HF 1984

1st Unofficial Engrossment - 88th Legislature (2013 - 2014)

Posted on 05/05/2014 09:19 a.m.

1.1A bill for an act 1.2relating to state government; providing for enhancement of accountability and 1.3transparency in public construction; establishing a requirement for a definition 1.4of responsible contractor;proposing coding for new law in Minnesota Statutes, 1.5chapter 16C. 1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.7    Section 1. new text begin [16C.285] RESPONSIBLE CONTRACTOR REQUIREMENT new text end 1.8 new text begin DEFINED. new text end 1.9     new text begin Subdivision 1. new text end new text begin Definitions. new text end new text begin (a) For purposes of this section, the terms defined in this new text end 1.10 new text begin subdivision have the meanings given them. new text end 1.11 new text begin (b) "Construction contract" means a contract or subcontract of any tier for work on new text end 1.12 new text begin a project. new text end 1.13 new text begin (c) "Contractor" means a vendor that submits a bid or proposal or otherwise responds new text end 1.14 new text begin to a solicitation document of a contracting authority for work on a project. A contractor new text end 1.15 new text begin includes a construction manager but does not include a material supplier. new text end 1.16 new text begin (d) "Contracting authority" means a state agency, the Minnesota State Colleges and new text end 1.17 new text begin Universities, the University of Minnesota, the Metropolitan Council, the Metropolitan new text end 1.18 new text begin Airports Commission, or a municipality that enters into a construction contract or new text end 1.19 new text begin authorizes or directs entering into a construction contract. new text end 1.20 new text begin (e) "Municipality" means a county, town, home rule charter or statutory city, school new text end 1.21 new text begin district, housing and redevelopment authority, port authority, economic development new text end 1.22 new text begin authority, sports facilities authority, joint powers board or organization created under new text end 1.23 new text begin section 471.59 or other statute, special district, drainage authority, watershed district, new text end 1.24 new text begin destination medical center corporation, or other municipal corporation or political new text end 1.25 new text begin subdivision of the state authorized by law to enter into contracts. new text end 2.1 new text begin (f) "Prime contractor" means a contractor awarded a construction contract by a new text end 2.2 new text begin contracting authority for work on a project. new text end 2.3 new text begin (g) "Principal" means an owner holding at least a 25 percent ownership interest new text end 2.4 new text begin in a business. new text end 2.5 new text begin (h) "Project" means building, erection, construction, alteration, remodeling, new text end 2.6 new text begin demolition, or repair of buildings, real property, highways, roads, bridges, or other new text end 2.7 new text begin construction work performed pursuant to a construction contract. new text end 2.8 new text begin (i) "Related entity" means: new text end 2.9 new text begin (1) a firm, partnership, corporation, joint venture, or other legal entity substantially new text end 2.10 new text begin under the control of a contractor or vendor; new text end 2.11 new text begin (2) a predecessor corporation or other legal entity having one or more of the same new text end 2.12 new text begin principals as the contractor or vendor; new text end 2.13 new text begin (3) a subsidiary of a contractor or vendor; new text end 2.14 new text begin (4) one or more principals of a contractor or vendor; and new text end 2.15 new text begin (5) a person, firm, partnership, corporation, joint venture, or other legal entity that new text end 2.16 new text begin substantially controls a contractor or vendor. new text end 2.17 new text begin (j) "Solicitation document" means an invitation to bid, bid specifications, request for new text end 2.18 new text begin proposals, request for qualifications, or other solicitation of contractors for purposes of new text end 2.19 new text begin a construction contract. new text end 2.20 new text begin (k) "Subcontractor" means a vendor that seeks to enter into a subcontract or enters new text end 2.21 new text begin into a subcontract for work on a project. new text end 2.22 new text begin (l) "Vendor" means a business, including a construction contractor or a natural new text end 2.23 new text begin person, and includes both if the natural person is engaged in a business. new text end 2.24     new text begin Subd. 2. new text end new text begin Responsible contractor required. new text end new text begin (a) A contractor must meet the new text end 2.25 new text begin minimum criteria in subdivision 3 to be eligible to be awarded a construction contract new text end 2.26 new text begin as the lowest responsible bidder or the vendor or contractor offering the best value as new text end 2.27 new text begin provided in section 16C.28, 103D.811, 103E.505, 116A.13, 123B.52, 160.17, 160.262, new text end 2.28 new text begin 161.32, 161.3206, 161.3209, 161.38, 162.17, 365.37, 374.13, 375.21, 383C.094, 412.311, new text end 2.29 new text begin 429.041, 458D.21, 469.015, 469.068, 469.101, 471.345, 473.4057, 473.523, 473.652, new text end 2.30 new text begin 473.756, 473J.11, or any of their successor provisions. new text end 2.31 new text begin (b) This section applies to publicly owned or financed projects where the contracting new text end 2.32 new text begin authority's construction contract with the prime contractor is estimated to exceed $50,000 new text end 2.33 new text begin and is awarded pursuant to a lowest responsible bidder selection method or a best value new text end 2.34 new text begin selection method. A subcontractor must meet the minimum criteria in subdivision 3 to be new text end 2.35 new text begin eligible to be awarded a subcontract on a project regardless of the value of the subcontract. new text end 3.1 new text begin (c) If only one contractor responds to a solicitation document, a contracting authority new text end 3.2 new text begin may award a construction contract to the responding contractor even if the minimum new text end 3.3 new text begin criteria in subdivision 3 are not met. new text end 3.4     new text begin Subd. 3. new text end new text begin Minimum criteria. new text end new text begin "Responsible contractor" means a contractor or new text end 3.5 new text begin subcontractor that conforms to the responsibility requirements in the solicitation document new text end 3.6 new text begin for its portion of the work on the project and verifies that it meets the following minimum new text end 3.7 new text begin criteria: new text end 3.8 new text begin (1) the contractor or subcontractor: new text end 3.9 new text begin (i) is in compliance with workers' compensation and unemployment insurance new text end 3.10 new text begin requirements; new text end 3.11 new text begin (ii) is currently registered with the Department of Revenue and the Department of new text end 3.12 new text begin Employment and Economic Development if it has employees; new text end 3.13 new text begin (iii) has a valid federal tax identification number or a valid Social Security number if new text end 3.14 new text begin an individual; and new text end 3.15 new text begin (iv) has filed a certificate of authority to transact business in Minnesota with the new text end 3.16 new text begin secretary of state if a foreign corporation or cooperative; new text end 3.17 new text begin (2) the contractor, subcontractor, or related entity is in compliance with and, during new text end 3.18 new text begin the three-year period before submitting the verification, has not violated section 177.24, new text end 3.19 new text begin 177.25, 177.41 to 177.44, 181.13, 181.14, or 181.722, and has not violated United States new text end 3.20 new text begin Code, title 29, sections 201 to 219, or United States Code, title 40, sections 3141 to new text end 3.21 new text begin 3148. For purposes of this clause, a violation occurs when a contractor, subcontractor, or new text end 3.22 new text begin related entity: new text end 3.23 new text begin (i) willfully or repeatedly fails to pay statutorily required wages or penalties of new text end 3.24 new text begin $25,000 or more on one or more separate projects within the three-year period; new text end 3.25 new text begin (ii) has been issued an order to comply by the commissioner of labor and industry new text end 3.26 new text begin that has become final; new text end 3.27 new text begin (iii) has been issued at least two determination letters within the three-year period new text end 3.28 new text begin by the Department of Transportation finding an underpayment by the contractor, new text end 3.29 new text begin subcontractor, or related entity to its own employees; or new text end 3.30 new text begin (iv) has been found liable for underpayment of wages or penalties in an action new text end 3.31 new text begin brought in a court having jurisdiction. new text end 3.32 new text begin Provided that, if the contractor, subcontractor, or related entity contests a determination new text end 3.33 new text begin of underpayment by the Department of Transportation in a contested case proceeding, new text end 3.34 new text begin a violation does not occur until the contested case proceeding and any appeals have new text end 3.35 new text begin concluded with a determination that the contractor, subcontractor, or related entity new text end 3.36 new text begin underpaid wages or penalties; new text end 4.1 new text begin (3) the contractor, subcontractor, or related entity is in compliance with and, during new text end 4.2 new text begin the three-year period before submitting the verification, has not violated any municipality's new text end 4.3 new text begin requirements for payment of wages for construction work performed for that municipality new text end 4.4 new text begin as provided in ordinance, resolution, policy, or contractual provision. For purposes of this new text end 4.5 new text begin clause, a violation occurs when a municipality determines that a contractor, subcontractor, new text end 4.6 new text begin or related entity has willfully or repeatedly failed to pay wages or penalties required by the new text end 4.7 new text begin municipality in the amount of $25,000 or more on one or more separate projects within the new text end 4.8 new text begin three-year period. Provided that, if the contractor, subcontractor, or related entity contests new text end 4.9 new text begin a municipality's finding of unpaid wages or penalties in a legal proceeding, a violation does new text end 4.10 new text begin not occur until the legal proceeding and any appeals have concluded with a determination new text end 4.11 new text begin that the contractor, subcontractor, or related entity underpaid wages or penalties; new text end 4.12 new text begin (4) the contractor, subcontractor, or related entity is in compliance with and, during new text end 4.13 new text begin the three-year period before submitting the verification, has not violated section 181.723 new text end 4.14 new text begin or chapter 326B. For purposes of this clause, a violation occurs when a contractor, new text end 4.15 new text begin subcontractor, or related entity has been issued a final administrative or licensing order; new text end 4.16 new text begin (5) the contractor, subcontractor, or related entity has not operated under false names new text end 4.17 new text begin or fronts as a small business, a socially or economically disadvantaged small business, or a new text end 4.18 new text begin disadvantaged business enterprise; new text end 4.19 new text begin (6) the contractor, subcontractor, or related entity has not, more than twice during new text end 4.20 new text begin the three-year period before submitting the verification, had a certificate of compliance new text end 4.21 new text begin under section 363A.36 revoked or suspended, with the revocation or suspension becoming new text end 4.22 new text begin final because it was upheld by the Office of Administrative Hearings or was not appealed new text end 4.23 new text begin to the office; new text end 4.24 new text begin (7) the contractor, subcontractor, or related entity has not received a final new text end 4.25 new text begin determination assessing a monetary sanction from the Department of Administration new text end 4.26 new text begin or Transportation for failure to meet targeted group business, disadvantaged business new text end 4.27 new text begin enterprise, or veteran-owned business goals more than once during the three-year period new text end 4.28 new text begin before submitting the verification; new text end 4.29 new text begin (8) the contractor, subcontractor, or related entity is not currently debarred by the new text end 4.30 new text begin federal government or the state and is currently not ineligible to be awarded a construction new text end 4.31 new text begin contract by a contracting authority or perform work under a construction contract by new text end 4.32 new text begin this section; and new text end 4.33 new text begin (9) all subcontractors that the contractor or subcontractor intends to use to perform new text end 4.34 new text begin project work have verified to the contractor or subcontractor through a signed statement new text end 4.35 new text begin under oath by an owner or officer that they meet the minimum criteria listed in clauses new text end 4.36 new text begin (1) to (7). new text end 5.1     new text begin Subd. 4. new text end new text begin Verification of compliance. new text end new text begin A contractor responding to a solicitation new text end 5.2 new text begin document of a contracting authority shall submit to the contracting authority a signed new text end 5.3 new text begin statement under oath by an owner or officer verifying compliance with each of the new text end 5.4 new text begin minimum criteria in subdivision 3 at the time that it responds to the solicitation document. new text end 5.5 new text begin A contracting authority may accept a sworn statement as sufficient to demonstrate that a new text end 5.6 new text begin contractor is a responsible contractor and shall not be held liable for awarding a contract new text end 5.7 new text begin in reasonable reliance on that statement. Failure to verify compliance with any one of the new text end 5.8 new text begin minimum criteria or a false statement under oath in a verification of compliance shall new text end 5.9 new text begin render a contractor or subcontractor ineligible to be awarded a construction contract on the new text end 5.10 new text begin project for which the verification was submitted. A false statement under oath verifying new text end 5.11 new text begin compliance with any of the minimum criteria may result in termination of the construction new text end 5.12 new text begin contract that has already been awarded to a contractor or subcontractor that submits a false new text end 5.13 new text begin statement. A contracting authority shall not be liable for declining to award a contract new text end 5.14 new text begin or terminating a contract in reasonable reliance on a determination that the contractor new text end 5.15 new text begin failed to verify compliance with the minimum criteria or falsely stated that it meets the new text end 5.16 new text begin minimum criteria. new text end 5.17     new text begin Subd. 5. new text end new text begin Subcontractor verification. new text end new text begin A contractor or subcontractor shall new text end 5.18 new text begin include in its verification of compliance under subdivision 4 a list of all of its first-tier new text end 5.19 new text begin subcontractors that it intends to retain for work on the project. If the prime contractor or new text end 5.20 new text begin any subcontractor retains additional subcontractors on the project after submitting its new text end 5.21 new text begin verification of compliance, the prime contractor or subcontractor shall obtain verifications new text end 5.22 new text begin of compliance from each additional subcontractor with which it has a direct contractual new text end 5.23 new text begin relationship and shall submit a supplemental verification confirming compliance with new text end 5.24 new text begin subdivision 3, clause (8). The prime contractor shall submit to the contracting authority new text end 5.25 new text begin upon request copies of the signed verifications of compliance from all subcontractors of new text end 5.26 new text begin any tier pursuant to subdivision 3, clause (8). The prime contractor and subcontractors new text end 5.27 new text begin shall not be responsible for the false statements of any subcontractor with which they do new text end 5.28 new text begin not have a direct contractual relationship. The prime contractor and subcontractors shall new text end 5.29 new text begin be responsible for false statements by their first-tier subcontractors with which they have new text end 5.30 new text begin a direct contractual relationship only if they accept the verification of compliance with new text end 5.31 new text begin knowledge that it contains a false statement or with reckless disregard for whether the new text end 5.32 new text begin statement is true or false. new text end 5.33     new text begin Subd. 6. new text end new text begin Additional criteria. new text end new text begin Nothing in this section shall restrict the discretion of a new text end 5.34 new text begin contracting authority to establish additional criteria for defining a responsible contractor. new text end 5.35     new text begin Subd. 7. new text end new text begin Implementation. new text end new text begin The definition of responsible contractor, as defined in new text end 5.36 new text begin subdivision 3, or a statement that a responsible contractor must comply with section new text end 6.1 new text begin 16C.285, subdivision 3, shall be included in the solicitation document for all projects new text end 6.2 new text begin covered by this section. The solicitation document for any project shall state that any new text end 6.3 new text begin contractor or subcontractor that does not meet the minimum criteria in subdivision 3 is new text end 6.4 new text begin not a responsible contractor and is not eligible to be awarded a construction contract for new text end 6.5 new text begin the project or to perform work on the project. The solicitation document shall provide new text end 6.6 new text begin that a false statement under oath verifying compliance with any of the minimum criteria new text end 6.7 new text begin may result in termination of the contract awarded to the contractor or subcontractor that new text end 6.8 new text begin submits a false statement. The solicitation document shall state that the prime contractor new text end 6.9 new text begin shall submit to the contracting authority upon request copies of the signed verifications of new text end 6.10 new text begin compliance from all subcontractors of any tier pursuant to subdivision 3, clause (8). new text end 6.11     new text begin Subd. 8. new text end new text begin Effective date. new text end new text begin This section is effective January 1, 2015, and shall apply new text end 6.12 new text begin to all construction contracts entered into based on solicitation documents issued on or new text end 6.13 new text begin after that date. new text end