With today’s high operations tempo, thousands of Minnesota service members have been called to duty overseas, gaining accolades from Governor Tim Pawlenty, who said that “[t]he Minnesota spirit of service is one of the things that make[s] our state so special.” In recognition of that service, the Minnesota legislature passed a law (Minnesota Statute § 161.321, subd. 2(a)) establishing a veteran-owned small business preference that adds a 6% preference for eligible and certified veteran-owned and service-disabled veteran-owned small businesses. Since then, the Minnesota Department of Transportation (Mn/DOT) incorporated a Veterans’ Preference into the state-funded construction program.

Under Mn/DOT’s program, eligible certified veteran-owned or service-disabled veteran-owned small businesses will receive a preference in the evaluation of their proposal for state funded, Mn/DOT-let projects. This preference will be equal to 6% of the amount bid by the prime contractor, not to exceed $60,000, and it will only be applied for the purpose of evaluating proposals, not for determining the contract award amount or payment due under the contract.

To qualify for the preference, the bidder must be majority owned and operated by either: (1) recently separated veterans who have been in active military service at any time on or after September 11, 2001, and who have been honorably discharged; or (2) honorably discharged veterans of any era with a service-connected disability. Eligibility can be established by presenting documents showing certification by the U.S. Department of Veterans Affairs, submitting a DD-214 showing eligible active-duty service or showing certification by the Minnesota Department of Veterans Affairs.

To claim the preference, a bidder must complete and submit the required documentation no later than the date and time set for the opening of proposals for the project. These documents include:

  • The Veteran-Owned/Service Disabled Veteran-Owned Preference Form, which will be attached to the bid proposal.
  • The documents establishing eligibility for the preference as set forth above.  

In addition to allowing the veterans’ preference, the law also authorizes Mn/DOT to require a prime contractor to subcontract a specific portion of the work to a veteran-owned small business. Accordingly, Mn/DOT established a goal-setting process whereby each project is assigned a specific goal based on the scope of work, project location and availability of certified veteran-owned businesses, taking into account that portion of the work to be self-performed by the bidder if the bidder is a qualified veteran-owned business. The contractor is then required to either propose the participation of specific veteran-owned small businesses to meet that goal or request a waiver from the goal requirement. The eligibility requirements for subcontractors are identical to those for prime contractors, and Mn/DOT may require the successful bidder to submit documentation showing that the proposed subcontractors are qualified veteran-owned businesses.

The successful bidder must submit documentation showing it has met the goal no later than five business days following the opening of the bids, or it may request a waiver from the goal requirement. A waiver will only be granted if the bidder can establish that qualified veteran-owned small businesses were not reasonably available.

Prime contractors interested in applying for the Veterans’ Preference should be aware that final payment may be withheld unless the contractor presents an affidavit showing the total monetary amounts of work performed by veteran-owned/service-disabled veteran-owned businesses.

With more than 410,000 veterans and 27,349 active and reserve service members in Minnesota, the Veterans’ Preference could give many veteran-owned small businesses an advantage over the competition.