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

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8This chapter provides a summary of the results of the survey and interviews, and provides analysis of key data regarding states’ use of race-neutral measures. It includes a separate analysis of data from the subset of states that use or have used 100% race-neutral measures in their DBE programs. SURVEY RESULTS The survey was sent to representatives of all 50 states and the District of Columbia. Responses were received from 47 states, or 94%—a high response rate that ensured that states of all sizes and geographic areas were represented. Survey respondents were asked to evaluate 22 race-neutral measures in four categories: 1. Supportive services and training 2. Administrative support 3. Marketing and outreach 4. Financial assistance. Respondents used a five-point scale to rank these strategies: 1 = Not at all effective 2 = Somewhat effective 3 = Effective 4 = Very effective 5 = Extremely effective. All of the 22 race-neutral strategies were rated “effective” (receiving a rating of 3, 4, or 5) by at least 50% of the respon- dents who had used them. A summary of patterns in states’ assessment of the strategies is provided in chapter three. Most Commonly Used Race-Neutral Measures Respondents had more experience with some of the 22 strate- gies named in the survey than others. Six strategies were used by more than 90% of respondents, whereas at the other end of the spectrum only 24% of respondents had used the strat- egy “limiting certain small contracts to proposals by small firms only.” Respondents had the most experience with supportive ser- vices and training measures; of the five measures in that grouping, four had been used by more than 90% of respon- dents. They were also very experienced with several of the marketing and outreach strategies, including “branding, mar- keting, and publicizing the state’s DBE programs,” which had been used by 100% of respondents. Fewer respondents had used the strategies related to finan- cial assistance. Administrative support strategies (measures that states take to facilitate DBE participation by adjusting their policies or by establishing initiatives such as mentor/protégé programs) were also less frequently used. Figure 1 shows the eight strategies most commonly used by respondents. Most and Least Effective Race-Neutral Measures Supportive services and training measures ranked among the highest in terms of effectiveness, with four of the five mea- sures in this category ranking among the most effective in the survey (among respondents who had used them). The strategy ranking the highest in the survey, however, was an adminis- trative support strategy—“limiting certain small contracts to proposals by small firms only,” which was rated effective by 91% of those who had used it. Figure 2 shows how respon- dents rated the effectiveness of the 22 strategies named in the survey. The strategies receiving the highest percentage of 4 and 5 ratings (“very effective” or “extremely effective”) among those who had used them were also identified. These strategies were the same as those that received the highest percentage of ratings of 3, 4, and 5, with one exception: The strategy “par- ticipating in loan mobilization programs (assisting banks in providing loans to DBEs)” 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 ratings of 4 and 5 (see Figure 3) and those that received the highest percentage of ratings of 1 and 2. This strategy, along with the two other strategies that received the highest percentages of ratings of 4 and 5 (see Fig- ure 3), is the subject of a case example in chapter five. Least Effective Strategies Of the 22 strategies discussed in the survey, no strategy was rated ineffective (receiving ratings of 1 or 2—“not at all effec- tive” or “somewhat effective”) by more than half of those who CHAPTER TWO SUMMARY OF SURVEY RESPONSES

9had used it. The strategy rated least effective, “assisting DBEs with bonding and financing,” was rated a 1 or 2 by 43% of those who had used it. Eight strategies were rated less effective (receiving ratings of 1 or 2) by between 38% and 43% of respondents who had used them. These strategies fell under the categories of admin- istrative support, marketing and outreach, and financial assis- tance. See Figure 2 (bottom chart) for the strategies respondents rated least effective. Most Significant Challenges The challenges states identified as most significant in meeting their DBE goals for highway contracting spanned multiple areas. Financial challenges were significant, including exter- nal factors (the economy, fuel costs), DBEs’ cash flow issues and lack of access to capital, and DBEs’ inability to obtain bonding. Challenges relating to DBEs’ lack of skills, experi- ence, or equipment were cited as well. Figure 4 shows the 19 challenges listed in the survey in order of how significant they were rated by survey respondents who had experienced them. Patterns in States’ Use of Race-Neutral Measures States’ responses to the survey questions about the effective- ness of 22 race-neutral strategies and the significance of 19 challenges in meeting their DBE participation goals were evaluated across all respondents and among states using 100% race-neutral measures. Of the measures most commonly used by respondents’ agencies, the following four were also among those rated most effective: • Branding, marketing, and publicizing the states’ DBE programs • Assisting firms in using technology • Providing firms with one-on-one business reviews and/or technical assistance • Providing training classes and technical education. There were no strategies that were commonly used but rated ineffective. Of the strategies rated least effective, only one was used by more than 70% of respondents: “publishing newsletters reaching out to DBEs,” which was used by 85% of respondents and rated effective by 62% of those. Additional observations about strategies’ effectiveness include: • The strategy “facilitating meetings and networking between DBEs and prime contractors” was the third most commonly used strategy, but tied for 13th place in the effectiveness rankings at 69%. This strategy relates more closely to fostering communication and connec- tions between DBEs and prime contractors than any other strategy listed in the survey, and respondents wrote more about that topic than any other topic in the survey. The overarching theme among their comments was how critically important communication between DBEs and prime contractors is, both in establishing new relation- ships and in maintaining successful partnerships. • In respondents’ open-ended comments, the only strategy labeled ineffective was advertising contracting opportu- nities in trade papers or regular newspapers. Those who mentioned this stated that DBE firms do not read these publications for job opportunities. • A few respondents mentioned that using state DOT staff to provide support services, training, and outreach was FIGURE 1 Race-neutral strategies most commonly used by survey respondents. (*Respondents who provided a 1 to 5 rating for a strategy rather than selecting “Have not used” were counted as having used the strategy.)

10 FIGURE 2 The 22 race-neutral strategies, and the percentage of survey respondents that gave each strategy a rating of 3, 4, or 5 (“effective,” “very effective,” and “extremely effective”). *Among those who had used these strategies.

FIGURE 3 Race-neutral strategies receiving the highest percentage of 4 and 5 ratings (“very effective” and “extremely effective”) from survey respondents. *Among those who had used these strategies. FIGURE 4 Respondents’ ratings of the significance of 19 challenges that impact states’ ability to meet their DBE goals. *Among those who had experienced these challenges.

more effective than using consultants. However, other respondents described positive relationships with con- sultants, in some cases citing their close oversight of con- sultants and strong working relationships during their contract. RESPONSES FROM THE SUBSET OF STATES THAT HAVE USED 100% RACE-NEUTRAL MEASURES Following a 2005 court decision, each DOT in the nine states under the jurisdiction of the Ninth Circuit Court of Appeals either must use 100% race-neutral measures to meet its DBE participation goals or must receive a waiver from the FHWA allowing the agency to use race-conscious measures to target certain subgroups (based on statistical evidence of discrimi- nation within the state DOT’s contracting market). The states in the Ninth Circuit are Alaska, Arizona, Cali- fornia, Hawaii, Idaho, Montana, Nevada, Oregon, and Wash- ington. All have used 100% race-neutral measures for some period of time since 2005. In addition to these states, five other states reported in the survey that they currently use 100% race-neutral measures to meet their DBE goals: Florida, Maine, Maryland, Vermont, and Wyoming. In general, dis- cussion of survey responses in this section refers to this sub- set of 14 states. Most and Least Effective Measures Among States Using 100% Race-Neutral Means States using 100% race-neutral measures were relatively sim- ilar to other states in their assessment of which race-neutral strategies are most effective (see Figures 5 and 6). 12 • Of the top 10 strategies that each group identified as most effective, seven strategies were shared between the two groups. • In comparing which strategies were rated very or extremely effective by the highest percentages of each group, respondents using 100% race-neutral measures fell within 20 percentage points of those in the other states in their ratings of nearly all measures. – Of the 22 strategies, 10 were rated more highly by race-neutral states and 12 were rated more highly by the other states. In general, neither group tended to provide markedly higher ratings than the other. – The biggest difference between the two groups was in rating the strategy “assisting DBEs with bonding and financing.” Sixty percent of race-neutral states rated this very or extremely effective, whereas just 17% of other states did (see Figure 7). States using 100% race-neutral measures were also simi- lar to other states in their assessment of which race-neutral strategies are least effective. • Of the 10 strategies that each group identified as least effective, nine of these were shared between the two groups. • In comparing which strategies were rated a 4 or 5 (very or extremely effective) by the lowest percentages of each group, respondents using 100% race-neutral measures again fell within 20 percentage points of those in the other states in their ratings of nearly all measures. • Among strategies that were rated a 4 or 5 less often by 100% race-neutral states than by other states, the biggest differences between the two groups were in rating two strategies. “Providing firms with one-on-one business FIGURE 5 These 10 strategies were rated most effective by respondents who had used 100% race-neutral measures. *Among respondents who had used these strategies.

13 FIGURE 6 These six strategies were rated most often as very or extremely effective by respondents who had used 100% race-neutral measures. *Among respondents who had used these strategies. FIGURE 7 These strategies were rated a 4 or 5 (very or extremely effective) more often by respondents from 100% race-neutral states than by respondents from other states. *Among respondents who had used these strategies. reviews and/or technical assistance” was rated a 4 or 5 by 43% of race-neutral states that had used it versus 69% of other states that had. “Requiring pre-bid registration by prime contractors” was rated a 4 or 5 by 27% of race- neutral states that had used it compared with 50% of other states that had (see Figure 8). Challenges Involved in Using 100% Race-Neutral Measures States using 100% race-neutral measures were similar to states nationwide in their assessment of which challenges are the most significant obstacles to meeting their DBE participation goals (see Figure 9). • Of the top eight challenges that each group identified as most significant, seven were shared between the two groups. • Respondents using 100% race-neutral measures tended to identify certain issues as problems more than states in general did. For example, 100% of race-neutral states identified a DBEs’ inability to obtain bonding as a prob- lem, whereas 74% of states in general did.

14 FIGURE 9 These challenges were rated most significant by survey respondents who had used 100% race-neutral measures. *Among respondents who had experienced these challenges. FIGURE 8 These strategies were rated a 4 or 5 (very or extremely effective) less often by respondents from 100% race-neutral states than by respondents from other states. *Among respondents who had used these strategies.