HF 77

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to state government; establishing best value as the criteria for
construction contracts; amending Minnesota Statutes 2006, sections 16C.03,
subdivision 3; 16C.06, subdivisions 2, 7; 16C.10, subdivisions 1, 6; 16C.26;
16C.28, subdivision 3; 16C.32, subdivision 2; 16C.33, subdivisions 5, 7; 161.32,
subdivision 1b; 471.345, by adding a subdivision; repealing Minnesota Statutes
2006, sections 16C.27; 16C.28, subdivisions 1, 2, 4, 5.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2006, section 16C.03, subdivision 3, is amended to read:

Subd. 3.

Acquisition authority.

The commissioner shall acquire all goods,
services, new text begin construction, new text end and utilities needed by agencies. The commissioner shall acquire
goods, services, new text begin construction, new text end and utilities by requests for bids, requests for proposals,
reverse auctions as provided in section 16C.10, subdivision 7, or other methods provided
by law, unless a section of law requires a particular method of acquisition to be used. The
commissioner shall make all decisions regarding acquisition activities. The determination
of the acquisition method and all decisions involved in the acquisition process, unless
otherwise provided for by law, shall be based on best value which includes an evaluation
of price and may include other considerations including, but not limited to, environmental
considerations, quality, and vendor performance. A best value determination must be
based on the evaluation criteria detailed in the solicitation document. If criteria other than
price are used, the solicitation document must state the relative importance of price and
other factors. deleted text begin Unless it is determined by the commissioner that an alternative solicitation
method provided by law should be used to determine best value, a request for bid must
be used to solicit formal responses for all building and construction contracts. deleted text end Any
or all responses may be rejected. When using the request for bid process, the bid must
be awarded to the lowest responsive and responsible bidder, taking into consideration
conformity with the specifications, terms of delivery, the purpose for which the contract
or purchase is intended, the status and capability of the vendor, and other considerations
imposed in the request for bids. The commissioner may decide which is the lowest
responsible bidder for all purchases and may use the principles of life-cycle costing, where
appropriate, in determining the lowest overall bid. The duties set forth in this subdivision
are subject to delegation pursuant to this section.

Sec. 2.

Minnesota Statutes 2006, section 16C.06, subdivision 2, is amended to read:

Subd. 2.

Solicitation process.

(a) A formal solicitation must be used to acquire all
goods, service contracts, new text begin construction, new text end and utilities estimated at or more than $50,000,
or in the case of a Department of Transportation solicitation, at or more than $100,000,
unless otherwise provided for. All formal responses must be sealed when they are received
and must be opened in public at the hour stated in the solicitation. Formal responses must
be authenticated by the responder in a manner specified by the commissioner.

(b) An informal solicitation may be used to acquire all goods, service contracts, new text begin
construction, new text end and utilities that are estimated at less than $50,000, or in the case of a
Department of Transportation solicitation, at or less than $100,000. The number of
vendors required to receive solicitations may be determined by the commissioner.
Informal responses must be authenticated by the responder in a manner specified by
the commissioner.

Sec. 3.

Minnesota Statutes 2006, section 16C.06, subdivision 7, is amended to read:

Subd. 7.

Other states with resident preference.

Acquisition of goods deleted text begin and deleted text end new text begin , new text end
services new text begin , and construction new text end must be awarded according to the provisions of this chapter
except that a resident vendor shall be allowed a preference over a nonresident vendor from
a state that gives or requires a preference to vendors from that state. The preference shall
be equal to the preference given or required by the state of the nonresident vendor.

Sec. 4.

Minnesota Statutes 2006, section 16C.10, subdivision 1, is amended to read:

Subdivision 1.

Single source.

The solicitation process described in this chapter is
not required when there is clearly and legitimately only a single source for the goods
deleted text begin and deleted text end new text begin , new text end services new text begin , and construction, new text end and the commissioner determines that the price has been
fairly and reasonably established.

Sec. 5.

Minnesota Statutes 2006, section 16C.10, subdivision 6, is amended to read:

Subd. 6.

Expenditures under specified amounts.

The solicitation process
described in this chapter is not required for:

(1) acquisition of goods deleted text begin or deleted text end new text begin , new text end services, new text begin or construction, new text end other than professional or
technical services, in an amount of $2,500 or less; or

(2) acquisition of professional or technical services in an amount of $5,000 or less,
provided the requirements of section 16C.08, subdivisions 3 to 6, are met.

Sec. 6.

Minnesota Statutes 2006, section 16C.26, is amended to read:

16C.26 deleted text begin COMPETITIVE BIDS deleted text end new text begin STANDARD REQUIREMENT PRICE
CONTRACTS new text end .

deleted text begin Subdivision 1. deleted text end

deleted text begin Application. deleted text end

deleted text begin Except as otherwise provided by sections
and , all contracts for building and construction or repairs must be based on
competitive bids.
deleted text end

Subd. 2.

Requirement contracts.

Standard requirement price contracts for
building and construction deleted text begin must deleted text end new text begin may new text end be established deleted text begin by competitive bids as provided in
subdivision 1 deleted text end . The standard requirement price contracts may contain escalation clauses
and may provide for a negotiated price increase or decrease based upon a demonstrable
industrywide or regional increase or decrease in the vendor's costs or for the addition
of similar products or replacement items not significant to the total value of existing
contracts. The term of these contracts may not exceed five years including all extensions.

Subd. 3.

Publication of notice; expenditures over $25,000.

If the amount of
an expenditure is estimated to exceed $25,000, deleted text begin bids deleted text end new text begin solicitations new text end must be deleted text begin solicited deleted text end
new text begin invited new text end by public notice in a manner designated by the commissioner. To the extent
practical, this must include posting on a state Web site. For expenditures over $50,000,
the commissioner shall deleted text begin solicit sealed bids deleted text end new text begin invite responses new text end by providing notices to all
prospective deleted text begin bidders deleted text end new text begin responders new text end known to the commissioner by posting notice on a state
Web site at least seven days before the final date of submitting deleted text begin bids deleted text end new text begin responses new text end . All deleted text begin bids deleted text end
new text begin responses new text end over $50,000 must be sealed when they are received and must be opened in
public at the hour stated in the notice. All original deleted text begin bids deleted text end new text begin responses new text end and all documents
pertaining to the award of a contract must be retained and made a part of a permanent file
or record and remain open to public inspection.

Subd. 4.

Building and construction contracts; $50,000 or less.

An informal deleted text begin bid deleted text end
new text begin solicitation new text end may be used for building, construction, and repair contracts that are estimated
at less than $50,000. Informal deleted text begin bids deleted text end new text begin solicitations new text end must be authenticated by the bidder in
a manner specified by the commissioner.

Subd. 5.

Standard specifications, security.

Contracts must be based on the
standard specifications prescribed and enforced by the commissioner under this chapter,
unless otherwise expressly provided. Each deleted text begin bidder deleted text end new text begin responder new text end for a contract must furnish
security approved by the commissioner to ensure the making of the contract being deleted text begin bid for deleted text end new text begin
responded to new text end .

deleted text begin Subd. 6. deleted text end

deleted text begin Noncompetitive bids. deleted text end

deleted text begin Agencies are encouraged to contract with small
targeted group businesses designated under section when entering into contracts
that are not subject to competitive bidding procedures.
deleted text end

Sec. 7.

Minnesota Statutes 2006, section 16C.28, subdivision 3, is amended to read:

Subd. 3.

Special circumstances.

The commissioner may reject the deleted text begin bid deleted text end new text begin response new text end
of any deleted text begin bidder deleted text end new text begin responder new text end who has failed to perform a previous contract with the state.
In the case of identical low deleted text begin bids deleted text end new text begin responses new text end from two or more deleted text begin bidders deleted text end new text begin responders new text end , the
commissioner may use negotiated procurement methods with the tied low deleted text begin bidders deleted text end
new text begin responders new text end for that particular transaction so long as the price paid does not exceed the
low tied deleted text begin bid deleted text end price. The commissioner may award contracts to more than one deleted text begin bidder in
accordance with subdivision 1, if doing so does not decrease the service level or diminish
the effect of competition deleted text end new text begin responder under section 16C.06, subdivision 4 new text end .

Sec. 8.

Minnesota Statutes 2006, section 16C.32, subdivision 2, is amended to read:

Subd. 2.

Authority.

(a) Subject to limitations in sections 16B.31, subdivision 1;
16B.33, subdivision 1; 16C.16; and 16C.32 to 16C.34, and notwithstanding any other
law to the contrary, the commissioner may:

(1) solicit and award a design-build contract on the basis of either a qualifications
based or a design and price-based selection process provided in section 16C.33 if the
conditions in paragraph (b) are met;

(2) select a construction manager at risk as provided in section 16C.34, and award a
guaranteed maximum price contract for a construction manager at risk if the conditions of
paragraph (c) are met; and

(3) select a contractor by a job order contracting delivery method as provided
in section 16C.35.

(b) The commissioner may not utilize design-build contracts for more than five
percent of its total projects let, by number, in each of the fiscal years 2006 and 2007, and
ten percent of its total projects let, by number, in each fiscal year thereafter, that are funded
in whole or in part with proceeds from the sale of state general obligation bonds; and

(c) The commissioner may not utilize construction manager at risk contracts for more
than five percent of its total projects let, by number, in each of the fiscal years 2006 and
2007, and ten percent of its total projects let, by number, in each fiscal year thereafter, that
are funded in whole or in part with proceeds from the sale of state general obligation bonds.

(d) Pursuant to section 16B.31, subdivision 4, if the project is within the Capitol
area, the project shall comply with sections 15B.03, subdivision 3; 15B.08, subdivision 2;
15B.10; and 15B.15, subdivision 4.

(e) The commissioner shall, for each design-build or construction manager at risk
contract, make a written determination, including specific findings, indicating whether use
of the design-build or construction manager at risk procurement serves the public interest.

(f) The solicitation of requests for qualifications or proposals does not obligate
the commissioner to enter into a design-build or construction manager at risk contract.
In accordance with the stated criteria and subcriteria for evaluating qualifications or
proposals, the commissioner may accept or reject any or all responses received as a result
of the request. The solicitation for qualifications or proposals may be canceled at any time
in the commissioner's sole discretion if it is considered to be in the public's best interest.
If the commissioner rejects all responses or cancels the solicitation for proposals, the
commissioner may resolicit a request for qualifications or proposals using the same or
different requirements or request selection of a primary designer pursuant to section
16B.33, 16C.08, or 16C.095 and proceed with deleted text begin competitive bidding deleted text end new text begin solicitations new text end pursuant
to sections new text begin 16C.06, 16C.10, and new text end 16C.25 to 16C.29.

Sec. 9.

Minnesota Statutes 2006, section 16C.33, subdivision 5, is amended to read:

Subd. 5.

Design-build qualifications-based selection process.

In a design-build
qualifications-based selection process, the following shall apply:

(a)(1) the commissioner shall establish procedures for determining the appropriate
content of each request for qualifications, the weighted criteria and subcriteria to be used
to evaluate the design-builders, and the procedures for evaluating qualifications in an
open, competitive, and objective manner; (2) the criteria and subcriteria shall include,
but are not limited to, the proposer's experience as a constructor or primary designer,
including capacity of key personnel, technical competence and capability to perform, the
past performance of the proposer and its employees, its safety record and compliance with
state and federal law, and availability to and familiarity with the project locale; (3) the
commissioner may include in the request for qualifications criteria a requirement that the
proposer include the overhead and fee that the design-builder proposes to charge for its
construction services; and (4) the commissioner shall issue a request for qualifications
that includes the information as described in subdivision 3.

(b) After obtaining and evaluating qualifications from each design-builder, in
accordance with the weighted criteria and subcriteria and procedures set forth in the
request for qualifications, the board shall select a short list of at least three and no more
than five proposals. The board must receive at least three proposals from design-builders
or the commissioner shall either:

(1) solicit new proposals;

(2) revise the request for qualifications and thereafter solicit new proposals using
the revised request for qualifications; or

(3) request selection of a primary designer pursuant to section 16B.33, 16C.08, or
16C.095 and proceed with deleted text begin competitive bidding deleted text end new text begin solicitations new text end pursuant to sections new text begin 16C.06,
16C.10, and new text end 16C.25 to 16C.29.

(c) The board shall conduct formal interviews with the short list of proposers, but
shall not disclose any proprietary or confidential information contained in one proposal
to another proposer.

(d) The board shall select the design-builder that scores the highest on the evaluation
criteria and subcriteria. The commissioner shall make the award to the design-builder who
scores the highest score pursuant to the weighted criteria and subcriteria as determined
by the board, unless the commissioner rejects all proposals or proceeds pursuant to
paragraphs (f) and (g). In the case of the Minnesota State Colleges and Universities, the
board shall narrow the selection to the two design-builders that score the highest on the
evaluation criteria and subcriteria for recommendation to the respective commissioner, and
the commissioner shall make the final selection and shall notify the board of the selection.

(e) The commissioner shall conduct fee and contract negotiations with the selected
design-builder and shall enter into the contract consistent with subdivision 6.

(f) If the selected design-builder declines the appointment or is unable to reach
agreement with the commissioner on the terms of the contract, the commissioner may,
within 60 days after the first selection, request the board to make another selection.

(g) If the board fails to make a selection and forward its recommendation to the
commissioner within 60 days of the request for a second selection, the commissioner may
appoint a design-builder without the recommendation of the board.

(h) If a project for which a design-builder has been selected by the board becomes
inactive, lapses, or changes as the result of a project phasing, insufficient appropriations,
or other reasons, the commissioner may, if the project is reactivated, retain the same
design-builder to complete the project.

Sec. 10.

Minnesota Statutes 2006, section 16C.33, subdivision 7, is amended to read:

Subd. 7.

Design-build design and price-based proposals.

(a) In a design and
price-based selection process the following shall apply:

(1) selection must be based on best value, which includes an evaluation of price
and design, and may include other criteria including, but not limited to, the proposer's
experience as a constructor or primary designer;

(2) the commissioner shall establish procedures for determining the appropriate
content of each request for qualifications, and the weighted criteria and subcriteria to
be used to evaluate the design-builders including, but not limited to, the proposer's
experience as a constructor or primary designer, including capacity of key personnel,
technical competence, capability to perform and the past performance of the proposer and
its employees, its safety record and compliance with state and federal law, quality and past
performance, and the procedures for evaluating qualifications in an open, competitive,
and objective manner; and

(3) the commissioner shall issue a request for qualifications that includes the
information as described in subdivision 3.

(b) After obtaining and evaluating qualifications from each design-builder, in
accordance with the weighted criteria and subcriteria and procedures set forth in the
request for qualifications, the board shall select a short list of three proposers. The board
must receive at least three proposals from design-builders or the commissioner shall either:

(1) solicit new proposals;

(2) revise the request for qualifications and thereafter solicit new proposals using
the revised request for qualifications; or

(3) request selection of a primary designer pursuant to section 16B.33, 16C.08, or
16C.095 and proceed with deleted text begin competitive bidding deleted text end new text begin solicitations new text end pursuant to sections new text begin 16C.06,
16C.10, and new text end 16C.25 to 16C.29.

(c) The commissioner shall issue a request for proposals to the selected
design-builders. The submitted proposals shall consist of, at a minimum, the following
elements:

(1) preliminary plans and specifications and other information in sufficient detail to
describe the character, quality, and scope of the project;

(2) a design and construction critical path schedule;

(3) the price at which the design-builder will complete all design and construction
requested in the proposal for the project if selected; and

(4) other materials the board determines are necessary to fix the design, schedule,
and cost of the project.

(d) Proposals must be sealed and may not be opened until the expiration of the time
established for making proposals as set forth in the request for proposals.

(e) Proposals must identify the primary designer and the primary construction
contracting entity that are members of the design-builder's team.

(f) The amount and type of design services requested by the board shall not be
exceeded by those submitting proposals. Proposals exceeding the amount and type of
design services requested by the board may be rejected by the board. Unless compensated
in excess of the minimum stipend for their effort, design-builders must not be required to
submit detailed architectural or engineering design or construction documents as part of
the proposal.

(g) Except as described in paragraph (h), the commissioner shall award to each
design-builder that submits a responsive design-build proposal under this subdivision, a
stipend in an amount of not less than 0.3 percent of the commissioner's estimated cost of
design and construction. If the request for proposals requires extensive design services
beyond preliminary plans and specifications as requested as part of the proposal, the
stipend shall be adjusted to an amount commensurate with the amount of design services
requested for each proposal.

(h) No stipend shall be awarded to the design-builder selected to complete the
project.

(i) For projects where the design-builder accepts the stipend offered by the board,
the commissioner shall be deemed the owner of the design, subject to the rights of the
proposer to such design for publication and use in other projects. However, the use of the
design in its totality, or near totality, by the commissioner is prohibited.

(j) The commissioner may require each design-builder to submit with its proposal a
cash deposit, letter of credit in a form acceptable to the commissioner, or bid bond not to
exceed five percent of the maximum cost of the design-builder's proposal. If the proposal
is accepted but the design-builder fails, without good cause to execute the design-build
contract, the deposit or bond is forfeited in an amount not to exceed the difference between
the proposal in question and the next highest proposal.

Sec. 11.

Minnesota Statutes 2006, section 161.32, subdivision 1b, is amended to read:

Subd. 1b.

Lowest responsible bidder; electronic bids.

Bidders may submit
bids electronically in a form and manner required by the commissioner; however, the
commissioner may require that all bids of $5,000,000 and over for trunk highway
contracts must be submitted electronically. Trunk highway construction contracts,
including design-build contracts, must be awarded deleted text begin to the lowest responsible bidder,
taking into consideration conformity with the specifications, the purpose for which the
contract or purchase is intended, the status and capability of the vendor, and other
considerations imposed in the call for bids. The commissioner may decide which is the
lowest responsible bidder for all contracts and may use the principles of life-cycle costing,
when appropriate, in determining the lowest overall bid deleted text end new text begin based on best value. Best value
includes an evaluation of price, and may include other considerations, including but
not limited to environmental considerations, quality, and performance. The best value
determination must be based on evaluation criteria specified in the document soliciting
bids. If criteria other than price are used, the solicitation document must state the relative
importance of price and other factors new text end . Any or all bids may be rejected. When competitive
bids are required and all bids are rejected, new bids, if solicited, must be called for as in
the first instance, unless otherwise provided by law.

Sec. 12.

Minnesota Statutes 2006, section 471.345, is amended by adding a subdivision
to read:

new text begin Subd. 2a. new text end

new text begin Construction contracts. new text end

new text begin A contract for the construction, alteration, repair
or maintenance of real or personal property must be based on best value. Best value
includes an evaluation of price, and may include other considerations, including but not
limited to environmental considerations, quality, and performance. If a municipality
must obtain bids or quotations for a contract covered by this subdivision, the best value
determination must be based on evaluation criteria specified in the document soliciting
bids or quotations. If criteria other than price are used, the solicitation document must
state the relative importance of price and other factors.
new text end

Sec. 13. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2006, sections 16C.27; and 16C.28, subdivisions 1, 2, 4, and
5, new text end new text begin are repealed.
new text end

Sec. 14. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 13 are effective July 1, 2007, and apply to contracts for which
solicitations or quotations are sought after that date.
new text end