Minnesota Veteran-Owned Small Business Procurement Preference

Section 16C.16, subdivision 6a runs the state's veteran-owned small business programme, and its first sentence contains a drafting choice worth noticing. Except when mandated by the federal government as a condition of receiving federal funds, the commissioner of administration shall award up to a 12 percent preference on state procurement to certified small businesses that are majority-owned and operated by veterans, "but no less than the percentage awarded to any other group under this section". The clause after the comma is a floor. If the legislature ever raises the preference for small targeted group businesses or for businesses in economically disadvantaged areas, the veteran preference rises with it automatically. No other preference group in section 16C.16 has that protection, and no other state in this catalog writes one. Three other tools sit alongside the price preference. The commissioner may award a contract for goods, services or construction directly to a veteran-owned small business without a competitive solicitation, up to a total contract award value including extension options of $100,000. For a small firm, the direct award is usually worth more than the 12 percent. The commissioner may designate a purchase of goods or services for award only to veteran-owned small businesses where the commissioner determines that at least three such businesses are likely to respond. That is a set-aside, and the three-responder test is the only condition on it. Subdivision 7a lets the commissioner combine categories: a purchase may be designated to any combination of small businesses, small targeted group businesses, veteran-owned small businesses and businesses in economically disadvantaged areas where at least three businesses in two or more of those categories are likely to respond. And the commissioner may, as a condition of awarding a construction contract or approving a professional or technical services contract, set goals requiring the prime contractor to subcontract a portion to a veteran-owned small business, with a waiver procedure where qualified firms are not reasonably available, and with financial incentives for exceeding goals and financial penalties for missing them. Certification has two steps and the second one is the one people miss. The business must be majority-owned and operated by a veteran, and before the commissioner of administration certifies it, the commissioner of veterans affairs must verify that the owner is a veteran as defined in section 197.447. A business whose owner does not meet the 181-day test in section 197.447 cannot be certified no matter how the ownership is structured. There is no service-connected disability requirement anywhere in subdivision 6a. Service-disabled status is not a separate tier in Minnesota state procurement the way it is in federal procurement. The legislature wrote the purpose into paragraph (e): to facilitate the transition of veterans from military to civilian life, to help compensate veterans for their sacrifices, and to enhance economic development within Minnesota.