Minnesota Construction Bidding Process

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What is the Bid Process in Construction? 

The construction bidding process involves five steps: bid solicitation, bid submission, bid selection, contract formation, and project delivery. For a contractor in Minnesota to achieve success in the construction bidding process, you need to plan and improve in each of these areas. 

If you’re a new contractor or are looking to secure more bids more often, follow our guide below. 

What Should a Construction Bid Include? 

Successful construction bids generally contain the total cost of building the structure, including expenses for subcontractors, general contractors’ costs, overhead profit, and scope of work. A bid will also need to contain information such as company details, the date, a clear definition of the work, and a project name. Without all of these elements combined, you may not meet the necessary standards. 

How Do You Estimate a Construction Bid? 

An accurate estimate is not only vital for winning a bid, but it can also determine which Minnesota Construction bonds you may need. A professional estimate will include: 

• Direct costs: This includes materials, labor, and equipment expenses tied directly to construction activities. 
• Indirect costs: Consider costs that don’t involve direct construction work, like permits, utilities, security, quality control, administration, and legal fees. 
• Labor hours: Wages paid to construction teams should be factored in, including potential overtime. 
• Subcontractor expenses: Don’t forget to calculate costs associated with hiring subcontractors for specialized tasks like plumbing, electrical work, or HVAC installation. 

What Are the Five Steps in the Process of Bidding? 

1. Bid Solicitation: This is when the project owner or general contractor invites contractors to submit bids. 
2. Bid Submission: Contractors prepare and submit their bids with all necessary details, such as pricing, scope of work, and deadlines. 
3. Bid Selection: The owner of the project will look over bids, including the contractor’s costs, qualifications, and the scope of work suggested. Based on this information, they will choose a bid they believe is best. 
4. Contract Formation: Once the project owner chooses a bid, they will set up a contract with the winning contractor. 
5. Project Delivery: At this phase, the contractor will begin work on the project and secure any further surety bonds they may need. 

What Licenses and Bonds Do You Need for Minnesota Construction Bidding? 

Minnesota does not issue a single statewide “general contractor” license for most commercial building work. Instead, the Minnesota Department of Labor and Industry (DLI) licenses residential building contractors, residential remodelers, and residential roofers who contract with homeowners (with a limited gross-receipts exemption and annual certificate of exemption). Companies contracting with homeowners to install residential solar systems must hold a residential building contractor or remodeler license. Core trades are regulated statewide: electrical contractors and electricians are licensed through DLI’s Board of Electricity, and plumbers are licensed under the Plumbing Board. Mechanical/HVAC contractors are not state-licensed as such but must file a $25,000 mechanical contractor bond with DLI to perform gas, heating, ventilation, air-conditioning, fuel-burning, or refrigeration work. 

Before a contract can be awarded, vendors doing business with the state of Minnesota must register in the SWIFT Supplier Portal to obtain a Supplier/Vendor ID. Businesses bidding on MnDOT highway work must also be registered with the Minnesota Secretary of State. 

For highway and bridge lettings, MnDOT requires a proposal guaranty (bid security) equal to 5% of the bid, provided as a bid bond, cashier’s check, or certified check. After the award, Minnesota’s Public Contractors’ Performance and Payment Bond Act requires performance and payment bonds. This requirement generally applies when the contract amount meets or exceeds the municipal bidding threshold in Minn. Stat. § 471.345, subd. 3 (currently $175,000). Bond amounts are not less than the contract price (with limited discretion for certain state contracts). 

Common Mistakes Made While Bidding 

Even a well-prepared contractor can be rejected for a bid. Some common reasons this might happen are: 

• Incomplete documentation, such as proof of bonds and licenses. 
• Inaccurate cost estimates, where your estimate is much higher or lower than average. 
• Lack of experience, unproven track record. 
• Simple mistakes, like not following the guidelines for the bid strictly or missing paperwork. 
• Ambitious timelines, if your proposed timeline does not align with the average timelines submitted you may face rejection. 

State vs. Federal Bids? 

Understanding the difference between state and federal bids can help you stay compliant when you submit your bid. 

Topic	State	Federal
Procurement Laws and Regulations	State-specific procurement laws and regulations, varying by state.	Must comply with the Federal Acquisition Regulation, which is stricter and more rigorous.
Bonding Requirements	Often need state licensing and bonds like bid bonds and performance bonds.	Also needs bonds but is often required from a federally approved surety company.
Project Scope	Projects can range from small repairs to large public works in a specific area.	Contracts can be large-scale, spanning multiple states.
Set-Aside Programs	Some states have set-aside programs for small businesses, minority-owned, or veteran-owned businesses, but this varies.	The federal government has many set-aside programs for small businesses, veteran-owned, women-owned, and disadvantaged businesses through programs like 8(a) or HUBZone.
Competition	Often limited to nearby areas, reducing competition.	Open to contractors nationwide, increasing competition and opportunities.

Unique Aspects of the Minnesota Construction Bidding Process

1. State-level credentials and business registration. Minnesota does not issue a single statewide “general contractor” license for commercial work. The Department of Labor and Industry (DLI) licenses residential building contractors, residential remodelers, and residential roofers who contract with homeowners. Companies contracting with homeowners to install residential solar systems must also hold a residential building contractor or remodeler license. Electrical contractors/electricians and plumbers are licensed statewide (through DLI’s Board of Electricity and the Plumbing Board). Mechanical/HVAC contractors are not state-licensed as such but must file a $25,000 mechanical contractor bond with DLI to perform gas, heating, ventilation, air-conditioning, fuel-burning, or refrigeration work. Contractors performing one specialty skill (residential) or working on commercial projects without a residential license must register under DLI’s Construction Contractor Registration program. Business entities—domestic or foreign—must register with the Minnesota Secretary of State and, if making taxable sales, register for a Minnesota Tax ID and Sales & Use Tax account with the Department of Revenue. Vendors doing business with the state register in the SWIFT Supplier Portal. 
2. Building codes and plan review. The Minnesota State Building Code (MSBC) establishes the minimum construction standard statewide. It is enforceable by municipalities that adopt it by ordinance; when adopted, local amendments are not permitted (the state maintains a uniform code, including energy and accessibility provisions). The current Minnesota codes are published by DLI (with Minnesota-specific amendments), and the state has issued an updated Minnesota Commercial Energy Code. 
3. Environmental and water resource permits. Projects that disturb one acre or more of soil must obtain coverage under the MPCA NPDES/SDS Construction Stormwater General Permit before land-disturbing work begins. Work affecting public waters below the ordinary high-water level generally requires a DNR Public Waters Work Permit. Activities affecting wetlands outside public waters are regulated under Minnesota’s Wetland Conservation Act (administered locally with BWSR oversight). Activities in waters/wetlands may also require federal authorization from the U.S. Army Corps of Engineers and state 401 certification. Floodplain development requires permits under local floodplain ordinances. 
4. Insurance requirements. Minnesota law requires every employer to carry workers’ compensation insurance or be approved to self-insure; there is no hour-based exemption. The state does not impose a universal general liability mandate on all contractors, but DLI requires licensed residential building contractors/remodelers to maintain liability insurance as a condition of licensure. And most public owners and lenders specify general and excess liability coverage in their contracts. 
5. Public works bidding and prequalification. Formal solicitations are used for most acquisitions at or above $50,000 (at or above $100,000 for MnDOT), with solicitations posted through the state’s SWIFT Supplier Portal. MnDOT highway lettings occur on fixed bid opening dates and are submitted electronically via Bid Express. MnDOT has no prequalification requirement for submitting construction bids (separate prequalification applies to professional/technical consultants). 
6. Bid security and final bonds. MnDOT requires a proposal guaranty (bid security) equal to 5 percent of the bid, provided as a bid bond, cashier’s check, or certified check. After the award, Minnesota’s Public Contractors’ Performance and Payment Bond Act requires performance and payment bonds on public works contracts at or above the Uniform Municipal Contracting Law’s sealed-bid threshold—currently $175,000. Bond penalties must be at least equal to the contract price, but DOT/Administration may require the required amount at 75% on certain state contracts. 

Minnesota Bid Network 

Contractors and suppliers looking for state and local work in Minnesota track two main platforms: 

• Supplier Portal (Minnesota Management & Budget / Office of State Procurement). SWIFT is the state’s accounting and procurement system and the 24/7 vendor portal for supplier registration, maintaining profiles and UNSPSC commodity codes, viewing/responding to online solicitations when enabled, and managing payments. Vendors can register as Bidders/Suppliers and, after selecting relevant commodity categories, receive email notifications when matching events are posted. 
• MnDOT Bid Letting via Bid Express. All highway, bridge, and maintenance lettings are advertised on MnDOT’s Bid Letting “Advertisements” pages. Proposals are submitted electronically through Bid Express. New bidders obtain a SWIFT Supplier/Vendor ID, are added to MnDOT’s Bid Express vendor table, and create a Bid Express digital ID. MnDOT does not require prequalification to submit construction bids. Bid tabs/abstracts, addenda, tentative letting schedules, and award information are posted online. 

Because SWIFT and MnDOT’s Bid Express workflows are designed for government-to-business (G2B) and business-to-business (B2B) transactions, they do not facilitate direct consumer sales. By registering in SWIFT (the state’s integrated financial/procurement system) and keeping company and commodity data current, vendors gain broad visibility into statewide contracting and can receive automatic alerts when new opportunities align with their profile. 

Succeed in the Minnesota Construction Bidding Process 

To succeed in the Minnesota construction bidding process, you need accurate estimates and documentation as well as a solid grasp of the requirements and nuances of state vs federal bids. However, one of the most important components of your bid is securing the right surety bonds, such as bid bonds, performance bonds, and payment bonds.

When you choose a reliable surety bond agency, you can feel confident that your bond will meet all legal and regulatory requirements. At Surety Bond Professionals, we know the challenges you may face and are here to support you with all your bond needs. Contact us today for a quote. 

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