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Evergreen Ledger

SHB 2420

Signed

House

Small works roster limits

Increasing small works roster contract limits.

How does a bill become law?
  1. Introduced: The bill is filed and assigned a number.
  2. Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
  3. Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
  4. Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
  5. Governor: The Governor reviews the bill and decides whether to sign or veto it.
  6. Signed: The bill has been signed into law.
Introduced: February 3, 2026
Last Action: March 18, 2026
Status: C 97 L 26
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AI Analysis

This analysis was generated by AI and may contain errors. It is not legal advice. Always refer to the official bill text for authoritative information.
People & CommunitiesBalancedCorporate & Wealthy Interests

This bill raises the dollar threshold for using the simplified small works roster procurement process for public construction projects in Washington, and adds requirements to increase contracting opportunities for small and underrepresented-owned businesses. It also streamlines requirements for very small contracts and improves transparency through reporting and standardized forms.

  • Raises the maximum contract size for the small works roster process from $350,000 to up to $650,000, phased in over five years: $530,000 (2026–27), $560,000 (2027–28), $590,000 (2028–29), $620,000 (2029–30), and $650,000 (2030 onward).
  • Requires state and local agencies to give priority direct contracting to small, minority-, women-, and veteran-owned businesses on the roster for projects under $150,000, with rotation rules to ensure fairness.
  • Allows contracts under $5,000 to be awarded without retainage or performance bonds, and permits agencies to waive retainage for larger projects (over $5,000) while assuming liability for contractor nonpayment of wages, taxes, and penalties.
  • Mandates annual documentation of efforts to use small works roster procedures, public posting of awarded contracts, and publication of contractors contacted for direct negotiation.
  • Requires the Department of Enterprise Services to create and host standardized bid and contract templates on its public website for use by agencies and contractors.

Who is affected

  • Small, minority-, women-, and veteran-owned construction businesses — Small, minority-, women-, and veteran-owned businesses benefit from increased opportunities to win public works contracts directly, without competitive bidding, if they are on the small works roster and meet eligibility criteria.
  • State and local government agencies responsible for public works procurement — State agencies and local governments (e.g., cities, counties, school districts) gain flexibility to award more public works projects using simplified procedures, and must follow new documentation and reporting requirements.
  • General contractors on the small works roster — General contractors on the small works roster must respond to bid invitations, participate in rotation requirements for direct contracts, and ensure their business qualifies if seeking preferential treatment for small business set-asides.
  • Washington residents and public fund users — Taxpayers and ratepayers may benefit from increased competition and transparency in small public works contracts, and potentially lower costs due to streamlined procurement.
Effective: 2026-07-01Fiscal impact: The bill does not specify a direct fiscal impact on the state budget, but may increase spending on public works due to higher contract limits; any savings from reduced retainage or bond requirements for contracts under $5,000 are likely minimal.
Model: Intel/Qwen3-Coder-Next-int4-AutoRoundGenerated: Mar 19, 2026 at 7:58 PM

Pro/Con Analysis

Potential Benefits (5)

  • Direct contracting preference for small, minority-, women-, and veteran-owned businesses significantly increases contract opportunities for historically excluded groups, potentially raising revenue and capacity for these firms—many of which are sole proprietorships or micro-businesses operating near median income thresholds.

    Business & EmploymentPeopleRef: Sec. 1(4)(b)(i)-(v)

  • Eliminating retainage and bond requirements for contracts under $5,000 reduces upfront capital and administrative barriers for micro-businesses and sole proprietors, enabling more small contractors to bid on low-dollar jobs—especially beneficial for new entrants and part-time workers.

    Business & EmploymentPeopleRef: Sec. 1(5)

  • Raising the small works roster threshold to $650,000 allows agencies to streamline procurement for more projects, reducing bidding time and administrative overhead—savings that could redirect public funds toward actual construction or maintenance, benefiting communities through faster project delivery.

    Local GovernmentPeopleRef: Sec. 1(1)(a)

  • Mandated annual reporting of awarded contracts and contractors contacted increases transparency and accountability, enabling public oversight of procurement fairness—especially valuable for watchdogs and community groups monitoring equity in public spending.

    Local GovernmentLean peopleRef: Sec. 1(6)-(7) and New Sec. 2

  • Standardized bid and contract templates on the DES website reduce paperwork and legal complexity for small contractors, lowering barriers to entry and enabling more Washington small businesses to participate in public works without hiring consultants.

    Business & EmploymentPeopleRef: Sec. 1(4)(a) and New Sec. 2
Potential Concerns (5)

  • The $150,000 direct contracting preference for small, minority-, women-, and veteran-owned businesses creates a two-tiered system where only firms meeting narrow ownership and size criteria (per 2023 c 395) gain preferential access—many small businesses (e.g., non-underrepresented general contractors) are excluded from this advantage, potentially reducing their bid volume and revenue despite being on the roster.

    Business & EmploymentIndustryRef: Sec. 1(4)(b)(i)-(v)

  • The rotation and documentation requirements for direct contracting impose administrative burdens on local governments (e.g., school districts, small cities), requiring staff time to track business ownership status, enforce rotation, and document compliance—costs that may fall disproportionately on under-resourced rural or small jurisdictions.

    Local GovernmentIndustryRef: Sec. 1(4)(b)(i)-(v)

  • The preference applies only to projects under $150,000—a narrow slice of public works—and excludes larger contracts where most revenue is concentrated. Firms that qualify as “small” under state definitions (≤$10M annual revenue or ≤500 employees) may benefit, but only if they already hold roster status; new entrants face barriers to entry, reinforcing incumbent advantage.

    Business & EmploymentIndustryRef: Sec. 1(4)(b)(i)-(v)

  • Waiving retainage and performance bonds for contracts under $5,000—and allowing waivers for larger projects—reduces financial safeguards against contractor nonpayment of wages and taxes; while the agency assumes liability, this shifts risk to public funds and may increase audit or enforcement costs if contractors default.

    Public SafetyLean industryRef: Sec. 1(5)

  • Raising the small works roster threshold to $650,000 disproportionately benefits larger general contractors who can now compete for contracts previously reserved for smaller firms, potentially crowding out micro-businesses that previously dominated the $350K–$650K range.

    Business & EmploymentIndustryRef: Sec. 1(1)(a)

Who Is Most Affected

Small, minority-, women-, and veteran-owned construction businessesPositive Impact

Small, minority-, women-, and veteran-owned businesses that meet the state’s definition (per 2023 c 395) and are on the roster gain direct contracting access for projects under $150K, increasing revenue and capacity—though only if they already hold roster status; new entrants still face barriers.

General contractors on the small works rosterMixed Impact

Larger general contractors on the roster benefit from higher contract thresholds ($650K vs $350K), increasing their eligible project volume—but lose preferential access to the $150K segment, which is now reserved for underrepresented firms.

State and local government agencies responsible for public works procurementMixed Impact

State and local agencies gain flexibility and administrative efficiency for mid-sized projects, but face new documentation, reporting, and rotation requirements that may strain small or rural offices with limited staff.

Washington residents and public fund usersMixed Impact

Taxpayers and ratepayers benefit from faster project delivery and increased transparency, but may bear indirect costs if retained wage/tax liability shifts to agencies without corresponding budget increases—potentially straining public works maintenance backlogs.

Micro-business and sole proprietor contractors (non-underrepresented)Mixed Impact

Micro-businesses and sole proprietors (non-underrepresented) may see reduced bid volume on the $150K segment due to the preference for minority/women/veteran firms, but benefit from waived retainage/bonds on sub-$5K jobs and standardized templates.