What is the Buy Oregon Preference?
The Buy Oregon preference is a program that both requires and permits a procuring agency to extend a preference to certain suppliers of certain products and services that meet the state’s criteria. The goal of this preference is to help Oregon businesses by encouraging the development and growth of local supply chains, creation of local jobs and continued revitalization of the state’s economy.
The preference must be applied to suppliers that offer products or services that are predominantly manufactured, produced or performed in the state of Oregon if price, fitness, availability and quality are otherwise equal.
Additionally, the preference must be applied to suppliers who reside in or are headquartered in Oregon and are otherwise considered to be resident suppliers. This reciprocity preference is achieved by adding a percent increase to the bid, proposal or quote of an out-of-state supplier that is equal to the percent of the preference given to the supplier in the state in which it resides, as applicable.
Finally, the preference permits a procuring agency to provide in its solicitation for a discretionary 10 percent price advantage for products produced or services performed entirely in Oregon. This preference allows an agency to award a contract even if the bid, proposal or quote is 10 percent higher than a product that is fabricated or processed, or a service that is performed, outside of the state.
When to Use the Buy Oregon Preference
A procuring agency must use the preference when it is evaluating supplier responses to a solicitation. There are two ways in which the preference must be used by a procuring agency in an evaluation:
- To break a tie, if two or more suppliers submit identical responses.
- To factor in a reciprocal preference for a resident supplier who has paid Oregon unemployment taxes or income taxes for 12 months immediately preceding submission of a solicitation response, maintains a business address in the state, and identified itself in its response as a resident supplier.
Additionally, a procuring agency may specify a Buy Oregon preference when developing its solicitation document. In this instance, a procuring agency may provide a discretionary preference of no more than 10 percent to procure products that are fabricated or processed, or services that are performed, entirely within Oregon.
The procuring agency must include appropriate clauses related to these preferences in the solicitation document and if providing for a discretionary preference the solicitation document must stipulate the specific percentage. Refer to
Competitive Sealed Bidding (ITB) and
Competitive Sealed Proposals (RFP) for more information on Buy Oregon preference provisions in templates related to these procurement methods.
How to Use the Buy Oregon Preference
The following sections describe mandatory requirements and permissive considerations for the preference.
Mandatory Requirements
The procuring agency must apply the preference during the evaluation process. Refer to
Evaluation Strategy for more information on the evaluation process.
Breaking a Tie
When a procuring agency evaluates solicitation responses and determines they are identical in price, fitness, availability and quality, it must apply Buy Oregon preferences in the following order of precedence when selecting a supplier:
- If there is only one supplier offering products or services that are predominantly manufactured, produced or performed within the state, the procuring agency must award the contract to this supplier.
- If there are two or more suppliers offering products or services that are predominantly manufactured, produced or performed within the state, the agency must award the contract by drawing lots among the identical responses.
- If there are no suppliers offering products or services that are predominantly manufactured, produced or performed within the state, the agency must award the contract by a random drawing among the identical responses.
If the procuring agency is required to break a tie through a random drawing to determine the awarded supplier, the procuring agency must use a fair and equitable process that does not allow the person making the selection an opportunity to manipulate the drawing.
A procuring agency must consider the following factors to determine if responses are identical in price, fitness, availability and quality, for the purpose of applying this preference:
Applying a Reciprocal Preference
A procuring agency must include a reciprocal preference provision in its solicitation document for nonresident suppliers responding to competitive bidding, proposals or request for quotes. The reciprocal preference results in a percent increase to an out-of-state supplier’s response that is equal to the preference given to the supplier in the state in which the supplier resides.
Resource: To facilitate a procuring agency's evaluation of offers received from nonresident suppliers, the National Association of State Procurement Officials (NASPO) maintains a state preference repository website. This site has an official list of states that give preference to resident suppliers.
To properly apply the mandatory preference the procuring agency must calculate the cost score by adding the appropriate preference percentage, if any, to an out-of-state supplier’s offer, in response to a solicitation, using the following formula:
Offer + (Offer x Reciprocal Preference Percentage Rate) = Cost Score
Optional Considerations
In addition to mandatory provisions of the preference, the following section describes how a procuring agency may optionally use the preference in a solicitation.
Applying a Discretionary Preference
A procuring agency may provide for a discretionary percentage preference of not more than 10 percent for products fabricated or processed, or services performed, entirely within the state of Oregon. This preference is not applicable to emergency work, minor alterations, ordinary repairs or maintenance of public improvements, or construction work (refer to ORS 279C.320).
If more than one supplier qualifies for the preference, the procuring agency may give a further preference to a supplier that resides in or is headquartered in Oregon.
State law provides that a procuring agency may increase the preference percentage higher than 10 percent if the agency finds and documents good cause for establishing a higher percentage in a written order.
To properly apply the discretionary preference and calculate the cost score, the procuring agency must subtract the preference percentage specified in the solicitation document to each offer where the products are fabricated or processed, or services are performed, entirely in the state of Oregon.
Offer – (Offer x Discretionary Preference Percentage Rate) = Cost Score
Reporting
A procuring agency that awards a contract that exceeds $10,000 to an out-of-state supplier must ensure that the supplier reports the following information in the form and format required by the Department of Revenue:
- Total contract price.
- Terms of payment.
- Length of contract and such other information as the Department requires.
The awarded nonresident contractor must report this information promptly upon award of a contract, and the procuring agency must ensure that this requirement has been satisfied prior to issuing a final payment on the contract.