Senate Bill 6192 - Amending RCW 39.04.360
By: Bryce Sinner
The Washington State legislature recently passed Substitute Senate Bill 6192, which amends RCW 39.04.360 and is currently waiting the Governor’s signature. It’s not law yet, but likely will be soon. There are a few traps for the unwary here and advantages for savvy downstream contractors, so I wanted to bring this to your attention and make sure you are aware of these changes.
Background:
Chapter 39.04 RCW generally applies to Public Works projects. RCW 39.04.360 previously provided that a Public Works contracting agency was required to issue a change order for the full dollar amount of any portion of additional work not in dispute within 30 days. If the contracting agency did not issue a change order within 30 days, interest accrued at 1% per month on the undisputed portion of the change. I’ve had several clients use this to their advantage to pressure contracting agencies to issue change orders by noting the provision and asserting the right to interest.
Changes to RCW 39.04.360:
The changes to RCW 39.04.360 significantly expand its reach. It will apply not just to contractors, but also to subcontractors and suppliers, AND not just to Public Works projects, but also to “private construction project(s).”
The introductory sentence to Section (1) reads as follows: “No later than 30 days after satisfactory completion of any additional work or portion of any additional work by a contractor, subcontractor, or supplier on a public works project or private construction project, except private residential projects of 12 units or less, and receipt by the owner, state, or municipality of a request from the contractor for issuance of a change order to the contract, the owner, state, or municipality shall issue a change order to the contract for the full dollar amount of the work not in dispute to the contractor.”
General contractors and subcontractors will also have an obligation to issue change orders to lower tier subcontractors and suppliers. Section (1) continues: “Within 10 days of receipt of a change order from the owner, state, municipality, or upper-tier contractor, the contractor or subcontractor must issue change orders to lower-tier subcontractors impacted by the change.”
If any of the parties obligated to issue such change orders fails to comply with these deadlines, interest accrues at 1% per month.
The changes also add an obligation for a general contractor to pass subcontractor and supplier change orders through to the owner, provided the subcontractor or supplier has requested a change. Section (2) states in relevant part, “No later than 30 days after satisfactory completion of any additional work or portion of any additional work authorized by the owner, state, or municipality and a request by a subcontractor or supplier, the contractor must request a change order from the owner, state, or municipality.”
Finally, if a party fails to comply with the statute, the revisions provide the aggrieved party a right to interest, costs, and attorney fees for the aggrieved party. Section (3) states: “An aggrieved party may bring a civil action for violations of this section in a court of competent jurisdiction for appropriate relief, including interest and reasonable attorneys' fees and costs.” This could provide a vehicle for subcontractors to make claims against general contractors who fail to pass through their change order requests to the owner.
Initial Takeaways:
The revisions to the statute may go unnoticed by private owners and general contractors on private projects because it is essentially hidden away in the Public Works statute. Savvy contractors and subcontractors should be able to use the statute to their advantage in pressuring owners and contractors into issuing change orders. It will also provide a vehicle to recover attorney fees in circumstances where fees may otherwise be unavailable, particularly interesting is the scenario where a subcontractor requests a change order and the general contractor fails to pass it through to the owner. However, even though the statute provides timeframes for submitting change orders, I would advise you continue to comply with contract change order and notice procedures and deadlines, which are almost always shorter than the durations provided in the statute.
Below is a link to the bill status and a link to the current version of the bill as passed by the legislature.
Bill Status - https://app.leg.wa.gov/billsummary?Year=2023&BillNumber=6192
Bill as Pass by the Legislature - https://lawfilesext.leg.wa.gov/biennium/2023-24/Pdf/Bills/Senate%20Passed%20Legislature/6192-S.PL.pdf?q=20240312132524