# Targeted group business program (Minnesota) _Minnesota's state-procurement preference program for small businesses majority owned and operated by women, persons with substantial physical disabilities or specific minorities — its statute, predecessors and amendments, rules and the 2025 disparity study_ | Targeted group business program (Minnesota) | | |---|---| | Statute | Minn. Stat. § 16C.16 (Laws 1998, ch. 386, art. 1, sec. 17) | | Enacted | signed April 20, 1998, Governor Arne Carlson (Independent-Republican) | | Administered by | Commissioner of Administration | | Eligible owners | women, persons with a substantial physical disability, specific minorities (businesses at least 51 percent owned and operated) | | Statutory purpose | "to remedy the effects of past discrimination against members of targeted groups" | | Preferences | statute: up to six percent (1998), up to 12 percent (from 2023); rule text: up to six percent over the lowest responsible offer | | Rules | Minn. R. ch. 1230 | | Latest study | Keen Independent Research, *2025 Joint Disparity Study* | | Parent articles | [[At Issue - Minnesota's Feminist Regime]] · [[DFL Feminists]] · [[GOP Feminists]] · [[How Minnesota Got Here]] | The **targeted group business program** is the Minnesota state-procurement program under which the Commissioner of Administration "shall periodically designate businesses that are majority owned and operated by women, persons with a substantial physical disability, or specific minorities as targeted group businesses" and may give them price preferences and direct awards.[^1] Its statute states that "The purpose of the program is to remedy the effects of past discrimination against members of targeted groups."[^1] The current section was enacted in the 1998 procurement recodification, passed by a DFL Legislature and signed by Governor [[Arne Carlson]], an Independent-Republican; a DFL Legislature and Governor [[Tim Walz]] doubled its preference ceiling to 12 percent in 2023.[^2][^3][^4][^5] The program is instrument 16 of the ledger in [[At Issue - Minnesota's Feminist Regime]], beside the state's workforce and equal pay certificates for contractors.[^6][^7] The Republican governor who signed it, and the state Republican Party's 2026 platform rejecting "any form of set-asides or quotas" in contracting, are treated in [[GOP Feminists]]; the DFL record in [[DFL Feminists]]. [[How Minnesota Got Here]], the parent account, closes its schedule of the state's sex-keyed instruments in 1985, before this statute.[^8][^9] ## The statute **Small businesses.** Section 16C.16 requires the commissioner to ensure that "small businesses receive at least 25 percent of the value of anticipated total state procurement of goods and services, including printing and construction."[^1] A 2005 amendment signed by Governor [[Tim Pawlenty]] added a duty to seek small-business bids on master contracts.[^10][^4] **Designation.** A group may be targeted within a purchasing category "if the commissioner determines there is a statistical disparity" between purchases from businesses owned by group members and those businesses' share of all businesses in the state in that category; an individual business may also be included if needed "to remedy discrimination against the owner based on race, gender, or disability".[^1] The commissioner is to "attempt to ensure that purchases from targeted group businesses reflect a fair and equitable representation of all the state's purchasing".[^1] **Purchasing methods.** The commissioner "may award up to a 12 percent preference for specified goods or services to small targeted group businesses"; may award contracts up to $100,000 directly to small or small targeted group businesses without competitive solicitation; may reserve a purchase for them if at least three are likely to respond; and may set subcontracting goals for prime contractors.[^1] Parallel subdivisions cover small businesses in economically disadvantaged areas and veteran-owned small businesses.[^1] **Other public bodies.** The 1998 act's conforming amendments let the University of Minnesota's regents, the commissioner of transportation and the Metropolitan Council each award "up to a six percent preference in the amount bid" to small targeted group businesses designated under the new section, and preserved municipalities' power to set aside part of their procurement for such businesses.[^11] **History.** The section's history runs from "1998 c 386 art 1 s 17" through amendments in 1999, 2003, 2005, 2009, 2010, 2011, 2012, 2014, 2015, 2016, 2023 and 2025, under governors of three parties.[^1][^4] ## Predecessors and amendments **A 1983 set-aside.** Laws 1983, chapter 301 — the state-government act that also made the [[Council on the Economic Status of Women]] a legislative commission — amended former § 16.083, the state's small-business set-aside statute. It directed a share of set-aside awards to businesses owned and operated by socially or economically disadvantaged persons, and required that construction and consultant contracts over $200,000 subcontract at least ten percent "to a business owned and operated by a socially or economically disadvantaged person or persons".[^12][^13] **Carlson's council.** Executive Order 91-14, signed by Governor Carlson in May 1991, created a State Affirmative Action Council, with the Commissioner of Administration among its members, to monitor "the state procurement program" among other programs and "to assure equal access to contracting opportunities"; it was to work with the Commission on the Economic Status of Women.[^14] **The 1998 recodification.** The 1998 act, signed April 20, 1998, repealed former § 16B.19 with more than two dozen other sections of chapter 16B and moved state procurement law into the new chapter 16C.[^2] As first enacted, § 16C.16 let the commissioner "award up to a six percent preference in the amount bid" for small targeted group businesses and up to four percent for small businesses in economically disadvantaged areas.[^15] **The 2023 increase.** Laws 2023, chapter 62, signed on May 24, 2023, raised the targeted-group preference from six to 12 percent, made the same change for veteran-owned businesses and economically disadvantaged areas, and allowed certification "by a nationally recognized certifying organization" the commissioner authorizes.[^5] The 2025 study reports that the preference "increased from 6 percent in 2023" and that noncompetitive direct awards rose to $100,000 from $25,000.[^16] ## The rules The Department of Administration's rules define a "Targeted group business" as certified businesses "at least 51 percent owned and operated by women, persons with substantial physical disabilities, or specific minorities", and, among the terms for the socially and economically disadvantaged program, define "Women" as "persons of the female gender."[^17] Part 1230.1603, in its 2017 text, sets a "Presumption of disadvantage": women, persons with substantial physical disabilities and listed minorities "are deemed to be socially and economically disadvantaged individuals", subject to a signed, notarized certification and a personal net-worth limit taken from federal rules.[^18] Part 1230.1810 directs the division to "attempt to achieve utilization of targeted group, economically disadvantaged area, and veteran-owned small businesses in proportion to their representation in the state's market area."[^19] It provides that a certified targeted group business "may be awarded up to a six percent preference in the amount offered over the lowest responsible offer from another vendor" — the statute's pre-2023 figure.[^19][^5] ## The 2025 disparity study **The study.** The Department of Administration led sixteen public entities — among them MnDOT, the Metropolitan Council, Hennepin County and the University of Minnesota — in a joint study by Keen Independent Research, as it had for the 2017 study.[^20] The July 2025 summary says the State "regularly conducts disparity studies" and has operated the program "since the 1990s"; firms owned by people of color, women and persons with substantial physical disabilities are eligible.[^21][^22] **Legal framework.** Summarizing a legal appendix by Holland & Knight, the summary lists strict scrutiny for minority-business programs, intermediate scrutiny "for WBE programs and LGBTQ+ business programs", and rational-basis review for small, veteran-owned and disability-owned business programs; it reports that the Eighth Circuit and Minnesota courts apply intermediate scrutiny to gender-conscious programs.[^23] The summary states that race-conscious programs "cannot be quotas or have unlimited duration".[^22] **Findings.** On the department's contracts from July 2016 through June 2023, minority- and woman-owned businesses received about 10.5 percent of dollars, against 21.8 percent expected from availability and 11.4 percent in the 2017 study.[^21] White woman-owned companies received 5.6 percent of contract dollars against 12.7 percent availability, a "disparity index of 44".[^24] Women business owners earned less than men after accounting for certain race- and gender-neutral factors, and about 35 percent of woman-owned firms in the availability database were certified.[^25][^26] The study concluded that the evidence "indicates a need for continued Admin remedial actions" and "may be consistent with raising an inference of discrimination" against certain minority groups and woman-owned businesses.[^24] **Recommendations.** It recommended annual reporting of certified-firm use by group and a review about every five to six years of whether the program "continues to be needed or should be refined".[^27] ## Record and readings **Reading one.** On the At Issue spine's first reading, the program is a sex-classifying preference: its rules define "Women" as "persons of the female gender", its companion disadvantaged-business program presumes women owners disadvantaged, and the statute now allows preferences of up to 12 percent for the purpose of remedying "the effects of past discrimination"; it was enacted under an Independent-Republican governor and its ceiling doubled under a DFL one.[^17][^18][^1][^5][^4] **Reading two.** On the second reading, the program is a disparity-conditioned remedy: designation within a purchasing category requires a finding of "a statistical disparity", preferences are capped and discretionary, certification rests on a signed statement and a net-worth limit, and the State commissions recurring disparity studies under the intermediate scrutiny the study says courts apply to gender-conscious programs; the 2025 study found continuing disparities for white woman-owned firms.[^1][^18][^23][^24] Neither reading is supported by a claim that the program is a quota or that the 2026 federal suits challenge it.[^22][^28][^29] ## Open items 1. **The program's start.** The enactment date of the program in former § 16B.19, which the 1998 act recodified, was not verified; the 2025 study dates it "since the 1990s".[^2][^22] 2. **Current designations.** The categories and groups the commissioner now designates under subdivision 5 were not read; the department's program pages could not be retrieved for this article.[^1] 3. **The 1983 set-aside.** Whether the 1983 set-aside's socially or economically disadvantaged persons included women was not determined from the text read.[^12] 4. **Use of the preferences.** The dollar value of preferences awarded to woman-owned firms was not found.[^22] ## See also - [[Women's Economic Security Act]] · [[Council on the Economic Status of Women]] · [[Minnesota Human Rights Act]] - [[At Issue - Minnesota's Feminist Regime]] · [[DFL Feminists]] · [[GOP Feminists]] · [[How Minnesota Got Here]] - [[Arne Carlson]] · [[Tim Pawlenty]] · [[Tim Walz]] · [[Rudy Perpich]] ## Notes [^1]: Minn. Stat. § 16C.16 (2025), small business and targeted group procurement — subd. 4 purpose "to remedy the effects of past discrimination"; subd. 5 designation of businesses owned by women, persons with disabilities or minorities; subd. 6 preferences up to 12 percent. https://www.revisor.mn.gov/statutes/cite/16C.16 [^2]: Laws of Minnesota 1998, ch. 386 (S.F. 726), signed April 20, 1998 — state procurement recodified as chapter 16C, including the targeted group purchasing program and its designation of businesses majority owned and operated by women. https://www.revisor.mn.gov/laws/1998/0/386/ [^3]: Minnesota Legislative Reference Library, "Party Control of the Minnesota Legislature and Governor's Office" — party control of the House, Senate and governorship by session, including 1981–82, 1983–84, 2011–12, 2013–14, 2017–18, 2019–20, 2023–24 and 2025–26. https://www.lrl.mn.gov/histleg/caucus_table [^4]: Minnesota Legislative Reference Library, "Minnesota Governors" — list with dates of office and party: Perpich (DFL) from 12/29/1976; Quie (Independent-Republican) from 1/4/1979; Perpich from 1/3/1983; Carlson (Independent-Republican) from 1/7/1991; Ventura (Reform) from 1/4/1999; Pawlenty from 1/6/2003; Dayton from 1/3/2011; Walz (DFL) from 1/7/2019. https://www.lrl.mn.gov/lrl/mngov/gov.aspx [^5]: Laws of Minnesota 2023, ch. 62 (H.F. 1830), art. 2, secs. 77–80 — raising the preferences in § 16C.16, subds. 6, 6a and 7, from six to 12 percent, and amending § 16C.19 to allow certification by a nationally recognized certifying organization the commissioner authorizes. https://www.revisor.mn.gov/laws/2023/0/62/ [^6]: Minn. Stat. § 363A.36 (2025), certificates of compliance for public contracts — workforce certificate for contracts over $100,000 with businesses of 40 or more employees; municipalities encouraged to adopt plans; history from 1969 c 975 s 19. https://www.revisor.mn.gov/statutes/cite/363A.36 [^7]: Minn. Stat. § 363A.44 (2025), equal pay certificate — required for state contracts over $500,000 with businesses of 40 or more full-time employees; history 2014 c 239 art 2 s 6 and later amendments. https://www.revisor.mn.gov/statutes/cite/363A.44 [^8]: Republican Party of Minnesota, *2026 Official Party Platform* ("Adopted by the Republican Party of Minnesota"; PDF, June 2026), linked from the party's resources page — civil rights, quotas and set-asides, privacy, education and family sections. https://mngop.com/wp-content/uploads/2026/06/Republican-Party-of-Minnesota_2026_PlatformPDF.pdf [^9]: Minnesota record, *How Minnesota Got Here — Minnesota's Administrative Discrimination Regime* (merged master, footnoted; compiled June 12, refreshed June 19, 2026), §4.7 — the four instruments (Duluth Model, comparable worth, the women's-economic-status organ, § 43A.191) and their construction schedule 1976–1985. [^10]: Laws of Minnesota 2005, ch. 156 (H.F. 1481), art. 2, sec. 25, signed June 3, 2005 — amending § 16C.16, subd. 1, to require the commissioner to solicit and encourage Minnesota small businesses to bid on master contracts and to seek terms letting agencies buy from them. https://www.revisor.mn.gov/laws/2005/0/156/ [^11]: Laws of Minnesota 1998, ch. 386 (S.F. 726), art. 2, secs. 52, 60, 93 and 94 — conforming amendments letting the University of Minnesota regents, the commissioner of transportation and the Metropolitan Council give six percent preferences to small targeted group businesses, and municipalities set aside procurement for them. https://www.revisor.mn.gov/laws/1998/0/386/ [^12]: Laws of Minnesota 1983, ch. 301 (H.F. 1290), approved June 8, 1983, secs. 70–76 — amending former § 16.083, the small-business set-aside statute: the annual set-aside share, awards to businesses owned and operated by socially or economically disadvantaged persons, and ten percent subcontracting on contracts over $200,000. https://www.revisor.mn.gov/laws/1983/0/301/ [^13]: Laws of Minnesota 1983, ch. 301 (H.F. 1290), approved June 8, 1983, sec. 60 — amending § 3.9222 to replace the advisory council with a legislative commission of five representatives and five senators; the commission's study duties. https://www.revisor.mn.gov/laws/1983/0/301/ [^14]: Executive Order 91-14, "Providing for a State Affirmative Action Council," signed by Governor Carlson May 3, 1991 (LRL archive scan) — council purpose, "assuring equal access to protected groups under M.S. 43A.19 and M.S. 473.143," and cooperating councils. https://www.lrl.mn.gov/archive/execorders/91-14.pdf [^15]: Laws of Minnesota 1998, ch. 386 (S.F. 726), art. 1, sec. 17 — § 16C.16 as first enacted: the 25 percent small-business share, the targeted group purchasing program and its purpose, designation on a statistical disparity, and "up to a six percent preference in the amount bid." https://www.revisor.mn.gov/laws/1998/0/386/ [^16]: Keen Independent Research, *2025 Joint Disparity Study: Final Summary Report* (July 21, 2025), for the Minnesota Department of Administration, p. 7 — Admin's TGB, ED and VET programs: subcontracting goals on contracts over $500,000; a price or scoring preference up to 12 percent, "increased from 6 percent in 2023"; Equity Select direct awards up to $100,000. https://mn.gov/admin/assets/MN_Admin_FinalSummaryReport_07212025_tcm36-694391.pdf [^17]: Minn. R. ch. 1230, small business procurement — part 1230.0150, subp. 23, "Targeted group business" (at least 51 percent owned and operated by women, persons with disabilities or specific minorities); subp. 24, definitions, including "Women." https://www.revisor.mn.gov/rules/1230/full [^18]: Minn. R. 1230.1603 (published Nov. 13, 2017; 42 SR 543), social and economic disadvantage — subp. 1, "Presumption of disadvantage" for women, persons with substantial physical disabilities and listed minorities; signed, notarized certification; personal net-worth limit under 49 C.F.R. part 26. https://www.revisor.mn.gov/rules/1230/full [^19]: Minn. R. 1230.1810, preferences — item B: certified targeted group, economically disadvantaged area or veteran-owned small businesses "may be awarded up to a six percent preference" over the lowest responsible offer. https://www.revisor.mn.gov/rules/1230.1810/ [^20]: Keen Independent Research, *2025 Joint Disparity Study: Final Summary Report* (July 21, 2025), for the Minnesota Department of Administration, p. 3 — the sixteen participating entities, led by the Department of Administration as for the 2017 Study, including MnDOT, the Metropolitan Council, Minnesota State Colleges and Universities, Hennepin and Ramsey counties and the University of Minnesota. https://mn.gov/admin/assets/MN_Admin_FinalSummaryReport_07212025_tcm36-694391.pdf [^21]: Keen Independent Research, *2025 Joint Disparity Study: Final Summary Report* (July 21, 2025), for the Minnesota Department of Administration, p. 1 — the State "regularly conducts disparity studies"; Admin's MBE/WBE utilization of 10.5 percent, July 2016–June 2023, against 21.8 percent availability and 11.4 percent in the 2017 Study; MBE/WBEs about 35 percent of available firms. https://mn.gov/admin/assets/MN_Admin_FinalSummaryReport_07212025_tcm36-694391.pdf [^22]: Keen Independent Research, *2025 Joint Disparity Study: Final Summary Report* (July 21, 2025), for the Minnesota Department of Administration — the Targeted Group Business program "since the 1990s"; current eligibility; legal standards for narrow tailoring. https://mn.gov/admin/assets/MN_Admin_FinalSummaryReport_07212025_tcm36-694391.pdf [^23]: Keen Independent Research, *2025 Joint Disparity Study: Final Summary Report* (July 21, 2025), for the Minnesota Department of Administration, p. 6 — Appendix N, prepared by Holland & Knight: strict scrutiny for MBE programs, intermediate scrutiny for WBE and LGBTQ+ programs, rational basis for small, veteran-owned and disability-owned business programs; intermediate scrutiny in the Eighth Circuit and Minnesota. https://mn.gov/admin/assets/MN_Admin_FinalSummaryReport_07212025_tcm36-694391.pdf [^24]: Keen Independent Research, *2025 Joint Disparity Study: Final Summary Report* (July 21, 2025), for the Minnesota Department of Administration, p. 68 — white woman-owned companies received 5.6 percent of Admin contract dollars against 12.7 percent availability, a disparity index of 44; MBE/WBEs combined 10.5 percent against 21.8 percent; conclusions on remedial action. https://mn.gov/admin/assets/MN_Admin_FinalSummaryReport_07212025_tcm36-694391.pdf [^25]: Keen Independent Research, *2025 Joint Disparity Study: Final Summary Report* (July 21, 2025), for the Minnesota Department of Administration, p. 17 — business earnings: women business owners had lower earnings than men, with statistically significant differences remaining after accounting for certain race- and gender-neutral factors; similar findings for several minority groups and owners with disabilities. https://mn.gov/admin/assets/MN_Admin_FinalSummaryReport_07212025_tcm36-694391.pdf [^26]: Keen Independent Research, *2025 Joint Disparity Study: Final Summary Report* (July 21, 2025), for the Minnesota Department of Administration, p. 33 — certification: about 42 percent of MBEs and 35 percent of WBEs in the availability database held a business certification, 38 percent of MBE/WBEs overall; interviewees unaware of certifications or how to obtain them. https://mn.gov/admin/assets/MN_Admin_FinalSummaryReport_07212025_tcm36-694391.pdf [^27]: Keen Independent Research, *2025 Joint Disparity Study: Final Summary Report* (July 21, 2025), for the Minnesota Department of Administration, p. 78 — recommended monitoring and at least annual reporting of certified-firm utilization by group, and a formal evaluation about every five to six years before program sunset or reauthorization. https://mn.gov/admin/assets/MN_Admin_FinalSummaryReport_07212025_tcm36-694391.pdf [^28]: Complaint, *United States v. State of Minnesota*, No. 0:26-cv-00273 (D. Minn. filed Jan. 14, 2026), Doc. 1 — Title VII; ¶29 quoting § 43A.02, subd. 33; Count 1, ¶60, on justification and approval of hires outside the protected groups; Weber and Johnson discussed. https://www.justice.gov/crt/media/1423361/dl [^29]: Complaint, *United States v. Minnesota Department of Education and Minnesota State High School League*, No. 0:26-cv-02078 (D. Minn. filed Mar. 30, 2026), Doc. 1 — funding and assurances (¶¶29–35); § 121A.04 (¶¶73–75); Count I, Title IX; Count II, contractual assurances. https://www.justice.gov/crt/media/1433251/dl