2002 Minnesota Statutes

CHAPTER 16C. State procurement

  16C.01 Repealed, 1985 c 285 s 54 

     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. 10a.    Organizational conflict of interest.  
 "Organizational conflict of interest" means that because of 
 existing or planned activities or because of relationships with 
 other persons: 

    (1) the vendor is unable or potentially unable to render 
 impartial assistance or advice to the state; 

    (2) the vendor's objectivity in performing the contract 
 work is or might be otherwise impaired; or 

    (3) the vendor has an unfair advantage. 

    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. 

    HIST: 1998 c 386 art 1 s 3; 1Sp2001 c 10 art 2 s 33 

     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; 

    (5) procurement from rehabilitation facilities; and 

    (6) organizational conflicts of interest. 

    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, reverse 
 auctions as provided in section 16C.10, subdivision 7, 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. 4a.    Commissioner approval.  Notwithstanding any 
 law to the contrary, after January 1, 2002, any contract entered 
 into by the department of transportation must be approved by the 
 commissioner, unless the commissioner has delegated approval 
 authority to the department of transportation under subdivision 
 16. 

    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. 

    HIST: 1998 c 386 art 1 s 4; 2000 c 420 s 1; 1Sp2001 c 10 art 2 
 s 34,35 

     16C.04 Ethical practices and conflict of interest. 

    Subdivision 1.    Duty.  An employee of the executive 
 branch involved directly or indirectly in the acquisition or 
 grants 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 or the award and administration of grant 
 contracts.  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.  

    Subd. 3.    Organizational conflicts of interest.  (a) 
 The commissioner shall make reasonable efforts to avoid, 
 mitigate, or neutralize organizational conflicts of interest.  
 To avoid an organizational conflict of interest, the 
 commissioner may utilize methods including disqualifying a 
 vendor from eligibility for a contract award or canceling the 
 contract if the conflict is discovered after a contract has been 
 issued.  To mitigate or neutralize a conflict, the commissioner 
 may use methods such as revising the scope of work to be 
 conducted, allowing vendors to propose the exclusion of task 
 areas that create a conflict, or providing information to all 
 vendors to assure that all facts are known to all vendors.  

    (b) In instances where a conflict or potential conflict has 
 been identified and the commissioner determines that vital 
 operations of the state will be jeopardized if a contract with 
 the vendor is not established, the commissioner may waive the 
 requirements in paragraph (a). 

    HIST: 1998 c 386 art 1 s 5; 1Sp2001 c 10 art 2 s 36; 2002 c 
 298 s 1,2 

     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 without specific, written approval by the 
 commissioner according to established policy, procedures, and 
 standards, or 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, work 
 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.  A signature is not 
 required for work orders and amendments to work orders related 
 to department of transportation contracts.  Bond purchase 
 agreements by the Minnesota public facilities authority do not 
 require the approval of the commissioner.  

    (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 and the jobs skills partnership board 
 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. 

    HIST: 1998 c 386 art 1 s 6; 1999 c 86 art 1 s 11; 1999 c 230 s 
 1; 2000 c 488 art 2 s 1; 1Sp2001 c 8 art 2 s 10; 1Sp2001 c 10 
 art 2 s 37 

     16C.055 Barter arrangements limited. 

    Subdivision 1.    Report.  By January 15, 2002, the 
 legislative auditor shall report to the legislature and governor 
 on agency use of barter agreements in furtherance of an agency's 
 mission.  The report shall list the type and approximate value 
 of each agency's agreement or agreements. 

    Subd. 2.    Restriction.  After July 1, 2002, an agency 
 may not contract or otherwise agree with a nongovernmental 
 entity to receive total nonmonetary consideration valued at more 
 than $100,000 in exchange for the agency providing nonmonetary 
 consideration, unless such an agreement is specifically 
 authorized by law.  This subdivision does not apply to the state 
 lottery. 

    HIST: 1Sp2001 c 10 art 2 s 38 

     16C.06 Acquisitions. 

    Subdivision 1.    Publication requirements.  Notices of 
 solicitations for acquisitions estimated to be more than 
 $25,000, or $100,000 in the case of a department of 
 transportation acquisition, 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 $50,000, or 
 in the case of a department of transportation solicitation, at 
 or more than $100,000, 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 $50,000, or in the case of a department of 
 transportation solicitation, at or less than $100,000.  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. Repealed, 2001 c 202 s 21 

    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. 

    HIST: 1998 c 386 art 1 s 7; 1Sp2001 c 8 art 2 s 11,12; 1Sp2001 
 c 10 art 2 s 39 

*   NOTE:  Subdivision 3 was also amended by Laws 2001, First 
*Special Session chapter 10, article 2, section 40, to read as 
*follows: 

*   "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. 

*   (c) If the commissioner rejects all responses to a 
*solicitation, information in the responses, other than the 
*information made public pursuant to paragraph (a), remains 
*nonpublic data, as defined in section 13.02, until a selection 
*is made based on responses to a resolicitation of bids, the 
*evaluation process is completed based on responses to a 
*resolicitation of a request for proposals, or a determination is 
*made to abandon the purchase."

  16C.065 Repealed, 2000 c 492 art 1 s 88 

     16C.066 Cost-benefit analysis. 

    (a) The commissioner or an agency official to whom the 
 commissioner has delegated duties under section 16C.03, 
 subdivision 16, may not approve a contract or purchase of goods 
 or services for transit or other transportation purposes in an 
 amount greater than $10,000,000 unless a cost-benefit analysis 
 has been completed and shows a positive benefit to the public.  
 The management analysis division must perform or direct the 
 performance of the analysis.  A cost-benefit analysis must be 
 performed for a project if an aggregation of contracts or 
 purchases for a project exceeds $10,000,000. 

    (b) All cost-benefit analysis documents under this section, 
 including preliminary drafts and notes, are public data. 

    (c) This section applies to contracts for goods or services 
 that are expected to have a useful life of more than three 
 years.  This section does not apply for purchase of goods or 
 services for response to a natural disaster if an emergency has 
 been declared by the governor. 

    (d) This section expires June 30, 2003. 

    HIST: 1Sp2001 c 10 art 2 s 41 

     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.  

    HIST: 1998 c 386 art 1 s 8 

     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.  This paragraph does not apply to contracts 
 for professional services as defined in sections 326.02 to 
 326.15. 

    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. 

    HIST: 1998 c 386 art 1 s 9; 1999 c 116 s 1 

     16C.081 Exception for federal contracts. 

    Notwithstanding any law to the contrary, an agency may, 
 when required by a federal agency entering into an 
 intergovernmental contract, negotiate contract terms providing 
 for full or partial prepayment to the federal agency before work 
 is performed or services are provided. 

    HIST: 1998 c 403 s 1; 1999 c 86 art 1 s 7,8; 1999 c 231 s 21; 
 1Sp2001 c 10 art 2 s 42 

     16C.09 Procedure for service contracts. 

    (a) 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 without specific, written approval by the 
 commissioner according to established policy, procedures, and 
 standards, or 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) For purposes of paragraph (a), clause (1), employees 
 are available if qualified and: 

    (1) are already doing the work in question; or 

    (2) 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. 

    HIST: 1998 c 386 art 1 s 10; 1999 c 230 s 2 

     16C.095 Selection of certain professional service 
  contractors. 

    Subdivision 1.    Professional services covered.  This 
 section applies to an agency contract for professional services 
 of persons regulated by the board of architecture, engineering, 
 land surveying, landscape architecture, geoscience, and interior 
 design for which the agency, with the approval of the 
 commissioner, decides to use procedures under this section.  If 
 the agency, with the approval of the commissioner, decides to 
 use procedures under this section, it must comply with 
 subdivisions 2, 3, and 4.  This section does not apply to an 
 agency contract that is subject to section 16B.33. 

    Subd. 2.    Qualification-based selection.  
 Notwithstanding section 16C.06, subdivision 6, an agency must 
 rank contractors described in subdivision 1 on the basis of 
 qualifications, as described in subdivision 3, for the type of 
 professional service required.  An agency may solicit pricing 
 information from a single responder at a time in rank order, 
 commencing with the highest ranked contractor, to determine 
 contractor compensation only after the agency has ranked 
 prospective contractors based on the factors the agency 
 specifies in accordance with subdivisions 3 and 4. 

    Subd. 3.    Procedures.  Subject to subdivision 2, 
 procedures for screening and selection of contractors are within 
 the sole discretion of the agency and must be approved by the 
 commissioner when the agency seeks approval to use this 
 alternative.  Procedures may be adjusted to accommodate the 
 agency's cost, scope, and schedule objectives for a particular 
 project.  Screening and selection procedures may include a 
 consideration of each contractor's: 

    (1) specialized expertise, capabilities, and technical 
 competence as demonstrated by the proposed approach and 
 methodology to meet the project requirements; 

    (2) resources available to perform the work, including any 
 specialized services, within the specified time limits for the 
 project; 

    (3) record of past performance, including but not limited 
 to price and cost data from previous projects, quality of work, 
 ability to meet schedules, cost control, and contract 
 administration; 

    (4) ownership status and employment practices regarding 
 women, minorities, and emerging small businesses or historically 
 underutilized businesses; 

    (5) availability to the project locale; 

    (6) familiarity with the project locale; 

    (7) proposed project management techniques; and 

    (8) ability and proven history in handling special project 
 constraints. 

    Subd. 4.    Selection.  (a) The agency shall rank 
 prospective contractors based on the factors approved by the 
 commissioner, which the agency must specify in the request for 
 proposal, in accordance with this section.  The agency and the 
 highest ranked contractor shall mutually discuss and refine the 
 scope of services for the project and shall negotiate 
 conditions, including but not limited to compensation and 
 performance schedule, based on the scope of the services.  The 
 compensation level paid must be reasonable and fair to the 
 agency, as determined solely by the agency. 

    (b) If the agency and the highest ranked contractor are 
 unable for any reason to negotiate a contract at a compensation 
 level that is reasonable and fair to the agency, the agency 
 shall, either orally or in writing, terminate negotiations with 
 this contractor.  The agency may then negotiate with the next 
 highest ranked contractor, as provided in this subdivision.  The 
 negotiation process may continue through successive contractors, 
 according to agency ranking, until an agreement is reached or 
 the agency terminates the contracting process. 

    HIST: 2001 c 100 s 1 

     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 
 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. 

    Subd. 7.    Reverse auction.  (a) For the purpose of 
 this subdivision, "reverse auction" means a purchasing process 
 in which vendors compete to provide goods at the lowest selling 
 price in an open and interactive environment. 

    (b) The provisions of section 16C.06, subdivisions 2 and 3, 
 do not apply when the commissioner determines that a reverse 
 auction is the appropriate purchasing process. 

    HIST: 1998 c 386 art 1 s 11; 1999 c 245 art 5 s 1; 2000 c 420 
 s 2 

     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. 

    HIST: 1998 c 386 art 1 s 12 

     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.  

    HIST: 1998 c 386 art 1 s 13 

     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. 

    HIST: 1998 c 386 art 1 s 14 

     16C.135 Purchases of fuel and vehicles by state agencies.

    Subdivision 1.    Definition.  For purposes of this 
 section "cleaner fuels" means: 

    (1) biodiesel blends of 20 percent or greater by volume 
 (B20-B100); 

    (2) compressed natural gas; 

    (3) ethanol blends of 70 percent or greater by volume 
 (E70-E100); 

    (4) hydrogen; 

    (5) liquefied natural gas; and 

    (6) liquefied petroleum gas. 

    Subd. 2.    Fuel purchases.  When purchasing fuel for 
 use in the central motor pool or for use in a motor vehicle 
 owned or leased by an agency, the commissioner or the agency 
 shall purchase, and shall require persons purchasing on their 
 behalf to purchase, cleaner fuels for use in the motor vehicle 
 if cleaner fuels are reasonably available at similar costs to 
 other fuels and if cleaner fuels are compatible with the use to 
 which the motor vehicle is put. 

    Subd. 3.    Vehicle purchases.  When purchasing a motor 
 vehicle for the central motor pool or for use by an agency, the 
 commissioner or the agency shall purchase a motor vehicle that 
 is capable of being powered by cleaner fuels, or a motor vehicle 
 powered by electricity or by a combination of electricity and 
 liquid fuel, if such a motor vehicle is reasonably available at 
 similar costs to other vehicles and if the vehicle is capable of 
 carrying out the purpose for which it is purchased. 

    HIST: 2002 c 312 s 1 

     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 or reduce the energy costs of a state building or 
 facility if: 

    (1) the term of the contract does not exceed 15 years, with 
 not more than a 15-year payback beginning at the completion of 
 the project; 

    (2) the entire cost of the contract is a percentage of the 
 resultant savings in energy costs and measurable operational 
 costs.  "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 not cost effective to directly measure energy cost and/or 
 energy usage, reasonable engineering estimates may be 
 substituted for measured results.  "Savings in measurable 
 operational costs" may include savings from inventory reductions 
 and outside maintenance expense, but do not include savings from 
 in-house staff labor; 

    (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 and operational costs.  (a) The 
 entire cost of an energy efficiency installment purchase 
 contract must be a percentage of the resultant savings in energy 
 and operational 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 and operational costs that must 
 be shared with other parties to the contract.  

    (b) The state and the contract vendor may agree to a 
 reasonable floor price for each type of energy used in the 
 savings calculations at the time of contract execution.  If the 
 state and the vendor agree to a floor price, that floor price 
 shall be used throughout the term of the contract. 

    HIST: 1998 c 386 art 1 s 15; 1999 c 250 art 1 s 66; 2002 c 260 
 s 1 

     16C.145 Nonvisual technology access standards. 

    (a) The commissioner shall develop nonvisual technology 
 access standards.  The standards must be included in all 
 contracts for the procurement of information technology by, or 
 for the use of, agencies, political subdivisions, and the 
 Minnesota state colleges and universities.  The University of 
 Minnesota is encouraged to consider similar standards.  

    (b) The nonvisual access standards must include the 
 following minimum specifications: 

    (1) that effective, interactive control and use of the 
 technology including the operating system, applications 
 programs, prompts, and format of the data presented, are readily 
 achievable by nonvisual means; 

    (2) that the nonvisual access technology must be compatible 
 with information technology used by other individuals with whom 
 the blind or visually impaired individual must interact; 

    (3) that nonvisual access technology must be integrated 
 into networks used to share communications among employees, 
 program participants, and the public; and 

    (4) that the nonvisual access technology must have the 
 capability of providing equivalent access by nonvisual means to 
 telecommunications or other interconnected network services used 
 by persons who are not blind or visually impaired. 

    (c) Nothing in this section requires the installation of 
 software or peripheral devices used for nonvisual access when 
 the information technology is being used by individuals who are 
 not blind or visually impaired. 

    HIST: 1998 c 366 s 27; 1999 c 250 art 1 s 54 

     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. 

    HIST: 1998 c 386 art 1 s 16 

     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.  (a) 
 Except as otherwise provided in paragraph (b), the commissioner 
 may award up to a six percent preference in the amount bid on 
 state procurement to small businesses located in an economically 
 disadvantaged area.  

    (b) The commissioner may award up to a four percent 
 preference in the amount bid on state construction to small 
 businesses located in an economically disadvantaged area.  

    (c) 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. 

    (d) 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. 

    (e) The department of revenue shall gather data necessary 
 to make the determinations required by paragraph (c), clause 
 (1), and shall annually certify counties that qualify under 
 paragraph (c), 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. 

    HIST: 1998 c 386 art 1 s 17; 1999 c 232 s 1 

     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.  Notwithstanding 
 section 15.059, the council expires June 30, 2003. 

    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.  

    HIST: 1998 c 386 art 1 s 18; 2001 c 162 s 9 

     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. 

    HIST: 1998 c 386 art 1 s 19 

     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. 

    HIST: 1998 c 386 art 1 s 20 

     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. 

    HIST: 1998 c 386 art 1 s 21 

     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. 

    HIST: 1998 c 386 art 1 s 22 

     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 or 
 cooling utility that will specify, but not be limited to, the 
 appropriate terms and conditions for the interchange of district 
 heating or cooling services. 

    HIST: 1998 c 386 art 1 s 23; 1Sp2001 c 10 art 2 s 43 

     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. 

    HIST: 1998 c 386 art 1 s 24 

     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. 

    HIST: 1998 c 386 art 1 s 25 

     16C.25 Building and construction contracts. 

    Notwithstanding sections 16C.06 and 16C.10, sections 16C.26 
 to 16C.29, and other provisions of law not inconsistent with the 
 provisions of sections 16C.26 to 16C.29 apply to building and 
 construction contracts entered into on or after August 1, 2002. 

    HIST: 1998 c 386 art 1 s 26; 2002 c 254 s 1 

     16C.26 Competitive bids. 

    Subdivision 1.    Application.  Except as otherwise 
 provided by sections 16C.26 and 16C.27, all contracts for 
 building and construction or repairs must be based on 
 competitive bids. 

    Subd. 2.    Requirement contracts.  Standard requirement 
 price contracts for building and construction must be 
 established by competitive bids as provided in subdivision 1.  
 The standard requirement price contracts may contain escalation 
 clauses and may provide for a negotiated price increase or 
 decrease based upon a demonstrable industrywide or regional 
 increase or decrease in the vendor's costs or for the addition 
 of similar products or replacement items not significant to the 
 total value of existing contracts.  The term of these contracts 
 may not exceed five years including all extensions. 

    Subd. 3.    Publication of notice; expenditures over 
 $15,000.  If the amount of an expenditure is estimated to 
 exceed $15,000, sealed bids must be solicited by public notice 
 inserted at least once in a newspaper or trade journal not less 
 than seven days before the final date of submitting bids.  The 
 commissioner shall designate the newspaper or trade journal for 
 that publication and may designate different newspapers or 
 journals according to the nature of the purchase or contract.  
 The commissioner shall also solicit sealed bids by sending 
 notices by mail to all prospective bidders known to the 
 commissioner and by posting notice on a public bulletin board in 
 the commissioner's office at least five days before the final 
 date of submitting bids.  All bids must be sealed when they are 
 received and must be opened in public at the hour stated in the 
 notice.  All original bids and all documents pertaining to the 
 award of a contract must be retained and made a part of a 
 permanent file or record and remain open to public inspection. 

    Subd. 4.    Building and construction contracts; $15,000 
 or less.  All contracts, the amount of which is estimated to 
 be $15,000 or less, may be made either upon competitive bids or 
 in the open market, in the discretion of the commissioner.  So 
 far as practicable, however, they must be based on at least 
 three competitive bids which must be permanently recorded.  

    Subd. 5.    Standard specifications, security.  
 Contracts must be based on the standard specifications 
 prescribed and enforced by the commissioner under this chapter, 
 unless otherwise expressly provided.  Each bidder for a contract 
 must furnish security approved by the commissioner to ensure the 
 making of the contract being bid for. 

    Subd. 6.    Noncompetitive bids.  Agencies are 
 encouraged to contract with small targeted group businesses 
 designated under section 16C.16 when entering into contracts 
 that are not subject to competitive bidding procedures. 

    HIST: 2002 c 254 s 2 

     16C.27 Bids not required. 

    Subdivision 1.    Single source of supply.  Competitive 
 bidding is not required for contracts clearly and legitimately 
 limited to a single source of supply, and the contract price may 
 be best established by direct negotiation. 

    Subd. 2.    Negotiated contracts.  In lieu of any of the 
 other requirements of sections 16C.26 to 16C.28, the 
 commissioner may negotiate a contract for public work to be 
 performed at a state-owned institution or installation if the 
 cost does not exceed $15,000 and if the head of the affected 
 state agency requests the commissioner to do so.  The 
 commissioner shall have prepared whatever plans and 
 specifications for the public work deemed necessary by the 
 commissioner to protect the public interest.  Contractor's bonds 
 or security pursuant to chapter 574 are not required for 
 contracts entered into under this subdivision. 

    Subd. 3.    Emergency purchases.  In emergencies, the 
 commissioner may, without calling for bids, contract directly 
 for the repair, rehabilitation, and improvement of a state-owned 
 structure or may authorize an agency to do so.  An emergency for 
 the purposes of this subdivision is an unforeseen occurrence or 
 combination of circumstances which calls for immediate action in 
 the public interest. 

    HIST: 2002 c 254 s 3 

     16C.28 Contracts; award. 

    Subdivision 1.    Lowest responsible bidder.  All state 
 building and construction contracts entered into by or under the 
 supervision of the commissioner or an agency for which 
 competitive bids are required must be awarded to the lowest 
 responsible bidder, taking into consideration conformity with 
 the specifications, terms of delivery, the purpose for which the 
 contract 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.  The head of the interested agency shall make the decision, 
 subject to the approval of the commissioner.  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. 

    Subd. 2.    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 under 
 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. 

    Subd. 3.    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 
 1, if doing so does not decrease the service level or diminish 
 the effect of competition. 

    Subd. 4.    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. 

    Subd. 5.    Preferences not cumulative.  The preferences 
 under sections 16B.121, 16C.06, subdivision 7, and 16C.16 apply, 
 but 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 those 
 sections. 

    HIST: 2002 c 254 s 4 

     16C.29 Contract management and review. 

    The commissioner must develop procedures to audit agency 
 personnel to whom the commissioner has delegated contracting 
 authority, in order to ensure compliance with laws and 
 guidelines governing issuance of contracts, including laws and 
 guidelines governing conflicts of interest. 

    HIST: 2002 c 254 s 5 

     16C.30 Definitions. 

    Subdivision 1.    Scope.  For purposes of section 
 16C.31, the terms in this section have the meanings given them, 
 unless the context clearly indicates otherwise. 

    Subd. 2.    Board.  "Board" means the designer selection 
 board, as described in section 16B.33. 

    Subd. 3.    Clarifications.  "Clarifications" means a 
 written or oral exchange of information that takes place after 
 the receipt of proposals to ensure conformance with the request 
 for proposals and to address minor, clerical revisions in a 
 proposal. 

    Subd. 4.    Commissioner.  "Commissioner" means the 
 commissioner of administration. 

    Subd. 5.    Designer.  "Designer" means an architect, 
 landscape architect, or engineer licensed or certified under 
 sections 326.02 to 326.15 or a partnership, association, or 
 corporation composed primarily of registered architects, 
 landscape architects, or engineers or of all three. 

    Subd. 6.    Owner's representative.  "Owner's 
 representative" means a qualified professional who may oversee 
 scheduling, cost control, constructability, project management, 
 quality control, life-cycle costing, and building technology. 

    Subd. 7.    Person.  "Person" means an individual, 
 partnership, corporation, association, or any other legal entity.

    Subd. 8.    Phase-one submittal.  "Phase-one submittal" 
 means statements of qualifications from design-builders under 
 section 16C.31, subdivision 6. 

    Subd. 9.    Phase-two proposal.  "Phase-two proposal" 
 means an offer by a design-builder to enter into a design-build 
 contract for a project under section 16C.31, subdivision 7, in 
 response to a request for proposals. 

    Subd. 10.    Project.  "Project" means an undertaking to 
 design and construct, erect, or remodel a building by or for the 
 state or an agency under the supervision and control of the 
 commissioner under section 16B.30 or the board of regents of the 
 University of Minnesota or the board of trustees of the 
 Minnesota state colleges and universities. 

    Subd. 11.    Expiration.  This section expires January 
 1, 2004. 

    HIST: 2002 c 393 s 40 

     16C.31 Design-build contracts. 

    Subdivision 1.    General authority.  (a) 
 Notwithstanding section 16C.03, subdivision 3, the commissioner 
 may solicit and award a design-build contract between the 
 commissioner and a design-builder utilizing the competitive 
 acquisition process described in subdivisions 5 through 9 if the 
 commissioner meets the conditions in paragraph (b).  A 
 design-build contract may provide the architectural, 
 engineering, and related design services as well as the labor, 
 materials, supplies, equipment, and construction services for a 
 project.  A design-build contract may include telecommunications 
 cabling but must not include acquisition of personal property 
 related to the operations of the occupants.  The commissioner 
 may make changes to the project without invalidating the 
 design-build contract. 

    (b) The commissioner shall, for each project for which the 
 commissioner intends to use the design-build method, make a 
 written determination that it is in the best interest of the 
 state to use the design-build method to complete the project.  
 In making this determination, the commissioner shall use the 
 following criteria as the minimum basis for the determination: 

    (1) the extent to which the project requirements can be 
 adequately defined in a request for proposal before completing 
 the design process; 

    (2) the suitability of the delivery method with respect to 
 scope, schedule, cost, and quality factors; 

    (3) the suitability of the delivery method to minimize 
 life-cycle costs to the extent available within the project 
 budget; 

    (4) the suitability of the delivery method to efficiently 
 achieve functionality requirements; 

    (5) the impact of the project schedule on the agency's 
 delivery of services and project cost; 

    (6) the resources of the department of administration to 
 manage the project through employment of experienced personnel 
 or hiring of consultants; 

    (7) the resources of the department of administration to 
 oversee the project with persons who are familiar and 
 experienced with the design-build method of project delivery or 
 similar experience; and 

    (8) other criteria that the commissioner deems relevant and 
 that are included in the written determination. 

    (c) The authority and duties prescribed for the board, the 
 commissioner, and department of administration under this 
 section are granted to and must be performed by the board of 
 regents of the University of Minnesota and the board of trustees 
 of the Minnesota state colleges and universities on projects 
 under their control. 

    Subd. 2.    Licensing requirements.  (a) Each 
 design-builder shall be, employ, or have as a partner, member, 
 coventurer, or subcontractor, persons duly licensed, certified, 
 or registered to provide the services required to complete the 
 project and do business in this state. 

    (b) A design-builder may contract with the commissioner to 
 provide professional or construction services that the 
 design-builder is not itself licensed, certified, registered, or 
 qualified to perform, so long as the design-builder provides the 
 services through subcontracts with duly licensed, certified, or 
 registered, or otherwise qualified persons in accordance with 
 this section. 

    (c) Nothing in this section authorizing design-build 
 contracts is intended to limit or eliminate the responsibility 
 or liability owed by a professional on a design-build project to 
 the state or other third parties under existing law.  The design 
 service portion of a design-build contract is considered a 
 service and not a product. 

    Subd. 3.    University of Minnesota and Minnesota state 
 colleges and universities selection process.  (a) The board of 
 regents of the University of Minnesota and the board of trustees 
 of the Minnesota state colleges and universities shall select 
 design-builders for all design-build projects under their 
 supervision and control and funded by the state following the 
 procedures and performing the duties prescribed for the board 
 and commissioner in subdivisions 5 through 9.  The board of 
 regents and the board of trustees shall either use the board or 
 establish an evaluation team of at least seven persons to 
 evaluate and recommend design-builders under this section to 
 include three persons selected as provided in paragraph (b).  
 The final selection must be made by the board of regents or the 
 board of trustees. 

    (b) Upon written request from the board of regents or the 
 board of trustees, each of the following three organizations 
 shall nominate one individual whose name and qualifications must 
 be submitted to the board of trustees for consideration:  the 
 Consulting Engineers Council of Minnesota after consultation 
 with other professional engineering societies in the state; the 
 AIA Minnesota; and the Minnesota chapter of the Associated 
 General Contractors after consultation with other commercial 
 contractor associations in the state.  The board of regents or 
 the board of trustees may appoint the three named individuals to 
 the evaluation team or reject a nominated individual and request 
 another nomination.  The board of regents or the board of 
 trustees shall determine the term of the appointment.  The other 
 members of the evaluation team must be representatives of the 
 University of Minnesota or the Minnesota state colleges and 
 universities.  The interviews are public meetings and a video or 
 audio recording of the meetings must be made and is public 
 information.  The final recommendations and rankings must be in 
 writing. 

    Subd. 4.    Development of design criteria.  (a) Each 
 request for proposals for a design-build contract must contain 
 design criteria prepared by a design criteria professional who 
 holds licenses or certifications under sections 326.02 to 326.15 
 and is either an employee of the state, the University of 
 Minnesota, or a consultant hired by the commissioner.  If the 
 design criteria professional is a consultant hired by the state, 
 the licensure requirement may be met by employing individuals 
 who hold a license or licenses under sections 326.02 to 326.15.  
 The commissioner may elect to designate the board to select the 
 consultant in compliance with section 16B.33.  

    (b) Design criteria set forth in the request for proposals 
 must specify all information needed to adequately describe the 
 project, including performance-based criteria such as 
 sustainability and life-cycle costing requirements; interior 
 space requirements, including adjacency diagrams; material 
 quality standards; architectural image and building form 
 standards; building air quality requirements; commissioning 
 requirements; building burn-in requirements; cost estimates; 
 design and construction schedules; site development 
 requirements; utility requirements; storm water retention and 
 disposal requirements; and parking requirements.  If necessary 
 to adequately describe the project, the design criteria must 
 include a boundary and topographic survey of the site, with the 
 legal description and geotechnical and environmental information 
 concerning the site.  

    (c) There must be an owner's representative for each 
 design-build project.  The owner's representative must be either 
 an employee of the state, University of Minnesota, or a 
 consultant hired by the commissioner.  Subject to the minimum 
 requirements of paragraphs (a) and (b), the commissioner, in 
 consultation with the agency, the owner's representative, and 
 the design criteria professional, shall determine the scope and 
 level of detail required for the design criteria to be included 
 in the request for proposals. 

    Subd. 5.    Solicitation of proposals.  (a) The 
 commissioner shall prepare a request for proposals, which must 
 contain, at a minimum, the following elements: 

    (1) the identity of the agency that will utilize the 
 completed project; 

    (2) the procedures for submitting proposals, the criteria 
 for evaluation of proposals and their relative weight for each 
 phase, how those criteria will be scored, and the procedures for 
 making awards; 

    (3) the terms and conditions for the design-build contract; 

    (4) the design criteria; 

    (5) the qualifications the design builder will be required 
 to have; 

    (6) a request for a critical path method schedule for 
 commencement and completion of the project; 

    (7) budget limits for the project; 

    (8) affirmative action, disadvantaged businesses, small 
 business, or set-aside goals or requirements for the 
 design-build contract; 

    (9) requirements for insurance, performance and payment 
 bonds, bid bonds, and cash deposits; 

    (10) a description of the drawings, specifications, or 
 other submittals to be submitted with the phase-two proposal, 
 with guidance as to the form and level of completeness of the 
 drawings, specifications, or submittals that will be acceptable; 

    (11) the professional and technical services contract to be 
 entered into with the design-builders selected to submit 
 phase-two proposals, including scope of work, use of ideas or 
 information, and compensation; and 

    (12) identification of any other material information 
 available from the commissioner or board, including, without 
 limitation, surveys, soils reports, drawings or models of 
 existing structures, environmental studies, photographs, or 
 references to public records. 

    (b) The solicitation of request for proposals does not 
 obligate the commissioner to enter into a design-build 
 contract.  In accordance with the stated criteria for evaluating 
 proposals, the commissioner may accept or reject any or all 
 proposals received as a result of the request.  The notification 
 of rejection of all proposals must include an explanation for 
 all proposals being rejected.  The solicitation for proposals 
 may be canceled at any time in the commissioner's sole 
 discretion if it is considered to be in the state's best 
 interest.  If the commissioner rejects all proposals or cancels 
 the solicitation for proposals, the commissioner may resolicit a 
 request for proposals using the same or different requirements 
 or request the board to select a designer under section 16B.33 
 and proceed with the design-bid-build delivery method. 

    Subd. 6.    Qualification; phase-one submittal.  (a) In 
 phase one, the board and commissioner shall evaluate the 
 design-build qualifications of the design-builders who responded 
 to the request for proposals with phase-one submittals based on 
 each design-builder's experience, technical competence, and 
 capability to perform; the past performance of the 
 design-builder and its employees, quality control organization 
 and system, sustainability, and life-cycle costing methodology; 
 and other appropriate facts submitted by each design-builder in 
 response to the request for proposals all in accordance with the 
 weighted criteria that are stated for phase-one evaluations in 
 the request for proposals.  The phase-one or phase-two 
 evaluation of the "past performance" or "experience" of a 
 proposer must not include the exercise or assertion of a 
 person's legal rights.  The board or commissioner may require 
 clarifications from design-builders. 

    (b) If the project is within the capitol area, the capitol 
 area architecture and planning board, as defined in section 
 15.50, shall participate in the evaluation of phase-one 
 submittals. 

    (c) The board shall select to a short list the most 
 qualified design-builders that have responded with phase-one 
 submittals based on the weighted criteria for phase-one 
 evaluations stated in the request for proposals.  For projects 
 involving only renovation, in the discretion of the 
 commissioner, the design-builder may be selected only on the 
 phase-one submissions, or after a phase-two submission.  For all 
 other projects, the board shall prepare a list of at least three 
 potential design-builders to submit phase-two proposals.  The 
 board shall not proceed to obtain phase-two proposals or make a 
 selection, as applicable, unless it receives phase-one 
 submittals from at least three qualified design-builders.  If 
 the board receives fewer than three phase-one submittals from 
 qualified design-builders, the commissioner may cancel the 
 solicitation for proposals, revise the request for proposals, 
 and solicit new proposals or request the board to select a 
 designer under section 16B.33 and proceed with the 
 design-bid-build delivery method. 

    (d) The commissioner shall enter into the professional and 
 technical services contract included in the request for 
 proposals with each of the design-builders qualified by the 
 board to submit phase-two proposals. 

    Subd. 7.    Phase-two proposals.  (a) The professional 
 and technical services contract with the design-builders 
 selected to submit phase-two proposals provided in the request 
 for proposals must require at least the following: 

    (1) preliminary plans and specifications, renderings, and 
 models as may be required in the request for proposals in 
 sufficient detail, to describe the character, quality, and scope 
 of the project; 

    (2) a design and construction schedule; 

    (3) the all-inclusive fixed price at which the 
 design-builder will complete the project if the phase-two 
 proposal is accepted, including a total development cost budget 
 in detail by building component with all soft costs, allowances, 
 and design fees; and 

    (4) other materials the board or commissioner determines 
 are necessary to fix the design, schedule, and cost of the 
 project. 

    (b) Phase-two proposals must be sealed and may not be 
 opened until expiration of the time established for making 
 proposals as set forth in the request for proposals. 

    (c) Phase-two proposals must identify each person with whom 
 the design-builder proposes to enter into subcontracts for 
 primary design and construction obligations under the 
 design-build contract.  Persons so identified may not be 
 replaced without the approval of the commissioner, or the award 
 may be revoked. 

    (d) The design-builder must submit a written statement that 
 the phase-two proposal meets all requirements of the request for 
 proposals. 

    (e) The commissioner may require each design-builder to 
 submit with its phase-one or phase-two proposal, as applicable, 
 a cash deposit or bid bond in the amount of five percent of the 
 budget for the design-build contract.  If the phase-one or 
 phase-two proposal, as applicable, is accepted but the 
 design-builder fails to execute the design-build contract, the 
 deposit or bond is forfeited to the extent allowable under law, 
 including the cost to the state of delays, resolicitation, and 
 other results of the failure of the selected design-builder to 
 enter into the design-build contract. 

    Subd. 8.    Stipulated fee.  The commissioner may award 
 a stipulated fee not less than two-tenths of one percent of the 
 department's estimated cost of design and construction to each 
 short-listed, responsible proposer who provides a responsive but 
 unsuccessful proposal.  If the commissioner does not award a 
 contract, all short-listed proposers may receive the stipulated 
 fee.  If the commissioner cancels the contract before reviewing 
 the technical proposals, the commissioner may award each 
 design-builder on the short list a stipulated fee of not less 
 than two-tenths of one percent of the commissioner's estimated 
 cost of design and construction.  The commissioner shall pay the 
 stipulated fee, if any, to each proposer within 90 days after 
 the award of the contract or the decision not to award a 
 contract.  In consideration for paying the stipulated fee, the 
 commissioner may use any ideas or information contained in the 
 proposals in connection with any contract awarded for the 
 project or in connection with a subsequent procurement, without 
 any obligation to pay any additional compensation to the 
 unsuccessful proposers.  Notwithstanding the other provisions of 
 this subdivision, an unsuccessful short-list proposer may elect 
 to waive the stipulated fee.  If an unsuccessful short-list 
 proposer elects to waive the stipulated fee, the commissioner 
 may not use ideas and information contained in that proposer's 
 proposal.  Upon the request of the commissioner, a proposer who 
 waived a stipulated fee may withdraw the waiver, in which case 
 the commissioner shall pay the stipulated fee, if any, to the 
 proposer and thereafter may use ideas and information in the 
 proposer's proposal. 

    Subd. 9.    Design-builder selection.  (a) After 
 obtaining and evaluating proposals from each design-builder 
 according to the criteria and procedures in the request for 
 proposals, the board shall rank the phase-one or phase-two 
 proposals, as applicable, and select the proposal that is rated 
 the highest based on the weighted evaluation criteria in the 
 request for proposal.  The board or commissioner may require 
 clarifications from design-builders during the evaluation 
 process.  Selection according to this method may result in an 
 award not being made to the lowest cost proposal. 

    (b) If the project is within the capitol area, the capitol 
 area architectural and planning board shall participate in the 
 evaluation of phase-two proposals. 

    Subd. 10.    Award of design-build contract.  If the 
 commissioner decides not to reject all proposals, the 
 commissioner shall award and enter into the design-build 
 contract with the design-builder that submitted the phase-one or 
 phase-two proposal, as applicable, rated highest based on the 
 weighted evaluation criteria as evaluated under the request for 
 qualifications or request for proposals as applicable. 

    Subd. 11.    Expiration.  This section expires January 
 1, 2004. 

    HIST: 2002 c 393 s 41