1. FHWA Office of Civil Rights
DBE Program Administration and Oversight on Projects with Alternative Contracting Methods Handbook

2. Presentation Team
Martha Kenley FHWA DBE Program Team Leader Christine Thorkildsen FHWA Civil Rights Program Manager New York Division

3. Background Many questions from the field
How to apply DBE regs in ACM??
HCR/HCC was addressing one by one
We needed a Handbook
Compilation of best practices/lessons learned
Not guidance or requirements – Just some good ideas!
To address the many questions HCR was receiving on how to administer and provide oversight of the DBE program in alternative contacting and procurement, FHWA created a handbook entitled: “Disadvantaged Business Enterprise (DBE) Program Administration and Oversight on Projects with Alternative Contracting and Procurement Methods”. The handbook was written to assist FHWA Division Offices in their oversight of the DBE program when sponsor agencies deliver projects through the design-build, or other alternative project delivery and procurement methods. The handbook is not guidance, but a compilation of best practices and lessons learned from staff who have implemented the DBE program in the alternative contracting and procurement context.

4. Background
Workgroup: Offices of Civil Rights, Chief Counsel, Resource Center, Divisions, Infrastructure
ACM DBE oversight from pre-award to completion
Best practices/Lessons learned
19 projects – large and small
RC and RN DBE programs
Interviews/review of contract documents
Fully reviewed by appropriate program areas, Chief Counsel and USDOT
Workgroup: FHWA Offices of Civil Rights, Chief Counsel, Resource Center, Divisions, Infrastructure
Chose 19 alternative contracting projects nationwide that were complete or near completion and had DBE participation
Interviewed Project Staff to learn best practices and lessons learned in administering DBE in the alternative contracting context
Handbook is tool for practitioners; not guidance

5. Status of the Handbook Content is complete
Needs “cosmetic improvements”
Issued summer 2018
Will provide:
learning development opportunities
Practical application (peer exchanges/technical assistance)

6. Outline of Handbook
Background, summary tables and links to key terms and the projects
Pre-Award
Goal setting
Contract documents
Outreach/Education
Post Award
Monitoring
CUF/GFE/Prompt Pay/Reporting
Outreach
Final Acceptance
Documentation

7. What is Alternative Contracting??
How the project is procured, designed and built
Anything other than design-bid-build
New contracting methods as we speak
No matter what method, keep with the intention of DBE regs
Refers to how the construction project is procured, designed and built.
On the most basic level, alternative contracting is another way of referring to highway construction contracting that is anything other than awarding a construction contract to a prime contractor based on low bid

8. Design-Build One entity Single contract Design & construction
Best value
Award at minimal design
Design Build: Construction contract procurement where the owner/recipient/agency considers bids from design build teams and may award the contract based on the best value. The team both designs and builds the project

9. Construction Manager General Contractor (CM/GC)
Also known as CMAR (Construction Manager at risk)
Construction Manager hired at design phase
Constructability input
Helps owner design a constructible project
~75% design owner & CM negotiate GMP
If acceptable CM →General Contractor
Similar procurement and contracting as D-B-B
allows an owner to engage a construction manager during the design process to provide constructability input
During the design phase, the construction manager provides input regarding scheduling, pricing, phasing and other input that helps the owner design a more constructible project.
At approximately an average of 60% to 90% design completion, the owner and the construction manager negotiate a 'guaranteed maximum price' for the construction of the project based on the defined scope and schedule.
If this price is acceptable to both parties, they execute a contract for construction services, and the construction manager becomes the general contractor.
The CM/GC delivery method is also called the Construction Manager at-Risk (CMR) method by state law in some states.

10. Private Public Partnerships (P3)
Contractual agreement between public and private entity
Brings in creativity, efficiency and capital
Transfer responsibility to the Developer or Concessionaire to: design/build/finance/operate/maintain
P3 could be a 40 yr+ project
Non-traditional partners

11. Alternative Financing
Transportation Investment Generating Economic Recovery (TIGER)
Transportation Infrastructure Finance and Innovation Act (TIFIA)
Private Public Partnerships (PPP)
Innovative Project Delivery
Project implementation that encompasses design, build, finance, operate, and maintain
Typically involves multiple stakeholders beyond owner agency and the design-builder or prime contractor
Can be public private partnerships

12. Discussion on Transfer of Risk
Benefit of ACM for recipient is transfer of risk for design/construction
This is not true for civil rights compliance responsibilities
Recipient bears responsibility to ensure DBE program receives effective oversight

13. DBE and Alternative Contracting
Alternative Contracting challenges:
Ensuring intent of regulatory requirements are met
DBEs have meaningful opportunities to compete
New scenarios at time of award
New partners
Regulations and guidance structured around Design Bid Build (DBB) model
Methods of project delivery have DBB model
DBE in some Alternative Contracting poses challenges to
Ensuring regulatory requirements are met
DBEs have meaningful opportunities to compete

14. DBE Goal Setting Involve Consider Civil rights practitioners
All stakeholders
Consider
Subcontracting opportunities
Market area
Available pool of DBEs
Public input
(same considerations as setting any goal!)
Involving civil rights practitioners early and throughout the life of the project is key
Goal on Design and another for construction assures opportunities in design will be considered up front. If one goal proposer might miss design opportunities and wait for construction due to startup “busyness”
Goal Setting
Involve civil rights practitioners
Consider separate goals for design and construction
Is goal based on sound principles: probable work items, market area, available pool of DBEs?
Does the goal take into account all reasonably foreseeable subcontracting opportunities?

15. Goal Setting Design-Build
Must consider the opportunities in design as well as construction
Consider separate goals – one for design and one for build
If D/B is not focusing on the DBE program at start of project, DBE opportunities in design could be missed

16. Considerations in Goal Setting

17. Goal Setting CM/GC Similar to D-B-B
Goal could be set on design work if design has its own contract
Separate goal for construction
Selected proposer must submit utilization plan which meets DBE goal or show GFE why they could not

18. Goal Setting P3 D-B-F-O-M
Projects with federal funding in operations and maintenance can set goals on that portion of the contract
Most p3 do not
Goal is set on D-B

19. Goal Setting TIGER Project
Recipients of TIGER are sometimes “non-traditional”
If awarded to STA – DBE goal
If awarded to sub-recipient thru STA – DBE goal
If awarded to directly to non-STA – NO DBE program requirements

20. Goal Setting Lessons Learned
Understand where the funding is coming from and how it is being used
Document your process to determine the goal
Use credible data
Beware of political pressure
One goal or two in D-B
Include input from stakeholders
Document goal setting process
Base goal setting on data not political or stakeholder pressure
Consider setting goals on professional services portion or may only get DBE participation in construction—lost opportunities
Input from stakeholders

21. Pre-Award Documents RFQ – Request for Qualifications
ITP – Instructions to Proposers
RFP - Request for Proposals
PMP – Project Management Plan
DBEPP – DBE Program Plan

22. RFQ Filters to a “short list” of qualified proposers
Possible factors of evaluation:
Past DBE program compliance
May notify bidders
Project will include DBE goal
DBE Plan will be required
Link to DBE directory to begin utilization plan
Recipients use responses to RFQs to “short list” proposals by evaluating factors such as innovation, previous work history, bonding capacity, and DBE program compliance. Typically RFQs:
Notify bidders to submit their professional qualifications
May notify bidders that DBE will apply; plan will be required with proposal; include link to DBE directory
As the project sponsor and/or Civil Rights practitioner you should advocate for language in the RFQ that supports future success of DBE program.

23. RFP
Project requirements and details – Including all DBE program requirements
Include civil rights staff in review of RFP
Most successful projects
Details of DBE requirements
Requires DBEPP at time of proposal
DBE portion of proposal is given score
Outreach events by proposer
Encourage local businesses and state’s MWBE programs

24. ITP Projects that gave DBE portion a score
Proposer had to certify they were aware of the goal and will comply with DBE requirements
Commitment at time of award or must show GFE
Separate goals (D/B) – DBE Plan for design and 50% plan for build (or GFE)

25. DBEPP Contractor’s Plan Required as part of proposals or after award
Maintaining DBEPP continues thru life of project – details in RFP
Successful projects
Anticipated commitments →actual commitment
Requires types of work and dollar value expected
D-B has CR team
Monthly progress meetings
If anticipated is not achieved GFE finds another opportunite

26. PMP Project Sponsor’s plan Successful projects
Details of how oversight will be achieved
Data collection system
Sanctions

27. Pre-Award Findings
Not involving Civil Rights Specialists early in the contract
DBE oversight and compliance is complicated – details in contract language is essential
Projects move fast and accumulate enormous amount of data – be ready!
Watchout for tiering of subcontracting

28. Outreach Early involvement Partnership Visible leadership
Transparent goal setting
Targeted outreach to meet objective
Leverage resources - DBESS

29. Post Award Monitoring Commercially Useful Function reviews
Prompt Payment
Good Faith Efforts
Enforcement

30. Monitoring Goal Achievement
Continual running tally
Well documented process of oversight
Utilization of sanctions when warranted
Regular meetings
Elevate importance of compliance in beginning of project

31. Innovative Program Compliance
If additional resources are necessary by the owner
Paid for by the contractor/developer
Elevates the importance of accurate, timely, complete information/documentation/data by the contractor/developer

32. CUF Know when DBEs are working Request “Look Ahead Schedule” in RFP
CUF final approval from public agency
Don’t make overly burdensome
May need additional resources
PE firms – same process
Use skype, internet, other resources

33. Prompt Payment Multiple layers of subcontract tiering
Make sure electronic data system can monitor tiering
Contract structure may not pay prime regularly
Address in RFP when payments will be due to lower tiers, even when prime is not paid

34. Embracing Technology Electronic data collections systems
RFP must require
Training
Overreliance without accessing
Specify reasonable access – prime/sponsor/subcontractors

35. Enforcement Documentation Lack of prompt follow-up
Timely, solid, accurate and complete monitoring→
Effective enforcement
Motivation to fulfill DBE obligations

36. Final Acceptance & Beyond
Federal funds in operations and maintenance?
Maintain a list of lessons learned
Applying risk based approach on future projects
Serves to justify rationale for making implementing new requirements
Shared responsibility and teamwork results in an overall better project

37. DBE in Final Acceptance
Keep running tally by comparing ongoing payments to commitments
Use software if possible; require prime to use owner’s online reporting tool
Create a documented process for certifying project-level compliance

38. DBE Challenges in ACM Goal setting
Identifying DBEs with minimal design plans
Monitoring commitments
Determining GFE
Providing effective oversight
Working with non-traditional partners
In some alternative contracting methods, it can be challenging to:
Identify specific DBEs prior to award when design is 30% complete
Determine when Good Faith Effort determinations should be made
Provide effective oversight and ensure compliance with multiple and non-traditional partners

39. DBE in Alternative Contracting
Questions?