Are you verifying your contractor is responsible before awarding a contract? SAO can help

Published: March 31, 2022

Before hiring a contractor to work on your home, it's wise to make sure they are licensed, bonded and insured. It helps to protect you if the contractor doesn't complete work properly, if there are any damages, or if workers are injured while at your home. For governments, it's not just wise—it's required by law.

Local governments are required to verify contractors are “responsible” before entering into a contract for a public works project. The first step is to look up your contractor on the website of the Washington State Department of Labor and Industries (L&I), but that doesn't cover everything. Under RCW 39.04.350, there are nine steps governments must consider when evaluating whether a contractor is responsible.

We've put together some tips to help you comply with the statute:

• Understand all the criteria and get your questions answered. You'll find answers to frequently asked questions in SAO's resource, Is This Bidder Responsible? The Municipal Research Services Center (MRSC) also has information about responsible bidder criteria here. We recommend that you read both documents to gain a better understanding of the requirements.

• Complete all the steps that are required in the statute. Currently, there are nine steps you must complete if they apply to you—make sure you do them all. Governments often miss one of the nine steps, partly because the Legislature recently added it to this statute. It involves getting a signed statement from the contractor that says it hasn't been notified by L&I or by a court that it has violated various wage or fair labor laws for workers within the last three years. Keep this signed statement in your bid files.

• Before you award the contract, document that your lowest bidder is responsible. Outside parties are interested in your determination of the lowest responsible bidder, including SAO auditors. SAO's resource includes a Responsible Bidder Checklist that describes the nine steps you need to take and the best place to go to find the information. It can also help you document that you completed the steps.

• Remember, you are still responsible if you contract out. If you contract with a project manager who will evaluate responsible bidders for you, ask that person for the support and keep it in your bid files. It's best to centrally store documentation to support all of your procurement processes.

• Monitor the statute for changes. Be aware that the Legislature has made changes to this statute every year for the last four years, so you should check it periodically. In three of those four years, the Legislature added more steps.

How to reach us for more assistance

Remember, SAO can help. If you have questions about procurement, submit them using our HelpDesk in the client portal.

We also have financial management specialists at SAO's Center for Government Innovation available to talk with you about best practices, resources, or internal controls. For assistance, reach out to us at Center@sao.wa.gov.