Contractors should prepare for Minnesota's Responsible Contractor Law, which will apply to most bid solicitations for state and local construction contracts in Minnesota issued after December 31, 2015. The law will apply to all publicly-owned and publicly-financed low-bid and best-value contracts over $50,000.
Contractors will be ineligible for public contracts and subcontracts unless they meet the new minimum bidding criteria imposed by the law. They must be currently registered and insured; and they must be free of specified violations of wage and hour laws and affirmative-action requirements for the previous three years. (Violations before June 3, 2014, however, do not count.) Any future failure to meet the criteria will effectively be a three-year debarment from public projects, which can be a death penalty for contractors who rely on public projects.
Contractors should take specific steps prepare for this law.
Contractors should assess their own compliance with the new bidding criteria.Use this checklist to assess your compliance.
A contractor should speak with an attorney if he or she has any questions about whether an existing or future citation might fall within one of the listed categories or can be resolved in a way that avoids an adverse finding or determination.
Prepare Verification/Listing Form
With their bids and quotes, contractors and subcontractors must verify under oath that they comply with all of the new criteria. They must also list all of the subcontractors they intend to use and verify that those listed subcontractors have provided their own sworn verification.
Contractors are not bound to use the listed subs, but within 14 days must supplement their original verification with a statement under oath that the substitute subs have also verified their compliance. Though owners will likely incorporate the required verification and listing forms into their specified bid forms, subcontractors will need to prepare their own forms to attach to the quotes they send to prime bidders.
Contractors should also consider preparing a form they can provide to subs who fail to include the required verification with their quotes. Failure to provide a verification form to a DBE, for example, might even be a factor used by the owner in weighing a bidder's efforts to meet DBE goals.
Modify Contract Forms
If a verification is exposed as false after award, the law entitles owners to terminate the contract and contractors to terminate a subcontract. An owner may even insist that the contractor terminate a subcontract. As a result, owners and contractors may want to modify their contract and subcontract forms to include a false verification as an event of default justifying termination.
Employ One or More Notaries
Because all verifications must be under oath, contractors and subcontractors will need ready access to a notary public. The best way is to have one or more notaries in the office. Notaries, however, cannot e-notarize an electronic bid without an E-Notarization Authorization Certificate. Applications for E-Notarization must be submitted to the Office of the Minnesota Secretary of State.
Bid documents must include a description of the law. If they don't, a contractor should alert the owner to give the owner an opportunity to issue an addendum to correct the deficiency and avoid a post-bid protest and re-bid.
Most Importantly: Be Prepared
It can't be stressed enough: be ready for the new law. The lack of preparation could lead to bid rejections, bid protests, re-bids, and contract terminations.