Disadvantaged Business Enterprise (DBE)

Q. Recently I had an IFB open for two items – para-transit mini-buses & para-transit minivan conversions. The IFB contained certifications for debarment (primary & lower tier), Buy America, Transit Vehicle Mfgr’s (TVM) DBE, lobbying, bus testing, ineligible contractors, and ADA compliance. I have a total of three bidders for the two items. My apparent lowest bidder for the mini-buses meets specs in all respects and submitted all certifications. My question with their bid regards the TVM cert. All the certs provided by this bidder are signed and submitted by the bidder as the bidder. That seems correct for all but the TVM cert, which should certify that the manufacturer’s DBE plan is compliant with FTA requirements. Can we accept the TVM cert as is? Can we allow the bidder to submit a new cert signed by the manufacturer? Do have to reject the bid based on an incorrect cert? My other question regarding the other two bidders (one of which is the only bidder for the minivan conversions) is the exact opposite. For both of these bidders virtually all the certs were completed and signed by the manufacturer, not by the bidder. While this seems to be correct for the TVM cert, all the other certs require that the bidder/offeror certify the information. Again, are these certs acceptable? Can correct certs be substituted? Do I have to reject? A. As we read the certification requirements, all of them, except for the Buy America (BA) Certification, may be treated as matters of responsibility, which means as long as the proper certifications are submitted before award, the requirements are satisfied. For BA, however, the certification must be submitted properly with the sealed bid except for the case of a clerical error. Several of these certifications, including BA, are discussed in the Best Practices Procurement Manual (BPPM) section 4.3.3.2. The BPPM is available online here. Based on the above reasoning, we would say the TVM certification for the mini-buses may be treated as a matter of responsibility, and therefore signed by the TVM manufacturer prior to award. As for the mini-van conversion bids, the only issue in our minds is the BA certifications. If the manufacturers signed and certified compliance with BA, then it appears that the intent and objective of the statute has been met, and we could treat the issue as one in the nature of a clerical error. But we are not the experts here, and we would suggest you contact the FTA attorney who handles BA issues – Joseph Pixley, at 202-366-1936. As noted earlier, we feel the other certifications can be corrected prior to award.

Q. We had our bid opening and rejected the two bids because they were way off from the project budget. We have done some revisions to the scope of work and will rebid the project. If we did not revise the scope of work, we would have to wait 6 months to rebid it as it was originally in order to comply with South Carolina Procurement Law. There was some confusion regarding the DBE goal, although the DBE FTA Clause was attached to the bid documents, as were the other required clauses. The architect would like to include the phrase below when we rebid. What do you think? I have told the architect that the DBE Goals are goals and can never be referred to as requirements? "They are goals, not requirements. However, we strongly encourage all bidders to endeavor to meet these goals and will disqualify a low bidder who cannot show satisfactory documentation of having made a good faith effort to do so. In the event that the apparent low bidder does not achieve the DBE goals, the DBE Coordinator will conduct a thorough review of documentation of that bidder’s good faith effort to determine whether there was justifiable cause for the goals not to have been met. Such documentation must be included in the Sealed Bid and will not be accepted afterward. We do not believe the goals that have been set are onerous, however, and are not aware at this time of a justifiable reason a bidder would not be able to meet the DBE goals." A. We think your DBE language is good. You might say something like, "They are goals, but if they cannot be met, then bidders are REQUIRED to submit evidence/documentation of good faith efforts to meet the goals. Evidence of good faith efforts is a “requirement,” and this evidence must be submitted with bids in order to be responsive. A failure to meet the goals that is not documented with evidence of good faith efforts with the bid will render the bid non-responsive. In the event that the apparent low bidder does not achieve the DBE goals, the DBE Coordinator will conduct a thorough review of documentation of that bidder’s good faith effort to determine whether there was justifiable cause for the goals not to have been met. Such documentation must be included in the Sealed Bid and will not be accepted afterward. We do not believe the goals that have been set are onerous, however, and are not aware at this time of a justifiable reason a bidder would not be able to meet the DBE goals."

Q. If you have a DBE goal in a procurement - no one complies nor do they address Good Faith - do you have to throw out? A. Since none of the offerors addressed this DBE requirement, we would suggest you reopen the RFP response time for this purpose only and allow no other changes or additions to the proposal. Tell the companies that you must have the info and documentation required by the RFP in order to find them responsive to your requirements. Another possibility is to advise all responders that you are treating this as a matter of responsibility since no one was responsive. This will allow you to talk to each of them and get info while you are evaluating their proposals. We would also suggest you confer with your legal counsel as to the best course of action. Our preference is to move the award along while being fair with all the offerors.

Q. If, during an RFP procurement, you want to award a contract to one company but use the DBE from another - is that permissible? A. We understand that this competitive contract award will be a cost-type prime contract. Given this scenario, we feel it is critical that your agency evaluate and have confidence in all the proposed subcontractors. We also suggest you include a clause in the prime contract giving you the right to consent to the subs before they are awarded (the Federal cost-type contracts have a standard subcontracting clause with this right.) With a cost-type contract, it is in fact your agency that bears the risk of poor performance by a subcontractor (and not the prime as would be the case in a fixed price prime contract). Since you bear the risk, you should also have the right to consent to the subcontractor. We would advise the prime that you do not feel the proposed subcontractor is acceptable to your agency. You can ask the prime to compete and select new proposals (and you can certainly make the prime aware of firms you believe are qualified to do the work.)

Q. Trying to determine if the above named vendor is a certified DBE to provide sub-contracting opportunities, or if there is any listing of vendors to perform on medical services bids containing FTA requirements. A. You should contact the Federal DOT - Office of Small and Disadvantaged Business Utilization in Washington, DC at 800-532-1169 or 202-366-1930. The Internet address is: http://www.osdbu.dot.gov/.

Q. Please provide information about the DBE program and supportive services funding. Is a percentage of a funding for a project dedicated (budgeted) to providing supportive services? When a goal is established for a project, does the FTA monitor the grant to see if the awardees meet the goal? What relief is available to DBE's who feel that they may not be getting opportunities to participate in these procurements? I have researched the DBE program through the DOT web site and other sources and have not been ale to find this info. I’m not sure that one of the agencies that receive these government funds may be not using them for their intended purpose. A. We would suggest you take your concerns to the FTA Civil Rights Officer in your regional FTA office. That person is the best individual to deal with these DBE issues.

Q. I am interested in bidding on food / beverage concessions for an airport in Richmond, Virginia. I recently purchased a franchise. I am 100% owner of the corporation set up to own the franchise, and I am female. Can a franchise business such as this, where the ownership of the franchise is under a corporation, be approved as a DBE? A. The DBE rule for airport concessions may be found at 49 CFR Part 23, but interpretation of Part 23 is outside of FTA's expertise. For information, you should see the Office of Small & Disadvantaged Business Utilization web page on the DOT web site. The online address for the DOT Office of Small and Disadvantaged Business is http://osdbuweb.dot.gov/index.cfm. The site also lists points of contact that can assist you. The contact person in OSDBU for women -owned businesses is Pat Hodge at 1-800-532-1169. Her email address is pat.hodge@dot.gov. A list of DOT small business contacts, including FAA personnel who can help you with FAA programs, may be found at http://osdbuweb.dot.gov/osdbu_services/SmallBusTools.cfm.

Q. Our small transit system is exempt from DBE Program requirements, because our federal dollars contracting opportunities are less than $250,000 per fiscal year. What, if any, DBE clause language should be included in our non-vehicle contracts? The suggested clause in the FAQ section of this website will not work for us, because it requires transit system to enter their annual DBE contract goal. We do not have an annual DBE contract goal because we are exempt. At a recent FTE Triennial Review workshop, we were told DBE Exempt transit systems should not include any DBE clause in their contracts, other than TVMs when purchasing buses. Do you concur? Effective 11-15-00 CFR 49 Part 26.21 provides exemption from DBE program requirements for small systems, with federal dollar contracting opportunities of less than $250,000 per year. A. Since the agency is exempt from the Part 26 requirements, the requirements of 49 CFR 18.36(e) apply. That section reads... (e) Contracting with small and minority firms, women's business enterprise and labor surplus area firms. (1) The grantee and subgrantee will take all necessary affirmative steps to assure that minority firms, women's business enterprises, and labor surplus area firms are used when possible. (2) Affirmative steps shall include: (i) Placing qualified small and minority businesses and women's business enterprises on solicitation lists; (ii) Assuring that small and minority businesses, and women's business enterprises are solicited whenever they are potential sources; (iii) Dividing total requirements, when economically feasible, into smaller tasks or quantities to permit maximum participation by small and minority business, and women's business enterprises; (iv) Establishing delivery schedules, where the requirement permits, which encourage participation by small and minority business, and women's business enterprises; (v) Using the services and assistance of the Small Business Administration, and the Minority Business Development Agency of the Department of Commerce; and (vi) Requiring the prime contractor, if subcontracts are to be let, to take the affirmative steps listed in paragraphs (e)(2) (i) through (v) of this section. Your agency should include an appropriate clause, citation, or other contract provision to meet the requirements of subparagraph (e)(2)(vi) but should not use the FTA model contract provision since it was drafted exclusively for use within a Part 26 program.

Q. In the process of representing local Transportation Management Association recipient in connection with RFP to provide local transit services. Seeking suggested language incorporating requirements of new DBE rule in 49 CRR Part 26, and pursuant to the FTA Best Practices Manual at Section 28, was referred here for that assistance. Can you provide some language/requisite requirements in respect of same, please? A. Below is suggested contract clause language and guidance from FTA for implementing the new DBE rules in 49 CFR Part 26.

Q. Is the contractor, in this case an Artist, required to submit the DBE Certification? The project will involve federal funds and has an overall goal of 12%. Based on an earlier response from the Helpline, the contractor is not required to document good faith efforts but there is no mention of the Certification. A. The agency's DBE requirements will be reflected in the contract terms and conditions, which the artist will sign and be committed to. You do not need a pre-contract certification from the artist. Execution of the contract will satisfy the artist's commitment to the DBE requirements.

Q. In our Professional Contracts, the department has been using 49 CFR Part 23 (DBE certification). Do we now have to incorporate 49 CFR Part 26 as well? Is there suggested wording for Part 26 similar to that of Part 23? The Department is in the process of submitting a Professional Services Contract to the Dept. of Property & Procurement for processing. I've included the DBE Certification (49 CFR Part 23) but since Part 26 has been included, I would like to know how to proceed. A. 49 CFR Part 23 has been replaced by 49 CFR Part 26. FTA has drafted instructions for grantees and suggested contract clause language, which you will find below.

Q. Has the model clause/language to use as a contract clause incorporating the requirements of the new DBE rule in 49 CFR Part 26 been developed as of yet? A. Following is the guidance and suggested clause language developed by FTA for the new DBE rule. This will be published in the BPPM Appendix A.1. DISADVANTAGED BUSINESS ENTERPRISE (DBE) Background and Applicability The newest version on the Department of Transportation's Disadvantaged Business Enterprise (DBE) program became effective July 16, 2003. The rule provides guidance to grantees on the use of overall and contract goals, requirement to include DBE provisions in subcontracts, evaluating DBE participation where specific contract goals have been set, reporting requirements, and replacement of DBE subcontractors. Additionally, the DBE program dictates payment terms and conditions (including limitations on retainage) applicable to all subcontractors regardless of whether they are DBE firms or not.  The DBE program applies to all DOT-assisted contracting activities. A formal clause such as that below must be included in all contracts above the micro-purchase level. The requirements of clause subsection b flow down to subcontracts.  A substantial change to the payment provisions in this newest version of Part 26 concerns retainage (see section 26.29). Grantee choices concerning retainage should be reflected in the language choices in clause subsection d.  Clause Language The following clause language is suggested, not mandatory. It incorporates the payment terms and conditions applicable to all subcontractors based in Part 26 as well as those related only to DBE subcontractors. The suggested language allows for the options available to grantees concerning retainage, specific contract goals, and evaluation of DBE subcontracting participation when specific contract goals have been established.  Disadvantaged Business Enterprises  a. This contract is subject to the requirements of Title 49, Code of Federal Regulations, Part 26, Participation by Disadvantaged Business Enterprises in Department of Transportation Financial Assistance Programs. The national goal for participation of Disadvantaged Business Enterprises (DBE) is 10%. The agency's overall goal for DBE participation is __ %. A separate contract goal [of __ % DBE participation has] [has not] been established for this procurement.  b. The contractor shall not discriminate on the basis of race, color, national origin, or sex in the performance of this contract. The contractor shall carry out applicable requirements of 49 CFR Part 26 in the award and administration of this DOT-assisted contract. Failure by the contractor to carry out these requirements is a material breach of this contract, which may result in the termination of this contract or such other remedy as {insert agency name} deems appropriate. Each subcontract the contractor signs with a subcontractor must include the assurance in this paragraph (see 49 CFR 26.13(b)).  c. {If a separate contract goal has been established, use the following} Bidders/offerors are required to document sufficient DBE participation to meet these goals or, alternatively, document adequate good faith efforts to do so, as provided for in 49 CFR 26.53. Award of this contract is conditioned on submission of the following [concurrent with and accompanying sealed bid] [concurrent with and accompanying an initial proposal] [prior to award]: 1. The names and addresses of DBE firms that will participate in this contract;  2. A description of the work each DBE will perform;  3. The dollar amount of the participation of each DBE firm participating;  4. Written documentation of the bidder/offeror's commitment to use a DBE subcontractor whose participation it submits to meet the contract goal;  5. Written confirmation from the DBE that it is participating in the contract as provided in the prime contractor's commitment; and  6. If the contract goal is not met, evidence of good faith efforts to do so.  [Bidders][Offerors] must present the information required above [as a matter of responsiveness] [with initial proposals] [prior to contract award] (see 49 CFR 26.53(3)).  {If no separate contract goal has been established, use the following} The successful bidder/offeror will be required to report its DBE participation obtained through race-neutral means throughout the period of performance.  d. The contractor is required to pay its subcontractors performing work related to this contract for satisfactory performance of that work no later than 30 days after the contractor's receipt of payment for that work from the {insert agency name}. In addition, [the contractor may not hold retainage from its subcontractors.] [is required to return any retainage payments to those subcontractors within 30 days after the subcontractor's work related to this contract is satisfactorily completed.] [is required to return any retainage payments to those subcontractors within 30 days after incremental acceptance of the subcontractor's work by the {insert agency name} and contractor's receipt of the partial retainage payment related to the subcontractor's work.]  e. The contractor must promptly notify {insert agency name}, whenever a DBE subcontractor performing work related to this contract is terminated or fails to complete its work, and must make good faith efforts to engage another DBE subcontractor to perform at least the same amount of work. The contractor may not terminate any DBE subcontractor and perform that work through its own forces or those of an affiliate without prior written consent of {insert agency name}.

Q. Can you please clarify the grantee's obligation to do DBE outreach during the bidding process when a prime or a DBE sub is requesting our involvement such as: A DBE sub contacted us expressing their interest to bid as a sub on the project. A Prime sent us a letter asking us if we know of any DBE firm that is interested in bidding this project and for us to post their DBE SOLICITATION letter on our bulletin board or other public service areas. We have included the link to Southern CA cluster directory as a source for DBE subs in the DBE section of our bid solicitation documents. A. The obligation comes from 49 CFR 26.51(a) - to "meet the maximum feasible portion of your overall goal by using race-neutral means of facilitating DBE participation." Among the examples that follow is "(4) Carrying out information and communications programs on ... specific contract opportunities." Although no specific practice is required, a forum for uniting potential primes and subs would be an excellent means to accomplish this.

Q. Does our District's practice of referencing the State of California's UPC DBE Directory maintained by CALTRANS to contractors and the public meet the intent of 49CFR26.31 that explains, "what requirements pertain to the DBE directory"? All of our bid documents have language that directs contractors and the public to the CALTRANS website and we also state that we will print and distribute any sections of the directory, or the directory in its entirety, upon request. Caltrans is the lead agency responsible for maintaining the UPC mandated DBE directory in the State of California. The District pays a fee to CALTRANS for the maintenance of the directory. We use it to identify subcontractors or prime contractors when soliciting bids or proposals and to refer prime contractors to when they are seeking qualified DBE subcontractors and ask for our assistance. A. The practice you describe meets the requirements of 49 CFR 26.31 and is acceptable.

Q. I cannot get any one to give me the new forms to submit my DBE quarterly reports on. My last ones were rejected by FTA because they said I needed the new form. I cannot find the form on your website. Can someone please send me the new report form? A. The semi-annual DBE Awards or Commitments and Payments reporting form can be found at web-site: http://osdbu.dot.gov/business/dbe/dbe_program.cfm.

Q. In calculating the use of DBE firms, can an agency include minority-owned and women-owned businesses even if those firms do not meet the disadvantaged business criteria detailed in the BPPM Table located in Section 7 DBE Certification and Eligibility? A. The regulation dealing with your question may be found at 49 CFR 26.55(f), which reads: (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)). http://a257.g.akamaitech.net/7/257/2422/05dec20031700/edocket.access.gpo.gov/cfr_2003/octqtr/pdf/49cfr26.55.pdf

Q. Will running a notice containing our DBE program policy statement in the classified ad section of our local daily newspaper satisfy the requirements of 49 CFR Part 26.23? 49 CFR Part 26.23 states the organization's DBE policy statement be circulated throughout our organization and to the DBE and non-DBE business communities that perform work on our DOT-assisted contracts. A. You should post the notice in the same place or places you post solicitations. If you post solicitations through the local paper, you can publicize the DBE statement that way as well. Perhaps the easiest way to satisfy the requirement is to post the DBE statement on the agency's web site.

Q. When there is a contract change that impacts the scope and budget, is there a requirement to review and adjust DBE contract goals with each change? A. The DBE rule does not require grantees to use goals on any given contract. The Best Practices Procurement Manual (BPPM) discusses the use of contract goals in Section 7.3.5.2 - Using Contract Goals. The flexibility afforded to grantees under the new DBE rule would extend to contract changes as well. You have the discretion to review contract changes and make decisions as you deem appropriate on whether or not to adjust contract goals with each change.

Q. Our agency does not maintain a DBE Program because we do not have more than $250,000 of FTA funds awarded per year, exclusive of transit vehicle purchases. However, we are preparing to award an advertising concession contract for our buses - which are federally funded. Are we required to set DBE goals and comply with federal DBE regulations for this contract? Also, is there a federal requirement that a DBE must be awarded a contract if his/her financial guarantee falls within 10% of a competitor's bid? A. Since your agency does not fall within the dollar threshold established by the new DBE rule, we do not believe the DBE requirements for a DBE Program, etc. apply to you, and thus to this contract. However, FTA does have a more general policy regarding revenue contracts that may affect how you award this concession contract. FTA policy regarding revenue contracts may be found in the Best Practices Procurement Manual (BPPM), Section 1.3.3.8 - Revenue Contracts. FTA requires revenue contracts to be competed in order to make the business opportunity available to all interested parties, including DBEs. The guidance in the BPPM states, "The grantee is responsible for taking all necessary and reasonable steps to ensure that DBEs have maximum opportunity to compete for revenue contracts since these contracts are considered business opportunities." A partial answer to your question, then, about complying with Federal regulations in the award of a revenue contract is that you must ensure that it is competed and that DBEs are given a full opportunity to compete for the contract. We do not believe you are required to set DBE goals for this or any other particular contract under the new DBE rule that is discussed in Section 7.3.5.2 - Using Contract Goals, of the BPPM. You may wish to review Chapter 7 of the BPPM. Also, we are aware of no Federal rule that a DBE must be awarded a contract if its bid falls within a certain percent of a bid from a non-DBE.

Q. In a recent RFP for conducting a Fare Policy Study, we stated that subcontracting was not permitted (for many reasons). Due to this we do not have a DBE goal in this procurement. Now DBE's are maintaining that we should allow subcontracting. Am I required to allow subcontracting, wherever subcontracting opportunities exists? Or can we state "no-subs" if we have sufficient reasons for it? A. We are not aware of any requirement that your agency allow subcontracting on any given procurement. While we are not aware of your reasons for requiring the prime contractor to perform all of the work in-house, we believe you have the authority to make such decisions if the reasons are sound, and if it will not preclude competition for the contract. The new DBE rule does not require subcontracting goals for every procurement. This new DBE rule is discussed in the BPPM Chapter 7. BPPM Section 7.3.5.2* - Using Contract Goals. It clearly states that "grantees are not required to set goals on every DOT-assisted contract." The issue of using contract goals may be found in 49 CFR § 26.51(d) "What Means Do Recipients Use to Meet Overall Goals?" ____________ *BPPM Section 7.3.5.2 - Using Contract Goals is available on the Internet.

Q. Is the purchase of Light Rail Vehicles covered under the DBE TVM Requirement? City of Charlotte is soliciting RFP's for 15 low floor light rail vehicles utilizing FTA funds. A. Light Rail Vehicles are covered under the DBE TVM requirement in 49 CFR 26.49. There is also the language in 26.49(d) that would allow project-specific goals if the need arises.

Q. In the Procurement of laboratory testing services and drug/alcohol collections services, must the contractor be required to be an Affirmative Action Employer and meet the DBE requirements? Also, must the Affirmative Action and DBE requirement clause language be included in the contract? A. Assuming your contract is being funded with Federal funds, it must contain the non-discrimination in employment provisions required by Federal regulations. The requirements are contained in Clause #24 of the Best Practices Procurement Manual (BPPM), Appendix A.1. With respect to the DOT Disadvantaged Business Enterprise (DBE) regulations, these may also be found in the BPPM, Chapter 7. As you read the new DBE rule, you will find that grantees have complete flexibility to review any individual contract for subcontracting opportunities and to use specific DBE subcontracting goals where they deem them appropriate. The rule expresses a preference, however, that grantees meet their overall organizational DBE goals through race-neutral measures instead of using contract goals. You should read this chapter of the BPPM carefully for guidance concerning DBE requirements. The BPPM may be found here.

Q. Section 1.3.3.8 of the BPPM states that revenue contracts should include the "maximum opportunity" for DBE participation. However, it also states that federal contract clauses are not required "if federal funds (not assets) are not used to generate revenue." We are planning to award a contract to advertise on federally funded buses. Are DBE goals required in the RFP? Are federal contract clauses required given that federal funds are not being used but the revenue will be generated from federally funded assets? A. Since Federal funds are not being used in this revenue contract, the contract does not need to include any Federal clauses, including clauses relating to Disadvantaged Business Enterprise (DBE). Even if Federal funds were being used, the new DBE rule does not require grantees to use DBE goals on any given contract. For a discussion of the new DBE rule (and how it differs from the old rule), see the Best Practices Procurement Manual (BPPM), Chapter 7, Disadvantaged Business Enterprise. Section 7.3.5.2 discusses the subject of Using Contract Goals. You will note that DBE contract goals are used for subcontracting opportunities under the prime contract, but this strategy is left to the grantee's discretion on a case-by-case basis and in no event does FTA require that all contracts use subcontracting goals. The BPPM may be found here. Q.  Is there a DBE goal requirement for FTA-funded railcar overhaul contracts?  A.  The FTA regulations dealing with DBE matters are set forth in detail in the Best Practices Procurement Manual, Chapter 7. The BPPM is available online: http://www.fta.dot.gov/funding/thirdpartyprocurement/grants_financing_6037.html.The BPPM in section 7.3 discusses goals for DBE participation. Section 7.3.5.2 - "Using Contract Goals," provides guidance on when contract goals are to be used and how they should be determined. You will see that FTA has no specific contract goal requirement, but leaves that determination to the grantee based upon the grantee's assessment of DBE subcontracting opportunities on any given project and whether the grantee's overall agency goal can be achieved through race-neutral means, in which case a contract goal would be unnecessary.