HF 1863

as introduced - 93rd Legislature (2023 - 2024) Posted on 02/16/2023 01:41pm

A bill for an act
relating to state government; changing provisions for state procurement, finance,
asset preservation account, and Designer Selection Board; amending Minnesota
Statutes 2022, sections 16A.15, subdivision 3; 16A.632, subdivision 2; 16B.307,
subdivision 1; 16B.33, subdivisions 1, 3, 3a, by adding a subdivision; 16C.10,
subdivision 2; 16C.251; 16C.32, subdivision 1.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2022, section 16A.15, subdivision 3, is amended to read:

Subd. 3.

Allotment and encumbrance.

(a) A payment may not be made without prior
obligation. An obligation may not be incurred against any fund, allotment, or appropriation
unless the commissioner has certified a sufficient unencumbered balance or the accounting
system shows sufficient allotment or encumbrance balance in the fund, allotment, or
appropriation to meet it. The commissioner shall determine when the accounting system
may be used to incur obligations without the commissioner's certification of a sufficient
unencumbered balance. An expenditure or obligation authorized or incurred in violation of
this chapter is invalid and ineligible for payment until made valid. A payment made in
violation of this chapter is illegal. An employee authorizing or making the payment, or
taking part in it, and a person receiving any part of the payment, are jointly and severally
liable to the state for the amount paid or received. If an employee knowingly incurs an
obligation or authorizes or makes an expenditure in violation of this chapter or takes part
in the violation, the violation is just cause for the employee's removal by the appointing
authority or by the governor if an appointing authority other than the governor fails to do
so. In the latter case, the governor shall give notice of the violation and an opportunity to
be heard on it to the employee and to the appointing authority. A claim presented against
an appropriation without prior allotment or encumbrance may be made valid on investigation,
review, and approval by the agency head in accordance with the commissioner's policy, if
the services, materials, or supplies to be paid for were actually furnished in good faith
without collusion and without intent to defraud. The commissioner may then pay the claim
just as properly allotted and encumbered claims are paid.

(b) The commissioner may approve payment for materials and supplies in excess of the
obligation amount when increases are authorized by section 16C.03, subdivision 3.

(c) To minimize potential construction delay claims, an agency with a project funded
by a building appropriation may allow a new text begin consultant or new text end contractor to proceed with
supplemental work within the limits of the appropriation before money is encumbered.
Under this circumstance, the agency may requisition funds and allow new text begin consultants or
new text end contractors to expeditiously proceed with new text begin services or new text end a construction sequence. While the
new text begin consultant or new text end contractor is proceeding, the agency shall immediately act to encumber the
required funds.

Sec. 2.

Minnesota Statutes 2022, section 16A.632, subdivision 2, is amended to read:

Subd. 2.

Standards.

(a) Article XI, section 5, clause (a), of the constitution states general
obligation bonds may be issued to finance only the acquisition or betterment of state land,
buildings, and improvements of a capital nature. In interpreting this and applying it to the
purposes of the program contemplated in this section, the following standards are adopted
for the disbursement of money from the capital asset preservation and replacement account deleted text begin : deleted text end new text begin .
new text end

(b) deleted text begin No deleted text end new text begin An appropriation under this section may not be used to acquire new text end new land deleted text begin , deleted text end new text begin or new text end
buildings deleted text begin , or major new improvements will be acquired. These projects, including all capital
expenditures required to permit their effective use for the intended purpose on completion,
will be estimated and provided for individually through a direct appropriation for each
project. deleted text end new text begin or to construct new buildings or additions.
new text end

(c) An expenditure will be made from the account only when it is a capital expenditure
on a capital asset previously owned by the state, within the meaning of accepted accounting
principles as applied to public expenditures. The commissioner of administration will consult
with the commissioner of management and budget to the extent necessary to ensure this
and will furnish the commissioner of management and budget a list of projects to be financed
from the account in order of their priority. The commissioner shall also furnish each revision
of the list. The legislature assumes that many provisions for preservation and replacement
of portions of existing capital assets will constitute betterments and capital improvements
within the meaning of the constitution and capital expenditures under correct accounting
principles, and will be financed more efficiently and economically under the program than
by direct appropriations for specific projects. However, the purpose of the program is to
accumulate data showing how additional costs may be saved by appropriating money from
the general fund for preservation measures, the necessity of which is predictable over short
periods.

(d) The commissioner of administration will furnish instructions to agencies to apply
for funding of capital expenditures for preservation and replacement from the account, will
review applications, will make initial allocations among types of eligible projects enumerated
below, will determine priorities, and will allocate money in priority order until the available
appropriation has been committed. new text begin An appropriation under this section may not be used to
make minor emergency repairs.
new text end

(e) Categories of projects considered likely to be most needed and appropriate for
financing are the following:

(1) unanticipated emergencies of all kinds deleted text begin , for which a relatively small amount should
be initially reserved, replaced from money allocated to low-priority projects, if possible, as
emergencies occur, and used for stabilization rather than replacement if the cost would
exhaust the account and should be specially appropriated deleted text end new text begin involving impacts to state-owned
property new text end ;

(2) new text begin major new text end projects to deleted text begin remove deleted text end new text begin address new text end life safety deleted text begin hazards, like deleted text end new text begin for existing buildings and
sites, including but not limited to security, new text end replacement of mechanical new text begin and other building new text end
systems, building code violations, or structural defects deleted text begin , at costs not large enough to require
major capital requests to the legislature deleted text end ;

(3) deleted text begin elimination deleted text end new text begin removal new text end or containment of hazardous substances like asbestos or PCBs;

(4) deleted text begin moderate cost replacement deleted text end new text begin major projects to replace new text end and repair deleted text begin of deleted text end roofs, windows,
tuckpointing, and structural members necessary to preserve the exterior and interior of
existing buildings; and

(5) up to ten percent of an appropriation awarded under this section may be used for
design costs for projects eligible to be funded from this account in anticipation of future
funding from the account.

Sec. 3.

Minnesota Statutes 2022, section 16B.307, subdivision 1, is amended to read:

Subdivision 1.

Standards.

(a) Article XI, section 5, clause (a), of the constitution requires
that state general obligation bonds be issued to finance only the acquisition or betterment
of public land, buildings, and other public improvements of a capital nature. Money
appropriated for asset preservation, whether from state bond proceeds or from other revenue,
is subject to the following additional limitations:

(b) An appropriation for asset preservation may not be used to acquire new land nor to
acquire or construct new buildings deleted text begin , deleted text end new text begin or new text end additions to buildings deleted text begin , or major new improvements deleted text end .

(c) An appropriation for asset preservation may be used only for a capital expenditure
on a capital asset previously owned by the state, within the meaning of generally accepted
accounting principles as applied to public expenditures. The commissioner of administration
will consult with the commissioner of management and budget to the extent necessary to
ensure this and will furnish the commissioner of management and budget a list of projects
to be financed from the account in order of their priority. The legislature assumes that many
projects for preservation and replacement of portions of existing capital assets will constitute
betterments and capital improvements within the meaning of the constitution and capital
expenditures under generally accepted accounting principles, and will be financed more
efficiently and economically under this section than by direct appropriations for specific
projects.

(d) Categories of projects considered likely to be most needed and appropriate for asset
preservation appropriations are the following:

(1) new text begin major new text end projects to deleted text begin remove deleted text end new text begin address new text end life safety hazards deleted text begin , like deleted text end new text begin for existing buildings and
sites, including but not limited to security, new text end building code violations new text begin , new text end or structural defects.
Notwithstanding paragraph (b), a project in this category may include an addition to an
existing building if it is a required component of the hazard deleted text begin removal deleted text end new text begin abatement new text end project;

(2) projects to eliminate or contain hazardous substances like asbestos or lead paint;

(3) major projects to new text begin address accessibility and building code violations; new text end replace or repair
roofs, windows, tuckpointing, mechanical deleted text begin or deleted text end new text begin , new text end electrical new text begin , plumbing or other building new text end systems,
utility infrastructure, new text begin and new text end tunnels deleted text begin , deleted text end new text begin ; make new text end site deleted text begin renovations deleted text end new text begin improvements new text end necessary to support
building use deleted text begin , deleted text end new text begin ; new text end and new text begin repair new text end structural components necessary to preserve the exterior and interior
of existing buildings; and

(4) new text begin major new text end projects to deleted text begin renovate deleted text end new text begin repair new text end parking deleted text begin structures deleted text end new text begin facilities and surface lots new text end .

(e) Up to ten percent of an appropriation subject to this section may be used for design
costs for projects eligible to be funded under this section in anticipation of future asset
preservation appropriations.

Sec. 4.

Minnesota Statutes 2022, section 16B.33, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) As used in this section, the following terms have the
meanings given them:

(b) "Agency" has the meaning given in section 16B.01.

(c) "Architect" means an architect or landscape architect registered to practice under
sections 326.02 to 326.15.

(d) "Board" means the state Designer Selection Board.

(e) "Design-build" means the process of entering into and managing a single contract
between the commissioner and the design-builder in which the design-builder agrees to
both design and construct a project as specified in the contract at a guaranteed maximum
or a fixed price.

(f) "Design-builder" means a person who proposes to design and construct a project in
accordance with the requirements of section 16C.33.

(g) "Designer" means an architect or engineer, or a partnership, association, or corporation
comprised primarily of architects or engineers or of both architects and engineers.

(h) "Engineer" means an engineer registered to practice under sections 326.02 to 326.15.

(i) "Person" includes an individual, corporation, partnership, association, or any other
legal entity.

(j) "Primary designer" means the designer who is to have primary design responsibility
for a project, and does not include designers who are merely consulted by the user agency
and do not have substantial design responsibility, or designers who will or may be employed
or consulted by the primary designer.

(k) "Project" means an undertaking to construct, erect, or remodel a building by or for
the state or an agency. new text begin Capital projects exempt from the requirements of this section include
demolition or decommissioning of state assets; hazardous materials abatement; repair and
replacement of utility infrastructure, parking lots, and parking structures; security upgrades;
building systems replacement or repair including alterations to building interiors needed to
accommodate the systems; and other asset preservation work not involving remodeling of
occupied space.
new text end

(l) "User agency" means the agency undertaking a specific project. For projects
undertaken by the state of Minnesota, "user agency" means the Department of Administration
or a state agency with an appropriate delegation to act on behalf of the Department of
Administration.

Sec. 5.

Minnesota Statutes 2022, section 16B.33, subdivision 3, is amended to read:

Subd. 3.

Agencies must request designer.

(a) Application. Upon undertaking a project
with an estimated cost greater than deleted text begin $2,000,000 deleted text end new text begin $4,000,000 new text end or a planning project with
estimated fees greater than deleted text begin $200,000 deleted text end new text begin $400,000 new text end , every user agency, except the Capitol Area
Architectural and Planning Board, shall submit a written request for a primary designer for
its project to the commissioner, who shall forward the request to the board. The University
of Minnesota and the Minnesota State Colleges and Universities shall follow the process
in subdivision 3a to select designers for their projects. The written request must include a
description of the project, the estimated cost of completing the project, a description of any
special requirements or unique features of the proposed project, and other information which
will assist the board in carrying out its duties and responsibilities set forth in this section.

(b) Reactivated project. If a project for which a designer has been selected by the board
becomes inactive, lapses, or changes as a result of project phasing, insufficient appropriations,
or other reasons, the commissioner, the Minnesota State Colleges and Universities, or the
University of Minnesota may, if the project is reactivated, retain the same designer to
complete the project.

(c) Fee limit reached after designer selected. If a project initially estimated to be below
the cost and planning fee limits of this subdivision has its cost or planning fees revised so
that the limits are exceeded, the project must be referred to the board for designer selection
even if a primary designer has already been selected. In this event, the board may, without
conducting interviews, elect to retain the previously selected designer if it determines that
the interests of the state are best served by that decision and shall notify the commissioner
of its determination.

Sec. 6.

Minnesota Statutes 2022, section 16B.33, subdivision 3a, is amended to read:

Subd. 3a.

Higher education projects.

(a) When the University of Minnesota or the
Minnesota State Colleges and Universities undertakes a project involving construction or
major remodeling, as defined in section 16B.335, subdivision 1, with an estimated cost
greater than deleted text begin $2,000,000 deleted text end new text begin $4,000,000 new text end or a planning project with estimated fees greater than
deleted text begin $200,000 deleted text end new text begin $400,000 new text end , the system shall submit a written request for a primary designer to the
commissioner, as provided in subdivision 3.

(b) When the University of Minnesota or the Minnesota State Colleges and Universities
undertakes a project involving renovation, repair, replacement, or rehabilitation, the system
office may submit a written request for a primary designer to the commissioner as provided
in subdivision 3.

(c) For projects at the University of Minnesota or the State Colleges and Universities,
the board shall select at least two primary designers under subdivision 4 for recommendation
to the Board of Regents or the Board of Trustees. Meeting records or written evaluations
that document the final selection are public records. The Board of Regents or the Board of
Trustees shall notify the commissioner of the designer selected from the recommendations.

Sec. 7.

Minnesota Statutes 2022, section 16B.33, is amended by adding a subdivision to
read:

new text begin Subd. 6. new text end

new text begin Rate of inflation. new text end

new text begin No later than December 31 of every fifth year starting in
2025, the commissioner shall determine the percentage increase in the rate of inflation, as
measured by the Means Quarterly Construction Cost Index, during the four-year period
preceding that year. The thresholds in subdivisions 3, paragraph (a); and 3a, paragraph (a),
shall be increased by the percentage calculated by the commissioner to the nearest
ten-thousandth dollar.
new text end

Sec. 8.

Minnesota Statutes 2022, section 16C.10, subdivision 2, is amended to read:

Subd. 2.

Emergency acquisition.

The solicitation process described in this chapter new text begin and
chapter 16B new text end is not required in emergencies. In emergencies, the commissioner may make
new text begin or authorize new text end any purchases necessary for the new text begin design, construction, new text end repair, rehabilitation, and
improvement of a deleted text begin state-owned deleted text end new text begin publicly owned new text end structure or may new text begin make or new text end authorize an agency
to do so and may purchase, or may authorize an agency to purchase, new text begin any new text end goods, services,
or utility services directly for immediate use. new text begin This provision applies to projects conducted
by Minnesota State Colleges and Universities.
new text end

Sec. 9.

Minnesota Statutes 2022, section 16C.251, is amended to read:

16C.251 BEST AND FINAL OFFER.

A "best and final offer" solicitation process may not be used for building and construction
contracts new text begin awarded based on competitive bids new text end .

Sec. 10.

Minnesota Statutes 2022, section 16C.32, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

As used in sections 16C.32 to 16C.35, the following terms
have the meanings given them, unless the context clearly indicates otherwise:

(1) "acceptance" means a formal resolution of the commissioner authorizing the execution
of a design-build, construction manager at risk, or job order contracting contract;

(2) "agency" means any state officer, employee, board, commission, authority,
department, or other agency of the executive branch of state government. Unless specifically
indicated otherwise, as used in sections 16C.32 to 16C.35, agency also includes the Minnesota
State Colleges and Universities;

(3) "architect" means an architect or landscape architect registered to practice under
sections 326.02 to 326.15;

(4) "board" means the state Designer Selection Board, unless the estimated cost of the
project is less than deleted text begin $2,000,000 deleted text end new text begin the amount specified in section 16B.33, subdivision 3 new text end , in
which case the commissioner may act as the board;

(5) "Capitol Area Architectural and Planning Board" means the board established to
govern the Capitol Area under chapter 15B;

(6) "commissioner" means the commissioner of administration or the Board of Trustees
of the Minnesota State Colleges and Universities, whichever controls a project;

(7) "construction manager at risk" means a person who is selected by the commissioner
to act as a construction manager to manage the construction process, which includes, but
is not limited to, responsibility for the price, schedule, and workmanship of the construction
performed in accordance with the procedures of section 16C.34;

(8) "construction manager at risk contract" means a contract for construction of a project
between a construction manager at risk and the commissioner, which contract shall include
a guaranteed maximum price, construction schedule, and workmanship of the construction
performed;

(9) "design-build contract" means a contract between the commissioner and a
design-builder to furnish the architectural, engineering, and related design services as well
as the labor, materials, supplies, equipment, and construction services for a project;

(10) "design and price-based proposal" means the proposal to be submitted by a
design-builder in the design and price-based selection process, as described in section
16C.33, which proposal meets the requirements of section 16C.33, subdivision 7, paragraph
(c), in such detail as required in the request for proposals;

(11) "design and price-based selection" means the selection of a design-builder as
described in section 16C.33, subdivision 8;

(12) "design criteria package" means performance criteria prepared by a design criteria
professional who shall be either an employee of the commissioner or shall be selected in
compliance with section 16B.33, 16C.08, or 16C.087;

(13) "design criteria professional" means a person licensed under chapter 326, or a person
who employs an individual or individuals licensed under chapter 326, required to design a
project, and who is employed by or under contract to the commissioner to provide
professional, architectural, or engineering services in connection with the preparation of
the design criteria package;

(14) "guaranteed maximum price" means the maximum amount that a design-builder,
construction manager at risk, or subcontractor will be paid pursuant to a contract to perform
a defined scope of work;

(15) "guaranteed maximum price contract" means a contract under which a design-builder,
construction manager, or subcontractor is paid on the basis of their actual cost to perform
the work specified in the contract plus an amount for overhead and profit, the sum of which
must not exceed the guaranteed maximum price set forth in the contract;

(16) "job order contracting" means a project delivery method that requests a limited
number of bids from a list of qualified contractors, selected from a registry of qualified
contractors who have been prescreened and who have entered into master contracts with
the commissioner, as provided in section 16C.35;

(17) "past performance" or "experience" does not include the exercise or assertion of a
person's legal rights;

(18) "person" includes an individual, corporation, partnership, association, or any other
legal entity;

(19) "project" means an undertaking to construct, alter, or enlarge a building, structure,
or other improvements, except highways and bridges, by or for the state or an agency;

(20) "qualifications-based selection" means the selection of a design-builder as provided
in section 16C.33;

(21) "request for qualifications" means the document or publication soliciting
qualifications for a design-build, construction manager at risk, or job order contracting
contract as provided in sections 16C.33 to 16C.35;

(22) "request for proposals" means the document or publication soliciting proposals for
a design-build or construction manager at risk contract as provided in sections 16C.33 and
16C.34; and

(23) "trade contract work" means the furnishing of labor, materials, or equipment by
contractors or vendors that are incorporated into the completed project or are major
components of the means of construction. Work performed by trade contractors involves
specific portions of the project, but not the entire project.