CONFERENCE COMMITTEE REPORT ON H. F. No. 1984
relating to state government; providing for enhancement of accountability and
transparency in public construction; establishing a requirement for a definition
of responsible contractor;proposing coding for new law in Minnesota Statutes,
May 8, 2014
The Honorable Paul Thissen
Speaker of the House of Representatives
The Honorable Sandra L. Pappas
President of the Senate
We, the undersigned conferees for H. F. No. 1984 report that we have agreed upon
the items in dispute and recommend as follows:
That the House concur in the Senate amendments and that H. F. No. 1984 be further
amended as follows:
Delete everything after the enacting clause and insert:
"Section 1. [16C.285] RESPONSIBLE CONTRACTOR REQUIREMENT
1.19 Subdivision 1. Definitions. (a) For purposes of this section, the terms defined in this
1.20subdivision have the meanings given them.
1.21(b) "Construction contract" means a contract or subcontract of any tier for work on
1.23(c) "Contractor" means a prime contractor or subcontractor, and does not include
1.24a material supplier.
1.25(d) "Contracting authority" means a state agency, the Minnesota State Colleges and
1.26Universities, the University of Minnesota, the Metropolitan Council, the Metropolitan
1.27Airports Commission, or a municipality that enters into a construction contract or
1.28authorizes or directs entering into a construction contract.
1.29(e) "Municipality" means a county, town, home rule charter or statutory city, school
1.30district, housing and redevelopment authority, port authority, economic development
2.1authority, sports facilities authority, joint powers board or organization created under
2.2section 471.59 or other statute, special district, instrumentality, drainage authority,
2.3watershed district, destination medical center corporation, or other municipal corporation
2.4or political subdivision of the state authorized by law to enter into contracts.
2.5(f) "Prime contractor" means a vendor that submits a bid or proposal or otherwise
2.6responds to a solicitation document of a contracting authority for work on a project or is
2.7awarded a construction contract by a contracting authority for work on a project. A prime
2.8contractor includes a construction manager for purposes of this section.
2.9(g) "Principal" means an owner holding at least a 25 percent ownership interest
2.10in a business.
2.11(h) "Project" means building, erection, construction, alteration, remodeling,
2.12demolition, or repair of buildings, real property, highways, roads, bridges, or other
2.13construction work performed pursuant to a construction contract.
2.14(i) "Related entity" means:
2.15(1) a firm, partnership, corporation, joint venture, or other legal entity substantially
2.16under the control of a contractor or vendor;
2.17(2) a predecessor corporation or other legal entity having one or more of the same
2.18principals as the contractor or vendor;
2.19(3) a subsidiary of a contractor or vendor;
2.20(4) one or more principals of a contractor or vendor; and
2.21(5) a person, firm, partnership, corporation, joint venture, or other legal entity that
2.22substantially controls a contractor or vendor.
2.23(j) "Solicitation document" means an invitation to bid, bid specifications, request for
2.24proposals, request for qualifications, or other solicitation of contractors for purposes of
2.25a construction contract.
2.26(k) "Subcontractor" means a vendor that seeks to enter into a subcontract or enters
2.27into a subcontract for work on a project.
2.28(l) "Vendor" means a business, including a construction contractor or a natural
2.29person, and includes both if the natural person is engaged in a business.
2.30 Subd. 2. Responsible contractor required. (a) A contractor must meet the
2.31minimum criteria in subdivision 3 to be eligible to be awarded a construction contract
2.32as the lowest responsible bidder or the vendor or contractor offering the best value as
2.33provided in section 16C.28, 103D.811, 103E.505, 116A.13, 123B.52, 160.17, 160.262,
2.34161.32, 161.3206, 161.3209, 161.38, 162.17, 365.37, 374.13, 375.21, 383C.094, 412.311,
2.35429.041, 458D.21, 469.015, 469.068, 469.101, 471.345, 473.4057, 473.523, 473.652,
2.36473.756, 473J.11, or any of their successor provisions.
3.1(b) This section applies to publicly owned or financed projects where the contracting
3.2authority's construction contract with the prime contractor is estimated to exceed $50,000
3.3and is awarded pursuant to a lowest responsible bidder selection method or a best value
3.4selection method. A subcontractor must meet the minimum criteria in subdivision 3 to be
3.5eligible to be awarded a subcontract on a project regardless of the value of the subcontract.
3.6(c) If only one prime contractor responds to a solicitation document, a contracting
3.7authority may award a construction contract to the responding prime contractor even if the
3.8minimum criteria in subdivision 3 are not met.
3.9 Subd. 3. Minimum criteria. "Responsible contractor" means a contractor that
3.10conforms to the responsibility requirements in the solicitation document for its portion of
3.11the work on the project and verifies that it meets the following minimum criteria:
3.12(1) the contractor:
3.13(i) is in compliance with workers' compensation and unemployment insurance
3.15(ii) is currently registered with the Department of Revenue and the Department of
3.16Employment and Economic Development if it has employees;
3.17(iii) has a valid federal tax identification number or a valid Social Security number if
3.18an individual; and
3.19(iv) has filed a certificate of authority to transact business in Minnesota with the
3.20secretary of state if a foreign corporation or cooperative;
3.21(2) the contractor or related entity is in compliance with and, during the three-year
3.22period before submitting the verification, has not violated section 177.24, 177.25, 177.41
3.23to 177.44, 181.13, 181.14, or 181.722, and has not violated United States Code, title 29,
3.24sections 201 to 219, or United States Code, title 40, sections 3141 to 3148. For purposes
3.25of this clause, a violation occurs when a contractor or related entity:
3.26(i) repeatedly fails to pay statutorily required wages or penalties on one or more
3.27separate projects for a total underpayment of $25,000 or more within the three-year period;
3.28(ii) has been issued an order to comply by the commissioner of labor and industry
3.29that has become final;
3.30(iii) has been issued at least two determination letters within the three-year period by
3.31the Department of Transportation finding an underpayment by the contractor or related
3.32entity to its own employees;
3.33(iv) has been found by the commissioner of labor and industry to have repeatedly or
3.34willfully violated any of the sections referenced in this clause pursuant to section 177.27;
4.1(v) has been issued a ruling or findings of underpayment by the administrator of the
4.2Wage and Hour Division of the United States Department of Labor that have become final
4.3or have been upheld by an administrative law judge or the Administrative Review Board; or
4.4(vi) has been found liable for underpayment of wages or penalties or misrepresenting
4.5a construction worker as an independent contractor in an action brought in a court having
4.7Provided that, if the contractor or related entity contests a determination of underpayment
4.8by the Department of Transportation in a contested case proceeding, a violation does not
4.9occur until the contested case proceeding has concluded with a determination that the
4.10contractor or related entity underpaid wages or penalties;
4.11(3) the contractor or related entity is in compliance with and, during the three-year
4.12period before submitting the verification, has not violated section 181.723 or chapter
4.13326B. For purposes of this clause, a violation occurs when a contractor or related entity
4.14has been issued a final administrative or licensing order;
4.15(4) the contractor or related entity has not, more than twice during the three-year
4.16period before submitting the verification, had a certificate of compliance under section
4.17363A.36 revoked or suspended based on the provisions of section 363A.36, with
4.18the revocation or suspension becoming final because it was upheld by the Office of
4.19Administrative Hearings or was not appealed to the office;
4.20(5) the contractor or related entity has not received a final determination assessing a
4.21monetary sanction from the Department of Administration or Transportation for failure
4.22to meet targeted group business, disadvantaged business enterprise, or veteran-owned
4.23business goals, due to a lack of good faith effort, more than once during the three-year
4.24period before submitting the verification;
4.25(6) the contractor or related entity is not currently suspended or debarred by the
4.26federal government or the state of Minnesota or any of its departments, commissions,
4.27agencies, or political subdivisions; and
4.28(7) all subcontractors that the contractor intends to use to perform project work have
4.29verified to the contractor through a signed statement under oath by an owner or officer that
4.30they meet the minimum criteria listed in clauses (1) to (6).
4.31Any violations, suspensions, revocations, or sanctions, as defined in clauses (2) to
4.32(5), occurring prior to July 1, 2014, shall not be considered in determining whether a
4.33contractor or related entity meets the minimum criteria.
4.34 Subd. 4. Verification of compliance. A contractor responding to a solicitation
4.35document of a contracting authority shall submit to the contracting authority a signed
4.36statement under oath by an owner or officer verifying compliance with each of the
5.1minimum criteria in subdivision 3 at the time that it responds to the solicitation document.
5.2A contracting authority may accept a sworn statement as sufficient to demonstrate that a
5.3contractor is a responsible contractor and shall not be held liable for awarding a contract
5.4in reasonable reliance on that statement. Failure to verify compliance with any one of the
5.5minimum criteria or a false statement under oath in a verification of compliance shall
5.6render the prime contractor or subcontractor that makes the false statement ineligible to be
5.7awarded a construction contract on the project for which the verification was submitted.
5.8A false statement under oath verifying compliance with any of the minimum criteria
5.9may result in termination of a construction contract that has already been awarded to a
5.10prime contractor or subcontractor that submits a false statement. A contracting authority
5.11shall not be liable for declining to award a contract or terminating a contract based on a
5.12reasonable determination that the contractor failed to verify compliance with the minimum
5.13criteria or falsely stated that it meets the minimum criteria.
5.14 Subd. 5. Subcontractor verification. A prime contractor or subcontractor shall
5.15include in its verification of compliance under subdivision 4 a list of all of its first-tier
5.16subcontractors that it intends to retain for work on the project. If a prime contractor or
5.17any subcontractor retains additional subcontractors on the project after submitting its
5.18verification of compliance, the prime contractor or subcontractor shall obtain verifications
5.19of compliance from each additional subcontractor with which it has a direct contractual
5.20relationship and shall submit a supplemental verification confirming compliance with
5.21subdivision 3, clause (7), within 14 days of retaining the additional subcontractors.
5.22A prime contractor shall submit to the contracting authority upon request copies of
5.23the signed verifications of compliance from all subcontractors of any tier pursuant to
5.24subdivision 3, clause (7). A prime contractor and subcontractors shall not be responsible
5.25for the false statements of any subcontractor with which they do not have a direct
5.26contractual relationship. A prime contractor and subcontractors shall be responsible for
5.27false statements by their first-tier subcontractors with which they have a direct contractual
5.28relationship only if they accept the verification of compliance with actual knowledge
5.29that it contains a false statement.
5.30 Subd. 6. Additional criteria. Nothing in this section shall restrict the discretion of a
5.31contracting authority to establish additional criteria for defining a responsible contractor.
5.32 Subd. 7. Implementation. The definition of responsible contractor, as defined
5.33in subdivision 3, or a statement that the term responsible contractor as used in the
5.34solicitation document means a contractor as defined in subdivision 3, shall be included
5.35in the solicitation document for all projects covered by this section. The solicitation
5.36document for any project shall state that any prime contractor or subcontractor that does
6.1not meet the minimum criteria in subdivision 3 or fails to verify that it meets those
6.2criteria is not a responsible contractor and is not eligible to be awarded a construction
6.3contract for the project or to perform work on the project. The solicitation document
6.4shall provide that a false statement under oath verifying compliance with any of the
6.5minimum criteria shall render the prime contractor or subcontractor that makes the false
6.6statement ineligible to be awarded a construction contract on the project and may result in
6.7termination of a contract awarded to a prime contractor or subcontractor that submits a
6.8false statement. The solicitation document shall state that a prime contractor shall submit
6.9to the contracting authority upon request copies of the signed verifications of compliance
6.10from all subcontractors of any tier pursuant to subdivision 3, clause (7).
6.11 Subd. 8. Effective date. This section is effective January 1, 2015, and shall apply
6.12to all construction contracts entered into based on solicitation documents issued on
6.13or after that date.
Delete the title and insert:
relating to state government; providing for enhancement of accountability
and transparency in public construction; establishing a requirement for and a
definition of responsible contractor;proposing coding for new law in Minnesota
Statutes, chapter 16C."
|We request the adoption of this report and repassage of the bill.