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From page 9... ... On the supply-side, the program encourages recipients to undertake efforts to increase the number of firms that can be certified to participate in the program and to enhance the ability of DBEs to compete effectively in the highway contracting marketplace. Such "race-neutral" activities include structuring solicitations, quantities, specifications, and delivery schedules to facilitate increased participation by DBEs; assisting DBEs to overcome barriers related to surety bonding and other types of financing; assisting start-up DBE firms to become established; implementing communications programs regarding contracting procedures and specific contract opportunities; implementing supportive services programs to develop business management, record keeping, and accounting skills; helping firms learn to handle increasingly significant projects and a greater diversity of project types; and assisting firms in the adoption of emerging technologies and use of electronic media.33 On the demand-side, the DBE Program requires state DOTs to encourage prime contractors and consultants to subcontract to DBEs by placing percentage participation goals on certain contracts and requiring prime contractors and consultants to make good-faith efforts to meet those goals, and ensuring distribution of the DBE directory to the widest feasible universe of prime contractors.34 Such demand-side activities are described in Part 26 as "race-conscious" efforts.35 C H A P T E R 2 Designing Defensible DBE Programs 27 Highway Trust Fund monies are also allocated to American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the Virgin Islands. Read the entire page →
From page 10... ... 10 State Federal-aid Highway Fund Apportionment (in thousands) FFY 2007 Rank Federal-aid Highway Fund Apportionment (in thousands) Read the entire page →
From page 11... ... This project seeks to provide guidance and models to state DOTs considering what evidence is necessary to meet their constitutional obligations and regulatory mandates. The guidelines for disparity and availability studies, presented below, reflect recent judicial decisions about what is necessary to meet strict constitutional scrutiny and implement best practices for DBE Programs, based upon controlling precedents, sound science, and practical experience. Read the entire page →
From page 12... ... Over 300 disparity studies have been conducted in the 20 years since Croson.41 Studies have varied considerably in content and in quality. At their best, they have been independent, objective, comprehensive assessments conducted in accordance with accepted practices in social science research and have been instrumental in assisting government entities, including state DOTs, to survive constitutional challenges to their M/WBE or DBE Programs. Read the entire page →
From page 13... ... .45 Instead, some commissioned availability studies to assist their programs to become narrowly tailored by providing improved estimates of DBE availability from which to set annual DBE participation goals, as required by 49 CFR 26. To date, this approach has been upheld by the court that has addressed the issue.46 In the remainder of this chapter, we identify best practices regarding if, when, why, and how state DOTs should conduct disparity or availability studies rather than employ one of the other four methods allowed for under 49 CFR 26.45.47 These results will contribute to improved state DOT decision making and more effective implementation of the DBE Program. Read the entire page →
From page 14... ... First, the state DOT's legal counsel must consider the likelihood of litigation against its implementation of the DBE Program.49 Litigation risks can be influenced by many factors, including the following: • The level of consensus in the local contracting community, both DBE and non-DBE, concerning the need for and appropriateness of race-conscious contracting goals;50 • The quality of relationships between the state DOT and the local contracting community, both DBE and non-DBE; • The extent of the race-neutral aspects of the DBE Program and the level of resources devoted to such efforts; • How vigorously the race-conscious aspects of the DBE Program are implemented and enforced; • The reasonableness of the current overall DBE goals; • The reasonableness of the current contract-level DBE goals and the method by which they are determined; • The reasonableness of the agency in granting waivers of DBE goals when legitimate good-faith efforts to achieve the goals proved insufficient; and • Whether there is a race-conscious program for statefunded transportation contracts in addition to the federal DBE Program. The greater the perceived likelihood of a legal challenge to the DBE Program, the more prudent it becomes to consider commissioning a disparity or availability study. Read the entire page →
From page 15... ... has a raceconscious M/WBE Program for state-funded transportation contracts, then a disparity study is strongly recommended because such a program may not be able to rely upon Congressional findings of a compelling interest.56 In such cases, the marginal cost of expanding the scope of such a study to also include a DBE availability or disparity study should be relatively modest. Therefore, it may be sensible for a state DOT to consider adding a DBE study onto the state-funds disparity study. Read the entire page →
From page 16... ... Appendix C is a full discussion of the legal issues and judicial decisions. Review of Existing Studies State DOTs That Have Performed Disparity or Availability Studies For this report, we contacted each state DOT and the District of Columbia and requested its annual DBE goal submissions for FFYs 2006, 2007, and 2008.58 We also asked whether each was currently performing, had recently performed, or had ever performed a disparity or availability study. Read the entire page →
From page 17... ... Wilson Consulting Group, LLC Disparity ongoing FL MGT of America, Inc. Disparity 1999 GA Boston Research Group Disparity 2005 HI NERA Economic Consulting Disparity ongoing ID BBC Research & Consulting Disparity 2007 IL NERA Economic Consulting Availability 2004 LA D.J. Read the entire page →
From page 18... ... A race- and gender-based contracting program must be "narrowly tailored" to any evidence of discrimination in the agency's markets. For state DOTs, this is the crucial task for goal setting under Part 26:72 recipients must utilize raceneutral means to the maximum feasible extent to meet the overall goal73 and project the portion of the goal that it expects to meet through race-neutral measures and race-conscious subcontracting goals.74 The requirement that recipients utilize 18 69For CDOT (ongoing) Read the entire page →
From page 19... ... x indicates the relevant study element was present, an empty cell indicates that the element was not present; (2) in the type column, A indicates an availability study, D indicates a disparity study; (3) Read the entire page →
From page 20... ... Notes: (1) x indicates the relevant study element was present, an empty cell indicates that the element was not present; (2) Read the entire page →
From page 21... ... D n/a n/a n/a n/a Notes: (1) x indicates the relevant study element was present, an empty cell indicates that the element was not present; (2) Read the entire page →
From page 22... ... overall DBE availability estimates and annual goals that are a weighted average of underlying industry-level availability estimates, rather than a simple average. The weights used are the proportion of dollars spent with each industry and allow the overall availability measure to be influenced more heavily by availability in those industries where more contracting dollars are spent, and less heavily by availability in those industries where relatively few contracting dollars are spent. Read the entire page →
From page 23... ... . studies of local subcontracting markets after the removal of affirmative action programs.81 In disparity studies, econometric studies of minority and female business formation rates address the first type of barrier, and econometric studies of minority and female business owner earnings address the second type of barrier. Read the entire page →
From page 24... ... In either case a vicious circle is in operation keeping Negro business down.86 Evidence of this type of discrimination has proven repeatedly persuasive to courts in upholding race-conscious contracting programs. In determining that the DBE Program met strict scrutiny, the Tenth Circuit wrote: The government's evidence is particularly striking in the area of the race-based denial of access to capital, without which the formation of minority subcontracting enterprises is stymied. Read the entire page →
From page 25... ... State DOTs using prequalified contractor lists to set DBE goals were Indiana, Kentucky, Michigan, Ohio, Pennsylvania, Tennessee, Virginia, and West Virginia.97 By comparison to the use of bidders lists and alternates such as prequalified contractor lists, the two remaining goalsetting options were employed with much less frequency. Other than Maine DOT in FFYs 2007 and 2008, no state DOT has used the goals of other DOT recipients to set its own goals, and only five states have employed the DBE directory and Census Bureau data approach. Read the entire page →
From page 26... ... 26 Table 4. Goal-setting methods employed by state DOTs, FFYs 2006–2008. Read the entire page →
From page 27... ... (1) (used DBE directories and Census Bureau data) Read the entire page →
From page 28... ... 8% 76% 10% 6% DBE Directories & Census Data Bidders List or Similar Disparity or Availability Study Other Methods Source: Table 15 8% 76% 12% 4% DBE Directories & Census Data Bidders List or Similar Disparity or Availability Study Other Methods Source: Table 15 6.1% 71% 16% 6.1% DBE Directories & Census Data Bidders List or Similar Disparity or Availability Study Other Methods Source: Table 15 Read the entire page →

From page 9...

... On the supply-side, the program encourages recipients to undertake efforts to increase the number of firms that can be certified to participate in the program and to enhance the ability of DBEs to compete effectively in the highway contracting marketplace. Such "race-neutral" activities include structuring solicitations, quantities, specifications, and delivery schedules to facilitate increased participation by DBEs; assisting DBEs to overcome barriers related to surety bonding and other types of financing; assisting start-up DBE firms to become established; implementing communications programs regarding contracting procedures and specific contract opportunities; implementing supportive services programs to develop business management, record keeping, and accounting skills; helping firms learn to handle increasingly significant projects and a greater diversity of project types; and assisting firms in the adoption of emerging technologies and use of electronic media.33 On the demand-side, the DBE Program requires state DOTs to encourage prime contractors and consultants to subcontract to DBEs by placing percentage participation goals on certain contracts and requiring prime contractors and consultants to make good-faith efforts to meet those goals, and ensuring distribution of the DBE directory to the widest feasible universe of prime contractors.34 Such demand-side activities are described in Part 26 as "race-conscious" efforts.35 C H A P T E R 2 Designing Defensible DBE Programs 27 Highway Trust Fund monies are also allocated to American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the Virgin Islands.