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A bill passed through the state senate last week is designed to help make sure architectural and engineering firms get paid for the time they spent on successfully bidding an indefinite quantity contract.

But while the bill promises to benefit some businesses, the state’s transportation department is concerned it could put the state at a disadvantage in receiving federal highway dollars.

The Federal Highway Administration doesn’t pay firms for just being included in an indefinite quantity contract; it pays only when a firm actually completes work orders under the contract. By creating a state law that would require payment to those firms that are not used, as proposes, the federal government could refuse to give Oregon money to be used for such contracts, warns the Oregon Department of Transportation.

State agencies in Oregon have long used indefinite quantity contracts as a way to have immediate services available when they’re on short notice. Firms that sign an indefinite quantity contract with state agencies sit 鈥渙n call,鈥� waiting for work from the agency to come up.

The issue, according to Sal Kadri, owner of the Portland-based CAD business ValueCad, is that if no work comes through on a contract, a firm doesn’t get paid, even though it costs the firms money to prepare their bids to win the contracts, as well as sitting on call.

SB 667 would accomplish two goals. In addition to allowing firms to pull out of a contract if they haven’t received any work in three years, it would require a state public agency to pay each firm that takes the 鈥減ull out鈥� option an amount equal to 2 percent of the initial budget for the project. The percentage would compensate the firm for both bidding on the project and waiting on call for work.

Clyde Saiki, ODOT‘s deputy for central services, said he understands the concerns of small firms and believes it’s an issue that deserves to be addressed. But he’s concerned that if the bill passes, the resulting law could result in ODOT losing its main source of funding, which comes from the Federal Highway Administration.

鈥淭he Federal Highway Administration has requirements that must be abided by in order to receive federal highway funding,鈥� Saiki said. 鈥淭he agency is dependent on that federal funding, and we are concerned that this bill is too narrowly focused and wording in it could be in contrast to the federal policies.鈥�

Saiki pointed to an agency like the U.S. Army Corps of Engineers, which already has internal policy to pay the on call firms even if they’re not used. But the FHA’s policy doesn’t allow that.

鈥淭he concerns of these firms are completely valid, and we aren’t arguing that at all,鈥� Saiki said. 鈥淏ut we use these types of contracts for our architecture and engineering services, so we just don’t want to move forward with anything without ensuring that it doesn’t affect potential funding.鈥�

But small firm owners like Kadri think the issue is too big to ignore.

He estimates it takes he and his staff a week’s worth of time for each contract they bid on.聽 And while he does look for other types of work, he said the recession has forced him to turn to indefinite quantity contracts because so much of the work out there is being done by public agencies.

鈥�(Indefinite quantity contracts) proliferated during the recession because there is much more uncertainty,鈥� Kadri said. 鈥淭hese types of contracts are needed, and we aren’t asking them to go away. We just want some assurance.鈥�

Saiki agrees that the environment over the last few years has played into the prevalence of these contracts. It’s an important enough issue, he said, that he is going to sit down with Kadri and legislators this week in order to see if there are amendments that could be made to help clear up some of the uncertainty.

But while Saiki understands the concerns firms 鈥� especially small ones 鈥� have with these types of contracts, he won’t say he’s optimistic about finding a resolution that will please everyone.

鈥淚 don’t want to say there isn’t a solution, because we haven’t had that conversation yet,鈥� he said. 鈥淎ll I can say is that we are going to listen and try to work something out.鈥�

While some state agencies may take issue with the bill, it passed on the senate floor by a 23-5 vote. The office of Sen. Chip Shields, who brought the bill to the Senate floor, said that the outcome of the discussion between Saiki, Kadri and legislators could change the language of the bill before it’s heard in the House Committee on Business and Labor.