(1) An affected contracting agency shall suspend any bidder’s, proposer’s, contractor’s or subcontractor’s right to submit a bid or proposal for, or receive an award of, a public contract in the future if the bidder, proposer, contractor or subcontractor knowingly commits any of the acts listed in this subsection. The affected contracting agency shall suspend the right only after providing notice and opportunity for hearing in a manner that the affected contracting agency provides by rule. The affected contracting agency shall specify a time for the suspension that is up to one year for a first violation, up to three years for a second violation and up to five years for a third violation. Each violation must remain on record for five years. After five years the affected contracting agency may not consider the violation in reviewing future violations. A bidder, proposer, contractor or subcontractor may not:

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(a) Enter into any agreement to represent that a disadvantaged business enterprise, a minority-owned business, a woman-owned business, a veteran-owned business or an emerging small business certified under ORS § 200.055 will perform work or supply materials under a public contract without the knowledge and consent of the disadvantaged business enterprise, minority-owned business, woman-owned business, veteran-owned business or emerging small business.

(b) Exercise or permit another bidder, proposer, contractor or subcontractor to exercise management and decision making control over the internal operations of a disadvantaged business enterprise, a minority-owned business, a woman-owned business, a veteran-owned business or an emerging small business, other than the bidder’s, proposer’s, contractor’s or subcontractor’s own enterprise or business. As used in this paragraph, ‘internal operations’ does not include normal scheduling, coordination, execution or performance as a subcontractor on a public contract.

(c) Use a disadvantaged business enterprise, a minority-owned business, a woman-owned business, a veteran-owned business or an emerging small business to perform a public contract or subcontract or to supply material under a public contract to meet an established goal or requirement if the disadvantaged business enterprise, minority-owned business, woman-owned business, veteran-owned business or emerging small business does not perform a commercially useful function in carrying out responsibilities and obligations under the public contract.

(d) Fail to perform a commercially useful function in performing a public contract or subcontract or in supplying material to a contractor or subcontractor that is performing a public contract or subcontract if the bidder, proposer, contractor or subcontractor is presented as a certified disadvantaged business enterprise, minority-owned business, woman-owned business, veteran-owned business or emerging small business to meet an established goal or requirement.

(2) The Certification Office for Business Inclusion and Diversity shall revoke an enterprise’s or a business’s certification under ORS § 200.055 as a disadvantaged business enterprise, a minority-owned business, a woman-owned business, a veteran-owned business or an emerging small business if, after conducting an investigation in a manner similar to the manner provided in ORS § 200.065 (4) for investigating a violation of ORS § 200.065 (1) or (2), the Oregon Business Development Department finds that the enterprise or business allows or commits any of the acts listed in this subsection. A disadvantaged business enterprise, a minority-owned business, a woman-owned business, a veteran-owned business or an emerging small business may not:

(a) Use the enterprise’s or business’s name to meet a goal or requirement for disadvantaged business enterprises, minority-owned businesses, woman-owned businesses, veteran-owned businesses or emerging small businesses to participate in a public contract or subcontract if the enterprise or business does not in fact intend to or does not actually perform work under the public contract or subcontract or does not intend to or does not purchase and supply material under a public contract or subcontract to supply material.

(b) Use personnel of an uncertified enterprise or business to operate, manage or otherwise control the disadvantaged business enterprise, minority-owned business, woman-owned business, veteran-owned business or emerging small business.

(c) Exhibit a pattern of failing to perform a commercially useful function in performing a public contract or subcontract or supplying material to a contractor or subcontractor on a public contract if the enterprise or business is represented as a disadvantaged business enterprise, a minority-owned business, a woman-owned business, a veteran-owned business or an emerging small business certified under ORS § 200.055 for the purpose of meeting an established goal or requirement.

(3)(a) An affected contracting agency shall notify the department if the affected contracting agency investigates a disadvantaged business enterprise, a minority-owned business, a woman-owned business, a veteran-owned business or an emerging small business for failing to perform a commercially useful function.

(b) The department may conduct an independent investigation of a disadvantaged business enterprise, a minority-owned business, a woman-owned business, a veteran-owned business or an emerging small business for exhibiting a pattern of failing to perform a commercially useful function in response to notifications from one or more affected contracting agencies under paragraph (a) of this subsection.

(4) As used in this section, ‘commercially useful function’:

(a) Means a function or service:

(A) That the enterprise or business actually performs;

(B) For which a demand exists in the marketplace; and

(C) For which the enterprise or business receives payment that is proportionate to the work that the enterprise or business performs or that conforms with industry standards.

(b) Does not include acting as a broker to provide for others to perform work. [1987 c.893 § 11; 1989 c.1043 § 6; 1991 c.91 § 1; 1995 c.452 § 21; 2015 c.148 § 3; 2015 c.565 § 7; 2023 c.497 § 7]

[1987 c.893 § 1; repealed by 1989 c.1043 § 14]

RESPONSIBILITY OF CONTRACTING AGENCIES