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DDOT DBE Summit Thursday, May 5, 2011
Martha Kenley National DBE Program Manager FHWA Office of Civil
Rights 202-366-8110 [email protected]
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LEARNING OBJECTIVES
l Revisions to 49 CFR Part 26 l DBE Common Problems
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REVISED DBE RULE
l Termination for Convenience 49 CFR §26.53 (f) has been
expanded
l Prime contractors may not terminate for convenience a DBE
that it used to meet a contract goal without:
l Good Cause l State DOT written approval
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REVISED DBE RULE
l Program Oversight 49 CFR §26.37 has been expanded
l State DOTs must provide written certification that work
committed to DBEs is actually performed by DBEs to which the work
was committed
l Every contract
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REVISED DBE RULE
l Small Business Requirement 49 CFR §26.39 has been added
l State DOT must include a small business element to its DBE
program to facilitate participation by small businesses generally,
not just DBEs
l Submitted to FHWA by Feb. 28, 2012
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REVISED DBE RULE
l Accountability 49 CFR §26.47 has added (c)
l State DOT that not meet its overall DBE goal in any given year
must submit written analysis of why the goal was not met and
corrective actions to be taken
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REVISED DBE RULE
Increase PNW cap from $750,000 to
$1.32 M as an inflationary adjustment
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REVISED DBE RULE
l Interstate Certification 49 CFR §26.83 has been expanded
l DBE is certified in its home state A and applies for
certification in State B
l State B has 60 days to determine if it has concerns with
certifying the firm and to supply the firm with a written
description of the specific concerns it has
l The firm then must respond either in writing or in person and
has the BOP to convince State B that its concerns are unfounded
l Implemented beginning January 1, 2012
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REVISED DBE RULE
l Certification Issues l NAICS Code. Work performed by DBE must
be
described in terms of most specific NAICS Code that best
describes type of work DBE owners can control and will perform on
State DOT contracts
l May have multiple NAICS Codes l State DOTs may also add a
description of work–
clear and specific l Ensure NAICS Codes are current and
accurate l Update Directory by August 28, 2011
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REVISED DBE RULE
l A DBE stays certified until its certification is removed
through due process procedures in 49 CFR§26.87
l No such thing as “recertification” or “expiration”
l State DOT (UCP) can perform onsites at any time if changed
circumstances are indicated in Annual Affidavit or 3rd Part
Complaint, or as a matter of procedure at certain intervals of
time
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YOU NEED TO KNOW. . .
Or be reminded. . . . . . Issues regularly encountered
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DBE CONTRACT GOALS
l States are not required to set DBE goals on every Federal-aid
contract, but must set goals on enough individual contracts to
cumulatively reach the overall goal
l States set appropriate, “narrowly tailored,” DBE goals on
individual contracts
l If a prime does not meet the DBE contract goal, it must
provide the State DOT with documentation to show that it used “good
faith efforts” to do so
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DBE CONTRACT GOALS
l If a prime contractor/consultant does not meet the DBE
contract goal, it must provide the State DOT with documentation to
show that it used “good faith efforts” to do so
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STATE DOT EVALUATION OF GFE
l Rigorous review of documented efforts l Review performance of
other bidders l Lowest price not sufficient reason to
reject l Review all subcontractor quotes l Follow up with DBEs
to see if contacted l Beware of meaningless, pro-forma
contact/solicitation
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CONTRACT ADMINISTRATION
l What’s in DDOT’s Contract? l What happens in the event
of
breach?
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CONTRACT TERMS
Contract must contain these provisions
l Non-discrimination l Prompt payment l Retainage l Enforcement
Provisions
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PROMPT PAYMENT
l Must have contract provision that requires primes to pay all
subcontractors, material suppliers, truckers no later than 30 days
after completion and acceptance
l “Satisfactory Completion” means portion of the work has been
completed and accepted.
l Are subs being paid promptly? 17
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RETAINAGE
DOT must select one of the following options for retainage:
l Decline to hold retainage and prohibit
prime from holding retainage l Decline to hold retainage from
prime,
but allow prime to hold from sub l Hold retainage from prime and
provide
for incremental acceptance l Is this working?
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SANCTIONS
l What does the contract say? l Withhold estimates, progress
payments l Breach of contract l Liquidated damages l Internal
prequalification process
remedies
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APPROVING DBE COMMITMENTS
l Is DBE certified to perform type of work listed?
l Is the dollar amount of the subcontract
commensurate with the type of work to be performed?
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APPROVING DBE COMMITMENTS
As part of its DBE commitment, prime lists DBE hauler with two
trucks for $2M worth of trucking services over a period of one
year
l It’s O.K., he might be able to pull it off l No way--that’s
not good faith
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PROJECT MONITORING
Project monitoring not just responsibility of Civil Rights
Staff
l State field/central office l FHWA
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DBE COMPLIANCE
l Is this allowed? l Can it be counted?
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DBE COMPLIANCE
Prime hires DBE as a subcontractor to furnish and install- lists
toward DBE commitment
Oversight reveals DBE is working as a broker
l Is this allowed? l Can this be counted?
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DBE COMPLIANCE
DBE is using prime’s equipment. l Is this allowed? l Can it be
counted?
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DBE COMPLIANCE
DBE purchases materials or supplies from the prime. l Is this
allowed? l Can it be counted?
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DBE COMPLIANCE
DBE leases equipment that includes two persons that are not
employees of the DBE.
l Is this allowed? l Can it be counted?
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CONTRACT COMPLIANCE
Prime lists DBE X toward goal to perform rebar services. Due to
weather delays, prime is behind schedule (bonus for early
completion). Oversight reveals Prime’s employees help DBE tie rebar
to save time.
l Is this allowed? l Can it be counted?
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CONTRACT COMPLIANCE
Prime listed DBE hauler X to perform hauling services for a
contract item.
Oversight reveals that no one has ever seen a truck owned by DBE
hauler X on job site. Prime says DBE’s truck broke down, and DBE is
supplementing with other DBE and non-DBE trucks.
l Is this allowed? l Can it be counted?
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CONSTITUTIONAL CHALLENGES
l Midwest Fence Corp. v. U.S. Dep’t of Transp., et al., No.
10-C-5627 (N.D. Ill.)
l Geyer Signal, Inc. v. MNDOT, et al l Richard F. Kline Inc. v.
State Highway
Administration et al l Associated General Contractors of
America v. California Department of Transportation
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THE END - THANK YOU
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Martha Kenley National DBE Program Manager FHWA Office of Civil
Rights 202-366-8110 [email protected]
