Purpose

This bill aims to protect the state by preventing certain sticky or unfair terms from being required in state procurement contracts. It adds protections to ensure contracts with Minnesota state agencies are fair and stay within Minnesota law.

Main Provisions

• a) Unenforceable terms in state contracts
  • A state contract cannot require the state to defend, indemnify, or hold harmless another person or entity unless statute specifically allows it.
  • A term cannot bind a party with conditions that can be unilaterally changed by the other party.
  • A term cannot require mandatory arbitration.
  • A term cannot try to extend arbitration obligations to disputes that are not related to the original contract.
  • A term cannot require the contract to be interpreted under laws of a state other than Minnesota.
  • A term cannot obligate state funds in future years through automatic renewal (as defined in another statute).
  • A term cannot conflict with Chapter 13, the Minnesota Government Data Practices Act.
  • A term cannot limit the contracting agency’s ability to install or run software on infrastructure chosen by the contracting agency when that infrastructure is approved or provided by the Department of Information Technology Services (ITS); this includes any requirement to run software on infrastructure dedicated solely to the contracting agency.
• b) Effect of prohibited terms
  • If a contract includes a prohibited term, that term is void, and the contract remains enforceable as if the term never existed.
• c) Accessibility
  • The commissioner must post a copy of this section on the department’s website.

Significant Changes to Existing Law

• The bill adds a new set of specific unenforceable terms to Minnesota Statutes 16C.05, Subdivision 8, making these terms invalid in state contracts.
• It clarifies that contracts cannot include provisions that unduly bind the state, defy Minnesota law, or impose unfair conditions on state procurement.
• It requires public posting of the new section by the department, increasing transparency.

Implementation and Enforcement

• Enforceability: Prohibited terms are void; contracts will be treated as if the prohibited term never existed.
• Oversight: The relevant state department (the commissioner) must post the section publicly on its website.
• Scope: Applies to contracts entered into by the state regarding procurement, with specific references to ITS-provided infrastructure and Minnesota law.

Practical Impact and Considerations

• For state agencies: Agencies will need to review procurement contracts and templates to ensure no prohibited terms are included.
• For vendors/contractors: Provisions attempting to impose any of the prohibited terms would be void, and agencies may push back on such terms during negotiations.
• For Minnesota law: The bill reinforces Minnesota-centric governance of contracts and data practices, and reduces exposure to external governing laws, unilateral changes, or automatic renewals.

Relevant Terms - state procurement contracts - Minnesota Statutes 16C.05 Subd. 8 - unenforceable terms - defend indemnify hold harmless - unilateral change - mandatory arbitration - arbitration extension - governing law outside Minnesota - automatic renewal (as defined in section 325G.56) - Minnesota Government Data Practices Act (Chapter 13) - Department of Information Technology Services (ITS) - software on agency infrastructure - contracting agency infrastructure - Department posting requirement - Section 325G.56 - Section 13 (Minnesota Government Data Practices Act)