1. Colette Holt & Associates Transportation Research Board of the National Academies 90th Annual Meeting Washington, D.C. Transportation Research Board of the National Academies 90th Annual Meeting Washington, D.C. Disadvantaged Business Enterprise Program: Private Sector Perspective on Legal Issues Colette Holt Attorney at Law 24 January 2011

2. Colette Holt & Associates 2 2010 Notice of Proposed Rulemaking Private Sector Perspective  Accountability for Overall Goals  Loss of remedial focus  Failure to seriously think through what would the market look like “but for” discrimination  Politically motivated methodologies to reduce goals  Magical thinking about the effects of race-neutral approaches  Failure to measure results  Failure to provide adequate resources  Unintended consequence: lower goals?  Overall: support

3. Colette Holt & Associates 3 2010 Notice of Proposed Rulemaking Private Sector Perspective, cont.  Goal Submission  Eases administrative burdens on recipients  Reduces stakeholder input  Reduces incentive & opportunity to revise goal setting methodologies  Overall: support  Focus on FTA & FAA recipients with fluctuating funding  Review annual recipients’ reviews of progress towards meeting overall goals

4. Colette Holt & Associates 4 2010 Notice of Proposed Rulemaking Private Sector Perspective, cont.  Improving Program Oversight  Weakest link in the DBE Program  Problems  Lack of on site monitoring  Unauthorized DBE substitutions  Slow or no pay  Commercially useful function determinations  Balkanization of responsibility: “DBE compliance is not the project manager’s job”

5. Colette Holt & Associates 5 2010 Notice of Proposed Rulemaking Private Sector Perspective, cont.  Sham joint ventures  Brokers  DBELO reporting to CEO on paper only  Inadequate staff resources  Inconsistent regional guidance  Wishing will not make it so  Increased training for regional offices  Imposition of penalties for poor Program administration  Criminal prosecutions filling the void  Commercially useful function investigations  indictments  Lack of expertise of prosecutors  confusion of Program standards  Overall: support

6. Colette Holt & Associates 6 2010 Notice of Proposed Rulemaking Private Sector Perspective, cont.  Personal Net Worth Test  Indexing long overdue  Harmonizes Part 26 & Part 23  Retirement accounts are wealth  “Illiquidity” argument is too broad  Total exclusion will benefit the wealthiest & least disadvantaged DBEs  racially disproportionate impact (i.e., helping white women)  Reduce to present value  No cap  Overall: support

7. Colette Holt & Associates 7 2010 Notice of Proposed Rulemaking Private Sector Perspective, cont.  Interstate Certification  Balancing act between administrative ease & Program integrity  Rebuttable presumption reduces paperwork & provides an “out” for non-state UCP  Burden should be an the applicant, per usual approach & stance of seeking a government benefit  “Fast track” timetable may be difficult to follow  Publicize that there is no “recertification”; review eligibility triennially; create USDOT database of denials & decerts  Overall: support

8. Colette Holt & Associates 8 2010 Notice of Proposed Rulemaking Private Sector Perspective, cont.  Fostering Small Business Participation  Critical element, too often honored in the discussion but not the execution; internal agency resistance  Possible approaches  Unbundling  Small business setasides  Waiving or reducing bonding  State law issues?  Federal solution?

9. Colette Holt & Associates 9 2010 Notice of Proposed Rulemaking Private Sector Perspective, cont.  DBE Terminations & Substitutions  Primes must receive prior approval  Critical Program element  Unauthorized substitutions may be the largest contract performance problem  Reports of blatant discrimination  Overall: support  Counting DBE purchases & leases  Current rule prohibits credit for items purchases from the prime  Overall: support keeping present approach

10. Colette Holt & Associates 10 2010 Notice of Proposed Rulemaking Private Sector Perspective, cont.  Certification Issues  NAICS codes  Procedure for code removal  Effect of code removal  Eligibility on the basis of current capacities  No unnecessary barriers reflecting future projections  Certifications don’t lapse or expire  Overall: support  Do require periodic site visits  Prohibit user fees from DBEs

11. Colette Holt & Associates 11 Litigation Update  Kline v. Pocari & Maryland DOT  Pleading stage  New study & statute forthcoming  mootness?  AGC of San Diego v. Caltrans  Expert reports filed  Effect of exclusion of Hispanic & sub-continent Asian males?  Kevcon v. US  Expert reports filed  Dismissed by plaintiff with prejudice

12. Colette Holt & Associates 12 Litigation Update, cont.  Midwest Fence v. Illinois DOT & Illinois Tollway  Pleading stage  Both agencies have draft disparity studies  Controlling case law upheld IDOT’s DBE Program in 2007

13. Colette Holt & Associates 13 Federal Railroad Administration Disparity Study  RFI pending for study  Challenges  Data collection  Non-DBE subcontractor payments  Grantee records  Role of Congressional record for Part 26?  Regulatory structure like Part 26?  Time for completion  Cost  Follow National TRB Guidelines? http://onlinepubs.trb.org/onlinepubs/nchrp/nchrp_rpt_644.pdf

14. Colette Holt & Associates 14 Colette Holt Attorney at Law 1730 North Clark Street Suite 4007 Chicago, IL 60614-5363 312.846.1438 (Office) 773.255.6844 (Cell) colette.holt@mwbelaw.com