1.1A bill for an act1.2relating to state government; authorizing preferences in state procurement and 1.3awarding of contracts for service-disabled veteran-owned small businesses;1.4amending Minnesota Statutes 2008, sections 16C.16, by adding a subdivision; 1.516C.19; 16C.20; 161.321; 473.142.1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:1.7    Section 1. Minnesota Statutes 2008, section 16C.16, is amended by adding a 1.8subdivision to read:1.9    Subd. 6a.Service-disabled veteran-owned small businesses.(a) The 1.10commissioner shall award up to a six percent preference in the amount bid on state 1.11procurement to certified small businesses that are majority-owned and operated by 1.12veterans having service-connected disabilities, as determined by the United States 1.13Department of Veterans Affairs.1.14(b) The purpose of this designation is to facilitate the transition of service-disabled 1.15veterans from military to civilian life, and to help compensate them for their sacrifices, 1.16including but not limited to their sacrifice of health and time, for the state and nation during 1.17their military service, as well as to enhance economic development within Minnesota.1.18(c) For purposes of this section and section 16C.19, the following terms have the 1.19meanings given them:1.20(1) "veteran" has the meaning given in section 197.447; and1.21(2) "service-connected disability" has the meaning given in United States Code, title 1.2238, section 101(16), as determined by the United States Department of Veterans Affairs.1.23EFFECTIVE DATE.This section is effective July 1, 2009, and applies to 1.24procurement contract bid solicitations issued on and after that date.2.1    Sec. 2. Minnesota Statutes 2008, section 16C.19, is amended to read:2.216C.19 ELIGIBILITY; RULES.2.3(a) A small business wishing to participate in the programs under section 
         16C.16, 2.4subdivisions 4 to 7
         , must be certified by the commissioner. The commissioner shall adopt 2.5by rule standards and procedures for certifying that small businesses, small targeted group 2.6businesses, and small businesses located in economically disadvantaged areas are eligible 2.7to participate under the requirements of sections 
         16C.16 to 
         16C.21. The commissioner 2.8shall adopt by rule standards and procedures for hearing appeals and grievances and other 2.9rules necessary to carry out the duties set forth in sections 
         16C.16 to 
         16C.21.  2.10(b) The commissioner may make rules which exclude or limit the participation of 2.11nonmanufacturing business, including third-party lessors, brokers, franchises, jobbers, 2.12manufacturers' representatives, and others from eligibility under sections 
         16C.16 to 2.1316C.21
         .  2.14(c) The commissioner may make rules that set time limits and other eligibility limits 2.15on business participation in programs under sections 
         16C.16 to 
         16C.21.  2.16(d) Notwithstanding paragraph (c), for purposes of sections 16C.16 to 16C.21, a 2.17service-disabled veteran-owned small business, the principal place of business of which 2.18is in Minnesota, is certified if it has been verified by the United States Department of 2.19Veterans Affairs as being a service-disabled veteran-owned small business in accordance 2.20with Public Law 109-461 and Code of Federal Regulations, title 38, part 74.2.21EFFECTIVE DATE.This section is effective July 1, 2009, and applies to 2.22procurement contract bid solicitations issued on and after that date.2.23    Sec. 3. Minnesota Statutes 2008, section 16C.20, is amended to read:2.2416C.20 CERTIFICATION.2.25A business that is certified by the commissioner of administration as a small 2.26business, small targeted group business or, a small business located in an economically 2.27disadvantaged area, or a service-disabled veteran-owned small business is eligible to 2.28participate under the requirements of sections 
         137.31 and 
         161.321 and, if certified as a 2.29small business or, small targeted group business, or service-disabled veteran-owned small 2.30business, under section 
         473.142 without further certification by the contracting agency.  2.31EFFECTIVE DATE.This section is effective July 1, 2009, and applies to 2.32procurement contract bid solicitations issued on and after that date.3.1    Sec. 4. Minnesota Statutes 2008, section 161.321, is amended to read:3.2161.321 SMALL BUSINESS CONTRACTS.3.3    Subdivision 1. Definitions. For purposes of this section the following terms have 3.4the meanings given them, except where the context clearly indicates a different meaning is 3.5intended.3.6(a) "Award" means the granting of a contract in accordance with all applicable laws 3.7and rules governing competitive bidding except as otherwise provided in this section.3.8(b) "Contract" means an agreement entered into between a business entity and the 3.9state of Minnesota for the construction of transportation improvements.3.10(c) "Subcontractor" means a business entity which enters into a legally binding 3.11agreement with another business entity which is a party to a contract as defined in 3.12paragraph (b).3.13(d) "Targeted group business" means a business designated under section 
         16C.16, 3.14subdivision 5
         .  3.15(e) "Service-disabled veteran-owned small business" means a business designated 3.16under section 16C.16, subdivision 6a.3.17    Subd. 2. Small business set-asides. (a) The commissioner may award up to a six 3.18percent preference in the amount bid for specified construction work to small targeted 3.19group businesses and service-disabled veteran-owned small businesses.3.20(b) The commissioner may designate a contract for construction work for award only 3.21to small targeted group businesses if the commissioner determines that at least three small 3.22targeted group businesses are likely to bid. The commissioner may designate a contract 3.23for construction work for award only to service-disabled veteran-owned small businesses 3.24if the commissioner determines that at least three service-disabled veteran-owned small 3.25businesses are likely to bid.3.26(c) The commissioner, as a condition of awarding a construction contract, may set 3.27goals that require the prime contractor to subcontract a portion of the contract to small 3.28targeted group businesses and service-disabled veteran-owned small businesses. The 3.29commissioner must establish a procedure for granting waivers from the subcontracting 3.30requirement when qualified small targeted group businesses and  service-disabled 3.31veteran-owned small businesses are not reasonably available. The commissioner may 3.32establish financial incentives for prime contractors who exceed the goals for use of 3.33subcontractors and financial penalties for prime contractors who fail to meet goals under 3.34this paragraph. The subcontracting requirements of this paragraph do not apply to prime 3.35contractors who are small targeted group businesses or service-disabled veteran-owned 3.36small businesses.4.1(d) The commissioner may award up to a four percent preference in the amount bid 4.2on procurement to small businesses located in an economically disadvantaged area as 4.3defined in section 
         16C.16, subdivision 7.  4.4    Subd. 3. Awards to small businesses. At least 75 percent of subcontracts awarded 4.5to small targeted group businesses must be performed by the business to which the 4.6subcontract is awarded or another small targeted group business. At least 75 percent 4.7of subcontracts awarded to service-disabled veteran-owned small businesses must be 4.8performed by the business to which the subcontract is awarded or another service-disabled 4.9veteran-owned small business.4.10    Subd. 4. Awards, limitations. Contracts awarded pursuant to this section are 4.11subject to all limitations contained in rules adopted by the commissioner of administration.4.12    Subd. 5. Recourse to other businesses. If the commissioner is unable to award 4.13a contract pursuant to the provisions of subdivisions 2 and 3, the award may be placed 4.14pursuant to the normal solicitation and award provisions set forth in this chapter and 4.15chapter 16C.4.16    Subd. 6. Rules. The rules adopted by the commissioner of administration to define 4.17small businesses and to set time and other eligibility requirements for participation in 4.18programs under sections 
         16C.16 to 
         16C.19 apply to this section. The commissioner may 4.19promulgate other rules necessary to carry out this section.  4.20    Subd. 7. Noncompetitive bids. The commissioner is encouraged to purchase from 4.21small targeted group businesses and service-disabled veteran-owned small businesses4.22designated under section 
         16C.16 when making purchases that are not subject to 4.23competitive bidding procedures.  4.24    Subd. 8. Report by commissioner. The commissioner of transportation shall report 4.25to the commissioner of administration on compliance with this section. The information 4.26must be reported at the time and in the manner requested by the commissioner.4.27EFFECTIVE DATE.This section is effective July 1, 2009, and applies to 4.28procurement contract bid solicitations issued on and after that date.4.29    Sec. 5. Minnesota Statutes 2008, section 473.142, is amended to read:4.30473.142 SMALL BUSINESSES.4.31(a) The Metropolitan Council and agencies specified in section 
         473.143, subdivision 4.321
         , may award up to a six percent preference in the amount bid for specified goods or 4.33services to small targeted group businesses and service-disabled veteran-owned small 4.34businesses designated under section 
         16C.16.  5.1(b) The council and each agency specified in section 
         473.143, subdivision 1, 5.2may designate a purchase of goods or services for award only to small targeted group 5.3businesses designated under section 
         16C.16 if the council or agency determines that at 5.4least three small targeted group businesses are likely to bid. The council and each agency 5.5specified in section 473.143, subdivision 1, may designate a purchase of goods or services 5.6for award only to service-disabled veteran-owned small businesses designated under 5.7section 16C.16 if the council or agency determines that at least three service-disabled 5.8veteran-owned small businesses are likely to bid.5.9(c) The council and each agency specified in section 
         473.143, subdivision 1, as a 5.10condition of awarding a construction contract or approving a contract for consultant, 5.11professional, or technical services, may set goals that require the prime contractor 5.12to subcontract a portion of the contract to small targeted group businesses and 5.13service-disabled veteran-owned small businesses designated under section 
         16C.16. The 5.14council or agency must establish a procedure for granting waivers from the subcontracting 5.15requirement when qualified small targeted group businesses and service-disabled 5.16veteran-owned small businesses are not reasonably available. The council or agency 5.17may establish financial incentives for prime contractors who exceed the goals for use of 5.18subcontractors and financial penalties for prime contractors who fail to meet goals under 5.19this paragraph. The subcontracting requirements of this paragraph do not apply to prime 5.20contractors who are small targeted group businesses and service-disabled veteran-owned 5.21small businesses. At least 75 percent of the value of the subcontracts awarded to small 5.22targeted group businesses under this paragraph must be performed by the business to 5.23which the subcontract is awarded or by another small targeted group business. At least 5.2475 percent of the value of the subcontracts awarded to service-disabled veteran-owned 5.25small businesses under this paragraph must be performed by the business to which the 5.26subcontract is awarded or another service-disabled veteran-owned small business.5.27(d) The council and each agency listed in section 
         473.143, subdivision 1, are 5.28encouraged to purchase from small targeted group businesses and service-disabled 5.29veteran-owned small businesses designated under section 
         16C.16 when making purchases 5.30that are not subject to competitive bidding procedures.  5.31(e) The council and each agency may adopt rules to implement this section.5.32(f) Each council or agency contract must require the prime contractor to pay any 5.33subcontractor within ten days of the prime contractor's receipt of payment from the 5.34council or agency for undisputed services provided by the subcontractor. The contract 5.35must require the prime contractor to pay interest of 1-1/2 percent per month or any 5.36part of a month to the subcontractor on any undisputed amount not paid on time to the 6.1subcontractor. The minimum monthly interest penalty payment for an unpaid balance of 6.2$100 or more is $10. For an unpaid balance of less than $100, the prime contractor shall 6.3pay the actual penalty due to the subcontractor. A subcontractor who prevails in a civil 6.4action to collect interest penalties from a prime contractor must be awarded its costs and 6.5disbursements, including attorney fees, incurred in bringing the action.6.6(g) This section does not apply to procurement financed in whole or in part 6.7with federal funds if the procurement is subject to federal disadvantaged, minority, or 6.8women business enterprise regulations. The council and each agency shall report to the 6.9commissioner of administration on compliance with this section. The information must be 6.10reported at the time and in the manner requested by the commissioner.6.11EFFECTIVE DATE.This section is effective July 1, 2009, and applies to 6.12procurement contract bid solicitations issued on and after that date.