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

Pre-Award

Award

Post-Award

Contract Administration

Contract Close-Out

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

Pre-Construction Meeting Weekly Meetings Complete List of Subcontractors Copies of DBE Contracts

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!

Please feel free to contact me with questions:

Melissa Boyles

DBE Supportive Services Program Manager

ADOT Civil Rights

mboyles@azdot.gov

(602) 712-7761