HB 3646
Adds entities in which employees of the entity own at least 50 percent of the ownership interest in the entity directly or through an employee stock ownership plan to the list of sources to which a contracting agency may give preference in procuring goods or services for public contracts.
Take action
Record your position on this measure.
Sign in to record your position, submit testimony, or contact your legislator.
Sign in to take actionPublic sentiment
Support
64%
Oppose
36%
- Introduced
- Passed House
- Passed Senate
- To Governor
- Became Law
Bill overview
This bill changes Oregon’s public procurement rules to give preference to businesses where employees own at least 50% of the company, either directly or through an employee stock ownership plan. State agencies can now favor these businesses when purchasing goods and services, provided the cost isn’t more than 5% higher than non-employee-owned businesses. The bill also allows agencies to set higher cost percentages under specific circumstances and establishes an effective date.
Key provisions
- States agencies can give preference to businesses owned by their employees.
- Preference applies to entities where employees own at least 50% of the ownership interest, directly or through an employee stock ownership plan.
- Cost of goods or services from preferred businesses cannot exceed 5% more than non-preferred businesses.
- Contracting agencies can set higher cost percentages with a written determination and justification.
- The bill applies to procurements advertised or solicited on or after January 1, 2026.
Who is affected
- State Agencies
- Businesses owned by employees
- Contractors
- Procurement officers
- Oregon residents and businesses
Notable changes
- Introduces a new preference for employee-owned businesses in public procurement.
- Clarifies the definition of an employee stock ownership plan.
- Establishes a cost threshold for the preference (5% maximum increase).
Sponsors
Official sponsors from legislative records.
Primary sponsor
Cosponsors
Arguments in favor
Reasons to support this legislation.
Supporters of HB 3646 argue that the legislation promotes employee ownership and expands on Oregon's existing framework to provide state procurement preferences to businesses with significant employee ownership. Proponents cite benefits such as improved job security, worker retention, satisfaction, retirement security, engagement, motivation, local economic prosperity, and reduced inequality. Testimonies from companies like Recology Northern Oregon, Bob's Red Mill Natural Foods, and others highlight the advantages of Employee Stock Ownership Plans (ESOPs), including equal distribution of ownership among employees, increased employee retention, and long-term wealth building. By incentivizing companies to transition to employee ownership, supporters believe HB 3646 would promote local economic growth and create long-term wealth opportunities for Oregonians.
Source: Testimony Summaries
Arguments opposed
Reasons to oppose this legislation.
Testifiers generally oppose expanding preferences for employee-owned businesses, citing concerns that it could distort the competitive bidding process and increase costs to taxpayers. They emphasize the importance of a fair, transparent, and competitive procurement system, where public contracts are awarded based on objective criteria such as price, quality, performance, and capacity, rather than ownership structure. Many believe that favoring certain companies over others based on ownership structure could lead to increased costs for taxpayers and limit access for other qualified businesses, undermining the competitiveness of the market. By prioritizing fairness and transparency over other considerations, testifiers aim to ensure that public contracts are awarded in a way that provides the best value for taxpayers.