Minnesota’s New “Responsible Contractor” Act

Doc1At the Contractor Seminar held in St. Cloud on January 20th, information on the new Minnesota “Responsible Contractor” Act was presented. As of January 1, 2015, any contractor bidding on public work in Minnesota must certify their compliance with this new law, Minnesota Statutes 16C.285.

Historically, Minnesota let contracts to the “lowest, responsive and responsible bidder.”

  • “Low” equaled low price (an objective standard)
  • “Responsive” equaled the bid responds to and does not materially differ from the solicitation (mostly objective standard)
  • “Responsible” equaled capable of performing the contract (subjective standard but was mostly a “status”).

Traditionally, public owners had discretion to determine whether a bidder was “responsible”, and questions of “responsibility” could be determined during an investigation after bid opening, but before contract award.

The new “Responsible Contractor” Act establishes new “minimum criteria” that contractors must meet. The Act’s primary operative provision provides that a contractor must meet the minimum criteria to qualify as a responsible contractor. This section applies to publicly owned or financed projects where the contracting authority’s construction contract with the prime contractor is estimated to exceed $50,000.

What are these minimum criteria?

  1. Workers’ Compensation and Unemployment Insurance
    a. Must be in compliance
    b. If you have employees, must be registered with DEED
    c. Valid Tax ID
    d. If foreign corporation, filed certificate of authority to do business with Secretary of State
  2. Wages and Misrepresentation of Employment Relationship
    a. No violations of various federal and state labor laws
    b. Have not misrepresented nature of employment relationship with employees
  3. Registration and Licensing
    a. Must register with DOLI through Construction Contractor Registration Pilot Program for independent contractor analysis
    b. Must not have violated applicable codes and licensing requirements for 3 years prior to verification
  4. Affirmative action Plan – Have not had a certificate of compliance for Affirmative Action Plan revoked or suspended
  5. Targeted Group DBE and Vet Owned Business – Have not received a final determination assessing a monetary sanction for the Department of Administration or MnDOT for failure to meet goals due to lack of good faith efforts
  6. No Debarments – Cannot have been suspended or debarred by federal or state or political subdivision
  7. Subcontractor Compliance – All subcontractors that the contractor intends to use to perform project work have verified to the contract through a signed statement under oath by an owner or officer that they meet the minim criteria listed in clauses (1) to (6).

The law requires a contractor bidding or proposing public work to certify that it complies with all of the minimum requirements above. If the contractor fails to do so, or provides a false certification, then it will be ineligible to be awarded public work.

The information contained in this blog post is for educational purposes only as well as to give you general information and a general understanding of the new Minnesota “Responsible Contractor” Law, not to provide specific legal advice. For more specific information on the new Minnesota “Responsible Contractor” Act and how it will impact your company, please contact Aaron Dean with Moss & Barnett at (612) 877-5255.