Bill Text: MN HF1984 | 2013-2014 | 88th Legislature | Engrossed
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Public construction accountability and transparency enhanced, and responsible contractor definition and requirement established.
Spectrum: Moderate Partisan Bill (Democrat 11-3)
Status: (Passed) 2014-05-16 - Secretary of State Chapter 253 [HF1984 Detail]
Download: Minnesota-2013-HF1984-Engrossed.html
Bill Title: Public construction accountability and transparency enhanced, and responsible contractor definition and requirement established.
Spectrum: Moderate Partisan Bill (Democrat 11-3)
Status: (Passed) 2014-05-16 - Secretary of State Chapter 253 [HF1984 Detail]
Download: Minnesota-2013-HF1984-Engrossed.html
1.2relating to state government; providing for enhancement of accountability and
1.3transparency in public construction; establishing a requirement for a definition
1.4of responsible contractor;proposing coding for new law in Minnesota Statutes,
1.5chapter 16C.
1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.7 Section 1. [16C.285] RESPONSIBLE CONTRACTOR REQUIREMENT
1.8DEFINED.
1.9 Subdivision 1. Definitions. (a) For purposes of this section, the following terms
1.10have the meanings given.
1.11(b) "Construction contract" means a contract or subcontract of any tier for work on
1.12a project.
1.13(c) "Contractor" means a vendor that submits a bid or proposal or otherwise responds
1.14to a solicitation document of a contracting authority for work on a project. A contractor
1.15includes a construction manager but does not include a material supplier.
1.16(d) "Contracting authority" means a state agency, the Minnesota State Colleges and
1.17Universities, the University of Minnesota, the Metropolitan Council, the Metropolitan
1.18Airports Commission, or a municipality that enters into a construction contract or
1.19authorizes or directs entering into a construction contract.
1.20(e) "Municipality" means a county, town, home rule charter or statutory city, school
1.21district, housing and redevelopment authority, port authority, economic development
1.22authority, sports facilities authority, joint powers board or organization created under
1.23section 471.59 or other statute, special district, drainage authority, watershed district,
1.24destination medical center corporation, or other municipal corporation or political
1.25subdivision of the state authorized by law to enter into contracts.
2.1(f) "Prime contractor" means a contractor awarded a construction contract by a
2.2contracting authority for work on a project.
2.3(g) "Principal" means an owner holding at least a 25 percent ownership interest
2.4in a business.
2.5(h) "Project" means building, erection, construction, alteration, remodeling,
2.6demolition, or repair of buildings, real property, highways, roads, bridges, or other
2.7construction work performed pursuant to a construction contract.
2.8(i) "Related entity" means:
2.9(1) a firm, partnership, corporation, joint venture, or other legal entity substantially
2.10under the control of a contractor or vendor;
2.11(2) a predecessor corporation or other legal entity having one or more of the same
2.12principals as the contractor or vendor;
2.13(3) a subsidiary of a contractor or vendor;
2.14(4) one or more principals of a contractor or vendor; and
2.15(5) a person, firm, partnership, corporation, joint venture, or other legal entity that
2.16substantially controls a contractor or vendor.
2.17(j) "Solicitation document" means an invitation to bid, bid specifications, request for
2.18proposals, request for qualifications, or other solicitation of contractors for purposes of
2.19a construction contract.
2.20(k) "Subcontractor" means a vendor that seeks to enter into a subcontract or enters
2.21into a subcontract for work on a project.
2.22(l) "Vendor" means a business, including a construction contractor or a natural
2.23person, and includes both if the natural person is engaged in a business.
2.24 Subd. 2. Responsible contractor required. (a) A contractor must meet the
2.25minimum criteria in subdivision 3 to be eligible to be awarded a construction contract
2.26as the lowest responsible bidder or the vendor or contractor offering the best value as
2.27provided in sections 16C.28, 103D.811, 103E.505, 116A.13, 123B.52, 160.17, 160.262,
2.28161.32, 161.3206, 161.3209, 161.38, 162.17, 365.37, 374.13, 375.21, 383C.094, 412.311,
2.29429.041, 458D.21, 469.015, 469.068, 469.101, 471.345, 473.4057, 473.523, 473.652,
2.30473.756, or 473J.11, or any of their successor provisions.
2.31(b) This section applies to projects where the contracting authority's construction
2.32contract with the prime contractor is estimated to exceed $50,000 and is awarded pursuant
2.33to a lowest responsible bidder selection method or a best value selection method. A
2.34subcontractor must meet the minimum criteria in subdivision 3 to be eligible to be awarded
2.35a subcontract on such a project regardless of the value of the subcontract.
3.1(c) If only one contractor responds to a solicitation document, a contracting authority
3.2may award a construction contract to the responding contractor even if the minimum
3.3criteria in subdivision 3 are not met.
3.4 Subd. 3. Minimum criteria. "Responsible contractor" means a contractor or
3.5subcontractor that conforms to the responsibility requirements in the solicitation document
3.6for its portion of the work on the project and verifies that it meets the following minimum
3.7criteria:
3.8(1) the contractor or subcontractor is in compliance with workers' compensation
3.9and unemployment insurance requirements; is currently registered with the Department
3.10of Revenue and the Department of Employment and Economic Development if it has
3.11employees; has a valid federal tax identification number or a valid Social Security number
3.12if an individual; and has filed a certificate of authority to transact business in Minnesota
3.13with the secretary of state if a foreign corporation or cooperative;
3.14(2) the contractor, subcontractor, or related entity is in compliance with and, during
3.15the three-year period before submitting the verification, has not violated section 177.24,
3.16177.25, 177.41 to 177.44, 181.13, 181.14, or 181.722, and has not violated United States
3.17Code, title 29, sections 201 to 219, or United States Code, title 40, sections 3141 to 3148.
3.18For purposes of this clause, a violation occurs when a contractor, subcontractor, or related
3.19entity fails to pay statutorily required wages or penalties of $25,000 or more on one or
3.20more separate projects within the three-year period; has been issued an order to comply
3.21by the commissioner of labor and industry or authorized designee or representative;
3.22has been issued at least two determination letters within the three-year period by the
3.23Department of Transportation finding an underpayment by the contractor, subcontractor,
3.24or related entity to its own employees; or has been found liable in an action brought in
3.25a court having jurisdiction. Provided that, if the contractor, subcontractor, or related
3.26entity contests an order to comply issued by the commissioner of labor and industry or
3.27a determination of underpayment by the Department of Transportation in a contested
3.28case proceeding, a violation does not occur until the contested case proceeding and any
3.29appeals have concluded with a determination that the contractor, subcontractor, or related
3.30entity underpaid wages or penalties;
3.31(3) the contractor, subcontractor, or related entity is in compliance with and, during
3.32the three-year period before submitting the verification, has not violated any municipality's
3.33requirements for payment of wages for construction work performed for that municipality
3.34as provided in ordinance, resolution, policy, or contractual provision. For purposes of this
3.35clause, a violation occurs when a municipality determines that a contractor, subcontractor,
3.36or related entity has failed to pay wages or penalties required by the municipality in the
4.1amount of $25,000 or more on one or more separate projects within the three-year period.
4.2Provided that, if the contractor, subcontractor, or related entity contests a municipality's
4.3finding of unpaid wages or penalties in a legal proceeding, a violation does not occur
4.4until the legal proceeding and any appeals have concluded with a determination that the
4.5contractor, subcontractor, or related entity underpaid wages or penalties;
4.6(4) the contractor, subcontractor, or related entity is in compliance with and, during
4.7the three-year period before submitting the verification, has not violated section 181.723
4.8or chapter 326B. For purposes of this clause, a violation occurs when a contractor,
4.9subcontractor, or related entity has been issued a final administrative or licensing order;
4.10(5) the contractor, subcontractor, or related entity has no current federal or state tax
4.11liens or current federal or state delinquent tax liabilities;
4.12(6) the contractor, subcontractor, or related entity is not currently debarred by the
4.13federal government or the state and is currently not ineligible to be awarded a construction
4.14contract by a contracting authority or perform work under a construction contract on a
4.15project covered under subdivision 4; and
4.16(7) all subcontractors the contractor or subcontractor intends to use to perform project
4.17work have verified to the contractor or subcontractor through a signed statement under
4.18oath by an owner or officer that they meet the minimum criteria listed in clauses (1) to (6).
4.19 Subd. 4. Verification of compliance. A contractor responding to a solicitation
4.20document of a contracting authority shall submit to the contracting authority a signed
4.21statement under oath by an owner or officer verifying compliance with each of the
4.22minimum criteria in subdivision 3 at the time that it responds to the solicitation document.
4.23A contracting authority may accept a sworn statement as sufficient to demonstrate that a
4.24contractor is a responsible contractor and shall not be held liable for awarding a contract
4.25in reasonable reliance on such a statement. Failure to verify compliance with any one of
4.26the minimum criteria shall render a contractor or subcontractor ineligible to be awarded
4.27a construction contract. A false statement under oath verifying compliance with any of
4.28the minimum criteria may result in termination of the construction contract awarded to
4.29a contractor or subcontractor that submits such a false statement. If a false statement is
4.30made under oath in a verification of compliance with knowledge that it is false or with
4.31reckless disregard for whether it is true or false, such a false statement shall render
4.32that contractor or subcontractor not responsible and therefore ineligible to be awarded
4.33a construction contract by a contracting authority on projects covered by this section or
4.34allowed to perform work on projects covered by this section under a construction contract,
4.35as defined in subdivision 1, for a period of three years. The period of ineligibility due
5.1to a false statement under oath in a verification of compliance may be reduced by the
5.2commissioner of administration in the event of an emergency.
5.3 Subd. 5. Subcontractor verifications. A contractor or subcontractor shall
5.4include in its verification of compliance under subdivision 4 a list of all of its first-tier
5.5subcontractors that it intends to retain for work on the project. If the prime contractor or
5.6any subcontractor retains additional subcontractors on the project after submitting its
5.7verification of compliance, the prime contractor or subcontractor shall obtain verifications
5.8of compliance from each additional subcontractor with which it has a direct contractual
5.9relationship and shall submit a supplemental verification confirming compliance with
5.10subdivision 3, clause (7). The prime contractor shall submit to the contracting authority
5.11upon request copies of the signed verifications of compliance from all subcontractors of
5.12any tier pursuant to subdivision 3, clause (7). The prime contractor and subcontractors
5.13shall not be responsible for the false statements of any subcontractor with which they do
5.14not have a direct contractual relationship. The prime contractor and subcontractors shall
5.15be responsible for false statements by their first-tier subcontractors with which they have
5.16a direct contractual relationship only if they accept the verification of compliance with
5.17knowledge that it contains a false statement or with reckless disregard for whether the
5.18statement is true or false.
5.19 Subd. 6. Additional criteria. Nothing in this section shall restrict the discretion of a
5.20contracting authority to establish additional criteria for defining a responsible contractor.
5.21 Subd. 7. Implementation. The definition of responsible contractor, as defined in
5.22subdivision 3, shall be included in the solicitation document for all projects covered by
5.23this section. The solicitation document for any project shall state that any contractor or
5.24subcontractor that does not meet the minimum criteria in subdivision 3 is not a responsible
5.25contractor and is not eligible to be awarded a construction contract for the project or to
5.26perform work on the project. The solicitation document shall provide that a false statement
5.27under oath verifying compliance under subdivision 4 with any of the minimum criteria
5.28may result in termination of the contract awarded to the contractor or subcontractor that
5.29submits a false statement. The solicitation document shall provide that if a false statement
5.30is made under oath in a verification of compliance with knowledge that it is false or with
5.31reckless disregard for whether it is true or false, such a false statement shall render
5.32that contractor or subcontractor not responsible and therefore ineligible to be awarded
5.33a construction contract by a contracting authority on projects covered by this section or
5.34allowed to perform work on projects covered by this section under a construction contract,
5.35as defined in subdivision 1, for a period of three years. The solicitation document shall
5.36state the obligations in subdivision 5, including the obligation that the prime contractor
6.1shall submit to the contracting authority upon request copies of the signed verifications of
6.2compliance from all subcontractors of any tier pursuant to subdivision 3, clause (7).
6.3EFFECTIVE DATE.This section is effective January 1, 2015, and shall apply to
6.4all construction contracts entered into based on solicitation documents issued on or after
6.5that date.
1.3transparency in public construction; establishing a requirement for a definition
1.4of responsible contractor;proposing coding for new law in Minnesota Statutes,
1.5chapter 16C.
1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.7 Section 1. [16C.285] RESPONSIBLE CONTRACTOR REQUIREMENT
1.8DEFINED.
1.9 Subdivision 1. Definitions. (a) For purposes of this section, the following terms
1.10have the meanings given.
1.11(b) "Construction contract" means a contract or subcontract of any tier for work on
1.12a project.
1.13(c) "Contractor" means a vendor that submits a bid or proposal or otherwise responds
1.14to a solicitation document of a contracting authority for work on a project. A contractor
1.15includes a construction manager but does not include a material supplier.
1.16(d) "Contracting authority" means a state agency, the Minnesota State Colleges and
1.17Universities, the University of Minnesota, the Metropolitan Council, the Metropolitan
1.18Airports Commission, or a municipality that enters into a construction contract or
1.19authorizes or directs entering into a construction contract.
1.20(e) "Municipality" means a county, town, home rule charter or statutory city, school
1.21district, housing and redevelopment authority, port authority, economic development
1.22authority, sports facilities authority, joint powers board or organization created under
1.23section 471.59 or other statute, special district, drainage authority, watershed district,
1.24destination medical center corporation, or other municipal corporation or political
1.25subdivision of the state authorized by law to enter into contracts.
2.1(f) "Prime contractor" means a contractor awarded a construction contract by a
2.2contracting authority for work on a project.
2.3(g) "Principal" means an owner holding at least a 25 percent ownership interest
2.4in a business.
2.5(h) "Project" means building, erection, construction, alteration, remodeling,
2.6demolition, or repair of buildings, real property, highways, roads, bridges, or other
2.7construction work performed pursuant to a construction contract.
2.8(i) "Related entity" means:
2.9(1) a firm, partnership, corporation, joint venture, or other legal entity substantially
2.10under the control of a contractor or vendor;
2.11(2) a predecessor corporation or other legal entity having one or more of the same
2.12principals as the contractor or vendor;
2.13(3) a subsidiary of a contractor or vendor;
2.14(4) one or more principals of a contractor or vendor; and
2.15(5) a person, firm, partnership, corporation, joint venture, or other legal entity that
2.16substantially controls a contractor or vendor.
2.17(j) "Solicitation document" means an invitation to bid, bid specifications, request for
2.18proposals, request for qualifications, or other solicitation of contractors for purposes of
2.19a construction contract.
2.20(k) "Subcontractor" means a vendor that seeks to enter into a subcontract or enters
2.21into a subcontract for work on a project.
2.22(l) "Vendor" means a business, including a construction contractor or a natural
2.23person, and includes both if the natural person is engaged in a business.
2.24 Subd. 2. Responsible contractor required. (a) A contractor must meet the
2.25minimum criteria in subdivision 3 to be eligible to be awarded a construction contract
2.26as the lowest responsible bidder or the vendor or contractor offering the best value as
2.27provided in sections 16C.28, 103D.811, 103E.505, 116A.13, 123B.52, 160.17, 160.262,
2.28161.32, 161.3206, 161.3209, 161.38, 162.17, 365.37, 374.13, 375.21, 383C.094, 412.311,
2.29429.041, 458D.21, 469.015, 469.068, 469.101, 471.345, 473.4057, 473.523, 473.652,
2.30473.756, or 473J.11, or any of their successor provisions.
2.31(b) This section applies to projects where the contracting authority's construction
2.32contract with the prime contractor is estimated to exceed $50,000 and is awarded pursuant
2.33to a lowest responsible bidder selection method or a best value selection method. A
2.34subcontractor must meet the minimum criteria in subdivision 3 to be eligible to be awarded
2.35a subcontract on such a project regardless of the value of the subcontract.
3.1(c) If only one contractor responds to a solicitation document, a contracting authority
3.2may award a construction contract to the responding contractor even if the minimum
3.3criteria in subdivision 3 are not met.
3.4 Subd. 3. Minimum criteria. "Responsible contractor" means a contractor or
3.5subcontractor that conforms to the responsibility requirements in the solicitation document
3.6for its portion of the work on the project and verifies that it meets the following minimum
3.7criteria:
3.8(1) the contractor or subcontractor is in compliance with workers' compensation
3.9and unemployment insurance requirements; is currently registered with the Department
3.10of Revenue and the Department of Employment and Economic Development if it has
3.11employees; has a valid federal tax identification number or a valid Social Security number
3.12if an individual; and has filed a certificate of authority to transact business in Minnesota
3.13with the secretary of state if a foreign corporation or cooperative;
3.14(2) the contractor, subcontractor, or related entity is in compliance with and, during
3.15the three-year period before submitting the verification, has not violated section 177.24,
3.16177.25, 177.41 to 177.44, 181.13, 181.14, or 181.722, and has not violated United States
3.17Code, title 29, sections 201 to 219, or United States Code, title 40, sections 3141 to 3148.
3.18For purposes of this clause, a violation occurs when a contractor, subcontractor, or related
3.19entity fails to pay statutorily required wages or penalties of $25,000 or more on one or
3.20more separate projects within the three-year period; has been issued an order to comply
3.21by the commissioner of labor and industry or authorized designee or representative;
3.22has been issued at least two determination letters within the three-year period by the
3.23Department of Transportation finding an underpayment by the contractor, subcontractor,
3.24or related entity to its own employees; or has been found liable in an action brought in
3.25a court having jurisdiction. Provided that, if the contractor, subcontractor, or related
3.26entity contests an order to comply issued by the commissioner of labor and industry or
3.27a determination of underpayment by the Department of Transportation in a contested
3.28case proceeding, a violation does not occur until the contested case proceeding and any
3.29appeals have concluded with a determination that the contractor, subcontractor, or related
3.30entity underpaid wages or penalties;
3.31(3) the contractor, subcontractor, or related entity is in compliance with and, during
3.32the three-year period before submitting the verification, has not violated any municipality's
3.33requirements for payment of wages for construction work performed for that municipality
3.34as provided in ordinance, resolution, policy, or contractual provision. For purposes of this
3.35clause, a violation occurs when a municipality determines that a contractor, subcontractor,
3.36or related entity has failed to pay wages or penalties required by the municipality in the
4.1amount of $25,000 or more on one or more separate projects within the three-year period.
4.2Provided that, if the contractor, subcontractor, or related entity contests a municipality's
4.3finding of unpaid wages or penalties in a legal proceeding, a violation does not occur
4.4until the legal proceeding and any appeals have concluded with a determination that the
4.5contractor, subcontractor, or related entity underpaid wages or penalties;
4.6(4) the contractor, subcontractor, or related entity is in compliance with and, during
4.7the three-year period before submitting the verification, has not violated section 181.723
4.8or chapter 326B. For purposes of this clause, a violation occurs when a contractor,
4.9subcontractor, or related entity has been issued a final administrative or licensing order;
4.10(5) the contractor, subcontractor, or related entity has no current federal or state tax
4.11liens or current federal or state delinquent tax liabilities;
4.12(6) the contractor, subcontractor, or related entity is not currently debarred by the
4.13federal government or the state and is currently not ineligible to be awarded a construction
4.14contract by a contracting authority or perform work under a construction contract on a
4.15project covered under subdivision 4; and
4.16(7) all subcontractors the contractor or subcontractor intends to use to perform project
4.17work have verified to the contractor or subcontractor through a signed statement under
4.18oath by an owner or officer that they meet the minimum criteria listed in clauses (1) to (6).
4.19 Subd. 4. Verification of compliance. A contractor responding to a solicitation
4.20document of a contracting authority shall submit to the contracting authority a signed
4.21statement under oath by an owner or officer verifying compliance with each of the
4.22minimum criteria in subdivision 3 at the time that it responds to the solicitation document.
4.23A contracting authority may accept a sworn statement as sufficient to demonstrate that a
4.24contractor is a responsible contractor and shall not be held liable for awarding a contract
4.25in reasonable reliance on such a statement. Failure to verify compliance with any one of
4.26the minimum criteria shall render a contractor or subcontractor ineligible to be awarded
4.27a construction contract. A false statement under oath verifying compliance with any of
4.28the minimum criteria may result in termination of the construction contract awarded to
4.29a contractor or subcontractor that submits such a false statement. If a false statement is
4.30made under oath in a verification of compliance with knowledge that it is false or with
4.31reckless disregard for whether it is true or false, such a false statement shall render
4.32that contractor or subcontractor not responsible and therefore ineligible to be awarded
4.33a construction contract by a contracting authority on projects covered by this section or
4.34allowed to perform work on projects covered by this section under a construction contract,
4.35as defined in subdivision 1, for a period of three years. The period of ineligibility due
5.1to a false statement under oath in a verification of compliance may be reduced by the
5.2commissioner of administration in the event of an emergency.
5.3 Subd. 5. Subcontractor verifications. A contractor or subcontractor shall
5.4include in its verification of compliance under subdivision 4 a list of all of its first-tier
5.5subcontractors that it intends to retain for work on the project. If the prime contractor or
5.6any subcontractor retains additional subcontractors on the project after submitting its
5.7verification of compliance, the prime contractor or subcontractor shall obtain verifications
5.8of compliance from each additional subcontractor with which it has a direct contractual
5.9relationship and shall submit a supplemental verification confirming compliance with
5.10subdivision 3, clause (7). The prime contractor shall submit to the contracting authority
5.11upon request copies of the signed verifications of compliance from all subcontractors of
5.12any tier pursuant to subdivision 3, clause (7). The prime contractor and subcontractors
5.13shall not be responsible for the false statements of any subcontractor with which they do
5.14not have a direct contractual relationship. The prime contractor and subcontractors shall
5.15be responsible for false statements by their first-tier subcontractors with which they have
5.16a direct contractual relationship only if they accept the verification of compliance with
5.17knowledge that it contains a false statement or with reckless disregard for whether the
5.18statement is true or false.
5.19 Subd. 6. Additional criteria. Nothing in this section shall restrict the discretion of a
5.20contracting authority to establish additional criteria for defining a responsible contractor.
5.21 Subd. 7. Implementation. The definition of responsible contractor, as defined in
5.22subdivision 3, shall be included in the solicitation document for all projects covered by
5.23this section. The solicitation document for any project shall state that any contractor or
5.24subcontractor that does not meet the minimum criteria in subdivision 3 is not a responsible
5.25contractor and is not eligible to be awarded a construction contract for the project or to
5.26perform work on the project. The solicitation document shall provide that a false statement
5.27under oath verifying compliance under subdivision 4 with any of the minimum criteria
5.28may result in termination of the contract awarded to the contractor or subcontractor that
5.29submits a false statement. The solicitation document shall provide that if a false statement
5.30is made under oath in a verification of compliance with knowledge that it is false or with
5.31reckless disregard for whether it is true or false, such a false statement shall render
5.32that contractor or subcontractor not responsible and therefore ineligible to be awarded
5.33a construction contract by a contracting authority on projects covered by this section or
5.34allowed to perform work on projects covered by this section under a construction contract,
5.35as defined in subdivision 1, for a period of three years. The solicitation document shall
5.36state the obligations in subdivision 5, including the obligation that the prime contractor
6.1shall submit to the contracting authority upon request copies of the signed verifications of
6.2compliance from all subcontractors of any tier pursuant to subdivision 3, clause (7).
6.3EFFECTIVE DATE.This section is effective January 1, 2015, and shall apply to
6.4all construction contracts entered into based on solicitation documents issued on or after
6.5that date.
