DBE Compliance News

SBA Increases Small Business Size Standards

admin — Thu, 03 May 2012 20:52:55 +0000

Earlier this year, the Small Business Administration (SBA) published a final rule that increased the small business size definitions of 34 industries and three sub-industries in the North American Industry Classification System (NAICS) Sector 54 – Professional, Technical, and Scientific Services industry area. Size standards are based either on average annual revenue or number of employees.

As part of an ongoing review of all size standards, SBA evaluated all of the revenue-based size standards in these sectors to determine whether to revise the existing size standards. SBA took into account the structural characteristics within individual industries, including average firm size, degree of competition, and federal government contracting trends to ensure that size definitions reflect current economic conditions within those industries. SBA estimates that as many as 8,350 additional firms will become eligible for SBA programs as a result of these revisions, thereby giving federal agencies a larger selection of small businesses to choose from for small business procurement opportunities and enabling more small businesses to retain their small business status. These new size standards
went into effect on March 12, 2012.
For more information on revisions to the small business size standards, visit“What’s New with Size Standards.”

Caltrans DBE Brochure

admin — Mon, 23 Apr 2012 20:40:00 +0000

Caltrans has developed a new brochure for recently certified DBE firms entitled “OK. I’m DBE Certified. What’s Next?”

Sections include the following:

Be Proactive
Educate Yourself
Event Calendar
Market Your Firm
Network
Be Prepared
Contract Award
Commercially Useful Function
Prevailing Wage
Prompt Payment
Supportive Services
A&E Contracts
Local Agency Projects
Contacts

Caltrans Disparity Study Public Hearings

admin — Fri, 13 Apr 2012 20:30:11 +0000

Caltrans is conducting an Availability and Disparity Study that will assist Caltrans and local governments in implementing their DBE programs in accordance with 49 Code of Federal Regulations Part 26.

The Study includes an analysis of the experiences of vendors and contractors with Caltrans and local agencies in connection with implementation of their DBE Program, and involves an analysis of whether or not there is evidence of discrimination or its effects in the transportation contracting industry in California. The California transportation contracting industry includes contracts funded by the Federal Highway Administration (FHWA) and Federal Transit Administration (FTA) which are administered by Caltrans and local agencies as a primary recipient and sub-recipient of FHWA and FTA funds.

You are invited to participate in public hearings that will be held statewide in each Caltrans district. The first hearing will be held on May 1st in Sacramento. The purpose of the public hearings is to obtain personal testimony and accounts of experiences and incidents by vendors and contractors in the California public transportation contracting industry. The information Caltrans is seeking includes, but is not limited to:

Whether or not firms face difficulties or barriers when bidding as prime contractors, subcontractors, or suppliers.
Whether or not business owners believe they have been treated fairly or unfairly based on their race, ethnicity, or gender.
Whether or not prime contractors solicit, or fail to solicit, bids or price quotes from DBEs on non-DBE goal projects.
Whether or not there is a level playing field for firms in access to capital, bonding, and insurance.

If you are unable to attend a public hearing to provide Caltrans your testimony, you may submit it electronically, no later than Friday, July 8, 2012, to Anna_Silva@dot.ca.gov, or by U.S. mail to: Caltrans Office of Business & Economic Opportunity, Attention: Anna Silva, 1823 14th Street, Sacramento, CA 95814.

If you have any questions about the Caltrans public hearings, or would like to receive more information on the Availability and Disparity Study, contact Anna Silva, Disparity Study Project Manager, at (916) 324-0964 or Anna_Silva@dot.ca.gov.

Find the complete schedule, at http://www.dot.ca.gov/hq/bep/.

DBE Goal Shortfall

admin — Thu, 29 Mar 2012 20:33:45 +0000

§ 26.47 Can recipients be penalized for failing to meet overall goals?

(a) You cannot be penalized, or treated by the Department as being in noncompliance with this rule, because your DBE participation falls short of your overall goal, unless you have failed to administer your program in good faith.

(b) If you do not have an approved DBE program or overall goal, or if you fail to implement your program in good faith, you are in noncompliance with this part.

(c) If the awards and commitments shown on your Uniform Report of Awards or Commitments and Payments at the end of any fiscal year are less than the overall goal applicable to that fiscal year, you must do the following in order to be regarded by the Department as implementing your DBE program in good faith:

(1) Analyze in detail the reasons for the difference between the overall goal and your awards and commitments in that fiscal year;

(2) Establish specific steps and milestones to correct the problems you have identified in your analysis and to enable you to meet fully your goal for the new fiscal year;

(3) (i) If you are a state highway agency; one of the 50 largest transit authorities as determined by the FTA; or an Operational Evolution Partnership Plan airport or other airport designated by the FAA, you must submit, within 90 days of the end of the fiscal year, the analysis and corrective actions developed under paragraphs (c)(1) and (2) of this section to the appropriate operating administration for approval. If the operating administration approves the report, you will be regarded as complying with the requirements of this section for the remainder of the fiscal year.

(ii) As a transit authority or airport not meeting the criteria of paragraph (c)(3)(i) of this section, you must retain analysis and corrective actions in your records for three years and make it available to FTA or FAA on request for their review.

(4) FHWA, FTA, or FAA may impose conditions on the recipient as part of its approval of the recipient’s analysis and corrective actions including, but not limited to, modifications to your overall goal methodology, changes in your race-conscious/race-neutral split, or the introduction of additional race-neutral or race-conscious measures.

(5) You may be regarded as being in noncompliance with this Part, and therefore subject to the remedies in §26.103 or §26.105 of this part and other applicable regulations, for failing to implement your DBE program in good faith if any of the following things occur:

(i) You do not submit your analysis and corrective actions to FHWA, FTA, or FAA in a timely manner as required under paragraph (c)(3) of this section;

(ii) FHWA, FTA, or FAA disapproves your analysis or corrective actions; or

(iii) You do not fully implement the corrective actions to which you have committed or conditions that FHWA, FTA, or FAA has imposed following review of your analysis and corrective actions.

(d) If, as recipient, your Uniform Report of DBE Awards or Commitments and Payments or other information coming to the attention of FTA, FHWA, or FAA, demonstrates that current trends make it unlikely that you will achieve DBE awards and commitments that would be necessary to allow you to meet your overall goal at the end of the fiscal year, FHWA, FTA, or FAA, as applicable, may require you to make further good faith efforts, such as by modifying your race-conscious/race-neutral split or introducing additional race-neutral or race-conscious measures for the remainder of the fiscal year.

U.S. Transportation Secretary LaHood Recommends $2.2 Billion to Strengthen Backbone of America’s Transportation Network

admin — Tue, 14 Feb 2012 20:40:54 +0000

Funding for 29 Capital Transit Projects Will Create Jobs, Opportunities Across America

WASHINGTON – U.S. Transportation Secretary Ray LaHood today recommended $2.2 billion in funding to begin or advance construction of 29 significant rail and bus rapid transit projects in 15 states.

The projects, included in President Obama’s proposed Fiscal Year 2013 budget, will put thousands of Americans to work building the vital infrastructure the nation needs to improve access to jobs while reducing U.S. dependence on oil and spurring new economic development.

“President Obama called on us to rebuild America by putting people back to work on transportation projects that are built to last,” said Secretary LaHood. “The budget proposal released yesterday demonstrates our commitment to put people back to work to build the infrastructure we need that will improve our transit systems, highways, railways and airports well into the future. At this make-or-break moment for the middle class, we can afford to do no less.”

President Obama’s proposed budget recommends investing $243.7 million for seven new transit construction projects, including rail and bus rapid transit projects in California, Florida, North Carolina, Oregon, Texas, and Washington State. An additional 10 projects that were recommended for funding in previous years, but have not yet received federal commitments, will receive $769.5 million in this year’s budget.

“President Obama is committed to building an America that works for all of us, and these projects will ensure that hard-working families have real transportation choices,” said Federal Transit Administrator Peter Rogoff. “They represent truly transformational investments that will provide the public with new and reliable ways to get to work, school, and medical appointments while easing congestion on many of our highways.”

In addition to the transit construction projects that have not yet been funded, the proposed budget provides nearly $1.2 billion for the continued funding of 12 rail and bus rapid transit projects already under construction in Dallas, Denver, Hartford, Houston, Minneapolis-St. Paul, New York City, Northern Virginia, Orlando, Salt Lake City, and Seattle.

The New Starts and Small Starts capital investment program is one of the largest discretionary grant programs in the federal government. Proposed projects, such as rapid rail, light rail, commuter rail, bus rapid transit, and ferries, are evaluated and rated on a number of measures at several steps in the process as they seek FTA approval for a federal funding commitment to finance project construction.

Secretary LaHood and FTA Administrator Peter Rogoff recently proposed changes to the New Starts/Small Starts program to reduce red tape in order to allow approved projects to begin construction sooner and help FTA focus more on local needs, such as economic development, community revitalization, and responding to historically underserved populations.

Examples of some of the projects in the President’s proposed FY 2013 budget include:

Charlotte, North Carolina, LYNX Blue Line Extension (Northeast Corridor): The Charlotte Area Transit System (CATS) proposed the construction of a new light rail transit line that would extend from Uptown Charlotte, the region’s central business district, northeast to the US 29 interchange and the University of North Carolina – Charlotte campus. Commuters along the I-85/US 29 corridor have suffered through increasing congestion that population increases and economic development are expected to only make worse. The LRT will be 9.3 miles and serve 11 new stations. The FTA plans to fund 50 percent of the total $1.07 billion project cost, or $534.6 million.
Jacksonville, Florida, Southeast Corridor and North Corridor Bus Rapid Transit (BRT): The FTA recommended funding for two BRT projects in Jacksonville that will combine for 20 miles of new rapid transit routes and 21 new stations. The Southeast Corridor will receive its first recommendation for funding in the President’s budget and the FTA will continue to support development of the North Corridor. The two corridors will serve a highly transit-dependent population along extremely congested parts of the Jacksonville area. The total cost of the two projects is more than $57 million, of which FTA will cover nearly $47 million, or 80 percent of the two projects.
Grand Rapids, Michigan, Silver Line Bus Rapid Transit (BRT): The Interurban Transit Partnership proposed to implement a BRT line along Division Avenue from the Grand Rapids central business district to 60^th Street/Division Avenue. The FTA will invest 80 percent of the total $35.3 million project cost, or $28.2 million. The project is expected to offer commuters a true alternative to the highly congested US 13. The BRT will include real-time passenger information at stations, traffic signal priority, off-board fare collection, and the purchase of 10 low-floor, hybrid-fueled buses.

All the recommendations are part of the FTA’s Annual Report on Funding Recommendations for Fiscal Year 2013, available online here. Individual detailed project descriptions are available here.

Fostering Small Business Participation

admin — Mon, 06 Feb 2012 18:54:12 +0000

49 CFR Part 26 has been updated to include the following:

§ 26.39 Fostering small business participation.

(a) Your DBE program must include an element to structure contracting requirements to facilitate competition by small business concerns, taking all reasonable steps to eliminate obstacles to their participation, including unnecessary and unjustified bundling of contract requirements that may preclude small business participation in procurements as prime contractors or subcontractors.

(b) This element must be submitted to the appropriate DOT operating administration for approval as a part of your DBE program by February 28, 2012. As part of this program element you may include, but are not limited to, the following strategies:

(1) Establishing a race-neutral small business set-aside for prime contracts under a stated amount (e.g., $1 million).

(2) In multi-year design-build contracts or other large contracts (e.g., for “megaprojects”) requiring bidders on the prime contract to specify elements of the contract or specific subcontracts that are of a size that small businesses, including DBEs, can reasonably perform.

(3) On prime contracts not having DBE contract goals, requiring the prime contractor to provide subcontracting opportunities of a size that small businesses, including DBEs, can reasonably perform, rather than self-performing all the work involved.

(4) Identifying alternative acquisition strategies and structuring procurements to facilitate the ability of consortia or joint ventures consisting of small businesses, including DBEs, to compete for and perform prime contracts.

(5) To meet the portion of your overall goal you project to meet through race-neutral measures, ensuring that a reasonable number of prime contracts are of a size that small businesses, including DBEs, can reasonably perform.

(c) You must actively implement your program elements to foster small business participation. Doing so is a requirement of good faith implementation of your DBE program.

[76 FR 5097, Jan. 28, 2011]

DIR CMU Requirements

admin — Mon, 30 Jan 2012 06:45:05 +0000

The Compliance Monitoring Unit or “CMU” is a new component within the DLSE that was created to monitor and enforce prevailing wage requirements on public works projects that receive state bond funding and on other projects that are legally required to use the CMU. The CMU began operations on January 1, 2012, following the recent adoption of AB 436 and approval of revisions to program regulations. By actively monitoring compliance on an ongoing basis while work is being performed, the CMU will play a special role in ensuring that public works construction workers are promptly paid the proper prevailing wage rates and in helping maintain a level playing field for contractors who comply with the law.

Effective Date and Applicability: The laws and regulations that govern the new program are effective January 1, 2012. Only projects for which the public works contract is awarded on or after January 1, 2012 are subject to the CMU requirements. Contracts awarded prior to January 1, 2012 will remain subject to the prior monitoring and enforcement rules (labor compliance programs for some bond-funded or design-build projects or no specific monitoring requirement) for the life of those projects.

PWC 100 Form – Awarding Bodies: Completion of this form puts you in compliance with the requirement to notify both the Division of Apprenticeship Standards and the Division of Labor Standards Enforcement, Compliance Monitoring Unit of a public works awarded contract. Please complete and submit the electronic PWC 100 form.

For more information, see the Department of Industrial Relations website.

FTA Guidance to Complete New DBE Implementation Plans

admin — Fri, 16 Dec 2011 20:24:27 +0000

Guidance to Complete New DBE Implementation Plans

Section 26.39 12/6/2011

The following questions and answers relate to implementation of Section 26.39 Fostering Small Business Participation

1. What are recipients required to submit to the concerned operating administration (OA) to comply with 49 CFR § 26.39?

Recipients must submit to the appropriate OA an amendment to their DBE program plan that sets forth in detail the steps to be taken to facilitate competition by small business concerns.
The concerned OA will provide instructions to recipients on whether the amendment should be submitted for review as a stand-alone document or whether it should be incorporated into the recipient’s existing DBE program plans. If the amendment is submitted for review as a stand-alone document, it must be integrated into the body of the recipient’s DBE program plan document once approved.
There is no requirement that the DBE plan amendment be signed by all recipients in the state.
Recipients must submit the program amendment to the concerned OA by February 28, 2012.

2. By what date must the small business element be implemented?

The implementation date should be established by the OA when it approves the small business element submitted by the recipient. This date should not be more than nine months after the approval date.
Recipients are encouraged to include an implementation schedule as part of their submission to ensure the small business element is fully operational within nine months of approval.

3. Must the recipient address each of the strategies presented as examples in the rule as part of its submission?

No. The list of strategies set out in the rule is designed to give you some ideas on how to accomplish the objectives of the rule. Additional suggestions may be found in the preamble discussion of the rule at 76 Fed. Reg. 5094. This is not an exclusive list, and you are not expected to explain why one strategy was chosen instead of others.
Recipients may choose one or more of the listed strategies or may develop any alternative strategy that can be effective in creating contracting opportunities for small businesses.
Recipients (particularly FTA and FAA recipients) also may collaborate with regional partners by pooling resources and/or creating joint programs, but each recipient in the collaborative must make a submission to the appropriate OA.
In any case, we believe it to be advisable that your submission address unbundling contracts in the context of your procurement program, even if unbundling is not ultimately a strategy you choose.
A recipient that has an existing race-neutral small business program that has been used to set aside state-funded contracts for competition among small businesses may decide to use that program for federally-assisted contracts to meet this requirement, subject to OA approval. However, the recipient is not required to do so. If an existing small business program is used to comply with the rule, recipients must take steps to separate state and federal contracts to ensure proper reporting to US DOT of DBE participation on federally-assisted contracts only.

4. How should recipients define a small business when developing a small business program to foster small business participation?

Since the small business element developed by a recipient will be a part of the recipient’s approved DBE program plan, recipients should use the definition of small business concerns set out in 49 CFR §26.5.
This will ensure that all small businesses allowed to participate in the recipient’s program (DBEs and non-DBEs alike) are subject to the same size standards and, consequently, compete with similarly-sized businesses.
A state or local MBE/WBE or other program, in which eligibility requires satisfaction of race/gender or other criteria in addition to business size, may not be used to comply with the rule.

5. Should a personal net worth (PNW) requirement be a part of any small business program used to comply with this requirement?

A recipient has the option of establishing a PNW threshold as an eligibility criterion for its small business program element. Except in a micro-small business program (where a PNW threshold could be lower), if a recipient chooses to establish such a requirement as part of its program, the PNW threshold should be consistent with the one in 49 CFR Part 26.

6. Could a micro-small business program be an appropriate part of a small business element in a DBE program?

Yes. A recipient may develop a program for very small businesses (e.g., those with annual gross receipts well below the SBA small business size criteria). As part of such a program, a recipient could also have a lower PNW threshold for owners of the very small businesses.
Where a recipient creates a micro-small business program, we believe it is a best practice to also provide opportunities to facilitate competition among small businesses that are larger than those eligible to participate in the micro-small business program.

7. Are small business goals required?

No. The use of small business goals is optional.
The use of race-neutral small business goals on the same contracts that have DBE contract goals can be difficult to administer. We recommend that recipients not do so unless they have a clear understanding of these complexities and how they expect to manage them.

8. Can supportive services programs be used to meet the requirements of section 26.39?

The FHWA-funded “supportive service program” is intended to be used only to assist DBEs. Recipients should not include services to non-DBEs as part of that program.
However, a state- or locally-funded supportive services-type program could be made available to non-DBE firms as a part of the recipient’s small business program element.
Outreach activities are not sufficient, standing alone, to meet the requirements of section 26.39. Recipients are responsible for taking active, effective steps to increase small business participation.

9. Should a small business program include a verification requirement? If so, may a recipient rely upon or accept the verification process used by another entity?

Yes to both questions.
To ensure that a firm is in fact a small business concern and to minimize fraud and abuse, it is advisable for a recipient to take steps to verify eligibility of a firm to participate in the recipient’s program. This means that a program should not allow firms to self-certify/verify as small businesses.
A recipient may rely on the certification/verification processes used by another entity as long as the process is designed to confirm eligibility consistent with small business criteria consistent with those of Part 26. A certified DBE is presumed eligible to participate in a small business program developed to comply with 49 CFR §26.39, unless it is a micro-small business program.
While it is not necessary for a recipient to verify the small business status of every firm that might in some way benefit from the recipient’s program, if participation will result in a tangible advantage for a firm (e.g., getting a contract via a small business set-aside program), verification is important to avoid program fraud.

10. Are recipients expected to report on the level of small business participation achieved through their program?

No. Recipients will be required only to track and report any race-neutral participation by certified DBEs achieved through their small business element or program in the same way they report race-neutral DBE participation obtained though other methods (see by 49 CFR §26.11(a)).
Nevertheless, recipients may find it useful to collect data on small business participation obtained through their program, in order to answer any future questions that could arise about the results of their programs.

11. How is the small business program element requirement to be applied to sub-recipients?

The required small business program amendment is part of your overall DBE program. Therefore, it applies to sub-recipients in the same way as your overall DBE program.
Just as direct recipients are expected to ensure that their sub-recipients comply with goal-setting or certification requirements, so direct recipients are expected to ensure that sub-recipients implement the recipient’s approved small business element made a part of the recipient’s DBE program plan.
In any case where a sub-recipient has its own DBE program, separate from that of a direct recipient, the sub-recipient is responsible for creating its own small business program and submitting it to the concerned operating administration for approval.

12. How does this Q&A relate to guidance posted July 15, 2009, titled “What actions should a recipient take before implementing a small business program on federally assisted projects as a race- and gender-neutral means of facilitating DBE participation in meeting the recipient’s overall goal?”

This guidance should be read in concert with the July 2009 Q&A.
In establishing a race-neutral small business set-aside as a measure under the small business program element required by section 26.39, you should follow the guidance in the July 2009 Q&A.
It is important to note that implementing a small business element or program is intended to facilitate compliance with the twin obligations in 49 CFR §26.51: (1) to meet the maximum feasible portion of the overall goal by using race-neutral means of obtaining DBE participation and (2) to establish DBE contract goals to meet any portion of the overall goal you are unable to meet using race-neutral means alone.

13. The DBE rule appears to prohibit set-asides. How, then, is it permitted to have small business set-asides as part of the small business program element?

Section 26.43 generally prohibits the use of set-asides for DBEs. This means that limiting competition on a contract to DBEs – a category based on race- or gender-based classifications – is forbidden. It is the race-conscious nature of a DBE set-aside that necessitates this prohibition.
A small business set-aside is different. In this case, competition is limited only on the basis of business size. This is a race-neutral, rather than race-conscious, classification. Consequently, a small business set-aside does not fall under the prohibition applying to DBE set-asides.

Caltrans DBE Outreach Plan

admin — Mon, 10 Oct 2011 17:27:27 +0000

Caltrans has developed a Business Plan for DBE Outreach on Federally-Funded Projects. The Business Plan was presented to the bidding community as a tool and guide to meeting the DBE goal on individual contracts and to assist in conducting adequate outreach to meet the goal.

Caltrans Press Release

admin — Fri, 02 Sep 2011 20:28:10 +0000

Caltrans issued a press release on September 1, 2011:

$23 Billion in California Transportation Projects Could ‘Grind to a Halt’ Without New Federal Transportation Bill

SACRAMENTO – The California Department of Transportation (Caltrans) today announced that Malcolm Dougherty, Acting Caltrans Director, has sent a letter urging Congress to swiftly pass legislation that will reauthorize transportation funding and protect $23 billion in active state and local transportation projects.

Without an extension or reauthorization, the department will be unable to continue existing transportation projects across the state. In the attached letter to the California congressional delegation, Acting Director Dougherty states that without continued federal funding, thousands of active state and local transportation projects valued at
$23 billion would grind to a halt within weeks of the end of the Federal Fiscal Year (September 30).

The current surface transportation legislation, the Safe, Accountable, Flexible, and Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), expired in 2009. Congress has extended the Act seven times, but the latest extension expires on September 30. The federal government currently provides about $3.4 billion per year for transportation projects across the state.

To read the Acting Director’s letter to the California Congressional Delegation, please visit: http://www.dot.ca.gov/docs/CaltransDirectortoCalCongress_29August2011_FINAL.pdf