| 1 | 1 | | 1.1 A bill for an act |
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| 2 | 2 | | 1.2 relating to state government; changing provisions for state contracts; amending |
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| 3 | 3 | | 1.3 Minnesota Statutes 2024, sections 16C.05, by adding a subdivision; 16C.16, |
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| 4 | 4 | | 1.4 subdivisions 6, 6a, 7; repealing Minnesota Statutes 2024, section 16C.36. |
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| 5 | 5 | | 1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: |
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| 6 | 6 | | 1.6 Section 1. Minnesota Statutes 2024, section 16C.05, is amended by adding a subdivision |
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| 7 | 7 | | 1.7to read: |
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| 8 | 8 | | 1.8 Subd. 8.Unenforceable terms.(a) A contract entered into by the state shall not contain |
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| 9 | 9 | | 1.9a term that: |
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| 10 | 10 | | 1.10 (1) requires the state to defend, indemnify, or hold harmless another person or entity; |
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| 11 | 11 | | 1.11 (2) binds the state by terms and conditions that may be unilaterally changed by the other |
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| 12 | 12 | | 1.12party; |
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| 13 | 13 | | 1.13 (3) requires mandatory arbitration; |
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| 14 | 14 | | 1.14 (4) attempts to extend arbitration obligations to parties outside the original contract or |
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| 15 | 15 | | 1.15to disputes unrelated to the original contract; |
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| 16 | 16 | | 1.16 (5) construes the contract in accordance with the laws of a state other than Minnesota; |
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| 17 | 17 | | 1.17 (6) obligates state funds in subsequent fiscal years in the form of automatic renewal; or |
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| 18 | 18 | | 1.18 (7) is inconsistent with chapter 13, the Minnesota Government Data Practices Act. |
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| 19 | 19 | | 1.19 (b) If a contract is entered into that contains a term prohibited in paragraph (a), that term |
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| 20 | 20 | | 1.20shall be void and the contract is enforceable as if it did not contain that term. |
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| 21 | 21 | | 1.21 (c) The commissioner shall post a copy of this section on its website. |
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| 22 | 22 | | 1Section 1. |
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| 23 | 23 | | 25-00444 as introduced01/08/25 REVISOR EB/BM |
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| 24 | 24 | | SENATE |
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| 25 | 25 | | STATE OF MINNESOTA |
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| 26 | 26 | | S.F. No. 2501NINETY-FOURTH SESSION |
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| 27 | 27 | | (SENATE AUTHORS: XIONG) |
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| 28 | 28 | | OFFICIAL STATUSD-PGDATE |
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| 29 | 29 | | Introduction and first reading03/13/2025 |
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| 30 | 30 | | Referred to State and Local Government 2.1 Sec. 2. Minnesota Statutes 2024, section 16C.16, subdivision 6, is amended to read: |
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| 31 | 31 | | 2.2 Subd. 6.Purchasing methods.(a) The commissioner may award up to a 12 percent |
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| 32 | 32 | | 2.3preference for specified goods or services to small targeted group businesses. |
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| 33 | 33 | | 2.4 (b) The commissioner may award a contract for goods, services, or construction directly |
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| 34 | 34 | | 2.5to a small business or small targeted group business without going through a competitive |
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| 35 | 35 | | 2.6solicitation process up to a total contract award value, including extension options, of |
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| 36 | 36 | | 2.7$100,000. |
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| 37 | 37 | | 2.8 (c) The commissioner may designate a purchase of goods or services for award only to |
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| 38 | 38 | | 2.9small businesses or small targeted group businesses if the commissioner determines that at |
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| 39 | 39 | | 2.10least three small businesses or small targeted group businesses are likely to respond to a |
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| 40 | 40 | | 2.11solicitation. |
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| 41 | 41 | | 2.12 (d) The commissioner, as a condition of awarding a construction contract or approving |
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| 42 | 42 | | 2.13a contract for professional or technical services, may set goals that require the prime |
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| 43 | 43 | | 2.14contractor to subcontract a portion of the contract to small businesses or small targeted |
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| 44 | 44 | | 2.15group businesses. The commissioner must establish a procedure for granting waivers from |
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| 45 | 45 | | 2.16the subcontracting requirement when qualified small businesses or small targeted group |
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| 46 | 46 | | 2.17businesses are not reasonably available. The commissioner may establish financial incentives |
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| 47 | 47 | | 2.18for prime contractors who exceed the goals for use of small business or small targeted group |
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| 48 | 48 | | 2.19business subcontractors and financial penalties for prime contractors who fail to meet goals |
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| 49 | 49 | | 2.20under this paragraph. The subcontracting requirements of this paragraph do not apply to |
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| 50 | 50 | | 2.21prime contractors who are small businesses or small targeted group businesses. |
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| 51 | 51 | | 2.22 Sec. 3. Minnesota Statutes 2024, section 16C.16, subdivision 6a, is amended to read: |
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| 52 | 52 | | 2.23 Subd. 6a.Veteran-owned small businesses.(a) Except when mandated by the federal |
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| 53 | 53 | | 2.24government as a condition of receiving federal funds, the commissioner shall award up to |
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| 54 | 54 | | 2.25a 12 percent preference, but no less than the percentage awarded to any other group under |
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| 55 | 55 | | 2.26this section, on state procurement to certified small businesses that are majority-owned and |
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| 56 | 56 | | 2.27operated by veterans. |
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| 57 | 57 | | 2.28 (b) The commissioner may award a contract for goods, services, or construction directly |
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| 58 | 58 | | 2.29to a veteran-owned small business without going through a competitive solicitation process |
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| 59 | 59 | | 2.30up to a total contract award value, including extension options, of $100,000. |
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| 60 | 60 | | 2.31 (c) The commissioner may designate a purchase of goods or services for award only to |
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| 61 | 61 | | 2.32a veteran-owned small business if the commissioner determines that at least three |
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| 62 | 62 | | 2.33veteran-owned small businesses are likely to respond to a solicitation. |
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| 63 | 63 | | 2Sec. 3. |
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| 64 | 64 | | 25-00444 as introduced01/08/25 REVISOR EB/BM 3.1 (d) The commissioner, as a condition of awarding a construction contract or approving |
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| 65 | 65 | | 3.2a contract for professional or technical services, may set goals that require the prime |
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| 66 | 66 | | 3.3contractor to subcontract a portion of the contract to a veteran-owned small business. The |
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| 67 | 67 | | 3.4commissioner must establish a procedure for granting waivers from the subcontracting |
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| 68 | 68 | | 3.5requirement when qualified veteran-owned small businesses are not reasonably available. |
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| 69 | 69 | | 3.6The commissioner may establish financial incentives for prime contractors who exceed the |
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| 70 | 70 | | 3.7goals for use of veteran-owned small business subcontractors and financial penalties for |
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| 71 | 71 | | 3.8prime contractors who fail to meet goals under this paragraph. The subcontracting |
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| 72 | 72 | | 3.9requirements of this paragraph do not apply to prime contractors who are veteran-owned |
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| 73 | 73 | | 3.10small businesses. |
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| 74 | 74 | | 3.11 (e) The purpose of this designation is to facilitate the transition of veterans from military |
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| 75 | 75 | | 3.12to civilian life, and to help compensate veterans for their sacrifices, including but not limited |
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| 76 | 76 | | 3.13to their sacrifice of health and time, to the state and nation during their military service, as |
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| 77 | 77 | | 3.14well as to enhance economic development within Minnesota. |
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| 78 | 78 | | 3.15 (f) Before the commissioner certifies that a small business is majority-owned and operated |
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| 79 | 79 | | 3.16by a veteran, the commissioner of veterans affairs must verify that the owner of the small |
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| 80 | 80 | | 3.17business is a veteran, as defined in section 197.447. |
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| 81 | 81 | | 3.18 Sec. 4. Minnesota Statutes 2024, section 16C.16, subdivision 7, is amended to read: |
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| 82 | 82 | | 3.19 Subd. 7.Economically disadvantaged areas.(a) The commissioner may award up to |
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| 83 | 83 | | 3.20a 12 percent preference on state procurement to small businesses located in an economically |
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| 84 | 84 | | 3.21disadvantaged area. |
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| 85 | 85 | | 3.22 (b) The commissioner may award a contract for goods, services, or construction directly |
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| 86 | 86 | | 3.23to a small business located in an economically disadvantaged area without going through |
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| 87 | 87 | | 3.24a competitive solicitation process up to a total contract award value, including extension |
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| 88 | 88 | | 3.25options, of $100,000. |
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| 89 | 89 | | 3.26 (c) The commissioner may designate a purchase of goods or services for award only to |
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| 90 | 90 | | 3.27a small business located in an economically disadvantaged area if the commissioner |
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| 91 | 91 | | 3.28determines that at least three small businesses located in an economically disadvantaged |
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| 92 | 92 | | 3.29area are likely to respond to a solicitation. |
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| 93 | 93 | | 3.30 (d) The commissioner, as a condition of awarding a construction contract or approving |
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| 94 | 94 | | 3.31a contract for professional or technical services, may set goals that require the prime |
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| 95 | 95 | | 3.32contractor to subcontract a portion of the contract to a small business located in an |
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| 96 | 96 | | 3.33economically disadvantaged area. The commissioner must establish a procedure for granting |
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| 97 | 97 | | 3Sec. 4. |
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| 98 | 98 | | 25-00444 as introduced01/08/25 REVISOR EB/BM 4.1waivers from the subcontracting requirement when qualified small businesses located in an |
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| 99 | 99 | | 4.2economically disadvantaged area are not reasonably available. The commissioner may |
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| 100 | 100 | | 4.3establish financial incentives for prime contractors who exceed the goals for use of |
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| 101 | 101 | | 4.4subcontractors that are small businesses located in an economically disadvantaged area and |
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| 102 | 102 | | 4.5financial penalties for prime contractors who fail to meet goals under this paragraph. The |
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| 103 | 103 | | 4.6subcontracting requirements of this paragraph do not apply to prime contractors who are |
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| 104 | 104 | | 4.7small businesses located in an economically disadvantaged area. |
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| 105 | 105 | | 4.8 (e) A business is located in an economically disadvantaged area if: |
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| 106 | 106 | | 4.9 (1) the owner resides in or the business is located in a county in which the median income |
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| 107 | 107 | | 4.10for married couples is less than 70 percent of the state median income for married couples; |
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| 108 | 108 | | 4.11 (2) the owner resides in or the business is located in an area designated a labor surplus |
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| 109 | 109 | | 4.12area by the United States Department of Labor; or |
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| 110 | 110 | | 4.13 (3) the business is a certified rehabilitation facility or extended employment provider as |
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| 111 | 111 | | 4.14described in chapter 268A. |
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| 112 | 112 | | 4.15 (f) The commissioner may designate one or more areas designated as targeted |
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| 113 | 113 | | 4.16neighborhoods under section 469.202 or as border city enterprise zones under section |
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| 114 | 114 | | 4.17469.166 as economically disadvantaged areas for purposes of this subdivision if the |
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| 115 | 115 | | 4.18commissioner determines that this designation would further the purposes of this section. |
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| 116 | 116 | | 4.19If the owner of a small business resides or is employed in a designated area, the small |
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| 117 | 117 | | 4.20business is eligible for any preference provided under this subdivision. |
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| 118 | 118 | | 4.21 (g) The Department of Revenue shall gather data necessary to make the determinations |
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| 119 | 119 | | 4.22required by paragraph (e), clause (1), and shall annually certify counties that qualify under |
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| 120 | 120 | | 4.23paragraph (e), clause (1). An area designated a labor surplus area retains that status for 120 |
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| 121 | 121 | | 4.24days after certified small businesses in the area are notified of the termination of the |
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| 122 | 122 | | 4.25designation by the United States Department of Labor. |
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| 123 | 123 | | 4.26 Sec. 5. REPEALER. |
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| 124 | 124 | | 4.27 Minnesota Statutes 2024, section 16C.36, is repealed. |
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| 125 | 125 | | 4Sec. 5. |
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| 126 | 126 | | 25-00444 as introduced01/08/25 REVISOR EB/BM 16C.36 REORGANIZATION SERVICES UNDER MASTER CONTRACT. |
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| 127 | 127 | | The commissioner of administration must make available under a master contract program a |
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| 128 | 128 | | list of eligible contractors who can assist state agencies in using data analytics to: |
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| 129 | 129 | | (1) accomplish agency reorganization along service rather than functional lines in order to |
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| 130 | 130 | | provide more efficient and effective service; and |
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| 131 | 131 | | (2) bring about internal reorganization of management functions in order to flatten the |
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| 132 | 132 | | organizational structure by requiring that decisions are made closer to the service needed, eliminating |
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| 133 | 133 | | redundancies, and optimizing the span of control ratios to public and private sector industry |
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| 134 | 134 | | benchmarks. |
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| 135 | 135 | | 1R |
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| 136 | 136 | | APPENDIX |
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| 137 | 137 | | Repealed Minnesota Statutes: 25-00444 |
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