1. DBE GOAL SETTING METHODOLOGY The Basics August 2009

2. The Basic Purpose of Goal Setting The “heart” of the DBE program The “heart” of the DBE program Drives program implementation Drives program implementation A proxy for a discrimination free local transportation contracting market A proxy for a discrimination free local transportation contracting market

3. Goal-Setting Resources Always start with the regulations – 49 CFR § 26.45 Always start with the regulations – 49 CFR § 26.45 U.S. DOT Tips for Goal-Setting U.S. DOT Tips for Goal-Setting US DOT Questions and Answers US DOT Questions and Answers www.osdbu.dot.gov www.osdbu.dot.gov FHWA – Division Office and Headquarters FHWA – Division Office and Headquarters

4. Annual DBE Goal Submission Documents the methodology and process used by the recipient to arrive at an overall DBE goal for the year. Documents the methodology and process used by the recipient to arrive at an overall DBE goal for the year. Based on evidence Based on evidence August 1 st deadline August 1 st deadline Should reflect data collected and dollars for entire federal aid program Should reflect data collected and dollars for entire federal aid program –Exceptions: Project goal or sub recipients with independent DBE program/goal

5. The four elements of the Goal- Setting process Step One analysis – relative availability of DBEs (49 CFR 26.45(c)) Step One analysis – relative availability of DBEs (49 CFR 26.45(c)) Step Two analysis – effects of discrimination (49 CFR 26.45(d)) Step Two analysis – effects of discrimination (49 CFR 26.45(d)) Race and Gender-Neutral Projections (49 CFR 26.45(f)(3) Race and Gender-Neutral Projections (49 CFR 26.45(f)(3) Public Participation (49 CFR 26.45(g)) Public Participation (49 CFR 26.45(g))

6. Relative Availability of DBEs 1 of 6 What is that number and how did you come up with it? What is that number and how did you come up with it? The focus is on firms that are ready, willing, and able to compete for the kind of federally assisted contracts you intend to let. The focus is on firms that are ready, willing, and able to compete for the kind of federally assisted contracts you intend to let. Cannot use past participation as the baseline figure Cannot use past participation as the baseline figure Methodology should cover all areas of contracting that include Federal funding Methodology should cover all areas of contracting that include Federal funding No need to round up to whole numbers No need to round up to whole numbers

7. Relative Availability of DBEs 2 of 6 Five approaches listed in the rule Five approaches listed in the rule –DBE Directories and Census Bureau Data –Bidders List –Disparity Study –Goal of Another Recipient –Alternative Method

8. Relative Availability of DBEs 3 of 6 General principles applicable to all approaches General principles applicable to all approaches –Explain yourself and show your work –Describe the data and how it was used to determine RR –Refine the data if necessary –Define your local market area –Weighting (not required, but must make sense) –Not limited to certified DBEs … included potential DBEs –Change in amount of federal dollars expected not relevant unless significant impact on contracts let

9. Relative Availability of DBEs 5 of 6 Disparity Studies Disparity Studies –When using the disparity study of a city as part of the goal setting for a state, must make the connection between that data and the state’s use of it (why is some or all of it appropriate).

10. Relative Availability of DBEs 4 of 6 Bidders List Approach Bidders List Approach –How was it created –Does it capture unsuccessful prime contractors and subcontractors (both DBE and non-DBE) –If not, what steps are taken to improve the data?

11. Relative Availability of DBEs 6 of 6 Alternative Approach Alternative Approach –Must be based on local market conditions –Must be rationally related to relative availability of DBEs in the market –Must explain why approach taken is appropriate

12. Evidence of Adjustment 1 of 4 The objective is to make sure the overall goal is as precise as possible The objective is to make sure the overall goal is as precise as possible Must consider all available evidence Must consider all available evidence Must explain decision to make or not make an adjustment Must explain decision to make or not make an adjustment

13. Evidence of Adjustment 2 of 4 Past participation of DBEs Past participation of DBEs This is what the rules describes as the “current capacity of DBEs to perform work in your DOT- assisted contracting program, as measured by the volume of work DBEs have performed in recent year.” Should have at least five years of current data Should have at least five years of current data Use full years worth of data Use full years worth of data Use the median instead of the mean Use the median instead of the mean

14. Evidence of Adjustments 3 of 4 Disparity Studies not already accounted for in Step One Disparity Studies not already accounted for in Step One –Any kind of study designed to investigate the existence of discrimination in contracting –Recipient must affirmatively state whether there are or are not studies that have been conducted in your local market –Must explain why evidence from studies was or was not used in goal setting

15. Evidence of Adjustments 4 of 4 Evidence from related fields Evidence from related fields –Disparities in financing, bonding, insurance –Employment, self-employment, education, training, union apprenticeship programs –Typically documents the continuing affects of past discrimination –Number of certified DBEs not a separate basis for step two adjustment

16. Race/Gender-Neutral Projections 1 of 2 Exceeding overall goal in the past Exceeding overall goal in the past DBE prime contracts DBE prime contracts DBE sub participation on no-goal contracts (include state funded contracts as measure) DBE sub participation on no-goal contracts (include state funded contracts as measure) DBE subcontracts in excess of contract goal DBE subcontracts in excess of contract goal Past achievements Past achievements Use the median instead of the mean Use the median instead of the mean

17. Race/Gender Neutral Projections 2 of 2 RN Initiatives implemented by Recipients RN Initiatives implemented by Recipients –Do not identify unless truly RN –Quantify achievements if possible –Small Business Programs – new guidance –Listing of initiatives in goal submission does not constitute “approval” by the operating administration

18. Public Participation Consultation Consultation –Face-to-face dialogue –Document input received and response Publication Publication –Beginning and end dates required –Where –Document input received and response

19. Interim Goal or Goal Setting Mechanism Need additional time to collect data or take other steps Need additional time to collect data or take other steps Reflect relative availability of DBE to maximum extent given data Reflect relative availability of DBE to maximum extent given data Avoid imposing undue burden on non- DBEs Avoid imposing undue burden on non- DBEs

20. Proposed Change to 3 year cycle Staggered three year schedule established by operating administrations Staggered three year schedule established by operating administrations Annual review of goals ? Annual review of goals ? Adjustments for new opportunities or changed circumstances? Adjustments for new opportunities or changed circumstances?

21. QUESTIONS?