If you advertise and award a Federal- aid contract, as a Local Public Agency—
LPA—
you have the responsibility to manage the Federal Disadvantaged Business
Enterprise—DBE—program requirements. Failure to properly manage the DBE
program could lead to project termination or potential delay due to
complaints or lawsuits.
To avoid this, the Federal Highway Administration requires you to follow
your state's Federally-approved DBE program where your key
responsibility is DBE Contract Administration.
While the specific requirements within each state's DBE Program may vary, your
main responsibility is DBE Contract Administration.
To keep it simple, let's separate Contract Administration into two phases:
Pre-Award and Post-Award.
Let's talk about the Pre-Award phase first.
In the Pre-Award phase of a Federal-aid Contract, you are expected to address
administrative elements of the contract. For every contract, you must include the
following clauses: --Assurances. The required DBE assurances are found in the
federal DBE regulations.
These assurances are contract provisions that hold the prime contractor, the
subcontractors, and you, the LPA, accountable to your State’s approved DBE
program guidelines.
--Prompt Payment. The prompt payment clause ensures that the subcontractors,
including DBEs, receive payment for work performed within thirty days of the
prime contractor receiving their payment. --Compliance and Enforcement. Compliance
and Enforcement provisions may be termed differently in your State’s DBE Program.
However, if prime, sub-, or DBE contractors do not comply with program
requirements, these provisions serve as a guide for action by LPAs and State
Departments of Transportation.
You will also need to determine if your State's program includes a retainage
provision. Retainage is the withholding of a portion of payments
until the contractor’s work is completed and accepted.
If the answer to this question is yes, You will need to ensure the return of
retainage verbiage that is included in the contract. A return of retainage clause
ensures all subcontractors, including DBEs, receive retained monies due to
them upon the completion of their part of the contract.
It is the responsibility of the LPA to enforce the return of retainage clause.
Also, in the Pre-Award phase, we must address the DBE goal. This goal ensures
DBE participation.
If a DBE goal is included in the advertisement of the Federal-aid
contract, you have these responsibilities:
1. Review the prime contractor’s response to ensure they are: --able to meet the goal, or
if not,
--review and evaluate the prime contractor’s Good Faith Efforts.
Good Faith Efforts are the actions that prove the contractor took all
necessary and reasonable steps
to achieve the contract goal or sufficient DBE participation on the
contract.
2. Obtain a written list of the DBEs named by the prime contractor.
This should include a description of the type of work and the dollar amount of
the subcontract. --Ensure the DBEs identified on the Federal-aid contract are
certified for the type of work they are performing using your State’s certified
DBE directory.
3. You must verify the prime contractor’s Commitment to the DBE firms. To do this,
obtain a written confirmation of the Commitment from the listed DBEs to
ensure the information obtained from the prime contractor is accurate. This
written confirmation must identify the name of the DBE,
the type of work the DBE will perform, and the subcontract Award amount the DBE
is expected to receive.
Our key points for the Pre –Award phase were: --Ensure your contract includes the
required DBE Program provisions
--If DBE goals apply,
confirm the Prime contractor has complied with the Program Requirements.
In the Post-Award phase of Contract Administration for a Federal-aid contract,
you are responsible for monitoring the project to ensure DBE Program compliance.
After a Federal-aid contract has been Awarded, your responsibilities are to:
Conduct project-level monitoring. This means you are expected to visit the
project site and to confirm and document that the listed DBEs are: --Performing the
type of work specified in the contract and, --Performing a commercially useful
function.
This means the DBEs are using their own Resources, including employees, equipment,
materials, etcetera.
You must also get confirmation from the DBE at the prime contractor is
adhearing to the specific contract provisions for the DBE Program
such as prompt payment, and return of retainage, if applicable.
Maintain records and reports. This means collecting Payment data, DBE
participation data, and other statistical data for submission, as required, by your
State DOT.
If you answered “yes” to the DBE goal in the Pre-Award phase,
you have another responsibility in the Post-Award phase. You must ensure that
the DBEs listed by the prime contractor in the Pre-Award contract phase
are actually awarded a subcontract for the type of work and dollar amount
(Award Amount) that was listed.
The simplest way to sum up your responsibilities for a contract with DBE
goals
is to think of CAP: By carefully and effectively monitoring your projects, the
project
CAP will always be straight.
It is the prime contractor’s responsibility to notify you, the LPA, if the CAP is no
longer equal and why, prior to any change. In other words, the DBE (or contract) goal
Commitment made by the prime contractor in the Pre-Award phase should equal the
actual award made to DBE subcontractors. And finally, in the Post-
Award phase, Payments made to DBE subcontractors should equal the DBE
goal Commitment and Award amounts.
In essence, there should be no surprises at the end of a Federal-aid project,
and your CAP
should always be straight.
In other words, Commitment equals
Award
equals Payments.
Compliance and Enforcement are essential to all aspects of Contract
Administration. As an LPA, you are expected to monitor Federal-aid projects
to ensure that prime, sub-, and DBE contractors comply with DBE Program
provisions.
Finally, as an LPA,
you want to ensure compliance with these responsibilities to ensure your project
is reimbursed for funds that may have already been expended on a Federal-aid
contract. By complying with your State’s approved DBE Program,
you will prevent project delays due to complaints, lawsuits, withholdings, or
suspensions, etcetera.
You will also, and perhaps more importantly,
ensure successful project closeout and prevent termination or loss of State
DOT funds.
Remember,
these are your key responsibilities for the DBE Program:
--Follow your State's Federally-approved program. --You have Contract Administration
responsibilities in two phases: --Pre-Award – Ensure your contracts include DBE
Program provisions, and;
--Post-Award – monitor and enforce DBE Program provisions. If you do these things,
you will successfully complete your Federal-aid projects.