Small business contracting requirements modified, report to the legislature on compliance required, and compliance plan requirements for certain public contracts over a threshold amount repealed.

A bill for an act

relating to metropolitan government; modifying small business contracting

requirements and requiring report to the legislature on compliance; repealing

compliance plan requirements for certain public contracts over a threshold amount;

amending Minnesota Statutes 2025 Supplement, section 473.142; repealing

Minnesota Statutes 2024, section 473.144.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2025 Supplement, section 473.142, is amended to read:

473.142 SMALL BUSINESSES.

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Subdivision 1.

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Preference awards.

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(a)
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The Metropolitan Council and agencies specified

in section
473.143, subdivision 1
, may award a preference up to the percentage under section

16C.16, subdivision 6
, paragraph (a), for specified goods or services to small targeted group

businesses and veteran-owned small businesses designated under section
16C.16
. The

council and each agency specified in section
473.143, subdivision 1
, may award a preference

up to the percentage under section
161.321, subdivision 2
, paragraph (a), in the amount bid

for specified construction work to small targeted group businesses and veteran-owned small

businesses designated under section
16C.16
.

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Subd. 2.

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Designations.

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(b)
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The council and each agency specified in section
473.143,

subdivision 1
, may designate a contract for construction, goods, or services for award
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only
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to
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small businesses or
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small targeted group businesses designated under section
16C.16
if

the council or agency determines that at least three
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small businesses or
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small targeted group

businesses are likely to respond to a solicitation. The council and each agency specified in

section
473.143, subdivision 1
, may designate a contract for construction, goods, or services

for award only to veteran-owned small businesses designated under section
16C.16
if the

council or agency determines that at least three veteran-owned small businesses are likely

to respond to a solicitation.

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Subd. 3.

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Contract requirements.

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(c)
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The council and each agency specified in section

473.143, subdivision 1
, as a condition of awarding or approving a contract, may set goals

that require the prime contractor to subcontract a portion of the contract to
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small businesses,
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small targeted group businesses
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and
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, or
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veteran-owned small businesses designated under

section
16C.16
. The council or agency must establish a procedure for granting waivers from

the subcontracting requirement when qualified
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small businesses,
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small targeted group

businesses
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and
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, or
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veteran-owned small businesses are not reasonably available. The council

or agency may establish financial incentives for prime contractors who exceed the goals

for use of subcontractors and financial penalties for prime contractors who fail to meet goals

under this
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paragraph
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subdivision
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. The subcontracting requirements of this
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paragraph
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subdivision
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do not apply to prime contractors who are
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small businesses,
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small targeted

group businesses
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and
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, or
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veteran-owned small businesses. At least 75 percent of the value

of the subcontracts awarded to small targeted group businesses under this
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paragraph
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subdivision
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must be performed by the business to which the subcontract is awarded or by

another small targeted group business. At least 75 percent of the value of the subcontracts

awarded to veteran-owned small businesses under this
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paragraph
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subdivision
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must be

performed by the business to which the subcontract is awarded or another veteran-owned

small business.

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Subd. 4.

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Direct solicitation.

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(d)
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The council and each agency listed in section
473.143,

subdivision 1
, may award a contract for construction, goods, or services directly to
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small

businesses,
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small targeted group businesses
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,
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or veteran-owned small businesses designated

under section
16C.16
, up to a total contract award value, including extension options, of

the amount specified in section
16C.16, subdivision 6
, paragraph (b), without completing

a competitive solicitation process.

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Subd. 5.

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Authorized rulemaking.

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(e)
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The council and each agency may adopt rules to

implement this section.

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Subd. 6.

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Prompt payment.

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(f)
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Each council or agency contract must require the prime

contractor to pay any subcontractor within ten days of the prime contractor's receipt of

payment from the council or agency for undisputed services provided by the subcontractor.

The contract must require the prime contractor to pay interest of 1-1/2 percent per month

or any part of a month to the subcontractor on any undisputed amount not paid on time to

the subcontractor. The minimum monthly interest penalty payment for an unpaid balance

of $100 or more is $10. For an unpaid balance of less than $100, the prime contractor must

pay the actual penalty due to the subcontractor. A subcontractor who prevails in a civil

action to collect interest penalties from a prime contractor must be awarded its costs and

disbursements, including attorney fees, incurred in bringing the action.

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Subd. 7.

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Applicability.

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(g)
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This section does not apply to procurement financed in whole

or in part with federal funds if the procurement is subject to federal disadvantaged, minority,

or women business enterprise regulations. The council and each agency must report to the

commissioner of administration on compliance with this section. The information must be

reported at the time and in the manner requested by the commissioner.

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Subd. 8.

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Legislative report.

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By February 1 of each year, the council shall submit a

report to the legislature concerning contract awards during the preceding calendar year. At

a minimum, the report must include:

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(1) a summary of any programs that specifically work with small businesses and small

targeted businesses;

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(2) a review of the use of preferences for contracting during the preceding year, including

frequency of establishment of a preference and frequency and amount of procured goods

from, and contract awards to:

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(i) small targeted group businesses; and

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(ii) small businesses;

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(3) a review of goals and good-faith efforts to use small targeted group businesses, small

businesses, and veteran-owned small businesses in subcontracts, including analysis of

methods used for, and effectiveness of, good-faith efforts; and

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(4) a summary of any financial incentives used or sanctions imposed.

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Sec. 2.
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REPEALER.
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Minnesota Statutes 2024, section 473.144,

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is repealed.

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APPENDIX

Repealed Minnesota Statutes: 26-06168

473.144 CERTIFICATES OF COMPLIANCE FOR CONTRACTS.

(a) For all contracts for goods and services in excess of $100,000, neither the council nor an agency listed in section
473.143, subdivision 1
, shall accept any bid or proposal for a contract or agreement from any business having more than 40 full-time employees within this state on a single working day during the previous 12 months, unless the firm or business has an affirmative action plan for the employment of minority persons, women, and qualified disabled individuals submitted to the commissioner of human rights for approval. Neither the council nor an agency listed in section
473.143, subdivision 1
, shall execute the contract or agreement until the affirmative action plan has been approved by the commissioner of human rights. Receipt of a certificate of compliance from the commissioner of human rights signifies that a business has an approved affirmative action plan. A certificate is valid for two years. Section
363A.36
governs revocation of certificates. The rules adopted by the commissioner of human rights under section
363A.37
apply to this section.

(b) This paragraph applies to a contract for goods or services in excess of $100,000 to be entered into between the council or an agency listed in section
473.143, subdivision 1
, and a business that is not subject to paragraph (a), but that has more than 40 full-time employees on a single working day during the previous 12 months in the state where the business has its primary place of business. The council or the agency may not execute a contract or agreement with a business covered by this paragraph unless the business has a certificate of compliance issued by the commissioner under paragraph (a) or the business certifies to the contracting agency that it is in compliance with federal affirmative action requirements.