Can Oregon's Department of Administrative Services force every state agency to use DAS-prescribed indemnity and insurance clauses in the agency's own contracts?

Plain-English summary

The Department of Administrative Services (DAS) Risk Manager asked the AG two questions about DAS's reach over the contracts of other Oregon state agencies. DAS administers the State Insurance Fund and is the central state agency for risk management. It wanted to adopt two policies: first, requiring state agencies to incorporate DAS-prescribed indemnity and insurance clauses in their contracts; and second, prohibiting agencies from using contract clauses that might create new liabilities for the State Insurance Fund without DAS's consent.

Attorney General Hardy Myers's answer drew a careful line. DAS has substantial central authority over state government operations, but the legislature has also granted independent contracting authority to specific agencies for specific purposes. DAS cannot override that statutory grant of independent authority by administrative fiat. So the answer to the first question depends on which agency is involved.

For agencies whose contracting flows through DAS or that operate under DAS-administered procurement rules, DAS can require the use of prescribed clauses. For agencies that have independent statutory authority to enter their own contracts (universities, the Oregon Lottery Commission, certain semi-independent boards and commissions, and others with specific statutory grants), DAS cannot force the issue through administrative policy.

On the second question (preventing agencies from using clauses that create new SIF liabilities), the AG concluded that DAS has greater use. The State Insurance Fund is DAS's responsibility under ORS 278.011 et seq. DAS can condition SIF coverage on the agency's use of approved indemnity terms, even for agencies with independent contracting authority. The agency remains free to enter the contract on whatever terms it chooses, but if those terms create new SIF exposure, DAS may decline to extend SIF coverage to that exposure.

Currency note

This opinion was issued in 2008. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: What is DAS's general authority over state contracts?
A: ORS chapter 184 establishes DAS as the central administrative-services agency for state government. ORS chapter 279A creates a unified procurement framework for most state-agency contracting, with DAS playing a coordinating and standard-setting role. Many state agencies operate under DAS-administered procurement rules, and DAS may issue model contract language that those agencies must use.

Q: Which agencies have independent contracting authority?
A: At the time of this opinion, examples included the Oregon University System (now reorganized), the Oregon Lottery Commission, the Oregon Health and Science University, the Oregon State Bar, certain port and water districts, and other entities with specific statutory authority to enter their own contracts. Each agency's enabling statute would have to be read to determine the scope of its independent authority.

Q: How does the State Insurance Fund work?
A: ORS 278.011 et seq. establishes the SIF as a fund for self-insurance of state agencies. Premiums and assessments are paid by the participating agencies. Coverage decisions are made by DAS as fund administrator. The SIF covers liability claims against state employees and agencies acting within the scope of their official duties, subject to coverage rules DAS adopts.

Q: What's the practical effect of conditioning SIF coverage on approved indemnity clauses?
A: It creates strong incentive for agencies to use the approved clauses. If an agency enters a contract with an unusually broad indemnity that the agency owes to a vendor, and DAS has not approved that indemnity, then the agency's potential exposure under the indemnity may not be covered by the SIF. The agency would be self-insuring that risk against its own budget, which most agencies prefer to avoid.

Q: Could the legislature give DAS clearer authority?
A: Yes. The AG's analysis turns on the existing statutory mosaic. The legislature could pass a statute giving DAS uniform authority over all state-agency indemnity and insurance clauses, or could amend specific agencies' enabling statutes to reduce independent contracting authority. Absent that legislative action, the line the AG drew controls.

Background and statutory framework

Oregon's procurement and risk-management framework is layered. ORS chapter 184 sets up DAS. ORS chapter 278 establishes the State Insurance Fund and related risk-management programs. ORS chapter 279A creates the Public Contracting Code, with general procurement rules that apply unless an agency has its own contracting authority outside the chapter. ORS chapter 351 (now reorganized) governed the public university system. Many other agencies have their own contracting provisions in their enabling statutes.

DAS Risk Manager Terri Sahli's questions reflected a recurring tension in state administration: DAS wants uniform, enterprise-wide risk management to control SIF exposure and protect the state taxpayer; individual agencies want flexibility to negotiate contracts that fit their specific operational and political needs. The AG's answer threaded that needle by recognizing both DAS's central authority and individual agencies' statutory contracting power, then giving DAS effective use through the SIF coverage tool without claiming a general supervisory power DAS does not have.

Citations and references

Statutes (as cited in the opinion):
- ORS 184.305 et seq. (DAS authority)
- ORS 278.011 et seq. (State Insurance Fund and risk management)
- ORS chapter 279A (Public Contracting Code)

Source

• Landing page: https://www.doj.state.or.us/oregon-department-of-justice/office-of-the-attorney-general/attorney-general-opinions/
• Original PDF: https://www.doj.state.or.us/wp-content/uploads/2008/04/op2008-1.pdf

Original opinion text

HARDY MYERS

PETER D. SHEPHERD

Attorney General

Deputy Attorney General

DEPARTMENT OF JUSTICE
GENERAL COUNSEL DIVISION

April 29, 2008

Terri Sahli, Risk Manager
Department of Administrative Services
1225 Ferry Street SE, U150
Salem, OR 97301-4287
Re:

Opinion Request OP-2008-1

Dear Ms. Sahli:
The Department of Administrative Services (DAS) is considering policies that (1) require
state agencies to incorporate DAS-prescribed indemnity and insurance clauses in their contracts;
and (2) preclude agencies from using contract clauses that may have the effect of exposing the
State Insurance Fund to new liabilities without DAS’s consent. You ask about DAS’s authority
in this area.
QUESTIONS PRESENTED
Question 1. Does DAS have authority to adopt a policy that requires state agencies to
incorporate DAS-prescribed indemnity or insurance clauses, or both, into those agencies’
contracts?
Short answer. DAS may require some but not all state agencies to insert DASprescribed indemnity or insurance clauses into the agencies’ contracts. If a state agency enters
into a contract pursuant to a DAS delegation under ORS 279A.140, then DAS may require the
agency to insert such clauses. But if a state agency enters into a contract under its own statutory
contracting authority, then DAS may not require the agency to include these clauses.
Question 2. Does DAS have authority to adopt a policy that precludes state agencies
from expressly promising to indemnify or insure agencies’ contractors against tort claims
without DAS’s permission?
Short answer. Yes.
DISCUSSION
1.

Method of Statutory Analysis

To answer your questions, we must interpret the statutes that establish DAS’s powers and
duties. In PGE v. Bureau of Labor and Industries, 317 Or 606, 859 P2d 1143 (1993), the

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Terri Sahli, Risk Manager
April 29, 2008
Page 2

Oregon Supreme Court set out the methodology for interpreting statutes. First, we examine the
text and context. Id., 317 Or at 610. Text is the language of the statutory provision and context
includes other portions of the same statute, other provisions of the bill in which the statute was
adopted and the chapter into which a provision has been codified. Vsetecka v. Safeway Stores,
Inc., 337 Or 502, 508, 98 P3d 1116 (2004); Morsman v. City of Madras, 203 Or App 546, 561,
126 P3d 6, rev den 340 Or 483, 135 P3d 318 (2006); State v. Ortiz, 202 Or App 695, 698, 124
P3d 611 (2005). In examining the text and context, we apply statutory and judicially-created
rules such as to give “words of common usage” their “plain, natural, and ordinary meaning[,]”
and, if there are several provisions, to adopt a construction, if possible, that gives effect to them
all. PGE, 317 Or at 611; ORS 174.010.
If the legislature’s intent is clear from the text and context, the inquiry ends there. If
legislative intent remains unclear, we look to the legislative history of the statute to discern that
intent. PGE, 317 Or at 611-12.
2.

DAS’s Contracting Authority

An agency has the powers expressly conferred by statute or necessarily implied to carry
out the powers expressly granted. Ochoco Const. v. DLCD, 295 Or 422, 426, 667 P2d 499
(1983). DAS has two potential sources of statutory authority to require agencies to include
indemnity and commercial insurance requirements in their contracts or to preclude agencies from
extending tort claim protection to contractors: (1) its contracting authority under ORS 279A.140
of the Public Contracting Code (ORS chapters 279A, 279B, and 279C); and, (2) its authority
under ORS 278.405(1) to direct and manage all risk management programs of state government.
For ease of analysis, we begin with DAS’s contracting authority.
Under ORS 279A.140, DAS has the authority to enter into, administer, or approve
contracts for many, but not all, state agencies:
(1) The Oregon Department of Administrative Services shall conduct all
procurements and administer the contracting for goods, services and personal
services, including architectural, engineering and land surveying services and
related services, for state agencies unless a state agency is specifically
authorized by ORS 279A.050 or provisions of law other than the Public
Contracting Code to enter into a contract. The authority described in this
subsection may be delegated in whole or in part in accordance with ORS
279A.075.
(2) The following requirements and procedures apply to all contracts of state
agencies:
(a) A personal services contract is not valid or effective without the written
approval of the department unless:
(A) The contract is authorized under ORS 279A.050; or

Terri Sahli, Risk Manager
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(B) The department has delegated authority to the contracting agency under ORS
279A.075 to make the personal services contract. * * *.
(Emphasis added.)
ORS 279A.050(3) through (6) authorize particular state agencies to enter into certain
contracts. DAS has no authority to enter into, administer or approve those contracts pursuant to
ORS 279A.140(1) and (2). Moreover, the Public Contracting Code does not apply to certain
agencies and contracts. See, e.g., ORS 279A.025 (providing partial list of exemptions); ORS
351.086 (exempting Oregon University System from much of the Code); ORS 461.120
(exempting State Lottery from Public Contracting Code “[e]xcept as otherwise provided by
law”).
If DAS has authority to enter into, administer, or approve contracts for a state agency
under ORS 279A.140, that authority would include authority to require insertion of indemnity
clauses and commercial insurance requirements. But DAS has no contracting authority to
require such language in contracts specifically exempted from DAS contracting authority under
ORS 279A.140 (or exempt from the requirements of the Public Contracting Code under ORS
279A.025 or other statutes). Because DAS might want the option to require all state agency
contracts to contain certain indemnity or insurance clauses, we next examine whether DAS has
the power to do so under its risk management authority.
3.

DAS’s Risk Management Authority

The legislature expressly charged DAS with the duty to direct and manage the state’s risk
management and insurance programs. ORS 278.405 provides:
The Oregon Department of Administrative Services shall direct and manage all
risk management and insurance programs of state government except for
employee benefit insurance programs as otherwise provided in ORS chapter 243.
Authority granted the department in this section includes but is not limited to
the following authority:
(1) To provide all insurance coverages including coverage of related legal
expenses required by law, requisitioned by individual agencies, or which the
department determines necessary or desirable for the efficient operation of state
government, including but not limited to casualty insurance, property insurance,
workers’ compensation insurance and surety insurance.
(2) To purchase insurance policies, develop and administer self-insurance
programs, or any combinations thereof, as may be in the best interest of the state
in carrying out the authorities granted in subsection (1) of this section.
(3) To consolidate and combine state insurance coverages.

Terri Sahli, Risk Manager
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(4) To purchase such risk management, actuarial and other professional services
as may be required.
(5) To provide technical services in risk management and insurance to state
agencies.
(6) To adopt rules and policies governing the administration of the state’s
insurance and risk management activities and to carry into full force and effect
the provisions of this chapter, ORS 30.260 to 30.290, 278.322 and 655.505 to
655.555. The department, by rule or policy, may determine the Insurance Fund’s
contribution to the cost of defense, settlements and judgments in actions or
proceedings. The department may condition payment of all or part of any loss
covered by the Insurance Fund on compliance with the rules and policies
adopted under this chapter.
(Emphasis added.)
“Risk management” is not defined by the statute. Recently, this office concluded that, for
purposes of ORS 278.405, “risk management” has its plain meaning, which is “the act of coping
with and controlling the chance of loss or the perils to the subject matter of insurance.” Letter of
Advice, dated March 19, 2007, to Terri Sahli, Risk Manager, Department of Administrative
Services (OP-2007-1) at 4, 2007 Or AG Lexis 4, 9 (March 19th Letter). In other words, as used
in ORS 278.405, “risk management” means risk control. We noted that, when “risk
management” is used as a term of art, it sometimes includes risk transference and risk retention
as well as risk control, but “[a]s ORS 278.405 separately mentions insurance (risk transference)
and self-insurance (risk retention), it appears that the legislature likely intended the term ‘risk
management’ to encompass only a risk control element * * .” March 19th Letter at 4 n1.
For purpose of your current questions, we must determine whether, by giving DAS the
authority to control risk, the legislature intended to give DAS the power to require state agencies
to include certain clauses in their contracts, if those clauses might serve to minimize the state’s
losses. A clause requiring a contractor to indemnify the state potentially would minimize the
state’s losses by requiring reimbursement for those losses. A requirement that the contractor
must maintain specific insurance also potentially minimizes state losses by ensuring that the
contractor has available funds in the event of damage or liability. Thus, both clauses potentially
could minimize the state’s losses.
ORS 278.405 authorizes DAS generally to “direct and manage” all risk management
programs of state government. In other words, DAS is the agency responsible for managing
programs to control the state’s risk. That authority “includes, but is not limited to” “purchas[ing]
such risk management * * * services as may be required” and “provid[ing] technical services in
risk management * * .” ORS 278.405(4) and (5), respectively. DAS could not rely on either of
those two specific provisions to require state agencies to include certain clauses in their
contracts, although it might rely on the latter (“provid[ing] technical services in risk
management”) to recommend inclusion of that language. Other than those two examples of “risk

Terri Sahli, Risk Manager
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management” activities, the text of ORS 278.405 does not contain any indication about what
actions the legislature intended to authorize under the rubric of “risk management.”
ORS 278.405 is a provision enacted into ORS chapter 278, the chapter governing
“insurance for public bodies.” We thus look to the insurance context for a description of “risk
control” activities:
Risk control is accomplished by conducting a venture so that risk is minimized.
Brakes, train whistles, fire escapes, and safety campaigns are common
instruments of such risk management. Risk control may be effected either
through risk avoidance (as, for example, by effective enforcement of regulations
against accumulations of flammable waste) or through risk reduction (such as the
removal of accumulated waste materials to reduce the risk of fire). Risk control
activities by an insurance company may even extend to participation in the design
of a business operation (such as the specifications for the asphalt surfaces of
loading platforms in amusement parks to assure firm footing under all weather
conditions).
R. Keeton and A. Widiss, INSURANCE LAW: A GUIDE TO FUNDAMENTAL PRINCIPLES, LEGAL
DOCTRINES, AND COMMERCIAL PRACTICES (1988) at 11 (footnotes deleted). In other words, risk
control in the insurance context denotes a program of safety measures to minimize risk. The two
specific examples of risk activities listed in ORS 278.405 are consistent with that understanding.
On the other hand, nothing in ORS 278.405 unambiguously demonstrates that the legislature
necessarily intended the term to be so limited. Because there remains some ambiguity about the
scope of the term “risk management,” we consult the legislative history.
4.

Legislative History

The legislature enacted ORS 278.405 in 1985. Or Laws 1985, ch 731, § 2. Before 1985,
the Department of General Services (DGS; DAS’s predecessor) administered two separate
insurance funds established under separate statutes: the “Restoration Fund,” established under
former ORS 278.011 – 278.085, and the “Liability Fund,” established under former ORS
278.100 – 278.150. The Restoration Fund provided funds for replacing and rebuilding lost or
damaged state property, and the Liability Fund provided funds for state and participating local
public bodies’ tort liabilities. No statute expressly authorized DGS to provide risk control
services.
In 1985, at the request of DGS, the legislature enacted Oregon Laws 1985, chapter 731
(HB 2152), which consolidated those funds. At a hearing on that bill before the House
Committee on State and Federal Affairs, Gene Snyder, the Administrator of DGS’s Risk
Management Division, explained that the bill was meant to give DGS authority to administer a
comprehensive insurance program including risk control services:
In addition * * * the consultant recommended that we provide a loss control
program to state agencies to help reduce their losses and, in 1981 the Ways and
Means Committee provided funding to establish a Risk Management Division to

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carry out these purposes. At that time we were unable to amend the statutes and
redesign these statutes to do the job that was envisioned by the study and the
Ways and Means Committee and that is the purpose of this bill today is to provide
that statutory policy direction to operate the program.
Testimony of Gene Snyder, Administrator, Risk Management Division, DGS, House Committee
on State and Federal Affairs (HB 2152), January 28, 1985, Tape 19, side 2 at 85. Mr. Snyder
again discussed the risk control program in response to questions from the Committee about how
the bill would affect the State Accident Insurance Fund’s (SAIF) operations:
SNYDER: We also would be working with [SAIF] in the area of their services
that are provided to state agencies to make sure that the loss control services are
properly utilized by state agencies.
REPRESENTATIVE ROBERTS: Are you suggesting that loss control and
charging agencies on the basis of their loss – that practice is something that
[SAIF] is not now doing that you think needs to be corrected?
SNYDER: Mr. Chairman, [SAIF] is providing these services to state agencies at
the present time, but there’s no statutes that identify a state agency that has got the
responsibility for working with them [state agencies] and that is what we are
proposing in this statute is to define * * * [DGS] as that state agency as a part of
our overall risk management program.
Minutes, House Committee on State and Federal Affairs (HB 2152), January 28, 1985, Tape 20,
side 2 at 85.
The legislative history of HB 2152 thus shows that, in 1985, no state agency had express
legislative authority to provide loss control services to state agencies. The legislature enacted
ORS 278.405 to give DGS that authority. ORS 278.405 also authorized DGS to adopt rules and
policies to govern administration of the state’s risk management activities.
In 1991, the legislature amended ORS 278.405 to give DGS additional authority to
condition payment of all or part of any loss covered by the Insurance Fund on compliance with
those rules and policies. Or Laws 1991, ch 566, section 6 (6). Thus, as of 1991, not only could
DGS provide risk control services to state agencies, but it also could adopt state policies
concerning risk control and enforce them by conditioning payment of agencies’ losses covered
by the Insurance Fund on compliance with those policies.
We also note that, in 1985, when the legislature enacted ORS 278.405(1), former ORS
279.712(1) (1983) authorized DGS to contract for the purchase of all supplies, materials,
equipment and services other than personal required by state agencies, and former ORS
279.712(2) (1983) authorized DAS to approve all professional or personal services contracts of
agencies for architectural, engineering, and related services. But former ORS 279.712(3) (1983)
exempted the contracts of certain state entities from sections (1) and (2). So, when the
legislature enacted ORS 278.405, like now, DGS did not have authority to contract for or

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approve the contracts of all agencies. We next address the potential conflict between the
limitations in ORS 279A.140 and the potentially broad grant of authority to DAS under ORS
278.405.
5.

DAS’s Public Contracting Authority and Risk Management Authority

The Public Contracting Code obviously governs public contracting and contains DAS’s
authority to enter into, administer, and approve public contracts. As noted above, under ORS
279A.140, DAS has no authority to contract for or approve the terms of those agency contracts
that are specifically exempted from DAS oversight by ORS 279A.050 or other laws. The
obvious intent of those statutes, as expressed in their unambiguous language, is to exempt certain
agencies and contracts from DAS control as to certain contracting activities.
ORS 278.405, on the other hand, is part of the group of statutes that govern insurance for
public bodies, rather than public contracting. ORS 278.405 addresses DAS’s risk management
authority in general, broad-brush terms except for the specific authorizations to purchase risk
management services and provide technical risk management services to agencies. ORS
278.405(4) and (5). Nothing in ORS 278.405 unambiguously authorizes DAS to require that
certain contract language be inserted into all state agency contracts. Construing ORS 278.405 to
authorize DAS to require insertion of particular language in state agency contracts that are
expressly exempted from DAS’s contracting oversight under the Public Contracting Code would
cause ORS 278.405 to conflict with the code. Whenever possible, we are to construe statutes to
be consistent with each other. Fairbanks v. Bureau of Labor and Industries, 323 Or 88, 94,
913 P2d 703 (1996) (statutes should be read together and harmonized, while giving effect to a
consistent legislative policy). If there is an irreconcilable conflict between a general and
particular provision, the latter is paramount to the former so that a particular intent controls over
a general intent that is inconsistent with the particular intent. Bobo v. Kulongoski, 338 Or 111,
119, 107 P3d 18 (2005).
Applying the rule of construction that we should first avoid a conflict between two
statutes, if possible, we construe ORS 278.405 not to authorize DAS to require insertion of
specific indemnity and commercial insurance requirements into contracts exempt from DAS
control pursuant to the Public Contracting Code. But interpreting ORS 278.405 to authorize
DAS to recommend insertion of those clauses does not create a conflict with ORS 279A.140 and
would appear to be consistent with the legislature’s intentions in enacting ORS 278.405.
6.

Contract Clauses Creating Potential Liabilities

As a final matter, we must distinguish between the contract clauses discussed above that
seek to avoid potential state liability and contract clauses that expressly create or enhance
potential state liabilities. The latter may take various forms, such as: (1) contract language
declaring a contractor to be an “agent” for purposes of the Oregon Tort Claims Act (OTCA),
ORS 30.260 to 30.300, which, among other things, requires public bodies to indemnify their
officers, employees, and agents against tort claims arising out of acts or omissions occurring in
the performance of duty (but excluding cases of malfeasance in office or willful or wanton
neglect of duty), ORS 30.285(1) and (2); (2) a contractual declaration that the parties “intend”

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(but do not guarantee) that the contractor is an agent; (3) both a declaration that the parties
“intend” the contractor to be an agent and a clause agreeing that the state will indemnify the
contractor up to tort claim limits; or, (4) a clause extending insurance coverage to the contractor
up to stated claims limits.1/ The question is whether a state agency (or a contract) for which DAS
has no contracting oversight authority under ORS 279A.140 may include such clauses without
DAS’s prior approval.2/
The foregoing clauses each affirmatively create or increase the risk of potential state
liabilities that would not exist or be increased if a contract did not directly address these points.
While it is possible for a contractor to be entitled to OTCA indemnity as a matter of law and the
particular facts surrounding a claim, the purpose of these clauses is to shift risk (or increase the
likelihood that risk will be shifted) from the contractor to the state. Accordingly, such clauses
create contingent liabilities for the state. DAS, as the manager of the state’s risk management
and insurance programs, has an oversight role whenever state agencies purport to protect
contractors from third party liabilities through contract clauses.
Article XI, section 7, of the Oregon Constitution prohibits the state generally from
creating potential liabilities without currently funding them.3/ Consequently, those potential
liabilities must be funded either through the purchase of insurance or through the state’s selfinsurance fund.4/
State agencies may not purchase insurance (with exceptions inapplicable to this opinion)
without DAS’s approval. ORS 278.415. Thus, an agency neither could obligate itself to provide
insurance nor purchase insurance to fulfill that obligation without express approval from DAS.
DAS also is authorized:
To provide all insurance coverages including coverage of related legal expenses
required by law, requisitioned by individual agencies, or which the department
determines necessary or desirable for the efficient operation of state government,
including but not limited to casualty insurance, property insurance, workers’
compensation insurance and surety insurance.
ORS 278.405(1). According to this provision, DAS has authority to provide insurance if (1) the
insurance is required by law; (2) requisitioned by an agency; or (3) DAS determines the
insurance to be necessary or desirable for the efficient operation of state government. The first
of those provisions is inapplicable, because this opinion addresses contractual obligations to
extend indemnity or insurance coverage rather than insurance coverage required by law.
The second circumstance in which DAS may provide insurance is when an agency
“requisitions” it. The most apt dictionary definition of “requisition” is
3a: the act of requiring something to be furnished b: a demand or application
made usu. with authority: as (1): a demand made by military authorities upon
civilians (as the people of an invaded country) for supplies, labor, shelter, or other
military needs * * * (2): a written request for something (as materials, supplies,

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or personnel) authorized but not made available automatically ”
WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY UNABRIDGED at 1929 (2002). Thus, as
ordinarily used, the term “requisition” appears to have two elements: (1) a demand to furnish
something; (2) that the requester is authorized to get. In other words, that language authorizes
DAS to provide insurance to an agency that has some authority, independent of that provision
itself, to obtain insurance. As discussed above, an agency only has the powers expressly
conferred by statute or necessarily implied to carry out the powers expressly granted. Ochoco
Const., 295 Or at 426.
Accordingly, an agency would need express statutory authority to demand insurance or
that authority would have to be necessarily implied to carry out the powers expressly granted to
the agency. One example of such authority is contained in ORS 278.315. That provision gives
the Department of Human Services (DHS) the discretion to provide tort liability coverage
through DAS to certain county or private community care providers with whom DHS contracts.
It further provides that the coverage may be part of the contract between DHS and those
providers. But in the absence of similar authority to obtain insurance, an agency could not
demand it from DAS.
On the other hand, an agency could ask DAS to exercise its discretion to provide
insurance pursuant to the third circumstance listed in the statute, which gives DAS discretion to
provide insurance if it determines that it is necessary or desirable for the efficient operation of
the state government. This office previously concluded that this portion of ORS 278.405(1)
authorizes DAS to provide insurance coverage to the Columbia River Gorge Commission and its
members, even though that Commission was not a part of Oregon state government, if DAS
determined that providing insurance coverage would promote state government’s efficient
operation. Letter of Advice dated May 20, 2005, to David Hartwig, Administrator, Department
of Administrative Services (OP-2005-3) at 2, 2005 Or AG Lexis 4.
Similarly, DAS may determine that providing insurance to contractors in some instances
furthers the efficient operation of state government because it furthers the state’s ability to attract
qualified people to provide services. But that decision is left to DAS, not to other state agencies.
See also ORS 278.125(1) (authorizing DAS to purchase the insurance that it deems necessary or
desirable to accomplish the purposes of ORS chapter 278 and the OTCA and such other
insurance as may be desirable to “insure the state, participating local public bodies or their
officers, employees or agents against liability.”).
In light of the above, we conclude that DAS may require all state agencies to obtain
DAS’s consent to include clauses in their contracts that create potential demands, or increase the
risk of such demands, on the State Insurance Fund or on state insurance policies where that
demand would not otherwise exist by virtue of the work to be performed under the contract. As
noted above, DAS has authority under ORS 278.405(6) “[t]o adopt rules and policies governing
the administration of the state’s insurance and risk management activities * * * ” and to “ * * *
condition payment of all or part of any loss covered by the Insurance Fund on compliance with *
* * [those] rules and policies * * *.”