How to meet Caltrans requirements for DBEs

The stated purpose of the California Department of Transportation (Caltrans) Disadvantaged Business Enterprise (DBE) Program is “to increase the level of participation of disadvantaged businesses in all transportation related federally funded projects” in an effort “to remedy past and current discrimination against disadvantaged business enterprises, ensure a level playing field and equal opportunity in federally assisted contracts, improve the flexibility and efficiency of the DBE Program, and reduce burdens on small businesses.”

Under 49 CFR Part 26, recipients of federal highway funds are required to set an annual overall DBE goal; the Caltrans DBE goal for federal fiscal year 2010 is 13.5 percent.

The Caltrans Office of Business and Economic Opportunity (OBEO) program was developed to increase the participation of DBE firms as prime contractors, subcontractors, suppliers, truckers, manufacturers, or other service providers, and to help bidders meet DBE goals on every project. Compliance and reporting requirements under the program are covered in a new publication from OBOE and are outlined here.

Document outreach efforts
The Special Provisions for federally funded projects require a bidder to document outreach efforts to maximize DBE compliance. In particular, contractors must document the work they offer to DBE firms. In that documentaion, identify the work you would otherwise perform with your staff that is now being made available to DBE participation. Show the dollar value and percentage of the total contract. The work, supplies and services you chose should be more than what is needed to meet the individual DBE contract goal. List the bid item number, description of the work and what portion of the item was offered to DBEs.

Keep a list of the names of certified DBEs you contacted, the dates on which they were asked to bid on the project, and the type of work offered. Describe how you made the initial contact and the dates of follow-up. Include supporting documents, such as copies of letters, faxes, telephone logs and telephone statements.

Making contact
Begin the solicitation process by obtaining the DBE Certification Directory at www.dot.ca.gov/hq/bep/find_certified.htm. A tutorial is available at the website with instructions on how to use the DBE Query Form to search for DBE firms. You can search using:
● Firm/DBA Name
● Firm Identification Number
● Caltrans District
● County
● Majority Owner Gender
● Race/Ethnicity
● DBE Firms
● License Type or Work Category Codes
● NAICS Categories or Codes
● City, Zip Code or Area Code

Document written invitations sent to certified DBEs, including contract description, bid opening date, items of work the bidder is soliciting, name of the estimator, assistance available to DBEs and sub-bid conditions, such as providing bonding, insurance, etc.

Solicit DBEs and follow-up well in advance of the bid opening. Continue soliciting and performing follow-up activities for DBE sub-bids until sufficient DBEs have been contacted to allow you to meet the goal. If too few DBEs responded, expand your request to other DBEs. If you advertise for DBE participation, keep a list of the name and date of each publication used and attach copies of the published ads. Ads should include contract description, bid opening date, items of work the bidder is soliciting bids on, estimator name, and assistance available. Ads should be run in publications DBEs frequently use to locate Caltrans contracts.

Selecting a DBE
Document DBE responses, including the telephone number of each DBE that provided a quote and the quote. If the firm selected is not a DBE, you’ll have to explain why. Identify the exact reason a DBE subbid was rejected. Simply saying the quote was “too high” or “partial” is not sufficient. You will be requried to explain why the price was considered excessive or unreasonable in comparison to the total bid. Deciding to perform work with your own staff does not relieve you of the responsibility to make good faith efforts. You cannot reject DBEs as unqualified without sound reasons based on thorough investigation of their capabilities.

You don’t have to accept higher quotes from DBEs if the price difference is excessive or unreasonable; however, you must negotiate in good faith with interested DBEs and have evidence that you did so.

Providing assistance to DBEs
Maintain lists of efforts you made to assist interested DBEs in obtaining bonding, credit, insurance, equipment, supplies, and materials. Do not include supplies and equipment the DBE subcontractor purchases or leases from the prime.

Bidding without plans
A new service allows bidders, DBEs, small businesses and Disabled Veteran Businesses to participate in the bidding process without a set of plans. A detailed explanation of the opt-in feature can be found at www.dot.ca.gov/hq/esc/oe/.

Nothing remains the same
Currently the federal government is considering changing the rules. In particular:
● Disallowing credits for supplies and other items o
● Requiring agencies to break up larger contracts into smaller parts so DBE firms can bid on more pieces of a project
● Revising the DBE certification application and raising the net worth allowed for DBEs
● Requiring recipient agencies to take a more hands-on approach
● Amending conditions for terminations and substitution of DBEs.

Stay tuned. As soon as the changes are finalized, we’ll cover them in detail in SCCA Magazine.

by Pam Gruebnau, Editor, Southern California Contractors Association magazine