Minnesota Legal Compliance Audit Guide for Local Government - Section 4
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Minnesota Legal Compliance Audit Guide for Local Government - Section 4

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LEGAL COMPLIANCE MANUALCONTRACTING - BID LAWSIntroductionA municipality entering into an agreement for the sale or purchase of supplies,materials, equipment or the rental thereof, or the construction, alteration, repair ormaintenance of real or personal property must abide by the statutes relating tocontracting and bidding. In addition, for counties, such statutory requirements alsoapply to contracts for "work or labor."A municipality, for the purpose of this section, is a county, town, city, school district,or ot her municipal corporation or political subdivision of the state authorized by law toent er into contracts. Each contract must be approved by the appropriate aut hority, asauthorized by statute or charter, within the municipality.If the audited governmental unit is one of the listed types of municipalities and it hasthe power to contract, complete the questionnaire to determine if the municipalityconformed to the contracting and bidding statutes.Minn. Stat. § 471.345, the Uniform Municipal Contracting Law, was established toprovide dollar limits for all municipalities upon contracts which shall or may be ent eredinto on the basis of competitive bids, quotations, or purchase or sale in the openmarket. Beginning August 1, 2000, the statute sets the basic requirements forgovernmental subdivisions as set forth below . (For pre-August 1, 2000, contracts,apply Section 4 from the 1999 Legal Compliance Audit Guide.)A. For Municipalities of Less ...

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Introduct ion
LEGAL COMPLIANCE MANUAL
CONTRACTING  BID LAWS
A municipalit y entering int o an agreement f or t he sale or purchase of supplies, mat erials, equipment or t he rent al thereof , or t he const ruct ion, alt erat ion, repair or maintenance of real or personal propert y must abide by t he statut es relating t o cont racting and bidding. In addit ion, f or count ies, such st atut ory requirement s also apply t o cont ract s for " w ork or labor."
A municipalit y, for the purpose of t his section, is a count y, tow n, city, school dist rict, or ot her municipal corporation or polit ical subdivision of t he state aut horized by law t o ent er int o cont ract s. Each cont ract must be approv ed by t he appropriat e aut horit y, as authorized by st at ute or charter, w ithin the municipalit y.
If t he audit ed gov ernment al unit is one of t he list ed t ypes of municipalit ies and it has t he pow er t o cont ract , complet e t he quest ionnaire t o det ermine if t he municipalit y conf ormed to t he cont ract ing and bidding st atut es.
Minn. St at . § 4 71 .3 45 , t he Uniform Municipal Cont ract ing Law , w as established t o provide dollar limit s for all municipalit ies upon cont racts w hich shall or may be ent ered int o on t he basis of compet it ive bids, quot at ions, or purchase or sale in t he open market . Beginning A ugust 1, 2 000, t he statut e set s the basic requirements for government al subdivisions as set f ort h below . (For preA ugust 1, 2000, cont ract s, apply Sect ion 4 f rom t he 1 999 Legal Compliance Audit Guide. )
A.
B.
11/03
For Municipalities of Less Than 2,5 00 Population.
1.
2.
3.
For cont racts over $35,0 00sealed bids, solicit ed by public not ice and subject t o t he part icular requirement s of t he governmental subdivision.
For contracts from $10,000 to $35,000sealed bids or direct negot iat ion, w it h t w o quot at ions w henever possible.
For cont ract s of $10,000 or lessopen market or quot at ions (w it h at least t w o cont ract quot ations, if pract icable).
For All Ot her Municipalit ies.
1.
2.
3.
For cont racts over $5 0,0 00sealed bids, solicit ed by public not ice and subject t o t he part icular requirement s of t he governmental subdivision.
For contracts from $10,000 to $50,000sealed bids or direct negot iat ion, w it h t w o quot at ions w henever possible.
For cont ract s of $10,000 or lessopen market or quot ations (w it h at least t w o cont ract quot ations, if pract icable).
41
§ 4 7 1 . 3 4 5 , s ub d . 3
N o
W ork pap er Ref e ren c e
( N ot e : Fo r p re A u g u s t 1 , 2 0 0 0 , c o n t r a c t s , a p p ly S e c t i o n 4 f r o m t h e 1 9 9 9 Leg al C om p l ian c e A u d i t Gu id e. )
A .
1 .
b .
a.
3 .
2 .
§ 4 7 1 . 3 4 5 , s ub d . 5
§ 4 7 1 . 3 4 5 , s ub d . 4
a.
Hav e t he b ids b een so licit ed b y pu blic no t ice?
C on t r ac t s o v er $ 3 5 , 0 0 0
Yes
T h e es t i m a t e d c o n t r ac t a m o u n t d e t e r m i n es w h e t h e r s ea le d b id s o r q u o t a t i o n s a re re q u ir ed .
Hav e all co nt rac t s est im at ed t o ex ceed $ 3 5 ,0 0 0 been let on sealed bid s?
b .
a.
c .
If q u o t a t i o n s w e re u se d , w e re t h e q u ot a t i o n s k ep t o n f ile for at least one y ear?
If q uot at ions w ere used and obt aining t w o or m ore qu ot es w as po ssible, w ere t w o o r m ore q uo t es o b t a i n ed ?
d .
c .
§ 4 7 1 . 3 4 5 , s ub d . 3
M inn . St at . S ec t i o n
Con t rac t s f rom $ 1 0 ,0 0 0 t o $ 3 5 ,0 0 0 can be m ade o n sealed bid s or b y direc t neg ot iat ion based on qu ot at ion s.
If s eal ed b id s w er e u sed , w er e t h e req u ir em e n t s o f A . 1 . m et ?
A re t h e b id s o n f ile ? (See Int rod uc t ion sect ion ent it led “ Dest ruc t ion of Reco rds, ” pag es iii t hro ug h iv .)
T h e es t i m a t e d c o n t r ac t a m o u n t d e t e r m i n es w h e t h e r s ea le d b id s o r q u o t a t i o n s a re re q u ir ed .
B.
Hav e all co nt rac t s est im at ed t o ex ceed $ 5 0 ,0 0 0 been let on sealed bid s?
C o n t r ac t s es t i m a t e d t o b e $ 1 0 , 0 0 0 o r l es s m a y b e m a d e e it h e r u p o n q u ot a t i o n o r in t h e o p en m a r k et . If q u o t a t i o n s w ere used , are t hey on f ile?
For all ot her m un icip alit ies
1 .
C on t r ac t s o v er $ 5 0 , 0 0 0
Fo r m u n i c ip a li t i es o f l es s t h a n 2 , 5 0 0 p o p u la t i o n
A re t h e b id s o n f ile ? (See Int rod uc t ion sect ion ent it led “ Dest ruc t ion of Reco rds, ” pag es iii t hro ug h iv .)
Part I. Uniform Law s  Applies to All M unicipalities
C ON T RA C T IN G  BID LA W S
b .
c .
1 1 / 0 3
H a v e a ll c o n t r ac t s es t i m a t e d t o e x c e ed $ 1 0 , 0 0 0 b u t n o t t o e x c e e d $ 3 5 , 0 0 0 b e en l et o n s e al ed b i d s o r neg ot iat ed q uo t es?
4 2
Hav e t he b ids b een so licit ed b y pu blic no t ice?
3 .
§ 4 7 1 . 3 4 5 , s ub d . 5
N O T E: Ex c e p t i o n s t o t h e c o m p e t i t i v e b i dd i n g re q u ir em e n t s o f M i n n . S t a t . § 4 7 1 . 3 4 5 e x i s t f o r w a t e r t a n k s er v i c e c o n t r a c t s , p r o c u re m e n t f r o m e c o n o m i c a ll y d is ad v a n t a g ed p e rs o n s, s h ar ed h o s p it a l o r a m b u l an c e se rv i c e p u rc h a si n g , f u e l c o n t r a c t s f o r g e n er at i o n o f m u n i c i p al p o w e r, p r o c u re m e n t f r o m r e h ab i li t a t i o n f a c il it i e s, e n er g y ef f icien t pro ject s, an d so lid w ast e co nt rac t s. If a co nt rac t y ou aud it f alls int o o ne o f t hese c at ego ries, rev iew t he relev ant ex cep t ion s t o s ee if i t s c ri t er ia ar e m e t .SeeSt at .  M in n . 7 1 . 3 4 5 , §§ 4 5 b, su b d s. 8 , 1 0 , 1 1 , 1 2 , an d 1 3 ; an d 4 0 0 . 0 4 .
Spec if icat ion s on co nt rac t s. W ere t he sp ecif icat ion s w rit t en s o as n o t t o e x c l u d e a ll b u t o n e t y p e o r k i n d o f s u p p li es o r e q u ip m e n t ?
§ 4 7 1 . 3 4 5 , su b d . 1 5
N o
W ork pap er Ref e ren c e
O t h e r C o n si d er at i o n s
4 3
If t he m un icip alit y co nt rac t ed f or t he p urc hase o f sup plies, m a t e r ia ls , o r e q u ip m e n t w i t h o u t r e g ar d t o c o m p e t i t i v e b i d d in g requ irem ent s, w as t he p urc hase t hro ug h a n at ion al m un icip al a ss o c ia t i o n ’ s p u rc h a si n g al li an c e o r c o o p e ra t i v e c r ea t e d b y a j o in t p o w e rs ag r ee m e n t t h a t p u r c h a se s i t e m s f r o m m o r e t h a n o n e so urc e o n t h e b asis o f c om p et i t iv e b id s o r c o m pet i t iv e qu ot at ion s?
D .
C o n t r ac t s es t i m a t e d t o b e $ 1 0 , 0 0 0 o r l es s m a y b e m a d e e it h e r u p o n q u ot a t i o n o r in t h e o p en m a r k et . If q u o t a t i o n s w ere used , are t hey on f ile?
§ 4 7 1 . 3 4 5 , s ub d . 4
If q u o t a t i o n s w e re u se d , w e re t h e q u ot a t i o n s k ep t o n f ile for at least one y ear?
c .
b .
d .
2 .
Con t rac t s f rom $ 1 0 ,0 0 0 t o $ 5 0 ,0 0 0 can be m ade o n sealed bid s or b y direc t neg ot iat ion based on qu ot at ion s.
M inn . St at . S ec t i o n
a.
Part I. Uniform Law s  Applies to A ll M unicipalities (Continued)
C ON T RA C T IN G  BID LA W S
If s eal ed b id s w er e u sed , w er e t h e req u ir em e n t s o f B. 1 . m et ?
Yes
§ 4 7 1 . 3 4 5 , su bd . 5 a
C.
Cou nt y or t ow n c on t rac t s f or t he ren t al of equ ipm ent est im at ed t o b e $ 6 0 , 0 0 0 o r l es s m a y , a t t h e d is c re t i o n o f t h e b o a rd , b e m a d e b y d ir ec t n e g o t i at i o n b y o b t a in i n g t w o o r m o r e q u o t a t i o n s w h e n p os si b le . If t h i s m e t h o d w a s u s ed , w e re q u o t a t i o n s k e p t on f ile for at least one y ear?
H a v e a ll c o n t r ac t s es t i m a t e d t o e x c e ed $ 1 0 , 0 0 0 b u t n o t t o e x c e e d $ 5 0 , 0 0 0 b e en l et o n s e al ed b i d s o r neg ot iat ed q uo t es?
If q uot at ions w ere used and obt aining t w o or m ore qu ot es w as po ssible, w ere t w o o r m ore q uo t es o b t a i n ed ?
§ 4 7 1 . 3 5
1 1 / 0 3
1 .
E.
t h e ag g reg at e c lai m s rec o rd f o r t h e ap p ro p ri at e p erio d ?
W a s t h e t e r m o f t h e c o n t r ac t f i v e y e ar s o r le ss , in c l u d in g ex t ensio ns?
b .
c .
a.
Did t he RFP inc lud e:
W as t he RFP no t ice p laced in a n ew spap er or t rade jo urn al at least 2 1 day s bef ore t he f inal d at e f or su bm it t ing pro po sals?
4 4
t h e c o v e r ag e t o b e p r o v i de d ;
3 .
2 .
W a s t h e r eq u e st f o r p ro p o s al s ( RFP) in w r it i n g ?
t h e c r it e r ia f o r ev a lu a t i o n o f p r o p o sa ls ; an d
Gr ou p In su ran c e
For sch oo l dist ric t co nt rac t s lim it ed t o t he p urc hase o f a f inish ed t a n g ib le p ro d u c t , See n o t e in Par t II. D . , inf ra.
Yes
b .
M inn . St at . S ec t i o n
§ 5 7 4 . 2 6
F.
5 .
§ 471.6161
A n y p o l it i c a l s u b d iv i s io n t h a t p r o v i d es g ro u p i ns u ra n c e f o r 2 5 o r m o r e em p l o y e es m u s t c o m p l y w i t h c e rt a i n b id d i n g r eq u i re m e n t s in c on t rac t ing f or o r renew ing said in suran ce.
N O T E: If t h e p ro j ec t i s u n d e r $ 5 0 , 0 0 0 , c o n t r a c t o r m a y p r o v i d e f o r ir rev o c ab le b an k let t er of c r ed it i n pl ac e o f a per f o rm a n c e bo nd pro v ided t he let t er of cr edit is sub ject t o t he sam e c o n d i t i o n s a s a p er f o r m a n c e b o n d .
Part I. Uniform Law s  Applies to A ll M unicipalities (Continued)
C ON T RA C T IN G  BID LA W S
4 .
3 .
2 .
1 .
W a s a w r it t e n ra t i o n al e e x p la in i n g t h e p o l it i c a l s u b d iv i s io n ’ s d ec i si on p rep ar ed p ri or t o en t e ri ng in t o a c o n t r ac t ?
N o
W ork pap er Ref e ren c e
§ 5 7 4 . 2 6 1 , su bd . 1 a
In t e res t in c o n t rac t . (See C o n f l ic t s o f In t e r es t S ec t i o n , p ag e 2  1 . )
Cont ract or’ s perf orm ance and pay m ent bon ds. Con t ract ors d o in g p ub li c w o rk ar e r eq u ir ed t o g iv e bo t h a p er f o rm a n c e b o n d an d a p a y m e n t b o n d i n an a m o u n t n o t l es s t h a n t h e c o n t r ac t p r ic e if t h e c o n t r ac t i s m o r e t h a n $ 7 5 , 0 0 0 .
a.
W ere bo nd s receiv ed f or all c on t rac t s great er t han $ 7 5 , 0 0 0 ?
W e re t h e am o u n t s su f f i c ie n t ?
1 1 / 0 3
a.
3 .
1 .
a.
A d v e r t i se m e n t f o r Bi d s
If t he co nt ract w as not aw arded t o t he low est b idder, w ere reason able an d ap pro priat e reason s do cu m ent ed in t he m inu t es?
Em e r g en c y Ex c e p t i o n s
D i d t h e p u b l is h ed n o t i c e in c l u d e a b ri ef d e s c ri p t i o n o f t h e w o rk ?
1 1 / 0 3
N o
W ork pap er Ref e ren c e
W ere bid s adv ert ised f or in a qu alif ied leg al new spap er o f t h e Co un t y ?
Part II. Law s Relating to Specific M unicipalities
If t h e c o n t r ac t i s f o r t h e p u r c h as e o f p r o p e rt y o r f o r w o r k an d l ab o r , w a s t h e p u b li c n o t i c e, s t a t i n g t i m e an d p l ac e f o r b id s , p u b li sh e d t w o w e ek s p ri o r t o t h e dead line?
Yes
C ON T RA C T IN G  BID LA W S
D i d t h e p u b l is h ed n o t i c e in c l u d e t h e t i m e a n d p l ac e o f aw ar di ng t h e c o n t r ac t ?
4 5
In c a se o f a n e m e rg e n c y a ri si n g f r o m t h e d e st r u c t i o n o r i m p a ss ab i li t y o f r o ad o r b ri d g es b y f l o o d s, r ai n o r s n o w , o r o t h e r c a su a lt y , o r t h e b re ak i n g o r d a m a g in g o f a n y p r o p er t y i n t h e c o u n t y i f t h e p u b l ic h e al t h , s af e t y , o r w e lf a r e w o u l d su f f e r b y d e la y , c o n t r a c t s f o r p u r c h as e o r
W a s t h e c o n t r a c t e x e c u t e d in w r it i n g ?
c .
2 .
§ 375.21; f or Road Const ruct ion Cont ract s, see also § 160.17
M inn . St at . S ec t i o n
If t he c on t rac t is f or t he c on st ruc t ion or rep air of road s, brid ges, or b uild ing s, w as t he p ub lic n ot ice, st at ing t im e a n d p la c e f o r b i d s, p u b l is h ed t h r e e w e ek s p ri o r t o t h e dead line?
If t h e c o n t r ac t i n v o lv e d w o r k an d l ab o r f o r t h e co nst ruc t ion or rep air of road s, b ridg es, o r bu ildin gs, w a s a f a it h f u l p er f o r m a n c e b o n d r ec e iv e d f r o m t h e co nt ract or?
W as t he c on t rac t aw arded t o t he lo w est respo nsib le bidd er?
b .
Cou nt ies
A .
W e re t h e n am e s o f t h e b i d de rs an d t h e a m o u n t o f t h e b i d s p u t o n r e c o rd ?
d .
b .
e.
A w ar di ng t h e C on t r ac t
a.
e.
c .
d .
See also § 5 7 4 . 2 6
§ 3 7 5 . 2 1
4 .
§ 3 7 3 .0 1 , s ub d . 1
(1 )
W e re b id s ad v e r t i se d at l e as t o n c e in a ne w s p ap e r o f gen eral circ ulat ion in t he area w here t he p rop ert y is l o c at e d ?
D i d t h e n o t i c e c o n t a in t h e t i m e a n d p l ac e f o r c o n s id e ri n g p ro p o s al s a s w e ll as a l eg a l d e sc r ip t i o n o f t h e r ea l p r o p er t y i n v o l v e d ?
If t h e es t i m a t e d c o st o f r ep a ir s a n d m a i n t e n an c e o f o n e d r ai n ag e sy s t e m f o r o n e y e ar w i ll b e l es s t h a n t h e great er of $ 5 0 ,0 0 0 , o r $ 1 ,0 0 0 per m ile of op en d it ch in t h e di t c h sy s t em , t h e d rai nag e au t h o ri t y m a y h av e su c h w o r k d o n e w i t h o u t a d v e r t i si n g f o r b id s o r e n t e ri n g in t o a co nt rac t . W ere t hese c on dit ion s m et ?
Part II. Law s Relating to Specific M unicipalities (Continued)
If t h e c o un t y so ld real p ro pert y :
d .
b .
c .
a.
§ 3 7 5 . 2 2
c .
M inn . St at . S ec t i o n
Drain age Sy st em s
A d v e r t i se m e n t f o r Bi d s
1 .
a.
1 1 / 0 3
C ON T RA C T IN G  BID LA W S
b .
§ 4 1 2 . 3 1 1
W a s t h e r eq u e st f o r b id s p u b li sh e d at l e as t o n c e in t h e o f f ic ial n ew sp ap er?
St at ut ory Cit ies
B.
Yes
In c ase of an em ergen cy arising f rom break age, d a m a g e, o r d ec a y i n c o u n t y p r o p er t y t h a t c a n n o t b e a ll o w e d t o w a it f o r t h e t i m e re q u ir ed t o a d v e rt i s e f o r bid s, rep airs m ay be m ade w it ho ut adv ert ising f or b ids if t h e w o r k is au t h o r i ze d b y a m a j o ri t y o f t h e b o a rd o f c o u n t y c o m m i ss io n e rs an d t h e a c t i o n is ra t i f i ed a n d rec ord ed in t he o f f icial p roc eedin gs o f t he b oard at it s n e x t m e et i n g .
W ork pap er Ref e ren c e
a.
N o
5 .
§ 103E.705, subd. 5
 rep ai rs m a y b e m a d e w i t h o ut a d v er t is in g f o r b id s; b u t ,  in t h a t c a s e, t h e a c t i o n o f t h e b o ar d sh a ll b e r ec o r d ed i n  its o f f icial p roc eedin gs.
4 6
If a ny em erg en c y ex c ep t io ns w ere t a ken by t h e c o un t y , w ere t he req uired bo ard ac t ion s reco rded in t he o f f icial pro ceed ing s?
W as th e real propert y so ld t o t he high est b idder?
W e re b id s ad v e r t i se d f o r in t h e o f f i c ia l n e w s p ap e r o f t h e co un t y f or t hree c on secu t iv e w eeks?
Sale of Real Propert y
If n o , w e re re as o n s d o c u m e n t e d i n t h e m i n u t e s an d w e re t h e re as o n s s t a t e d re as o n ab l e a n d app rop riat e?
§ 1 2 3 B. 5 2 , s ub d . 1
A w ar di ng t h e C on t r ac t
c .
M inn . St at . S ec t i o n
______________
______________
D .
Sc ho ols
2 .
A d v e r t i se m e n t f o r Bi d s
______________
3 .
1 .
A d v e r t i se m e n t f o r Bi d s
a.
4 .
b .
W as th e con t ract aw arded t o t he low est respon sible bidder?
(A spec ial em ergen cy is a sit uat ion requ iring im m ediat e a c t i o n es se n t i al t o t h e h e al t h , s af e t y , o r w e lf a r e o f t h e t o w n . )
____
If t h e re w a s n o n o t i c e g iv e n o r s ea le d b id s so l ic i t e d , d id a spec ial em ergen cy ex ist ?
____
T o w n s
If t he co nt ract w as not aw arded t o t he low est b idder, w ere r ea so n a b le an d a p pr o p ri at e r ea so n s d o c u m e n t e d in t h e m inu t es?
§ 1 2 3 B. 5 2 , s ub d . 1
a.
W a s t w o w e ek s p u b li sh e d n ot i c e o f t h e re q u es t f o r b i d s m ade in t he of f icial new spaper?
____
____
W as t h e no t i c e p u b li sh ed at l eas t t e n d ay s in ad v an c e of t he last dat e f or su bm ission of bid s?
If t he co nt ract w as not aw arded t o t he low est b idder, w ere reason able an d ap pro priat e reason s do cu m ent ed in t he m inu t es?
b .
W as th e con t ract aw arded t o t he low est respon sible bidder?
If t he co nt ract w as not aw arded t o t he low est b idder, w ere r ea so n a b le an d a p pr o p ri at e r ea so n s d o c u m e n t e d in t h e m inu t es?
W ork pap er Ref e ren c e
N o
Yes
C ON T RA C T IN G  BID LA W S
____
§ 3 6 5 . 3 7
D i d t h e n o t i c e st a t e t h e t i m e an d p l ac e f o r su b m i t t i n g bid s?
____
C.
1 .
§ 365.37; f or Road Const ruct ion Cont ract s, see also § 160.17
W as t he c on t rac t aw arded t o t he lo w est respo nsib le bidd er?
2 .
D id t h e n o t ic e in c lu d e a b ri ef d e sc r ip t i o n o f t h e su b jec t m at t er?
3 .
2 .
Part II. Law s Relating to Specific M unicipalities (Continued)
W a s a p ub l ic n o t i c e o f t h e t i m e an d p l ac e t o s u b m i t b i d s p o s t e d in t h e t h r e e m o s t p u b l i c p la c es in t h e t o w n f o r t en d ay s or p ub lished f or t w o w eeks in a new spap er g e n er al ly c i r c u la t e d in t h e t o w n ?
c .
1 1 / 0 3
4 7
b .
a.
W a s t h e c o n t r a c t e x e c u t e d in w r it i n g ?