1.1                          A bill for an act 
  1.2             relating to state government; modifying state 
  1.3             procurement provisions; amending Minnesota Statutes 
  1.4             2000, sections 16C.02, by adding a subdivision; 
  1.5             16C.03, subdivision 2; 16C.04, by adding a 
  1.6             subdivision; 16C.05, subdivision 2; 16C.06, 
  1.7             subdivisions 2 and 3; 16C.07; 16C.08, subdivision 4; 
  1.8             16C.081; 43A.047; and 574.26, subdivision 2. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 2000, section 16C.02, is 
  1.11  amended by adding a subdivision to read: 
  1.12     Subd. 10a.  [ORGANIZATIONAL CONFLICT OF 
  1.13  INTEREST.] "Organizational conflict of interest" means that 
  1.14  because of existing or planned activities or because of 
  1.15  relationships with other persons: 
  1.16     (1) a vendor is unable or potentially unable to render 
  1.17  impartial assistance or advice to the state; 
  1.18     (2) the vendor's objectivity in performing the contract 
  1.19  work is or might be otherwise impaired; or 
  1.20     (3) the vendor has an unfair advantage. 
  1.21     Sec. 2.  Minnesota Statutes 2000, section 16C.03, 
  1.22  subdivision 2, is amended to read: 
  1.23     Subd. 2.  [RULEMAKING AUTHORITY.] Subject to chapter 14, 
  1.24  the commissioner may adopt rules, consistent with this chapter 
  1.25  and chapter 16B, relating to the following topics: 
  1.26     (1) solicitations and responses to solicitations, bid 
  1.27  security, vendor errors, opening of responses, award of 
  2.1   contracts, tied bids, and award protest process; 
  2.2      (2) contract performance and failure to perform; 
  2.3      (3) authority to debar or suspend vendors, and 
  2.4   reinstatement of vendors; 
  2.5      (4) contract cancellation; and 
  2.6      (5) procurement from rehabilitation facilities; and 
  2.7      (6) organizational conflicts of interest. 
  2.8      Sec. 3.  Minnesota Statutes 2000, section 16C.04, is 
  2.9   amended by adding a subdivision to read: 
  2.10     Subd. 3.  [ORGANIZATIONAL CONFLICTS OF INTEREST.] (a) The 
  2.11  commissioner shall make reasonable efforts to avoid, mitigate, 
  2.12  or neutralize organizational conflicts of interest.  To avoid an 
  2.13  organizational conflict of interest, the commissioner may 
  2.14  utilize methods including disqualifying a vendor from 
  2.15  eligibility for a contract award or canceling the contract if 
  2.16  the conflict is discovered after a contract has been issued.  To 
  2.17  mitigate or neutralize a conflict, the commissioner may use 
  2.18  methods such as revising the scope of work to be conducted, 
  2.19  allowing vendors to propose the exclusion of task areas that 
  2.20  create a conflict, or providing information to all vendors to 
  2.21  assure that all facts are known to all vendors.  
  2.22     (b) In instances where a conflict or potential conflict has 
  2.23  been identified and the commissioner determines that vital 
  2.24  operations of the state will be jeopardized if a contract with 
  2.25  the vendor is not established, the commissioner may waive the 
  2.26  requirements in paragraph (a). 
  2.27     Sec. 4.  Minnesota Statutes 2000, section 16C.05, 
  2.28  subdivision 2, is amended to read: 
  2.29     Subd. 2.  [CREATION AND VALIDITY OF CONTRACTS.] (a) A 
  2.30  contract is not valid and the state is not bound by it unless: 
  2.31     (1) it has first been executed by the head of the agency or 
  2.32  a delegate who is a party to the contract; 
  2.33     (2) it has been approved by the commissioner; 
  2.34     (3) it has been approved by the attorney general or a 
  2.35  delegate as to form and execution; 
  2.36     (4) the accounting system shows an obligation in an expense 
  3.1   budget or encumbrance for the amount of the contract liability; 
  3.2   and 
  3.3      (5) the combined contract and amendments shall not exceed 
  3.4   five years without specific, written approval by the 
  3.5   commissioner according to established policy, procedures, and 
  3.6   standards, or unless otherwise provided for by law.  The term of 
  3.7   the original contract must not exceed two years unless the 
  3.8   commissioner determines that a longer duration is in the best 
  3.9   interest of the state.  
  3.10     (b) Grants, interagency agreements, purchase orders, work 
  3.11  orders, and annual plans need not, in the discretion of the 
  3.12  commissioner and attorney general, require the signature of the 
  3.13  commissioner and/or the attorney general.  Bond purchase 
  3.14  agreements by the Minnesota public facilities authority do not 
  3.15  require the approval of the commissioner.  
  3.16     (c) A fully executed copy of every contract must be kept on 
  3.17  file at the contracting agency. 
  3.18     Sec. 5.  Minnesota Statutes 2000, section 16C.06, 
  3.19  subdivision 2, is amended to read: 
  3.20     Subd. 2.  [SOLICITATION PROCESS.] (a) A formal solicitation 
  3.21  must be used to acquire all goods, service contracts, and 
  3.22  utilities estimated at or more than $25,000 $50,000 unless 
  3.23  otherwise provided for.  All formal responses must be sealed 
  3.24  when they are received and must be opened in public at the hour 
  3.25  stated in the solicitation.  Formal responses must be 
  3.26  authenticated by the responder in a manner specified by the 
  3.27  commissioner.  
  3.28     (b) An informal solicitation may be used to acquire all 
  3.29  goods, service contracts, and utilities that are estimated at 
  3.30  less than $25,000 $50,000.  The number of vendors required to 
  3.31  receive solicitations may be determined by the commissioner.  
  3.32  Informal responses must be authenticated by the responder in a 
  3.33  manner specified by the commissioner. 
  3.34     Sec. 6.  Minnesota Statutes 2000, section 16C.06, 
  3.35  subdivision 3, is amended to read: 
  3.36     Subd. 3.  [INFORMATION IN BIDS AND PROPOSALS.] (a) Only the 
  4.1   name of the vendor and dollar amounts specified in a response to 
  4.2   a request for bids shall be read at the time of opening.  Only 
  4.3   the name of the responding vendors to all requests for proposals 
  4.4   shall be read at the time of opening.  All other information 
  4.5   contained in a vendor's response to a bid is classified as 
  4.6   nonpublic data, as defined in section 13.02, and remains 
  4.7   nonpublic data until completion of the selection process.  All 
  4.8   other information contained in a vendor's response to a request 
  4.9   for proposal, other than the name of the vendor, is classified 
  4.10  as nonpublic data, as defined in section 13.02, and remains 
  4.11  nonpublic data until the completion of the evaluation process.  
  4.12     (b) All responses are public information at the time of the 
  4.13  award unless otherwise provided for.  All responses and 
  4.14  documents pertaining to the final award of an acquisition must 
  4.15  be retained and made a part of a permanent file or record and 
  4.16  remain open to public inspection, after award, unless otherwise 
  4.17  provided for by law. 
  4.18     (c) If the commissioner rejects all responses to a 
  4.19  solicitation, information in the responses, other than the 
  4.20  information made public pursuant to paragraph (a), remains 
  4.21  nonpublic data, as defined in section 13.02, until a selection 
  4.22  is made based on responses to a resolicitation of bids, the 
  4.23  evaluation process is completed based on responses to a 
  4.24  resolicitation of a request for proposals, or a determination is 
  4.25  made to abandon the purchase. 
  4.26     Sec. 7.  Minnesota Statutes 2000, section 16C.07, is 
  4.27  amended to read: 
  4.28     16C.07 [EMPLOYEE SKILLS INVENTORY.] 
  4.29     The commissioner of employee relations shall develop a 
  4.30  directory of services that state agencies commonly provide that 
  4.31  are professional or technical in nature.  
  4.32     Before an agency may seek approval of a professional or 
  4.33  technical services contract valued at a total cost in excess of 
  4.34  $25,000, it must certify to the commissioner that it has 
  4.35  publicized the contract by posting notice at appropriate 
  4.36  worksites within agencies and has made reasonable efforts to 
  5.1   determine that no state employee or agency, including an 
  5.2   employee or agency outside the contracting agency, is able and 
  5.3   available to perform the required services.  When possible, this 
  5.4   posting should be done electronically.  
  5.5      Sec. 8.  Minnesota Statutes 2000, section 16C.08, 
  5.6   subdivision 4, is amended to read: 
  5.7      Subd. 4.  [REPORTS.] (a) The commissioner shall submit to 
  5.8   the governor, the chairs of the house ways and means and senate 
  5.9   finance committees, and the legislative reference library a 
  5.10  yearly listing of all contracts for professional or technical 
  5.11  services executed.  The report must identify the contractor, 
  5.12  contract amount, duration, and services to be provided.  The 
  5.13  commissioner shall also issue yearly reports summarizing the 
  5.14  contract review activities of the department by fiscal year. 
  5.15     (b) The fiscal year report must be submitted by September 1 
  5.16  of each year and must: 
  5.17     (1) be sorted by agency and by contractor; 
  5.18     (2) show the aggregate value of contracts issued by each 
  5.19  agency and issued to each contractor; 
  5.20     (3) distinguish between contracts that are being issued for 
  5.21  the first time and contracts that are being extended; 
  5.22     (4) state the termination date of each contract; and 
  5.23     (5) identify services by commodity code, including topics 
  5.24  such as contracts for training, contracts for research and 
  5.25  opinions, and contracts for computer systems. 
  5.26     (c) Within 30 days of final completion of a contract over 
  5.27  $40,000 covered by this subdivision, the head of the agency 
  5.28  entering into the contract must submit a one-page report to the 
  5.29  commissioner who must submit a copy to the legislative reference 
  5.30  library.  The report must:  
  5.31     (1) summarize the purpose of the contract, including why it 
  5.32  was necessary to enter into a contract; 
  5.33     (2) state the amount spent on the contract; and 
  5.34     (3) explain why this amount was a cost-effective way to 
  5.35  enable the agency to provide its services or products better or 
  5.36  more efficiently.  
  6.1      Sec. 9.  Minnesota Statutes 2000, section 16C.081, is 
  6.2   amended to read: 
  6.3      16C.081 [EXCEPTION FOR FEDERAL CONTRACTS.] 
  6.4      Notwithstanding any law to the contrary, the commissioner 
  6.5   of transportation, commissioner of the pollution control agency, 
  6.6   or commissioner of natural resources an agency may, when 
  6.7   required by a federal agency entering into an intergovernmental 
  6.8   contract, negotiate contract terms providing for full or partial 
  6.9   prepayment to the federal agency before work is performed or 
  6.10  services are provided. 
  6.11     Sec. 10.  Minnesota Statutes 2000, section 43A.047, is 
  6.12  amended to read: 
  6.13     43A.047 [CONTRACTED SERVICES.] 
  6.14     (a) Executive agencies, including the Minnesota state 
  6.15  colleges and universities system, must demonstrate that they 
  6.16  cannot use available staff before hiring outside consultants or 
  6.17  services.  If use of consultants is necessary, agencies are 
  6.18  encouraged to negotiate contracts that will involve permanent 
  6.19  staff, so as to upgrade and maximize training of state employees.
  6.20     (b) If agencies reduce operating budgets, agencies must 
  6.21  give priority to reducing spending on professional and technical 
  6.22  service contracts before laying off permanent employees. 
  6.23     (c) Agencies must report to the commissioner of 
  6.24  administration by November 1 each year on implementation of this 
  6.25  section during the previous fiscal year.  The reports must 
  6.26  include amounts spent on professional and technical service 
  6.27  contracts during the previous fiscal year.  The commissioner 
  6.28  shall compile the reports into a uniform format and forward them 
  6.29  to the chairs of the senate finance and house ways and means 
  6.30  committees by November 15. 
  6.31     Sec. 11.  Minnesota Statutes 2000, section 574.26, 
  6.32  subdivision 2, is amended to read: 
  6.33     Subd. 2.  [TERMS.] Except as provided in sections 574.263 
  6.34  and 574.264 or if the amount of the contract is $10,000 $75,000 
  6.35  or less, a contract with a public body for the doing of any 
  6.36  public work is not valid unless the contractor gives (1) a 
  7.1   performance bond to the public body with whom the contractor 
  7.2   entered into the contract, for the use and benefit of the public 
  7.3   body to complete the contract according to its terms, and 
  7.4   conditioned on saving the public body harmless from all costs 
  7.5   and charges that may accrue on account of completing the 
  7.6   specified work, and (2) a payment bond for the use and benefit 
  7.7   of all persons furnishing labor and materials engaged under, or 
  7.8   to perform the contract, conditioned for the payment, as they 
  7.9   become due, of all just claims for the labor and materials.  
  7.10  Reasonable attorneys' fees, costs, and disbursements may be 
  7.11  awarded in an action to enforce claims under the act if the 
  7.12  action is successfully maintained or successfully appealed.