
names of all persons who have received any moneys belonging to the 38
state, and have not accounted therefor; 39
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(7) Authenticate with his or her official seal papers issued from 1
his or her office; 2
(8) Publish an annual, anonymized dashboard on the agency's 3
official website summarizing the number of assertions of improper 4
governmental action received, case statuses and outcomes, funds 5
recovered, and average time to resolution;6
(9) Make his or her official report annually on or before the 7
31st of December. 8
Sec. 6. RCW 43.09.055 and 1998 c 232 s 3 are each amended to 9
read as follows: 10
The state auditor ((may, where)) shall:11
(1) Where there is reasonable cause to believe that a misuse of 12
state moneys has occurred, conduct an audit of financial and legal 13
compliance of any entity that receives public moneys through contract 14
or grant in return for services; and15
(2) Conduct audits of financial and legal compliance of a random 16
sampling of entities that received public moneys through contract or 17
grant in return for services in the previous five years. In selecting 18
entities for audit under this subsection, the auditor shall 19
prioritize entities that received public money from agencies which 20
award large numbers of grants or issue direct client assistance or 21
provider reimbursements. 22
This authority includes examinations of ((not-for-profit)) 23
nonprofit corporations who provide personal services to a state 24
agency or to clients of a state agency. Such a financial audit shall 25
be performed in a manner consistent with this chapter, and may be 26
performed according to an agreed upon procedures engagement as in the 27
existing 1998 standards of the American institute of certified public 28
accountants professional standards section 600. 29
The state auditor may charge the contracting agency, whether 30
state or local, for the costs of an audit of a ((not-for-profit)) 31
nonprofit corporation that receives public moneys through contract or 32
grant in return for services. Any contracting agency that is 33
responsible to the state auditor for such costs shall use due 34
diligence to recover costs from the audited entity.35
Sec. 7. RCW 43.09.185 and 2022 c 148 s 1 are each amended to 36
read as follows: 37
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State agencies ((and)), local governments , and public officials 1
as defined in RCW 42.40.020 shall immediately report to the state 2
auditor's office known or suspected loss of public funds or assets or 3
other illegal activity. The state auditor must adopt policies as 4
necessary to implement this section. 5
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