Ending Unfair Contracts Harming Minority Businesses Will Aid Gov. Kotek’s Affordable Housing Goals

As a Hispanic woman who founded and owns a small engineering firm, I’m urging Oregon state lawmakers to pass Senate Bill 1575, which will protect businesses like mine from state and local government’s unfair contract practices. It will also allow our industry to help Gov. Tina Kotek meet her affordable housing project goals.

I am proud to say by most measures I would be considered a success story. As the first college graduate in my family, I have a career in engineering affording my children more stability and opportunities than I had growing up. With a lot of time and hard work, I am now an owner of a 10-person civil engineering firm that I started in 2012.

Sadly, Oregon’s engineers, architects and land surveyors are being forced by state and local governments into unfair contracting practices called “duty to defend” clauses, which require us to pay the legal expenses for others involved in construction projects even before fault is determined.

This is detrimental to design firms, especially women, minority and emerging small businesses, who cannot afford to take on that kind of liability.

This isn’t about shirking responsibility – it’s about ensuring fairness so everyone is paying their own way and adequately protected by their insurance. We can, and should, be responsible for our own actions and liability. But these potentially massive financial risks are uninsurable. We cannot get liability insurance to cover the costs of others potential failures, meaning every time I sign a contract with this clause, I am essentially risking my business, the equity in my home, and everything that I have been able to build. I am also risking my employee's jobs. I fail to see how any of those outcomes are in the interests of the public or taxpayer. It’s hypocritical and patronizing that we should be forced to risk financial ruin by agreeing to a government contract to build affordable housing for the houseless people in our communities.

It is particularly offensive that state and local governments require a 20% to 30% small business participation goal for public works projects but still allow their legal counsel and procurement officers to include this small business killer clause. This practice reeks of the right hand not knowing what the left hand of government is doing.

The outcome communicates an insincerity of helping the actual small, women and minority owned businesses succeed.

My company paying the legal fees to defend another party's actions over which we have absolutely no control is unfair, and those costs should never be considered “part of doing business” with the government. In addition, the public agency contract terms extend between 3 and 6 years after construction. So even though my small company only has 23 open contracts, we are still subject to the terms and conditions of over 90 closed contracts, almost all of which include some type of duty to defend clause.

If the duty to defend clause is allowed to remain in government contracts, Oregon’s small businesses will be left behind and unable to participate in the Governor's new affordable housing projects. Passing Senate Bill 1575 would help my company and hundreds of other women and minority and emerging small businesses in the engineering, architecture and land surveying design professions compete.