National Academies Press: OpenBook

Implementing Race-Neutral Measures in State Disadvantaged Business Enterprise Programs (2011)

Chapter: Chapter Three - State Strategies for Implementing Race-Neutral Measures

« Previous: Chapter Two - Summary of Survey Responses
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Suggested Citation:"Chapter Three - State Strategies for Implementing Race-Neutral Measures." National Academies of Sciences, Engineering, and Medicine. 2011. Implementing Race-Neutral Measures in State Disadvantaged Business Enterprise Programs. Washington, DC: The National Academies Press. doi: 10.17226/14505.
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Suggested Citation:"Chapter Three - State Strategies for Implementing Race-Neutral Measures." National Academies of Sciences, Engineering, and Medicine. 2011. Implementing Race-Neutral Measures in State Disadvantaged Business Enterprise Programs. Washington, DC: The National Academies Press. doi: 10.17226/14505.
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Suggested Citation:"Chapter Three - State Strategies for Implementing Race-Neutral Measures." National Academies of Sciences, Engineering, and Medicine. 2011. Implementing Race-Neutral Measures in State Disadvantaged Business Enterprise Programs. Washington, DC: The National Academies Press. doi: 10.17226/14505.
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Suggested Citation:"Chapter Three - State Strategies for Implementing Race-Neutral Measures." National Academies of Sciences, Engineering, and Medicine. 2011. Implementing Race-Neutral Measures in State Disadvantaged Business Enterprise Programs. Washington, DC: The National Academies Press. doi: 10.17226/14505.
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Suggested Citation:"Chapter Three - State Strategies for Implementing Race-Neutral Measures." National Academies of Sciences, Engineering, and Medicine. 2011. Implementing Race-Neutral Measures in State Disadvantaged Business Enterprise Programs. Washington, DC: The National Academies Press. doi: 10.17226/14505.
×
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Suggested Citation:"Chapter Three - State Strategies for Implementing Race-Neutral Measures." National Academies of Sciences, Engineering, and Medicine. 2011. Implementing Race-Neutral Measures in State Disadvantaged Business Enterprise Programs. Washington, DC: The National Academies Press. doi: 10.17226/14505.
×
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Suggested Citation:"Chapter Three - State Strategies for Implementing Race-Neutral Measures." National Academies of Sciences, Engineering, and Medicine. 2011. Implementing Race-Neutral Measures in State Disadvantaged Business Enterprise Programs. Washington, DC: The National Academies Press. doi: 10.17226/14505.
×
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Suggested Citation:"Chapter Three - State Strategies for Implementing Race-Neutral Measures." National Academies of Sciences, Engineering, and Medicine. 2011. Implementing Race-Neutral Measures in State Disadvantaged Business Enterprise Programs. Washington, DC: The National Academies Press. doi: 10.17226/14505.
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Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

15 This chapter synthesizes states’ responses to the open-ended survey questions about their experiences with implementing race-neutral strategies. As described in chapter one, survey respondents were asked to rate the effectiveness of 22 race- neutral strategies on a 1 to 5 scale, and they were given the opportunity to provide more detail about how they imple- mented these strategies and to describe other strategies in addi- tion to the 22 listed in the survey. Respondents provided detail about their implementation of 17 of the 22 listed strategies, and these open-ended responses are summarized in this chapter. Details of respondents’ numerical ratings of the 17 strategies’ effectiveness, as well as what percentage of states had used each strategy, accompany these summaries to provide addi- tional perspective. Respondents’ ratings of the effectiveness of the other five strategies are shown in Figure 2 (see chapter two), and detailed ratings of all 22 strategies are available in Appendix B. The full text of all open-ended survey responses is also available in Appendix B, and program materials that states provided as part of their responses are listed in Appendix C. The 22 strategies in the survey were grouped into four cat- egories: supportive services and training, administrative sup- port, marketing and outreach, and financial assistance. In this chapter, the additional strategies mentioned by survey respon- dents in their open-ended comments are listed under these four categories as well. As noted earlier, states differ in their interpretation of what constitutes a race-neutral measure. (For example, some states may provide advantages to prime contractors that frequently and proactively use DBE subcontractors, whereas other states do not view this practice as race-neutral.) Readers are advised to consult their agencies’ legal counsel as appropriate before implementing a new strategy. The descriptions of many strategies in this report refer to DBE firms and prime contractors as two discrete categories, which reflect that these strategies focus on assisting DBEs in bidding as subcontractors to non-DBE prime contractors. However, it is recognized that DBE firms can serve as prime contractors as well and, wherever possible, this is acknow- ledged in the language of this report. This chapter also includes respondents’ open-ended com- ments on related topics, such as partnerships with other agen- cies and advice for states transitioning to the use of 100% race- neutral measures. SUPPORTIVE SERVICES AND TRAINING MEASURES Survey respondents rated their familiarity and experience with five components of supportive services and training programs: business development assistance, bidding assistance, tech- nology assistance, one-on-one business reviews, and training classes. Respondents were very familiar with most of these program elements. Respondents identified their supportive services programs as key components of their efforts to meet their goals for DBE participation, and a respondent from one state that uses 100% race-neutral measures noted the importance of supportive ser- vices in advice to other states that are facing the transition to 100% race-neutral measures. On the following pages, supportive services measures are listed in order from most to least effective (as rated by survey respondents). (See Appendix B for full details on respondents’ ratings of each measure.) Strategy #1: Providing firms with one-on-one business reviews and/or technical assistance A total of 91% of responding states had used this strategy, and this was the supportive services measure that respondents gave the highest marks. Of the states that had used it, 91% rated it effective, with 60% rating it a 4 or 5 (very or extremely effec- tive). In addition, of all the measures listed in the survey, this measure was rated a 5 (extremely effective) by more respon- dents than any other strategy. This measure may include efforts such as developing indi- vidualized technical assistance tailored to specific companies based on information gathered in one-on-one reviews and working one-on-one with specific DBEs over time. Survey respondents described the advantages of working one-on-one with firms, including using one-on-one reviews to approach topics that DBEs may feel uncomfortable discussing in a group. One respondent described an ineffective implementa- tion involving hiring a consultant to provide one-on-one CHAPTER THREE STATE STRATEGIES FOR IMPLEMENTING RACE-NEUTRAL MEASURES

assistance to DBE firms; this respondent believed that not enough firms were helped, or helped sufficiently, to justify the expense. In some states, this type of one-on-one support is provided as part of a small business development program, and one respondent reported that both large and small DBE firms have emphasized the program’s value in helping them grow their businesses. In this state, one-on-one training and business assistance is seen as key to the program’s success. See Case Study #3 in chapter five for details on Colorado DOT’s imple- mentation of this strategy. Strategy #2: Providing firms with bidding assistance, such as holding mock workshops on the bidding process or providing assistance with plan reading, bidding and estimating, job costing, and writing/designing statements of qualifications Eighty-one percent of states had used this strategy; of those states, 87% said it was effective, with 50% rating it a 4 or 5 (very or extremely effective). One respondent described a par- ticularly successful implementation of this strategy—a hands- on, interactive training course taught by a vendor, with a focus on technology. Course content included determining overhead and markup, searching electronically for bidding opportuni- ties, and bidding electronically, and all participants received a free electronic bidding license for one year. This state saw a marked increase in DBEs bidding and receiving work fol- lowing the training, and the respondent recommended this interactive approach to training rather than more academic, lecture-style accounting courses. Another respondent recommended that states that are tran- sitioning to using 100% race-neutral measures educate DBEs on how to use state bidding information to solicit subcontract work with prime contractors that have submitted proposals for projects. Strategy #3: Assisting firms in using technology, such as electronic bidding, website development, and conducting business over the Internet Ninety-one percent of states had used this strategy; of those states, 84% said it was effective, with 49% rating it a 4 or 5 (very or extremely effective). In addition to the successful hands-on, interactive classroom training mentioned in Strat- egy #2, one respondent described success with conducting on- site training visits. This state works with a “DBE temp,” who has 40 years of experience with the department’s construction program, to conduct the training. The trainer discusses various topics, including the certification process, orientation upon certification, how to develop a quote, how to connect with large subcontractors or prime contractors, and how to submit quotes electronically. 16 Strategy #4: Providing training classes and technical education Ninety-eight percent of states had used this strategy; of those states, 83% said it was effective, with 39% rating it a 4 or 5 (very or extremely effective). Respondents described several examples of effective implementations, including: • Tailoring training to meet the needs of different DBE subgroups; • Involving members of the industry in training programs as coaches or instructors; and • Team-oriented training that brings participants together from around the state. The respondent noted that having the training class stay in a hotel fosters camaraderie that lasts beyond the training and may lead to joint efforts on contracts. This state takes advantage of the hotel setting in assigning evening homework; teams work on projects and presentations to be given the next day. Team exer- cises include submitting a DOT bid. Two survey respondents reported that reimbursing DBEs for participation in training classes in their line of work was less effective—they reported that few or no firms took advantage of this benefit. One respondent also cau- tioned against providing one-size-fits-all DBE training, noting that DBEs come in a wide range of sizes, ethnicities, and levels of expertise. “Some are challenged technologi- cally and others in business management or safety and risk management or working capital,” this respondent noted. “State DOTs should offer different types of training and assistance to various DBE subgroups, developed to meet each group’s particular needs.” Another respondent pointed to the lack of privacy in group training as a challenge; feedback from that state’s DBE firms has indicated that some DBEs view their problems as confidential and do not wish to discuss them in a group set- ting. This respondent also noted the difficulty in serving DBE firms that need varying levels of assistance through a group training class. Strategy #5: Providing firms with business development assistance, such as marketing and training assistance or help with business management, business plans, or financial statements Ninety-four percent of states had used this strategy; of those states, 77% found it to be effective, with 48% rating it a 4 or 5 (very or extremely effective). Working one-on-one with specific DBE firms over a period of time was mentioned as a successful strategy, as was providing scholarships to business management classes. One respondent mentioned conducting executive management training as a way to increase DBEs’ entrepreneurial skills, noting that this type of training indi-

17 rectly identifies firms that are committed to business growth and development. Several respondents recommended establishing a small or emerging business development program that complements a state’s DBE program. These programs can include financial incentives, restricted projects, and other strategies, because any small company can benefit. In one state, a respondent described a two-phase program, in which Phase 1 identifies firms’ strengths and weaknesses and Phase 2 works with the firm on the areas that need improvement. It was noted that use of this program was an effective strategy after the Ninth Circuit Court decision was handed down. ADMINISTRATIVE SUPPORT STRATEGIES Administrative support strategies include measures that states take to facilitate DBE participation by adjusting their policies (such as by reserving small contracts for smaller firms) or by establishing initiatives such as mentor/protégé programs. In this section, administrative support strategies are listed in order from most to least effective (as rated by survey respon- dents). (See Appendix B for full details on respondents’ ratings of each strategy.) Strategy #6: Limiting certain small contracts to proposals by small firms only This race-neutral strategy was unique among the 22 strate- gies in the survey in that most states did not have experience with it, but those that did gave it very high marks. Indeed, this strategy received both the highest percentage of ratings of effective (3, 4, or 5) and the highest percentage of ratings of very or extremely effective (4 or 5) of all the strategies in the survey. Although only one-quarter of states had used this strategy, 91% of those that had used it found it to be effec- tive, with 64% rating it a 4 or 5 (very or extremely effective). The Florida DOT (FDOT), which rated this strategy highly, was contacted to discuss how that agency has used this strategy successfully. FDOT staff noted that the FHWA has allowed the use of federal money on contracts reserved for small businesses, and that Florida’s initiative is funded as part of the state’s alternative contracting program, allowing it to comply with the state’s contracting regulations. See Case Example #1 in chapter five for more details. Strategy #7: Collecting data on DBE participation that exceeds contract goal requirements or that is achieved on contracts with no DBE participation goals Collecting this type of data is a regulatory requirement, and a high percentage of states reported experience with this. Of those states, 80% found it to be an effective process, but only 37% rated it a 4 or 5 (very or extremely effective). Respon- dents provided other examples of collecting data and docu- mentation as well. • One state that has a 100% race-neutral program contin- ues to collect good faith effort documentation at the time of the bid to provide a barometer of expected DBE participation. Strategy #8: Facilitating mentor/protégé programs (in which established contractors assist smaller, developing firms) Mentor/protégé programs pair a DBE firm with an established DBE or non-DBE firm, and the established firm provides business development assistance to the protégé DBE firm. For example, the two firms may meet regularly, with the mentor firm assessing the protégé’s strengths, weaknesses, and oppor- tunities; recommending training options; and monitoring progress (Smith 2005). Forty-three percent of states had used this strategy; of those states, 60% found it to be effective, with 30% rating it a 4 or 5 (very or extremely effective). Several respondents described effective implementations of mentor/protégé programs, including: • Mentor/protégé agreements of limited scope and dura- tion, focused on a specific work area. • A job shadowing program that pairs a DBE firm that wants to expand into a new area of work with an estab- lished firm from another state that performs that type of work. Working with firms from another state minimizes competition between mentor firms and those they are assisting. • Establishing two mentor/protégé programs for different purposes: a long-term program and a project-specific program. Elements of ineffective implementations include: • Programs in which mentors are not allowed to subcontract with protégés because of concerns about ethical conflicts. • Mentor/protégé agreements that extend over multiple years and are too all-encompassing; these may require attorney assistance. • Job shadowing programs in which established firms are expected to provide assistance to smaller firms that will then become their competitors. Strategy #9: Unbundling contracts (breaking large contracts into multiple smaller contracts) to allow and encourage DBEs to bid as prime contractors or quote on subcontracts Fifty-five percent of the states had used this strategy; of those, 58% found it to be effective, with 35% rating it a 4 or 5 (very or extremely effective).

Respondents did not provide detail on how they imple- mented this strategy. However, in interviews for Case Exam- ple #1 (see chapter five) on reserving small contracts for small businesses, an FDOT manager noted that unbundling contracts creates additional work for procurement and engineering staff, who may then have to process and execute several small con- tracts instead of one larger one. He noted that using this strat- egy involves striking a balance between meeting the needs of the DBE program and being sensitive to the workloads of other areas of the department. Respondents mentioned several other administrative sup- port strategies. Strategies targeting DBE firms are listed first, followed by strategies targeting prime contractors. Establishing a Small Business Certification One state described implementing an Emerging Small Busi- ness Enterprise (ESBE) certification to ensure that the maxi- mum feasible portion of its overall DBE goal is met by using race-neutral means. “ESBE contract goals are established so that, over the period to which the overall DBE goal applies, they will cumulatively result in meeting the overall goal through the use of race-neutral means,” the respondent wrote. All DBEs are considered to be ESBEs for the purposes of goal setting, and the use of the ESBE certification has allowed this state to be very aggressive in terms of goal setting on individ- ual contracts. Making Efforts to Bring DBE Firms into the Full Range of Highway Contracting The survey asked respondents about this issue in an open- ended question; they were not asked to rate this strategy’s effectiveness. Fifty-four percent of respondents said they had taken race-neutral measures in this area; one respondent’s agency invites a wide range of DBE firms to its classroom- based training and encourages prime contractors to expand their use of DBEs beyond traffic control, landscaping, and trucking. Monitoring Design-Build Contracts for DBE Opportunities This strategy involves aggressively monitoring design-build contracts to take maximum advantage of new DBE opportu- nities at each stage of the project. Commissioning a Capacity Analysis Study A capacity analysis study aims to quantify the capacity of DBE firms to perform in different areas of highway construction. The difficulty of quantifying capacity in a consistent manner was noted as a challenge in implementing this strategy. 18 Encouraging Prime Contractors to Accommodate Non-union DBE Firms This strategy was mentioned by one state that has experienced problems with prime contractors that are unionized being reluctant to hire DBE firms that are not. This state encourages contractors to negotiate project-specific labor agreements for non-union DBEs to enable them to work on the projects with- out violating the prime’s union agreement. This respondent also noted that federal DBE regulations do not allow con- tractors to refuse to hire DBEs based on their non-union sta- tus; this state makes this clear to both prime contractors and DBE firms. MARKETING AND OUTREACH STRATEGIES Marketing and outreach strategies include efforts that a state takes to market, brand, and publicize its DBE programs, and other efforts to reach out to DBE firms throughout the state, including qualified firms that are not yet certified. In this section, marketing and outreach strategies are listed in order from most to least effective (as rated by survey respon- dents). (See Appendix B for full details on respondents’ ratings of each strategy.) Many strategies in this section are interrelated, and in some cases respondents commented on which marketing strategies were most effective. Although notifying DBEs of contract opportunities by fax or e-mail was described as effective, pub- lishing contract opportunities in newspapers and trade papers was not. One respondent noted that feedback from DBEs indi- cated that firms do not have time to search for opportunities in newspapers. Branding, Marketing, and Publicizing the State’s DBE Programs; Creating a DBE Directory; and/or Providing Information Through Outreach Events, Publications, Websites, and Other Vehicles All of the states had used this strategy; 85% found it to be effective, with 60% rating it a 4 or 5 (very or extremely effec- tive). Federal DBE regulations require all states to maintain a DBE directory. Many states also have DBE newsletters, and several respondents mentioned their state’s newsletters in their responses. The respondent from Vermont provided the following link to that state’s electronic archive of DBE newsletters: http://www.aot.state.vt.us/CivilRights/DBE%20 Newsletter.htm. Examples of effective implementations include: • Holding panels of successful DBEs to share their expe- riences and inspire others. • Attending marketplace/trade show events and network- ing outreach events.

19 • Hosting construction conferences geared to prime contractors and DBEs that discuss the general direc- tion of the construction industry, with upper management from the state DOT, FHWA, and other government agencies attending to discuss the importance of DBE participation. Strategy #10: Notifying DBEs of new construction projects by e-mail Eighty-nine percent of states had used this strategy; of those, 74% found it to be effective, but only 33% rated it a 4 or 5 (very or extremely effective). Examples of effective imple- mentations included: • Creating a listserv to aid in getting information out to all bidders and subcontractor candidates efficiently. • Weekly electronic notification of all new bidding oppor- tunities and bid results. Strategy #11: Facilitating meetings and networking between DBEs and prime contractors and technical assistance partners Ninety-six percent of states had used this strategy; of those, 69% found it to be effective, with 47% rating it a 4 or 5 (very or extremely effective). Respondents wrote more comments about this strategy than about any other. Respondents’ com- ments on this strategy are divided into two categories: establishing new relationships and maintaining successful partnerships on existing projects. Establishing New Relationships Introducing DBE Firms to Prime Contractors Facilitating one-on-one interactions between prime contrac- tors and DBE firms, and between DBE firms and DOT staff, is a commonly used strategy. Small states may be able to make introductions directly through DBE program staff, and many states host meet-and-greet sessions that can take a variety of formats. Examples include: • Contractor speed dating: Prime contractors are given booths and DBE firms rotate through them every 10 min. • An annual “Meet the Primes” event held in conjunc- tion with a monthly meeting of the state road builders association. • Project-specific matchmaker events that are geared to DBEs, but are open to other small businesses as well. • An annual workshop focused on expansion and part- nering opportunities. Other examples of successful implementations include: • Encouraging and facilitating partnerships among DBE firms. • Targeting prime contractors with assistance in fulfilling DBE participation commitments. • Holding pre-bid or pre-letting meetings. One state cautioned against holding meet-and-greet events that are solely for DBEs and do not involve department project delivery staff or the prime contracting community, noting that giving DBEs opportunities to network and build relationships with prime contractors is key to the success of these events. Encouraging and Facilitating Partnerships Among DBE Firms Assisting DBE firms in forming partnerships with one another is a common strategy as well. Examples of successful imple- mentations include: • Assisting several independent truck owner/operator DBE firms in forming a consortium to bid projects together, with each DBE acting as consortium prime contractor in rotation. The state assisted these firms in marketing the newly formed consortium. • Encouraging DBE firms to form project partnerships with firms that perform work in complementary areas. • Encouraging graduating DBE firms to actively mentor or form joint ventures with other DBE firms. Targeting and Assisting Prime Contractors Some states perform outreach to prime contractors to encour- age use of DBE firms. One respondent mentioned that being a small state allows the DBE program staff to work with each prime contractor directly, whereas another state sends letters to all contractors and subcontractors explaining their obligations toward meeting DBE program goals. This state tracks DBE participation by project to identify contractors and projects with below-average DBE usage, which allows the DBE coor- dinator to work proactively with the firms involved to address any problems. The state stressed the importance of providing prime contractors with the means to identify DBEs for each project, including providing a clear database, cross-reference information, and suggestions when needed. Holding Pre-bid or Pre-letting Meetings Several states hold these meetings, which allow prime con- tractors and DBEs interested in a particular project to meet. Examples of successful implementations include: • Design-build pre-bid meetings in which DBE firms are given a few minutes each to introduce themselves and their businesses to the short-listed prime contractors.

• Mandatory pre-bid meetings linked to mandatory net- working sessions. • Pre-letting meetings in which DOT staff review the contracts that will be let, and prime contractors and DBE firms identify which projects they are interested in bidding or subcontracting on. Maintaining Successful Partnerships States identified several ways in which DOTs can help prime contractors and DBE firms maintain strong partner- ships once a working relationship is established, such as proactive project monitoring by DOT staff and early inter- vention when issues arise. This prevents relationships from deteriorating over disagreements and allows problems to be addressed before they adversely affect the project. Exam- ples of ways in which states have facilitated strong partner- ships include: • Co-locating DBE subcontractors and prime contractors on large construction projects to give DBEs access to information about schedule and scope changes. • Partnering meetings in which partnership agreements are formed between the DOT and the prime contractor and subcontractors. In these agreements, the partners come together to agree on common objectives at the initiation of a project. Strategy #15: Publishing newsletters reaching out to DBEs (e.g., publicizing contracting or subcontracting opportunities, small business programs, benefits, and training; outlining laws and regulations affecting small businesses) Eighty-five percent of states had used this strategy; of those, 62% found it to be effective, with 38% rating it a 4 or 5 (very or extremely effective). Examples of effective implementa- tions include: • Developing a calendar of events to inform DBEs of upcoming training classes. • Including a “request for sub-bids” section in the monthly DBE newsletter where contractors can advertise for quotes. Other Marketing and Outreach Strategies Outreach to Infrequent Bidders One state contacts DBE firms that have submitted only one or two bids during the previous year to encourage them to partic- ipate more. DBE program staff work with these firms to iden- tify the reasons they did not bid more often and to provide solutions to help them become more active. 20 FINANCIAL ASSISTANCE STRATEGIES In this section, financial assistance strategies are listed in order from most to least effective (as rated by survey respondents). (See Appendix B for full details on respondents’ ratings of each strategy.) Strategy #16: Participating in loan mobilization programs (assisting banks in providing loans to DBEs) Just 28% of the states had used this strategy; however, of those that had, 62% found it to be very or extremely effective (rating it a 4 or 5). This strategy tended to divide respondents—it received no ratings of 3 (effective), and it appears in both the list of strategies that received the highest percentage of rat- ings of 4 and 5 (see Figure 3 in chapter two) and the list of those that received the highest percentage of ratings of 1 and 2. Case Example #2 describes how the Rhode Island DOT (RIDOT) effectively administers its DBE loan program. RIDOT obtained an FHWA waiver allowing the agency to provide loans only to underutilized DBEs. See Case Exam- ple #2 in chapter five for details. Strategy #17: Assisting DBEs with bonding and financing Sixty percent of the states had used this strategy. Of those, 57% of the states found it to be effective, with 25% rating it a 4 or 5 (very or extremely effective). In addition, this strat- egy was ranked highly by 100% race-neutral states, with 60% of those rating it very or extremely effective. Two respon- dents mentioned that they are exploring this strategy. • One state has a bond guarantee program in which the department would guarantee 80% or 90% of a DBE firm’s bond, but has been unable to get a surety com- pany to participate in the program. • Another DOT is evaluating the practice of reimbursing DBE firms for bonding fees if they are required to carry their own bond for a project. This respondent noted that prime contractors in the state have traditionally carried subcontractors under their own bond, but that this prac- tice is beginning to diminish. Additional Financial Strategies Elimination of Retainage Requirements Retainage is money held back from contractors or subcontrac- tors until the work is completed; it is meant to ensure that the job is completed satisfactorily. One respondent described a strategy involving elimination of up-front retainage on prime contractors and subcontractors, which allows firms to spend

21 this money on other items, such as purchasing bonding and insurance. ADDITIONAL RACE-NEUTRAL STRATEGIES One state has had success using community organizing strate- gies, especially in rural parts of the state. DBE program staff asked community leaders, teachers, and ministers to invite highway construction business owners they know to a meet- ing in a church, school, or restaurant. This strategy has helped the state DOT recruit potential DBE firms in areas of the state where none are certified in highway construction, although there are experienced firms that would be eligible for certification. SURVEY RESPONSES ON OTHER TOPICS To augment the information on using race-neutral measures and address challenges, the survey included questions on sev- eral related topics, including partnerships, collecting feedback from DBEs on the value of different program elements, tran- sitioning to using 100% race-neutral measures, and using waivers to target subgroups with race-conscious measures. Interagency Partnerships As agencies across the country face budget constraints, form- ing partnerships with other entities can help leverage limited resources. Survey respondents were asked about two types of partnerships—with other governmental agencies and with the private sector. • Sixty-three percent of respondents reported having part- nerships with other state DOTs or other agencies within their state to encourage or promote expansion of DBEs on government contracts. • Seventy-nine percent of respondents reported having partnerships with industry (contractors and consultants) to encourage the growth of DBEs. A few respondents mentioned these partnerships in their survey responses. As an effective or innovative strategy, one respondent mentioned partnering with the Associated Gen- eral Contractors organization to help educate prime con- tractors and DBEs on the DBE program and its contractual requirements. Another respondent described bringing part- ners from other state and federal agencies and technical assis- tance providers to meet with DBEs and brainstorm strategies for building capacity. Collecting Feedback from Disadvantaged Business Enterprises on Effective Measures Many states survey DBE firms or collect feedback informally about which aspects of their DBE programs are most valuable. Among survey respondents, 53% of states had gathered this type of feedback. States mentioned several successful methods of collecting feedback: • Conducting formal Internet- or fax-based surveys, includ- ing needs assessment surveys. • Reviewing results of surveys conducted by supportive services providers. • Gathering feedback informally during staff interactions with DBE firms, including over lunch during training classes. • Having DBE program staff attend DBEs’ monthly asso- ciation meetings to solicit feedback. • Holding a brainstorming session with DBEs. Transitioning to Using 100% Race-Neutral Measures The survey asked states which strategies had the greatest immediate impact on helping them meet their DBE participa- tion goals after the Ninth Circuit Court’s decision was handed down. Six states answered this question; of these, two indi- cated that they had not met their goals, and one reported that none of the methods had helped. The other three states listed specific strategies, with one naming its supportive services program; the second listing a business development program, partnering meetings, and contracting special notices; and the third highlighting the use of DBEs as prime contractors. Considering that similar court decisions might occur in other areas of the country in the future, the survey also asked respondents what advice they would give to states that are just beginning to use solely race-neutral measures as the result of such a decision. Four respondents answered the question; they advised states to: • Involve industry representatives as coaches or instructors. • Ensure that reliable systems are in place for collecting contract and payment data, and prepare and organize the necessary data in advance of a disparity study. • Ensure that the supportive services program uses a vari- ety of strategies to help DBEs grow their businesses in a race-neutral environment. • Facilitate upper management support of the DBE program. Finally, the survey asked states whether eliminating race- conscious measures affected their state’s ability to meet its goals for DBE participation and, if so, whether the level of DBE participation increased or decreased after race-conscious measures were eliminated. Seven respondents answered this question; six answered “no” and one indicated that DBE participation did not change. However, in answer to another question, one of these respon- dents indicated that the state had not met its goals, and noted

that use of DBEs fell off dramatically once contract goals were eliminated. Waivers Allowing the Use of Race-Conscious Measures The survey asked states whether they had requested a waiver from the FHWA allowing them to target specific subgroups with race-conscious measures. Seven states (15% of those responding) reported that they had requested such a waiver. 22 • Four of these states are under the jurisdiction of the Ninth Circuit Court; two of these waiver requests were approved and approval is pending on the other two. • One other state—not one that uses 100% race-neutral measures—gave an example of requesting and receiv- ing a project-specific waiver allowing separate goals for minorities and for Caucasian women. The seventh state mentioned requesting a waiver to establish a financing program.

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TRB’s National Cooperative Highway Research Program (NCHRP) Synthesis 416: Implementing Race-Neutral Measures in State Disadvantaged Business Enterprise Programs explores race-neutral strategies being used effectively by state departments of transportation (DOTs) to meet their Disadvantaged Business Enterprises (DBE) participation goals. It also reviews and synthesizes problems faced by state DOTs in the administration of their DBE programs and identifies race-neutral remedies used to overcome these challenges.

As state DOT's carry out their highway construction programs, they are required to direct a portion of their federal-aid fund expenditures toward small businesses called DBEs. A DBE is defined as a small, for-profit business concern that is at least 51% owned and controlled by one or more socially and economically disadvantaged individuals. States are required to meet the maximum feasible portion of their DBE participation goals using race-neutral means designed to remove barriers and enhance opportunities for all small businesses, not just DBEs.

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