<a id="pl.1.3"></a><var>1.3</var>transparency in public construction; establishing a requirement for a definition <br/>
<a id="pl.1.4"></a><var>1.4</var>of responsible contractor;proposing coding for new law in Minnesota Statutes, <br/>
<a id="pl.1.5"></a><var>1.5</var>chapter 16C.<br/>
<a id="pl.1.6"></a><var>1.6</var>BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:<br/>
<br/>
<a id="bill.0.1.0"></a><a id="pl.1.7"></a><var>1.7</var>    Section 1. <b>[16C.285] RESPONSIBLE CONTRACTOR REQUIREMENT </b><br/>
<a id="pl.1.8"></a><var>1.8</var><b>DEFINED.</b><br/>
<a id="pl.1.9"></a><var>1.9</var>    Subdivision 1. <b>Definitions.</b> (a) For purposes of this section, the terms defined in this <br/>
<a id="pl.1.10"></a><var>1.10</var>subdivision have the meanings given them.<br/>
<a id="pl.1.11"></a><var>1.11</var>(b) "Construction contract" means a contract or subcontract of any tier for work on <br/>
<a id="pl.1.12"></a><var>1.12</var>a project.<br/>
<a id="pl.1.13"></a><var>1.13</var>(c) "Contractor" means a vendor that submits a bid or proposal or otherwise responds <br/>
<a id="pl.1.14"></a><var>1.14</var>to a solicitation document of a contracting authority for work on a project. A contractor <br/>
<a id="pl.1.15"></a><var>1.15</var>includes a construction manager but does not include a material supplier.<br/>
<a id="pl.1.16"></a><var>1.16</var>(d) "Contracting authority" means a state agency, the Minnesota State Colleges and <br/>
<a id="pl.1.17"></a><var>1.17</var>Universities, the University of Minnesota, the Metropolitan Council, the Metropolitan <br/>
<a id="pl.1.18"></a><var>1.18</var>Airports Commission, or a municipality that enters into a construction contract or <br/>
<a id="pl.1.19"></a><var>1.19</var>authorizes or directs entering into a construction contract.<br/>
<a id="pl.1.20"></a><var>1.20</var>(e) "Municipality" means a county, town, home rule charter or statutory city, school <br/>
<a id="pl.1.21"></a><var>1.21</var>district, housing and redevelopment authority, port authority, economic development <br/>
<a id="pl.1.22"></a><var>1.22</var>authority, sports facilities authority, joint powers board or organization created under <br/>
<a id="pl.1.23"></a><var>1.23</var>section 471.59 or other statute, special district, drainage authority, watershed district, <br/>
<a id="pl.1.24"></a><var>1.24</var>destination medical center corporation, or other municipal corporation or political <br/>
<a id="pl.1.25"></a><var>1.25</var>subdivision of the state authorized by law to enter into contracts.<br/>
<a id="pl.2.1"></a><var>2.1</var>(f) "Prime contractor" means a contractor awarded a construction contract by a <br/>
<a id="pl.2.2"></a><var>2.2</var>contracting authority for work on a project.<br/>
<a id="pl.2.3"></a><var>2.3</var>(g) "Principal" means an owner holding at least a 25 percent ownership interest <br/>
<a id="pl.2.4"></a><var>2.4</var>in a business.<br/>
<a id="pl.2.5"></a><var>2.5</var>(h) "Project" means building, erection, construction, alteration, remodeling, <br/>
<a id="pl.2.6"></a><var>2.6</var>demolition, or repair of buildings, real property, highways, roads, bridges, or other <br/>
<a id="pl.2.7"></a><var>2.7</var>construction work performed pursuant to a construction contract.<br/>
<a id="pl.2.8"></a><var>2.8</var>(i) "Related entity" means:<br/>
<a id="pl.2.9"></a><var>2.9</var>(1) a firm, partnership, corporation, joint venture, or other legal entity substantially <br/>
<a id="pl.2.10"></a><var>2.10</var>under the control of a contractor or vendor;<br/>
<a id="pl.2.11"></a><var>2.11</var>(2) a predecessor corporation or other legal entity having one or more of the same <br/>
<a id="pl.2.12"></a><var>2.12</var>principals as the contractor or vendor;<br/>
<a id="pl.2.13"></a><var>2.13</var>(3) a subsidiary of a contractor or vendor;<br/>
<a id="pl.2.14"></a><var>2.14</var>(4) one or more principals of a contractor or vendor; and  <br/>
<a id="pl.2.15"></a><var>2.15</var>(5) a person, firm, partnership, corporation, joint venture, or other legal entity that <br/>
<a id="pl.2.16"></a><var>2.16</var>substantially controls a contractor or vendor.<br/>
<a id="pl.2.17"></a><var>2.17</var>(j) "Solicitation document" means an invitation to bid, bid specifications, request for <br/>
<a id="pl.2.18"></a><var>2.18</var>proposals, request for qualifications, or other solicitation of contractors for purposes of <br/>
<a id="pl.2.19"></a><var>2.19</var>a construction contract.<br/>
<a id="pl.2.20"></a><var>2.20</var>(k) "Subcontractor" means a vendor that seeks to enter into a subcontract or enters <br/>
<a id="pl.2.21"></a><var>2.21</var>into a subcontract for work on a project.<br/>
<a id="pl.2.22"></a><var>2.22</var>(l) "Vendor" means a business, including a construction contractor or a natural <br/>
<a id="pl.2.23"></a><var>2.23</var>person, and includes both if the natural person is engaged in a business.<br/>
<a id="pl.2.24"></a><var>2.24</var>    Subd. 2. <b>Responsible contractor required.</b> (a) A contractor must meet the <br/>
<a id="pl.2.25"></a><var>2.25</var>minimum criteria in subdivision 3 to be eligible to be awarded a construction contract <br/>
<a id="pl.2.26"></a><var>2.26</var>as the lowest responsible bidder or the vendor or contractor offering the best value as <br/>
<a id="pl.2.27"></a><var>2.27</var>provided in section 16C.28, 103D.811, 103E.505, 116A.13, 123B.52, 160.17, 160.262, <br/>
<a id="pl.2.28"></a><var>2.28</var>161.32, 161.3206, 161.3209, 161.38, 162.17, 365.37, 374.13, 375.21, 383C.094, 412.311, <br/>
<a id="pl.2.29"></a><var>2.29</var>429.041, 458D.21, 469.015, 469.068, 469.101, 471.345, 473.4057, 473.523, 473.652, <br/>
<a id="pl.2.30"></a><var>2.30</var>473.756, 473J.11, or any of their successor provisions. <br/>
<a id="pl.2.31"></a><var>2.31</var>(b) This section applies to publicly owned or financed projects where the contracting <br/>
<a id="pl.2.32"></a><var>2.32</var>authority's construction contract with the prime contractor is estimated to exceed $50,000 <br/>
<a id="pl.2.33"></a><var>2.33</var>and is awarded pursuant to a lowest responsible bidder selection method or a best value <br/>
<a id="pl.2.34"></a><var>2.34</var>selection method.  A subcontractor must meet the minimum criteria in subdivision 3 to be <br/>
<a id="pl.2.35"></a><var>2.35</var>eligible to be awarded a subcontract on a project regardless of the value of the subcontract.<br/>
<a id="pl.3.1"></a><var>3.1</var>(c) If only one contractor responds to a solicitation document, a contracting authority <br/>
<a id="pl.3.2"></a><var>3.2</var>may award a construction contract to the responding contractor even if the minimum <br/>
<a id="pl.3.3"></a><var>3.3</var>criteria in subdivision 3 are not met.<br/>
<a id="pl.3.4"></a><var>3.4</var>    Subd. 3. <b>Minimum criteria.</b>  "Responsible contractor" means a contractor or <br/>
<a id="pl.3.5"></a><var>3.5</var>subcontractor that conforms to the responsibility requirements in the solicitation document <br/>
<a id="pl.3.6"></a><var>3.6</var>for its portion of the work on the project and verifies that it meets the following minimum <br/>
<a id="pl.3.7"></a><var>3.7</var>criteria:<br/>
<a id="pl.3.8"></a><var>3.8</var>(1) the contractor or subcontractor: <br/>
<a id="pl.3.9"></a><var>3.9</var>(i) is in compliance with workers' compensation and unemployment insurance <br/>
<a id="pl.3.10"></a><var>3.10</var>requirements;<br/>
<a id="pl.3.11"></a><var>3.11</var>(ii) is currently registered with the Department of Revenue and the Department of <br/>
<a id="pl.3.12"></a><var>3.12</var>Employment and Economic Development if it has employees;<br/>
<a id="pl.3.13"></a><var>3.13</var>(iii) has a valid federal tax identification number or a valid Social Security number if <br/>
<a id="pl.3.14"></a><var>3.14</var>an individual; and<br/>
<a id="pl.3.15"></a><var>3.15</var>(iv) has filed a certificate of authority to transact business in Minnesota with the <br/>
<a id="pl.3.16"></a><var>3.16</var>secretary of state if a foreign corporation or cooperative;<br/>
<a id="pl.3.17"></a><var>3.17</var>(2) the contractor, subcontractor, or related entity is in compliance with and, during <br/>
<a id="pl.3.18"></a><var>3.18</var>the three-year period before submitting the verification, has not violated section 177.24, <br/>
<a id="pl.3.19"></a><var>3.19</var>177.25, 177.41 to 177.44, 181.13, 181.14, or 181.722, and has not violated United States <br/>
<a id="pl.3.20"></a><var>3.20</var>Code, title 29, sections 201 to 219, or United States Code, title 40, sections 3141 to <br/>
<a id="pl.3.21"></a><var>3.21</var>3148. For purposes of this clause, a violation occurs when a contractor, subcontractor, or <br/>
<a id="pl.3.22"></a><var>3.22</var>related entity: <br/>
<a id="pl.3.23"></a><var>3.23</var>(i) willfully or repeatedly fails to pay statutorily required wages or penalties of <br/>
<a id="pl.3.24"></a><var>3.24</var>$25,000 or more on one or more separate projects within the three-year period;<br/>
<a id="pl.3.25"></a><var>3.25</var>(ii) has been issued an order to comply by the commissioner of labor and industry <br/>
<a id="pl.3.26"></a><var>3.26</var>that has become final;<br/>
<a id="pl.3.27"></a><var>3.27</var>(iii) has been issued at least two determination letters within the three-year period <br/>
<a id="pl.3.28"></a><var>3.28</var>by the Department of Transportation finding an underpayment by the contractor, <br/>
<a id="pl.3.29"></a><var>3.29</var>subcontractor, or related entity to its own employees; or<br/>
<a id="pl.3.30"></a><var>3.30</var>(iv) has been found liable for underpayment of wages or penalties in an action <br/>
<a id="pl.3.31"></a><var>3.31</var>brought in a court having jurisdiction.<br/>
<a id="pl.3.32"></a><var>3.32</var>Provided that, if the contractor, subcontractor, or related entity contests a determination <br/>
<a id="pl.3.33"></a><var>3.33</var>of underpayment by the Department of Transportation in a contested case proceeding, <br/>
<a id="pl.3.34"></a><var>3.34</var>a violation does not occur until the contested case proceeding and any appeals have <br/>
<a id="pl.3.35"></a><var>3.35</var>concluded with a determination that the contractor, subcontractor, or related entity <br/>
<a id="pl.3.36"></a><var>3.36</var>underpaid wages or penalties;<br/>
<a id="pl.4.1"></a><var>4.1</var>(3) the contractor, subcontractor, or related entity is in compliance with and, during <br/>
<a id="pl.4.2"></a><var>4.2</var>the three-year period before submitting the verification, has not violated any municipality's <br/>
<a id="pl.4.3"></a><var>4.3</var>requirements for payment of wages for construction work performed for that municipality <br/>
<a id="pl.4.4"></a><var>4.4</var>as provided in ordinance, resolution, policy, or contractual provision. For purposes of this <br/>
<a id="pl.4.5"></a><var>4.5</var>clause, a violation occurs when a municipality determines that a contractor, subcontractor, <br/>
<a id="pl.4.6"></a><var>4.6</var>or related entity has willfully or repeatedly failed to pay wages or penalties required by the <br/>
<a id="pl.4.7"></a><var>4.7</var>municipality in the amount of $25,000 or more on one or more separate projects within the <br/>
<a id="pl.4.8"></a><var>4.8</var>three-year period. Provided that, if the contractor, subcontractor, or related entity contests <br/>
<a id="pl.4.9"></a><var>4.9</var>a municipality's finding of unpaid wages or penalties in a legal proceeding, a violation does <br/>
<a id="pl.4.10"></a><var>4.10</var>not occur until the legal proceeding and any appeals have concluded with a determination <br/>
<a id="pl.4.11"></a><var>4.11</var>that the contractor, subcontractor, or related entity underpaid wages or penalties;<br/>
<a id="pl.4.12"></a><var>4.12</var>(4) the contractor, subcontractor, or related entity is in compliance with and, during <br/>
<a id="pl.4.13"></a><var>4.13</var>the three-year period before submitting the verification, has not violated section 181.723 <br/>
<a id="pl.4.14"></a><var>4.14</var>or chapter 326B. For purposes of this clause, a violation occurs when a contractor, <br/>
<a id="pl.4.15"></a><var>4.15</var>subcontractor, or related entity has been issued a final administrative or licensing order;<br/>
<a id="pl.4.16"></a><var>4.16</var>(5) the contractor, subcontractor, or related entity has not operated under false names <br/>
<a id="pl.4.17"></a><var>4.17</var>or fronts as a small business, a socially or economically disadvantaged small business, or a <br/>
<a id="pl.4.18"></a><var>4.18</var>disadvantaged business enterprise;<br/>
<a id="pl.4.19"></a><var>4.19</var>(6) the contractor, subcontractor, or related entity has not, more than twice during <br/>
<a id="pl.4.20"></a><var>4.20</var>the three-year period before submitting the verification, had a certificate of compliance <br/>
<a id="pl.4.21"></a><var>4.21</var>under section 363A.36 revoked or suspended, with the revocation or suspension becoming <br/>
<a id="pl.4.22"></a><var>4.22</var>final because it was upheld by the Office of Administrative Hearings or was not appealed <br/>
<a id="pl.4.23"></a><var>4.23</var>to the office;<br/>
<a id="pl.4.24"></a><var>4.24</var>(7) the contractor, subcontractor, or related entity has not received a final <br/>
<a id="pl.4.25"></a><var>4.25</var>determination assessing a monetary sanction from the Department of Administration <br/>
<a id="pl.4.26"></a><var>4.26</var>or Transportation for failure to meet targeted group business, disadvantaged business <br/>
<a id="pl.4.27"></a><var>4.27</var>enterprise, or veteran-owned business goals more than once during the three-year period <br/>
<a id="pl.4.28"></a><var>4.28</var>before submitting the verification;<br/>
<a id="pl.4.29"></a><var>4.29</var>(8) the contractor, subcontractor, or related entity is not currently debarred by the <br/>
<a id="pl.4.30"></a><var>4.30</var>federal government or the state and is currently not ineligible to be awarded a construction <br/>
<a id="pl.4.31"></a><var>4.31</var>contract by a contracting authority or perform work under a construction contract by <br/>
<a id="pl.4.32"></a><var>4.32</var>this section; and<br/>
<a id="pl.4.33"></a><var>4.33</var>(9) all subcontractors that the contractor or subcontractor intends to use to perform <br/>
<a id="pl.4.34"></a><var>4.34</var>project work have verified to the contractor or subcontractor through a signed statement <br/>
<a id="pl.4.35"></a><var>4.35</var>under oath by an owner or officer that they meet the minimum criteria listed in clauses <br/>
<a id="pl.4.36"></a><var>4.36</var>(1) to (7).<br/>
<a id="pl.5.1"></a><var>5.1</var>    Subd. 4. <b>Verification of compliance.</b> A contractor responding to a solicitation <br/>
<a id="pl.5.2"></a><var>5.2</var>document of a contracting authority shall submit to the contracting authority a signed <br/>
<a id="pl.5.3"></a><var>5.3</var>statement under oath by an owner or officer verifying compliance with each of the <br/>
<a id="pl.5.4"></a><var>5.4</var>minimum criteria in subdivision 3 at the time that it responds to the solicitation document.  <br/>
<a id="pl.5.5"></a><var>5.5</var>A contracting authority may accept a sworn statement as sufficient to demonstrate that a <br/>
<a id="pl.5.6"></a><var>5.6</var>contractor is a responsible contractor and shall not be held liable for awarding a contract <br/>
<a id="pl.5.7"></a><var>5.7</var>in reasonable reliance on that statement. Failure to verify compliance with any one of the <br/>
<a id="pl.5.8"></a><var>5.8</var>minimum criteria or a false statement under oath in a verification of compliance shall <br/>
<a id="pl.5.9"></a><var>5.9</var>render a contractor or subcontractor ineligible to be awarded a construction contract on the <br/>
<a id="pl.5.10"></a><var>5.10</var>project for which the verification was submitted. A false statement under oath verifying <br/>
<a id="pl.5.11"></a><var>5.11</var>compliance with any of the minimum criteria may result in termination of the construction <br/>
<a id="pl.5.12"></a><var>5.12</var>contract that has already been awarded to a contractor or subcontractor that submits a false <br/>
<a id="pl.5.13"></a><var>5.13</var>statement. A contracting authority shall not be liable for declining to award a contract <br/>
<a id="pl.5.14"></a><var>5.14</var>or terminating a contract in reasonable reliance on a determination that the contractor <br/>
<a id="pl.5.15"></a><var>5.15</var>failed to verify compliance with the minimum criteria or falsely stated that it meets the <br/>
<a id="pl.5.16"></a><var>5.16</var>minimum criteria.<br/>
<a id="pl.5.17"></a><var>5.17</var>    Subd. 5. <b>Subcontractor verification.</b> A contractor or subcontractor shall <br/>
<a id="pl.5.18"></a><var>5.18</var>include in its verification of compliance under subdivision 4 a list of all of its first-tier <br/>
<a id="pl.5.19"></a><var>5.19</var>subcontractors that it intends to retain for work on the project. If the prime contractor or <br/>
<a id="pl.5.20"></a><var>5.20</var>any subcontractor retains additional subcontractors on the project after submitting its <br/>
<a id="pl.5.21"></a><var>5.21</var>verification of compliance, the prime contractor or subcontractor shall obtain verifications <br/>
<a id="pl.5.22"></a><var>5.22</var>of compliance from each additional subcontractor with which it has a direct contractual <br/>
<a id="pl.5.23"></a><var>5.23</var>relationship and shall submit a supplemental verification confirming compliance with <br/>
<a id="pl.5.24"></a><var>5.24</var>subdivision 3, clause (8). The prime contractor shall submit to the contracting authority <br/>
<a id="pl.5.25"></a><var>5.25</var>upon request copies of the signed verifications of compliance from all subcontractors of <br/>
<a id="pl.5.26"></a><var>5.26</var>any tier pursuant to subdivision 3, clause (8). The prime contractor and subcontractors <br/>
<a id="pl.5.27"></a><var>5.27</var>shall not be responsible for the false statements of any subcontractor with which they do <br/>
<a id="pl.5.28"></a><var>5.28</var>not have a direct contractual relationship. The prime contractor and subcontractors shall <br/>
<a id="pl.5.29"></a><var>5.29</var>be responsible for false statements by their first-tier subcontractors with which they have <br/>
<a id="pl.5.30"></a><var>5.30</var>a direct contractual relationship only if they accept the verification of compliance with <br/>
<a id="pl.5.31"></a><var>5.31</var>knowledge that it contains a false statement or with reckless disregard for whether the <br/>
<a id="pl.5.32"></a><var>5.32</var>statement is true or false.<br/>
<a id="pl.5.33"></a><var>5.33</var>    Subd. 6. <b>Additional criteria.</b> Nothing in this section shall restrict the discretion of a <br/>
<a id="pl.5.34"></a><var>5.34</var>contracting authority to establish additional criteria for defining a responsible contractor.<br/>
<a id="pl.5.35"></a><var>5.35</var>    Subd. 7. <b>Implementation.</b> The definition of responsible contractor, as defined in <br/>
<a id="pl.5.36"></a><var>5.36</var>subdivision 3, or a statement that a responsible contractor must comply with section <br/>
<a id="pl.6.1"></a><var>6.1</var>16C.285, subdivision 3, shall be included in the solicitation document for all projects <br/>
<a id="pl.6.2"></a><var>6.2</var>covered by this section. The solicitation document for any project shall state that any <br/>
<a id="pl.6.3"></a><var>6.3</var>contractor or subcontractor that does not meet the minimum criteria in subdivision 3 is <br/>
<a id="pl.6.4"></a><var>6.4</var>not a responsible contractor and is not eligible to be awarded a construction contract for <br/>
<a id="pl.6.5"></a><var>6.5</var>the project or to perform work on the project. The solicitation document shall provide <br/>
<a id="pl.6.6"></a><var>6.6</var>that a false statement under oath verifying compliance with any of the minimum criteria <br/>
<a id="pl.6.7"></a><var>6.7</var>may result in termination of the contract awarded to the contractor or subcontractor that <br/>
<a id="pl.6.8"></a><var>6.8</var>submits a false statement. The solicitation document shall state that the prime contractor <br/>
<a id="pl.6.9"></a><var>6.9</var>shall submit to the contracting authority upon request copies of the signed verifications of <br/>
<a id="pl.6.10"></a><var>6.10</var>compliance from all subcontractors of any tier pursuant to subdivision 3, clause (8).<br/>
<a id="pl.6.11"></a><var>6.11</var>    Subd. 8. <b>Effective date.</b>  This section is effective January 1, 2015, and shall apply <br/>
<a id="pl.6.12"></a><var>6.12</var>to all construction contracts entered into based on solicitation documents issued on or <br/>
<a id="pl.6.13"></a><var>6.13</var>after that date.<br/>