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State Purchasing

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 Materials Management 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 potential contractors.

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 services. Minn. Stat., sec. 16C.08.

October 2012

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