Oversight/Monitoring and Counting DBE use on Federal Aid Highway Projects Ken Woodruff, Civil Rights Program Manager, FHWA-Indiana

 Minority or Woman owned business  Minority/Woman owns 51% or greater  Owner must have technical expertise  Must control work and workforce  Must own necessary equipment  Must pay employees  Must negotiate and pay for materials

 Addresses Demonstrated Discrimination  Use of Statewide and Contract Goals  Race Conscious  Use of DBE without Goals or as Primes  Race Neutral

 CUF equates to how a company would act without the DBE program  Operates within Standard Industry Practices

 49 CFR = Counting DBE Credit  To get Credit, DBE must perform a CUF  Improper Counting Enables Fraud ▪ Fraud ≠ Good  Perpetuates Discrimination ▪ Discrimination ≠ Good  Compromise Program Goals (address discrimination) ▪ Program Goals = Good ▪ 1 tool of many

 DBE role is limited to that of an extra participant in a transaction  Funds passed through for appearance of participation ▪ Paid from top, never on jobsite ▪ Contractor shows up and work performed by Prime Contractor ▪ Example: DBE on construction contract (3 piece suit & dress shoes) (no other employees)  DBE Prime does not perform or exercise responsibility for at least required percentage of the total cost of its contract with its own work force  DBE Prime subcontracts greater portion of work than industry practice  DBE Sub does not perform required amount of work for compensation received – with own workforce

 Required to use DBE as noted in pre-bid (up to goal amount) on the Affirmative Action Commitment.  Prime may replace DBEs for good-cause only & with prior SDOT approval  DBE Credit for CUF work performed by DBE

 DBE in control of  The Business  The Workforce  The Work  The Equipment  The Schedule  The Payroll…

 a)the work to be performed by the DBE is outside of the DBE's known experience or capability (certification too);  (b)the DBE provides little or no supervision of the work, the DBE superintendent is not a regular employee of that firm or supervision is performed by personnel associated with the prime contractor, another business or personnel not under the control of the DBE firm;  (c)the DBE work force is not under the DBE firm's control and direction or work is performed by personnel normally employed by the prime contractor or another business;

 (d)any portion of the work designated to be performed by a DBE subcontractor is performed by the prime contractor;  (e) equipment used by the DBE firm belongs to the prime contractor or another contractor with no formal lease agreement or the equipment signs and markings cover another owner‘s Rights Section will determine "substantial portion" on a case by case basis;

 (f)materials or supplies necessary for the DBE firm's performance are delivered to, billed to, or paid by another business;  (g)the DBE firm subcontracts or assigns any portion of work to another firm;  (h)the DBE firm is working without a subcontract agreement approved by the Department, except in the case of trucking;  (i)a DBE trucking business use trucks owned by the prime contractor;

 (j)a DBE prime contractor subcontracts more than 50% of the contract value;  (k) a DBE prime contractor only purchases materials while performing little or no work;  (l) the agreement between the prime contractor and DBE firm artificially inflates the DBE participation or erodes the ownership, control or independence of the firm;

 (m)a DBE firm works for only one prime contractor;  (n)employees work for both the DBE firm and the prime contractor or mentor;  (o)the volume of work is beyond the capacity of the DBE firm;  (p)inquiries by Department or FHWA representatives are answered by the prime contractor or mentor; and  (q)the DBE firm's owner is not aware of the status of the work or the performance of the business.

 Early in the life of the contract, &  Often during life of the contract  Whenever a DBE is on the Job…  Take a close look  Document your observations  Involve INDOT as soon as a problem is detected!

 Know the Standard Industry Practice  Interview adjacent State DOT  Find Similar Work Performed by Non-DBE  Check Payrolls from other Jobs where Prime and DBE worked together.  Lease Agreements  ACT SWIFTLY, and  DOCUMENT EVERYTHING!

 Red Flag Evaluations Completed and in Project Files  If a problem is detected communicate with District EEO and EOD  Provide Red Flag and Narrative of Concerns  Act Promptly  CUF is a Contract Matter and can only be remedied within that contract

 No DBE credit granted for that work  Prime must make GFE and replace DBE  May use DBE firms over contract goal already committed  Otherwise prime must seek and solicit new DBE

 Count ALL DBE use on a contract not only that committed on the Affirmative Action Certification  Under reporting creates higher contract goals  Count work, supplies/materials & brokerage fees

 DBE Manufactured Materials count at 100%  Materials Supplied from non-DBE Manufacturer at 60%

 DBE Trucks Owned by DBE  Count All  DBE Trucks Leased by DBE  Count All  Non-DBE Trucks Leased by DBE  Count up to the equivalent of DBE Trucks (owned/leased)

 DBE Firm X, used to meet a DBE goal, uses 2 of its own trucks on a contract.  Firm X leases 2 trucks from DBE Firm Y for work on the contract.  Firm X also leases 6 trucks from non-DBE Firm Z for the contract.  The DBE would get the following credit: Firm X: 2 DBE Trucks + Firm Y: 2 DBE Trucks 4 DBE Trucks + 4 (out of the 6) additional non-DBE trucks (the number that is equal to but not more than the number of DBE trucks provided by the DBEs).  Total Full credit = 8 DBE Trucks  Allowable Credit = 8 DBE Trucks + Fees/Commission on 2 Non-DBE Trucks – (If desired)  NOTE: Trucks must be of comparable size (tonnage)

 Shall have formal lease/haul agreement submitted to INDOT  For each DBE truck expected to be counted towards DBE participation– regardless of Tier ▪ Primary lease (with Prime) ▪ Identifying the terms and parties ▪ Identifying work to be performed ▪ Rates (comparably appropriate) ▪ Supplemental lease (lower tier) - 49 CFR (d)(6) ▪ DBE has exclusive use of and control over the leased truck(s). ▪ Does not preclude the leased truck(s) from working for others during the term of the lease with the consent of the DBE ▪ As long as the lease gives the DBE absolute priority for use of the leased truck (recall authority)

 CUF is a contract administration concern  Compliance on past performance does not mean current performance is compliant

 USDOT OIG Investigation  Suspension/Debarment  Loss of DBE Status  Prosecution  Fines  Loss of Contracts/Business  Whistleblowers & Qui Tam

 Please go to the US DOT OIG HOTLINE  OIG Fraud Hotline 1200 New Jersey Ave SE West Bldg, 7th Floor Washington, DC Phone: Web: OIG Hotline FormOIG Hotline Form