Chapter 279 — Public Contracts and Purchasing

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2001 EDITION

PURCHASING AND BIDDING GENERALLY

279.005 Policy of competition in public contracts. (1) It is the policy of the State of Oregon to encourage public contracting competition that supports openness and impartiality to the maximum extent possible.

(2) The Legislative Assembly finds that:

(a) Competition exists not only in prices, but in the technical competence of suppliers, in their ability to make timely deliveries and in the quality and performance of their products and services and that a balance must exist between performance competition and price competition;

(b) The nature of effective competition varies with the product or service being procured and that while competitive sealed bids are a common method of procurement, it is not always the most advantageous or practical method of source selection; and

(c) Meaningful competition can be achieved through a variety of methods when procuring products or services. The methods include but are not limited to:

(A) Price competition as represented by the initial or acquisition price;

(B) Competition as represented by price and performance evaluations of the competing items and suppliers;

(D) Competition as represented by evaluation of the capabilities of the bidders or proposers to perform the services followed by a negotiation on price; or

(E) Competition as represented by another method of procurement that is reasonably calculated to satisfy the public contracting agency’s need. [1993 c.724 §19]

279.007 Methods of fostering competition. (1) All public contracts shall be made under conditions that foster competition among a sufficient number of potential suppliers that offer a wide spectrum of products and services and that represent a broad marketplace. Fostering competition shall be reflected in:

(a) Writing specifications and procurement documents in a simple and easy to read format;

(b) Searching for new sources of supply;

(d) Everyday courtesy shown to prospective suppliers and contractors; and

(e) The way information on contracting opportunities is provided to suppliers, including but not limited to advertisement in publications of general circulation or the Oregon Department of Administrative Services’ electronic bulletin board services, and any other reasonable methods that encourage competition and that are consistent with ORS 279.025.

(2) A public contracting agency may evaluate every aspect of competition in its effort to purchase products or services, choose the appropriate solicitation process in accordance with the criteria described in ORS 279.005 and arrive at offers that represent optimal value to the state. [1993 c.724 §20]

279.008 [Repealed by 1975 c.771 §33]

279.009 Exemption of public improvement contracts from ORS 279.005 and 279.007. Any contract of public improvement, as defined in ORS 279.011, shall not be subject to the requirements of ORS 279.005 and 279.007. [1993 c.724 §39]

Note: 279.009 was enacted into law by the Legislative Assembly but was not added to or made a part of ORS chapter 279 or any series therein by legislative action. See Preface to Oregon Revised Statutes for further explanation.

279.010 [Repealed by 1975 c.771 §33]

279.011 Definitions for ORS 279.005 to 279.111. As used in ORS 279.005 to 279.111:

(1) "Board" means a local contract review board created pursuant to ORS 279.055.

(2) "Department" means the Oregon Department of Administrative Services.

(3) "Director" means the Director of the Oregon Department of Administrative Services.

(4) "Emergency" means circumstances that could not have been reasonably foreseen that create a substantial risk of loss, damage, interruption of services or threat to the public health or safety that requires prompt execution of a contract to remedy the condition.

(5) "Findings" means the justification for an agency conclusion that includes, but is not limited to, information regarding:

(a) Operational, budget and financial data.

(b) Public benefits.

(d) Specialized expertise required.

(e) Public safety.

(f) Market conditions.

(g) Technical complexity.

(h) Funding sources.

(6) "Public contract" means any purchase, lease or sale by a public agency of personal property, public improvements or services other than agreements which are for personal service.

(7) "Public agency" or "public contracting agency" means any agency of the State of Oregon or any political subdivision thereof authorized by law to enter into public contracts and any public body created by intergovernmental agreement.

(8) "Public improvement" means projects for construction, reconstruction or major renovation on real property by or for a public agency. "Public improvement" does not include emergency work, minor alteration, ordinary repair or maintenance necessary in order to preserve a public improvement. [1975 c.771 §1; 1979 c.196 §1; 1979 c.869 §1a; 1981 c.54 §1; 1983 c.690 §2; 1991 c.20 §1; 1993 c.500 §29; 1997 c.685 §1]

279.012 [Repealed by 1975 c.771 §33]

279.013 [1975 c.771 §2; 1977 c.456 §1; 1979 c.195 §1; 1981 c.466 §1; 1981 c.528 §5; 1981 c.712 §1; repealed by 1983 c.690 §28]

279.014 [Amended by 1967 c.202 §1; 1973 c.42 §1; repealed by 1975 c.771 §33]

279.015 Competitive bidding; exceptions; exemptions. (1) Subject to the policies and provisions of ORS 279.005 and 279.007, all public contracts shall be based upon competitive bids or proposals except:

(a) Contracts made with other public agencies or the federal government.

(b) Contracts made with qualified nonprofit agencies providing employment opportunities for disabled individuals.

(d) A contract for products, services or supplies if the value of the contract is less than $5,000.

(e) Insurance and service contracts as provided for under ORS 414.115, 414.125, 414.135 and 414.145.

(f) Contracts for repair, maintenance, improvement or protection of property obtained by the Director of Veterans’ Affairs under ORS 407.135 and 407.145 (1).

(g) Contracts between public agencies utilizing an existing solicitation or current requirement contract of one of the public agencies that is party to the contract for which:

(A) The original contract met the requirements of this chapter;

(B) The contract allows other public agency usage of the contract; and

(h) If a project is competitively bid and all responsive bids from responsible bidders exceed the public agency’s cost estimate, the public agency, in accordance with rules adopted by the public agency, may negotiate with the lowest responsive, responsible bidder, prior to awarding the contract, in order to solicit value engineering and other options to attempt to bring the project within the agency’s cost estimate. A negotiation with the lowest responsive, responsible bidder pursuant to this paragraph shall not result in the award of the contract to that bidder if the scope of the project is significantly changed from the original bid proposal. Notwithstanding any other provision of law, the records of a bidder used in contract negotiation pursuant to this paragraph are not subject to public inspection until after the negotiated contract has been awarded or the negotiation process has been terminated.

(2) Subject to subsection (6)(b) of this section, the Director of the Oregon Department of Administrative Services or a local contract review board may exempt certain public contracts or classes of public contracts from the competitive bidding requirements of subsection (1) of this section upon approval of the following findings submitted by the public contracting agency seeking the exemption:

(a) It is unlikely that such exemption will encourage favoritism in the awarding of public contracts or substantially diminish competition for public contracts; and

(b) The awarding of public contracts pursuant to the exemption will result in substantial cost savings to the public contracting agency. In making such finding, the director or board may consider the type, cost, amount of the contract, number of persons available to bid and such other factors as may be deemed appropriate.

(3)(a) Before final adoption of the findings required by subsection (2) of this section exempting a contract for a public improvement from the requirement of competitive bidding, a public agency shall hold a public hearing.

(b) Notification of the public hearing shall be published in at least one trade newspaper of general statewide circulation a minimum of 14 days prior to the hearing.

(c) The notice shall state that the public hearing is for the purpose of taking comments on the agency’s draft findings for an exemption from the competitive bidding requirement. At the time of the notice, copies of the draft findings shall be made available to the public. At the option of the public agency, the notice may describe the process by which the findings are finally adopted and may indicate the opportunity for any further public comment.

(d) At the public hearing, the public agency shall offer an opportunity for any interested party to appear and present comment.

(e) If a public agency is required to act promptly due to circumstances beyond its control that do not constitute an emergency, notification of the public hearing can be published simultaneously with the agency’s solicitation of contractors for the alternative public contracting method, as long as responses to the solicitation are due at least five days after the meeting and approval of the findings.

(4) A public contract also may be exempted from the requirements of subsection (1) of this section if:

(a) Emergency conditions require prompt execution of the contract;

(b) In case of sale of surplus property by a public agency, the number, value and nature of the items to be sold make it probable that the cost of conducting a sale by competitive bidding will be such that a liquidation sale will result in substantially greater net revenue to the public agency; or

(c)(A) The public contract is made between regularly organized fire departments, as defined in ORS 652.050, for fire protection equipment, as defined in ORS 476.005, and:

(i) The recipient regularly organized fire department makes a written request for the fire protection equipment to the transferor regularly organized fire department;

(ii) The fire protection equipment is surplus to or unusable by the transferor;

(iii) The total fair market value of fire protection equipment received by the recipient does not exceed $50,000 per calendar year; and

(iv) The transferor holds a public hearing, with notice given as outlined in subsection (3)(b) of this section, and finds that the public contract is in the public’s interest.

(B) As used in subparagraph (A) of this paragraph, "public contract" includes a sale at no cost.

(5) The director or board shall adopt rules allowing the governing body of a public agency and the officer of a public agency for contracts under $50,000 to declare that an emergency exists and establishing procedures for determining when the conditions in subsection (4)(a) of this section are present. The rules shall prescribe that if an emergency is declared, any contract awarded under this subsection and subsection (4)(a) of this section must be awarded within 60 days following declaration of the emergency, unless the director or board grants an extension.

(6) In granting exemptions pursuant to subsection (2)(a) and (b) of this section, the director or board shall:

(a) Where appropriate, direct the use of alternate contracting and purchasing practices that take account of market realities and modern or innovative contracting and purchasing methods, which are also consistent with the public policy of encouraging competition.

(b) Require and approve or disapprove written findings by the public contracting agency that support the awarding of a particular public contract or a class of public contracts, without the competitive requirements of subsection (1) of this section. The findings must show that the exemption of a contract or class of contracts complies with the requirements of subsection (2)(a) and (b) of this section.

(7) A written agreement under ORS chapter 190 is not necessary under subsection (1)(g) of this section if the arrangement is between or among units of local government. [1975 c.771 §3; 1977 c.304 §6; 1983 c.244 §1; 1983 c.590 §10; 1983 c.690 §3a; 1987 c.538 §1; 1987 c.777 §1; 1989 c.224 §40; 1989 c.454 §1; 1993 c.724 §21; 1995 c.612 §17; 1997 c.685 §2; 1997 c.802 §8a; 1999 c.59 §72; 2001 c.113 §1]

279.016 [Amended by 1971 c.481 §1; repealed by 1975 c.771 §33]

279.017 Specifications for contracts; exemptions. (1) Specifications for public contracts shall not expressly or implicitly require any product by any brand name or mark, nor the product of any particular manufacturer or seller unless the product is exempt under subsection (2) of this section.

(2) The Director of the Oregon Department of Administrative Services or a local contract review board may exempt certain products or classes of products from subsection (1) of this section upon any of the following findings:

(a) It is unlikely that such exemption will encourage favoritism in the awarding of public contracts or substantially diminish competition for public contracts;

(b) The specification of a product by brand name or mark, or the product of a particular manufacturer or seller, would result in substantial cost savings to the public agency;

(d) Efficient utilization of existing equipment or supplies requires the acquisition of compatible equipment or supplies. [1975 c.771 §4; 1983 c.690 §4; 1997 c.802 §9]

279.018 [Repealed by 1975 c.771 §33]

279.019 Exemption procedure; appeal. (1) Exemptions granted by the Director of the Oregon Department of Administrative Services pursuant to ORS 279.015 (2) or 279.017 (2) constitute rulemaking and not contested cases under ORS 183.310 to 183.550. However, an exemption granted with regard to a specific contract shall be granted by order of the director, which order shall set forth findings supporting the decision of the director to grant or deny the request for exemption. Such order shall be reviewable pursuant to ORS 183.484 and shall not constitute a contested case order. Jurisdiction for review of the order shall be with the Circuit Court of Marion County. The court may award costs and attorney fees to the prevailing party.

(2) Any person except the public contracting agency or anyone representing it may bring a petition for a declaratory judgment to test the validity of any rule adopted by the director under ORS 279.015 and 279.017 in the manner provided in ORS 183.400.

(3) Any person except the public contracting agency or anyone representing it may bring an action for writ of review pursuant to ORS chapter 34 to test the validity of any exemption granted pursuant to ORS 279.015, 279.017 and 279.055 by a board. [1975 c.771 §6; 1983 c.690 §5]

279.020 [Repealed by 1975 c.771 §33]

279.021 Preferences; foreign contractor. (1) In all public contracts, the public contracting agency shall prefer goods or services that have been manufactured or produced in this state if price, fitness, availability and quality are otherwise equal.

(2)(a) Where a public contract is awarded to a foreign contractor and the contract price exceeds $10,000, the contractor shall promptly report to the Department of Revenue on forms to be provided by the Department of Revenue the total contract price, terms of payment, length of contract and such other information as the Department of Revenue may require before final payment can be received on the public contract. The public contracting agency shall satisfy itself that the requirement of this subsection has been complied with before it issues a final payment on a public contract.

(b) For purposes of this subsection, a foreign contractor is one who is not domiciled in or registered to do business in the State of Oregon. [1975 c.771 §5]

279.022 [Repealed by 1975 c.771 §33]

279.023 Least cost policy for public improvements; costs estimates in budget process; record of costs. (1) It is the policy of the State of Oregon that public agencies shall make every effort to construct public improvements at the least cost to the public agency.

(2) Not less than 30 days prior to adoption of its budget for the subsequent budget period, each public agency shall prepare and file with the Commissioner of the Bureau of Labor and Industries a list of every public improvement known to the agency that the agency plans to fund in the budget period, identifying each improvement by name and estimating the total on-site construction costs. The list shall also contain a statement as to whether the agency intends to perform the construction by a private contractor. If the agency intends to perform construction work using the agency’s own equipment and personnel on a project estimated to cost more than $125,000, then the agency shall also show that its decision conforms to the policy stated in subsection (1) of this section. The list is a public record and may be revised periodically by the agency.

(3) Before a public agency constructs a public improvement with its own equipment or personnel:

(a) If the estimated cost exceeds $125,000, the public agency shall prepare adequate plans and specifications and the estimated unit cost of each classification of work. The estimated cost of the work shall include a reasonable allowance for the cost, including investment cost, of any equipment used. As used in this paragraph, "adequate" means sufficient to control the performance of the work and to assure satisfactory quality of construction by the public agency personnel.

(b) The public agency shall cause to be kept and preserved a full, true and accurate account of the costs of performing the work, including all engineering and administrative expenses and the cost, including investment costs, of any equipment used. The final account of the costs shall be a public record.

(4) Subsections (2) and (3) of this section do not apply to any public agency when the public improvement is to be used for the distribution or transmission of electric power.

(5) For purposes of this section, resurfacing of highways, roads or streets at a depth of two or more inches and at an estimated cost that exceeds $125,000 is a public improvement. [1975 c.771 §7; 1979 c.869 §2; 1981 c.281 §1; 1987 c.776 §2; 1997 c.239 §1]

279.024 [Repealed by 1975 c.771 §33]

279.025 Requirements for advertisement for bids. (1) An advertisement for bids shall be published at least once in at least one newspaper of general circulation in the area where the contract is to be performed and in as many additional issues and publications as the public contracting agency may determine. The Director of the Oregon Department of Administrative Services or a local contract review board, by rule or order, may authorize advertisements for bids to be published electronically instead of in a newspaper of general circulation if the director or board determines that electronic advertisements for bids are likely to be cost effective. If the contract is for a public improvement with an estimated cost in excess of $125,000, the advertisement for bids shall be published in at least one trade newspaper of general statewide circulation. The director or board may, by rule, require an advertisement for bids to be published more than once or in one or more additional publications.

(2) All advertisements for bids shall state:

(a) If the contract is for a public work subject to ORS 279.348 to 279.380 or the Davis-Bacon Act (40 U.S.C. 276a);

(b) The date and time after which bids will not be received, which shall be not less than five days after the date of the last publication of the advertisement;

(c) The date that prequalification applications must be filed under ORS 279.039 (1) and the class or classes of work for which bidders must be prequalified if prequalification is a requirement;

(d) The character of the work to be done or the material or things to be purchased;

(e) The office where the specifications for the work, material or things may be reviewed;

(f) The name and title of the person designated for receipt of bids; and

(g) The date, time and place that the public contracting agency will publicly open the bids. [Formerly 279.065; 1977 c.289 §1; 1979 c.282 §1; 1983 c.690 §6; 1985 c.724 §1; 1987 c.741 §18; 1987 c.776 §1; 1987 c.865 §2; 1991 c.197 §1; 1997 c.239 §2; 1997 c.802 §11; 1999 c.88 §1]

279.026 [Repealed by 1975 c.771 §33]

279.027 Requirements for bid documents and bids; disclosure of first-tier subcontractors. (1) A public contracting agency preparing bid documents for a public contract shall, at a minimum, include:

(a) A statement that, if the contract is for a public work subject to ORS 279.348 to 279.380 or the Davis-Bacon Act (40 U.S.C. 276a), no bid will be received or considered by the public contracting agency unless the bid contains a statement by the bidder as a part of its bid that the provisions of ORS 279.350 or 40 U.S.C. 276a are to be complied with;

(b) The date and time after which bids will not be received, which shall be not less than five days after the date of the last publication of the advertisement;

(c) The date that prequalification applications must be filed under ORS 279.039 (1) and the class or classes of work for which bidders must be prequalified if prequalification is a requirement;

(d) The character of the work to be done or the material or things to be purchased;

(e) The office where the specifications for the work, material or things may be reviewed;

(f) The name and title of the person designated for receipt of bids;

(g) The date, time and place that the public contracting agency will publicly open the bids;

(h) A statement that each bid must identify whether the bidder is a resident bidder, as defined in ORS 279.029;

(i) A statement that the public contracting agency may reject any bid not in compliance with all prescribed public bidding procedures and requirements and may reject for good cause any or all bids upon a finding of the agency that it is in the public interest to do so;

(j) Information addressing whether a contractor or subcontractor must be licensed under ORS 468A.720; and

(k) A statement that no bid for a construction contract shall be received or considered by the public contracting agency unless the bidder is registered with the Construction Contractors Board or licensed by the State Landscape Contractors Board as required by ORS 671.530.

(2) All bids made to the public contracting agency pursuant to ORS 279.015 and 279.025 shall be:

(a) In writing.

(b) Filed with the person designated for receipt of bids by the public contracting agency.

(3)(a) Within four working hours after the date and time of the deadline when the bids are due to the public contracting agency for a public improvement, a bidder shall submit to the public contracting agency a disclosure of the first-tier subcontractors that:

(A) Will be furnishing labor or will be furnishing labor and materials in connection with the public improvement; and

(B) Will have a contract value that is equal to or greater than five percent of the total project bid or $15,000, whichever is greater, or $350,000 regardless of the percentage of the total project bid.

(b) For each contract to which this subsection applies, the public contracting agency shall designate a deadline for submission of bids that has a date and time that is on Monday through Thursday or that is on Friday prior to 12 noon.

(d) This subsection does not apply to public contracts for public improvements that have been exempted from competitive bidding requirements under ORS 279.015 (2).

(4) The disclosure of first-tier subcontractors under subsection (3) of this section shall include:

(a) The name of each subcontractor; and

(b) The category of work that each subcontractor will be performing.

(5) A public contracting agency shall accept the subcontractor disclosure. The public contracting agency shall consider the bid of any contractor that does not submit a subcontractor disclosure to the public contracting agency to be a nonresponsive bid and may not award the contract to the contractor. A public contracting agency is not required to determine the accuracy or the completeness of the subcontractor disclosure.

(6) After having been opened, the bids and the subcontractor disclosures shall be filed for public inspection.

(7) A surety bond, irrevocable letter of credit issued by an insured institution as defined in ORS 706.008, cashier’s check or certified check of each bidder shall be attached to all bids as bid security unless the contract for which a bid is submitted has been exempted from this requirement pursuant to ORS 279.033. Such security shall not exceed 10 percent of the amount bid for the contract. [Formerly 279.070; 1997 c.351 §2; 1999 c.88 §2; 1999 c.689 §3; 2001 c.104 §86; 2001 c.507 §1]

Note: Section 6, chapter 507, Oregon Laws 2001, provides:

Sec. 6. Section 4 of this 2001 Act [279.323] and the amendments to ORS 279.027, 279.322 and 279.722 by sections 1, 2 and 5 of this 2001 Act apply to public contracts first advertised on or after January 1, 2002. [2001 c.507 §6]

279.028 [Repealed by 1975 c.771 §33]

279.029 Award of contract; bond; waiver of bond in case of emergency. (1) After the bids are opened as required by ORS 279.027, and after a determination is made that a contract is to be awarded, the public contracting agency shall award the contract to the lowest responsible bidder.

(2) In determining the lowest responsible bidder, a public contracting agency shall:

(a) If the contract is for a public improvement, check the list created by the Construction Contractors Board under ORS 701.227 for bidders who are not qualified to hold a contract for a public improvement; and

(b) For the purpose of awarding the contract, add a percent increase on the bid of a nonresident bidder equal to the percent, if any, of the preference given to that bidder in the state in which the bidder resides.

(3) The Oregon Department of Administrative Services on or before January 1 of each year shall publish a list of states that give preference to in-state bidders with the percent increase applied in each such state. The public contracting agency may rely on the names of states and percentages so published in determining the lowest responsible bidder without incurring any liability to any bidder.

(4) The successful bidder shall:

(a) Promptly execute a formal contract.

(b) If the contract is for a public improvement, execute and deliver to the public contracting agency a good and sufficient bond, to be approved by the public contracting agency, in a sum equal to the contract price for the faithful performance of the contract. In lieu of a surety bond, the public contracting agency may permit the successful bidder to submit a cashier’s check or certified check in an amount equal to 100 percent of the contract price. If the public improvement contract is with a single person to provide both design and construction of a public improvement, the obligation of the surety bond, or the obligation of the bidder on the cashier’s check or certified check, for the faithful performance of the contract required by this paragraph, shall be also for the preparation and completion of the design and related services covered under the contract. Notwithstanding when a cause of action, claim or demand accrues or arises, the surety or the bidder on the cashier’s check or certified check shall not be liable after final completion of the contract, or longer if defined in the contract, for damages of any nature, economic or otherwise and including corrective work, attributable to the design aspect of a design-build project, or for the costs of design revisions needed to implement corrective work.

(5) In cases of emergency, or where the interest or property of the public contracting agency probably would suffer material injury by delay or other cause, the requirement of furnishing a good and sufficient bond for the faithful performance of any public contract may be excused, if a declaration of such emergency is made and concurred in by all members of the governing board of the public contracting agency.

(6) As used in this section:

(a) "Lowest responsible bidder" means the lowest bidder who is not on the list established by the Construction Contractors Board pursuant to ORS 701.227 and who has:

(A) Substantially complied with all prescribed public bidding procedures and requirements;

(B) Met the standards of responsibility. In determining if a prospective bidder has met the standards of responsibility, the public contracting agency shall consider whether a prospective bidder has:

(i) Available the appropriate financial, material, equipment, facility and personnel resources and expertise, or ability to obtain the resources and expertise, necessary to indicate the capability of the prospective bidder to meet all contractual responsibilities;

(ii) A satisfactory record of performance. The public contracting agency shall document the record of performance of a prospective bidder if the public contracting agency finds the prospective bidder not to be responsible under this sub-subparagraph;

(iii) A satisfactory record of integrity. The public contracting agency shall document the record of integrity of a prospective bidder if the public contracting agency finds the prospective bidder not to be responsible under this sub-subparagraph;

(iv) Qualified legally to contract with the public contracting agency; and

(v) Supplied all necessary information in connection with the inquiry concerning responsibility. If a prospective bidder fails to promptly supply information requested by the public contracting agency concerning responsibility, the public contracting agency shall base the determination of responsibility upon any available information, or may find the prospective bidder not to be responsible; and

(b) "Resident bidder" means a bidder that has paid unemployment taxes or income taxes in this state during the 12 calendar months immediately preceding submission of the bid, has a business address in this state and has stated in the bid whether the bidder is a "resident bidder" pursuant to this subsection.

(c) "Nonresident bidder" means a bidder who is not a "resident bidder" as defined by paragraph (b) of this subsection. [Formerly 279.075; 1981 c.466 §2; 1987 c.865 §1; 1999 c.462 §1; 1999 c.647 §§1,1a]

279.030 [Amended by 1971 c.659 §1; repealed by 1975 c.771 §33]

279.031 Return or retention of bid security. Upon the execution of the contract and bond by the successful bidder, the bid security of the successful bidder shall be returned to the bidder. The bidder who is awarded a contract and who fails promptly and properly to execute the contract or bond shall forfeit the bid security that accompanied the successful bid. The bid security shall be taken and considered as liquidated damages and not as a penalty for failure of the bidder to execute the contract and bond. The bid security of unsuccessful bidders may be returned to them when the bids have been opened and the contract has been awarded, and shall not be retained by the public body after the contract has been duly signed. [Formerly 279.080; 1981 c.712 §2]

279.032 [Repealed by 1975 c.771 §33]

279.033 Exemption of contracts from bid security and bond. The Director of the Oregon Department of Administrative Services or a local contract review board may exempt certain contracts or classes of contracts from the requirement for bid security and from the requirement that a good and sufficient bond be furnished to assure performance of the contract and payment of obligations incurred in the performance; provided, however, the public contracting agency may require bid security and a good and sufficient performance and payment bond even though the contract is of a class exempted by the director or board. [1975 c.771 §11; 1983 c.690 §7]

279.034 [Repealed by 1975 c.771 §33]

279.035 Rejection of bids. The public contracting agency may reject any bid not in compliance with all prescribed public bidding procedures and requirements, and may, for good cause, reject any or all bids upon a finding of the agency it is in the public interest to do so. In any case where competitive bids are required and all bids are rejected, and the proposed contract is not abandoned, new bids may be called for as in the first instance. [1975 c.771 §12; 1985 c.724 §2]

279.036 [Amended by 1969 c.607 §1; repealed by 1975 c.771 §33]

279.037 Disqualification from consideration for award of contracts; written decision required. (1)(a) A public contracting agency may disqualify a person from consideration for award of that agency’s contracts for the reasons listed in subsection (2) of this section after providing the person with notice and a reasonable opportunity to be heard.

(b) In lieu of the disqualification process described in paragraph (a) of this subsection, a public contracting agency contracting for a public improvement may petition the Construction Contractors Board to disqualify a person from consideration for award of that agency’s public improvement contracts for the reasons listed in subsection (2) of this section. The Construction Contractors Board shall provide the person with notice and a reasonable opportunity to be heard.

(c) A public contracting agency or the Construction Contractors Board may not disqualify a person under this section for a period of more than three years.

(2) A person may be disqualified from consideration for award of an agency’s contracts for any of the following reasons:

(a) The person has been convicted of a criminal offense as an incident in obtaining or attempting to obtain a public or private contract or subcontract, or in the performance of such contract or subcontract.

(b) The person has been convicted under state or federal statutes of embezzlement, theft, forgery, bribery, falsification or destruction of records, receiving stolen property, or any other offense indicating a lack of business integrity or business honesty that currently, seriously and directly affects the person’s responsibility as a contractor.

(d) The person has committed a violation of a contract provision that is regarded by the public contracting agency or the Construction Contractors Board to be so serious as to justify disqualification. A violation may include but is not limited to a failure to perform the terms of a contract or an unsatisfactory performance in accordance with the terms of the contract. However, a failure to perform or an unsatisfactory performance caused by acts beyond the control of the contractor may not be considered to be a basis for disqualification.

(e) The person does not carry workers’ compensation or unemployment insurance as required by statute.

(3) A public contracting agency or the Construction Contractors Board shall issue a written decision to disqualify a person pursuant to this section. The decision shall:

(a) State the reasons for the action taken; and

(b) Inform the disqualified person of the appeal right of the person under:

(A) ORS 279.043 and 279.045 if the decision to disqualify was issued by a public contracting agency; or

(B) ORS 183.310 to 183.550 if the decision to disqualify was issued by the Construction Contractors Board.

(4) A copy of the decision issued under subsection (3) of this section shall be mailed or otherwise furnished immediately to the disqualified person. [1975 c.771 §13; 1977 c.289 §7; 1999 c.647 §2; 2001 c.546 §1]

279.038 [Repealed by 1975 c.771 §33]

279.039 Prequalification of bidders; notification. (1) Any public contracting agency may adopt a rule, resolution, ordinance or other regulation requiring mandatory prequalification for all persons desiring to bid for public contracts that are to be let by the agency. The rule, resolution, ordinance or other regulation authorized by this section shall include the time for submitting prequalification applications and a general description of the type and nature of the contracts that may be let. The prequalification application shall be in writing on a standard form prescribed by the Director of the Oregon Department of Administrative Services or a local contract review board.

(2) The public contracting agency shall within 30 days of the receipt of the prequalification application submitted pursuant to subsection (1) of this section, notify the prospective bidder if the prospective bidder is qualified or not based on the standards of responsibility listed in ORS 279.029 (6)(a)(B), the nature and type of contracts that the prospective bidder is qualified to bid on and the time period for which the prequalification is valid. If the public contracting agency does not prequalify the prospective bidder as to any contracts covered by the rule, resolution, ordinance or other regulation, the notice shall specify which of the standards of responsibility listed in ORS 279.029 (6)(a)(B) the prospective bidder failed to meet. Unless the reasons are specified, the bidder shall be deemed to have been prequalified in accordance with the application.

(3) If a public contracting agency subsequently discovers that a person heretofore prequalified under subsections (1) and (2) of this section is no longer qualified, the agency may revoke the prequalification upon reasonable notice to the prospective bidder; provided, however, that such revocation shall be invalid as to any contract for which an advertisement for bids has already been made under ORS 279.025. [1975 c.771 §14; 1977 c.289 §2; 1981 c.712 §3; 1983 c.690 §8; 1999 c.647 §3]

279.040 [Repealed by 1975 c.771 §33]

279.041 Application for prequalification; notification; investigation, revocation or revision. (1) When a public contracting agency permits or requires prequalification of bidders, a person who wishes to prequalify shall submit a prequalification application to the agency on a standard form prescribed by the Director of the Oregon Department of Administrative Services or a local contract review board. Within 30 days after receipt of a prequalification application, the public contracting officer shall investigate the prospective bidder as necessary to determine if the prospective bidder is qualified. The determination shall be made in less than 30 days, if practical, if the prospective bidder requests an early decision to allow the bidder as much time as possible to prepare a bid on a contract that has been advertised. In making its determination, the agency shall consider only the applicable standards of responsibility listed in ORS 279.029 (6)(a)(B). The agency shall promptly notify the person whether or not that person is qualified.

(2) If the agency finds that a prospective bidder is qualified, the notice shall state the nature and type of contracts that the person is qualified to bid on and the period of time for which the qualification is valid under the rule, resolution, ordinance or other regulation. If the agency finds the prospective bidder is not qualified as to any contracts covered by the rule, resolution, ordinance or other regulation, the notice shall specify the reasons found under ORS 279.029 (6)(a)(B) for not prequalifying the prospective bidder and inform the person of the right to a hearing under ORS 279.043 and 279.045.

(3) If a public contracting agency has reasonable cause to believe that there has been a substantial change in the conditions of a prequalified person and that the person is no longer qualified or is less qualified, the agency may revoke or may revise and reissue the prequalification after reasonable notice to the prequalified person. The notice shall state the reasons found under ORS 279.029 (6)(a)(B) for revocation or revision of the prequalification of the person and inform the person of the right to a hearing under ORS 279.043 and 279.045. A revocation or revision does not apply to any contract for which publication of advertisement for bids, in accordance with ORS 279.025, commenced prior to the date the notice of revocation or revision was received by the prequalified person. [1975 c.771 §15; 1977 c.289 §3; 1981 c.712 §4; 1983 c.690 §9; 1999 c.647 §4]

279.042 [Repealed by 1975 c.771 §33]

279.043 Appeal of disqualification. Any person who wishes to appeal disqualification as a bidder shall, within three business days after receipt of notice of disqualification, notify the public contracting agency that the person appeals the disqualification. Immediately upon receipt of such notice of appeal, a public contracting agency which is an agency of the State of Oregon shall notify the Director of the Oregon Department of Administrative Services. If the public contracting agency is a political subdivision of the state or a public body created by intergovernmental agreement, it shall notify the appropriate board. [1975 c.771 §17; 1977 c.289 §4; 1983 c.690 §10]

279.044 [Repealed by 1975 c.771 §33]

279.045 Appeal procedure; hearing; costs; judicial review. (1) The procedure for appeal from a disqualification or denial, revocation or revision of a prequalification by a public contracting agency shall be in accordance with this section and is not subject to ORS 183.310 to 183.550 except where specifically provided by this section.

(2) Promptly upon receipt of notice of appeal from a public contracting agency as provided for by ORS 279.043, the Director of the Oregon Department of Administrative Services or the local contract review board shall notify the person appealing and the public contracting agency of the time and place of the hearing. The director or board shall conduct the hearing and decide the appeal within 30 days after receiving the notification from the public contracting agency. The director or board shall set forth in writing the reasons for the decision.

(3) In the hearing the director or board shall consider de novo the notice of disqualification or denial, revocation or revision of a prequalification, the reasons listed in ORS 279.037 (2) on which the public contracting agency based the disqualification or the standards of responsibility listed in ORS 279.029 (6)(a)(B) on which the public contracting agency based the denial, revocation or revision of the prequalification and any evidence provided by the parties. In all other respects, hearings before the director shall be conducted in the same manner as a contested case under ORS 183.415 (3) to (6) and (9), 183.425, 183.440, 183.450 and 183.452.

(4) The director may allocate the director’s cost for the hearing between the person appealing and the public contracting agency whose disqualification or prequalification decision is being appealed. The allocation shall be based upon facts found by the director and stated in the final order which, in the director’s opinion, warrant such allocation of the costs. If the final order does not allocate the director’s costs for the hearing, such costs shall be paid as follows:

(a) If the decision to disqualify or deny, revoke or revise a prequalification of a person as a bidder is upheld, the director’s costs shall be paid by the person appealing the disqualification or prequalification decision.

(b) If the decision to disqualify or deny, revoke or revise a prequalification of a person as a bidder is reversed by the director, the director’s costs shall be paid by the public contracting agency whose disqualification or prequalification decision is the subject of the appeal.

(5) The decision of the director or board may be reviewed only upon a petition, filed within 15 days after the date of the decision, in the circuit court of the county in which the director or board has its principal office. The circuit court shall reverse or modify the decision only if it finds:

(a) The decision was procured by corruption, fraud or undue means.

(b) There was evident partiality or corruption on the part of the director or board or any of its members.

(c) There was an evident material miscalculation of figures or an evident material mistake in the description of any person, thing or property referred to in the decision.

(6) The procedure provided in this section is the exclusive means of judicial review of the decision of the director or board. The judicial review provisions of ORS 183.480 and writs of review and mandamus as provided in ORS chapter 34, and other legal, declaratory and injunctive remedies are not available.

(7) The circuit court may, in its discretion, stay the letting of the contract which is the subject of the petition in the same manner as a suit in equity. In the event the court determines that there has been an improper disqualification or denial, revocation or revision of a prequalification and the contract has been let, the court may proceed to take evidence to determine the damages, if any, suffered by the petitioner and award such damages as the court may find as a judgment against the director or board. The court may award costs and attorney fees to the prevailing party. [1975 c.771 §18; 1977 c.289 §5; 1983 c.690 §11; 1985 c.757 §6; 1997 c.802 §12; 1999 c.448 §8; 1999 c.647 §5; 1999 c.849 §60; 2001 c.104 §87]

Note: The amendments to 279.045 by section 61, chapter 849, Oregon Laws 1999, become operative January 1, 2004. See section 62, chapter 849, Oregon Laws 1999. The text that is operative on and after January 1, 2004, including amendments by section 88, chapter 104, Oregon Laws 2001, is set forth for the user’s convenience.

279.045. (1) The procedure for appeal from a disqualification or denial, revocation or revision of a prequalification by a public contracting agency shall be in accordance with this section and is not subject to ORS 183.310 to 183.550 except where specifically provided by this section.

(a) The decision was procured by corruption, fraud or undue means.

(b) There was evident partiality or corruption on the part of the director or board or any of its members.

(c) There was an evident material miscalculation of figures or an evident material mistake in the description of any person, thing or property referred to in the decision.

279.046 [Repealed by 1975 c.771 §33]

279.047 Effect of prequalification by Department of Transportation or Oregon Department of Administrative Services; personal service contract selection process for local government public improvements; rules. (1) If a person is prequalified with the Department of Transportation to perform contracts, or with the Oregon Department of Administrative Services to perform contracts, that person is rebuttably presumed qualified with any other public contracting agency for the same kind of work. When qualifying for the same kind of work with another public contracting agency, that person may submit proof of such prequalification in lieu of a prequalification application as required by ORS 279.039 (1) or as a request for prequalification under ORS 279.041 (1).

(2)(a) The Department of Transportation, the Oregon Department of Administrative Services or any other state public contracting agency shall adopt rules establishing a two-tiered selection process for when the department or agency executes contracts with engineers, architects and land surveyors to perform personal service contracts. This process shall apply only if:

(A) A public improvement is owned and maintained by a local government; and

(B) The Department of Transportation, the Oregon Department of Administrative Services or other state public contracting agency will serve as the lead state public contracting agency and will execute personal service contracts with engineers, architects and land surveyors for work on the public improvement project.

(b) The selection process required by paragraph (a) of this subsection shall require the lead state public contracting agency to select no fewer than the three most qualified consultants where feasible in accordance with ORS 279.057.

(c) The local government shall be responsible for the final selection of the consultant from the list of qualified consultants selected by the lead state public contracting agency or through an alternative process adopted by the local government.

(d) Nothing in this subsection applies to the selection process used by a local public contracting agency when the agency executes a contract directly with engineers, architects or land surveyors. [1975 c.771 §16; 1977 c.289 §6; 2001 c.712 §1]

279.048 [Repealed by 1975 c.771 §33]

279.049 Model rules generally; applicability to agencies. (1) The Attorney General shall prepare and maintain model rules of procedure appropriate for use by all public contracting agencies governing bid procedures, advertisements, the awarding of bids, retainage, claims, liens, bid security, payment and performance bonds and other matters involving public contracts, and may devise and publish forms for use therewith. The model rules prepared by the Attorney General under this section must be adopted by the Attorney General in the manner provided by ORS 183.310 to 183.550. Before adopting or amending any such rule, the Attorney General shall consult with the Director of the Oregon Department of Administrative Services, the Director of Transportation, representatives of county governments, representatives of city governments, representatives of school boards and other knowledgeable persons.

(2)(a) The Attorney General shall add to the model rules described in subsection (1) of this section a provision for procedures for the screening and selection of persons to perform architectural, engineering and land surveying personal service contracts. In developing such procedures, the Attorney General shall use the least restrictive processes allowed under ORS 183.341.

(b) The Attorney General shall add to the model rules described in subsection (1) of this section a two-tiered selection process for contracts executed with engineers, architects and land surveyors to perform personal service contracts as required by ORS 279.047.

(3) After each legislative session, the Attorney General shall review all laws passed by the Legislative Assembly that affect public contracting to determine if the model rules prepared under this section should be modified by the adoption of a new rule or by the amendment or repeal of an existing rule. If the Attorney General determines that a modification to the model rules is necessary, the Attorney General shall prepare the modification within such time as to allow the modification to take effect no later than 120 days after the effective date of the legislation that caused the rule to be modified. However, the Attorney General may prepare a modification to take effect 121 days or more after the effective date of the legislation if the Attorney General provides notice designating the time period within which the modification will take effect to the state agencies and persons listed in subsection (1) of this section.

(4) All public contracting agencies that have not established their own rules of procedure under subsection (5) of this section are subject to the model rules adopted by the Attorney General under this section, including all modifications to the model rules that the Attorney General may adopt.

(5)(a) A public contracting agency may elect to establish its own rules of procedure for public contracts that:

(A) Specifically state that the model rules adopted by the Attorney General under this section do not apply to the agency; and

(B) Prescribe the rules of procedure that the agency will use for public contracts, which may include portions of the model rules adopted by the Attorney General.

(b) A public contracting agency that has adopted its own rules under paragraph (a) of this subsection shall review those rules each time the Attorney General adopts a modification to the model rules under subsection (3) of this section to determine whether any modifications need to be adopted by the agency to ensure compliance with statutory changes. [1975 c.771 §26; 1983 c.690 §12; 1991 c.414 §1; 1999 c.29 §1; 2001 c.712 §2]

279.050 [Amended by 1969 c.349 §1; 1971 c.180 §1; repealed by 1975 c.771 §33]

279.051 Personal services contracts; procedures. (1) Except as provided in ORS 279.712, public agencies may enter into contracts for personal services. The Oregon Department of Administrative Services shall enter into contracts for personal services on behalf of state agencies that are subject to ORS 279.712. The provisions of this section do not relieve the agency of the duty to comply with ORS 279.712, any other law applicable to state agencies or applicable city or county charter provisions. Each public agency authorized to enter into personal service contracts shall create procedures for the screening and selection of persons to perform personal services.

(2) The Director of the Oregon Department of Administrative Services or a local contract review board by ordinance, resolution, administrative rule or other regulation may designate certain service contracts or classes of service contracts as personal service contracts. [1975 c.771 §27; 1979 c.196 §2; 1981 c.766 §1; 1983 c.690 §13; 1997 c.802 §1]

279.052 [Repealed by 1975 c.771 §33]

279.053 Laws not to prohibit participation in affirmative action projects; authority to limit bidding for affirmative action purposes. (1) No provision contained in chapter 771, Oregon Laws 1975, shall be construed to prohibit any public contracting body from engaging in bidding and contracting practices designed to accomplish affirmative action goals for disadvantaged or minority groups.

(2) In carrying out the policy of affirmative action, by appropriate ordinance, resolution or administrative rule, a public contracting body may limit competitive bidding on any public contract for procurement of goods and services or on any other public contract estimated to cost $50,000 or less to contracting entities owned or controlled by persons described in subsection (3) of this section.

(3) As used in this section "affirmative action" is a program designed to insure equal opportunity in employment and business for persons otherwise disadvantaged by reason of race, color, religion, sex, national origin, age or physical or mental disability. [1975 c.771 §32; 1981 c.325 §4; 1985 c.724 §3; 1989 c.224 §41]

279.054 [Repealed by 1975 c.771 §33]

279.055 Local contract review board; creation; power. (1) Every county by ordinance may create a local contract review board for the county. The board so created may consist of the governing body of the county or at least three persons appointed by and serving at the pleasure of that governing body.

(2) Any other local public agency having a governing body may adopt a resolution or ordinance creating its governing body as a local contract review board for that public agency. The local public agency shall file a copy of the resolution or ordinance with the county governing body. The board created by the local public agency shall not exercise its powers under subsection (4) of this section until the resolution or ordinance has been filed pursuant to this subsection.

(3) A county board created pursuant to subsection (1) of this section shall serve as the local contract review board for local public agencies that do not create their own boards pursuant to subsection (2) of this section, and that have their principal administrative offices within the county. The county board may impose fees on local public agencies that it serves under this subsection if the ordinance creating the county board authorized such fees. The fees shall be prescribed by rule adopted under subsection (5) of this section and shall be calculated to reimburse the county for its costs in serving the local public agencies.

(4) Except as provided in ORS 279.019 (1) and (2) and the authority to prescribe the standard prequalification application forms in ORS 279.039 (1), boards created under this section shall have all the powers granted the Oregon Department of Administrative Services and the Director of the Oregon Department of Administrative Services under ORS 279.011 to 279.063. The board shall exercise such powers only after it has adopted rules pursuant to the requirements of subsection (5) of this section.

(5) Each board created under this section shall have rulemaking authority to carry out the powers and duties of the board under ORS 279.011 to 279.063. The rules shall be adopted in the manner prescribed in the resolution or ordinance creating the board.

(6) A local public agency, other than a county, by resolution or ordinance may rescind its action to create a local contract review board. The rescission shall take effect on the date a copy of the resolution or ordinance is filed with the county governing body or on the date stated therein, whichever is the later date. After the date of filing or the date specified, the county board, created pursuant to subsection (1) of this section, shall serve as the local contract review board for the public agency.

(7) Notwithstanding subsection (3) of this section, a local public agency may contract with another public agency to serve as its local contract review board with the powers and duties the local board has over contracts of its own local public agency. Notice of the contract and of its termination shall be given to the county in the same manner as notice is given to the county under subsections (2) and (6) of this section. [1975 c.771 §34(2); 1979 c.647 §1; 1979 c.804 §6; 1983 c.690 §14]

279.056 When federal law and rules prevail over ORS 279.011 to 279.063. Notwithstanding any provision of ORS 279.011 to 279.063, the applicable federal laws, rules and regulations shall govern in any case where federal funds are involved and the federal laws, rules and regulations conflict with any of the provisions of ORS 279.011 to 279.063 or require additional conditions in public contracts not authorized by ORS 279.011 to 279.063. [1979 c.504 §2]

279.057 Contracts for services of engineers, architects and land surveyors; selection procedure; compensation; applicability only to state agencies. (1) A contract entered into by a public agency for the consulting services of registered professional engineers, registered architects or registered professional land surveyors is a personal service contract.

(2) A public agency shall select consultants described in subsection (1) of this section on the basis of qualifications for the type of professional service required. A public agency may solicit or use pricing policies and proposals or other pricing information to determine consultant compensation only after the public agency has selected a candidate under subsection (3) or (4) of this section.

(3) Subject to the requirements of subsection (2) of this section, the procedures that a public agency creates for the screening and selection of consultants and the selection of a candidate under this section shall be within the sole discretion of the public agency and may be adjusted to accommodate the public agency’s scope, schedule and budget objectives for a particular project. Adjustments to accommodate an agency’s objectives may include provision for the direct appointment of a consultant if the value of the project does not exceed a threshold amount as determined by the agency. Screening and selection procedures may include a consideration of each candidate’s:

(a) Specialized experience, capabilities and technical competence that may be demonstrated by the proposed approach and methodology to meet the project requirements;

(b) Resources available to perform the work and the proportion of the candidate staff’s time that would be spent on the project, including any specialized services, within the applicable time limits;

(c) Record of past performance, including but not limited to price and cost data from previous projects, quality of work, ability to meet schedules, cost control and contract administration;

(d) Ownership status and employment practices regarding women, minorities and emerging small businesses or historically underutilized businesses;

(e) Availability to the project locale;

(f) Familiarity with the project locale; and

(g) Proposed project management techniques.

(4) If the screening and selection procedures created by a public agency under subsection (3) of this section result in the determination by the public agency that two or more candidates are equally qualified, the public agency may select a candidate through any process adopted by the public agency.

(5) It is the goal of this state to promote a sustainable economy in the rural areas of the state. In order to monitor progress toward this goal, a state agency to which this section applies shall keep a record of the locations for the personal service contracts to be performed throughout the state that are entered into on or after January 1, 2002, the locations of the selected consultants and the direct expenses on each contract. This record shall include the total number of contracts over a 10-year period for each consultant firm. The record of direct expenses shall include all personnel travel expenses as a separate and identifiable expense on the contract. Upon request, the state agency shall make these records available to the public.

(6) The public agency and the selected candidate shall mutually discuss and refine the scope of services for the project and shall negotiate conditions, including but not limited to compensation level and performance schedule, based on the scope of services. The compensation level paid must be reasonable and fair to the public agency as determined solely by the public agency. Authority to negotiate a contract under this section does not supersede any provision of ORS 279.316 or 279.712.

(7) If the public agency and the selected candidate are unable for any reason to negotiate a contract at a compensation level that is reasonable and fair to the public agency, the public agency shall, either orally or in writing, formally terminate negotiations with the selected candidate. The public agency may then negotiate with another candidate. The negotiation process may continue in this manner through successive candidates until an agreement is reached or the agency terminates the consultant contracting process.

(8) Notwithstanding ORS 279.011, this section applies only if the public agency personal service contract is issued by an agency of the State of Oregon and not by an agency of any political subdivision thereof or any public body created by intergovernmental agreement.

(9) Notwithstanding subsection (8) of this section, this section applies to the selection of consultants by an agency of any political subdivision of this state or any public body created by intergovernmental agreement if the agency or public body receives moneys from the State Highway Fund under ORS 366.525 or 366.800 or a grant or loan from this state that will be used to pay for any portion of the design and construction of the project and:

(a) The total amount of any grants, loans or moneys from the State Highway Fund and from the state for the project exceeds 35 percent of the value of the project; and

(b) The value of the project exceeds $400,000. [1997 c.861 §2; 1999 c.59 §73; 2001 c.712 §3; 2001 c.948 §1]

Note: Section 2, chapter 948, Oregon Laws 2001, provides:

Sec. 2. The amendments to ORS 279.057 by section 1 of this 2001 Act first apply to public contracts for personal services advertised or solicited on or after July 1, 2002. [2001 c.948 §2]

Note: The amendments to 279.057 by section 3, chapter 948, Oregon Laws 2001, become operative July 1, 2008, and first apply to public contracts for personal services advertised or solicited on or after July 1, 2008. See sections 4 and 5, chapter 948, Oregon Laws 2001. The text that is operative on and after July 1, 2008, is set forth for the user’s convenience.

279.057. (1) A contract entered into by a public agency for the consulting services of registered professional engineers, registered architects or registered professional land surveyors is a personal service contract.

(a) Specialized experience, capabilities and technical competence that may be demonstrated by the proposed approach and methodology to meet the project requirements;

(b) Resources available to perform the work, including any specialized services, within the applicable time limits;

(c) Record of past performance, including but not limited to price and cost data from previous projects, quality of work, ability to meet schedules, cost control and contract administration;

(d) Ownership status and employment practices regarding women, minorities and emerging small businesses or historically underutilized businesses;

(e) Availability to the project locale;

(f) Familiarity with the project locale; and

(g) Proposed project management techniques.

279.058 Direct contracts allowed for services of engineers, architects and land surveyors. (1) As used in this section, "consultant" means a registered professional engineer, registered architect or registered professional land surveyor.

(2) An agency of any political subdivision of this state may enter into a personal service contract directly with a consultant if the project described in the personal service contract consists of work that has been substantially described, planned or otherwise previously studied or rendered in an earlier contract with the consultant that was awarded pursuant to rules adopted under ORS 279.049 and the new contract is a continuation of that project.

(3) A political subdivision may adopt criteria for determining when this section shall apply to a personal service contract. [2001 c.712 §5]

279.059 Subcontracting to emerging small businesses. (1) A public contracting agency may require a bidder to subcontract some part of the contract to, or obtain materials to be used in performing the contract from, a business enterprise that is a certified emerging small business.

(2) A public contracting agency may require that a contract be awarded to a responsible bidder as defined in ORS 200.005 and 200.045 (3). [1985 c.769 §§2, 3; 1987 c.893 §6; 1989 c.1043 §7]

279.060 [1969 c.522 §2; repealed by 1975 c.771 §33]

279.061 Limitation on public agency constructing public improvement. If a public agency fails to adopt and apply a cost accounting system that substantially complies with the model cost accounting guidelines developed by the Oregon Department of Administrative Services pursuant to section 3, chapter 869, Oregon Laws 1979, as determined by an accountant qualified to perform audits required by ORS 297.210 and 297.405 to 297.555 (Municipal Audit Law), the public agency shall not construct a public improvement with its own equipment or personnel if the cost is in excess of $5,000. [1981 c.281 §2]

279.063 Waiver of unreasonable delay of public agency against public policy. (1) Any clause in a public contract for a public improvement that purports to waive, release or extinguish the rights of a contractor to damages or an equitable adjustment arising out of unreasonable delay in performing the contract, if the delay is caused by acts or omissions of the public contracting agency or persons acting therefor, is against public policy and is void and unenforceable.

(2) Subsection (1) of this section is not intended to render void any contract provision that:

(a) Requires notice of any delay;

(b) Provides for arbitration or other procedures for settlement of contract disputes; or

279.065 [1969 c.522 §3; 1975 c.771 §8; renumbered 279.025]

279.067 Suit by or on behalf of adversely affected bidder or proposer; exception for personal service contract. (1) Any bidder or proposer adversely affected or any trade association of construction contractors acting on behalf of a member of the association to protect interests common to construction contractor members may commence a suit in the circuit court for the county in which are located the principal offices of the public contracting agency, for the purpose of requiring compliance with, or prevention of violations of, ORS 279.011 to 279.063, or to determine the applicability of ORS 279.011 to 279.063 to matters or decisions of the agency.

(2) The court may order such equitable relief as it considers appropriate in the circumstances. In addition to or in lieu of any equitable relief, the court may award an aggrieved bidder or proposer any damages suffered by the bidder or proposer as a result of violations of ORS 279.011 to 279.063 for the reasonable cost of preparing and submitting a bid or proposal. A decision of the public contracting agency shall not be voided if other equitable relief is available.

(3) If the public agency is successful in defending its actions against claims of violation or potential violation of ORS 279.011 to 279.063, then the court may award to the aggrieved public agency any damages suffered as a result of the suit.

(4) The court may order payment of reasonable attorney fees and costs on trial and on appeal to a successful party in a suit brought under this section.

(5) This section does not apply to personal service contracts under ORS 279.057.

(6) As used in this section:

(a) "Bidder" means any person who submitted a bid to a public agency.

(b) "Proposer" means any person who submitted a proposal to a public agency. [1983 c.690 §27; 1990 c.6 §1; 1997 c.685 §6; 1997 c.861 §3; 2001 c.104 §89]

279.070 [1969 c.522 §4; 1971 c.659 §2; 1975 c.771 §9; renumbered 279.027]

279.073 Action against successful bidder; amount of damages; when action to be commenced; defenses. (1) Any person that loses a competitive bid for a contract involving the construction, repair, remodeling, alteration, conversion, modernization, replacement or renovation of a building or structure may bring an action for damages against another person who is awarded the contract for which the bid was made if the person making the losing bid can establish that the other person knowingly violates the provisions of ORS 279.350, 656.017, 657.505 or 701.055 while performing the work under the contract, or knowingly failed to pay to the Department of Revenue all sums withheld from employees pursuant to ORS 316.167.

(2) A person bringing an action under this section must establish a violation of ORS 279.350, 316.167, 656.017, 657.505 or 701.055 by a preponderance of the evidence.

(3) Upon establishing that the violation occurred, the person shall recover, as liquidated damages, 10 percent of the total amount bid, by the person bringing the action, on the contract, or $5,000, whichever is greater.

(4) In any action under this section, the prevailing party shall be entitled to an award of reasonable attorney fees.

(5) An action under this section shall be commenced within two years of the substantial completion of the construction, repair, remodeling, conversion, modernization, improvement, rehabilitation, replacement or renovation. For the purposes of this subsection, "substantial completion" has the meaning given in ORS 12.135.

(6) No person shall be allowed to recover any amounts under this section if the defendant in the action establishes by a preponderance of the evidence that the plaintiff:

(a) Was in violation of ORS 701.055 at the time of making the bid on the contract;

(b) Was in violation of ORS 316.167, 656.017 or 657.505 with respect to any employees of the plaintiff as of the time of making the bid on the contract; or

(c) Was in violation of ORS 279.350 with respect to any contract performed by the plaintiff within one year prior to making the bid on the contract. [1991 c.323 §1]

Note: 279.073 was enacted into law by the Legislative Assembly but was not added to or made a part of ORS chapter 279 or any series therein by legislative action. See Preface to Oregon Revised Statutes for further explanation.

279.075 [1969 c.522 §5; 1975 c.771 §10; renumbered 279.029]

279.080 [1969 c.522 §6; renumbered 279.031]

279.085 [1969 c.522 §7; repealed by 1975 c.771 §33]

279.090 [1969 c.522 §8; repealed by 1975 c.771 §33]

279.095 Arrangements for use, operation, maintenance or disposition of personal property allowed. (1) Notwithstanding the public bidding requirements of this chapter, a local public body may negotiate with one or more private or public entities to establish contracts, agreements and other cooperative arrangements for the use, operation, maintenance or ultimate lawful disposition of personal property owned by or under the control of the local public body, including property acquired under ORS 279.820. Prior to approving such a contract, agreement or cooperative arrangement, the governing body of the public body must make a finding that the contract, agreement or arrangement will promote the economic development of the public body, of the geographical area in which the public body is situated or of other public bodies that perform similar functions.

(2) For the purposes of this section, "local public body" includes any city, county, port district, school district, special district or other political subdivision or municipal or public corporation and any instrumentality thereof, and any public body created by an intergovernmental agreement to which a local public body is a party. [1987 c.777 §2]

Note: 279.095 was enacted into law by the Legislative Assembly but was not added to or made a part of ORS chapter 279 or any series therein by legislative action. See Preface to Oregon Revised Statutes for further explanation.

279.101 Districts authorized to enter into property purchase contracts with payment period less than 30 years; county authority to enter into property purchase contracts; effect on other powers. (1) A district, as defined in ORS 198.010, may enter into a contract for the purchase or for the lease with option to purchase of real or personal property when the period of time allowed for payment under the contract does not exceed 30 years. A district entering into a contract authorized by this subsection and subsection (2) of this section may budget funds annually for payment of amounts due under the contract in each year during the term of the contract, unless the contract is terminated sooner in accordance with its terms.

(2) A county may enter into a contract for the purchase or for the lease with option to purchase of real or personal property when:

(a) The period of time allowed for payment under the contract does not exceed 30 years; and

(b) The county is not obligated to make payments under the contract in any fiscal year unless the county governing body includes such payments in the county’s budget for that fiscal year and makes an appropriation therefor.

(3) The powers granted to districts and counties by subsections (1) and (2) of this section are in addition to any other powers possessed by districts and counties in this state and subsections (1) and (2) of this section shall not be construed to limit such powers. [1989 c.407 §§1,2; 1995 c.333 §26]

Note: 279.101 was enacted into law by the Legislative Assembly but was not added to or made a part of ORS chapter 279 or any series therein by legislative action. See Preface to Oregon Revised Statutes for further explanation.

279.103 Evaluation of certain public improvement projects not contracted by competitive bidding. (1) Upon completion of and final payment for any public improvement contract in excess of $100,000 for which the public agency did not use the competitive bidding process, the public agency shall prepare and deliver to the Director of the Oregon Department of Administrative Services or the local contract review board an evaluation of the public improvement project.

(2) The evaluation shall include but not be limited to the following matters:

(a) The actual project cost as compared with original project estimates.

(b) The amount of any guaranteed maximum price.

(d) A narrative description of successes and failures during the design, engineering and construction of the project.

(e) An objective assessment of the use of the alternative contracting process as compared to the findings required by ORS 279.015.

(3) Evaluations required by this section shall be made available for public inspection.

(4) The evaluations required by this section must be completed within 30 days of the date that the public agency accepts the public improvement project. [1997 c.685 §4]

279.106 Requirement to subcontract with emerging small business. A public contracting agency may require a bidder to subcontract some part of the contract to, or obtain materials to be used in performing the contract from, certified emerging small businesses that are, as identified by the public contracting agency, located in, or draw their workforces from within, economically depressed areas, as designated by the Economic and Community Development Department in cooperation with the Employment Department. [1989 c.1043 §9]

Note: 279.106 and 279.111 were enacted into law by the Legislative Assembly but were not added to or made a part of ORS chapter 279 or any series therein by legislative action. See Preface to Oregon Revised Statutes for further explanation.

279.111 Discrimination in subcontracting prohibited; disqualification; appeal. (1) A contractor who contracts with a public contracting agency shall not discriminate against minority, women or emerging small business enterprises in the awarding of subcontracts. The contractor shall certify as part of the bid documents accompanying the bid on a public contract that the contractor has not discriminated against minority, women or emerging small business enterprises in obtaining any required subcontracts.

(2) The public contracting agency may disqualify any person as a bidder on a public contract if the agency finds that the person has violated subsection (1) of this section in a contract between the person and the agency.

(3) If the person desires to appeal the disqualification, the appeal procedure shall be subject to ORS 279.043 and 279.045. [1989 c.1043 §11]

Note: See note under 279.106.

279.116 Forest products sale contracts exempt from bidding requirements. (1) Contracts for the sale of forest products from lands owned or managed by the State Board of Forestry and the State Forestry Department shall be exempt from the provisions of ORS 279.011 to 279.542.

(2) Contracts for the sale of forest products from lands owned or managed by the State Board of Forestry and the State Forestry Department shall be conducted according to the relevant provisions of ORS 273.522 to 273.541 and ORS chapter 530.

(3) As used in this section, "forest products" has the meaning for that term given in ORS 321.005. [1995 c.375 §2]

Note: 279.116 was added to and made a part of ORS chapter 279 by legislative action but was not added to any smaller series therein. See Preface to Oregon Revised Statutes for further explanation.

PUBLIC CONTRACTS GENERALLY

(Conditions)

279.310 Definitions for ORS 279.310 to 279.323. When used in ORS 279.310 to 279.323, unless the context otherwise requires:

(1) "Person" includes the State Accident Insurance Fund Corporation and the Department of Revenue.

(2) "Public contract" means a contract made with the state, county, school district, municipality, municipal corporation or subdivision thereof.

(3) "Public improvement" has the meaning given that term by ORS 279.011. [Amended by 1953 c.131 §3; 1973 c.523 §1; 1983 c.740 §76; 2001 c.104 §90]

279.312 Conditions of public contracts concerning payment of laborers and suppliers of materials, contributions to Industrial Accident Fund, liens, withholding taxes and employee drug testing. (1) Every public contract shall contain a condition that the contractor shall:

(a) Make payment promptly, as due, to all persons supplying to such contractor labor or material for the prosecution of the work provided for in such contract.

(b) Pay all contributions or amounts due the Industrial Accident Fund from such contractor or subcontractor incurred in the performance of the contract.

(c) Not permit any lien or claim to be filed or prosecuted against the state, county, school district, municipality, municipal corporation or subdivision thereof, on account of any labor or material furnished.

(d) Pay to the Department of Revenue all sums withheld from employees pursuant to ORS 316.167.

(2) In addition to the conditions specified in subsection (1) of this section, every public improvement contract shall contain a condition that the contractor shall demonstrate that an employee drug testing program is in place. [Amended by 1953 c.131 §3; 1957 c.586 §14; 1965 c.26 §1; 1969 c.493 §76; 1999 c.588 §1]

279.313 Demolition contracts to require material salvage; lawn and landscape maintenance contracts to require composting or mulching. (1) Every public contract for demolition shall contain a condition requiring the contractor to salvage or recycle construction and demolition debris, if feasible and cost-effective.

(2) Every public contract for lawn and landscape maintenance shall contain a condition requiring the contractor to compost or mulch yard waste material at an approved site, if feasible and cost-effective. [1997 c.552 §20]

Note: 279.313 was added to and made a part of 279.310 to 279.323 by legislative action but was not added to any smaller series therein. See Preface to Oregon Revised Statutes for further explanation.

279.314 Conditions concerning payment of claims by public officers, payment to persons furnishing labor or materials and complaints. (1) Every public contract shall contain a clause or condition that, if the contractor fails, neglects or refuses to make prompt payment of any claim for labor or services furnished to the contractor or a subcontractor by any person in connection with the public contract as such claim becomes due, the proper officer or officers representing the state, county, school district, municipality, municipal corporation or subdivision thereof, as the case may be, may pay such claim to the person furnishing the labor or services and charge the amount of the payment against funds due or to become due the contractor by reason of such contract.

(2) Every public contract for a public improvement shall contain a clause or condition that, if the contractor or a first-tier subcontractor fails, neglects or refuses to make payment to a person furnishing labor or materials in connection with the public contract for a public improvement within 30 days after receipt of payment from the public contracting agency or a contractor, the contractor or first-tier subcontractor shall owe the person the amount due plus interest charges commencing at the end of the 10-day period that payment is due under ORS 279.445 (4) and ending upon final payment, unless payment is subject to a good faith dispute as defined in ORS 279.445. The rate of interest charged to the contractor or first-tier subcontractor on the amount due shall equal three times the discount rate on 90-day commercial paper in effect at the Federal Reserve Bank in the Federal Reserve district that includes Oregon on the date that is 30 days after the date when payment was received from the public contracting agency or from the contractor, but the rate of interest shall not exceed 30 percent. The amount of interest may not be waived.

(3) Every public contract for a public improvement and every contract related to the public contract shall contain a clause or condition that, if the contractor or a subcontractor fails, neglects or refuses to make payment to a person furnishing labor or materials in connection with the public contract, the person may file a complaint with the Construction Contractors Board, unless payment is subject to a good faith dispute as defined in ORS 279.445.

(4) The payment of a claim in the manner authorized in this section shall not relieve the contractor or the contractor’s surety from obligation with respect to any unpaid claims. [Amended by 1981 c.712 §5; 1999 c.689 §1]

279.315 [Formerly 653.767; repealed by 1995 c.286 §34]

279.316 Condition concerning hours of labor. (1)(a) Every public contract shall also contain a condition that no person shall be employed for more than 10 hours in any one day, or 40 hours in any one week, except in cases of necessity, emergency, or where the public policy absolutely requires it, and in such cases, except in cases of contracts for personal services as described in ORS 279.051, the employee shall be paid at least time and a half pay:

(A) For all overtime in excess of eight hours a day or 40 hours in any one week when the work week is five consecutive days, Monday through Friday; or

(B) For all overtime in excess of 10 hours a day or 40 hours in any one week when the work week is four consecutive days, Monday through Friday; and

(b) An employer must give notice to employees who work on a public contract in writing, either at the time of hire or before commencement of work on the contract, or by posting a notice in a location frequented by employees, of the number of hours per day and days per week that the employees may be required to work.

(2) In the case of contracts for personal services as defined in ORS 279.051, the contract shall contain a provision that the employee shall be paid at least time and a half for all overtime worked in excess of 40 hours in any one week, except for individuals under these contracts who are excluded under ORS 653.010 to 653.261 or under 29 U.S.C. sections 201 to 209 from receiving overtime.

(3) In the case of a contract for services at a county fair or for other events authorized by a county fair board, the contract shall contain a provision that the labor performed on the contract shall be paid at least time and a half for work in excess of 10 hours in any one day or 40 hours in any one week. An employer must give notice to employees who work on such a contract in writing, either at the time of hire or before commencement of work on the contract, or by posting a notice in a location frequented by employees, of the number of hours per day and days per week that employees may be required to work.

(4)(a) Except as provided in subsection (3) of this section, contracts for services shall contain a provision that requires that persons employed under such contracts shall receive at least time and a half pay for work performed on the legal holidays specified in a collective bargaining agreement or in ORS 279.334 (1)(a)(C)(ii) to (vii) and for all time worked in excess of 10 hours a day or in excess of 40 hours in a week, whichever is greater.

(b) An employer must give notice to employees who work on a contract for services in writing, either at the time of hire or before commencement of work on the contract, or by posting a notice in a location frequented by employees, of the number of hours per day and days per week that the employees may be required to work. [Amended by 1967 c.167 §1; 1979 c.5 §1; 1989 c.572 §1; 1993 c.279 §1; 1995 c.739 §2; 1997 c.265 §1; 1997 c.793 §1; 2001 c.104 §91]

279.318 Provisions relating to environmental and natural resources laws and rules; remedies when requirements change. (1) Bid documents for a public contract for a public improvement shall make specific reference to federal, state and local agencies that have enacted ordinances or regulations dealing with the prevention of environmental pollution and the preservation of natural resources that affect the performance of the contract. If the successful bidder awarded the project is delayed or must undertake additional work by reason of existing regulations or ordinances of agencies not cited in the public contract or due to the enactment of new or the amendment of existing statutes, ordinances or regulations relating to the prevention of environmental pollution and the preservation of natural resources occurring after the submission of the successful bid, the public contracting agency may:

(a) Terminate the contract;

(b) Complete the work itself;

(d) Require that the underlying property owner be responsible for cleanup;

(e) Go out to bid for a new contractor to provide the necessary services under the competitive bid requirements of ORS 279.015; or

(f) Issue the successful bidder a change order setting forth the additional work that must be undertaken.

(2) In addition to the obligation imposed under subsection (1) of this section to refer to federal, state and local agencies with regulations dealing with the prevention of environmental pollution and the preservation of natural resources, a public bid document must also make specific reference to known conditions at the construction site that may require the successful bidder to comply with the statutes, ordinances or regulations identified under subsection (1) of this section.

(3) If the successful bidder encounters a condition not referred to in the bid documents and not caused by the successful bidder and not discoverable by a reasonable prebid visual site inspection and the condition requires compliance with the regulations referred to under subsection (1) of this section, the successful bidder shall immediately give notice of the condition to the public contracting agency.

(4) Except in the case of an emergency and except as may otherwise be required by any environmental or natural resource regulation, the successful bidder shall not commence work nor incur any additional job site costs in regard to the condition encountered and described in subsection (3) of this section without written direction from the public contracting agency.

(5) Upon request by the public contracting agency, the successful bidder shall estimate the emergency or regulatory compliance costs as well as the anticipated delay and costs resulting from the encountered condition. This cost estimate shall be promptly delivered to the public contracting agency for resolution.

(6) Within a reasonable period of time, the public contracting agency may:

(a) Terminate the contract;

(b) Complete the work itself;

(d) Require that the underlying property owner be responsible for cleanup;

(e) Go out to bid for a new contractor to provide the necessary services under the competitive bid requirements of ORS 279.015; or

(f) Issue the successful bidder a change order setting forth the additional work that must be undertaken.

(7)(a) If the public contracting agency chooses to terminate the contract under subsection (6)(a) of this section, the successful bidder shall be entitled to all costs and expenses incurred to the date of termination, including overhead and reasonable profits, on the percentage of the work completed. The awarding agency shall have access to the successful bidder’s bid documents when making its determination of the additional compensation due to the successful bidder.

(b) If the public contracting agency causes work to be done by another contractor under subsection (1)(c) or (e) of this section or under subsection (6)(c) or (e) of this section, the successful bidder shall not be held liable for actions or omissions of the other contractor.

(c) The change order under subsection (1)(f) of this section or under subsection (6)(f) of this section shall include the appropriate extension of contract time and compensate the successful bidder for all additional costs, including overhead and profit, reasonably incurred as a result of complying with the applicable regulations. The awarding agency shall have access to the successful bidder’s bid documents when making its determination of the additional compensation due to the successful bidder.

(8) Notwithstanding the provisions of this section, an awarding agency:

(a) May allocate all or a portion of the known environmental and natural resource risks to a contractor by listing such environmental and natural resource risks with specificity in the bid documents; and

(b) In a local improvement district, may allocate all or a portion of the known and unknown environmental and natural resource risks to a contractor by so stating in the bid documents. [Amended by 1973 c.523 §2; 1975 c.771 §19; 1991 c.638 §1]

279.319 Condition concerning use of inmate labor for removal, abatement or demolition of asbestos in state buildings. (1) Every public contract for the removal, abatement or demolition of asbestos in a state building shall contain a condition requiring the contractor to use a certified inmate workforce, if available, of:

(a) Thirty percent, not to exceed 30 inmates the first year.

(b) Twenty-five percent, not to exceed 50 inmates the second year.

(2) As used in this section:

(a) "Inmate" means an inmate of a Department of Corrections institution.

(b) "Certified inmate" means an inmate certified pursuant to ORS 468A.730. [1989 c.1092 §5]

279.320 Condition concerning payment for medical care and providing workers’ compensation. (1) Every public contract shall contain a condition that the contractor shall promptly, as due, make payment to any person, copartnership, association or corporation, furnishing medical, surgical and hospital care or other needed care and attention, incident to sickness or injury, to the employees of such contractor, of all sums which the contractor agrees to pay for such services and all moneys and sums which the contractor collected or deducted from the wages of employees pursuant to any law, contract or agreement for the purpose of providing or paying for such service.

(2) Every public contract also shall contain a clause or condition that all subject employers working under the contract are either employers that will comply with ORS 656.017 or employers that are exempt under ORS 656.126. [Amended by 1967 c.359 §687; 1981 c.712 §6; subsection (2) enacted as 1989 c.684 §3; 2001 c.104 §92; 2001 c.190 §1]

279.321 Compensation for contractor on contracts declared void by court; exceptions; applicability. (1) If a court determines that a public improvement contract is void because the public agency letting the contract failed to comply with any statutory or regulatory competitive bidding or other procurement requirements, and the contractor entered into the contract without intentionally violating the laws regulating public improvement contracts, then, unless the court determines that substantial injustice would result, the contractor is entitled to reimbursement for work performed under the contract as follows:

(a) If the work under the public improvement contract is substantially complete, the public agency shall ratify the contract.

(b) If the work under the public improvement contract is not substantially complete, then the public agency shall ratify the contract and the contract shall be deemed terminated. Upon termination, the contractor shall be paid in accordance with ORS 279.330, unless the court determines that payment pursuant to ORS 279.330 would be a substantial injustice either to the public agency or the contractor, in which case the contractor shall be paid as the court deems equitable.

(c) For the purposes of this section, a ratified contract shall be deemed valid, binding and legally enforceable, and the contractor’s payment and performance bonds shall remain in full force and effect.

(2) Notwithstanding subsection (1) of this section, if a court determines that a public contract is void as a result of fraudulent or criminal acts or omissions of either the contractor, or both the public agency letting the contract together with the contractor, the contractor is not entitled to reimbursement for work performed under the contract.

(3) This section shall not apply to any public improvement contract if:

(a) The public agency’s employee that awarded the public improvement contract did not have the authority to do so under law, ordinance, charter, contract or agency rule; or

(b) Payment is otherwise prohibited by Oregon law.

(4) The contractor and all subcontractors under a public improvement contract are prohibited from asserting that the public improvement contract is void for any reason described in this section. [1997 c.828 §2]

279.322 Authority to substitute nondisclosed first-tier subcontractor; circumstances; rules. A prime contractor whose bid is accepted may substitute a first-tier subcontractor that was not disclosed under ORS 279.027 (3) by submitting the name of the new subcontractor and the reason for the substitution in writing to the public contracting agency. A prime contractor may substitute a first-tier subcontractor pursuant to this section in the following circumstances:

(1) When the subcontractor disclosed under ORS 279.027 (3) fails or refuses to execute a written contract after having had a reasonable opportunity to do so after the written contract, which must be reasonably based upon the general terms, conditions, plans and specifications for the public improvement project or the terms of the subcontractor’s written bid, is presented to the subcontractor by the prime contractor.

(2) When the disclosed subcontractor becomes bankrupt or insolvent.

(3) When the disclosed subcontractor fails or refuses to perform the subcontract.

(4) When the disclosed subcontractor fails or refuses to meet the bond requirements of the prime contractor that had been identified prior to the bid submittal.

(5) When the prime contractor demonstrates to the public contracting agency that the subcontractor was disclosed as the result of an inadvertent clerical error.

(6) When the disclosed subcontractor does not hold a license from the Construction Contractors Board and is required to be licensed by the board.

(7) When the prime contractor determines that the work performed by the disclosed subcontractor is substantially unsatisfactory and not in substantial accordance with the plans and specifications or that the subcontractor is substantially delaying or disrupting the progress of the work.

(8) When the disclosed subcontractor is ineligible to work on a public improvement pursuant to the applicable statutory provisions.

(9) When the substitution is for good cause. The Construction Contractors Board shall define "good cause" by rule. "Good cause" shall include, but not be limited to, the financial instability of a subcontractor. The definition of "good cause" shall reflect the least cost policy for public improvements established in ORS 279.023 (1).

(10) When the substitution is reasonably based on the contract alternates chosen by the public contracting agency. [1999 c.689 §6; 2001 c.104 §93; 2001 c.507 §2]

Note: See note under 279.027.

279.323 Complaint process for substitutions of subcontractors; civil penalties. (1)(a) A subcontractor disclosed under ORS 279.027 may file a complaint based on the subcontractor disclosure requirements under ORS 279.027 (3) with the Construction Contractors Board about a contractor if the contractor has substituted another subcontractor for the complaining subcontractor.

(b) If more than one subcontractor files a complaint with the board under paragraph (a) of this subsection relating to a single subcontractor disclosure, the board shall consolidate the complaints into one proceeding. If the board imposes a civil penalty under this section against a contractor, the amount collected by the board shall be divided evenly among all of the complaining subcontractors.

(c) Each subcontractor filing a complaint under paragraph (a) of this subsection shall post a deposit of $500 with the board upon filing the complaint.

(d) If the board determines that a contractor’s substitution was not in compliance with ORS 279.322, the board shall return the full amount of the deposit posted under paragraph (c) of this subsection to the complaining subcontractor.

(e) If the board determines that a contractor has not substituted a subcontractor or that the contractor’s substitution was in compliance with ORS 279.322, the board shall award the contractor $250 of the deposit and shall retain the other $250, which may be expended by the board.

(2) Upon receipt of a complaint under subsection (1) of this section, the board shall investigate the complaint. If the board determines that a contractor has substituted a subcontractor in a manner not in compliance with ORS 279.322, the board may impose a civil penalty against the contractor pursuant to subsections (3) to (5) of this section. Civil penalties under this section shall be imposed in the manner provided under ORS 183.090.

(3) If the board imposes a civil penalty under subsection (2) of this section and it is the first time the board has imposed a civil penalty under subsection (2) of this section against the contractor during a three-year period, the board shall:

(a) Impose a civil penalty on the contractor of up to 10 percent of the amount of the subcontract bid submitted by the complaining subcontractor to the contractor or $15,000, whichever is less. Amounts collected by the board under this paragraph shall be awarded to the complaining subcontractor or subcontractors; and

(b) Impose a civil penalty on the contractor of up to $1,000. Amounts collected by the board under this paragraph shall be retained by the board and may be expended by the board.

(4) If the board imposes a civil penalty under subsection (2) of this section and it is the second time the board has imposed a civil penalty under subsection (2) of this section against the contractor during a three-year period, the board may:

(a) Impose a civil penalty on the contractor of up to 10 percent of the amount of the subcontract bid submitted by the complaining subcontractor to the contractor or $15,000