House Bill No. 139
Introduced By swanson
By Request of the Department of Administration
A Bill for an Act entitled: "An Act generally revising the law relating to public contracts; amending Montana Procurement laws; eliminating preferences in the procurement process; modernizing state procurement procedure by providing options for source selection, clarifying terms and procedures, and streamlining the state procurement process; statutorily appropriating the proceeds of sales of property; providing exclusive remedies for unlawful solicitations or awards; providing for the procurement of consulting services in the same manner as other services are procured; amending sections 7-14-2404, 7-14-2406, 7-14-2716, 17-7-502, 18-1-101, 18-4-122, 18-4-123, 18-4-126, 18-4-132, 18-4-133, 18-4-141, 18-4-224, 18-4-231, 18-4-241, 18-4-242, 18-4-302, 18-4-303, 18-4-304, 18-4-305, 18-4-309, 18-4-310, 18-4-312, 18-4-313, 18-4-402, 18-5-308, 18-6-101, 18-7-104, 18-7-105, 18-8-211, 53-1-203, 53-30-505, and 60-2-112, MCA; repealing sections 18-1-102, 18-1-103, 18-1-106, 18-1-111, 18-1-112, 18-1-113, 18-1-114, 18-4-131, 18-4-225, 18-4-234, 18-7-107, 18-8-101, 18-8-102, 18-8-103, 18-8-104, 18-8-105, 18-8-106, 18-8-111, and 18-8-112, MCA; and providing effective dates and a retroactive applicability date."
WHEREAS, the Montana Supreme Court held in ISC Distributors, Inc. v. Trevor, 273 M 185, 903 P2d 170 (1995), that an unsuccessful bidder on a state contract may sue the state for money damages under Title 18, chapter 4, MCA, commonly known as the Montana Procurement Act; and
WHEREAS, a judgment for damages in a state contract suit brought pursuant to the Montana Procurement Act makes Montana taxpayers pay twice for the same product; and
WHEREAS, in enacting the Montana Procurement Act, the Legislature did not intend to allow disappointed bidders on state contracts to be awarded damages under the Montana Procurement Act, but rather intended that the exclusive remedies of a disappointed bidder be the remedies provided in section 18-4-242, MCA, which do not include the award of money damages to an unsuccessful bidder; and
WHEREAS, the Montana Supreme Court held in Meech v. Hillhaven West, Inc., 238 M 21, 776 P2d 488 (1989), that no fundamental right to a particular cause of action or remedy exists under Montana law and that Article II, section 16, of the Montana Constitution requires only that some remedy be provided for every wrong, and the Supreme Court held in Continental Oil Co. v. Montana Concrete Co., 63 M 223, 207 P 116 (1922), and General Agriculture Corp. v. Moore, 166 M 510, 534 P2d 859 (1975), that the Legislature may repeal a statutory cause of action or remedy during the pendency of a civil action invoking the remedy; and
WHEREAS, according to section 1-2-110, MCA, a statute may be repealed at any time by the Legislature, and persons acting under any statute are considered to be acting in contemplation of the Legislature's power to repeal the statute; and
WHEREAS, it is the intent of the Legislature by enacting [sections 6, 15, and 35] and repealing section 18-4-131, MCA, to reverse the holding of the Supreme Court in the ISC case as to the availability of the remedy of money damages; and
WHEREAS, it is the intent of the Legislature by enacting [section 35] to make the reversal of the ISC case apply retroactively, even to the parties in the ISC case, unless a final judgment is obtained in that case before [the effective date of this act], as provided in [section 36].
Be it enacted by the Legislature of the State of Montana:
Section 1. Section 7-14-2404, MCA, is amended to read:
"7-14-2404. Competitive bids for county road contracts. Each bidder shall comply with the requirements of Title 18,
chapter 1, part 2. The contract
shall must be awarded to the lowest responsible and responsive bidder in accordance with the
requirements of 18-1-102, 18-1-112, and Title 18, chapter 2, part 4, and the board may reserve the right to reject any and all
bids. When there is no prevailing rate of wages set by collective bargaining, the board shall determine the prevailing rate to
be stated in the contract."
Section 2. Section 7-14-2406, MCA, is amended to read:
"7-14-2406. Contracts for bridges. (1) All bids for construction or repair of bridges
shall must meet these requirements:
(a) If the department of transportation has adopted or established a standard plan and specifications, the bids must be
thereon on the standard plan and specifications.
(b) All bids must be sealed. Each bidder shall meet the requirements of Title 18, chapter 1, part 2.
(2) The board may reject any
and all bids. If a contract is awarded, the board shall do so award the contract in accordance
with the requirements of 18-1-102, 18-1-112, and Title 18, chapter 2, part 4. When there is no prevailing rate of wages set
by collective bargaining, the board shall determine the prevailing rate to be stated in the contract. The contract must be
entered with the unanimous consent of the members of the board.
(3) Before entering upon performance of the work, the contractor shall comply with the requirements of Title 18, chapter 2,
part 2. For the purposes of those sections with relation to contracts with the board, a contract
shall not be is not completed
until the board, while formally convened, affirmatively accepts all of the work thereunder done under the contract."
Section 3. Section 7-14-2716, MCA, is amended to read:
"7-14-2716. Award of contract by local improvement district. (1) If the committee awards a contract, it shall do so in
accordance with the requirements of
18-1-102, 18-1-112, and Title 18, chapter 2, part 4. When there is no prevailing rate of
wages set by collective bargaining, the committee shall determine the prevailing rate to be stated in the contract.
(2) Partial payments may be provided for in the contract and paid when certified by the county surveyor and committee."
Section 4. Section 17-7-502, MCA, is amended to read:
"17-7-502. Statutory appropriations -- definition -- requisites for validity. (1) A statutory appropriation is an appropriation made by permanent law that authorizes spending by a state agency without the need for a biennial legislative appropriation or budget amendment.
(2) Except as provided in subsection (4), to be effective, a statutory appropriation must comply with both of the following provisions:
(a) The law containing the statutory authority must be listed in subsection (3).
(b) The law or portion of the law making a statutory appropriation must specifically state that a statutory appropriation is made as provided in this section.
(3) The following laws are the only laws containing statutory appropriations: 2-9-202; 2-17-105; 2-18-812; 3-5-901; 5-13-403; 10-3-203; 10-3-310; 10-3-312; 10-3-314; 10-4-301; 15-1-111; 15-23-706; 15-30-195; 15-31-702; 15-37-117; 15-38-202; 15-65-121; 15-70-101; 16-1-404; 16-1-410; 16-1-411; 16-11-308; 17-3-106; 17-3-212; 17-5-404; 17-5-424; 17-5-804; 17-6-101; 17-6-201; 17-7-304; 18-6-101; 18-11-112; 19-2-502; 19-6-709; 19-9-1007; 19-17-301; 19-18-512; 19-18-513; 19-18-606; 19-19-205; 19-19-305; 19-19-506; 20-8-107; 20-8-111; 20-9-361; 20-26-1503; 23-5-136; 23-5-306; 23-5-409; 23-5-610; 23-5-612; 23-5-631; 23-7-301; 23-7-402; 32-1-537; 37-43-204; 37-51-501; 39-71-503; 39-71-907; 39-71-2321; 39-71-2504; 44-12-206; 44-13-102; 50-4-623; 50-5-232; 50-40-206; 53-6-150; 53-6-703; 53-24-206; 60-2-220; 67-3-205; 75-1-1101; 75-5-1108; 75-6-214; 75-11-313; 76-12-123; 80-2-103; 80-2-222; 80-4-416; 81-5-111; 82-11-136; 82-11-161; 85-1-220; 85-20-402; 90-3-301; 90-4-215; 90-6-331; 90-7-220; 90-7-221; and 90-9-306.
(4) There is a statutory appropriation to pay the principal, interest, premiums, and costs of issuing, paying, and securing all bonds, notes, or other obligations, as due, that have been authorized and issued pursuant to the laws of Montana. Agencies that have entered into agreements authorized by the laws of Montana to pay the state treasurer, for deposit in accordance with 17-2-101 through 17-2-107, as determined by the state treasurer, an amount sufficient to pay the principal and interest as due on the bonds or notes have statutory appropriation authority for the payments. (In subsection (3): pursuant to sec. 7, Ch. 567, L. 1991, the inclusion of 19-6-709 terminates upon death of last recipient eligible for supplemental benefit; and pursuant to sec. 7(2), Ch. 29, L. 1995, the inclusion of 15-30-195 terminates July 1, 2001.)"
Section 5. Section 18-1-101, MCA, is amended to read:
(1) Unless the context requires otherwise, in this title, "department" the following definitions
(1) "Department" means the department of administration provided for in Title 2, chapter 15, part 10.
Unless the context requires otherwise, in this part the following definitions apply: (a) "Goods" means supplies, equipment, materials, commodities, and specially manufactured products. (b) "Montana-made" means manufactured or produced in this state and made with the: (i) use of parts, materials, or supplies of which 50% or more were manufactured or produced in this state; or (ii) employment of persons of whom 50% or more are bona fide residents of Montana as defined in 18-2-401. (c) "Nonresident bidder" means a bidder whose residence is not in this state as determined under 18-1-103. (d) "Public agency" means a department, commission, council, board, bureau, committee, institution, agency, government
corporation, or other entity, instrumentality, or official of the legislative, executive, or judicial branch of this state and its
political subdivisions, including the board of regents and the Montana university system. (e) "Resident bidder" means a bidder whose residence is in this state as determined under 18-1-103.
(3) "Written" means that whenever written or in-writing determinations or documents are required, the public agency responsible for the procurement may specify an appropriate visual medium, such as by computer transmission or by facsimile machine transmission, in the specifications, contract, or rules of the public agency."
Section 6. Section 18-4-122, MCA, is amended to read:
"18-4-122. Purpose. The underlying purposes and policies of this chapter are to:
(1) simplify, clarify, and modernize the law governing procurement by the state of Montana;
(2) permit the continued development of procurement policies and practices;
(3) make as consistent as possible the procurement laws among the various jurisdictions;
(4) provide for increased public confidence in the procedures followed in public procurement;
ensure the fair and equitable treatment of all persons who deal with the procurement system of the state provide the
exclusive remedies for unlawful bid solicitations or contract awards;
(6) provide increased economy in state procurement activities and maximize to the fullest extent practicable the purchasing value of public funds of the state; and
(7) foster effective, broad-based competition within the free enterprise system
; and (8) provide safeguards for the maintenance of a procurement system of quality and integrity."
Section 7. Section 18-4-123, MCA, is amended to read:
"18-4-123. Definitions. In this chapter, unless the context clearly requires otherwise or a different meaning is prescribed for a particular section, the following definitions apply:
(1) "Business" means a corporation, partnership, individual, sole proprietorship, joint-stock company, joint venture, or other private legal entity.
(2) "Change order" means a written order, signed by an authorized department representative, directing the contractor to make changes which the changes clause of the contract authorizes the department to order without the consent of the contractor.
(3) "Contract" means all types of state agreements, regardless of what they may be called, for the procurement or disposal of supplies or services.
(4) "Contract modification" means a written alteration in specifications, delivery point, rate of delivery, period of performance, price, quantity, or other provisions of a contract accomplished by mutual action of the parties to the contract.
(5) "Contractor" means a person having a contract with a governmental body.
(6) "Data" means recorded information, regardless of form or characteristic.
(7) "Department" means the department of administration.
(8) "Designee" means
a duly an authorized representative of a person holding a superior position.
(9) "Director" means the director of the department of administration.
(10) "Employee" means an individual drawing a salary from a governmental body, whether elected or not, and any noncompensated individual performing personal services for a governmental body.
(11) "Governmental body" means a department, commission, council, board, bureau, committee, institution, legislative body, agency, government corporation, or other entity, instrumentality, or official of the executive, legislative, or judicial branch of this state, including the board of regents and the Montana university system.
(12) "Grant" means the furnishing by the federal government of assistance, whether financial or otherwise, to a person or
agency to support a program authorized by law. It does not include an award whose primary purpose is to procure an end
product, whether in the form of supplies or services. A contract resulting from
such an award is not a grant but a
(13) "Person" means any business, individual, union, committee, club, other organization, or group of individuals.
(14) "Printing" means the reproduction of an image from a printing surface generally made by a contact impression that
causes a transfer of ink or the reproduction of an impression by a photographic process and includes graphic arts,
typesetting, binding, and other operations necessary to produce a finished printed product. Printing does not include
rebinding or repair by a library or an office, department, board, or commission
thereof of books, journals, pamphlets,
magazines, and literary articles held as a part of its library collection.
(15) "Procurement" means buying, purchasing, renting, leasing, or otherwise acquiring any supplies or services. It also includes all functions that pertain to the obtaining of any supply or service, including description of requirements, selection and solicitation of sources, preparation and award of contract, and all phases of contract administration.
(16) "Procurement officer" means any person
duly authorized to enter into and administer contracts and make written
determinations with respect thereto to contracts. The term also includes an authorized representative acting within the limits
of his the representative's authority.
(17) "Purchasing agency" means any governmental body, other than the department,
which that is authorized by this
chapter or its implementing rules or by way of delegation from the director to enter into contracts.
(18) "Services" means the furnishing of labor, time, or effort by a contractor
, not involving the delivery of a specific end
product other than reports which are merely incidental to the required performance. The term does not include consulting
services as defined in 18-8-102, those services listed in 18-8-103, employment agreements or collective bargaining
agreements, the provision by providers of human services regulated by a state agency administered by the department of
public health and human services, or services related to construction contracts.
(19) "Supplies" means all property except as otherwise provided by law, including but not limited to equipment, materials, printing, and commodities, and excluding land or any interest in land.
(20) "Using agency" means any governmental body of the state
which that utilizes uses any supplies or services procured
under this chapter.
(21) "Vendor" means a person who offers or may offer supplies or services to a public agency."
Section 8. Section 18-4-126, MCA, is amended to read:
"18-4-126. Public access to procurement information -- records -- retention. (1) Procurement information is a public writing and must be available to the public as provided in 2-6-102 and 18-4-304.
(2) All procurement records must be retained, managed, and disposed of in accordance with the state records management program, Title 2, chapter 6.
(3) Written determinations required by this chapter must be retained in the appropriate official contract file of the department or the purchasing agency administering the procurement in accordance with the state records management program."
Section 9. Section 18-4-132, MCA, is amended to read:
"18-4-132. Application. (1)
Except as provided in 18-4-313, which applies retroactively to telecommunications
equipment and systems and data processing equipment acquired under existing contracts, leases, or rental agreements, and
subject to the terms of such agreements, this chapter applies only to contracts solicited or entered into after January 1, 1984,
unless the parties agree to its application to a contract solicited or entered into prior to January 1, 1984. (2) This chapter applies to expenditure of public funds irrespective of their source, including federal assistance money, by
this state acting through a governmental body, as defined in 18-4-123, under any contract ;. but this This chapter does not
apply to either grants or contracts between the state and its political subdivisions or other governments, except as provided
in part 4. This chapter also applies to the disposal of state supplies. Nothing in this This chapter or in rules adopted
thereunder pursuant to this chapter prevents do not prevent any governmental body or political subdivision from complying
with the terms and conditions of any grant, gift, bequest, or cooperative agreement. (3)(2) This chapter does not apply to construction contracts. (4)(3) This chapter does not apply to expenditures of or the authorized sale or disposal of equipment purchased with
money raised by student activity fees designated for use by the student associations of the university system. (5)(4) This chapter does not apply to contracts entered into by the Montana state lottery that have an aggregate value of
less than $250,000.
(5) This chapter does not apply to employment of:
(a) a registered professional engineer, surveyor, real estate appraiser, or registered architect;
(b) a physician, dentist, pharmacist, or other medical, dental, or health care provider;
(c) an expert witness hired for use in litigation, a hearings officer hired in rulemaking and contested case proceedings under the Montana Administrative Procedure Act, or an attorney as specified by executive order of the governor;
(d) consulting actuaries;
(e) a private consultant employed by the student associations of the university system with money raised from student activity fees designated for use by those student associations;
(f) a private consultant employed by the Montana state lottery;
(g) a private investigator licensed by any jurisdiction; or
(h) a claims adjuster."
Section 10. Section 18-4-133, MCA, is amended to read:
"18-4-133. Purchases exempt from general requirements. (1)
Fresh fruits and vegetables, other than potatoes, may not
be included in the supplies to be purchased as provided in this chapter. The department may allow a state agency or
institution to purchase fresh fruits and vegetables. An itemized account must be kept of these purchases, and the account
must be furnished to the department. (2) When immediate delivery of articles or performance of service is required by the public exigencies, the articles or
service required may be procured by open purchase or contract at the place and in the manner in which the articles are
usually bought and sold or the services engaged between individuals but under the direction of the department. (3)(2) The department of administration may exempt the department of corrections and the department of public health and
human services from the provisions of this chapter for the purchase of suitable clothing by the department of corrections
and the department of public health and human services for residents of its institutions and community-based programs. (4)(3) As used in this section, "suitable clothing" means styled, seasonable clothing, which will allow the resident to make
a normal appearance in the community."
Section 11. Section 18-4-141, MCA, is amended to read:
"18-4-141. Contract transfers and collusion prohibited -- violations and penalty. (1)
No A contract or order or any
interest therein in a contract or order may not be transferred, assigned, or subcontracted by the party to whom the contract
or order is given to any other party without the express written approval of the state, and the state may declare void any
unapproved transfer, assignment, or subcontract. No approval of a transfer, assignment, or subcontract may release the
original obligor or his sureties from their obligations to the state under the contract or order.
(2) Collusion or secret agreements between bidders for the purpose of securing any advantage to the bidders as against the state in the awarding of contracts is prohibited. The state may declare the contract void if the department finds sufficient evidence after a contract has been let that the contract was obtained by a bidder or bidders by reason of collusive or secret agreement among the bidders to the disadvantage of the state.
(3) All rights of action for a breach of a contract by the contracting parties are reserved to the state.
(4) A person who violates the provisions of 2-2-201 or this section, or both, is guilty of a misdemeanor and shall be fined not less than $500 or more than $5,000, and the state of Montana may at its option declare any contract in violation of the provisions of 2-2-201 or this section, or both, void ab initio."
Section 12. Section 18-4-224, MCA, is amended to read:
"18-4-224. Contract clauses -- rules. (1) The department may
adopt rules permitting or requiring, in its discretion,
permit or require the inclusion of clauses providing for adjustments in prices, time of performance, or other appropriate
contract provisions relating to the following subjects:
(a) the unilateral right of the state to order in writing:
(i) changes in the work within the scope of the contract; and
(ii) temporary work stoppage or delay of performance; and
(b) variations occurring between estimated quantities of work in a contract and actual quantities.
(2) Adjustments in price pursuant to clauses established under subsection (1) must be computed in one or more of the following ways:
(a) by agreement on a fixed price adjustment before commencement of the pertinent performance or as soon
commencement of performance as practicable;
(b) by unit prices specified in the contract or subsequently agreed upon;
(c) by the costs attributable to the events or situations under
such clauses established under subsection (1) with adjustment
of profit or fee, all as specified in the contract or subsequently agreed upon; or
such any other manner as the contracting parties may mutually agree ; or (e) in the absence of agreement by the parties, by a unilateral determination by the state of the costs attributable to the
events or situations under such clauses with adjustment of profit or fee, all as computed by the state in accordance with
applicable sections of the rules adopted under 18-4-225.
(3) The department may
adopt rules permitting or requiring , in its discretion, permit or require the inclusion in state
contracts of clauses providing for appropriate remedies and relating to the following subjects:
(a) liquidated damages, as appropriate;
(b) specified excuses for delay or nonperformance;
(c) termination of the contract for default; and
(d) termination of the contract, in whole or in part, for the convenience of the state.
(4) The director or the head of a purchasing agency may vary the clauses established by the department under subsections
(1) and (3) for inclusion in any particular state contract. Any variations must be supported by a written determination that
states the circumstances justifying
such the variation. Notice of any material variation must be stated in the invitation for
bids or request for proposals.
(5) Regardless of a provision in a contract, the department may accept a lower price or better value offered by a contractor."
Section 13. Section 18-4-231, MCA, is amended to read:
"18-4-231. Definition of specification. As used in 18-4-231 through
18-4-234 18-4-233, "specification" means any
description of the physical or functional characteristics or of the nature of a supply or service. It may include a description
of any requirement for inspecting, testing, or preparing a supply or service for delivery."
Section 14. Section 18-4-241, MCA, is amended to read:
"18-4-241. Authority to remove or suspend
from vendors' list vendor. (1) The department may remove a person
vendor for cause from consideration for award of contracts by the state. The removal may not be for a period of more than 3
(2) The department may temporarily suspend a
person vendor from consideration for award of contracts if there is probable
cause to believe that the person vendor has engaged in activities that may lead to removal. The suspension may not be for a
period exceeding 3 months unless If an indictment has been issued for an offense that would be a cause for removal under
subsection (3), in which case the suspension must, at the request of the attorney general, remain in effect at a minimum
until after the trial of the suspended person vendor. The authority to remove or suspend must be exercised in accordance
with rules adopted by the department.
(3) The causes for removal or suspension include the following:
(a) violation of contract provisions, as set forth in subsections (3)(a)(i) and (3)(a)(ii), of a character
which that is regarded
by the department to be so serious as to justify removal action:
(i) deliberate failure without good cause to perform in accordance with the specifications or within the time limit provided in the contract; or
(ii) a recent record of failure to perform or of unsatisfactory performance in accordance with the terms of one or more contracts, provided that failure to perform or unsatisfactory performance caused by acts beyond the control of the contractor may not be considered to be a basis for removal;
(b) failure to respond to a number of solicitations over a period of time as determined by the department in accordance
, and after adequate written notice to the affected person of the intent to remove or suspend or failure to provide
the department with a correct address;
(c) any other cause that the department determines to be so serious and compelling as to affect responsibility as a state
contractor, including removal by another governmental entity
for any cause listed in the department's rules; and
(d) failure to comply with the provisions of Title 39, chapter 51, or Title 39, chapter 71.
(4) The department shall issue a written decision to remove or suspend a vendor, stating the reasons for the action taken,
for reasons other than those reasons provided in subsection (3)(b). A copy of the decision must be mailed or otherwise
furnished immediately to the
person vendor involved."
Section 15. Section 18-4-242, MCA, is amended to read:
Remedies prior to and after award Exclusive remedies for unlawful solicitation or award. (1) If This
section establishes the exclusive remedies for a solicitation or award of a contract is determined to be in violation of the
law , the.
(2) Except for small purchases or limited solicitations made pursuant to 18-4-305, a bidder, offeror, or contractor aggrieved in connection with the solicitation or award of a contract may protest to the department. The protest must be submitted to the department in writing no later than 14 days after execution of the contract.
(3) If the protest is not resolved by mutual agreement, the department shall issue in writing a decision on the protest within 30 days after receipt of the protest. The decision must:
(a) state the reason for the action taken by the department with regard to the contract; and
(b) inform the aggrieved party of the party's right to request, within 14 days after the date of the department's written decision, a contested case hearing pursuant to the Montana Administrative Procedure Act.
(4) In a protest or contested case proceeding, the department may
apply the remedies, in an appropriate case, order a
remedy provided in subsections (2) and (3) subsection (5) or (6). (2)(5) If prior to before an award it is determined that a solicitation or proposed award of a contract is in violation of law,
the solicitation or proposed award must may be:
(a) canceled; or
(b) revised to comply with the law.
(3)(6) (a) If after an award it is determined that a solicitation or award of a contract is in violation of law and the person
awarded the contract has not acted fraudulently or in bad faith, the contract may be:
(i) ratified and affirmed, provided it is determined that doing so is in the best interests of the state; or
(ii) terminated, and the person awarded the contract must be compensated for the actual expenses reasonably incurred under
the contract, plus a reasonable profit,
prior to before the termination.
(b) If after an award it is determined that a solicitation or award of a contract is in violation of law and the person awarded the contract has acted fraudulently or in bad faith, the contract may be:
(i) declared void; or
(ii) ratified and affirmed if
such that action is in the best interests of the state, without prejudice to the state's rights to
appropriate damages. (4) In the event the matter is reviewed by a court, the court may apply the same remedies provided in subsections (2) and
(7) The exclusive method of judicial review of a solicitation or award by the department pursuant to this chapter is by a petition for judicial review pursuant to 2-4-702. In a proceeding pursuant to that section, the court may, in an appropriate case, order a remedy provided by subsection (5) or (6) of this section. Except as provided in subsections (6)(a)(ii) and (6)(b)(ii), there is no right under any legal theory to recover a form of damages or expenses for a solicitation or award of a contract in violation of law. Any other claim, cause of action, or request for relief for solicitations of awards allegedly made in violation of law may not be heard or granted by a district court other than as provided in this section.
(8) The state is not required to delay, halt, or modify the procurement process pending the result of a protest, contested case proceeding, or judicial review.
(9) The department may adopt rules governing the protest of solicitations and awards."
Section 16. Section 18-4-302, MCA, is amended to read:
"18-4-302. Methods of source selection. (1) Unless otherwise authorized by law, all state contracts for supplies and
services must be awarded by
competitive sealed bidding, pursuant to 18-4-303, except as provided in 18-4-133, 18-4-304
through 18-4-306, chapters 5 and 8 of a source selection method provided for in this title , and subsections (2) and (3) of this
section. Supplies or services offered for sale, lease, or rental by public utilities are exempt from this requirement if the
prices of the supplies or services are regulated by the public service commission or other governmental authority.
(2) At the time that the department or
a purchasing another agency opens bids or proposals, if a supplier's current publicly
advertised or established catalog price is received at or before the time that the bids or proposals are opened and is less than
the bid of the lowest responsible and responsive bidder or offeror or improves upon the conditions for the best proposal
received using the same factors and weights included in the proposal, the department or purchasing agency may reject all
bids and purchase the supply from that supplier without meeting the requirements of 18-4-303 through 18-4-306.
(3) An office supply procured by the department's central stores program
through bulk purchase or procured under a term
contract may be purchased by a purchasing an agency, without meeting the requirements of 18-4-303 through 18-4-306,
from a supplier whose publicly advertised price, established catalog price, or discount price offered to the purchasing
agency is less than the price offered by the central stores program or under the term contract if the office supply conforms
in all material respects to the terms, conditions, and quality offered by the central stores program or under the term contract.
A state office supply term contract must include a provision by which the contracting parties acknowledge and agree to the
provisions of this subsection.
(4) A contract for supplies or services, or both, may be negotiated, in accordance with department rules and with the approval of the department director, directly with a vendor without using competitive sealed bidding or a competitive sealed proposal. A contract may be awarded pursuant to this section only when it is advantageous to the state to use direct negotiation in the procurement of new or unique requirements of the state, in the procurement of new technologies, or to achieve best net value.
(5) The department may, on behalf of a state agency, participate in, sponsor, conduct, or administer a contract or other business relationship in a cooperative purchase pursuant to 18-4-402 with one or more public agencies, nonprofit organizations, or business entities if the department determines the contract or relationship to be in the best interests of the state."
Section 17. Section 18-4-303, MCA, is amended to read:
"18-4-303. Competitive sealed bidding. (1) An invitation for bids must be issued and must include a purchase description and conditions applicable to the procurement.
(2) Adequate public notice of the invitation for bids must be given a reasonable time
prior to before the date set forth
therein in the invitation for the opening of bids, in accordance with rules adopted by the department. Notice may include
publication in a newspaper of general circulation at a reasonable time prior to before the bid opening.
(3) Bids must be opened publicly
in the presence of one or more witnesses at the time and place designated in the
invitation for bids. Each bidder has the right to be present, either in person or by agent, when the bids are opened and has
the right to examine and inspect all bids. The amount of each bid and such other relevant information as may be specified
by rule, together with the name of each bidder, must be recorded. The record must be open to public inspection. After the
time of award, all bids and bid documents must be open to public inspection in accordance with the provisions of 2-6-102
and are subject to the requirements of subsection (4).
(4) Bids must be available for public inspection when the bids are opened if:
(a) the invitation for bids is issued by a state agency to contract with the private sector to provide services currently conducted by state employees; and
(b) acceptance of bids would result in the displacement of five or more state employees.
(5) Bids must be unconditionally accepted without alteration or correction, except as authorized in this chapter. Bids must
be evaluated based on the requirements set forth in the invitation for bids, which may include criteria to determine
acceptability, such as inspection, testing, quality, workmanship, delivery, and suitability for a particular purpose. Those
criteria that will affect the bid price and be considered in evaluation for award must be objectively measurable, such as
discounts, transportation costs, and total or life-cycle costs. The invitation for bids
shall must set forth the evaluation
criteria to be used. Only criteria set forth in the invitation for bids may be used in bid evaluation.
(6) Correction or withdrawal of inadvertently erroneous bids, before or after award, or cancellation of awards or contracts
such bid mistakes may be permitted in accordance with rules adopted by the department. After bid opening, no
changes in bid prices or other provisions of bids prejudicial to the interest of the state or fair competition may not be
permitted. Except as otherwise provided by rule, all decisions to permit the correction or withdrawal of bids or to cancel
awards or contracts based on bid mistakes must be supported by a written determination made by the department.
(7) The contract must be awarded with reasonable promptness by written notice to the lowest responsible and responsive
bidder whose bid meets the requirements and criteria set forth in the invitation for bids
, including the preferences
established by Title 18, chapter 1, part 1. If all bids exceed available funds as certified by the appropriate fiscal officer and
the low responsive and responsible and responsive bid does not exceed such the funds by more than 5%, the director or the
head of a purchasing agency is authorized may, in situations where in which time or economic considerations preclude
resolicitation of a reduced scope, to negotiate an adjustment of the bid price, including changes in the bid requirements,
with the low responsive and responsible and responsive bidder in order to bring the bid within the amount of available
(8) When it is considered impractical to initially prepare a purchase description to support an award based on price, an invitation for bids may be issued requesting the submission of unpriced offers, to be followed by an invitation for bids limited to those bidders whose offers have been qualified under the criteria set forth in the first solicitation."
Section 18. Section 18-4-304, MCA, is amended to read:
"18-4-304. Competitive sealed proposals. (1)
When, under rules adopted by the department, the director, the head of a
purchasing agency, or a designee of either officer above the level of the procurement officer determines that the use of
competitive sealed bidding is either not practicable or not advantageous to the state, a contract may be entered into by
competitive sealed proposals. The department may provide by rule that it is either not practicable or not advantageous to
the state to procure specified types of supplies and services by competitive sealed bidding. The department may procure
supplies and services through competitive sealed proposals.
(2) Proposals must be solicited through a request for proposals.
(3) Adequate public notice of the request for proposals must be given in the same manner as provided in 18-4-303(2).
(4) Proposals must be opened so as to avoid disclosure of contents to competing offerors during the process of negotiation. A register of proposals must be prepared in accordance with rules adopted by the department and must be open for public inspection after contract award. After the contract is executed, proposal documents may be inspected by the public, subject to the limitations of the Uniform Trade Secrets Act, Title 30, chapter 14, part 4.
(5) The request for proposals must state the evaluation factors and their relative importance
of price and other evaluation
factors. The award must be made to the responsible and responsive offeror whose proposal best meets the evaluation
criteria. Other factors or criteria may not be used in the evaluation. The contract file must demonstrate the basis on which
the award is made.
As provided in the request for proposals and under rules adopted by the department, discussions with responsible
offerors who submit apparently responsive proposals may be conducted for the purpose of clarification in order to assure
full understanding of and responsiveness to the solicitation requirements. Offerors must be accorded fair and equal
treatment with respect to any opportunity for discussion and revision of proposals, and revisions may be permitted, after
submissions and prior to award, for the purpose of obtaining best and final offers. The department may discuss a proposal
with an offeror for the purpose of clarification or revision of the proposal. In conducting discussions, there may not be
disclosure of any information derived from proposals submitted by competing offerors. The department may require the
submission of cost or pricing data in connection with an award under this section. (7) The award must be made to the responsible offeror whose proposal is determined in writing to be the most
advantageous to the state, taking into consideration price, including the preference in 18-1-102, and the evaluation factors
set forth in the request for proposals. No other factors or criteria may be used in the evaluation. The contract file must
contain the basis on which the award is made."
Section 19. Section 18-4-305, MCA, is amended to read:
"18-4-305. Small purchases and limited solicitations. Any procurement not exceeding the amount established by rule may be made in accordance with small purchase or limited solicitation procedures established by the department. Procurement requirements may not be artificially divided so as to constitute a small purchase or limited solicitation under this section."
Section 20. Section 18-4-309, MCA, is amended to read:
"18-4-309. Prequalification of suppliers. Prospective suppliers may be prequalified in accordance with department rules
for particular types of supplies and services.
Solicitation mailing lists of potential contractors must include but not be
limited to such prequalified suppliers."
Section 21. Section 18-4-310, MCA, is amended to read:
"18-4-310. Types of contracts.
Subject to the limitations of this section, any Any type of contract that will promote the
best interests of the state may be used , except that the use of a cost-plus-percentage-of-cost contract is prohibited. A
cost-reimbursement contract may be used only when a determination is made in writing that such contract is likely to be
less costly to the state than any other type or that it is impracticable to obtain the supplies or services required except under
such a contract."
Section 22. Section 18-4-312, MCA, is amended to read:
"18-4-312. Bid and contract performance security. (1) For state contracts for the procurement of services or of supplies, the department may in its discretion require:
(a) bid security;
(b) contract performance security to guarantee the faithful performance of the contract and the payment of all laborers,
materialmen, mechanics, and subcontractors; or
(c) both bid and contract performance security.
(2) If security is required under subsection (1), the following types of security may be required to be deposited with the state:
(a) a sufficient bond with a licensed surety company as surety;
(b) an irrevocable letter of credit not to exceed $100,000 in accordance with the provisions of Title 30, chapter 5, part 1;
(c) money of the United States;
(d) a cashier's check, certified check, bank money order, certificate of deposit, money market certificate, or bank draft that is drawn or issued by a federally chartered or state-chartered bank or savings and loan association that is insured by or for which insurance is administered by the federal deposit insurance corporation or that is drawn and issued by a credit union insured by the national credit union share insurance fund.
(3) The amount and type of the security must be determined by the department to be sufficient to cover the risk involved to
the state. The security must be payable to the state of Montana
and. Contract performance security must remain in effect
for the entire contract period. In determining the amount and type of contract performance security required for each
contract, the department shall consider the nature of the performance and the need for future protection to the state. In
determining the need for and amount of bid security, the department shall consider the risks involved to the state if a
successful bidder or offeror fails to enter into a formal contract. The considerations must include but are not limited to the
type of supply or service being procured, the dollar amount of the proposed contract, and delivery time requirements. The
department may adopt rules to assist it in making these determinations and in protecting the state in dealing with
irrevocable letters of credit. Bid and contract security requirements must be included in the invitations for bids or requests
(4) If a bidder or offeror to whom a contract is awarded fails or refuses to enter into the contract or provide contract performance security, as required by the invitation for bid or request for proposal, after notification of award, the department may, in its discretion, require the bidder to forfeit the bid security to the state and become immediately liable on the bid security, but not in excess of the sum stated in the security. The liability of the bidder or offeror, the maker of the security or bid bond, or the liability on the bid bond or other security may not exceed the amount specified in the invitation for bid or request for proposal.
(5) Negotiable instruments provided as bid security must be refunded to those bidders or offerors whose bids or proposals are not accepted.
(6) The provisions of Title 18, chapter 1, part 2, and Title 18, chapter 2, parts 2 and 3, do not apply to procurements under this chapter."
Section 23. Section 18-4-313, MCA, is amended to read:
"18-4-313. Contracts -- terms, extensions, and time limits. (1)
Unless otherwise provided by law, a contract, lease, or
rental agreement for supplies or services may not be made for a period of more than 7 years. However, the department may
contract for the lease or purchase of telecommunications equipment and systems, data processing equipment, the
department of revenue liquor agencies, and the department of public health and human services medicaid management
information system (MMIS) for a period not to exceed 10 years. A contract, lease, or rental agreement may be extended or
renewed if the terms of the extension or renewal, if any, are included in the solicitation, if funds are available for the first
fiscal period at the time of the agreement, and if the total contract period, including any extension or renewal, does not
exceed 7 years. Payment and performance obligations for succeeding fiscal periods are subject to the availability and
appropriation of funds for the fiscal periods. Unless otherwise provided by law, a contract, lease, or rental agreement for
supplies or services may be made for a specific duration determined by the department to obtain the best net value for the
Prior to Before the issuance, extension, or renewal of a contract, it must be determined that:
(a) estimated requirements cover the period of the contract and are reasonably firm and continuing; and
(b) the contract will serve the best interests of the state by encouraging effective competition or otherwise promoting economies in state procurement.
(3) When funds are not appropriated or otherwise made available to support continuation of performance in a subsequent fiscal period, the contract must be canceled."
Section 24. Section 18-4-402, MCA, is amended to read:
"18-4-402. Cooperative purchasing authorized. The department may participate in, sponsor, conduct, or administer a
cooperative purchasing agreement for the procurement of any supplies or services with one or more public procurement
units in accordance with an agreement entered into between the participants independent of the requirements of part 3.
cooperative Cooperative purchasing may include purchasing through federal supply schedules of the United States general
services administration, joint or multi-party multiparty contracts between public procurement units and open-ended state
public procurement unit contracts that are made available to local public procurement units."
Section 25. Section 18-5-308, MCA, is amended to read:
"18-5-308. Construction with other sections. Procurement from small businesses under this part is subject to all other
statutes governing state procurement and all rules
promulgated thereunder adopted pursuant to this part, as now or hereafter
later amended, except that in case of conflict this part governs and the provisions set forth in 18-1-102, 18-1-111, and
18-1-112 shall not apply."
Section 26. Section 18-6-101, MCA, is amended to read:
"18-6-101. Power to sell state property -- proceeds credited to
general fund from which property was purchased.
(1) The department has exclusive power, subject to the approval of the governor, to sell or otherwise dispose of or to
authorize the sale or other disposition of all materials and supplies, service equipment, or other personal property of every
kind owned by the state but not needed or used by any state institution or by any department of state government.
(2) Unless otherwise provided by law, the department shall credit the
general fund from which the property was purchased,
less a reasonable handling fee, with all the money received from a sale. The proceeds of the sale are statutorily
appropriated, as provided in 17-7-502, to the agency that owned the property before it was sold by the department. (3) Whenever the personal property was accounted for in an enterprise or internal service fund or designated subfund
account, the proceeds of the sale shall be credited to the appropriate enterprise or internal service fund or designated
Section 27. Section 18-7-104, MCA, is amended to read:
"18-7-104. Union label. All printing for which the state of Montana is chargeable
shall must bear the label of the branch
of the international typographical union, the allied printing trades council, or the amalgamated lithographers of America of
the locality in which it is printed, except under the following conditions. Printing firms not having the use of the labels and
who are desirous of presenting bids want to bid for printing as enumerated above shall be required to establish
consideration as a responsible bidder as follows:
(1) As a condition to consideration as a responsible bidder, printing concerns
must shall file with the secretary of state a
sworn statement to the effect that employees in the employ of the concern which that is to produce such the printing are
receiving the prevailing wage rate and are working under conditions prevalent in the locality in which the work is
Whenever If a collective bargaining agreement is in effect between an employer and employees who are represented by
a responsible organization which that is in no way influenced or controlled by the management, such the collective
bargaining agreement and its provisions shall must be construed as conditions prevalent in said the locality and shall be is
the minimum requirement for being adjudged considered a responsible bidder under this section, 18-7-107, or chapter 4 of
this title or this section.
(3) Printing firms
having the use of using the union labels, as set forth above shall be deemed as having provided in
subsection (1), have complied with the provisions of this section, 18-7-107, or chapter 4 or this section of this title, but
nothing in these provisions shall be construed as exempting such. However, this section does not exempt the bidders from
any the provisions of this section, 18-7-107, or chapter 4 of this title or this section, and such the bidders shall also be
required to conform to all the provisions thereof of chapter 4 and this section."
Section 28. Section 18-7-105, MCA, is amended to read:
"18-7-105. Penalty. Any officer of the state who
shall accept any accepts printed matter for which the state is chargeable
in whole or in part or who is found to have has had printed matter produced, under conditions other than as set forth in
chapter 4 of this title, or 18-7-104 , or 18-7-107 shall be, is subject to a fine of $50 for each and every offense."
Section 29. Section 18-8-211, MCA, is amended to read:
"18-8-211. Coordination with other statutes. (1) This part need not be complied with by an agency when the
contracting authority makes a finding in accordance with this or any other applicable law that an emergency requires the
immediate execution of the work involved.
Nothing in this This part relieves does not relieve the contracting authority from
complying with applicable law limiting emergency expenditures.
(2) The limitation on the preparation of working drawings contained in 18-2-111 applies to this part.
(3) The procedure for appointment of architects and consulting engineers pursuant to 18-2-112 applies to this part, except that the agency shall select its proposed list of three architects or consulting engineers in accordance with this part prior to submission to the department of administration.
(4) The exception for services estimated to cost less than $5,000 in 18-8-105 applies to this part."
Section 30. Section 53-1-203, MCA, is amended to read:
"53-1-203. Powers and duties of department of corrections. (1) The department of corrections shall:
(a) adopt rules necessary to carry out the purposes of 41-5-527 through 41-5-529 and rules for the admission, custody, transfer, and release of persons in department programs except as otherwise provided by law. However, rules adopted by the department may not amend or alter the statutory powers and duties of the state board of pardons and parole.
(b) subject to the functions of the department of administration, lease or purchase lands for use by institutions and classify those lands to determine those that may be most profitably used for agricultural purposes, taking into consideration the needs of all institutions for the food products that can be grown or produced on the lands and the relative value of agricultural programs in the treatment or rehabilitation of the persons confined in the institutions;
(c) contract with private, nonprofit Montana corporations to establish and maintain community-based prerelease centers for purposes of preparing inmates of the Montana state prison who are approaching parole eligibility or discharge for release into the community. The centers shall provide a less restrictive environment than the prison while maintaining adequate security. The centers must be operated in coordination with other department correctional programs, including the supervised release program provided for in Title 46, chapter 23, part 4. This subsection does not affect the department's authority to operate and maintain community-based prerelease centers.
(d) utilize the staff and services of other state agencies and units of the Montana university system, within their respective statutory functions, to carry out its functions under this title;
(e) propose programs to the legislature to meet the projected long-range needs of institutions, including programs and facilities for the diagnosis, treatment, care, and aftercare of persons placed in institutions;
(f) encourage the establishment of programs at the local and institutional level for the rehabilitation and education of adult felony offenders;
(g) administer all state and federal funds allocated to the department for youth in need of supervision and delinquent youth, as defined in 41-5-103;
(h) collect and disseminate information relating to youth in need of supervision and delinquent youth;
(i) maintain adequate data on placements that it funds in order to keep the legislature properly informed of the specific information, by category, related to youth in need of supervision and delinquent youth in out-of-home care facilities;
(j) provide funding for and place youth who are alleged or adjudicated to be delinquent or in need of supervision and who are referred or committed to the department;
(k) administer youth correctional facilities;
(l) provide supervision, care, and control of youth released from a state youth correctional facility; and
(m) use to maximum efficiency the resources of state government in a coordinated effort to:
(i) provide for children in need of temporary protection or correctional services; and
(ii) coordinate and apply the principles of modern institutional administration to the institutions in the department.
The department and a private, nonprofit Montana corporation may not enter into a contract under subsection (1)(c) for a
period that exceeds 10 years. The provisions of 18-3-104 and 18-4-313 that limit the term of a contract do not apply to a
contract authorized by subsection (1)(c).
(3) The department of corrections may enter into contracts with nonprofit corporations or associations or private organizations to provide substitute care for youth in need of supervision and delinquent youth in youth care facilities."
Section 31. Section 53-30-505, MCA, is amended to read:
"53-30-505. Contract time limit.
A contract entered into under 53-30-504 may not exceed a term of 30 years and must
contain provisions for renegotiation after 30 years. The provisions of 18-3-104 and 18-4-313 that limit the term of a
contract do not apply to a contract authorized by 53-30-504."
Section 32. Section 60-2-112, MCA, is amended to read:
"60-2-112. Competitive bidding. (1) Except as provided in subsections (2) through (4), when the estimated cost of any
work exceeds $50,000, the commission shall let the contract by competitive bidding to the lowest responsible and
responsive bidder. Award must be made upon the notice and terms that the commission prescribes by its rules.
except when prohibited by federal law, the commission shall make awards and contracts in accordance with 18-1-102 and
(2) The commission may let a contract by means other than competitive bidding if it determines that special circumstances so require. The commission shall specify the special circumstances in writing.
(3) The commission may enter into contracts with units of local government for the construction of projects without competitive bidding if it finds that the work can be accomplished at lower total costs, including total costs of labor, materials, supplies, equipment usage, engineering, supervision, clerical and accounting services, administrative costs, and reasonable estimates of other costs attributable to the project.
(4) The commission may delegate to the department the authority to enter, without competitive bidding, agreed-upon price contracts for projects costing $50,000 or less."
NEW SECTION. Section 33. Repealer. Sections 18-1-102, 18-1-103, 18-1-106, 18-1-111, 18-1-112, 18-1-113, 18-1-114, 18-4-131, 18-4-225, 18-4-234, 18-7-107, 18-8-101, 18-8-102, 18-8-103, 18-8-104, 18-8-105, 18-8-106, 18-8-111, and 18-8-112, MCA, are repealed.
NEW SECTION. Section 34. Severability. If a part of [this act] is invalid, all valid parts that are severable from the invalid part remain in effect. If a part of [this act] is invalid in one or more of its applications, the part remains in effect in all valid applications that are severable from the invalid applications.
NEW SECTION. Section 35. Retroactive applicability. [Sections 6 and 15] and the repeal of 18-4-131 apply retroactively, within the meaning of 1-2-109, in the case of an unlawful solicitation for bid or unlawful award of a contract, to a claim, to a cause of action, or to a request for relief other than those authorized by [section 15], unless a final judgment awarding damages has been rendered regarding that claim, cause of action, or request for relief prior to [the effective date of this act].
NEW SECTION. Section 36. Effective dates. (1) Except as provided in subsection (2), [this act] is effective October 1, 1997.
(2) [Sections 6, 15, 34, and 35 and this section] and the repeal of 18-4-131 are effective on passage and approval.