49 CFR Part 26 Goal Setting 2009 National DBE Conference

1. 49 CFR Part 26Goal Setting2009 National DBE Conference

2. When is a DBE Program required? • Defined in FAA Airports Division Order 5100.38C • DBE Regulation Title 49 CFR Part 26 • requires airports anticipating awarding more than $250,000 in prime contracts using Federal funds during a fiscal year to implement a DBE program. Applicable prime contracts include: • Construction (including noise mitigation); • Professional services; and/or • Equipment

3. New Program or goal update • Whole new DBE Program required if never submitted one since 1999 (when new regulation issued) • Keep the program current - update when needed based on changes at the Airport • Annual goal updates required each year • due August 1st (if required based on dollar amount of prime contracts awarded)

4. FAA Airports Division-AIP Grant Requirements • Contracts solely for land purchase are excluded from DBE program and goal requirements. (Order 5100.38C Para. 1422.a.) • Does not include land purchase, but does include related services (e.g., surveying, appraisals, etc.). • Airport recipients using entire grant funds to do work with its own personnel (in-force accounts) are not required to implement a DBE program. (Order 5100.38C Para 1422.I.(1)

5. If Not Using Federal Funds . . • Even if there are no Federal funds in a given contract, airports must still comply with: • Part 26.7(a)—Cannot exclude any person from participating in a contract, or use criteria or methods that defeat or impair the objectives of the DBE program, on the basis of race, color, sex or national origin. • Part 26.13—Must make assurances in grants and contracts regarding nondiscrimination.

6. Agency grants • FAA • FTA • FHWA • Submit separate goals to each agency

7. State Block Grants • Illinois, Missouri, Michigan, Wisconsin • State responsible for non-primary airports • May submit single overall goal covering all non-primary airports contracts funded by the block grant during a fiscal year • Some States also prepare Part 26 goals for Primary Airports - must submit individual goals for each primary airport

8. Full DBE program – Sample programs Must include general requirements plus: DBE Liaison Officer contact information and responsibilities; DBE directory; Monitoring and enforcement procedures (state or local laws that help to enforce the DBE program); Procedures for DBE certification (State UCP); Goal methodology – see sample program Update goal section each year if required based on dollar amount of contracts awarded (e.g., if over $250,000) Applicable goal sections 49 CFR Part 26.43 through 26.51

9. Full DBE program requirements (continued) • Evidence of good-faith efforts; • Procedures to ensure contractor compliance; and; • Prompt payment mechanism.

10. Part 26 DBE Goals • Airports recipients are not required to set their DBE goal at 10% or any other amount but must present accurate analysis of how they arrived at the number • Require the maximum use of race-neutral measures

11. Part 26 Accomplishments Accomplishments Due December 1 • FHWA and FTA submit twice, June 1 and December 1 • FAA Submit once a year

12. Announcement and Publication of Goals Required to be announced at public meeting or other type of public forum or circulation Part 26 also required to be published

13. Methods for Public Participation meeting or consultation to announce DBE and ACDBE goals) • Informational Meetings • Public Meetings • Pre-bid Meetings • Telephone Surveys • Mail surveys or email surveys or other • Meeting w/DBEs or ACDBEs on past projects

14. What is Race Neutral participation? • Defined at 26.51 and 23.51 Race-neutral measure or program is one that is, or can be, used to assist all small businesses or increase opportunities for for all small businesses

15. Race Neutral examples include but not limited to: DBE/ACDBE prime or subcontracts when nothing but the low bid was considered History of exceeding goals-apply % Arranging solicitations in ways to facilitate DBE and other small business participation Providing assistance to help DBEs and other small businesses to obtain bonding and financing Providing technical assistance to all small businesses Ensuring distribution of the DBE directory to all small businesses and others

16. What is Race-conscious participation Race-conscious measure or program is one that is focused specifically on assisting only DBEs, including women-owned DBEs. • Conscious action to get DBEs • Like putting a goal on the invitation to bid

17. Race-Conscious Participation can be • DBE Contract goals • Anything the sponsor does just for DBEs like a bid conference or training where other businesses are not invited (not even other small businesses that are white and male owned). • Price credits for DBE’s would also be considered race-conscious.

18. DBE Goal Setting

19. Goal Setting Data Resources • NAICS Codes http://www.census.gov/epcd/www/naicstab.htm North American Industry Classification System B. U. S. Census Bureau http://www.census.gov/econ/www/ • Bidders List • Census Data • DBE Directory

20. Goal Setting Data Resources (continue) • Availability Directory • Telephone Books/Yellow Pages • Disparity Studies • often contain data on availability of DBEs & recommended goals • May use the percentage indicated – explain why it is valid • Combination of any of these sources • Reference DBE and ACDBE Sample Programs

24. DBE Sample Program • Goal paragraphs include: • Subpart C – 26.45 Overall Goals • Public Participation – announce and publish goal • 26.51 Breakout of Race-Neutral and Race-Conscious Participation • 26.51 – Contract Goals • Attachment 4 – Overall Goal Calculation Methodology

25. Define the Market Area First, define the local market area: • Area in which the majority of the Airport’s contractors and subcontractors that seek to do business with the airport are located • And the area in which the Airport spends the majority of its contracting dollars.

26. DBE Goal Setting –Step 1 • To determine: • The relative availability of DBEs • Total number of Ready, Willing and Able DBEs divided by total number of all firms for the types of contracts you anticipate awarding.

27. How do Airports set annual DBE goals? Determine Step 1 In the market area: May use census bureau data to determine how many of all businesses would be available to do the work http://www.census.gov/epcd/cbp/view/cbpview.html Use State DBE directory to determine how many “certified DBEs” could be available to do the work Divide DBE’s by total number of businesses for example: 7 certified DBEs found divided by 233 all businesses found = 3% If using the State’s goal, must make adjustment in Step 2 for the local area considerations

28. Step 1 • Comparison must be between businesses performing similar work in the same geographic area • Recipients can weight this figure based on the amount of money they spend in different fields

29. Example 1 - CALCULATING STEP 1 using DBE directory & censusDivide the number of DBEs ready, willing and able to bid on contracts (numerator) by the number of all firms (DBEs and non-DBEs) ready, willing and able to bid on contracts (denominator).

30. Part 26 Example 2 Use Weighting Whenever Possible

31. Calculating Step 1 – Part 26 • May use the goal of another recipient - If another airport or other DOT recipient (State) in the same, or substantially similar, market has set an overall goal,you may use that goal as a base figure step 1 for your goal. (make adjustments for your local area in Step 2) • Disparity Study • Phone Books

32. Step 2 Adjustment

33. DBE Goal Setting –Step 2 • Step 2. Once you have calculated a base figure, you must examine all of the evidence available in your jurisdiction to determine what adjustment, if any, is needed to the base figure in order to arrive at your overall goal.

34. Calculating Step 2 adjustment • Examine: • The current capacity of DBEs/ACDBEs to perform work as measured by the volume of work DBEs/ACDBEs have performed in recent years • Evidence from disparity studies, if not already used in the Step 1 base figure

35. Example - Step Two Adjustment Past Participation - Accomplishments-use median Past three years of past participation is:   2005 15% 2006 12% 2007 11% Calculate the median by arranging the values in order from low to high: 11% - 12% - 15% Median or middle number is 12%

36. Overall goal determination – Example This figure may be averaged with Step 1 to arrive at the overall goal. Step 1 = 12.8% (base figure) Step 2 = 12% Added = 24.8% divided by 2 = 12.4% overall goal

37. Example - Overall DBE Goal Step 1 = 12.8% Step 2 = Median of past 3 years accomplishments = 12% Step 1 and Step 2 added then averaged = 12.4% Therefore, recipient’s overall DBE goal for FY-09 is 12.4% The airport authority is awarding contracts in the amount of $7,210,000 of which $894,040 will be applied to DBE participation. The airport authority is applying 4% of it’s 12.4% overall goal to race-neutral participation and 8.4% to race-conscious participation. The basis for this breakout is that the authority exceeded it’s goal in FY-08 by 4% and expects to exceeds its FY-09 goal by at least 4% which is evidence of race-neutral participation.

38. Counting DBEs and ACDBEs

39. Commercial Useful Function • A DBE performs a commercially useful function when it: • is responsible by actually performing, managing, and supervising the work and; • is responsible with respect to materials and supplies used on the contract, for negotiating price, determining quality and quantity, ordering the material, and installing and paying for the material itself.

40. 26.55 – Counting DBE participation • (a) ….count only the value of the work actually performed by the DBE toward DBE goals. • (1) 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).

41. 26.55 Counting DBE Participation (continued) • (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.

42. 26.55 Counting DBE Participation (continued) • (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.

43. 26.55 Counting DBE Participation (continued) • (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) …..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.

44. 26.55 Counting DBE Participation (continued) • (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) ……. 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.

45. 26.55 Counting DBE Participation (continued) • (f) If a firm is not currently certified as a DBE in accordance with the standards of subpart D of this part at the time of the execution of the contract, do not count the firm's participation toward any DBE goals, except as provided for in §26.87(i)).

46. 26.55 Counting DBE Participation (continued) • (g) Do not count the dollar value of work performed under a contract with a firm after it has ceased to be certified toward your overall goal. • (h) Do not count the participation of a DBE subcontractor toward a contractor's final compliance with its DBE obligations on a contract until the amount being counted has actually been paid to the DBE.