Minnesota caps best value contracting for construction at one project a year or 20 percent of projects, whichever is greater.
According to Minnesota Legislature Office of the Revisor of Statutes, the limit applies in each of the first three fiscal years in which best value construction contracting is used.
Key Takeaways
- best value is framed as an alternative to the current low-bid system, according to Minnesota Legislature Office of the Revisor of Statutes.
- the cap allows no more than one project annually or 20 percent of projects, whichever is greater, in the first three fiscal years of use, according to Minnesota Legislature Office of the Revisor of Statutes.
- the commissioner decides which of two procurement processes applies, and the agency head makes the vendor determination only when the commissioner uses the paragraph (a), clause (2) method, subject to commissioner approval, according to Minnesota Legislature Office of the Revisor of Statutes.
- the best value offer takes into account the request for proposals specifications, the price, and the performance criteria described in the solicitation document, according to Minnesota Legislature Office of the Revisor of Statutes.
- a bidder who reads the solicitation's criteria before setting markup on a best value proposal has the criteria in hand when pricing.
Low bid and best value in Minnesota
Best value sits beside the low-bid system in the Minnesota text. According to Minnesota Legislature Office of the Revisor of Statutes, the state recognizes the importance of the inclusion of a best value contracting system for construction as an alternative to the current low-bid system of procurement.
The word the statute uses is alternative. A bidder should read that word as a choice between two procurement methods for a given project, not as a general statement that low bidding no longer applies. A solicitation that names its procurement method is the document to check for that choice, and a bidder who finds no named method should ask the owner before pricing.
The same section also addresses the scope of its definitions. According to Minnesota Legislature Office of the Revisor of Statutes, the definition does not apply to sections 16C.32, 16C.33, 16C.34, and 16C.35. Owners and estimators who read the definitions in this section should check whether a project falls under one of those sections before relying on them. Both routes are described in the statute as procurement, so the bid file should record which route the solicitation names next to the scope note.
The usage cap
The cap is the central limit in the statute. According to Minnesota Legislature Office of the Revisor of Statutes, "(c) The commissioner or any agency for which competitive bids or proposals are required may not use best value contracting for more than one project annually, or 20 percent of its projects, whichever is greater, in each of the first three fiscal years in which best value construction contracting is used."
The quoted line reaches two kinds of actors: the commissioner, and any agency for which competitive bids or proposals are required. The issuing body named on a solicitation is the party to confirm before assuming the cap applies to it.
The phrase whichever is greater changes the arithmetic. The cap is not simply a fifth of an agency's projects. For a small program, the one-project figure can be the larger number, and it sets the limit. An owner tracking its own count should note which figure is larger in each fiscal year. The cap is counted in projects and percentages, not dollars.
The cap is tied to a time window. A reader should record the fiscal years in which best value is used, because the limit runs through the first three fiscal years in which best value construction contracting is used, according to Minnesota Legislature Office of the Revisor of Statutes.
A simple log works well for this count. Use one line for each project, with the fiscal year, the agency name, and the project name, so the annual count and the 20 percent figure can be checked against the same records. Add a column for the first fiscal year of use so the three-year window is easy to see.
Illustrative example: counting the cap
This example is illustrative only. An agency that runs 10 projects in a fiscal year has 20 percent of 10, which is 2 projects. Because 2 is greater than 1, its limit that year is 2. An agency that runs 5 projects has 20 percent of 5, which is 1 project. That ties with the one-project figure, so its limit is 1. Write each count into the log above at the end of the fiscal year.
Who picks the process
The commissioner makes the first decision. According to Minnesota Legislature Office of the Revisor of Statutes, "The commissioner shall determine whether to use the procurement process described in paragraph (a), clause (1), or the procurement process described in paragraph (a), clause (2), and paragraph (c)."
The commissioner also sets the rules for the best value route. According to Minnesota Legislature Office of the Revisor of Statutes, the commissioner shall establish procedures for developing and awarding best value requests for proposals for construction projects.
A bidder does not make this choice, so the practical question is which process a given project uses. Owners and estimators who are preparing a bid should ask the owner which process applies to the project before the pricing work starts. The answer determines whether the solicitation is built around a low-bid comparison or around a proposal that is judged on more than price.
The quoted sentence compares two procurement processes, one in paragraph (a), clause (1), and one in paragraph (a), clause (2). A reader can take the process named in a solicitation and match it against those two references in the statute to see which route the project is following. A solicitation that does not name a process leaves that match undone, so the question goes back to the owner. A bidder should keep the named process beside its paragraph reference in the bid file, so the match is documented before pricing starts. For the submission side, see the sealed bid submission checklist.
Who judges the best value offer
The agency head makes the selection, but only in one branch of the procedure. According to Minnesota Legislature Office of the Revisor of Statutes, if the commissioner uses the method in paragraph (a), clause (2), and paragraph (c), the head of the agency shall determine which vendor or contractor offers the best value, subject to the approval of the commissioner.
In that branch, the sentence assigns the best value determination to the head of the agency. The commissioner's approval is a second decision point. A bidder following a Minnesota best value solicitation should track both steps, the agency head's determination and the commissioner's approval of it, because the approval step is named in the quoted text above. The selection step is tied to that one method, so a bidder should not assume the agency head makes this determination for every procurement. Keeping the commissioner's approval wording in the same file as the agency head's determination lets both steps be checked together.
The commissioner also has a multiple-award option. According to Minnesota Legislature Office of the Revisor of Statutes, the commissioner may award contracts to more than one vendor or contractor in accordance with subdivision 1, if doing so does not decrease the service level or diminish the effect of competition.
What the proposal weighs besides price
Price is one of several factors. According to Minnesota Legislature Office of the Revisor of Statutes, "the vendor or contractor offering the best value, taking into account the specifications of the request for proposals, the price and performance criteria as set forth in subdivision 1b, and described in the solicitation document."
The factors named beside price are the request for proposals specifications and the performance criteria. The quoted sentence points to subdivision 1b for the price and performance criteria, so a bidder should read that reference in the statute alongside the solicitation. The statute places the description of these criteria in the solicitation document, which makes that document the primary source for the proposal's content.
A bidder should read the solicitation for how much each factor counts before setting markup. A useful habit is to mark each place where the solicitation describes specifications, price, and performance criteria, and to note the exact wording beside each. Such notes give a bidder a record to compare against the final proposal. Build the price section from the solicitation's own wording for each criterion, rather than from a standard proposal outline. For related reading, see public bid pricing. Once the criteria are clear, set markup and margin from them.
Why other state lines are not comparable
This article covers Minnesota only. The other sources below should not be read as a best value rule for Minnesota.
According to North Carolina General Assembly, the listed purchases of apparatus, supplies, materials, or equipment include cases where performance or price competition for a product are not available. That line concerns purchases of goods, not best value.
According to Nevada Legislature, the line refers to 338.1375 in determining whether to approve or deny an application. Because it concerns an application, it cannot be compared with the Minnesota cap.
A reader comparing states should treat each quoted line as tied to its own publisher and section. The North Carolina line concerns purchases of goods, and the Nevada line concerns an application, so neither can stand in for the Minnesota cap. A bidder working in more than one state should keep a separate note for each state's rule, with its own citation, so no rule is carried from one place to another.
The next step is to read the solicitation's price and performance criteria before setting your markup on a best value proposal.
FAQ
What is the best value cap in Minnesota?
An agency may not use best value contracting for more than one project annually, or 20 percent of its projects, whichever is greater, in each of the first three fiscal years in which best value construction contracting is used, according to Minnesota Legislature Office of the Revisor of Statutes. The limit covers the commissioner or any agency for which competitive bids or proposals are required.
Who decides whether to use best value?
The commissioner determines whether to use one procurement process or the other, according to Minnesota Legislature Office of the Revisor of Statutes. Only if the commissioner uses the method in paragraph (a), clause (2), and paragraph (c), the agency head determines the best value vendor, subject to the commissioner's approval, according to Minnesota Legislature Office of the Revisor of Statutes. The commissioner also establishes procedures for developing and awarding best value requests for proposals for construction projects, according to the same Minnesota Legislature Office of the Revisor of Statutes page.
What does the award consider besides price?
According to Minnesota Legislature Office of the Revisor of Statutes, the best value vendor takes into account the specifications of the request for proposals, the price and performance criteria as set forth in subdivision 1b, and described in the solicitation document. The solicitation is the place to check how these criteria are described.
How many fiscal years does the cap cover?
The cap covers the first three fiscal years in which best value construction contracting is used, according to Minnesota Legislature Office of the Revisor of Statutes. A bidder should track those first three years by fiscal year.