Chapter 647 Oregon Laws 1999

Session Law

AN ACT

SB 271

Relating to public contracting; creating new provisions; amending ORS 279.029, 279.037, 279.039, 279.041 and 279.045 and section 7, chapter 689, Oregon Laws 1999 (Enrolled House Bill 2895); and repealing section 4, chapter 689, Oregon Laws 1999 (Enrolled House Bill 2895).

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

SECTION 1. ORS 279.029 is amended to read:

279.029. (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, 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.

(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 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

(C) [who has] Not been disqualified by the public contracting agency under ORS 279.037.

(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.

SECTION 1a. If House Bill 2895 becomes law, section 4, chapter 689, Oregon Laws 1999 (Enrolled House Bill 2895) (amending ORS 279.029), is repealed and ORS 279.029, as amended by section 1 of this 1999 Act, is amended to read:

(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 section 9, chapter 689, Oregon Laws 1999 (Enrolled House Bill 2895), 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.

(4) The successful bidder shall:

(a) Promptly execute a formal contract.

(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 section 9, chapter 689, Oregon Laws 1999 (Enrolled House Bill 2895), 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:

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

SECTION 1b. If House Bill 2895 becomes law, section 7, chapter 689, Oregon Laws 1999 (Enrolled House Bill 2895), is amended to read:

Sec. 7. Section 6, chapter 689, Oregon Laws 1999 (Enrolled House Bill 2895), [of this 1999 Act] and the amendments to ORS 279.027, [279.029,] 279.314, 279.420, 279.435 and 279.445 by sections 1 to [4] 3 and 11, chapter 689, Oregon Laws 1999 (Enrolled House Bill 2895), and the amendments to ORS 279.029 by section 1a of this 1999 Act shall first apply to public contracts first advertised on or after the effective date of chapter 689, Oregon Laws 1999 (Enrolled House Bill 2895) [this 1999 Act].

SECTION 1c. The amendments to ORS 279.029 and section 7, chapter 689, Oregon Laws 1999 (Enrolled House Bill 2895), by sections 1a and 1b of this 1999 Act become operative on January 1, 2000.

SECTION 2. ORS 279.037 is amended to read:

279.037. (1) A public contracting agency may disqualify [any person as a bidder on a public contract if the agency finds:] 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. The disqualification shall not be for a period of more than three years.

[(a) The person does not have sufficient financial ability to perform the contract. If a bond is required to insure performance of a contract, evidence that the person can acquire a surety bond in the amount and type required shall be sufficient to establish financial ability;]

[(b) The person does not have equipment available to perform the contract;]

[(c) The person does not have key personnel available of sufficient experience to perform the contract; or]

[(d) The person has repeatedly breached contractual obligations to public and private contracting agencies.]

[(2) The public contracting agency may make such investigation as is necessary to determine whether a person is qualified. If a bidder or prospective bidder fails to supply promptly information as requested by the public contracting agency pursuant to such investigation, such failure is grounds for disqualification.]

[(3) Any information voluntarily submitted by a bidder or prospective bidder pursuant to an investigation under subsection (2) of this section or in a prequalification statement required by ORS 279.039 or in a prequalification request submitted pursuant to ORS 279.041 shall be deemed a trade secret pursuant to ORS 192.501 to 192.505 if requested by the person submitting the information.]

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

(a) Conviction for the commission 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) Conviction 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.

(c) Conviction under state or federal antitrust statutes.

(d) Violation of a contract provision that is regarded by the public contracting agency 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.

(3) A public contracting agency 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 ORS 279.043 and 279.045.

(4) A copy of the decision issued under subsection (3) of this section shall be mailed or otherwise furnished immediately to the disqualified person.

SECTION 3. ORS 279.039 is amended to read:

279.039. (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 [disqualifies] does not prequalify the prospective bidder as to any contracts covered by the rule, resolution, ordinance or other regulation, the notice shall specify which [subsections] of the standards of responsibility listed in ORS [279.037] 279.029 (6)(a)(B) the prospective bidder failed to [comply with] 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.

SECTION 4. ORS 279.041 is amended to read:

279.041. (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 [only disqualify a person in accordance with ORS 279.037] consider only the applicable standards of responsibility listed in ORS 279.029 (6)(a)(B). [It] 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 [disqualifies a prospective bidder] 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 [279.037] 279.029 (6)(a)(B) for not prequalifying the prospective bidder [for the disqualification] 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 [279.037] 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.

SECTION 5. ORS 279.045 is amended to read:

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.

(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 [record of the investigation made by] 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 and 183.450. Hearings before a board shall be conducted under rules of procedure adopted by the board.

(4) The director may allocate the director's cost for the hearing between the person appealing [the disqualification] 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 in the circuit court of the county in which the director or board has its principal office filed within 15 days after the date of the decision. 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.

SECTION 6. The amendments to ORS 279.029, 279.037, 279.039, 279.041 and 279.045 by sections 1 and 2 to 5 of this 1999 Act shall first apply to public contracts that are entered into on or after the effective date of this 1999 Act.

Approved by the Governor July 13, 1999

Filed in the office of Secretary of State July 13, 1999

Effective date October 23, 1999

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