Comment on FR Doc # E8-28789

As the Finance Director/County Treasurer for Jackson County, OR I became concerned about this witholding requirement when I first read about it and I have become more concerned as I have thought about it and discussed this with other Finance professionals. There are a number of specific concerns that I have, which I will summarize below: 1) The 3% witholding requirement affects the cashflow of contractors. As such, I am convinced that it will result in higher bids to the county as contractors seek to cover their cashflow needs net of the 3% witholding. This is not equivalent to a payment retainage because the retainage is released immediately upon completion of work. The contractor will apply this witholding against taxes at year- end; however, the fact remains that it was unavailable through the year at a time when that contractor needed to pay his or her own bills and sub-contractors. This will result in higher priced bids to governments. Note that this is an ongoing cost. 2) Financial software can not currently handle this new requirement. In our case, we have an Oracle ERP product but not the latest version. Since Oracle, like most software providers, doesn't support versions 6 years old, this will force us to either go through the cost of an upgrade (estimates exceed 1/4 million dollars) or try to hire a programmer to develop a workaround. It is unlikely that a workaround can be developed for this proprietary software. Therefore, software expenses will be realized as a result of this legislation if enacted. 3) This will increase Accounts Payable staff costs in the areas of voucher auditing, answering vendor questions, obtaining additional TIN numbers, indentification of exceptions,1099 preparation, etc. Some of this will be one-time; a significant portion will be ongoing. 4) Outside audit costs will likely increase due to the additional complexity this creates in Accounts Payable transactions. 5) This will create confusion for contractors working with multiple local governments in that some will withold 3% but others, not having exceeded the $100 million threshold, will not withold. In the end, the biggest ongoing issue is that this will actually increase the dollar amount of bids made to affected local governments. It could also reduce the number of interested bidders. Why would a vendor seek our business knowing that they will have 3% taken from their payments when they can seek the same business from a local city and not realize this witholding? Again, it is a cashflow issue and most vendors will be unimpressed by any arguments that it works out the same at year-end when their taxes are calculated. Thank you for the opportunity to provide my input.