SF 3587

1st Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to state government; modifying procurement provisions; requiring a
report; amending Minnesota Statutes 2004, sections 16C.02, subdivisions 4,
12, 14, by adding subdivisions; 16C.03, subdivisions 3, 4, 8, 13, 16; 16C.05,
subdivisions 1, 2; 16C.08, subdivision 2, by adding a subdivision; Minnesota
Statutes 2005 Supplement, sections 16C.09; 16C.10, subdivision 7.

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

Section 1.

Minnesota Statutes 2004, section 16C.02, is amended by adding a
subdivision to read:

new text begin Subd. 3a. new text end

new text begin Best and final offer. new text end

new text begin "Best and final offer" means an optional step in
the solicitation process in which responders are requested to improve their response by
methods including, but not limited to, the reduction of cost, clarification or modification of
the response, or the provision of additional information.
new text end

Sec. 2.

Minnesota Statutes 2004, section 16C.02, subdivision 4, is amended to read:

Subd. 4.

Best value.

"Best value" describes a result intended in the acquisition of all
goods and services. Price must be one of the evaluation criteria when acquiring goods
and services. Other evaluation criteria may include, but are not limited to, environmental
considerations, quality, and vendor performance. new text begin In achieving "best value" strategic
sourcing tools, including, but not limited to, best and final offers, negotiations, contract
consolidation, product standardization, and mandatory-use enterprise contracts shall be
used at the commissioner's discretion.
new text end

Sec. 3.

Minnesota Statutes 2004, section 16C.02, is amended by adding a subdivision
to read:

new text begin Subd. 6a. new text end

new text begin Enterprise procurement. new text end

new text begin "Enterprise procurement" means the process
undertaken by the commissioner to leverage economies of scale of multiple end users to
achieve cost savings and other favorable terms in contracts for goods and services.
new text end

Sec. 4.

Minnesota Statutes 2004, section 16C.02, subdivision 12, is amended to read:

Subd. 12.

Request for proposal or RFP.

"Request for proposal" or "RFP" means a
solicitation in which it is not advantageous to set forth all the actual, detailed requirements
at the time of solicitation and responses are deleted text begin subject to negotiation deleted text end new text begin negotiated to achieve
best value for the state new text end .

Sec. 5.

Minnesota Statutes 2004, section 16C.02, subdivision 14, is amended to read:

Subd. 14.

Response.

"Response" means the offer received from a vendor in
response to a solicitation. A response includes submissions commonly referred to as
"offers," new text begin "best and final offers," new text end "bids," "quotes," or "proposals."

Sec. 6.

Minnesota Statutes 2004, section 16C.02, is amended by adding a subdivision
to read:

new text begin Subd. 20. new text end

new text begin Strategic sourcing. new text end

new text begin "Strategic sourcing" means methods used to analyze
and reduce spending on goods and services including, but not limited to, spend analysis,
product standardization, contract consolidation, multiple jurisdiction purchasing alliances,
reverse auctions, lifecycle costing, and other techniques.
new text end

Sec. 7.

Minnesota Statutes 2004, section 16C.03, subdivision 3, is amended to read:

Subd. 3.

Acquisition authority.

The commissioner shall acquire all goods, services,
and utilities needed by agencies. The commissioner shall acquire goods, services, 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. new text begin In achieving best value, methods including best and final offers,
negotiations, contract consolidation, product standardization, mandatory-use contracts,
total cost of ownership assessments, and other strategic sourcing techniques shall be
employed at the commissioner's discretion. The commissioner shall engage in enterprise
procurements to the extent practicable. new text end 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. new text begin Contract awards for all systems integration projects that exceed $500,000 in cost
shall be based on the proposal that provides best value to the state's requirements, as
determined by the evaluation criteria contained in the solicitation document. Evaluation
criteria for the acquisition of such information technology services shall provide for
the selection of a contractor on an objective basis not limited to cost alone. new text end 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. 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. 8.

Minnesota Statutes 2004, section 16C.03, subdivision 4, is amended to read:

Subd. 4.

Contracting authority.

The commissioner shall conduct all contracting by,
for, and between agencies and perform all contract management and review functions for
contracts, except those functions specifically delegated to be performed by the contracting
agency, the attorney general, or otherwise provided for by law. new text begin The commissioner must
involve agency staff and agency staff must participate in the development of enterprise
procurements including the development of product standards, specifications, and other
requirements.
new text end

Sec. 9.

Minnesota Statutes 2004, section 16C.03, subdivision 8, is amended to read:

Subd. 8.

Policy and procedures.

The commissioner is authorized to issue policies,
procedures, and standards applicable to all acquisition activities by and for agencies. new text begin
Consistent with the authority specified in this chapter, the commissioner shall develop
and implement policies, procedures, and standards ensuring the optimal use of strategic
sourcing techniques.
new text end

Sec. 10.

Minnesota Statutes 2004, section 16C.03, subdivision 13, is amended to read:

Subd. 13.

Central stores.

The commissioner is authorized to provide agencies with
supplies and equipment and operate all central stores and supply rooms serving more
than one agency. new text begin The commissioner is authorized to require agency use of this service
if consistent with "best value."
new text end

Sec. 11.

Minnesota Statutes 2004, section 16C.03, subdivision 16, is amended to read:

Subd. 16.

Delegation of duties.

The commissioner may delegate duties imposed by
this chapter to the head of an agency and to any subordinate of the agency head. Delegated
duties shall be exercised in the name of the commissioner and under the commissioner's
direct supervision and control. A delegation of duties may include, but is not limited to,
allowing individuals within agencies to acquire goods, services, and utilities within dollar
limitations and for designated types of acquisitions. Delegation of contract management
and review functions must be filed with the secretary of state and may not, except with
respect to delegations within the Department of Administration, exceed two years in
duration. The commissioner may withdraw any delegation at the commissioner's sole
discretion. new text begin The commissioner may require an agency head or subordinate to accept
delegated responsibility to procure goods or services intended for the exclusive use of the
agency receiving the delegation.
new text end

Sec. 12.

Minnesota Statutes 2004, section 16C.05, subdivision 1, is amended to read:

Subdivision 1.

Agency cooperation.

Agencies shall fully cooperate with the
commissioner in the management and review of state contracts new text begin and in the development
and implementation of strategic sourcing techniques new text end .

Sec. 13.

Minnesota Statutes 2004, section 16C.05, subdivision 2, is amended to read:

Subd. 2.

Creation and validity of contracts.

(a) A contract is not valid and the state
is not bound by it and no agency, without the prior written approval of the commissioner
granted pursuant to subdivision 2a, may authorize work to begin on it unless:

(1) it has first been executed by the head of the agency or a delegate who is a party
to the contract;

(2) it has been approved by the commissioner; and

(3) the accounting system shows an encumbrance for the amount of the contract
liability new text begin except as allowed by policy approved by the commissioner and the commissioner
of finance for routine, low-dollar procurements new text end .

(b) The combined contract and amendments must not exceed five years without
specific, written approval by the commissioner according to established policy, procedures,
and standards, or unless otherwise provided for by law. The term of the original contract
must not exceed two years unless the commissioner determines that a longer duration is
in the best interest of the state.

(c) Grants, interagency agreements, purchase orders, work orders, and annual plans
need not, in the discretion of the commissioner and attorney general, require the signature
of the commissioner and/or the attorney general. A signature is not required for work
orders and amendments to work orders related to Department of Transportation contracts.
Bond purchase agreements by the Minnesota Public Facilities Authority do not require
the approval of the commissioner.

(d) Amendments to contracts must entail tasks that are substantially similar to
those in the original contract or involve tasks that are so closely related to the original
contract that it would be impracticable for a different contractor to perform the work. The
commissioner or an agency official to whom the commissioner has delegated contracting
authority under section 16C.03, subdivision 16, must determine that an amendment would
serve the interest of the state better than a new contract and would cost no more.

(e) A fully executed copy of every contract, amendments to the contract, and
performance evaluations relating to the contract must be kept on file at the contracting
agency for a time equal to that specified for contract vendors and other parties in
subdivision 5.

(f) The attorney general must periodically review and evaluate a sample of state
agency contracts to ensure compliance with laws.

Sec. 14.

Minnesota Statutes 2004, section 16C.08, is amended by adding a subdivision
to read:

new text begin Subd. 1a. new text end

new text begin Enterprise procurement process. new text end

new text begin Notwithstanding section 15.061 or
any other law, the commissioner shall, to the fullest extent practicable, conduct enterprise
procurements that result in the establishment of professional or technical contracts for
use by multiple state agencies. The commissioner is authorized to mandate use of any
contract entered into as a result of an enterprise procurement process. Agencies shall fully
cooperate in the development and use of contracts entered into under this section.
new text end

Sec. 15.

Minnesota Statutes 2004, section 16C.08, subdivision 2, is amended to read:

Subd. 2.

Duties of contracting agency.

(a) Before an agency may seek approval of
a professional or technical services contract valued in excess of $5,000, it must provide
the following:

(1) a description of how the proposed contract or amendment is necessary and
reasonable to advance the statutory mission of the agency;

(2) a description of the agency's plan to notify firms or individuals who may be
available to perform the services called for in the solicitation; deleted text begin and
deleted text end

(3) a description of the performance measures or other tools that will be used to
monitor and evaluate contract performance deleted text begin . deleted text end new text begin ; and
new text end

new text begin (4) an explanation detailing, if applicable, why this procurement is being pursued
unilaterally by the agency and not as an enterprise procurement.
new text end

(b) In addition to paragraph (a), the agency must certify that:

(1) no current state employee is able and available to perform the services called
for by the contract;

(2) the normal competitive bidding mechanisms will not provide for adequate
performance of the services;

(3) reasonable efforts will be made to publicize the availability of the contract to
the public;

(4) the agency will develop and implement a written plan providing for the
assignment of specific agency personnel to manage the contract, including a monitoring
and liaison function, the periodic review of interim reports or other indications of past
performance, and the ultimate utilization of the final product of the services;

(5) the agency will not allow the contractor to begin work before the contract is fully
executed unless an exception under section 16C.05, subdivision 2a, has been granted by
the commissioner and funds are fully encumbered;

(6) the contract will not establish an employment relationship between the state or
the agency and any persons performing under the contract; and

(7) in the event the results of the contract work will be carried out or continued by
state employees upon completion of the contract, the contractor is required to include
state employees in development and training, to the extent necessary to ensure that after
completion of the contract, state employees can perform any ongoing work related to
the same function.

(c) A contract establishes an employment relationship for purposes of paragraph (b),
clause (6), if, under federal laws governing the distinction between an employee and an
independent contractor, a person would be considered an employee.

Sec. 16.

Minnesota Statutes 2005 Supplement, section 16C.09, is amended to read:

16C.09 PROCEDURE FOR SERVICE CONTRACTS.

(a) Before entering into or approving a service contract new text begin valued in excess of $5,000 new text end ,
the commissioner must determine, at least, that:

(1) no current state employee is able and available to perform the services called
for by the contract;

(2) the work to be performed under the contract is necessary to the agency's
achievement of its statutory responsibilities and there is statutory authority to enter into
the contract;

(3) the contract will not establish an employment relationship between the state or
the agency and any persons performing under the contract;

(4) the contractor and agents are not employees of the state;

(5) the contracting agency has specified a satisfactory method of evaluating and
using the results of the work to be performed; and

(6) the combined contract and amendments will not exceed five years without
specific, written approval by the commissioner according to established policy, procedures,
and standards, or unless otherwise provided for by law. The term of the original contract
must not exceed two years, unless the commissioner determines that a longer duration is
in the best interest of the state.

(b) For purposes of paragraph (a), clause (1), employees are available if qualified
and:

(1) are already doing the work in question; or

(2) are on layoff status in classes that can do the work in question.

An employee is not available if the employee is doing other work, is retired, or has decided
not to do the work in question.

(c) This section does not apply to an agency's use of inmates pursuant to sections
241.20 to 241.23 or to an agency's use of persons required by a court to provide:

(1) community service; or

(2) conservation or maintenance services on lands under the jurisdiction and control
of the state.

Sec. 17.

Minnesota Statutes 2005 Supplement, section 16C.10, subdivision 7, is
amended to read:

Subd. 7.

Reverse auction.

(a) For the purpose of this subdivision, "reverse auction"
means a purchasing process in which vendors compete to provide goods or deleted text begin computer deleted text end
services at the lowest selling price in an open and interactive environment. new text begin Reverse
auctions may not be utilized to procure engineering design services or architectural
services or to establish building and construction contracts under sections 16C.26 to
16C.29.
new text end

(b) The provisions of sections 13.591, subdivision 3, and 16C.06, subdivision 2,
do not apply when the commissioner determines that a reverse auction is the appropriate
purchasing process.

Sec. 18. new text begin REPORT.
new text end

new text begin By January 15, 2008, the commissioner of administration must report to the chairs of
the legislative committees with jurisdiction over state procurement regarding the impact of
the changes in sections 1 to 17 and the use of strategic sourcing techniques on Minnesota
businesses, including an analysis of the size of contracts and award recipients.
new text end