MnDOT Policy FM014
View/print signed policy (PDF)
When writing, awarding, executing, and administering contracts, including grant contracts, the Minnesota Department of Transportation (MnDOT) will:
- Comply with all applicable state and federal laws, rules, and regulations;
- Comply with all applicable policies and procedures issued by oversight agencies including the Department of Administration and Minnesota Management & Budget;
- Use written contracts that achieve MnDOT’s objectives while adequately managing risks to protect MnDOT’s interests;
- Actively manage contracts to ensure that contractors are held accountable for results and are paid only the proper amount; and
- Protect and promote public trust and confidence in public contracting.
In this policy, “contract” and “agreement” are interchangeable terms and, all references to “contract” and “agreement” refer to a written legal obligation of MnDOT, including grant obligations, regardless of whether titled “contract” or “agreement.”
MnDOT must use contracts to achieve its business objectives. How MnDOT writes, awards, and administers contracts significantly affects MnDOT’s legal rights and responsibilities. It also can significantly affect public trust and confidence in MnDOT. This policy establishes uniform standards applicable to all MnDOT contracts to help ensure that legal and financial risks are well managed, and to ensure integrity and accountability.
- Employees responsible for writing, awarding, negotiating, and managing contracts, including contract administrators, project managers, project engineers, consultant coordinators, and other employees who work with consultants, contractors, political subdivisions and grantees;
- Employees with delegated authority to execute contracts on behalf of MnDOT;
- Supervisors and managers of employees responsible for awarding and managing contracts; and
- All managers are responsible for compliance with internal control practices, and procedures.
Subjects appear in chronological order to help employees navigate through the process and to set expectations for managing MnDOT contracts:
- Understand ethical obligations and implement ethical practices;
- Understand legal requirements before entering into a state contract;
- Use procurement methods prescribed by statute;
- Use the appropriate contract templates;
- Prepare well-written contracts; and
- Obtain proper approvals and signatures for all contracts, record contract data in the system of record, and retain a copy of each contract.
- Review invoices, make prompt payments, and be alert to fraud.
- Use an amendment for changes in a contract and execute the amendment before work starts and the contract expires.
- Diligently pursue the resolution of performance issues in a timely manner.
1. Employees must understand ethical obligations and implement ethical practices.
A. Employees must abide by the Code of Ethics
Public trust and confidence in MnDOT is critical to the success of the department. MnDOT employees must use their authority and department resources in the public interest. MnDOT employees must adhere to the highest ethical values when conducting state business. MnDOT employees are required to follow the MnDOT Code of Ethics Policy.
All MnDOT employees are required to comply with Minnesota Statutes §43A.38, Code of Ethics for Employees in the Executive Branch. This law governs a number of topics including accepting gifts, using confidential information, using state property, and determining and resolving conflicts of interest. An employee who violates the Code of Ethics is subject to discipline, up to and including discharge from employment. A MnDOT employee involved in procurement or contract administration must contact Human Resources if the employee believes they may have an actual or perceived conflict of interest.
B. Employees must watch for organizational conflicts of interest
The Code of Ethics discussed in the previous paragraph focuses on a state employee’s ability to act impartially. Organizational conflict of interest however focuses on a state contractor’s ability to act in the best interest of the state, rather than its own interests or the interests of another party.
Organizational conflicts of interest taint the fairness and transparency of the procurement process, and raise doubts about the quality of the contractor’s performance and deliverables. Examples of organizational conflicts of interest include, but are not limited to, unequal access to information, biased ground rules in solicitation, and impaired objectivity due to a present or future financial or business relationship.
MnDOT must make reasonable efforts to avoid, mitigate, or neutralize organizational conflicts of interest that may arise during the procurement process, as required by state law, Minnesota Statutes §16C.04. A MnDOT employee must notify the Contract Management Section, Office of Chief Counsel, if the employee suspects or discovers a potential conflict of interest, or if a contractor or potential contractor discloses a potential conflict of interest.
The Contract Management Section reviews potential conflicts and determines an appropriate department response. Appropriate responses to an actual or perceived conflict of interest can include the following, as required by Minnesota Statutes §16C.04:
- Disqualifying the contractor from eligibility for a contract award;
- Canceling the contract if the conflict is discovered after a contract has been issued;
- Revising the scope of work to be conducted;
- Allowing contractors to propose the exclusion of tasks that create a conflict; and
- Providing information to all contractors regarding actions taken by MnDOT.
2. Employees must understand legal requirements before entering into a state contract.
A. There are statutory requirements for a valid state contract
- Minnesota Statutes §16C.05 requires the State to use written contracts. An oral contract is unenforceable. The
state can only be bound to a contract that has been signed by all of the following:
- Agency head, (or someone acting for that agency head pursuant to a valid delegation of authority); and
- Commissioner of Administration (or someone with delegated authority)
- Authorizing or permitting work to proceed before funds are encumbered and a contract is signed is a violation of State law, Minnesota Statutes §16C.05 and Minnesota Statutes §16A.15. MnDOT employees must make every reasonable effort to avoid 16A and 16C violations. An employee must not authorize or permit a contractor to begin work before the encumbrance of funds and execution of the contract unless authorized to do so by the employee’s manager. If a 16A or 16C violation occurs, the employee incurring the violation must complete the appropriate form documenting the reason for the violation. Employees are subject to discipline for violating these statutes.
B. MnDOT must have specific statutory authority for each contract it enters into
MnDOT derives its powers to enter into contracts from Minnesota statutes. The statutory authority to enter into a contract must be in the recitals or background of the contract.
C. MnDOT has legal authority to enter into many types of contracts
MnDOT has the statutory authority to enter into a variety of contracts. Each contract type has legal requirements and business considerations. MnDOT employees must familiarize themselves with the related statutes, rules, policies, and procedures associated with each before entering into an agreement. The most commonly used methods of contracting are building construction contracts; cooperative agreements; grant contracts; highway construction contracts; interagency agreements; joint powers agreements; partnership agreements; professional/technical services contracts; railroad contracts; state aid contracts; and utility agreements. See definition section. The best way to become familiar with these requirements is by discussing program needs with Contract Management Section staff and by reading the Contract Management "News" (note: for employees only).
D. Misappropriation of Money
No MnDOT employee may intentionally use money appropriated by law, or fees collected knowing that the use is for a purpose other than the purpose of which the money was appropriated. Unless a greater penalty is specified elsewhere in law, an employee who violates Minnesota Statutes §16A.139 “Misappropriation of Money,” is guilty of a gross misdemeanor.
3. Employees must use procurement methods prescribed by statute.
State law prescribes the method for awarding contracts for the procurement of goods, services, and construction contracts. In most instances, state law requires fair and open competition in the form of requests for bids or requests for proposals Minnesota Statutes §16C and Minnesota Statutes chapter 161. MnDOT will use competitive methods of procurement unless specifically exempted by statute or an alternative method approved by the Department of Administration is used.
4. Employees must use the appropriate contract templates.
A. Select an appropriate bid/proposal solicitation template
When MnDOT is required to obtain bids or proposals for a contract, MnDOT staff must use the correct solicitation document for that type of contract. Solicitation documents are as follows:
- A request for bids is for building construction contracts.
- A request for bids is for “traditional” (bid-build) highway construction contracts, and Request for Qualifications (RFQ) and Request for Proposals (RFP) documents are for alternative contracting methods such as Design-Build and CM/GC.
- An RFP or a Request for Letters of Interest (RFLOI) is for procuring consultant services.
- An RFP is also used for competitive grants solicitations when an open competitive solicitation is required (programs that have an ongoing application process for a discrete pool of applicants, such as airports, do not require an open competitive solicitation).
After determining the statutory authority and type of contract, MnDOT staff must utilize an appropriate Contract Management Section - approved template for that particular type of transaction. Solicitation documents and the contact information are as follows:
- Request for Proposal (RFP) and Request for Letters of Interest (RFLOI), and other documents used to procure Professional/Technical Services contracts, Consultant Services Section;
- Design-Build, Construction Manager/General Contractor (CMGC) procurement and the Request for Bid documents for highway construction, Project Management and Technical Support; and,
- Building construction requests for bid documents, Department of Administration; and,
- RFP for open competitive grant solicitations, Contract Management Section.
B. Use an approved contract template after the selection of a contractor
Various offices act as the custodian of contract templates. For example, Consultant Services holds the templates for professional/technical services contracts. The Cooperative Agreements Unit has a collection of cooperative agreement templates. The modal offices have templates for grant agreements. To ensure that the terms and conditions of contracts comply with current State law and MnDOT policies, MnDOT employees must use a current template.
C. Incorporate Prevailing Wage documentation
“Prevailing wage” requirements apply to public works projects, funded in whole or part with state or federal funds, including building and highway construction projects. The Prevailing Wage Special Provisions (Division A) and applicable Wage Determinations must be incorporated into contract documents. MnDOT may become liable to a prime or subcontractor for a portion of the prevailing wage if MnDOT fails to incorporate the applicable Wage Determinations. Project managers must enforce contract labor requirements and cooperate with the Labor Compliance Unit.
D. The Contract Management Section must review and approve contract templates
The custodians of contract templates should perform an annual review of the templates with the Contract Management Section, Office of Chief Counsel. This review ensures that contract drafters are using templates that are up to date.
E. Be aware of additional requirements for capital projects funded with state general obligation bond (“GO bonds”) funds
The Minnesota Legislature may appropriate GO bonds funds for capital projects, such as buildings or modal assets. State grants funded through GO bonds, rather than general funds, must comply with the requirements and restrictions found in Article XI, § 5(a) of the Minnesota Constitution, Minnesota Statutes § 16A.695, and MMB’s Commissioner’s Orders. MMB provides guidance, checklists, and contract templates to ensure compliance with state law and to protect the tax-exempt status of the bonds. If you have a question regarding bonding, contact the Office of Financial Management.
5. Employees must prepare well-written contracts.
Drafting MnDOT contracts is a shared responsibility. The Contract Management Section and other specialty offices are responsible for providing approved contract templates. Project Managers, agreement administrators and others are responsible for drafting “non-boilerplate” sections of the contract such as the scope of work and payment sections. The following sections discuss minimum requirements for all MnDOT contracts.
A. Basic form requirements
- The contract must have a MnDOT contract number on the document, preferably in the upper right hand corner. The contract number allows Contract Management Section and other MnDOT offices to track each contract and record contract data. This number is required for every contract. Highway construction contracts use their own numbering system.
- The contract must correctly identify the parties by their full and correct legal names.
- Attach and label all exhibits to the contract. Costs, dates, property and highway numbers must be consistent between the contract and exhibits. Clearly identify materials incorporated “by reference” such as title of the document, where the document is located, and the version date (if applicable).
B. Scope of work and payment requirements
When drafting the duties of the contractor and MnDOT, be clear, concise, and unambiguous. The contract must answer who, what, where, when, and how much. The following is a list of items to address when drafting.
- List precisely and in plain language, the duties of the contractor, the time for performance, required deliverables, and deadlines for delivery;
- Specify the final product;
- List the cost of services and any reimbursement separately; and
- Include a total contract cost. It is unlawful to agree to uncapped expenses.
C. Liability, indemnification, and insurance requirements
MnDOT contracts must include provisions mitigating the risk of liability for MnDOT. These risks generally include the risk of faulty designs created by consultants; and the risk of personal injury and property damage arising from the acts and omissions of MnDOT consultants, contractors, political subdivisions or grant recipients.
- MnDOT cannot agree to indemnify, defend, or hold another party harmless. The Attorney General’s Office has advised that an agreement by a state agency to indemnify another party, absent a supporting appropriation, is a violation of Article XI, Section 1 of the Minnesota Constitution. Contact the Contract Management Section for the “Attorney General’s Office Manual, State of Minnesota, 1999” (now out of print). An agreement by MnDOT to indemnify another party constitutes an unencumbered and uncapped obligation and is therefore illegal.
- In addition, Minnesota Statutes §16A.15, prohibits state employees from making expenditures or incurring obligations without supporting appropriations.
- Although MnDOT may not agree to indemnify another party, MnDOT may require another party to indemnify MnDOT. Indemnification is a traditional method of allocating the risk of liability or loss due to the improper performance of work to the party performing the work. In some cases, however, the role of the parties may call for a more balanced allocation of the risks. The Contract Management Section must review all requests from a party to a MnDOT contract to remove or to change the standard indemnification clauses in contract templates.
- Insurance requirements are another method traditionally used in contracts to manage risk. Insurance requirements include:
- Commercial general liability;
- Workers’ compensation;
- Automobile liability;
- Professional/technical errors and omissions liability; and
- Other forms of insurance, such as Builder’s Risk or Pollution Liability, may be required depending on the risks involved with the project.
MnDOT requires most state contractors to obtain the required insurance. Contractors must submit requests for insurance coverage variances to Contract Management Section for review. The Contract Management Section will review requests on a case-by-case basis and provide direction to the Contract Administrator. The Contract Management Section will consult with the Risk Management Division as necessary to make coverage determinations. Consultation with the Project Manager may be required to provide project information to the Risk Management Division to identify unique risks. When Contract Management Section reviews insurance coverage questions, the review will include:
- Cost of insurance coverage versus the potential loss or harm;
- Commercial availability of the desired coverage; and
- Amount of the insurance coverage based on the potential risks of loss or harm.
D. Payment and audit clause requirements
State contracting laws contain provisions intended to safeguard public funds and to maintain the integrity of the contracting process. MnDOT employees must incorporate those safeguards into the payment terms of contracts.
- MnDOT can generally only make payments after the receipt of goods or the performance of services.
- State law does permit a prepayment for software or software maintenance services, sole source maintenance agreements for exhibit booth space, newspaper, magazine, and other subscription fees, Minnesota Statutes §16A.065.
- MnDOT can make prepayments, to county, municipal, and other governmental entities, under certain conditions. These allowable prepayments are governed by Minnesota Statutes §16A.41, Subd. 1a.
- When required by a federal agency a state agency may negotiate contract terms providing for payment to the federal agency before work is performed, Minnesota Statutes §16C.071.
- Any contract or pass-through disbursement of public funds to a contractor or grantee must contain an audit clause providing for review of the contractor’s books, records, documents, accounting practices and procedures relevant to the contract.
- The audit clause must provide that these records be subject to examination by the contracting agency and the Legislative Auditor or State Auditor, whichever is appropriate, for a minimum of six years.
- There is an exception to the audit requirement when a contract is for the purchase, lease, or license of software and data from the State.
- Contracts must inform contractors of their obligations to pay subcontractors promptly. Minnesota law requires prime contractors under state contracts to make prompt payments to their subcontractors Minnesota Statutes 16A.1245.
The prompt payment to subcontractor’s law imposes obligations on both state agencies and their prime contractors. The law places a duty on state agencies to ensure that their contracts include a provision requiring the prime contractor to pay its subcontractors promptly as required by the law. The law requires prime contractors to pay their subcontractors “within ten days of the prime contractor’s receipt of payment from the state for undisputed services provided by the subcontractors.”
The law does not require “enforcement” by MnDOT, but rather it gives subcontractors certain rights against the prime contractor. MnDOT can (and must, upon request) provide information to subcontractors concerning MnDOT payments made to a prime, or payment bond information (for construction contracts). MnDOT employees should not purport to provide legal advice to any party. While the Contract Management Section will discuss publicly available information with subcontractors, ethical constraints prevent MnDOT staff from providing legal advice to aggrieved subcontractors; and they are advised to seek their own legal counsel.
E. Intellectual property and government data
- MnDOT recognizes the value of the data that it generates, receives, or procures through its contracts. To protect this asset, MnDOT contracts must include the State’s standard provisions establishing MnDOT’s intellectual property rights in works for hire. Before executing a contract or license agreement with terms deviating from the State’s standard intellectual property provisions, MnDOT staff must send the terms and conditions to Contract Management Section for review and comment from the Attorney General.
- MnDOT also has a duty to comply with Minnesota Statutes §13, “Government Data Practices.” This Act regulates how state agencies collect, create, store, maintain, disseminate, and provide access to government data. When the State hires a contractor, the data created or collected by the contractor as part of that engagement becomes “government data.” In addition, the state may also provide “government data,” that the contractor will need to perform its work. The contractor, working as MnDOT’s agent, is required to comply with the Data Practices Act just as if MnDOT was performing the work. All contracts must include a Data Practices clause notifying the other party of the obligations and potential penalties under the Act.
F. Federal Requirements
- When federal funds are used to pay a portion of state contracts, the federal program may require MnDOT (the “recipient” in federal terminology) to include specific clauses in MnDOT’s contract with its contractor (known as a “sub-recipient” or “vendor” in federal terminology), known as a “flow-down” clause. MnDOT must comply with all “flow-down” requirements.
- When federal funds are used, the contract must include the Catalog of Federal Domestic Assistance (CFDA) number, program name, and other information as required by federal regulations.
6. Employees must obtain proper approvals and signatures for all contracts, record contract data in the system of record, and retain a copy of each contract.
A. Required signatures
Every MnDOT contract must be approved, signed in compliance with the protocol in this policy, and as determined by the Contract Management Section. No district or office may vary from this signing protocol unless approved by the Contract Management Section.
Most MnDOT contracts require four signatures:
- “Encumbrance Verification” (the MnDOT employee who encumbered funds for the contract);
- Commissioner of Transportation (or a delegate of the Commissioner) and;
- Commissioner of Administration (or a delegate of the Commissioner), this signature is not required for grants, annual plan agreements, leases, and interagency agreements.
B. MnDOT employees must have delegated authority to sign contracts
MnDOT employees must determine whether they have authority to take a particular action (such as signing a contract) on behalf of the agency.
By law, the Commissioner and a Deputy Commissioner have the authority to sign MnDOT contracts and other documents. The law allows them to delegate this authority, as they deem proper. Approval of a Delegation of Authority is a formal process that includes filing an official form with the Secretary of State. Except for the Commissioner and a Deputy Commissioner, MnDOT employees may sign contracts only if they have been specifically delegated the authority to sign contracts. When approving contracts, the Contract Management Section will review to ensure that the MnDOT official who signed the contract has a valid delegation of authority.
When determining whether a delegation is valid, consider the following:
- First, the current commissioner must sign the delegation order. The delegation of authority order remains in effect only as long as the issuing commissioner continues in office.
- Secondly, the delegation order must be current to the person and position. Delegations are specific to a person and a position. A delegation remains in effect only so long as the named individual remains in the specified position. A delegation does not stay with the position after the named individual leaves it, nor does it follow the individual to a new position.
C. Political subdivisions must properly document approval of a contract
Agreements with other units of government consist of two items:
- Resolution evidencing approval of the agreement
- Proper signatures pursuant to the resolution
The governing body of the political subdivision must adopt a resolution. It must clearly indicate that the body is approving the contract (it is best to include the MnDOT contract number in the resolution if available). The resolution must be “certified” by the official (for example the City Clerk or County Auditor) responsible for maintaining the official records of the political subdivision, who declares that the copy of the resolution is a true copy of the original on file with the certifying officer. Since many political subdivisions now post approved board/council minutes on the internet, a printout of approved minutes showing approval of the resolution is an acceptable alternative to a certified copy of the resolution.
Generally, the resolution will specify the officers required to sign the agreement. If the resolution uses the word “and” in signature requirements (e.g. the Mayor and the City Clerk) Contract Management Section will require both signatures on the contract. If the resolution states “appropriate city officials,” Contract Management Section will review the “apparent authority” of the signers.
D. Business entities must have actual or apparent authority
For business entities, the person signing must have Apparent Authority. Apparent Authority means that a reasonable person would believe that the person signing the contract had authority to act on behalf of the company. For an example, an officer of a business would have both actual and apparent authority to sign a contract. A “General Manager” or a “Contracts Manager” may also have apparent authority to sign based on the particular circumstances. When in doubt, MnDOT employees must request acceptable written evidence of the contractor’s delegation of authority. Acceptable written evidence would include a board resolution or applicable provisions of either the articles of organization or the member control agreement.
E. The Commissioner of Administration must sign most state contracts
The Commissioner of Administration is required to sign all State contracts except Grants, Annual Plan Agreements, Leases, and Interagency Agreements. With some exceptions, the Commissioner of Administration has delegated to Contract Management Section the authority to sign most MnDOT contracts on behalf of the Department of Administration. This delegation covers only the types of contracts specifically defined by the delegation.
F. Record all contract data in the system of record for contracts
MnDOT has designated one or more systems of record for contract data. These systems facilitate legislative reporting, responses to data practices requests, historical record-keeping and legal holds. Therefore, MnDOT offices responsible for recording contract data in a system of record must accurately record the required information for every MnDOT contract.
G. Retain a copy of each contract
- Minnesota Statutes §16C.05 requires state agencies to retain a fully executed copy of each contract and amendment for at least six years.
- MnDOT uses a mixture of paper contracts and electric contracts. Minnesota Statutes §325L.07 recognizes electronic contracts. Retain all contracts on file, regardless of whether it is a paper or electronic contract. How MnDOT retains the contract varies based on whether it is in paper or electronic form.
- Minnesota Statutes §325L.12 provides that an electronic record is a valid record when a law requires that a record be retained.
- For electronic contracts, the originating office must work with the Contract Management Section to determine the proper storage protocol for that electronic document (generally the MnDOT “eDOCs” system or its successor).
- The Contract Management Section ensures the circulation of paper contracts.
- Refer to the MnDOT Records Retention and Disposal policy and the MnDOT Records Retention Schedule (note: for employees only) to ensure compliance with records management requirements.
7. Employees must review invoices, make prompt payments, and be alert to fraud.
A. MnDOT employees must review invoices
Before approving payment, MnDOT staff must review invoices to ensure that all costs and expenses are correct and proper within the terms of the contract.
B. Minnesota has a prompt payment law, Minnesota Statutes §16A.124, which requires state agencies to pay valid obligations in a short timeframe.
- The law generally requires state agencies to pay valid contractor invoices within the contractor’s early payment discount period. If there is no early payment discount, the agency must pay the invoice no later than 30 days following the receipt of the invoice for the completed delivery of the product or service. If MnDOT fails to make prompt payments, the contractor may invoice MnDOT for interest on the late payment, at a rate of 1.5% per month (18% per year), on the portion of the payment past due. If a contractor has to bring a legal action to get payment, they are entitled to an award of attorney’s fees incurred in bringing that action.
- If MnDOT believes that an invoice is incorrect, improper, or otherwise defective, MnDOT must notify the contractor within ten days of discovering the error. MnDOT then requests the contractor to submit a corrected invoice. The payment obligation is “suspended” until a corrected invoice is received. If contested, the 30-day payment period starts on receipt of the corrected invoice.
- A different standard applies to invoices undergoing an audit, such as the final invoice on a professional/technical services contract. In that case, payment is not past due until more than 30 days have passed since the completion of the audit.
- The prompt payment law requires project managers and agreement administrators to deal with all submitted invoices in an expeditious manner. Project managers must promptly review invoices and either authorize their payment or determine that they should be contested. If contested, the agreement administrator must provide notice to the contractor within ten days. Payment of interest on late payment adds cost for the state without adding any extra value.
- For construction contracts, where contractors do not typically submit “invoices,” the prompt payment obligation starts with the approval of an engineer’s estimate or the architect’s certification of a building contractor’s pay application.
C. Be alert for and report potential fraud and false claims
MnDOT personnel involved in the approval and payment of invoices may encounter costs that appear to be false or inflated. These charges may violate a state law, Minnesota Statutes §15C.01, also known as the Minnesota False Claims Act. The MnDOT False Claims against the State Policy requires all MnDOT employees to report suspected violations of the Minnesota False Claims Act to the employee’s supervisor, Office of Chief Counsel, or by completing MnDOT’s anonymous MnDOT Report of Wrongdoing/Questionable Activity Form (note: for employees only).
8. Employees must use an amendment for changes in a contract and execute the amendment before work begins and the contract expires.
A. Execute an amendment in order to make changes to a contract
In this policy, the term “amendment” includes the following contractual terms: addendum, supplemental agreement, change orders, and task orders.
The amendment must “entail tasks that are substantially similar to those in the original contract or involve tasks that are so closely related to the original contract that it would be impracticable for a different contractor to perform the work. The commissioner of the Department of Administration (or an agency official to whom the commissioner has delegated contracting authority, under Minnesota Statutes §16C.03, Subd. 16) must determine that an amendment to a professional/technical contract would serve the interest of the state better than a new contract and would cost no more,” Minnesota Statutes §16C.05, Subd. 2(c). The amendment itself must be properly numbered and approved in the same way as the original contract.
B. Execute amendments in a timely manner and follow the required process if the contract has expired
Execute amendments to contracts before the original contract expires. If the original contract has already expired, it will generally be necessary to prepare a new contract, and a contract administrator should contact Contract Management Section to discuss this. In rare cases, as stated above, it may be necessary to amend a contract that has already expired. In those cases, complete a 16A.15 -16C.05 violation form. Attach the 16A.15 – 16C.05 form to the amendment for the expired contract. The violation memo requires:
- Verification that no work was done on the contract after the expiration date or,
- If the work has begun under the contract, an explanation as to why the obligation was incurred or the contract was not fully executed prior to the begin date and,
- Describe the corrective action to prevent the problem.
Contact the Contract Management Section prior to executing the amendment to ensure that the draft amendment contains language incorporating the terms and conditions from the original contract. Submit a signed copy of the 16A.15 – 16C.05 form with all amendments that are past the expiration date. In all cases, MnDOT requires executed amendments no later than 30 days after the original contract expiration date. The Project Manager must contact the Contract Management Section as soon as possible if the 30-day deadline is not achievable. The Contract Management Section will advise Project Managers on their contracting options. The Project Manager may not process an amendment after the 30-day deadline except with the written consent of their Division Director.
9. Employees must diligently pursue the resolution of performance issues in a proper manner.
Employees must diligently administer contracts to ensure fulfillment of contract requirements. Non-compliance with contract terms necessitates prompt discussion with the contractor. If MnDOT fails to enforce the contract terms, the contractor may argue that MnDOT has “waived” its right to enforce later.
Protecting MnDOT’s legal position in contract disputes requires a resolution process. MnDOT staff must determine the severity of the performance issue, ranging from minor to repeated significant issues. If a contract includes provisions for resolving performance issues, MnDOT staff must comply with the contract provisions. If a resolution process is not achievable, MnDOT staff must follow these steps:
- Escalate issues to the appropriate management individual (MnDOT and contractor). Follow the chain-of-command to ensure accurate and shared information among all parties.
- Consult with the Contract Management Section to ensure accurate and shared information.
- Request a plan from the contractor to resolve the performance issue by a specified time.
- Document communications with the contractor and MnDOT staff time to correct the issue.
The severity of the performance issue will indicate:
- The appropriate level of escalation (vis-à-vis the chain-of-command) and,
- The timeline for the contractor’s response to MnDOT’s request for a plan to remedy the issues identified.
MnDOT employees discovering potential consultant errors and omissions during the construction phase of a project must refer to the MnDOT Consultant Errors and Omissions Policy. Consult with the Contract Management Section prior to contract termination.
About Contract Management (note: for employees only)
MnDOT Contract Management Section and Related Links
MnDOT Consultant Services Website
MnDOT Report Wrongdoing/Questionable Activity Form (note: for employees only)
MnDOT Contract Administration Manual
MnDOT Project Management & Technical Support Cooperative Agreements (note: for employees only)
An amendment is a written change to a contract. The title “amendment” may be one of the following:
An addendum is a supplement to the proposal package covering additions, corrections, or changes in the bidding conditions for the advertised work that the department issues to prospective bidders before the date and time for opening proposals.
- Change Order
Used in construction and consultant contracts, the meaning of change orders can vary depending on the type of contract and context.
- Construction Work Order
A written order signed by the engineer of a contractual status requiring performance or other action by the Contractor without negotiations of any sort.
- Supplemental Agreement
A written agreement between the Department and the Contractor, executed on the prescribed form and approved as required by law, covering the performance of extra work or other alterations or adjustments as provided for within the general scope of the contract, but for which extra work or change order constitutes a modification of the contract as originally executed and approved.
- Task Order
Document executed under an Indefinite Delivery/Indefinite Quantity (IDIQ) contract to determine location, contract time, and scope of work.
Conflict of Interest
A situation in which a person has a private or personal interest sufficient to appear to influence the objective exercise of his or her official duties as say, a public official, an employee, or a professional. Conflict of interest is not just about money. It is about the presence of factors – any factors – that a reasonable person might think is likely to bias the objectivity of the decision-making process.
The MnDOT Code of Ethics Policy identifies the responsibilities employees must follow when faced with a potential or actual conflict of interest, and they must notify their supervisor, manager or Human Resources as soon as possible (but not more than three working days).
- Building Construction Contract
A building construction contract is for the construction, repair, and remodel of buildings under MnDOT’s control.
- Cooperative Agreement
A cooperative agreement is an agreement between MnDOT and a local unit of government pursuant to Minnesota Statutes §161.20, under which the parties agree to share costs of roadway construction projects or other responsibilities for roadway maintenance and operations. Refer to MnDOT Cost Participation for Cooperative Construction Projects and Maintenance Responsibilities Policy.
A grant is a contract between a granting agency and a grantee when the principal purpose of the relationship is to transfer cash or something of value to the grantee to support a public purpose by allowing the grantee to administer a program or deliver a service. The granting agency generally receives no direct benefit because of making the grant (in other words, there is no “quid pro quo”); rather the grant enables the grantee to provide a general societal benefit. An agency must have specific statutory authority to enter into any grant contract or program. Grant Contracts are governed by Minnesota Statutes §16B.97 and Minnesota Statutes §16B.98, as well as policies issued by the Minnesota Department of Administration Office of Grants Management. The website identifies grants management policies applicable to all Executive Branch agencies, boards, commissions, councils, authorities and task forces. Forms for use with these policies are included.
- Highway Construction Contract
A contract for the construction and maintenance of the highway system wherein the contractor generally provides all labor and materials necessary to complete construction according to a plan provided or approved by MnDOT.
- Interagency Agreement
An agreement between two or more Minnesota state agencies to share resources, work, or otherwise allocate or use state resources. Parties to these agreements must be agencies and quasi-agencies of the State of Minnesota (including the MnSCU college system and “quasi” agencies such as the Minnesota Historical Society). An interagency agreement is not permissible with the University of Minnesota (which is a “constitutional corporation”), the Metropolitan Council, or Metropolitan Airports Commission (MAC). Both Met Council and MAC are political subdivisions even though the Governor appoints some or all members.
- Joint Powers Agreement
A joint powers agreement between two or more governmental units whereby the parties may jointly exercise any power common to the contracting parties or any similar powers. The agreement may provide for the exercise of such powers by one or more of the participating governmental units on behalf of the other participating units. The agreement may also provide for one governmental unit to exercise one of its powers on behalf of another governmental unit even in the absence of a commonality of powers.
- Partnership Agreement
A partnership agreement is for a collaborative relationship between MnDOT and another entity, either governmental or non-governmental, with the parties exchanging goods, services, or money. Partnership in this context denotes collaboration, which is different from the legal definition of partnership, which is an agreement to share profits and losses from an undertaking. MnDOT may enter into agreements with partners for such services as:
- Research and experimentation;
- Shared facilities, equipment, staff, data and other services; or
- Other cooperative programs that promote efficiencies or innovation in transportation related areas. See the MnDOT Partnership Agreements Policy.
- Professional/Technical (P/T) Services Contract
A contract for services that are intellectual in character, including consultation, analysis, evaluation, planning, programming, or recommendation, and result in the production of a report of completion of a task. Professional or technical contracts do not include the provision of supplies or materials except by the approval of the commissioner or except as incidental to the provision of professional or technical services, Minnesota Statutes §16C.08, Subd. 1.
- Railroad Agreement
The primary agreement in this category involves agreeing with railroad owners on how to deal with the effects of highway construction over, across, above, and adjacent to railroads. MnDOT contracts with railroads to close at-grade crossings or to upgrade signals and other protective devices at crossings. In addition, MnDOT contracts with both rail operators and rail users to upgrade rail and shipping facilities to maintain the economic viability of railroad service in the state. These agreements involve both loans and grants.
- State Aid Agreement
There are varieties of agreements prepared by State Aid, but the common thread is that they generally provide for MnDOT passing through federal or state aid funds to a local government for an infrastructure project. In these agreements, MnDOT is primarily acting as a fiscal agent, to receive and to disburse federal and state aid transportation funds.
- Utility Agreement
A utility agreement is with an owner of a public or private utility, most often addressing a highway construction project that will affect a utility owner’s facility. Consult the MnDOT Utility Accommodation on Highway Right of Way Policy.
Contractor is a term that also means consultant, local unit of government, grantee, recipient, or partner.
Delegation of Authority
Delegation of Authority allows the Commissioner of Transportation to delegate duties to subordinate employees, Minnesota Statutes 15.06, §Subd. 6. Division Directors, Office Directors, and District Engineers recommend individual employees for delegation authority for specific tasks or the signing of specific documents. A Deputy Commissioner approves or disapproves proposed delegation orders. Read more about the Delegation of Authority Orders (note: for employees only).
Organizational Conflict of Interest
Organizational conflict of interest means that because of existing or planned activities or because of relationships with other persons, a contractor is unable or potentially unable to render impartial advice or assistance to the state; or the contractor’s objectivity in performing the work is or might otherwise be impaired; or the contractor has an unfair advantage.
The MnDOT contract administrator and MnDOT program manager are responsible for the completeness of the work, accuracy, and consistency with the terms, conditions, and specifications of the agreement and act as MnDOT’s liaison for the contract.
MnDOT contract administrator, authorized representative, program manager, or construction office manager
- Review invoices and initiate payments based on recommendations of the project manager;
- Process any payment related documents;
- Reconcile all payment disputes between MnDOT and consultant;
- Receive and review project related documents and take appropriate action as needed including:
- Progress reports
- Process review correspondence
- Product acceptance correspondence
- Agreement terms and conditions related correspondence
- Assure monies are encumbered to pay invoices
- Process agreement amendment requests
- Facilitate negotiations, prepare, and execute amendments.
MnDOT Labor Compliance Unit
- Enforce prevailing wage requirements.
MnDOT program manager
- Refer to MnDOT Contract Administration Manual for responsibilities;
- Ensure contractor is performing the work detailed in the contract in the agreed manner;
- Ensure that the people identified to do the work are performing the work;
- Conduct periodic field/office visits to review work in progress;
- Enforce any technical work related terms and conditions of the project;
- Receive all products;
- Coordinate MnDOT’s reviews to meet MnDOT’s commitments in the contract;
- Issue all review comments, corrections and additions in writing to contractor;
- Determine acceptability of all products;
- Approve invoiced work effort and recommend payment;
- Determine validity for contract amendments;
- Initiate amendment requests detailing reasons for additional project resources, if any, to accomplish the work and, includes clear justification and anticipated costs; and
- Cooperate with the Labor Compliance Unit regarding prevailing wage requirements.
MnDOT Resident Office
- Ensure completion of construction contracts according to contract requirements;
- Provide technical supervision for construction projects;
- Coordinate the activities of public utilities, contractors, and other governmental agencies on construction projects;
- Document contract work progress for paying the contractors;
- Inform property owners, news media, other governmental agencies, and the public of construction operations within the District;
- Provide requested technical assistance to other governmental agencies on their construction projects;
- Ensure all required traffic safety and control measures are in-place in the construction areas.
Q: What are MOU and MOA?
A: The acronyms MOU (Memorandum of Understanding) and MOA (Memorandum of Agreement) are generally interchangeable names. These are often non-binding “agreements” typically for planning purposes to summarize the expectation of the parties (typically with a local unit of government). A MOU or MOA sets expectations without being enforceable as a contract. A MOU or MOA often serves as the basis of a future formal contract and does not authorize payment or create a legal obligation on behalf of the State. An MOA with a federal agency, however, is a binding contract.
MnDOT Contract Administration Manual
Office of the Minnesota Secretary of State
Minnesota Statutes §16C State Procurement
Minnesota Statutes §161 Trunk Highways
MnDOT Audit Certificates Policy
MnDOT Audit Office Authority Functions Policy
MnDOT Audit Oversight of Consultant Contract Indirect Cost Rates Policy
MnDOT Consultant Errors and Omissions Policy
MnDOT False Claims against the State Policy
MnDOT Partnership Agreements Policy
MnDOT Records Retention and Disposal Policy
MnDOT Records Retention Schedule (note: for employees only)
- 2004, Amending Expired Contracts
- 1995, Approval of T-Contracts
- 1982, Contract Development
- 1982, Contract Development and Execution
- 1982, Uniform Procedures for Development and Execution for MnDOT Contracts
- 2000, Work Order T-Contracts and Consultant Contracts
Responsible Senior Officer
Elizabeth M. Parker
Assistant Chief Counsel Office of Chief Counsel