Office of the Revisor of Statutes
Minnesota Session Laws - 1990, Regular Session
Key: (1) language to be deleted (2) new language
Laws of Minnesota 1990
CHAPTER 541-H.F.No. 2230
An act relating to public purchasing; establishing
programs for purchasing from certain small targeted
group businesses and businesses located in
economically disadvantaged areas; requiring prompt
payment to subcontractors; providing penalties;
amending Minnesota Statutes 1988, sections 16B.07, by
adding a subdivision; 16B.20, subdivisions 1 and 3;
161.321, subdivisions 1, 4, 5, and by adding a
subdivision; Minnesota Statutes 1989 Supplement,
sections 16B.19; 16B.20, subdivision 2; 16B.21;
16B.22; 16B.226; 116J.68; 136.27; 136.72; 137.31,
subdivision 6; 161.321, subdivisions 2, 3, and 6;
161.3211; 241.27, subdivision 2; 471.345, subdivision
8; and 473.142; Laws 1989, chapter 352, section 25;
proposing coding for new law in Minnesota Statutes,
chapters 16A; 16B; and 137; repealing Minnesota
Statutes 1989 Supplement, sections 16B.189; 137.31,
subdivision 3a; and 645.445, subdivision 5.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. [16A.1245] [PROMPT PAYMENT TO SUBCONTRACTORS.]
Each state agency contract must require the prime
contractor to pay any subcontractor within ten days of the prime
contractor's receipt of payment from the state for undisputed
services provided by the subcontractor. The contract must
require the prime contractor to pay interest of 1-1/2 percent
per month or any part of a month to the subcontractor on any
undisputed amount not paid on time to the subcontractor. The
minimum monthly interest penalty payment for an unpaid balance
of $100 or more is $10. For an unpaid balance of less than
$100, the prime contractor shall pay the actual penalty due to
the subcontractor. A subcontractor who prevails in a civil
action to collect interest penalties from a prime contractor
must be awarded its costs and disbursements, including
attorney's fees, incurred in bringing the action.
Sec. 2. Minnesota Statutes 1988, section 16B.07, is
amended by adding a subdivision to read:
Subd. 6. [NONCOMPETITIVE BIDS.] Agencies are encouraged to
purchase from small targeted group businesses designated under
section 16B.19 when making purchases that are not subject to
competitive bidding procedures.
Sec. 3. Minnesota Statutes 1989 Supplement, section
16B.19, is amended to read:
16B.19 [DESIGNATION OF PROCUREMENTS FROM SMALL BUSINESSES.]
Subdivision 1. [SMALL BUSINESS PROCUREMENTS.] 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 printing and 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. In making the annual red
19:8designation of such procurements the commissioner shall
attempt (1) to vary the included procurements so that a variety
of goods and services 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
set-aside awards, the commissioner may designate a portion of
the small business set-aside 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 solicitation and
bidding processes.
Subd. 1a. [SMALL BUSINESS.] The commissioner shall adopt
rules defining "small business" for purposes of sections 16B.189
to 16B.22, "small business" means a small business, as defined
in section 645.445, with its principal place of business in
Minnesota 137.31, 137.35, 161.321, and 473.142. The definition
must include only businesses with their principal place of
business in Minnesota. The definition must establish different
size standards for various types of businesses. In establishing
these standards, the commissioner must consider the differences
among industries caused by the size of the market for goods or
services and the relative size and market share of the
competitors operating in those markets.
The definition of "small business" in section 645.445
applies to sections 16B.189 to 16B.22, 137.31, 137.35, 161.321,
and 473.142, until the commissioner adopts rules with a new
definition. However, only small businesses with a principal
place of business in Minnesota are included for purposes of
these sections.
Subd. 2. [CONSULTANT, PROFESSIONAL AND TECHNICAL
PROCUREMENTS.] Every state agency shall for each fiscal year
designate for awarding to small businesses at least 25 percent
of the value of anticipated procurements of that agency for
consultant services or professional and technical services. The
set-aside under this subdivision is in addition to that provided
by subdivision 1, but shall otherwise comply with section 16B.17.
Subd. 2a. [TARGETED GROUP PURCHASING.] The commissioner
shall establish a program for purchasing goods and services from
targeted group businesses, as designated in subdivision 2b. 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
assure that for each category of goods or services purchased by
the state, the percentage of purchasing from each type of
targeted group business is proportional to the representation of
that targeted group business among all businesses in the state
in the purchasing category.
Subd. 2b. [DESIGNATION OF TARGETED GROUPS.] (a) The
commissioner of administration shall periodically designate
businesses that are majority owned and operated by women,
persons with a disability, or specific minorities as targeted
group businesses within purchasing categories the commissioner
determines. A group must 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 business owned
by group members among all business in the state in the
purchasing category. The commissioner must review public
agencies' purchasing from businesses owned by women, persons
with a disability, and minorities at least once every two
years. The commissioner must review the representation of
businesses owned by these groups among all businesses in the
state at least once every five years.
(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 service 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.
Subd. 2c. [PURCHASING METHODS.] (a) The commissioner may
award up to a six percent preference in the amount bid for
specified goods or services to small targeted group businesses.
(b) The commissioner may designate a purchase of goods or
services for award only to small targeted group businesses, if
the commission determines that at least three small targeted
group businesses are likely to bid.
(c) The commissioner, as a condition of awarding a
construction contract or approving a contract for consultant,
professional, or technical services, may set goals that require
the prime contractor to subcontract a portion of the contract to
small targeted group businesses. The commissioner must
establish a procedure for granting waivers from the
subcontracting requirement when qualified small targeted group
businesses are not reasonably available. The commissioner may
establish financial incentives for prime contractors who exceed
the goals for use of subcontractors and financial penalties for
prime contractors who fail to meet goals under this paragraph.
The subcontracting requirements of this paragraph do not apply
to prime contractors who are small targeted group businesses.
Subd. 2d. [ECONOMICALLY DISADVANTAGED AREAS.] The
commissioner may award up to a four percent preference in the
amount bid on state procurement to small businesses located in
an economically disadvantaged area. A business is located in an
economically disadvantaged area if:
(1) the owner resides or is employed in a county in which
the median income for married couples is less than 70 percent of
the state median income for married couples; or
(2) the owner resides or is employed in an area designated
a labor surplus area by the United States Department of Labor;
or
(3) the business is a rehabilitation facility or work
activity program.
The commissioner may designate one or more areas designated
as targeted neighborhoods under section 469.202 or as enterprise
zones under section 469.167 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.
The department of revenue shall gather data necessary to
make the determinations required by clause (1), and shall
annually certify counties that qualify under 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.
Subd. 3. [NEGOTIATED PRICE OR BID CONTRACT SURETY
BONDS.] The commissioner may elect to use either a negotiated
price or bid contract procedure as may be appropriate in the
awarding of a procurement contract under the set-aside or
preference program established in sections 16B.19 to 16B.22.
The amount of an award may not exceed by more than five percent
the commissioner's estimated price for the goods or services, if
they were to be purchased on the open market and not under this
set-aside program. Surety bonds guaranteed by the federal Small
Business Administration and second party bonds are acceptable
security for a construction award under this section. "Second
party bond" means a bond that designates as principal,
guarantor, or both, a person or persons in addition to the
person to whom the contract is proposed for award.
Subd. 4. [DETERMINATION OF ABILITY TO PERFORM.] Before
making an award under the preference programs established in
subdivision 5 for economically disadvantaged small businesses
subdivisions 2a to 2d, the commissioner shall evaluate whether
the small business scheduled to receive the award is able to
perform the contract. This determination shall include
consideration of production and financial capacity and technical
competence.
Subd. 5. [CERTAIN SMALL BUSINESS PREFERENCES LIMITS.] The
commissioner shall award a five percent preference in the amount
bid on all state procurements to economically disadvantaged
small businesses to encourage the participation of economically
disadvantaged small businesses in state procurement. At least
75 percent of the value of the procurements subcontracts awarded
to economically disadvantaged small targeted group businesses
under subdivision 2c, paragraph (c) must actually be performed
by the business to which the award subcontract is made awarded
or by another economically disadvantaged small targeted group
business. An economically disadvantaged small business that has
been awarded more than three-tenths of one percent of the value
of the total anticipated procurements for a fiscal year under
this subdivision is disqualified from receiving further
preference advantages for that fiscal year.
Subd. 6. [CONTRACTS IN EXCESS OF $200,000; SUBCONTRACTS.]
The commissioner, as a condition of awarding state procurements
for construction contracts or approving contracts for
consultant, professional, or technical services under section
16B.17 in excess of $200,000, may set goals which require that
the prime contractor subcontract a portion of the contract to
economically disadvantaged small businesses. Each construction
contractor bidding on a project over $200,000 on which this
subcontracting is required shall submit with the bid a list of
the economically disadvantaged small businesses that are
proposed to be utilized on the project with a statement
indicating the portion of the total bid to be performed by each
business. The commissioner shall reject any bid to which this
subdivision applies that does not contain this information.
Prime contractors receiving construction contract awards in
excess of $200,000 shall furnish to the commissioner the name of
each economically disadvantaged small business that is
performing work or supplying supplies and materials on the prime
contract and the dollar amount of the work performed or to be
performed or the supplies and materials to be supplied. Once
the contract has been awarded, the prime contractor must use the
economically disadvantaged small business subcontractors
proposed to be utilized on the project, unless the
subcontractors are unable to perform in accordance with the
award.
This subdivision does not apply to prime contractors that
are themselves economically disadvantaged small businesses, as
certified under section 16B.22.
Subd. 9. [PROCUREMENT PROCEDURES.] All laws and rules
pertaining to solicitations, bid evaluations, contract awards,
and other procurement matters apply equally to procurements
designated for small businesses. In the event of conflict with
other rules, section 16B.18 and rules adopted under it govern,
if section 16B.18 applies. If it does not apply, sections
16B.19 to 16B.22 and rules adopted under those sections govern.
Subd. 10. [APPLICABILITY.] This section does not apply to
construction contracts or contracts for consultant,
professional, or technical services under section 16B.17 that
are financed in whole or in part with federal funds and that are
subject to federal disadvantaged business enterprise regulations.
Sec. 4. Minnesota Statutes 1988, section 16B.20,
subdivision 1, is amended to read:
Subdivision 1. [COMMISSIONER OF ADMINISTRATION.] The
commissioners of administration and trade and economic
development shall publicize the provisions of the set-aside
program purchasing programs in sections 16B.19 to 16B.22,
attempt to locate small businesses able to perform set-aside
procurement awards under the programs, and encourage
participation. When the commissioner of administration
determines that a small business is unable to perform under
a set-aside contract program established in sections 16B.19 to
16B.22, the commissioner shall inform the commissioner of trade
and economic development who shall assist the small business in
attempting to remedy the causes of the inability to perform a
set-aside award. In assisting the small business, the
commissioner of trade and economic development in cooperation
with the commissioner of administration shall use management or
financial assistance programs made available by or through the
department of trade and economic development, other state or
governmental agencies, or private sources.
Sec. 5. Minnesota Statutes 1989 Supplement, section
16B.20, subdivision 2, is amended to read:
Subd. 2. [ADVISORY COUNCIL.] A small business and targeted
group procurement advisory council is created. The council
consists of 13 members appointed by the commissioner of
administration. A chair of the advisory council shall be
elected from among the members. The appointments are subject to
the appointments program provided by section 15.0597. The
terms, compensation, and removal of members are as provided in
section 15.059.
Sec. 6. Minnesota Statutes 1988, section 16B.20,
subdivision 3, is amended to read:
Subd. 3. [DUTIES.] The small business procurement advisory
council shall:
(1) advise the commissioner of administration on matters
relating to the small business and targeted group procurement
program;
(2) review complaints or grievances from small business and
targeted group vendors or contractors who are doing or
attempting to do business under the program; and
(3) review the reports of the commissioners of
administration and trade and economic development provided by
section 16B.21 to ensure compliance with the goals of the
program.
Sec. 7. Minnesota Statutes 1989 Supplement, section
16B.21, is amended to read:
16B.21 [REPORTS.]
Subdivision 1. [COMMISSIONER OF ADMINISTRATION.] The
commissioner shall submit an annual report pursuant to section
3.195 to the governor and the legislature with a copy to the
commissioner of trade and economic development indicating the
progress being made toward the objectives and goals of sections
16B.19 to 16B.22, 137.31, 137.35, 161.321, and 473.142 during
the preceding fiscal year. The commissioner shall also submit a
quarterly report to the small business and targeted group
procurement advisory council. These reports shall include the
following information:
(1) the total dollar value and number of potential
set-aside awards identified during this period and the
percentage of total state procurement this figure reflects;
(2) the number of small businesses identified by and
responding to the small business procurement program, the total
dollar value and number of set-aside and other contracts
actually awarded to small businesses, and the total number of
small businesses that were awarded set-aside and other
contracts;
(3) the total dollar value and number of contracts awarded
to economically disadvantaged small targeted group businesses
pursuant to each bidding process authorized by section sections
16B.19, subdivision 5 2c, 137.31, 137.35, 161.321, and 473.142;
the total number and value of these contracts awarded to each
economically disadvantaged small targeted group business and to
each category type of economically disadvantaged small targeted
group business in each purchasing category, and the percentages
of the total state procurements procurement for each purchasing
category the figures represent.
(4) the total dollar value and number of contracts awarded
to small businesses in economically disadvantaged areas under
the bidding process authorized in section 16B.19, subdivision
2d; the total number and value of these contracts awarded to
each business, and to all business within each economically
disadvantaged area in each purchasing category, and the
percentages of total procurement for each purchasing category
the figures represent.
The information required by clauses (1) and (2) must be
presented on a statewide basis and also broken down by
geographic regions within the state.
Subd. 2. [COMMISSIONER OF TRADE AND ECONOMIC DEVELOPMENT.]
The commissioner of trade and economic development shall submit
an annual report to the governor and the legislature pursuant to
section 3.195 with a copy to the commissioner of
administration. This report shall include the following
information:
(1) the efforts undertaken to publicize the provisions of
the small business and small targeted group business procurement
program during the preceding fiscal year;
(2) the efforts undertaken to identify economically
disadvantaged small targeted group businesses and the efforts
undertaken to encourage participation in the set-aside bid
preference targeted group purchasing program;
(3) the efforts undertaken by the commissioner to remedy
the inability of small businesses and targeted group businesses
to perform on potential set-aside or other contract awards; and
(4) the commissioner's recommendations for strengthening
the small business and economically disadvantaged small targeted
group business procurement program and delivery of services to
small businesses.
Subd. 3. [REPORTS FROM OTHER AGENCIES.] The commissioner
of transportation, each metropolitan agency listed in section
473.143, subdivision 1, and the University of Minnesota shall
report to the commissioner of administration all information
that the commissioner requests to make reports required under
this section. The information must be reported at the time and
in the manner requested by the commissioner of administration.
Sec. 8. Minnesota Statutes 1989 Supplement, section
16B.22, is amended to read:
16B.22 [ELIGIBILITY; RULES.]
Subdivision 1. [ELIGIBILITY.] A small business certified
as economically disadvantaged under section 645.445, subdivision
5, clause (1) or (2), is eligible to participate under the
requirements of sections 16B.19 to 16B.22 for a maximum of five
years from the date of receipt of the first award under this
program and after that period is not eligible to participate for
another five years. An economically disadvantaged small
business is not eligible to participate in this program if:
(1) the owner of the business has previously participated
in the program and the business exceeded the time limit
specified in section 645.445, subdivision 5, clause (4), or this
subdivision;
(2) the business has exceeded the time limit specified in
section 645.445, subdivision 5, clause (4), or this subdivision,
and has been renamed, restructured, or otherwise reorganized.
Subd. 2. [RULES.] (a) A small business wishing to
participate in the programs under section 16B.19, subdivisions
2a to 2d, must be certified by the commissioner. The
commissioner shall adopt by rule additional standards and
procedures for certifying that small businesses and economically
disadvantaged, small targeted group businesses, and small
businesses located in economically disadvantaged areas are
eligible to participate under the requirements of sections
16B.19 to 16B.22. 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 16B.19 to 16B.22.
(b) 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 16B.19 to 16B.22.
(c) The commissioner may make rules that set time limits
and other eligibility limits on business participation in
programs under sections 16B.19 to 16B.22.
Sec. 9. Minnesota Statutes 1989 Supplement, section
16B.226, is amended to read:
16B.226 [CERTIFICATION.]
A business that is certified by the commissioner of
administration as a small business or an economically
disadvantaged, small targeted group business or a business
located in an economically disadvantaged area is eligible to
participate under the requirements of sections 137.31,
161.321, 471.345, and, if certified under section 645.445,
subdivision 5, clauses (3) to (5) as a small targeted group
business, under section 473.142 without further certification by
the contracting agency. Personnel in state agencies currently
involved in certifying small businesses shall be reduced
accordingly.
Sec. 10. [16B.227] [CRIMINAL PENALTY.]
A person who knowingly provides false information to a
public official or employee for the purpose of obtaining or
retaining certification as a small targeted group business or a
small business located in an economically disadvantaged area
under sections 16B.189 to 16B.226, 137.31, 137.35, 161.321, or
473.142, is guilty of a misdemeanor.
Sec. 11. Minnesota Statutes 1989 Supplement, section
116J.68, is amended to read:
116J.68 [BUREAU OF SMALL BUSINESS.]
Subdivision 1. The bureau of small business within the
business assistance center shall serve as a clearinghouse and
referral service for information needed by small businesses
including economically disadvantaged small targeted group
businesses and small businesses located in an economically
disadvantaged area.
Subd. 2. The bureau shall:
(a) provide information and assistance with respect to all
aspects of business planning and business management related to
the start-up, operation, or expansion of a small business in
Minnesota;
(b) refer persons interested in the start-up, operation, or
expansion of a small business in Minnesota to assistance
programs sponsored by federal agencies, state agencies,
educational institutions, chambers of commerce, civic
organizations, community development groups, private industry
associations, and other organizations or to the business
assistance referral system established by the Minnesota Project
Outreach Corporation;
(c) plan, develop, and implement a master file of
information on small business assistance programs of federal,
state, and local governments, and other public and private
organizations so as to provide comprehensive, timely information
to the bureau's clients;
(d) employ staff with adequate and appropriate skills and
education and training for the delivery of information and
assistance;
(e) seek out and utilize, to the extent practicable,
contributed expertise and services of federal, state, and local
governments, educational institutions, and other public and
private organizations;
(f) maintain a close and continued relationship with the
director of the procurement program within the department of
administration so as to facilitate the department's duties and
responsibilities under sections 16B.19 to 16B.22 relating to the
small targeted group business set aside and economically
disadvantaged business program of the state;
(g) develop an information system which will enable the
commissioner and other state agencies to efficiently store,
retrieve, analyze, and exchange data regarding small business
development and growth in the state. All executive branch
agencies of state government and the secretary of state shall to
the extent practicable, assist the bureau in the development and
implementation of the information system;
(h) establish and maintain a toll free telephone number so
that all small business persons anywhere in the state can call
the bureau office for assistance. An outreach program shall be
established to make the existence of the bureau well known to
its potential clientele throughout the state. If the small
business person requires a referral to another provider the
bureau may use the business assistance referral system
established by the Minnesota Project Outreach Corporation;
(i) conduct research and provide data as required by state
legislature;
(j) develop and publish material on all aspects of the
start-up, operation, or expansion of a small business in
Minnesota;
(k) collect and disseminate information on state
procurement opportunities, including information on the
procurement process;
(l) develop a public awareness program through the use of
newsletters, personal contacts, and electronic and print news
media advertising about state assistance programs for small
businesses, including those programs specifically for socially
disadvantaged small business persons;
(m) publicize to small businesses section 14.115 which
requires consideration of small business issues in state agency
rulemaking;
(n) enter into agreements with the federal government and
other public and private entities to serve as the statewide
coordinator or host agency for the federal small business
development center program under United States Code, title 15,
section 648;
(o) establish an evaluation mechanism to determine if
assistance providers have adequate expertise and resources to
deliver quality services. Evaluation of assistance providers
may be based on the ability of the provider to offer the
advertised service, the training and experience of the provider,
and the formal evaluation process used by the provider. The
evaluation mechanism must be designed so that the business
assistance referral system established by the Minnesota Project
Outreach Corporation may use the results of the evaluation in
providing clients with referrals to providers; and
(p) assist providers in the evaluation of their programs
and the assessment of their service area needs. The bureau may
establish model evaluation techniques and performance standards
for providers to use.
Sec. 12. Minnesota Statutes 1989 Supplement, section
136.27, is amended to read:
136.27 [CAPITAL PROJECTS BIDDING PROCEDURES.]
In awarding contracts for capital projects under section
16B.09, the board must consider the documentation provided by
the bidders regarding their qualifications including evidence of
having successfully completed similar work, or delivering
services or products comparable to that being requested. The
board shall formulate procedures to administer this section
which include practices that will assist in the economic
development of small businesses and economically disadvantaged,
small targeted group businesses, and businesses in economically
disadvantaged areas designated under section 16B.19.
Sec. 13. Minnesota Statutes 1989 Supplement, section
136.72, is amended to read:
136.72 [CAPITAL PROJECTS BIDDING PROCEDURES.]
In awarding contracts for capital projects under section
16B.09, the state board for community colleges shall consider
the documentation provided by the bidders regarding their
qualifications, including evidence of having successfully
completed similar work, or delivering services or products
comparable to that being requested. The board shall set
procedures to administer this section, which must include
practices that will assist in the economic development of small
businesses and economically disadvantaged, small targeted group
businesses, and businesses in economically disadvantaged areas
designated under section 16B.19.
Sec. 14. Minnesota Statutes 1989 Supplement, section
137.31, subdivision 6, is amended to read:
Subd. 6. [ANNUAL REPORT.] The University of Minnesota
shall submit an annual report as provided in section 3.195, to
the governor and the legislature, with a copy to the
commissioner of trade and economic development, indicating the
progress being made toward the objectives and goals of this
section. The report shall include the following information:
(a) the total dollar value and number of procurement
contracts identified and set aside during this period and the
percentage of total value of university procurements that this
figure reflects;
(b) the number of small businesses identified by and
responding to the university set-aside program, the total dollar
value and number of procurement contracts actually awarded to
small businesses with appropriate designation as to the total
number and value of procurement contracts awarded to each small
business, and the total number of small businesses that were
awarded procurement contracts; and
(c) the total dollar value and number of procurement
contracts awarded to economically disadvantaged small businesses
with appropriate designation as to the total number and value of
procurement contracts awarded to each small business, and the
percentages of the total value of university procurements the
figures of total dollar value and the number of procurement
contracts reflect; and
(d) the number of procurement contracts which were
designated and set aside pursuant to this section but which were
not awarded to a small business, the estimated total dollar
value of these awards, the lowest offer or bid on each of these
awards made by the small business, and the price at which these
contracts were awarded pursuant to regular procurement
procedures.
Sec. 15. [137.35] [TARGETED BUSINESSES.]
Subdivision 1. [PURCHASING METHODS.] (a) The regents may
award up to a six percent preference in the amount bid for
specified goods and services to small targeted group businesses
designated under section 16B.19.
(b) The regents may designate a purchase of goods or
services for award only to small targeted group businesses
designated under section 16B.19 if the regents determine that at
least three small targeted group businesses are likely to bid.
(c) The regents, as a condition of awarding a construction
contract or approving a contract for consultant, professional,
or technical services, may set goals that require the prime
contractor to subcontract a portion of the contract to small
targeted group businesses. The regents must establish a
procedure for granting waivers from the subcontracting
requirement when qualified small targeted group businesses are
not reasonably available. The regents may establish financial
incentives for prime contractors who exceed the goals for use of
subcontractors and financial penalties for prime contractors who
fail to meet goals under this paragraph. The subcontracting
requirements of this paragraph do not apply to prime contractors
who are small targeted group businesses. At least 75 percent of
the value of the subcontracts awarded to small targeted group
businesses under this paragraph must be performed by the
business to which the subcontract is awarded or by another small
targeted group business.
(d) The regents may award up to a four percent preference
in the amount bid on university procurement to small businesses
located in an economically disadvantaged area as defined in
section 16B.19.
(e) The regents may delegate responsibility under this
section to university employees.
Subd. 2. [ELIGIBILITY.] The rules adopted by the
commissioner of administration to define small businesses and to
set time and other eligibility requirements for participation in
programs under sections 16B.19 to 16B.22 apply to this section.
Subd. 3. [NONCOMPETITIVE BIDS.] The regents are encouraged
to purchase from small targeted group businesses designated
under section 16B.19 when making purchases that are not subject
to competitive bidding procedures.
Subd. 4. [REPORT.] The regents must report to the
commissioner of administration on compliance with this section.
The information must be reported at the time and in the manner
requested by the commissioner.
Sec. 16. [137.36] [PROMPT PAYMENT TO SUBCONTRACTORS.]
Each university contract must require the prime contractor
to pay any subcontractor within ten days of the prime
contractor's receipt of payment from the university for
undisputed services provided by the subcontractor. The contract
must require the prime contractor to pay interest of 1-1/2
percent per month or any part of a month to the subcontractor on
any undisputed amount not paid on time to the subcontractor.
The minimum monthly interest penalty payment for an unpaid
balance of $100 or more is $10. For an unpaid balance of less
than $100, the prime contractor shall pay the actual penalty due
to the subcontractor. A subcontractor who prevails in a civil
action to collect interest penalties from a prime contractor
must be awarded its costs and disbursements, including attorney
fees, incurred in bringing the action.
Sec. 17. Minnesota Statutes 1988, section 161.321,
subdivision 1, is amended to read:
Subdivision 1. [DEFINITIONS.] For purposes of this section
the following terms have the meanings given them, except where
the context clearly indicates a different meaning is intended.
(a) "Award" means the granting of a contract in accordance
with all applicable laws and rules governing competitive bidding
except as otherwise provided in this section.
(b) "Contract" means an agreement entered into between a
business entity and the state of Minnesota for the construction
of transportation improvements.
(c) "Subcontractor" means a business entity which enters
into a legally binding agreement with another business entity
which is a party to a contract as defined in clause (b).
(d) "targeted group business" means a business designated
under section 16B.19, subdivision 2b.
Sec. 18. Minnesota Statutes 1989 Supplement, section
161.321, subdivision 2, is amended to read:
Subd. 2. [SMALL BUSINESS SET-ASIDES.] The commissioner
shall set aside, on a fiscal year basis, at least five percent
of the construction work to be performed by contract for award
to small businesses or economically disadvantaged small
businesses or for award to businesses which guarantee use of
small businesses or economically disadvantaged small businesses
as subcontractors. (a) The commissioner may award up to a six
percent preference in the amount bid for specified construction
work to small targeted group businesses.
(b) The commissioner may designate a contract for
construction work for award only to small targeted group
businesses if the commissioner determines that at least three
small targeted group businesses are likely to bid.
(c) The commissioner, as a condition of awarding a
construction contract, may set goals that require the prime
contractor to subcontract a portion of the contract to small
targeted group businesses. The commissioner must establish a
procedure for granting waivers from the subcontracting
requirement when qualified small targeted group businesses are
not reasonably available. The commissioner may establish
financial incentives for prime contractors who exceed the goals
for use of subcontractors and financial penalties for prime
contractors who fail to meet goals under this paragraph. The
subcontracting requirements of this paragraph do not apply to
prime contractors who are small targeted group businesses.
(d) The commissioner may award up to a four percent
preference in the amount bid on procurement to small businesses
located in an economically disadvantaged area as defined in
section 16B.19.
Sec. 19. Minnesota Statutes 1989 Supplement, section
161.321, subdivision 3, is amended to read:
Subd. 3. [AWARDS TO SMALL BUSINESSES.] At least 75 percent
of the amount so set aside must be subcontracts awarded, if
possible, either to economically disadvantaged small targeted
group businesses as direct contracts or as part of contracts
awarded to businesses which guarantee the use, as
subcontractors, of economically disadvantaged small businesses.
For purposes of this section, economically disadvantaged small
business has the meaning defined in section 645.445, subdivision
5, except that a business is also eligible under clause (4) if
it filed its first annual federal and state income tax returns
within the preceding ten years must be performed by the business
to which the subcontract is awarded or another small targeted
group business.
Sec. 20. Minnesota Statutes 1988, section 161.321,
subdivision 4, is amended to read:
Subd. 4. [AWARDS, LIMITATIONS.] The amount of any
individual contract or subcontract awarded pursuant to
subdivisions 2 and 3 shall not exceed $200,000, nor shall any
one small business be awarded an aggregate amount of contracts
or subcontracts or both in excess of $200,000 in any one fiscal
year. Contracts awarded pursuant to this section shall be are
subject to all applicable limitations contained in section
16B.19, subdivisions 2, 3, and 6 rules adopted by the
commissioner of administration.
Sec. 21. Minnesota Statutes 1988, section 161.321,
subdivision 5, is amended to read:
Subd. 5. [RECOURSE TO OTHER BUSINESSES.] In the event that
If the commissioner is unable to award a contract pursuant to
the provisions of subdivisions 2 and 3, the award may be placed
pursuant to the normal solicitation and award provisions set
forth in this chapter and chapter 16 16B.
Sec. 22. Minnesota Statutes 1989 Supplement, section
161.321, subdivision 6, is amended to read:
Subd. 6. [RULES.] The commissioner may promulgate by rule,
standards and procedures for certifying that small businesses,
and economically disadvantaged small businesses are eligible to
participate in the set-aside program authorized in subdivisions
2 and 3. The rules adopted by the commissioner of
administration to define small businesses and to set time and
other eligibility requirements for participation in programs
under sections 16B.19 to 16B.22 apply to this section. The
commissioner may promulgate other rules as may be necessary to
carry out the provisions of this section.
Sec. 23. Minnesota Statutes 1988, section 161.321, is
amended by adding a subdivision to read:
Subd. 7. [NONCOMPETITIVE BIDS.] The commissioner is
encouraged to purchase from small targeted group businesses
designated under section 16B.19 when making purchases that are
not subject to competitive bidding procedures.
Sec. 24. Minnesota Statutes 1989 Supplement, section
161.3211, is amended to read:
161.3211 [REPORT BY COMMISSIONER OF TRANSPORTATION.]
The commissioner of transportation shall submit an annual
report pursuant to section 3.195, to the governor and the
legislature indicating the progress being made toward the
objectives and goals of section 161.321 during the preceding
fiscal year. This report shall include the following
information:
(a) the total dollar value and number of potential
set-aside awards identified during this period and the
percentage of total construction work this figure reflects;
(b) the number of small businesses identified and
responding to the set-aside program, the total dollar value and
number of set-aside contracts actually awarded to small
businesses with an approximate designation as to the total
number and value of set-aside contracts awarded to each small
business, and the total number of small businesses that were
awarded set-aside contracts;
(c) the total dollar value and number of set-aside
contracts awarded to economically disadvantaged small businesses
with an approximate designation as to the total number and value
of contracts awarded to each such small business, and the
percentages of the total construction work the figures of the
total dollar value and the number of contracts reflect;
(d) the number of contracts which were designated and set
aside pursuant to section 161.321, but which were not awarded to
a small business, the estimated total dollar value of these
awards, the lowest bid on each of these awards made by a small
business, and the price at which these contracts were awarded
pursuant to the normal procedures report to the commissioner of
administration on compliance with this section. The information
must be reported at the time and in the manner requested by the
commissioner.
Sec. 25. Minnesota Statutes 1989 Supplement, section
241.27, subdivision 2, is amended to read:
Subd. 2. [REVOLVING FUND; USE OF FUND.] There is
established in the department of corrections under the control
of the commissioner of corrections the Minnesota correctional
industries revolving fund to which shall be transferred the
revolving funds authorized in Minnesota Statutes 1978, sections
243.41, 243.85, clause (f), and any other industrial revolving
funds heretofore established at any state correctional facility
under the control of the commissioner of corrections. The
revolving fund established shall be used for the conduct of the
industrial and commercial activities now or hereafter
established at any state correctional facility, including but
not limited to the purchase of equipment, raw materials, the
payment of salaries, wages and other expenses necessary and
incident thereto. The purchase of materials and commodities for
resale are not subject to the competitive bidding procedures of
section 16B.07, but are subject to all other provisions of
chapter 16B. When practical, purchases must be made from
economically disadvantaged small targeted group businesses
designated under section 16B.19. Additionally, the expenses of
inmate vocational training and the inmate release fund may be
financed from the correctional industries revolving fund in an
amount to be determined by the commissioner. The proceeds and
income from all industrial and commercial activities conducted
at state correctional facilities shall be deposited in the
correctional industries revolving fund subject to disbursement
as hereinabove provided. The commissioner of corrections may
request that money in the fund be invested pursuant to section
11A.25; the proceeds from the investment not currently needed
shall be accounted for separately and credited to the fund.
Sec. 26. Minnesota Statutes 1989 Supplement, section
471.345, subdivision 8, is amended to read:
Subd. 8. [PROCUREMENT FROM ECONOMICALLY DISADVANTAGED
PERSONS.] For purposes of this subdivision, the following terms
shall have the meanings herein ascribed to them:
(a) "Economically disadvantaged Small targeted group
business" has the meaning given it in means businesses
designated under section 645.445 16B.19.
(b) "Business entity" means an entity organized for profit,
including an individual, partnership, corporation, joint
venture, association, or cooperative.
Nothing in this section shall be construed to prohibit any
municipality from adopting a resolution, rule, regulation, or
ordinance which on an annual basis designates and sets aside for
awarding to economically disadvantaged small targeted group
businesses a percentage of the value of its anticipated total
procurement of goods and services, including construction, and
which uses either a negotiated price or bid contract procedure
in the awarding of a procurement contract under a set-aside
program as allowed in this subdivision, provided that any award
based on a negotiated price shall not exceed by more than five
percent the municipality's estimated price for the goods and
services if they were purchased on the open market and not under
the set-aside program.
Sec. 27. Minnesota Statutes 1989 Supplement, section
473.142, is amended to read:
473.142 [SMALL BUSINESSES.]
(a) The metropolitan council and agencies specified in
section 473.143, subdivision 1, shall attempt to award at least
nine percent of the value of all procurement, other than
contracts under paragraph (c), to economically disadvantaged
small businesses. For purposes of this section, economically
disadvantaged small business has the meaning defined in section
645.445, clauses (3) to (5). In furtherance of this goal, the
council or an agency shall set aside a percentage of all
procurements for bidding only by these businesses. The council
or an agency shall award a five percent preference to
economically disadvantaged small businesses, as defined in
section 645.445, in the amount bid on procurements. At least 75
percent of the value of the procurements awarded to economically
disadvantaged small businesses must actually be performed by the
business to which the award was made or another economically
disadvantaged small business. An economically disadvantaged
small business that has been awarded more than three-tenths of
one percent of the value of the total anticipated procurements
for a fiscal year from the agency is disqualified from receiving
further preference advantages for that fiscal year from that
agency. An economically disadvantaged small business is not
eligible to participate in the bid preference established under
this subdivision under conditions specified in section 16B.22,
subdivision 1.
(b) The council and each agency specified in section
473.143, subdivision 1, as a condition of awarding procurements
for construction, consultant, professional, or technical service
contracts in excess of $200,000, shall attempt to assure that a
portion of the contract award to a prime contractor be
subcontracted to an economically disadvantaged small business,
or that a portion of the contract award be expended in
purchasing materials or supplies from an economically
disadvantaged small business. Subcontracting or purchasing of
supplies under this subdivision is not included in determining
achievement of goals under paragraph (a) or (c).
(c) The council and each agency specified in section
473.143, subdivision 1, shall attempt to award at least six
percent of the value of all procurements for consultant services
or professional or technical services to economically
disadvantaged small businesses.
(d) In implementing paragraphs (a) and (c), the council and
each agency specified in section 473.143, subdivision 1, shall
attempt to purchase a variety of goods and services from
different economically disadvantaged small businesses may award
up to a six percent preference in the amount bid for specified
goods or services to small targeted group businesses designated
under section 16B.19.
(b) The council and each agency specified in section
473.143, subdivision 1, may designate a purchase of goods or
services for award only to small targeted group businesses
designated under section 16B.19 if the council or agency
determines that at least three small targeted group businesses
are likely to bid.
(c) The council and each agency specified in section
473.143, subdivision 1, as a condition of awarding a
construction contract or approving a contract for consultant,
professional, or technical services, may set goals that require
the prime contractor to subcontract a portion of the contract to
small targeted group businesses designated under section 16B.19.
The council or agency must establish a procedure for granting
waivers from the subcontracting requirement when qualified small
targeted group businesses are not reasonably available. The
council or agency may establish financial incentives for prime
contractors who exceed the goals for use of subcontractors and
financial penalties for prime contractors who fail to meet goals
under this paragraph. The subcontracting requirements of this
paragraph do not apply to prime contractors who are small
targeted group businesses. At least 75 percent of the value of
the subcontracts awarded to small targeted group businesses
under this paragraph must be performed by the business to which
the subcontract is awarded or by another small targeted group
business.
(d) The council and each agency listed in section 473.143,
subdivision 1, are encouraged to purchase from small targeted
group businesses designated under section 16B.19 when making
purchases that are not subject to competitive bidding procedures.
(e) The council and each agency may adopt rules to
implement this section.
(f) Each council or agency contract must require the prime
contractor to pay any subcontractor within ten days of the prime
contractor's receipt of payment from the council or agency for
undisputed services provided by the subcontractor. The contract
must require the prime contractor to pay interest of 1-1/2
percent per month or any part of a month to the subcontractor on
any undisputed amount not paid on time to the subcontractor.
The minimum monthly interest penalty payment for an unpaid
balance of $100 or more is $10. For an unpaid balance of less
than $100, the prime contractor shall pay the actual penalty due
to the subcontractor. A subcontractor who prevails in a civil
action to collect interest penalties from a prime contractor
must be awarded its costs and disbursements, including attorney
fees, incurred in bringing the action.
(g) This section does not apply to procurement financed in
whole or in part with federal funds if the procurement is
subject to federal disadvantaged, minority, or women business
enterprise regulations. The council and each agency shall
report annually to the legislature commissioner of
administration on compliance with this subdivision section. The
reports must include the information specified in section 16B.21
that pertains to purchasing from economically disadvantaged
small businesses must be reported at the time and in the manner
requested by the commissioner.
Sec. 28. [STUDIES.]
(a) The commissioner of trade and economic development
shall evaluate the effectiveness of programs to provide working
capital to small businesses and the need for additional programs.
(b) The commissioner of administration shall review current
practice and study the extent to which public agencies need to
reserve retainage from progress payments on public contracts.
(c) The commissioner of administration shall review current
practices and study the extent to which public agencies need to
require security bonds on public contracts.
(d) The reviews and evaluations in this section must be
done by January 15, 1991.
Sec. 29. Laws 1989, chapter 352, section 25, is amended to
read:
Sec. 25. [REPEALER.]
(a) Minnesota Statutes 1988, section 137.31, subdivision 3,
is repealed.
(b) Laws 1984, chapter 654, article 2, section 49, is
repealed.
(c) Sections 1 and 22 are repealed on January 4, 1990.
(d) Minnesota Statutes 1988, section 473.406, is repealed.
(e) The amendments to Minnesota Statutes, made by sections
2 to 21, are repealed June 30, 1990, and the revisor shall
reinstate the stricken language and delete the new language in
those sections.
(f) Notwithstanding Minnesota Statutes, section 645.36,
section 25, paragraphs (a) and (d), are repealed June 30, 1990,
and Minnesota Statutes 1988, sections 137.31, subdivision 3; and
473.406, are revived on that date.
Sec. 30. [RULES.]
The commissioner of administration may adopt emergency
rules for purposes of implementing sections 3 to 9. For
purposes of certifying small targeted group businesses and small
businesses located in economically disadvantaged areas, the
commissioner of administration may use, without further
rulemaking, previous rules used to implement the program
governing socially or economically disadvantaged businesses. If
the commissioner uses those rules, the phrase "socially or
economically disadvantaged business" in those rules must be read
to refer to targeted group businesses and businesses located in
economically disadvantaged areas. The phrase "set-aside"
program in those rules must be read to refer to the programs
created in section 3.
Sec. 31. [REPEALER.]
Minnesota Statutes 1989 Supplement, sections 16B.189;
137.31, subdivision 3a; and 645.445, subdivision 5, are repealed.
Sec. 32. [EFFECTIVE DATE.]
Sections 1 to 28 and 31 are effective July 1, 1990, and
apply only to contracts for which notice of invitation to bid or
requests for proposals are issued after that date. Sections 29
and 30 are effective the day following final enactment. The
rulemaking authority granted to the commissioner of
administration in section 8, paragraph (c), is effective the day
following final enactment.
Presented to the governor April 26, 1990
Signed by the governor May 3, 1990, 5:55 p.m.
Official Publication of the State of Minnesota
Revisor of Statutes