Disadvantaged Business Enterprises (DBE) Program

Minnesota Department of Transportation

April 25, 2013

Minnesota County Highway Accountants

Association, Best Western Plus Kelly InnSt. Cloud, Minnesota

Presented By: Ashanti Payne

Office of Civil Rights

DBE Project Life-Cycle: Beginning to EndMnDOT’s Policy Statement DBE Project goals (Planning) -

When do DBE goals apply?When are they set within MnDOT’s procurement process?How are goals set for projects?

Contract Clearance - Who is responsible for ensuring goals are met?Commercially Useful Function (CUF)Counting DBE Credit/Trucking

Submitting a Responsible Bid (Good Faith Efforts)The Good Faith Effort(GFE) review by DBE Specialist

Items which may be reviewed in assessing GFEs

DBE Project Life-Cycle (Cont.)

Reconsideration Process -

Contract Compliance (Post Award DBE Monitoring) On-Site Reviews Replacement of DBE’s Prompt Payment Contractor Payment Forms - Final Payment Affidavit –

DBE Commitments vs. Payments

Policy Statement

It is the policy of the Minnesota Department of Transportation (MnDOT) that DBEs, as defined in 49 C.F.R. Part 26, and other small businesses, shall have the maximum feasible opportunity to participate in contracts financed in whole or in parts with federal funds. Consistent with this policy and Title VI of 1964 Civil Rights Act, MnDOT will not allow any person or business to be excluded from participation in, denied the benefits of, or otherwise be discriminated against in connection with the award and performance of any U.S. Department of Transportation (USDOT) assisted contract because of sex, race, color, or national origin. MnDOT has established a Disadvantaged Business Enterprise (DBE) program in accordance with the regulations of the DOT, 49 C.F.R. Part 26 to implement this policy.

Current Overall DBE Goal 10.3% DBE participation on federally funded projects:

FHWA 2009 - 3.9% 2010 - 5.6% 2011 – 7.6% 2012 – 6.6%Transit Projects

2009 – 0 2010 – 3.6% 2011 – 0% 2012 – 8.7%

Disadvantaged Business Enterprise (DBE)

DBE Goals must be set on any contract(s) financed in whole or in part with federal funds.

We review the following when setting goals on any given project on a case by case basis; [project location, project size, sub contracting opportunities, work types & availability (ready, willing & able) of DBEs]

Ultimately the Prime Contractors are held to meet the goals identified on the project. However, it is the responsibility of all subs to work closely with the Prime in meeting those goals.

What happens if a goal is not met at the time one is set;What happens if a goal is not met throughout the monitoring of the

project;

DBE Project Goals – When do they apply? How and when are they set? Who is responsible for compliance? What if they are not met?

Goal Setting Protocol:

Step One – Office of Civil Rights (OCR) receives required information from District Office and Special Provisions Engineer Project Breakdown Scopes of Work Cost Estimate Advertisement Date Letting Date Anticipated Start Working Days Any Pertinent Project-related Information

Goal Setting Protocol (Cont.):

Step Two – Identifying Scopes of Work DBE’s Can performBituminous (Pavement, Sawing, Mill, Seal Coats, etc.)

Concrete (Bridge, Pavement, Sawing, etc.)

Electrical (Supplies Installation, Signals, etc.)

Excavation (Clear & Grub, Demolition, Removal of Curb & Gutter, etc.)

Fencing (Ornamental, Wire, Chain, Wood, Guardrails, etc.)

Landscaping (Mulching, Silt fence, Erosion Control, etc.)

Pavement Marking (Interim, Removal, Epoxy, etc.)

Materials (Aggregate, RipRap, Oil, etc.)

Misc. (Utilities, Drainage, Painting

Planning (Traffic Control, Signing, Surveying, Consulting, etc.)

Goal Setting Protocol (Cont.):Step Two (Cont.) – Identifying Scopes of Work DBE’s Can

perform

Sewer (Installation, RC Pipe, Irrigation, etc,)

Rebar/Steel (Installation, Erection, Placement, etc.)

Trucking (Grading, Hauling, etc.)

Walls (Noise, Retaining, etc.)

Other (Any other scopes that may be a part of THIS project)

Goal Setting Protocol (Cont.):Step Three – Arriving at an “Overall” DBE Project Goal

How is it done?

What is the Purpose?

Step Four – Exclusion of Scopes of WorkWhy?

What are the key factors to consider when excluding work

Step Five – Establishing a final Project Goal

Goal Setting Protocol (Cont.):

Step Six – Final Approval and Signature from OCR Director

Step Seven – DBE Project Goal is sent to MnDOT Special Provisions Engineer

Step Eight – Project is advertised according relevant schedule and appropriate Letting

Goal Setting Protocol (Cont.):Questions?

Contract Clearance:

Meet The Established Goal On The Project!!!!!• Meet the DBE goal on a project or demonstrate Good Faith

Efforts.• The bidder must show that it took all necessary and reasonable

steps to achieve a DBE goal or other requirements of 49 C.F.R. Part 26 which, by their scope, intensity, and appropriateness to the objective, could reasonably be expected to obtain sufficient DBE participation. (49 C.F.R. §26.53)

Contract Clearance (Cont.):Goal Is Met

Commercial Useful Function (CUF)DBE firms must perform at least 30% of subcontract§ 26.55

(1) A DBE performs a commercially useful function when it is responsible for execution of the work of the contract and is carrying out its responsibilities by actually performing, managing, and supervising the work involved. To perform a commercially useful function, the DBE must also be responsible, with respect to materials and supplies used on the contract, for negotiating price, determining quality and quantity, ordering the material, and installing (where applicable) and paying for the material itself. To determine whether a DBE is performing a commercially useful function, you must evaluate the amount of work subcontracted, industry practices, whether the amount the firm is to be paid under the contract is commensurate with the work it is actually performing and the DBE credit claimed for its performance of the work, and other relevant factors.

(2) A DBE does not perform a commercially useful function if its role is limited to that of an extra participant in a transaction, contract, or project through which funds are passed in order to obtain the appearance of DBE participation. In determining whether a DBE is such an extra participant, you must examine similar transactions, particularly those in which DBEs do not participate.

(3) If a DBE does not perform or exercise responsibility for at least 30 percent of the total cost of its contract with its own work force, or the DBE subcontracts a greater portion of the work of a contract than would be expected on the basis of normal industry practice for the type of work involved, you must presume that it is not performing a commercially useful function.

Contract Clearance (Cont.):

Bottom Line – MnDOT OCR must determine the value of the work actually performed by the DBE(s) with their own equipment and forces in order to apply it towards the DBE Goal.

Forms (Assist OCR in the determination) Exhibit A’s Bidders List Advertisements and Quotes

Counting DBE Credit/Trucking (Cont.):

§ 26.55 How is DBE participation counted toward goals?

(a) When a DBE participates in a contract, you count only the value of the work actually performed by the DBE toward DBE goals.

(1) Count the entire amount of that portion of a construction contract (or other contract not covered by paragraph (a)(2) of this section) that is performed by the DBE's own forces. Include the cost of supplies and materials obtained by the DBE for the work of the contract, including supplies purchased or equipment leased by the DBE (except supplies and equipment the DBE subcontractor purchases or leases from the prime contractor or its affiliate).

(2) Count the entire amount of fees or commissions charged by a DBE firm for providing a bona fide service, such as professional, technical, consultant, or managerial services, or for providing bonds or insurance specifically required for the performance of a DOT-assisted contract, toward DBE goals, provided you determine the fee to be reasonable and not excessive as compared with fees customarily allowed for similar services.

(3) When a DBE subcontracts part of the work of its contract to another firm, the value of the subcontracted work may be counted toward DBE goals only if the DBE's subcontractor is itself a DBE. Work that a DBE subcontracts to a non-DBE firm does not count toward DBE goals.

(b) When a DBE performs as a participant in a joint venture, count a portion of the total dollar value of the contract equal to the distinct, clearly defined portion of the work of the contract that the DBE performs with its own forces toward DBE goals.

Counting DBE Credit/Trucking (Cont.):§ 26.55

d) Use the following factors in determining whether a DBE trucking company is performing a commercially useful function:

(1) The DBE must be responsible for the management and supervision of the entire trucking operation for which it is responsible on a particular contract, and there cannot be a contrived arrangement for the purpose of meeting DBE goals.

(2) The DBE must itself own and operate at least one fully licensed, insured, and operational truck used on the contract.

(3) The DBE receives credit for the total value of the transportation services it provides on the contract using trucks it owns, insures, and operates using drivers it employs.

(4) The DBE may lease trucks from another DBE firm, including an owner-operator who is certified as a DBE. The DBE who leases trucks from another DBE receives credit for the total value of the transportation services the lessee DBE provides on the contract.

(5) The DBE may also lease trucks from a non-DBE firm, including from an owner-operator. The DBE who leases trucks from a non-DBE is entitled to credit for the total value of transportation services provided by non-DBE lessees not to exceed the value of transportation services provided by DBE-owned trucks on the contract. Additional participation by non-DBE lessees receives credit only for the fee or commission it receives as a result of the lease arrangement. If a recipient chooses this approach, it must obtain written consent from the appropriate Department Operating Administration.

Example to this paragraph (d)(5): DBE Firm X uses two of its own trucks on a contract. It leases two trucks from DBE Firm Y and six trucks from non-DBE Firm Z. DBE credit would be awarded for the total value of transportation services provided by Firm X and Firm Y, and may also be awarded for the total value of transportation services provided by four of the six trucks provided by Firm Z. In all, full credit would be allowed for the participation of eight trucks. With respect to the other two trucks provided by Firm Z, DBE credit could be awarded only for the fees or commissions pertaining to those trucks Firm X receives as a result of the lease with Firm Z.

Counting DBE Credit/Trucking (Cont.)(e) Count expenditures with DBEs for materials or supplies toward DBE goals as provided in the following:

(1)(i) If the materials or supplies are obtained from a DBE manufacturer, count 100 percent of the cost of the materials or supplies toward DBE goals.

(ii) For purposes of this paragraph (e)(1), a manufacturer is a firm that operates or maintains a factory or establishment that produces, on the premises, the materials, supplies, articles, or equipment required under the contract and of the general character described by the specifications.

(2)(i) If the materials or supplies are purchased from a DBE regular dealer, count 60 percent of the cost of the materials or supplies toward DBE goals.

(ii) For purposes of this section, a regular dealer is a firm that owns, operates, or maintains a store, warehouse, or other establishment in which the materials, supplies, articles or equipment of the general character described by the specifications and required under the contract are bought, kept in stock, and regularly sold or leased to the public in the usual course of business.

(A) To be a regular dealer, the firm must be an established, regular business that engages, as its principal business and under its own name, in the purchase and sale or lease of the products in question.

(B) A person may be a regular dealer in such bulk items as petroleum products, steel, cement, gravel, stone, or asphalt without owning, operating, or maintaining a place of business as provided in this paragraph (e)(2)(ii) if the person both owns and operates distribution equipment for the products. Any supplementing of regular dealers' own distribution equipment shall be by a long-term lease agreement and not on an ad hoc or contract-by-contract basis.

(C) Packagers, brokers, manufacturers' representatives, or other persons who arrange or expedite transactions are not regular dealers within the meaning of this paragraph (e)(2).

(3) With respect to materials or supplies purchased from a DBE which is neither a manufacturer nor a regular dealer, count the entire amount of fees or commissions charged for assistance in the procurement of the materials and supplies, or fees or transportation charges for the delivery of materials or supplies required on a job site, toward DBE goals, provided you determine the fees to be reasonable and not excessive as compared with fees customarily allowed for similar services. Do not count any portion of the cost of the materials and supplies themselves toward DBE goals, however.

Counting DBE Credit/Trucking (Cont.)

Mentor Protégé Arrangement(s)

May be used to fulfill part or all of the DBE goal Formal Arrangement(s)/Agreement(s) Prior Approval from MnDOT Office of Civil Rights

Includes both DBE Protégé and Mentor

§ 26.55

(b) When a DBE performs as a participant in a joint venture, count a portion of the total dollar value of the contract equal to the distinct, clearly defined portion of the work of the contract that the DBE performs with its own forces toward DBE goals.

Contract Clearance:If everything adds up – The Project is cleared for Award and gets built:

- On Time- On Budget

Discussion/Questions?

Submitting A Responsible Bid/Good Faith Effort (GFE)

Good Faith Efforts - Forms Narrative

a letter explaining in detail the efforts the ALB made to meet the DBE goal

Exhibit A Certificate of Good Faith Efforts Consolidated Form

Bidders List

Good Faith Efforts AffidavitGFE Materials must be submitted within five (5) business days after notification of being the Apparent Low Bidder (ALB)

Submitting A Responsible Bid/GFE (Cont.)

MnDOT Office of Civil Rights Evaluation – 5 Key Factors:

I. Solicitation

II. Negotiation

III.Assistance (Materials, Supplies, Plans, Bonding, etc.)

IV.Breaking out Portions of Work Being Self-performed

V. De-bundling

Reconsideration Process

Post Award DBE Monitoring

Post AwardOn-Site ReviewsMonitoring DBE Field Work- Exhibit A.

Competed/executed by DBE PrincipalDBE resources & Capacity (i.e, people, equipment, etc.)DBE subcontractors- Controlling own work, using own resources & doing the workConsistent with Exhibit A

Replacement of DBE’sContractor Payment Form

Complete, Consistent, Accurate

Final Payment AffidavitStandard Specifications for Construction, Section 1908:

A Contractor must submit a Final Payment Affidavit showing amounts paid to a DBE before final payment can be made on a project.

Affidavit must be approved by OCR before final payment.Affidavit sent to Project Engineer & the Office of Civil Rights.

Contractor Payment Form

Contract Number: Agency/Grantee/Consultants/Subcontractor: Payment Reporting Period:

From: To: Instructions: All Agencies/Grantees/Consultants/Subcontractors making payments to Contractors/Subcontractors/Suppliers/Service Providers, regardless of their tier or DBE status, are required to

complete and submit this form to the Mn/DOT Office of Civil Rights (OCR), until final payment is made. Failure to comply with this form, and Minnesota’s prompt payment law may cause progress payments to the Design-Builder’s to be withheld. Submit one copy of this form to the Mn/DOT OCR and one copy to the Office of Transit Grant Manager, no later than ten (10) days after receiving payment from Mn/DOT.

Agency/Grantee/Subcontractor Information Original Contract Amount Committed DBE % Actual DBE % to Date

Name:

Address:

Phone:

Name of Subcontractor/Supplier DBE?

(Check if Yes)

Description of Work Subcontract Amount

1. 1. 1.

2. 2. 2.

3. 3. 3.

4. 4. 4.

5. 5. 5.

Amount of Current Payment % Paid to date Final Payment? Yes/No

1. 1. 1.

2. 2. 2.

3. 3. 3.

4. 4. 4.

5. 5. 5.

Company Officials Signature & Title Date Signed Name & Title of Individual Completing Report

(Type or Print Clearly)

Title: Title:

Phone: Fax:

This form may be submitted in an alternate format

DBE Total Payment FormMinnesota Department of Transportation

Office of Civil Rights DBE Total Payment Affidavit

Pursuant to Mn/DOT Standard Specifications for Construction, Section 1908, the following DBE Total Payment Affidavit shall be executed by the Prime Contractor after all work has been performed by a DBE on this project.

Contract Number: State of: County of I, , being first duly sworn, do depose and say that (Authorized Representative) 1. I am the authorized representative of (Name of Individual Company, Partnership or Corporation) and I have the authority to make this Affidavit for and on behalf of said Prime Contractor. 2. The following DBE Subcontractors/Suppliers/Service Providers/Sub-Consultants have performed work on this contract/project with a total dollar value of:

Name of DBE Firm Dollar Amount of

Subcontract Total Dollar Amount

Paid DBE

1.

2.

3.

3. If the dollar value of the DBE firm’s total work is less than the DBE’s original subcontract/agreement, please explain:

4. I have fully informed myself regarding the accuracy of the statements made in this Affidavit.

Signed:

(Prime Contractor or Authorized Representative)

Subscribed and sworn to before me. This day of , 20

(Notary Public)

My commission expires , 20

Notary Seal

Prepare Affidavit in duplicate. Submit one original to the Project Engineer, and one original to: Mn/DOT Office of Civil Rights 395 John Ireland Blvd., MS 170 St. Paul, MN 55155

No. 1908 – Standard Specifications for Construction Unless the Contractor has presented an Affidavit showing the total dollar amounts of work performed by Disadvantaged Business Enterprises (DBE), final payment may be withheld.

DBE Commitments vs. PaymentsWhat Does This Mean?

Don’t Forget

Your Responsibilities Fulfill DBE Commitment Prompt Payment DBE Replacement Award of Contract (After receiving clearance letter) Exhibit A submittal. Trucking Guidelines

EEO Office Responsibilities Good Faith Affidavit Certificate of Good Faith Efforts Bidders List Contractor Payments Contract Clearance (timely mannered, 3-5 days)

MnDOT Office of Civil RightsSmall Business Contracting Section, Supervisor

Ashanti Payne ashanti.payne@state.mn.us 651-366-3071

DBE Specialists

Andrea Robinson (East Metro) andrea.robinson@state.mn.us 651-366-3353

Cole Busch (MnDOT Districts 1,2,3,4) cole.busch@state.mn.us 651-366-3332

Sheila Scott (MnDOT Districts 6,7,8)sheila.scott@state.mn.us 651-366-3323

Terrina White-Vasser (West Metro) terrina.white-vasser@state.mn.us 651-366-3074

Targeted Group Business (TGB) and Veterans Programs

Michael Johnson (Team Lead) michael.allan.johnson@state.mn.us 651-366-3329

Joyce Brown-Griffin (TGB Specialist) joyce.brown-griffin@state.mn.us 651-366-3350

Michelle Reynolds (Veterans Specialist) michelle.reynolds@state.mn.us 651-366-3335

DBE Administration Contact

Diane Clark diane.clark@state.mn.us 651-366-4290

Heidi Audette heidi.audette@state.mn.us 651-366-3328

http://www.dot.state.mn.us/civilrights/index.html