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TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: DIRECTOR OF PUBLIC WORKS
DATE: AUGUST 5, 2003
SUBJECT: ADOPTION OF A DISADVANTAGED BUSINESS ENTERPRISE (DBE) GOAL FOR THE FEDERAL FISCAL YEAR 2002-03
STAFF COORDINATOR: JUDY A. HUEY, SENIOR ADMINISTRATIVE ANALYST
Adopt the Overall Annual Goal of four percent (4%) for the Disadvantaged Business Enterprise (DBE) participation in Federal-Aid-Highway projects during the FY 2002-03 Federal fiscal year.
Current regulations regarding disadvantaged (small, minority-owned, and woman-owned) businesses require each city to develop a Disadvantaged Business Enterprise (DBE) Program in accordance with directions from the California Department of Transportation (Caltrans). The proposed DBE Program for Federal Fiscal Year 2002/2003 for the City of Rancho Palos Verdes (the City) is attached for your review and approval.
In the past, there was a federal requirement to have DBE participation set at a fixed percentage of overall annual construction costs. However, agencies were being sued on the grounds that this was arbitrary and discriminated against contractors who could not qualify as DBEs. Legislation now mandates a different approach to be taken by agencies concerning DBEs: agencies are to calculate on a definitive basis their proposed DBE percentages and file an approved DBE Program with Caltrans.
Staff anticipates using federal funds for the overlay of Crest Road.
ANALYSIS & CONCLUSIONS
There are three methodologies available to agencies for calculating their DBE goals: (1) the "Bidders List" methodology; (2) the "Approved Goal of Another Local Agency" methodology; and (3) the "Census Data and DBE Directory" methodology. The first methodology, which involves using data from a bidders list that is to be created and maintained by each city, is the most accurate – and the favored – approach; it is also the methodology that all cities are required to use once they have developed bidders lists.
The attached DBE Program describes in detail the calculation of the City’s DBE percentage. A summary of the procedure follows:
A combined bidders list was developed from an analysis of bid proposals received by the cities of Bell Gardens, Cudahy, Maywood, Paramount, and Rosemead. Contractors and sub-contractors were identified and listed with one or more of the ten work elements of Federally-funded public works projects. (The ten work elements are: paving, concrete, cold mill, crack fill/seal, manhole adjusting, striping/signing, storm drains, street lighting, traffic signals, and landscaping.) The list of bidders developed by this analysis was then compared to the on-line DBE Directory to identify DBE firms, and DBE percentages for each work element were calculated by dividing the number of DBE firms by the total number of firms for each work element. (These figures are to be calculated and updated annually.) Finally, the DBE percentages were applied to the cost of each work element for the one project the City will have during the upcoming fiscal year and multiplied by the percentage of Federal funding available, resulting in a Base Figure of 3.62% (rounded to 4%).
RACE-NEUTRAL and RACE-CONSCIOUS COMPONENTS
The overall annual DBE goal consists of two parts: the race-neutral component and the race-conscious component.
Race-neutral methods include: (1) configuring large contracts into smaller contracts, when to do so would make contracts more accessible to smaller businesses and would not impose significant additional cost, delay, or risk to the City; (2) encouraging contractors to consider subcontractors for parts of the work for which there is a known supply of ready, willing, and able subcontractors; (3) assisting in overcoming limitations in bonding and financing; (4) providing technical assistance in orienting small businesses to public contracting procedures, use of the Internet, and the City’s contracting activities; and (5) providing outreach and communications programs on contract procedures and opportunities.
If a city is not meeting its goals through race-neutral measures, it must use contract-specific (race-conscious) goals. Contract goals are established so that, over the course of a fiscal year, they will cumulatively result in meeting any portion of the overall goal that is not expected to be met through the use of race-neutral means.
The City plans to achieve its overall annual goal of 4% for DBE participation with 0% race-
neutral and 4% race-conscious components. Contract and bid documents for the one project expected to be awarded during the current Fiscal Year shall include a contract-specific DBE goal of 4%, which is the race-conscious portion of the overall annual goal. (The contract-specific goal for any project advertised after the first project is advertised in a given fiscal year may need adjustment if the overall annual goal is not being met.)
GOOD FAITH EFFORTS (GFE)
The prime contractor for each project is responsible for obtaining sufficient DBE participation and must make good faith efforts on the City’s behalf. Good faith efforts are investigated if a city’s goal is not met. Examples of good faith efforts are listed in Exhibit C of the DBE Program.
At a minimum, all bidders should submit Bidder Information Sheets (see Exhibit D of the DBE Program) on the subcontractors listed on their bid proposals pursuant to Federal law (the ones performing work worth at least $10,000 or ½ of 1% of total contract, whichever is greater). Not only does this document the bidder’s good faith efforts, it enables the City to develop an accurate and representative bidders list.
The public must be informed that the City has developed a DBE goal and that the program is available for inspection during normal business hours for 30 days following the date of the notice, with comments being accepted for 45 days following the date of the notice. (One-time advertisements in newspapers, woman/minority-focused media, trade publications, and websites, in addition to public posting are suggested.) Proof of Advertising must be submitted to Caltrans with the final DBE Program. The City should respond to any comments from the public, and a summary of the comments and responses should also be sent to Caltrans. The City’s DBE Goal has been advertised and posted in accordance with Federal guidelines.
UPDATES TO DOCUMENTS
Contract and bid documents now include information regarding contract-specific DBE goals. Other clauses required by DBE regulations also should be added to the City’s "boilerplate" contract and bid documents.
Failure to establish a DBE goal may jeopardize Federal funding for all Federal-Aid-Highway projects.
Adopting the staff recommendation will allow staff to utilize federal funds for the Crest Road Arterial Street Rehabilitation project.
Dean E. Allison
Director of Public Works
Overall Annual Goal-Setting Methodology