SF 1734

as introduced - 88th Legislature (2013 - 2014) Posted on 02/28/2014 09:53am

A bill for an act
relating to transportation; contracts; enhancing the commissioner of
transportation's power to suspend or debar; establishing related processes;
amending Minnesota Statutes 2012, section 161.315, subdivisions 1, 2, by adding
subdivisions; repealing Minnesota Statutes 2012, section 161.315, subdivision
5; Minnesota Rules, parts 1230.3000; 1230.3100; 1230.3200; 1230.3300;
1230.3400; 1230.3500; 1230.3600; 1230.3700; 1230.3800; 1230.3900;
1230.4000; 1230.4100; 1230.4200; 1230.4300.

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

Section 1.

Minnesota Statutes 2012, section 161.315, subdivision 1, is amended to read:

Subdivision 1.

Legislative intent.

Recognizing that the preservation of the integrity
of the public contracting process of the Department of Transportation is vital to the
development of a balanced and efficient transportation system and a matter of interest to
the people of the state, the legislature hereby determines and declares that:

(1) the procedures of the department for bidding and awarding department contracts
exist to secure the public benefits of free and open competition and to secure the quality of
public works;

(2) the opportunity to be awarded department contracts or to supply goods or
services to the department is a privilege, not a right; and

(3) new text begin in order to preserve the integrity of the public contracting process, new text end the privilege
of transacting business with the department or local deleted text begin road deleted text end authority should be deleted text begin denied
deleted text end new text begin awarded only new text end to new text begin responsible new text end persons deleted text begin convicted of a contract crime in order to preserve the
integrity of the public contracting process deleted text end .

Sec. 2.

Minnesota Statutes 2012, section 161.315, subdivision 2, is amended to read:

Subd. 2.

Definitions.

The terms used in this section have the meanings given them
in this subdivision.

(a) "Affiliate" means a predecessor or successor of a person by merger, reorganization,
or otherwise, who is, or that has as an officer or director an individual who is, a relative of
the person or an individual over whose actions the person exercises substantial influence
or control, or a group of entities so connected or associated that one entity controls or has
the power to control each of the other entities. "Affiliate" includes the affiliate's principals.
One person's ownership of a controlling interest in another entity or a pooling of equipment
or income among entities is prima facie evidence that one entity is an affiliate of another.

deleted text begin (b) "Contract crime" means a violation of state or federal antitrust law, fraud, theft,
embezzlement, bribery, forgery, misrepresentation, making false statements, falsification
or destruction of records, or other criminal offense in connection with obtaining,
attempting to obtain, or performing a public or private contract or subcontract.
deleted text end

deleted text begin (c) "Conviction" has the meaning given it in section 609.02, subdivision 5.
deleted text end

new text begin (b) "Business" means a sole proprietorship, partnership, association, corporation,
or other entity formed for the purpose of doing business as a contractor, subcontractor,
consultant, or supplier.
new text end

new text begin (c) "Commissioner" means the commissioner of transportation.
new text end

(d) "Debar" new text begin or "debarment" new text end means to disqualify from receiving a contract or from
serving as a subcontractor or material supplier deleted text begin as provided by Laws 1984, chapter 654,
article 2, section 8 deleted text end .

new text begin (e) "MnDOT contract" means a written instrument:
new text end

new text begin (1) containing the elements of offer, acceptance, and consideration to which the
Department of Transportation is a party, or acts as an agent for a party; and
new text end

new text begin (2) which is subject to the approval of the commissioner.
new text end

deleted text begin (e) deleted text end new text begin (f) new text end "Person" means a natural person or a business, corporation, association,
partnership, sole proprietorship, or other entity formed to do business as a contractor,
subcontractor, new text begin consultant, subconsultant, new text end or material supplier deleted text begin and includes an affiliate deleted text end new text begin ,
including affiliates new text end of a person.

deleted text begin (f) deleted text end new text begin (g) new text end "Pooling" means a combination of persons engaged in the same business or
combined for the purpose of engaging in a particular business or commercial venture and
who all contribute to a common fund or place their holdings of a given stock or other
security in the hand and control of a managing member or committee of the combination.

deleted text begin (g) "Suspend" means to temporarily disqualify from receiving a contract or from
serving as a subcontractor or material supplier as provided by Laws 1984, chapter 654,
article 2, section 8.
deleted text end

(h) new text begin "Principal" means an officer, director, or partner, or an employee or shareholder
engaged in management of the business.
new text end

new text begin (i) new text end "Relative" means an individual related by consanguinity within the second degree
as determined by the common law, a spouse, or an individual related to a spouse within
the second degree as determined by the common law, and includes an individual in an
adoptive relationship within the second degree as determined by the common law.

new text begin (j) "Responsible person" means a person who:
new text end

new text begin (1) has the necessary production, construction, and technical equipment and
facilities, or the ability to obtain them;
new text end

new text begin (2) if services are to be provided, has the necessary skills or is in the business of
supplying those services;
new text end

new text begin (3) can demonstrate a satisfactory credit standing, lack of delinquent tax liability,
and the financial capability to perform a contract as evidenced by the ability to obtain
bonding when required;
new text end

new text begin (4) has no unresolved record of failure to perform or of unsatisfactory performance
of contracts for the state or other customers;
new text end

new text begin (5) is not currently debarred by another government entity for any cause including
defaults on contracts, late deliveries, products not meeting specifications, substandard
installation, or service;
new text end

new text begin (6) is otherwise qualified under rules, laws, and regulations, including but not limited
to having incorporated in or registered to do business in Minnesota;
new text end

new text begin (7) has not engaged in unlawful practices, associated with organized crime, or
operated under false names or fronts as a small business or a socially or economically
disadvantaged business;
new text end

new text begin (8) is in compliance with all tax laws of Minnesota, as evidenced by timely filing of
all required returns, reports, payments, and possession of all applicable stamps, licenses,
or other permits, and freedom from any judgment, lien, or seizure of assets or property to
satisfy tax payments or duties; and
new text end

new text begin (9) furnishes all requested information necessary to determine responsibility as
outlined in clauses (1) to (8) within 30 calendar days or within a reasonable amount of
time determined by the commissioner.
new text end

new text begin (k) "Suspend" or "suspension" means to temporarily disqualify from receiving a
contract or from serving as a subcontractor or material supplier.
new text end

Sec. 3.

Minnesota Statutes 2012, section 161.315, is amended by adding a subdivision
to read:

new text begin Subd. 7. new text end

new text begin Causes for suspension or debarment. new text end

new text begin (a) A person shall be debarred
upon conviction, or when conviction is imputed under subdivision 11:
new text end

new text begin (1) for commission of a criminal offense as an incident to obtaining or attempting to
obtain a public or private contract or subcontract, or in the performance of the contract
or subcontract;
new text end

new text begin (2) under state or federal statutes of embezzlement, theft, forgery, bribery, falsification
or destruction of records, receiving stolen property, or other offense indicating lack of
business integrity or business honesty that affects responsibility as a state contractor; or
new text end

new text begin (3) under state or federal antitrust statutes arising out of the submission of bids
or proposals.
new text end

new text begin (b) The commissioner may, but is not required to, suspend or debar a person without
a conviction when there is compelling evidence of conduct described in paragraph (a).
new text end

new text begin (c) The commissioner may, in the public interest, suspend or debar a person if one
or more of the following occurs:
new text end

new text begin (1) violation of contract provisions of a character so serious as to justify debarment
action:
new text end

new text begin (i) failure without good cause to perform according to specifications, time limits, or
any terms or conditions in the contract; or
new text end

new text begin (ii) a record of failure to perform or of unsatisfactory performance according to the
terms of one or more contracts or as measured by standard commercial practices, provided
the failure to perform or unsatisfactory performance was not caused by acts beyond the
control of the person; or
new text end

new text begin (2) any other cause the commissioner determines to be serious and compelling,
including but not limited to:
new text end

new text begin (i) threatening, abusive, or intimidating behavior;
new text end

new text begin (ii) collusion with other persons to restrain competition;
new text end

new text begin (iii) giving false information on a person's registration application or response to
a solicitation;
new text end

new text begin (iv) submitting to the commissioner false or fraudulent documents;
new text end

new text begin (v) violating terms of suspension;
new text end

new text begin (vi) all acts that would disqualify the person as a responsible person; and
new text end

new text begin (vii) debarment by another governmental entity.
new text end

Sec. 4.

Minnesota Statutes 2012, section 161.315, is amended by adding a subdivision
to read:

new text begin Subd. 8. new text end

new text begin Authority to suspend or debar. new text end

new text begin (a) After written notice to the person
involved and providing for a reasonable opportunity for that person to be heard, the
commissioner shall have the authority to suspend or debar the person.
new text end

new text begin (b) The commissioner may, but is not required to, suspend a person and its affiliates
by order upon receiving compelling evidence of conduct described in subdivision 7,
paragraphs (b) and (c).
new text end

new text begin (c) The commissioner shall debar a person and its affiliates by order upon receiving
evidence of conviction described in subdivision 7, paragraph (a). The commissioner may,
but is not required to, debar a person and the person's affiliates by order upon receiving
compelling evidence of conduct described in subdivision 7, paragraph (b) or (c).
new text end

Sec. 5.

Minnesota Statutes 2012, section 161.315, is amended by adding a subdivision
to read:

new text begin Subd. 9. new text end

new text begin Notice of suspension or debarment. new text end

new text begin The written notice of suspension or
debarment shall provide:
new text end

new text begin (1) that a suspension or debarment proceeding has been initiated;
new text end

new text begin (2) the reason for the proposed suspension or debarment in terms sufficient to
provide notice of the conduct or transactions upon which proposed suspension or
debarment is based;
new text end

new text begin (3) the effect of the suspension or debarment;
new text end

new text begin (4) the proposed term of the suspension or debarment; and
new text end

new text begin (5) that within 30 calendar days of receipt of the notice, the person may:
new text end

new text begin (i) submit written arguments, with relevant supporting evidence, in opposition of the
proposed suspension or debarment; and
new text end

new text begin (ii) request an opportunity to be heard after providing written detailed explanations
of the arguments and relevant supporting evidence in opposition of the proposed
suspension or debarment.
new text end

Sec. 6.

Minnesota Statutes 2012, section 161.315, is amended by adding a subdivision
to read:

new text begin Subd. 10. new text end

new text begin Suspension or debarment and appeal process. new text end

new text begin (a) The commissioner's
designee shall review written arguments and supporting evidence submitted in opposition
to a proposed suspension or debarment and make a determination as to the appropriateness
of the proposed suspension or debarment. If requested, the commissioner's designee shall
meet with the person involved to hear argument in opposition to the proposed suspension
or debarment. The commissioner's designee shall issue a suspension or debarment order
within 45 days of receipt of any written arguments in opposition to the suspension or
debarment.
new text end

new text begin (b) A suspended or debarred person may file an appeal in writing with the
commissioner within 30 calendar days or receipt of the commissioner designee's
suspension or debarment order. The appeal shall be heard by the commissioner or a
department official designated by the commissioner who was not involved in the initial
suspension or debarment decision. A decision on the suspension or debarment appeal shall
be issued within 30 calendar days of receipt of the appeal.
new text end

Sec. 7.

Minnesota Statutes 2012, section 161.315, is amended by adding a subdivision
to read:

new text begin Subd. 11. new text end

new text begin Suspension or debarment based on affiliation. new text end

new text begin (a) The actions of
a person are imputed to a business when the conduct which gave rise to the suspension
or debarment occurred in connection with the person's performance of duties for or on
behalf of that business and in the course of employment, with the knowledge, approval,
acquiescence, or subsequent ratification of the conduct by the business.
new text end

new text begin (b) The actions of a business are imputed to any principal or other person associated
with the business subject to debarment or suspension who participated in, knew of, or had
reason to know of the conduct.
new text end

new text begin (c) A business must be debarred when it:
new text end

new text begin (1) employs a former principal, or a currently debarred or suspended business or
person, as a principal or in another significant decision-making capacity;
new text end

new text begin (2) is owned by or associated in a joint venture with a currently debarred or
suspended business, or is controlled by a principal or former principal of a currently
debarred or suspended business; or
new text end

new text begin (3) is a business in which a former principal of a currently debarred or suspended
business has a significant financial interest and the former principal controls or has the
authority to control, direct, manage, or influence any activities of the business with respect
to the relevant MnDOT contract.
new text end

new text begin (d) The period of debarment must be the same as that of the debarred former
principal of the business.
new text end

Sec. 8.

Minnesota Statutes 2012, section 161.315, is amended by adding a subdivision
to read:

new text begin Subd. 12. new text end

new text begin Term of suspension or debarment. new text end

new text begin (a) A person convicted as provided
in subdivision 7, paragraph (a), shall be debarred for a period of not less than one year. A
person's suspension or debarment based on compelling evidence of conduct described in
subdivision 7, paragraph (b) or (c), may be suspended or debarred for a period of less than
one year. In no instance shall a person be:
new text end

new text begin (1) suspended for more than six months for conduct which gave rise to the grounds
for suspension, unless the person is proposed for state of federal debarment. If the person
is proposed for state or federal debarment, the suspension must not exceed the length of
time necessary for the state or federal government to issue the final order; or
new text end

new text begin (2) debarred for more than three years for conduct which gave rise to the grounds
for debarment. If new or different grounds arise, the commissioner must start a new
suspension or debarment proceeding.
new text end

new text begin (b) The commissioner shall establish the term of suspension or debarment. In
establishing the term of suspension or debarment, consideration shall be given to:
new text end

new text begin (1) the seriousness of the offense;
new text end

new text begin (2) whether restitution has been made;
new text end

new text begin (3) whether the suspended or debarred person cooperated in civil or criminal lawsuits;
new text end

new text begin (4) the state's need to preserve the competitive process;
new text end

new text begin (5) whether the business is suspended or debarred or has been suspended or debarred
in another jurisdiction;
new text end

new text begin (6) any other relevant mitigating or extenuating circumstances; and
new text end

new text begin (7) the length of the suspension or debarment period in another jurisdiction.
new text end

new text begin The term of the suspension or debarment shall accrue upon issuance of the commissioner's
final debarment order.
new text end

Sec. 9.

Minnesota Statutes 2012, section 161.315, is amended by adding a subdivision
to read:

new text begin Subd. 13. new text end

new text begin Notice to public. new text end

new text begin The commissioner shall provide the commissioner of
administration a copy of each suspension or debarment order, or suspension or debarment
termination concurrent with delivery to the affected person. The commissioner shall
publish on the department's Web site a list of suspended and debarred persons and the
effective dates of the suspension and debarment. The commissioner shall also publish
notice of debarment terminations and the effective date of the termination.
new text end

Sec. 10. new text begin REPEALER.
new text end

new text begin (a) new text end new text begin Minnesota Statutes 2012, section 161.315, subdivision 5, new text end new text begin is repealed.
new text end

new text begin (b) new text end new text begin Minnesota Rules, parts 1230.3000; 1230.3100; 1230.3200; 1230.3300;
1230.3400; 1230.3500; 1230.3600; 1230.3700; 1230.3800; 1230.3900; 1230.4000;
1230.4100; 1230.4200; and 1230.4300, new text end new text begin are repealed.
new text end