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29 CHAPTER FIVE CONCLUSIONS The survey questionnaire requested comments on what Lack of resources (financial, bonding, insurances, the state transportation agencies (STAs) believed were the etc.) (12); improvements that have resulted from the revised regulation. Stigma of "DBE" designation or perception of special The following list indicates the Final Rule improvements, with treatment (5); the number of responses noted in parentheses. Responses that Larger contract sizes (5); had similar content and subject were grouped together. Prime contractors unwilling to work with new DBE firms (4); Prompt payment provisions (6), FHWA/U.S.DOT (3); Goals responsive to market (5), Lack of incentives to prime contractors to exceed Unified Certification Program (UCP) (4), goals (1); Personal net worth (2), Personal net worth reporting (1); Race-neutral participation (2), Not all DBEs are ready, willing, and able (1); Better interpretation guidance--good faith effort (2), and Trucking rules (1); and Reduced number of fraudulent firms owing to compli- DBE perception that certification is a work guarantee (1). ance audits (1). The primary barrier described by the STAs is the contin- STAs were also asked to describe the methods, other than uing difficulty with the lack of resources available to DBE goal achievement, used to determine program effectiveness. firms. Larger contract sizes and related ideas that limit com- Similar comments have been grouped together. The number petitive opportunities was also a key trend described in the in parentheses indicates the number of similar responses. responses. Measures of improved Disadvantaged Business Enter- The questionnaire contained a request for information on prise (DBE) firm competitiveness (27). what activities the STAs were involved in that included new DBE firm growth and/or graduating from DBE pro- methods or techniques to improve operational effectiveness. gram (10); Responses that had similar content and subject were grouped Number of DBE firms with contracts (8); together. Not all STAs provided a response. Number of ready, willing, and able firms competing for contracts (4); Implement or continue implementation of Champ, a Firms bidding as prime contractors (3); DBEs obtaining contracts outside of STA contracts software system for managing contract compliance (2), (2); and Improve business development programs (2), Ability to stay in business (1). Develop auditing or monitoring for design contracts (2), Feedback from companies using surveys, focus groups, Improve supportive services offerings (2), town meetings, etc.) (9). Improve our good faith effort analysis (2), Number of new DBE firm start-ups (3). Targeted assistance programs (1), Race-neutral participation (3). Provide DBE training for on-line bidding (1), Conduct more focus groups to learn about program The diverse number of responses suggests that STAs tend needs (1), to view DBE program effectiveness somewhat differently. Learn UCP best practices (1), and However, the primary focus of the STAs responding to the Develop next phase of mentorprotg program (1). questionnaire was on success measures related to DBE firms rather than on internal or administrative goals. The new methods and techniques identified here are predom- inately improvements in existing programs and activities. STAs were requested to provide their thoughts and exper- tise on what the greatest barriers were or remain for DBE uti- Respondents were asked to provide their thoughts and lization. The number of responses is noted in parentheses. expertise on what was needed to improve the DBE program Responses that had similar content and subject were grouped and use of DBE firms. The following list notes the number of together. responses in parentheses. Responses that had similar content

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30 and subject were grouped together. There was significant noted that they were experiencing an increase in bun- diversity in the responses to this question. dled contracts. In addition, more STAs are using design build delivery programs on larger projects. The impact Return to two goal program: women and minorities (4). of designbuild was unknown at this time. Increase support services funding commensurate with A few STAs have been successful at establishing and the size of the state's DBE program and number of par- accomplishing their goals in a race-neutral program. ticipants (3). Split goals were predominate among the STA data in Establish local DBE/small business bonding and insur- this study. ance consortia (1). Good faith efforts are approved nearly 80% of the time. Create legal consortiums for subcontract oversight and This includes those who achieve or exceed the contract resolution (1). goal, as well as those accepted after an evaluation of the Increase education of non-DBE contractors (1). contractor's efforts to achieve the goal. Raise personal net worth cap (1). Overconcentration is predominately a complaint-driven Increase Associated General Contractors of America process. Not all STAs have a method to evaluate or rate participation (1). overconcentration. No summary can be given on over- Measure success by growth and net worth of DBEs concentration correction strategies because little over- rather than dollars contracted (1). concentration has been reported. Provide more standardization and guidance nation- Waivers on program elements can be submitted to the ally (1). U.S.DOT. Nearly as many STAs indicated that they had Provide better access to prime contractors; break down been instructed not to submit waivers as those who had. barriers (1). It was unclear, from the questionnaire, if any had been When requested, have the U.S.DOT issue guidance (1). approved. Include DBE utilization in bidding software (1). Recipients must collect data about bidders on their con- Continue networking with Small Business Administra- tracts and subcontracts for later use in calculating over- tion (1). all goals. Data collection was not uniform and not all Consider regular dealer and trucking credit to conform record keeping is being implemented in accordance to industry practice (1). with the regulation. Previously, a paper-based record system, the automation and capture of data will need The DBE program's evolution resulting in the recent regu- development. lation has created many new requirements for DBE contrac- tors, non-DBE contractors, and STA administrators. The data from this study suggest that STAs have, in most instances, This study is one of the few published reports on the DBE adapted their programs or are in the process of addressing the program. It is a significant contract management area that new requirements. Recalling the major points of change in the needs further data collection and analysis to identify best program, the study data revealed the following: practices or effective solutions. Through technology transfer activities these best practices and solutions can be dissemi- Set-aside programs are not being used. nated to STAs. In particular, the following topics are sug- State goals are no longer 10% across the board, but range gested for future research: from 5% to 17%. Goal accomplishment was mixed for 2002, with equal proportions exceeding their goals and Program effectiveness and performance measures not meeting their goals. Methods for improving goal setting accuracy--Some Certified DBEs and ready, willing, and able contractors STAs are successfully achieving their goals, whereas willing to work in construction are not the same. States others are not, based on their reported goals and need to track the bidders on their contracts to determine achievements. The methods for establishing goals ready, willing, and able DBEs. could be studied to better assist DBE program Bonding assistance and financial assistance for DBEs administrators. remain predominately U.S.DOT Office of Small and STA program performance measures for compar- Disadvantaged Business Utilization programs. One STA isons--Achieving goals is the primary performance provided documentation attesting to a local assistance measure for STAs. However, many STAs have been program. successful in other aspects of their programs that sup- Mentorprotg programs have been developed in one- port goal achievement. A study to benchmark other third of the surveyed STAs, with some variation in their program elements and performance indicators could structure and format. Their primary focus is to aid in aid DBE program administrators. small business development. Their use is nonmandatory. Technical/administrative issues A recommended race-neutral strategy was to divide Refined good faith effort analysis procedures--There contracts into smaller pieces; however, 50% of the STAs is wide latitude in determination of good faith efforts.

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31 A study that would model the various approaches to for determining overconcentration might be devel- good faith effort analysis would aid all STA programs oped to aid program managers in identifying where that have good faith effort requirements. and when it occurs. Designbuild and bundled contract impact analy- Resource issues sis--There is inadequate scientific data measuring the A significant limiting factor for DBE participation is impact of new contracting approaches such as design the lack of resources such as bonding and insurance. build and bundled contracts. The anecdotal data sug- The issues to be researched might include appropriate gest that there is an impact on DBE contracting oppor- models to provide assistance and to evaluate if the tunities. This needs to be balanced with the impact on assistance creates an imbalance in the competitive STA management requirements. bid process. Best practices DBE company growth models--Growth models Generally, the overall lack of published investigations on would aid DBE firms in understanding the pattern these and related issues has limited the amount of informa- of growth for a construction firm in the transporta- tion that is disseminated about DBE administrative activities. tion construction industry. Suggestions for all aspects Innovative practices that could have a significant impact on of business growth could assist in business decision all DBE programs may be discounted if they do not have making. independent analysis or evaluation data. Overall, the DBE Overconcentration definition and analysis model-- programs reviewed in this study had some common points or Overconcentration and the analysis for overconcentra- objectives, but there were wide variations in interpretation, tion vary among the STAs. A more consistent method implementation, and tracking.