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6 programs for highways, highway safety, and transit for the Contractors slow in providing close-out documentation, 6-year period (19982003) and it provided technical correc- Contractors losing interest in completing punchlist items, tions to the original law ("TEA-21 . . ." 2001). The reautho- Overpayment recovery being more difficult, and rization required that the General Accounting Office (GAO) Difficulty for prime contractors to get subcontractors conduct a review of the program throughout the United back for repair or cleanup. States (Disadvantaged Business Enterprises . . . 2001). GAO conducted a survey in October 2000, distributing copies to Of the states with a zero-retainage policy in 2001, only 7 52 transportation agencies (50 STAs, Puerto Rico, and the were zero retainage before the revision of the DBE regula- District of Columbia) and the 36 largest transit authorities. tion, and 12 had changed their regulations to comply. The following selected results, based on the 1999 regulation requirements, are significant to the scope of this study: OTHER DISADVANTAGED BUSINESS Approximately three-fourths of the states and transit ENTERPRISE REGULATION COMMENTARY authorities reported that the 1999 regulations have A wide variety of publications have commented on the changes made it more difficult to administer the DBE program. proposed in the 1999 regulation and how it would affect Half indicated that the 1999 regulations made it more implementation of the program. A good summary of contract difficult for DBEs to apply to the program. issues is represented by Parvin's "Top Ten Issues on Certifica- The GAO could not calculate the total number of certi- tion for DBE Contractors" (1999) and provided here. fied DBEs nationwide because of duplication in state and transit authority directories. 1. The USDOT has given the states broad discretion in estab- Using anecdotal information, a number of factors or lishing their DBE programs, including the opportunity to barriers were identified that may limit DBE ability to request a "waiver" of the regulations on goal setting, good participate, such as inadequate working capital and lim- faith efforts, and counting. In essence, state DOTs could fashion their own program, with the help of the contracting ited access to bonding. industry. Quotas and set-asides are specifically excluded. The report recommended that the U.S.DOT (1) enhance The DBE goal of 10 percent is an aspirational goal. It does the collection of data so that more and better informa- not require a state DOT or a contractor to have 10 percent DBE participation or any other percentage. tion will be available to evaluate the impact of the DBE 2. Guidance and interpretations of the regulations are binding program and (2) help states and transit authorities set only if over the signature of the Secretary of Transportation DBE participation goals that reflect the availability of and only if there is included a statement that the USDOT ready, willing, and able DBEs in the relevant market. General Counsel has reviewed the document and approved it as consistent with the language and intent of 49 CFR Part 26. 3. Section 26.29 establishes a prompt payment provision that Some specific results from the 2000 GAO survey identi- could create problems both in subcontractor relations and fied where STA implementation had progressed at that time cash flow. Under that section, state DOTs must establish a prime contract clause which requires prime contractors to on several key issues. pay subcontractors within a specified number of days from receipt of payment from the DOT. The clause must also Ninety-two percent had not submitted a unified certifi- require prime contractors to pay retainage within a specified cation plan to the U.S.DOT. number of days after the subcontractor's work is satisfacto- rily completed. There is no requirement that the DOTs must Only 27% of the respondents had a bidders list fully release retainage for that work. The DOT may also require developed and implemented. that subcontracts include an Alternative Dispute Resolution Fifty-seven percent did not have a computer database provision for disputes or may provide a clause in the prime to track and monitor information identified in the new contract that prime contractors will not be paid for work done by subcontractors unless and until the prime contractor regulation. insures that subcontractors are promptly paid. DBE credit may not be given until the prime contractor pays the DBE. 4. State DOTs will be required to address overconcentration AASHTO SURVEY of DBEs in specialty subcontracting fields. The measures may include the use of incentives, technical assistance, In November 2001, the AASHTO Subcommittee on Con- business development programs, and mentor/protg pro- grams. Business development and mentor/protg programs struction, Contract Administration Task Force, conducted a could become prevalent. survey on the effect of 1999 DBE regulations on retainage 5. State DOTs must set DBE goals based on demonstrable evi- ("AASHTO . . ." 2001). The 1999 regulations require that dence of the availability of "ready, willing, and able" DBE firms. Legitimate disparity studies can be used as one means prime contractors pay subcontractors in full on completion of of making such a determination. the subcontractor's work. Therefore, holding retainage until the 6. State DOTs must meet the maximum feasible portion of project is accepted by the state was possible but not realistic. their overall goal by using race-neutral means (without using When these data were summarized, 19 of 47 respondents DBE Contract goals). This is a new, important requirement. The balance of the goal can be done by DBE Contract goals. indicated that they were using a zero-retainage practice. 7. Good Faith Efforts must be taken seriously by State DOTs. Problems noted in the survey with respect to zero retainage In other words, they can no longer state that contracts will included be awarded on the basis of Good Faith Efforts and then