Chapter 264 Oregon Laws 1999

Session Law

AN ACT

SB 398

Relating to review of public contracts; creating new provisions; amending ORS 279.712 and 291.047; and declaring an emergency.

Be It Enacted by the People of the State of Oregon:

SECTION 1. ORS 291.047 is amended to read:

291.047. (1) The Attorney General shall approve for legal sufficiency all personal services contracts, all architectural and engineering services contracts and all information technology contracts calling for payment in excess of $75,000 entered into by a state agency before any such contract becomes binding on the State of Oregon and before any service may be performed or payment may be made under the contract.

(2) [On and after July 1, 1998,] The Attorney General shall approve for legal sufficiency all public contracts not subject to subsection (1) of this section that are entered into by a state agency and that provide for payment in excess of $100,000 before any such contract becomes binding on the State of Oregon and before any service may be performed or payment may be made under the contract.

(3) The Attorney General shall impose by rule requirements necessary to carry out the provisions of this section [and ORS 291.045]. Such rules shall include, but are not limited to, a requirement that state agencies submit to the Attorney General procurement and other contract documents for review of the anticipated contract before a procurement of goods or services is publicly advertised[,] if the anticipated contract is reasonably expected to require review for legal sufficiency. A state agency may request that the Attorney General [also shall provide to state agencies model] assist the agency in developing requests for proposals, invitations to bid and requests for qualifications or information that are suitable to the needs of the agency.

(4) The Attorney General may exempt by rule [certain] classes of contracts from the requirements of this section [and ORS 291.045] if the Attorney General determines that the degree of risk assumed by [the] state agencies under such contracts is not materially reduced by legal review of individual contracts within the class.

(5) The Attorney General may, by rule, set forth a process to exempt contracts or classes of contracts from the requirements of this section when:

(a) The contract is substantially composed of forms, terms or conditions that have been preapproved by the Attorney General; or

(b) Circumstances exist that create a substantial risk of loss, damage, interruption of services or threat to public health or safety and that require prompt execution of a contract to deal with the risk.

(6) Notwithstanding subsections (1) and (2) of this section, the Attorney General may authorize services to be performed under a contract described in subsection (1) or (2) of this section before approval for legal sufficiency if the Attorney General determines that the authorization will not result in undue risk to this state. An authorization under this subsection shall be limited to specific classes of contracts or to contracts for specific agency programs. The Attorney General may condition an authorization on a finding by the Director of the Oregon Department of Administrative Services, or a designee of the director, and by any other agency with a role in approving such contracts that the contract administration practices of the requesting agency are adequate to manage the proposed contract and that the mission of the agency will be significantly impaired without such authorization.

SECTION 2. (1) If the parties to a public contract perform under the contract before the contract is approved for legal sufficiency by the Attorney General as required under ORS 291.047 and section 3, chapter 869, Oregon Laws 1997, the agency may ratify the public contract if the Attorney General determines that the contract is legally sufficient prior to ratification. As a condition for approval, the Attorney General may require that the contract be amended as necessary to make the contract legally sufficient.

(2) Upon approval of the public contract for legal sufficiency and ratification of the public contract by a state agency under this section, the public contract is effective and the state agency may make payments on the ratified public contract even if the payments are for services rendered prior to ratification.

(3) The Attorney General may adopt rules to implement this section.

SECTION 3. ORS 279.712 is amended to read:

279.712. (1) The Oregon Department of Administrative Services shall purchase or otherwise provide for the acquisition or furnishing of all supplies, materials, equipment and services, including architectural, engineering and other personal services, required by state agencies, except to the extent the department authorizes a state agency to purchase directly in accordance with ORS 279.727.

(2) Subsection (1) of this section does not apply to:

(a) Purchases of alcoholic liquor by the Oregon Liquor Control Commission;

(b) Agreements entered into by the Department of Education for the purchase or distribution of textbooks;

(c) Personal service and public improvement contracts of the Department of Transportation relating to maintenance or construction of highways, bridges, parks or other transportation facilities;

(d) Personal service and public improvement contracts of the State Department of Fish and Wildlife for dams, fishways, ponds and related fish and game propagation facilities;

(e) Insurance and service contracts to provide medical assistance as provided for under ORS 414.115, 414.125, 414.135 and 414.145;

(f) Personal service and public improvement contracts of the Economic Development Department relating to its foreign trade offices operating outside the state;

(g) Personal service contracts of the Attorney General relating to attorney services required by law to be performed by the Attorney General;

(h) Personal service contracts entered into by the Director of Veterans' Affairs for real estate broker services; and

(i) A contract of any other state agency when the agency is specifically authorized by any provisions of law other than this chapter to enter into the contract.

(3) The following requirements and procedures apply to personal service contracts:

(a) Except as provided in subsection (2) of this section, the Oregon Department of Administrative Services shall execute all personal service contracts of state agencies, and all requisite approvals must be obtained, including the approval of the Attorney General, if applicable, before any state agency personal service contract becomes binding upon the state and before any service may be performed or payment may be made under the contract, unless the contract is exempt from the prohibition against services being performed before review for legal sufficiency is obtained under ORS 291.047 (6).

(b) The department shall by rule set forth the requirements necessary to implement the provisions of this subsection, including but not limited to rules establishing:

(A) The type of documentation that must accompany contracts submitted to the department for procurement.

(B) A reporting system for personal service contracts. A state agency shall submit to the department personal service contract information as directed by the department.

(C) Procedures for the screening and selection of persons to perform personal services when the department authorizes a state agency to contract directly pursuant to ORS 279.051.

(D) Procedures to permit services to be performed when circumstances exist that create substantial risk of loss, damage, interruption of services or threat to public health or safety and that require prompt action to protect the interests of this state.

(c) The department may exempt certain personal service contracts or classes of personal service contracts, in whole or in part, from the requirements of this subsection if the department finds that:

(A) It is unlikely that an exemption will encourage favoritism in the awarding of a personal service contract or will substantially diminish competition for personal service contracts; and

(B) The awarding of a personal service contract pursuant to the exemption will result in substantial cost savings to the state agency.

(d) In making its findings under paragraph (c) of this subsection, the department may consider the type, cost and amount of the contract, number of persons available to contract and such other factors as the department considers appropriate.

(e) Each state agency shall file with the department a copy of each personal service contract entered into by the agency, including appropriate documentation as required by the department. The department shall keep the copy of the contract and its documentation on file for three years, after which the department may destroy the file.

(f) The department shall maintain a system for filing copies of personal service contracts and documentation submitted to it under paragraph (e) of this subsection.

(g) The department shall submit a biennial report to the Legislative Assembly concerning the use of personal service contracts by state agencies. The report shall specify the name of each contracting agency, the amount paid under each personal service contract entered into by the agency, the name of the contractor, the duration of the contract and the contract's basic purpose. The report also shall include the total dollar figure of all personal service contracts for each year of the preceding biennium.

(h) The department may not approve any personal service contract [that requires payment of more than $75,000 unless] before the contract has been reviewed for legal sufficiency and approved by the Attorney General, if such review and approval are required under ORS 291.047. [The approval of the Attorney General must be given prior to the effective date of the contract. A contract without prior approval of the Attorney General under this paragraph is not binding on the State of Oregon, and no service may be performed under the contract.]

(i) Whenever a state agency pays more in a calendar year under a personal service contract for services historically performed by state employees than the agency would have paid to its employees performing the same work, the agency shall so report to the department and include in the report a statement of justification for the greater costs.

(j) The department shall notify all state agencies of the requirements of this section.

SECTION 4. This 1999 Act being necessary for the immediate preservation of the public peace, health and safety, an emergency is declared to exist, and this 1999 Act takes effect July 1, 1999.

Approved by the Governor June 16, 1999

Filed in the office of Secretary of State June 16, 1999

Effective date July 1, 1999

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