1.1                          A bill for an act
  1.2             relating to public administration; providing oversight 
  1.3             of certain state and metropolitan government 
  1.4             contracts; amending Minnesota Statutes 1994, sections 
  1.5             15.061; 16A.11, by adding a subdivision; 16B.17; 
  1.6             16B.19, subdivisions 2 and 10; and 473.129, by adding 
  1.7             a subdivision; proposing coding for new law in 
  1.8             Minnesota Statutes, chapter 16B. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 1994, section 15.061, is 
  1.11  amended to read: 
  1.12     15.061 [~~CONSULTANT,~~ PROFESSIONAL ~~AND~~ OR TECHNICAL 
  1.13  SERVICES.] 
  1.14     ~~Pursuant to the provisions of~~ In accordance with section 
  1.15  16B.17, the head of a state department or agency may, with the 
  1.16  approval of the commissioner of administration, contract 
  1.17  for ~~consultant services and~~ professional ~~and~~ or technical 
  1.18  services in connection with the operation of the department or 
  1.19  agency.  A contract negotiated under this section ~~shall~~ is not 
  1.20  ~~be~~ subject to the competitive bidding requirements of chapter ~~16~~ 
  1.21  16B. 
  1.22     Sec. 2.  Minnesota Statutes 1994, section 16A.11, is 
  1.23  amended by adding a subdivision to read: 
  1.24     Subd. 3b.  [CONTRACTS.] The detailed budget estimate must 
  1.25  also include the following information on professional or 
  1.26  technical services contracts: 
  1.27     (1) the number and amount of contracts over $25,000 for 
  2.1   each agency for the past biennium; 
  2.2      (2) the anticipated number and amount of contracts over 
  2.3   $25,000 for each agency for the upcoming biennium; and 
  2.4      (3) the total value of all contracts from the previous 
  2.5   biennium, and the anticipated total value of all contracts for 
  2.6   the upcoming biennium. 
  2.7      Sec. 3.  [16B.167] [EMPLOYEE SKILLS INVENTORY.] 
  2.8      (a) The commissioners of employee relations and 
  2.9   administration shall develop a list of skills that state 
  2.10  agencies commonly seek from professional or technical service 
  2.11  contracts, in consultation with exclusive representatives of 
  2.12  state employees. 
  2.13     (b) Before an agency may seek approval of a professional or 
  2.14  technical services contract valued in excess of $5,000, it must 
  2.15  certify to the commissioner that it has publicized the contract 
  2.16  by posting notice at appropriate worksites within agencies and 
  2.17  has made reasonable efforts to determine that no state employee, 
  2.18  including an employee outside the contracting agency, is able to 
  2.19  perform the services called for by the contract. 
  2.20     Sec. 4.  Minnesota Statutes 1994, section 16B.17, is 
  2.21  amended to read: 
  2.22     16B.17 [~~CONSULTANTS AND~~ PROFESSIONAL OR TECHNICAL 
  2.23  SERVICES.] 
  2.24     Subdivision 1.  [TERMS.] For the purposes of this section, 
  2.25  ~~the following terms have the meanings given them:~~ 
  2.26     ~~(a) [CONSULTANT SERVICES.]~~ "~~Consultant~~ professional or 
  2.27  technical services" means services ~~which~~ that are intellectual 
  2.28  in character; ~~which~~ that do not involve the provision of 
  2.29  supplies or materials; ~~which~~ that include consultation analysis, 
  2.30  evaluation, prediction, planning, or recommendation; and ~~which~~ 
  2.31  that result in the production of a report or the completion of a 
  2.32  task.  
  2.33     ~~(b) [PROFESSIONAL AND TECHNICAL SERVICES.] "Professional~~ 
  2.34  ~~and technical services" means services which are predominantly~~ 
  2.35  ~~intellectual in character; which do not involve the provision of~~ 
  2.36  ~~supplies or materials; and in which the final result is the~~ 
  3.1   ~~completion of a task rather than analysis, evaluation,~~ 
  3.2   ~~prediction, planning, or recommendation.~~  
  3.3      Subd. 2.  [PROCEDURE FOR ~~CONSULTANT AND~~ PROFESSIONAL ~~AND~~ OR 
  3.4   TECHNICAL SERVICES CONTRACTS.] Before approving a proposed state 
  3.5   contract for ~~consultant services or~~ professional ~~and~~ or 
  3.6   technical services, the commissioner must determine, at least, 
  3.7   that:  
  3.8      (1) all provisions of section 16B.19 and subdivision 3 of 
  3.9   this section have been verified or complied with; 
  3.10     (2) the work to be performed under the contract is 
  3.11  necessary to the agency's achievement of its statutory 
  3.12  responsibilities, and there is statutory authority to enter into 
  3.13  the contract; 
  3.14     (3) the contract will not establish an employment 
  3.15  relationship between the state or the agency and any persons 
  3.16  performing under the contract; 
  3.17     (4) no current state employees will engage in the 
  3.18  performance of the contract; 
  3.19     (5) no state agency has previously performed or contracted 
  3.20  for the performance of tasks which would be substantially 
  3.21  duplicated under the proposed contract; ~~and~~ 
  3.22     (6) the contracting agency has specified a satisfactory 
  3.23  method of evaluating and using the results of the work to be 
  3.24  performed; and 
  3.25     (7) the combined contract and amendments will not extend 
  3.26  for more than five years.  
  3.27     Subd. 3.  [DUTIES OF CONTRACTING AGENCY.] Before an agency 
  3.28  may seek approval of a ~~consultant or~~ professional ~~and~~ or 
  3.29  technical services contract valued in excess of $5,000, it must 
  3.30  certify to the commissioner that:  
  3.31     (1) no state employee is able to perform the services 
  3.32  called for by the contract; 
  3.33     (2) the normal competitive bidding mechanisms will not 
  3.34  provide for adequate performance of the services; 
  3.35     (3) ~~the services are not available as a product of a prior~~ 
  3.36  ~~consultant or professional and technical services contract, and~~ 
  4.1   the contractor has certified that the product of the services 
  4.2   will be original in character; 
  4.3      (4) reasonable efforts were made to publicize the 
  4.4   availability of the contract to the public; 
  4.5      (5) the agency has received, reviewed, and accepted a 
  4.6   detailed work plan from the contractor for performance under the 
  4.7   contract; ~~and~~ 
  4.8      (6) the agency has developed, and fully intends to 
  4.9   implement, a written plan providing for the assignment of 
  4.10  specific agency personnel to a monitoring and liaison function~~;~~, 
  4.11  the periodic review of interim reports or other indications of 
  4.12  past performance, and the ultimate utilization of the final 
  4.13  product of the services; and 
  4.14     (7) the agency will not allow the contractor to begin work 
  4.15  before funds are fully encumbered. 
  4.16     The agency certification must provide detail on how the 
  4.17  agency complied with this subdivision.  In particular, the 
  4.18  agency must describe how it complied with clauses (1) and (4) 
  4.19  and section 16B.167, paragraph (b), and what steps it has taken 
  4.20  to verify the competence of the proposed contractor. 
  4.21     Subd. 3a.  [RENEWALS.] The renewal of a professional or 
  4.22  technical contract must comply with all requirements, including 
  4.23  notice, applicable to the original contract.  A renewal contract 
  4.24  must be identified as such.  All notices and reports on a 
  4.25  renewal contract must state the date of the original contract 
  4.26  and the amount paid previously under the contract.  
  4.27     Subd. 4.  [REPORTS.] (a) The commissioner shall submit to 
  4.28  the governor, the chairs of the house ways and means and senate 
  4.29  finance committees, and the ~~legislature~~ legislative reference 
  4.30  library a monthly listing of all contracts for ~~consultant~~ 
  4.31  ~~services and for~~ professional ~~and~~ or technical services executed 
  4.32  or disapproved in the preceding month.  The report must identify 
  4.33  the parties and the contract amount, duration, and tasks to be 
  4.34  performed.  The commissioner shall also issue quarterly reports 
  4.35  summarizing the contract review activities of the department 
  4.36  during the preceding quarter. 
  5.1      (b) The monthly and quarterly reports must: 
  5.2      (1) be sorted by agency and by contractor; 
  5.3      (2) show the aggregate value of contracts issued by each 
  5.4   agency and issued to each contractor; 
  5.5      (3) distinguish between contracts that are being issued for 
  5.6   the first time and contracts that are being renewed; 
  5.7      (4) state the termination date of each contract; and 
  5.8      (5) categorize contracts according to subject matter, 
  5.9   including topics such as contracts for training, contracts for 
  5.10  research and opinions, and contracts for computer systems. 
  5.11     (c) Within 30 days of final completion of a contract over 
  5.12  $5,000 covered by this subdivision, the chief executive of the 
  5.13  agency entering into the contract must submit a one-page 
  5.14  performance report to the commissioner who must submit a copy to 
  5.15  the legislative reference library.  The report must: 
  5.16     (1) summarize the purpose of the contract, including why it 
  5.17  was necessary to enter into a contract; 
  5.18     (2) state the amount spent on the contract; and 
  5.19     (3) explain why this amount was a cost-effective way to 
  5.20  enable the agency to provide its services or products better or 
  5.21  more efficiently.  
  5.22     Subd. 5.  [CONTRACT TERMS.] (a) A ~~consultant or technical~~ 
  5.23  ~~and~~ professional or technical services contract must by its 
  5.24  terms permit the agency to unilaterally terminate the contract 
  5.25  prior to completion, upon payment of just compensation, if the 
  5.26  agency determines that further performance under the contract 
  5.27  would not serve agency purposes.  If the final product of the 
  5.28  contract is ~~to be~~ a written report, ~~no more than three copies of~~ 
  5.29  ~~the report, one in camera ready form, shall be submitted to the~~ 
  5.30  ~~agency.  One of the copies~~ a copy must be filed with the 
  5.31  legislative reference library.  
  5.32     (b) The terms of a contract must provide that no more than 
  5.33  90 percent of the amount due under the contract may be paid 
  5.34  until the final product has been reviewed by the chief executive 
  5.35  of the agency entering into the contract, and the chief 
  5.36  executive has certified that the contractor has satisfactorily 
  6.1   fulfilled the terms of the contract. 
  6.2      Sec. 5.  Minnesota Statutes 1994, section 16B.19, 
  6.3   subdivision 2, is amended to read: 
  6.4      Subd. 2.  [~~CONSULTANT,~~ PROFESSIONAL ~~AND~~ OR TECHNICAL 
  6.5   PROCUREMENTS.] Every state agency shall for each fiscal year 
  6.6   designate for awarding to small businesses at least 25 percent 
  6.7   of the value of anticipated procurements of that agency for 
  6.8   ~~consultant services or~~ professional ~~and~~ or technical services.  
  6.9   The set-aside under this subdivision is in addition to that 
  6.10  provided by subdivision 1, but ~~shall~~ must otherwise comply with 
  6.11  section 16B.17. 
  6.12     Sec. 6.  Minnesota Statutes 1994, section 16B.19, 
  6.13  subdivision 10, is amended to read: 
  6.14     Subd. 10.  [APPLICABILITY.] This section does not apply to 
  6.15  construction contracts or contracts for ~~consultant,~~ 
  6.16  professional~~,~~ or technical services under section 16B.17 that 
  6.17  are financed in whole or in part with federal funds and that are 
  6.18  subject to federal disadvantaged business enterprise regulations.
  6.19     Sec. 7.  Minnesota Statutes 1994, section 473.129, is 
  6.20  amended by adding a subdivision to read: 
  6.21     Subd. 2a.  [CONTRACT CONDITIONS; REPORTING.] The 
  6.22  metropolitan council shall provide, by rule, conditions for its 
  6.23  professional and technical service contracts that are equivalent 
  6.24  to the conditions required for state contracts under section 
  6.25  16B.17. 
  6.26     Sec. 8.  [METROPOLITAN COUNCIL.] 
  6.27     During the biennium ending June 30, 1997, the amount of 
  6.28  nonfederal funds spent by the metropolitan council on 
  6.29  professional or technical service contracts, as defined in 
  6.30  section 16B.17, may not exceed 90 percent of the amount of 
  6.31  nonfederal funds that the metropolitan council, the metropolitan 
  6.32  transit commission, the metropolitan waste control commission, 
  6.33  and the regional transit board spent on these contracts during 
  6.34  the biennium from July 1, 1993, to June 30, 1995. 
  6.35     Sec. 9.  [LEGISLATIVE AUDITOR.] 
  6.36     The legislative audit commission shall consider directing 
  7.1   the legislative auditor to conduct a follow-up study of agency 
  7.2   contracting and compliance with laws governing contracting. 
  7.3      Sec. 10.  [SPENDING LIMITATION ON CONTRACTS.] 
  7.4      During the biennium ending June 30, 1997, the aggregate 
  7.5   amount spent by all departments or agencies defined in Minnesota 
  7.6   Statutes, section 15.91, subdivision 1, from direct-appropriated 
  7.7   funds on professional or technical service contracts may not 
  7.8   exceed 90 percent of the aggregate amount these departments or 
  7.9   agencies spent on these contracts from direct-appropriated funds 
  7.10  during the biennium from July 1, 1993, to June 30, 1995.  For 
  7.11  purposes of this section, professional or technical service 
  7.12  contracts are as defined in Minnesota Statutes, section 16B.17, 
  7.13  but do not include contracts for highway construction or 
  7.14  maintenance.  The governor or a designated official must limit 
  7.15  or disapprove proposed contracts as necessary to comply with 
  7.16  this section. 
  7.17     Sec. 11.  [EFFECTIVE DATE.] 
  7.18     Sections 1 to 10 are effective July 1, 1995.