Committee hears bill to allow ESOPs to qualify for contracting preference (HB 3646)

Representative Thuy Tran introduced House Bill 3,646 to add employee-owned companies — entities in which employees own at least 50% of the ownership interest directly or through an employee stock ownership plan (ESOP) — to the types of suppliers that contracting agencies may give a preference in public procurement.

Tran said the bill mirrors a prior law that allowed preference for Oregon benefit corporations and was drafted to be permissive rather than mandatory. Dan Blue of Recology explained ESOPs are qualified retirement plans created under federal law (internal revenue code 401(a) structures were referenced) that allocate company stock to employees as a retirement benefit; Recology and Bob's Red Mill representatives testified that ESOPs increase productivity, reduce turnover, and improve retirement security for employees. Sean Jackson of Bob's Red Mill said the company became 100% employee-owned to ensure local ownership and continuity.

Witnesses noted an important limit in the draft: the contracting preference would apply only when the ESOP-providing bid is within 5% of other bids, a provision intended to balance cost and social benefits. Committee members asked whether there would be a size cutoff or other eligibility limits; witnesses said those details can vary and committed to provide follow-up information. No committee action was taken at the hearing.