Minnesota Legislature
SF 3733
as introduced - 92nd Legislature (2021 - 2022) Posted on 03/08/2022 08:07am
Current Version - as introduced
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A bill for an act
relating to state government; modifying state procurement and contract provisions;
amending Minnesota Statutes 2020, sections 16C.16, subdivisions 1, 4, 5, 6, 6a,
7, 7a; 16C.19; 16C.251; 16C.36.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2020, section 16C.16, subdivision 1, is amended to read:
Subdivision 1.
Small business procurements.
(a) The commissioner shall for each
fiscal year ensure that small businesses receive at least 25 percent of the value of anticipated
total state procurement of goods and services, including deleted text begin printing anddeleted text end construction. The
commissioner shall divide the procurements so designated into contract award units of
economically feasible production runs in order to facilitate offers or bids from small
businesses.
(b) The commissioner must solicit and encourage Minnesota small businesses to submit
responses or bids when the commissioner is entering into master contracts. If cost-effective,
when entering into a master contract, the commissioner must attempt to negotiate contract
terms that allow agencies the option of purchasing from small businesses, particularly small
businesses that are geographically proximate to the entity making the purchase.
(c) In making the annual designation of such procurements the commissioner shall
attempt (1) to vary the included procurements so that a variety of goods and servicesnew text begin ,
including construction,new text end produced by different small businesses are obtained each year, and
(2) to designate small business procurements in a manner that will encourage proportional
distribution of such awards among the geographical regions of the state. To promote the
geographical distribution of awards, the commissioner may designate a portion of the small
business procurement for award to bidders from a specified congressional district or other
geographical region specified by the commissioner. The failure of the commissioner to
designate particular procurements shall not be deemed to prohibit or discourage small
businesses from seeking the procurement award through the normal process.
Sec. 2.
Minnesota Statutes 2020, section 16C.16, subdivision 4, is amended to read:
Subd. 4.
Targeted group purchasing.
The commissioner shall establish a program for
purchasing goods and servicesnew text begin , including construction,new text end from targeted group businesses, as
designated in subdivision 5. The purpose of the program is to remedy the effects of past
discrimination against members of targeted groups. In furtherance of this purpose, the
commissioner shall attempt to ensure that purchases from targeted group businesses reflect
a fair and equitable representation of all the state's purchasing.
Sec. 3.
Minnesota Statutes 2020, section 16C.16, subdivision 5, is amended to read:
Subd. 5.
Designation of targeted groups.
(a) The commissioner of administration shall
periodically designate businesses that are majority owned and operated by women, persons
with a substantial physical disability, or specific minorities as targeted group businesses
within purchasing categories as determined by the commissioner. A group may be targeted
within a purchasing category if the commissioner determines there is a statistical disparity
between the percentage of purchasing from businesses owned by group members and the
representation of businesses owned by group members among all businesses in the state in
the purchasing category.
(b) In addition to designations under paragraph (a), an individual business may be
included as a targeted group business if the commissioner determines that inclusion is
necessary to remedy discrimination against the owner based on race, gender, or disability
in attempting to operate a business that would provide goods or servicesnew text begin , including
construction,new text end to public agencies.
(c) The designations of purchasing categories and businesses under paragraphs (a) and
(b) are not rules for purposes of chapter 14, and are not subject to rulemaking procedures
of that chapter.
Sec. 4.
Minnesota Statutes 2020, section 16C.16, subdivision 6, is amended to read:
Subd. 6.
Purchasing methods.
(a) The commissioner may award up to a deleted text begin sixdeleted text end new text begin 12new text end percent
preference for specified goods or servicesnew text begin , including construction,new text end to small targeted group
businesses.
(b) The commissioner may award a contract for goodsdeleted text begin ,deleted text end new text begin ornew text end services, deleted text begin ordeleted text end new text begin includingnew text end
constructionnew text begin ,new text end directly to a small business or small targeted group business without going
through a competitive solicitation process up to a total contract award value, including
extension options, of deleted text begin $25,000deleted text end new text begin $100,000new text end .
(c) The commissioner may designate a purchase of goods or servicesnew text begin , including
construction,new text end for award only to small businesses or small targeted group businesses if the
commissioner determines that at least three small businesses or small targeted group
businesses are likely to respond to a solicitation.
(d) The commissioner, as a condition of awarding a construction contract or approving
a contract for professional or technical services, may set goals that require the prime
contractor to subcontract a portion of the contract to small businesses or small targeted
group businesses. The commissioner must establish a procedure for granting waivers from
the subcontracting requirement when qualified small businesses or small targeted group
businesses are not reasonably available. The commissioner may establish financial incentives
for prime contractors who exceed the goals for use of small business or small targeted group
business subcontractors and financial penalties for prime contractors who fail to meet goals
under this paragraph. deleted text begin The subcontracting requirements of this paragraph do not apply to
prime contractors who are small businesses or small targeted group businesses.
deleted text end
Sec. 5.
Minnesota Statutes 2020, section 16C.16, subdivision 6a, is amended to read:
Subd. 6a.
Veteran-owned small businesses.
(a) Except when mandated by the federal
government as a condition of receiving federal funds, the commissioner shall award up to
a deleted text begin sixdeleted text end new text begin 12new text end percent preference, but no less than the percentage awarded to any other group
under this section, on state procurement to certified small businesses that are majority-owned
and operated by veterans.
(b) The commissioner may award a contract for goodsdeleted text begin ,deleted text end new text begin ornew text end services, deleted text begin ordeleted text end new text begin includingnew text end
constructionnew text begin ,new text end directly to a veteran-owned small business without going through a competitive
solicitation process up to a total contract award value, including extension options, of
deleted text begin $25,000deleted text end new text begin $100,000new text end .
(c) The commissioner may designate a purchase of goods or servicesnew text begin , including
construction,new text end for award only to a veteran-owned small business if the commissioner
determines that at least three veteran-owned small businesses are likely to respond to a
solicitation.
(d) The commissioner, as a condition of awarding a construction contract or approving
a contract for professional or technical services, may set goals that require the prime
contractor to subcontract a portion of the contract to a veteran-owned small business. The
commissioner must establish a procedure for granting waivers from the subcontracting
requirement when qualified veteran-owned small businesses are not reasonably available.
The commissioner may establish financial incentives for prime contractors who exceed the
goals for use of veteran-owned small business subcontractors and financial penalties for
prime contractors who fail to meet goals under this paragraph. deleted text begin The subcontracting
requirements of this paragraph do not apply to prime contractors who are veteran-owned
small businesses.
deleted text end
(e) The purpose of this designation is to facilitate the transition of veterans from military
to civilian life, and to help compensate veterans for their sacrifices, including but not limited
to their sacrifice of health and time, to the state and nation during their military service, as
well as to enhance economic development within Minnesota.
(f) Before the commissioner certifies that a small business is majority-owned and operated
by a veteran, the commissioner of veterans affairs must verify that the owner of the small
business is a veteran, as defined in section 197.447.
Sec. 6.
Minnesota Statutes 2020, section 16C.16, subdivision 7, is amended to read:
Subd. 7.
Economically disadvantaged areas.
(a) The commissioner may award up to
a deleted text begin sixdeleted text end new text begin 12new text end percent preference on state procurement to small businesses located in an
economically disadvantaged area.
(b) The commissioner may award a contract for goodsdeleted text begin ,deleted text end new text begin ornew text end services, deleted text begin ordeleted text end new text begin includingnew text end
constructionnew text begin ,new text end directly to a small business located in an economically disadvantaged area
without going through a competitive solicitation process up to a total contract award value,
including extension options, of deleted text begin $25,000deleted text end new text begin $100,000new text end .
(c) The commissioner may designate a purchase of goods or servicesnew text begin , including
construction,new text end for award only to a small business located in an economically disadvantaged
area if the commissioner determines that at least three small businesses located in an
economically disadvantaged area are likely to respond to a solicitation.
(d) The commissioner, as a condition of awarding a construction contract or approving
a contract for professional or technical services, may set goals that require the prime
contractor to subcontract a portion of the contract to a small business located in an
economically disadvantaged area. The commissioner must establish a procedure for granting
waivers from the subcontracting requirement when qualified small businesses located in an
economically disadvantaged area are not reasonably available. The commissioner may
establish financial incentives for prime contractors who exceed the goals for use of
subcontractors that are small businesses located in an economically disadvantaged area and
financial penalties for prime contractors who fail to meet goals under this paragraph. deleted text begin The
subcontracting requirements of this paragraph do not apply to prime contractors who are
small businesses located in an economically disadvantaged area.
deleted text end
(e) A business is located in an economically disadvantaged area if:
(1) the owner resides in or the business is located in a county in which the median income
for married couples is less than 70 percent of the state median income for married couples;
(2) the owner resides in or the business is located in an area designated a labor surplus
area by the United States Department of Labor; or
(3) the business is a certified rehabilitation facility or extended employment provider as
described in chapter 268A.
(f) The commissioner may designate one or more areas designated as targeted
neighborhoods under section 469.202 or as border city enterprise zones under section
469.166 as economically disadvantaged areas for purposes of this subdivision if the
commissioner determines that this designation would further the purposes of this section.
If the owner of a small business resides or is employed in a designated area, the small
business is eligible for any preference provided under this subdivision.
(g) The Department of Revenue shall gather data necessary to make the determinations
required by paragraph (e), clause (1), and shall annually certify counties that qualify under
paragraph (e), clause (1). An area designated a labor surplus area retains that status for 120
days after certified small businesses in the area are notified of the termination of the
designation by the United States Department of Labor.
Sec. 7.
Minnesota Statutes 2020, section 16C.16, subdivision 7a, is amended to read:
Subd. 7a.
Designated purchases and subcontractor goals.
(a) When designating
purchases directly to a business in accordance with this section, the commissioner may also
designate a purchase of goods or servicesnew text begin , including construction,new text end directly to any combination
of small businesses, small targeted group businesses, veteran-owned small businesses or
small businesses located in an economically disadvantaged area if the commissioner
determines that at least three businesses in two or more of the disadvantaged business
categories are likely to respond.
(b) When establishing subcontractor goals under this section, the commissioner may set
goals that require the prime contractor to subcontract a portion of the contract to any
combination of a small business, small targeted group business, veteran-owned small
business, or small business located in an economically disadvantaged area.
Sec. 8.
Minnesota Statutes 2020, section 16C.19, is amended to read:
16C.19 ELIGIBILITY; RULES.
(a) A small business wishing to participate in the programs under section 16C.16,
subdivisions 4 to 7, must be certified by the commissionernew text begin or, if authorized by the
commissioner, by a nationally recognized certifying organizationnew text end . new text begin The commissioner may
choose to authorize a nationally recognized certifying organization if the certification
requirements are substantially the same as those adopted under the rules authorized in this
section and the business meets the requirements in section 16C.16, subdivision 2.
new text end
new text begin (b) new text end The commissioner shall adopt by rule standards and procedures for certifying that
small targeted group businesses, small businesses located in economically disadvantaged
areas, and veteran-owned small businesses are eligible to participate under the requirements
of sections 16C.16 to 16C.21. The commissioner shall adopt by rule standards and procedures
for hearing appeals and grievances and other rules necessary to carry out the duties set forth
in sections 16C.16 to 16C.21.
deleted text begin (b)deleted text end new text begin (c)new text end The commissioner may make rules which exclude or limit the participation of
nonmanufacturing business, including third-party lessors, brokers, franchises, jobbers,
manufacturers' representatives, and others from eligibility under sections 16C.16 to 16C.21.
deleted text begin (c)deleted text end new text begin (d)new text end The commissioner may make rules that set time limits and other eligibility limits
on business participation in programs under sections 16C.16 to 16C.21.
deleted text begin (d)deleted text end new text begin (e)new text end Notwithstanding paragraph (a), for purposes of sections 16C.16 to 16C.21, a
veteran-owned small business, the principal place of business of which is in Minnesota, is
certified if:
(1) it has been verified by the United States Department of Veterans Affairs as being
either a veteran-owned small business or a service-disabled veteran-owned small business,
in accordance with Public Law 109-461 and Code of Federal Regulations, title 38, part 74;
or
(2) the veteran-owned small business supplies the commissioner with proof that the
small business is majority-owned and operated by:
(i) a veteran as defined in section 197.447; or
(ii) a veteran with a service-connected disability, as determined at any time by the United
States Department of Veterans Affairs.
deleted text begin (e)deleted text end new text begin (f)new text end Until rules are adopted pursuant to paragraph (a) for the purpose of certifying
veteran-owned small businesses, the provisions of Minnesota Rules, part 1230.1700, may
be read to include veteran-owned small businesses. In addition to the documentation required
in Minnesota Rules, part 1230.1700, the veteran owner must have been discharged under
honorable conditions from active service, as indicated by the veteran owner's most current
United States Department of Defense form DD-214.
deleted text begin (f)deleted text end new text begin (g)new text end Notwithstanding paragraph (a), for purposes of sections 16C.16 to 16C.21, a
minority- or woman-owned small business, the principal place of business of which is in
Minnesota, is certified if it has been certified by the Minnesota unified certification program
under the provisions of Code of Federal Regulations, title 49, part 26.
deleted text begin (g)deleted text end new text begin (h)new text end The commissioner may adopt rules to implement the programs under section
16C.16, subdivisions 4 to 7, using the expedited rulemaking process in section 14.389.
Sec. 9.
Minnesota Statutes 2020, section 16C.251, is amended to read:
16C.251 BEST AND FINAL OFFER.
A "best and final offer" solicitation process may not be used for building and construction
contractsnew text begin awarded based on competitive bidsnew text end .
Sec. 10.
Minnesota Statutes 2020, section 16C.36, is amended to read:
16C.36 REORGANIZATION SERVICES UNDER MASTER CONTRACT.
The commissioner of administration must make available under a master contract program
a list of eligible contractors who can assist state agencies in using data analytics to:
(1) accomplish agency reorganization along service rather than functional lines in order
to provide more efficient and effective service; and
(2) bring about internal reorganization of management functions in order to flatten the
organizational structure by requiring that decisions are made closer to the service needed,
eliminating redundancies, and optimizing the span of control ratios to public and private
sector industry benchmarks.
deleted text begin
The commissioner of administration must report to the legislature by January 15, 2013,
and January 15, 2014, on state agency use of eligible contractors under this section, and on
improvements in efficiency and effectiveness, including the contract oversight process, of
state services as a result of services provided by contractors.
deleted text end