05-12-26 City Council Workshop Packet

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14 216348v2 Appendix B: State of Minnesota Bid, Quote, and Contract Requirements The Uniform Municipal Contracting Law, Minn. Stat. § 471.345 sets out procedures that cities must follow for contracts to sell, purchase, or rent supplies, materials, or equipment, or to construct, alter, repair, or maintain real or personal property. The estimated amount of the contract dictates which procedures apply. Of course, estimates should be reasonable. For example, if a city asks for quotations because it estimates the value of a contract will be below the bid threshold but all of the quotations are over the threshold, the city should solicit formal bids. Contracts estimated to have a value over $175,000 must be made by sealed bids, solicited by public notice, and awarded to the lowest responsible bidder. Bids should be retained for the period specified in the City’s records retention schedule. The requirement that the successful bidder be “responsible” protects cities from having to choose unqualified or unscrupulous low bidders. It allows a city council to consider factors such as the bidder’s financial responsibility, integrity, skill and ability, and the likelihood that the bidder will do satisfactory work. A city can even include evaluation criteria for “responsible” bidders in the bid specifications. The Minnesota state statute above deems that contracts estimated to be worth more than $25,000, up to $175,000, can be made either by sealed bids or by direct negotiation based on quotations. Departments with a purchase between $25,000 and $175,000 should solicit two written quotes or RFPs, when possible. All quotes and proposals received must be kept on file for at least 18 months. Each department is responsible for managing these records. Contracts with estimated values of $25,000 or less may be made either upon quotation or in the open market. If quotations are used, at least two quotations must be obtained if practicable, and the quotations must be kept on file for at least 18 months. Increases to contracted prices must be consistent with the specifications of the original contract. If the increases are not in the specifications of the original contract, the requested increases must include detailed reasoning for their inclusion, and those approving such increases must consider obtaining additional quotes, sealed bids, or RFPs for these increases depending on the levels outlined in the Quick Reference Guide on page 2. “Best Value” Procurement Alternative In 2007, the Minnesota Legislature authorized cities and other government entities to use a “best value” procurement process for construction, building, alteration, improvement, or repair contracts. Best value procurement is a process based on competitive proposals (as an alternative to bids) that awards the contract to 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 Minn. Stat. § 16C.02, subd. 4a and described in the solicitation document. The price and performance criteria mentioned in the previous paragraph may include, but are not limited to: