Disadvantaged Business Enterprise (DBE) Goal-Setting on Federal Aid Highway Construction Projects

Powerpoint Presentation: 01goalsetting.ppt (568 Kb)

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September 7, 2004 San Diego, California
California Department of Transportation

Disadvantaged Business Enterprise (DBE) Goal-Setting on Federal Aid Highway Construction Projects

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Workshop presented by:

Kris Kuhl - P.E.
Chief, Office of Contract Awards
Office Engineer

Workshop Objectives

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• Review California DOT's DBE goal setting
  
  
  • basic process
  • strengths and weaknesses
    
    
• Highlight other DOT's processes
• Determine Best Practices
• Use of Geographical Information Systems

Goal Setting Process

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• Authority to Set Contract Goals
  
  
  • DBE: 49 Code of Federal Regulations, Part 26.51
    
    
• Roles and Responsibilities From our annual DBE Program plan:
  
  
  • Office Engineer performs analysis of the contract items & DBE availability in making a goal recommendation
  • Civil Rights reviews OE's recommendation and sets the contract goal

Process Overview

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For projects with any federal aid:

– Office Engineer reviews contract items and

• determines work likely performed by prime
• reviews remaining items for subcontractor work
• applies DBE "match list" against these items
• counts items with significant DBE matches toward the goal
• applies factors to these items
• calculates rough goal by dividing DBE $ by total estimate
• rounds this percentage to the nearest whole percent

DBE Match List

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• To "match" DBEs to an item of work, the DBE must be:
  
  
  • Certified as a DBE to do the item of work
  • "Ready, willing and able" to perform the item of work
  • Interested in doing the work in the project area or work statewide
    
    
• An item will not count toward the goal if:
  
  
  • there are a low number of DBE matches (<10)
  • the item of work is <$2000 (if not combinable with similar work)

Factors & Other Considerations

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• 100% of the item estimate is counted unless:
  
  
  • item involves supply of material, apply 12% factor
  • item involves trucking, apply 10% factor
  • item is for portable CMS, apply 50% factor for rental
    
    
• A goal of 0% is possible when:
  
  
  • the amount of subcontractable work is negligible
  • the number of DBE matches is minimal

Step 1 - Identify Controlling Items

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Step 2 - Review Potential Subcontractable Items

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Step 3 - Apply DBE Match List

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Step 4 - Count significantly matched items towards goal

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Step 5 - Apply DBE Factors

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Step 6 - Calculate Rough Goal by Dividing DBE $ by Total $

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Step 7 - Round to Nearest Whole Percent

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Strengths & Weaknesses of the Goal Setting Process

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• Strengths:
  
  
  • useful for most projects
  • repeatable
  • rational
    
    
• Weaknesses:
  
  
  • relies on DBEs geographic preference
  • goal is set well before bid opening and won't reflect addenda or changes in DBE availability
  • assumes DBEs are ready, willing and able
  • does not work well when the nature of the work is specialized

Summary of Project Goal Setting.Practices Nationwide

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• Caltrans conducted telephone interviews of 48 state DOTs:
  
  
  • Contractor Prequalification
  • Bidder's Lists
  • Level of Annual Goal
  • Size of local DBE pool
  • Level of work required by the prime
  • Race Neutral Measures
  • Use of Codes
  • Project Goal Setting

Results of Survey

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• Contractor Prequalification:
  
  
  • 7 states prequalify all contractors
  2
  • 9 states prequalify only the primes
  • 12 states don't prequalify contractors (incl. CA)
    
    
• Bidder's List
  
  
  • 35 states have Bidder's lists
  • 29 states use the list to assist in goal setting
    
    
• Annual DBE Goals
  
  
  • varies from 5% to 22.3% (Avg. = 9.5%)

More Results

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• Size of DBE Construction Contractor Pool
  
  
  • 38 states indicated knowledge of DBE pool
    
    
• Percentage of Work Required by the Prime
  
  
  • varies from 25% to 51% (avg. = 41.9%).
  • 16 states use the 30 % Federal level
    
    
• Race Neutral Measures
  
  
  • 32 states use some race neutral measures
  • 6 states use 100% race neutral measures

Project Goal Setting Comparison

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• Use of Standard Codes:
  
  
  • 23 use NAICS
  • 20 use a state coding method (work categories)
    
    
• Project Goal Setting:
  
  
  • 39 states use the contract items
  • 6 states don't set project goals
  • 3 states use fixed goals

Summary of Best Practices

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• Effectiveness in achieving project goals
• Effectiveness in achieving annual goal
• Satisfaction with the process

Use of Geographical Information Systems

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Geographic Information System

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How can we answer the question, "Where are DBE's willing to work?"

One method would be to determine DBE home office proximity to the project location.

The following slides illustrate Caltrans' efforts to use GIS to assist in project goal setting

DBE Stay Local Vs. Go Statewide

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Need for GIS in Goal Setting

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Problem:

• About 67% - 73% of DBEs say that they are willing to work statewide, but in reality only 30 % actually work statewide
• Existing DBE match system relies on certification information
• Using 75 mile radius in urban areas and 125 mile radius in rural areas catches about 72% of DBEs

Urban vs. Rural Area Comparison

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DBE/GIS Process Overview

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• Select DBE at some distance (75 Miles for urban and 125 miles for rural ) of project site
• Match DBEs with license required for each item
• Combine GIS result with DBE match

Match DBE with License

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GIS Match Results

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Factor GIS Result into DBE Match

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Questions, Comments & Recommendations

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THANK YOU!