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DBE Compliance in Federal ContractingMelissa Boyles
DBE Supportive Services Program ManagerArizona Department of Transportation
January 28, 2010
Arizona Association of County EngineersAnnual Meeting and 2010 Esterbrooks Awards
Discussion of Current Climate
Identification of Stakeholders
Stakeholder Impacts
Brief History of DBE Activity in Arizona
Explanation of Program
Overview of Compliance
Q&A
“… small businesses and entrepreneurs will play an important role in the economy’s eventual recovery through their flexibility and their ability to create innovative solutions, new industries, and jobs.”
The Small Business Economy;
Report to the President, 2009
Since the 1990’s small businesses have been responsible for the creation of between 60 – 80% of all new jobs
Responsible for the production of between 80 – 95% of U.S. Gross Domestic Product
Small businesses recover from recessions more quickly
Businesses with fewer than 20 employees, historically, are responsible for the majority of new job creation following a recession
60% of the small businesses in Arizona are either woman or minority owned
Approximately 1.5% of federally funded projects have been subcontracted to DBEs (women and minority firms)
Federal Government
Regional/State Grant Recipients
Arizona Department of Transportation
Primary FHWA Recipient for Arizona
Sub-Recipients of ADOT
Small, women, and minority owned firms (DBEs)
Federal Contractors
*ADOT also receives and distributes funding from various administrations under the US Dept of Transportation
Federal Government
Level playing field for small business
Strong preference for race/gender-neutral participation
Remedy past discrimination
Economic recovery
Grant Recipients and Subrecipients
Be more competitive on a national level
Use the geographic preference to drive economic development in Arizona’s small business community
Ensure eligibility for funding and ensure that funds received are not jeopardized by lack of compliance
Small, women, and minority owned firms
Over 60% of Arizona businesses are women and minority owned
Currently less than 1% of all potentially eligible businesses are DBE certified (0.3%)
Many DBEs allowed their certifications to lapse due to the lack of goals at ADOT
Not aware of federal contracting opportunities
DBEs must bid on projects in order to demonstrate “ready, willing, and able” status
Goals are tailored based on the availability of subs
Federal Contractors
ADOT’s race/gender-conscious program will be re-instituted in early 2010
Goals will be set on both design and construction projects
As a result of lack of participation over the past 3 years, aggressive goals will be set on planning, design, and construction projects
Lack of availability of subs will present a challenge
Lack of recent participation in the program will present challenges
May 2005 – 9th Circuit Court of Appeals found race and gender-based federal aide programs to be unconstitutional without “evidence of past discrimination.”
December 2005 - FHWA issued guidance requiring all funding recipients to conduct Disparity Studies to support current race and gender-based programs.
January 2006 - ADOT suspended all race and gender-conscious requirements and instituted a wholly race and gender-neutral program.
July 2007 - ADOT hired a third-party consultant to conduct a state-wide disparity study.
The study purpose was to determine whether minority-owned and disadvantaged business enterprises (DBEs) were underutilized in ADOT’s transportation design and construction programs.
Prior to January 2006, DBE participation averaged 10 – 15% (20%+ on some projects)
The current participation is at 1.5%
Recent History – ADOT DBE Participation
Findings resulted in recommendation for an annual goal of 8% DBE Participation
4.9% Race and Gender-Neutral
3.1% Race and Gender-Conscious
For construction projects all protected classes were included except women owned companies
For design projects all protected classes were included
The complete Study can be found on the ADOT Web site at www.azdot.gov
Current ADOT DBE participation is achieved through an annual goal of 10.5% via a race/gender-neutral program
The findings of the Disparity Study have been evaluated
Official approval anticipated Jan 2010
A race/gender-conscious program will be reinstituted in early 2010
ADOT will be setting aggressive goals
ADOT is expecting sub-recipients to partner with them to ensure the success of the program
Race-Conscious vs Race-Neutral
Race-Conscious Used as a “last resort”
Each project scope is evaluated for DBE opportunity
Goals are set based on identified subcontracting trades and the availability of DBEs to perform them
Race-Neutral Preferred by the Federal Government
DBE participation is achieved on a voluntary basis
Participation is facilitated by education, outreach, and the introduction of DBEs to the prime contracting community
DBE Supportive Services
Program
Three Key Stakeholder Groups DBEs and potentially eligible firms
ADOT Sub-recipients
Federal Contractors
Goals related to sub-recipients Provide clear guidance regarding contract
compliance and reporting components
Provide training where necessary/desired
Provide support in reaching out to small business communities statewide
Assist in race-neutral efforts
Provide training support for local prime contractors
CFR 49 Part 26 details the Disadvantaged Business Enterprise requirements for all US Dept of Transportation assisted contracts.
DBE Inclusion is a requirement not an option; just like Buy America or Davis Bacon
$1 rule = $1 of federal funding and DBE opportunity must be assessed
DBE activity is monitored from “Promises to Payments”
As a result of the low level of participation, FHWA will be reviewing ADOT’s DBE program in February 2010
Goals of the Program
Goals of the program include:
Nondiscrimination in the award and administration of federally assisted projects
Fostering an environment wherein DBEs can compete fairly and barrier free
Narrowly tailoring DBE opportunity
Ensuring that participating companies meet 49 CFR Part 26 requirements
Introduce eligible firms to the program, help them increase capacity, and ultimately graduate from the program
Race-Neutral Activities
Consider doing the following: Stress DBE inclusion as a priority to contractors
Specifically target small, women, and minority businesses in your procurement advertising efforts
Provide training for small, women, and minority businesses regarding how to do business with your agency
Conduct outreach events to educate the community on upcoming contracting opportunities
Conduct outreach events to encourage DBE certification
Facilitate interaction between prime contractors and small, women, and minority subcontractors
Take advantage of assistance available through ADOT
DBE Goal Request DBE Goal Calculation DBE Goal Clause Language in
Solicitation Pre-Bid/Proposal Meeting
Affidavits at the time of Bid Overall Participation Individual DBE Scope and Bid $
Bidders Lists DBE Bid Verification Notice to Proceed
DBE Payroll Records
Change Orders
Approved Invoices
Monthly DBE Activity Reports
Request(s) for DBE Substitutions/Scope Reductions
DBE Onsite Form(s)
Substantial Completion Letter
Final Pay Request
Certificate of Payment for each DBE
Final DBE Utilization Report
Final Completion Letter
Today
The more we do now, the less we’ll struggle with later Don’t wait for the race-conscious program
to be reinstated
Train your staff regarding compliance
Revisit boilerplate language
Establish an outreach program
(it doesn’t have to be expensive!)
Work with primes and subs to build relationships and address challenges
DBE compliance doesn’t have to be difficult
Follow the framework … “cradle to grave”
Remember that DBEs are NOT like other subs
We can help address issues
Reductions, terminations, and replacements have to be approved
Subs listed at time of bid have to be utilized
There are resources available; let us help!
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