• Adopt a written code of business ethics and conduct and make its "available to each employee during the covered contract;
• Exercise "due diligence" to prevent and detect criminal conduct;
• Promote an organizational culture that encourages ethical conduct and compliance;
• Make a timely written disclosure to the agency inspector general with a copy to the contracting officer whenever the contractor as "credible evidence: of a violation of the Civil False Claims Act or a federal criminal law involving fraud, conflict of interest, bribery or gratuity violations.

Every contractor (except for small business) must establish a business ethics and awareness program and an internal control system within 90 days of contract award. The contractor's system and program shall include:

• Reasonable steps to communicate standards, procedures and provide training;
• An internal control system that includes standards and procedures to facilitate timely discovery of improper conduct, periodic assessments of criminal conduct, reporting mechanisms such as a hotline and disciplinary action for improper conduct for failing to prevent or detect improper conduct;
• Disclosure of improper conduct to the federal government. Not only must the contractor comply with these business and ethics provisions, these provisions must be included in subcontracts in purchase orders in excess of $5 million and 120 day's duration.

In addition, the contractor must verify subcontractor and supplier compliance. The Associated General Contractor's (AGC) Federal Government Contractor Ethics And Compliance Programs, tool kit and guidance publication includes generic ethics and compliance programs. This sample program assists contractors to navigate these complex and new regulatory waters.

http://apps.leg.wa.gov/documents/billdocs/2007-08/Pdf/Bills/Session%20Law%202008/2014-S.SL.pdf

The Bill was allegedly held up by House Speaker and Rules Committee Chairman, Frank Chopp, an opponent of the proposed legislation.  Some proponents of the Bill claim that Chopp did so intentionally, in an effort to thwart the Bill's likely approval on the House floor.  Nevertheless, the Bill's sponsor, Mercer Island Senator Brian Weinstein, remains optimistic and plans to re-introduce the Bill for a third time during next year's legislative session.

Weinstein also issued a statement last Wednesday offering to compromise with Chopp with regard to SB 6385.  Weinstein is willing to agree, with some minor caveats, to Chopp's three-point proposal, which would create a new state regulatory agency for contractors, set up a task force to look at construction issues, and make more stringent contractor licensing requirements, if Chopp would support a modified version of SB 6385.  This modified version would give homeowners, after giving the builder notice and an opportunity to cure the defect, the right to sue a builder in tort who has violated the building codes. 

Had Senate Bill 6385 passed, it would have allowed homeowners to sue their contractor for negligent construction, a cause of action which the Washington courts have never recognized.  Such a change in the law would have significantly impacted the building industry as a whole, likely increasing the cost of contactors' liability insurance and, thus, the cost of housing.

Until now, homeowners have only been able to sue their contractors for defective construction under expressed or implied warranties agreed to in their contract.  Mercer Island Senator, Brian Weinstein, however, is hoping to change that.  He is sponsoring senate bill 6385 which, if passed, would allow homeowners to sue their contractor for negligent construction. 

SB 6385 is significant since Washington has never before provided recovery in tort for defective construction.  While many other states, including Oregon, have provided for negligent construction claims, Washington has been hesitant to do so.  The concern is that, unlike manufacturers in the product liability setting, contractors cannot easily predict these sorts of liability risks prior to commencing work.  Because every construction job is different, the contractor cannot easily evaluate the magnitude of the risk involved.  Regardless, contractors will be forced to guess at these risks, and the effect will be increased housing costs.

Critics feel that the new law is, therefore, too extreme in its expansion of legal liability for contractors.  Opponents of SB 6385 are concerned that the new bill will have the greatest impact on smaller contractors and non-profit organizations, such as Habitat for Humanity, whose work is essential to a healthy building industry.  Proponents of SB 6385, on the other hand, feel that contractors should provide quality work to begin with and the new law only reinforces that fact and will only affect contractors who perform carelessly and provide a shoddy product.

On February 1, 2008, SB 6385 was approved by the Senate by a vote of 27 to 20 and was passed to the House Judiciary Committee, who voted on February 28th to pass the bill with amendments.  SB 6385 is currently with the House Rules Committee for a second reading and, if passed on to the House floor in the next couple days, will likely become law.  If the House fails to act soon, however, the bill will once again die, as it did last year.