1. Executive Summary
Decision Requested
Monitor for Skanska’s Certified Claim submission under GP 1-09.11(2); prepare response when filed.
- Recommendation: Deny — HB 2081 rate increase does not satisfy Section 1-07.1(5)2 conditions
- Cost Exposure: $27,366.84 claimed; WSDOT position is $0
- Risk Level: Low — protest denied; Skanska bypassed DRB; claim in preparation with outside counsel
Core Question
Does the 2025 Business & Occupation Tax rate increase under House Bill 2081 meet the three conditions of Section 1-07.1(5)2 entitling Skanska to an equitable adjustment?
House Bill 2081 increased Washington’s B&O Tax rate on certain businesses effective January 1, 2025. Skanska notified WSDOT of its intent to request a Change Order for the additional tax cost on the Brickyard project (LTR 248, Oct 8, 2025). WSDOT denied the equitable adjustment, finding the tax change does not meet the conditions of Section 1-07.1(5)2 (SL 9727-181, Oct 20, 2025).
Skanska filed a formal protest (LTR 266, Nov 3, 2025) and supplemented with arguments that the rate increase satisfies all three contractual conditions, quantifying the Brickyard impact at $27,366.84 (LTR 277, Nov 17, 2025). WSDOT denied eligibility and closed the issue, referring Skanska to Section 1-09.11 for Claims (SL 9727-215, Dec 9, 2025).
Rather than pursue the standard dispute/DRB path, Skanska filed a Notice of Intent to Claim under GP 1-09.11(2) (LTR 302, Dec 23, 2025). WSDOT acknowledged (SL 9727-231). Skanska subsequently reported the Certified Claim is being prepared with outside counsel (LTR 353, Feb 20, 2026). WSDOT confirmed Skanska may file prior to Final Contract Voucher or Final Acceptance (SL 9727-284, Feb 27, 2026). No submission date has been provided.
2. Skanska Assertions and WSDOT Position
Skanska Assertion
House Bill 2081 satisfies all three conditions of Section 1-07.1(5)2 for an equitable adjustment: (1) the tax affects the cost of performing the Work; (2) the change was enacted after the Proposal Due Date; and (3) the rate increase is not a type of tax change excluded by the Contract. Skanska quantified the Brickyard-specific impact at $27,366.84 (LTR 277).
WSDOT Position
The HB 2081 B&O Tax rate increase does not satisfy the conditions of Section 1-07.1(5)2. WSDOT determined the specific conditions for equitable adjustment were not met and denied the request (SL 9727-181). Upon protest and supplement, WSDOT reaffirmed the denial and closed the issue, directing Skanska to the Section 1-09.11 claims process (SL 9727-215).
Skanska Assertion
The B&O Tax rate change under HB 2081 was enacted after the Proposal Due Date and is therefore within the class of tax changes the Contract’s equitable adjustment provision was designed to address. Skanska could not have anticipated or priced this rate increase in its original proposal.
WSDOT Position
Timing of the tax change alone does not trigger entitlement. All conditions of Section 1-07.1(5)2 must be satisfied, not merely the timing element. WSDOT’s analysis found the conditions as a whole were not met. The equitable-adjustment clause does not create a general entitlement for every post-Proposal tax change — only those meeting all specified conditions.
Procedural Context
Skanska elected to skip the standard GP 1-04.5 dispute/DRB path. It filed a Notice of Intent to Claim under GP 1-09.11(2) (LTR 302, Dec 23, 2025). WSDOT acknowledged (SL 9727-231). The Certified Claim is being prepared with outside counsel (LTR 353, Feb 20, 2026); no submission date given.
WSDOT Position
WSDOT confirmed Skanska may file the Certified Claim prior to Final Contract Voucher or Final Acceptance (SL 9727-284, Feb 27, 2026). The substantive position remains unchanged from SL 9727-215: protest denied, no equitable adjustment owed. The claim path does not alter the underlying merits.
3. Risk
Strengths
- Denial grounded in the specific conditions of Section 1-07.1(5)2; formally denied via SL 9727-215.
- Skanska bypassed DRB, proceeding directly to Certified Claim; indicates limited confidence in the merits under DRB review.
- Claimed amount ($27,366.84) is modest, limiting incentive for protracted litigation.
Potential Weaknesses
- Claim being prepared with outside counsel; a certified claim triggers formal response obligations under GP 1-09.11.
- The detailed three-condition analysis underlying WSDOT’s denial is not fully articulated in available letters; claim response will need to develop this analysis.
Defense Layering
| Layer | Defense | Use In |
|---|---|---|
| 1. | HB 2081 does not satisfy all conditions of Section 1-07.1(5)2; denial upheld by SL 9727-215 | Claim Response |
| 2. | GP 1-04.1(1)(e) assigns tax payment responsibility to the Design-Builder; equitable adjustment is a narrow exception | Claim Response / Reserve |
| 3. | Skanska’s election to skip DRB may affect procedural posture for subsequent litigation | Reserve |
Fallback Position
If the Certified Claim has any merit on a narrow reading, the quantum ($27,366.84) is sufficiently small that a partial settlement may be preferable to protracted litigation. WSDOT’s current position is that no adjustment is owed.
4. Chronology
| Date | Event |
|---|---|
| 2025-10-08 | Skanska LTR 248 — Notifies intent to request Change Order for 2025 B&O Tax changes (HB 2081) |
| 2025-10-20 | WSDOT SL 9727-181 — Refers to Section 1-07.1(5)2; HB 2081 does not meet conditions; equitable adjustment denied |
| 2025-11-03 | Skanska LTR 266 — Formal Notice of Protest 007 |
| 2025-11-17 | Skanska LTR 277 — Supplement; argues rate increase meets all three contractual conditions; Brickyard = $27,366.84 |
| 2025-12-09 | WSDOT SL 9727-215 — Protest denied. No eligibility. Issue closed. Refers to Section 1-09.11 Claims. |
| 2025-12-23 | Skanska LTR 302 — Notice of Intent to Claim under GP 1-09.11(2); requests 60-day extension |
| 2026-01 | WSDOT SL 9727-231 — Acknowledges Notice of Intent to Claim |
| 2026-02-20 | Skanska LTR 353 — Courtesy update: Certified Claim being prepared with outside counsel; no submission date given |
| 2026-02-27 | WSDOT SL 9727-284 — Acknowledges update; Skanska may file prior to Final Contract Voucher or Final Acceptance |
5. Cost & Time
Skanska’s Claim
| Category | Amount |
|---|---|
| B&O Tax increment on Brickyard contract work (HB 2081 rate increase) | $27,366.84 |
| Total Cost Claimed | $27,366.84 |
| Schedule Extension | None claimed |
WSDOT Exposure Scenarios
| Scenario | Cost | Time |
|---|---|---|
| WSDOT position (Section 1-07.1(5)2 not met) | $0 | None |
| Partial (claim partially valid on narrow reading) | Up to $27,367 | None |
| Worst case (full claim awarded) | $27,367 | None |