1.1                          A bill for an act
  1.2             relating to education finance; authorizing a school 
  1.3             district to build a school building using design-build 
  1.4             construction techniques; amending Minnesota Statutes 
  1.5             2002, sections 123B.52, subdivision 1; 471.345, by 
  1.6             adding a subdivision; proposing coding for new law in 
  1.7             Minnesota Statutes, chapter 123B. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9      Section 1.  Minnesota Statutes 2002, section 123B.52, 
  1.10  subdivision 1, is amended to read: 
  1.11     Subdivision 1.  [CONTRACTS.] A contract for work or labor, 
  1.12  or for the purchase of furniture, fixtures, or other property, 
  1.13  except books registered under the copyright laws, or for the 
  1.14  construction or repair of school houses not covered under 
  1.15  sections 123B.525 to 123B.5258, the estimated cost or value of 
  1.16  which shall exceed that specified in section 471.345, 
  1.17  subdivision 3, must not be made by the school board without 
  1.18  first advertising for bids or proposals by two weeks' published 
  1.19  notice in the official newspaper.  This notice must state the 
  1.20  time and place of receiving bids and contain a brief description 
  1.21  of the subject matter. 
  1.22     Additional publication in the official newspaper or 
  1.23  elsewhere may be made as the board shall deem necessary. 
  1.24     After taking into consideration conformity with the 
  1.25  specifications, terms of delivery, and other conditions imposed 
  1.26  in the call for bids, every such contract must be awarded to the 
  2.1   lowest responsible bidder, be duly executed in writing, and be 
  2.2   otherwise conditioned as required by law.  The person to whom 
  2.3   the contract is awarded shall give a sufficient bond to the 
  2.4   board for its faithful performance.  Notwithstanding section 
  2.5   574.26 or any other law to the contrary, on a contract limited 
  2.6   to the purchase of a finished tangible product, a board may 
  2.7   require, at its discretion, a performance bond of a contractor 
  2.8   in the amount the board considers necessary.  A record must be 
  2.9   kept of all bids, with names of bidders and amount of bids, and 
  2.10  with the successful bid indicated thereon.  A bid containing an 
  2.11  alteration or erasure of any price contained in the bid which is 
  2.12  used in determining the lowest responsible bid must be rejected 
  2.13  unless the alteration or erasure is corrected as provided in 
  2.14  this section.  An alteration or erasure may be crossed out and 
  2.15  the correction thereof printed in ink or typewritten adjacent 
  2.16  thereto and initialed in ink by the person signing the bid.  In 
  2.17  the case of identical low bids from two or more bidders, the 
  2.18  board may, at its discretion, utilize negotiated procurement 
  2.19  methods with the tied low bidders for that particular 
  2.20  transaction, so long as the price paid does not exceed the low 
  2.21  tied bid price.  In the case where only a single bid is 
  2.22  received, the board may, at its discretion, negotiate a mutually 
  2.23  agreeable contract with the bidder so long as the price paid 
  2.24  does not exceed the original bid.  If no satisfactory bid is 
  2.25  received, the board may readvertise.  Standard requirement price 
  2.26  contracts established for supplies or services to be purchased 
  2.27  by the district must be established by competitive bids.  Such 
  2.28  standard requirement price contracts may contain escalation 
  2.29  clauses and may provide for a negotiated price increase or 
  2.30  decrease based upon a demonstrable industrywide or regional 
  2.31  increase or decrease in the vendor's costs.  Either party to the 
  2.32  contract may request that the other party demonstrate such 
  2.33  increase or decrease.  The term of such contracts must not 
  2.34  exceed two years with an option on the part of the district to 
  2.35  renew for an additional two years.  Contracts for the purchase 
  2.36  of perishable food items, except milk for school lunches and 
  3.1   vocational training programs, in any amount may be made by 
  3.2   direct negotiation by obtaining two or more written quotations 
  3.3   for the purchase or sale, when possible, without advertising for 
  3.4   bids or otherwise complying with the requirements of this 
  3.5   section or section 471.345, subdivision 3.  All quotations 
  3.6   obtained shall be kept on file for a period of at least one year 
  3.7   after receipt. 
  3.8      Every contract made without compliance with the provisions 
  3.9   of this section shall be void.  Except in the case of the 
  3.10  destruction of buildings or injury thereto, where the public 
  3.11  interest would suffer by delay, contracts for repairs may be 
  3.12  made without advertising for bids.  
  3.13     Sec. 2.  [123B.525] [TITLE.] 
  3.14     Sections 123B.5251 to 123B.5259 may be referred to as the 
  3.15  Minnesota school facility design-build program. 
  3.16     Sec. 3.  [123B.5251] [DESIGN-BUILD CONSTRUCTION CONTRACTS; 
  3.17  DEFINITIONS.] 
  3.18     Subdivision 1.  [TERMS DEFINED.] The terms used in sections 
  3.19  123B.5251 to 123B.5259 have the meanings given in this section. 
  3.20     Subd. 2.  [COMMISSIONER.] "Commissioner" means the 
  3.21  commissioner of education. 
  3.22     Subd. 3.  [CRITERIA DEVELOPER.] "Criteria developer" means 
  3.23  an architect or engineer who holds a license under chapter 326. 
  3.24     Subd. 4.  [DESIGN-BUILD CONTRACT.] "Design-build contract" 
  3.25  means a single contract between a school board and a 
  3.26  design-build company or firm to furnish the architectural or 
  3.27  engineering and related design services as well as the labor, 
  3.28  material, supplies, equipment, and construction services for a 
  3.29  school construction project. 
  3.30     Subd. 5.  [DESIGN-BUILD FIRM.] "Design-build firm" means a 
  3.31  proprietorship, partnership, limited liability partnership, 
  3.32  joint venture, corporation, any type of limited liability 
  3.33  company, professional corporation, or any legal entity. 
  3.34     Subd. 6.  [DESIGN PROFESSIONAL.] "Design professional" 
  3.35  means a person who holds a license under chapter 326 that is 
  3.36  required to be registered under Minnesota law. 
  4.1      Subd. 7.  [DESIGN-BUILD SCHOOL CONSTRUCTION 
  4.2   PROJECT.] "Design-build school construction project" means the 
  4.3   procurement of both the design and construction of a school 
  4.4   facility project in a single contract with a company or 
  4.5   companies capable of providing the necessary engineering 
  4.6   services and construction. 
  4.7      Subd. 8.  [DESIGN-BUILDER.] "Design-builder" means the 
  4.8   design-build firm that proposes to design and build a school 
  4.9   project governed by the procedures of this section. 
  4.10     Subd. 9.  [REQUEST FOR PROPOSALS OR RFP.] "Request for 
  4.11  proposals" or "RFP" means the document by which the school board 
  4.12  solicits proposals from prequalified design-build firms to 
  4.13  design and construct the school project. 
  4.14     Subd. 10.  [REQUEST FOR QUALIFICATIONS OR RFQ.] "Request 
  4.15  for qualifications" or "RFQ" means a document to prequalify and 
  4.16  short-list potential design-build firms. 
  4.17     Subd. 11.  [SCHOOL BOARD.] "School board" means the board 
  4.18  of directors of an independent, common, or special school 
  4.19  district. 
  4.20     Sec. 4.  [123B.5252] [DESIGN-BUILD AUTHORITY; BEST VALUE 
  4.21  SELECTION.] 
  4.22     Notwithstanding section 123B.52 or 471.345, or any other 
  4.23  law to the contrary, a school board may solicit and award a 
  4.24  design-build contract for a project on the basis of a best value 
  4.25  selection process according to the provisions of sections 
  4.26  123B.5251 to 123B.5259.  To proceed under sections 123B.5251 to 
  4.27  123B.5259, the school must notify the commissioner of the 
  4.28  board's intent to use design-build authority on the school 
  4.29  facility, the project must have received a positive review and 
  4.30  comment under section 123B.70, and the project must be 
  4.31  authorized in accordance with chapter 475. 
  4.32     Sec. 5.  [123B.5253] [DETERMINATION TO USE DESIGN-BUILD 
  4.33  SELECTION METHOD.] 
  4.34     Subdivision 1.  [GENERAL CRITERIA.] A design-build 
  4.35  contracting procedure authorized under sections 123B.5251 to 
  4.36  123B.5259 may be used for a specific project only after a school 
  5.1   board determines that awarding a design-build contract will 
  5.2   serve the public interest. 
  5.3      Subd. 2.  [SPECIFIC CRITERIA.] A school board shall use the 
  5.4   following criteria as the minimum basis for determining when to 
  5.5   use the design-build method of project delivery: 
  5.6      (1) the extent to which it can adequately define the 
  5.7   project requirements in a proposed scope of the design and 
  5.8   construction desired; 
  5.9      (2) the time constraints for delivery of the project; 
  5.10     (3) the capability and experience of potential contractors 
  5.11  with the design-build method of project delivery or similar 
  5.12  experience; 
  5.13     (4) the suitability of the project for use of the 
  5.14  design-build method of project delivery with respect to time, 
  5.15  schedule, costs, and quality factors; 
  5.16     (5) the capability of the school board to manage the 
  5.17  project, including the employment of experienced personnel or 
  5.18  outside consultants; 
  5.19     (6) the capability of the school board to oversee the 
  5.20  project with individuals or design-build firms who are familiar 
  5.21  and experienced with the design-build method of project delivery 
  5.22  or similar experience; and 
  5.23     (7) the original character of the product or the services. 
  5.24     Sec. 6.  [123B.5254] [DESIGN-BUILD NOTICE AND REPORT.] 
  5.25     A school board shall summarize in a written statement its 
  5.26  reasons for proposing to use the design-build construction 
  5.27  contracting procedure.  This statement, along with other 
  5.28  relevant information describing the project, must be made 
  5.29  available upon request to interested parties. 
  5.30     Sec. 7.  [123B.5255] [LICENSING REQUIREMENTS.] 
  5.31     Subdivision 1.  [LICENSED PROFESSIONAL REQUIRED.] Each 
  5.32  design-builder shall employ, or have as a partner, member, 
  5.33  officer, coventurer, or subcontractor, a person duly licensed 
  5.34  and registered to provide the design services required to 
  5.35  complete the project and do business in the state. 
  5.36     Subd. 2.  [CONTRACTING FOR LICENSED PROFESSIONAL.] A 
  6.1   design-builder may enter into a contract to provide professional 
  6.2   or construction services for a project that the design-builder 
  6.3   is not licensed, registered, or qualified to perform, so long as 
  6.4   the design-builder provides those services through 
  6.5   subcontractors with duly licensed, registered, or otherwise 
  6.6   qualified individuals in accordance with sections 123B.5251 to 
  6.7   123B.5259. 
  6.8      Subd. 3.  [LIABILITY.] (a) Nothing in this section 
  6.9   authorizing design-build contracts is intended to limit or 
  6.10  eliminate the responsibility or liability owed by a professional 
  6.11  on a design-build project to the state, county, or city, or 
  6.12  other third parties under existing law. 
  6.13     (b) The design service portion of a design-build contract 
  6.14  must be considered a service and not a product. 
  6.15     Sec. 8.  [123B.5256] [DESIGN-BUILD RFQ; CRITERIA DEVELOPER; 
  6.16  EVALUATION.] 
  6.17     Subdivision 1.  [TWO-PHASE PROCEDURE.] If the school board 
  6.18  determines that the design-build best value method of project 
  6.19  delivery is appropriate for a project, the school board shall 
  6.20  establish a two-phase procedure for awarding the design-build 
  6.21  contract as described in this section and section 123B.5257. 
  6.22     Subd. 2.  [CRITERIA DEVELOPER.] During the phase one RFQ 
  6.23  and before solicitation, the school board shall hire a criteria 
  6.24  developer to help the school board develop the contents of the 
  6.25  RFQ.  A criteria developer may not participate in the review or 
  6.26  discussion of responses to an RFQ or RFP when the member has a 
  6.27  financial interest in any of the design-build firms that respond 
  6.28  to the RFP.  "Financial interest" includes, but is not limited 
  6.29  to, being or serving as an owner, employee, partner, limited 
  6.30  liability partner, shareholder, joint venturer, family member, 
  6.31  officer, or director of a design-build firm responding to an RFP 
  6.32  for a specific project, or having any other economic interest in 
  6.33  the design-build firm.  The criteria developer must be treated 
  6.34  as a school district employee in the event of litigation 
  6.35  resulting from any action arising out of the criteria 
  6.36  developer's service to the school board. 
  7.1      Subd. 3.  [CONTENTS.] The school board, in consultation 
  7.2   with the criteria developer, shall prepare an RFQ.  The RFQ must 
  7.3   include the following: 
  7.4      (1) the minimum qualifications of design-builders necessary 
  7.5   to meet the requirements for acceptance; 
  7.6      (2) a scope of work statement and schedule; 
  7.7      (3) documents defining the project requirements; 
  7.8      (4) the form of contract to be awarded; 
  7.9      (5) the weighted selection criteria for compiling a short 
  7.10  list and the number of firms to be included in the short list, 
  7.11  which must be at least one but not more than three; 
  7.12     (6) a description of the RFP requirements; 
  7.13     (7) the maximum time allowed for design and construction; 
  7.14     (8) the school board's estimated cost of design and 
  7.15  construction; and 
  7.16     (9) requirements for construction experience, design 
  7.17  experience, financial, personnel, and equipment resources 
  7.18  available from potential design-builders for the project and 
  7.19  experience in other design-build transportation projects or 
  7.20  similar projects, provided that these requirements may not 
  7.21  unduly restrict competition. 
  7.22     Subd. 4.  [EVALUATION.] The school board and criteria 
  7.23  developer shall evaluate the design-build qualifications of 
  7.24  responding firms and shall compile a short list of no more than 
  7.25  three most highly qualified firms in accordance with 
  7.26  qualifications criteria described in the RFQ.  If only one 
  7.27  design-build firm responds to the RFQ or remains on the short 
  7.28  list, the school board may readvertise or cancel the project as 
  7.29  the school board deems necessary. 
  7.30     Sec. 9.  [123B.5257] [RFP FOR DESIGN-BUILD.] 
  7.31     During phase two, the school board shall issue an RFP to 
  7.32  the design-builders on the short list.  The request must include:
  7.33     (1) the scope of work, including: 
  7.34     (i) performance and technical requirements; 
  7.35     (ii) conceptual design; 
  7.36     (iii) specifications; and 
  8.1      (iv) functional and operational elements for the delivery 
  8.2   of the completed project, which must be prepared by a registered 
  8.3   or licensed professional engineer; 
  8.4      (2) a description of the qualifications required of the 
  8.5   design-builder and the selection criteria, including the weight 
  8.6   or relative order, or both, of each criterion; 
  8.7      (3) copies of the contract documents that the successful 
  8.8   proposer will be expected to sign; 
  8.9      (4) the maximum time allowable for design and construction; 
  8.10     (5) the project's estimated cost of design and 
  8.11  construction; 
  8.12     (6) the requirement that a submitted proposal be segmented 
  8.13  into two parts, a technical proposal and a price proposal; 
  8.14     (7) the requirement that each proposal be in a separately 
  8.15  sealed, clearly identified package and include the date and time 
  8.16  of the submittal deadline; 
  8.17     (8) the requirement that the price proposal contain all 
  8.18  design, construction, engineering, inspection, and construction 
  8.19  costs of the proposed project; 
  8.20     (9) the date, time, and location of the public opening of 
  8.21  the sealed price proposals; and 
  8.22     (10) other information relevant to the project. 
  8.23     Sec. 10.  [123B.5258] [DESIGN-BUILD AWARD.] 
  8.24     Subdivision 1.  [AWARD; COMPUTATION; ANNOUNCEMENT.] (a) 
  8.25  Except as provided in subdivision 2, a design-build contract 
  8.26  shall be awarded according to paragraphs (b) to (d). 
  8.27     (b) The school board and criteria developer shall score the 
  8.28  technical proposals using the selection criteria in the RFP.  
  8.29  The school board shall reject any proposal it deems 
  8.30  nonresponsive. 
  8.31     (c) The school board shall announce the technical proposal 
  8.32  score for each design-builder, publicly open the sealed price 
  8.33  proposals, and divide each design-builder's price by the 
  8.34  technical score that the school board has given to it to obtain 
  8.35  an adjusted score.  The design-builder selected must be the 
  8.36  responsive and responsible design-builder whose adjusted score 
  9.1   is the lowest. 
  9.2      (d) Unless all proposals are rejected, the school board 
  9.3   shall award the contract to the responsive and responsible 
  9.4   design-builder with the lowest adjusted price.  The school board 
  9.5   reserves the right to reject all proposals. 
  9.6      Subd. 2.  [LOW-BID, DESIGN-BUILD PROCESS.] (a) The school 
  9.7   board may also use low-bid, design-build procedures to award a 
  9.8   design-build contract where the scope of the work can be clearly 
  9.9   defined. 
  9.10     (b) Low-bid, design-build projects must require an RFP. 
  9.11     (c) A proposal submitted under this subdivision must 
  9.12  include a technical proposal separate from a price proposal.  
  9.13  The low-bid, design-build procedures must follow a two-step 
  9.14  process for review of the responses to the RFP as follows: 
  9.15     (1) review of the technical proposal by the school board.  
  9.16  The school board must open the technical proposal first and must 
  9.17  determine if it complies with the requirements of the RFP and is 
  9.18  responsive.  The school board may not perform any ranking or 
  9.19  scoring of the technical proposals; and 
  9.20     (2) determination of the low bidder based on the price 
  9.21  proposal.  The school board may not open the price proposal 
  9.22  until the review of the technical proposal is complete. 
  9.23     (d) The contract award under low-bid, design-build 
  9.24  procedures must be made to the proposer whose sealed bid is 
  9.25  responsive to the technical requirements as determined by the 
  9.26  school board and is also the lowest bid. 
  9.27     Subd. 3.  [REJECTION OF BIDS.] The school board may reject 
  9.28  all bids under this section. 
  9.29     Sec. 11.  [123B.5259] [REPORT.] 
  9.30     A school district that uses a design-build contract must 
  9.31  submit to the commissioner a yearly listing of all executed 
  9.32  design-build contracts.  The report must identify the 
  9.33  contractor, contract amount, duration, and services provided.  
  9.34  The commissioner must summarize this information for the state's 
  9.35  school districts and post this information on the department's 
  9.36  Web site. 
 10.1      Sec. 12.  Minnesota Statutes 2002, section 471.345, is 
 10.2   amended by adding a subdivision to read: 
 10.3      Subd. 2a.  [CONTRACT EXCEPTIONS.] A design-build contract 
 10.4   entered into under sections 123B.525 to 123B.5258 by a school 
 10.5   board is exempt from the provisions of this section. 
 10.6      <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2004.