HomeMy WebLinkAboutAdmin Order 44-26-02 -- Proposing Public Contracting Rule AmendmentsADMINISTRATIVE ORDER NO. 44-26-02
ofthe
City Manager of the City of Eugene
REGARDING THE OPPORTUNITY TO COMMENT ON A PROPOSAL TO
AMEND PUBLIC CONTRACTING RULES 2025.
The City Manager of the City of Eugene finds that:
A. Section 2.019 of the Eugene Code, 1971 ("EC"), authorizes the City Manager to
adopt Rules for implementation of any provisions of the Code. EC 2.1400 through 2.1451 establish
the City of Eugene Public Contracting Regulations and EC 2.1400 and EC 2.1415 specifically
authorize the City Manager to adopt rules for implementing those re gulations.
B. On July 10, 2025, Administrative Order No. 44-25-01-F was issued adopting the
City of Eugene Public Contracting Rules 2025 (''the Rules ").
C. It is necessary to amend Rule 137-049-0820 in order to maintain compliance with
state public contracting law.
THEREFORE, I propose d to amend the City of Eugene Public Contracting Rules 2025
by repealing Rule 137-049-0820 and replacing it as set forth be low and r enaming the Rules to City
of Eugene Public Contracting Rules 2026, and I order that a N otice of the intended Rule
amendments substantially conforming to the Notice attached as Exhibit A to this Order, shall be:
1. Made available to any person who has requeste d such notic e;
2. Made available to any business which possesses a license issued pursuant to this
Rule; and
3. Published in the Register Guard Newspaper for at le ast five day s.
PROPOSED AMENDMENTS TO
CITY OF EUGENE PU BLIC CONTRACTING RULES 2025
(Proposed additions to current Rule are indicated in blue underline ;
del etions are indicated in rsd strikethrough.)
137-049-0820. Retainage
1) Withholding of Retainage. A Contracting Agency shall not retain may withhold amounts from
a Contractor's progress payments on Public Improvement Contracts as retainage in an
amount in oxsess of not to exceed five percent of the Contrast Prise for Work completed . If
payment. Generally, the purpose of retainage is to incentivize the Contractor ha&-to
satisfactorily progress the work and complete the Project on schedule o r otherwi se protect
the Contracting Agency's interests.
Administrative Order --Page 1 of 7
2) Procedures for Holding Retainage .
a) If a Contracting Agency will withhold retainage on a Public Improvement Contract, it
must include the retainage requirement and amount of retainage in the Solicitation
Documents and resulting Contract.
b) The Contracting Agency shall hold all retained moneys in a Contracting Agency fund or
account, and, for all accounts other than those contemplated by subsection (2)(c),
interest is not required to accrue on the retained moneys.
c) Interest Bearing Account. Following the Contract Award, the Contractor may elect to
have the Contracting Agency deposit the retainage, as the retainage accumulates, in an
interest bearing account in a bank or other financial institution for the benefit of the
Contracting Agency . Any such election must be made timely such that it does not result
in schedule delays . If the Contracting Agency is a state Contracting Agency, the account
must be established through the State Treasurer . Earnings on the account accrue to the
Contractor. When a Contractor on a Public Improvement Contract elects to have the
Contracting Agency deposit the accumulated retainage in an interest-bearing account,
the Contractor, within 30 days following payment of the final amount due for construction
of the Public Improvement, shall pay to each subcontractor that performed at least work
on the construction the subcontractor's pr oportional share of the interest earnings that
accrued to the Contractor as a result of the election . A subcontractor's share of the total
amount of interest earnings under this subsection must be determined by the proportion
that the amount of retainage withhe ld from the subcontractor bears to the amount of
retainage withheld from the Contractor and the length of time the retainage was withheld
from the subcontractor. A share of the interest earnings shall be paid to a subcontracto r
under this subsection only when Retainage is withheld from the subcontractor for more
than 60 days after the day on which the first partial payment was due the subcontractor
under the terms of the subcontract: and the amount of interest earnings due the
subcontractor exceeds $100.
3) Reduction or Elimination of Retainage .
a) 50% Completion Milestone . After 50 percent of the CentFaot 1NeFk anEI work under the
Public Improvement Contract is complete, the Contractor may request e limination or
reduction of retainage by Written application. wh ich shall include Written approval of the
Contractor's surety. Following receipt of a Written application by the Contractor, the
Contracting Agency shall consider whether work is progressing satisfactorily, up8n the
ContFactor's Sllbmission of VVritten application containing the sllrety's VVritten approval ,
the Contracting Agency may, in requirements are being met, and the Contracting
Agency's interests will be protected if retainage is eliminated or reduced . In its sole
discretion, reElllce or eliminate retainage on any remaining progress payments . Thethe
Contracting Agency shall decide whether to grant the reduction or elimination of
retainage and shall respond in Writing to all sllch applications with its decision within a
reasonable time. VVhen the CentFaot VVeFk is
!2)__97~.5% Completion Milestone . After 97 .5 percent oempleteEI , .Qf_the work under the
Public Improvement Contract is complete, at the Contracting Agency 's may, at its
discretion and without application by the Contractor, the Contracting Agency may reduce
the retained amount to 100 percent of the value of the Contract work remaining
llnperformed C8ntract \0J8r kt o be done .
4) Procedures for Payment of Retainage Following Final Completion . The retainage held by A
~ Contracting Agency may at any time reinstate retainage . Retainage shallmust be inc luded
in and paid to the Contractor as part of the final payment of the Contract Price .
Admin ist rat ive Order --Page 2 of 7
a) Notification of Final Completion . The Contractor shall notify the Contracting Agency in
Writing when the Contractor considers the work complete . Within 15 days after receipt,
the Contracting Agency shall either:
A) Notify the Contractor that the work has been accepted and pay the amount held as
retainage to the Contractor as part of the final payment of the Contract Price.,.
Following notification of final completion . Additionally, the Contracting Agency shall
pay interest at the rate of 1.5 percent per month on the final payment due the
Contractor, interest to commence 30 days after the work under the Contract has
been completed and accepted and to run until the date when the final payment is
tendered to the Contractor: or
2) Cash Retainage Contract 12rice $500,000 er bess. \J\fhen the Contract Price fer a Pblbl ic
lmpFOvement Contract is $500,000 or less , a Contracting Agency may reseFVe as retainage
fFom any progress payment an amo1,1nt not to exceed fii1e peFCent, pblrsblant to ORS
279C .570(7). The Contracting Agency shall hold all FOtained moneys in a ContFacting
Agency fblnd or accoblnt, and inteFOst is not FOqbliFOd to accrble on the FOtained moneys .
3) Cash Retainage Contract Price in Excess of $500,000. When the Contract Price fur a
Pblblic lmpFOvement Contract exceeds $500,000, the Contracting Agency shall, in the
eFdinaF)' coblFse, depesit cash Fetainage in an ameblnt net te exceed five peFGent fFem any
pFegFess payment dble blndeF the Flblblic lmpFevement CentFact inte an inteFest beaFing
escFew acceblnt, pblFSblant te ORS 279C .570(2) fl=leblse Bill 2415 (2019 OFegen baws ,
ChapteF 48e)). The CentracteF binder the Flblblic Improvement ContFact is entitled te Feceive
interest on the retained moneys from the date the Contractor's related payment req1,1est is
f1,1lly approved by the Contracting Agency 1,1ntil the date the retained moneys are paid by the
Contracting Agency to the Contractor . For pblrposes of this section, a payment of retainage
is deemed to be "paid" by a Contracting Agency when the payment is transmitted to the
Contractor, or otherwise applied against an obligation of the Contractor binder the Pblblic
Improvement Contract.
4) Alternatives In biebl of Cash Retainage . Unless a Contracting Agency that reseFVes an
amoblnt as retainago finds in writing that accepting bonds , secblritios , or other instrblments
descFibed in part (a) of this section OF a SblFety bond descF ibed in part (b) of this section
poses an extraoFdinaF)' Fisk that is not typically associated with the bonds , secblFities , otheF
instFblments OF sblrety bond, as applicable , the Contracting Agency , in liebl of withholding
meneys from payment, shall accept frem the Contraster:
B) Notify the Contractor that the work has not been accepted and describe the work yet
to be performed on the Contract; however, if the Contracting Agency does not
provide such notice within the 15-day period, the interest provided by this subsection
shall commence to run 30 days after the end of the 15-day period . The amount held
as retainage shall be paid following the Contractor's completion of the work and the
Contracting Agency's acceptance. as part of final payment of the Contract Price .
b) Failure to Reach Final Completion . If the Contractor abandons the work or leaves the
work unfinished or otherwise fails to reach final completion, the Contracting Agency may
apply all or part of the retainage to costs incurred arising from the Contractor's failure to
reach final completion . If there is a dispute with respect to compensation due under the
Contract. retainage held may be released to the Contractor in conjunction or in
accordance with resolution of such dispute.
5) Alternatives In Lieu of Cash Retainage -Requirements . A Contractor may submit and a
Contracting Agency shall accept from a Contractor in lieu of withholding moneys for all or a
portion of the retainage required under a Public Improvement Contract: (i) a Retainage
Administrative Order --Page 3 of 7
Surety Bond. or (ii) deposit of bonds. securities or other instruments. A Contracting Agency
may reject surety bonds. bonds. securities or other instruments that a Contractor submits
only if the Contracting Agency first finds in Writing good cause for the rejection that is based
on unique project circumstances .
a) Retainage Surety Bonds . A Retainage Surety Bond compliant with the requirements of
this section may be submitted to a Contracting Agency in lieu of all or any portion of the
amount of funds retained, or to be retained, by the Contracting Agency . A Retainage
Surety Bond must be in substantially the form specified in ORS 701.435(4). A surety
bond must be executed by a surety bonding company that is authorized to transact
surety business in Oregon and may not be a surety obligation of an individual. The
surety bond and any proceeds of the surety bond must be made subject to all claims and
liens and in the same manner and priority specified for retainage under ORS 279C.550
to 279C .570 and 279C .600 to 279C.625.
A) Amount of Retainage Surety Bond .
(i) Full Retainage Surety Bond . A Contractor may provide a Retainage Surety Bond
in lieu of all retainage required by the Public Improvement Contract. The amount
of the Retainage Surety Bond shall be calculated by applying the retainage
percentage to the Contract Price and must include a provision for coverage of
any increases in the Contract Price. If a full Retainage Surety Bond is provided
by a Contractor at any time after the first progress payment has been made. the
Contracting Agency. within 30 days after receipt. shall pay any retained amount
to the Contractor .
(ii) Partial Retainage Surety Bond. A Contractor may provide a Retainage Surety
Bond in lieu of a portion of the retainage required by the Public Improvement
Contract. Following receipt of a Retainage Surety Bond in an amount less than
the full amount required to be retained. the Contracting Agency, within 30 days of
receipt, shall pay to the Contractor any retained amounts up to the amount of the
Retainage Surety Bond . If the amount of the Retainage Surety Bond is less than
the amount retained by the Contracting Agency , the Contracting Agency will pay
to the Contractor the retainage in the amount of the Retainage Surety Bond. and
the remaining required retainage will be subject to Section (4). If the amount of
the Retainage Surety Bond is in excess of the amount reta ined by the
Contracting Agency. the Contracting Agency will pay to the Contractor the
retained amount. and will reduce the moneys the Contracting Agency holds as
retainage from progress payments in an amount equal to the value of the
Retainage Surety Bond in excess of the amount retained as of the date of the
bond .
B) Subcontracting Requirements for Retainage Surety Bonds . When a Contracting
Agency accepts a Retainage Surety Bond in lieu of retainage from a Contractor
under this section. the Contractor shall accept surety bonds from subcontractors or
suppliers from which the Contractor has withheld reta inage .
(i) At any time before final payment on a Public Improvement Contract. a
subcontractor may submit a surety bond to a Contractor and request that the
Contractor on the Public Improvement Contract submit a surety bond to the
Contracting Agency for the portion of the Contractor's retainage that pertain s to
the subcontractor. The surety bond the subcontractor provides to the Contractor
Administrative Order --Page 4 of 7
must meet the requirements set forth in paragraph (a)(A). When a Contractor at a
subcontractor's request obtains and submits to the Contracting Agency a surety
bond under this subsection, the Contractor may withhold from payments to the
subcontractor an amount equivalent to the portion of the Contractor's surety bond
premium for which the subcontractor is responsible .
(ii) Within 30 days after a subcontractor's request, the Contractor shall provide, and
the Contracting Agency shall accept, a surety bond that meets the requirements
set forth in subsection (a) unless:
(I) The Contracting Agency has found in Writing good cause to reject the surety
bond based on unique project circumstances;
(II) The surety bond is not commercially available: or
{Ill) The subcontractor refuses to pay to the Contractor the subcontractor's
portion of the surety bond premium or refuses to provide the Contractor with
a surety bond that meets the requirements of subsection (a).
(iii) A surety bond the subcontractor submits under this section, and any proceeds
from the surety bond, must be made subject to all claims and liens and in the
same manner and priority specified for retainage under ORS 279C .550 to
279C .570 and 279C.600 to 279C .625 .
(iv) A Contractor must, within 30 days after receiving a surety bond from a
subcontractor or supplier, release to the subcontractor or supplier the amount the
Contractor holds as retainage that is equivalent to the amount the subcontractor
or supplier submitted as the surety bond .
(v) A surety bond under this section must be in substantially the form specified in
ORS 701.435(4).
b) Requirements for Deposit of Bonds, Securities or Other Instruments ("Deposit")
Submitted by a Contractor in Lieu of Retainage.
atfil Bonds, securities,--Gf and other instruments that are deposited and accepted as
provided in subsection (6)(a) of this rule ; or
b) A surety bond deposited as provided in subsection (6)(b) of this rule .
5) Deposit in interest bearing accounts . Upon election of the Contractor and when the Contract
Price in the Public Improvement Contract is $500,000 or less, a Contracting Agency shall
deposit cash retainage in an interest bearing account in a bank , savings bank, trust
company, or savings association, for the benefit of the Contracting Agency. Earnings on
such an account shall accrue on the cash retainage from the date the Contractor's related
payment request is fully approi.1ed by the Contracting Agency until the date the retained
moneys are paid by Urn Contracting Agency to the Contractor. For purposes of this section ,
a payment of retainage is deemed to be "paid" by a Contracting Agency when the payment
is transmil:tod to tho Contractor, or othoP,11,1iso applied against an obligation of tho Contractor
under tho Public Improvement Contract. VVhon tho contractor makes an election for deposit
of retainage into an interest bearing account and the Contract Price in the Public
Improvement Contract exceeds $500 ,000 , the Contractor's election shall be satisfied by the
Contracting Agency's establishment of an interest bearing escro111 account, pursuant to ORS
279C .570(2) [House Bill 2415 (2019 Oregon Laws , Chapter 486)].
6) Alternatives In Lieu of Cash Retainage Requirements . In lieu of cash retainage to be held
by a Contracting Agency, the Contractor may substitute one of the following:
a) Deposit of bonds, securities or other instruments:
Admin ist rat ive Order --Page 5 of 7
A) The Contractor may deposit bonds , securities, or other instruments with the
Contrasting Agonoy , or in any bank or trust company to be held f.or the benefit of the
Contrasting Agonoy . If the Contrasting Agonoy accepts the deposit , the Contrasting
Agonoy shall red use the sash retainage by an amount equal to the value of the
bonds and sos1::1ritios , and roimb1::1rso tho oxsoss to tho Contractor.
~) ~onds , soc1::1ritios or othor instrnmonts deposited or acquired by a Contractor in lieu
of Ga-SR retainage must be of a character approved by the Director of the Oregon
Department of Administrative Services, which may include, without limitationincluding
but not limited to :
(i) Bills, certificates, notes , or bonds of the United States.
(ii) Other obligations of the United States or agencies of the United States.
(iii) Obligations of a corporation wholly owned by the -F-federal Gg_overnment.
(iv) Indebted ness of the Federal National Mortgage Association.
(v) General obligation bonds of the State of Oregon or a political subdivision of the
State of Oregon.
(vi) Irrevocable letters of credit issued by an insured institution, as defined in ORS
706.008.
B) Bonds, securities or other instruments may be deposited with: {i) ~ the
Contracting Agency~ determination that all requirements fo r the protection of the
Contracting Agency's interests ha ve boon fulfilled , it shall release to the Contractor
all bonds and securities deposited in lieu of retainage .
b) Deposit of surety bond . A Contracting Agency, at its discretion , may allow the Contractor
to deposit a surety bond in a form acceptable to or (ii) in a bank or other financial
institution for the Contracting Agency in lieu of all or a portion of funds retained or to be
retained. A Contractor depositing such a bond shall assept surety bonds from its
subcontractors and suppliers in lieu of retainage . In such oases , retainage shall be
reduced by an amount equal to the 't'alue of the bond , and the e,x:cess shall be
reimbursedto hold for the Contracting Agency's benefit.
7) Rocovory of Additional Costs . Pursuant to ORS 279A .5G0(J), a Contracting Agoncy may
rocovor from tho Contractor all additional costs incurrod in tho propor handling of rotainago
alternatives requested by the Contractor, whether a request for the deposit of
Q Interest or earnings on the bonds, securities, or other instruments accru e to the
Contractor.
D) Amount of Deposit.
(i) Deposit Equivalent to Full Amount of Retainage . A Contractor may provide a
Deposit meeting the requirements of this section in lieu of GaSA-fil!_retainage
required by the Public Improvement Contract. The amount of the Deposit shall be
calculated by applying the retainage , a request for a surety bond in lieu of cash
percentage to the Contract Price and must include a provision for coverage of
any increases in the Contract Price . If a Deposit equivalent to the full amount of
retainag e or an election f.or an interest bearing account. If a s provided by a
Contractor at any time after the first progress payment has been made, the
Contracting Agency shall pay any retained amount to the Contractor.
(ii) Partial Deposit. If a Contractor provides a Deposit in lieu of a portion of the
retainage required by the Public Improvement Contract in an amount le ss than
the full amount required to be retained, the Contracting Agency incurs costs
associated w ith establishing a fun d or account under s ection (2) of thi s rule or
establishing an interest bearing escrow account under section (J) of this rule ,
shall pay to the Contractor any retained amounts up to the amount of the
Deposit. If the amount of the Deposit is less than the amount retained by the
Admin ist rative Order --Page 6 of 7
Contracting Agency , the Contracting Agency will pay to the Contractor the
retainage in the amount of the Deposit. and the remaining retainage will be
remain subject to Section (4). If the amount of the Deposit is in excess of the
amount retained by the Contracting Agency. the Contracting Agency will pay to
the Contractor the retained amount, and will reduce the moneys the Contracting
Agency holds as retainage from progress payments in an amount equal to the
value of the surety bond in excess of the amount retained as of the date of the
Deposit. is not permitteEI to reco>v•er such costs from the Contractor.
6) Costs Incurred Holding Retainage or Amounts in Lieu of Retainage .
a) Contractor's costs . A Contractor shall bear additional costs that the Contractor incurs
after the date on which the Contractor submits a bid or proposal to the Contracting
Agency that arise from (a) utilizing Retainage Surety Bonds, Bonds, Securities, or Other
Instruments in lieu of holding retainage as described in Section (5) (including Retainage
Surety Bond premiums), or (b) requesting that the Contracting Agency deposit retainage
in an interest bearing account as set forth in Section 2(c). These costs are not
reimbursable project costs and the Contracting Agency is not responsible for paying
these costs.
b) Recovery of Additional Costs Incurred by Agency. If a Contracting Agency incurs
additional costs arising from a Contractor's exercise of (a) utilizing Retainage Surety
Bonds, Bonds, Securities, or Other Instruments in lieu of holding retainage as described
in Section (5). or (b) requesting that the Contracting Agency deposit retainage in an
interest bearing account as set forth in Section 2(c), the Contracting Agency may
recover the additional costs from the Contractor by reducing the final payment. As work
on the Contract progresses, the Contracting Agency shall. upon demand, inform the
Contractor of all accrued costs.
~1) AEIElitional Separate Retainage When Certified Payroll Statements Not Filed . l=lursuant to
Notwithstanding ORS 279~555 or 279C .570(7) or OAR 137-049-0820, if a Contractor is
required to file certified payroll statements anEI fails to €lo so , under ORS 279C.845(7), the
Contracting Agency shall retain 25 percent of any amount earned by the Contractor on a-
Pl:lblic lNorks Contract the public works until the Contractor has filed &l:lch statomonts with
the Contracting Agency . Tho Contracting Agency shall pay tho Contractor tho amol:lnt
retaineEI l:lnEler this provision within 14 €lays after the Contractor files the certified
statements , regarElless of 1Nhether a sl:lbcontractor has fileEI sl:lch statements (bl:lt see
279C .845(1) regarEling the reql:lirement for both contractors anEI sl:lbcontractors to file
certifieEI statements with the Contracting Agency). Soo in accordance with BOLi rnlo at OAR
839 025 001 0 rules .
Related State Statutes. ORS 2 79A065, ORS 2 79C.845, ORS 2 79 C.560, ORS 279C.570 & ORS
701.420,DOJ 15-2019, amend filed 12/23/2019, effective 01/01/2020,DOJ
Dated this ~ day of October, 2026.
Administrative Order --Page 7 of 7
Jennifer D. Haruyama
City Manager
Exhibit A
to Administrative Order No. 44-26-02
NOTICE OF OPPORTUNITY TO COMMENT ON PROPOSED AMENDMENT OF
PUBLIC CONTRACTING RULES 2025.
Sections 2.1400 through 2.1451 of the Eugene Code ("EC") establish the City of Eugene Public
Contracting Regulations. The City Manager is authorized by EC 2.019 to adopt rules for
implementation of any provisions of the Code and EC 2.1400 and EC 2.1415 specifically authorize
the City Manager to adopt rules to implement the City of Eugene Public Contracting Regulations.
Pursuant to that authority, the City Manager intends to amend and rename Public Contracting
Rules 2025 in order to maintain compliance with state public contracting law.
The principal documents, reports, or studies prepared by or relied upon by the City in considering
the need for and in preparing this Rule are ORS Chapters 279A, 279B, and 279C (which can be
reviewed on the Oregon State Legislature's website), and the Oregon Attorney General's Model
Public Contracting Rules (which can be reviewed on the Oregon Department of Justice's website).
The proposed Rules may be reviewed at Eugene City Hall, 500 E. 4th Ave., Eugene, Oregon, during
normal business hours or on the City of Eugene's website at https ://www.eugene-
or.gov/520/ Administrative-Order.
Comments on the proposed Rules should be submitted in writing to Drew Pryor, 500 E. 4th Ave .
Suite 303, Eugene, Oregon, 97401, or via e-mail to dpryor@eugene-or.gov. To be considered,
written and e-mail comments must be received within 15 days of the first date of publication as
indicated below. If the City Manager chooses to take action after considering the comments
received, the proposed or modified rule will be adopted by administrative order.
Jennifer D. Haruyama, City Manager
Dates of Publication: November 2 , _l_, __±_, _5_, _£_, 2026.
Signature: 'T9~
Email: TMiller@eugene-or.gov
Notice -Page 1 of 1