Minnesota Session Laws - 2012, Regular Session

CHAPTER 254--S.F.No. 1597

An act

relating to veterans; modifying certain Department of Transportation contracting requirements; authorizing counties to provide a bid preference for awarding contracts to veteran-owned small businesses;

amending Minnesota Statutes 2010, section 161.321; proposing coding for new law in Minnesota Statutes, chapter 375.

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

ARTICLE 1

DEPARTMENT OF TRANSPORTATION CONTRACTING

Section 1.

Minnesota Statutes 2010, section 161.321, is amended to read:

161.321 SMALL BUSINESS CONTRACTS.

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 paragraph (b).

(d) "Targeted group business" means a business designated under section 16C.16, subdivision 5.

(e) "Veteran-owned small business" means a business designated under section 16C.16, subdivision 6a.

Subd. 2.

Small new text begin targeted group business, small new text end business deleted text begin set-asides deleted text end new text begin ; contract preferences new text end .

(a) The commissioner may award up to a six percent preference in the amount bid for specified construction work to small targeted group businesses deleted text begin and veteran-owned small businesses deleted text end .

(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. deleted text begin The commissioner may designate a contract for construction work for award only to veteran-owned small businesses if the commissioner determines that at least three veteran-owned small businesses are likely to bid. deleted text end

deleted text begin (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 and veteran-owned small businesses. The commissioner must establish a procedure for granting waivers from the subcontracting requirement when qualified small targeted group businesses and veteran-owned small 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 or veteran-owned small businesses. deleted text end

deleted text begin (d) deleted text end new text begin (c) new text end The commissioner may award up to a four percent preference in the amount bid deleted text begin on procurement deleted text end new text begin for specified construction work new text end to small businesses located in an economically disadvantaged area as defined in section 16C.16, subdivision 7.

new text begin Subd. 2a. new text end

new text begin Small targeted group business; subcontracting goals. new text end

new text begin (a) The commissioner, as a condition of awarding a construction contract, may set goals that require the prime contractor to subcontract portions of the contract to small targeted group businesses. Prime contractors must demonstrate good faith efforts to meet the project goals. The commissioner shall establish a procedure for granting waivers from the subcontracting requirement when qualified small targeted group businesses are not reasonably available. The commissioner may establish (1) financial incentives for prime contractors who exceed the goals set for the use of subcontractors under this subdivision; and (2) sanctions for prime contractors who fail to make good faith efforts to meet the goals set under this subdivision. new text end

new text begin (b) The small targeted group business subcontracting requirements of this subdivision do not apply to prime contractors who are small targeted group businesses. new text end

new text begin Subd. 2b. new text end

new text begin Veteran-owned small business; contract preferences. new text end

new text begin (a) The commissioner may award up to a six percent preference in the amount bid for specified construction work to veteran-owned small businesses, except when prohibited by the federal government as a condition of receiving federal funds. When a bid preference is provided under this section, the percentage of preference in bid amount under this subdivision may not be less than the percentage of bid preference provided to any small targeted group business under subdivision 2. new text end

new text begin (b) When a bid preference is provided under this subdivision, the commissioner must be as inclusive as possible in specifying contracts for construction work, as well as for construction-related professional and technical services, available under this bid preference program for veteran-owned small businesses. The term "construction" must be given broad meaning for purposes of specifying and letting contracts for veteran-owned small businesses and must include, but is not limited to, preplanning, planning, and all other construction-related professional and technical services. new text end

new text begin (c) When a bid preference is provided under this subdivision, the commissioner must strive to ensure that contracts will be awarded on a proportional basis with contracts awarded under subdivision 2. new text end

new text begin (d) The commissioner may designate a contract for construction work for award only to veteran-owned small businesses, if the commissioner determines that at least three veteran-owned small businesses are likely to bid. new text end

new text begin Subd. 2c. new text end

new text begin Veteran-owned small business; subcontracting goals. new text end

new text begin (a) The commissioner, as a condition of awarding a construction contract, may set goals that require the prime contractor to subcontract portions of the contract to veteran-owned small businesses, except when prohibited by federal law or rule as a condition of receiving federal funds. Prime contractors must demonstrate good faith efforts to meet the project goals. The commissioner shall establish a procedure for granting waivers from the subcontracting requirement when qualified veteran-owned small businesses are not reasonably available. The commissioner may establish (1) financial incentives for prime contractors who exceed the goals set for the use of subcontractors under this subdivision; and (2) sanctions for prime contractors who have not been granted a waiver and fail to meet goals set under this subdivision. new text end

new text begin (b) The subcontracting requirements of this subdivision do not apply to prime contractors who are veteran-owned small businesses. new text end

Subd. 3.

new text begin Small targeted group business subcontract new text end awards deleted text begin to small businesses deleted text end .

At least 75 percent of subcontracts awarded to small targeted group businesses must be performed by the business to which the subcontract is awarded or another small targeted group business.

new text begin Subd. 3a. new text end

new text begin Veteran-owned small business; subcontract awards. new text end

At least 75 percent of subcontracts awarded to veteran-owned small businesses must be performed by the business to which the subcontract is awarded or another veteran-owned small business.

Subd. 4.

new text begin Contract new text end awards, limitations.

Contracts awarded pursuant to this section are subject to all limitations contained in rules adopted by the commissioner of administration.

new text begin Subd. 4a. new text end

new text begin Small targeted group business; limited duration and reevaluation. new text end

new text begin The commissioner shall cooperate with the commissioner of administration to periodically reevaluate the targeted group businesses to determine whether there is a statistical disparity between the percentage of construction contracts awarded to businesses owned by targeted group members and the representation of businesses owned by targeted group members among all businesses in the state in the construction category. The commissioner of administration shall designate targeted groups pursuant to section 16C.16, subdivision 5. new text end

Subd. 5.

Recourse to other businesses.

If the commissioner is unable to award a contract pursuant to the provisions of subdivisions 2 deleted text begin and 3 deleted text end new text begin to 4a new text end , the award may be placed pursuant to the normal solicitation and award provisions set forth in this chapter and chapter 16C.

Subd. 6.

Rules new text begin ; eligibility new text end .

new text begin (a) new text end 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 16C.16 to 16C.19 apply to this section. The commissioner may promulgate other rules necessary to carry out this section.

new text begin (b) In addition to other eligibility requirements, a small targeted group business or veteran-owned small business is eligible for the bid preferences under this section only for eight years following the latest of: new text end

new text begin (1) the effective date of this section; new text end

new text begin (2) for a targeted group business, the date of initial certification by the commissioner of administration, as provided under section 16C.19; new text end

new text begin (3) for a veteran-owned small business, the date of initial certification by the United States Department of Veterans Affairs, as provided under section 16C.19, paragraph (d); or new text end

new text begin (4) for a veteran-owned small business, the release or discharge of any one of the owners from military active service, as defined in section 190.05, subdivision 5, lasting for a period of 179 days or longer. new text end

Subd. 7.

Noncompetitive bids.

The commissioner is encouraged to purchase from small targeted group businesses and veteran-owned small businesses designated under section 16C.16 when making purchases that are not subject to competitive bidding procedures.

Subd. 8.

deleted text begin Report by commissioner deleted text end new text begin Reporting new text end .

new text begin (a) new text end The commissioner deleted text begin of transportation deleted text end 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 new text begin of administration new text end .

new text begin (b) By February 1 of each even-numbered year, the commissioner of transportation shall submit a report to the chairs and ranking minority members of the legislative committees with jurisdiction over transportation policy and finance and veterans policy and finance concerning contract awards during the preceding biennium under this section. At a minimum, the report must include: new text end

new text begin (1) a summary of the program; new text end

new text begin (2) a review of the use of preferences for contracting during the preceding biennium, including frequency of establishment of a preference and frequency and amount of contract awards to: new text end

new text begin (i) small targeted group businesses; and new text end

new text begin (ii) veteran-owned small businesses; new text end

new text begin (3) a review of goals and good faith efforts to use small targeted group businesses and veteran-owned small businesses in subcontracts, including analysis of methods used for, and effectiveness of, good faith efforts; new text end

new text begin (4) a summary of any financial incentives used or sanctions imposed; new text end

new text begin (5) agency commentary on any perceived impediments, whether statutory, administrative, or otherwise, that may be limiting the participation of small targeted group businesses and veteran-owned small businesses in the agency's contract preference program; new text end

new text begin (6) information on each reevaluation under subdivision 4a, including details on the methodology for reevaluation; and new text end

new text begin (7) any recommendations for legislative or programmatic changes. new text end

new text begin Subd. 9. new text end

new text begin Veteran-owned small business; purpose. new text end

new text begin The purpose of the state contracting bid preference program for veteran-owned small businesses is to facilitate the healthy transition of veterans from military to civilian life, and to help compensate veterans for their sacrifices including, but not limited to, their sacrifice of health and time to the state and nation during their military service, as well as to enhance economic development within Minnesota. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment, and applies to contracts let on or after July 1, 2012. new text end

ARTICLE 2

AUTHORIZING COUNTIES FOR BID PREFERENCE FOR VETERAN-OWNED SMALL BUSINESSES

Section 1.

new text begin [375.771] VETERAN-OWNED SMALL BUSINESS CONTRACTS. new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) The definitions in this subdivision apply to this section. new text end

new text begin (b) "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. new text end

new text begin (c) "Contract" means an agreement entered into between a business entity and the county for procurement of goods and services including both technical and nontechnical goods and services, printing, and construction. new text end

new text begin (d) "County board" or "board" has the meaning given in section 375.01. new text end

new text begin (e) "County purchasing department" has the meaning given in section 375.72. new text end

new text begin (f) "Director of purchasing" has the meaning given in section 375.74. new text end

new text begin (g) "Subcontractor" means a business entity that enters into a legally binding agreement with another business entity that is a party to a contract as defined in paragraph (c). new text end

new text begin (h) "Veteran" has the meaning given in section 197.447. new text end

new text begin (i) "Veteran-owned small business" means a business designated under section 16C.16, subdivision 6a. new text end

new text begin Subd. 2. new text end

new text begin Policy; purpose; director. new text end

new text begin (a) A county board may establish a program within the county in accordance with this section to provide a bid preference for awarding contracts to designated veteran-owned small businesses for the procurement of technical and nontechnical goods and services including, but not limited to, printing and construction, broadly defined to include all phases of the construction process. new text end

new text begin (b) The purpose of this program is to facilitate the transition of veterans from military to civilian life, and to help compensate veterans for their sacrifices including, but not limited to, their sacrifice of health and time to the community, state, and nation during their military service, as well as to enhance economic development throughout Minnesota. new text end

new text begin (c) The county board may direct the county director of purchasing, or other designated official within the county purchasing department, to administer this program in accordance with county policy established by the board. new text end

new text begin Subd. 3. new text end

new text begin Small business set-asides. new text end

new text begin (a) The county director of purchasing may award up to a six percent preference in the amount bid for procurement of goods and services including, but not limited to, technical and nontechnical goods and services, printing, and construction to veteran-owned small businesses having their principal place of business in Minnesota. new text end

new text begin (b) The board, as a condition of awarding a construction contract, may set goals that require the prime contractor to subcontract a portion of the contract to veteran-owned small businesses. The board must establish a procedure for granting waivers from the subcontracting requirement when qualified veteran-owned small businesses are not reasonably available. The board may establish financial incentives for prime contractors who exceed the goals for use of veteran-owned small business subcontractors and financial penalties for prime contractors who fail to meet goals under this paragraph. The subcontracting requirements of this paragraph do not apply to prime contractors who are veteran-owned small businesses. new text end

new text begin Subd. 4. new text end

new text begin Awards to small businesses. new text end

new text begin At least 75 percent of subcontracts awarded to veteran-owned small businesses must be performed by the business to which the subcontract is awarded or another veteran-owned small business. new text end

new text begin Subd. 5. new text end

new text begin Awards, limitations. new text end

new text begin Contracts awarded under this section are subject to all limitations adopted by the board. new text end

new text begin Subd. 6. new text end

new text begin Recourse to other businesses. new text end

new text begin If the director is unable to award a contract under subdivisions 3 and 4, the award may be placed under normal solicitation and award statutes and rules. new text end

new text begin Subd. 7. new text end

new text begin Noncompetitive bids. new text end

new text begin The board is encouraged to purchase from veteran-owned small businesses designated under section 16C.16, subdivision 6a, when making purchases that are not subject to competitive bidding procedures. new text end

new text begin Subd. 8. new text end

new text begin Report to board. new text end

new text begin At the request of the county board, the county treasurer shall report to the board on compliance with this section. The information must be reported at the time and in the manner requested by the board. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2012, for contracts awarded by counties on or after that date. new text end

Presented to the governor April 26, 2012

Signed by the governor April 30, 2012, 11:04 a.m.