To qualify for the targeted group and economically disadvantaged procurement programs, the business must file an application for certification and supporting documentation with the Materials Management Division of the Department of Administration. The application and supporting documentation are reviewed by the staff of the Materials Management Division for conformity with applicable laws. A business that is certified by the Department of Administration is eligible to participate in small business procurement programs of the Department of Administration, and could be eligible to participate in similar programs of the state Department of Transportation and some metropolitan agencies, without further certification. Certified businesses must submit an annual report to the Materials Management Division verifying information on file with the Division. The incentive for targeted group vendors is the pricing preference received on state contracts. Specifically, the Commissioner of Administration may award up to a six percent preference for specified goods or services (i.e., a bid for $106 is treated the same as a bid for $100 by a non- targeted business), when the bidder is a small targeted group business. The Commissioner may award a contract for goods, services, or construction directly to a small business or small targeted group business without going through a competitive solicitation process up to a total contract award of $25,000. Likewise, a pricing preference of up to six percent (four percent for construction projects) may be awarded for bids submitted by a small business located in an “economically disadvantaged area”. For this purpose, a business can qualify by meeting one of three tests: the owner resides in or the business is located in a county in which the median income for married couples is less than 70 percent of the state median income for married couples; the owner resides in or the business is located in an area designated a “labor surplus” area by the U.S. Department of Labor; or, the business is a rehabilitation facility or work activity program. Also, the Department of Administration may designate a “targeted neighborhood” (so designated pursuant to Minn. Stat. § 469.202) or an “enterprise zone” (so designated pursuant to Minn. Stat. § 469.167) as “economically disadvantaged” for purposes of that 6 percent preference. The Minnesota legislature made changes to state procurement contracts to certified veteran- owned small businesses (businesses that are majority-owned and operated by veterans). The commissioner may award contract for goods, services, or construction directly to a veteran-owned small business without going through a competitive solicitation process up to a total contract award value, including extension options, of $25,000. Equity select also extends to direct award to certified targeted group and economically disadvantaged small businesses. All laws and rules pertaining to solicitations, bid evaluations, contract awards, and other procurement matters apply equally to procurements from small businesses. Before making an award under the small targeted group business program, the Department of Administration is directed by statute to evaluate whether the small business scheduled to receive the award is able to perform the contract. The determination includes consideration of production and financial capacity and technical competence. Note, however, that Minnesota Statutes provide that the state may use a “reverse auction” procedure in which vendors compete in an open and interactive environment to deliver the lowest price for goods or services. When the Commissioner of the Minnesota Department of Administration determines that a reverse auction is the appropriate process the provisions of Minn. Stat. § 16C.06 on solicitations do not apply.
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