HOUSE BILL NO. 5537

A bill to amend 1984 PA 431, entitled

"The management and budget act,"

by amending sections 115, 241, 261, 305, and 404 (MCL 18.1115, 18.1241, 18.1261, 18.1305, and 18.1404), section 115 as amended by 2018 PA 389, section 241 as amended by 2012 PA 430, section 261 as amended by 2020 PA 174, and sections 305 and 404 as amended by 1999 PA 8.

the people of the state of michigan enact:

Sec. 115. (1) "Institution of higher education" or "university" means a state supported 4-year college or university.

(1) (2) "Information technology services" means services involving all aspects of managing and processing information, including, but not limited to, all of the following:

(a) Application development and maintenance.

(b) Desktop computer support and management.

(c) Mainframe computer support and management.

(d) Server support and management.

(e) Local area network support and management, including, but not limited to, wireless networking.

(f) Information technology project management.

(g) Information technology planning and budget management.

(h) Telecommunication services, security, infrastructure, and support.

(2) "Institution of higher education" or "university" means a state supported 4-year college or university.

(3) "JCOS" means the joint capital outlay subcommittee of the appropriations committees.

(4) "Merit" means a reasonable expectation, based on objective criteria such as experience, education, and training, that a prospective employee can adequately perform the duties of the job.

(5) (4) Except as used in sections 284 to 292, "record" means a public record, as that term is defined in section 2 of the freedom of information act, 1976 PA 442, MCL 15.232.

(6) (5) "State agency" means a department, board, commission, office, agency, authority, or other unit of state government. State agency does not include an institution of higher education or a community college or, for purposes of article 2 or 3, the legislative branch of government. For purposes of article 2 or 3, except for those sections pertaining to the authorization, planning, construction, and funding of a capital outlay project, including construction of a facility to house offices or functions necessary for operation of the judicial branch of government, state agency does not include the judicial branch of government.

(7) (6) "Unit of local government" means a political subdivision of this state, including school districts, community college districts, intermediate school districts, cities, villages, townships, counties, and authorities, if the political subdivision has as its primary purpose the providing of local governmental service for citizens in a geographically limited area of the state and has the power to act primarily on behalf of that area.

Sec. 241. (1) Except for the contracts permitted in section 240, a contract shall must not be awarded for the construction, repair, remodeling, or demolition of a facility unless the contract is let pursuant to in accordance with a bidding procedure that is approved by the board. The department shall issue directives prescribing procedures to be used to implement this section. The procedures shall must require a competitive solicitation in the award of any contract for construction, repair, remodeling, or demolition of a facility.

(2) The department may award or approve the award, if the board approves, of construction contracts to construct a project for which the director is the agent and may expend, for the purposes and in the manner set forth, the amounts appropriated. The director is not the agent for a community college or institution of higher education, but may act in that capacity upon on the specific request of a community college or institution of higher education.

(3) At the time that a person submits a proposal for the award of a contract under this section, the person must submit a form prescribed by the department under which the person attests under penalty of perjury and subject to a civil fine of $5,000.00 that the person uses only hiring practices based on the merit of prospective employees.

(4) (3) In awarding a contract under this section, the department shall give a preference of up to 10% of the amount of the contract to a qualified disabled veteran, as that term is defined in section 261. If the qualified disabled veteran otherwise meets the requirements of the contract solicitation and with the preference is the lowest bidder, the department shall must enter into a construction contract with the qualified disabled veteran under this act. If 2 or more qualified disabled veterans are the lowest bidders on a contract, all other things being equal, the qualified disabled veteran with the lowest bid shall must be awarded the contract under this act.

(5) The department shall not award a contract under this section to a person to which either or both of the following apply:

(a) The person uses hiring practices based on criteria other than the merit of prospective employees.

(b) The person does not submit the form described in subsection (3).

(6) (4) Subject to subsection (3), (4), and except as otherwise provided in subsection (5), for projects funded in whole or part with state funds, the construction contract award shall must be made to the responsive and responsible best value bidder. As used in this subsection, "responsive and responsible best value bidder" means a bidder who that meets all the following:

(a) A bidder who that complies with all bid specifications and requirements.

(b) A bidder who that has been determined by the department to be responsible by the following criteria:

(i) The bidder's financial resources.

(ii) The bidder's technical capabilities.

(iii) The bidder's professional experience.

(iv) The bidder's past performance.

(v) The bidder's insurance and bonding capacity.

(vi) The bidder's business integrity.

(c) A bidder who that has been selected by the department through a selection process that evaluates the bid on both price and qualitative components to determine what is the best value for this state. Qualitative components may include, but are not limited to, all of the following:

(i) Technical design.

(ii) Technical approach.

(iii) Quality of proposed personnel.

(iv) Management plans.

Sec. 261. (1) The department shall provide for the purchase of, the contracting for, and the providing of supplies, materials, services, insurance, utilities, third party third-party financing, equipment, printing, and all other items as needed by state agencies for which the legislature has not otherwise expressly provided. If consistent with federal statutes, law, in all purchases made by the department, all other things being equal, preference shall must be given to products manufactured or services offered by Michigan-based firms or by facilities with respect to which the operator is designated as a clean corporate citizen under part 14 of the natural resources and environmental protection act, 1994 PA 451, MCL 324.1401 to 324.1429, or to biobased products whose content is sourced in this state. The department shall solicit competitive bids from the private sector whenever practicable to efficiently and effectively meet the state's needs. The department shall first determine that competitive solicitation of bids in the private sector is not appropriate before using any other procurement method for an acquisition.

(2) The department shall make all discretionary decisions concerning the solicitation, award, amendment, cancellation, and appeal of state contracts.

(3) The department shall utilize competitive solicitation for all purchases authorized under this act unless 1 or more of the following apply:

(a) Procurement of goods or services is necessary for the imminent protection of public health or safety or to mitigate an imminent threat to public health or safety, as determined by the director or his or her the designated representative of the director.

(b) Procurement of goods or services is for emergency repair or construction caused by unforeseen circumstances when the repair or construction is necessary to protect life or property.

(c) Procurement of goods or services is in response to a declared state of emergency or state of disaster under the emergency management act, 1976 PA 390, MCL 30.401 to 30.421.

(d) Procurement of goods or services is in response to a declared state of emergency under 1945 PA 302, MCL 10.31 to 10.33.

(d) (e) Procurement of goods or services is in response to a declared state of energy emergency under 1982 PA 191, MCL 10.81 to 10.89.

(e) (f) Procurement of goods or services is within a state agency's purchasing authority delegated under subsection (4), and the state agency has established policies or procedures approved by the department to ensure that goods or services are purchased by the state agency at fair and reasonable prices.

(4) The department may delegate its procurement authority to other state agencies within dollar limitations and for designated types of procurements. The department may withdraw delegated authority upon on a finding that a state agency did not comply with departmental procurement directives. If a state agency has the department's procurement authority delegated to it under this subsection and if it chooses to exercise an option under an existing procurement contract to continue that procurement contract, before exercising that option, the state agency shall must first obtain written approval from the department that exercising the option is in the best interest of this state.

(5) The department may enter into lease purchases or installment purchases for periods not exceeding the anticipated useful life of the items purchased unless otherwise prohibited by law.

(6) The department shall issue directives for the procurement, receipt, inspection, and storage of supplies, materials, and equipment, and for printing and services needed by state agencies. The department shall provide standard specifications and standards of performance applicable to purchases.

(7) The department may enter into a cooperative purchasing agreement with 1 or more other states or public entities for the purchase of goods, including, but not limited to, recycled goods, and services necessary for state programs.

(8) At the time that a person submits a proposal for the award of a contract under this section, the person must submit a form prescribed by the department under which the person attests under penalty of perjury and subject to a civil fine of $5,000.00 that the person uses only hiring practices based on the merit of prospective employees.

(9) (8) In awarding a contract under this section, the department shall give a preference of up to 10% of the amount of the contract to a qualified disabled veteran. If the qualified disabled veteran otherwise meets the requirements of the contract solicitation and with the preference is the lowest bidder, the department shall must enter into a procurement contract with the qualified disabled veteran under this act. If 2 or more qualified disabled veterans are the lowest bidders on a contract, all other things being equal, the qualified disabled veteran with the lowest bid shall must be awarded the contract under this act.

(10) (9) It is the goal of the department to award each year not less than 5% of its total expenditures for construction, goods, and services to qualified disabled veterans. The department may count toward its 5% yearly goal described in this subsection that portion of all procurement contracts in which the business entity that received the procurement contract subcontracts with a qualified disabled veteran. Each year, the department shall report to each house of the legislature on all of the following for the immediately preceding 12-month period:

(a) The number of qualified disabled veterans who that submitted a bid for a state procurement contract.

(b) The number of qualified disabled veterans who that entered into procurement contracts with this state and the total value of those procurement contracts.

(c) Whether the department achieved the goal described in this subsection.

(d) The recommendations described in subsection (10).(11).

(11) (10) Each year, the department shall review the progress of all state agencies in meeting the 5% goal with input from statewide veterans service organizations and from the business community, including businesses owned by qualified disabled veterans, and shall make recommendations to each house of the legislature regarding continuation, increases, or decreases in the percentage goal. The recommendations shall must be based upon on the number of businesses that are owned by qualified disabled veterans and on the continued need to encourage and promote businesses owned by qualified disabled veterans.

(12) (11) To assist the department in reaching the goal described in subsection (9), (10), the governor shall recommend to the legislature changes in programs to assist businesses owned by qualified disabled veterans.

(13) (12) Beginning October 1, 2017, the department and all state agencies may not enter into a contract with a person to acquire or dispose of supplies, services, or information technology unless the contract includes a representation that the person is not currently engaged in, and an agreement that the person will may not engage in, the boycott of a person based in or doing business with a strategic partner.

(14) The department shall not award a contract under this section to a person to which either or both of the following apply:

(a) The person uses hiring practices based on criteria other than the merit of prospective employees.

(b) The person does not submit the form described in subsection (8).

(15) (13) The following records are exempt from disclosure under the freedom of information act, 1976 PA 442, MCL 15.231 to 15.246, as provided in this subsection:

(a) A bid, quote, or proposal submitted in connection with the authority granted under this section, and records created in the preparation for and evaluation of the bid, quote, or proposal until the time of final notification of award of the contract.

(b) Records containing a trade secret, as that term is defined under section 2 of the uniform trade secrets act, 1998 PA 448, MCL 445.1902, or financial or proprietary information submitted in connection with the authority granted under this section.

(16) (14) The department shall develop policies and procedures that require all procurement contracts entered into by the department or a state agency, including departments that have delegated procurement authority under this act, to include performance-related liquidated damages or performance targets with incentives in all procurement contracts. The department shall also develop policies and procedures that require the department or state agency to enforce these provisions. Departments or state agencies acting under delegated authority shall inform the department of relevant performance issues. Exceptions to the inclusion or enforcement of performance-related contract provisions may only be granted by the department as provided in a written or electronic record by the department.

(17) (15) As used in this section:

(a) "Biobased product" means a product granted the United States Department of Agriculture certified biobased product label.

(b) "Boycott" means refusal to have dealings with, divest from, or otherwise engage with a person. Boycott does not include 1 or more of the following:

(i) A decision based on bona fide business or economic reasons.

(ii) A boycott against a public entity of a foreign state when the boycott is applied in a nondiscriminatory manner.

(iii) Conduct necessary to comply with applicable law in the person's home jurisdiction.

(c) "Financial or proprietary information" means information that has not been publicly disseminated or which that is unavailable from other sources, the release of which might cause the submitter of the information competitive harm.

(d) "Person" means any of the following:

(i) An individual, corporation, company, limited liability company, business association, partnership, society, trust, or any other nongovernmental entity, organization, or group.

(ii) Any governmental entity or agency of a government.

(iii) Any successor, subunit, parent company, or subsidiary of, or company under common ownership or control with, any entity described in subparagraph (i) or (ii).

(e) "Qualified disabled veteran" means a business entity that is 51% or more owned by 1 or more veterans with a service-connected disability.

(f) "Service-connected disability" means a disability incurred or aggravated in the line of duty in the active military, naval, or air service as described in 38 USC 101(16).

(g) "Strategic partner" means a strategic partner described in 22 USC 8601 to 8606.8607.

(h) "Veteran" means an individual who meets both of the following:

(i) Is a veteran, as that term is defined in section 1 of 1965 PA 190, MCL 35.61.

(ii) Was released from his or her service with an honorable or general discharge.

Sec. 305. (1) "Total state spending" means the sum of state operating fund expenditures, not including transfers between funds.

(2) "Total state spending from state sources" means the sum of state operating fund expenditures not including transfers between funds, federal aid, and restricted local and private sources of financing.

(3) "Transfer payments" means as defined by the bureau Bureau of economic analysis Economic Analysis of the United States department Department of commerce Commerce or its successor.

(4) "Unit of local government" means unit of local government as defined in section 115(5).

Sec. 404. (1) "Revenues" means the increases in the net current assets of a fund other than from expenditure refunds and residual equity transfers.

(2) "Revolving fund" means a self-supporting fund which that provides services or sells goods to state agencies, other governmental jurisdictions, or the public.

(3) "Unencumbered balance" means that portion of an appropriation not yet expended and encumbered.

(4) "Unexpended balance" means that portion of an appropriation not yet expended.

(5) "Unit of local government" means unit of local government as defined by section 115(5).

(5) (6) "Work project" means a 1-time nonrecurring undertaking for the purpose of accomplishing an objective contained in specific line-item appropriation for that purpose or any other specific line-item appropriation designated as a work project by law under criteria established under section 451a(1).