By Bob Huber, Stinson Leonard Street
The Minnesota legislature recently passed a bill amending Minnesota’s Responsible Contractor Act. Going into the session, contractor lobbyists knew they could not expect of the law to be repealed. Their goal was to reduce paperwork and make the law more workable. In the end, they were able to persuade the legislators to clarify parts of the Act and correct an issue posed by truckers.
1) Eliminates the Notarization Requirement
As originally passed, the law required that all contractors and subcontractors submit with each bid or quote a sworn, notarized verification that the subcontractor meets the minimum criteria imposed by the Act.
Effective for all bid solicitations issued after July 1, 2015, the amendment will eliminate the requirement that verifications need to be notarized. The contractor will still need to sign a statement “under oath” verifying that it meets the minimum criteria, and the same penalties apply for false verifications, but the verification will no longer need to be signed by a notary public. This is the change that will have the most practical impact on the contractors and subcontractors required to submit verifications.
2) Clarifies Definition of Material Suppliers
The amendment clarifies the critical distinction between subcontractors and suppliers. The original law requires “subcontractors,” but not “material suppliers,” to submit with each quote a sworn verification that the subcontractor meets the minimum criteria imposed by the Act. The Act originally defined a supplier as a vendor that contracts “for work on a project,” which could be interpreted to mean anyone who delivers material or otherwise steps onto the project.
As amended, the Act modifies the definition of a supplier to include those who deliver or unload materials, equipment or materials to a project, but excludes those who deliver mineral aggregate and deposit it “substantially in place, directly or through spreaders, from the transporting vehicles.” This is an important distinction on highway projects.
3) Carves out an Exception for “Motor Carrier”
The legislation also creates a new category, “motor carrier,” which it defines as a “business or natural person providing for-hire transportation of materials, equipment, or supplies for a project.” Motor carriers will still need to verify their compliance with the law’s minimum criteria, but rather than submitting a sworn verification for each project, they will only be required to provide contractors and subcontractors with annual verifications.
This change will eliminate the virtually impossible task of obtaining a job-by-job verification from each of the many truckers that work on highway-heavy projects.
4) Requires Supplemental Verification Before Signing Contract
The amendment added an additional paperwork requirement. As originally adopted, the law requires a contractor’s verification to include a list all of the first-tier subcontractors it intends to use on the project and to affirm that each of those subcontractors have provided their own verification to the contractor. The law also prohibits, and will still prohibit, a contractor from listing any subcontractor that did not provide that verification. The contractor is not now required to provide a more complete list before signing the contract, but is only required to later supplement its original list within 14 days after retaining additional subcontractors.
When the amendments take effect on July 1, however, the successful bidder must provide the owner with a supplemental verification, listing each subcontractor “with which it will have a direct contractual statement” before executing the prime contract. That means the contractor must provide at least two verifications before signing the contract, one with its bid and one before signing the contract. The law will still allow a contractor to add subcontractors later and provide a further supplemental verification if they do so.
The Act was amended in other ways, but the four just discussed will have the most practical effect on owners, contractors and subcontractors.
As noted, the amendments apply to all bid solicitations issued after July 1, 2015. The original law applies to all solicitations issued before that date.