HomeMy WebLinkAboutR-2002-130 Disadvantaged Business Enterprise ProgramRESOLUTION NO. R-2002-130
A RESOLUTION approving and adopting a Disadvantaged Business Enterprise
Program and authorizing submittal of said Program with the
United States Department of Transportation, the Federal Transit
Administration, and all other appropriate federal and state
agencies for review and approval.
WHEREAS, the City of Yakima receives funds from the United Stated
Department of Transportation (DOT) for certain public works projects and from the
Federal Transit Administration (FTA), an agency .of the DOT, regarding the
operation of City Transit Division; and
WHEREAS, federal DOT regulations require the City to adopt a
Disadvantaged Business Enterprise (DBE) Program with regard to
contracts/projects that are funded in whole or part by DOT or FTA;
WHEREAS, attached hereto for City Council consideration and potential
adoption is a proposed DBE Program that was developed with the assistance of the
Yakima Valley Conference of Governments (YVCOG) and is largely based upon a
model DBE Program provided by DOT; and
WHEREAS, the City Council deems it to be in the best interest of the City of
Yakima to approve and adopt the attached DBE Program and authorize submission
of said Program to DOT and FTA, now, therefore,
BE IT. RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA:
The attached and incorporated Disadvantaged Business Enterprise Program
is hereby approved and adopted and City representatives are hereby authorized to
submit said Program with the United States Department of Transportation, the
Federal Transit Administration, and all other appropriate federal and state agencies
for review and approval.
ADOPTED BY THE CITY COUNCIL this 15th day of October, 2002.
ATTEST:
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City Clerk
y Place, Mayor
Public
Notice
Public Notice
The City of Yakima has established a Disadvantaged Business Enterprise (DBE) program in
accordance with regulations of U.S. Department of Transportation (DOT), 49 CFR Part 26. For
the purpose of this DBE program, the City of Yakima proposes to set its overall goal utilizing all
information available to it, including information provided by statistical evidence in the
community and public comment.
The City of Yakima proposes that it establish a three year rolling average goal of 10%, beginning
October 1, 2002 through September 30, 2005 for the Federal financial assistance the City will
expend in DOT -assisted contracts, to certified DBE firms that are available, willing, and able.
The proposed goal and the basis for its rationale are available for public inspection for 30 days
during regular business hours, 8 A.M. to 5 P.M., Monday through Friday, in the Purchasing
Manager's Office located at Yakima City Hall, 129 North rd St., Yakima, • Washington, 98901.
The proposed goal is also available for viewing on the City's website at www.ci.yakima.wa.us
Click on "City Services", then "Purchasing", then "Draft DBE Program".
The City of Yakima and DOT will accept public comment on the goal for 45 days from the date
of this notice. The goal may be adjusted from comments or information received in the next 45
days. Substantial written comments should be addressed to:
Sue Ownby, Purchasing Manager, DBELO
City of Yakima
129 No. 2nd St.
Yakima, WA 98901
Dated August 6, 2002
Publish on next available date
City of Yakima
DBE Program
(Effective 10/1/02 through 9/30/05)
CITY of YAKIMA
DBE PROGRAM
(Effective 10/1/02 through 9/30/05)
Definition of Terms
The terms used in this program have the meanings defined in 49 CFR 26.5.
Objectives !Policy Statement (26.1, 26.23)
The City of Yakima, hereinafter referred to as the City, has established a
Disadvantaged Business Enterprise (DBE) program in accordance with regulations
of the U.S. Department of Transportation (DOT), 49 CFR Part 26. The City receives
Federal financial assistance from the Department of Transportation, and as a
condition of receiving this assistance, the City has signed an assurance that it will
comply with 49 CFR Part 26.
It is the policy of the City to ensure that DBEs, as defined in 49 CFR Part 26, have
an equal opportunity to receive and participate in DOT -assisted contracts. It is also
the City's policy:
• To ensure nondiscrimination in the award and administration of DOT
assisted contracts;
• To, create a level playing field on which DBEs can compete fairly for DOT
assisted contracts;
• To ensure that the DBE Program is narrowly tailored in accordance with
applicable law;
• To ensure that only firms that fully meet 49 CFR Part 26 eligibility
standards are permitted to participate as DBEs;
• To help remove barriers to the participation of DBEs in DOT assisted
contracts; and
• To assist the development of firms that can compete successfully in the
market place outside the DBE Program.
The City's Purchasing Manager is designated the DBE Liaison Officer (DBELO). In
this capacity, the Purchasing Manager is responsible for implementing all aspects of
the DBE program. Implementation of the DBE program is accorded the same
priority as compliance with all other legal obligations incurred by the City in its
financial assistance agreements with the Department of Transportation.
The Yakima City Council .adopted this policy statement, which is disseminated to
City Departments, officers, and employees. The City also distributed this statement
to DBE and non -DBE business enterprises performing work as needed on DOT -
assisted contracts by publishing it in the Yakima Herald -Republic and on the City's
official web site.
Date: \v ON ` im.
Richard A. Zais, Jr., City Manager
ore CO T!t T NO: 42e0R_9!%
REs:n ',nta NO: aaoa7/3D
Nondiscrimination. (26.7)
The City will never exclude any person from participation in, deny any person the
benefits of, or otherwise discriminate against anyone in connection with the award
and performance of any contract covered by 49 CFR Part 26 on the basis of race,
color, sex, or national origin.
In administering its DBE program, the City will not directly or through contractual
or other arrangements use criteria or methods of administration that have the effect
of defeating or substantially impairing accomplishment of the objectives of the DBE
program with respect to individuals of a particular race, color, sex, or national
origin.
DBE Program Updates (26.21)
The City will continue to carry out this program until all funds from DOT financial
assistance are expended. The City will provide to DOT updates representing
significant changes in the program.
Quotas (26.43)
In accordance with 49 CFR Part 26 and rulings of the U.S. Federal Courts, the City
does not use quotas in the administration of this DBE program.
DBE Liaison Officer (DBELO) (26.45)
The City believes it is the obligation of the entire city staff to see that the DBE
program is fully implemented and successful. To that end, every city staff member
involved with the administration of DOT -assisted projects is obligated to carry out
this policy. However, for the purpose of coordinating city staff, the City designates
the Purchasing Manager as the DBELO:
Sue Ownby, CPPB
Purchasing Manager
129 North 2nd Street
Yakima, Washington 98901
Phone (509) 576-6695
FAX (509) 576-6394
E-mail sownby@ci.yakima.wa.us
In this capacity, the Purchasing Manager is responsible for implementing all
aspects of the DBE program and ensuring that the City complies with all provisions
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of 49 CFR Part 26. The Purchasing Manager has direct, independent access to the
City Manager concerning DBE program matters. The DBELO has a staff of 2
professional employees assigned to the Purchasing Division on a full-time basis and
who devote a portion of their time to this program. An organization chart displaying
the DBELO's position in the organization is found in Attachment A to this program.
The responsibility for developing, implementing, and monitoring the DBE program
shall be a coordinated effort with other appropriate city staff members and officials.
Some of the duties and responsibilities of the various city staff members may
include the following:
• Gathers and reports statistical data and other information as required by
DOT;
• Reviews third party contracts and purchase requisitions for compliance with
this program;
• Works with City of Yakima Transit Division to set overall annual goals;
• Ensures that bid notices and requests for proposals are available to DBEs in
a timely manner;
• Identifies contracts and procurements so that DBE goals are included in
solicitations (both race -neutral methods and contract specific goals) and
monitors results;
• Analyzes City's progress toward goal attainment and identifies ways to
improve progress;
• Participates in pre-bid meetings;
• Advises the CEO/governing body on DBE matters and achievement;
• Participates with legal counsel and project managers to determine contractor
compliance with good faith efforts;
• Provides DBEs with information and assistance in preparing bids, obtaining
bonding and insurance;
• Plans and participates in DBE training seminars;
• Certifies DBEs according to the criteria set by DOT and acts as liaison to the
Uniform Certification Process in Washington State;
• Provides outreach to DBEs and community organizations to advise them of
opportunities; and
• Maintains the City's updated directory on certified DBEs.
Federal Financial Assistance Agreement Assurance (26.13)
The City has signed the following assurance, applicable to all DOT -assisted
contracts and their administration:
The City shall not discriminate on the basis of race, color, national origin, or
sex in the award and performance of any DOT assisted contract or in the
administration of its DBE Program or the requirements of 49 CFR part 26.
The recipient shall take all necessary and reasonable steps under 49 CFR
part 26 to ensure nondiscrimination in the award and administration of DOT
09/25/02 2:42 PM .
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assisted contracts. The recipient's DBE Program, as required by 49 CFR part
26 and as approved by DOT, is incorporated by reference in this agreement.
Implementation of this program is a legal obligation and failure to carry out
its terms shall be treated as a violation of this agreement. Upon notification
to the City of its failure to carry out its approved program, the Department
may impose sanctions as provided for under part 26 and may, in appropriate
cases, refer the matter for enforcement under 18 U.S.C. 1001 and/or the
Program Fraud Civil Remedies Act of 1986 (31 U.S.C. 3801 et seq.).
DBE Financial Institutions
It is the policy of the City to investigate the full extent of services offered by
financial institutions owned and controlled by socially and economically
disadvantaged individuals in the community, to make reasonable efforts to use
these institutions, and to encourage prime contractors on DOT -assisted contracts to
make use of these institutions. The City has surveyed banking, savings and loan,
mortgage organizations, the small business administration and the chamber of
commerce to determine their knowledge of any DBE institutions. The City has not
identified any DBE financial institutions in the community.
As information on the availability of DBE financial institutions becomes known, it
may be obtained from the DBELO.
Directory (26.25)
The City has never maintained an independent directory identifying all the firms
eligible to participate as DBEs but rather has relied on the State of Washington's
list of certified DBEs. The Washington State Office of Minority and Women's
Business Enterprises maintains the Directory. The Internet address for accessing
the State's Directory is http://www.omwbe.wa.gov/directory/directory.htm. As part
of complying with DOT policy guidelines, the City has put together a directory
listing DBEs available to the City.
The directory will list the firm's name, address, phone number, certification
number, and the type of work the firm has been certified to perform as a DBE. The
City shall revise the Directory annually (once each calendar year). The Directory
will be made available by contacting the Purchasing Manager at City Hall, 129
North 2nd Street, Yakima, Washington 98901.
Overconcentration (26.33)
At this time, the City has not identified over concentrations of DBEs in any
particular area of contractors used by the City.
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(Business Development Programs (26.35)
At this time, the City does not have a business development or mentor -protege
program.
Required Contract Clauses (26.13, 26.29)
Contract Assurance
The City shall ensure that the following clause is placed in every DOT -assisted
contract and subcontract:
The contractor or subcontractor shall not discriminate on the basis of race,
color, national origin, or sex in the performance of this contract. The
contractor shall carry out applicable requirements of 49 CFR part 26 in the
award and administration of DOT assisted contracts. 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.
Prompt Payment
The City shall include the following clause in each DOT -assisted prime contract:
The prime contractor agrees it is important to pay each subcontractor promptly
under this prime contract for satisfactory performance and failure to due so may
exclude DBE subcontractors from participating in City contracts.
Therefore, the contractor agrees to bill the City for each subcontractor's
satisfactory performance of work on at least a biweekly basis, and pay each
subcontractor under this prime contract for satisfactory performance of its
contract no later than (14) fourteen days from the receipt and an approval of an
invoice from the prime contractor.
The prime contractor .agrees further to return retainage payments to each
subcontractor within (14) fourteen days after the subcontractor's work is
satisfactorily completed. Any delay or postponement ofpayment from the
above referenced time frame may occur only for good cause following written
approval of the City. This clause applies to both DBE and non -DBE
subcontractors.
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Monitoring and Enforcement Mechanisms (26.37)
The City will bring to the attention of the Department of Transportation any false,
fraudulent, or dishonest conduct in connection with the program, so that DOT can
take the steps (e.g., referral to the Department of Justice for criminal prosecution,
referral to the DOT Inspector General, action under suspension and debarment or
Program Fraud and Civil Penalties rules) provided in 26.109. The City also will
consider similar action under our own legal authorities, including responsibility
determinations in future contracts in events of non-compliance with DBE regulation
by a participant in our procurement activities.
Overall Goals (26.45)
Amount of Goal
The City established a three year rolling average goal of 10% beginning October 1,
2002 through September 30, 2005 for the Federal financial assistance the City will
expend in DOT -assisted contracts. This is exclusive of FTA funds to be used for the
purchase of transit vehicle and real estate procurement.
Method
The following is a brief summary of the method used to calculate its goal:
City of Yakima staff provided information to Yakima Valley
Conference of Governments (YVCOG) staff to determine what the Base
Percentage Figure should be. YVCOGs documentation of methodology
is enclosed as Attachment B.
Transit Vehicle Manufacturers (26.49)
The City requires transit vehicle manufacturers as a condition of being authorized
to bid or propose on FTA -assisted transit vehicle procurements to certify they have
complied with the requirements of this section. Alternatively, the City may, at its
discretion and with FTA approval, establish project -specific goals for DBE
participation in the procurement of transit vehicles in lieu of Transit Vehicle
Manufacturers complying with this program element.
Process
The City will begin the process of submitting its overall goal to DOT on or about
May 15 of each year. The actual goal will be submitted to the FTA on or about
August 1 of each year.
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The City will consult each year with the State of Washington's Office of Minority
and Women's Business Enterprises and local community building and trades groups
to obtain information concerning the availability of disadvantaged and non -
disadvantaged businesses, the effects of discrimination on opportunities for DBEs,
and the City's efforts to establish a level playing field for the participation of DBEs
before establishing the City's overall goal.
Following consultation, the City will publish a notice of the proposed overall goal,
informing the public that the proposed goal and its rationale are available for
inspection at the Purchasing Manager's Office, Yakima City Hall, during normal
business hours for 30 days following the date of the notice. The notice shall inform
the public that the City and DOT will accept comments on the overall goal for 45
days from the date of issuing the notice.
The City will normally publish the notice of the proposed overall goal in the Yakima
Herald -Republic and on the City's Official Web Site on or about June 1 of each year.
The notice shall include the addresses to which comments may be sent and .the
addresses (including office and web site) where the proposal may be reviewed. .
The City's overall goal submission to DOT will include a summary of information
and any significant comments received during the public participation process and
any City's responses.
The City will begin using its overall goal on October 1 of each year, unless it has
received other instructions from DOT.
Break-out of Estimated Race -Neutral and Race -Conscious Participation
The City will meet the maximum feasible portion of its overall goal by using race -
neutral means of facilitating DBE participation. The City will use the following
race -neutral means to increase DBE participation:
• Develop a DBE list as extensively as possible,
• Send notices of projects to contractors on the City's DBE list,
• Provide prime contractors a list of DBEs to partner with or provide
subcontract services, and
• Advertise using available minority media the projects that could
accommodate small business.
Note: Race -neutral means the City will outreach, technically assist, and revise the
procurement process to insure increased opportunities for all small businesses, not
just for DBEs.
The City will meet the maximum feasible portion of its overall goal by using race -
neutral means of facilitating DBE participation.
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Race -neutral DBE participation includes:
• Any time a DBE wins a prime contract through customary competitive
procurement procedures,
• Any time a DBE is awarded a subcontract on a prime contract that does not
carry a DBE goal,
Or, even if there is a DBE goal,
• Any time a DBE wins a subcontract from a prime contractor that did not
consider its DBE status in making the award (e.g., a prime contractor that
uses a strict low bid system to award its subcontracts).
Race -neutral means include, but are not limited to, the following:
• Arranging solicitations, times for the presentation of bids, quantities,
specifications, and delivery schedules in ways that facilitate DBE and other
small businesses participation (e.g., unbundling large contracts to make them
more accessible to small businesses, requiring or encouraging prime
contractors to subcontract portions of work that they might otherwise
perform with their own forces);
• Providing assistance in overcoming limitations such as inability to obtain
bonding or financing (e.g., by such means as simplifying the bonding process,
reducing bonding requirements, eliminating the impact of surety costs from
bids, and providing services to help DBEs, and other small businesses, obtain
bonding and financing);
• Providing technical assistance and other services;
• Carrying out information and communications programs on contracting
procedures and specific contract opportunities (e.g., ensuring the inclusion of
DBEs, and other small businesses, on recipient mailing lists for bidders;
ensuring the dissemination to bidders on prime contracts of lists of potential
subcontractors; provision of information in languages other than English,
where appropriate);
• Implementing a supportive services program to develop and improve
immediate and long-term business management, record keeping, and
financial and accounting capability for DBEs and other small businesses;
• Providing services to help DBEs, and other small businesses, improve long-
term development, increase opportunities to participate in a variety of kinds
of work, handle increasingly significant projects, and achieve eventual self-
sufficiency;
• Assist in establishing a program to assist new, start-up firms, particularly in
fields in which DBE participation has historically been low;
• Ensuring distribution of our DBE directory, through print and electronic
means, to the broadest range of potential prime contractors; and
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• •Assisting DBEs, and other small businesses, to develop their capability to
utilize emerging technology and conduct business through electronic media
The City estimates that to meet its overall goal of 10%, it will obtain 5% from race -
neutral participation and 5% through race -conscious measures.
The City will adjust the estimated breakout of race -neutral and race -conscious
participation as needed to reflect actual DBE participation (see 26.51(f)) and track
and report race -neutral and race -conscious participation separately. ,
For reporting purposes, race -neutral DBE participation includes, but is not
necessarily limited to, the following:
• DBE participation through a prime contract a DBE obtains through
customary competitive procurement procedures;
• DBE participation through a subcontract on a prime contract that does not
carry a DBE goal;
• DBE participation on a prime contract exceeding a contract goal; and
• DBE participation through a subcontract from a prime contractor that did not
consider a firm's DBE status in making the award.
It is the City's goal to reduce the percentage of the overall goal obtained by race
conscious methods as the Program and the number of available DBEs further
develops.
Contract Goals (26.51)
The City will use contract goals to meet any portion of the overall goal the City does
not project being able to meet using race -neutral means. Contract goals are
established so that, over the period to which the overall goalapplies, they will
cumulatively result in meeting any portion of our overall goal that is not projected
to be met through the use of race -neutral means.
The City will establish contract goals only on those DOT -assisted contracts that
have subcontracting possibilities. The City need not establish a contract goal on
every such contract, and the size of contract goals will be adapted to the
circumstances of each such contract (e.g., type and location of work, availability of
DBEs to perform the particular type of work). The City will express its contract
goals as a percentage of the federal share of a DOT -assisted contract.
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Good Faith Efforts (26.53)
Information to be submitted
The City treats bidder/offerors' compliance with good faith effort requirements as a
matter of responsibility.
Each solicitation for which a contract goal has been established will require the
bidders/offerors to submit the following information
• The names and addresses of DBE firms that will participate in the contract;
• A description of the work that each DBE will perform;
• The dollar amount of the participation of each DBE firm;
• Written and signed documentation of commitment to use a DBE
subcontractor whose participation it submits to meet a contract goal;
• Written and signed confirmation from the DBE that it is participating in the
contract as provided in the prime contractor's commitment; and
• If the contract goal is not met, evidence of good faith efforts.
Demonstration of good faith efforts
The obligation of the bidder/offeror is to make good faith efforts. The bidder/offeror
can demonstrate that it has done so either by meeting the contract goal or
documenting good faith efforts. Examples of good faith efforts are found in Appendix
A to 49 CFR Part 26.
The Purchasing Manager is responsible for determining whether a bidder/offeror
who has not met the contract goal has documented sufficient good faith efforts to be
regarded as responsible.
The Purchasing Manager will ensure that all information is complete and accurate
and adequately documents the bidder/offeror's good faith efforts before committing
to the performance of the contract by the bidder/offeror.
Administrative Reconsideration
Within (15) fifteen days of being informed by the City that they (bidder/offeror) are
not a responsible bidder/offeror because they did not document sufficient good faith
efforts, a bidder/offeror may request administrative reconsideration. •
Bidder/offerors should make their request in writing to the following
reconsideration official:
1i
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Glenn K. Rice
Assistant City Manager
129 North 2nd Street
Yakima, Washington, 98901.
The reconsideration official will not have played any role in the original
determination that the bidder/offeror did not document sufficient good faith efforts.
As part of this reconsideration, the bidder/offeror will have the opportunity to
provide written documentation or argument concerning the issue of whether it met
the goal or made adequate good faith efforts to do so.
The bidder/offeror will have the opportunity to meet in person with our
reconsideration official to discuss the issue of whether they met the goal or made
adequate good faith efforts to do.
The City will send the bidder/offeror a written decision on reconsideration,
explaining the basis for finding that the bidder did or did not meet the goal or make
adequate good faith efforts to do so. The result of the reconsideration process is not
administratively appealable to the Department of Transportation.
Good Faith Efforts when a DBE is replaced on a contract
The City requires that a contractor make good faith efforts to replace any DBE that
is terminated or has otherwise failed to complete its work on a contract with
another certified DBE, to the extent needed to meet the contract goal. The City
requires the prime contractor to immediately notify the DBELO of any DBE's
inability or unwillingness to perform the work and provide reasonable
documentation.
In this situation, the City shall require the prime contractor to obtain prior
approval of the substitute DBE and to provide copies of new or amended
subcontracts or documentation of good faith efforts. If the contractor fails or refuses
to comply within the time specified, the City shall issue a stop order stopping all or
part of payment/work until satisfactory action is taken. If the contractor still fails to
comply, the City may issue a termination for default proceeding.
Counting DBE Participation (26.55)
The City will count DBE participation toward overall and contract goals as provided
in 49 CFR 26.55.
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Certification (26.61 - 26.91)
The City will use the certification standards of Subpart D of part 26 and the
certification procedures of Subpart E of part 26 to determine the eligibility of firms
to participate as DBEs in DOT -assisted contracts. A firm must meet all certification
eligibility standards to be certified as a DBE. The City will make its certification
decision based on the facts as a whole.
Process / Unified Certification Program
The State of Washington Office of Minority and Women's Business Enterprises has
a unified certification program. This agency also conducts certifications, re -
certifications, and decertification.
Certification Appeals
Any firm or complainant may appeal the City's decision in a certification matter to
DOT. Such appeals may be sent to:
Department of Transportation
Office of Civil Rights
Certification Appeals Branch
400 7th St., SW, Room 5414
Washington, DC 20590
The City will promptly implement any DOT certification appeal decisions affecting
the eligibility of DBEs for its DOT -assisted contracting (e.g., certify a firm if DOT
has determined that our denial of its application was erroneous).
"No Change" Affidavits and Notices of Change
The City requires all DBEs to inform the City by written affidavit of any change in
circumstances affecting a DBE's ability to meet size, disadvantaged status,
ownership or control criteria of 49 CFR part 26 or of any material changes in the
information provided with its application for certification.
City also requires owners of all DBEs it has certified to submit on the anniversary
date of their certification a "no change" affidavit meeting the requirements of
26.83(j). The text of this affidavit is as follows: -
I swear (or affirm) that there have been no changes in the circumstances of
[name of DBE firm] affecting its ability to meet the size, disadvantaged
status, ownership, or control requirements of 49 CFR part 26. There have
been no material changes in the information provided with [name of DBE]'s
application for certification, except for any changes about which you have
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provided written notice to the [City] under 26.83(i). [Name of firm] meets
Small Business Administration (SBA) criteria for being a small business
concern and its average annual gross receipts (as defined by SBA rules) over
the firm's previous three fiscal years do not exceed $16.6 million.
The City requires DBEs to submit with this affidavit documentation of the firm's
size and gross receipts.
Personal Net Worth
The City will require all disadvantaged owners of applicants and of currently
certified DBEs whose eligibility under 49 CFR part 26 City review, to submit a
statement of personal net worth.
Information Collection and Reporting
Bidders List
The City will create a bidders list consisting of information about all DBE and non -
DBE firms that bid or quote on DOT -assisted contracts. The purpose of this
requirement is to allow use of the bidders list approach to calculating overall goals.
The Bidders List will include:
• The Bidders name
• Address
• DBE/non-DBE status.
The City will collect this information by inserting a contract clause requiring prime
bidders to report name/addresses and other information of all firms that provide a
quote to them.
Monitoring Payments to DBEs
The City will require prime contractors to maintain records and documents of
payments to DBEs for three years following the performance of their contract and to
make these records available for inspection upon request by any authorized
representative of the City or DOT. This reporting requirement also extends to any
certified DBE subcontractor.
The City will keep a running tally of actual payments to DBE firms for work
committed to them at the time of contract award and perform interim audits of
contract payments to DBEs. The audit will review payments to DBE subcontractors
to ensure that the actual amount paid to DBE subcontractors equals or exceeds the
dollar amounts stated in the schedule of DBE participation.
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Reporting to DOT
DBE participation is reported to DOT as follows:
• The City will report DBE participation quarterly using DOT Form 4630.
• Reports will reflect payments actually made to DBEs on DOT assisted
contracts.
Confidentiality
The City will safeguard from disclosure to third parties information that may
reasonably be regarded as confidential business information consistent with federal,
state, and local law. Notwithstanding any contrary provisions of state or local law,
the City will not release personal financial information submitted in response to the
personal net worth requirement to a third party (other than DOT) without the -`
written consent of the submitter.
Attachments
Attachment A: City of Yakima Organizational Chart.
Attachment B: Overall Goal Submission Developed by YVCOG
A copy of 49 CFR Part 26
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Organizational
Chart
K. Roberts
City Clerk
Records
2.0 Positions
City Council Clerk
Agenda Preparation &
Council Minute Transcription
Central Records Depository
Recorder for Various Advisory
Boards and Commissions
Voter Registration
-Public/Customer Service/
Inquiry
Administrative Services
2002 Budgeted Staffing Levels
D. Moore
Executive Secretary
S. Brandt
Administrative
Secretary
R. A. ZAIS, JR.
CITY MANAGER
130.47 Positions
A. Sutton
Human Resources Manager
Human Resources/ Personnel
6.0 Positions
Recruitment
Employee Orientation
Records Maintenance
Insurance Plan Oversight
Workers' Unemployment
Compensation
Labor Negotiations Support
Retirement
G. Rice
Assistant City Manager
Department Planning & Direction
Intergovernmental Affairs
Media Relations
Special Project Support
Chief Labor Negotiator
S. Ownby
Purchasing Manager
Purchasing Division
2.0 Positions
Procurement of Goods &
Services
Central Supply Control
Disposal of Surplus Property
Purchasing Law & Regulation
Compliance
Public Works Improvement Proj.
WMBE Reporting
Prevailing Wage Assessment
AIMMS oversight
Purchase Audits
* Disadvantaged Business Enterprise
concerns only
*DBE
Only
R. Paolella
City Attorney
Legal Department
12.60 Employees
Prosecution
J. West
J. Cutter
C. Martinez
Clerical
Support
Civil
L. Peterson
P. McMurray
H. Harvey
D. Calvin
Water/Irrigation Supt.
Water/Irrigation Division
35.72 Positions
Wastewater Division
62.26 Positions
Water Treatment Operation &
Maintenance
Domestic Water System
Operation & Maintenance
Irrigation System Operation &
Maintenance
Water Services Installation
Wastewater Treatment
Operation & Maintenance
Wastewater Collection System
Operation & Maintenance
Food Processing Wastewater
Collection & Treatment
Biosolids Recycling
Surface Drainage (Stormwater
Collection)
Industrial Pretreatment
Program
Overall Goal
Submission
Developed By
YVCOG
Attachment B: Overall Goal Submission
DOCUMENTATION
Methodology for Setting Goals for Participation
of Disadvantaged Business enterprises (DBE) in
Federal Transit Administration Assisted Contract
Review of Yakima Transit Contracts
The Yakima Valley Conference of Governments (YVCOG) staff contacted the City of
Yakima's Purchasing Office and requested copies of all contract bids or quotes where
Yakima Transit was a substantial recipient in the current federal fiscal year and in the
previous four federal fiscal years. For the purposes of this documentation, substantial
recipient is deemed to mean receiving at least 15 percent of the product or benefit of the
contract. The YVCOG received bid lists for contracts let between March 1994 to
February 1999 and biyearly Disadvantaged Business Enterprise (DBE) reports from
January 1994 to September 1999. The City of Yakima also provided a compiled list of
minority vendors that contained 281 vendor firms.
A review of the City of Yakima's minority vendor's list revealed seven firms that were
certified by Washington State Office of Minority and Women's Business Enterprises
(OMWBE) as Minority Business Enterprise or Women's Business enterprise
(MBE/WBE). Of these seven firms, five were further certified as DBE firms. A listing
of firms on the City's minority vendor's list that are certified as MBEs/WBEs or DBEs in
other states was not available.
A review of contracts let during Federal Fiscal Year (FFY) of 1999 showed three
contracts let for bid in which Yakima Transit was a substantial recipient. A total of five
bids or quotes were received on these contracts and, of the five firms bidding, one bidder
was listed by the City of Yakima and certified by the OMWBE as a DBE contractor. One
contract for $47,765 was awarded to a business owned by a DBE.
A review of biyearly DBE reports and bid tabulation and comparison sheets for FFY
1994 through FFY 1998 showed no participation by Yakima Transit in contracts awarded
in FFY 1994 and only marginal participation in contracts awarded in FFY 1995 and
1996. In FFY 1997 and 1998 Yakima Transit was a substantial recipient of goods or
services for five contracts awarded. A total of sixteen bids were received on these
contracts and of the 16 firms bidding, the City of Yakima listed two bidders as DBE
contractors. One contract for $11,216 was awarded to a DBE business.
Determination of Base Percentage Figure.
Guidance for determination of goals for participation by DBEs in Department of
Transportation (DOT) programs (Chapter 49, Combined Federal Regulations, Part 26.45.)
suggests four methodologies for determining a base percentage goal for participation of
ready, willing and able DBEs in DOT -assisted contracts.
One methodology is to determine the number of ready, willing, and able DBEs in the
local market from locally or regionally compiled lists of DBEs. The number of DBEs
can then be divided by the number of all ready, willing, and able businesses in the local
market listed in the Census Bureau's County Business Patterns to determine the base
percentage of DBEs in the local market. Another suggested methodology is to use the
results of a locally administered disparity study to determine a base percentage goal for
DBE participation in DOT -assisted contracts. A third suggested methodology is to use
the goal of another DOT recipient, adjusted for your market. A fourth suggested
methodology is to use a bidders list, taking the number of DBEs which have bid or
quoted on DOT -assisted contracts in the previous year and divide that number by the
number of all businesses which have bid or quoted on DOT -assisted contracts in the same
time period. Due to the small number of contracts participated in by Yakima Transit in
any year reviewed, it was determined by YVCOG staff that this fourth methodology
would be the most effective in periodic updates of the DBE goals.
Notes: None of the contracts awarded during Federal Fiscal Years 1995 and 1996
identified Yakima Transit as a significant participant.
(1) A contract was awarded for dial -a -ride paratransit services based on
the contractor being reimbursed on a per passenger rate for each passenger
transported.
(2) Averages are the average of the three Federal Fiscal Years when
contracts were awarded on behalf of Yakima Transit.
Taking the FFY 1998 and 1999 figures form the table above, YVCOG staff determined
that the percentage of DBEs which are interested in and willing toparticipate in
contracting opportunities in Yakima Transit's market is between 15 and 20 percent of all
available businesses.
Adjustment of Base Figure
The guidance in 49 CFR, Part 26.45, paragraph (d) states: "Once you have calculated a
base figure, you must examine all of the evidence available in your jurisdiction to
determine what adjustment, if any, is needed to the base figure in order to arrive at your
overall goal." The guidance further states in paragraph (d), subsections (i), (ii), and (iii)
that the types of evidence that must be considered includes: "(i) The current capacity of
DBEs to perform work in DOT -assisted contracting programs, as measured by the
volume of work DBE's have performed in recent years; (ii) Evidence from disparity
studies conducted anywhere within your jurisdiction and not already accounted for in
Attachment B: Overall Goal Submission 2
City of Yakima DBE Plan
your base figure; and, (iii) If you.base figure is the goal of another, you must adjust it for
differences in your local market and your contracting program."
Only evidence of DBEs capacity to perform work on DOT -assisted contracts was used
because no disparity studies have been conducted in the City of Yakima and the goal of
another DOT recipient was not used. As noted in the review section of this document,
bid tabulation and comparison sheets from the City of Yakima Purchasing Office to
Yakima Transit show that of five contracts let between FFY 1997 and 1998 in which
Yakima Transit was a significant participant, one DBE contractor was awarded a contract
for $11,216, or 35 percent of the total dollars awarded in contracts let FFY 1998 in which
Yakima Transit was a substantial recipient.
YVCOG Recommendation of Base Goal Adjustment
Noting the significant year-to-year fluctuation in the number and dollar amounts of
contracts let in which Yakima Transit is a participant, the limited availability of DBEs,
and the small amount of Federal Transit Administration funds being contracted out,
YVCOG staff recommends Yakima Transit adopt a three-year rolling average goal of 10
percent DBE participation in DOT -assisted contracts. This matches the FTA's national
goal of 10 percent.
Overall Goal of Yakima Transit DBE Program
The guidance indicates once an overall goal has been determined, recipients of Federal
Transit Administration (FTA) funds should express their overall goal as a percentage of
all FTA funds (exclusive of FTA funds to be used for the purchase of transit vehicles)
that the recipients will expend in FTA -assisted contracts in the forthcoming fiscal year.
Therefore, Yakima Transit's overall goal for FFY 2000 is the following: a three-year
rolling average of 10 percent of the financial assistance expended in FTA -assisted
contracts (exclusive of FTA funds used for the purchase of transit vehicles).
Basis of Goal Calculations and Adjustments
YVCOG staff based these calculations on copies of bid documents, biyearly participation
reports, the City of Yakima's minority vendor's list, which were provided to YVCOG
staff by Sue Ownby, City Purchasing Manager and DBE Liaison Officer; and on the
directory of DBE certified firms maintained by the Washington State Office of Minority
and Women's Business Enterprises (OWMBE). The Internet address for accessing the
State's Directory is http://www.wsdot.wa.gov/omwbe.
Attachment B: Overall Goal Submission 3
City of Yakima DBE Plan
49 CFR Part 26
2001 CFR Title 46, Volume 8 Page 1 of 2
Title 49 --Transportation
Subtitle A --Office of the Secretary of Transportation
PART 26 --PARTICIPATION BY DISADVANTAGED BUSINESS
ENTERPRISES IN DEPARTMENT OF TRANSPORTATION FINANCIAL
ASSISTANCE PROGRAMS
PDF.
PDF.
PDF
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•
26.1 What are the objectives of this part?
26.3 To whom does this part apply?
26.5 What do the terms used in this part mean?
26.7 What discriminatory actions are forbidden?
26.9 How does the Department issue guidance and interpretations under this
part?
26.11 What records do recipients keep and report?
26.13 What assurances must recipients and contractors make?
26.15 How can recipients apply for exemptions or waivers?
26.21 Who must have a DBE program?
26.23 What is the requirement for a policy statement?
26.25 What is the requirement for a liaison officer?
26.27 What efforts must recipients make concerning DBE financial
institutions?
711
26.29
What prompt payment mechanisms must recipients have?
Itn y. 26.31 What requirements pertain to the DBE directory?
Ell
TX_T,
P� 26.33
P
P
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PDF.
PDF,
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1122
What steps must a recipient take to address overconcentration of DBEs
in certain types of work?
26.35 What role do business development and mentor -protege programs have
in the DBE program?
26.37 What are a recipient's responsibilities for monitoring the performance
of other program participants?
26.41 What is the role of the statutory 10 percent goal in this program?
26.43 Can recipients use set -asides or quotas as part of this program?
26.45 How do recipients set overall goals?
26.47 Can recipients be penalized for failing to meet overall goals?
26.49 How are overall goals established for transit vehicle manufacturers?
http://www.access.gpo.gov/nara/cfr/waisidx_01/49cfr26_01.html 7/15/2002
2001 CFR Title 46, Volume 8
kin 26.51 What means do recipients use to meet overall goals?
tyn
71 In
7.1
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71 'CI
In 7t.
rin
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7 4n
26.53 What are the good faith efforts procedures recipients follow in
situations where there are contract goals?
26.55 How is DBE participation counted toward goals?
26.61 How are burdens of proof allocated in the certification process?
26.63 What rules govern group membership determinations?
26.65 What rules govern business size determinations?
26.67 What rules determine social and economic disadvantage?
26.69 What rules govern determinations of ownership?
26.71 What rules govern determinations concerning control?
26.73 What are other rules affecting certification?
26.81 What are the requirements for Unified Certification Programs?
26.83 What procedures do recipients follow in making certification
decisions?
26.85 What rules govem recipients' denials of initial requests for
certification?
Page 2c
26.87 What procedures does a recipient use to remove a DBE's eligibility?
fn26.89 What is the process for certification appeals to the Department of
Transportation?
M; 26.91 What actions do recipients take following DOT certification appeal
decisions?
26.101 What compliance procedures apply to recipients?
TKT•
PDF.
26.103 What enforcement actions apply in FHWA and FTA programs?
xy 26.105 What enforcement actions apply in FAA programs?
xl. 26.107 What enforcement actions apply to firms participating in the DBE
program?
26.109 What are the rules governing information, confidentiality, cooperation,
and intimidation or retaliation?
71 In
http://www.access.gpo.gov/nara/cfr/waisidx_01/49cfr26_01.html 7/15/2
§ 25.545
§ 25.545 Pre-employment inquiries.
(a) Marital status. A recipient shall
not make pre-employment .inquiry as
to the marital status of an applicant
for employment, including whether
such applicant is "Miss" or "Mrs."
(b) Sex. A recipient may make pre-
employment inquiry as to the sex of an
applicant for employment, but only if
such inquiry is made equally of such
applicants of both sexes and if the re-
sults of such inquiry are not used in
connection with discrimination prohib-
ited by these Title IX regulations.
§ 25.550 Sex as a bona fide occupa-
tional qualification.
A recipient may take action other-
wise prohibited by §§25.500 through
25.550 provided it is shown that sex is a
bona fide occupational qualification for
that action, such that consideration of
sex with regard to such action is essen-
tial to successful operation of the em-
ployment function concerned. A recipi-
ent shall not take action pursuant to
this section that is based upon alleged
comparative employment characteris-
tics or stereotyped characterizations of
one or the other sex, or upon pref-
erence based on sex of the recipient,
employees, students, or other persons,
but nothing contained in this section
shall prevent a recipient from consid-
ering an employee's sex in relation to
employment in a locker room or toilet
facility used only by. members of one
sex.
Subpart F—Procedures
§ 25.600 Notice of covered programs.
Within 60 days of September 29, 2000,
each Federal agency that awards Fed-
eral financial assistance shall publish
in the FEDERAL REGISTER a notice of
the programs covered by these Title IX
regulations. Each such Federal agency
shall periodically republish the notice
of covered programs to reflect changes
in covered programs. Copies of this no-
tice also shall be made available upon
request to the Federal agency's office
that enforces Title IX.
§ 25.605 Enforcement procedures.
The investigative, compliance, and
enforcement procedural provisions of
49 CFR Subtitle A (10-1-01 Edition)
Title VI of the Civil Rights Act of 1964
(42 U.S.C. 2000d) ("Title VI") are hereby
adopted and applied to these Title IX
regulations. These procedures may be
found at 49 CFR part 21.
[65 FR 52895, Aug. 30, 2000]
PART 26—PARTICIPATION BY DIS-
ADVANTAGED BUSINESS ENTER-
PRISES IN DEPARTMENT OF
TRANSPORTATION FINANCIAL
ASSISTANCE PROGRAMS
Subpart A—General
Sec.
26.1 What are the objectives of this part?
26.3 To whom does this part apply?
26.5 What do the terms used in this part
mean?
26.7 What discriminatory actions are forbid-
den?
26.9 How does the Department issue guid-
ance and interpretations under this part?
26.11 What records do recipients keep and
report?
26.13 What assurances must recipients and
contractors make?
26.15 How can recipients apply for exemp-
tions or waivers?
Subpart B—Administrative Requirements
for DBE Programs for Federally -Assisted
Contracting
26.21 Who must have a DBE program?
26.23 What is the requirement for a policy
statement?
26.25 What is the requirement for a liaison
officer?
26.27 What efforts must recipients make
concerning DBE financial institutions?
26.29 What prompt payment mechanisms
must recipients have?
26.31 What requirements pertain to the DBE
directory?
26,33 What steps must a recipient take to
address overconcentration of DBEs in
certain types of work?
26.35 What role do business development
and mentor -protege programs have in the
DBE program?
26.37 What are a recipient's responsibilities
for monitoring the performance of other
program participants?
Subpart C—Goals, Good Faith Efforts, and
Counting
26.41 What is the role of the statutory 10
percent goal in this program?
26.43 Can recipients use set -asides or quotas
as part of this program?
26.45 How do recipients set overall goals?
262
Office of the Secretary of Transportation
26.47 Can recipients be penalized for failing
to meet overall goals?
26.49 How are overall goals established for
transit vehicle manufacturers?
26.51 What means do recipients use to meet
overall goals?
26.53 What are the good faith efforts proce-
dures recipients follow in situations
where there are contract goals?
26.55 How is DBE participation counted to-
ward goals?
Subpart D—Certification Standards
26.61 How are burdens of proof allocated in
the certification process?
26.63 What rules govern group membership
determinations?
26.65 What rules govern business size deter-
minations?
26.67 What rules determine social and eco-
nomic disadvantage?
26.69 What rules govern determinations of
ownership?
26.71 What rules govern determinations con-
cerning control?
26.73 What are other rules affecting certifi-
cation?
Subpart E—Certification Procedures
26.81 What are the requirements for Unified
Certification Programs?
26.83 What procedures do recipients follow
in making certification decisions?
26.85 What rules govern recipients' denials
of initial requests for certification?
26.87 What procedures does a recipient use
to remove a DBE's eligibility?
26.89 What is the process for certification
appeals to the Department of Transpor-
tation?
26.91 What actions do recipients take fol-
lowing DOT certification appeal deci-
sions?
Subpart F—Compliance and Enforcement
26.101 What compliance procedures apply to
recipients?
26.103 What enforcement actions apply in
FHWA and FTA programs?
26.105 What enforcement actions apply in
FAA programs?
26.107 What enforcement actions apply to
firms participating in the DBE program?
26.109 What are the rules governing infor-
mation, confidentiality, cooperation, and
intimidation or retaliation?
APPENDIX A TO PART 26—GUIDANCE CON-
CERNING GOOD FAITH EFFORTS
APPENDIX B TO PART 26—F0RMS [RESERVED]
APPENDIX C TO PART 26—DBE BUSINESS DE-
VELOPMENT PROGRAM GUIDELINES
APPENDIX D TO PART 26—MENT0R-PROTEGE
PROGRAM GUIDELINES
§ 26.3
APPENDIX E TO PART 26—INDIVIDUAL DETER-
MINATIONS OF SOCIAL AND ECONOMIC DIS-
ADVANTAGE
AUTH0RrrY: 23 U.S.C. 324; 42 U.S.C. 2000d, et
seq.; 49 U.S.0 1615, 47107, 47113, 47123; Sec.
1101(b), Pub. L. 105-178, 112 Stat. 107, 113:
SOURCE: 64 FR 5126, Feb. 2, 1999, unless oth-
erwise noted.
Subpart A—General
§ 26.1 What are the objectives of this
part?
This part seeks to achieve several ob-
jectives:
(a) To ensure nondiscrimination in
the award and administration of DOT -
assisted contracts in the Department's
highway, transit, and airport financial
assistance programs;
(b) To create a level playing field on
which DBEs can compete fairly for
DOT -assisted contracts;
(c) To ensure that the Department's
DBE program is narrowly tailored in
accordance with applicable law;
(d) To ensure that only firms that
fully meet this part's eligibility stand-
ards are permitted to participate as
DBEs;
(e) To help remove barriers to the
participation of DBEs in DOT -assisted
contracts;
.(f) To assist the development of firms
that can compete successfully in the
marketplace outside the DBE program;
and
(g) To provide appropriate flexibility
to recipients of Federal financial as-
sistance in establishing and providing
opportunities for DBEs.
§ 26.3 To whom does this part apply?
(a) If you are a recipient of any of the
following types of funds, this part ap-
plies to you:
(1) Federal -aid highway funds author-
ized under Titles I (other than Part B)
and V of the Intermodal Surface Trans-
portation Efficiency Act of 1991
,(ISTEA), Pub. L. 102-240, 105 Stat. 1914,
or Titles I, III, and V of the Transpor-
tation Equity Act for the 21st Century
(TEA -21), Pub.. L. 105-178, 112 Stat. 107.
(2) Federal transit funds authorized
by Titles I, III, V and VI of ISTEA,
Pub. L. 102-240 or by Federal transit
laws in Title 49, U.S. Code, or Titles I,
263
26.5
III, and V of _ the TEA -21, Pub. L. 105-
178.
(3) Airport funds authorized by 49
U.S.C. 47101, et seq.
(b) [Reserved]
(c) If you are letting a contract, and
that contract 'is to be performed en-
tirely outside the United States, • its
territories 'and possessions, Puerto
Rico, Guam, or the Northern Marianas
Islands, this part does not apply to the
contract.
(d) If you are letting a contract in
which DOT financial assistance does
not participate, this part does not
apply to the contract.
26.5 What do the terms used in this
part mean?
Affiliation has the same meaning the
term has in the Small Business Admin-
istration (SBA) regulations, 13 CFR
part 121.
(1) Except as otherwise provided in 13
CFR part 121, concerns are affiliates of
each other when, either directly or in-
directly:
(i) One concern controls or has the
power to control the other; or
(ii) A third party or parties controls
or has the power to control both; or
(iii) An identity of interest between
or among parties exists such that af-
filiation may be found.
(2) In determining whether affiliation
exists, it is necessary to consider all
appropriate. factors, including common
ownership, common management, and
contractual relationships. Affiliates
must be considered together in deter-
mining whether a concern meets small
business size'criteria and the statutory
cap on the participation of firms in the
DBE program.
Alaska Native means a citizen of the
United States who is a person of one-
fourth degree or more Alaskan Indian
(including Tsimshian Indians not en-
rolled in the Metlaktla Indian Commu-
nity), Eskimo, or Aleut blood, or a
combination of those bloodlines. The
term includes, in the absence of proof
of a minimum blood quantum, any cit-
izen whom a Native village or Native
group regards as an Alaska Native if'
their father or mother is regarded as
an Alaska Native.
Alaska Native Corporation (ANC)
means any Regional Corporation, Vil-
49 CFR Subtitle A (10-1-01 Edition)
lage Corporation, Urban Corporation,
or Group Corporation organized under
the laws of the State of Alaska in ac-
cordance with the Alaska Native
Claims Settlement Act, as amended (43
U.S.C. 1601, et seq.).
Compliance means that a recipient
has correctly implemented the require-
ments of this part.
Contract means a legally binding re-
lationship obligating a seller to furnish
supplies or services (including, but not
limited to, construction and profes-
sional services) and the buyer to pay
for them. For purposes of this part, a
lease is considered to be a contract.
Contractor means one who partici-
pates, through a contract or sub-
contract (at any tier), in a DOT -as-
sisted highway, transit, or airport pro-
gram.
Department or DOT means the U.S.
Department of Transportation, includ-
ing the Office of the Secretary, the
Federal Highway Administration
(FHWA), the Federal Transit Adminis-
tration (FTA), and the Federal Avia-
tion Administration (FAA).
Disadvantaged ' business enterprise or
DBE means a for-profit small business
concern—
(1) That is at least 51 percent owned
by one or more individuals who are
both socially and economically dis-
advantaged or, in the case of a corpora-
tion, in which 51 percent of the stock is
owned by one or more such individuals;
and
(2) Whose management and daily
business operations are controlled by
one or more of 'the socially and eco-
nomically disadvantaged individuals
who own it.
DOT -assisted contract means any con-
tract between a recipient and a con-
tractor (at any tier) funded in whole or
in part with DOT financial assistance, •
including letters of credit or loan guar-
antees, except a contract solely for the
purchase of land.
Good faith efforts means efforts to
achieve a DBE goal or other require-
ment of this part which, by their scope,
intensity, and appropriateness to, the
objective, can reasonably be expected
to fulfill the program requirement. -
Immediate family member means fa-
ther, mother, husband, wife, son,
daughter, brother, sister, grandmother,
264
Office of the Secretary of Transportation
grandfather, grandson, granddaughter,
mother-in-law, or father-in-law.
Indian tribe means any Indian tribe,
band, nation, or other organized group
or community of Indians, including
any ANC, which is recognized as eligi-
ble for the special programs and serv-
ices provided by the United States to
Indians because of their status as Indi-
ans, or is recognized as such by the
State in which the tribe, band, nation,
group, or community resides. See defi-
nition of "tribally -owned concern" in
this section.
Joint venture means an association of
a DBE firm and one or more other
firms to carry out a single, for-profit
business enterprise, for which the par-
ties combine their property, capital, ef-
forts, skills and knowledge, and in
which the DBE is responsible for a dis-
tinct, clearly defined portion of the
work of the contract and whose share
in the capital contribution, control,
management, risks, and profits of the
joint venture are commensurate with
its ownership interest.
Native Hawaiian means any indi-
vidual whose ancestors were natives,
prior to 1778, of the area which now
comprises the State of Hawaii.
Native Hawaiian Organization means
any community service organization
serving Native Hawaiians in the State
of Hawaii which is a not-for-profit or-
ganization chartered by the State of
Hawaii, is controlled by Native Hawai-
ians, and whose business activities will
principally benefit such Native Hawai-
ians.
Noncompliance means that a recipient
has not correctly implemented the re-
quirements of this part.
Operating Administration or OA means
any of the following parts of DOT; the
Federal Aviation Administration
(FAA), Federal Highway Administra-
tion (FHWA), and Federal Transit Ad-
ministration (FTA). The "Adminis-
trator" of an operating administration
includes his or her designees.
Personal net worth means the net
value of the assets of an individual re-
maining after total liabilities are de-
ducted. An individual's personal net
worth' does not include: The individ-
ual's ownership interest in an appli-
cant or participating DBE firm; or the
individual's equity in his or her pri-
26.5
mary place of residence. An individ-
ual's personal net worth includes only
his or her own share of assets held
jointly or as community property with
the individual's spouse.
Primary industry classification means
the four digit Standard Industrial Clas-
sification (SIC) code designation which
best describes the primary business of
a firm. The SIC code designations are
described in the Standard Industry
Classification Manual. As the North
American Industrial Classification
System (NAICS) replaces the SIC sys-
tem, references to SIC codes and the
SIC Manual are deemed to refer to the
NAICS manual and applicable codes.
The SIC Manual and the NAICS Man-
ual are available through the National
Technical Information Service (NTIS)
of the U.S. Department of Commerce
(Springfield, VA, 22261). NTIS also
makes materials available through its
web site (www.ntis.gov/naics).
Primary recipient means a recipient
which receives DOT financial assist-
ance and passes some or all of it on to
another recipient.
Principal place of business means the
business location where the individuals
who manage the firm's day-to-day op-
erations spend most working hours and
where top management's business
records are kept. If the offices from
which management is directed and
where business records are kept are in
different locations, the recipient will
determine the principal place of busi-
ness for DBE program purposes.
Program means any undertaking on a
recipient's part to use DOT financial
assistance, authorized by the laws to
which this part applies.
Race -conscious measure or program is
one that is focused specifically on as-
sisting 'only DBEs, including women -
owned DBEs.
Race -neutral measure or program is
one that is, or can be, used to assist all
small businesses. For the purposes of
this part, race -neutral includes gender -
neutrality.
Recipient is any entity, public or pri-
vate, to which DOT financial assist-
ance isextended, whether directly or
through another recipient, through the
programs of the FAA, FHWA, or FTA,
or who has applied for such assistance.
265
§26.7
Secretary means the Secretary of
Transportation or his/her designee.
Set-aside means a contracting prac-
tice restricting eligibility for the com-
petitive award of a contract solely to
DBE firms.
Small Business Administration or SBA
means the United States Small Busi-
ness Administration.
Small business concern means, with re-
spect to firms seeking to participate as
DBEs in DOT -assisted contracts, a
small business concern as defined pur-
suant to section 3 of the Small Busi-
. ness Act and Small Business Adminis-
tration regulations implementing it (13
CFR part 121) that also does not exceed
the cap on average annual gross re-
ceipts specified in §26.65(b).
Socially and economically disadvan-
taged individual means any individual
who is a citizen (or lawfully admitted
permanent resident) of the United
States and who is—
(1) Any individual who a recipient
finds to be a socially and economically
disadvantaged individual on a case-by-
case basis.
(2) Any individual in the following
groups, members of which are
rebuttably presumed to be socially and
economically disadvantaged:
(i) "Black Americans," which in-
cludes persons having origins in any of
the Black racial groups of Africa;
(ii) "Hispanic Americans," which in-
cludes persons of Mexican, Puerto
Rican, Cuban, Dominican, Central or
South American, or other Spanish or
Portuguese culture or origin, regard-
less of race;
(iii) "Native Americans," which in-
eludes persons who are American Indi-
ans, Eskimos, Aleuts, or Native Hawai-
ians;
(iv) "Asian -Pacific • Americans,"
which includes persons whose origins
are from Japan, China, Taiwan, Korea,
Burma (Myanmar), Vietnam, Laos,
Cambodia (Kampuchea), Thailand, Ma-
laysia, Indonesia, the Philippines,
Brunei, Samoa, Guam, the U.S. Trust
Territories of the Pacific Islands (Re-
public of Palau), the Commonwealth of
the Northern Marianas Islands, Macao,
Fiji, Tonga, Kirbati, Juvalu, Nauru,,
Federated States of Micronesia, or
Hong Kong;
49 CFR Subtitle A (10-1-01 Edition)
(v) "Subcontinent Asian Americans,"
which includes persons whose origins
are from India, Pakistan, Bangladesh,
Bhutan, the Maldives Islands, Nepal or
Sri Lanka;
(vi) Women;
(vii) Any additional groups whose
members are designated as socially and
economically disadvantaged by the
SBA, at such time as the SBA designa-
tion becomes effective.
Tribally -owned concern means any
concern at least 51 percent owned by an
Indian tribe as defined in this section.
You refers to a recipient, unless a
statement in the text of this part or
the context requires otherwise (i.e.,
'You must do XYZ' means that recipi-
ents must do XYZ).
[64 FR 5126, Feb. 2, 1999, as amended at 64 FR
34570, June 28, 1999]
§ 26.7 What discriminatory actions are
forbidden?
(a) You must never exclude any per-
son from participation in, deny any
person the benefits of, or otherwise dis-
criminate against anyone in connec-
tion with the award and performance of
any contract covered by this part on
the basis of race, color, sex, or national
origin.
(b) In administering your DBE pro-
gram, you must not, directly or
through contractual or other arrange-
ments, use criteria or methods of ad-
ministration that have the effect of de-
feating or substantially impairing ac-•
complishment of the objectives of the
program with respect to individuals of
a particular race, color, sex, or na-
tional origin.
§ 26.9 How does the Department issue
guidance and interpretations under
this part?
(a) This part applies instead of sub-
parts A and C through E of 49 CFR part
23 in effect prior to March 4, 1999. (See --
49 CFR Parts 1 to 99, revised as of Octo-
ber 1, 1998.) Only guidance and inter-
pretations (including interpretations
set forth in certification appeal deci-
sions) consistent with this part 26 and
issued after March 4,"1999 have defini-
tive, .binding effect in implementing
the provisions of this part and con-
stitute the official position of the De-
partment of Transportation.
266
Office of the Secretary of Transportation
(b) The Secretary of Transportation,
Office of the Secretary of Transpor-
tation, FHWA, FTA, and FAA may
issue written interpretations of or
written guidance concerning this part.
Written interpretations and guidance
are valid and binding, and constitute
the official position of the Department
of Transportation, only if they are
issued over the signature of the Sec-
retary of Transportation or if they con-
tain the following statement:
The General Counsel of the Department of
Transportation has reviewed this document
and approved it as consistent with the lan-
guage and intent of 49 CFR part 26.
§ 26.11 What records do recipients
keep and report?
(a) [Reserved]
(b) You must continue to provide
data about your DBE program to the
Department as directed by DOT oper-
ating administrations.
(c) You must create and maintain a
bidders list.
(1) The purpose of this list is to pro-
vide you as accurate data as possible
about the universe of DBE and non -
DBE contractors and subcontractors
who seek to work on your Federally -as-
sisted contracts for use in helping you
set your overall goals.
(2) You must obtain the following in-
formation about DBE and non -DBE
contractors and subcontractors who
seek to work on your Federally -as-
sisted contracts:
(i) Firm name;
(ii) Firm address;
(iii) Firm's status as a DBE or non -
DBE;
(iv) Age of the firm; and
(v) The annual gross receipts of the
firm. You may obtain this information
by asking each firm to indicate into
what gross receipts bracket they fit
(e.g., less than $500,000; $500,000-$1 mil-
lion; $1-2 million; $2-5 million; etc.)
rather than requesting an exact figure
from the firm.
(3) You may acquire the information
for your bidders list in a variety of
ways. For example, you can collect the
data from all bidders, before or after
the bid due date'. You can conduct a
survey that will result in statistically
sound estimate of the universe of DBE
and non -DBE contractors and sub-
§ 26.15
contractors who seek to work on your
Federally -assisted contracts. You may
combine different data collection ap-
proaches (e.g., collect name and address
information from all bidders, while
conducting a survey with respect to
age and gross receipts information).
[64 FR 5126, Feb. 2, 1999, as amended at 65 FR
68951, Nov. 15, 2000]
§ 26.13 What assurances must recipi-
ents and contractors make?
(a) Each financial assistance agree-
ment you sign with a DOT operating
administration (or a primary recipient)
must include the following assurance:
The recipient shall not discriminate on the
basis of race, color, national origin, or sex in
the award and performance of any DOT -as-
sisted contract or in the administration of
its DBE program or the requirements of 49
CFR part 26. The recipient shall take all nec-
essary and reasonable steps under 49 CFR
part 26 to ensure nondiscrimination in the
award and administration of DOT -assisted
contracts. The recipient's DBE program, as
required by 49 CFR part 26 and as approved
by DOT, is incorporated by reference in this
agreement. Implementation of this program
is a legal obligation and failure to carry out
its terms shall be treated as a violation of
this agreement: Upon notification to the re-
cipient of its failure to carry out its ap-
proved program, the Department may im-
pose sanctions as provided for under part 26
and may, in appropriate cases, refer the mat-
ter for enforcement under 18 U.S.C. 1001 and/
or the Program Fraud Civil Remedies Act of
1986 (31 U.S.C. 3801 et seq.).
(b) Each contract you sign with a
contractor (and each subcontract the
prime contractor signs with a subcon-
tractor) must include the following as-
surance:
The contractor, sub recipient or subcon-
tractor shall not discriminate on the basis of
race, color, national origin, or sex in the per-
formance of this contract. The contractor
shall carry out applicable requirements of 49
CFR part 26 in the award and administration
of DOT -assisted contracts. Failure by the
contractor to carry out these requirements
is a material breach of this contract, which
may result in the termination of this con-
tract or such other remedy as the recipient
deems appropriate.
§ 26.15 How can recipients apply for
exemptions or waivers?
(a) You can apply for an exemption
from any provision of this part. To
apply, you must request the exemption
267
§ 26.21
in writing from the Office of the Sec-
retary of Transportation, FHWA, FTA,
or FAA. The Secretary will grant the
request only if it documents special or
exceptional circumstances, not likely
to be generally applicable, and not con-
templated in connection with the rule-
making that established this part, that
make your compliance with a specific
provision of this part impractical. You
must agree to take any steps that the
Department specifies to comply with
the intent of the provision from which
an exemption is granted. The Secretary
will issue a written response to all ex-
emption requests.
(b) You can apply for a waiver of any
provision of Subpart B or C of this part
including, but not limited to, any pro-
visions regarding administrative re-
quirements, overall goals, contract
goals or good faith efforts. Program
waivers are for the purpose of author-
izing you to operate a DBE program
that achieves the objectives of this
part by means that may differ from one
or more of the requirements of Subpart
B or C of this part. To receive a pro-
gram waiver; you must follow these
procedures:
(1) You must apply through the con-
cerned operating administration. The
application must include a specific pro-
gram proposal and address how you
will meet the criteria of paragraph
(b)(2) of this section. Before submitting
your application, you must have had
public participation in developing your
proposal, including consultation with
the DBE community and at least one
public hearing. Your application must
include a summary of the public par-'
ticipation process and the information
gathered through it.
(2) Your application must • show
that—
(i) There is a reasonable basis to con-
clude that you could achieve a level of
DBE participation consistent with the
objectives of this part using different
or innovative means other than those
that are 'provided in subpart B or C of
this part;
(ii) Conditions in your jurisdiction
are appropriate for implementing the'
proposal;
(iii) Your proposal would prevent dis-
crimination against any individual or
group in access to contracting opportu-
49 CFR Subtitle A (10-1-01 Edition)
nities or other benefits of the program;
and •
(iv) Your proposal is consistent with
applicable law and program require-
ments of the concerned operating ad-
ministration's financial assistance pro-
gram.
(3) The Secretary has the authority
to approve your application. If the Sec-
retary grants your application, you
may administer your DBE program as
provided in your proposal, subject to
the following conditions:
(i) DBE eligibility is determined as
provided in subparts D and E of this
part, and DBE participation is counted
as provided in § 26.49;
(ii) Your level of DBE participation
continues to be consistent with the ob-
jectives of this part;
(iii) There is a reasonable limitation
on the duration of your modified pro-
gram; and
(iv) Any other conditions the Sec-
retary makes on the grant of the waiv-
er.
(4) The Secretary may end a program
waiver at any time and require you to
comply with this part's provisions. The
Secretary may also extend the waiver,
if he or she determines that all require-
ments of paragraphs (b)(2) and (3) of
this section continue to be met. Any
such extension shall be for no longer
than period originally set for the dura-
tion of the program..
Subpart B—Administrative Re-
quirements for DBE Programs
for Federally -Assisted Con-
tracting
§ 26.21 Who must have a DBE pro-
gram?
(a) If you are in one of these cat-
egories and let DOT -assisted contracts,
you must have a DBE program meeting
the requirements of this part:
(1) All FHWA recipients receiving
funds authorized by a statute to which
this part applies;
(2) FTA recipients receiving plan-
ning, capital and/or operating assist-
ance who will award prime contracts
(excluding transit vehicle purchases)
exceeding $250,000 in FTA funds in a
Federal fiscal year;
(3) FAA recipients receiving grants
for airport planning or development
•
268
Office of the Secretary of Transportation
who will award prime contracts exceed-
ing $250,000 in FAA funds in a Federal
fiscal. year.
(b)(1) You must submit a DBE pro-
gram conforming to this part by Au-
gust 31, 1999 to the concerned operating
administration (OA). Once the OA has
approved your program, the approval
counts for all of your DOT -assisted pro-
grams (except that goals are reviewed
by the particular operating administra-
tion that provides funding for your'
DOT -assisted contracts).
(2) You do not have to submit regular
updates of your DBE programs, as long
as you remain in compliance. However,
you must submit significant changes in
the program for approval.
(c) You are not eligible to receive
DOT financial assistance unless DOT
has approved your DBE program and
you are in compliance with it and this
part. You must continue to carry out
your program until all funds from DOT
financial assistance have been ex-
pended.
[64 FR 5126, Feb. 2, 1999, as amended at 64 FR
34570, June 28, 1999; 65 FR 68951, Nov. 15, 2000]
§ 26.23 What is the requirement for a
policy statement?
You must issue a signed and dated
policy statement that expresses your
commitment to your DBE program,
states its objectives, and outlines re-
sponsibilities for its implementation.
You must circulate the statement
throughout your organization and to
the DBE and non -DBE business com-
munities that perform work on your
DOT -assisted contracts.
§ 26.25 What is the requirement• for a
liaison officer?
You must have a DBE liaison officer,
who shall have direct, independent ac-
cess to your Chief Executive Officer
concerning DBE program matters. The
liaison officer shall be responsible for
implementing all aspects of your DBE
program. You must also have adequate
staff to administer the program in
compliance with this part.
26.27 What efforts must recipients
make concerning DBE financial in-
stitutions?
You must thoroughly investigate the
full extent of services offered by finan-
§ 26.29
cial institutions owned and controlled
by socially and economically disadvan-
taged individuals in your community
and make . reasonable efforts to use
these institutions. You must also en-
courage prime contractors to use such
institutions.
§ 26.29 What prompt payment mecha-
nisms must recipients have?
(a) You must establish, as part of
your DBE program, a contract clause
to require prime contractors to pay
subcontractors for satisfactory per-
formance of their contracts no later
than a specific number of days from re-
ceipt of each payment you make to the
prime contractor. This clause must
also require the prompt return of
retainage payments from the prime
contractor to the subcontractor within
a specific number of days after the sub-
contractor's work is satisfactorily
completed.
(1) This clause may provide for appro-
priate penalties for failure to comply,
the terms and conditions of which you
set.
(2) This clause may also provide that
any delay or postponement of payment
among the parties may take place only
for good cause, with your prior written
approval.
(b) You may also establish, as part.of
your DBE program, any of the fol-
lowing additional, mechanisms to en-
sure prompt payment:
(1) A contract clause that requires
prime contractors to include in their
subcontracts language providing that
prime contractors and subcontractors
will use appropriate alternative dis-
pute resolution mechanisms to resolve
payment disputes. You may specify the
nature of such mechanisms.
(2) A contract clause providing that
the prime contractor will not be reim-
bursed for work performed by sub-
contractors unless and until the prime
contractor ensures that the sub-
contractors are promptly paid for the
work they have performed.
(3) Other mechanisms, consistent
with this part and applicable state and
local law, to ensure that DBEs and
other contractors are fully and prompt-
ly paid.
269.
§ 26.31
§ 26.31 What requirements .pertain to
the DBE directory?
You must maintain and make avail-
able to interested persons a directory
identifying all firms eligible to partici-
pate as DBEs in your program. In the
listing for each firm, you must include
its address, phone number, and the
types of work the firm has been cer-
tified to perform as a DBE. You must
revise your directory at least annually
and make updated information avail-
able to contractors and the public on
request.
§ 26.33 What steps must a recipient
take to address overconcentration
of DBEs in certain types of work?
(a) If you determine that DBE firms
are so overconcentrated in a certain
type of work as to unduly burden the
opportunity of non -DBE firms to par-
ticipate in this type of work, you must
devise appropriate measures to address
this overconcentration.
(b) These measures may include the
use of incentives, technical assistance,
business development programs, men-
tor -protege programs, and other appro-
priate measures designed to assist
DBEs in performing work outside of
the specific field in which you have de-
termined that non -DBEs are unduly
burdened. You may also consider vary-
• ing your use of contract goals, to the
extent consistent with § 26.51, to unsure
that non -DBEs are not unfairly pre-
vented from competing for sub-
contracts.
(c) You must obtain the approval of
the concerned DOT operating adminis-
tration for your determination of over -
concentration and the measures you
devise to address it. Once approved, the
measures become part of your DBE
program.
§ 26.35 What role do business develop-
ment and mentor -protege programs
have in the DBE program?
(a) You may or, if an operating ad-
ministration directs you to, you must
establish a DBE business development
program (BDP) to assist firms in gain-
ing the ability to compete successfully
in the marketplace outside the DBE
program. You may require a DBE firm,
as a condition of receiving assistance
through the BDP, to agree to tenni-:
49 CFR Subtitle -A (10-1-01 Edition)
nate its participation in the DBE pro-
gram after a certain time has passed or
certain objectives have been reached.
See Appendix C of this part for guid-
ance on administering BDP programs.
(b) As part of a BDP or separately,
you may establish a "mentor -protege"
program, in which another DBE or non -
DBE firm is the principal source of
business development assistance to a
DBE firm.
(1) Only firms you have certified as
DBEs before they are proposed for par-
ticipation in a mentor -protege program
are eligible to participate in the men-
tor -protege program.
(2) During the course of the mentor -
protege relationship, you must:
(f) Not award DBE credit to a non -
DBE mentor firm for using its own
protege firm for more than one half of
its goal on any contract let by the re-
cipient; and
(ii) Not award DBE credit to a non -
DBE mentor firm for using its own
protege firm for more than every other
contract performed by the protege
firm.
(3) For purposes of making deter-
minations bf business size under this
part, you must not treat protege firms
as affiliates of mentor firms, when both
firms are participating under an ap-
proved mentor -protege program. See
Appendix D of this part for guidance
concerning the operation of mentor -
protege programs.
(c) Your BDPs and mentor -protege
programs must be approved by the con-
cerned operating administration before
you implement them. Once approved,
they become part of your DBE pro-
gram.
§ 26.37 What are a recipient's respon-
sibilities for monitoring the per-
formance of other program partici-
pants? . _
(a) You must implement appropriate
mechanisms to ensure compliance with
the part's requirements by all program
participants (e.g., applying legal and
contract remedies available under Fed-
eral, state and local law). You must set
forth these mechanisms in your DBE
program.
(b) Your DBE program must also in-
clude a monitoring and enforcement
270
Office of the Secretary of Transportation
mechanism to ensure that work com-
mitted to DBEs at contract award is
actually performed by DBEs.
(c) This mechanism must provide for
a running tally of actual DBE attain-
ments (e.g., payments actually made to
DBE firms), including a means of com-
paring these attainments to commit-
ments. In your reports of DBE partici-
pation to the Department, you must
display both commitments and attain-
ments.
[64 FR 5126, Feb. 2, 1999, as amended at 65 FR
68951, Nov. 15, 2000]
Subpart C—Goals, Good Faith
Efforts, and Counting
§ 26.41 What is the role of the statu-
tory 10 percent goal in this pro-
gram?
(a) The statutes authorizing this pro-
gram provide that, except to the extent
the Secretary determines otherwise,
not less than 10 percent of the author-
ized funds are to be expended with
DBEs.
(b) This 10 percent goal is an aspira-
tional goal at the national level, which
the Department uses as a tool in evalu-
ating and monitoring DBEs' opportuni-
ties to participate in DOT -assisted con-
tracts.
(c) The national 10 percent goal does
not authorize or require recipients to
set overall or contract goals at the 10
percent level, or any other particular
level, or to take any special adminis-
trative steps if their goals are above or
below 10 percent.
§ 26.43 Can recipients use set -asides or
quotas as part of this program?
(a) You are not permitted to use
quotas for DBEs on DOT -assisted con-
tracts subject to this part.
(b) You may not set-aside contracts
for DBEs on DOT -assisted contracts
subject to this part, except that, in
limited and extreme circumstances,
you may use set -asides when no other
method could be reasonably expected
to redress egregious instances of dis-
crimination.
§ 26.45 How do recipients set overall
goals?
(a)(1) Except as provided in para-
graph (a)(2) of this section, you must
§ 26.45
set an overall goal for DBE participa-
tion in your DOT -assisted contracts.
(2) If.you are a FTA or FAA recipient
who reasonably anticipates awarding
(excluding transit vehicle purchases)
$250,000 or less in FTA or FAA funds in
prime contracts in a Federal fiscal
year, you are not required to develop
overall goals for FTA or FAA respec-
tively for that fiscal year. However, if
you have an existing DBE program, it
must remain in effect and you must
seek to fulfill the objectives outlined
in §26.1.
(b) Your overall goal must be based
on demonstrable evidence of the avail-
ability of ready, willing and able DBEs
relative to all businesses ready, willing •
and able to participate on your DOT -
assisted contracts (hereafter, the "rel-
ative availability of DBEs"). The goal
must reflect your determination of the
level of DBE participation you would
expect absent the effects of discrimina-
tion. You cannot simply rely on either
the 10 percent national goal, your pre-
vious overall goal or past DBE partici-
pation rates in your program without
reference to the relative availability of
DBEs in your market.
(c) Step 1. You must begin your goal
setting process by determining a base
figure for the relative availability of
DBEs. The following are examples of
approaches that you may take toward
determining a base figure. These exam-
ples are provided as a starting point for
your goal setting process. Any percent-
age figure derived from one of these ex-
amples should be considered a basis
from which you begin when examining
all evidence available in your jurisdic-
tion. These examples are not intended
as an exhaustive list. Other methods or
combinations of methods to determine
a base figure may be used, subject to
approval by the concerned operating
administration.
(1) Use DBE Directories and Census Bu-
reau Data. Determine the number of
ready, willing and able DBEs in your
market from your DBE directory.
Using the Census Bureau's County
Business Pattern (CBP) data base, de-
termine the number of all ready, will-
ing and able businesses available in
your market that perform work in the
same SIC codes. (Information about the
CBP data base may be obtained from
271
§ 26.45
the Census Bureau at their web site,
www.census.gov/epcd/cbp/view/ •
cbpview.html.) Divide the number of
DBEs by the number of all businesses
to derive a base figure for the' relative
availability of DBEs in your market.
(2) Use a bidders list. Determine the
number of DBEs that have bid or
quoted on your DOT -assisted , prime
contracts or subcontracts in the pre-
vious year. Determine the number of
all businesses that have bid or quoted
on prime or subcontracts in the same
time period. Divide the number of DBE
bidders and quoters by the number for
all businesses to derive a base figure
for the relative availability of DBEs in
your market.
(3) Use data from a disparity study. Use
a percentage figure derived from data
in a valid, applicable disparity study.
(4) Use the goal of another DOT recipi-
ent. If another DOT recipient in the
same, or substantially similar, market
has set an overall goal in compliance
with this rule, you may use that goal
as a base figure for your goal.
(5) Alternative methods. You may use.
other methods to determine a base fig-
ure for your overall goal. Any method-
ology you choose must be based on de-
monstrable evidence of local market
conditions and be designed to ulti-
mately attain a goal that is rationally
related to the relative availability of
DBEs in your market.
(d) Step 2. Once you have calculated a
base figure, you must examine all of
the evidence available in your jurisdic-
tion to determine what adjustment, if
any, is needed to the base figure in
order to arrive at your overall goal.
(1) There are many types of evidence
that must be considered when adjust-
ing the'base figure. These include:
(i) The current capacity of DBEs to
perform work in your DOT -assisted
contracting program, as measured by
the volume of work DBEs have per-
formed in recent years;
(ii) Evidence from disparity studies
conducted anywhere within your juris-
diction, to the extent it is not already
accounted for in your base figure; and
(iii) If your base figure is the goal of
another recipient, you must adjust it
for differences in your local market_
and your contracting program.
49 CFR Subtitle A (10-1-01 Edition)
(2) If available, you must consider
evidence from related fields that affect
the opportunities for DBEs to form,
grow and compete. These include, but
are not limited to:
(i) Statistical disparities in the abil-
ity of DBEs to get the financing, bond-
ing and insurance required to partici-
pate in your program;
(ii) Data on employment, self-em-
ployment, education, training and
union apprenticeship programs, to -the
extent you can relate it to the opportu- .
nities for•DBEs to perform in your pro- .
gram.
(3) If you attempt to make an adjust-
ment to your base figure to account for
the continuing effects of past discrimi-.
nation (often called the "but for" fac-
tor) or the effects of an ongoing DBE
program, the adjustment must be based
on demonstrable evidence that is logi-
cally and directly 'related to the effect
for which the adjustment is sought.
(e) Once you have determined a per-
centage figure in accordance with para-
graphs (c) and (d) of this section, you
should express your overall goal as fol-
lows:
(1) If you. are an FHWA recipient, as
a percentage of all Federal -aid highway
funds you will expend in FHWA-as-
sisted contracts in the forthcoming fis-
cal year;
(2) If you are an FTA or FAA recipi-
ent, as a percentage of all FTA or FAA
funds (exclusive of FTA funds to be
used for the purchase of transit vehi-
cles) that you will expend in FTA or
FAA -assisted contracts in the forth-
coming fiscal year. In appropriate
cases, the FTA or FAA Administrator
may permit you to express your overall
goal as a percentage of funds for a par-
ticular grant or project or group of
grants and/or projects.
(0(1) If you set overall goals on a fis-
cal year basis, you must submit them
to the applicable DOT operating ad-
ministration for review on August 1 of
each year, unless the Administrator of
the concerned operating administra-
tion establishes a different submission
date.
(2) If you are an FTA or FAA recipi-
ent and set your overall goal on a
272
Office of the Secretary of Transportation
project or grant basis, you must sub-
mit the goal for review at a time deter-
mined by the FTA or FAA Adminis-
trator.
(3) You must include with your over-
all goal submission a description of the
methodology you used to establish the
goal, including your base figure and
the evidence with which it was cal-
culated, and the adjustments you made
to the base figure and the evidence re-
lied on for the adjustments. You should
also include a summary listing of the
relevant available evidence in your ju-
risdiction and, where applicable, an ex-
planation of why you did not use that
evidence to adjust your base figure.
You must also include your projection
of the portions of the overall goal you
expect to meet through race -neutral
and race -conscious measures, respec-
tively (see § 26.51(c)).
(4) You are not required to obtain
prior operating administration concur-
rence with the your overall goal. How-
ever, if the operating administration's
review suggests that your overall goal
has not been correctly calculated, or
that your method for calculating goals
is inadequate, the operating adminis-
tration may, after consulting with you,
adjust your overall goal or require that
you do so. The adjusted overall goal is
binding on you.
(5) If you need additional time to col-
lect data or take other steps to develop
an approach to setting overall goals,
you may request the approval of the
concerned operating administration for
an interim goal and/or goal -setting
mechanism. Such a mechanism must:
(i) Reflect the relative availability of
DBEs in your local market to the max-
imum extent feasible given the data
available to you; and
(ii) Avoid imposing undue burdens on
non -DBEs.
(g) In establishing an overall goal,
you must provide for public participa-
tion. This public participation must in-
clude:
(1) Consultation with minority, wom-
en's and general contractor groups,
community organizations, and other
officials or organizations which could
be expected to have .information con-
cerning the availability of disadvan-
taged and non -disadvantaged busi-
nesses, the effects of discrimination on
§ 26.49
opportunities for DBEs, and your ef-
forts to establish a level playing field
for the participation of DBEs.
(2) A published notice announcing
your proposed overall goal, informing
the public that the proposed goal and
its rationale are available for inspec-
tion during normal business hours at
your principal office for 30 days fol-
lowing the date of the notice, and in-
forming the public that you and the
Department will accept comments on
the goals for 45 days from the date of
the notice. The notice must include ad-
dresses to which comments may be
sent, and you must publish it in gen-
eral circulation media and available
minority -focused media and trade asso-
ciation publications.
(h) Your overall goals must provide
for participation by all certified DBEs
and must not be subdivided into group -
specific goals.
[64 FR 5126, Feb. 2, 1999, as amended at 64 FR
34570, June 28, 1999; 65 FR 68951, Nov. 15, 2000]
§26.47 Can recipients be penalized for
failing to meet overall goals?
(a) You cannot be penalized, or treat-
ed by the Department as being in non-
compliance with this rule, because
your DBE participation falls short of
your overall goal, unless you have.
failed to administer your program in
good faith.
(b) If you do not have an approved
DBE program or,overall goal, or if you
fail to implement your program in
good faith, you are in noncompliance
with this part.
§ 26.49 How are overall goals estab-
lished for transit vehicle manufac-
turers?
(a) If you are an FTA recipient, you
must require in _your DBE program
that each transit vehicle manufac-
turer, as a condition of being author-
ized to bid or propose on FTA -assisted
transit vehicle procurements, certify
that it has complied with the require-
ments of this section. You do not in-
clude FTA assistance used in transit
vehicle procurements in the base
amount from which your overall goal is
calculated.
273
§ 26.51
(b) If you are a transit vehicle manu-
facturer, you must establish and sub-
mit for FTA's approval an annual over-
all percentage goal. In setting your
overall goal, you should be guided, to
the extent applicable, by the principles
underlying § 26.45. The base from which
you calculate this goal is the amount
of FTA financial assistance included in
transit vehicle contracts you will per-
form during the fiscal year in question.
You must exclude from this base funds -
attributable to work performed outside
the United States and its territories,
possessions, and commonwealths. The
requirements and procedures of this
part with respect to submission and ap-
proval of overall goals apply to you as
they do to recipients.
(c) As a transit vehicle manufacturer,
you may make the certification re-
quired by this section if you have sub-
mitted the goal this section requires
and FTA has approved it or not dis-
approved it.
(d) As a recipient, you may, with
FTA approval, establish project -spe-
cific goals for DBE participation in the
procurement of transit vehicles in lieu
of complying through the procedures of
this section.
(e) If you are an FHWA or FAA re-
cipient, you may, with FHWA or FAA
approval, use the procedures of this
section with respect to procurements
of vehicles or specialized equipment. If
you choose to do so, then the manufac-
turers of this equipment must meet the
same requirements (including goal ap-
proval by FHWA or FAA)' as.transit ve-
hicle manufacturers must meet in
FTA -assisted procurements.
§ 26.51 What means do recipients use
to meet overall goals?
(a) You must meet the maximum fea-
sible portion of your. overall goal by
using race -neutral means of facili-
tating DBE participation. Race -neutral
DBE participation includes any time a
DBE wins a prime contract through
customary competitive procurement
procedures, is awarded a subcontract
on a prime contract that does not
carry a DBE goal, or even if there is a
DBE goal, wins a subcontract from a
prime contractor that did not consider
its DBE status in making the award
(e.g., a prime contractor that uses a
49 CFR Subtitle A (10-1-01 Edition)
strict low bid system to award sub-
contracts).
(b) Race -neutral means include, but
are not limited to, the following:
(1) Arranging solicitations, times for
the presentation of bids, quantities,
specifications, and delivery schedules
in ways that facilitate DBE, and other
small businesses, participation (e.g.,
unbundling large contracts to make
them more accessible to small busi-
nesses, requiring or encouraging prime
contractors t� subcontract portions of
work that they might•otherwise per-
form with their own forces);
(2) Providing assistance in over-
coming limitations such as inability to
obtain bonding or financing (e.g., by
such means as simplifying the bonding
process, reducing bonding require-
ments, eliminating the impact of sur-
ety costs from bids, and providing serv-
ices to help DBEs, and other small
businesses, obtain bonding and financ-
ing);
(3) Providing technical assistance
and other services;
(4) Carrying out information and
communications programs on con-
tracting procedures and specific con-
tract opportunities (e.g., ensuring the
inclusion of DBEs, and other small
businesses, on recipient mailing lists
for bidders; ensuring the dissemination
to bidders on prime contracts of lists of
potential subcontractors; provision of
information in languages other than
English, where appropriate);
(5) Implementing a supportive serv-
ices program to develop and improve
immediate and long-term business
management, record keeping, and fi-
nancial and accounting capability for
DBEs and other small businesses;
(6) Providing services to help DBEs,
and other small businesses, improve
long-term development, increase op-
portunities to participate in a variety
of kinds of work, handle increasingly
significant projects, and achieve even-
tual self-sufficiency;
(7) Establishing a program to assist
new, start-up firms, particularly in
fields in which DBE participation has
historically been low;
(8) Ensuring distribution of your DBE
directory, through print and electronic
means, to the widest feasible universe
of potential prime contractors; and
274
Office of the Secretary of Transportation
(9) Assisting DBEs, and other small
businesses, to develop their capability
to utilize emerging technology and
conduct business through electronic
media.
(c) Each time you submit your over-
all goal for review by the concerned op-
erating administration, you must also
submit your projection of the portion
of the goal that you expect to meet
through race -neutral means and your
basis for that projection. This projec-
tion is subject to approval by the con-
cerned operating administration, in
conjunction with its review of your
overall goal.
(d) You must establish contract goals
to meet any portion of your overall
goal you do not project being able to
meet using race -neutral means.
(e) The following provisions apply to
the use of contract goals:
(1) You may use contract goals only
on those DOT -assisted contracts that
have subcontracting possibilities.
(2) You are not required to set a con-
tract goal on every DOT -assisted con-
tract. You are not required to set each
contract goal at the same percentage
level as the overall goal. The goal for a
specific contract may be higher or
lower than that percentage level of the
overall goal, depending on such factors
as the type of work involved, the loca-
tion of the work, and the availability
of DBEs for the work of the particular
contract. However, over the period cov-
ered by your overall goal, you must set
contract goals so that they will cumu-
latively result in meeting any portion
of your overall goal you do not project
being able to meet through the use of
grace -neutral means.
(3) Operating administration ap-
proval of each contract goal is not nec-
essarily required. However, operating
administrations may review and ap-
prove or disapprove any contract goal
you establish.
(4) Your contract goals must provide
for participation by all certified DBEs
and must not be subdivided into group -
specific goals.
(f) To ensure that your DBE program
continues to be narrowly tailored to
overcome the effects of discrimination,
you must adjust your use of contract
goals as follows:
§ 26.51
(1) If your approved projection under
paragraph (c) of this section estimates
that you can meet your entire overall
goal for a given year through race -neu-
tral means, you must implement your
program without setting contract goals
during that year._
Example to Paragraph '(n(1): Your overall
goal for Year I is 12 percent. You estimate
that you can obtain 12 percent or more DBE
participation through the use of race -neutral
measures, without any use of contract goals.
In this case, you do not set any contract
goals for the contracts that will be per-
formed in Year I.
(2) If, during the course of any year
in which you are using contract goals,
you determine that _you will exceed
your overall goal, you must reduce or
eliminate the use of contract goals to
the extent necessary to ensure that the
use of contract goals does not result in
exceeding the overall goal. If you de-
termine that you will fall short of your
overall goal, then you must make ap-
propriate modifications in your use of
race -neutral and/or race -conscious
measures to allow you to meet the
overall goal.
Example to Paragraph (j)(2): In Year II, your
overall goal is 12 percent. You have esti-
mated that you can obtain 5 percent DBE
participation through use of race -neutral
measures. You therefore plan to obtain the
remaining 7 percent participation through
use of DBE goals. By September, you have
already obtained 11 percent DBE participa-
tion for the year. For contracts let during
the remainder of the year, you use contract
.goals only to the extent necessary to obtain
an additional one percent DBE participation.
However, if you determine in September that
your participation for the year is likely to be
only 8 percent total, then you would increase
your use of race -neutral and/or race -con-
scious means during the remainder of the
year in order to achieve your overall goal.
(3) If the DBE participation you have
obtained by race -neutral means alone
meets or exceeds your overall goals for
two consecutive years, you are not re-
quired to make a projection of the
amount of your goal you can meet
using such means in the next year. You
do not set contract goals on any con-
tracts in the next year. You continue
using only race -neutral means to meet
your overall goals unless and until you
do not meet your overall goal for a
year.
275
§26.53
Example to Paragraph (J)(3): Your overall
goal for Years I and Year II is 10 percent. The
DBE participation you obtain through•race-
neutral measures alone is 10 percent or more
in each year. (For this purpose, it does not
matter whether you obtained additional DBE
participation through using contract goals
in these years.) In Year III and following
years, you do not need to make a projection
under paragraph (c) of this section of the
portion of your overall goal you expect to
meet using race -neutral means. You simply
use race -neutral means to achieve your over-
all goals. However, if in Year VI your DBE
participation falls short of your overall goal,
then you must make a paragraph (c) projec-
tion for Year VII and, if necessary, resume
use of contract goals in that year.
(4) If you obtain DBE participation
that exceeds your overall goal in two
consecutive years through the use of
contract goals (i.e., not through the
use of race -neutral means alone), you
must reduce your use of contract goals
proportionately in the following year.
Example to Paragraph (f)(4): In Years I and
II, your overall goal is 12 percent, and you
obtain 14 and 16 percent DBE participation,
respectively. You have exceeded your goals
over the two-year period by an average of 25
percent. In Year III, your overall goal is
again 12 percent, and your paragraph (c) pro-
jection estimates that you will obtain 4 per-
cent DBE participation through race -neutral
means and 8 percent through contract goals.
You then reduce the contract goal projection
by 25 percent (i.e., from 8 to 6 percent) and
set contract goals accordingly during the
year. If in Year III you obtain 11 percent par-
ticipation, you do not use this contract goal
adjustment mechanism for Year IV, because
there have not 'been two consecutive years of
exceeding overall goals.
(g) In any year in which you project
meeting part of your goal through
race -neutral means and the remainder
through contract goals, you must
maintain data separately on DBE
achievements in those contracts with
and without contract goals, respec-
tively. You must report this data to
the concerned operating administra-
tion as provided in § 26.11..
§ 26.53 What are the good faith efforts
procedures recipients follow in situ-
ations where there are contract
goals?
(a) When you have established a DBE
contract goal, you must award the con-
tract only to a bidder/offeror who
makes good faith efforts to meet it.
49 CFR Subtitle A (10-1-01 Edition)
You must determine that a bidder/of-
feror has made good faith efforts if the
bidder/offeror does either of the fol-
lowing things:
(1) Documents that it has obtained
enough, DBE participation to meet the
goal; or
(2) Documents that it made adequate
good faith efforts to meet the goal,
even though it did not succeed in ob-
taining enough DBE participation to
do so. If the bidder/offeror does docu-
ment adequate good faith efforts, you,
must not deny award of the contract on
the basis that the bidder/offeror failed
to meet the goal. See Appendix A of
this part for guidance in determining
the adequacy of a bidder/offeror's good
faith efforts.
(b), In your solicitations for DOT -as-
sisted contracts for which a contract
goal has been established, you must re-
quire the following:
(1) Award of the contract' will be con-
ditioned on meeting the requirements
of this section;
(2) All bidders/offerors will be re-
quired to submit the following infor-
mation to the recipient, at the time
provided in paragraph (b)(3) of this sec-
tion:
(i) The names and addresses of DBE
firms that will participate in the con-
tract;
(ii) A description of the work that
each DBE will perform;
(iii) The dollar amount of the partici-
pation of each DBE firm participating;
(iv) Written documentation of the
bidder/offeror's commitment to use a
DBE subcontractor whose participation
it submits to meet a contract goal;
(v) Written confirmation from the
DBE that it is participating in the con-
tract as provided in the prime contrac-
tor's commitment; and
(vi) If the contract goal is not met,
evidence of good faith efforts (see Ap-
pendix A of this part); and
(3) At your discretion, the bidder/of-
feror must present the information re-
quired by paragraph (b)(2) of this sec-
tion—
(1) Under sealed bid procedures, as a
matter of responsiveness, or with ini-
tial proposals, under contract negotia-
tion procedures; or .
276
Office of the Secretary of Transportation
(ii) At any time before you commit
yourself to the performance of the con-
tract by the bidder/offeror, as a matter
of responsibility.
(c) You must make sure all informa-
tion is complete and accurate and ade-
quately documents the bidder/offeror's
good faith efforts before committing
yourself to the performance of the con-
tract by the bidder/offeror.
(d) If you determine that the appar-
ent successful bidder/offeror has failed
to meet the requirements of paragraph
(a) of this section, you must, before
awarding the contract, provide the bid-
der/offeror an opportunity for adminis-
trative reconsideration.
(1) As part of this reconsideration,
the bidder/offeror must have the oppor-
tunity to provide written documenta-
tion or argument concerning the issue
of whether it met the goal or made ade-
quate good faith efforts to do so.
(2) Your decision on reconsideration
must be made by an official who did
not take part in the original deter-
mination that the bidder/offeror failed
to meet the goal or make adequate
good faith efforts to do so.
(3) The bidder/offeror must have the
opportunity to meet in person with
your reconsideration official to discuss
the issue of whether it met the goal or
made adequate good faith efforts to do
so.
(4) You must send the bidder/offeror a
written decision on reconsideration,
explaining the basis for finding that
the bidder did or did not meet the goal
or make adequate good faith efforts to
•do so.
(5) The result of the reconsideration
process is not administratively appeal-
able to the Department of Transpor-
tation.
(e) In a "design-build" or "turnkey"
contracting situation, in which the re-
cipient lets a master contract to a con-
tractor, who in turn lets subsequent
subcontracts for the work of the
project, a recipient may establish a
goal for the project. The master con-
tractor then establishes contract goals,
as appropriate, for the subcontracts it
lets. Recipients must maintain over-
sight,of the master contractor's activi-
ties to ensure that they are conducted
consistent with the requirements of
this part.
§ 26.55
(f)(1) You must require that a prime
contractor not terminate for conven-
ience a DBE subcontractor listed in re-
sponse to paragraph (b)(2) of this sec-
tion (or an approved substitute DBE
firm) and then perform the work of the
terminated subcontract with its own
forces or those of an affiliate, without
your prior written consent.
(2) When a DBE subcontractor is ter-
minated, or fails to complete its work
on the contract for any reason, you
must require the prime contractor to
make good faith efforts to find another
DBE subcontractor to substitute for
the original DBE. These good faith ef-
forts shall be directed at finding an-
other DBE to perform at least the same
amount of work under the contract as
the DBE that was terminated, to the
extent needed to meet the contract
goal you established for the procure-
ment.
(3) You must include in each prime
contract a provision for appropriate ad-
ministrative remedies that you will in-
voke if the prime contractor fails to
comply with the requirements of this
section.
(g) You must apply the requirements
of this section to DBE bidders/offerors
for prime contracts. In determining
whether a DBE bidder/offeror for a
prime contract has met a contract
goal, you count the work the DBE has
committed to performing with its own
forces as well as the work that it has
committed to be performed by DBE
subcontractors and DBE suppliers.
§ 26.55 How is DBE participation
counted toward goals?
(a) When a DBE participates in a con-
tract, you count only the value of the
work actually performed by the DBE
toward DBE goals.
(1) Count the entire amount of that
portion of a construction contract (or
other contract not covered by para-
graph (a)(2) of this section) that is per-
formed by the DBE's own forces. In-
clude the cost of supplies and materials
obtained by the DBE for the work of
the contract, including supplies pur-
chased or equipment leased by the DBE
(except supplies and equipment the
DBE subcontractor purchases or leases
from the prime contractor or its affil-
iate).
277
§ 26.55
(2) Count the entire amount of fees or
commissions charged by a DBE firm for
providing a bona fide service, such as
professional, technical, consultant, or
managerial services, or for providing
bonds or insurance specifically re-
quired for the performance of a DOT -
assisted contract, toward DBE goals,
provided you determine the fee to be
reasonable and not excessive as corn -
pared with fees customarily allowed for
similar services.
(3) When a DBE subcontracts part of
the work of itscontract to another
firm, the value of the subcontracted
work may be counted toward DBE
goals only if the DBE's subcontractor
is itself a DBE. Work that a DBE sub-
contracts to a non -DBE firm does not
count toward DBE goals.
(b) When a DBE performs as a partic-
ipant in a joint venture, count a por-
tion of the total dollar value of the
contract equal to the distinct, clearly
defined portion of the work of the con-
tract that the DBE performs with its
own forces toward DBE goals.
(c) Count expenditures to a DBE con-
tractor toward DBE goals only if the
DBE is performing a commercially.use-
ful function on that contract.
(1) A DBE performs a commercially
useful function when it is responsible
for execution of the work of the con-
tract and is carrying out its respon-
sibilities by actually performing, man-
aging, and supervising the work in-
volved. To perform a commercially
useful function, the DBE must also be
responsible, with respect to materials
and supplies used on the contract, for
negotiating price, determining quality
and quantity, ordering the material,
and installing (where applicable) and
paying for the material itself. To de-
termine whether a DBE is performing a
commercially useful function, you
must evaluate the amount of work sub-
contracted, industry practices, whether
the amount the firm is to be paid under
the contract is commensurate with the
work it is actually performing and the
DBE credit claimed for its performance
of the work, and other relevant factors.
(2) A DBE does not perform a com-
mercially useful function if its role is
limited to that of an extra participant
in a transaction, contract, or project
through which funds are passed in
49 CFR Subtitle A (10-1-01 Edition)
order to obtain the appearance of DBE
participation. In determining whether
a DBE is such an extra participant, you
must examine similar transactions,
particularly those in which DBEs do
not participate.
(3) If a DBE does not perform or exer-
ciseresponsibility for at least 30 per-
cent of the total cost of its contract
with its own work force, or the DBE
subcontracts a greater portion of the
work of a contract than would be ex-
pected on the basis of normal industry
practice for the type of work involved,
you must presume that it is not per-
forming a commercially useful func-
tion.
(4) When a DBE is presumed not to be
performing a commercially useful func- -
tion as provided in paragraph (c)(3) of
this section, the DBE may present evi-
dence to rebut this presumption. You
may determine that the firm is per-
forming a commercially useful func-
tion given the type of work involved
and normal industry practices.
(5) Your decisions on commercially
useful function matters are subject to
review by the concerned operating ad-
ministration, but are not administra-
tively appealable to DOT.
(d) Use the following factors in deter-
mining whether a DBE trucking com-
pany is performing a commercially
useful function:
(1) The DBE must be responsible for
the management and supervision of the
entire trucking operation for which it
is responsible on a particular contract,
and there cannot be a contrived ar-
rangement for the Purpose of meeting
DBE goals.
(2) The DBE must itself own and op-
erate at least one fully licensed, in-
sured, and operational truck used on
the contract.
(3) The DBE _receives credit for the
total value of the transportation serv-
ices it provides on the contract using
trucks it owns, insures, and operates
using drivers it employs.
(4) The DBE may lease trucks from
another DBE firm, including an owner -
operator who is certified as a DBE. The
DBE who leases trucks from another
DBE •receives credit for the total value
of the transportation services the les-
see DBE provides on the contract.
278
Office of the Secretary of Transportation
(5) The DBE may also lease trucks
from a non -DBE firm, including an
owner -operator. The DBE who leases
trucks from a non -DBE is entitled to
credit only for the fee or commission it
receives as a result of the lease ar-
rangement. The DBE does not receive
credit for the total value of the trans-
portation services provided by the les-
see, since these services are not pro-
vided by a DBE.
(6) For purposes of this paragraph (d),
a lease must indicate that the DBE has
exclusive use of and control over the
truck. This does not preclude the
leased truck from working for others
during the term of the lease with the
consent of the DBE, so long as the
lease gives the DBE absolute priority
for use of the leased truck. Leased
trucks must display the name and
identification number of the DBE.
(e) Count expenditures with DBEs for
materials or supplies toward DBE goals
as provided in the following:
(1)(i) If the materials or supplies are
obtained from a DBE manufacturer,
count 100 percent of the cost of the ma-
terials or supplies toward DBE goals.
(ii) For purposes of this paragraph
(e)(1), a manufacturer is a firm that op-
erates or maintains a factory or estab-
lishment that produces, on the prem-
ises, the • materials, supplies, articles,
or equipment required under the con-
tract and of the general character de-
scribed by the specifications.
(2)(i) If the materials or supplies are
purchased from a DBE regular dealer,
count 60 percent of the cost of the ma-
terials or supplies toward DBE goals.
(ii) For purposes of this section, a
regular dealer is a firm that owns, op-
erates, or maintains a store, ware-
house, or other establishment in which
the materials, supplies, articles or
equipment of the general character de-
scribed by the specifications and re-
quired under the contract are bought,
kept in stock, and regularly sold or
leased to the public in the usual course
of business.
(A) To be a regular dealer, the firm
must be an established, regular busi-
ness that engages, as its principal busi-
ness and under its own name, in the
§ 26.55
purchase and sale or lease of the prod-
ucts in question.
(B) A person may be a regular dealer
in such bulk items as petroleum prod-
ucts, steel, cement, gravel, stone, or
asphalt without owning, operating, or
maintaining a place of business as pro-
vided in this paragraph (e)(2)(ii) if the
person both owns and operates dis-
tribution equipment for the products.
Any supplementing of regular dealers'
own distribution equipment shall be by
a long-term lease agreement and not
on an ad hoc or contract -by -contract
basis.
(C) Packagers, brokers, manufactur-
ers' representatives, or other persons
who arrange or expedite transactions
are not regular dealers within the
meaning of this paragraph (e)(2).
(3) With respect to materials or sup-
plies purchased from a DBE which is
neither a manufacturer nor a regular
dealer, count the entire amount of fees
or commissions charged for assistance
in the procurement of the materials
and supplies, or. fees or transportation
charges for the delivery of materials or
supplies required on a job site, toward
DBE goals, provided you determine the
fees to be reasonable and not excessive
as compared with fees customarily al-
lowed for similar services. Do not
count any portion of the cost of the
materials and supplies themselves to-
ward DBE goals, however.
(f) If a firm is not currently certified
as a DBE in accordance with the stand-
ards of subpart D of this part at the
time of the execution of the contract,
do not count the firm's participation
toward any DBE goals, except as pro-
vided for in § 26.87(i)).
(g) Do not count the dollar value of
work performed under a contract with
a firm after it has ceased to be cer-
tified toward your overall goal.
(h) Do not count the participation of
a DBE subcontractor toward a contrac-
tor's final compliance with its DBE ob-
ligations on a contract until the
amount being counted has actually
been paid to the DBE.
[64 FR 5126, Feb. 2, 1999, as amended at 65 FR
68951, Nov. 15, 2000]
279
§26.61
Subpart D—Certification Standards
§ 26.61 How are burdens of proof allo-
cated in the certification process?
(a) In determining whether to certify
a firm as eligible to participate as a
DBE, you must apply the standards of
this subpart.
(b) The firm seeking certification has
the burden of demonstrating to you, by
a preponderance of the evidence, that
it meets the requirements of this sub-
part concerning group membership or
individual disadvantage, business size,
ownership, and control.
(c) You must rebuttably presume
that members of the designated groups
identified in §26.67(a) are socially and
economically disadvantaged. This
means that they do not have the bur-
den -of proving to you that they are so-
cially and economically disadvantaged.
However, applicants have the obliga-
tion to provide you information con-
cerning their economic disadvantage
(see § 26.67).
(d) Individuals who are not presumed
to be socially and economically dis-
advantaged, and individuals concerning
whom the presumption of disadvantage
has been rebutted, have the burden of
proving to you, by a preponderance of
the evidence, that they are socially and
economically disadvantaged. (See Ap-
pendix E of this part.)
(e) You must make determinations
concerning whether individuals and
firms have met their burden of dem-
onstrating group membership, owner-
ship, control, and social and economic
disadvantage (where disadvantage
must be demonstrated on an individual
basis) by considering all the facts in
the record, viewed as a whole.
§26.63 What rules govern group mem-
bership determinations?
(a) If you have reason to question
whether an individual is a member of a
group that is presumed to be socially
and economically disadvantaged, you
must require the individual to dem-
onstrate, by a preponderance of the
evidence, that he or she is a member of
the group.
(b) In making such a determination,
you must consider whether the person
has held himself out to be a member of
the group over a long period of time
49 CFR Subtitle A (10-1-01 Edition)
prior to application for certification
and whether the person is regarded as a
member of the group by the relevant
community. You may require the ap-
plicant to produce appropriate docu-
mentation of group membership.
(1) If you determine that an indi-
vidual claiming to be a member of a
group presumed to be disadvantaged is
not a member of a designated disadvan-
taged group, the individual must dem-
onstrate social arid economic disadvan-
tage on an individual basis.
(2) Your decisions concerning mem-
bership in a designated group are sub-
ject to the certification appeals proce-
dure of § 26.89.
§ 26.65 What rules govern business size
determinations?
(a) To be an eligible DBE, a firm (in-
cluding its affiliates) must be an exist-
ing small business, as defined by Small
Business Administration (SBA) stand-
ards. You must apply current SBA
business size standard(s) found in 13
CFR part 121 appropriate to the type(s)
of work the firm seeks to perform in
DOT -assisted contracts.
(b) Even if it meets the requirements
of paragraph (a) of this section, a firm
is not an eligible DBE in any Federal
fiscal year if the firm (including its af-
filiates) has had average annual gross
receipts, as defined by SBA regulations
(see 13 CFR 121.402), over the firm's pre-
vious three fiscal years, in excess of
$16.6 million. The Secretary adjusts
this amount for inflation from time to
time.
§ 26.67 What rules determine social
and economic disadvantage?
(a) Presumption of disadvantage. (1)
You must rebuttably presume that
citizens of the United States (or law-
fully admitted permanent residents)
who are women, Black Americans, His-
panic Americans, Native Americans,
Asian -Pacific Americans, Subcontinent
Asian Americans, or' other minorities
found to be disadvantaged by the SBA,
are socially and economically dis-
advantaged individuals. You must re-
quire applicants to submit a signed, no-
tarized certification that each pre-
sumptively disadvantaged owner is, in
fact, socially and economically dis-
advantaged.
280
Office of the Secretary of Transportation
(2)(i) You must require each indi-
vidual owner of a firm applying to par-
ticipate as a DBE (except a firm apply-
ing to participate as a DBE airport
concessionaire) whose ownership and
control are relied upon for DBE certifi-
cation to submit a signed, notarized
statement of personal net worth, with
appropriate supporting documentation.
This statement and documentation
must not be unduly lengthy, burden-
some, or intrusive.
(ii) Notwithstanding any provision of
state law, you must not release an in-
dividual's personal net worth state-
ment nor any documentation sup-
porting it to any third party without
the written consent of the submitter.
Provided, that you must transmit this
information to DOT in any certifi-
cation appeal proceeding under §26.89
in which the disadvantaged status of
the individual is in question.
(iii) In determining net worth, you
must exclude an individual's ownership
interest in the applicant firm and the
individual's equity in his or her pri-
mary residence (except any portion of
such equity that is attributable to ex-
cessive withdrawals from the applicant
firm). A contingent liability does not
reduce an individual's net worth. The
personal net worth of an individual
claiming to be an Alaska Native will
include assets and income from sources
other than an Alaska Native Corpora-
tion and exclude any of the following
which the individual receives from any
Alaska Native Corporation: cash (in-
cluding cash dividends on stock re-
ceived from an ANC) to the extent that
it does not, in the aggregate, exceed
$2,000 per individual per annum; stock
(including stock issued or distributed
by an ANC as a dividend or distribution
on stock); a partnership interest; land
or an interest in land (including land
or an interest in land received from an
ANC as a dividend or distribution on
stock); and an interest in a settlement
trust.
(b) Rebuttal of presumption of dis-
advantage. (1) If the statement of per-
sonal net worth that an individual sub-
mits under paragraph (a)(2) of this sec-
tion shows that the individual's per-
sonal net worth exceeds $750,000, the in-
dividual's presumption of economic
disadvantage is rebutted. You are not
§ 26.67
required to have a proceeding under
paragraph (b)(2) of this section in order
to rebut the presumption of economic
disadvantage in this case.
(2) If you have a reasonable basis to
believe that an individual who is a
member of one of the designated groups
is not, in fact, socially and/or economi-
cally disadvantaged you may, at any
time, start a proceeding to determine
whether the presumption should be re-
garded as rebutted with respect to that
individual. Your proceeding must fol-
low the procedures of § 26.87.
(3) In such a proceeding, you have the
burden of demonstrating, by a prepon-
derance of the evidence, that the indi-
vidual is not socially and economically
disadvantaged. You may require the in-
dividual to produce information rel-
evant to the determination of his or
her disadvantage.
(4) When an individual's presumption
of social and/or economic disadvantage
has been rebutted, his or her ownership
and control of the firm in question can-
not be used for purposes of DBE eligi-
bility under this subpart unless and
until he or she makes an individual
showing of social and/or economic dis-
advantage. If the basis for rebutting
the presumption is a determination
that the individual's personal net
worth exceeds $750,000, the individual is
no longer eligible for participation in
the program and cannot regain eligi-
bility by making an individual showing
of disadvantage.
(c) 8(a) and SDB Firms. If a firm ap-
plying for certification has a current,
valid certification from or recognized
by the SBA under the 8(a) or small and
disadvantaged business (SDB) program
(except an SDB certification based on
the firm's self -certification as an SDB),
you may accept the firm's 8(a) or SDB
certification in lieu of conducting your
own certification proceeding, just as
you may accept the certification of an-
other DOT recipient for this purpose.
You are not required to do so, however.
(d) Individual determinations of social
and economic disadvantage. Firms
owned and controlled by individuals
who are not presumed to be socially
and economically disadvantaged (in-
cluding individuals whose presumed
disadvantage has been rebutted) may
apply for DBE certification. You must
281
§ 26.69
make a case-by-case determination of
whether each individual whose owner-
ship and control are relied upon for
DBE certification is socially and eco-
nomically disadvantaged. In such a
proceeding, the applicant firm has the
burden of demonstrating to you, by a
preponderance of the evidence, that the
individuals who own and control it are
socially and economically disadvan-
taged. An individual whose personal
net worth exceeds $750,000 shall not be
deemed to be economically disadvan-
taged. In making these determinations,
use the guidance found in Appendix E
of this part. You must require that ap-
plicants provide sufficient information
to permit determinations under the
guidance of Appendix E of this part.
[64 FR 5126, Feb. 2, 1999, as amended at 64 FR
34570, June 28, 1999]
§ 26.69 What rules govern determina-
tions of ownership?
(a) In determining whether the so-
cially and economically disadvantaged
participants in a firm own the firm,
you must consider all the facts in the
record, viewed as a whole.
(b) To be an eligible DBE, a firm
must be at least 51 percent owned by
socially and economically disadvan-
taged individuals.
(1) In the case of a corporation, such
individuals must own at least 51 per-
cent of the each class of voting stock
outstanding and 51 percent of the ag-
gregate of all stock outstanding.
(2) In the case of a partnership, 51
percent of each class of partnership in-
terest must be owned by socially and
economically disadvantaged individ-
uals. Such ownership must be reflected
in the firm's partnership agreement.
(3) In the case of a limited liability
company, at least 51 percent of each
class of member interest must be
owned by socially and economically
disadvantaged individuals.
(c) The firm's ownership by socially
and economically disadvantaged indi-
viduals must be real, substantial, and
continuing, going beyond pro forma
ownership of the firm as reflected in
ownership documents. The disadvan-
taged owners must enjoy the cus-
tomary incidents of ownership, and
share in the risks and profits commen-
surate with their ownership interests,
49 CFR Subtitle A (10-1-01 Edition)
as demonstrated by the substance, not
merely the form, of arrangements.
(d) All securities that constitute
ownership of a firm shall be held di-
rectly by disadvantaged persons. Ex-
cept as provided in this paragraph (d),
no securities or assets held in trust, or
by any guardian for a minor, are con-
sidered as held by disadvantaged per-
sons in determining the ownership of a
firm. However, securities or assets held
in trust are regarded as held by a dis-
advantaged individual for purposes of
determining ownership of the firm, if—
(1) The beneficial owner of securities
or assets held in trust is a disadvan-
taged individual, and the trustee is the
same or another such individual; or
(2) The beneficial owner of a trust is
a disadvantaged individual who, rather
than the trustee, exercises effective
control over the management, policy-
making, and daily operational activi-
ties of the firm. Assets. held in a rev-
ocable living trust may be counted
only in the situation where the same
disadvantaged individual is the sole
grantor, beneficiary, and trustee.
(e) The contributions of capital or ex-
pertise by the socially and economi-
cally disadvantaged owners to acquire
their ownership interests must be real
and substantial. Examples of insuffi-
cient contributions include a promise
to contribute capital, an unsecured
note payable to the firm or an owner
who is not a disadvantaged individual,
or mere participation in a firm's ac-
tivities as an employee. Debt instru-
ments from financial institutions or
other organizations that lend funds in
the normal course of their business do
not render a firm ineligible, even if the
debtor's ownership interest is security
for the loan.
(f) The following requirements apply
to situations in which expertise is re-
lied upon as part of a disadvantaged
owner's contribution to acquire owner-
ship:
(1) The owner's expertise must be—
(i) In a specialized field;
(ii) Of outstanding quality;
(iii) In areas critical to the firm's op-
erations;
(iv) Indispensable to the firm's poten-
tial success;
(v) Specific to the type of work the
firm performs; and
282
Office of the Secretary of Transportation
(vi) Documented in the records of the
firm. These records must clearly show
the contribution of expertise and its
value to the firm.
(2) The individual whose expertise is
relied upon must have a significant fi-
nancial investment in the firm.
(g) You must always deem as held by
a socially and economically disadvan-
taged individual, for purposes of deter-
mining ownership, all interests in a
business or other assets obtained by
the individual—
(1) As the result of a final property
settlement or court order in a divorce
or legal separation, provided that no
term or condition of the agreement or
divorce decree is inconsistent with this
section; or
(2) Through inheritance, or otherwise
because of the death of the former
owner.
(h)(1) You must presume as not being
held by a socially and economically
disadvantaged individual, for purposes
of determining ownership, all interests
in a business or other assets obtained
by the individual as the result of a gift,
or transfer without adequate consider-
ation, from any non -disadvantaged in-
dividual or non -DBE firm who is—
(i) Involved in the same firm for
which the individual is seeking certifi-
cation, or an affiliate of that firm;
(ii) Involved in the same or a similar
line of business; or
(iii) Engaged in an ongoing business
relationship with the firm, or an affil-
iate of the firm, for which the indi-
vidual is seeking certification.
(2) To overcome this presumption and
permit the interests or assets to be
counted, the disadvantaged individual
must demonstrate to you, by clear and
convincing evidence, that—
(i) The gift or transfer to the dis-
advantaged individual was made for
reasons other than obtaining certifi-
cation as a DBE; and
(ii) The disadvantaged individual ac-
tually controls the management, pol-
icy, and operations of the firm, not-
withstanding the continuing participa-
tion of a non -disadvantaged individual
who provided the gift or transfer.
(i) You must apply the following
rules in situations in which marital as-
sets form a basis for ownership of a
firm:
§ 26.69
(1) When marital assets (other than
the assets of the business in question),
held jointly or as community property
by both spouses, are used to acquire
the ownership interest asserted by one
spouse, you must deem the ownership
interest in the firm to have been ac-
quired by that spouse with his or her
own individual resources, provided that
the other spouse irrevocably renounces
and transfers all rights in the owner-
ship interest in the manner sanctioned
by the laws of the state in which either
spouse or the firm is domiciled. You do •
not count a greater portion of joint or
community property assets toward
ownership than state law would recog-
nize as belonging to the socially and
economically disadvantaged owner of
the applicant firm.
(2) A copy of the document legally
transferring and renouncing the other
spouse's rights in the jointly owned or
community assets used to acquire an
ownership interest in the firm must be
included as part of the firm's applica-
tion for DBE certification.
(j) You may consider the following
factors in determining the ownership of
a firm. However, you must not regard a
contribution of capital as failing to be
real and substantial, or find a firm in-
eligible, solely because—
(1) A socially and economically dis-
advantaged individual acquired his or
her ownership interest as the result of
a gift, or transfer without adequate
consideration, other than the types set
forth in paragraph (h) of this section;
(2) There is a provision for the co -sig-
nature of a spouse who is not a socially
and economically disadvantaged indi-
vidual on financing agreements, con-
tracts for the purchase or sale of real
or personal property, bank signature
cards, or other documents; or
(3) Ownership of the firm in question
or its assets is transferred for adequate
consideration from a spouse who is not
a socially and economically disadvan-
taged individual to a spouse who is
such an individual. In this case, you
must give particularly close and care-
ful scrutiny to the ownership and con-
trol of a firm to ensure that it is owned
and controlled, in substance as well as
in form, by a socially and economically
disadvantaged individual.
283
§26.71 49 CFR Subtitle A (10-1-01 Edition)
§ 26.71 What rules govern determina-
tions concerning control?
• (a) In determining 'whether socially
and economically disadvantaged own-
ers control a firm, you must consider
all the facts in the record, viewed as a
whole.
(b) Only an independent business may
be certified as a DBE. An independent
business is one the viability of which
does not depend on its relationship
with another firm or firms.
(1) In determining whether a poten-
tial DBE is an independent business,
you must scrutinize relationships with
non -DBE firms, in such areas as per-
sonnel, facilities, equipment, financial
and/or bonding support, and other re-
sources.
(2) You must consider whether
present or recent employer/employee
relationships between the disadvan-
taged •owner(s) of the potential DBE
and non -DBE firms or persons associ-
ated with non -DBE firms compromise
the independence of the potential DBE
firm.
(3) You must examine the firm's rela-
tionships with prime contractors to de-
termine whether a pattern of exclusive
or primary dealings with a prime con-
tractor compromises the independence
of the potential DBE firm.
(4) In considering factors related to
the independence of a potential DBE
firm, you must consider the consist-
ency of relationships between the po-
tential DBE and non -DBE firms with
normal industry practice.
(c) A DBE firm must not be subject
to any formal or informal restrictions
which limit the customary discretion
of the socially and economically dis-
advantaged owners. There can be no re-
strictions through corporate charter
provisions, by-law provisions, con-
tracts or any other formal or informal
devices (e.g., cumulative voting rights,
voting powers attached to different
classes of stock, employment con-
tracts, requirements for concurrence
•by •non -disadvantaged partners, condi-
tions precedent or subsequent, execu-
tory agreements, voting trusts, restric-
tions on or assignments of voting
rights) that prevent the socially and
economically disadvantaged owners,
-without the cooperation or vote of any
non -disadvantaged individual, from
making any business decision of the
firm. This paragraph does not preclude
a spousal co -signature on documents as
provided for in §26.69(j)(2).
(d) The socially and economically
disadvantaged owners must possess the
power to direct or cause the direction
of the management and policies of the
firm and to make day-to-day as well as
long-term decisions on matters of man-
agement, policy and operations.
(1) A disadvantaged owner must hold
the highest officer position in the com-
pany (e.g., chief executive officer or
president).
(2) In a corporation, disadvantaged
owners must control the board of direc-
tors.
(3) In a partnership, one or more dis-
advantaged owners must serve as gen-
eral partners, with control over all
partnership decisions.
(e) Individuals who are not socially
and economically disadvantaged may
be involved in a DBE firm as owners,
managers,. employees, stockholders, of-
ficers, and/or directors. Such individ-
uals must not, however, possess or ex-
ercise the power to control the firm, or
be disproportionately responsible for
the operation of the firm.
(f) The socially and economically dis-
advantaged owners of the firm may del-
egate various areas of the manage-
ment, policymaking, or daily oper-
ations of the firm to other participants
in the firm, regardless of whether these
participants are socially and economi-
cally disadvantaged individuals. Such
delegations of authority must be rev-
ocable, and the socially and economi-
cally disadvantaged owners must re-
tain the power to hire and fire any per-
son to whom such authority is dele-
gated. The managerial role of the so-
cially and economically disadvantaged
owners in the firm's overall affairs
must be such that the recipient can
reasonably conclude that the socially
and economically disadvantaged own-
ers actually exercise control over the
firm's operations, management, and
policy.
(g) The socially and economically
disadvantaged owners must have an
overall understanding of, and manage-
rial and technical competence and ex-
perience directly related to, the type of
business in which the firm is engaged
284
Office of the Secretary of Transportation
and the firm's operations. The socially
and economically disadvantaged own-
ers are not required to have experience
or expertise in every critical area of
the firm's operations, or to have great-
er experience or expertise in a given
field than managers or key employees.
The socially and economically dis-
advantaged owners must have the abil-
ity to intelligently and critically
evaluate information presented by
other participants in the firm's activi-
ties and to use this information to
make independent decisions concerning
the firm's daily operations, manage-
ment, and policymaking. Generally,
expertise limited to office manage-
ment, administration, or bookkeeping
functions unrelated to the principal
business activities of the firm is insuf-
ficient to demonstrate control.
(h) If state or local law requires the
persons to have a particular license or
other credential in order to own and/or
control a certain type of firm, then the
socially and economically disadvan-
taged persons who own and control a
potential DBE firm of that type must
possess the required license or creden-
tial. If state or local law does not re-
quire such a person to have such a li-
cense or credential to own and/or con-
trol a firm, you must not deny certifi-
cation solely on the ground that the
person lacks the license or credential.
However, you may take into account
the absence of the license or credential
as one factor in determining whether
the socially and economically dis-
advantaged owners actually control
the firm.
(i)(1) You may consider differences in
remuneration between the socially and
economically disadvantaged owners
and other participants in the firm in
determining whether to certify a firm
as a DBE. Such consideration shall be
in the context of the duties of the per-
sons involved, normal industry prac-
tices, the firm's policy and practice
concerning reinvestment of income,
and any other explanations for the dif-
ferences proffered by the firm. You
may determine that a firm is con-
trolled by its socially and economi-
cally disadvantaged owner although
that owner's remuneration is lower
than that of some other participants in
the firm.
§ 26.71
(2) In a case where a non -disadvan-
taged individual formerly controlled
the firm, and a socially and economi-
cally disadvantaged individual now
controls it, you may consider a dif-
ference between the remuneration of
the former and current controller of
the firm as a factor in determining who
controls the firm, particularly when
the non -disadvantaged individual re-
mains involved with the firm and con-
tinues to receive greater compensation
than the disadvantaged individual.
(j) In order to be viewed as control-
ling a firm, a socially and economi-
cally disadvantaged owner cannot en-
gage in outside employment or other
business interests that conflict with
the management of the firm or prevent
the individual from devoting sufficient
time and attention to the affairs of the
firm to control its activities. For ex-
ample, absentee ownership of a busi-
ness and part-time work in a full-time
firm are not viewed as constituting
control. However, an individual could
be viewed as controlling a part-time
business that operates only on eve-
nings and/or weekends, if the indi-
vidual controls it all the time it is op-
erating.
(k)(1) A socially and economically
disadvantaged individual may control
a firm even though one or more of the
individual's immediate family mem-
bers (who themselves are not socially'
and economically disadvantaged indi-
viduals) participate in the firm as a
manager, employee, owner, or in an-
other capacity. Except as otherwise
provided in this paragraph, you must
make a judgment about the control the
socially and economically disadvan-
taged owner exercises vis-a-vis other
persons involved in the business as you
do in other situations, without regard
to whether or not the other persons are
immediate family members.
(2) If you cannot determine that the
socially and economically disadvan-
taged owners—as distinct from the
family as a whole—control the firm,
then the socially and economically dis-
advantaged owners have failed to carry
their burden of proof concerning con-
trol, even though they may participate
significantly in the firm's activities.
285
§26.73
(1) Where a firm was formerly owned
and/or controlled by a non -disadvan-
taged individual (whether or not an im-
mediate family member), ownership
and/or control were transferred to a so-
cially and economically disadvantaged
individual, and the non -disadvantaged
individual remains involved with the
firm in any capacity, the disadvan-
taged individual now owning the firm
must demonstrate to you, by clear and
convincing evidence, that:
(1) The transfer of ownership and/or
control to the disadvantaged individual,
was made for reasons other than ob-
taining certification as a DBE; and
(2) The disadvantaged individual ac-
tually controls the management, pol-
icy, and operations of the firm, not-
withstanding the continuing participa-
tion of a non -disadvantaged individual
who formerly owned and/or controlled
the firm.
(m) In determining whether a firm is
controlled by its socially and economi-
cally disadvantaged owners, you may
consider whether the firm owns equip-
ment necessary to perform its work.
However, you must not determine that
a firm is not controlled by socially and
economically disadvantaged individ-
uals solely because the firm leases,
rather than owns, such equipment,
where. leasing, equipment is a normal
industry practice and the lease does
not involve a relationship with a prime
contractor or other party that com-
promises the independence of the firm.
(n) You must grant certification to a
firm only for specific types of work in
which the socially and economically
disadvantaged owners have the ability
to control the firm. To become cer-
tified in an additional type, of work,
the firm need demonstrate to you only
that its socially and economically dis-
advantaged owners are able to control
the firm with respect to that type of
work. You may not, in this situation,
require that the firm be recertified or
submit a new application for certifi-
cation, but you must verify the dis-
advantaged owner's control of the firm
in the additional type of work.
(o) A business operating under a fran-
chise or license agreement may be cer-
tified if it meets the standards in this
subpart and the franchiser or licenser
is not affiliated with the franchisee or
49 CFR SubtitleA (10-1-01 Edition)
licensee. In determining whether affili-
ation exists, you should generally not
consider the 'restraints relating to
standardized quality, advertising, ac-
counting format, and other provisions
imposed on the franchisee or licensee
by the franchise agreement or license,
provided that the franchisee or licensee
has the right to profit from its efforts
and bears the risk of loss commensu-
rate with ownership. Alternatively,
even though a franchisee or licensee
may not be controlled by virtue of such
provisions in the franchise agreement
or license, affiliation. could arise
through other means, such as common
management or excessive restrictions
on the sale or transfer of the franchise
interest or license.
(p) In order for a partnership to be
controlled by socially and economi-
cally disadvantaged individuals, any
non -disadvantaged partners must not
have the power, without the specific
written concurrence of the socially and
economically disadvantaged partner(s),
to contractually bind the partnership
or subject the partnership to contract
or tort liability.
(q) The socially and economically
disadvantaged individuals controlling a
firm may use an employee leasing com-
pany. The use of such a company does
not preclude the socially and economi-
cally disadvantaged individuals from
controlling their firm if they continue
to maintain an employer-employee re-
lationship with the leased employees.
This includes being responsible for hir-
ing, firing, training, assigning, and
otherwise controlling the on-the-job
activities of the employees; as well as
ultimate responsibility for wage and
tax obligations related to the employ-
ees.
§ 26.73 What are other rules affecting
certification? '
(a)(1) Consideration of whether a firm
performs a commercially useful func-
tion or is a regular dealer pertains
solely to counting toward DBE goals
the participation of firms that have al-
ready been certified as DBEs. Except as
provided in paragraph (a)(2) of this sec-
tion, you must not consider commer-
cially useful function issues in any way
in making decisions about whether to
certify a firm as a DBE.
286
Office of the Secretary of Transportation
(2) You may consider, in making cer-
tification decisions, whether a firm has
exhibited a pattern of conduct indi-
cating its involvement in attempts to
evade or subvert the intent or require-
ments of the DBE program.
(b) You must evaluate the eligibility
of a firm on the basis of present cir-
cumstances. You must not refuse to
certify a firm based solely on historical
information indicating a lack of owner-
ship or control of the firm by socially
and economically disadvantaged indi-
viduals at some time in the past, if the
firm currently meets the ownership
and control standards of this part. Nor
must you refuse to certify a firm solely
on the basis that it is a newly formed
firm.
(c) DBE firms and firms seeking DBE
certification shall cooperate fully with
your requests (and DOT requests) for
information relevant to the certifi-
cation process. Failure or refusal to
provide such information is a ground
for a denial or removal of certification.
(d) Only firms organized for profit
may be eligible DBEs. Not-for-profit
organizations, even though controlled
by socially and economically disadvan-
taged individuals, are not eligible to be
certified as DBEs.
(e) An eligible DBE firm must be
owned by individuals who are socially
and economically disadvantaged. Ex-
cept as provided in this paragraph, a
firm that is not owned by such individ-
uals, but instead is owned by another
firm—even a DBE firm—cannot be an
eligible DBE.
(1) If socially and economically dis-
advantaged individuals own and con-
trol a firm through a parent or holding
company, established for tax, capital-
ization or other purposes consistent
with industry practice, and the parent
or holding company in turn owns and
controls an operating subsidiary, you
may certify the subsidiary if it other-
wise meets all• requirements of this
subpart. In this situation, the indi-
vidual owners and controllers of the
parent or holding company are deemed
to control the subsidiary through the
parent or holding company.
(2) You may certify such a subsidiary
only if there is cumulatively 51 percent
ownership of the subsidiary by socially
and economically disadvantaged indi-
§ 26.73
viduals. The following examples illus-
trate .how this cumulative ownership
provision works:
Example 1: Socially and economically dis-
advantaged individuals own 100 percent of a
holding company, which has a wholly-owned
subsidiary. The subsidiary may be certified,
if it meets all other requirements.
Example 2: Disadvantaged individuals own
100 percent of the holding company, which
owns 51 percent of a subsidiary. The sub-
sidiary may be certified, if all other require-
ments are met.
Example 3: Disadvantaged individuals own
80 percent of the holding company, which in
turn owns 70 percent of a subsidiary. In this
case, the cumulative ownership of the sub-
sidiary by disadvantaged individuals is 56
percent (80 percent of the 70 percent). This is
more than 51 percent, so you may certify the
subsidiary, if all other requirements are met.
Example 4: Same as Example 2 or 3, but
someone other than the socially and eco-
nomically disadvantaged owners of the par-
ent or holding company controls the sub-
sidiary. Even though the subsidiary is owned
by disadvantaged individuals, through the.
holding or parent company, you cannot cer-
tify it because it fails to meet control re-
• quirements.
Example 5: Disadvantaged individuals own
60 percent of the holding company, which in
turn owns 51 percent of a subsidiary. In this
case, the cumulative ownership of the sub-
sidiary by disadvantaged individuals is about
31 percent. This is less than 51 percent, so
you cannot certify the subsidiary.
Example 6: The holding company, in addi-
tion to the subsidiary seeking certification;
owns several other companies. The combined
gross receipts of the holding companies and
its subsidiaries are greater than the size
standard for the subsidiary seeking certifi-
cation and/or the gross receipts cap of
§26.65(b). Under the rules concerning affili-
ation, the subsidiary fails to meet the size
standard and cannot be certified.
(f) Recognition of a business as a sep-
arate entity for tax or corporate pur-
poses is not necessarily sufficient to
demonstrate that a firm is an inde-
pendent business, owned and controlled
by socially and economically disadvan-
taged individuals.
(g) You must not require a DBE firm
to be prequalified as a condition for
certification unless the recipient re-
quires all firms that participate in its
contracts and subcontracts to be
prequalified.
(h) A firm that is owned by an Indian
tribe, Alaska Native Corporation, or
287
§ 26.81
Native Hawaiian organization as an en-
tity, rather than by Indians, Alaska
Natives, or Native Hawaiians as indi-
viduals, may be eligible for certifi-
cation. Such a firm must meet the size
standards .of § 26.65. Such a firm must
be controlled by socially and economi-
cally disadvantaged individuals, as pro-
vided in § 26.71.
Subpart E—Certification
Procedures
§ 26.81 What are the requirements for
Unified Certification Programs?
(a) You and all other DOT recipients
in your state must participate in a
Unified Certification Program (UCP).
(1) Within three years of March 4,
1999, you and the other recipients in
your state must sign an agreement es-
tablishing the UCP for that state and
submit the agreement to the Secretary
for approval. The Secretary may, on
the basis of extenuating circumstances
shown by the recipients in the state,
extend this deadline for no more than
• one additional year.
(2) The agreement must provide for
the establishment of a UCP meeting all
the requirements of this section. The
agreement must specify that the UCP
will follow all certification procedures
and standards of this part, on the same
basis as recipients; that the UCP shall
cooperate fully with oversight, review,
and monitoring activities of DOT and
its operating administrations; and that
the UCP shall implement DOT direc-
tives and guidance concerning certifi-
cation matters. The agreement shall
also commit recipients to ensuring
that the UCP has sufficient resources
and expertise to carry out the require-
ments of this part. The agreement
shall include an implementation sched-
ule ensuring that the UCP is.fully oper-
ational no later than 18 months fol-
lowing the approval of the agreement
by the Secretary.
(3) Subject to approval by the Sec-
retary, the UCP in each state may take
any form acceptable to the recipients
in that state.
(4) The Secretary shall review the
UCP and approve it, disapprove it, or
remand it to the recipients in the state
for revisions. A complete agreement
which is not disapproved or remanded
49 CFR Subtitle A (10-1-01 Edition)
within 180 days of its receipt is deemed
to be accepted.
(5) If you and the other recipients in
your state fail to meet the deadlines
set forth in this paragraph (a), you
shall have the opportunity to make an
explanation to the Secretary why a
deadline could not be met and why
meeting the deadline was beyond your
control. If you fail to make such an ex-
planation, or the explanation does not
justify the failure to meet the dead-
line, the Secretary shall direct you to
complete the required action by a date
certain. If you and the. other recipients
fail to carry out this direction in a
timely manner, you are collectively in
noncompliance with this part.
(b) The UCP shall make all certifi-
cation decisions on behalf of all DOT
recipients in the state with respect to
participation in the DOT DBE Pro-
gram.
(1) Certification decisions by the UCP
shall •be binding on all DOT recipients
within the state.
(2) The UCP shall provide "one-stop
shopping" to applicants for certifi-
cation, such that an applicant is re-
quired to apply only once for a DBE
certification that will be honored by
all recipients in the state.
(3) All obligations of recipients with
respect to certification and non- "
discrimination must be carried out by
UCPs, and recipients may use only
UCPs that comply with the certifi-
cation and nondiscrimination require-
ments of this part.
(c) All certifications by UCPs shall
be pre -certifications; i.e., certifications
that have been made final before the
due date for bids or offers on a contract
on which a firm seeks to participate as
a DBE.
(d) A UCP is not required to process
an application for certification from a
firm having its principal. place of busi-
ness outside the state if the firm is not
certified by the UCP in the state in
which it maintains its principal place
of business. The "home state" UCP
shall share its information and docu-
ments concerning the firm with other
UCPs that are considering the firm's
application.
(e) Subject to DOT approval as pro-
vided in this section, the recipients in
288
Office of the Secretary of Transportation
two or more states may form a re-
gional UCP. UCPs may also enter into
written reciprocity agreements with
other UCPs. Such an agreement shall
outline the specific responsibilities of
each participant. A UCP may accept
the certification of any other UCP or
DOT recipient.
(f) Pending the establishment of
UCPs meeting the requirements of this
section, you may enter into agree-
ments with other recipients, on a re-
gional or inter-jurisdictional basis, to
perform certification functions re-
quired by this part. You may also grant
reciprocity to other recipient's certifi-
cation decisions.
(g) Each UCP shall maintain a uni-
fied DBE directory containing, for all
firms certified by the UCP (including
those from other states certified under
the provisions of this section), the in-
formation required by § 26.31. The UCP
shall make the directory available to
the public electronically, on the inter -
net, as well as in print. The UCP shall
update the electronic version of the di-
rectory by including additions, dele-
tions, and other changes as soon as
they are made.
(h) Except as otherwise specified in
this section, all provisions of this sub-
part and subpart D of this part per-
taining to recipients also apply to
UCPs.
§ 26.83 What procedures do recipients
follow in making certification deci-
sions?
(a) You must ensure that only firms
certified as eligible DBEs under this
section participate as DBEs in your
program.
(b) You must determine the eligi-
bility of firms as DBEs consistent with
the standards of subpart D of this part.
When a UCP is formed, the UCP must
meet all the requirements of subpart D
of this part and -this subpart that re-
cipients are required to meet.
(c) You must take all the following
steps in determining whether a DBE
firm meets the standards of subpart D
of this part:
(1) Perform an on-site visit to the of-
fices of the firm. You must interview
the principal officers of the firm and
review their resumes and/or work his-
tories. You must also perform an on-
§ 26.83
site visit to job sites if there are such
sites on which the firm is working at
the time of the eligibility investigation
in your jurisdiction or local area. You
may rely upon the site visit report of
any other recipient with respect to a
firm applying for certification;
(2) If the firm is a corporation, ana-
lyze the ownership of stock in the firm;
(3) Analyze the bonding and financial
capacity of the firm;
(4) Determine the work history of the
firm, including contracts it has re-
ceived and work it has completed;
(5) Obtain a statement from the firm
of the type of work it prefers to per-
form as part of the DBE program and
its preferred locations for performing
the work, if any;
(6) Obtain or compile a list of the
equipment owned by or available to the
firm and the licenses the firm and its
key personnel possess to perform the
work it seeks to do as part of the DBE
program;
(7) Require potential DBEs to com-
plete and submit an appropriate appli-
cation form.
(i) Uniform form. [Reserved]
(ii) You must make sure that the ap-
plicant attests to the accuracy and
truthfulness of the information on the
application form. This shall be done ei-
ther in the form • of an affidavit sworn
to by the applicant before a person who
is authorized by state law to admin-
ister oaths or in the form of an
unsworn declaration executed under
penalty of perjury of the laws of the
United States.
(iii) You must review all information
on the form prior to making a decision
about the eligibility of the firm.
(d) When another recipient, in con-
nection with its consideration of the
eligibility of a firm, makes a written
request for certification information
you have obtained about that firm
(e.g., including application materials
or the report of a site visit, if you have
made one to the firm), you must
promptly make the information avail-
able to the other recipient.
(e) When another DOT recipient has
certified a firm, you have discretion to
take any of the following actions:
(1) Certify the firm in reliance on the
certification decision of the other re-
cipient;
289
§ 26.85
(2) Make an independent certification
decision based on documentation pro-
vided by the other recipient, aug-
mented by any additional information
you require the applicant to provide; or
(3) Require the applicant to go
through your application process with-
out regard to the action of the other
recipient.
(f) Subject to the approval of the con-
cerned operating administration as
part of your DBE program, you may
impose a reasonable application fee for
certification. Fee waivers shall be
made in appropriate cases.
(g) You must safeguard from disclo-
sure to unauthorized persons informa-
tion gathered as part of the certifi-
cation process that may reasonably be
regarded as proprietary or other con-
fidential business information, con-
sistent with applicable Federal, state,
and local law. •
(h) Once you have certified a DBE, it
shall remain certified for a period of at
least three years unless and until its
certification has been removed through
the .procedures of §26.87. You may not
require DBEs to reapply for certifi-
cation as a condition of continuing to
participate in the program during this
three-year period, unless the factual
basis on which the certification was
made changes.
(i) If you are a DBE, you must inform
the recipient or UCP in writing of any
change in circumstances affecting your
ability to meet size, disadvantaged sta-
tus, ownership, or control require-
ments of this part or any material
change in the information provided in
your application form.
(1) Changes in management responsi-
bility among members of a limited li-
ability company are covered by this re-
quirement.
(2) You must attach supporting docu-
mentation describing in detail the na-
ture of such changes.
(3) The notice must take the form of
an affidavit sworn to by the applicant
before a person who is authorized by
state law to administer oaths or of an
unsworn declaration executed under
penalty of perjury of the laws of the
United States. You must provide the
written notification within 30 days of
the occurrence of the change. If you
fail to make timely notification of
49 CFR Subtitle A (10-1-01 Edition)
such a change, you will be deemed to
have failed to cooperate under
§ 26.109(c).
(j) If you are a DBE, you must pro-
vide to the recipient, every year on the
anniversary of the date of your certifi-
cation, an" affidavit sworn to by the
firm's owners before a person who is
authorized by' state law to administer
oaths or an unsworn declaration exe-
cuted under penalty of perjury of the
laws of the United States. This affi-
davit must affirm that there have been
no changes in the firm's circumstances •
affecting its ability to meet size, dis-
advantaged status, ownership, or con-
trol requirements of this part or any
material changes in the information
provided in its application form, except
for changes about which you have noti-
fied the recipient under paragraph (i)
of this section. The affidavit shall spe-
cifically affirm that your firm con-
tinues to meet SBA business size cri-
teria and the overall gross receipts cap
of this part, documenting this affirma-
tion with supporting documentation of
your firm's size and gross receipts. If
you fail to provide this affidavit in a
timely manner, you will be deemed to
have failed to cooperate under
§26.109(c).
(k) If you are a recipient, you must
make decisions on applications for cer-
tification within 90 days of receiving
from the applicant firm all information
required under this part. You may ex-
tend this time period once, for no more
than an additional 60 days, upon writ-
ten notice to the firm, explaining fully
and specifically the reasons for the ex-
tension. You may establish a different
time frame in your DBE program, upon
a showing that this time frame is not
feasible, and,subject to the approval of
the concerned operating administra-
tion. Your failure to make a decision
by the applicable deadline under this
paragraph is deemed a constructive de-
nial of the application, on the basis of
which the firm may appeal to DOT
under § 26.89.
§ 26.85 What rules govern recipients'
denials of initial requests for cer-
tification?
(a) When you deny a request by a
firm,' which is not currently 'certified
with you, to be certified as a DBE, you
290
Office of the Secretary of Transportation
must provide the firm a written expla-
nation of the reasons for the denial,
specifically referencing the evidence in
the record that supports each reason
for the denial. All documents and other
information on which the denial is
based must be made available to the
applicant, on request.
(b) When a firm is denied certifi-
cation, you ,must establish a time pe-
riod of no more than twelve months
that must elapse before the firm may
reapply to the recipient for certifi-
cation. You may provide, in your DBE
program, subject to approval by the
concerned operating administration, a
shorter waiting period for reapplica-
tion. The time period for reapplication
begins to run on the date the expla-
nation required by paragraph (a) of this
section is received by the firm.
(c) When you make an administra-
tively final denial of certification con-
cerning a firm, the firm may appeal the
denial to the Department under § 26.89.
§ 26.87 What procedures does a recipi-
ent use to remove a DBE's eligi-
bility?
(a) Ineligibility complaints. (1) Any per-
son may file with you a written com-
plaint alleging that a currently -cer-
tified firm is ineligible and specifying
the alleged reasons why the firm is in-
eligible. You are not required to accept
a general allegation that a firm is in-
eligible or an anonymous complaint.
The complaint may include any infor-
mation or arguments supporting the
complainant's assertion that the firm
is ineligible and should not continue to
be certified. Confidentiality of com-
plainants' identities must be protected
as provided in §26.109(b).
(2) You must review your records
concerning the firm, any material pro-
vided by the firm and the complainant,
and other available information. You
may request additional information
from the firm or conduct any other in-
vestigation that you deem necessary.
(3) If you determine, based on this re-
view, that there is reasonable cause to
believe that the firm is ineligible, you
must provide written notice to the firm
that you propose to find the firm ineli-
gible, -setting forth the reasons for the
proposed determination. If you deter-
mine that such reasonable cause does
§ 26.87
not exist, you must notify the com-
plainant and the firm in writing of this
determination and the reasons for it.
All statements of reasons for findings
on the issue of reasonable cause must
specifically reference the evidence in
the record on which each reason is
based.
(b) Recipient -initiated proceedings. If,
based on notification by the firm of a
change in its circumstances or other
information that comes to your atten-
tion, you determine that there is rea-
sonable cause to believe that a cur-
rently certified firm is ineligible, you
must provide written notice to the firm
that you propose to find the firm ineli-
gible, setting forth the reasons for the
proposed determination. The statement
of reasons for the finding of reasonable
cause must specifically reference the
evidence in the record on which each
reason is based.
(c) DOT directive to initiate proceeding.
(1) If the concerned operating adminis-
tration determines that information in
your certification records, or other in-
formation available to the concerned
operating administration, provides rea-
sonable cause to believe that a firm
you certified does not meet the eligi-
bility criteria of this part, the con-
cerned operating administration may
direct you to initiate a proceeding to
remove the firm's certification.
(2) The concerned operating adminis-
tration must provide you and the firm
a notice setting forth the reasons for
the directive, including any relevant
documentation or other information.
(3) You must immediately commence
and prosecute a proceeding to remove
eligibility as provided by paragraph (b)
of this section.
(d) Hearing. When you notify a firm
that there is reasonable cause to re-
move its eligibility, as provided in
paragraph (a), (b5, or (c) of this section,
you must give the firm an opportunity
for an informal hearing, at which the
firm may respond to the reasons for
the proposal to remove its eligibility in
person and provide information and ar-
guments concerning why it should re-
main certified.
(1) In such a proceeding, you bear the
burden of proving, by a preponderance
of the evidence, that the firm does not
291
§26.87
meet the certification standards of this
part.
(2) You must maintain a complete
record of the hearing, by any means ac-
ceptable under state law for the reten-
tion of a verbatim record of an admin-
istrative hearing. If there is an appeal
to DOT under § 26.89, you must provide
a transcript of the hearing to DOT and,
on request, to the firm. You must re-
tain the original record of the hearing.
You may charge the firm only for the
cost of copying the record.
(3) The firm may elect to present in-
formation and arguments in writing,
without going to a hearing. In such a
situation, you bear the same burden of
proving, by a preponderance of the evi-
dence, that the firm does not meet the
certification standards, as you would
during a hearing.
(e) Separation of functions. You must
ensure that the decision in a pro-
ceeding to remove a firm's eligibility is
made by an office and personnel that
did not take part in actions leading to
or seeking to implement the proposal
to remove the firm's eligibility and are
not subject, with respect to the matter,
to direction from the office or per-
sonnel who did take part in these ac-
tions.
(1) Your method of implementing this
requirement must be made part of your
DBE program.
(2) The decisionmaker must be an in-
dividual who is knowledgeable about
• the certification requirements of your
DBE program and this part.
(3) Before a UCP is operational in its
state, a small airport or small transit
authority (i.e., an airport or transit au-
thority serving an area with less than
250,000 population) is required to meet
this requirement only to the extent
feasible.
(f) Grounds for decision. You must not
base a decision to remove eligibility on
a reinterpretation or changed opinion
of information available to the recipi-
ent at the time of its certification of
the firm. You may base such a decision
only on one or more of the following:
(1) Changes in the firm's cir-
cumstances since the certification of
the firm by the recipient that render
the firm unable to meet the eligibility
standards of this part;
49 CFR Subtitle A (10-1-01 Edition)
(2) Information or evidence not avail-
able to you at the time the firm was
certified;
(3) Information that was concealed or
misrepresented by the firm in previous
certification actions by a recipient;
(4) A change in the certification
standards or requirements of the De-
partment since you certified the firm;
or
(5) A documented finding that your
determination to certify the firm was
factually erroneous.
(g) Notice of decision. Following your
decision, you must provide the firm
written notice of the decision and the
reasons for it, including specific ref-
erences to the evidence in the record
that supports each reason for the deci-
sion. The notice must inform the firm
of the consequences of your decision
and of the availability of an appeal to
the Department of Transportation
under §26.89. You must send copies of
the notice to the complainant in an.in-
eligibility complaint or the concerned
operating administration that had di-
rected you to initiate the proceeding.
(h) Status of firm during proceeding. (1)
A firm remains an eligible DBE during
the pendancy of your proceeding to re-
move its eligibility.
(2) The firm does not become ineli-
gible until the issuance of the notice
provided for in paragraph (g) of this
section.
(i) Effects of removal of eligibility.
When you remove a firm's eligibility,
you must take the following action:
(1) When a prime contractor has
made a commitment to using the ineli-
gible firm, or you have made a commit-
ment to using a DBE prime contractor,
but a subcontract or contract has not
been executed before you issue the de-
certification notice provided for in
paragraph (g) of this section, the ineli-
gible firm does not count toward the
contract goal or overall goal. You must
direct the prime contractor to meet
the contract goal with an eligible DBE
firm or demonstrate to you that it has
made a good faith effort to do so.
(2) If a prime contractor has executed
a subcontract with the firm before you
have notified the firm of its ineligi-
bility, the prime 'contractor may con-
tinue to use the firm on the contract
292
Office of the Secretary of Transportation
and may continue to receive credit to-
ward its DBE goal for the firm's work.
In this case, or in a case where you
have let a prime contract to the DBE
that was later ruled ineligible, the por-
tion of the ineligible firm's perform-
ance of the contract remaining after
you issued the notice of its ineligi-
bility shall not count toward your
overall goal, but may count toward the
contract goal.
(3) Exception: If the DBE's ineligi-
bility is caused solely by its having ex-
ceeded the size standard during the
performance of the contract, you may
continue to count its participation on
that contract toward overall and con-
tract goals.
(j) Availability of appeal. When you
make an administratively final re-
moval of a firm's eligibility under this
section, the firm may appeal the re-
moval to the Department under § 26.89.
§ 26.89 What is the process for certifi-
cation appeals to the Department of.
Transportation?
(a)(1) If you are a firm which is de-
nied certification or whose eligibility
is removed by a recipient, you may
make an administrative appeal to the
Department.
(2) If you are a complainant in an in-
eligibility complaint to a recipient (in-
cluding the concerned operating ad-
ministration in the circumstances pro-
vided in §26.87(c)), you may appeal to
the Department if the recipient does
not find reasonable cause to propose re-
moving the firm's eligibility or, fol-
lowing a removal of eligibility pro-
ceeding, determines that the firm is el-
igible.
(3) Send appeals to the following ad-
dress: Department of Transportation,
Office of Civil Rights, 400 7th Street,
SW, Room 5414, Washington, DC 20590.
(b) Pending the Department's deci-
sion in the matter, the recipient's deci-
sion remains in effect. The Department
does not stay the effect of the recipi-
ent's decision while it is considering an
appeal.
(c) If you want to file an appeal, you
must send a letter to the Department
within 90 days of the date of the recipi-
ent's final decision, including informa-
tion and arguments concerning why
the recipient's decision should be re-
§ 26.89
versed. The Department may accept an
appeal filed later than 90 days after the
date of the decision if the Department
determines that there was good cause
for the late filing of the appeal.
(1) If you are an appellant who is a
firm which has been denied certifi-
cation, whose certification has been re-
moved, whose owner is determined not
to be a member of a designated dis-
advantaged group, or concerning whose
owner the presumption of disadvantage
has been rebutted, your letter must
state the name and address of any
other recipient which currently cer-
tifies the firm, which has rejected an
application for certification from the
firm or removed the firm's eligibility
within one year prior to the date of the
appeal, or before which an application
for certification or a removal of eligi-
bility is pending. Failure to provide
this information may be deemed a fail-
ure to cooperate under §26.109(c).
(2) If you are an appellant other than
one described in paragraph (c)(1) of this
section, the Department will request,
and the firm whose certification has
been questioned shall promptly pro-
vide, the information called for in
paragraph (c)(1) of this section. Failure
to provide this information may be
deemed a failure to cooperate under
§ 26.109(c).
(d) When it receives an appeal, the
Department requests a copy of the re-
cipient's complete administrative
record in the matter. If you are the re-
cipient, you must provide the adminis-
trative record, including a hearing
transcript, within 20 days of the De-
partment's request. The Department
may extend this time period on the
basis of a recipient's showing of good
cause. To facilitate the Department's
review of a recipient's decision, you
must ensure that such administrative
records are well organized, indexed,
and paginated. Records that do not
comport with these requirements are
not acceptable and will be returned to
you to be corrected immediately. If an
appeal is brought concerning one re-
cipient's certification decision con-
cerning a firm, and that recipient re-
lied on the decision and/or administra-
tive record of another recipient, this
requirement applies to both recipients
involved.
293
§ 26.91
(e) The Department makes its deci-
sion based solely on the entire adminis-
trative record. The Department does
not make a de novo review of the mat-
ter and does not conduct a hearing.
The Department may supplement the
administrative record by adding rel-
evant information made available by
the DOT Office of Inspector General;
Federal, state, or local law enforce-
ment authorities; officials of a DOT op-
erating administration or other appro-
priate DOT office; a recipient; or a firm
or other private party.
(f) As a recipient, when you provide
supplementary information to the De-
partment, you shall also make this in-
. formation available to the firm and
any third -party complainant involved,
consistent with Federal or applicable
state laws concerning freedom of infor-
mation and privacy. The Department
makes available, on request by the
firm and any third -party complainant
involved, any supplementary informa-
tion it receives from any source.
(1) The Department affirms your de-
cision unless it determines, based on
the entire administrative record, that
your decision is unsupported by sub-
stantial evidence .or inconsistent with
the substantive or procedural provi-
sions of this part concerning certifi-
cation.
(2) If the Department determines,
after reviewing the entire administra-
tive record, that your decision was un-
supported by substantial evidence or
inconsistent with the substantive or
procedural provisions of this part con-
cerning certification, the Department
reverses your decision and directs you
to certify the firm or remove its eligi-
bility, as appropriate. You must take
the action directed by the Depart-
ment's decision immediately upon re-
ceiving written notice of it.
(3) The Department is not required to
reverse your decision if the Depart-
ment determines that a procedural
error did not result in fundamental un-
fairness to the appellant or substan-
tially prejudice the opportunity of the
appellant to present its case.
(4) If it appears that the record is in-
complete or unclear with respect to
matters likely to have a significant
impact on the outcome of the case, the
Department may remand the record to
49 CFR Subtitle A (10-1-01 Edition)
you with instructions seeking clarifica-
tion or augmentation of the record be-
fore making a finding. The Department
may also remand a case to you for fur-
ther proceedings consistent with De-
partment instructions concerning the
proper application of the provisions of
this part.
(5) The Department does not uphold
your decision based on grounds not
specified in your decision.
(6) The Department's decision is
based on the status and circumstances
of the firm as of the date of the deci-
sion being appealed.
(7) The Department provides written
notice of its decision to you, the firm,
and the complainant in an ineligibility
complaint. A copy of the notice is also
sent to any other recipient whose ad-
ministrative record or decision has
been involved in the proceeding (see
paragraph (d) of this section). The no-
tice includes the reasons for the De-
partment's decision, including specific
references to the evidence in the record
that supports each reason for the deci-
sion.
(8) The Department's policy is to
make its decision within 180 days of re-
ceiving the complete administrative
record. If the Department does not
make its decision within this period,
the Department provides written no-
tice to concerned parties, including a
statement of the reason for the delay
and a date by which the appeal decision
will be made.
(g) All decisions under this section
are administratively final, and are not
subject to petitions. for reconsider-
ation.
[64 FR 5126, Feb. 2, 1999, as amended at 65 FR
68951, Nov. 15, 2000]
§ 26.91 What actions do recipients take
following DOT certification appeal
decisions?
(a) If you are the recipient from
whose action an appeal under § 26.89 is
taken, the decision is binding. It is not
binding on other recipients.
(b) If you are a recipient to which a
DOT determination under §26.89 is ap-
plicable, you must take the following
action:
(1) If the Department determines
that you erroneously certified a firm,
you must remove the firm's eligibility
294
Office of the Secretary of Transportation
on receipt of the determination, with-
out further proceedings on your part.
Effective on the date of your receipt of
the Department's determination, the
consequences of a removal of eligibility
set forth in §26.87(i) take effect.
(2) If the Department determines
that you erroneously failed to find rea-
sonable cause to remove the firm's eli-
gibility, you must expeditiously com-
mence a proceeding to determine
whether the firm's eligibility should be
removed, as provided in § 26.87.
(3) If the Department determines
that you erroneously declined to cer-
tify or removed the eligibility of the
firm, you must certify the firm, effec-
tive on the date of your receipt of the
written notice of Department's deter-
mination.
(4) If the Department determines
that you erroneously determined that
the presumption of social and eco-
nomic disadvantage either should or
should not be deemed rebutted, you
must take appropriate corrective ac-
tion as determined by the Department.
(5) If the Department affirms your
determination, no further action is
necessary.
• (c) Where DOT has upheld your de-
nial of certification to or removal of
eligibility from a firm, or directed the
removal of a firm's eligibility, other
recipients with whom the firm is cer-
tified may commence a proceeding to
remove the firm's eligibility under
§26.87. Such recipients must not re-
move the firm's eligibility absent such
a proceeding. Where DOT has reversed
your denial of certification to or re-
moval of eligibility from a firm, other
recipients must take the DOT action
into account in any certification ac-
tion involving the firm. However, other
recipients are not required to certify
the firm based on the DOT decision.
Subpart F—Compliance and
Enforcement
§ 26.101 What compliance procedures
apply to recipients?
(a) If you fail to comply with any re-
quirement of this part, you may be
subject to formal enforcement action
under §26.103 or §26.105 or appropriate
program sanctions by the concerned
operating administration, such as the
§ 26.103
suspension or termination of Federal
funds, or refusal to approve projects,
grants or contracts until deficiencies
are remedied. Program sanctions may
include, in the case of the FHWA pro-
gram, actions provided for under 23
CFR 1.36; in the case of the FAA pro-
gram, actions consistent with 49 U.S.C.
47106(d), 47111(d), and 47122; and in the
case of the FTA program, any actions
permitted under 49 U.S.C. chapter 53 or
applicable FTA program requirements.
(b) As provided in statute, you will
not be subject to compliance actions or
sanctions for failing to carry out any
requirement of this part because you
have been prevented from complying
because a Federal court has issued a
final order in which the court found
that the requirement is unconstitu-
tional.
§ 26.103 What enforcement actions
apply in FHWA and FTA programs?
The provisions of this section apply
to enforcement actions under FHWA
and FTA programs:
(a) Noncompliance complaints. Any
person who believes that a recipient
has failed to comply with its obliga-
tions under this part may file a written
complaint with the concerned oper-
ating administration's Office of Civil
Rights. If you want to file a complaint,
you must do so no later than 180 days
after the date of the alleged violation
or the date on which you learned of a
continuing course of conduct in viola-
tion of this part. In response to your
written request, the Office of Civil
Rights may extend the time for filing
in the interest of justice, specifying in
writing the reason for so doing. The Of-
fice of Civil Rights may protect the
confidentiality of your identity as pro-
vided in § 26.109(b). Complaints under
this part are limited to allegations of
violation of the provisions of this part.
(b) Compliance reviews. The concerned
operating administration may review
the recipient's compliance with this
part at any time, including reviews of
paperwork and on-site reviews, as ap-
propriate. The Office of Civil Rights
may direct the operating administra-
tion to initiate a compliance review
based on complaints received.
295
§ 26.105
(c) Reasonable cause notice. If it ap-
pears, from the investigation of a com-
plaint or the results of a compliance
review, that you, as a recipient, are in
noncompliance with this part, the ap-
propriate DOT , office promptly sends
you, return receipt requested, a writ-
ten notice advising you that there is
reasonable cause to find you 'in non-
compliance. The notice states the rea-
sons for this finding and directs you to
reply within 30 days concerning wheth-
er you wish to begin conciliation.
(d) Conciliation. (1) If you request con-
ciliation, the appropriate DOT office
shall pursue conciliation for at least 30,
but not more than 120, days from the
date of your request. The appropriate
DOT office may extend the conciliation
period for up to 30 days for good cause,
consistent with applicable statutes.
(2) If you and the appropriate DOT of-
fice sign a conciliation agreement,
then the matter is regarded as closed
and you are regarded as being in com-
pliance. The conciliation agreement
sets forth the measures you have taken
or will take to ensure compliance.
While a conciliation agreement is in ef-
fect, you remain eligible for FHWA or.
FTA financial assistance.
(3) The concerned operating adminis-
tration shall monitor your implemen-
tation of the conciliation agreement
and ensure that its terms are complied
with. If you fail to carry out the terms
of a conciliation agreement, you are in
noncompliance.
(4) If you do not request conciliation,
or a conciliation agreement is not
signed within the time provided in
paragraph (d)(1) of this section, then
enforcement proceedings begin.
(e) Enforcement actions. (1) Enforce-
ment actions are taken as provided in
this subpart.
(2) Applicable findings in enforce-
ment proceedings are binding on all
DOT offices.
§ 26.105 What enforcement actions
apply in FAA programs?
(a) Compliance with all requirements
of this part by airport sponsors and
other recipients of FAA financial as-
sistance is enforced through the proce-
dures of Title 49 of the United States
Code, including 49 U.S.C. 47106(d),
49 CFR Subtitle A (10-1-01 Edition)
47111(d), and 47122, and regulations im-
plementing them.
(b) The provisions of §26.103(b) and
this section apply to enforcement ac-
tions in FAA programs.
(c) Any person who knows of a viola-
tion of -this part by a -recipient of FAA
funds may file a complaint under 14
CFR part 16 with the Federal Aviation
Administration Office of Chief Counsel.
§ 26.107 What enforcement actions
apply to firms participating in the
DBE program?
(a) If you are a firm that does not
meet the eligibility criteria of subpart,
D of this part and that attempts to par-
ticipate in a DOT -assisted program as a
DBE on the basis of false, fraudulent,
or deceitful statements or representa-
tions or under circumstances indi-
cating a serious lack of business integ-
rity or honesty, the Department may
initiate suspension or debarment pro-
ceedings against you under 49 CFR part
29.
(b) If you are a firm that, in order to
meet DBE contract goals or other DBE
program requirements, uses or at-
tempts to use, on the basis of false,
fraudulent or deceitful statements or
representations or under circumstances
indicating a serious lack of business in-
tegrity or honesty, another firm that
does not meet the eligibility criteria of
subpart D of this part, the Department
may initiate suspension or debarment
proceedings against you under 49 CFR
part 29.
(c) In a suspension or debarment pro-
ceeding brought under paragraph (a) or
(b) of this section, the concerned oper-
ating administration may consider the
fact that a purported DBE has been
certified by a recipient. Such certifi-
cation does not preclude the Depart-
ment from determining that the pur-
ported DBE, or another firm that has
used or attempted to use it to meet
DBE goals, should be suspended or
debarred.
(d) The Department may take en-
forcement action under 49 CFR Part 31,
Program Fraud and' Civil Remedies,
against any participant in the DBE
program whose conduct is subject to
such action under 49 CFR part 31.
(e) The Department may refer to the
Department of Justice, for prosecution
296
Office of the Secretary of Transportation
under 18 U.S.C. 1001 or other applicable
provisions of law, any person who
makes a false or fraudulent statement
in connection with participation of a
DBE in any DOT -assisted program or
otherwise violates applicable Federal
statutes.
§ 26.109 What are the rules governing
information, confidentiality, co-
operation, and intimidation or re-
taliation?
(a) Availability of records. (1) In re-
sponding to requests for information
concerning any aspect of the DBE pro-
gram, the Department complies with
provisions of the Federal Freedom of
Information and Privacy Acts (5 U.S.C.
552 and 552a). The Department may
make available to the public any infor-
mation concerning the DBE program
release of which is not prohibited by
Federal law.
(2) If you are a recipient, you shall
safeguard from disclosure to unauthor-
ized persons information that may rea-
sonably be considered as confidential
business information, consistent with
Federal, state, and local law.
(b) Confidentiality of information on
Complainants. Notwithstanding the pro-
visions of paragraph (a) of this section,
the identity of complainants shall be
kept confidential, at their election. If
such confidentiality will hinder the in-
vestigation, proceeding or hearing, or
result in a denial of appropriate admin-
istrative due process to other parties,
the complainant must be advised for
the purpose of waiving the privilege.
Complainants are advised that, in some
circumstances, failure to waive the
privilege may result in the closure of
the investigation or dismissal of the
proceeding or hearing. FAA follows the
procedures of 14 CFR part 16 with re-
spect to confidentiality of information
in complaints.
(c) Cooperation. All participants in
the Department's DBE program (in-
cluding, but not limited to, recipients,
DBE firms and applicants for DBE cer-
tification, complainants and appel-
lants, and contractors using DBE firms
to meet contract goals) are required to
cooperate fully and promptly with DOT
and recipient compliance reviews, cer-
tification reviews, investigations, and
other requests for information. Failure
Pt. 26, App. A
to do so shall be a ground for appro-
priate action against the party in-
volved (e.g., with respect to recipients,
a finding of noncompliance; with re-
spect to DBE firms, denial of certifi-
cation or removal of eligibility and/or
suspension and debarment; with re-
spect to a complainant or appellant,
dismissal of the complaint or appeal;
with respect to a contractor which uses
DBE firms to meet goals, findings of
non -responsibility for future contracts
and/or suspension and debarment).
(d) Intimidation and retaliation. If you
are a recipient, contractor, or any
other participant in the program, you
must not intimidate, threaten, coerce,
or discriminate against any individual
or firm for the purpose of interfering
with any right or privilege secured by
this part or because the individual or
firm has made a complaint, testified,
assisted, or participated in any manner
in an investigation, proceeding, or
hearing under this part. If you violate
this prohibition, you are in noncompli-
ance with this part.
APPENDIX A TO PART 26—GUIDANCE
CONCERNING GOOD FAITH EFFORTS
I. When, as a' recipient, you establish a
contract goal on a DOT -assisted contract, a
bidder must, in order to be responsible and/
or responsive, make good faith efforts to
meet the goal. The bidder can meet this re-
quirement in either of two ways. First, the
bidder can meet the goal, documenting com-
mitments for participation by DBE firms
sufficient for this purpose. Second, even if it
doesn't meet the goal, the bidder can docu-
ment adequate good faith efforts. This means
that the bidder must show that it took all
necessary and reasonable steps to achieve a
DBE goal or other requirement of this part
which, by their scope, intensity, and appro-
priateness to the objective, could reasonably
be expected to obtain sufficient DBE partici-
pation, even if they were not fully success-
ful.
II. In any situation in which you have es-
tablished a contract goal, part 26 requires
you to use the good faith efforts mechanism
of this part. As a recipient, it is up to you to
make a fair and reasonable judgment wheth-
er a bidder that did not meet the goal made
adequate good faith efforts. It is important
for you to consider the quality, quantity,
and intensity of the different kinds of efforts
that the bidder has made. The efforts em-
ployed by the bidder should be those that
one could reasonably expect a bidder to take
if the bidder were actively and aggressively
297
Pt. 26, App. A
'trying to obtain DBE participation sufficient
to meet the DBE contract goal. Mere pro
forma efforts are not good faith efforts to
meet the DBE contract requirements. We
emphasize, however, •that your determina-
tion concerning the sufficiency of the firm's
good faith efforts is a judgment call: meeting
quantitative formulas is not required.
III. The Department also strongly cautions
you against requiring that a bidder meet a
contract goal (i.e., obtain a specified amount
of DBE participation) in order to be awarded
a contract, even though the bidder makes an
adequate 'good faith efforts showing. This
rule specifically prohibits you from ignoring
bona fide good faith efforts.
IV. The following is a list of types of ac-
tions which you should consider as part of
the bidder's good faith efforts to obtain DBE
participation. It is not intended to be a man-
datory checklist, nor is it intended to be ex-
clusive or exhaustive. Other factors or types
of efforts may be relevant in appropriate
cases.
A. Soliciting• through all reasonable and
available means (e.g. attendance at pre-bid
meetings, advertising and/or written notices)
the interest of all certified DBEs who have
the capability to perform the work of the
contract. The bidder must solicit this inter-
est within sufficient time to allow the DBEs
to respond to the solicitation. The bidder
must determine with certainty if the DBEs
are interested by taking appropriate steps to
follow up initial solicitations.
B. Selecting portions of the work to be per-
formed by DBEs in order to increase the
likelihood that the DBE goals will be
achieved. This includes, where appropriate,
breaking out contract work items into eco-
nomically feasible units to facilitate DBE
participation, even when the prime con-
tractor might otherwise prefer to perform
these work items with its own forces.
C. Providing interested DBEs with ade-
quate information about the plans, specifica-
tions, and requirements of the contract in a
timely manner to assist them in responding
to a solicitation.
D. (1) Negotiating -in good faith with inter-
ested DBEs. It is the bidder's responsibility
to make a portion of the work available to
DBE subcontractors and suppliers and to se-
lect those portions of the work or material
needs consistent with the available DBE sub-
contractors and suppliers, so as to facilitate
DBE participation. Evidence of such negotia-
tion includes the names, addresses, and tele-
phone numbers of DBEs that were consid-
ered; a description of the information pro-
vided regarding the plans and specifications
for the work selected for subcontracting; and
evidence as to why additional agreements
could not be reached for DBEs to perform the
work.
49 CFR Subtitle A (10-1-01 Edition)
(2) A bidder using good business judgment
would consider a number of factors in negoti-
ating with subcontractors, including DBE
'subcontractors, and would take a firm's
price and capabilities as well as contract
goals into consideration. However, the fact
that there may. be some additional costs in-
volved in finding and using DBEs is not in
itself sufficient reason for a bidder's failure
to meet the contract DBE goal, as long as
such costs are reasonable. Also, the ability
or desire of a prime contractor to perform
the work of a contract with its own organiza-
tion does not relieve the bidder of the re-
sponsibility to make good faith efforts.
Prime contractors are not, however, required
to accept higher quotes from DBEs if the
price difference is excessive or unreasonable.
E. Not rejecting DBEs as being unqualified
without sound reasons based on a thorough
investigation of their .capabilities. The con-
tractor's standing within its industry, mem-
bership in specific groups, organizations, or
associations and political or social affili-
ations (for example union vs. non-union em-
ployee status) are not legitimate causes for
the rejection or non -solicitation of bids in
the contractor's efforts to meet the project
goal.
F. Making efforts to assist interested DBEs
in obtaining bonding, lines of credit, or in-
surance as required by the recipient or con-
tractor.
G. Making efforts to assist interested
DBEs in obtaining necessary equipment, sup-
plies, materials, or related assistance or
services.
H. Effectively using the services of avail-
able minority/women community organiza-
tions; minority/women contractors' groups;
local, state, and Federal minority/women
business assistance offices; and other organi-
zations as allowed -on a case-by-case basis to
provide assistance in the recruitment and
placement of DBEs.
V. In determining whether a bidder has
made good faith efforts, you, may take into
account the performance of other bidders in
meeting the contract. For example, when the
apparent successful bidder fails, to meet the
contract goal, but others meet it, you may
reasonably raise the question of whether,
with additional reasonable efforts, the appar-
ent successful bidder could have met the
goal. If the apparent successful bidder fails
to meet the goal, but meets or exceeds the
average DBE participation obtained by other
bidders, you may view this, in conjunction
with other factors, as "evidence of the appar-
ent successful bidder having made good faith
efforts.
298
Office of the Secretary of Transportation
APPENDIX B TO PART 26—FORMS
[RESERVED]
APPENDIX C TO PART 26—DBE BUSINESS
DEVELOPMENT PROGRAM GUIDELINES
The purpose of this program element is to
further the development of DBEs, including
but not limited to assisting them to move
into non-traditional areas of work and/or
compete in the marketplace outside the DBE
program, via the provision of training and
assistance from the recipient.
(A) Each firm that participates in a recipi-
ent's business development program (BDP)
program is subject .to a program term deter-
mined by the recipient. The term should con-
sist of two stages; a developmental stage and
a transitional stage.
(B) In order for a firm to remain eligible
for program participation, it must continue
to meet all eligibility criteria contained in
part 26.
(C) By no later than 6 months of program
entry, the participant should develop and
submit to the recipient a comprehensive
business plan setting forth the participant's
business targets, objectives and goals. The
participant will not be eligible for program
benefits until such business plan is sub-
mitted and approved by the recipient. The
approved business plan will constitute the
participant's short and long term goals and
the strategy for developmental growth to the
point of economic viability in non-tradi-
tional areas of work and/or work outside the
DBE program.
(D) The business plan should contain at
least the following:
(1) An analysis of market potential, com-
petitive environment and other business
analyses estimating the program partici-
pant's prospects for profitable operation dur-
ing the term of program participation and
after graduation from the program.
(2) An analysis of the firm's strengths and
weaknesses, with particular attention paid
to the means of correcting any financial,
managerial, technical, or labor conditions
which could impede the participant from re-
ceiving contracts other than those in tradi-
tional areas of DBE participation.
(3) Specific targets, objectives, and goals
for the business development of the partici-
pant during the next two years, utilizing the
results of the analysis conducted pursuant to
paragraphs (C) and (D)(1) of this appendix;
(4) Estimates of contract awards from the
DBE program and from other sources which
are needed to meet the objectives and goals
for the years covered by the business plan;
and
(5) Such other information as the recipient
may require.
(E) Each participant should annually re-
view its currently approved business plan
with the recipient and modify the plan as
Pt. 26, App. C
may be appropriate to account for any
changes iri the firm's structure and redefined
needs. The currently approved plan should be
considered the applicable plan for all pro-
gram purposes until the recipient approves
in writing a modified plan. The recipient
should establish an anniversary date for re-
view of the participant's business plan and
contract forecasts.
(F) Each participant should annually fore-
cast in writing its need for contract awards
for the next program' year and the suc-
ceeding program year during the review of
its business plan conducted under paragraph
(E) of this appendix. Such forecast should be
included in the participant's business plan.
The forecast should include:
(1) The aggregate dollar value of contracts
to be sought under the DBE program, reflect-
ing compliance with the business plan;
(2) The aggregate dollar value of contracts
to be sought in areas other than traditional
areas of DBE participation;
(3) The types of contract opportunities
being sought, based on the firm's primary
line of business; and
(4) Such other information as may be re-
quested by the recipient to aid in providing
effective business development assistance to
the participant.
(G) Program participation is divided into
two stages; (1) a developmental stage and (2)
a transitional stage. The developmental
stage is designed to assist participants to
overcome their social and economic dis-
advantage by providing such assistance as
may be necessary and appropriate to enable
them to access relevant markets and
strengthen their financial and managerial
skills. The transitional stage of program par-
ticipation follows the developmental stage
and is designed to assist participants to
overcome, insofar as practical, their social
and economic disadvantage and to prepare
the participant for leaving the program.
(H) The length of service in the program
term should not be a pre-set time frame for
either the developmental or transitional
stages but should be figured on the number
of years considered necessary in normal pro-
gression of achieving the firm's established
goals and objectives. The setting of such
time could be factored on such items as, but
not limited to, the number of contracts, ag-
gregate amount of the contract received,
years in business, growth potential, etc.
(I) Beginning in the first year of the transi-
tional stage of program participation, each
participant should annually submit for in-
clusion in its business plan a transition man-
agement plan outlining specific steps to pro-
mote profitable business operations in areas
other than traditional areas of DBE partici-
pation after graduation from the program.
The transition management plan should be
submitted to the recipient at the same time
other modifications are submitted pursuant
299
Pt. 26, App. D
to the annual review under paragraph (E) of
this section. The plan should set forth the
same information as required under para-
graph (F) of steps the participant will take
to continue its business development after
the expiration of its program term.
(J) When a participant is recognized as suc-
cessfully completing the program by sub-
stantially_achieving the targets, objectives
and goals set forth in its program term, and
has demonstrated the ability to compete in
the marketplace, its further participation
within the program may determined by
the recipient.
(K) In determining whether a concern has
substantially achieved the goals and objec-
tives of its business plan, the following fac-
tors, among others, should be considered by
the recipient:
(1) Profitability;
(2) Sales, including improved ratio of non-
traditional contracts to traditional -type
contracts;
(3) Net worth, financial ratios, working
capital, capitalization, access to credit and
capital;
(4) Ability to obtain bonding;
(5) A positive comparison of the. DBE's
business and financial profile with profiles of
non -DBE businesses in the same area or
similar business category; and
(6) Good management capacity and capa-
bility.
(L) Upon determination by the recipient
that the participant should be graduated
from the developmental' program, the recipi-
ent should notify the participant in writing
of its intent to graduate the firm in a letter
of notification. The letter of notification
should set forth findings, based on the facts,
for every material issue relating to the basis
of the program graduation with specific rea-,
sons for each finding. The letter of notifica-
tion should also provide the participant 45
' days from the date of service of the letter to
submit in writing information that would ex-
plain why the proposed basis of graduation is
not warranted.
(M) Participation of a DBE firm in the pro-
gram may be discontinued by the recipient
prior to expiration of the firm's program
term for good cause due to the failure of the
firm to engage in business practices that will
promote its competitiveness within a reason-
able period of time as evidenced by, among
other indicators, a pattern of inadequate per-
formance or unjustified delinquent .perform-
ance. Also, the recipient can discontinue the
participation of a firm that does not actively
pursue and bid on contracts, and a firm that,
without justification, regularly fails to re-
spond to solicitations in the type of work it
is qualified for and in the geographical areas
where 'it has indicated availability under its
approved business plan. The recipient should
take 'such action if over a 2 -year period a
DBE firm exhibits such a pattern.
49 CFR Subtitle A (10-1-01 Edition)
APPENDIX D. TO PART,26—MENTOR-
PROTEGE PROGRAM GUIDELINES
(A) The purpose of this program element is
to further the development of DBEs, includ-
ing but not limited to assisting them to
move into non-traditional areas of work and/
or compete in the marketplace outside the
DBE program, via the provision of training
and assistance from other firms. To operate
a mentor -protege program, a recipient must
obtain the approval of the concerned oper-
ating administration.
(B)(1) Any mentor -protege relationship
shall be based on a written development
plan, approved by the recipient, which clear-
ly sets forth the objectives of the parties and
'their respective roles, the duration of the ar-
rangement and the services and resources to
be provided by the mentor to the protege.
The formal mentor -protege agreement may
set a fee schedule to cover the direct and in-
direct.cost for such services rendered by the
mentor for specific training and assistance
to the protege through the life of the agree-
ment.. Services provided by the mentor may
be reimbursable under the FTA, FHWA, and
FAA programs.
(2) To be eligible for reimbursement, the
mentor's services provided and associated
costs must be directly attributable and prop-
erly allowable to specific individual con-
tracts. The recipient may establish a line
item for the mentor to quote the portion of
the fee schedule expected to be provided dur-
ing the life of the contract. The amount
claimed shall be verified by the recipient and
paid on an incremental basis representing
the time the protege is working on the con-
tract. The total individual contract figures
accumulated over the life of the agreement
shall not exceed the amount stipulated in
the original mentor/protege agreement.
(C) DBEs involved in a mentor -protege
agreement must be independent business en-
tities which meet the requirements for cer-
.tification as defined in subpart D of this
part. A protege firm must be certified before
it begins participation in a mentor -protege
arrangement. If the recipient chooses to rec-
ognize mentor/protege agreements, it should
establish formal general program guidelines.
These guidelines must be submitted to the
operating administration for approval prior
to the recipient executing an individual
contractor/ subcontractor mentor -protege
agreement. ,
APPENDIX E TO PART 26—INDIVIDUAL
DETERMINATIONS OF SOCIAL AND
ECONOMIC DISADVANTAGE
The following guidance is adapted, with
minor modifications, from SBA regulations
concerning social and economic disadvan-
tage determinations (see 13 CFR 124.103(c)
and 124.104).
300
Office of the Secretary of Transportation
SOCIAL DISADVANTAGE '
I. Socially disadvantaged individuals are
those who have been subjected to racial or
ethnic prejudice or cultural bias within
American society because of their identities
as members of groups and without regard to
their individual qualities. Social disadvan-
tage must stem from circumstances beyond
their control. Evidence of individual social
disadvantage must include the following ele-
ments:
(A) At least one objective distinguishing
feature that has contributed to social dis-
advantage, such as race, ethnic origin, gen-
der, disability, long-term residence in an en-,
vironment isolated from the mainstream of
American society, or other similar causes
not common to individuals who are not so-
cially disadvantaged;
(B) Personal experiences of substantial and
chronic social disadvantage in American so-
ciety, not in other countries; and
(C) Negative impact on entry into or ad-
vancement in the business world because of
the disadvantage. Recipients will consider
any relevant evidence in assessing this ele-
ment. In every case, however, recipients will
consider education, , employment and busi-
ness history, where applicable, to see if the
totality of circumstances shows disadvan-
tage in entering into or advancing in the
business world.
(1) Education. Recipients will consider such
factors as denial of equal access to institu-
tions of higher education and vocational
training, exclusion from social and profes-
sional association with students or teachers,
denial of educational honors rightfully
earned, and social patterns or pressures
which discouraged the individual from pur-
suing a professional or business education.
(2) Employment. Recipients will consider
such factors as unequal treatment in hiring,
promotions and other aspects of professional
advancement, pay and fringe benefits, and
other terms and conditions of employment;
retaliatory or discriminatory behavior by an
employer or labor union; and social patterns
or pressures which have channeled the indi-
vidual into non-professional or non -business
fields.
(3) Business history. The recipient will con-
sider such factors as unequal access to credit
or capital, acquisition of credit or capital
under commercially unfavorable cir-
cumstances, unequal treatment in opportu-
nities for government contracts or other
work, unequal treatment by potential cus-
tomers and business associates, and exclu-
sion from business or professional organiza-
tions.
II. With respect to paragraph I.(A) of this
appendix, the Department notes that people
with disabilities have disproportionately low
incomes and high rates of unemployment.
Many physical and attitudinal barriers re -
Pt. 26, App. E
main to their full participation in education,
employment, and business opportunities
available to the general public. The Ameri-
cans with Disabilities Act (ADA) was passed
in recognition of the discrimination faced by
people with disabilities. It is plausible that
many individuals with disabilities—espe-
cially persons with severe disabilities (e.g.,
significant mobility, vision, or hearing im-
pairments)—may, be socially and economi-
cally disadvantaged.
III. Under the laws concerning social and
economic disadvantage, people with disabil-
ities are not a group presumed to be dis-
advantaged. Nevertheless, recipients should
look carefully at individual showings of dis-
advantage by individuals with disabilities,
making a case-by-case judgment about
whether such an individual meets the cri-
teria of this appendix. As public entities sub-
ject to Title II of the ADA, recipients must
also ensure their DBE programs are acces-
sible to individuals with disabilities. For ex-
ample, physical barriers or the lack of appli-
cation and information materials in acces-
sible formats cannot be permitted to thwart
the access of potential applicants to the cer-
tification process or other services made'
available to DBEs and applicants.
ECONOMIC DISADVANTAGE
(A) General. Economically disadvantaged
individuals are socially disadvantaged indi-
viduals whose ability to compete in the free
enterprise system has been impaired due to
diminished capital and credit opportunities
as compared to others in the same or similar
line of business who are not socially dis-
advantaged.
(B) Submission of narrative and financial in-
formation. .
(1) Each individual claiming economic dis-
advantage must describe the conditions
which are the basis for the claim in a nar-
rative statement, and must submit personal
financial information.
(2) When married, an individual claiming
economic disadvantage also must submit
separate financial information for his or her
spouse, unless the individual and the spouse
are legally separated.
(C) Factors to be considered. In considering
diminished capital and credit opportunities,
recipients will examine factors relating to
the personal financial condition of any indi-
vidual claiming disadvantaged status, in-
cluding personal income for the past two
years (including bonuses and the value of
company stock given in lieu of cash), per-
sonal net worth, and the fair market value of
all assets, whether encumbered or not. Re-
- cipients will also consider the financial con-
dition of the applicant compared to the fi-
nancial profiles of small businesses in the
same primary industry classification, or, if
not available, in similar lines of business,
301
Pt. 27
which are not owned and controlled by so-
cially and economically disadvantaged indi-
viduals in evaluating the individual's access
to credit and capital. The financial profiles
that recipients will compare include total
assets, net sales, pre-tax profit, sales/work-
ing capital ratio, and net worth.
(D) Transfers within two years.
(1) Except as set forth in paragraph (D)(2)
of this appendix, recipients will attribute to
an, individual claiming disadvantaged status
any assets which that individual has trans-
ferred to an immediate family member, or to
a trust, a beneficiary of which is an imme-
diate family member, for less than fair mar-
ket value, within two years prior to a con-
cern's application for participation in the
DBE program, unless the individual claiming
disadvantaged status can demonstrate that
the transfer is to or on behalf of an imme-
diate family member for that individual's
education, medical expenses, or some other
form of essential support.
(2) Recipients will not attribute to an indi-
vidual claiming disadvantaged status any as-
sets transferred by that individual to an im-
mediate family member that are consistent
with the customary recognition of special
occasions, such as birthdays,.. graduations,
anniversaries, and retirements.
(3) In determining an individual's access to
capital and credit, recipients may consider
any assets that the individual transferred
within such two-year period described by
paragraph (D)(1) of this appendix that are
not considered in evaluating the individual's
assets and net worth (e.g., transfers to char-
ities):
PART 27—NONDISCRIMINATION
ON THE BASIS OF DISABILITY IN
PROGRAMS AND ACTIVITIES RE-
CEIVING OR BENEFITTING FROM
FEDERAL FINANCIAL ASSISTANCE
Subpart A—General
Sec.
27.1 Purpose:
27.3 Applicability.
27.5 Definitions.
27.7 Discrimination prohibited.
27.9 Assurance required.
27.11 Remedial action, voluntary action,
and compliance planning.
27.13 Designation of responsible employee
and adoption of grievance procedures.
27:15 Notice.
27.17 Effect of State or local law.
27.19 Compliance with Americans with Dis-
abilities Act requirements and FTA pol-
icy.
49 CFR Subtitle A (10-1-01 Edition)
Subpart B—Program Accessibility Require-
ments in Specific Operating Adminis-
tration Programs: Airports, Railroads,
and Highways
27.71 Airport facilities.
27.72 Boarding assistance for aircraft.
27.75 Federal Highway Administration—
highways.
27.77 Recipients of Essential Air Service
subsidies.
Subpart C—Enforcement
27.121 Compliance information.
27.123 Conduct of investigations.
27.125 Compliance procedure.
27.127 Hearings.
27.129 Decisions and notices. •
AUTHORITY: Sec. 504 of the Rehabilitation
Act of 1973, as amended (29 U.S.C. 794); sec. 16
(a) and (d) of the Federal Transit Act of 1964,
as amended (49 U.S.C. 5310 (a) and (f); sec.
165(b) of the Federal -Aid Highway Act of
1973, as amended (23 U.S.C. 142 nt.).
SOURCE: 44 FR 31468, May 31, 1979, unless
otherwise noted.
EDITORIAL NOTE: Nomenclature changes to
part 27 appear at 61 FR 56424, Nov. 1, 1996.
Subpart A—General
§ 27.1 Purpose.
The purpose of this part is to carry
out the intent of section 504 of the Re-
habilitation Act of 1973 (29 U.S.C. 794)
as amended, to the end that no other-
wise qualified individual with a dis-
ability in the United States shall, sole-
ly by reason of his or her disability, be
excluded from the participation in, be
denied the benefits of, or be subjected
to discrimination under any program
or activity receiving Federal financial
assistance.
§ 27.3 Applicability.
(a) This part applies to each recipient
of Federal financial assistance from
the Department of Transportation and
to each program _or activity that re-_
ceives or benefits from such assistance.
(b) Design, construction, or alter-
ation of buildings or other fixed facili-
ties by public entities subject to part
37 of this title shall be in conformance
with appendix A to part 37 of this title.
All other entities subject to section 504
shall design, construct or alter a build-
ing, or other fixed facilities shall be in
conformance with either appendix A to
302
ITEM TITLE:
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. *) F
For Meeting Of 10/15/02
Adoption of Disadvantaged Business Enterprise Program
SUBMITTED BY: Chris Waarvick, Director of Public Works
Ken Mehin, Transit Manager
Sue Ownby, Purchasing Manager, DBEL
CONTACT PERSON/TELEPHONE: Sue Ownby / 576-6695
SUMMARY EXPLANATION:
Submitted for Council approval is the City of Yakima Disadvantaged Business
Enterprise (DBE) program with documented methodology to establish a 10%
aspirational goal. Once approved, the effective date of this program will be 10/1/02
to 9/30/05.
YVCOG has worked with the city to establish a three-year rolling average goal of 10%
DBE participation for Federal financial assistance the City will expend in DOT -
assisted contracts. The Transit Council Committee has reviewed this program/goal at
their July 23, 2002 meeting and approved it to move onto the next step. The draft
program wad advertised in several different venues with a 45 -day public comment
period that ended 9/23/02. While one person requested some additional information,
there were no other comments received from the public.
Resolution X Ordinance _ Other (Specify) Public Notice, DBE Program, Overall
Goal Submission Developed by YVCOG, 49 CFR Part 26
Contract Mail to (name and address):
Phone:
Funding Source
APPROVED FOR SUBMITTAL: ( - - - - .\-77 . A • City Manager
STAFF RECOMMENDATION: Approve Resolution adopting DBE program and
aspirational goal.
BOARD/COMMISSION RECOMMENDATION: Approve Resolution adopting DBE
program and aspirational goal
COUNCIL ACTION: Resolution adopted. RESOLUTION NO. R-2002-130