Minnesota Department of Transportation

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Civil Rights

Committed to equality in transportation service

Small Business Contract Preferences

What are Small Business Contract Preferences?

State law authorizes the Commissioner of Transportation to designate certain contracts for award to Targeted Group Businesses and Veteran-Owned small businesses if certain conditions are met on a project.

This preference does not apply to firms who are certified only as Disadvantaged Business Enterprises. There are different certification programs for DBE and TGB firms. Many DBE firms are eligible to receive TGB certification if the firm applies through the Department of Administration. State law requires a firm be certified as a TGB or VET firm for these Small Business Contract Preferences to apply. Learn more about TGB or VET certification or view the state directory of certified Targeted Group Businesses and Veteran-Owned Businesses here.

How do the Small Business Contract Preferences work?

Minnesota Statutes § 161.321 allows for the Commissioner of Transportation to “designate a contract for construction work for award only to small targeted group businesses if the commissioner determines that at least three targeted group businesses are likely to bid.” The Commissioner of Transportation also may “designate a contract for construction work for award only to veteran-owned small businesses if the commissioner determines that at least three veteran-owned small businesses are likely to bid.”

There are three main criteria that must be met for a contract to fall under this law. 

  1. The contract must be covered by the law
  2. At least three qualifying businesses must be “likely to bid,” and
  3. The contract must be awarded in accordance with all laws governing competitive bidding, except as specifically provided in the statute. 

Does this apply to all contracts?

No. The law only applies to contracts that are “for the construction of transportation improvements.” That means that these small business contract preferences do not apply to contracts for goods, general services, or professional/technical services. However, there may be other small business contracting preferences that apply to contracts for goods, general services, or professional technical services. Contact us for more information.

Also, MnDOT must determine whether at least three TGB or VET firms are likely to bid before a contract can be designated as under the Small Business Contract Preference.

Finally, after MnDOT designates a contract for award to a qualified small business, MnDOT must obtain bids from qualified businesses through the competitive process. MnDOT then awards the contract to the qualified small business that is the lowest responsible bidder.

How are contracts selected for Small Business Contract Preferences?

MnDOT has procedures to follow the requirements for these Small Business Contract Preferences. These procedures include:

  1. Reviewing projects to determine if it might be beneficial to use this contracting method
  2. Determining that at least three small businesses are likely to bid,
  3. Designating contracts, and
  4. Advertising and awarding contracts in a transparent manner.

Districts will review projects to determine funding sources and work with the Office of Civil Rights to determine if there are at least three available, capable TGB or VET firms to perform the work. If the project does not have federal funding and there are at least three certified firms interested, MnDOT may then designate the contract only for award to a qualified small business. This designation will come from the Office of Construction and Innovative Contracting at MnDOT, and be specified in the MnDOT bid package. The project will be advertised on the MnDOT public advertisement webpage and bid results will be posted on the public bid results webpage. MnDOT will review the bids and make the contract award, if any, to the qualified small business who submitted the lowest responsive and responsible bid.

If you have questions about Small Business Contract Preferences or any of our programs, please contact us for more information.