2014 DBE PROGRAM
REVISIONS
January 12, 2015
Martha Kenley
National DBE Program Manager
Denesha James
Attorney Advisor
Federal Highway Administration
[email protected] [email protected]
Effective Date
• Effective November 3, 2014
• Includes use of new forms:
• DBE Certification Application; PNW
Form; Uniform Report; MAP-21 Data
• The forms can be found on the DOCR
website:
https://www.civilrights.dot.gov/disadvant
aged-business-enterprise/dbe-guidance
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Size Standard
• Increased from $22.41 million to $23.98
million
• Averaged over 3 year period (last 3
years)
• Gross receipts of firm and affiliates
• Size cap for individual firms may be
lower depending on Small Business Size
Standard tied to NAICS Code
PNW Form
• Applicants and certifiers must use standard
DOT PNW Form without modification
• Each individual whose ownership and
control are relied upon for DBE certification
must complete the form
• Not required for spouse who is not active in
the business or other non-disadvantaged
owners
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PNW Form
• List fair market value of all properties
and identify source of market valuation
• Equity is fair market value minus
amount due on mortgage and any
equity line of credit
• Certifying entity will calculate PNW of
applicant based upon information
provided
PNW Review
• Note asset transfers 2 years prior to
date of PNW form
• No “one-size-fits-all”
• May ask some applicants for back up
documentation if necessary to serve a
useful purpose that addresses a specific
question
• Exercise judgment and restraint
Uniform Certification Application
• Applicants and certifiers must use
standard application form without
modification
• Some items removed; some added
• Checklist revised, changing some
documents from mandatory to optional
Uniform Certification Application
• Added space for dates of site visits
conducted by other States.
• Added space for applicant to describe
its primary activities, the products and
services it provides and the NAICS
codes it thinks are most applicable.
Uniform Certification Application
• DO NOT accept applicant-suggested
NAICS codes without verifying
applicability or that it is the NAICS Code
that most narrowly describes the firm’s
proposed activity on federally assisted
projects. Appeal rights for NAICS Codes
denied
Uniform Certification Application
• Control section asks for information
concerning the tasks most commonly
performed and how often these tasks
are performed to determine the
amount of time owners and others
devote to specific areas of a firm’s
operations
• Tool to assist in onsite review
Uniform Certification Application
• Federal –not State—tax returns
• No “one size fits all”
• You may request clarification of
information contained in application
• Notarized or signed under penalty of
perjury
• Request and collect only information
necessary
Uniform Report
• Separate forms for general DBE reports and
project reports (only difference is instructions)
• Collects information on minority womenowned DBEs
• Collects information on actual payments to
DBEs on ongoing contracts as a response to
GAO criticism that actual payments were not
matched to commitments in given year
• First report on new form due June 1, 2015
MAP-21 Data
• Each State DOT must report the number
of DBEs (not ACDBES) in their directory
controlled by:
– White women
– Minority or other males
– Minority Women
• Convert to percentages
• Report firms’ location: either home state
or out of state
MAP-21 Data
• More than 1 owner in category, choose
owner “with largest stake” in firm who
is also involved in controlling the firm
• State DOT, on behalf of UCP, submits in
a letter format to [email protected]
• Due January 1, 2015, and every year
thereafter
Objectives 26.1
• Adds: “To promote DBEs in all types of
Federally-assisted contracts and
procurement activities conducted by
recipients”
Definitions
• “Spouse” now includes domestic partnership
or civil union recognized under State law
• “Social and economically disadvantaged
individual:” adds: “who has been subjected
to racial or ethnic prejudice or cultural bias
within American society because of his or her
identity as a member of groups …The social
disadvantage must stem from circumstances
beyond the individual’s control.”
Definitions 26.5
• Removes all references to lapsed SBA
Memorandum of Understanding in definitions
and Certification Application
• “Native Americans” are presumed
disadvantaged if they are enrolled in a
federally or State recognized Indian tribe. If
not, must show individual disadvantage
• “Immediate family member:” adds sister-inlaw; brother-in-law, and domestic partner and
civil unions recognized under State law
(removal of grandchildren inadvertent)
Record Retention 26.11
• The minimum records related to certification that
must be kept indefinitely to facilitate interstate
certification are
– the complete application package for each
certified firm:
– the affidavits of no-change submitted by those
firms
– the notices of change submitted by those firms
– on-site reviews
• All other records are to be kept for at least 3 years or
for the time period set forth in the grant agreement
(whichever is longer)
Assurances 26.13
• Failure by contractor to carry out these
requirements is a material breach. . .
which may result in the termination of this
contract or other remedy as the recipient
deems appropriate, including, but not
limited to:
–
–
–
–
Withholding progress payments
Assessing sanctions
Liquidated damages
Disqualification from future biddings
DBE Program Plan 26.21
• FHWA direct primary recipients must
have an approved DBE program plan
• FHWA subrecipients are expected to
operate under the primary recipient’s
FHWA-approved DBE program plan
Overall Goals 26.45
• Methodology
– Bidder’s List O.K. if includes 3 years of data
of primes and subcontractors, both
successful and unsuccessful—if not, must
be supplemented with other data sources
– Prequalification and plan holder’s lists
must be supplemented with other data
sources
Overall Goal
• Project goals (not contract goals)
require recipient to follow same
procedures as overall goal (no change)
• In evaluating adequacy of methodology,
FHWA will be guided by Departmental
guidance (i.e., Tips on Goal Setting)
• FHWA may adjust your overall goal or
require the State DOT do so
Overall Goal
• Step 2 Adjustment should not be made
if:
– Base figure and median past participation
are close
– Adjustment perpetuates past
discrimination
Must explain why the adjustment is
appropriate
Overall Goal
• Advertising or posting for comment is
optional. If State chooses to do so, time
period is decreased from 45 to 30 days;
public comment period will not extend
Aug. 1 deadline
• Must post proposed goal on website
• Must consult (face-to-face, video
conference) with minority, women and
general contractor groups, and other
relevant stakeholders before submitting to
FHWA for review
Race-Neutral Participation 26.51
•
•
•
•
DBE primes
DBE participation on non-goal contracts
DBE participation beyond goal
Only change is that you cannot count as
race neutral DBE participation on
contracts with goals those DBEs that
prime says it used-- not because of
goal-- but because it has strict low-bid
policy
Good Faith Efforts 26.53
• Bidders must submit names and addresses
of DBE firms that will participate
• Description of work to be performed and
NAICs Code found on Directory
• Bidder’s commitment to use DBEs listed
• Confirmation from DBEs
• Documentation of Good Faith Efforts if
goal is not met
Good Faith Efforts 26.53(b) and
26.53(f)
• May provide as matter of responsiveness with
bid
• As a matter of responsibility within 7 days after
bid opening (5 days beginning Jan. 1, 2017)
• Negotiated procurement, including designbuild, is excluded
• Must use committed DBEs unless receive
State’s written consent to remove or replace
• If terminate or replace without consent, prime
not entitled to payment for work performed
Good Faith Efforts Procedures
26.53 (g)
• When DBE terminated or replaced –with
permission– or fails to perform work, State
must require prime to make good faith
efforts to find another DBE to perform at
least the same amount of work needed to
meet the contract goal (not new)
• If State requests documentation, prime
must submit within 7 days (may extend
additional 7 days) and recipient shall
provide written determination of
sufficiency of GFE
Good Faith Efforts 26.53(h) and
26.53(j)
• Prime contract must include a clause
(see 26.13(b)) that failure by prime to
carry out this part is a material breach,
that may result in termination or other
remedies as recipient deems
appropriate
• Prime contractor awarded the contract
must make DBE subcontracts available
upon request
Counting DBE Trucking 26.55 (d)
• DBE may get credit for value of trucking
services performed by non-DBE firm
that leases trucks with drivers—not to
exceed value of trucking performed by
DBE firm (1:1)
• DBE may get 100% credit if leases trucks
without drivers from non-DBE truck
leasing company
Regular Dealers 26.55 (e)
• Count credit for regular dealers on a
contract-by-contract basis
• Not a change. There is no certification for
“regular dealers.” They are usually
assigned a wholesaler NAICS Code.
• Must ensure that DBE is performing in a
regular dealer capacity to receive credit
for 60% of the cost of supplies.
• Not “middle-man” or “transaction
facilitator”
Certification Social and Economic
Disadvantage 26.67 (b) (1)
• Certifiers may rebut someone’s claim of
economic disadvantage—despite the fact
that liabilities bring PNW below $1.32 M—
if a reasonable person would consider the
owner to be a wealthy individual
• “Ability to accumulate substantial wealth”
• Specific factors that certifier may consider
• Used as tool for egregious circumstances
• Proceeding that follows 26.87 is required
and certifying entity has burden of proof
Certification 26.67(b)(2)
• May rebut individual’s claim to be
socially disadvantaged through
proceeding under procedures of 26.87
in which certifying entity has burden of
proof
• If rebutted, applicant may make
individual showing of disadvantage
under Appendix E
Certification 26.67 (c)
• Transfers within 2 years
• Must count as part of a disadvantaged
individual’s PNW any assets transferred
to an immediate family member or to
applicant firm for less than fair market
value within 2 years of the date of
application or annual affidavit
• Unless transfer is for education, medical
expenses, recognition of special events
Ownership 26.69
• Emphasizes contribution of capital must
be real, substantial, and continuing
• Disadvantaged owners should be
entitled to profits and losses
proportional to their ownership interest
and “any terms or practices that give a
non-disadvantaged individual or firm a
priority or superior right to a firm’s
profits are grounds for denial”
Control 26.71 (l)
There is rebuttable presumption of control
by non-disadvantaged person when:
• A firm was formerly owned and controlled
by a non-disadvantaged individual
whether or not an immediate family
member; and
• Ownership is transferred to disadvantaged
individual; and
• Non-disadvantaged individual remains in
firm
Control 25.71 (l) (cont.)
To rebut this presumption, disadvantaged
individual must demonstrate by clear and
convincing evidence that:
• The transfer was made for reasons other
than obtaining DBE certification
• The disadvantaged individual actually
controls the firm
Certification Procedures 26.83
• Onsite reviews are mandatory to
principal place of business and jobsites
if active
• Must interview principal officers and
resumes/work histories
• Interviews with key personnel are
discretionary
Certification Procedures 26.83
Specifies what documents to review when
analyzing legal structure. Must review:
• Documents of legal structure
• Lease and loan agreements
• Bank signature cards
• Payroll records
• Work history, contracts received,
completed
Certification Procedures 26.83
• Must request or compile list of
equipment
• Must request and review relevant
professional licenses
• Must review resumes of disadvantaged
owners
• Must review Federal income tax returns
for last 3 years (business and personal
for disadvantaged owners)
Certification 26.83
• Removes any reference to “recertification”
after 3 years or at any other time
• Certifying entity may not require DBEs to
reapply for certification or undergo a
recertification process
• State should conduct periodic on-site
reviews (include in DBE Program Plan)
• If onsite is due to an investigation, may
perform unannounced
Removal of Eligibility 26.87
• Grounds for initiating decertification
procedures:
• Decision to certify was clearly erroneous
(changed from “factually erroneous”)
• Failure to cooperate (Annual Affidavit;
Notification of Material Change)
• Exhibited pattern of conduct to subvert
intent or requirements of program
Annual Affidavit 26.83(j)
• DBE must provide every year in an
affidavit form
• Form must merely affirm that there
have been no changes in the firm that
would affect eligibility
• Only may request Federal tax returns—
not new PNW
• Additional requests on case-by-case
basis if reasonable
Annual Affidavit 26.83(j)(cont.)
• Should not include changes to DBEseparate obligation within 30 days of
change 26.83(i)
• Failure to provide affidavit can be reason
to initiate decertification procedures
under 26.87
• Only if fails to respond to reasonable
request, not if merely untimely
• Removal proceedings should not continue
if DBE provides information
Summary Suspension 26.88
• State can immediately suspend a DBE’s
certification without hearing
• Disadvantaged owner dies or is in jail
• There is adequate evidence of material
change
• DBE fails to notify of material change or
fails to timely file an affidavit of no change
• Is directed by Operating Administration
(FHWA) (FTA) or (FAA)
Summary Suspension 26.88
(cont.)
• After initiating suspension, the State must
immediately notify the DBE by certified mail to
last know address
• Suspension occurs when DBE receives or is
deemed to have received notice
• State must then expedite 26.87 hearing to
determine eligibility
• While suspended, DBE will not be eligible to
meet goals on new contracts, but can continue
to receive credit on contracts executed before
suspension
Summary Suspension 26.88
(cont.)
• When DBE receives notice it may:
• Withdraw
• Provide information to recipient why it
remains eligible
• Recipient must lift the suspension or
begin decertification proceedings
within 30 days of receiving information
from suspended DBE
DBE Appeals 26.89
• DBE denied certification or whose
certification removed may appeal
• Must send letter to DOCR within 90 days of
date of final decision
• Letter must include specific reasons for
appeal and/or facts recipient did not
consider
DBE Appeals 26.89 (cont.)
• DOCR does not make de novo review
• DOCR makes decision based solely on
administrative record as supplemented by
appeal
• DOCR may also supplement the record by
adding relevant information made
available to it
• Time it takes for appeal decision does not
affect waiting period for DBE to reapply
Appendix A—Good Faith Efforts
• Recipient’s determination of good faith
efforts is judgment call based upon
objective standards and after careful
consideration of totality of efforts;
• Should not use quantitative formulas
Appendix A—Good Faith Efforts
Contractors’ Efforts:
• Solicit through all reasonable means DBEs
with capability to do work
• May include attending pre-bid meetings
and matchmaking events
• Posting notices; sending emails
• Solicit as early as possible
• Unbundling
• Establishing flexible timeframes
Appendix A—Good Faith Efforts
• Negotiating in good faith; specifying work
considered for DBEs; explaining why
agreements could not be reached
• Not rejecting a DBE quote because it was
not the lowest received as long as the
quote was not unreasonable
Also, a prime contractor may not reject a
replacement DBE merely because it’s unable
to find a DBE at the original price
Appendix A—Good Faith Efforts
Recipient’s Obligations in Reviewing and
Evaluating Good Faith Efforts
• Must review performance of other bidders
• Must require contractor to submit copies
of each DBE and non-DBE subcontractor
quote where a non-DBE was selected over
a DBE due to price
• Reach out to DBEs listed to confirm they
were actually contacted by prime
Questions
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