Legislature House of Representatives House Research State Government
The legislature has enacted laws that state agencies must follow when
purchasing goods and services.
The Department of Administration has overall responsibility for state
contracts for purchases of goods and services.
In some cases, the department purchases goods and services and sells them to
state agencies. For some goods and services, the department enters into a master
contract from a vendor, and allows agencies to buy the goods and services from
this master contract. In other cases, the department delegates the contracting
authority to individual agencies. Department of Administration authority
generally does not apply to the Minnesota State Colleges and Universities (MnSCU)
system. Minn. Stat., sec. 16C.03.
Most agency purchases are based on "best value."
The determination of "best value" includes price, but may also include other
considerations, such as quality and vendor performance. If criteria other than
price are used, the contracting agency must state the relative importance of
price and other factors.
Minn. Stat., sec. 16C.03.
A formal sealed bid process is used to acquire most goods and services estimated
at more than $50,000 ($100,000 for the Department of Transportation). Purchases
of less than these amounts may be made without receiving sealed bids.
Minn. Stat., sec. 16C.06.
There are separate laws governing state building and construction contracts.
These contracts may be based on best value or may be
awarded to the "lowest responsible bidder."
Minn. Stat., sec. 16C.26.
State law provides certain bid preferences that can modify the determination
of who is the lowest bidder on a contract.
The Commissioner of Administration may award up to a 6 percent preference in
the amount bid for specified goods or services to small targeted group
businesses, businesses owned by veterans, or to businesses located in economically disadvantaged areas. More detailed
information about this program, including which businesses are eligible for the
preference, can be found through the
Division of the Department of Administration.
Different laws apply to state agency contracts for professional or consultant services.
In contracts for professional or technical services the law requires that
reasonable notice be given of the availability of the contract. Generally, these
contracts are not based on sealed bids, and an agency is free to negotiate with
There are other requirements that apply to most professional/technical
service contracts. For example, the agency must determine that no current state
employee is able and available to perform the services, and that the normal
competitive bidding mechanisms will not provide for adequate performance of the
Minn. Stat., sec. 16C.08.