B. Procedure for Awarding the Construction Contract B. Procedure for Awarding the Construction Contract

B. Procedure for Awarding the Construction Contract

The procedure for awarding the construction contract is governed in part by the drainage code and in part by other statutes that govern municipal contracting.⁷²³

The method of contract awarding varies depending on whether the construction is for establishment of a new drainage project or for repair of an existing drainage system. Whether competitive bidding must be used also depends upon the estimated cost of the contract.

Work Done by Federal Government

If any drainage work is to be done by the United States or one of its agencies, a notice of awarding that contract does not need to be published and a contract for that construction is not necessary.⁷²⁴

Contracts for Drainage Projects

Contracts for drainage projects estimated to cost $25,000 or less may be awarded upon negotiation after solicitation of at least two quotes or in open market.⁷²⁵

Contracts for drainage projects estimated to exceed $25,000 but not $100,000 may be awarded by solicitation of sealed bids or by negotiation after solicitation of at least two quotes.⁷²⁶

Whenever quotes are obtained for negotiation, the quotes must be kept on file by the drainage authority for a period of at least one year after receipt.⁷²⁷

Contracts for drainage projects estimated to exceed $100,000 must be awarded after solicitation of sealed bids.⁷²⁸

Contracts for Repairs

Repairs to a drainage system that cost less for one year than the greater of the dollar amount requiring the solicitation of sealed bids under Minn. Stat. § 471.345, subdivision 3 ($100,000 currently) or $1,000 per mile of open ditch in the system may be awarded without advertising for bids or entering into a contract.⁷²⁹

Repairs that cost more than the amount requiring the solicitation of sealed bids under Minn. Stat. § 471.345, subdivision 3 ($100,000 currently) or $1,000 per mile of open ditch in the system must be contracted through the advertisement and solicitation of sealed bids.

Contracts for repairs and construction after a disaster are not required to advertise for bids. Any of the following disaster conditions qualify:

1. Repair of a drainage system destroyed or impaired by floods, natural disaster, or unforeseen circumstances;
   
2. The area where the drainage system is located has been declared a disaster area by the President of the United States and federal funds are available for repair or reconstruction; and
   
3. The public interests would be damaged by repair or reconstruction being delayed.⁷³⁰
   

Best Value Alternative

The Best Value Alternative bidding process is an alternative contract awarding method to the “lowest responsible bidder” method of competitive bidding.⁷³¹ Drainage authorities may award a contract for construction, alteration, repair, or maintenance work to the contractor offering the “best value.”⁷³² The Best Value Alternative allows the drainage authority to consider performance factors rather than just cost. Some examples of performance criteria include, but are not limited to:

1. The quality of the contractor’s performance on previous projects;
   
2. The timeliness of the contractor’s performance on previous projects;
   
3. The level of customer satisfaction with the contractor’s performance on previous projects;
   
4. The contractor’s record of performing previous projects on budget and ability to minimize cost overruns;
   
5. The contractor’s ability to minimize change orders;
   
6. The contractor’s ability to prepare appropriate project plans;
   
7. The contractor’s technical capabilities;
   
8. The individual qualifications of the contractor’s key personnel; or
   
9. The contractor’s ability to assess and minimize risks.⁷³³
   

The solicitation documents under the Best Value Alternative must state the weight that will be given to price and the other selection criteria.⁷³⁴

A project may be split up into several contracts by section or by labor and material or let as one job.⁷³⁵ Where a project involves both open ditching and drain tile work, the open portion and the drain tile portion may be let to different contractors, since there is different expertise involved. Sometimes the entire project is let to an excavation contractor who will then sublet the drain tile work. Subletting, while not unlawful, is not highly desirable because of the loss of control that the drainage authority experiences in selecting the subcontractor and supervising the work. When a project calls for more than one specialty, it is recommended to break the project up and to let it in sections.

1. Notice of Contract Awarding

The notice of awarding of the contract is to be published in a legal newspaper in the county or counties where the project is to be constructed.⁷³⁶ If the estimated cost is more than $25,000, the notice must also be published in a construction trade newspaper.⁷³⁷

The notice of contract awarding must contain the following:

1. Time and location for awarding the contract;
   
2. The approximate amount of work and its estimated cost;
   
3. That bids may be for the work as one job, or in sections, or separately, for bridges, ditches, and open work, tile, or tile construction work, if required or advisable;
   
4. That each bid must be accompanied by a certified check or a bond furnished by an approved security corporation payable to the drainage authority for ten percent of the bid, as a security that the bidder will enter into a contract and give a bond; and
   
5. That the drainage authority reserves the right to reject any and all bids.
   

A sample notice of contract awarding is found in Template A .

If the project is a county or joint county project, the invitation to bidders must be published two consecutive weeks in a legal newspaper in the county or counties where the work is to be done.⁷³⁸ For projects that are conducted by the watershed district, publication only needs to be done once and does not have to be published as a legal notice in the county where the project is pending. Rather, the statute calls for publication “in at least one of the newspapers in the state where notices are usually published.”⁷³⁹

2. How Contract May Be Awarded (“Bidding”)

Where the solicitation of bids is required, the contract must be awarded to the lowest responsible bidder.⁷⁴⁰ When bidding is conducted under the Best Value Alternative method, the contract must be awarded to the lowest responsible bidder after applying the weighted selection criteria.⁷⁴¹

The lowest bidder is not necessarily the lowest responsible bidder. The drainage authority may find a bidder to be irresponsible based upon reasonable, documented judgment of integrity, skill, ability, and the likelihood of the bidder doing faithful and satisfactory work.⁷⁴² Prior, unsatisfactory work by the bidder may justify the drainage authority in rejecting the bid.⁷⁴³ Having rejected the lowest bid, the drainage authority may accept the next lowest bid.⁷⁴⁴

If the drainage authority wishes more time to consider the bids, it may take the letting under advisement and adjourn, notifying the bidders of its decision by mail. In so doing, the drainage authority should check the bid specifications for limitations in the length of time that the drainage authority may hold a bidder to its bid.

The project engineer must attend the meeting to award the contract.⁷⁴⁵ The engineer ensures that each bid conforms to the plans and specifications: a bid must be rejected if it is not responsive.⁷⁴⁶

If no satisfactory bid is received, the drainage authority may reject all bids, with or without giving reasons therefor, and may then re-advertise.⁷⁴⁷ If no satisfactory bid is received a second time and if no petition is received for adjustment of the engineer’s cost estimate or the viewers’ report within a reasonable time,⁷⁴⁸ the drainage authority may dismiss the petition as not feasible.

A contract may be let even if there is only one satisfactory bid from a responsible bidder.

3. Procedure if Contract Not Awarded Due to Bids or Costs

If all bids exceed 130 percent of the total construction cost as estimated by the project engineer or in excess of the benefits, less damages and other costs, no contract may be awarded unless a special re-evaluation procedure is followed.⁷⁴⁹

The special procedure involves a petition by a person interested in the drainage project to have the estimated drainage project costs or the plans and specifications re-evaluated.⁷⁵⁰ The successful petition will raise the engineer’s estimate of costs or will reduce the bids. There are three types of petitions that may be brought:

1. A petition stating the person’s determinations regarding an error(s) made in the estimate of the drainage project cost;⁷⁵¹
   
2. Petition stating that the plans and specifications could be changed in a manner materially affecting the cost of the drainage system without interfering with efficiency;⁷⁵² or
   
3. A petition stating that bids were received only for a price more than 30 percent in excess of the detailed survey report because inflation increased the construction cost between the time the detailed survey cost estimate and the time of awarding the contract, or that after the contract was awarded there was unavoidable delay not caused by the contractor, and between the time of awarding the contract and completion of construction inflation increased construction costs resulting in the contract not being completed for an amount equal to or less than the assessed benefits.⁷⁵³
   

The petition should request the drainage authority refer the detailed survey report and viewers’ report back to the engineer and the viewers for additional consideration.⁷⁵⁴

A sample petition for reevaluation of estimated costs or plans and specifications after project is established is found in Template B.

After the petition is received, the drainage authority must order a hearing by designating the time and place of the hearing and directing the auditor to give notice of the hearing by publication.⁷⁵⁵

A sample order setting hearing on petition for reevaluation of estimated costs or plans and specifications after project is established is found in Template C .

A sample notice of hearing on petition for reevaluation of estimated costs or plans and specifications after project is established is found in Template D.

At the hearing, the drainage authority shall consider the petition and then take public comments from all interested parties.⁷⁵⁶

After the hearing, the drainage authority may order the engineer to amend the detailed survey report if the drainage authority determines and adopts the following findings:

1. The detailed survey report cost estimate was erroneous and should be corrected;
   
2. The plans and specifications could be changed in a manner materially affecting the cost of the drainage project without interfering with efficiency; and
   
3. With the correction or modification a contract would be awarded within the 30 percent limitation and equal to or less than benefits.⁷⁵⁷
   

If the drainage authority finds that the amended changes affect the amount of benefits or damages to any property or that the benefits should be reexamined because of inflated land values or inflated construction costs, it shall refer the viewers’ report to the viewers to reexamine the benefits and damages.⁷⁵⁸

If a new viewers’ report is adopted, a party may appeal the benefits and damages to district court.⁷⁵⁹

There is no statutory right to appeal from the order granting or denying the relief asked for in the petition to modify. The entire matter could be reviewed by filing a petition for a writ of certiorari to the Minnesota Court of Appeals.⁷⁶⁰ The drainage authority should not rescind the order establishing and dismiss the petition for the project until after the time for review by certiorari of its order rejecting the petition to modify the order establishing has run out. If no action is commenced within 60 days after notice of denial is given to the petitioner,⁷⁶¹ the drainage authority may proceed to rescind the order establishing, order the dismissal of the petition, and further order the petitioners to pay the costs.

FOOTNOTES

⁷²³ See, e.g., Uniform Municipal Contracting Law, 2007 Minn. Laws, ch. 148, art. 3, § 8, codified at Minn. Stat. § 471.345 (2015); see, specifically, Minn. Stat. § 471.345, subd. 6 (“The purpose of this section is to establish for all municipalities, uniform dollar limitations upon contracts which shall or may be entered into on the basis of competitive bids, quotations or purchase or sale in the open market. To the extent inconsistent with this purpose, all laws governing contracts by a particular municipality or class thereof are superseded. In all other respects such laws shall continue applicable.”).
⁷²⁴ Minn. Stat. § 103E.505, subd. 8 (2015).
⁷²⁵ Minn. Stat. § 471.345, subd. 5 (2015).
⁷²⁶ Minn. Stat. § 471.345, subd. 4 (2015).
⁷²⁷ Minn. Stat. § 471.345, subds. 4 & 5 (2015).
⁷²⁸ Minn. Stat. § 471.345, subd. 3 (2015).
⁷²⁹ Minn. Stat. § 103E.705, subd. 5 (2015).
⁷³⁰ Minn. Stat. § 103E.705, subd. 7 (2015).
⁷³¹ Minn. Stat. § 103E.505, subd. 5 (2015).
⁷³² Minn. Stat. § 471.345, subds. 3a & 4a (2015).
⁷³³ Minn. Stat. § 16C.28, subd. 1b (2015).
⁷³⁴ Minn. Stat. § 16C.28, subd. 1(c) (2015).
⁷³⁵ Minn. Stat. § 103E.505, subd. 5 (2015).
⁷³⁶ Minn. Stat. § 103E.505, subd. 3 (2015).
⁷³⁷ Minn. Stat. § 103E.505, subd. 3 (2015).
⁷³⁸ Minn. Stat. § 375.21, subd. 1 (2015).
⁷³⁹ Minn. Stat. § 103D.811, subd. 2 (2015).
⁷⁴⁰ Minn. Stat. § 103E.505, subd. 5 (2015).
⁷⁴¹ Minn. Stat. § 16C.28, subd. 1(c) (2015).
⁷⁴² Kelling v. Edwards, 134 N.W. 221, 223 (Minn. 1912).
⁷⁴³ Kelling v. Edwards, 134 N.W. 221, 223 (Minn. 1912).
⁷⁴⁴ Den Mar Constr. Co. v. Am. Ins. Co., 290 N.W.2d 737, 741 (Minn. 1979).
⁷⁴⁵ Minn. Stat. § 103E.505, subd. 4 (2015).
⁷⁴⁶ Minn. Stat. § 103E.505, subd. 4 (2015).
⁷⁴⁷ Minn. Stat. § 103E.505, subd. 3(5) (2015).
⁷⁴⁸ See Chapter 2, Section VII, Paragraph B.3.
⁷⁴⁹ See Minn. Stat. §§ 103E.505, subd. 5; 103E.511; & 103D.801. The procedures are similar whether it is a county, joint county or watershed district project. Compare Minn. Stat. § 103E.511, with Minn. Stat. § 103D.801.
⁷⁵⁰ See Minn. Stat. §§ 103E.511, subds. 2 & 3 (2015).
⁷⁵¹ Minn. Stat. § 103E.511, subd. 2 (2015).
⁷⁵² Minn. Stat. § 103E.511, subd. 2 (2015).
⁷⁵³ Minn. Stat. § 103E.511, subd. 3(a) (2015).
⁷⁵⁴ Minn. Stat. §§ 103E.511, subds. 2 & 3 (2015).
⁷⁵⁵ Minn. Stat. § 103E.511, subd. 4 (2015).
⁷⁵⁶ Minn. Stat. § 103E.511, subd. 5(a) (2015).
⁷⁵⁷ Minn. Stat. § 103E.511, subd. 5(b) (2015).
⁷⁵⁸ Minn. Stat. § 103E.511, subd. 5(c) (2015).
⁷⁵⁹ Minn. Stat. § 103E.511, subd. 5(f) (2015).
⁷⁶⁰ See Chapter 2, Section VIII, Paragraphs B.6 & D.3.
⁷⁶¹ See Minn. Stat. § 606.01 (2015) (“No writ of certiorari shall be issued, to correct any proceeding, unless such writ shall be issued within 60 days after the party applying for such writ shall have received due notice of the proceeding sought to be reviewed thereby. The party shall apply to the Court of Appeals for the writ.”).