1997 Minnesota Statutes

     16B.19 Designation of procurements from small businesses.

    Subdivision 1.    Small business procurements.  The 
 commissioner shall for each fiscal year ensure that small 
 businesses receive at least 25 percent of the value of 
 anticipated total state procurement of goods and services, 
 including printing and construction.  The commissioner shall 
 divide the procurements so designated into contract award units 
 of economically feasible production runs in order to facilitate 
 offers or bids from small businesses.  In making the annual 
 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 set-aside awards, the 
 commissioner may designate a portion of the small business 
 set-aside procurement for award to bidders from a specified 
 congressional district or other geographical region specified by 
 the commissioner.  The failure of the commissioner to designate 
 particular procurements shall not be deemed to prohibit or 
 discourage small businesses from seeking the procurement award 
 through the normal solicitation and bidding processes.  

    Subd. 1a.    Small business.  The commissioner shall 
 adopt rules defining "small business" for purposes of sections 
 16B.19 to 16B.22, 137.31, 137.35, 161.321, and 473.142.  The 
 definition must include only businesses with their principal 
 place of business in Minnesota.  The definition must establish 
 different size standards for various types of businesses.  In 
 establishing these standards, the commissioner must consider the 
 differences among industries caused by the size of the market 
 for goods or services and the relative size and market share of 
 the competitors operating in those markets.  

    The definition of "small business" in section 645.445 
 applies to sections 16B.19 to 16B.22, 137.31, 137.35, 161.321, 
 and 473.142, until the commissioner adopts rules with a new 
 definition.  However, only small businesses with a principal 
 place of business in Minnesota are included for purposes of 
 these sections. 

    Subd. 2.    Professional or technical procurements.  
 Every state agency shall for each fiscal year designate for 
 awarding to small businesses at least 25 percent of the value of 
 anticipated procurements of that agency for 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 16B.17. 

    Subd. 2a.    Targeted group purchasing.  The 
 commissioner shall establish a program for purchasing goods and 
 services from targeted group businesses, as designated in 
 subdivision 2b.  The purpose of the program is to remedy the 
 effects of past discrimination against members of targeted 
 groups.  In furtherance of this purpose, the commissioner shall 
 attempt to assure that for each category of goods or services 
 purchased by the state, the percentage of purchasing from each 
 type of targeted group business is proportional to the 
 representation of that targeted group business among all 
 businesses in the state in the purchasing category. 

    Subd. 2b.    Designation of targeted groups.  (a) The 
 commissioner of administration shall periodically designate 
 businesses that are majority owned and operated by women, 
 persons with a substantial physical disability, or specific 
 minorities as targeted group businesses within purchasing 
 categories the commissioner determines.  A group must be 
 targeted within a purchasing category if the commissioner 
 determines there is a statistical disparity between the 
 percentage of purchasing from businesses owned by group members 
 and the representation of businesses owned by group members 
 among all businesses in the state in the purchasing category.  
 The commissioner must review public agencies' purchasing from 
 businesses owned by women, persons with a substantial physical 
 disability, and minorities at least once every two years.  The 
 commissioner must review the representation of businesses owned 
 by these groups among all businesses in the state at least once 
 every five years. 

    (b) In addition to designations under paragraph (a), an 
 individual business may be included as a targeted group business 
 if the commissioner determines that inclusion is necessary to 
 remedy discrimination against the owner based on race, gender, 
 or disability in attempting to operate a business that would 
 provide goods or service to public agencies. 

    (c) The designations of purchasing categories and 
 businesses under paragraphs (a) and (b) are not rules for 
 purposes of chapter 14, and are not subject to rulemaking 
 procedures of that chapter. 

    Subd. 2c.    Purchasing methods.  (a) The commissioner 
 may award up to a six percent preference in the amount bid for 
 specified goods or services to small targeted group businesses. 

    (b) The commissioner may designate a purchase of goods or 
 services for award only to small targeted group businesses, if 
 the commission determines that at least three small targeted 
 group businesses are likely to bid. 

    (c) The commissioner, as a condition of awarding a 
 construction contract or approving a contract for consultant, 
 professional, or technical services, may set goals that require 
 the prime contractor to subcontract a portion of the contract to 
 small targeted group businesses.  The commissioner must 
 establish a procedure for granting waivers from the 
 subcontracting requirement when qualified small targeted group 
 businesses are not reasonably available.  The commissioner may 
 establish financial incentives for prime contractors who exceed 
 the goals for use of subcontractors and financial penalties for 
 prime contractors who fail to meet goals under this paragraph.  
 The subcontracting requirements of this paragraph do not apply 
 to prime contractors who are small targeted group businesses. 

    Subd. 2d.    Economically disadvantaged areas.  The 
 commissioner may award up to a four percent preference in the 
 amount bid on state procurement to small businesses located in 
 an economically disadvantaged area.  A business is located in an 
 economically disadvantaged area if: 

    (1) the owner resides or is employed in a county in which 
 the median income for married couples is less than 70 percent of 
 the state median income for married couples; or 

    (2) the owner resides or is employed in an area designated 
 a labor surplus area by the United States Department of Labor; 
 or 

    (3) the business is a rehabilitation facility or work 
 activity program. 

    The commissioner may designate one or more areas designated 
 as targeted neighborhoods under section 469.202 or as enterprise 
 zones under section 469.167 as economically disadvantaged areas 
 for purposes of this subdivision if the commissioner determines 
 that this designation would further the purposes of this 
 section.  If the owner of a small business resides or is 
 employed in a designated area, the small business is eligible 
 for any preference provided under this subdivision. 

    The department of revenue shall gather data necessary to 
 make the determinations required by clause (1), and shall 
 annually certify counties that qualify under clause (1).  An 
 area designated a labor surplus area retains that status for 120 
 days after certified small businesses in the area are notified 
 of the termination of the designation by the United States 
 Department of Labor. 

    Subd. 3.    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. 4.    Determination of ability to perform.  Before 
 making an award under the preference programs established in 
 subdivisions 2a to 2d, the commissioner shall evaluate whether 
 the small business scheduled to receive the award is able to 
 perform the contract.  This determination shall include 
 consideration of production and financial capacity and technical 
 competence.  

    Subd. 5.    Limits.  At least 75 percent of the value of 
 the subcontracts awarded to small targeted group businesses 
 under subdivision 2c, paragraph (c), must be performed by the 
 business to which the subcontract is awarded or by another small 
 targeted group business.  

    Subd. 6. Repealed by amendment, 1990 c 541 s 3 

    Subd. 7.  Repealed, 1984 c 654 art 2 s 48 

    Subd. 8. Repealed by amendment, 1989 c 352 s 3 

    Subd. 9.    Procurement procedures.  All laws and rules 
 pertaining to solicitations, bid evaluations, contract awards, 
 and other procurement matters apply equally to procurements 
 designated for small businesses.  In the event of conflict with 
 other rules, section 16B.18 and rules adopted under it govern, 
 if section 16B.18 applies.  If it does not apply, sections 
 16B.19 to 16B.22 and rules adopted under those sections govern.  

    Subd. 10.    Applicability.  This section does not apply 
 to construction contracts or contracts for professional or 
 technical services under section 16B.17 that are financed in 
 whole or in part with federal funds and that are subject to 
 federal disadvantaged business enterprise regulations. 

    HIST: 1984 c 544 s 24; 1984 c 654 art 2 s 48; 1984 c 655 art 2 
 s 13 subd 1; 1985 c 296 s 2-5; 1987 c 365 s 9; 1988 c 644 s 1; 
 1989 c 352 s 3,25; 1990 c 541 s 3,29; 1991 c 199 art 1 s 4; art 
 2 s 1; 1992 c 514 s 4; 1995 c 254 art 1 s 56,57