Minnesota Administrative Rules
Agency 103 - Administration Department
Chapter 1230 - STATE CONTRACTS
SMALL BUSINESS PROCUREMENT PROGRAM
Part 1230.1820 - REQUIRED SUBCONTRACTING FOR CONSTRUCTION OR PROFESSIONAL OR TECHNICAL SERVICES

A. Goals for subcontracting will depend on the type of work involved, location of project, size of project, and the availability of certified, willing, and able targeted group, economically disadvantaged area, or veteran-owned small businesses open to subcontracts from the prime contractor.

B. Credit toward the goal established for the contract shall be at 100 percent for subcontractors who provide labor, materials, and supplies and at 60 percent for subcontractors who provide supplies and materials only.

A. The prime contractor may request a waiver for some or all specialties based on a documented unsuccessful effort to obtain certified targeted group, economically disadvantaged area, or veteran-owned subcontractors. The request for waiver must be accompanied by documentation showing the effort and steps taken to secure certified targeted group, economically disadvantaged area, or veteran-owned subcontractors.

B. A prime contractor may request a waiver for a specific specialty if a certified targeted group, economically disadvantaged area, or veteran-owned subcontractor cannot or will not fulfill a subcontract and no suitable alternative subcontractor is available so as to prevent significant project delay.

A. Prime contractors who exceed the established goal on a given project for use of certified targeted group, economically disadvantaged area, or veteran-owned subcontractors by more than three percent may be awarded a financial incentive over and above the awarded project price, the incentive to be determined in the following manner:

B. Prime contractors who have been awarded a contract and fail to meet the project goal for certified targeted group, economically disadvantaged area, or veteran-owned subcontractor use without approved waiver shall be penalized up to six percent of the total project value, not to exceed $60,000. The penalty to be assessed will be proportionate to the actual underuse of certified targeted group, economically disadvantaged area, or veteran-owned subcontractors as compared to the project goal. The contractor involved shall be notified in writing of the proposed penalty and the reasons for the penalty. Within 15 calendar days of receipt of the notice the contractor may request a hearing before the director or the director's designee. The director may uphold, modify, or reject the penalty. The decision of the director may be appealed within 30 calendar days to the commissioner. If there are facts in dispute, the commissioner may refer the matter to the Office of Administrative Hearings for a contested case hearing under Minnesota Statutes, sections 14.57 to 14.62, or, if feasible, may affirm or reject the director's decision. Any person receiving an adverse decision from the commissioner may appeal in any appropriate court in this state.

C. If required in a solicitation, prime contractors who fail to meet the project goal without waiver for a project to be awarded and are the apparent low responder shall have a penalty of up to six percent, not to exceed $60,000, added to their total price when other prime contractors have submitted responses that meet the specified subcontracting goal. The penalty to be added must be proportionate to the underuse determined in the response as compared to the announced project goal.

D. The formula to be utilized in the application of this subpart is: Penalty (to be added to the response) = maximum penalty x (underuse ÷ project goal).

E. The division may cancel solicitations and resolicit the project when no responses meet the announced goal and the evidence available to the division indicated sufficient responsible certified targeted group, economically disadvantaged area, or veteran-owned subcontractors are willing and able to do the work.