A new law requires cities, school districts, and other local governmental entities to engage in the competitive bidding process only for contracts over $175,000. The change went into effect on August 1, 2018, and applies to contracts entered into on or after that date.

Legislative background
The competitive bidding threshold hasn’t been increased since 2008. The new Uniform Municipal Contracting Law found in Minnesota Statute 471.345 (also commonly referred to as the “Public Bidding Law”) requires competition among contractors, which helps ensure fiscal responsibility with taxpayer money when contracting. If a local government entity contracts by direct negotiation, it is obligated to have at least two quotes.

The threshold for contracts requiring sealed bids was raised from $100,000 to $175,000. Sealed bids or direct negotiation by obtaining two or more quotations are required for contracts between $25,000 and $175,000. There is no requirement to advertise bids or proposals. Upon quotation or in the open market, with at least two quotations are required for contracts less than $25,000. All quotations shall be kept on file for a period of at least one year after receipt.

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. Notices are to be posted at least 10 days before the specified due date and time of the bid. All original bids, proposals, and all documents pertaining to the award of a contract must be retained and made part of a permanent file or record and remain open to public inspection. A contract should be executed in writing.

“Best Value” Procurement Alternative
As an alternative, governmental entities may use a “best value” procurement process. “Best value” procurement is a process based on competitive proposals 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 [specific] performance criteria.” If an interview of the vendor’s or contractor’s personnel is one of the selection criteria, the relative weight of the interview shall be stated in the solicitation document and applied accordingly.

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