1.1                          A bill for an act 
  1.2             relating to local government; increasing the 
  1.3             flexibility of local government contracting; 
  1.4             increasing the purchasing authority of city managers 
  1.5             in plan B cities; increasing the competitive bidding 
  1.6             threshold for small cities; authorizing the use of 
  1.7             reverse auction and electronic bidding and selling; 
  1.8             amending Minnesota Statutes 2002, sections 412.691; 
  1.9             429.041, subdivisions 1, 2; 469.015, subdivisions 1, 
  1.10            3; 471.345, subdivisions 3, 4, by adding subdivisions. 
  1.11  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.12     Section 1.  Minnesota Statutes 2002, section 412.691, is 
  1.13  amended to read: 
  1.14     412.691 [MANAGER IS PURCHASING AGENT; AUDIT AND APPROVAL.] 
  1.15     The manager shall be the chief purchasing agent of the 
  1.16  city.  All purchases for the city and all contracts shall be 
  1.17  made or let by the manager when the amount of the purchase or 
  1.18  contract does not exceed $15,000 $25,000 unless a lower limit is 
  1.19  provided by the city council; but all claims resulting therefrom 
  1.20  shall be audited and approved by the council as provided in 
  1.21  section 412.271.  All other purchases shall be made and all 
  1.22  other contracts let by the council after the recommendation of 
  1.23  the manager has first been obtained.  All contracts, bonds and 
  1.24  instruments of every kind to which the city is a party shall be 
  1.25  signed by the mayor and the manager on behalf of the city and 
  1.26  shall be executed in the name of the city. 
  1.27     Sec. 2.  Minnesota Statutes 2002, section 429.041, 
  1.28  subdivision 1, is amended to read: 
  2.1      Subdivision 1.  [PLANS AND SPECIFICATIONS, ADVERTISEMENT 
  2.2   FOR BIDS.] When the council determines to make any improvement, 
  2.3   it shall let the contract for all or part of the work, or order 
  2.4   all or part of the work done by day labor or otherwise as 
  2.5   authorized by subdivision 2, no later than one year after the 
  2.6   adoption of the resolution ordering such improvement, unless a 
  2.7   different time limit is specifically stated in the resolution 
  2.8   ordering the improvement.  The council shall cause plans and 
  2.9   specifications of the improvement to be made, or if previously 
  2.10  made, to be modified, if necessary, and to be approved and filed 
  2.11  with the clerk, and if the estimated cost exceeds $35,000 for 
  2.12  municipalities of less than 2,500 population, or $50,000 for all 
  2.13  others, shall advertise for bids for the improvement in the 
  2.14  newspaper and such other papers and for such length of time as 
  2.15  it may deem advisable.  If the estimated cost exceeds $100,000, 
  2.16  publication shall be made no less than three weeks before the 
  2.17  last day for submission of bids once in the newspaper and at 
  2.18  least once in either a newspaper published in a city of the 
  2.19  first class or a trade paper.  To be eligible as such a trade 
  2.20  paper, a publication shall have all the qualifications of a 
  2.21  legal newspaper except that instead of the requirement that it 
  2.22  shall contain general and local news, such trade paper shall 
  2.23  contain building and construction news of interest to 
  2.24  contractors in this state, among whom it shall have a general 
  2.25  circulation.  The advertisement shall specify the work to be 
  2.26  done, shall state the time when the bids will be publicly opened 
  2.27  for consideration by the council, which shall be not less than 
  2.28  ten days after the first publication of the advertisement when 
  2.29  the estimated cost is less than $100,000 and not less than three 
  2.30  weeks after such publication in other cases, and shall state 
  2.31  that no bids will be considered unless sealed and filed with the 
  2.32  clerk and accompanied by a cash deposit, cashier's check, bid 
  2.33  bond, or certified check payable to the clerk, for such 
  2.34  percentage of the amount of the bid as the council may specify.  
  2.35  In providing for the advertisement for bids the council may 
  2.36  direct that the bids shall be opened publicly by two or more 
  3.1   designated officers or agents of the municipality and tabulated 
  3.2   in advance of the meeting at which they are to be considered by 
  3.3   the council.  Nothing herein shall prevent the council from 
  3.4   advertising separately for various portions of the work involved 
  3.5   in an improvement, or from itself, supplying by such means as 
  3.6   may be otherwise authorized by law, all or any part of the 
  3.7   materials, supplies, or equipment to be used in the improvement 
  3.8   or from combining two or more improvements in a single set of 
  3.9   plans and specifications or a single contract. 
  3.10     Sec. 3.  Minnesota Statutes 2002, section 429.041, 
  3.11  subdivision 2, is amended to read: 
  3.12     Subd. 2.  [CONTRACTS; DAY LABOR.] In contracting for an 
  3.13  improvement, the council shall require the execution of one or 
  3.14  more written contracts and bonds, conditioned as required by 
  3.15  law.  The council shall award the contract to the lowest 
  3.16  responsible bidder or it may reject all bids.  If any bidder to 
  3.17  whom a contract is awarded fails to enter promptly into a 
  3.18  written contract and to furnish the required bond, the 
  3.19  defaulting bidder shall forfeit to the municipality the amount 
  3.20  of the defaulter's cash deposit, cashier's check, bid bond, or 
  3.21  certified check, and the council may thereupon award the 
  3.22  contract to the next lowest responsible bidder.  When it appears 
  3.23  to the council that the cost of the entire work projected will 
  3.24  be less than $35,000 for municipalities of less than 2,500 
  3.25  population, or $50,000 for all others, or whenever no bid is 
  3.26  submitted after proper advertisement or the only bids submitted 
  3.27  are higher than the engineer's estimate, the council may 
  3.28  advertise for new bids or, without advertising for bids, 
  3.29  directly purchase the materials for the work and do it by the 
  3.30  employment of day labor or in any other manner the council 
  3.31  considers proper.  The council may have the work supervised by 
  3.32  the city engineer or other qualified person but shall have the 
  3.33  work supervised by a registered engineer if done by day labor 
  3.34  and it appears to the council that the entire cost of all work 
  3.35  and materials for the improvement will be more than $25,000.  In 
  3.36  case of improper construction or unreasonable delay in the 
  4.1   prosecution of the work by the contractor, the council may order 
  4.2   and cause the suspension of the work at any time and relet the 
  4.3   contract, or order a reconstruction of any portion of the work 
  4.4   improperly done, and where the cost of completion or 
  4.5   reconstruction necessary will be less than $35,000 for 
  4.6   municipalities of less than 2,500 population, or $50,000 for all 
  4.7   others, the council may do it by the employment of day labor. 
  4.8      Sec. 4.  Minnesota Statutes 2002, section 469.015, 
  4.9   subdivision 1, is amended to read: 
  4.10     Subdivision 1.  [BIDS; NOTICE.] All construction work, and 
  4.11  work of demolition or clearing, and every purchase of equipment, 
  4.12  supplies, or materials, necessary in carrying out the purposes 
  4.13  of sections 469.001 to 469.047, that involve expenditure 
  4.14  of $35,000 for an authority whose area of operation is less than 
  4.15  2,500 population and $50,000 for all other authorities or more 
  4.16  shall be awarded by contract.  Before receiving bids the 
  4.17  authority shall publish, once a week for two consecutive weeks 
  4.18  in an official newspaper of general circulation in the community 
  4.19  a notice that bids will be received for that construction work, 
  4.20  or that purchase of equipment, supplies, or materials.  The 
  4.21  notice shall state the nature of the work and the terms and 
  4.22  conditions upon which the contract is to be let, naming a time 
  4.23  and place where bids will be received, opened and read publicly, 
  4.24  which time shall be not less than seven days after the date of 
  4.25  the last publication.  After the bids have been received, opened 
  4.26  and read publicly and recorded, the authority shall award the 
  4.27  contract to the lowest responsible bidder, provided that the 
  4.28  authority reserves the right to reject any or all bids.  Each 
  4.29  contract shall be executed in writing, and the person to whom 
  4.30  the contract is awarded shall give sufficient bond to the 
  4.31  authority for its faithful performance.  If no satisfactory bid 
  4.32  is received, the authority may readvertise.  The authority may 
  4.33  establish reasonable qualifications to determine the fitness and 
  4.34  responsibility of bidders and to require bidders to meet the 
  4.35  qualifications before bids are accepted. 
  4.36     Sec. 5.  Minnesota Statutes 2002, section 469.015, 
  5.1   subdivision 3, is amended to read: 
  5.2      Subd. 3.  [PERFORMANCE AND PAYMENT BONDS.] Performance and 
  5.3   payment bonds shall be required from contractors for any works 
  5.4   of construction as provided in and subject to all the provisions 
  5.5   of sections 574.26 to 574.31 except for contracts entered into 
  5.6   by an authority for an expenditure of less than $35,000 for an 
  5.7   authority whose area of operation is less than 2,500 population 
  5.8   and $50,000 for all others.  
  5.9      Sec. 6.  Minnesota Statutes 2002, section 471.345, 
  5.10  subdivision 3, is amended to read: 
  5.11     Subd. 3.  [CONTRACTS OVER $35,000 FOR MUNICIPALITIES OF 
  5.12  LESS THAN 2,500 POPULATION; $50,000 FOR ALL OTHERS.] If the 
  5.13  amount of the contract is estimated to exceed $35,000 for 
  5.14  municipalities of less than 2,500 population, or $50,000 for all 
  5.15  others, sealed bids shall be solicited by public notice in the 
  5.16  manner and subject to the requirements of the law governing 
  5.17  contracts by the particular municipality or class thereof 
  5.18  provided that with regard to repairs and maintenance of ditches, 
  5.19  bids shall not be required if the estimated amount of the 
  5.20  contract does not exceed the amount specified in section 
  5.21  103E.705, subdivisions 5, 6, and 7. 
  5.22     Sec. 7.  Minnesota Statutes 2002, section 471.345, 
  5.23  subdivision 4, is amended to read: 
  5.24     Subd. 4.  [CONTRACTS FROM $10,000 TO $35,000 FOR 
  5.25  MUNICIPALITIES OF LESS THAN 2,500 POPULATION; $50,000 FOR ALL 
  5.26  OTHERS.] If the amount of the contract is estimated to exceed 
  5.27  $10,000 but not to exceed $35,000 for municipalities of less 
  5.28  than 2,500 population, or $50,000 for all others, the contract 
  5.29  may be made either upon sealed bids or by direct negotiation, by 
  5.30  obtaining two or more quotations for the purchase or sale when 
  5.31  possible, and without advertising for bids or otherwise 
  5.32  complying with the requirements of competitive bidding.  All 
  5.33  quotations obtained shall be kept on file for a period of at 
  5.34  least one year after receipt thereof. 
  5.35     Sec. 8.  Minnesota Statutes 2002, section 471.345, is 
  5.36  amended by adding a subdivision to read: 
  6.1      Subd. 16.  [REVERSE AUCTION.] Notwithstanding any other 
  6.2   procedural requirements of this section, a municipality may 
  6.3   contract to purchase supplies, materials, and equipment using an 
  6.4   electronic purchasing process in which vendors compete to 
  6.5   provide the supplies, materials, or equipment at the lowest 
  6.6   selling price in an open and interactive environment. 
  6.7      Sec. 9.  Minnesota Statutes 2002, section 471.345, is 
  6.8   amended by adding a subdivision to read: 
  6.9      Subd. 17.  [ELECTRONIC SALE OF SURPLUS SUPPLIES, MATERIALS, 
  6.10  AND EQUIPMENT.] Notwithstanding any other procedural 
  6.11  requirements of this section, a municipality may contract to 
  6.12  sell supplies, materials, and equipment which is surplus, 
  6.13  obsolete, or unused using an electronic selling process in which 
  6.14  purchasers compete to purchase the surplus supplies, materials, 
  6.15  or equipment at the highest purchase price in an open and 
  6.16  interactive environment. 
  6.17     Sec. 10.  Minnesota Statutes 2002, section 471.345, is 
  6.18  amended by adding a subdivision to read: 
  6.19     Subd. 18.  [ELECTRONIC BIDDING.] Notwithstanding any other 
  6.20  procedural requirements of this section, vendors may submit 
  6.21  bids, quotations, and proposals electronically in a form and 
  6.22  manner required by the municipality.  A municipality may require 
  6.23  that bid, performance, or payment bonds, or other security, be 
  6.24  furnished electronically.