Chase bill to help small business owners, contractors, signed into law

Gov. Inslee signs Senate Bill 5734
sponsored by Sen. Chase

A bill to make it easier for more small businesses and contractors to participate in public works projects by lowering the percentage rate a public entity must retain of the contract amount was signed into law on Tuesday.

“In order to grow our economy and encourage small businesses to thrive, we must level the playing field,” said. Sen. Maralyn Chase, D-Edmonds and the sponsor of Senate Bill 5734. 

“Small contractors might not have bid on public projects in the past because the retainage for the contracted bond requirement was too high. Now, that we have lowered that rate more small businesses and contractors will be able to compete.”

Current law requires that a state or local entity awarding a public works contract must require the contractor to have a surety bond to make sure the contractor faithfully fulfills all provisions laid out in the original public works contract. The surety bond must include all labor, subcontractor and material supplier costs in addition to payment of all taxes and penalties, if applicable. The bond must equal the full contract price. If the contract is $35,000 or less, the bond requirement may be waived; however, 50 percent of the contract amount may be retained by the public entity.

Under Senate Bill 5734, the contractor, general contractor, or construction manager has the option to have the public entity retain 10 percent instead of 50 percent of the contract amount in lieu of the bond requirement for public works contracts up to $150,000, instead of $35,000.

“Empowering all business owners to be self-sufficient and full partners in the growth of the economy is critical,” said Chase. “For our small businesses owned by women and people of color, this bill breaks down significant financial barriers. This is a good step forward for our state and all small business owners and contractors.”

The bill will take effect in 90 days.

Sen. Chase represents the 32nd legislative district which includes Shoreline, Woodway, parts of Edmonds, Mountlake Terrace, Lynnwood, and northwest Seattle.