1.1 	A bill for an act
1.2 	relating to state government; modifying procurement provisions; requiring a 
1.3 	report;amending Minnesota Statutes 2004, sections 16C.02, subdivisions 4, 
1.4 	12, 14, by adding subdivisions; 16C.03, subdivisions 3, 4, 8, 13, 16; 16C.05, 
1.5 	subdivisions 1, 2; 16C.08, subdivision 2, by adding a subdivision; Minnesota 
1.6 	Statutes 2005 Supplement, sections 16C.09; 16C.10, subdivision 7.
1.7 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.8 	Section 1. Minnesota Statutes 2004, section 16C.02, is amended by adding a 
1.9 	subdivision to read:
1.10 		Subd. 3a.Best and final offer. "Best and final offer" means an optional step in 
1.11 	the solicitation process in which responders are requested to improve their response by 
1.12 	methods including, but not limited to, the reduction of cost, clarification or modification of 
1.13 	the response, or the provision of additional information.

1.14 	Sec. 2. Minnesota Statutes 2004, section 16C.02, subdivision 4, is amended to read:
1.15 		Subd. 4.Best value. "Best value" describes a result intended in the acquisition of all 
1.16 	goods and services. Price must be one of the evaluation criteria when acquiring goods 
1.17 	and services. Other evaluation criteria may include, but are not limited to, environmental 
1.18 	considerations, quality, and vendor performance. In achieving "best value" strategic 
1.19 	sourcing tools, including, but not limited to, best and final offers, negotiations, contract 
1.20 	consolidation, product standardization, and mandatory-use enterprise contracts shall be 
1.21 	used at the commissioner's discretion.

1.22 	Sec. 3. Minnesota Statutes 2004, section 16C.02, is amended by adding a subdivision 
1.23 	to read:
2.1 		Subd. 6a.Enterprise procurement. "Enterprise procurement" means the process 
2.2 	undertaken by the commissioner to leverage economies of scale of multiple end users to 
2.3 	achieve cost savings and other favorable terms in contracts for goods and services.

2.4 	Sec. 4. Minnesota Statutes 2004, section 16C.02, subdivision 12, is amended to read:
2.5 		Subd. 12.Request for proposal or RFP. "Request for proposal" or "RFP" means a 
2.6 	solicitation in which it is not advantageous to set forth all the actual, detailed requirements 
2.7 	at the time of solicitation and responses are subject to negotiation negotiated to achieve 
2.8 	best value for the state.

2.9 	Sec. 5. Minnesota Statutes 2004, section 16C.02, subdivision 14, is amended to read:
2.10 		Subd. 14.Response. "Response" means the offer received from a vendor in 
2.11 	response to a solicitation. A response includes submissions commonly referred to as 
2.12 	"offers," "best and final offers," "bids," "quotes," or "proposals."

2.13 	Sec. 6. Minnesota Statutes 2004, section 16C.02, is amended by adding a subdivision 
2.14 	to read:
2.15 		Subd. 20.Strategic sourcing. "Strategic sourcing" means methods used to analyze 
2.16 	and reduce spending on goods and services including, but not limited to, spend analysis, 
2.17 	product standardization, contract consolidation, multiple jurisdiction purchasing alliances, 
2.18 	reverse auctions, lifecycle costing, and other techniques.

2.19 	Sec. 7. Minnesota Statutes 2004, section 16C.03, subdivision 3, is amended to read:
2.20 		Subd. 3.Acquisition authority. The commissioner shall acquire all goods, services, 
2.21 	and utilities needed by agencies. The commissioner shall acquire goods, services, and 
2.22 	utilities by requests for bids, requests for proposals, reverse auctions as provided in 
2.23 	section  16C.10, subdivision 7, or other methods provided by law, unless a section of law 
2.24 	requires a particular method of acquisition to be used. The commissioner shall make all 
2.25 	decisions regarding acquisition activities. The determination of the acquisition method 
2.26 	and all decisions involved in the acquisition process, unless otherwise provided for by 
2.27 	law, shall be based on best value which includes an evaluation of price and may include 
2.28 	other considerations including, but not limited to, environmental considerations, quality, 
2.29 	and vendor performance. In achieving best value, methods including best and final offers, 
2.30 	negotiations, contract consolidation, product standardization, mandatory-use contracts, 
2.31 	total cost of ownership assessments, and other strategic sourcing techniques shall be 
2.32 	employed at the commissioner's discretion. The commissioner shall engage in enterprise 
3.1 	procurements to the extent practicable. A best value determination must be based on the 
3.2 	evaluation criteria detailed in the solicitation document. If criteria other than price are 
3.3 	used, the solicitation document must state the relative importance of price and other 
3.4 	factors. Contract awards for all systems integration projects that exceed $500,000 in cost 
3.5 	shall be based on the proposal that provides best value to the state's requirements, as 
3.6 	determined by the evaluation criteria contained in the solicitation document. Evaluation 
3.7 	criteria for the acquisition of such information technology services shall provide for 
3.8 	the selection of a contractor on an objective basis not limited to cost alone. Unless it 
3.9 	is determined by the commissioner that an alternative solicitation method provided by 
3.10 	law should be used to determine best value, a request for bid must be used to solicit 
3.11 	formal responses for all building and construction contracts. Any or all responses may 
3.12 	be rejected. When using the request for bid process, the bid must be awarded to the 
3.13 	lowest responsive and responsible bidder, taking into consideration conformity with 
3.14 	the specifications, terms of delivery, the purpose for which the contract or purchase is 
3.15 	intended, the status and capability of the vendor, and other considerations imposed in the 
3.16 	request for bids. The commissioner may decide which is the lowest responsible bidder 
3.17 	for all purchases and may use the principles of life-cycle costing, where appropriate, in 
3.18 	determining the lowest overall bid. The duties set forth in this subdivision are subject to 
3.19 	delegation pursuant to this section. 

3.20 	Sec. 8. Minnesota Statutes 2004, section 16C.03, subdivision 4, is amended to read:
3.21 		Subd. 4.Contracting authority. The commissioner shall conduct all contracting by, 
3.22 	for, and between agencies and perform all contract management and review functions for 
3.23 	contracts, except those functions specifically delegated to be performed by the contracting 
3.24 	agency, the attorney general, or otherwise provided for by law. The commissioner must 
3.25 	involve agency staff and agency staff must participate in the development of enterprise 
3.26 	procurements including the development of product standards, specifications, and other 
3.27 	requirements.

3.28 	Sec. 9. Minnesota Statutes 2004, section 16C.03, subdivision 8, is amended to read:
3.29 		Subd. 8.Policy and procedures. The commissioner is authorized to issue policies, 
3.30 	procedures, and standards applicable to all acquisition activities by and for agencies.
3.31 	Consistent with the authority specified in this chapter, the commissioner shall develop 
3.32 	and implement policies, procedures, and standards ensuring the optimal use of strategic 
3.33 	sourcing techniques.

4.1 	Sec. 10. Minnesota Statutes 2004, section 16C.03, subdivision 13, is amended to read:
4.2 		Subd. 13.Central stores. The commissioner is authorized to provide agencies with 
4.3 	supplies and equipment and operate all central stores and supply rooms serving more 
4.4 	than one agency. The commissioner is authorized to require agency use of this service 
4.5 	if consistent with "best value."

4.6 	Sec. 11. Minnesota Statutes 2004, section 16C.03, subdivision 16, is amended to read:
4.7 		Subd. 16.Delegation of duties. The commissioner may delegate duties imposed by 
4.8 	this chapter to the head of an agency and to any subordinate of the agency head. Delegated 
4.9 	duties shall be exercised in the name of the commissioner and under the commissioner's 
4.10 	direct supervision and control. A delegation of duties may include, but is not limited to, 
4.11 	allowing individuals within agencies to acquire goods, services, and utilities within dollar 
4.12 	limitations and for designated types of acquisitions. Delegation of contract management 
4.13 	and review functions must be filed with the secretary of state and may not, except with 
4.14 	respect to delegations within the Department of Administration, exceed two years in 
4.15 	duration. The commissioner may withdraw any delegation at the commissioner's sole 
4.16 	discretion. The commissioner may require an agency head or subordinate to accept 
4.17 	delegated responsibility to procure goods or services intended for the exclusive use of the 
4.18 	agency receiving the delegation.

4.19 	Sec. 12. Minnesota Statutes 2004, section 16C.05, subdivision 1, is amended to read:
4.20 		Subdivision 1.Agency cooperation. Agencies shall fully cooperate with the 
4.21 	commissioner in the management and review of state contracts and in the development 
4.22 	and implementation of strategic sourcing techniques.

4.23 	Sec. 13. Minnesota Statutes 2004, section 16C.05, subdivision 2, is amended to read:
4.24 		Subd. 2.Creation and validity of contracts. (a) A contract is not valid and the state 
4.25 	is not bound by it and no agency, without the prior written approval of the commissioner 
4.26 	granted pursuant to subdivision 2a, may authorize work to begin on it unless:
4.27 	(1) it has first been executed by the head of the agency or a delegate who is a party 
4.28 	to the contract;
4.29 	(2) it has been approved by the commissioner; and
4.30 	(3) the accounting system shows an encumbrance for the amount of the contract 
4.31 	liability except as allowed by policy approved by the commissioner and the commissioner 
4.32 	of finance for routine, low-dollar procurements.
5.1 	(b) The combined contract and amendments must not exceed five years without 
5.2 	specific, written approval by the commissioner according to established policy, procedures, 
5.3 	and standards, or unless otherwise provided for by law. The term of the original contract 
5.4 	must not exceed two years unless the commissioner determines that a longer duration is 
5.5 	in the best interest of the state.
5.6 	(c) Grants, interagency agreements, purchase orders, work orders, and annual plans 
5.7 	need not, in the discretion of the commissioner and attorney general, require the signature 
5.8 	of the commissioner and/or the attorney general. A signature is not required for work 
5.9 	orders and amendments to work orders related to Department of Transportation contracts. 
5.10 	Bond purchase agreements by the Minnesota Public Facilities Authority do not require 
5.11 	the approval of the commissioner.
5.12 	(d) Amendments to contracts must entail tasks that are substantially similar to 
5.13 	those in the original contract or involve tasks that are so closely related to the original 
5.14 	contract that it would be impracticable for a different contractor to perform the work. The 
5.15 	commissioner or an agency official to whom the commissioner has delegated contracting 
5.16 	authority under section  16C.03, subdivision 16, must determine that an amendment would 
5.17 	serve the interest of the state better than a new contract and would cost no more. 
5.18 	(e) A fully executed copy of every contract, amendments to the contract, and 
5.19 	performance evaluations relating to the contract must be kept on file at the contracting 
5.20 	agency for a time equal to that specified for contract vendors and other parties in 
5.21 	subdivision 5.
5.22 	(f) The attorney general must periodically review and evaluate a sample of state 
5.23 	agency contracts to ensure compliance with laws.

5.24 	Sec. 14. Minnesota Statutes 2004, section 16C.08, is amended by adding a subdivision 
5.25 	to read:
5.26 		Subd. 1a.Enterprise procurement process. Notwithstanding section 15.061 or 
5.27 	any other law, the commissioner shall, to the fullest extent practicable, conduct enterprise 
5.28 	procurements that result in the establishment of professional or technical contracts for 
5.29 	use by multiple state agencies. The commissioner is authorized to mandate use of any 
5.30 	contract entered into as a result of an enterprise procurement process. Agencies shall fully 
5.31 	cooperate in the development and use of contracts entered into under this section.

5.32 	Sec. 15. Minnesota Statutes 2004, section 16C.08, subdivision 2, is amended to read:
6.1 		Subd. 2.Duties of contracting agency. (a) Before an agency may seek approval of 
6.2 	a professional or technical services contract valued in excess of $5,000, it must provide 
6.3 	the following:
6.4 	(1) a description of how the proposed contract or amendment is necessary and 
6.5 	reasonable to advance the statutory mission of the agency;
6.6 	(2) a description of the agency's plan to notify firms or individuals who may be 
6.7 	available to perform the services called for in the solicitation; and
6.8 	(3) a description of the performance measures or other tools that will be used to 
6.9 	monitor and evaluate contract performance.; and
6.10 	(4) an explanation detailing, if applicable, why this procurement is being pursued 
6.11 	unilaterally by the agency and not as an enterprise procurement.
6.12 	(b) In addition to paragraph (a), the agency must certify that:
6.13 	(1) no current state employee is able and available to perform the services called 
6.14 	for by the contract;
6.15 	(2) the normal competitive bidding mechanisms will not provide for adequate 
6.16 	performance of the services;
6.17 	(3) reasonable efforts will be made to publicize the availability of the contract to 
6.18 	the public;
6.19 	(4) the agency will develop and implement a written plan providing for the 
6.20 	assignment of specific agency personnel to manage the contract, including a monitoring 
6.21 	and liaison function, the periodic review of interim reports or other indications of past 
6.22 	performance, and the ultimate utilization of the final product of the services;
6.23 	(5) the agency will not allow the contractor to begin work before the contract is fully 
6.24 	executed unless an exception under section  16C.05, subdivision 2a, has been granted by 
6.25 	the commissioner and funds are fully encumbered; 
6.26 	(6) the contract will not establish an employment relationship between the state or 
6.27 	the agency and any persons performing under the contract; and
6.28 	(7) in the event the results of the contract work will be carried out or continued by 
6.29 	state employees upon completion of the contract, the contractor is required to include 
6.30 	state employees in development and training, to the extent necessary to ensure that after 
6.31 	completion of the contract, state employees can perform any ongoing work related to 
6.32 	the same function.
6.33 	(c) A contract establishes an employment relationship for purposes of paragraph (b), 
6.34 	clause (6), if, under federal laws governing the distinction between an employee and an 
6.35 	independent contractor, a person would be considered an employee.

7.1 	Sec. 16. Minnesota Statutes 2005 Supplement, section 16C.09, is amended to read:
7.2 	16C.09 PROCEDURE FOR SERVICE CONTRACTS.
7.3 	(a) Before entering into or approving a service contract valued in excess of $5,000, 
7.4 	the commissioner must determine, at least, that:
7.5 	(1) no current state employee is able and available to perform the services called 
7.6 	for by the contract;
7.7 	(2) the work to be performed under the contract is necessary to the agency's 
7.8 	achievement of its statutory responsibilities and there is statutory authority to enter into 
7.9 	the contract;
7.10 	(3) the contract will not establish an employment relationship between the state or 
7.11 	the agency and any persons performing under the contract;
7.12 	(4) the contractor and agents are not employees of the state;
7.13 	(5) the contracting agency has specified a satisfactory method of evaluating and 
7.14 	using the results of the work to be performed; and
7.15 	(6) the combined contract and amendments will not exceed five years without 
7.16 	specific, written approval by the commissioner according to established policy, procedures, 
7.17 	and standards, or unless otherwise provided for by law. The term of the original contract 
7.18 	must not exceed two years, unless the commissioner determines that a longer duration is 
7.19 	in the best interest of the state.
7.20 	(b) For purposes of paragraph (a), clause (1), employees are available if qualified 
7.21 	and:
7.22 	(1) are already doing the work in question; or
7.23 	(2) are on layoff status in classes that can do the work in question.
7.24 	An employee is not available if the employee is doing other work, is retired, or has decided 
7.25 	not to do the work in question.
7.26 	(c) This section does not apply to an agency's use of inmates pursuant to sections 
7.27 	241.20 to 241.23 or to an agency's use of persons required by a court to provide:
7.28 	(1) community service; or
7.29 	(2) conservation or maintenance services on lands under the jurisdiction and control 
7.30 	of the state.

7.31 	Sec. 17. Minnesota Statutes 2005 Supplement, section 16C.10, subdivision 7, is 
7.32 	amended to read:
7.33 		Subd. 7.Reverse auction. (a) For the purpose of this subdivision, "reverse auction" 
7.34 	means a purchasing process in which vendors compete to provide goods or computer
7.35 	services at the lowest selling price in an open and interactive environment. Reverse 
8.1 	auctions may not be utilized to procure engineering design services or architectural 
8.2 	services or to establish building and construction contracts under sections 16C.26 to 
8.3 	16C.29.
8.4 	(b) The provisions of sections 13.591, subdivision 3, and 16C.06, subdivision 2, 
8.5 	do not apply when the commissioner determines that a reverse auction is the appropriate 
8.6 	purchasing process.

8.7 	Sec. 18. REPORT.
 8.8 	By January 15, 2008, the commissioner of administration must report to the chairs of 
8.9 	the legislative committees with jurisdiction over state procurement regarding the impact of 
8.10 	the changes in sections 1 to 17 and the use of strategic sourcing techniques on Minnesota 
8.11 	businesses, including an analysis of the size of contracts and award recipients.