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2014 Changes in DBE Certification Standards and DBE Final Rule Overview State of Hawai’i Department of Transportation Office of Civil Rights Disadvantaged.

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Presentation on theme: "2014 Changes in DBE Certification Standards and DBE Final Rule Overview State of Hawai’i Department of Transportation Office of Civil Rights Disadvantaged."— Presentation transcript:

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2 2014 Changes in DBE Certification Standards and DBE Final Rule Overview State of Hawai’i Department of Transportation Office of Civil Rights Disadvantaged Business Enterprise Program DBE 1

3 Business Size Standards The USDOT cap on statutory gross receipts (the average annual gross receipts over the previous three fiscal years) applicable to small businesses eligible to participate in the program is increased from $22.41 million to $23.98 million. 2

4 Economic Disadvantage $1.32 million PNW cap, excludes primary residence and ownership interest in applicant’s firm remains the same. A firm may be disqualified if there is evidence that the owner is not economically disadvantaged due to assets and resources that indicate an ability to accumulate substantial wealth based on specific factors Factors considered include whether the average adjusted gross income over the most recent three years exceeds $350,000, total fair market value of owners assets exceeds $6 million or whether the earnings were offset by losses, whether the income was unusual and not likely to occur in the future. 3

5 Ownership In evaluating whether the ownership of a firm is real and substantial the new rule examines whether there are any agreements or practices in place that give a non-disadvantaged individual or firm a priority or superior right to a DBE’s profits. If so, these agreements may constitute grounds for removal from the program. 4

6 Control An assumption of control is created when a non-disadvantaged individual, who is a former owner of the firm, remains involved in the operation of the firm unless a determination is made by HDOT that the disadvantaged owner is in control. 5

7 Forms and Data Collection New Uniform Certification Application (UCA) New Personal Net Worth form is an adaptation of the SBA form and must be notarized. The spouse of disadvantaged owner who is involved in the operation of the firm must also submit a PNW form with the application and this PNW must be notarized. 6

8 Summary Suspension A DBE’s certification will be suspended w/o a hearing for 30 days upon evidence that the owner has died or is incarcerated. Other material changes affecting certification may result in summary suspension. HDOT has 30 days to reinstate or initiate removal proceedings. 7

9 Certification Appeals An applicant who appeals the denial of its application for certification to the Department is not prohibited from reapplying at the end of the waiting period if the appeal has not been decided. 8

10 DBE FINAL RULE OVERVIEW  WHAT IS THE DIFFERENCE BETWEEN DBE AND UDBE?  WHAT DOCUMENTS ARE DUE 5 DAYS AFTER BID OPENING?  WHAT’S NEW ON GOOD FAITH EFFORTS (GFE)  WHAT FACTORS ARE CONSIDERED WHEN REVIEWING GFE  WHAT’S NEW REGARDING DETERMINATION OF GFE?  CAN A UDBE BE REPLACED AFTER A SHOW OF GFE?  CAN A PRIME CONTRACTOR TAKE AWAY WORK COMMITTED TO DBES?  WHAT SANCTIONS ARE IMPOSED FOR NON-COMPLIANCE? 9

11 DBE / UDBE (not a part of the final rule) A UDBE is a DBE that belongs to any of the following groups: Women African Americans Hispanic Americans Native Americans (including Native Hawaiians) Only the participation of UDBEs will be counted to meet the contract goal. All other DBEs will be counted as race-neutral participation and will be added to HDOT’s overall goal 10

12 WHAT DOCUMENTS CAN BE SUBMITTED UP TO 5 DAYS AFTER BID OPENING? 11 Confirmation of DBE (revised) DBE Name DBE Address Primary/Secondary NAICS Codes Description of Work Prime Contractor Name Project Name Project Number Dollar amounts for all subcontractors, suppliers, and manufacturers both UDBE and non-UDBE (required for all bidders not just low) Written documentation of the bidder’s/offeror’s commitment to use UDBEs listed to meet the contract goal Copies of quotes for all subcontractors when a non-UDBE was selected over a UDBE to work on the contract AND the contract goal was not met.  HDOT reserves right to ask for subcontracts.

13 GOOD FAITH EFFORTS (GFE) It is important to note that good faith efforts only applies to contracts that have contract goals. GFE is NOT required when the participation by DBEs is obtained through race-neutral means. A DBE is used on a contract with a goal, but is not a UDBE and whose participation is not counted towards the contract goal 12 Federal Aide Contracts YES NO NO GFE All Bidders/offeror required to submit DBE participation info & GFE documentation 5 calendar days after bid opening

14 WHAT FACTORS ARE CONSIDERED WHEN REVIEWING GFE? Did Bidder/Offeror submit required information as a matter of responsibility? Solicited through all reasonable means? Broke apart portions of work to be performed by UDBEs? Provided information on plans and specs? Negotiated in good faith with UDBEs? Relied solely on price? Rejected UDBE as unqualified without sound reason? Assisted in obtaining bonding or financing? Assisted with getting equipment or supplies? Asked for advice from minority or women organizations? Did other bidders/offerors meet the goal? Did not replace UDBE because could not find one at original price? 13

15 WHAT’S NEW REGARDING DETERMINATION OF GFE? Prior to the final rule, HDOT did not request copies of quotes for all subcontractors when a contract goal is not met, and a non- UDBE is selected over a UDBE. Prior to the final rule, HDOT did not request written documentation of the bidder’s/offeror’s commitment to use UDBEs and the UDBE’s confirmation that it will perform work specified Prime contractors have 7 calendar days after HDOT approves replacing a UDBE to submit documentation of good faith efforts 14

16 15 CAN A UDBE BE REPLACED AFTER A SHOW OF GFE? Yes. But…. A prime contractor’s inability to find a replacement UDBE at the original price is not sufficient to demonstrate that good faith efforts have been made Even if the contractor has the ability and/or desire to perform the contract work with its own forces, it does not relieve the contractor of the obligation to make good faith efforts to find a replacement UDBE

17 CAN A PRIME CONTRACTOR TAKE AWAY WORK COMMITTED TO DBES? 16 No, unless the prime contractor receives written consent from the HDOT Prime contractor is required to show good cause for replacing the UDBE Prime contractor has 7 days to show good faith efforts after receiving approval to replace a UDBE

18 WHAT SANCTIONS ARE IMPOSED FOR NON-COMPLIANCE? 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 the recipient deems appropriate which may include, but is not limited to, (1) withholding monthly progress payments (2) assessing sanctions (3) liquidated damages and/or (4) disqualifying the contractor from future bidding as non- responsible 17

19 QUESTIONS? 18


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