2005 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  16C.01 Repealed, 1985 c 285 s 54 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, including an amendment to or extension of a contract. 

    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; 1Sp2003 c 
 1 art 2 s 45 

     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. 

    Subd. 17.    Contract extension.  The term of a contract 
 may be extended for a time longer than the time specified in 
 this chapter, up to a total term of ten years, if the 
 commissioner, in consultation with the commissioner of finance, 
 determines that the contractor will incur upfront costs under 
 the contract that cannot be recovered within a two-year period 
 and that will provide cost savings to the state and that these 
 costs will be amortized over the life of the contract. 

    Subd. 18.    Contracts with foreign vendors.  (a) The 
 commissioner and other agencies to which this section applies 
 and the legislative branch of government shall, subject to 
 paragraph (d), cancel a contract for goods or services from a 
 vendor or an affiliate of a vendor or suspend or debar a vendor 
 or an affiliate of a vendor from future contracts upon 
 notification from the commissioner of revenue that the vendor or 
 an affiliate of the vendor has not registered to collect the 
 sales and use tax imposed under chapter 297A on its sales in 
 Minnesota or to a destination in Minnesota.  This subdivision 
 shall not apply to state colleges and universities, the courts, 
 and any agency in the judicial branch of government.  For 
 purposes of this subdivision, the term "affiliate" means any 
 person or entity that is controlled by, or is under common 
 control of, a vendor through stock ownership or other 
 affiliation. 

    (b) Beginning January 1, 2006, each vendor or affiliate of 
 a vendor selling goods or services, subject to tax under chapter 
 297A, to an agency or the legislature must provide its Minnesota 
 sales and use tax business identification number, upon request, 
 to show that the vendor is registered to collect Minnesota sales 
 or use tax. 

    (c) The commissioner of revenue shall periodically provide 
 to the commissioner and the legislative branch a list of vendors 
 who have not registered to collect Minnesota sales and use tax 
 and who are subject to being suspended or debarred as vendors or 
 having their contracts canceled. 

    (d) The provisions of this subdivision may be waived by the 
 commissioner or the legislative branch when the vendor is the 
 single source of such goods or services, in the event of an 
 emergency, or when it is in the best interests of the state as 
 determined by the commissioner in consultation with the 
 commissioner of revenue.  Such consultation is not a disclosure 
 violation under chapter 270B. 

    HIST: 1998 c 386 art 1 s 4; 2000 c 420 s 1; 1Sp2001 c 10 art 2 
 s 34,35; 1Sp2003 c 1 art 2 s 46; 1Sp2005 c 3 art 5 s 1 

     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.045 Reporting of violations. 

    A state employee who discovers evidence of violation of 
 laws or rules governing state contracts is encouraged to report 
 the violation or suspected violation to the employee's 
 supervisor, the commissioner or the commissioner's designee, or 
 the legislative auditor.  The legislative auditor must report to 
 the Legislative Audit Commission if there are multiple 
 complaints about the same agency.  The auditor's report to the 
 Legislative Audit Commission under this section must disclose 
 only the number and type of violations alleged.  An employee 
 making a good faith report under this section is covered by 
 section 181.932, prohibiting the employer from discriminating 
 against the employee. 

    HIST: 1Sp2003 c 1 art 2 s 47 

     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 and no 
 agency, without the prior written approval of the commissioner 
 granted pursuant to subdivision 2a, may authorize work to begin 
 on 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; and 

    (3) the accounting system shows an encumbrance for the 
 amount of the contract liability. 

    (b) The combined contract and amendments must 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.  

    (c) 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.  

    (d) Amendments to contracts must entail tasks that are 
 substantially similar to those in the original contract or 
 involve tasks that are so closely related to the original 
 contract that it would be impracticable for a different 
 contractor to perform the work.  The commissioner or an agency 
 official to whom the commissioner has delegated contracting 
 authority under section 16C.03, subdivision 16, must determine 
 that an amendment would serve the interest of the state better 
 than a new contract and would cost no more. 

    (e) A fully executed copy of every contract, amendments to 
 the contract, and performance evaluations relating to the 
 contract must be kept on file at the contracting agency for a 
 time equal to that specified for contract vendors and other 
 parties in subdivision 5. 

    (f) The attorney general must periodically review and 
 evaluate a sample of state agency contracts to ensure compliance 
 with laws. 

    Subd. 2a.    Emergency authorization.  The commissioner 
 may grant an agency approval to authorize work to begin on a 
 contract prior to the full execution of the contract in the 
 event of an emergency as defined in section 16C.10, subdivision 
 2. 

    Subd. 3.    Exception.  The requirements of subdivision 
 2 do not apply to contracts of the Department of Employment and 
 Economic Development distributing state and federal funds for 
 the purpose of subcontracting the provision of program services 
 to eligible recipients.  For these contracts, the commissioner 
 of employment and economic development is authorized to directly 
 enter into agency contracts and encumber available funds.  For 
 contracts distributing state or federal funds pursuant to the 
 federal Workforce Investment Act, United States Code, title 29, 
 section 2911 et seq., or section 116L.17, the commissioner of 
 employment and economic development in consultation with the Job 
 Skills Partnership Board is authorized to directly enter into 
 agency contracts and encumber available funds to ensure a rapid 
 response to the needs of dislocated workers.  The commissioner 
 of employment and economic development 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 education that were 
 previously entered into by the commissioner of employment and 
 economic development. 

    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; 2003 c 130 s 12; 1Sp2003 c 1 art 2 s 48,49; 2004 c 
 206 s 7 

     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.  To the extent practical, this 
 must include posting on a state Web site. 

    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. 3a.    Information in bids and proposals.  Data 
 relating to bids and proposals are governed by section 13.591. 

    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 
 classified by section 13.591, subdivision 4. 

    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 39,40; 1Sp2003 c 1 art 2 s 50; 1Sp2003 c 8 art 2 s 
 13,20; 2005 c 163 s 51 

     16C.064 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 in an amount greater than $50,000,000 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.  Money 
 appropriated for the contract or purchase must be used to pay 
 for the analysis.  A cost-benefit analysis must be performed for 
 a project if an aggregation of contracts or purchases for a 
 project exceeds $50,000,000. 

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

    (c) If a cost-benefit analysis does not show a positive 
 benefit to the public, the governor may approve a contract or 
 purchase of goods or services if a cost-effectiveness study had 
 been done that shows the proposed project is the most effective 
 way to provide a necessary public good. 

    (d) 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.  This section does not apply to 
 contracts involving the Minnesota state colleges and 
 universities, state buildings, or state highways. 

    (e) This section is repealed effective July 1, 2008. 

    HIST: 2005 c 156 art 2 s 21 

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

  16C.07 Repealed, 1Sp2003 c 1 art 2 s 136 

     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.  (a) Before an 
 agency may seek approval of a professional or technical services 
 contract valued in excess of $5,000, it must provide the 
 following: 

    (1) a description of how the proposed contract or amendment 
 is necessary and reasonable to advance the statutory mission of 
 the agency; 

    (2) a description of the agency's plan to notify firms or 
 individuals who may be available to perform the services called 
 for in the solicitation; and 

    (3) a description of the performance measures or other 
 tools that will be used to monitor and evaluate contract 
 performance. 

    (b) In addition to paragraph (a), the agency must certify 
 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) reasonable efforts will be made to publicize the 
 availability of the contract to the public; 

    (4) the agency will develop and implement a written plan 
 providing for the assignment of specific agency personnel to 
 manage the contract, including 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; 

    (5) the agency will not allow the contractor to begin work 
 before the contract is fully executed unless an exception under 
 section 16C.05, subdivision 2a, has been granted by the 
 commissioner and funds are fully encumbered; 

    (6) the contract will not establish an employment 
 relationship between the state or the agency and any persons 
 performing under the contract; and 

    (7) in the event the results of the contract work will be 
 carried out or continued by state employees upon completion of 
 the contract, the contractor is required to include state 
 employees in development and training, to the extent necessary 
 to ensure that after completion of the contract, state employees 
 can perform any ongoing work related to the same function. 

    (c) A contract establishes an employment relationship for 
 purposes of paragraph (b), clause (6), if, under federal laws 
 governing the distinction between an employee and an independent 
 contractor, a person would be considered an employee. 

    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 agency has demonstrated that 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 contractor and agents are not employees of the 
 state; 

    (4) the contracting agency has specified a satisfactory 
 method of evaluating and using the results of the work to be 
 performed; and 

    (5) 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; 

    (5) identify services by commodity code, including topics 
 such as contracts for training, contracts for research and 
 opinions, and contracts for computer systems; and 

    (6) identify which contracts were awarded without following 
 the solicitation process in this chapter because it was 
 determined that there was only a single source for the services. 

    (c) Within 30 days of final completion of a contract over 
 $50,000 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; 

    (3) be accompanied by the performance evaluation prepared 
 according to subdivision 4a; and 

    (4) if the contract was awarded without following the 
 solicitation process in this chapter because it was determined 
 that there was only a single source for the services, explain 
 why the agency determined there was only a single source for the 
 services. 

    Subd. 4a.    Performance evaluation.  Upon completion of 
 a professional or technical services contract, an agency 
 entering into the contract must complete a written performance 
 evaluation of the work done under the contract.  The evaluation 
 must include an appraisal of the contractor's timeliness, 
 quality, cost, and overall performance in meeting the terms and 
 objectives of the contract.  Contractors may request copies of 
 evaluations prepared under this subdivision and may respond in 
 writing.  Contractor responses must be maintained with the 
 contract file. 

    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; 1Sp2003 c 1 art 2 
 s 51-54; 1Sp2003 c 8 art 1 s 7 

     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.085 Waiver. 

    Notwithstanding sections 16C.08, 16C.09, 43A.047, or other 
 law to the contrary, the commissioner of administration may 
 enter into or approve a service contract for printing services 
 or services provided by the DocuComm Division without 
 determining that no current state employee is able and available 
 to perform the services called for by the contract. 

    HIST: 1Sp2003 c 1 art 2 s 55 

     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. 

    (c) This section does not apply to an agency's use of 
 inmates pursuant to sections 241.20 to 241.23 or to an agency's 
 use of persons required by a court to provide: 

    (1) community service; or 

    (2) conservation or maintenance services on lands under the 
 jurisdiction and control of the state. 

    HIST: 1998 c 386 art 1 s 10; 1999 c 230 s 2; 2005 c 136 art 13 
 s 1 

     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 
 extended employment providers that are certified by the 
 commissioner of employment and economic development, and day 
 training and habilitation services licensed under sections 
 245B.01 to 245B.08; 

    (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 or computer services 
 at the lowest selling price in an open and interactive 
 environment. 

    (b) The provisions of sections 13.591, subdivision 3, and 
 16C.06, subdivision 2, 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; 1Sp2003 c 1 art 2 s 56; 1Sp2003 c 8 art 1 s 8; art 2 s 14; 
 2004 c 206 s 52; 2005 c 9 s 1; 2005 c 156 art 2 s 22 

     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.137 Minimizing energy use; renewable fuels. 

    Subdivision 1.    Goals and actions.  (a) Using 2005 as 
 a baseline, the state of Minnesota shall reduce the use of 
 gasoline by on-road vehicles owned by state departments by 25 
 percent by 2010 and by 50 percent by 2015, and the use of 
 petroleum-based diesel fuel in diesel-fueled vehicles by ten 
 percent by 2010 and 25 percent by 2015. 

    (b) To meet the goals established in paragraph (a), each 
 state department must, whenever legally, technically, and 
 economically feasible, subject to the specific needs of the 
 department and responsible management of agency finances: 

    (1) ensure that all new on-road vehicles purchased, 
 excluding emergency and law enforcement vehicles: 

    (i) use "cleaner fuels" as that term is defined in section 
 16C.135, subdivision 1, clauses (1), (3), and (4); or 

    (ii) have fuel efficiency ratings that exceed 30 miles per 
 gallon for city usage or 35 miles per gallon for highway usage, 
 including but not limited to hybrid electric cars and 
 hydrogen-powered vehicles; 

    (2) increase its use of renewable transportation fuels, 
 including ethanol, biodiesel, and hydrogen from agricultural 
 products; and 

    (3) increase its use of Web-based Internet applications and 
 other electronic information technologies to enhance the access 
 to and delivery of government information and services to the 
 public, and reduce the reliance on the department's fleet for 
 the delivery of such information and services. 

    Subd. 2.    SmartFleet Committee.  (a) The commissioner 
 of administration, or the commissioner's designee, shall chair a 
 SmartFleet Committee consisting of representatives designated by 
 the commissioners of the Pollution Control Agency, the 
 Departments of Agriculture and Commerce, and other state 
 departments that wish to participate.  To ensure effective and 
 efficient state participation, the SmartFleet Committee must 
 assist state departments in implementing the requirements of 
 this section, including providing information, guidance, sample 
 policies and procedures, and technical and planning assistance. 

    (b) The SmartFleet Committee must evaluate the goals and 
 directives established in this section by December 2006 and 
 periodically thereafter.  The committee may make recommendations 
 to the governor and appropriate committees of the legislature 
 for new or adjusted goals and directives, in light of the 
 progress the state has made implementing this section, and of 
 the availability of new or improved technologies. 

    (c) For the systematic and efficient monitoring of progress 
 in implementing this section by the SmartFleet Committee, the 
 Department of Administration shall implement a fleet reporting 
 and information management system.  Each department will use 
 this management system to demonstrate its progress in complying 
 with this section. 

    Subd. 3.    Exclusion.  Petroleum-based diesel fuel used 
 in a vehicle which a department has retrofit to use ultra low 
 sulfur diesel fuel and to add additional emissions control 
 technologies is excluded when evaluating progress toward the 
 reduction goals established in subdivision 1.  This exclusion 
 applies only to vehicles purchased before the model year in 
 which the federal Environmental Protection Agency's new clean 
 diesel emission reduction rules take effect. 

    HIST: 1Sp2005 c 1 art 1 s 6 

     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.143 Energy forward pricing mechanisms. 

    Subdivision 1.    Definitions.  The following 
 definitions apply in this section: 

    (1) "energy" means natural gas, heating oil, propane, and 
 any other energy source except electricity used in state 
 facilities; and 

    (2) "forward pricing mechanism" means a contract or 
 financial instrument that obligates a state agency to buy or 
 sell a specified quantity of energy at a future date at a set 
 price. 

    Subd. 2.    Authority.  Notwithstanding any other law to 
 the contrary, the commissioner may use forward pricing 
 mechanisms for budget risk reduction. 

    Subd. 3.    Conditions.  Forward pricing mechanism 
 transactions must be made only under the following conditions: 

    (1) the quantity of energy affected by the forward pricing 
 mechanism must not exceed 90 percent of the estimated energy use 
 for the state agency for the same period, which shall not exceed 
 24 months; and 

    (2) a separate account must be established for each state 
 agency using a forward pricing mechanism. 

    Subd. 4.    Written policies and procedures.  Before 
 exercising the authority under this section, the commissioner 
 must develop written policies and procedures governing the use 
 of forward pricing mechanisms.  

    HIST: 2005 c 156 art 2 s 23 

     16C.144 Guaranteed energy savings program. 

    Subdivision 1.    Definitions.  The following 
 definitions apply to this section.  

    (a) "Utility" means electricity, natural gas, or other 
 energy resource, water, and wastewater. 

    (b) "Utility cost savings" means the difference between the 
 utility costs after installation of the utility cost-savings 
 measures pursuant to the guaranteed energy savings agreement and 
 the baseline utility costs after baseline adjustments have been 
 made. 

    (c) "Baseline" means the preagreement utilities, 
 operations, and maintenance costs. 

    (d) "Utility cost-savings measure" means a measure that 
 produces utility cost savings or operation and maintenance cost 
 savings.  

    (e) "Operation and maintenance cost savings" means a 
 measurable difference between operation and maintenance costs 
 after the installation of the utility cost-savings measures 
 pursuant to the guaranteed energy savings agreement and the 
 baseline operation and maintenance costs after inflation 
 adjustments have been made.  Operation and maintenance costs 
 savings shall not include savings from in-house staff labor.  

    (f) "Guaranteed energy-savings agreement" means an 
 agreement for the installation of one or more utility 
 cost-savings measures that includes the qualified provider's 
 guarantee as required under subdivision 2.  

    (g) "Baseline adjustments" means adjusting the utility 
 cost-savings baselines annually for changes in the following 
 variables: 

    (1) utility rates; 

    (2) number of days in the utility billing cycle; 

    (3) square footage of the facility; 

    (4) operational schedule of the facility; 

    (5) facility temperature set points; 

    (6) weather; and 

    (7) amount of equipment or lighting utilized in the 
 facility.  

    (h) "Inflation adjustment" means adjusting the operation 
 and maintenance cost-savings baseline annually for inflation. 

    (i) "Lease purchase agreement" means an agreement 
 obligating the state to make regular lease payments to satisfy 
 the lease costs of the utility cost-savings measures until the 
 final payment, after which time the utility cost-savings 
 measures become the sole property of the state of Minnesota.  

    (j) "Qualified provider" means a person or business 
 experienced in the design, implementation, and installation of 
 utility cost-savings measures. 

    (k) "Engineering report" means a report prepared by a 
 professional engineer licensed by the state of Minnesota 
 summarizing estimates of all costs of installations, 
 modifications, or remodeling, including costs of design, 
 engineering, installation, maintenance, repairs, and estimates 
 of the amounts by which utility and operation and maintenance 
 costs will be reduced.  

    (l) "Capital cost avoidance" means money expended by a 
 state agency to pay for utility cost-savings measures with a 
 guaranteed savings agreement so long as the measures that are 
 being implemented to achieve the utility, operation, and 
 maintenance cost savings are a significant portion of an overall 
 project as determined by the commissioner. 

    (m) "Guaranteed energy-savings program guidelines" means 
 policies, procedures, and requirements of guaranteed savings 
 agreements established by the Department of Administration. 

    Subd. 2.    Guaranteed energy-savings agreement.  The 
 commissioner may enter into a guaranteed energy-savings 
 agreement with a qualified provider if: 

    (1) the qualified provider is selected through a 
 competitive process in accordance with the guaranteed 
 energy-savings program guidelines within the Department of 
 Administration; 

    (2) the qualified provider agrees to submit an engineering 
 report prior to the execution of the guaranteed energy-savings 
 agreement.  The cost of the engineering report may be considered 
 as part of the implementation costs if the commissioner enters 
 into a guaranteed energy-savings agreement with the provider; 

    (3) the term of the guaranteed energy-savings agreement 
 shall not exceed 15 years from the date of final installation; 

    (4) the commissioner finds that the amount it would spend 
 on the utility cost-savings measures recommended in the 
 engineering report will not exceed the amount to be saved in 
 utility operation and maintenance costs over 15 years from the 
 date of implementation of utility cost-savings measures; 

    (5) the qualified provider provides a written guarantee 
 that the annual utility, operation, and maintenance cost savings 
 during the term of the guaranteed energy-savings agreement will 
 meet or exceed the annual payments due under a lease purchase 
 agreement.  The qualified provider shall reimburse the state for 
 any shortfall of guaranteed utility, operation, and maintenance 
 cost savings; and 

    (6) the qualified provider gives a sufficient bond in 
 accordance with section 574.26 to the commissioner for the 
 faithful implementation and installation of the utility 
 cost-savings measures.  

    Subd. 3.    Lease purchase agreement.  The commissioner 
 may enter into a lease purchase agreement with any party for the 
 implementation of utility cost-savings measures in accordance 
 with the guaranteed energy-savings agreement.  The 
 implementation costs of the utility cost-savings measures 
 recommended in the engineering report shall not exceed the 
 amount to be saved in utility and operation and maintenance 
 costs over the term of the lease purchase agreement.  The term 
 of the lease purchase agreement shall not exceed 15 years from 
 the date of final installation.  The lease is assignable in 
 accordance with terms approved by the commissioner of finance. 

    Subd. 4.    Use of capital cost avoidance.  The affected 
 state agency may contribute funds for capital cost avoidance for 
 guaranteed energy-savings agreements.  Use of capital cost 
 avoidance is subject to the guaranteed energy-savings program 
 guidelines within the Department of Administration. 

    Subd. 5.    Report.  By January 15, 2007, the 
 commissioner of administration shall submit to the commissioner 
 of finance and the chairs of the senate and house of 
 representatives capital investment committees a list of projects 
 in the agency that have been funded using guaranteed energy 
 savings, as outlined in this section, during the preceding 
 biennium.  For each guaranteed energy-savings agreement entered 
 into, the commissioner of administration shall contract with an 
 independent third party to evaluate the cost-effectiveness of 
 each utility cost-savings measure implemented to ensure that 
 such measures were the least-cost measures available.  For the 
 purposes of this section, "independent third party" means an 
 entity not affiliated with the qualified provider, that is not 
 involved in creating or providing conservation project services 
 to that provider, and that has expertise (or access to 
 expertise) in energy savings practices.  

    Subd. 6. Repealed by amendment, 2005 c 156 art 2 s 24 

    HIST: 1Sp2003 c 8 art 1 s 9; 2005 c 156 art 2 s 24 

     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 Rehabilitation facilities and extended employment 
  providers. 

    The commissioner, in consultation with the commissioner of 
 employment and economic development, shall prepare a list containing 
 products and 
 services of certified rehabilitation facilities and extended 
 employment providers as described in chapter 268A for 
 acquisition by state agencies and institutions. 

    HIST: 1998 c 386 art 1 s 16; 1Sp2003 c 8 art 1 s 10; 2004 c 206 s 52 

     16C.16 Designation of procurements from small businesses.

    Subdivision 1.    Small business procurements.  (a) 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.  

    (b) The commissioner must solicit and encourage Minnesota 
 small businesses to submit responses or bids when the 
 commissioner is entering into master contracts.  If 
 cost-effective, when entering into a master contract, the 
 commissioner must attempt to negotiate contract terms that allow 
 agencies the option of purchasing from small businesses, 
 particularly small businesses that are geographically proximate 
 to the entity making the purchase. 

    (c) 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 certified rehabilitation facility or 
 extended employment provider as described in chapter 268A. 

    (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; 1Sp2003 c 8 art 1 
 s 11; 2005 c 156 art 2 s 25 

     16C.17 Encouragement of participation; advisory council. 

    Subdivision 1.    Commissioner of administration.  The 
 commissioners of administration and employment 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 employment 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 
 employment 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 Employment 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 employment 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; 1Sp2003 c 4 s 1 

     16C.18 Reports. 

    Subdivision 1. Repealed, 1Sp2003 c 8 art 1 s 13 

    Subd. 2.    Commissioner of employment and economic 
 development.  The commissioner of employment 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; 1Sp2003 c 4 s 1 

     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. 6a.    Computers for schools.  The commissioner 
 may transfer state surplus computers to Minnesota Computers for 
 Schools for refurbishing and distribution to any school, school 
 system, college, or university in Minnesota. 

    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 16A.013 
 to 16A.016 do not apply to this subdivision. 

    HIST: 1998 c 386 art 1 s 24; 2003 c 112 art 2 s 50; 2005 c 65 
 s 1 

     16C.231 Surplus property. 

    Notwithstanding section 15.054 or 16C.23, the commissioner 
 may sell a surplus gun used by a state trooper to the trooper 
 who used the gun in the course of employment.  The sale price 
 must be the fair market value of the gun, as determined by the 
 commissioner. 

    HIST: 2005 c 156 art 2 s 26 

     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 
 $25,000.  If the amount of an expenditure is estimated to 
 exceed $25,000, bids must be solicited by public notice in a 
 manner designated by the commissioner.  To the extent practical, 
 this must include posting on a state Web site.  For expenditures 
 over $50,000, the commissioner shall solicit sealed bids by 
 providing notices to all prospective bidders known to the 
 commissioner by posting notice on a state Web site at least 
 seven days before the final date of submitting bids.  All bids 
 over $50,000 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; $50,000 
 or less.  An informal bid may be used for building, 
 construction, and repair contracts that are estimated at less 
 than $50,000.  Informal bids must be authenticated by the bidder 
 in a manner specified by the commissioner. 

    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; 2005 c 78 s 3,4; 2005 c 156 art 2 s 
 27,28 

     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 in a 
 manner that is clear and authenticated by an authorized 
 representative of the responder.  An alteration or erasure may 
 be crossed out and the correction printed in ink or typewritten 
 adjacent to it and initialed by an authorized representative of 
 the responder. 

    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; 2005 c 78 s 5; 2005 c 156 art 2 s 29 

     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 Expired, 2002 c 393 s 40 

  16C.31 Expired, 2002 c 393 s 41 

     16C.32 Design-build, construction manager at risk, and 
  job order contracting contracts. 

    Subdivision 1.    Definitions.  As used in sections 
 16C.32 to 16C.35, the following terms have the meanings given 
 them, unless the context clearly indicates otherwise: 

    (1) "acceptance" means a formal resolution of the 
 commissioner authorizing the execution of a design-build, 
 construction manager at risk, or job order contracting contract; 

    (2) "agency" means any state officer, employee, board, 
 commission, authority, department, or other agency of the 
 executive branch of state government.  Unless specifically 
 indicated otherwise, as used in sections 16C.32 to 16C.35, 
 agency also includes the Minnesota State Colleges and 
 Universities; 

    (3) "architect" means an architect or landscape architect 
 registered to practice under sections 326.02 to 326.15; 

    (4) "board" means the state Designer Selection Board, 
 unless the estimated cost of the project is less than 
 $2,000,000, in which case the commissioner may act as the board; 

    (5) "Capitol Area Architectural and Planning Board" means 
 the board established to govern the Capitol area under chapter 
 15B; 

    (6) "commissioner" means the commissioner of administration 
 or the Board of Trustees of the Minnesota State Colleges and 
 Universities, whichever controls a project; 

    (7) "construction manager at risk" means a person who is 
 selected by the commissioner to act as a construction manager to 
 manage the construction process, which includes, but is not 
 limited to, responsibility for the price, schedule, and 
 workmanship of the construction performed in accordance with the 
 procedures of section 16C.34; 

    (8) "construction manager at risk contract" means a 
 contract for construction of a project between a construction 
 manager at risk and the commissioner, which contract shall 
 include a guaranteed maximum price, construction schedule, and 
 workmanship of the construction performed; 

    (9) "design-build contract" means a contract between the 
 commissioner and a design-builder to furnish the architectural, 
 engineering, and related design services as well as the labor, 
 materials, supplies, equipment, and construction services for a 
 project; 

    (10) "design and price-based proposal" means the proposal 
 to be submitted by a design-builder in the design and 
 price-based selection process, as described in section 16C.33, 
 which proposal meets the requirements of section 16C.33, 
 subdivision 7, paragraph (c), in such detail as required in the 
 request for proposals; 

    (11) "design and price-based selection" means the selection 
 of a design-builder as described in section 16C.33, subdivision 
 8; 

    (12) "design criteria package" means performance criteria 
 prepared by a design criteria professional who shall be either 
 an employee of the commissioner or shall be selected in 
 compliance with section 16B.33, 16C.08, or 16C.095; 

    (13) "design criteria professional" means a person licensed 
 under chapter 326, or a person who employs an individual or 
 individuals licensed under chapter 326, required to design a 
 project, and who is employed by or under contract to the 
 commissioner to provide professional, architectural, or 
 engineering services in connection with the preparation of the 
 design criteria package; 

    (14) "guaranteed maximum price" means the maximum amount 
 that a design-builder, construction manager at risk, or 
 subcontractor will be paid pursuant to a contract to perform a 
 defined scope of work; 

    (15) "guaranteed maximum price contract" means a contract 
 under which a design-builder, construction manager, or 
 subcontractor is paid on the basis of their actual cost to 
 perform the work specified in the contract plus an amount for 
 overhead and profit, the sum of which must not exceed the 
 guaranteed maximum price set forth in the contract; 

    (16) "job order contracting" means a project delivery 
 method that requests a limited number of bids from a list of 
 qualified contractors, selected from a registry of qualified 
 contractors who have been prescreened and who have entered into 
 master contracts with the commissioner, as provided in section 
 16C.35; 

    (17) "past performance" or "experience" does not include 
 the exercise or assertion of a person's legal rights; 

    (18) "person" includes an individual, corporation, 
 partnership, association, or any other legal entity; 

    (19) "project" means an undertaking to construct, alter, or 
 enlarge a building, structure, or other improvements, except 
 highways and bridges, by or for the state or an agency; 

    (20) "qualifications-based selection" means the selection 
 of a design-builder as provided in section 16C.33; 

    (21) "request for qualifications" means the document or 
 publication soliciting qualifications for a design-build, 
 construction manager at risk, or job order contracting contract 
 as provided in sections 16C.33 to 16C.35; 

    (22) "request for proposals" means the document or 
 publication soliciting proposals for a design-build or 
 construction manager at risk contract as provided in sections 
 16C.33 and 16C.34; and 

    (23) "trade contract work" means the furnishing of labor, 
 materials, or equipment by contractors or vendors that are 
 incorporated into the completed project or are major components 
 of the means of construction.  Work performed by trade 
 contractors involves specific portions of the project, but not 
 the entire project. 

    Subd. 2.    Authority.  (a) Subject to limitations in 
 sections 16B.31, subdivision 1; 16B.33, subdivision 1; 16C.16; 
 and 16C.32 to 16C.34, and notwithstanding any other law to the 
 contrary, the commissioner may: 

    (1) solicit and award a design-build contract on the basis 
 of either a qualifications based or a design and price-based 
 selection process provided in section 16C.33 if the conditions 
 in paragraph (b) are met; 

    (2) select a construction manager at risk as provided in 
 section 16C.34, and award a guaranteed maximum price contract 
 for a construction manager at risk if the conditions of 
 paragraph (c) are met; and 

    (3) select a contractor by a job order contracting delivery 
 method as provided in section 16C.35. 

    (b) The commissioner may not utilize design-build contracts 
 for more than five percent of its total projects let, by number, 
 in each of the fiscal years 2006 and 2007, and ten percent of 
 its total projects let, by number, in each fiscal year 
 thereafter, that are funded in whole or in part with proceeds 
 from the sale of state general obligation bonds; and 

    (c) The commissioner may not utilize construction manager 
 at risk contracts for more than five percent of its total 
 projects let, by number, in each of the fiscal years 2006 and 
 2007, and ten percent of its total projects let, by number, in 
 each fiscal year thereafter, that are funded in whole or in part 
 with proceeds from the sale of state general obligation bonds. 

    (d) Pursuant to section 16B.31, subdivision 4, if the 
 project is within the Capitol area, the project shall comply 
 with sections 15B.03, subdivision 3; 15B.08, subdivision 2; 
 15B.10; and 15B.15, subdivision 4. 

    (e) The commissioner shall, for each design-build or 
 construction manager at risk contract, make a written 
 determination, including specific findings, indicating whether 
 use of the design-build or construction manager at risk 
 procurement serves the public interest. 

    (f) The solicitation of requests for qualifications or 
 proposals does not obligate the commissioner to enter into a 
 design-build or construction manager at risk contract.  In 
 accordance with the stated criteria and subcriteria for 
 evaluating qualifications or proposals, the commissioner may 
 accept or reject any or all responses received as a result of 
 the request.  The solicitation for qualifications or proposals 
 may be canceled at any time in the commissioner's sole 
 discretion if it is considered to be in the public's best 
 interest.  If the commissioner rejects all responses or cancels 
 the solicitation for proposals, the commissioner may resolicit a 
 request for qualifications or proposals using the same or 
 different requirements or request selection of a primary 
 designer pursuant to section 16B.33, 16C.08, or 16C.095 and 
 proceed with competitive bidding pursuant to sections 16C.25 to 
 16C.29. 

    Subd. 3.    Report to the legislature.  The commissioner 
 shall report to the legislature by January 15, 2010, the number 
 of projects and the total cost of those projects that were 
 delivered under contracts authorized under subdivision 2. 

    HIST: 2005 c 78 s 6 

     16C.33 Design-build. 

    Subdivision 1.    Conflict of interest.  A board member 
 may not participate in the review, discussion, or selection of a 
 primary designer, a design-builder, or a firm in which the 
 member has a financial interest. 

    Subd. 2.    Design-builder licensing requirements.  (a) 
 Each design-builder must be, employ, or have as a partner, 
 member, coventurer, or subcontractor, persons or a firm with 
 persons who are duly licensed and 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 for which the 
 design-builder is not itself licensed, registered, or qualified 
 to perform, so long as the design-builder provides such services 
 through subcontracts with duly licensed, registered, or 
 otherwise qualified persons in accordance with this section. 

    (c) Nothing in this section or section 16C.32 is intended 
 to limit or eliminate the responsibility or liability owed by an 
 architect or engineer on a design-build project to the 
 commissioner and third parties under existing law.  The design 
 service portion of a design-build contract is considered a 
 service and not a product. 

    Subd. 3.    Solicitation of qualifications or proposals. 
  (a) Every user agency, except the Capitol Area Architectural 
 and Planning Board, shall submit a written request for a 
 design-builder for its project to the commissioner who shall 
 forward the request to the board, consistent with section 
 16B.33, subdivision 3a.  The University of Minnesota shall 
 follow the process in subdivision 4 to select design-builders 
 for projects that are subject to section 16B.33.  The written 
 request must include a description of the project, the total 
 project cost, a description of any special requirements or 
 unique features of the proposed project, and other information 
 requested by the board which will assist the board in carrying 
 out its duties and responsibilities set forth in this section. 

    (b) A request for qualifications or proposals soliciting 
 design-builders shall be prepared for each design-build contract 
 pursuant to subdivision 5 or 7.  The request for qualifications 
 or proposals shall contain, at a minimum, the following elements:

    (1) the identity of the agency for which the project will 
 be built and that will award the design-build contract; 

    (2) procedures for submitting qualifications or proposals, 
 the criteria for evaluation of qualifications or proposals and 
 the relative weight for each criterion and subcriterion, and the 
 procedures for making awards according to the stated criteria 
 and subcriteria, including a reference to the requirements of 
 this section; 

    (3) the proposed terms and conditions for the contract; 

    (4) the desired qualifications of the design-builder and 
 the desired or permitted areas of construction to be performed 
 by named members of the design-build team, if applicable.  The 
 primary designer shall be a named member of the design-build 
 team; 

    (5) the schedule for commencement and completion of the 
 project; 

    (6) any applicable budget limits for the project; 

    (7) the requirements for insurance and statutorily required 
 performance and payment bonds; 

    (8) the identification and location of any other 
 information in the possession or control of the agency that the 
 user agency determines is material, which may include surveys, 
 soils reports, drawings or models of existing structures, 
 environmental studies, photographs, or references to public 
 records; 

    (9) for a design-build design and price-based selection 
 process, the request shall also include the design criteria 
 package, including the performance and technical requirements 
 for the project, and the functional and operational elements for 
 the delivery of the completed project.  The request shall also 
 contain a description of the drawings, specifications, or other 
 submittals to be included with the proposal, with guidance as to 
 the form and level of completeness of the drawings, 
 specifications or submittals that will be acceptable, and the 
 stipend to be paid to the design-builders selected to submit the 
 above described information; and 

    (10) the criteria shall not impose unnecessary conditions 
 beyond reasonable requirements to ensure maximum participation 
 of qualified design-builders.  The criteria shall not consider 
 the collective bargaining status of the design-builder. 

    (c) Notice of requests for qualifications or proposals must 
 be advertised in the State Register.  

    Subd. 4.    University of Minnesota projects.  (a) The 
 University of Minnesota may elect to use the design-build method 
 of project delivery for projects involving construction or major 
 remodeling, as defined in section 16B.335, subdivision 1, with 
 an estimated cost greater than $2,000,000, in which case the 
 University of Minnesota shall submit a written request for a 
 design-builder to the commissioner of administration, who shall 
 forward the request to the board, as provided in subdivision 3.  
 For design-build projects undertaken by the University of 
 Minnesota under this subdivision, the Board of Regents shall 
 exercise the powers and duties of the commissioner granted in 
 subdivisions 5, 6, 7, and 8. 

    (b) When the University of Minnesota undertakes any other 
 project involving construction, renovation, repair, replacement, 
 or rehabilitation, the Board of Regents may, in addition to any 
 other method of project delivery available to the University of 
 Minnesota, submit a written request for a design-builder to the 
 commissioner of administration, who shall forward the request to 
 the board, as provided in subdivision 3. 

    (c) For projects for which the University of Minnesota 
 requests a design-builder, the University of Minnesota may use 
 either the design-build qualifications-based selection process 
 under subdivision 5 or the design-build design and price-based 
 selection process under subdivision 7.  The board shall score 
 proposals in accordance with subdivision 5 or 7, as applicable, 
 and narrow the selection to the two highest scoring proposers 
 for recommendation to the Board of Regents.  The Board of 
 Regents shall make the final selection and shall notify the 
 board of the selection.  Meeting records or written evaluations 
 that document the final selection are public records. 

    (d) The University of Minnesota may not utilize 
 design-build contracts for more than five percent of its total 
 projects let, by number, in each of the fiscal years 2006 and 
 2007, and ten percent of its total projects let, by number, in 
 each fiscal year thereafter, that are funded in whole or in part 
 with proceeds from the sale of state general obligation bonds. 

    Subd. 5.    Design-build qualifications-based selection 
 process.  In a design-build qualifications-based selection 
 process, the following shall apply: 

    (a)(1) the commissioner shall establish procedures for 
 determining the appropriate content of each request for 
 qualifications, the weighted criteria and subcriteria to be used 
 to evaluate the design-builders, and the procedures for 
 evaluating qualifications in an open, competitive, and objective 
 manner; (2) the criteria and subcriteria shall include, but are 
 not limited to, the proposer's experience as a constructor or 
 primary designer, including capacity of key personnel, technical 
 competence and capability to perform, the past performance of 
 the proposer and its employees, its safety record and compliance 
 with state and federal law, and availability to and familiarity 
 with the project locale; (3) the commissioner may include in the 
 request for qualifications criteria a requirement that the 
 proposer include the overhead and fee that the design-builder 
 proposes to charge for its construction services; and (4) the 
 commissioner shall issue a request for qualifications that 
 includes the information as described in subdivision 3. 

    (b) After obtaining and evaluating qualifications from each 
 design-builder, in accordance with the weighted criteria and 
 subcriteria and procedures set forth in the request for 
 qualifications, the board shall select a short list of at least 
 three and no more than five proposals.  The board must receive 
 at least three proposals from design-builders or the 
 commissioner shall either: 

    (1) solicit new proposals; 

    (2) revise the request for qualifications and thereafter 
 solicit new proposals using the revised request for 
 qualifications; or 

    (3) request selection of a primary designer pursuant to 
 section 16B.33, 16C.08, or 16C.095 and proceed with competitive 
 bidding pursuant to sections 16C.25 to 16C.29. 

    (c) The board shall conduct formal interviews with the 
 short list of proposers, but shall not disclose any proprietary 
 or confidential information contained in one proposal to another 
 proposer. 

    (d) The board shall select the design-builder that scores 
 the highest on the evaluation criteria and subcriteria.  The 
 commissioner shall make the award to the design-builder who 
 scores the highest score pursuant to the weighted criteria and 
 subcriteria as determined by the board, unless the commissioner 
 rejects all proposals or proceeds pursuant to paragraphs (f) and 
 (g).  In the case of the Minnesota State Colleges and 
 Universities, the board shall narrow the selection to the two 
 design-builders that score the highest on the evaluation 
 criteria and subcriteria for recommendation to the respective 
 commissioner, and the commissioner shall make the final 
 selection and shall notify the board of the selection. 

    (e) The commissioner shall conduct fee and contract 
 negotiations with the selected design-builder and shall enter 
 into the contract consistent with subdivision 6. 

    (f) If the selected design-builder declines the appointment 
 or is unable to reach agreement with the commissioner on the 
 terms of the contract, the commissioner may, within 60 days 
 after the first selection, request the board to make another 
 selection. 

    (g) If the board fails to make a selection and forward its 
 recommendation to the commissioner within 60 days of the request 
 for a second selection, the commissioner may appoint a 
 design-builder without the recommendation of the board. 

    (h) If a project for which a design-builder has been 
 selected by the board becomes inactive, lapses, or changes as 
 the result of a project phasing, insufficient appropriations, or 
 other reasons, the commissioner may, if the project is 
 reactivated, retain the same design-builder to complete the 
 project. 

    Subd. 6.    Design-build qualifications-based acceptance 
 by commissioner.  The contract between the commissioner and 
 the design-builder selected under subdivision 5 shall require 
 the following: 

    (a) The design-builder shall develop design documents of 
 the project for review and approval by the commissioner prior to 
 project bidding. 

    (b) The design-builder shall competitively bid all trade 
 contract work for the project from a list of qualified firms, 
 subject to availability of such qualified firms for the specific 
 work.  The list of qualified firms shall be based upon an open, 
 competitive, and objective prequalification process in which the 
 selection criteria includes, in addition to the proposed price, 
 the firm's experience as a constructor or primary designer, 
 including capacity of key personnel, technical competence, 
 capability to perform, the past performance of the firm and its 
 employees, including its safety record and compliance with state 
 and federal law, availability to and familiarity with the 
 project locale, and other considerations as defined by the 
 design-builder and the commissioner.  The design-builder and the 
 commissioner shall jointly determine the composition of the list 
 of qualified firms.  The criteria shall not impose unnecessary 
 conditions beyond reasonable requirements to ensure maximum 
 participation of qualified contractors. 

    (c) With the approval of the commissioner, the 
 design-builder may name either or both a mechanical and 
 electrical subcontractor or subcontractors as a named member of 
 the design-builder's team, and if either or both a mechanical 
 and electrical subcontractor or subcontractors is so named, the 
 design-builder is not required to competitively bid the 
 mechanical or electrical trade contract work.  A named 
 mechanical or electrical subcontractor member of a 
 design-builder's team shall competitively bid all subcontracted 
 portions of the mechanical or electrical subcontractor's work 
 from a list of qualified firms.  Such qualified firms shall be 
 determined as described in paragraph (b).  The commissioner and 
 the design-builder shall agree to a list of labor, materials, 
 and equipment that shall be competitively bid. 

    (d) With the commissioner's approval or request, team 
 members of the design-builder, including the design-builder, may 
 also submit bids for trade contract work. 

    (e) Either or both the mechanical or electrical 
 subcontractor or subcontractors who are named subcontractor 
 members of the design-builder's team shall enter into guaranteed 
 maximum price contracts with the design-builder. 

    (f) The design-builder and the commissioner shall enter 
 into a guaranteed maximum price contract. 

    Subd. 7.    Design-build design and price-based proposals. 
  (a) In a design and price-based selection process the 
 following shall apply: 

    (1) selection must be based on best value, which includes 
 an evaluation of price and design, and may include other 
 criteria including, but not limited to, the proposer's 
 experience as a constructor or primary designer; 

    (2) the commissioner shall establish procedures for 
 determining the appropriate content of each request for 
 qualifications, and the weighted criteria and subcriteria to be 
 used to evaluate the design-builders including, but not limited 
 to, the proposer's experience as a constructor or primary 
 designer, including capacity of key personnel, technical 
 competence, capability to perform and the past performance of 
 the proposer and its employees, its safety record and compliance 
 with state and federal law, quality and past performance, and 
 the procedures for evaluating qualifications in an open, 
 competitive, and objective manner; and 

    (3) the commissioner shall issue a request for 
 qualifications that includes the information as described in 
 subdivision 3. 

    (b) After obtaining and evaluating qualifications from each 
 design-builder, in accordance with the weighted criteria and 
 subcriteria and procedures set forth in the request for 
 qualifications, the board shall select a short list of three 
 proposers.  The board must receive at least three proposals from 
 design-builders or the commissioner shall either: 

    (1) solicit new proposals; 

    (2) revise the request for qualifications and thereafter 
 solicit new proposals using the revised request for 
 qualifications; or 

    (3) request selection of a primary designer pursuant to 
 section 16B.33, 16C.08, or 16C.095 and proceed with competitive 
 bidding pursuant to sections 16C.25 to 16C.29. 

    (c) The commissioner shall issue a request for proposals to 
 the selected design-builders.  The submitted proposals shall 
 consist of, at a minimum, the following elements: 

    (1) preliminary plans and specifications and other 
 information in sufficient detail to describe the character, 
 quality, and scope of the project; 

    (2) a design and construction critical path schedule; 

    (3) the price at which the design-builder will complete all 
 design and construction requested in the proposal for the 
 project if selected; and 

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

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

    (e) Proposals must identify the primary designer and the 
 primary construction contracting entity that are members of the 
 design-builder's team. 

    (f) The amount and type of design services requested by the 
 board shall not be exceeded by those submitting proposals.  
 Proposals exceeding the amount and type of design services 
 requested by the board may be rejected by the board.  Unless 
 compensated in excess of the minimum stipend for their effort, 
 design-builders must not be required to submit detailed 
 architectural or engineering design or construction documents as 
 part of the proposal. 

    (g) Except as described in paragraph (h), the commissioner 
 shall award to each design-builder that submits a responsive 
 design-build proposal under this subdivision, a stipend in an 
 amount of not less than 0.3 percent of the commissioner's 
 estimated cost of design and construction.  If the request for 
 proposals requires extensive design services beyond preliminary 
 plans and specifications as requested as part of the proposal, 
 the stipend shall be adjusted to an amount commensurate with the 
 amount of design services requested for each proposal. 

    (h) No stipend shall be awarded to the design-builder 
 selected to complete the project. 

    (i) For projects where the design-builder accepts the 
 stipend offered by the board, the commissioner shall be deemed 
 the owner of the design, subject to the rights of the proposer 
 to such design for publication and use in other projects.  
 However, the use of the design in its totality, or near 
 totality, by the commissioner is prohibited. 

    (j) The commissioner may require each design-builder to 
 submit with its proposal a cash deposit, letter of credit in a 
 form acceptable to the commissioner, or bid bond not to exceed 
 five percent of the maximum cost of the design-builder's 
 proposal.  If the proposal is accepted but the design-builder 
 fails, without good cause to execute the design-build contract, 
 the deposit or bond is forfeited in an amount not to exceed the 
 difference between the proposal in question and the next highest 
 proposal. 

    Subd. 8.    Design-build design and price-based selection 
 process.  (a) The board shall review submissions as described 
 in subdivision 7; conduct formal interviews with all three 
 proposers but not allow the disclosure of any price, 
 proprietary, or confidential information contained in one 
 proposal to another proposer; and select the proposal that 
 scores the highest based on the weighted evaluation criteria and 
 subcriteria, except for projects under the control of Minnesota 
 State Colleges and Universities.  The commissioner shall make 
 the award to the design-builder who scores the highest score 
 pursuant to the weighted criteria and subcriteria as determined 
 by the board, unless the commissioner rejects all proposals or 
 proceeds pursuant to paragraph (c) or (d).  For Minnesota State 
 Colleges and Universities projects, the board shall narrow the 
 selection to the two highest scoring proposers for 
 recommendation to the commissioner, and the commissioner shall 
 review the submissions as described in subdivision 7; conduct 
 formal interviews with both proposers recommended by the board, 
 but not allow the disclosure of any price, proprietary, or 
 confidential information contained in one proposal to another 
 proposer; and select the proposal that scores the highest based 
 on the commissioner's application of the weighted evaluation 
 criteria and subcriteria; and shall notify the board of the 
 selection. 

    (b) After a proposal is accepted, the commissioner is 
 deemed the owner of the design, subject to the rights of the 
 proposer to such design for publication and use in other 
 projects. 

    (c) After a proposal is accepted, the commissioner and the 
 design-builder shall enter into a fixed-price contract. 

    (d) If the design-builder selected for a project declines 
 the appointment or is unable to reach agreement with the 
 commissioner concerning the terms of the contract, the 
 commissioner may, within 60 days after the first selection, 
 request the board to make another selection. 

    (e) If the design-builder selected for a project, prior to 
 executing a design-build contract, replaces either the primary 
 designer or the primary construction contracting entity, the 
 commissioner shall notify the board of the replacement and 
 request the board to either approve the new design-builder or to 
 select another design-builder. 

    (f) If the board fails to make a second selection as 
 described in paragraph (d) or (e) and forward its recommendation 
 to the commissioner within 60 days of the commissioner's request 
 for a second selection, the commissioner may appoint a 
 design-builder to the project without the recommendation of the 
 board. 

    HIST: 2005 c 78 s 7 

     16C.34 Construction manager at risk. 

    Subdivision 1.    Solicitation of qualifications.  (a) 
 Every user agency, except the Capitol Area Architectural and 
 Planning Board, shall submit a written request for proposals for 
 a construction manager at risk for its project to the 
 commissioner.  The written request for proposals must include a 
 description of the project, the estimated cost of completing the 
 project, a description of any special requirements or unique 
 features of the proposed project, and other information which 
 will assist the commissioner in carrying out its duties and 
 responsibilities set forth in this section. 

    (b) The commissioner may include in the request for 
 qualifications criteria a requirement that the proposer include 
 the overhead and fee that the construction manager at risk 
 proposes to charge for its services. 

    (c) A request for qualifications shall be prepared for each 
 construction manager at risk contract as provided in this 
 section.  The request for qualifications shall contain, at a 
 minimum, the following elements: 

    (1) the identity of the agency for which the project will 
 be built and that will award the construction manager at risk 
 contract; 

    (2) procedures for submitting qualifications, the criteria 
 and subcriteria for evaluation of qualifications and the 
 relative weight for each criteria and subcriteria, and the 
 procedures for making awards in an open, competitive, and 
 objective manner, and according to the stated criteria and 
 subcriteria, including a reference to the requirements of this 
 section; 

    (3) the terms and conditions for the contract; 

    (4) the qualifications that the construction manager at 
 risk shall be desired to have; 

    (5) a schedule for commencement and completion of the 
 project; 

    (6) any applicable budget limits for the project; 

    (7) requirements for insurance, statutorily required 
 performance and payment bonds; 

    (8) identification and location of any other information in 
 the possession or control of the agency that the user agency 
 determines is material, which may include surveys, soils 
 reports, drawings or models of existing structures, 
 environmental studies, photographs, or references to public 
 records; and 

    (9) criteria shall not impose unnecessary conditions beyond 
 reasonable requirements to ensure maximum participation of 
 construction managers at risk.  The criteria shall not consider 
 the collective bargaining status of the construction manager at 
 risk. 

    (d) Notice of requests for qualifications must be 
 advertised in the State Register.  

    Subd. 2.    Construction manager at risk selection 
 process.  In a construction manager at risk selection process, 
 the following shall apply: 

    (a)(1) Upon receipt of a written request from a user agency 
 for a construction manager at risk for its project, the 
 commissioner shall create a selection committee composed of a 
 minimum of three persons, at least one of whom has construction 
 industry expertise; (2) the selection committee shall establish 
 procedures for determining the appropriate content of each 
 request for qualifications, the weighted criteria and 
 subcriteria to be used to score the proposals of the 
 construction managers at risk, and shall establish procedures 
 for evaluating qualifications in an open, competitive, and 
 objective manner; and (3) the commissioner shall issue a request 
 for qualifications that includes the information as described in 
 subdivision 1. 

    (b) In accordance with the criteria and procedures set 
 forth in the request for qualifications, the selection committee 
 shall evaluate the construction manager at risk's experience as 
 a constructor, including, but not limited to, capacity of key 
 personnel, technical competence, capability to perform, the past 
 performance of the construction manager at risk and its 
 employees, its safety record and compliance with state and 
 federal law, availability to and familiarity with the project 
 locale, and other appropriate facts submitted by the 
 construction manager at risk in response to the request for 
 qualifications.  The commissioner must receive at least three 
 proposals from construction managers or the commissioner may 
 either (1) solicit new proposals; (2) request the selection 
 committee to revise the request for qualifications and 
 thereafter solicit new proposals using the revised request for 
 qualifications; (3) select another allowed procurement method; 
 or (4) reject all proposals. 

    (c)(1) The selection committee shall review the proposers' 
 qualifications and create a short list of three to five 
 proposals of construction managers at risk; (2) the commissioner 
 shall issue a request for proposal requiring fee and expense 
 proposals and other information as desired from the short-listed 
 construction managers at risk; (3) the selection committee shall 
 conduct formal interviews with the short-listed construction 
 managers at risk but shall not disclose any proprietary or 
 confidential information contained in one proposal to another 
 proposer; and (4) the selection committee shall recommend the 
 construction manager at risk achieving the highest score on the 
 evaluation criteria as described in subdivision 1, paragraph (b).

    (d) The board shall select the primary designer as 
 described in section 16B.33 or in the case of the commissioner, 
 section 16C.08 or 16C.095. 

    Subd. 3.    Construction manager at risk contract.  (a) 
 The commissioner shall conduct contract negotiations with the 
 recommended construction manager at risk. 

    (b) If the construction manager at risk selected for the 
 project declines the appointment or is unable to reach agreement 
 with the commissioner concerning the fee or terms of the 
 contract, the commissioner shall, within 60 days after the first 
 selection, request the selection committee to make another 
 recommendation. 

    (c) If the selection committee fails to make a second 
 recommendation and forward it to the commissioner within 60 days 
 of the commissioner's request for a second recommendation, the 
 commissioner may select a construction manager at risk without 
 the recommendation of the selection committee. 

    (d) The primary designer selected by the board shall 
 develop various design documents for review and approval by the 
 commissioner. 

    (e) The construction manager at risk shall competitively 
 bid all trade contract work for the project from a list of 
 qualified firms, subject to availability of such qualified firms 
 for the specific work.  The list of qualified firms shall be 
 based upon an open, competitive, and objective prequalification 
 process in which the selection criteria includes the firm's 
 experience as a constructor, including capacity of key 
 personnel, technical competence, capability to perform, the past 
 performance of the firm and its employees, including its safety 
 record and compliance with state and federal law, availability 
 to and familiarity with the project locale, and other 
 considerations as defined by the construction manager at risk 
 and the commissioner.  The construction manager at risk and the 
 commissioner shall jointly determine the composition of the list 
 of qualified firms.  The criteria shall not impose unnecessary 
 conditions beyond reasonable requirements to ensure maximum 
 participation of qualified contractors.  With the commissioner's 
 approval or request, the construction manager at risk may also 
 submit bids for trade contract work. 

    (f) The construction manager at risk and the commissioner 
 shall enter into a guaranteed maximum price contract for the 
 project. 

    HIST: 2005 c 78 s 8 

     16C.35 Job order contracting. 

    Subdivision 1.    Authority.  The commissioner may 
 undertake construction utilizing job order contracting for 
 projects that do not exceed a construction cost of $250,000. 

    Subd. 2.    Job order contracting request for 
 qualifications.  (a) The commissioner is authorized to issue a 
 request for qualifications that includes the criteria that will 
 be used for the projects, provided that these criteria do not 
 unduly restrict competition, nor impose conditions beyond 
 reasonable requirements to ensure maximum participation of all 
 qualified contractors, and does not relate to the collective 
 bargaining status of the contractor. 

    (b) The request for qualifications must be publicized in a 
 manner designated by the commissioner that ensures open and 
 unrestricted access for any potential responder.  To the extent 
 practical, this must include posting on a state Web site.  To 
 the extent practical, the commissioner must give notice to 
 representatives of targeted group businesses designated under 
 section 16C.16.  

    Subd. 3.    Qualified contractors.  (a) The commissioner 
 shall review the responses to the request for qualifications and 
 determine responder's ability to enter into the master contract 
 that will be utilized for the projects.  The commissioner shall 
 establish a list of qualified contractors based on the 
 proposers' ability to enter into a master contract as described 
 in the request for qualifications. 

    (b) The commissioner shall enter into master contracts with 
 all qualified contractors. 

    (c) The commissioner shall establish procedures to allow 
 firms to submit qualifications at least annually to allow 
 placement on the list of contractors qualified to enter into a 
 master contract. 

    Subd. 4.    Construction services bidding.  The 
 commissioner shall request bids for construction services for 
 any project using job order contracting from qualified 
 contractors as follows: 

    (1) for construction projects up to a maximum cost of 
 $50,000, the commissioner shall request a minimum of two bids; 

    (2) for construction projects with a cost greater than 
 $50,000, but less than or equal to $100,000, the commissioner 
 shall request a minimum of three bids; 

    (3) for construction projects with a cost greater than 
 $100,000 but less than or equal to $250,000, the commissioner 
 shall request a minimum of four bids. 

    Subd. 5.    Qualified contractor selection.  The 
 commissioner shall select the contractor who submits the lowest 
 price bid for the construction services proposed. 

    Subd. 6.    Reasonable distribution of bid requests among 
 qualified contractors.  The commissioner in requesting bidding 
 for projects using job order contracting as described in this 
 section shall develop a system to ensure a reasonable 
 opportunity for all qualified contractors to bid on construction 
 services on a periodic basis. 

    HIST: 2005 c 78 s 9