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  • Oregon Senate Passes Fair Contracting Bill to Aid Minority Businesses, Gov. Kotek’s Affordable Housing Goals

Oregon Senate Passes Fair Contracting Bill to Aid Minority Businesses, Gov. Kotek’s Affordable Housing Goals

26 Feb 2024 4:10 PM | PLSO Office (Administrator)

Oregon’s engineers, architects and land surveyors thank the Senate for passingSenate Bill 1575, urge quick action in House

SALEM, Ore. — Today, the Oregon Senate passed Senate Bill 1575 to end unfair contract practices in public sector projects that harm small businesses, particularly emerging, women and minority owned businesses. The bill now heads to the House for further consideration.

“Oregon’s engineers, architects and land surveyors care deeply about our communities, which is why we invest in our local economy, creating jobs and building affordable housing for Oregonians,” said Alison Davis, Executive Director of American Council of Engineering Companies of Oregon. “Passing Senate Bill 1575 would eliminate bad and unfair contract practices in the public sector and ensure everyone involved in a project pays their fair share of legal expenses. This isn’t about shirking responsibility – it’s about ensuring fairness so everyone is paying their own way and adequately protected by their insurance.”

Oregon professional service contracts often require design professionals – including engineers, architects, surveyors, landscape architects and planners – to defend others involved in projects for legal claims or damages even though the design professional is not responsible. This “duty to defend” language is legally problematic, expensive and a barrier to entry for many small, emerging, women and minority owned businesses, and is uninsurable by professional liability insurance carriers. 

“As a Hispanic woman who founded and owns a small engineering firm, I’m urging Oregon lawmakers to pass Senate Bill 1575, which will protect businesses like mine from state and local government’s unfair contract practices. It will also allow our industry to help Gov. Tina Kotek meet her affordable housing project goals,” said Tina Adams, Professional Engineer and President of Casso Consulting, Inc. “It’s hypocritical and patronizing that we should be forced to risk financial ruin by agreeing to a government contract to build affordable housing for the houseless people in our communities. It is particularly offensive that state and local governments require a 20% to 30% small business participation goal for public works projects but still allow their legal counsel and procurement officers to include this small business killer clause.”

Businesses purchase liability insurance to protect themselves from legal harm. However, there is limited professional liability insurance available to engineers, architects and land surveyors that covers the legal expenses for others involved in construction projects. This leaves Oregon’s design professionals stuck in an unfair situation with no way to protect themselves other than to unfairly assume the risk and hope for the best or forgo designing projects. Often, design firms do make the tough decision to walk away from contracts, but they cannot walk away every time. When designers are compelled to sign these agreements, they are committing their business assets to pay these costs, regardless of fault. Because these risks are significant, and potentially catastrophic, the result is fewer firms seeking such work at a time when the Governor has prioritized affordable housing projects.

SB 1575, introduced by state Sens. Floyd Prozanski and Kim Thatcher, would require each party to a construction contract be responsible for their own negligence or fault. This means parties will pay damages based on the actual liability, rather than mere alleged liability, allowing them to purchase the proper insurance and compete on an even playing field.

Oregon is home to more than 100 engineering and surveying businesses, which employ nearly 4,000 people. With Senate passage of SB 1575, Oregon is one step closer to joining California, Colorado, Utah and Washington in having laws stating a design professional will only be responsible for defense costs to the proportionate extent of their liability or fault. The bill will now be considered in the 

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