1.1                          A bill for an act 
  1.2             relating to public administration; providing oversight 
  1.3             of certain state contracts; amending Minnesota 
  1.4             Statutes 1994, sections 15.061; 16A.11, by adding a 
  1.5             subdivision; 16B.17; and 16B.19, subdivisions 2 and 
  1.6             10; proposing coding for new law in Minnesota 
  1.7             Statutes, chapters 3; and 16B. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9      Section 1.  [3.225] [PROFESSIONAL AND TECHNICAL SERVICE 
  1.10  CONTRACTS.] 
  1.11     Subdivision 1.  [APPLICATION.] This section applies to a 
  1.12  contract for professional or technical services entered into by 
  1.13  the house of representatives, the senate, the legislative 
  1.14  coordinating commission, or any group under the jurisdiction of 
  1.15  the legislative coordinating commission.  For purposes of this 
  1.16  section, "professional or technical services" contract has the 
  1.17  meaning given it in section 16B.17. 
  1.18     Subd. 2.  [REQUIREMENTS FOR ALL CONTRACTS.] Before entering 
  1.19  into a contract for professional or technical services, the 
  1.20  contracting entity shall determine that: 
  1.21     (1) all provisions of section 16B.19, subdivision 2, and 
  1.22  subdivision 3 of this section have been verified or complied 
  1.23  with; 
  1.24     (2) the work to be performed under the contract is 
  1.25  necessary to the entity's achievement of its responsibilities; 
  1.26     (3) the contract will not establish an employment 
  2.1   relationship between the state or the entity and any persons 
  2.2   performing under the contract; 
  2.3      (4) no current legislator or legislative employees will 
  2.4   engage in the performance of the contract; 
  2.5      (5) no state agency has previously performed or contracted 
  2.6   for the performance of tasks that would be substantially 
  2.7   duplicated under the proposed contract; 
  2.8      (6) the contracting entity has specified a satisfactory 
  2.9   method of evaluating and using the results of the work to be 
  2.10  performed; and 
  2.11     (7) the combined contract and amendments will not extend 
  2.12  for more than five years. 
  2.13     Subd. 3.  [CONTRACTS IN EXCESS OF $5,000.] Before an entity 
  2.14  may seek to enter into a professional or technical services 
  2.15  contract valued in excess of $5,000, it must determine that: 
  2.16     (1) no legislative employee is able and available to 
  2.17  perform the services called for by the contract; 
  2.18     (2) reasonable efforts were made to publicize the 
  2.19  availability of the contract to the public; 
  2.20     (3) the entity has received, reviewed, and accepted a 
  2.21  detailed work plan from the contractor for performance under the 
  2.22  contract; and 
  2.23     (4) the entity has developed, and fully intends to 
  2.24  implement, a written plan providing for:  the assignment of 
  2.25  personnel to a monitoring and liaison function; the periodic 
  2.26  review of interim reports or other indications of past 
  2.27  performance; and the ultimate utilization of the final product 
  2.28  of the services. 
  2.29     Subd. 4.  [RENEWALS.] The renewal of a professional or 
  2.30  technical service contract must comply with all requirements, 
  2.31  including notice, applicable to the original contract.  A 
  2.32  renewal contract must be identified as such.  All notices and 
  2.33  reports on a renewal contract must state the date of the 
  2.34  original contract and the amount previously paid under the 
  2.35  contract. 
  2.36     Subd. 5.  [REPORTS.] (a) The house of representatives, the 
  3.1   senate, and the legislative coordinating commission shall submit 
  3.2   to the legislative reference library a monthly listing of all 
  3.3   contracts for professional or technical services executed in the 
  3.4   preceding month.  The report must identify the parties and the 
  3.5   contract amount, duration, and tasks to be performed. 
  3.6      (b) The monthly report must: 
  3.7      (1) be sorted by contracting entity and by contractor; 
  3.8      (2) show the aggregate value of contracts issued by each 
  3.9   agency and issued to each contractor; 
  3.10     (3) distinguish between contracts that are being issued for 
  3.11  the first time and contracts that are being renewed; 
  3.12     (4) state the termination date of each contract; and 
  3.13     (5) categorize contracts according to subject matter, 
  3.14  including topics such as contracts for training, contracts for 
  3.15  research and opinions, and contracts for computer systems. 
  3.16     (c) Within 30 days of final completion of a contract in 
  3.17  excess of $5,000 covered by this subdivision, the chief 
  3.18  executive of the entity entering into the contract must file a 
  3.19  one-page performance report with the legislative reference 
  3.20  library.  The report must: 
  3.21     (1) summarize the purpose of the contract, including why it 
  3.22  was necessary to enter into a contract; 
  3.23     (2) state the amount spent on the contract; 
  3.24     (3) explain why this amount was a cost-effective way to 
  3.25  enable the entity to provide its services or products better or 
  3.26  more efficiently. 
  3.27     Subd. 6.  [CONTRACT TERMS.] (a) A professional or technical 
  3.28  services contract must by its terms permit the contracting 
  3.29  entity to unilaterally terminate the contract prior to 
  3.30  completion, upon payment of just compensation, if the entity 
  3.31  determines that further performance under the contract would not 
  3.32  serve entity purposes.  If the final product of the contract is 
  3.33  a written report, a copy must be filed with the legislative 
  3.34  reference library. 
  3.35     (b) The terms of a contract must provide that no more than 
  3.36  90 percent of the amount due under the contract may be paid 
  4.1   until the final product has been reviewed by the person entering 
  4.2   into the contract on behalf of the contracting entity, and that 
  4.3   person has certified that the contractor has satisfactorily 
  4.4   fulfilled the terms of the contract. 
  4.5      Sec. 2.  Minnesota Statutes 1994, section 15.061, is 
  4.6   amended to read: 
  4.7      15.061 [CONSULTANT, PROFESSIONAL AND OR TECHNICAL 
  4.8   SERVICES.] 
  4.9      Pursuant to the provisions of In accordance with section 
  4.10  16B.17, the head of a state department or agency may, with the 
  4.11  approval of the commissioner of administration, contract 
  4.12  for consultant services and professional and or technical 
  4.13  services in connection with the operation of the department or 
  4.14  agency.  A contract negotiated under this section shall is not 
  4.15  be subject to the competitive bidding requirements of chapter 16 
  4.16  16B. 
  4.17     Sec. 3.  Minnesota Statutes 1994, section 16A.11, is 
  4.18  amended by adding a subdivision to read: 
  4.19     Subd. 3b.  [CONTRACTS.] The detailed budget estimate must 
  4.20  also include the following information on professional or 
  4.21  technical services contracts: 
  4.22     (1) the number and amount of contracts in excess of $25,000 
  4.23  for each agency for the past biennium; 
  4.24     (2) the anticipated number and amount of contracts in 
  4.25  excess of $25,000 for each agency for the upcoming biennium; and 
  4.26     (3) the total value of all contracts from the previous 
  4.27  biennium, and the anticipated total value of all contracts for 
  4.28  the upcoming biennium. 
  4.29     Sec. 4.  [16B.167] [EMPLOYEE SKILLS INVENTORY.] 
  4.30     (a) The commissioners of employee relations and 
  4.31  administration shall develop a list of skills that state 
  4.32  agencies commonly seek from professional or technical service 
  4.33  contracts, in consultation with exclusive representatives of 
  4.34  state employees. 
  4.35     (b) Before an agency may seek approval of a professional or 
  4.36  technical services contract valued in excess of $5,000, it must 
  5.1   certify to the commissioner that it has publicized the contract 
  5.2   by posting notice at appropriate worksites within agencies and 
  5.3   has made reasonable efforts to determine that no state employee, 
  5.4   including an employee outside the contracting agency, is able to 
  5.5   perform the services called for by the contract. 
  5.6      Sec. 5.  Minnesota Statutes 1994, section 16B.17, is 
  5.7   amended to read: 
  5.8      16B.17 [CONSULTANTS AND PROFESSIONAL OR TECHNICAL 
  5.9   SERVICES.] 
  5.10     Subdivision 1.  [TERMS.] For the purposes of this section, 
  5.11  the following terms have the meanings given them: 
  5.12     (a) [CONSULTANT SERVICES.] "Consultant professional or 
  5.13  technical services" means services which that are intellectual 
  5.14  in character; which that do not involve the provision of 
  5.15  supplies or materials; which that include consultation analysis, 
  5.16  evaluation, prediction, planning, or recommendation; and which 
  5.17  that result in the production of a report or the completion of a 
  5.18  task.  
  5.19     (b) [PROFESSIONAL AND TECHNICAL SERVICES.] "Professional 
  5.20  and technical services" means services which are predominantly 
  5.21  intellectual in character; which do not involve the provision of 
  5.22  supplies or materials; and in which the final result is the 
  5.23  completion of a task rather than analysis, evaluation, 
  5.24  prediction, planning, or recommendation.  
  5.25     Subd. 2.  [PROCEDURE FOR CONSULTANT AND PROFESSIONAL AND OR 
  5.26  TECHNICAL SERVICES CONTRACTS.] Before approving a proposed state 
  5.27  contract for consultant services or professional and or 
  5.28  technical services, the commissioner must determine, at least, 
  5.29  that:  
  5.30     (1) all provisions of section 16B.19 and subdivision 3 of 
  5.31  this section have been verified or complied with; 
  5.32     (2) the work to be performed under the contract is 
  5.33  necessary to the agency's achievement of its statutory 
  5.34  responsibilities, and there is statutory authority to enter into 
  5.35  the contract; 
  5.36     (3) the contract will not establish an employment 
  6.1   relationship between the state or the agency and any persons 
  6.2   performing under the contract; 
  6.3      (4) no current legislator or state employees will engage in 
  6.4   the performance of the contract; 
  6.5      (5) no state agency has previously performed or contracted 
  6.6   for the performance of tasks which that would be substantially 
  6.7   duplicated under the proposed contract; and 
  6.8      (6) the contracting agency has specified a satisfactory 
  6.9   method of evaluating and using the results of the work to be 
  6.10  performed; and 
  6.11     (7) the combined contract and amendments will not extend 
  6.12  for more than five years.  
  6.13     Subd. 3.  [DUTIES OF CONTRACTING AGENCY.] Before an agency 
  6.14  may seek approval of a consultant or professional and or 
  6.15  technical services contract valued in excess of $5,000, it must 
  6.16  certify to the commissioner that:  
  6.17     (1) no state employee is able and available to perform the 
  6.18  services called for by the contract; 
  6.19     (2) the normal competitive bidding mechanisms will not 
  6.20  provide for adequate performance of the services; 
  6.21     (3) the services are not available as a product of a prior 
  6.22  consultant or professional and technical services contract, and 
  6.23  the contractor has certified that the product of the services 
  6.24  will be original in character; 
  6.25     (4) reasonable efforts were made to publicize the 
  6.26  availability of the contract to the public; 
  6.27     (5) the agency has received, reviewed, and accepted a 
  6.28  detailed work plan from the contractor for performance under the 
  6.29  contract; and 
  6.30     (6) the agency has developed, and fully intends to 
  6.31  implement, a written plan providing for the assignment of 
  6.32  specific agency personnel to a monitoring and liaison function;, 
  6.33  the periodic review of interim reports or other indications of 
  6.34  past performance, and the ultimate utilization of the final 
  6.35  product of the services; and 
  6.36     (7) the agency will not allow the contractor to begin work 
  7.1   before funds are fully encumbered. 
  7.2      The agency certification must provide detail on how the 
  7.3   agency complied with this subdivision.  In particular, the 
  7.4   agency must describe how it complied with clauses (1) and (4) 
  7.5   and section 16B.167, paragraph (b), and what steps it has taken 
  7.6   to verify the competence of the proposed contractor. 
  7.7      Subd. 3a.  [RENEWALS.] The renewal of a professional or 
  7.8   technical contract must comply with all requirements, including 
  7.9   notice, applicable to the original contract.  A renewal contract 
  7.10  must be identified as such.  All notices and reports on a 
  7.11  renewal contract must state the date of the original contract 
  7.12  and the amount paid previously under the contract.  
  7.13     Subd. 4.  [REPORTS.] (a) The commissioner shall submit to 
  7.14  the governor, the chairs of the house of representatives ways 
  7.15  and means and senate finance committees, and the legislature 
  7.16  legislative reference library a monthly listing of all contracts 
  7.17  for consultant services and for professional and or technical 
  7.18  services executed or disapproved in the preceding month.  The 
  7.19  report must identify the parties and the contract amount, 
  7.20  duration, and tasks to be performed.  The commissioner shall 
  7.21  also issue quarterly reports summarizing the contract review 
  7.22  activities of the department during the preceding quarter. 
  7.23     (b) The monthly and quarterly reports must: 
  7.24     (1) be sorted by agency and by contractor; 
  7.25     (2) show the aggregate value of contracts issued by each 
  7.26  agency and issued to each contractor; 
  7.27     (3) distinguish between contracts that are being issued for 
  7.28  the first time and contracts that are being renewed; 
  7.29     (4) state the termination date of each contract; and 
  7.30     (5) categorize contracts according to subject matter, 
  7.31  including topics such as contracts for training, contracts for 
  7.32  research and opinions, and contracts for computer systems. 
  7.33     (c) Within 30 days of final completion of a contract in 
  7.34  excess of $5,000 covered by this subdivision, the chief 
  7.35  executive of the agency entering into the contract must submit a 
  7.36  one-page performance report to the commissioner who must submit 
  8.1   a copy to the legislative reference library.  The report must: 
  8.2      (1) summarize the purpose of the contract, including why it 
  8.3   was necessary to enter into a contract; 
  8.4      (2) state the amount spent on the contract; and 
  8.5      (3) explain why this amount was a cost-effective way to 
  8.6   enable the agency to provide its services or products better or 
  8.7   more efficiently.  
  8.8      Subd. 5.  [CONTRACT TERMS.] (a) A consultant or technical 
  8.9   and professional or technical services contract must by its 
  8.10  terms permit the agency to unilaterally terminate the contract 
  8.11  prior to completion, upon payment of just compensation, if the 
  8.12  agency determines that further performance under the contract 
  8.13  would not serve agency purposes.  If the final product of the 
  8.14  contract is to be a written report, no more than three copies of 
  8.15  the report, one in camera ready form, shall be submitted to the 
  8.16  agency.  One of the copies a copy must be filed with the 
  8.17  legislative reference library.  
  8.18     (b) The terms of a contract must provide that no more than 
  8.19  90 percent of the amount due under the contract may be paid 
  8.20  until the final product has been reviewed by the chief executive 
  8.21  of the agency entering into the contract, and the chief 
  8.22  executive has certified that the contractor has satisfactorily 
  8.23  fulfilled the terms of the contract. 
  8.24     Subd. 6.  [EXCEPTION.] This section and section 16B.167 do 
  8.25  not apply to contracts with private collection agencies for the 
  8.26  collection of debt owed to the state. 
  8.27     Sec. 6.  Minnesota Statutes 1994, section 16B.19, 
  8.28  subdivision 2, is amended to read: 
  8.29     Subd. 2.  [CONSULTANT, PROFESSIONAL AND OR TECHNICAL 
  8.30  PROCUREMENTS.] Every state agency shall for each fiscal year 
  8.31  designate for awarding to small businesses at least 25 percent 
  8.32  of the value of anticipated procurements of that agency for 
  8.33  consultant services or professional and or technical services.  
  8.34  The set-aside under this subdivision is in addition to that 
  8.35  provided by subdivision 1, but shall must otherwise comply with 
  8.36  section 16B.17. 
  9.1      Sec. 7.  Minnesota Statutes 1994, section 16B.19, 
  9.2   subdivision 10, is amended to read: 
  9.3      Subd. 10.  [APPLICABILITY.] This section does not apply to 
  9.4   construction contracts or contracts for consultant, 
  9.5   professional, or technical services under section 16B.17 that 
  9.6   are financed in whole or in part with federal funds and that are 
  9.7   subject to federal disadvantaged business enterprise regulations.
  9.8      Sec. 8. [LEGISLATIVE AUDITOR.] 
  9.9      The legislative audit commission shall consider directing 
  9.10  the legislative auditor to conduct a follow-up study of agency 
  9.11  contracting and compliance with laws governing contracting. 
  9.12     Sec. 9.  [SPENDING LIMITATION ON CONTRACTS.] 
  9.13     (a) During the biennium ending June 30, 1997, the aggregate 
  9.14  amount spent by all departments or agencies defined in Minnesota 
  9.15  Statutes, section 15.91, subdivision 1, from direct-appropriated 
  9.16  funds on professional or technical service contracts may not 
  9.17  exceed 90 percent of the aggregate amount these departments or 
  9.18  agencies spent on these contracts from direct-appropriated funds 
  9.19  during the biennium from July 1, 1993, to June 30, 1995.  For 
  9.20  purposes of this section, professional or technical service 
  9.21  contracts are as defined in Minnesota Statutes, section 16B.17, 
  9.22  but do not include contracts for highway construction or 
  9.23  maintenance.  The governor or a designated official must limit 
  9.24  or disapprove proposed contracts as necessary to comply with 
  9.25  this section.  This paragraph does not apply to contracts with 
  9.26  private collection agencies for the collection of debt owed to 
  9.27  the state. 
  9.28     (b) During the biennium ending June 30, 1997, the amount 
  9.29  spent by (1) the house of representatives; (2) the senate; and 
  9.30  (3) the legislative coordinating commission and all groups under 
  9.31  its jurisdiction, from direct-appropriated funds on professional 
  9.32  or technical service contracts may not exceed 90 percent of the 
  9.33  amount spent on these contracts from direct-appropriated funds 
  9.34  during the biennium from July 1, 1993 to June 30, 1995.  Each 
  9.35  entity listed in clauses (1), (2), and (3) of this paragraph 
  9.36  must be treated separately for purposes of determining 
 10.1   compliance with this paragraph, except that the legislative 
 10.2   coordinating commission and all groups under its jurisdiction 
 10.3   must be treated as one unit.  For purposes of this paragraph, 
 10.4   "professional or technical service contract" has the meaning 
 10.5   given it in Minnesota Statutes, section 16B.17. 
 10.6      Sec. 10.  [EFFECTIVE DATE.] 
 10.7      Sections 1 to 9 are effective July 1, 1995.