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Published on Friday, February 17, 2017

Bill that would change claims process on construction contracts still alive in the Senate

On Thursday, February 16, the Senate Law and Justice Committee amended SB 5788. Sponsored by Sen. Sharon Brown (R-Kennewick) the bill is also known as the “Mike M. Johnson” bill in reference to a state Supreme Court case that was favorable to public owners.  This bill would undermine the decision in that case.

Through an amendment, the committee struck all the bill language and replaced it with language that requires a contractor to prove an owner is not prejudiced by the contractor’s failure to follow the claim notice provisions in a contract prior to obtaining an equitable adjustment for the claim to the contractor.

While we appreciate the sponsor and the committee chair’s attempt to craft language that works better for cities, our underlying issues with the bill remain. Notably, this new language does not solve cities’ fundamental concerns around a contractor’s ability to more easily get out of a contract. Cities need protection from untimely and unsubstantiated claims. The claim notification requirements of a construction contract are extremely important for both public and private owners of construction projects. Under the claim notification clause, owners get real time updates regarding extra costs and possible delays, allowing them to make real-time decisions about how to proceed and budget, which is extremely important on public works projects. Under this legislation, the predictability and transparency we currently enjoy would be gone, hurting cities, and ultimately, our citizens. This predictability would be further eroded by the litigious nature of the bill, as now a jury or judge will need to decide if a claim is warranted.

SB 5788 heads to the Senate Rules Committee. We will continue to work this bill and provide updates.

Categories: Infrastructure
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