1.1A bill for an act1.2relating to veterans; modifying certain Department of Transportation contracting 1.3requirements; authorizing counties to provide a bid preference for awarding 1.4contracts to veteran-owned small businesses;amending Minnesota Statutes 1.52010, section 161.321; proposing coding for new law in Minnesota Statutes, 1.6chapter 375.1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:1.8ARTICLE 11.9DEPARTMENT OF TRANSPORTATION CONTRACTING1.10    Section 1. Minnesota Statutes 2010, section 161.321, is amended to read:1.11161.321 SMALL BUSINESS CONTRACTS.1.12    Subdivision 1. Definitions. For purposes of this section the following terms have 1.13the meanings given them, except where the context clearly indicates a different meaning is 1.14intended.1.15(a) "Award" means the granting of a contract in accordance with all applicable laws 1.16and rules governing competitive bidding except as otherwise provided in this section.1.17(b) "Contract" means an agreement entered into between a business entity and the 1.18state of Minnesota for the construction of transportation improvements.1.19(c) "Subcontractor" means a business entity which enters into a legally binding 1.20agreement with another business entity which is a party to a contract as defined in 1.21paragraph (b).1.22(d) "Targeted group business" means a business designated under section 
         16C.16, 1.23subdivision 5
         .2.1(e) "Veteran-owned small business" means a business designated under section 2.216C.16, subdivision 6a
         .2.3    Subd. 2. Small targeted group business, small business set-asides; contract 2.4preferences. (a) The commissioner may award up to a six percent preference in the 2.5amount bid for specified construction work to small targeted group businesses and 2.6veteran-owned small businesses.2.7(b) The commissioner may designate a contract for construction work for award only 2.8to small targeted group businesses if the commissioner determines that at least three small 2.9targeted group businesses are likely to bid. The commissioner may designate a contract for 2.10construction work for award only to veteran-owned small businesses if the commissioner 2.11determines that at least three veteran-owned small businesses are likely to bid.2.12(c) The commissioner, as a condition of awarding a construction contract, may 2.13set goals that require the prime contractor to subcontract a portion of the contract to 2.14small targeted group businesses and veteran-owned small businesses. The commissioner 2.15must establish a procedure for granting waivers from the subcontracting requirement 2.16when qualified small targeted group businesses and veteran-owned small businesses 2.17are not reasonably available. The commissioner may establish financial incentives for 2.18prime contractors who exceed the goals for use of subcontractors and financial penalties 2.19for prime contractors who fail to meet goals under this paragraph. The subcontracting 2.20requirements of this paragraph do not apply to prime contractors who are small targeted 2.21group businesses or veteran-owned small businesses.2.22(d) (c) The commissioner may award up to a four percent preference in the amount 2.23bid on procurement for specified construction work to small businesses located in an 2.24economically disadvantaged area as defined in section 
         16C.16, subdivision 7.2.25    Subd. 2a.Small targeted group business; subcontracting goals.(a) The 2.26commissioner, as a condition of awarding a construction contract, may set goals that 2.27require the prime contractor to subcontract portions of the contract to small targeted 2.28group businesses. Prime contractors must demonstrate good faith efforts to meet the 2.29project goals. The commissioner shall establish a procedure for granting waivers from 2.30the subcontracting requirement when qualified small targeted group businesses are not 2.31reasonably available. The commissioner may establish (1) financial incentives for prime 2.32contractors who exceed the goals set for the use of subcontractors under this subdivision; 2.33and (2) sanctions for prime contractors who fail to make good faith efforts to meet the 2.34goals set under this subdivision.2.35(b) The small targeted group business subcontracting requirements of this 2.36subdivision do not apply to prime contractors who are small targeted group businesses.3.1    Subd. 2b.Veteran-owned small business; contract preferences.(a) The 3.2commissioner may award up to a six percent preference in the amount bid for specified 3.3construction work to veteran-owned small businesses, except when prohibited by the 3.4federal government as a condition of receiving federal funds. When a bid preference is 3.5provided under this subdivision, the percentage of preference in bid amount may not be 3.6less than the percentage of bid preference provided to any small targeted group business 3.7under subdivision 2.3.8(b) When a bid preference is provided under this subdivision, the commissioner 3.9must be as inclusive as possible in specifying contracts for construction work, as well 3.10as for construction-related professional and technical services, available under this bid 3.11preference program for veteran-owned small businesses. The term "construction" must be 3.12given broad meaning for purposes of specifying and letting contracts for veteran-owned 3.13small businesses and must include, but is not limited to, preplanning, planning, and all 3.14other construction-related professional and technical services.3.15(c) When a bid preference is provided under this subdivision, the commissioner 3.16must strive to ensure that contracts will be awarded on a proportional basis with contracts 3.17awarded under subdivision 2.3.18(d) The commissioner may designate a contract for construction work for award 3.19only to veteran-owned small businesses, if the commissioner determines that at least three 3.20veteran-owned small businesses are likely to bid.3.21    Subd. 2c.Veteran-owned small business; subcontracting goals.(a) The 3.22commissioner, as a condition of awarding a construction contract, may set goals that 3.23require the prime contractor to subcontract portions of the contract to veteran-owned small 3.24businesses, except when prohibited by federal law or rule as a condition of receiving 3.25federal funds. Prime contractors must demonstrate good faith efforts to meet the project 3.26goals. The commissioner shall establish a procedure for granting waivers from the 3.27subcontracting requirement when qualified veteran-owned small businesses are not 3.28reasonably available. The commissioner may establish (1) financial incentives for prime 3.29contractors who exceed the goals set for the use of subcontractors under this subdivision; 3.30and (2) sanctions for prime contractors who have not been granted a waiver and fail 3.31to meet goals set under this subdivision.3.32(b) The subcontracting requirements of this subdivision do not apply to prime 3.33contractors who are veteran-owned small businesses.3.34    Subd. 3. Small targeted group business subcontract awards to small businesses.3.35At least 75 percent of subcontracts awarded to small targeted group businesses must be 4.1performed by the business to which the subcontract is awarded or another small targeted 4.2group business. 4.3    Subd. 3a.Veteran-owned small business; subcontract awards. At least 75 4.4percent of subcontracts awarded to veteran-owned small businesses must be performed by 4.5the business to which the subcontract is awarded or another veteran-owned small business.4.6    Subd. 4. Contract awards, limitations. Contracts awarded pursuant to this 4.7section are subject to all limitations contained in rules adopted by the commissioner 4.8of administration.4.9    Subd. 4a.Small targeted group business; limited duration and reevaluation.4.10The commissioner shall cooperate with the commissioner of administration to periodically 4.11reevaluate the targeted group businesses to determine whether there is a statistical disparity 4.12between the percentage of construction contracts awarded to businesses owned by targeted 4.13group members and the representation of businesses owned by targeted group members 4.14among all businesses in the state in the construction category. The commissioner of 4.15administration shall designate targeted groups pursuant to section 16C.16, subdivision 5.4.16    Subd. 5. Recourse to other businesses. If the commissioner is unable to award 4.17a contract pursuant to the provisions of subdivisions 2 and 3 to 4a, the award may be 4.18placed pursuant to the normal solicitation and award provisions set forth in this chapter 4.19and chapter 16C.4.20    Subd. 6. Rules; eligibility.(a) The rules adopted by the commissioner of 4.21administration to define small businesses and to set time and other eligibility requirements 4.22for participation in programs under sections 
         16C.16 to 
         16C.19 apply to this section. The 4.23commissioner may promulgate other rules necessary to carry out this section.4.24(b) In addition to other eligibility requirements, a small targeted group business or 4.25veteran-owned small business is eligible for the bid preferences under this section only for 4.26eight years following the latest of:4.27(1) the effective date of this section;4.28(2) for a targeted group business, the date of initial certification by the commissioner 4.29of administration, as provided under section 16C.19;4.30(3) for a veteran-owned small business, the date of initial certification by the United 4.31States Department of Veterans Affairs, as provided under section 16C.19, paragraph (d); or4.32(4) for a veteran-owned small business, the release or discharge of any one of the 4.33owners from military active service, as defined in section 190.05, subdivision 5, lasting for 4.34a period of 179 days or longer.4.35    Subd. 7. Noncompetitive bids. The commissioner is encouraged to purchase 4.36from small targeted group businesses and veteran-owned small businesses designated 5.1under section 
         16C.16 when making purchases that are not subject to competitive bidding 5.2procedures.5.3    Subd. 8. Report by commissioner Reporting.(a) The commissioner of 5.4transportation shall report to the commissioner of administration on compliance with this 5.5section. The information must be reported at the time and in the manner requested by the 5.6commissioner of administration.5.7(b) By February 1 of each even-numbered year, the commissioner of transportation 5.8shall submit a report to the chairs and ranking minority members of the legislative 5.9committees with jurisdiction over transportation policy and finance and veterans policy 5.10and finance concerning contract awards during the preceding biennium under this section. 5.11At a minimum, the report must include:5.12(1) a summary of the program;5.13(2) a review of the use of preferences for contracting during the preceding biennium, 5.14including frequency of establishment of a preference and frequency and amount of 5.15contract awards to:5.16(i) small targeted group businesses; and5.17(ii) veteran-owned small businesses;5.18(3) a review of goals and good faith efforts to use small targeted group businesses 5.19and veteran-owned small businesses in subcontracts, including analysis of methods used 5.20for, and effectiveness of, good faith efforts;5.21(4) a summary of any financial incentives used or sanctions imposed;5.22(5) agency commentary on any perceived impediments, whether statutory, 5.23administrative, or otherwise, that may be limiting the participation of small targeted 5.24group businesses and veteran-owned small businesses in the agency's contract preference 5.25program;5.26(6) information on each reevaluation under subdivision 4a, including details on the 5.27methodology for reevaluation; and5.28(7) any recommendations for legislative or programmatic changes.5.29    Subd. 9.Veteran-owned small business; purpose.The purpose of the state 5.30contracting bid preference program for veteran-owned small businesses is to facilitate 5.31the healthy transition of veterans from military to civilian life, and to help compensate 5.32veterans for their sacrifices including, but not limited to, their sacrifice of health and 5.33time to the state and nation during their military service, as well as to enhance economic 5.34development within Minnesota.5.35EFFECTIVE DATE.This section is effective the day following final enactment, 5.36and applies to contracts let on or after July 1, 2012.6.1ARTICLE 26.2AUTHORIZING COUNTIES FOR BID PREFERENCE FOR 6.3VETERAN-OWNED SMALL BUSINESSES6.4    Section 1. [375.771] VETERAN-OWNED SMALL BUSINESS CONTRACTS.6.5    Subdivision 1.Definitions.(a) The definitions in this subdivision apply to this 6.6section.6.7(b) "Award" means the granting of a contract in accordance with all applicable laws 6.8and rules governing competitive bidding, except as otherwise provided in this section.6.9(c) "Contract" means an agreement entered into between a business entity and the 6.10county for procurement of goods and services including both technical and nontechnical 6.11goods and services, printing, and construction.6.12(d) "County board" or "board" has the meaning given in section 375.01.6.13(e) "County purchasing department" has the meaning given in section 375.72.6.14(f) "Director of purchasing" has the meaning given in section 375.74.6.15(g) "Subcontractor" means a business entity that enters into a legally binding 6.16agreement with another business entity that is a party to a contract as defined in paragraph 6.17(c).6.18(h) "Veteran" has the meaning given in section 197.447.6.19(i) "Veteran-owned small business" means a business designated under section 6.2016C.16, subdivision 6a.6.21    Subd. 2.Policy; purpose; director.(a) A county board may establish a program 6.22within the county in accordance with this section to provide a bid preference for 6.23awarding contracts to designated veteran-owned small businesses for the procurement of 6.24technical and nontechnical goods and services including, but not limited to, printing and 6.25construction, broadly defined to include all phases of the construction process.6.26(b) The purpose of this program is to facilitate the transition of veterans from 6.27military to civilian life, and to help compensate veterans for their sacrifices including, but 6.28not limited to, their sacrifice of health and time to the community, state, and nation during 6.29their military service, as well as to enhance economic development throughout Minnesota.6.30(c) The county board may direct the county director of purchasing, or other 6.31designated official within the county purchasing department, to administer this program in 6.32accordance with county policy established by the board.6.33    Subd. 3.Small business set-asides.(a) The county director of purchasing may 6.34award up to a six percent preference in the amount bid for procurement of goods and 6.35services including, but not limited to, technical and nontechnical goods and services, 7.1printing, and construction to veteran-owned small businesses having their principal place 7.2of business in Minnesota.7.3(b) The board, as a condition of awarding a construction contract, may set goals that 7.4require the prime contractor to subcontract a portion of the contract to  veteran-owned 7.5small businesses. The board must establish a procedure for granting waivers from the 7.6subcontracting requirement when qualified veteran-owned small businesses are not 7.7reasonably available. The board may establish financial incentives for prime contractors 7.8who exceed the goals for use of veteran-owned small business subcontractors and 7.9financial penalties for prime contractors who fail to meet goals under this paragraph. The 7.10subcontracting requirements of this paragraph do not apply to prime contractors who are 7.11veteran-owned small businesses.7.12    Subd. 4.Awards to small businesses.At least 75 percent of subcontracts awarded 7.13to veteran-owned small businesses must be performed by the business to which the 7.14subcontract is awarded or another veteran-owned small business.7.15    Subd. 5.Awards, limitations.Contracts awarded under this section are subject to 7.16all limitations adopted by the board.7.17    Subd. 6.Recourse to other businesses.If the director is unable to award a contract 7.18under subdivisions 3 and 4, the award may be placed under normal solicitation and award 7.19statutes and rules.7.20    Subd. 7.Noncompetitive bids.The board is encouraged to purchase from 7.21veteran-owned small businesses designated under section 16C.16, subdivision 6a, when 7.22making purchases that are not subject to competitive bidding procedures.7.23    Subd. 8.Report to board.At the request of the county board, the county treasurer 7.24shall report to the board on compliance with this section. The information must be 7.25reported at the time and in the manner requested by the board.7.26EFFECTIVE DATE.This section is effective July 1, 2012, for contracts awarded 7.27by counties on or after that date.