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TVM DBE Certification: Guidance on the DBE Program and Goal Requirements


Janelle Hinton: Welcome to FTA
TVM DBE Certification: Guidance on the DBE Program and
Goal Requirement Webinar. My name is Janelle Hinton,
and with my colleague Ed Birce, we will highlight the DBE
regulations for becoming a Certified Transit Vehicle Manufacturer. During this presentation we are
going to discuss the purpose of the DBE Program, TVM
eligibility, DBE program elements, DBE goal methodology
requirements, and the DBE goal approval and disapproval process. The purpose of the DBE Program. The Disadvantaged Business
Enterprise Program is one dedicated to helping small
business owned and controlled by socially and economically
disadvantaged individuals, including minorities and women,
and participating in contracting opportunities created by DOT
financial assisted programs. What is a DBE? A DBE is a for-profit small
business concern that is at least 51 percent owned
and operated by one or more individuals who are both
socially and economically disadvantaged. Objectives of the DBE Program. The first objective is to
ensure nondiscrimination on DOT assisted contracts. Second, the DBE Program is
intended to create a level playing field for DBEs. Your program must make sure DBEs
have the same opportunities to compete for DOT assisted contracts. Narrowly tailored DBE Program,
meaning the methodology and implementation of your program,
should be based upon the unique circumstances in your
area and for your firm. You are to ensure only firms
meeting eligibility standards can participate. That means only certified
DBEs should be utilized in DOT assisted contracts,
removing barriers to the DBE participation by breaking large
contracts down into smaller projects that DBEs and
small businesses can bid on. You also want to help develop
DBE firms to compete outside of the DBE program, for
example, establishing a mentor-protege program. Lastly, the flexibility to
recipients to be creative in setting up their DBE
program in their own way. While certain aspects of the
regulations are required, the regulation also allows for
recipients to use their own unique approach to establishing
their program, as long as the requirement elements are met. What do we mean by TVM? Transit vehicle manufacturer,
known as a TVM, is a manufacturer whose primary
business purpose is to build vehicles specifically for
public mass transportation. Such vehicles include but are
not limited to buses, railcars, trolleys, ferries and vehicles
manufactured specifically for paratransit purposes. The definition includes
producers of vehicles that receive post production
alterations or retrofitting to be used for public
transportation purposes. Please note, businesses that
manufacture vehicles solely for personal use and for sale
off the lot are not considered transit vehicle manufacturers. The federal regulatory
requirement at 49 CFR Part 26.49 states if you are an FTA
recipient, you must require each transit vehicle manufacturer as
a condition of being authorized to bid or propose on FTA
assisted transit vehicle procurements certify that
it has complied with the DBE regulatory requirement. A transit vehicle manufacturer
may obtain this certification by submitting his DBE goal
and program plans to the FTA Office of Civil Rights. If you are a transit vehicle
manufacturer, you must establish and submit for FTA’s approval
an overall annual DBE goal, known as the goal methodology,
and a DBE Program plan. TVM eligibility. Only those transit vehicle
manufacturers listed on FTA’s eligible TVM list or that has
submitted a goal methodology to FTA that has been approved or
has not been disapproved at the time of solicitation
are eligible to bid. A TVM’s failure to implement
the DBE program in the manner prescribed by 49 CFR Part 26
may result in removal from FTA certified TVM lists and the
inability to bid on future FTA assisted vehicle procurement. Before bidding on FTA assisted
vehicle procurement, a TVM must submit a DBE goal to FTA, must
submit a DBE Program plan to FTA, and submit the TVM
certification approval to the transit agency within its bid package. That would be a copy of the TVM
Concurrence Letter or In Review Letter you received from FTA. To obtain certification, a
TVM must submit a DBE goal methodology and a DBE Program plan. An annual program plan submittal
is not required as long as it remains in compliance; however,
significant changes in the program plan must be
submitted for FTA approval. What we mean by significant
changes, if your firm receives a new CEO or general manager,
or a new DBE liaison officer is assigned, you must update
your program plan to reflect these changes. To maintain certification and
remain eligible, a TVM must submit an annual DBE goal
methodology to FTA by August 1st of each year. Further, TVMs must submit the
uniform report of DBE awards and commitments and payments
on June 1st and December 1st of each fiscal year. Now, I will pass it to my
colleague Ed to discuss the DBE Program plan. Ed Birce: Thank you, Janelle. In this section we will
look at DOT’s DBE Program and its elements. The DBE program has 12 elements. These elements are required
for each recipient and must be included in your submission. Note, each element must include
a narrative in your submission even if the narrative notes
that you are not developing a particular portion of
the program at this time. The 12 DBE program elements
are the Program Plan, Policy Statement, DBE Liaison
Officer, Financial Institutions, DBE Directory,
Overconcentration Analysis, Business Development Programs,
Determining and Meeting Goals, Required Contract Provisions,
Certification Standards and Procedures, Record
Keeping and Monitoring, and Monitoring and
Enforcement Mechanisms. Now that we are familiar
with the 12 elements, we will go into a little
more detail for each element. Element 1: Program Plan. The Program Plan details
your implementation of your DBE Program according
to federal guidelines. Please note, should any
significant changes occur after you have submitted a DBE Program
Plan, such as assigning a new DBELO or General Manager, you
must update your DBE Program and submit to FTA for approval. Element 2: Policy Statement. The Policy Statement affirms
your participation in the DBE Program. Moreover, it identifies the
objectives of your DBE Program, identifies your DBELO, as
well as how your company will disseminate this statement
internally and externally. Last, the Policy Statement
must be signed and dated by your current Chief Executive Officer. Element 3: DBE Liaison Officer. The DBELO undertakes the
responsibilities associated with DBE Program implementation
and has a direct reporting relationship with the CEO. Please note that this direct
reporting relationship must be reflected in your
organizational chart, too. In addition, the DBELO must have
adequate staff and authority to administer the program. Element 4: Financial Institutions. For this program element, it
is imperative that you conduct a thorough search for DBE
financial institutions and make this information
available to contractors. Whether you will be able to find
any financial institutions or will be able to use any
financial institutions, it will vary from case to case. In order for your DBE Program
to be compliant, you must demonstrate that you conducted
the search and present the outcomes of that search
to relevant parties. Please note that the
availability of financial institutions should be
reevaluated periodically. Even though no time period is
required by the regulation, FTA recommends that a
reevaluation is conducted every one to two years. Element 5: DBE Directory. The DBE Directory is issued by
each certifying agency and may help TVMs locate ready, willing
and able certified DBEs in specific work categories. Element 6: Overconcentration Analysis. For this element you want to
provide information detailing whether there is an
overconcentration of DBEs in a particular work category
and how you will address overconcentration. For example, if you find
yourself awarding a specific product to a specific group on a
consistent basis, we want to see that you are assessing
and evaluating any overconcentration. Element 7: Business
Development Programs. This element refers to
a mentor-protege program. In addition, it can also
foster small business growth and development. Should you decide to not have a
business development program at the time of your submission,
please do state so in a narrative and elaborate whether
you plan to implement such program in the future. Element 8: Determining
and Meeting Goals. In this program element you want
to calculate the percentage of federal funds that will be
directed towards DBE contractors and subcontractors. Keep in mind that we want
to see the work for all your calculations. Should you submit an
Excel document to show your calculations, we need to be able
to see the formulas associated with each calculation. Element 9: Required Contract Provisions. In order to achieve compliance
for Element 9, you must ensure that all federal regulatory DBE
provisions language is included in the contracts and
subcontracts where federal funds are involved. Element 10: Certification
Standards and Procedures. This element requires that
you direct potential DBEs to a local Unified
Certification Program, UCP, for certification information. Under Element 10 you must ensure
that all DBEs listed on any State UCP are certified. Note, it is your responsibility
to check periodically the DBEs you are working with are certified. Also, keep in mind that you are
not a certifying agency, but you can direct DBEs to certifying agencies. Element 11: Record
Keeping and Monitoring. As part of Element 11 you must
report DBE participation and provide FTA a copy of the
bidders list upon request. Note, although it is up to you
to decide what information you are collecting for your bidders
lists, there are five particular elements that regulations
require on the bidders list, and those are a firm’s name, the
firm’s address, a firm’s status as a DBE or non-DBE, age of
the firm, and the annual gross receipts of the firm. Moreover, you must ensure the
certified DBEs are performing the work contracted to them
and that they are being paid for their satisfactory performance
on a timely basis as required by the regulation. Last, Element 12: Monitoring
and Enforcement Mechanisms. Element 12 requires that you
implement appropriate mechanisms to ensure regulatory compliance
by all participants in the program, ie. the contractors
and subcontractors. Janelle Hinton: The
DBE Goal Methodology. The DBE goal methodology should
be an outline step by step of how you develop your DBE goal. What is a DBE goal? A DBE goal is the percentage
of FTA funds a TVM anticipates awarding to ready, willing and
able DBEs who provide supplies or services during an FTA
assisted vehicle procurement. The DBE goal methodology has
eight minimum requirements. Requirement 1, detailed list
of contracting opportunities. Requirement 2, geographic market area. Requirement 3, Step 1 base figure. Requirement 4, Step 2 adjustment. Requirement 5, Race-Conscious
and Race Neutral breakdown. Requirement 6, list of sources
used to establish the goal. Requirement 7, evidence
of meaningful consultation. And last, Requirement
8, proof of publication. Requirement 1: Detailed list
of contracting opportunities. You are to provide a list of
all domestic supplies and/or services outsourced
when manufacturing FTA funded vehicles. That should include both
contracting and subcontracting opportunities. You are to classify these
opportunities by the appropriate NAICS codes. Also, include the name of
the FTA recipient and vehicle procurements you anticipate bidding on. For example, if you intend
to bid on a procurement with California DOT for 50 railcars,
please include those details within your goal methodology. In this image here, we
have outlined some potential contracting opportunities for
this particular paratransit van. In our example here, we
have listed out the molded fiberglass roof, dual
roof air conditioners, rear vision camera. These are different potential
contracting opportunities which DBEs could perform work on this vehicle. Requirement 2: Geographic Market Area. Your geographic market area,
also known as the GMA, is the area that you award
a substantial majority of your contracts. Consider the geographic location
of your largest suppliers or the areas where a majority of
your products are sourced. The GMA does not have to be
the same geographic location as your facility. Make note, the GMA does not mean
the location in which you intend to bid on vehicle procurement,
meaning if you bid and win a contract with a transit agency
in the state of Ohio, that does not mean your GMA has to be
the state of Ohio as well. We are looking for the area in
which you award your contracts to get your supplies
and services to assist in your vehicle procurement. Clearly identify your geographic
market area as an individual state, a group of states
or a specific region. Clearly explain how you
determine the geographic market area within your goal methodology. Requirement 3: Step 1 base figure. Clearly identify the number of
ready, willing and able DBEs by the North American Industry
Classification Systems Code, also known as the NAICS Code, for your contracting opportunities. You are to search state UCP
directory, your firm’s own bidders list or other reliable
sources to locate DBEs. Next, you want to identify
the number of ready, willing and able All Firms by
NAICS Codes for the same contracting opportunities. You can search the Census Data,
bidders lists and other reliable sources to locate All Firms,
that’s both DBEs and non-DBEs. You want to include a clear
calculation that determine relative availability and
the percentage of funds you anticipate awarding. A clear narrative on how you
arrived at your base figure should accompany the data
and math equation you provide. Please note, you must select
NAICS Codes that best describe your contracting opportunities
without generalizing. For example, NAICS Code 336320,
Vehicular Lighting Equipment Manufacturing, should
be used instead of 3363, Motor Vehicle Parts and Manufacturing. See the difference between the two? One is more detailed while
the other is very broad. You may also visit the link
provided on the slide for the latest NAICS Code Manual. Here you can find the
definitions of all the NAICS Codes to help you identify the
NAICS Code for the specific type of work you may need. When locating DBEs, you can use
UCP DBE directories within your geographic market area,
your firm’s bidders lists, and other reliable sources. When locating All Firms, you can
use census bureau data located at www.census.gov, your
firm’s bidders lists and other reliable sources. The important key is
making sure you are using an apples-to-apples comparison and
ensuring you are comparing data from similar sources. For this example, we are
looking at NAICS Code 336320, Vehicular Lighting. We have identified 17 ready,
willing and able DBE from the UCP database within our
geographic market area for this specific NAICS Code. Next, we identify 67 ready,
willing and able All Firms from the Census Data for the same NAICS Code. We then divide the 17 DBEs by
the 67 All Firms to give us a base figure of 25.37 percent. Please note, displaying your
data in a table format makes for effective reporting. If you weigh your figure against
other contracting opportunities and the funds associated
with those contracts, your figure may change. We will discuss the
weighting approach later in the presentation. In our example here, we see the
table format I just mentioned. We have our NAICS Codes
listed in the left column. We then have the number of DBEs
of each NAICS Code in the orange column, and the number of All
Firms for those same NAICS Codes in the purple column. Again, this is an effective
approach for reporting your base figure calculation. Please note, if you have
multiple states within your geographic market area,
you should report the number of firms for each state by NAICS Code. You must indicate the number
of DBEs and All Firms for each state and add a total
column for your calculations. In the chart below, we
have six states within our geographic market area. For each NAICS Code, we
have identified the DBEs and All Firms for each of
the states within our GMA. You may also do the weighting approach. This approach provides a
more narrowly tailored model for availability. Weights used are proportions
of dollars spent within each industry. Resulting percentages is
more heavily influenced by our availability in industries
where more dollars are spent. You are to decide which work
types best represent your DOT assisted contracts. We advise using NAICS
Codes would be best. You should then tally the
dollars spent in each work type category as a percentage of the
total contract dollars spent, and assign work types to
each DBE and non-DBE firm. For our example here,
we are going to look at a construction project. We established 12 percent as
our base figure from the 15 DBEs divided by the 125 All Firms. In order for us to do the
weighted approach, we’ve identified 70 percent of our
funds was spent on asphalt, while 30 percent of our
funds was spent on trucking. For asphalt, we have a
ratio of 10 DBE over 100 All Firms available. For trucking, we have a ratio
of 5 available DBE over 25 All Firms available. We took each ratio and times it
by the percent of dollars spent on each respective work type. This gives us now a new weighted
base figure of 13 percent. Going further with that example,
this chart here shows us how we would report the weighted
percentages and the availability of asphalt and trucking to
get our weighted base figure of 13 percent. In this next example, we have
a snippet of another chart that outlines the different NAICS
Codes, the work category description, the number of DBE
firms, the number of All Firms, the relative availability ratio
for each of those NAICS Codes, and the weighted percentage. Each of these elements should
be included in your submission if you choose to develop
a weighted base figure. A good practice is to include
and Excel chart of your base figure calculations along
with your submission. The chart should include
the math equations used to develop your goal. Requirement 4: Step 2 adjustment. You must examine all evidence
available to determine if an adjustment to the base figure is needed. Clearly explain in a narrative
the process used in determining, as well as the evidence and
reason for the adjustment. If the evidence does not suggest
an adjustment is necessary, thoroughly explain the evidence
and the reason for not adjusting your goal. Although the Step 2 adjustment
is not required, the assessment must be done and clearly documented. Now, there are four options of
evidence that you may consider in your Step 2 adjustment. Option 1: Past Participation. A clear, concise
calculation must be provided. Option 2: Disparity Studies. An explanation for a study’s
applicability is also required. Option 3: Other TVM Goals. Option 4: Vetting. You must vet both DBEs and
non-DBEs used to calculate the goal, that is removing DBEs
that were unable to perform on your contract. Option 1: Past Participation. In order to determine past
participation median, also known as the historical median, you
are going to identify your DBE participation for the
past three to five years. You are to arrange those
participation values low to high, and select the middle value. Next, you will take the average
of your Step 1 base figure and historical median. For example, let’s say we have
a base figure of 8 percent. Our past participation for the
last three years was 5 percent, 10 percent and 12 percent,
giving us a historical median of 10 percent. We would then take the average
of the 8 percent base figure and the 10 percent historical
median to give us a value of an adjusted DBE goal of 9 percent. Let’s look at another example here. Our past DBE participation
for the last three years was 14 percent in 2015, 3 percent
in 2016 and 7 percent in 2017. This will give us a
historical median of 7 percent. Our initial base figure was 13 percent. We then take the average
of those values to get a new DBE goal of 10 percent. Option 2: Disparity Studies. Disparity studies are
jurisdictional surveys of minority and women owned
businesses, the availability of these businesses to perform
on contract and the effect of past discrimination
towards these groups. You should locate disparity
studies within your geographic market area. You want to determine
applicability to your goal by identifying similar NAICS codes
or work categories discussed in the disparity study. You also want to clearly
indicate if and how disparity studies impact your goal. Option 3: Other TVM Goals. If you use another TVM’s goal
during the Step 2 adjustment, you must analyze and ensure
similarities within the TVM’s geographic market area, TVM’s
work scope within their goal methodology, vehicles
manufactured, also all factors considered in their Step 2 adjustment. The objective is to ensure you
assess a goal of a similar firm. This means if your firm produces
railcars, you should not compare your goal to one of a bus manufacturer. If your firm has a geographic
market area of Ohio, you should not assess the goal of a firm
whose geographic market area is the state of New York. Option 4: Vetting Process. If you use the vetting process
in your goal adjustment, you must make sure that all DBEs
listed are indeed really, willing and able, and you
must perform a similar vetting process for All Firms
as well as your DBEs. Ed Birce: Next, we will look at the Race-Conscious/Race-Neutral
breakdown. In the
Race-Conscious/Race-Neutral breakdown we are looking for a
projection of race-neutral and race-conscious participation
you foresee meeting your set DBE goal. For this purpose, you must
clearly list the Race-Neutral measures used in the fiscal year. Please consider the Race-Neutral
suggestions listed in 49 CFR 26.51 part B. In addition, you must clearly
state the percentage of your goal achieved using Race-Neutral
measures in the fiscal year. Keep in mind that maximum
feasible portion of overall goal should be met using
Race-Neutral measures. Moreover, you must clearly
state the percentage of your goal achieved using Race-Conscious
measures in the fiscal year. In the narrative, we need to see
a clear explanation on how you determined the
Race-Conscious percentage. In this slide we go into more
details on the differences between Race-Neutral and
Race-Conscious measures and what we would ideally
see from program participants. Race-Neutral measures include
Outreach, Technical Assistance, Procurement Process
Modification, or other measures used to increase opportunities
for all small businesses, not just DBEs. Please incorporate Race-Neutral
measures that meet the needs of your small business community. Race-Conscious measures are
any measures that seek to assist DBEs only. Currently, contract goals
are the only FTA approved Race-Conscious measures. Should you decide to
establish any other DBE-focused initiatives that you categorize
as Race-Conscious measures, you must first seek approval from FTA. Requirement 6 addresses the
listing of sources used to establish the goal. Specifically, we will look
for a list of resources to locate DBEs. Please provide links where appropriate. For example, a link to a
UCP DBE Directory website or a bidders list. In addition, we will look
for a list of sources used to locate non-DBEs. Again, provide links where appropriate. An example in this case
would be a link to the U.S. Census Data website. Last, please list the sources
used for the Step 2 adjustment and provide links to
all additional evidence. Quite often, program
participants will provide links to various disparity
studies used in their goal determination. For Requirement 7, we
are looking for details on meaningful consultation. To fulfil the requirement of
this element, you may consult with minority and women
business associates, community organizations, general
contractor groups, DBELOs at transit agencies, and any
other groups with knowledge of availability of DBEs. Keep in mind that the purpose
of meaningful consultation is to receive feedback on
your DBE goal methodology and implementation, as well
as to discuss contracting opportunities with DBEs and non-DBEs. This may be done through
interactive exchanges such as outreach events and
scheduled meetings, etc. Now, let’s cover what
constitutes sufficient evidence of meaningful consultations. To fulfill Requirement 7, we
will look for invitation or flyer to the event and
sign-in sheets of attendees. You need not send physical
copies, but scanned copies of the original are sufficient. Email notices and communications. Again, this can be scanned
copies of the emails going back and forth. Document of your efforts to
search for DBE attendees to invite to your outreach events. Also, summarize all comments
received and explain how these comments impacted your goal. Keep in mind that it is
crucial you provide evidence of correspondence sent or
received during consultations. Effective practices or
meaningful consultation include disseminating targeted
correspondence to small business, minority, and women
advocacy groups to solicit comments and feedback from DBE
and small business stakeholders; developing and maintaining
relationships with national advocacy and small business
organizations throughout the fiscal year, as well as sending
a list of upcoming contracting opportunities to national
small business organizations and requests that these
opportunities are shared with members. In Requirement 8 we will
cover proof of publication. In order to fulfill this
requirement, you must publish your goal on your company’s webpage. You must do so prior to
submitting your goal to FTA. As the process is ongoing and
you make the edits that result in changes to your goal, you
must change the goal percentage on your website as appropriate. In addition, in order to comply
with requirement 8, you must accept public comments
for at least 30 days. Once you receive comments,
you must summarize all comments based on the publication and
explain how these comments impacted your goal. Should you not receive comments
or the comments did not impact your goal, make sure to state
this information clearly in a narrative. Although not required, you have
the option of publishing your goal in various media outlets. For example, general circulation
media, minority-focused media, trade publications, etc. Again, you must announce that
you will accept public comments for at least 30 days. The following picture is a
copy of an ideal Public Notice. You will notice that along
with the name of the company, the goal percentage is clearly
stated as well as the fiscal year applicable to the goal. In addition, you will notice
the statement that comments are accepted for 30 days along
with information as to where the public may send such comments. Janelle Hinton: DBE Goal Approval and Disapproval Process. On August 1st of each year,
TVMs submit the annual DBE Goal Methodology to FTA using the
[email protected] email. FTA will either approve the
goal and issue a TVM Concurrence Letter, or identify deficiencies
and issue an In Review Letter. TVMs will be given 30 days to
correct all noted deficiencies outlined within the In Review Letter. TVMs that do not address all
deficiencies within 30 days will receive an Ineligible Letter,
making them ineligible to bid on federally funded contracts. FTA will posted Approved
TVMs on the FTA TVM webpage. A firm may also receive an
Ineligible status for failure to submit semiannual Uniform
Reports of DBE Award and Commitment and Payment. We recommend reviewing
U.S. DOT’s issued guidance, Tips for Goal Setting
in the DBE Program, which can be found at
the link on this slide. This guidance outlines the
step-by-step summary of how to prepare your DBE goal. FTA uses the same guidance
when we review your DBE goals. In that respect, it is a good
practice to review this guidance prior to submitting
your DBE goal to FTA. If you have any questions, feel
free to submit your questions using FTA’s Contact Us tool
found at the link on this slide. Please make sure to select Civil
Rights & Accessibility as the dropdown category to ensure
your question is routed directly to our office. This concludes FTA’s
presentation of Transit Vehicle Manufacturers DBE
Certification, DBE Program and Goal Requirements. Thank you and have a great day.

Reynold King

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