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Bill would allow optional contracting preference for employee-owned companies (ESOPs) in state procurement
Summary
House Bill 3646 would add employee-owned firms in which employees own at least 50% (including through ESOP structures) to the list of business types that state contracting agencies may prefer when the price difference is under 5%; proponents said ESOPs promote employee wealth and local ties.
House Bill 3646 would allow state contracting agencies the option (not a mandate) to prefer companies in which employees own at least 50%—including employee stock ownership plans (ESOPs)—when evaluating bids for public contracts, provided the cost difference between bids is within a 5% threshold.
Representative Thuy Tran, who carried similar optional preferences last session, told the committee the measure extends an optional contracting preference already available to B Corps and in-state manufacturers. Tran said ESOPs are bipartisan and that Oregon has fewer than 80 ESOPs that together employ more than 30,000 Oregonians. Proponents argued ESOPs boost retirement savings and local wealth: testimony from Sean Jackson of Bob’s Red Mill and Dan Blue of Recology Northern Oregon highlighted employee-ownership outcomes including higher retirement saving rates and stronger local reinvestment.
Dan Blue said the measure is narrow and permissive and would apply after mandatory preferences are applied; he described the bill as an encouragement tool to assist business owners considering succession plans that keep firms locally owned. Sean Jackson described Bob’s Red Mill’s experience as a 100% employee-owned company and provided retirement and wealth metrics proponents say are typical for ESOPs.
Committee staff described the bill as operative Jan. 1, 2026, with no revenue impact and minimal fiscal impact. Several supporters asked the committee to advance the bill to help preserve local businesses and support employee wealth-building through ownership transitions.
