Disadvantaged Business Enterprises (DBE) Program Minnesota Department of Transportation

1. Disadvantaged Business Enterprises (DBE) Program Minnesota Department of Transportation April 25, 2013 Minnesota County Highway Accountants Association, Best Western Plus Kelly Inn St. Cloud, Minnesota Presented By: Ashanti Payne Office of Civil Rights

2. DBE Project Life-Cycle:Beginning to End MnDOT’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

3. 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

4. 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.

5. Disadvantaged Business Enterprise (DBE) 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%

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

7. 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

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

9. 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)

10. 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 Work • Why? • What are the key factors to consider when excluding work • Step Five – Establishing a final Project Goal

11. 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

12. Goal Setting Protocol (Cont.):Questions?

13. 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)

14. 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.

15. 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

16. 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.

17. 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.

18. 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.

19. 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.

20. Contract Clearance:If everything adds up – The Project is cleared for Award and gets built: - On Time - On Budget

21. Discussion/Questions?

22. Submitting A Responsible Bid/Good Faith Effort (GFE)

23. 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 Affidavit • GFE Materials must be submitted within five (5) business days after notification of being the Apparent Low Bidder (ALB)

24. Submitting A Responsible Bid/GFE (Cont.) • MnDOT Office of Civil Rights Evaluation – 5 Key Factors: • Solicitation • Negotiation • Assistance (Materials, Supplies, Plans, Bonding, etc.) • Breaking out Portions of Work Being Self-performed • De-bundling

25. Reconsideration Process

26. Post Award DBE Monitoring

27. On-Site Reviews Monitoring DBE Field Work- Exhibit A. Competed/executed by DBE Principal DBE resources & Capacity (i.e, people, equipment, etc.) DBE subcontractors- Controlling own work, using own resources & doing the work Consistent with Exhibit A Replacement of DBE’s Contractor Payment Form Complete, Consistent, Accurate Final Payment Affidavit Standard 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. Post Award

28. Contractor Payment Form

29. DBE Total Payment Form

30. DBE Commitments vs. PaymentsWhat Does This Mean?

31. 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)

32. Small Business Contracting Section, Supervisor Ashanti Payne ashanti.payne@state.mn.us 651-366-3071 DBE Specialists Andrea Robinson (East Metro)andrea.robinson@state.mn.us651-366-3353 Cole Busch (MnDOT Districts 1,2,3,4) cole.busch@state.mn.us651-366-3332 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 MnDOT Office of Civil Rights