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Minnesota Legislature

Office of the Revisor of Statutes

Chapter 471

Section 471.345

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471.345 UNIFORM MUNICIPAL CONTRACTING LAW.
    Subdivision 1. Municipality defined. For purposes of this section, "municipality" means a
county, town, city, school district or other municipal corporation or political subdivision of the
state authorized by law to enter into contracts.
    Subd. 2. Contract defined. A "contract" means an agreement entered into by a municipality
for the sale or purchase of supplies, materials, equipment or the rental thereof, or the construction,
alteration, repair or maintenance of real or personal property.
    Subd. 3. Contracts over $50,000. If the amount of the contract is estimated to exceed
$50,000, sealed bids shall be solicited by public notice in the manner and subject to the
requirements of the law governing contracts by the particular municipality or class thereof
provided that with regard to repairs and maintenance of ditches, bids shall not be required if the
estimated amount of the contract does not exceed the amount specified in section 103E.705,
subdivisions 5, 6, and 7
.
    Subd. 3a. Contracts over $50,000; best value alternative. As an alternative to the
procurement method described in subdivision 3, municipalities may award a contract for
construction, alteration, repair, or maintenance work to the vendor or contractor offering the best
value under a request for proposals as described in section 16C.28, subdivision 1, paragraph
(a), clause (2), and paragraph (c).
    Subd. 4. Contracts from $10,000 to $50,000. If the amount of the contract is estimated to
exceed $10,000 but not to exceed $50,000, the contract may be made either upon sealed bids or by
direct negotiation, by obtaining two or more quotations for the purchase or sale when possible, and
without advertising for bids or otherwise complying with the requirements of competitive bidding.
All quotations obtained shall be kept on file for a period of at least one year after receipt thereof.
    Subd. 4a. Contracts from $10,000 to $50,000; best value alternative. As an alternative
to the procurement method described in subdivision 4, municipalities may award a contract for
construction, alteration, repair, or maintenance work to the vendor or contractor offering the best
value under a request for proposals as described in section 16C.28, subdivision 1, paragraph
(a), clause (2), and paragraph (c).
    Subd. 5. Contracts less than $10,000. If the amount of the contract is estimated to be
$10,000 or less, the contract may be made either upon quotation or in the open market, in the
discretion of the governing body. If the contract is made upon quotation it shall be based, so far
as practicable, on at least two quotations which shall be kept on file for a period of at least one
year after their receipt. Alternatively, municipalities may award a contract for construction,
alteration, repair, or maintenance work to the vendor or contractor offering the best value under a
request for proposals as described in section 16C.28, subdivision 1, paragraph (a), clause (2), and
paragraph (c).
    Subd. 5a. County or town rental contracts. If the amount of a county or town contract for
the rental of equipment is estimated to be $60,000 or less, the contract may, in the discretion of
the county or town board, be made by direct negotiation by obtaining two or more quotations
for the rental when possible and without advertising for bids or otherwise complying with the
requirements of competitive bidding. All quotations shall be kept on file for a period of at least
one year after their receipt.
    Subd. 5b. Water tank service contracts. A municipality may, by direct negotiation or
through the solicitation of requests for proposals, enter into a multiyear professional service
contract for the engineering, repair, and maintenance of a water storage tank and appurtenant
facilities owned, controlled, or operated by the municipality, if the contract contains:
(1) a provision that the municipality is not required to make total payments in a single year
that exceed the water utility charges received by the municipality for that year;
(2) a provision requiring that the work performed be done under the review of a professional
engineer licensed in the state of Minnesota attesting that the work will be performed in compliance
with all applicable codes and engineering standards; and
(3) a provision that if, at the commencement of the contract, the water tank or appurtenant
facilities require engineering, repair, or service in order to bring the water tank or facilities into
compliance with federal, state, or local requirements, the party contracting with the municipality
is responsible for providing the engineering, repair, or service. The costs to bring the water tank or
facilities into compliance must be itemized separately and charged to the municipality in payments
spread over a period of not less than three years from the commencement of the contract.
    Subd. 6. Applicability of other laws. The purpose of this section is to establish for all
municipalities, uniform dollar limitations upon contracts which shall or may be entered into on
the basis of competitive bids, quotations or purchase or sale in the open market. To the extent
inconsistent with this purpose, all laws governing contracts by a particular municipality or class
thereof are superseded. In all other respects such laws shall continue applicable.
    Subd. 7. Minimum labor standards. Nothing in this section shall be construed to prohibit
any municipality from adopting rules, regulations, or ordinances which establish the prevailing
wage rate as defined in section 177.42, as a minimum standard for wages and which establish
the hours and working conditions prevailing for the largest number of workers engaged in the
same class of labor within the area as a minimum standard for a contractor's employees which
must be agreed to by any contractor before the contractor may be awarded any contract for the
furnishing of any labor, material, supplies, or service.
    Subd. 8. Procurement from economically disadvantaged persons. For purposes of this
subdivision, the following terms shall have the meanings herein ascribed to them:
(a) "Small targeted group business" means businesses designated under section 16C.16.
(b) "Business entity" means an entity organized for profit, including an individual,
partnership, corporation, joint venture, association, or cooperative.
Nothing in this section shall be construed to prohibit any municipality from adopting a
resolution, rule, regulation, or ordinance which on an annual basis designates and sets aside for
awarding to small targeted group businesses a percentage of the value of its anticipated total
procurement of goods and services, including construction, and which uses either a negotiated
price or bid contract procedure in the awarding of a procurement contract under a set-aside
program as allowed in this subdivision, provided that any award based on a negotiated price shall
not exceed by more than five percent the municipality's estimated price for the goods and services
if they were purchased on the open market and not under the set-aside program.
    Subd. 9.[Repealed, 1990 c 549 s 3]
    Subd. 10. Shared hospital or ambulance service purchasing. Supplies, materials, or
equipment to be used in the operation of a hospital licensed under sections 144.50 to 144.56 or an
ambulance service licensed under chapter 144E that are purchased or leased under a shared service
purchasing arrangement whereby more than one hospital or ambulance service purchases supplies,
materials, or equipment with one or more other hospitals or ambulance services either through
one of the hospitals or ambulance services or through another entity, may be purchased without
regard to the competitive bidding requirements of this section, if the following conditions are met:
(1) the hospital's or ambulance service's governing authority authorizes the arrangement;
(2) the shared services purchasing program purchases items available from more than one
source on the basis of competitive bids or competitive quotations of prices; and
(3) the arrangement authorizes the hospital's or ambulance service's governing authority or
its representatives to review the purchasing procedures to determine compliance with these
requirements.
The shared services purchasing program may award contracts to more than one bidder if
doing so does not decrease the service level or diminish the effects of competition.
    Subd. 11. Fuel contracts for generation of municipal power. Notwithstanding the amount
of the contract, any contract entered into by a municipality for the purchase of fuel required for
the generation of power from municipal power plants shall be governed by subdivision 4.
    Subd. 12. Procurement from rehabilitation facilities. Nothing in this section prohibits a
municipality from adopting a resolution, rule, regulation, or ordinance that on an annual basis
designates and sets aside for awarding to rehabilitation facilities as described in section 268A.06
a percentage of the value of its anticipated total procurement of goods and services, including
construction, and which uses either a negotiated price or bid contract procedure in the awarding of
a procurement contract under a set-aside program as allowed in this subdivision, provided that any
award based on a negotiated price shall not exceed by more than five percent the municipality's
estimated price for the goods and services if they were purchased on the open market and not
under the set-aside program.
    Subd. 13. Energy efficiency projects. The following definitions apply to this subdivision.
    (a) "Energy conservation measure" means a training program or facility alteration designed
to reduce energy consumption or operating costs and includes:
    (1) insulation of the building structure and systems within the building;
    (2) storm windows and doors, caulking or weatherstripping, multiglazed windows and
doors, heat absorbing or heat reflective glazed and coated window and door systems, additional
glazing, reductions in glass area, and other window and door system modifications that reduce
energy consumption;
    (3) automatic energy control systems;
    (4) heating, ventilating, or air conditioning system modifications or replacements;
    (5) replacement or modifications of lighting fixtures to increase the energy efficiency of the
lighting system without increasing the overall illumination of a facility, unless an increase in
illumination is necessary to conform to the applicable state or local building code for the lighting
system after the proposed modifications are made;
    (6) energy recovery systems;
    (7) cogeneration systems that produce steam or forms of energy such as heat, as well as
electricity, for use primarily within a building or complex of buildings;
    (8) energy conservation measures that provide long-term operating cost reductions.
    (b) "Guaranteed energy savings contract" means a contract for the evaluation and
recommendations of energy conservation measures, and for one or more energy conservation
measures. The contract must provide that all payments, except obligations on termination of the
contract before its expiration, are to be made over time, but not to exceed 15 years from the date
of final installation, and the savings are guaranteed to the extent necessary to make payments
for the systems.
    (c) "Qualified provider" means a person or business experienced in the design,
implementation, and installation of energy conservation measures. A qualified provider to whom
the contract is awarded shall give a sufficient bond to the municipality for its faithful performance.
    Notwithstanding any law to the contrary, a municipality may enter into a guaranteed energy
savings contract with a qualified provider to significantly reduce energy or operating costs.
    Before entering into a contract under this subdivision, the municipality shall provide
published notice of the meeting in which it proposes to award the contract, the names of the
parties to the proposed contract, and the contract's purpose.
    Before installation of equipment, modification, or remodeling, the qualified provider
shall first issue a report, summarizing estimates of all costs of installations, modifications, or
remodeling, including costs of design, engineering, installation, maintenance, repairs, or debt
service, and estimates of the amounts by which energy or operating costs will be reduced.
    A guaranteed energy savings contract that includes a written guarantee that savings will
meet or exceed the cost of energy conservation measures is not subject to competitive bidding
requirements of section 471.345 or other law or city charter. The contract is not subject to section
123B.52.
    A municipality may enter into a guaranteed energy savings contract with a qualified provider
if, after review of the report, it finds that the amount it would spend on the energy conservation
measures recommended in the report is not likely to exceed the amount to be saved in energy
and operation costs over 15 years from the date of installation if the recommendations in the
report were followed, and the qualified provider provides a written guarantee that the energy or
operating cost savings will meet or exceed the costs of the system. The guaranteed energy savings
contract may provide for payments over a period of time, not to exceed 15 years.
    A municipality may enter into an installment payment contract for the purchase and
installation of energy conservation measures. The contract must provide for payments of not
less than 1/15 of the price to be paid within two years from the date of the first operation, and
the remaining costs to be paid monthly, not to exceed a 15-year term from the date of the first
operation.
    A municipality entering into a guaranteed energy savings contract shall provide a copy of
the contract and the report from the qualified provider to the commissioner of commerce within
30 days of the effective date of the contract.
    Guaranteed energy savings contracts may extend beyond the fiscal year in which they
become effective. The municipality shall include in its annual appropriations measure for each
later fiscal year any amounts payable under guaranteed energy savings contracts during the
year. Failure of a municipality to make such an appropriation does not affect the validity of the
guaranteed energy savings contract or the municipality's obligations under the contracts.
    Subd. 14. Damage awards. In any action brought challenging the validity of a municipal
contract under this section, the court shall not award, as any part of its judgment, damages, or
attorney's fees, but may award an unsuccessful bidder the costs of preparing an unsuccessful bid.
    Subd. 15. Cooperative purchasing. A municipality may contract for the purchase of
supplies, materials, or equipment without regard to the competitive bidding requirements of
this section if the purchase is through a national municipal association's purchasing alliance or
cooperative created by a joint powers agreement that purchases items from more than one source
on the basis of competitive bids or competitive quotations.
    Subd. 16. Reverse auction. Notwithstanding any other procedural requirements of this
section, a municipality may contract to purchase supplies, materials, and equipment using an
electronic purchasing process in which vendors compete to provide the supplies, materials, or
equipment at the lowest selling price in an open and interactive environment. A municipality may
not use this process to contract for services, as defined by section 16C.02, subdivision 17, or a
service contract, as defined by section 16C.02, subdivision 16. Nothing in this subdivision must
be construed to prohibit a municipality from adopting a resolution, rule, regulation, or ordinance
relating to minimum labor standards under subdivision 7, or procurement from economically
disadvantaged persons under subdivision 8.
    Subd. 17. Electronic sale of surplus supplies, materials, and equipment. Notwithstanding
any other procedural requirements of this section, a municipality may contract to sell supplies,
materials, and equipment which is surplus, obsolete, or unused using an electronic selling process
in which purchasers compete to purchase the surplus supplies, materials, or equipment at the
highest purchase price in an open and interactive environment.
    Subd. 18. Electronic bidding. Notwithstanding any other procedural requirements of this
section, vendors may submit bids, quotations, and proposals electronically in a form and manner
required by the municipality. A municipality may allow bid, performance, or payment bonds, or
other security, to be furnished electronically.
    Subd. 19. Town road construction and maintenance. Notwithstanding any other
procedural requirements of this section, a town may contract for the construction or maintenance
of a town road by agreeing to the terms of an existing contract between a vendor and a county for
road construction or maintenance on an adjoining road if the existing county contract was made
in conformance with all applicable procedural requirements.
History: 1969 c 934 s 1; 1973 c 123 art 5 s 7; 1973 c 226 s 1,2; 1974 c 510 s 1; 1977 c
182 s 1-3; 1980 c 462 s 4; 1983 c 42 s 1-3; 1983 c 301 s 211; 1984 c 413 s 1; 1985 c 172 s 129;
1Sp1985 c 13 s 347; 1986 c 350 s 1,2; 1986 c 444; 1988 c 409 s 1; 1988 c 689 art 2 s 268; 1989 c
9 s 3; 1989 c 352 s 19,25; 1990 c 391 art 8 s 51; 1990 c 541 s 26,29; 1990 c 549 s 1; 1992 c
380 s 4-6; 1998 c 386 art 2 s 93; 1998 c 397 art 11 s 3; 1999 c 13 s 1; 2000 c 328 s 2-4; 2002
c 358 s 1; 1Sp2003 c 10 s 1; 2004 c 278 s 10-14; 2005 c 63 s 1; 2006 c 274 s 2; 2007 c 136
art 3 s 4; 2007 c 148 art 3 s 31-33