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Minnesota Session Laws - 1998, Regular Session

Key: (1) language to be deleted (2) new language

                            CHAPTER 386-S.F.No. 726 
                  An act relating to state agencies; modifying 
                  procurement procedures; amending Minnesota Statutes 
                  1996, sections 3.225, subdivision 2; 3.732, 
                  subdivision 6; 3.922, subdivision 5; 3C.10, 
                  subdivision 3; 4A.04; 6.551; 11A.24, subdivision 4; 
                  12.221, subdivision 5; 15.054; 15.061; 16A.101; 
                  16A.85, subdivision 1; 16B.181; 17.1015; 41A.023; 
                  43A.23, subdivision 1; 44A.01, subdivision 1; 45.0291; 
                  84.025, subdivision 7; 84.026; 84.0845; 85A.02, 
                  subdivisions 3, 16, and 18; 103F.515, subdivision 3; 
                  116.03, subdivision 2; 116J.035, subdivision 1; 
                  116J.402; 116J.58, subdivision 2; 116J.68, subdivision 
                  2; 116J.966, subdivision 1; 124.14, subdivision 1; 
                  126.151, subdivision 2; 129C.10, subdivision 7; 
                  136A.06; 136A.16, subdivision 1; 136A.29, subdivision 
                  6; 136F.23; 136F.56, subdivision 5; 136F.581, 
                  subdivision 3; 136F.66; 136F.72, subdivision 3; 
                  136F.96; 137.35, subdivisions 1, 2, and 3; 144.0742; 
                  144.95, subdivision 5; 161.315, subdivision 4; 161.32, 
                  by adding subdivisions; 161.321, subdivisions 1, 2, 5, 
                  6, and 7; 161.41, subdivision 2; 179A.23; 198.35, 
                  subdivision 1; 216C.02, subdivision 1; 237.51, 
                  subdivision 5a; 241.0221, subdivision 6; 241.27, 
                  subdivision 2; 246.36; 246.57, subdivisions 1 and 6; 
                  256B.031, subdivision 1; 256B.04, subdivisions 14 and 
                  15; 298.2211, subdivision 4; 349A.06, subdivision 1; 
                  349A.07, subdivision 6; 352.03, subdivisions 6 and 16; 
                  354.06, subdivision 2a; 354.07, subdivision 7; 
                  356A.06, subdivision 7; 446A.12, subdivision 5; 
                  462A.18, subdivision 2; 471.345, subdivision 8; 
                  473.142; 473.556, subdivision 14; 480.09, subdivision 
                  1; and 626.90, subdivision 2; Minnesota Statutes 1997 
                  Supplement, sections 3.225, subdivision 1; 16A.15, 
                  subdivision 3; 16B.465, subdivision 7; 16E.07, 
                  subdivision 9; 17.03, subdivision 12; 41D.03, 
                  subdivision 7; 61B.21, subdivision 1; 85A.02, 
                  subdivision 5b; 121.1113, subdivision 2; 136A.40; 
                  138.35, subdivision 1b; 179A.03, subdivision 14; 
                  216D.03, subdivision 2; 241.277, subdivision 2; 
                  256B.19, subdivision 2a; 256D.03, subdivision 6; 
                  353.03, subdivision 3a; 363.073, subdivision 1; and 
                  626.91, subdivision 2; proposing coding for new law in 
                  Minnesota Statutes, chapters 16C; and 174; repealing 
                  Minnesota Statutes 1996, sections 16B.06; 16B.07; 
                  16B.08; 16B.09; 16B.101; 16B.102; 16B.103; 16B.123; 
                  16B.13; 16B.14; 16B.15; 16B.16; 16B.167; 16B.17; 
                  16B.175; 16B.18, subdivisions 1, 2, and 4; 16B.185; 
                  16B.19; 16B.20, subdivisions 1 and 3; 16B.21; 16B.22; 
                  16B.226; 16B.227; 16B.23; 16B.28; 16B.29; and 16B.89; 
                  Minnesota Statutes 1997 Supplement, sections 16B.18, 
                  subdivision 3; 16B.20, subdivision 2; and 16B.482. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
                                   ARTICLE 1 
                               PROCUREMENT REFORM 
           Section 1.  Minnesota Statutes 1996, section 15.054, is 
        amended to read: 
           15.054 [PUBLIC EMPLOYEES NOT TO PURCHASE MERCHANDISE FROM 
        GOVERNMENTAL AGENCIES; EXCEPTIONS; PENALTY.] 
           No officer or employee of the state or any of its political 
        subdivisions shall sell or procure for sale or possess or 
        control for sale to any other officer or employee of the state 
        or the subdivision, as appropriate, any property or materials 
        owned by the state or subdivision except pursuant to conditions 
        provided in this section.  Property or materials owned by the 
        state or a subdivision, except real property, and not needed for 
        public purposes, may be sold to an employee of the state or the 
        subdivision after reasonable public notice at a public auction 
        or by sealed bid if the employee is the highest responsible 
        bidder and response, if the employee is not directly involved in 
        the auction or process pertaining to the administration and 
        collection of sealed bid process responses.  Requirements for 
        reasonable public notice may be prescribed by other law or 
        ordinance so long as at least one week's published or posted 
        notice is specified.  A state An employee of the state or a 
        political subdivision may purchase no more than one motor 
        vehicle from the state in any 12-month period.  A person 
        violating the provisions of this section is guilty of a 
        misdemeanor.  This section shall not apply to the sale of 
        property or materials acquired or produced by the state or 
        subdivision for sale to the general public in the ordinary 
        course of business.  Nothing in this section shall prohibit an 
        employee of the state or a political subdivision from selling or 
        possessing for sale public property if the sale or possession 
        for sale is in the ordinary course of business or normal course 
        of the employee's duties. 
           Sec. 2.  Minnesota Statutes 1996, section 16B.181, is 
        amended to read: 
           16B.181 [PURCHASES FROM CORRECTIONS INDUSTRIES.] 
           Subdivision 1.  [DEFINITIONS.] As used in this section: 
           (1) "public entity" or "public entities" includes the state 
        and an agency, department, or institution of the state, any 
        governmental unit as defined in section 471.59, the state 
        legislative and judicial branches, and state colleges and 
        universities; and 
           (2) "items" includes articles, products, supplies, and 
        services. 
           Subd. 2.  [PUBLIC ENTITIES; PURCHASES FROM CORRECTIONS 
        INDUSTRIES.] (a) The commissioner of corrections, in 
        consultation with the commissioner of administration, shall 
        prepare updated lists of the items available for purchase from 
        department of corrections industries and annually forward a copy 
        of the most recent list to all public entities within the 
        state.  A public entity that is supported in whole or in part 
        with funds from the state treasury shall may purchase items 
        directly from corrections industries those items that are 
        comparable in price, quality, and delivery time to items 
        available from other vendors.  An item is comparable in price if 
        the price is no more than five percent higher than the lowest 
        bid price.  The bid solicitation process is not required for 
        these purchases. 
           (b) The commissioner of administration shall develop a 
        contract pursuant to section 16B.09, or contracts to enable 
        public entities to purchase items directly from corrections 
        industries.  The commissioner of administration, in consultation 
        with the commissioner of corrections, shall determine the fair 
        market price for listed items.  In determining fair market 
        price, the commissioner shall use competitive bidding, or shall 
        consider open bid prices in previous years for similar products 
        which meet the needs of the public entity.  The commissioner of 
        administration shall require that all requests for bids or 
        proposals, for items provided by corrections industries, be 
        forwarded to the commissioner of corrections to enable 
        corrections industries to submit bids.  The commissioner of 
        corrections shall consult with the commissioner of 
        administration prior to introducing new products to the state 
        agency market. 
           (c) No public entity may evade the intent of this section 
        by adopting slight variations in specifications, when Minnesota 
        corrections industry items meet the reasonable needs and 
        specifications of the public entity. 
           (d) As part of its ongoing audit process, the legislative 
        auditor is requested to ensure that state agencies are in 
        compliance with this section.  The commissioners of 
        administration and corrections shall develop annual performance 
        measures outlining goals to maximize inmate work program 
        participation.  The commissioners of administration and 
        corrections shall appoint cochairs for a task force whose 
        purpose is to determine additional methods to achieve the 
        performance goals for public entity purchasing.  The task force 
        shall include representatives from the Minnesota house of 
        representatives, Minnesota senate, the Minnesota state colleges 
        and universities, University of Minnesota, Minnesota League of 
        Cities, Minnesota Association of Counties, and administrators 
        with purchasing responsibilities from the Minnesota state 
        departments of corrections, public safety, finance, 
        transportation, natural resources, human services, health, and 
        economic security. 
           (e) The commissioners of administration and corrections 
        shall appoint a joint task force to explore additional methods 
        that support the philosophy of providing a substantial market 
        opportunity to correctional industries that maximizes inmate 
        work opportunities.  The task force shall develop a plan and 
        prepare a set of criteria with which to evaluate the 
        effectiveness of the recommendations and initiatives in the 
        plan.  By February 15, 1997, the task force shall report to the 
        chairs of the senate and house of representatives committees 
        having jurisdiction over criminal justice funding.  If 
        performance goals for public entity purchasing are not achieved 
        in two consecutive fiscal years, public entities shall purchase 
        items available from corrections industries.  The commissioner 
        of administration shall be responsible for notifying public 
        entities of this requirement. 
           Sec. 3.  [16C.02] [DEFINITIONS.] 
           Subdivision 1.  [APPLICABILITY.] For purposes of this 
        chapter, the following terms have the meanings given them, 
        unless the context clearly indicates otherwise.  
           Subd. 2.  [AGENCY.] "Agency" means any state officer, 
        employee, board, commission, authority, department, entity, or 
        organization of the executive branch of state government.  
           Unless specifically provided elsewhere in this chapter, 
        agency does not include the Minnesota state colleges and 
        universities. 
           Subd. 3.  [AWARD.] "Award" means a commissioner's written 
        acceptance of a bid or proposal to provide goods, services, or 
        utilities. 
           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. 
           Subd. 5.  [COMMISSIONER.] "Commissioner" means the 
        commissioner of administration. 
           Subd. 6.  [CONTRACT.] "Contract" means any written 
        instrument or electronic document containing the elements of 
        offer, acceptance, and consideration to which an agency is a 
        party. 
           Subd. 7.  [FORMAL SOLICITATION.] "Formal solicitation" 
        means a solicitation which requires a sealed response. 
           Subd. 8.  [GOODS.] "Goods" means all types of personal 
        property including commodities, materials, supplies, and 
        equipment. 
           Subd. 9.  [INFORMAL SOLICITATION.] "Informal solicitation" 
        means a solicitation which does not require a sealed response. 
           Subd. 10.  [LEASE.] "Lease" means a contract conveying from 
        one entity to another the use of real or personal property for a 
        designated period of time in return for payment or other 
        consideration. 
           Subd. 11.  [REQUEST FOR BID OR RFB.] "Request for bid" or 
        "RFB" means a solicitation in which the terms, conditions, and 
        specifications are described and responses are not subject to 
        negotiation. 
           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 subject to 
        negotiation. 
           Subd. 13.  [RESIDENT VENDOR.] "Resident vendor" means a 
        person, firm, or corporation authorized to conduct business in 
        the state of Minnesota on the date a solicitation for a contract 
        is first advertised or announced.  It includes a foreign 
        corporation duly authorized to engage in business in Minnesota.  
           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," "bids," 
        "quotes," or "proposals." 
           Subd. 15.  [SEALED.] "Sealed" means a method determined by 
        the commissioner to prevent the contents being revealed or known 
        before the deadline for submission of responses. 
           Subd. 16.  [SERVICE CONTRACT.] "Service contract" means a 
        contract for any nonprofessional or technical services. 
           Subd. 17.  [SERVICES.] "Services" means, unless otherwise 
        indicated, both professional or technical services and service 
        performed under a service contract. 
           Subd. 18.  [SINGLE SOURCE.] "Single source" means an 
        acquisition where, after a search, only one supplier is 
        determined to be reasonably available for the required product, 
        service, or construction item. 
           Subd. 19.  [SOLICITATION.] "Solicitation" means the process 
        used to communicate procurement requirements and to request 
        responses from interested vendors.  A solicitation may be, but 
        is not limited to, a request for bid and request for proposal. 
           Sec. 4.  [16C.03] [COMMISSIONER'S AUTHORITY; POWERS AND 
        DUTIES.] 
           Subdivision 1.  [SCOPE.] The commissioner's authority in 
        this section applies to an agency and is subject to other 
        provisions of this chapter and chapter 16B.  Unless otherwise 
        provided, the provisions in this chapter and chapter 16B do not 
        apply to the Minnesota state colleges and universities. 
           Subd. 2.  [RULEMAKING AUTHORITY.] Subject to chapter 14, 
        the commissioner may adopt rules, consistent with this chapter 
        and chapter 16B, relating to the following topics: 
           (1) solicitations and responses to solicitations, bid 
        security, vendor errors, opening of responses, award of 
        contracts, tied bids, and award protest process; 
           (2) contract performance and failure to perform; 
           (3) authority to debar or suspend vendors, and 
        reinstatement of vendors; 
           (4) contract cancellation; and 
           (5) procurement from rehabilitation facilities. 
           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, or other methods 
        provided by law, unless a section of law requires a particular 
        method of acquisition to be used.  The commissioner shall make 
        all decisions regarding acquisition activities.  The 
        determination of the acquisition method and all decisions 
        involved in the acquisition process, unless otherwise provided 
        for by law, shall be based on best value which includes an 
        evaluation of price and may include other considerations 
        including, but not limited to, environmental considerations, 
        quality, and vendor performance.  A best value determination 
        must be based on the evaluation criteria detailed in the 
        solicitation document.  If criteria other than price are used, 
        the solicitation document must state the relative importance of 
        price and other factors.  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. 
           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. 
           Subd. 5.  [AMENDMENTS, CANCELLATIONS, AND APPEALS.] The 
        commissioner shall, in addition to the duties set forth in 
        subdivisions 3 and 4, make all decisions regarding amendments, 
        cancellations, and appeals of all agency acquisition activities 
        unless the duties are delegated pursuant to this section. 
           Subd. 6.  [LEASE AND INSTALLMENT PURCHASES.] The 
        commissioner is authorized to enter into lease purchases or 
        installment purchases for periods not exceeding the anticipated 
        useful life of the items acquired unless otherwise prohibited by 
        law. 
           Subd. 7.  [LEASE, RENTAL, AND INSTALLMENT AGREEMENTS.] The 
        commissioner is authorized to enter into lease, lease purchase, 
        rental, or installment agreements for the use or acquisition, 
        whichever is applicable, of real or personal property. 
           Subd. 8.  [POLICY AND PROCEDURES.] The commissioner is 
        authorized to issue policies, procedures, and standards 
        applicable to all acquisition activities by and for agencies. 
           Subd. 9.  [EMPLOYEE PURCHASING.] The commissioner is 
        authorized to enter into contracts under which a vendor agrees 
        to sell computer equipment and related products to state 
        employees, for their own use related to work, at contract prices.
        Employees may make only one purchase under this subdivision.  
        Under no circumstances shall the state be liable for purchases 
        made under this subdivision.  The provisions of section 43A.38, 
        subdivisions 4 and 5, clause (a), do not apply to this 
        subdivision. 
           Subd. 10.  [COOPERATIVE PURCHASING.] The commissioner is 
        authorized to enter into a cooperative purchasing agreement for 
        the provision of goods, services, and utilities with one or more 
        other states or governmental units, as described in section 
        471.59, subdivision 1.  The commissioner is authorized to enter 
        into cooperative purchasing agreements for the purchase of 
        goods, services, and utilities with health care facilities that 
        are required to provide indigent care. 
           Subd. 11.  [SURPLUS PROPERTY.] The commissioner is 
        authorized to purchase, accept, transfer, warehouse, sell, 
        distribute, or dispose of surplus property in accordance with 
        state and federal rules and regulations.  The commissioner may 
        charge a fee to cover any expenses incurred in connection with 
        any of these acts. 
           Subd. 12.  [CENTRAL DISTRIBUTION CENTER.] The commissioner 
        is authorized to provide and manage a central distribution 
        center for federal and state surplus personal property, as 
        defined in section 16C.23, and may provide and manage a 
        warehouse facility. 
           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. 
           Subd. 14.  [PROVISION OF GOODS, SERVICES, AND 
        UTILITIES.] The commissioner has the authority to provide goods, 
        services, and utilities under this chapter to state legislative 
        and judicial branch agencies, political subdivisions, the 
        Minnesota state colleges and universities, the University of 
        Minnesota, and federal government agencies. 
           Subd. 15.  [REIMBURSEMENT FOR GOODS, SERVICES, AND 
        UTILITIES.] The commissioner is authorized to charge a fee to 
        cover costs and expenses associated with operating a revolving 
        fund or an enterprise fund to acquire goods, services, and 
        utilities.  The fees are appropriated to the commissioner to 
        administer and manage the programs and facilities covered under 
        this section. 
           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. 
           Sec. 5.  [16C.04] [ETHICAL PRACTICES AND CONFLICT OF 
        INTEREST.] 
           Subdivision 1.  [DUTY.] An employee of the executive branch 
        involved directly or indirectly in the acquisition process, at 
        any level, is subject to the code of ethics in section 43A.38. 
           Subd. 2.  [CONFLICT OF INTEREST POLICY DEVELOPMENT.] (a) 
        The commissioner must develop policies regarding code of ethics 
        and conflict of interest designed to prevent conflicts of 
        interest for employees involved in the acquisition of goods, 
        services, and utilities.  The policies must apply to employees 
        who are directly or indirectly involved in the acquisition of 
        goods, services, and utilities, developing requests for 
        proposals, evaluating bids or proposals, awarding the contract, 
        selecting the final vendor, drafting and entering into 
        contracts, evaluating performance under these contracts, and 
        authorizing payments under the contract.  
           (b) The policies must contain a process for making 
        employees aware of policy and laws relating to conflict of 
        interest, and for training employees on how to avoid and deal 
        with potential conflicts.  
           (c) The policies must contain a process under which an 
        employee who has a conflict of interest or a potential conflict 
        of interest must disclose the matter, and a process under which 
        work on the contract may be assigned to another employee if 
        possible.  
           Sec. 6.  [16C.05] [CONTRACT MANAGEMENT; VALIDITY AND 
        REVIEW.] 
           Subdivision 1.  [AGENCY COOPERATION.] Agencies shall fully 
        cooperate with the commissioner in the management and review of 
        state contracts. 
           Subd. 2.  [CREATION AND VALIDITY OF CONTRACTS.] (a) A 
        contract is not valid and the state is not bound by 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; 
           (3) it has been approved by the attorney general or a 
        delegate as to form and execution; 
           (4) the accounting system shows an obligation in an expense 
        budget or encumbrance for the amount of the contract liability; 
        and 
           (5) the combined contract and amendments shall not exceed 
        five years, 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) Grants, interagency agreements, purchase 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. 
           (c) A fully executed copy of every contract must be kept on 
        file at the contracting agency. 
           Subd. 3.  [EXCEPTION.] The requirements of subdivision 2 do 
        not apply to contracts of the department of economic security 
        distributing state and federal funds for the purpose of 
        subcontracting the provision of program services to eligible 
        recipients.  For these contracts, the commissioner of economic 
        security is authorized to directly enter into agency contracts 
        and encumber available funds.  For contracts distributing state 
        or federal funds pursuant to the federal Economic Dislocation 
        and Worker Adjustment Assistance Act, United States Code, title 
        29, section 1651 et seq., or sections 268.9771, 268.978, 
        268.9781, and 268.9782, the commissioner of economic security is 
        authorized to directly enter into agency contracts with approval 
        of the workforce development council and encumber available 
        funds to ensure a rapid response to the needs of dislocated 
        workers.  The commissioner of economic security shall adopt 
        internal procedures to administer and monitor funds distributed 
        under these contracts.  This exception also applies to any 
        contracts entered into by the commissioner of children, 
        families, and learning that were previously entered into by the 
        commissioner of economic security. 
           Subd. 4.  [CONTRACT ADMINISTRATION.] A contracting agency 
        shall diligently administer and monitor any contract it has 
        entered into, pursuant to a delegation of duties from the 
        commissioner.  The commissioner may require an agency to report 
        to the commissioner at any time on the status of any contracts 
        to which the agency is a party. 
           Subd. 5.  [SUBJECT TO AUDIT.] A contract or any 
        pass-through disbursement of public funds to a vendor of goods 
        or services or a grantee made by or under the supervision of the 
        commissioner or any county or unit of local government must 
        include, expressed or implied, an audit clause that provides 
        that the books, records, documents, and accounting procedures 
        and practices of the vendor or other party, that are relevant to 
        the contract or transaction, are subject to examination by the 
        contracting agency and either the legislative auditor or the 
        state auditor, as appropriate, for a minimum of six years.  If 
        the contracting agency is a local unit of government, and the 
        governing body of the local unit of government requests that the 
        state auditor examine the books, records, documents, and 
        accounting procedures and practices of the vendor or other party 
        pursuant to this subdivision, the contracting agency shall be 
        liable for the cost of the examination.  If the contracting 
        agency is a local unit of government, and the grantee, vendor, 
        or other party requests that the state auditor examine all 
        books, records, documents, and accounting procedures and 
        practices related to the contract, the grantee, vendor, or other 
        party that requested the examination shall be liable for the 
        cost of the examination.  An agency contract made for purchase, 
        lease, or license of software and data from the state is not 
        required to contain this audit clause. 
           Subd. 6.  [AUTHORITY OF ATTORNEY GENERAL.] The attorney 
        general may pursue remedies available by law to avoid the 
        obligation of an agency to pay under a contract or to recover 
        payments made if services performed or goods received under the 
        contract are so unsatisfactory, incomplete, or inconsistent that 
        payment would involve unjust enrichment.  The contrary opinion 
        of the contracting agency does not affect the power of the 
        attorney general under this subdivision. 
           Subd. 7.  [CONTRACTS WITH INDIAN TRIBES AND 
        BANDS.] Notwithstanding any other law, an agency may not require 
        an Indian tribe or band to deny its sovereignty as a requirement 
        or condition of a contract with an agency. 
           Sec. 7.  [16C.06] [ACQUISITIONS.] 
           Subdivision 1.  [PUBLICATION REQUIREMENTS.] Notices of 
        solicitations for acquisitions estimated to be more than $25,000 
        must be publicized in a manner designated by the commissioner. 
           Subd. 2.  [SOLICITATION PROCESS.] (a) A formal solicitation 
        must be used to acquire all goods, service contracts, and 
        utilities estimated at or more than $25,000 unless otherwise 
        provided for.  All formal responses must be sealed when they are 
        received and must be opened in public at the hour stated in the 
        solicitation.  Formal responses must be authenticated by the 
        responder in a manner specified by the commissioner.  
           (b) An informal solicitation may be used to acquire all 
        goods, service contracts, and utilities that are estimated at 
        less than $25,000.  The number of vendors required to receive 
        solicitations may be determined by the commissioner.  Informal 
        responses must be authenticated by the responder in a manner 
        specified by the commissioner. 
           Subd. 3.  [INFORMATION IN BIDS AND PROPOSALS.] (a) Only the 
        name of the vendor and dollar amounts specified in a response to 
        a request for bids shall be read at the time of opening.  Only 
        the name of the responding vendors to all requests for proposals 
        shall be read at the time of opening.  All other information 
        contained in a vendor's response to a bid is classified as 
        nonpublic data, as defined in section 13.02, and remains 
        nonpublic data until completion of the selection process.  All 
        other information contained in a vendor's response to a request 
        for proposal, other than the name of the vendor, is classified 
        as nonpublic data, as defined in section 13.02, and remains 
        nonpublic data until the completion of the evaluation process.  
           (b) All responses are public information at the time of the 
        award unless otherwise provided for.  All responses and 
        documents pertaining to the final award of an acquisition must 
        be retained and made a part of a permanent file or record and 
        remain open to public inspection, after award, unless otherwise 
        provided for by law. 
           Subd. 4.  [MULTIPLE AWARDS.] The commissioner may award a 
        contract to more than one vendor if, in the opinion of the 
        commissioner, it is in the best interest of the state. 
           Subd. 5.  [STATE AS RESPONDER.] The head of an agency, in 
        consultation with the requesting agency and the commissioner, 
        may respond to a solicitation or request if the goods and 
        services meet the needs of the requesting agency and provide the 
        state with the best value.  When an agency responds to a 
        solicitation, all work product relating to the response is 
        nonpublic data as defined in section 13.02, and shall become 
        public information in accordance with subdivision 3. 
           Subd. 6.  [AWARDS.] Awards must 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.  If criteria 
        other than price are used, the solicitation document must state 
        the relative importance of price and other factors.  
           Subd. 7.  [OTHER STATES WITH RESIDENT 
        PREFERENCE.] Acquisition of goods and services must be awarded 
        according to the provisions of this chapter except that a 
        resident vendor shall be allowed a preference over a nonresident 
        vendor from a state that gives or requires a preference to 
        vendors from that state.  The preference shall be equal to the 
        preference given or required by the state of the nonresident 
        vendor.  
           Subd. 8.  [FEDERALLY FUNDED PROJECTS EXEMPT.] Subdivision 7 
        does not apply to a contract for any project in which federal 
        funds are expended. 
           Subd. 9.  [REJECTION.] At the discretion of the 
        commissioner, any or all responses may be rejected if it is 
        determined to be in the best interest of the state. 
           Subd. 10.  [PREFERENCES NOT CUMULATIVE.] The preferences 
        provided for under subdivision 7 and sections 16B.121 and 16C.16 
        are not cumulative.  The total percentage of preference granted 
        on a contract may not exceed the highest percentage of 
        preference allowed for that contract under any one of these 
        statutory sections. 
           Sec. 8.  [16C.07] [EMPLOYEE SKILLS INVENTORY.] 
           The commissioner of employee relations shall develop a 
        directory of services that state agencies commonly provide that 
        are professional or technical in nature.  
           Before an agency may seek approval of a professional or 
        technical services contract valued at a total cost in excess of 
        $25,000, it must certify to the commissioner that it has 
        publicized the contract by posting notice at appropriate 
        worksites within agencies and has made reasonable efforts to 
        determine that no state employee or agency, including an 
        employee or agency outside the contracting agency, is able and 
        available to perform the required services.  When possible, this 
        posting should be done electronically.  
           Sec. 9.  [16C.08] [PROFESSIONAL OR TECHNICAL SERVICES.] 
           Subdivision 1.  [DEFINITION.] For the purposes of this 
        section, "professional or technical services" means services 
        that are intellectual in character, including consultation, 
        analysis, evaluation, prediction, planning, programming, or 
        recommendation, and result in the production of a report or the 
        completion of a task.  Professional or technical contracts do 
        not include the provision of supplies or materials except by the 
        approval of the commissioner or except as incidental to the 
        provision of professional or technical services.  
           Subd. 2.  [DUTIES OF CONTRACTING AGENCY.] Before an agency 
        may seek approval of a professional or technical services 
        contract valued in excess of $5,000, it must certify to the 
        commissioner 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) the contractor has certified that the product of the 
        services will be original in character; 
           (4) reasonable efforts were made to publicize the 
        availability of the contract to the public; 
           (5) the agency has received, reviewed, and accepted a 
        detailed work plan from the contractor for performance under the 
        contract, if applicable; 
           (6) the agency has developed, and fully intends to 
        implement, a written plan providing for the assignment of 
        specific agency personnel to 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; and 
           (7) the agency will not allow the contractor to begin work 
        before funds are fully encumbered.  
           Subd. 3.  [PROCEDURE FOR PROFESSIONAL OR TECHNICAL SERVICES 
        CONTRACTS.] Before approving a proposed contract for 
        professional or technical services, the commissioner must 
        determine, at least, that: 
           (1) all provisions of subdivision 2 and section 16C.16 have 
        been verified or complied with; 
           (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) no agency has previously performed or contracted for 
        the performance of tasks which would be substantially duplicated 
        under the proposed contract; 
           (6) the contracting agency has specified a satisfactory 
        method of evaluating and using the results of the work to be 
        performed; and 
           (7) the combined contract and amendments will not exceed 
        five years, 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. 
           Subd. 4.  [REPORTS.] (a) The commissioner shall submit to 
        the governor, the chairs of the house ways and means and senate 
        finance committees, and the legislative reference library a 
        yearly listing of all contracts for professional or technical 
        services executed.  The report must identify the contractor, 
        contract amount, duration, and services to be provided.  The 
        commissioner shall also issue yearly reports summarizing the 
        contract review activities of the department by fiscal year. 
           (b) The fiscal year report must be submitted by September 1 
        of each year and must: 
           (1) be sorted by agency and by contractor; 
           (2) show the aggregate value of contracts issued by each 
        agency and issued to each contractor; 
           (3) distinguish between contracts that are being issued for 
        the first time and contracts that are being extended; 
           (4) state the termination date of each contract; and 
           (5) identify services by commodity code, including topics 
        such as contracts for training, contracts for research and 
        opinions, and contracts for computer systems. 
           (c) Within 30 days of final completion of a contract over 
        $40,000 covered by this subdivision, the head of the agency 
        entering into the contract must submit a one-page report to the 
        commissioner who must submit a copy to the legislative reference 
        library.  The report must:  
           (1) summarize the purpose of the contract, including why it 
        was necessary to enter into a contract; 
           (2) state the amount spent on the contract; and 
           (3) explain why this amount was a cost-effective way to 
        enable the agency to provide its services or products better or 
        more efficiently.  
           Subd. 5.  [CONTRACT TERMS.] (a) A professional or technical 
        services contract must by its terms permit the commissioner to 
        unilaterally terminate the contract prior to completion, upon 
        payment of just compensation, if the commissioner determines 
        that further performance under the contract would not serve 
        agency purposes. 
           (b) The terms of a contract must provide that no more than 
        90 percent of the amount due under the contract may be paid 
        until the final product has been reviewed by the head of the 
        agency entering into the contract and the head of the agency has 
        certified that the contractor has satisfactorily fulfilled the 
        terms of the contract, unless specifically excluded in writing 
        by the commissioner.  
           Subd. 6.  [FILING COPY.] If the final product of the 
        contract is a written report, a copy must be filed with the 
        legislative reference library. 
           Subd. 7.  [EXCLUSIONS.] This section does not apply to 
        contracts with individuals or organizations for administration 
        of employee pension plans authorized under chapter 354B or 354C. 
           Sec. 10.  [16C.09] [PROCEDURE FOR SERVICE CONTRACTS.] 
           Before entering into or approving a service contract, 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, 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. 
        For purposes of clause (1), employees are available if qualified 
        and: 
           (i) are already doing the work in question; or 
           (ii) 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. 
           Sec. 11.  [16C.10] [EXCEPTIONS TO THE SOLICITATION 
        PROCESS.] 
           Subdivision 1.  [SINGLE SOURCE.] The solicitation process 
        described in this chapter is not required when there is clearly 
        and legitimately only a single source for the goods and services 
        and the commissioner determines that the price has been fairly 
        and reasonably established. 
           Subd. 2.  [EMERGENCY ACQUISITION.] (a) For the purpose of 
        this subdivision, "emergency" means a threat to public health, 
        welfare, or safety that threatens the functioning of government, 
        the protection of property, or the health or safety of people.  
           (b) The solicitation process described in this chapter is 
        not required in emergencies.  In emergencies, the commissioner 
        may make any purchases necessary for the repair, rehabilitation, 
        and improvement of a state-owned structure or may authorize an 
        agency to do so and may purchase, or may authorize an agency to 
        purchase, goods, services, or utility services directly for 
        immediate use. 
           Subd. 3.  [FEDERAL AGENCY PRICE SCHEDULES.] Notwithstanding 
        anything in this chapter to the contrary, the commissioner may, 
        instead of soliciting bids, contract for purchases with 
        suppliers who have published schedules of prices effective for 
        sales to any federal agency of the United States.  These 
        contracts may be entered into, regardless of the amount of the 
        purchase price, if the commissioner considers them advantageous 
        and if the purchase price of all the commodities purchased under 
        the contract do not exceed the price specified by the schedule. 
           Subd. 4.  [COOPERATIVE AGREEMENTS.] The solicitation 
        process described in this chapter is not required for 
        cooperative agreements.  The commissioner may enter into 
        contracts or accept prices effective for sales to any 
        governmental unit as defined in section 471.59, through a 
        cooperative agreement as defined in section 471.59. 
           Subd. 5.  [SPECIFIC PURCHASES.] The solicitation process 
        described in this chapter is not required for acquisition of the 
        following: 
           (1) merchandise for resale purchased under policies 
        determined by the commissioner; 
           (2) farm and garden products which, as determined by the 
        commissioner, may be purchased at the prevailing market price on 
        the date of sale; 
           (3) goods and services from the Minnesota correctional 
        facilities; 
           (4) goods and services from rehabilitation facilities and 
        sheltered workshops that are certified by the commissioner of 
        economic security; 
           (5) goods and services for use by a community-based 
        residential facility operated by the commissioner of human 
        services; 
           (6) goods purchased at auction or when submitting a sealed 
        bid at auction provided that before authorizing such an action, 
        the commissioner consult with the requesting agency to determine 
        a fair and reasonable value for the goods considering factors 
        including, but not limited to, costs associated with submitting 
        a bid, travel, transportation, and storage.  This fair and 
        reasonable value must represent the limit of the state's bid; 
        and 
           (7) utility services where no competition exists or where 
        rates are fixed by law or ordinance. 
           Subd. 6.  [EXPENDITURES UNDER SPECIFIED AMOUNTS.] The 
        solicitation process described in this chapter is not required 
        for: 
           (1) acquisition of goods or services, other than 
        professional or technical services, in an amount of $2,500 or 
        less; or 
           (2) acquisition of professional or technical services in an 
        amount of $5,000 or less, provided the requirements of section 
        16C.08, subdivisions 3 to 6, are met. 
           Sec. 12.  [16C.11] [COOPERATIVE PURCHASING VENTURE; 
        PURCHASING REVOLVING FUND.] 
           The commissioner may enter into joint or cooperative 
        purchasing agreements with any entity that is authorized under 
        section 471.59 to do so.  The cooperative purchasing venture 
        revolving fund is a separate account in the state treasury.  The 
        commissioner may charge a fee to cover the commissioner's 
        administrative expenses to governmental units that have joint or 
        cooperative purchasing agreements with the state under section 
        471.59.  The fees collected must be deposited in the revolving 
        fund established by this section.  Money in the fund is 
        appropriated to the commissioner to administer the programs and 
        services covered by this chapter. 
           Sec. 13.  [16C.12] [AGRICULTURAL FOOD PRODUCTS GROWN IN 
        STATE.] 
           The commissioner shall encourage and make a reasonable 
        attempt to identify and purchase food products that are grown in 
        the state.  
           Sec. 14.  [16C.13] [CERTAIN VEHICLES.] 
           Upon the written request of the commissioner of public 
        safety, motor vehicles for use by investigative and undercover 
        agents of the department of public safety must be purchased by 
        the brand, make, and model specified by the agency. 
           Sec. 15.  [16C.14] [ENERGY EFFICIENCY INSTALLMENT 
        PURCHASES.] 
           Subdivision 1.  [CONTRACT CONDITIONS.] The commissioner may 
        contract to purchase by installment payments capital or other 
        equipment or services intended to improve the energy efficiency 
        of a state building or facility if: 
           (1) the term of the contract does not exceed ten years, 
        with not more than a ten-year payback; 
           (2) the entire cost of the contract is a percentage of the 
        resultant savings in energy costs only.  "Savings in energy cost"
        means a comparison of energy cost and energy usage under the 
        precontract conditions, including reasonable projections of 
        energy cost and usage if no change is made to the precontract 
        conditions, against energy cost and usage with the changes made 
        under the contract.  If it is impractical to directly measure 
        energy cost and/or energy usage, reasonable engineering 
        estimates may be substituted for measured results; 
           (3) the contract for purchase must be completed using a 
        solicitation; 
           (4) the commissioner has determined that the contract 
        vendor is a responsible vendor; 
           (5) the contract vendor can finance or obtain financing for 
        the performance of the contract without state assistance or 
        guarantee; and 
           (6) the state may unilaterally cancel the agreement if the 
        legislature fails to appropriate funds to continue the contract 
        or if the contractor at any time during the term of the contract 
        fails to perform its contractual obligations, including failure 
        to deliver or install equipment or materials, failure to replace 
        faulty equipment or materials in a timely fashion, and failure 
        to maintain the equipment as agreed in the contract. 
           Subd. 2.  [ENERGY APPROPRIATION.] The commissioner may 
        spend money appropriated for energy costs in payment of a 
        contract under this section.  
           Subd. 3.  [ENERGY CONSERVATION INCENTIVES.] Notwithstanding 
        any other law to the contrary, fuel cost savings resulting from 
        energy conservation actions shall be available at the managerial 
        level at which the actions took place for expenditure for other 
        purposes within the biennium in which the actions occur or in 
        the case of a shared savings agreement for the contract period 
        of the shared savings agreement.  For purposes of this 
        subdivision "shared savings agreement" means a contract meeting 
        the terms and conditions of subdivision 1.  
           Subd. 4.  [ENERGY COSTS.] The entire cost of an energy 
        efficiency installment purchase contract must be a percentage of 
        the resultant savings in energy costs.  Neither the state nor 
        any agency is liable to make payments on the contract except to 
        the extent that there are savings in energy costs that must be 
        shared with other parties to the contract.  
           Sec. 16.  [16C.15] [SHELTERED WORKSHOPS AND SERVICES WORK 
        ACTIVITY PROGRAMS.] 
           The commissioner, in consultation with the commissioner of 
        economic security, shall prepare a list containing products and 
        services of state-certified rehabilitation facilities, sheltered 
        workshops, and work activity programs for acquisition by state 
        agencies and institutions. 
           Sec. 17.  [16C.16] [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 
        designation 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 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.  
           Subd. 2.  [SMALL BUSINESS.] The commissioner shall adopt 
        rules defining "small business" for purposes of sections 16C.16 
        to 16C.21, 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.  
           Subd. 3.  [PROFESSIONAL OR TECHNICAL PROCUREMENTS.] Every 
        state agency must for each fiscal year designate for awarding to 
        small businesses at least 25 percent of the value of anticipated 
        procurements of that agency for professional or technical 
        services.  The set-aside under this subdivision is in addition 
        to that provided by subdivision 1, but must otherwise comply 
        with section 16C.08. 
           Subd. 4.  [TARGETED GROUP PURCHASING.] The commissioner 
        shall establish a program for purchasing goods and services 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. 
           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 services 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. 6.  [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 businesses or small targeted 
        group businesses if the commissioner determines that at least 
        three small businesses or small targeted group businesses are 
        likely to bid. 
           (c) 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.  The subcontracting requirements of this 
        paragraph do not apply to prime contractors who are small 
        businesses or small targeted group businesses. 
           Subd. 7.  [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 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 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. 8.  [SURETY BONDS.] 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. 9.  [DETERMINATION OF ABILITY TO PERFORM.] Before 
        making an award under the preference programs established in 
        subdivisions 4 to 7, the commissioner shall evaluate whether the 
        small business or small targeted group 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. 10.  [LIMITS.] At least 75 percent of the value of 
        the subcontracts awarded to small businesses or small targeted 
        group businesses under subdivision 6, paragraph (c), must be 
        performed by the business to which the subcontract is awarded or 
        by another small business or small targeted group business.  
           Subd. 11.  [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 or small targeted group 
        businesses.  In the event of conflict with other rules, section 
        16C.15 and rules adopted under it govern, if section 16C.15 
        applies.  If it does not apply, sections 16C.16 to 16C.21 and 
        rules adopted under those sections govern.  
           Subd. 12.  [APPLICABILITY.] This section does not apply to 
        construction contracts or contracts for professional or 
        technical services under section 16C.08 that are financed in 
        whole or in part with federal funds and that are subject to 
        federal disadvantaged business enterprise regulations. 
           Sec. 18.  [16C.17] [ENCOURAGEMENT OF PARTICIPATION; 
        ADVISORY COUNCIL.] 
           Subdivision 1.  [COMMISSIONER OF ADMINISTRATION.] The 
        commissioners of administration and trade and economic 
        development shall publicize the provisions of the purchasing 
        programs in sections 16C.16 to 16C.21, attempt to locate small 
        businesses or small targeted group businesses able to perform 
        under the programs, and encourage participation through 
        education, technical assistance, mentoring, and other means.  
        When the commissioner of administration determines that a small 
        business or small targeted group business is unable to perform 
        under a program established in sections 16C.16 to 16C.21, the 
        commissioner shall inform the commissioner of trade and economic 
        development who shall assist the small business or small 
        targeted group business in attempting to remedy the causes of 
        the inability to perform the award.  In assisting the small 
        business or small targeted group 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.  
           Subd. 2.  [ADVISORY COUNCIL.] The small business 
        procurement advisory 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. 
           Subd. 3.  [DUTIES.] The small business procurement advisory 
        council shall:  
           (1) advise the commissioner of administration on matters 
        relating to the small business and small targeted group business 
        procurement program; 
           (2) review complaints or grievances from small businesses 
        and small targeted group businesses 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 16C.18 to ensure compliance with the goals of the 
        program.  
           Sec. 19.  [16C.18] [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 
        16C.16 to 16C.21, 161.321, and 473.142 during the preceding 
        fiscal year. 
           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 small businesses and 
        small targeted group businesses and the efforts undertaken to 
        encourage participation in the targeted group purchasing 
        program; 
           (3) the efforts undertaken by the commissioner to remedy 
        the inability of small businesses and small targeted group 
        businesses to perform on potential awards; and 
           (4) the commissioner's recommendations for strengthening 
        the small business and small targeted group business procurement 
        program and delivery of services to small businesses. 
           Subd. 3.  [REPORTS FROM OTHER AGENCIES.] The commissioner 
        of transportation, and each metropolitan agency listed in 
        section 473.143, subdivision 1, 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. 20.  [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 commissioner.  The commissioner shall adopt by rule 
        standards and procedures for certifying that small businesses, 
        small targeted group businesses, and small businesses located in 
        economically disadvantaged areas 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.  
           (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 16C.16 to 16C.21. 
           (c) 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. 
           Sec. 21.  [16C.20] [CERTIFICATION.] 
           A business that is certified by the commissioner of 
        administration as a small business, small targeted group 
        business or a small business located in an economically 
        disadvantaged area is eligible to participate under the 
        requirements of sections 137.31 and 161.321 and, if certified as 
        a small business or small targeted group business, under section 
        473.142 without further certification by the contracting agency. 
           Sec. 22.  [16C.21] [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 16C.16 to 16C.20, 137.31, 137.35, 161.321, or 
        473.142 is guilty of a misdemeanor. 
           Sec. 23.  [16C.22] [DISTRICT HEATING.] 
           Notwithstanding any other law, general or special, the 
        commissioner is authorized to enter into or approve a written 
        agreement not to exceed 31 years with a district heating utility 
        that will specify, but not be limited to, the appropriate terms 
        and conditions for the interchange of district heating services. 
           Sec. 24.  [16C.23] [SURPLUS PROPERTY ACQUISITION, 
        DISTRIBUTION, AND DISPOSAL.] 
           Subdivision 1.  [DEFINITIONS.] "Governmental unit or 
        nonprofit organization" means a governmental unit as defined in 
        section 471.59, subdivision 1, an Indian tribal government, and 
        any nonprofit and tax-exempt medical institution, hospital, 
        clinic, health center, school, school system, college, 
        university, or other institution organized and existing for any 
        purpose authorized by federal law to accept surplus federal 
        property.  
           Subd. 2.  [SURPLUS PROPERTY.] "Surplus property" means 
        state or federal commodities, equipment, materials, supplies, 
        books, printed matter, buildings, and other personal or real 
        property that is obsolete, unused, not needed for a public 
        purpose, or ineffective for current use. 
           Subd. 3.  [AUTHORIZATION.] (a) The commissioner is the 
        state agency designated to transfer, purchase, accept, sell, or 
        dispose of surplus property for the state and for the benefit of 
        any other governmental unit or nonprofit organization for any 
        purpose authorized by state and federal law and in accordance 
        with state and federal rules and regulations.  Any governmental 
        unit or nonprofit organization may designate the commissioner to 
        purchase or accept surplus property for it upon mutually 
        agreeable terms and conditions.  The commissioner may acquire, 
        accept, warehouse, and distribute surplus property and charge a 
        fee to cover any expenses incurred in connection with any of 
        these acts.  
           (b) Federal surplus property that has been transferred to 
        the state for donation to public agencies and nonprofit 
        organizations must be transferred or sold in accordance with the 
        plan developed under paragraph (c).  Expenses incurred in 
        connection with the acquisition, warehousing, distribution, and 
        disposal of federal surplus property must be paid from the 
        surplus services revolving fund.  Proceeds of sales, minus any 
        expenses, must be deposited in the surplus services revolving 
        fund. 
           (c) The commissioner shall develop a detailed plan for 
        disposal of donated federal property in conformance with state 
        law and federal regulations.  The plan must be submitted to the 
        governor for certification and submission to the federal 
        administrator of general services. 
           (d) The commissioner, after consultation with one or more 
        nonprofit organizations with an interest in providing housing 
        for homeless veterans and their families, may acquire property 
        from the United States government that is designated by the 
        General Services Administration as surplus property.  The 
        commissioner may lease the property to a qualified nonprofit 
        organization that agrees to develop or rehabilitate the property 
        for the purpose of providing suitable housing for veterans and 
        their families.  The lease agreement with the nonprofit 
        organization may require that the property be developed for use 
        as housing for homeless and displaced veterans and their 
        families and for veterans and their families who lose their 
        housing. 
           Subd. 4.  [DEPOSIT OF RECEIPTS.] The surplus services 
        revolving fund is a separate fund in the state treasury.  All 
        money resulting from the acquisition, acceptance, warehousing, 
        distribution, and public sale of surplus property, must be 
        deposited in the fund.  Money paid into the surplus services 
        revolving fund is appropriated to the commissioner for the 
        purposes of the programs and services referred to in this 
        section.  
           Subd. 5.  [TRANSFER OR SALE.] (a) When the state or an 
        agency operating under a legislative appropriation obtains 
        surplus property from the commissioner, the commissioner of 
        finance must, at the commissioner's request, transfer the cost 
        of the surplus property, including any expenses of acquiring, 
        accepting, warehousing, and distributing the surplus property, 
        from the appropriation of the agency receiving the surplus 
        property to the surplus services revolving fund.  The 
        determination of the commissioner is final as to the cost of the 
        surplus property to the agency receiving the property. 
           (b) When any governmental unit or nonprofit organization 
        other than an agency receives surplus property from the 
        commissioner, the governmental unit or nonprofit organization 
        must reimburse the surplus services revolving fund for the cost 
        of the property, including the expenses of acquiring, accepting, 
        warehousing, and distributing it, in an amount the commissioner 
        sets.  The commissioner may, however, require the governmental 
        unit or nonprofit organization to deposit in advance in the 
        surplus services revolving fund the cost of the surplus property 
        upon mutually agreeable terms and conditions.  
           (c) The commissioner may transfer or sell state surplus 
        property to any person at public auction, at prepriced sale, or 
        by sealed bid process in accordance with applicable state laws. 
           Subd. 6.  [STATE SURPLUS PROPERTY.] The commissioner may do 
        any of the following to dispose of state surplus property:  
           (1) transfer it to or between state agencies; 
           (2) transfer it to a governmental unit or nonprofit 
        organization in Minnesota; or 
           (3) sell it and charge a fee to cover expenses incurred by 
        the commissioner in the disposal of the surplus property.  
           The proceeds of the sale less the fee are appropriated to 
        the agency for whose account the sale was made, to be used and 
        expended by that agency to purchase similar state property. 
           Subd. 7.  [GIFTS.] The commissioner is authorized to 
        solicit and accept donated money and fixed and consumable 
        property for the benefit of the state and any other governmental 
        unit or nonprofit organization for any purpose authorized by 
        state and federal law and in accordance with federal regulations 
        and rules.  The gift acceptance procedures of sections 7.09 to 
        7.12 do not apply to this subdivision. 
           Sec. 25.  [16C.24] [RULES.] 
           Minnesota Rules, parts 1230.0100 to 1230.4300, adopted 
        under chapter 16B, govern under this chapter until amended, 
        repealed, or superseded by rules adopted under chapter 16B or 
        this chapter.  In the event rules adopted under chapter 16B 
        conflict with provisions of this chapter, this chapter governs. 
           Sec. 26.  [16C.25] [BUILDING AND CONSTRUCTION CONTRACTS.] 
           Notwithstanding any contrary law, the provisions of 
        Minnesota Statutes 1996, section 16B.07, 16B.08, 16B.09, and all 
        other laws applicable to competitive bidding for building and 
        construction contracts on the day before the effective date of 
        this section apply to building and construction contracts 
        entered into on or after the effective date of this section. 
           Sec. 27.  Minnesota Statutes 1996, section 161.32, is 
        amended by adding a subdivision to read: 
           Subd. 1a.  [STANDARD SPECIFICATIONS, SECURITY.] Contracts 
        under this section must be based on specifications prescribed by 
        the commissioner.  Each bidder for a contract must furnish 
        security approved by the commissioner to ensure completion of 
        the contract. 
           Sec. 28.  Minnesota Statutes 1996, section 161.32, is 
        amended by adding a subdivision to read: 
           Subd. 1b.  [LOWEST RESPONSIBLE BIDDER.] Trunk highway 
        construction contracts, including design-build contracts, must 
        be awarded to the lowest responsible bidder, taking into 
        consideration conformity with the specifications, the purpose 
        for which the contract or purchase is intended, the status and 
        capability of the vendor, and other considerations imposed in 
        the call for bids.  The commissioner may decide which is the 
        lowest responsible bidder for all contracts and may use the 
        principles of life cycle costing, where appropriate, in 
        determining the lowest overall bid.  Any or all bids may be 
        rejected.  In a case where competitive bids are required and 
        where all bids are rejected, new bids, if solicited, must be 
        called for as in the first instance, unless otherwise provided 
        by law.  
           Sec. 29.  Minnesota Statutes 1996, section 161.32, is 
        amended by adding a subdivision to read: 
           Subd. 1c.  [ALTERATIONS AND ERASURES.] A bid containing an 
        alteration or erasure of any price contained in the bid which is 
        used in determining the lowest responsible bid must be rejected 
        unless the alteration or erasure is corrected pursuant to this 
        subdivision.  An alteration or erasure may be crossed out and 
        the correction printed in ink or typewritten adjacent to it and 
        initialed in ink by the person signing the bid.  
           Sec. 30.  Minnesota Statutes 1996, section 161.32, is 
        amended by adding a subdivision to read: 
           Subd. 1d.  [SPECIAL CIRCUMSTANCES.] The commissioner may 
        reject the bid of any bidder who has failed to perform a 
        previous contract with the state.  In the case of identical low 
        bids from two or more bidders, the commissioner may use 
        negotiated procurement methods with the tied low bidders for 
        that particular transaction, so long as the price paid does not 
        exceed the low tied bid price.  The commissioner may award 
        contracts to more than one bidder in accordance with subdivision 
        1b, if doing so does not decrease the service level or diminish 
        the effect of competition. 
           Sec. 31.  Minnesota Statutes 1996, section 161.32, is 
        amended by adding a subdivision to read: 
           Subd. 1e.  [RECORD.] A record must be kept of all bids, 
        including names of bidders, amounts of bids, and each successful 
        bid.  This record is open to public inspection. 
           Sec. 32.  [174.18] [ADVERTISEMENT OF HIGHWAY CONTRACTS.] 
           Notwithstanding anything in chapter 16C to the contrary, 
        all contracts for the repair, improvement, maintenance, or 
        construction of highways or highway bridges must be advertised 
        and let as provided by law for highway construction contracts.  
           Sec. 33.  Minnesota Statutes 1997 Supplement, section 
        363.073, subdivision 1, is amended to read: 
           Subdivision 1.  [SCOPE OF APPLICATION.] No department or 
        agency of the state shall accept any bid or proposal for a 
        contract or agreement (a) For all contracts for goods and 
        services in excess of $100,000, no department or agency of the 
        state shall accept any bid or proposal for a contract or 
        agreement from any business having more than 40 full-time 
        employees within this state on a single working day during the 
        previous 12 months, unless the firm or business has an 
        affirmative action plan for the employment of minority persons, 
        women, and qualified disabled individuals, submitted to the 
        commissioner of human rights for approval.  No department or 
        agency of the state shall execute any such contract or agreement 
        for goods or services in excess of $100,000 with any business 
        having more than 40 full-time employees, either within or 
        outside this state, on a single working day during the previous 
        12 months, unless the firm or business has an until the 
        affirmative action plan for the employment of minority persons, 
        women, and the disabled that has been approved by the 
        commissioner of human rights.  Receipt of a certificate of 
        compliance issued by the commissioner shall signify that a firm 
        or business has an affirmative action plan that has been 
        approved by the commissioner.  A certificate shall be valid for 
        a period of two years.  A municipality as defined in section 
        466.01, subdivision 1, that receives state money for any reason 
        is encouraged to prepare and implement an affirmative action 
        plan for the employment of minority persons, women, and 
        the qualified disabled and submit the plan to the commissioner 
        of human rights. 
           (b) This paragraph applies to a contract for goods or 
        services in excess of $100,000 to be entered into between a 
        department or agency of the state and a business that is not 
        subject to paragraph (a), but that has more than 40 full-time 
        employees on a single working day during the previous 12 months 
        in the state where the business has its primary place of 
        business.  A department or agency of the state may not execute a 
        contract or agreement with a business covered by this paragraph 
        unless the business has a certificate of compliance issued by 
        the commissioner under paragraph (a) or the business certifies 
        that it is in compliance with federal affirmative action 
        requirements. 
           (c) This section does not apply to contracts entered into 
        by the state board of investment for investment options under 
        section 352.96. 
           Sec. 34.  [REPORT.] 
           The commissioner of administration shall report to the 
        legislature by January 15, 1999, in the biennial report required 
        under Minnesota Statutes, section 115A.15, subdivision 5, on the 
        potential use of measurable objectives as a means of tracking 
        progress toward the purchase of recycled content goods. 
           Sec. 35.  [REPEALER.] 
           Minnesota Statutes 1996, sections 16B.06; 16B.07; 16B.08; 
        16B.09; 16B.101; 16B.102; 16B.103; 16B.123; 16B.13; 16B.14; 
        16B.15; 16B.16; 16B.167; 16B.17; 16B.175; 16B.18, subdivisions 
        1, 2, and 4; 16B.185; 16B.19; 16B.20, subdivisions 1 and 3; 
        16B.21; 16B.22; 16B.226; 16B.227; 16B.23; 16B.28; 16B.29; and 
        16B.89; and Minnesota Statutes 1997 Supplement, sections 16B.18, 
        subdivision 3; 16B.20, subdivision 2; and 16B.482, are repealed. 
           Sec. 36.  [EFFECTIVE DATE.] 
           Section 33 is effective May 1, 1998, except that it does 
        not apply to any part of the procurement process that results 
        from a solicitation dated before May 1, 1998.  The remainder of 
        this article is effective July 1, 1998, except that it does not 
        apply to any part of the procurement process that results from a 
        solicitation dated before July 1, 1998. 
                                   ARTICLE 2 
                             CONFORMING AMENDMENTS 
           Section 1.  Minnesota Statutes 1997 Supplement, section 
        3.225, subdivision 1, is amended to read: 
           Subdivision 1.  [APPLICATION.] This section applies to a 
        contract for professional or technical services entered into by 
        the house of representatives, the senate, the legislative 
        coordinating commission, or any group under the jurisdiction of 
        the legislative coordinating commission.  For purposes of this 
        section, "professional or technical services" has the meaning 
        defined in section 16B.17 16C.08, subdivision 1, but does not 
        include legal services for official legislative business. 
           Sec. 2.  Minnesota Statutes 1996, section 3.225, 
        subdivision 2, is amended to read: 
           Subd. 2.  [REQUIREMENTS FOR ALL CONTRACTS.] Before entering 
        into a contract for professional or technical services, the 
        contracting entity must determine that: 
           (1) all provisions of section 16B.19 16C.16, subdivision 2 
        3, relating to purchases from small businesses, have been 
        verified or complied with; 
           (2) the work to be performed under the contract is 
        necessary to the entity's achievement of its responsibilities; 
           (3) the contract will not establish an employment 
        relationship between the state or the entity and any persons 
        performing under the contract; 
           (4) no current legislative employees will engage in the 
        performance of the contract; 
           (5) no state agency has previously performed or contracted 
        for the performance of tasks which would be substantially 
        duplicated under the proposed contract; 
           (6) the contracting entity has specified a satisfactory 
        method of evaluating and using the results of the work to be 
        performed; and 
           (7) the combined contract and amendments will not extend 
        for more than five years. 
           Sec. 3.  Minnesota Statutes 1996, section 3.732, 
        subdivision 6, is amended to read: 
           Subd. 6.  [SETTLEMENT.] The head of each department or 
        agency, or a designee, acting on behalf of the state, may enter 
        into structured settlements, through the negotiation, creation, 
        and use of annuities or similar financial plans for claimants, 
        to resolve claims arising from the alleged negligence of the 
        state, its agencies, or employees.  Sections 16B.06, 16B.07, 
        16B.08, and 16B.09 16C.03, subdivision 4, 16C.05, and 16C.06 do 
        not apply to the state's selection of and contracts with 
        structured settlement consultants or purveyors of structured 
        settlement plans.  
           Sec. 4.  Minnesota Statutes 1996, section 3.922, 
        subdivision 5, is amended to read: 
           Subd. 5.  [OFFICERS; PERSONNEL; AUTHORITY.] The council 
        shall annually elect a chair and other officers as it may deem 
        necessary.  The chair may appoint subcommittees necessary to 
        fulfill the duties of the council.  It shall also employ and 
        prescribe the duties of employees and agents as it deems 
        necessary.  The compensation of the executive director of the 
        board is as provided by section 43A.18.  All employees are in 
        the unclassified service.  The chair is an ex officio member of 
        the state board of human rights.  Appropriations and other funds 
        of the council are subject to chapter 16B 16C.  The council may 
        contract in its own name.  Contracts must be approved by a 
        majority of the members of the council and executed by the chair 
        and the executive director.  The council may apply for, receive, 
        and spend in its own name, grants and gifts of money consistent 
        with the powers and duties specified in this section.  The 
        council shall maintain its primary office in Bemidji.  It shall 
        also maintain personnel and office space in St. Paul. 
           Sec. 5.  Minnesota Statutes 1996, section 3C.10, 
        subdivision 3, is amended to read: 
           Subd. 3.  [NEGOTIATED CONTRACTS.] The revisor's office may 
        negotiate for all or part of the editing, indexing, compiling, 
        and printing of Minnesota Statutes, supplements to Minnesota 
        Statutes, and Laws of Minnesota and contract with a law book 
        publisher for these services.  The provisions of chapter 16B 16C 
        as they relate to competitive bidding do not apply to these 
        contracts.  No contract may be made until the revisor of 
        statutes has consulted with the legislative coordinating 
        commission.  Failure or refusal of the commission to make a 
        recommendation promptly shall be deemed an affirmative 
        recommendation.  
           Sec. 6.  Minnesota Statutes 1996, section 4A.04, is amended 
        to read: 
           4A.04 [COOPERATIVE CONTRACTS.] 
           (a) The director may apply for, receive, and expend money 
        from municipal, county, regional, and other planning agencies; 
        apply for, accept, and disburse grants and other aids for 
        planning purposes from the federal government and from other 
        public or private sources; and may enter into contracts with 
        agencies of the federal government, local governmental units, 
        the University of Minnesota, and other educational institutions, 
        and private persons as necessary to perform the director's 
        duties.  Contracts made pursuant to this section are not subject 
        to the provisions of chapter 16B 16C, as they relate to 
        competitive bidding. 
           (b) The director may apply for, receive, and expend money 
        made available from federal sources or other sources for the 
        purposes of carrying out the duties and responsibilities of the 
        director relating to local and urban affairs.  
           (c) All money received by the director pursuant to this 
        section shall be deposited in the state treasury and is 
        appropriated to the director for the purposes for which the 
        money has been received.  The money shall not cancel and is 
        available until expended.  
           Sec. 7.  Minnesota Statutes 1996, section 6.551, is amended 
        to read: 
           6.551 [EXAMINATION OF GRANTEES AND CONTRACTORS OF LOCAL 
        GOVERNMENTS.] 
           The state auditor may examine the books, records, 
        documents, and accounting procedures and practices of a 
        contractor or grantee of a local government pursuant to section 
        16B.06 16C.05, subdivision 4 5.  The examination shall be 
        limited to the books, records, documents, and accounting 
        procedures and practices that are relevant to the contract or 
        transaction with the local government. 
           Sec. 8.  Minnesota Statutes 1996, section 11A.24, 
        subdivision 4, is amended to read: 
           Subd. 4.  [OTHER OBLIGATIONS.] (a) The state board may 
        invest funds in bankers acceptances, certificates of deposit, 
        deposit notes, commercial paper, mortgage securities and asset 
        backed securities, repurchase agreements and reverse repurchase 
        agreements, guaranteed investment contracts, savings accounts, 
        and guaranty fund certificates, surplus notes, or debentures of 
        domestic mutual insurance companies if they conform to the 
        following provisions: 
           (1) bankers acceptances and deposit notes of United States 
        banks are limited to those issued by banks rated in the highest 
        four quality categories by a nationally recognized rating 
        agency; 
           (2) certificates of deposit are limited to those issued by 
        (i) United States banks and savings institutions that are rated 
        in the top four quality categories by a nationally recognized 
        rating agency or whose certificates of deposit are fully insured 
        by federal agencies; or (ii) credit unions in amounts up to the 
        limit of insurance coverage provided by the National Credit 
        Union Administration; 
           (3) commercial paper is limited to those issued by United 
        States corporations or their Canadian subsidiaries and rated in 
        the highest two quality categories by a nationally recognized 
        rating agency; 
           (4) mortgage securities shall be rated in the top four 
        quality categories by a nationally recognized rating agency; 
           (5) collateral for repurchase agreements and reverse 
        repurchase agreements is limited to letters of credit and 
        securities authorized in this section; 
           (6) guaranteed investment contracts are limited to those 
        issued by insurance companies or banks rated in the top four 
        quality categories by a nationally recognized rating agency or 
        to alternative guaranteed investment contracts where the 
        underlying assets comply with the requirements of this section; 
           (7) savings accounts are limited to those fully insured by 
        federal agencies; and 
           (8) asset backed securities shall be rated in the top four 
        quality categories by a nationally recognized rating agency. 
           (b) Sections 16A.58 and 16B.06, 16C.03, subdivision 4, and 
        16C.05 do not apply to certificates of deposit and 
        collateralization agreements executed by the state board under 
        paragraph (a), clause (2). 
           (c) In addition to investments authorized by paragraph (a), 
        clause (4), the state board may purchase from the Minnesota 
        housing finance agency all or any part of a pool of residential 
        mortgages, not in default, that has previously been financed by 
        the issuance of bonds or notes of the agency.  The state board 
        may also enter into a commitment with the agency, at the time of 
        any issue of bonds or notes, to purchase at a specified future 
        date, not exceeding 12 years from the date of the issue, the 
        amount of mortgage loans then outstanding and not in default 
        that have been made or purchased from the proceeds of the bonds 
        or notes.  The state board may charge reasonable fees for any 
        such commitment and may agree to purchase the mortgage loans at 
        a price sufficient to produce a yield to the state board 
        comparable, in its judgment, to the yield available on similar 
        mortgage loans at the date of the bonds or notes.  The state 
        board may also enter into agreements with the agency for the 
        investment of any portion of the funds of the agency.  The 
        agreement must cover the period of the investment, withdrawal 
        privileges, and any guaranteed rate of return. 
           Sec. 9.  Minnesota Statutes 1996, section 12.221, 
        subdivision 5, is amended to read: 
           Subd. 5.  [REQUIREMENTS WAIVED.] Pursuant to any 
        federal-state agreement entered into by the state director, 
        serving as the governor's authorized representative, in the 
        acceptance of federal money made available as a result of a 
        disaster declaration, and upon the review and acceptance by the 
        attorney general's office of the language contained in the 
        subgrant agreement and any amendments to the agreement, the 
        requirements of section 16B.06 16C.05, subdivision 2, paragraph 
        (a), clause (3), must be waived. 
           Sec. 10.  Minnesota Statutes 1996, section 15.061, is 
        amended to read: 
           15.061 [PROFESSIONAL OR TECHNICAL SERVICES.] 
           In accordance with section 16B.17 sections 16C.03 and 
        16C.08, the head of a state department or agency may, with the 
        approval of the commissioner of administration, contract for 
        professional or technical services in connection with the 
        operation of the department or agency.  A contract negotiated 
        under this section is not subject to the competitive bidding 
        requirements of chapter 16B 16C. 
           Sec. 11.  Minnesota Statutes 1996, section 16A.101, is 
        amended to read: 
           16A.101 [SERVICE CONTRACTS.] 
           The state accounting system must list expenditures for 
        professional and technical service contracts, as defined in 
        section 16B.17 16C.08, subdivision 1, as a separate category.  
        No other expenditures may be included in this category. 
           Sec. 12.  Minnesota Statutes 1997 Supplement, section 
        16A.15, subdivision 3, is amended to read: 
           Subd. 3.  [ALLOTMENT AND ENCUMBRANCE.] (a) A payment may 
        not be made without prior obligation.  An obligation may not be 
        incurred against any fund, allotment, or appropriation unless 
        the commissioner has certified a sufficient unencumbered balance 
        or the accounting system shows sufficient allotment or 
        encumbrance balance in the fund, allotment, or appropriation to 
        meet it.  The commissioner shall determine when the accounting 
        system may be used to incur obligations without the 
        commissioner's certification of a sufficient unencumbered 
        balance.  An expenditure or obligation authorized or incurred in 
        violation of this chapter is invalid and ineligible for payment 
        until made valid.  A payment made in violation of this chapter 
        is illegal.  An employee authorizing or making the payment, or 
        taking part in it, and a person receiving any part of the 
        payment, are jointly and severally liable to the state for the 
        amount paid or received.  If an employee knowingly incurs an 
        obligation or authorizes or makes an expenditure in violation of 
        this chapter or takes part in the violation, the violation is 
        just cause for the employee's removal by the appointing 
        authority or by the governor if an appointing authority other 
        than the governor fails to do so.  In the latter case, the 
        governor shall give notice of the violation and an opportunity 
        to be heard on it to the employee and to the appointing 
        authority.  A claim presented against an appropriation without 
        prior allotment or encumbrance may be made valid on 
        investigation, review, and approval by the agency head in 
        accordance with the commissioner's policy, if the services, 
        materials, or supplies to be paid for were actually furnished in 
        good faith without collusion and without intent to defraud.  The 
        commissioner may then draw a warrant to pay the claim just as 
        properly allotted and encumbered claims are paid. 
           (b) The commissioner may approve payment for materials and 
        supplies in excess of the obligation amount when increases are 
        authorized by section 16B.07 16C.03, subdivision 2 3. 
           (c) To minimize potential construction delay claims, an 
        agency with a project funded by a building appropriation may 
        allow a contractor to proceed with supplemental work within the 
        limits of the appropriation before money is encumbered.  Under 
        this circumstance, the agency may requisition funds and allow 
        contractors to expeditiously proceed with a construction 
        sequence.  While the contractor is proceeding, the agency shall 
        immediately act to encumber the required funds. 
           Sec. 13.  Minnesota Statutes 1996, section 16A.85, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [AUTHORIZATION.] The commissioner of 
        administration may determine, in conjunction with the 
        commissioner of finance, the personal property needs of the 
        various state departments, agencies, boards, commissions and the 
        legislature of the kinds of property identified in this 
        subdivision that may be economically funded through a master 
        lease program and request the commissioner of finance to execute 
        a master lease.  The master lease may be used only to finance 
        the following kinds of purchases: 
           (a) The master lease may be used to finance purchases by 
        the commissioner of administration with money from an internal 
        services fund. 
           (b) The master lease may be used to refinance a purchase of 
        equipment already purchased under a lease-purchase agreement. 
           (c) The master lease may be used to finance purchases of 
        large equipment with a capital value of more than $100,000 and a 
        useful life of more than ten years. 
           (d) The legislature may specifically authorize a particular 
        purchase to be financed using the master lease.  The legislature 
        anticipates that this authorization will be given only to 
        finance the purchase of major pieces of equipment with a capital 
        value of more than $10,000. 
           The commissioner of finance may authorize the sale and 
        issuance of certificates of participation relative to a master 
        lease in an amount sufficient to fund these personal property 
        needs.  The term of the certificates must be less than the 
        expected useful life of the equipment whose purchase is financed 
        by the certificates.  The commissioner of administration may use 
        the proceeds from the master lease or the sale of the 
        certificates of participation to acquire the personal property 
        through the appropriate procurement procedure in chapter 16B 16C.
        Money appropriated for the lease or acquisition of this personal 
        property is appropriated to the commissioner of finance to make 
        master lease payments. 
           Sec. 14.  Minnesota Statutes 1997 Supplement, section 
        16B.465, subdivision 7, is amended to read: 
           Subd. 7.  [EXEMPTION.] The system is exempt from the 
        five-year limitation on contracts set by section 16B.07, 
        subdivision 2 sections 16C.05, subdivision 2, paragraph (a), 
        clause (5), 16C.08, subdivision 3, clause (7), and 16C.09, 
        clause (6). 
           Sec. 15.  Minnesota Statutes 1997 Supplement, section 
        16E.07, subdivision 9, is amended to read: 
           Subd. 9.  [AGGREGATION OF SERVICE DEMAND.] The office shall 
        identify opportunities to aggregate demand for technical 
        services required by government units for online activities and 
        may contract with governmental or nongovernmental entities to 
        provide services.  These contracts are not subject to the 
        requirements of chapter chapters 16B and 16C, except 
        sections 16B.167, 16B.17, and 16B.175 16C.04, 16C.07, 16C.08, 
        and 16C.09. 
           Sec. 16.  Minnesota Statutes 1997 Supplement, section 
        17.03, subdivision 12, is amended to read: 
           Subd. 12.  [CONTRACTS; APPROPRIATION.] The commissioner may 
        accept money as part of a contract with any public or private 
        entity to provide statutorily prescribed services by the 
        department.  A contract must specify the services to be provided 
        by the department and the amount and method of reimbursement.  
        Money generated in a contractual agreement under this section 
        must be deposited in a special revenue fund and is appropriated 
        to the department for purposes of providing services specified 
        in the contracts.  Contracts under this section must be 
        processed in accordance with section 16B.06 16C.05.  The 
        commissioner must report revenues collected and expenditures 
        made under this section to the chairs of the environment and 
        natural resources finance committee in the house of 
        representatives and the environment and agriculture budget 
        division in the senate by January 15 of each odd-numbered year. 
           Sec. 17.  Minnesota Statutes 1996, section 17.1015, is 
        amended to read: 
           17.1015 [PROMOTIONAL EXPENDITURES.] 
           In order to accomplish the purposes of section 17.101, the 
        commissioner may participate jointly with private persons in 
        appropriate programs and projects and may enter into contracts 
        to carry out those programs and projects.  The contracts may not 
        include the acquisition of land or buildings and are not subject 
        to the provisions of chapter 16B 16C relating to competitive 
        bidding. 
           The commissioner may spend money appropriated for the 
        purposes of section 17.101, and expenditures made pursuant to 
        section 17.101 for food, lodging, or travel are not governed by 
        the travel rules of the commissioner of employee relations.  
           Sec. 18.  Minnesota Statutes 1996, section 41A.023, is 
        amended to read: 
           41A.023 [POWERS.] 
           In addition to other powers granted by this chapter, the 
        board may: 
           (1) sue and be sued; 
           (2) acquire, hold, lease, and transfer any interest in real 
        and personal property for its corporate purposes; 
           (3) sell at public or private sale, at the price or prices 
        determined by the board, any note, mortgage, lease, sublease, 
        lease purchase, or other instrument or obligation evidencing or 
        securing a loan made for the purpose of economic development, 
        job creation, redevelopment, or community revitalization by a 
        public agency to a business, for-profit or nonprofit 
        organization, or an individual; 
           (4) obtain insurance on its property; 
           (5) obtain municipal bond insurance, letters of credit, 
        surety obligations, or similar agreements from financial 
        institutions; 
           (6) enter into other agreements or transactions, without 
        regard to chapter 16B or 16C, that the board considers necessary 
        or appropriate to carry out the purposes of this chapter with 
        federal or state agencies, political subdivisions of the state, 
        or other persons, firms, or corporations; 
           (7) establish and collect fees without regard to chapter 14 
        and section 16A.1285; 
           (8) accept appropriations, gifts, grants, and bequests; 
           (9) use money received from any source for any legal 
        purpose or program of the board; 
           (10) participate in loans for agricultural resource 
        projects in accordance with section 41A.035; 
           (11) provide small business development loans in accordance 
        with section 41A.036; and 
           (12) guarantee or insure bonds or notes issued by the board.
           Sec. 19.  Minnesota Statutes 1997 Supplement, section 
        41D.03, subdivision 7, is amended to read: 
           Subd. 7.  [PURCHASING INSTRUCTIONAL ITEMS.] Technical 
        educational equipment may be procured for programs of the 
        Minnesota center for agriculture education by the council either 
        by brand designation or in accordance with standards and 
        specifications the council may adopt, notwithstanding chapter 
        16B 16C. 
           Sec. 20.  Minnesota Statutes 1996, section 43A.23, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [GENERAL.] The commissioner is authorized 
        to request bids from carriers or to negotiate with carriers and 
        to enter into contracts with carriers which in the judgment of 
        the commissioner are best qualified to underwrite and service 
        the benefit plans.  Contracts entered into with carriers are not 
        subject to the requirements of sections 16B.19 to 16B.22 16C.16 
        to 16C.19.  The commissioner may negotiate premium rates and 
        coverage provisions with all carriers licensed under chapters 
        62A, 62C, and 62D.  The commissioner may also negotiate 
        reasonable restrictions to be applied to all carriers under 
        chapters 62A, 62C, and 62D.  Contracts to underwrite the benefit 
        plans must be bid or negotiated separately from contracts to 
        service the benefit plans, which may be awarded only on the 
        basis of competitive bids.  The commissioner shall consider the 
        cost of the plans, conversion options relating to the contracts, 
        service capabilities, character, financial position, and 
        reputation of the carriers, and any other factors which the 
        commissioner deems appropriate.  Each benefit contract must be 
        for a uniform term of at least one year, but may be made 
        automatically renewable from term to term in the absence of 
        notice of termination by either party.  The commissioner shall, 
        to the extent feasible, make hospital and medical benefits 
        available from at least one carrier licensed to do business 
        pursuant to each of chapters 62A, 62C, and 62D.  The 
        commissioner need not provide health maintenance organization 
        services to an employee who resides in an area which is not 
        served by a licensed health maintenance organization.  The 
        commissioner may refuse to allow a health maintenance 
        organization to continue as a carrier.  The commissioner may 
        elect not to offer all three types of carriers if there are no 
        bids or no acceptable bids by that type of carrier or if the 
        offering of additional carriers would result in substantial 
        additional administrative costs.  A carrier licensed under 
        chapter 62A is exempt from the tax imposed by section 60A.15 on 
        premiums paid to it by the state. 
           Sec. 21.  Minnesota Statutes 1996, section 44A.01, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [ESTABLISHMENT.] The Minnesota world trade 
        center corporation is a public corporation established to 
        facilitate and support Minnesota world trade center programs and 
        services and to promote the Minnesota world trade center.  The 
        corporation is a state agency, but is not subject to chapters 
        14, 16A, 16B, 16C, 43A, and 179A.  
           Sec. 22.  Minnesota Statutes 1996, section 45.0291, is 
        amended to read: 
           45.0291 [DEPARTMENT BONDS.] 
           Bonds issued under chapters 45 to 83, 309, 332, and 
        sections 326.83 to 326.98, are not state bonds or contracts for 
        purposes of sections 8.05 and 16B.06 16C.05, subdivision 2. 
           Sec. 23.  Minnesota Statutes 1997 Supplement, section 
        61B.21, subdivision 1, is amended to read: 
           Subdivision 1.  [FUNCTIONS.] The Minnesota life and health 
        insurance guaranty association shall perform its functions under 
        the plan of operation established and approved under section 
        61B.25, and shall exercise its powers through a board of 
        directors.  The association is not a state agency for purposes 
        of chapter 16A, 16B, 16C, or 43A.  For purposes of 
        administration and assessment, the association shall establish 
        and maintain two accounts: 
           (1) the life insurance and annuity account which includes 
        the following subaccounts: 
           (i) the life insurance account; 
           (ii) the annuity account; and 
           (iii) the unallocated annuity account; and 
           (2) the health insurance account. 
           Sec. 24.  Minnesota Statutes 1996, section 84.025, 
        subdivision 7, is amended to read: 
           Subd. 7.  [CONTRACTS.] The commissioner of natural 
        resources may contract with the federal government, local 
        governmental units, the University of Minnesota, and other 
        educational institutions, and private persons as may be 
        necessary in the performance of duties.  Contracts made pursuant 
        to this section for professional services shall not be subject 
        to the provisions of chapter 16B 16C, as they relate to 
        competitive bidding. 
           Sec. 25.  Minnesota Statutes 1996, section 84.026, is 
        amended to read: 
           84.026 [CONTRACTS FOR PROVISION OF NATURAL RESOURCES 
        SERVICES.] 
           The commissioner of natural resources is authorized to 
        enter into contractual agreements with any public or private 
        entity for the provision of statutorily prescribed natural 
        resources services by the department.  The contracts shall 
        specify the services to be provided and the amount and method of 
        reimbursement.  Funds generated in a contractual agreement made 
        pursuant to this section shall be deposited in the special 
        revenue fund and are appropriated to the department for purposes 
        of providing the services specified in the contracts.  All such 
        contractual agreements shall be processed in accordance with the 
        provisions of section 16B.06 16C.05.  The commissioner shall 
        report revenues collected and expenditures made under this 
        section to the chairs of the committees on appropriations in the 
        house and finance in the senate by January 1 of each 
        odd-numbered year. 
           Sec. 26.  Minnesota Statutes 1996, section 84.0845, is 
        amended to read: 
           84.0845 [ADVANCE OF MATCHING FUNDS.] 
           The commissioner may advance funds appropriated for fish 
        and wildlife programs to government agencies, the National Fish 
        and Wildlife Foundation, federally recognized Indian tribes and 
        bands, and private, nonprofit organizations for the purposes of 
        securing nonstate matching funds for projects involving 
        acquisition and improvement of fish and wildlife habitat and 
        related research and management.  The commissioner shall execute 
        agreements for contracts with the matching parties under section 
        16B.06 sections 16C.03, subdivision 4, and 16C.05 prior to 
        advancing any state funds.  The agreement or contract shall 
        contain provisions for return of the state's share and the 
        matching funds within a period of time specified by the 
        commissioner.  The state's funds and the nonstate matching funds 
        must be deposited in a separate account and expended solely for 
        the purposes set forth in the agreement or contract.  The 
        commissioner shall enter into agreements or contracts only with 
        the National Fish and Wildlife Foundation and federal and 
        nonprofit authorities deemed by the commissioner to be dedicated 
        to the purposes of the project. 
           Sec. 27.  Minnesota Statutes 1996, section 85A.02, 
        subdivision 3, is amended to read: 
           Subd. 3.  The board may conduct research studies and 
        programs, collect and analyze data and prepare reports, maps, 
        charts and other information relating to the zoological garden 
        or any wild or domestic animals or may contract for any of such 
        services without complying with chapter 16B 16C. 
           Sec. 28.  Minnesota Statutes 1997 Supplement, section 
        85A.02, subdivision 5b, is amended to read: 
           Subd. 5b.  [EXEMPTIONS.] The board is not subject to 
        sections 3.841 to 3.845, 15.057, 15.061, 16A.1285, and 16A.28; 
        chapter chapters 16B and 16C, except for sections 16B.07, 
        16B.102, 16B.17, 16B.19, 16B.35, and 16B.55 16B.35, 16B.55, 
        16C.06, 16C.08, 16C.09, and 16C.16; and chapter 14, except 
        section 14.386, paragraph (a), clauses (1) and (3).  Section 
        14.386, paragraph (b), does not apply to the board's actions.  
           Sec. 29.  Minnesota Statutes 1996, section 85A.02, 
        subdivision 16, is amended to read: 
           Subd. 16.  The board may acquire by lease-purchase or 
        installment purchase contract, transportation systems, 
        facilities and equipment that it determines will substantially 
        enhance the public's opportunity to view, study or derive 
        information concerning the animals to be located in the 
        zoological garden, and will increase attendance at the garden.  
        The contracts may provide for:  (1) the payment of money over a 
        12-year period, or over a longer period not exceeding 25 years 
        if approved by the board; (2) the payment of money from any 
        funds of the board not pledged or appropriated for another 
        purpose; (3) indemnification of the lessor or seller for damage 
        to property or injury to persons due primarily to the actions of 
        the board or its employees; (4) the transfer of title to the 
        property to the board upon execution of the contract or upon 
        payment of specified amounts; (5) the reservation to the lessor 
        or seller of a security interest in the property; and (6) any 
        other terms that the board determines to be commercially 
        reasonable.  Property so acquired by the board, and its purchase 
        or use by the board, or by any nonprofit corporation having a 
        concession from the board requiring its purchase, shall not be 
        subject to taxation by the state or its political subdivisions.  
        Each contract shall be subject to the provisions of chapter 16B 
        16C, relating to competitive bidding, provided that, 
        notwithstanding subdivision 5b, the board is not required to 
        readvertise for competitive proposals for any transportation 
        system, facilities and equipment heretofore selected from 
        competitive proposals. 
           Sec. 30.  Minnesota Statutes 1996, section 85A.02, 
        subdivision 18, is amended to read: 
           Subd. 18.  [PURCHASING.] The board may contract for 
        supplies, materials, purchase or rental of equipment, and 
        utility services.  Except as provided in subdivision 5b, chapter 
        16B 16C does not apply to these contracts.  
           Sec. 31.  Minnesota Statutes 1996, section 103F.515, 
        subdivision 3, is amended to read: 
           Subd. 3.  [CONSERVATION EASEMENTS.] (a) The board may 
        acquire, or accept by gift or donation, conservation easements 
        on eligible land.  An easement may be permanent or of limited 
        duration.  An easement acquired on land for windbreak purposes, 
        under subdivision 2, may be only of permanent duration.  An 
        easement of limited duration may not be acquired if it is for a 
        period less than 20 years.  The negotiation and acquisition of 
        easements authorized by this section are exempt from the 
        contractual provisions of chapter chapters 16B and 16C.  
           (b) The board may acquire, or accept by gift or donation, 
        flowage easements when necessary for completion of wetland 
        restoration projects. 
           Sec. 32.  Minnesota Statutes 1996, section 116.03, 
        subdivision 2, is amended to read: 
           Subd. 2.  The commissioner shall organize the agency and 
        employ such assistants and other officers, employees and agents 
        as the commissioner may deem necessary to discharge the 
        functions of the commissioner's office, define the duties of 
        such officers, employees and agents, and delegate to them any of 
        the commissioner's powers, duties, and responsibilities, subject 
        to the commissioner's control and under such conditions as the 
        commissioner may prescribe.  The commissioner may also contract 
        with persons, firms, corporations, the federal government and 
        any agency or instrumentality thereof, the water research center 
        of the University of Minnesota or any other instrumentality of 
        such university, for doing any of the work of the commissioner's 
        office, and none of the provisions of chapter 16B 16C, relating 
        to bids, shall apply to such contracts.  
           Sec. 33.  Minnesota Statutes 1996, section 116J.035, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [POWERS.] The commissioner may:  
           (a) apply for, receive, and expend money from municipal, 
        county, regional, and other government agencies; 
           (b) apply for, accept, and disburse grants and other aids 
        from other public or private sources; 
           (c) contract for professional services if such work or 
        services cannot be satisfactorily performed by employees of the 
        department or by any other state agency; 
           (d) enter into interstate compacts to jointly carry out 
        such research and planning with other states or the federal 
        government where appropriate; 
           (e) distribute informational material at no cost to the 
        public upon reasonable request; and 
           (f) enter into contracts necessary for the performance of 
        the commissioner's duties with federal, state, regional, 
        metropolitan, local, and other agencies or units of government; 
        educational institutions, including the University of 
        Minnesota.  Contracts made pursuant to this section shall not be 
        subject to the competitive bidding requirements of chapter 16B 
        16C.  
           The commissioner may apply for, receive, and expend money 
        made available from federal or other sources for the purpose of 
        carrying out the duties and responsibilities of the commissioner 
        pursuant to this chapter.  
           All moneys received by the commissioner pursuant to this 
        chapter shall be deposited in the state treasury and are 
        appropriated to the commissioner for the purpose for which the 
        moneys have been received.  The money shall not cancel and shall 
        be available until expended.  
           Sec. 34.  Minnesota Statutes 1996, section 116J.402, is 
        amended to read: 
           116J.402 [COOPERATIVE CONTRACTS.] 
           The commissioner of trade and economic development may 
        apply for, receive, and spend money for community development 
        from municipal, county, regional, and other planning agencies. 
        The commissioner may also apply for, accept, and disburse grants 
        and other aids for community development and related planning 
        from the federal government and other sources.  The commissioner 
        may enter into contracts with agencies of the federal 
        government, local governmental units, regional development 
        commissions, and the metropolitan council, other state agencies, 
        the University of Minnesota, and other educational institutions, 
        and private persons as necessary to perform the commissioner's 
        duties.  Contracts made according to this section, except those 
        with private persons, are not subject to the provisions of 
        chapter 16B 16C concerning competitive bidding.  
           The commissioner may apply for, receive, and spend money 
        made available from federal sources or other sources for the 
        purposes of carrying out the duties and responsibilities of the 
        commissioner.  
           Money received by the commissioner under this section must 
        be deposited in the state treasury and is appropriated to the 
        commissioner for the purposes for which the money has been 
        received.  The money does not cancel and is available until 
        spent.  
           Sec. 35.  Minnesota Statutes 1996, section 116J.58, 
        subdivision 2, is amended to read: 
           Subd. 2.  [PROMOTIONAL CONTRACTS.] In order to best carry 
        out duties and responsibilities and to serve the people of the 
        state in the promotion of tourism, trade, and economic 
        development, the commissioner may engage in programs and 
        projects jointly with a private person, firm, corporation or 
        association and may enter into contracts under terms to be 
        mutually agreed upon to carry out such programs and projects not 
        including acquisition of land or buildings.  Contracts may be 
        negotiated and are not subject to the provisions of chapter 16B 
        16C relating to competitive bidding.  
           Sec. 36.  Minnesota Statutes 1996, section 116J.68, 
        subdivision 2, is amended to read: 
           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 16C.16 to 
        16C.19 relating to the small targeted group business 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 the 
        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) 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; and 
           (n) 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. 37.  Minnesota Statutes 1996, section 116J.966, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [GENERALLY.] (a) The commissioner shall 
        promote, develop, and facilitate trade and foreign investment in 
        Minnesota.  In furtherance of these goals, and in addition to 
        the powers granted by section 116J.035, the commissioner may:  
           (1) locate, develop, and promote international markets for 
        Minnesota products and services; 
           (2) arrange and lead trade missions to countries with 
        promising international markets for Minnesota goods, technology, 
        services, and agricultural products; 
           (3) promote Minnesota products and services at domestic and 
        international trade shows; 
           (4) organize, promote, and present domestic and 
        international trade shows featuring Minnesota products and 
        services; 
           (5) host trade delegations and assist foreign traders in 
        contacting appropriate Minnesota businesses and investments; 
           (6) develop contacts with Minnesota businesses and gather 
        and provide information to assist them in locating and 
        communicating with international trading or joint venture 
        counterparts; 
           (7) provide information, education, and counseling services 
        to Minnesota businesses regarding the economic, commercial, 
        legal, and cultural contexts of international trade; 
           (8) provide Minnesota businesses with international trade 
        leads and information about the availability and sources of 
        services relating to international trade, such as export 
        financing, licensing, freight forwarding, international 
        advertising, translation, and custom brokering; 
           (9) locate, attract, and promote foreign direct investment 
        and business development in Minnesota to enhance employment 
        opportunities in Minnesota; 
           (10) provide foreign businesses and investors desiring to 
        locate facilities in Minnesota information regarding sources of 
        governmental, legal, real estate, financial, and business 
        services; 
           (11) enter into contracts or other agreements with private 
        persons and public entities, including agreements to establish 
        and maintain offices and other types of representation in 
        foreign countries, to carry out the purposes of promoting 
        international trade and attracting investment from foreign 
        countries to Minnesota and to carry out this section, without 
        regard to sections 16B.07 and 16B.09 section 16C.06; 
           (12) enter into administrative, programming, and service 
        partnerships with the Minnesota world trade center; and 
           (13) market trade-related materials to businesses and 
        organizations, and the proceeds of which must be placed in a 
        special revolving account and are appropriated to the 
        commissioner to prepare and distribute trade-related materials.  
           (b) The programs and activities of the commissioner of 
        trade and economic development and the Minnesota trade division 
        may not duplicate programs and activities of the commissioner of 
        agriculture or the Minnesota world trade center corporation. 
           (c) The commissioner shall notify the chairs of the senate 
        finance and house appropriations committees of each agreement 
        under this subdivision to establish and maintain an office or 
        other type of representation in a foreign country.  
           Sec. 38.  Minnesota Statutes 1997 Supplement, section 
        121.1113, subdivision 2, is amended to read: 
           Subd. 2.  [DEPARTMENT OF CHILDREN, FAMILIES, AND LEARNING 
        ASSISTANCE.] The department of children, families, and learning 
        shall contract for professional and technical services according 
        to competitive bidding procedures under chapter 16B 16C for 
        purposes of this section. 
           Sec. 39.  Minnesota Statutes 1996, section 124.14, 
        subdivision 1, is amended to read: 
           Subdivision 1.  The commissioner shall supervise 
        distribution of school aids and grants in accordance with law.  
        It may make rules consistent with law for the distribution to 
        enable districts to perform efficiently the services required by 
        law and further education in the state, including reasonable 
        requirements for the reports and accounts to it as will assure 
        accurate and lawful apportionment of aids.  State and federal 
        aids and discretionary or entitlement grants distributed by the 
        commissioner shall not be subject to the contract approval 
        procedures of the commissioner of administration or to chapter 
        16A or, 16B, or 16C.  The commissioner shall adopt internal 
        procedures for administration and monitoring of aids and grants. 
           Sec. 40.  Minnesota Statutes 1996, section 126.151, 
        subdivision 2, is amended to read: 
           Subd. 2.  [ACCOUNTS OF THE ORGANIZATION.] The commissioner 
        and the board of trustees of the Minnesota state colleges and 
        universities may retain dues and other money collected on behalf 
        of students participating in approved vocational student 
        organizations and may deposit the money in separate accounts.  
        The money in these accounts shall be available for expenditures 
        for state and national activities related to specific 
        organizations.  Administration of money collected under this 
        section is not subject to the provisions of chapters 15, 
        16A, and 16B, and 16C, and may be deposited outside the state 
        treasury.  Money shall be administered under the policies of the 
        applicable state board or agency relating to post-secondary and 
        secondary vocational student organizations and is subject to 
        audit by the legislative auditor.  Any unexpended money shall 
        not cancel but may be carried forward to the next fiscal year. 
           Sec. 41.  Minnesota Statutes 1996, section 129C.10, 
        subdivision 7, is amended to read: 
           Subd. 7.  [PURCHASING INSTRUCTIONAL ITEMS.] Technical 
        educational equipment may be procured for programs of the Lola 
        and Rudy Perpich Minnesota center for arts education by the 
        board either by brand designation or in accordance with 
        standards and specifications the board may adopt, 
        notwithstanding chapter chapters 16B and 16C. 
           Sec. 42.  Minnesota Statutes 1996, section 136A.06, is 
        amended to read: 
           136A.06 [FEDERAL FUNDS.] 
           The higher education services office is designated the 
        state agency to apply for, receive, accept, and disburse to both 
        public and private institutions of higher education all federal 
        funds which are allocated to the state of Minnesota to support 
        higher education programs, construction, or other activities and 
        which require administration by a state higher education agency 
        under the Higher Education Facilities Act of 1963, and any 
        amendments thereof, the Higher Education Act of 1965, and any 
        amendments thereof, and any other law which provides funds for 
        higher education and requires administration by a state higher 
        education agency as enacted or may be enacted by the Congress of 
        the United States; provided that no commitment shall be made 
        that shall bind the legislature to make appropriations beyond 
        current allocations of funds.  The office may apply for, 
        receive, accept, and disburse all administrative funds available 
        to the office for administering federal funds to support higher 
        education programs, construction, or other activities.  The 
        office also may apply for, receive, accept, and disburse any 
        research, planning, or program funds which are available for 
        purposes consistent with the provisions of this chapter.  In 
        making application for and administering federal funds the 
        office may comply with any and all requirements of federal law 
        and federal rules and regulations to enable it to receive and 
        accept such funds.  The expenditure of any such funds received 
        shall be governed by the laws of the state, except insofar as 
        federal regulations may otherwise provide.  The office may 
        contract with both public and private institutions in 
        administering federal funds, and such contracts shall not be 
        subject to the provisions of chapter 16B 16C.  All such money 
        received by the office shall be deposited in the state treasury 
        and are hereby appropriated to it annually for the purpose for 
        which such funds are received.  None of such moneys shall cancel 
        but shall be available until expended. 
           Sec. 43.  Minnesota Statutes 1996, section 136A.16, 
        subdivision 1, is amended to read: 
           Subdivision 1.  Notwithstanding chapter 16B 16C, the 
        Minnesota higher education services office is designated as the 
        administrative agency for carrying out the purposes and terms of 
        sections 136A.15 to 136A.1702.  The office may establish one or 
        more loan programs. 
           Sec. 44.  Minnesota Statutes 1996, section 136A.29, 
        subdivision 6, is amended to read: 
           Subd. 6.  The authority is authorized and empowered to 
        determine the location and character of any project to be 
        financed under the provisions of sections 136A.25 to 136A.42, 
        and to construct, reconstruct, remodel, maintain, manage, 
        enlarge, alter, add to, repair, operate, lease, as lessee or 
        lessor, and regulate the same, to enter into contracts for any 
        or all of such purposes, to enter into contracts for the 
        management and operation of a project, and to designate a 
        participating institution of higher education as its agent to 
        determine the location and character of a project undertaken by 
        such participating institution of higher education under the 
        provisions of sections 136A.25 to 136A.42 and as the agent of 
        the authority, to construct, reconstruct, remodel, maintain, 
        manage, enlarge, alter, add to, repair, operate, lease, as 
        lessee or lessor, and regulate the same, and as the agent of the 
        authority, to enter into contracts for any or all of such 
        purposes, including contracts for the management and operation 
        of such project.  Contracts of the authority or of a 
        participating institution of higher education to acquire or to 
        construct, reconstruct, remodel, maintain, enlarge, alter, add 
        to, or repair projects shall not be subject to the provisions of 
        chapter 16B 16C or section 574.26, or any other public contract 
        or competitive bid law. 
           Sec. 45.  Minnesota Statutes 1997 Supplement, section 
        136A.40, is amended to read: 
           136A.40 [ADMINISTRATION.] 
           The administration of sections 136A.25 to 136A.42, shall be 
        under the authority independent of other departments and 
        agencies and notwithstanding chapter 16B 16C.  The authority 
        shall not be subject to the provisions of chapter 14, including 
        section 14.386 in connection with the adoption of any rules, 
        rents, fees or charges or with the exercise of any other powers 
        or duties.  
           Sec. 46.  Minnesota Statutes 1996, section 136F.23, is 
        amended to read: 
           136F.23 [STUDENT ASSOCIATIONS; PURCHASING AUTHORITY.] 
           Notwithstanding chapter 16A or 16B 16C, the student 
        associations recognized by the board of trustees of the 
        Minnesota state colleges and universities may purchase goods or 
        materials through state purchasing authority for the ordinary 
        day-to-day operations of the associations.  The student 
        associations must be nonprofit 501(c)(3) organizations in order 
        to qualify for this authority.  The department of administration 
        may require that the purchase documents be approved by 
        appropriate officials in the board's central office. 
           Sec. 47.  Minnesota Statutes 1996, section 136F.56, 
        subdivision 5, is amended to read: 
           Subd. 5.  [SERVICE CONTRACTS.] The council may contract for 
        the services it needs to carry out its function.  The council 
        may also contract to provide services to other organizations. 
        The contracts are not subject to the contract approval 
        procedures of the commissioner of administration or of 
        chapter 16B 16C.  
           Sec. 48.  Minnesota Statutes 1996, section 136F.581, 
        subdivision 3, is amended to read: 
           Subd. 3.  [PROCUREMENT FROM DESIGNATED BUSINESSES.] The 
        policies and procedures must include provisions for procurement, 
        including construction, from small targeted group businesses and 
        businesses from economically disadvantaged areas designated 
        under section 16B.19 16C.16.  The board, colleges, and 
        universities shall use the methods contained in section 471.345, 
        subdivision 8, for such purchasing, or may develop additional 
        methods in which the cost percentage preferences are consistent 
        with the provision of section 16B.19 16C.16, subdivisions 2c and 
        2d 6, paragraph (a), and 7, or consistent with the provisions of 
        the University of Minnesota's targeted group business purchasing 
        program. 
           Sec. 49.  Minnesota Statutes 1996, section 136F.66, is 
        amended to read: 
           136F.66 [CAPITAL PROJECTS BIDDING PROCEDURES.] 
           In awarding contracts for capital projects under section 
        136F.64, the board 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, small targeted group 
        businesses, and businesses in economically disadvantaged areas 
        designated under section 16B.19 16C.16. 
           Sec. 50.  Minnesota Statutes 1996, section 136F.72, 
        subdivision 3, is amended to read: 
           Subd. 3.  [ADMINISTRATION.] Each college and university, 
        independent of other authority and notwithstanding chapters 
        16A and, 16B, and 16C, shall administer its activity funds.  The 
        board, independent of other authority and notwithstanding 
        chapters 16A and, 16B, and 16C, shall administer the 
        administrative fund established in the system office.  All 
        activity fund money collected shall be administered under the 
        policies of the board subject to audit of the legislative 
        auditor.  
           Sec. 51.  Minnesota Statutes 1996, section 136F.96, is 
        amended to read: 
           136F.96 [ADMINISTRATION.] 
           The administration of sections 136F.90 to 136F.98 shall be 
        under the board of trustees of the Minnesota state colleges and 
        universities independent of other authority and notwithstanding 
        chapters 16A and, 16B, and 16C. 
           Sec. 52.  Minnesota Statutes 1996, section 137.35, 
        subdivision 1, is amended to read: 
           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 16C.16, subdivision 5. 
           (b) The regents may designate a purchase of goods or 
        services for award only to small targeted group businesses 
        designated under section 16B.19 16C.16, subdivision 5, 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 16C.16, subdivision 7. 
           (e) The regents may delegate responsibility under this 
        section to university employees. 
           Sec. 53.  Minnesota Statutes 1996, section 137.35, 
        subdivision 2, is amended to read: 
           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 16C.16 to 16C.19 apply 
        to this section. 
           Sec. 54.  Minnesota Statutes 1996, section 137.35, 
        subdivision 3, is amended to read: 
           Subd. 3.  [NONCOMPETITIVE BIDS.] The regents are encouraged 
        to purchase from small targeted group businesses designated 
        under section 16B.19 16C.16 when making purchases that are not 
        subject to competitive bidding procedures. 
           Sec. 55.  Minnesota Statutes 1997 Supplement, section 
        138.35, subdivision 1b, is amended to read: 
           Subd. 1b.  [CONTRACTS; VOLUNTEERS; GRANTS AND GIFTS.] The 
        state archaeologist may contract with the federal government, 
        local governmental units, other states, the university and other 
        educational institutions, and private persons or organizations 
        as necessary in the performance of the duties in sections 138.31 
        to 138.42.  Contracts made under this section for professional 
        services shall not be subject to chapter 16B 16C, as it relates 
        to competitive bidding.  The state archaeologist may recruit, 
        train, and accept, without regard to personnel laws or rules, 
        the services of individuals as volunteers for or in aid of 
        performance of the state archaeologist's duties, and may provide 
        for the incidental expenses of volunteers, such as 
        transportation, lodging, and subsistence.  The state 
        archaeologist may apply for, receive, and expend grants and 
        gifts of money consistent with the powers and duties in sections 
        138.31 to 138.42.  Any money so received is appropriated for the 
        purpose for which it was granted.  
           Sec. 56.  Minnesota Statutes 1996, section 144.0742, is 
        amended to read: 
           144.0742 [CONTRACTS FOR PROVISION OF PUBLIC HEALTH 
        SERVICES.] 
           The commissioner of health is authorized to enter into 
        contractual agreements with any public or private entity for the 
        provision of statutorily prescribed public health services by 
        the department.  The contracts shall specify the services to be 
        provided and the amount and method of reimbursement therefor.  
        Funds generated in a contractual agreement made pursuant to this 
        section are appropriated to the department for purposes of 
        providing the services specified in the contracts.  All such 
        contractual agreements shall be processed in accordance with the 
        provisions of chapter 16B 16C.  
           Sec. 57.  Minnesota Statutes 1996, section 144.95, 
        subdivision 5, is amended to read: 
           Subd. 5.  [GENERAL AUTHORITY.] (a) To carry out 
        subdivisions 1 to 4, the commissioner of health may:  
           (1) accept money, property, or services from any source; 
           (2) receive and hold lands; 
           (3) accept gifts; 
           (4) cooperate with city, state, federal, or private 
        agencies whose research on mosquito control or on other 
        environmental matters may be affected by the commissioner's 
        mosquito management and research activities; and 
           (5) enter into contracts with any public or private entity. 
           (b) The contracts must specify the duties performed, 
        services provided, and the amount and method of reimbursement 
        for them.  Money collected by the commissioner under contracts 
        made under this subdivision is appropriated to the commissioner 
        for the purposes specified in the contracts.  Contractual 
        agreements must be processed under section 16B.17 16C.08.  
           Sec. 58.  Minnesota Statutes 1996, section 161.315, 
        subdivision 4, is amended to read: 
           Subd. 4.  [EXCEPTIONS.] The commissioner may terminate a 
        debarment by order, or the commissioner or a county, town, or 
        home rule or statutory city may award a contract to a debarred 
        or suspended person when: 
           (1) that person is the sole supplier of a material or 
        service required by the commissioner or a county, town, or home 
        rule or statutory city; 
           (2) the commissioner determines that an emergency exists as 
        defined in section 161.32, subdivision 3; 
           (3) the commissioner of administration determines that an 
        emergency exists as defined in section 16B.08 16C.10, 
        subdivision 6 2; 
           (4) in the case of a contract to be awarded by a county, 
        town, or home rule or statutory city, the governing body thereof 
        determines by resolution that an emergency exists that will 
        result in a road, street, or bridge being closed to travel; or 
           (5) the contract is for purchasing materials or renting 
        equipment for routine road maintenance. 
           Sec. 59.  Minnesota Statutes 1996, 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 16C.16, subdivision 2b 5. 
           Sec. 60.  Minnesota Statutes 1996, section 161.321, 
        subdivision 2, is amended to read: 
           Subd. 2.  [SMALL BUSINESS SET-ASIDES.] (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 16C.16, subdivision 7.  
           Sec. 61.  Minnesota Statutes 1996, section 161.321, 
        subdivision 5, is amended to read: 
           Subd. 5.  [RECOURSE TO OTHER BUSINESSES.] 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 16B 16C. 
           Sec. 62.  Minnesota Statutes 1996, section 161.321, 
        subdivision 6, is amended to read: 
           Subd. 6.  [RULES.] 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 16C.16 to 16C.19 apply to this 
        section.  The commissioner may promulgate other rules necessary 
        to carry out this section. 
           Sec. 63.  Minnesota Statutes 1996, section 161.321, 
        subdivision 7, is amended to read: 
           Subd. 7.  [NONCOMPETITIVE BIDS.] The commissioner is 
        encouraged to purchase from small targeted group businesses 
        designated under section 16B.19 16C.16 when making purchases 
        that are not subject to competitive bidding procedures. 
           Sec. 64.  Minnesota Statutes 1996, section 161.41, 
        subdivision 2, is amended to read: 
           Subd. 2.  [DETERMINATION OF VALUE; DISPOSITION.] The 
        commissioner shall administer all aspects of the disposition of 
        property declared to be surplus under this section.  The 
        commissioner shall first determine the value of the surplus 
        property.  The commissioner may then transfer the possession of 
        the surplus property to any state agency or political 
        subdivision of this state or to the United States government 
        upon receipt of payment in an amount equal to the value of the 
        surplus property. 
           The commissioner may also sell the surplus property under 
        the competitive bidding provisions of chapter 16B 16C if no 
        state agency or political subdivision of this state offers to 
        purchase the surplus property for its determined value.  
           Sec. 65.  Minnesota Statutes 1997 Supplement, section 
        179A.03, subdivision 14, is amended to read: 
           Subd. 14.  [PUBLIC EMPLOYEE.] "Public employee" or 
        "employee" means any person appointed or employed by a public 
        employer except:  
           (a) elected public officials; 
           (b) election officers; 
           (c) commissioned or enlisted personnel of the Minnesota 
        national guard; 
           (d) emergency employees who are employed for emergency work 
        caused by natural disaster; 
           (e) part-time employees whose service does not exceed the 
        lesser of 14 hours per week or 35 percent of the normal work 
        week in the employee's appropriate unit; 
           (f) employees whose positions are basically temporary or 
        seasonal in character and:  (1) are not for more than 67 working 
        days in any calendar year; or (2) are not for more than 100 
        working days in any calendar year and the employees are under 
        the age of 22, are full-time students enrolled in a nonprofit or 
        public educational institution prior to being hired by the 
        employer, and have indicated, either in an application for 
        employment or by being enrolled at an educational institution 
        for the next academic year or term, an intention to continue as 
        students during or after their temporary employment; 
           (g) employees providing services for not more than two 
        consecutive quarters to the board of trustees of the Minnesota 
        state colleges and universities under the terms of a 
        professional or technical services contract as defined in 
        section 16B.17 16C.08, subdivision 1; 
           (h) employees of charitable hospitals as defined by section 
        179.35, subdivision 3; 
           (i) full-time undergraduate students employed by the school 
        which they attend under a work-study program or in connection 
        with the receipt of financial aid, irrespective of number of 
        hours of service per week; 
           (j) an individual who is employed for less than 300 hours 
        in a fiscal year as an instructor in an adult vocational 
        education program; 
           (k) an individual hired by a school district or the board 
        of trustees of the Minnesota state colleges and universities to 
        teach one course for up to four credits for one quarter in a 
        year.  
           The following individuals are public employees regardless 
        of the exclusions of clauses (e) and (f):  
           (1) An employee hired by a school district or the board of 
        trustees of the Minnesota state colleges and universities except 
        at the university established in section 136F.13 or for 
        community services or community education instruction offered on 
        a noncredit basis:  (i) to replace an absent teacher or faculty 
        member who is a public employee, where the replacement employee 
        is employed more than 30 working days as a replacement for that 
        teacher or faculty member; or (ii) to take a teaching position 
        created due to increased enrollment, curriculum expansion, 
        courses which are a part of the curriculum whether offered 
        annually or not, or other appropriate reasons; and 
           (2) An employee hired for a position under clause (f)(1) if 
        that same position has already been filled under clause (f)(1) 
        in the same calendar year and the cumulative number of days 
        worked in that same position by all employees exceeds 67 
        calendar days in that year.  For the purpose of this paragraph, 
        "same position" includes a substantially equivalent position if 
        it is not the same position solely due to a change in the 
        classification or title of the position. 
           Sec. 66.  Minnesota Statutes 1996, section 179A.23, is 
        amended to read: 
           179A.23 [LIMITATION ON CONTRACTING-OUT OF SERVICES PROVIDED 
        BY MEMBERS OF A STATE OF MINNESOTA OR UNIVERSITY OF MINNESOTA 
        BARGAINING UNIT.] 
           Any contract entered into after March 23, 1982, by the 
        state of Minnesota or the University of Minnesota involving 
        services, any part of which, in the absence of the contract, 
        would be performed by members of a unit provided in sections 
        179A.10 and 179A.11, shall be subject to section 16B.07 16C.06 
        and shall provide for the preferential employment by a party of 
        members of that unit whose employment with the state of 
        Minnesota or the University of Minnesota is terminated as a 
        result of that contract.  
           Contracts entered into by the state of Minnesota for the 
        purpose of providing court reporter services or transcription of 
        the record of a hearing which was recorded by means of an audio 
        magnetic recording device shall be subject to section 16B.17 
        16C.08 and the preferential employment provisions enumerated in 
        this section.  Any court reporter seeking a contract pursuant to 
        the preferential employment provisions of this section shall be 
        given preference when the services are needed only if that court 
        reporter's charges for the services requested are no greater 
        than the average of the charges made for the identical services 
        by other court reporters in the same locality who are also under 
        contract with the state for those services.  
           Sec. 67.  Minnesota Statutes 1996, section 198.35, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [ESTABLISHMENT.] The board may establish a 
        veterans home in Silver Bay by renovating an existing facility 
        owned by the city of Silver Bay if the city donates the building 
        to the board at no cost.  Contracts made by the board for the 
        purposes of this subdivision are subject to chapter 16B 16C.  
        Buildings used for the veterans home must comply with 
        requirements established by federal agencies as conditions for 
        the receipt of federal funds for the nursing and boarding care 
        of veterans.  The city of Silver Bay shall secure the state 
        match requirement from sources other than the state general 
        fund.  Money from other sources must equal at least 35 percent 
        of the total cost of the renovation with the remainder of the 
        funds to be provided by the United States Veterans 
        Administration. 
           Sec. 68.  Minnesota Statutes 1996, section 216C.02, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [POWERS.] (a) The commissioner may: 
           (1) apply for, receive, and spend money received from 
        federal, municipal, county, regional, and other government 
        agencies and private sources; 
           (2) apply for, accept, and disburse grants and other aids 
        from public and private sources; 
           (3) contract for professional services if work or services 
        required or authorized to be carried out by the commissioner 
        cannot be satisfactorily performed by employees of the 
        department or by another state agency; 
           (4) enter into interstate compacts to carry out research 
        and planning jointly with other states or the federal government 
        when appropriate; 
           (5) upon reasonable request, distribute informational 
        material at no cost to the public; and 
           (6) enter into contracts for the performance of the 
        commissioner's duties with federal, state, regional, 
        metropolitan, local, and other agencies or units of government 
        and educational institutions, including the University of 
        Minnesota, without regard to the competitive bidding 
        requirements of chapters 16A and 16B 16C.  
           (b) The commissioner shall collect information on 
        conservation and other energy-related programs carried on by 
        other agencies, by public utilities, by cooperative electric 
        associations, by municipal power agencies, by other fuel 
        suppliers, by political subdivisions, and by private 
        organizations.  Other agencies, cooperative electric 
        associations, municipal power agencies, and political 
        subdivisions shall cooperate with the commissioner by providing 
        information requested by the commissioner.  The commissioner may 
        by rule require the submission of information by other program 
        operators.  The commissioner shall make the information 
        available to other agencies and to the public and, as necessary, 
        shall recommend to the legislature changes in the laws governing 
        conservation and other energy-related programs to ensure that: 
           (1) expenditures on the programs are adequate to meet 
        identified needs; 
           (2) the needs of low-income energy users are being 
        adequately addressed; 
           (3) duplication of effort is avoided or eliminated; 
           (4) a program that is ineffective is improved or 
        eliminated; and 
           (5) voluntary efforts are encouraged through incentives for 
        their operators.  
           The commissioner shall appoint an advisory task force to 
        help evaluate the information collected and formulate 
        recommendations to the legislature.  The task force must include 
        low-income energy users. 
           (c) By January 15 of each year, the commissioner shall 
        report to the legislature on the projected amount of federal 
        money likely to be available to the state during the next fiscal 
        year, including grant money and money received by the state as a 
        result of litigation or settlements of alleged violations of 
        federal petroleum pricing regulations.  The report must also 
        estimate the amount of money projected as needed during the next 
        fiscal year to finance a level of conservation and other 
        energy-related programs adequate to meet projected needs, 
        particularly the needs of low-income persons and households, and 
        must recommend the amount of state appropriations needed to 
        cover the difference between the projected availability of 
        federal money and the projected needs. 
           Sec. 69.  Minnesota Statutes 1997 Supplement, section 
        216D.03, subdivision 2, is amended to read: 
           Subd. 2.  [ESTABLISHMENT OF NOTIFICATION CENTER; RULES.] 
        (a) The notification center services must be provided by a 
        nonprofit corporation approved in writing by the commissioner.  
        The nonprofit corporation must be governed by a board of 
        directors of up to 20 members, one of whom is the director of 
        the office of pipeline safety.  The other board members must 
        represent and be elected by operators, excavators, and other 
        persons eligible to participate in the center.  In deciding to 
        approve a nonprofit corporation, the commissioner shall consider 
        whether it meets the requirements of this paragraph and whether 
        it demonstrates that it has the ability to contract for and 
        implement the notification center service. 
           (b) The commissioner shall adopt rules: 
           (1) establishing a notification process and competitive 
        bidding procedure for selecting a vendor to provide the 
        notification service; 
           (2) governing the operating procedures and technology 
        needed for a statewide notification center; and 
           (3) setting forth the method for assessing the cost of the 
        service among operators.  
           (c) The commissioner shall select a vendor to provide the 
        notification center service.  The commissioner may advertise for 
        bids as provided in section 16B.07 16C.06, subdivision 
        3 subdivisions 1 and 2, and base the selection of a vendor on an 
        identification of the lowest responsible bidder best value as 
        provided in section 16B.09 16C.06, subdivision 1 6.  The 
        commissioner shall select and contract with the vendor to 
        provide the notification center service, but all costs of the 
        center must be paid by the operators.  The commissioner may at 
        any time appoint a task force to advise on the renewal of the 
        contract or any other matter involving the center's operations. 
           (d) An operator may submit a bid and be selected to 
        contract to provide the notification center service under 
        paragraph (a) or (c).  The commissioner shall annually review 
        the services provided by the nonprofit corporation approved 
        under paragraph (a) or the vendor selected under paragraph (c). 
           Sec. 70.  Minnesota Statutes 1996, section 237.51, 
        subdivision 5a, is amended to read: 
           Subd. 5a.  [DEPARTMENT OF HUMAN SERVICES; DUTIES.] (a) In 
        addition to any duties specified elsewhere in sections 237.51 to 
        237.56, the department of human services shall: 
           (1) define economic hardship, special needs, and household 
        criteria so as to determine the priority of eligible applicants 
        for initial distribution of devices and to determine 
        circumstances necessitating provision of more than one 
        communication device per household; 
           (2) establish a method to verify eligibility requirements; 
           (3) establish specifications for communication devices to 
        be purchased under section 237.53, subdivision 3; 
           (4) inform the public and specifically the community of 
        communication-impaired persons of the program; and 
           (5) notwithstanding any provision of chapter chapters 16B 
        and 16C, develop guidelines for the purchase of some 
        communication devices from local retailers and dispensers if the 
        department determines that otherwise they will be economically 
        harmed by implementation of sections 237.50 to 237.56. 
           (b) The department may establish an advisory board to 
        advise the department in carrying out the duties specified in 
        this section and to advise the department of public service in 
        carrying out its duties under section 237.54.  If so 
        established, the advisory board must include, at a minimum, the 
        following communication-impaired persons: 
           (1) at least one member who is deaf; 
           (2) at least one member who is speech impaired; 
           (3) at least one member who is mobility impaired; and 
           (4) at least one member who is hard-of-hearing. 
           The membership terms, compensation, and removal of members 
        and the filling of membership vacancies are governed by section 
        15.059.  Advisory board meetings shall be held at the discretion 
        of the commissioner. 
           Sec. 71.  Minnesota Statutes 1996, section 241.0221, 
        subdivision 6, is amended to read: 
           Subd. 6.  [APPLICATION REVIEW PROCESS FOR SUBSIDY FUNDS.] 
        To qualify for a subsidy, a county or group of counties must 
        enter into a memorandum of agreement with the commissioner 
        agreeing to comply with the minimum standards and requirements 
        established by the commissioner under subdivision 4.  The 
        memorandum of agreement is not subject to the contract approval 
        procedures of the commissioner of administration or chapter 
        chapters 16B and 16C.  The commissioner shall provide forms and 
        instructions for submission of subsidy applications.  
           The commissioner shall require a county or group of 
        counties to document in its application that it is requesting 
        subsidy funds for the least restrictive alternative appropriate 
        to the county or counties detention needs.  The commissioner 
        shall evaluate applications and grant subsidies for local 
        detention facilities and alternative detention programs 
        described in this section in a manner consistent with the 
        minimum standards and requirements established by the 
        commissioner in subdivision 4 and within the limit 
        appropriations made available by law.  
           Sec. 72.  Minnesota Statutes 1996, 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 and 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 16C.06, but are subject to all other provisions 
        of chapter 16B chapters 16B and 16C.  When practical, purchases 
        must be made from small targeted group businesses designated 
        under section 16B.19 16C.16.  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. 73.  Minnesota Statutes 1997 Supplement, section 
        241.277, subdivision 2, is amended to read: 
           Subd. 2.  [REQUEST FOR PROPOSALS.] After consulting with 
        and considering the advice of the association of Minnesota 
        counties, the commissioner may issue a request for proposals and 
        select a vendor to operate the program.  Section 16B.17 16C.08 
        does not apply to the issuance of the request for proposals. 
           Sec. 74.  Minnesota Statutes 1996, section 246.36, is 
        amended to read: 
           246.36 [ACCEPTANCE OF VOLUNTARY, UNCOMPENSATED SERVICES.] 
           For the purpose of carrying out a duty, the commissioner of 
        human services shall have authority to accept uncompensated and 
        voluntary services and to enter into contracts or agreements 
        with private or public agencies, or persons, for uncompensated 
        and voluntary services, as the commissioner may deem 
        practicable.  Uncompensated and voluntary services do not 
        include services mandated by licensure and certification 
        requirements for health care facilities.  The volunteer 
        agencies, organizations, or persons who provide services to 
        residents of state facilities operated under the authority of 
        the commissioner are not subject to the procurement requirements 
        of chapters 16A and 16B 16C.  The agencies, organizations, or 
        persons may purchase supplies, services, and equipment to be 
        used in providing services to residents of state facilities 
        through the department of administration. 
           Sec. 75.  Minnesota Statutes 1996, section 246.57, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [AUTHORIZED.] The commissioner of human 
        services may authorize any state facility operated under the 
        authority of the commissioner to enter into agreement with other 
        governmental entities and both nonprofit and for-profit 
        organizations for participation in shared service agreements 
        that would be of mutual benefit to the state, other governmental 
        entities and organizations involved, and the public.  
        Notwithstanding section 16B.06 16C.05, subdivision 2, the 
        commissioner of human services may delegate the execution of 
        shared services contracts to the chief executive officers of the 
        regional centers or state operated nursing homes.  No additional 
        employees shall be added to the legislatively approved 
        complement for any regional center or state nursing home as a 
        result of entering into any shared service agreement.  However, 
        positions funded by a shared service agreement may be authorized 
        by the commissioner of finance for the duration of the shared 
        service agreement.  The charges for the services shall be on an 
        actual cost basis.  All receipts for shared services may be 
        retained by the regional treatment center or state-operated 
        nursing home that provided the services, in addition to other 
        funding the regional treatment center or state-operated nursing 
        home receives. 
           Sec. 76.  Minnesota Statutes 1996, section 246.57, 
        subdivision 6, is amended to read: 
           Subd. 6.  [DENTAL SERVICES.] The commissioner of human 
        services shall authorize any regional treatment center or 
        state-operated nursing home under the commissioner's authority 
        to provide dental services to disabled persons who are eligible 
        for medical assistance and are not residing at the regional 
        treatment center or state-operated nursing home, provided that 
        the reimbursement received for these services is sufficient to 
        cover actual costs.  To provide these services, regional 
        treatment centers and state-operated nursing homes may 
        participate under contract with health networks in their service 
        area.  Notwithstanding section 16B.06 16C.05, subdivision 2, the 
        commissioner of human services may delegate the execution of 
        these dental services contracts to the chief executive officers 
        of the regional centers or state-operated nursing homes.  All 
        receipts for these dental services shall be retained by the 
        regional treatment center or state-operated nursing home that 
        provides the services and shall be in addition to other funding 
        the regional treatment center or state-operated nursing home 
        receives. 
           Sec. 77.  Minnesota Statutes 1996, section 256B.031, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CONTRACTS.] The commissioner may contract 
        with health insurers licensed and operating under chapters 60A 
        and 62A, nonprofit health service plans licensed and operating 
        under chapter 62C, health maintenance organizations licensed and 
        operating under chapter 62D, and vendors of medical care and 
        organizations participating in prepaid programs under section 
        256D.03, subdivision 4, clause (b), to provide medical services 
        to medical assistance recipients.  Notwithstanding any other 
        law, health insurers may enter into contracts with the 
        commissioner under this section.  As a condition of the 
        contract, health insurers and health service plan corporations 
        must agree to comply with the requirements of section 62D.04, 
        subdivision 1, clauses (a), (b), (c), (d), and (f), and provide 
        a complaint procedure that satisfies the requirements of section 
        62D.11.  Nothing in this section permits health insurers not 
        licensed as health maintenance organizations under chapter 62D 
        to offer a prepaid health plan as defined in section 256B.02, 
        subdivision 12, to persons other than those receiving medical 
        assistance or general assistance medical care under this 
        section.  Contracts between the commissioner and a prepaid 
        health plan are exempt from the set-aside and preference 
        provisions of section 16B.19 16C.16, subdivisions 5 and 6, 
        paragraph (a), and 7.  Contracts must specify the services that 
        are included in the per capita rate.  Contracts must specify 
        those services that are to be eligible for risk sharing between 
        the prepaid health plan and the state.  Contracts must also 
        state that payment must be made within 60 days after the month 
        of coverage. 
           Sec. 78.  Minnesota Statutes 1996, section 256B.04, 
        subdivision 14, is amended to read: 
           Subd. 14.  [COMPETITIVE BIDDING.] When determined to be 
        effective, economical, and feasible, the commissioner may 
        utilize volume purchase through competitive bidding and 
        negotiation under the provisions of chapter 16B 16C, to provide 
        items under the medical assistance program including but not 
        limited to the following: 
           (1) eyeglasses; 
           (2) oxygen.  The commissioner shall provide for oxygen 
        needed in an emergency situation on a short-term basis, until 
        the vendor can obtain the necessary supply from the contract 
        dealer; 
           (3) hearing aids and supplies; and 
           (4) durable medical equipment, including but not limited to:
           (a) hospital beds; 
           (b) commodes; 
           (c) glide-about chairs; 
           (d) patient lift apparatus; 
           (e) wheelchairs and accessories; 
           (f) oxygen administration equipment; 
           (g) respiratory therapy equipment; 
           (h) electronic diagnostic, therapeutic and life support 
        systems; 
           (5) special transportation services; and 
           (6) drugs. 
           Sec. 79.  Minnesota Statutes 1996, section 256B.04, 
        subdivision 15, is amended to read: 
           Subd. 15.  [UTILIZATION REVIEW.] (1) Establish on a 
        statewide basis a new program to safeguard against unnecessary 
        or inappropriate use of medical assistance services, against 
        excess payments, against unnecessary or inappropriate hospital 
        admissions or lengths of stay, and against underutilization of 
        services in prepaid health plans, long-term care facilities or 
        any health care delivery system subject to fixed rate 
        reimbursement.  In implementing the program, the state agency 
        shall utilize both prepayment and postpayment review systems to 
        determine if utilization is reasonable and necessary.  The 
        determination of whether services are reasonable and necessary 
        shall be made by the commissioner in consultation with a 
        professional services advisory group or health care consultant 
        appointed by the commissioner.  
           (2) Contracts entered into for purposes of meeting the 
        requirements of this subdivision shall not be subject to the 
        set-aside provisions of chapter 16B 16C. 
           (3) A recipient aggrieved by the commissioner's termination 
        of services or denial of future services may appeal pursuant to 
        section 256.045.  A vendor aggrieved by the commissioner's 
        determination that services provided were not reasonable or 
        necessary may appeal pursuant to the contested case procedures 
        of chapter 14.  To appeal, the vendor shall notify the 
        commissioner in writing within 30 days of receiving the 
        commissioner's notice.  The appeal request shall specify each 
        disputed item, the reason for the dispute, an estimate of the 
        dollar amount involved for each disputed item, the computation 
        that the vendor believes is correct, the authority in statute or 
        rule upon which the vendor relies for each disputed item, the 
        name and address of the person or firm with whom contacts may be 
        made regarding the appeal, and other information required by the 
        commissioner. 
           (4) The commissioner may select providers to provide case 
        management services to recipients who use health care services 
        inappropriately or to recipients who are eligible for other 
        managed care projects.  The providers shall be selected based 
        upon criteria that may include a comparison with a peer group of 
        providers related to the quality, quantity, or cost of health 
        care services delivered or a review of sanctions previously 
        imposed by health care services programs or the provider's 
        professional licensing board. 
           Sec. 80.  Minnesota Statutes 1997 Supplement, section 
        256B.19, subdivision 2a, is amended to read: 
           Subd. 2a.  [DIVISION OF COSTS.] The county shall ensure 
        that only the least costly, most appropriate transportation and 
        travel expenses are used.  The state may enter into volume 
        purchase contracts, or use a competitive bidding process, 
        whenever feasible, to minimize the costs of transportation 
        services.  If the state has entered into a volume purchase 
        contract or used the competitive bidding procedures of chapter 
        16B 16C to arrange for transportation services, the county may 
        be required to use such arrangements. 
           Sec. 81.  Minnesota Statutes 1997 Supplement, section 
        256D.03, subdivision 6, is amended to read: 
           Subd. 6.  [DIVISION OF COSTS.] The state share of county 
        agency expenditures for general assistance medical care shall be 
        100 percent.  Payments made under this subdivision shall be made 
        according to sections 256B.041, subdivision 5 and 256B.19, 
        subdivision 1.  In counties where a pilot or demonstration 
        project is operated for general assistance medical care 
        services, the state may pay 100 percent of the costs of 
        administering the pilot or demonstration project.  
           Notwithstanding any provision to the contrary, beginning 
        July 1, 1991, the state shall pay 100 percent of the costs for 
        centralized claims processing by the department of 
        administration relative to claims beginning January 1, 1991, and 
        submitted on behalf of general assistance medical care 
        recipients by vendors in the general assistance medical care 
        program. 
           Beginning July 1, 1991, the state shall reimburse counties 
        up to the limit of state appropriations for general assistance 
        medical care common carrier transportation and related travel 
        expenses provided for medical purposes after December 31, 1990.  
        For purposes of this subdivision, transportation shall have the 
        meaning given it in Code of Federal Regulations, title 42, 
        section 440.170(a), as amended through October 1, 1987, and 
        travel expenses shall have the meaning given in Code of Federal 
        Regulations, title 42, section 440.170(a)(3), as amended through 
        October 1, 1987. 
           The county shall ensure that only the least costly most 
        appropriate transportation and travel expenses are used.  The 
        state may enter into volume purchase contracts, or use a 
        competitive bidding process, whenever feasible, to minimize the 
        costs of transportation services.  If the state has entered into 
        a volume purchase contract or used the competitive bidding 
        procedures of chapter 16B 16C to arrange for transportation 
        services, the county may be required to use such arrangements to 
        be eligible for state reimbursement for general assistance 
        medical care common carrier transportation and related travel 
        expenses provided for medical purposes. 
           In counties where prepaid health plans are under contract 
        to the commissioner to provide services to general assistance 
        medical care recipients, the cost of court ordered treatment 
        that does not include diagnostic evaluation, recommendation, or 
        referral for treatment by the prepaid health plan is the 
        responsibility of the county of financial responsibility. 
           Sec. 82.  Minnesota Statutes 1996, section 298.2211, 
        subdivision 4, is amended to read: 
           Subd. 4.  [OBLIGATIONS NOT STATE DEBT.] Bonds and other 
        obligations issued by the commissioner pursuant to this section, 
        along with all related documents, are not general obligations of 
        the state of Minnesota and are not subject to section 16B.06 
        sections 16C.03, subdivision 4, and 16C.05.  The full faith and 
        credit and taxing powers of the state are not and may not be 
        pledged for the payment of these bonds or other obligations, and 
        no person has the right to compel the levy of any state tax for 
        their payment or to compel the appropriation of any moneys of 
        the state for their payment except as specifically provided 
        herein.  These bonds and obligations shall be payable solely 
        from the property and moneys derived by the commissioner 
        pursuant to the authority granted in this section that the 
        commissioner pledges to their payment.  The legislature intends 
        not to appropriate money from the general fund to pay for these 
        bonds or other obligations.  All these bonds or other 
        obligations must contain the provisions of this subdivision or 
        words to the same effect on their face.  
           Sec. 83.  Minnesota Statutes 1996, section 349A.06, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CONTRACTS.] The director shall sell 
        tickets for the lottery through lottery retailers with whom the 
        director contracts.  Contracts under this section are not 
        subject to the provisions of sections 16B.06 to 16B.102, and 
        16B.17 16C.03, 16C.05, 16C.06, 16C.08, 16C.09, and 16C.10, and 
        are valid for a period of one year.  The director may permit a 
        retailer to sell tickets at more than one business location 
        under a contract entered into under this section. 
           Sec. 84.  Minnesota Statutes 1996, section 349A.07, 
        subdivision 6, is amended to read: 
           Subd. 6.  [EXEMPTIONS.] Lottery procurement contracts 
        entered into by the director are not subject to the provisions 
        of sections 16B.06 to 16B.102 or 16B.17 section 16C.03, 16C.05, 
        16C.06, 16C.08, 16C.09, or 16C.10, provided that the director 
        must utilize an open and competitive bid process, and as nearly 
        as practicable follow the procedures of chapter chapters 16B and 
        16C governing contracts, consistent with the provisions of this 
        section.  
           Sec. 85.  Minnesota Statutes 1996, section 352.03, 
        subdivision 6, is amended to read: 
           Subd. 6.  [DUTIES AND POWERS OF EXECUTIVE DIRECTOR.] The 
        management of the system is vested in the director, who is the 
        executive and administrative head of the system.  The director 
        shall be advisor to the board on matters pertaining to the 
        system and shall also act as the secretary of the board.  The 
        director shall: 
           (1) attend meetings of the board; 
           (2) prepare and recommend to the board appropriate rules to 
        carry out this chapter; 
           (3) establish and maintain an adequate system of records 
        and accounts following recognized accounting principles and 
        controls; 
           (4) designate an assistant director with the approval of 
        the board; 
           (5) appoint any employees, both permanent and temporary, 
        that are necessary to carry out the provisions of this chapter; 
           (6) organize the work of the system as the director deems 
        necessary to fulfill the functions of the system, and define the 
        duties of its employees and delegate to them any powers or 
        duties, subject to the control of the director and under 
        conditions the director may prescribe.  Appointments to exercise 
        delegated power must be by written order and shall be filed with 
        the secretary of state; 
           (7) with the advice and consent of the board, contract for 
        the services of an approved actuary, professional management 
        services, and any other consulting services as necessary and fix 
        the compensation for those services.  The contracts are not 
        subject to competitive bidding under chapter 16B 16C.  Any 
        approved actuary retained by the executive director shall 
        function as the actuarial advisor of the board and the executive 
        director, and may perform actuarial valuations and experience 
        studies to supplement those performed by the actuary retained by 
        the legislative commission on pensions and retirement.  Any 
        supplemental actuarial valuations or experience studies shall be 
        filed with the executive director of the legislative commission 
        on pensions and retirement.  Professional management services 
        may not be contracted for more often than once in six years.  
        Copies of professional management survey reports must be 
        transmitted to the secretary of the senate, the chief clerk of 
        the house of representatives, and the legislative reference 
        library as provided by section 3.195, to the executive director 
        of the commission and to the legislative auditor at the time as 
        reports are furnished to the board.  Only management firms 
        experienced in conducting management surveys of federal, state, 
        or local public retirement systems are qualified to contract 
        with the director; 
           (8) with the advice and consent of the board provide 
        in-service training for the employees of the system; 
           (9) make refunds of accumulated contributions to former 
        state employees and to the designated beneficiary, surviving 
        spouse, legal representative, or next of kin of deceased state 
        employees or deceased former state employees, as provided in 
        this chapter; 
           (10) determine the amount of the annuities and disability 
        benefits of employees covered by the system and authorize 
        payment of the annuities and benefits beginning as of the dates 
        on which the annuities and benefits begin to accrue, in 
        accordance with the provisions of this chapter; 
           (11) pay annuities, refunds, survivor benefits, salaries, 
        and necessary operating expenses of the system; 
           (12) certify funds available for investment to the state 
        board of investment; 
           (13) with the advice and approval of the board request the 
        state board of investment to sell securities when the director 
        determines that funds are needed for the system; 
           (14) prepare and submit to the board and the legislature an 
        annual financial report covering the operation of the system, as 
        required by section 356.20; 
           (15) prepare and submit biennial and annual budgets to the 
        board and with the approval of the board submit the budgets to 
        the department of finance; and 
           (16) with the approval of the board, perform other duties 
        required to administer the retirement and other provisions of 
        this chapter and to do its business. 
           Sec. 86.  Minnesota Statutes 1996, section 352.03, 
        subdivision 16, is amended to read: 
           Subd. 16.  [DATA PROCESSING SERVICES.] Notwithstanding 
        chapter 16B, or 16C or any law to the contrary, the executive 
        director of the system may use the services of the department of 
        administration, information services division, for electronic 
        data processing and related services or may contract for all or 
        a part of the services. 
           Sec. 87.  Minnesota Statutes 1997 Supplement, section 
        353.03, subdivision 3a, is amended to read: 
           Subd. 3a.  [EXECUTIVE DIRECTOR.] (a)  [APPOINTMENT.] The 
        board shall appoint, with the advice and consent of the senate, 
        an executive director on the basis of education, experience in 
        the retirement field, and leadership ability.  The executive 
        director shall have had at least five years' experience in an 
        executive level management position, which has included 
        responsibility for pensions, deferred compensation, or employee 
        benefits.  The executive director serves at the pleasure of the 
        board.  The salary of the executive director is as provided by 
        section 15A.0815. 
           (b)  [DUTIES.] The management of the association is vested 
        in the executive director who shall be the executive and 
        administrative head of the association.  The executive director 
        shall act as adviser to the board on all matters pertaining to 
        the association and shall also act as the secretary of the 
        board.  The executive director shall: 
           (1) attend all meetings of the board; 
           (2) prepare and recommend to the board appropriate rules to 
        carry out the provisions of this chapter; 
           (3) establish and maintain an adequate system of records 
        and accounts following recognized accounting principles and 
        controls; 
           (4) designate, with the approval of the board, up to two 
        persons who shall serve in the unclassified service and whose 
        salary is set in accordance with section 43A.18, subdivision 3, 
        appoint a confidential secretary in the unclassified service, 
        and appoint employees to carry out this chapter, who are subject 
        to chapters 43A and 179A in the same manner as are executive 
        branch employees; 
           (5) organize the work of the association as the director 
        deems necessary to fulfill the functions of the association, and 
        define the duties of its employees and delegate to them any 
        powers or duties, subject to the control of, and under such 
        conditions as, the executive director may prescribe; 
           (6) with the approval of the board, contract for the 
        services of an approved actuary, professional management 
        services, and any other consulting services as necessary to 
        fulfill the purposes of this chapter.  All contracts are subject 
        to chapter 16B 16C.  The commissioner of administration shall 
        not approve, and the association shall not enter into, any 
        contract to provide lobbying services or legislative advocacy of 
        any kind.  Any approved actuary retained by the executive 
        director shall function as the actuarial advisor of the board 
        and the executive director and may perform actuarial valuations 
        and experience studies to supplement those performed by the 
        actuary retained by the legislative commission on pensions and 
        retirement.  Any supplemental actuarial valuations or experience 
        studies shall be filed with the executive director of the 
        legislative commission on pensions and retirement.  Copies of 
        professional management survey reports shall be transmitted to 
        the secretary of the senate, the chief clerk of the house of 
        representatives, and the legislative reference library as 
        provided by section 3.195, to the executive director of the 
        commission and to the legislative auditor at the same time as 
        reports are furnished to the board.  Only management firms 
        experienced in conducting management surveys of federal, state, 
        or local public retirement systems shall be qualified to 
        contract with the director hereunder; 
           (7) with the approval of the board provide in-service 
        training for the employees of the association; 
           (8) make refunds of accumulated contributions to former 
        members and to the designated beneficiary, surviving spouse, 
        legal representative or next of kin of deceased members or 
        deceased former members, as provided in this chapter; 
           (9) determine the amount of the annuities and disability 
        benefits of members covered by the association and authorize 
        payment of the annuities and benefits beginning as of the dates 
        on which the annuities and benefits begin to accrue, in 
        accordance with the provisions of this chapter; 
           (10) pay annuities, refunds, survivor benefits, salaries, 
        and necessary operating expenses of the association; 
           (11) prepare and submit to the board and the legislature an 
        annual financial report covering the operation of the 
        association, as required by section 356.20; 
           (12) prepare and submit biennial and annual budgets to the 
        board for its approval and submit the approved budgets to the 
        department of finance for approval by the commissioner; 
           (13) reduce all or part of the accrued interest payable 
        under section 353.27, subdivisions 12, 12a, and 12b, or 353.28, 
        subdivision 5, upon receipt of proof by the association of an 
        unreasonable processing delay or other extenuating circumstances 
        of the employing unit.  The executive director shall prescribe 
        and submit for approval by the board the conditions under which 
        such interest may be reduced; and 
           (14) with the approval of the board, perform such other 
        duties as may be required for the administration of the 
        association and the other provisions of this chapter and for the 
        transaction of its business.  
           Sec. 88.  Minnesota Statutes 1996, section 354.06, 
        subdivision 2a, is amended to read: 
           Subd. 2a.  [DUTIES OF EXECUTIVE DIRECTOR.] The management 
        of the association is vested in the executive director who shall 
        be the executive and administrative head of the association.  
        The executive director shall act as advisor to the board on all 
        matters pertaining to the association and shall also act as the 
        secretary of the board.  The executive director shall: 
           (1) attend all meetings of the board; 
           (2) prepare and recommend to the board appropriate rules to 
        carry out the provisions of this chapter; 
           (3) establish and maintain an adequate system of records 
        and accounts following recognized accounting principles and 
        controls; 
           (4) designate an assistant executive director in the 
        unclassified service and two assistant executive directors in 
        the classified service with the approval of the board, and 
        appoint such employees, both permanent and temporary, as are 
        necessary to carry out the provisions of this chapter; 
           (5) organize the work of the association as the director 
        deems necessary to fulfill the functions of the association, and 
        define the duties of its employees and delegate to them any 
        powers or duties, subject to the director's control and under 
        such conditions as the director may prescribe; 
           (6) with the approval of the board, contract and set the 
        compensation for the services of an approved actuary, 
        professional management services, and any other consulting 
        services.  These contracts are not subject to the competitive 
        bidding procedure prescribed by chapter 16B 16C.  An approved 
        actuary retained by the executive director shall function as the 
        actuarial advisor of the board and the executive director and 
        may perform actuarial valuations and experience studies to 
        supplement those performed by the actuary retained by the 
        legislative commission on pensions and retirement.  Any 
        supplemental actuarial valuations or experience studies shall be 
        filed with the executive director of the legislative commission 
        on pensions and retirement.  Copies of professional management 
        survey reports must be transmitted to the secretary of the 
        senate, the chief clerk of the house of representatives, and the 
        legislative reference library as provided by section 3.195, to 
        the executive director of the commission and to the legislative 
        auditor at the same time as reports are furnished to the board.  
        Only management firms experienced in conducting management 
        surveys of federal, state, or local public retirement systems 
        are qualified to contract with the executive director; 
           (7) with the approval of the board, provide in-service 
        training for the employees of the association; 
           (8) make refunds of accumulated contributions to former 
        members and to the designated beneficiary, surviving spouse, 
        legal representative, or next of kin of deceased members or 
        deceased former members, under this chapter; 
           (9) determine the amount of the annuities and disability 
        benefits of members covered by the association and authorize 
        payment of the annuities and benefits beginning as of the dates 
        on which the annuities and benefits begin to accrue, under this 
        chapter; 
           (10) pay annuities, refunds, survivor benefits, salaries, 
        and necessary operating expenses of the association; 
           (11) prepare and submit to the board and the legislature an 
        annual financial report covering the operation of the 
        association, as required by section 356.20; 
           (12) certify funds available for investment to the state 
        board of investment; 
           (13) with the advice and approval of the board, request the 
        state board of investment to sell securities on determining that 
        funds are needed for the purposes of the association; 
           (14) prepare and submit biennial and annual budgets to the 
        board and with the approval of the board submit those budgets to 
        the department of finance; and 
           (15) with the approval of the board, perform such other 
        duties as may be required for the administration of the 
        association and the other provisions of this chapter and for the 
        transaction of its business.  The executive director may: 
           (i) reduce all or part of the accrued interest and fines 
        payable by an employing unit for reporting requirements under 
        section 354.52, based on an evaluation of any extenuating 
        circumstances of the employing unit; 
           (ii) assign association employees to conduct field audits 
        of an employing unit to ensure compliance with the provisions of 
        this chapter; and 
           (iii) recover overpayments, if not repaid to the 
        association, by suspending or reducing the payment of a 
        retirement annuity, refund, disability benefit, survivor 
        benefit, or optional annuity under this chapter until the 
        overpayment, plus interest, has been recovered. 
           Sec. 89.  Minnesota Statutes 1996, section 354.07, 
        subdivision 7, is amended to read: 
           Subd. 7.  Notwithstanding chapter 16B, or 16C or any law to 
        the contrary, the board may use the services of the department 
        of administration, information services division, for electronic 
        data processing and related services or may contract for all or 
        a portion of such services. 
           Sec. 90.  Minnesota Statutes 1996, section 356A.06, 
        subdivision 7, is amended to read: 
           Subd. 7.  [EXPANDED LIST OF AUTHORIZED INVESTMENT 
        SECURITIES.] (a)  [AUTHORITY.] Except to the extent otherwise 
        authorized by law or bylaws, a covered pension plan not 
        described by subdivision 6, paragraph (a), may invest its assets 
        only in accordance with this subdivision. 
           (b)  [SECURITIES GENERALLY.] The covered pension plan has 
        the authority to purchase, sell, lend, or exchange the 
        securities specified in paragraphs (c) to (g), including puts 
        and call options and future contracts traded on a contract 
        market regulated by a governmental agency or by a financial 
        institution regulated by a governmental agency.  These 
        securities may be owned as units in commingled trusts that own 
        the securities described in paragraphs (c) to (g).  
           (c)  [GOVERNMENT OBLIGATIONS.] The covered pension plan may 
        invest funds in governmental bonds, notes, bills, mortgages, and 
        other evidences of indebtedness provided the issue is backed by 
        the full faith and credit of the issuer or the issue is rated 
        among the top four quality rating categories by a nationally 
        recognized rating agency.  The obligations in which funds may be 
        invested under this paragraph include guaranteed or insured 
        issues of (1) the United States, its agencies, its 
        instrumentalities, or organizations created and regulated by an 
        act of Congress; (2) Canada and its provinces, provided the 
        principal and interest is payable in United States dollars; (3) 
        the states and their municipalities, political subdivisions, 
        agencies, or instrumentalities; (4) the International Bank for 
        Reconstruction and Development, the Inter-American Development 
        Bank, the Asian Development Bank, the African Development Bank, 
        or any other United States government sponsored organization of 
        which the United States is a member, provided the principal and 
        interest is payable in United States dollars. 
           (d)  [CORPORATE OBLIGATIONS.] The covered pension plan may 
        invest funds in bonds, notes, debentures, transportation 
        equipment obligations, or any other longer term evidences of 
        indebtedness issued or guaranteed by a corporation organized 
        under the laws of the United States or any state thereof, or the 
        Dominion of Canada or any province thereof if they conform to 
        the following provisions: 
           (1) the principal and interest of obligations of 
        corporations incorporated or organized under the laws of the 
        Dominion of Canada or any province thereof must be payable in 
        United States dollars; and 
           (2) obligations must be rated among the top four quality 
        categories by a nationally recognized rating agency. 
           (e)  [OTHER OBLIGATIONS.] (1) The covered pension plan may 
        invest funds in bankers acceptances, certificates of deposit, 
        deposit notes, commercial paper, mortgage participation 
        certificates and pools, asset backed securities, repurchase 
        agreements and reverse repurchase agreements, guaranteed 
        investment contracts, savings accounts, and guaranty fund 
        certificates, surplus notes, or debentures of domestic mutual 
        insurance companies if they conform to the following provisions: 
           (i) bankers acceptances and deposit notes of United States 
        banks are limited to those issued by banks rated in the highest 
        four quality categories by a nationally recognized rating 
        agency; 
           (ii) certificates of deposit are limited to those issued by 
        (A) United States banks and savings institutions that are rated 
        in the highest four quality categories by a nationally 
        recognized rating agency or whose certificates of deposit are 
        fully insured by federal agencies; or (B) credit unions in 
        amounts up to the limit of insurance coverage provided by the 
        National Credit Union Administration; 
           (iii) commercial paper is limited to those issued by United 
        States corporations or their Canadian subsidiaries and rated in 
        the highest two quality categories by a nationally recognized 
        rating agency; 
           (iv) mortgage participation or pass through certificates 
        evidencing interests in pools of first mortgages or trust deeds 
        on improved real estate located in the United States where the 
        loan to value ratio for each loan as calculated in accordance 
        with section 61A.28, subdivision 3, does not exceed 80 percent 
        for fully amortizable residential properties and in all other 
        respects meets the requirements of section 61A.28, subdivision 
        3; 
           (v) collateral for repurchase agreements and reverse 
        repurchase agreements is limited to letters of credit and 
        securities authorized in this section; 
           (vi) guaranteed investment contracts are limited to those 
        issued by insurance companies or banks rated in the top four 
        quality categories by a nationally recognized rating agency or 
        to alternative guaranteed investment contracts where the 
        underlying assets comply with the requirements of this 
        subdivision; 
           (vii) savings accounts are limited to those fully insured 
        by federal agencies; and 
           (viii) asset backed securities must be rated in the top 
        four quality categories by a nationally recognized rating agency.
           (2) Sections 16A.58 and 16B.06, 16C.03, subdivision 4, and 
        16C.05 do not apply to certificates of deposit and 
        collateralization agreements executed by the covered pension 
        plan under clause (1), item (ii). 
           (3) In addition to investments authorized by clause (1), 
        item (iv), the covered pension plan may purchase from the 
        Minnesota housing finance agency all or any part of a pool of 
        residential mortgages, not in default, that has previously been 
        financed by the issuance of bonds or notes of the agency.  The 
        covered pension plan may also enter into a commitment with the 
        agency, at the time of any issue of bonds or notes, to purchase 
        at a specified future date, not exceeding 12 years from the date 
        of the issue, the amount of mortgage loans then outstanding and 
        not in default that have been made or purchased from the 
        proceeds of the bonds or notes.  The covered pension plan may 
        charge reasonable fees for any such commitment and may agree to 
        purchase the mortgage loans at a price sufficient to produce a 
        yield to the covered pension plan comparable, in its judgment, 
        to the yield available on similar mortgage loans at the date of 
        the bonds or notes.  The covered pension plan may also enter 
        into agreements with the agency for the investment of any 
        portion of the funds of the agency.  The agreement must cover 
        the period of the investment, withdrawal privileges, and any 
        guaranteed rate of return. 
           (f)  [CORPORATE STOCKS.] The covered pension plan may 
        invest funds in stocks or convertible issues of any corporation 
        organized under the laws of the United States or the states 
        thereof, the Dominion of Canada or its provinces, or any 
        corporation listed on the New York Stock Exchange or the 
        American Stock Exchange, if they conform to the following 
        provisions: 
           (1) the aggregate value of corporate stock investments, as 
        adjusted for realized profits and losses, must not exceed 85 
        percent of the market or book value, whichever is less, of a 
        fund, less the aggregate value of investments according to 
        subdivision 6; 
           (2) investments must not exceed five percent of the total 
        outstanding shares of any one corporation. 
           (g)  [OTHER INVESTMENTS.] (1) In addition to the 
        investments authorized in paragraphs (b) to (f), and subject to 
        the provisions in clause (2), the covered pension plan may 
        invest funds in:  
           (i) venture capital investment businesses through 
        participation in limited partnerships and corporations; 
           (ii) real estate ownership interests or loans secured by 
        mortgages or deeds of trust through investment in limited 
        partnerships, bank sponsored collective funds, trusts, and 
        insurance company commingled accounts, including separate 
        accounts; 
           (iii) regional and mutual funds through bank sponsored 
        collective funds and open-end investment companies registered 
        under the Federal Investment Company Act of 1940; 
           (iv) resource investments through limited partnerships, 
        private placements, and corporations; and 
           (v) international securities. 
           (2) The investments authorized in clause (1) must conform 
        to the following provisions:  
           (i) the aggregate value of all investments made according 
        to clause (1) may not exceed 35 percent of the market value of 
        the fund for which the covered pension plan is investing; 
           (ii) there must be at least four unrelated owners of the 
        investment other than the state board for investments made under 
        clause (1), item (i), (ii), (iii), or (iv); 
           (iii) covered pension plan participation in an investment 
        vehicle is limited to 20 percent thereof for investments made 
        under clause (1), item (i), (ii), (iii), or (iv); and 
           (iv) covered pension plan participation in a limited 
        partnership does not include a general partnership interest or 
        other interest involving general liability.  The covered pension 
        plan may not engage in any activity as a limited partner which 
        creates general liability. 
           Sec. 91.  Minnesota Statutes 1996, section 446A.12, 
        subdivision 5, is amended to read: 
           Subd. 5.  [EXEMPTION.] The notes and bonds of the authority 
        are not subject to section 16B.06 sections 16C.03, subdivision 
        4, and 16C.05. 
           Sec. 92.  Minnesota Statutes 1996, section 462A.18, 
        subdivision 2, is amended to read: 
           Subd. 2.  [CONTRACTS AND SECURITY.] Notwithstanding the 
        provisions of this section, the agency shall have power to 
        contract with the holders of any of its notes or bonds, as to 
        the custody, collection, securing, investment, and payment of 
        any money of the agency, or any money held in trust or otherwise 
        for the payment of notes or bonds, and to carry out such 
        contract.  Money held in trust or otherwise for the payment of 
        notes or bonds or in any way to secure notes or bonds and 
        deposits of such money may be secured in the same manner as 
        money of the agency, and all banks and trust companies are 
        authorized to give such security for such deposits.  All money 
        so paid to the state treasurer as agent of the agency, from 
        whatever source, are appropriated to the agency.  The agency's 
        notes and bonds are not subject to section 16B.06 sections 
        16C.03, subdivision 4, and 16C.05.  
           Sec. 93.  Minnesota Statutes 1996, 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) "Small targeted group business" means businesses 
        designated under section 16B.19 16C.16.  
           (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 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. 94.  Minnesota Statutes 1996, section 473.142, is 
        amended to read: 
           473.142 [SMALL BUSINESSES.] 
           (a) The metropolitan council and agencies specified in 
        section 473.143, subdivision 1, 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 
        16C.16. 
           (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 16C.16 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 
        16C.16.  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 16C.16 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 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. 95.  Minnesota Statutes 1996, section 473.556, 
        subdivision 14, is amended to read: 
           Subd. 14.  [SMALL BUSINESS CONTRACTS.] In exercising its 
        powers to contract for the purchase of services, materials, 
        supplies, and equipment, pursuant to subdivisions 5, 7, 8 and 
        10, the commission shall designate and set aside each fiscal 
        year for awarding to small businesses approximately ten percent 
        of the value of anticipated contracts and subcontracts of that 
        kind for that year, in the manner required of the commissioner 
        of administration for state procurement contracts pursuant to 
        sections 16B.19 to 16B.22 16C.16 to 16C.19.  The commission 
        shall follow the rules promulgated by the commissioner of 
        administration pursuant to section 16B.22 16C.19, and shall 
        submit reports of the kinds required of the commissioners of 
        administration and economic development by section 16B.21 16C.18.
           Sec. 96.  Minnesota Statutes 1996, section 480.09, 
        subdivision 1, is amended to read: 
           Subdivision 1.  The state library shall be maintained in 
        the capitol and shall be under the supervision of the justices 
        of the supreme court.  Notwithstanding chapter 16B 16C or any 
        other act inconsistent herewith or acts amendatory thereof or 
        supplementary thereto, they shall direct the purchases of books, 
        pamphlets, and documents therefor and the sales and exchanges 
        therefrom upon such terms and conditions as they may deem just 
        and proper.  They may authorize the transfer of books and 
        documents to the University of Minnesota or any department 
        thereof, or to any state agency.  They shall adopt rules for the 
        government of the library and the management of its affairs, and 
        prescribe penalties for the violation thereof.  
           Sec. 97.  Minnesota Statutes 1996, section 626.90, 
        subdivision 2, is amended to read: 
           Subd. 2.  [LAW ENFORCEMENT AGENCY.] (a) The band has the 
        powers of a law enforcement agency, as defined in section 
        626.84, subdivision 1, paragraph (h), if all of the requirements 
        of clauses (1) to (4) are met: 
           (1) the band agrees to be subject to liability for its 
        torts and those of its officers, employees, and agents acting 
        within the scope of their employment or duties arising out of a 
        law enforcement agency function conferred by this section, to 
        the same extent as a municipality under chapter 466, and the 
        band further agrees, notwithstanding section 16B.06 16C.05, 
        subdivision 6 7, to waive its sovereign immunity for purposes of 
        claims of this liability; 
           (2) the band files with the board of peace officer 
        standards and training a bond or certificate of insurance for 
        liability coverage for the maximum amounts set forth in section 
        466.04; 
           (3) the band files with the board of peace officer 
        standards and training a certificate of insurance for liability 
        of its law enforcement officers, employees, and agents for 
        lawsuits under the United States Constitution; and 
           (4) the band agrees to be subject to section 13.82 and any 
        other laws of the state relating to data practices of law 
        enforcement agencies. 
           (b) The band shall enter into mutual aid/cooperative 
        agreements with the Mille Lacs county sheriff under section 
        471.59 to define and regulate the provision of law enforcement 
        services under this section.  The agreements must define the 
        trust property involved in the joint powers agreement. 
           (c) The band shall have concurrent jurisdictional authority 
        under this section with the Mille Lacs county sheriff's 
        department only if the requirements of paragraph (a) are met and 
        under the following circumstances: 
           (1) over all persons in the geographical boundaries of the 
        property held by the United States in trust for the Mille Lacs 
        band or the Minnesota Chippewa tribe; 
           (2) over all Minnesota Chippewa tribal members within the 
        boundaries of the Treaty of February 22, 1855, 10 Stat. 1165, in 
        Mille Lacs county, Minnesota; and 
           (3) concurrent jurisdiction over any person who commits or 
        attempts to commit a crime in the presence of an appointed band 
        peace officer within the boundaries of the Treaty of February 
        22, 1855, 10 Stat. 1165, in Mille Lacs county, Minnesota. 
           Sec. 98.  Minnesota Statutes 1997 Supplement, section 
        626.91, subdivision 2, is amended to read: 
           Subd. 2.  [LAW ENFORCEMENT AGENCY.] (a) The community has 
        the powers of a law enforcement agency, as defined in section 
        626.84, subdivision 1, paragraph (h), if all of the requirements 
        of clauses (1) to (4) are met: 
           (1) the community agrees to be subject to liability for its 
        torts and those of its officers, employees, and agents acting 
        within the scope of their employment or duties arising out of 
        the law enforcement agency powers conferred by this section to 
        the same extent as a municipality under chapter 466, and the 
        community further agrees, notwithstanding section 16B.06 16C.05, 
        subdivision 6 7, to waive its sovereign immunity with respect to 
        claims arising from this liability; 
           (2) the community files with the board of peace officer 
        standards and training a bond or certificate of insurance for 
        liability coverage for the maximum amounts set forth in section 
        466.04; 
           (3) the community files with the board of peace officer 
        standards and training a certificate of insurance for liability 
        of its law enforcement officers, employees, and agents for 
        lawsuits under the United States Constitution; and 
           (4) the community agrees to be subject to section 13.82 and 
        any other laws of the state relating to data practices of law 
        enforcement agencies. 
           (b) The community shall enter into an agreement under 
        section 471.59 with the Redwood county sheriff to define and 
        regulate the provision of law enforcement services under this 
        section and to provide for mutual aid and cooperation.  The 
        agreement must identify and describe the trust property involved 
        in the agreement.  For purposes of entering into this agreement, 
        the community shall be considered a "governmental unit" as that 
        term is defined in section 471.59, subdivision 1. 
           Sec. 99.  [EFFECTIVE DATE.] 
           This article is effective July 1, 1998, except that it does 
        not apply to any part of the procurement process that results 
        from a solicitation dated before July 1, 1998. 
           Presented to the governor April 10, 1998 
           Signed by the governor April 20, 1998, 11:22 a.m.

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