Host: Welcome back and we say that because we hope you saw our introductory video on “Do You Need a Disadvantaged Business Enterprise Program?”
But just to recap, the first video told us there was a $250,000 threshold and if you received that amount or more in FTA grants, and used it for contracting, you needed a DBE program in place. Today, we'll explore the main components of a DBE program.
Let's start with the program objectives, that is, the spirit behind the law. We want to ensure nondiscrimination in the award and administration of FTA-assisted contracts. One way we can do that is to create a level playing field on which DBEs can compete fairly for FTA-assisted contracts.
There are four key elements to understanding and complying with the DBE program: setting your goals; planning your program; monitoring and oversight; and reporting. In this presentation, we’ll focus on the highlights of planning your program and we want to stress the word "highlights.”
This video simply provides an overview of the program planning. For specifics, you can turn to any number of resources found on the FTA website. You'll even find templates that you can use to guide and shape your plan.
Instructor: The DBE program plan you’ll be creating is similar to an architect’s blue print or a coach’s playbook. It’s a detailed breakdown of how you’ll implement and administer your DBE program.
A DBE Program Plan consists of many elements. We will explain them for you in several groups.
The Policy Statement confirms your participation in the DBE program, identifies the objectives of your DBE program and who your DBE Liaison Officer is. The Statement also addresses the manner by which your company will disseminate information about your plan, both internally and externally.
Lastly, the Policy Statement must be signed and dated by your current Chief Executive Officer. For distribution purposes, most companies elect to post their Policy Statement on their companies or organization’s website.
Next, your organization must have a DBE Liaison Officer. This person undertakes the responsibilities associated with DBE program implementation and has a direct reporting relationship with the CEO. Conversely, the CEO must assist the Liaison Officer with adequate authority and staff to administer the program. It’s also advised that the roles and responsibilities of the Liaison Officer be made known to both the organization’s internal and external audiences – employees, clients, vendors and other important stakeholders.
Another type of DBE vendor can be a financial institution that provides you with services that we all need, such as banking, payroll, accounting, tax help and more. Therefore, the regulation dictates that you conduct a thorough search for DBE financial institutions. Also, a best practice within your program is to state how often you’d re-evaluate the availability of DBE financial institutions, say every one to two years. To be clear, you are not required to use a DBE financial institution, but you are required to look for them and make that list available to your prime and subcontractors who may have a need for these financial services.
Next, a DBE Directory is issued by each certifying agency – there’s at least one in every state in the country - and it can help you locate ready, willing, and able certified DBEs in specific work categories. Other recipients or manufacturers may also have a listing or directory of DBEs they have identified, so be sure to check with those agencies located closest to you.
A reminder to Transit Vehicle Manufacturers – checking with the civil rights office of a transit agency or a State civil rights office is also a good resource for determining ready, willing, and able DBEs.
Next is what’s known as Overconcentration Analysis. It indicates that you have monitoring mechanisms to ensure that over concentration can be identified and adequately addressed. This can be tricky to understand, so here’s an example.
Let’s say your prime contractor employs a DBE to build a fence around a bus depot. A year later, they build another bus depot and employ another DBE to build the surrounding fence. In fact, they do this every time you need a fence – they hire a DBE to do the fencing work. So in effect, they’re over concentrating DBEs in this one area of building fences. By doing this, you no longer have a level playing field, because they’re excluding any fence builder who’s not a DBE.
Not hiring any DBEs is not fair, but hiring too many in one area alone is also not fair. So the Overconcentration Analysis is designed to help you and your contractor maintain a balance. The analysis is your way of demonstrating that you’ve thought about this issue and you have a plan in place to find and keep this balance.
One method to do this, for instance, is to track the types of work performed by DBEs when goals are included in contracts. Whatever method you choose, you must describe it in your DBE program including a timeframe for how often you will conduct this analysis.
Next, a Business Development Program is a best practice area whose purpose is to further the development of DBEs. How?
By mentoring them, by helping them move into non-traditional areas of work, or helping them compete better in their marketplace. Why is this a good idea? When you help a DBE grow, that adds jobs, which is always good for the entire community.
Also on the list for your DBE program is Goal Setting. The big picture is this.
Your plan has to include your calculation of the percentage of Federal funds that will be directed toward DBE contractors and subcontractors and a detailed goal methodology with a step-by-step explanation of how you established your DBE goal.
What? Exactly. Since this requires a lot of detailed explanation, we’ll address this in another presentation.
Let’s recap what DBE Program Plan elements we’ve discussed so far.
Here is a list of the next set of elements needed in your DBE Program Plan.
Next up? Required Contract Provisions. Meaning, contracts between you and your contractors and subcontractors must include all DOT regulatory DBE provisions when Federal funds are involved. This even applies to purchase orders, since they’re considered contracts by the Federal government.
Let’s look at a few examples. One required contract clause is the “non-discrimination” clause.
Your job is to include it – using exactly this language – in all contracts with your prime contractors and with your subcontractors.
Another example of a required Contract Provision is prompt payment. The intent of this provision is to ensure that prime and subcontractors receive timely payment for the services or products they provide to you.
Federal law requires prime contractors to pay their subcontractors for satisfactory performance on their contracts no later than 30 days from receipt of each payment made.
There’s also an issue known as Retainage. Sometimes, a government agency will hold an amount of money in reserve until the prime contractor’s work has been completed to the agency’s satisfaction. In turn, the prime contractor may try to withhold or retain the same percentage of money owed to the subcontractors.
That’s okay so long as once the subcontractor’s work is completed, the prime contractor must pay the full amount to the sub-contractor within 30 days.
It doesn’t matter if the prime contractor has been paid in full by the government or not. When the DBE’s work is done, the DBE must be paid within 30 days.
So how do you ensure your prime contractor is upholding this 30-day compliance? That must be in your DBE plan too.
One method is to require prime contractors to complete a questionnaire that asks specific questions related to payment to subcontractors prior to, or immediately after, you process payment for their services. You must have a method for monitoring the timeliness of their payments to the DBEs and include a description of it in your DBE program.
The last item to know about Contract Provisions is that you, as a recipient of FTA funds, have legal remedies to ensure the provisions between you and your contractors are enforced. In extreme cases, you can cancel contracts, take contractors to court and hand out stiff financial penalties for violation of Contract Provisions.
Whatever legal remedies you intend to pursue must be included in your DBE program.
The next two items are Certification Standards and Certification Procedures.
DBE firms are certified by a state’s Unified Certification Program to ensure they are actually socially and economically disadvantaged. If you are a certifying member, you must have certification standards and procedures that comply with DOT regulations.
Moving on to Record Keeping and Monitoring, there are two items to remember. The first is a paperwork requirement. You must keep FTA apprised of your DBE participation via your annual and semi-annual DBE reports.
The next item pertains to monitoring. You are responsible for ensuring that certified DBEs are performing the work contracted to them and that they are being paid for their satisfactory performance. Sounds simple, right? You hire a DBE and they perform the work. Not always. Some unscrupulous companies have used DBEs as covers or shells to get work illegally.
Here’s how. A prime contractor wants the work, but knows that they will need DBE participation in order to win the contract.
So the prime partners with a DBE and says “I’ll pay you a lot of money, if I can use your company’s name to get the contract. Then, when I get the contract, you show up with your folks for the first day and my company will take over the work on the second and subsequent days. And no one will be the wiser.”
Not anymore. Those days are over; FTA requires that you be the one to monitor the performance of all your vendors, including prime contractors, sub contractors and DBEs. That means you need a plan to ensure that the DBE who was hired is actually doing the work given to them, not some other company.
You will have to do spot checks at the site where the work is taking place. You will have to audit your vendor’s books. You need to have a list of methods you plan to use to monitor your overall DBE Program. In short, you are responsible for enforcing the law.
We’ve just presented a lot of information; let’s review the elements we’ve discussed.
In the final section of this video we’ll review these Program Plan Elements. The next topic is complicated.
Remember that earlier, we discussed Goal Setting. From that you determine your Race Conscious & Race Neutral split – that is the percentage of FTA funds that will be spent on hiring DBEs using these differing methods.
Race conscious is a measure or program that is focused specifically on assisting only DBEs. Race neutral, on the other hand, is a measure or program, that’s used to assist all small businesses.
An example of a race conscious measure is the establishment of contract goals for DBE participation. So, the first part of Contract Goals says that you will make sure your prime contractor affirms to you that they will meet the DBE goals in their contract. If they fail to meet their goals they must prove to you that they conducted good faith efforts to utilize DBEs. You must receive documentation of these efforts and you must approve that documentation.
The second part of Contract Goals states that they should be used to meet any portion of your DBE goal you do not anticipate being able to meet using only race neutral measures.
In the context of these definitions, it is important to note that awards of contracts to DBEs are not necessarily race conscious actions. Whenever a DBE receives a prime contract because it is the lowest responsible bidder, the resulting DBE participation was achieved through race neutral means. Similarly, when a DBE receives a subcontract on a project that does not have a contract goal, its participation was also achieved through race neutral means. Note that the use of race neutral measures, such as outreach or technical assistance, specifically used to increase the participation of DBEs, does not convert these measures into race conscious measures.
Fostering small business participation is the next topic on our program plan, and its main components include: a method for facilitating small business competition, determining which small businesses are eligible to participate in your initiatives, outreach efforts and an implementation schedule. Since DBEs are often small businesses, having a strong small business participation plan will help contract DBEs.
This brings us to the last topic in our Program Plan: the Shortfall Analysis and Corrective Action Plan. As you know, once you receive $250,000 in Federal grants or more, you have to have a DBE program in place with stated goals for DBE inclusion.
The shortfall analysis is in place in the event that you fail to meet your overall goals. The analysis documents are where you identify the problems you faced and establish specific steps and milestones to correct those problems. And, while this a document you keep on file at your headquarters, you will be found in non-compliance if you fail to produce this document upon FTA request.
In addition, for those of you that are one of FTA’s 50 largest grantees, you must submit to your regional civil rights officer by December 1st, each year an analysis of how you will address your DBE goal shortfall.
A list of FTA’s 50 largest grantees can be found on FTA’s DBE website.
Here are a couple of reminders as you begin to build your plan. First, if you do use one of FTA's templates to help you form your plan, don’t leave the template language in your DBE Program Plan. The template is just that, a sample to guide you on the elements needed in your DBE program. Your program should be narrowly tailored to your individual circumstances.
Second, if a required element doesn’t apply to you, simply state that it doesn’t apply and provide a justification for its inapplicability.
Third, if you have a race neutral program in place, your DBE program plan must demonstrate how you are going to pursue that race neutral program.
Last, once you complete your DBE program, you do not need to update it unless you have significant changes.
What does this mean?
If there are changes in how your agency is organized – for instance, you get a new CEO, or you get a new DBE Liaison Officer - then your program plan needs to reflect that change. If there are new responsibilities for your Liaison Officer, or you establish new methods for assisting DBE participation, then the program needs to change.
Or, if there’s a change to the Federal law or regulations that affect DBEs, how you will implement those changes needs to be incorporated into your DBE program.
Here is a recap of the last section of DBE Program Plan Elements.
Don't leave FTA Template language in your plan, state why any required elements don’t apply to you, describe how you will pursue race neutral measures, and update your DBE Program Plan when it is needed.
And that is the essence of the DBE Program Plan. We’ve given you some fundamental information, which we hope you find useful.
But, we know that you may have specific questions concerning your organization. So by all means, reach out to us via our website or email. In the meantime, from all of us at FTA, thanks for watching.