Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program (2019)

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109 Introduction and Methodology Keen Independent Research LLC examined business assistance and best practices by state DOTs and their partners that promote success of DBE-certified firms and identified what state DOTs believe are key factors to those firms’ success. Interviewees were state DOT representatives from 17 states. The qualitative information was from anecdotal interviews of state DOT representatives located in Arizona, Delaware, Florida, Georgia, Hawaii, Iowa, Louisiana, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Mexico, Ohio, South Dakota, Tennessee, and Wisconsin. Survey responses were from written comments from 39 states and Washington, D.C. State DOT representatives’ responses have been reported in more general form to minimize the chance that readers could readily identify them. Each comment represents an interviewed state DOT representative. Some comments were derived from survey responses by state DOT representatives. Perceptions About Why Certain DBEs Have Been Successful The first portion of Appendix D summarizes comments from state DOTs about why some DBEs have achieved success. DBEs Securing Work Opportunities Without Goals State DOT representatives discussed why some DBEs are successful at securing work with no DBE contract goals. One representative said that DBEs in her state formed a consortium of other DBEs and non-DBEs to compete for contracts with no DBE preference. Comments include: • An interviewed representative of the Minnesota DOT said that a local minority-owned firm assembled a consortium of other DBEs and non-DBEs to successfully compete for MnDOT general engineering contacts with no DBE or TGB preference. She commented that their efforts are “novel and innovative,” and said, “They found their own niche to get in with MnDOT.” • In reference to DBEs obtaining work without goals, an interviewed representative of the South Dakota DOT remarked, “Usually these firms are the lowest bidder. It’s a low-bid system. Some of the firms have the resources in place to compete.” • An interviewed representative of the Montana DOT reported that some DBEs obtain sub- contract work on MDT projects without the help of contract goals. Regarding these firms, A P P E N D I X D Qualitative Information from Surveys and In-Depth Interviews with State DOTs

110 Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program she said, “These are established companies that have relationships, do good and perform the types of work that Montana needs.” She added that many of the people who started these firms “were already working in the industry and known in the industry.” • When asked about the DBEs successful at obtaining subcontract work without the help of DBE contract goals, an interviewed representative of the Nebraska DOT stated, “Neither is restricting themselves to a specific work type. These firms are branching out [Certain DBEs] . . . will do demolition, mainline paving, excavation, and other areas of work. They will also bid as a prime on small contracts. . . .” • Regarding DBEs that obtain a substantial amount of work without the benefit of a DBE goal, an interviewed representative of the Iowa DOT commented, “These firms took chances on their business and were successful doing so.” • An interviewed representative of the Wisconsin DOT said that many firms have been suc- cessful because they have “found their niche.” She commented that this can mean special- ized type of work, geographic area of work or types of customers. • When asked how some DBEs obtain a substantial amount of subcontracts without the help of DBE contract goals, an interviewed representative of the New Hampshire DOT stated, “They make it a priority to do good [DOT] work. Most of them have been around a while, have good relationships with primes and [just] do good work. Primes focus on whether the subcontractors do a good job and look for the job to be done on time.” • An interviewed representative of the New Mexico DOT reported that there are five or six DBEs that receive much of the work going to all DBEs. She said, “The reason that NMDOT exceeds the overall DBE goal is [because] there are five to six strong DBEs that got a lot of work.” Regarding why these DBEs are successful, the same DOT representative reported, “The DBEs that are successful do good work, are known in the community, and are used on jobs whether a DBE [job] or not.” • An interviewed representative of the Hawaii DOT reported that some subcontractors’ suc- cess was jump-started by their former status as Underutilized DBEs (UDBEs) when HDOT set UDBE contract goals. She said that some of the once UDBE-certified firms established relationships that have grown into other subcontracting opportunities. The same DOT representative said that DBE subcontracting opportunities decreased over time once the UDBE goals program changed to a program that included all DBEs. She also indicated that, overall, DBEs that never had UDBE certification have fewer opportunities to subcontract now. She went on to comment, “UDBE [goals] forced the hand of the primes . . . [to engage underutilized businesses].” She added that when goals are in place, industries where DBEs secure work include traffic control, trucking, striping, and lighting/electrical. • When asked why firms are willing to go through the paperwork to become a DBE even though the state DOT does not set DBE contract goals, an interviewed representative of the Florida DOT said, “Primes are encouraged to use DBEs . . . [and DBEs] want to be in that pool.” She added that some DBEs are more successful than others because of “capacity,” and indicated that some DBEs that are more “resourced” have the “ability to do more.” The same DOT representative added that FDOT encourages primes to use DBEs by grading them (A, B, or C) on their combined annual utilization of DBEs on FHWA-funded contracts and publishes these grades on a website. Each contractor, she continued, gets a letter from the Secretary of the Department of Transportation commenting on how well the firm performed. • When asked about DBEs that obtain a substantial amount of subcontracts without the benefit of a DBE goal, an interviewed representative of the Arizona DOT reported that she is not aware of any. She said that ADOT has a program where they set no DBE goals on some

Qualitative Information from Surveys and In-Depth Interviews with State DOTs 111 FHWA-funded contracts while tracking “voluntary” DBE participation. She noted that they do not yet have those results. • An interviewed representative of the Minnesota DOT could not identify any DBEs that obtained a substantial volume of state DOT subcontracts without the benefit of a goal. DBEs Working as Prime Contractors on DOT Projects State DOT representatives discussed reasons why some DBEs are successful at obtaining DOT work as prime contractors. Many representatives agree that small contract sizes and having adequate capacity improve DBE firms’ ability to bid and perform as prime contractors. Com- ments include: • An interviewed representative of the Arizona DOT discussed firms that have had success as primes. She said, “They have been around, do good quality work, and cut their teeth when ADOT had discipline-specific on-call contracts, [which were also smaller].” She explained that ADOT used to put firms on on-call lists for specific disciplines, which allowed more DBEs to compete. Now, she said, different types of work are consolidated onto one on-call list. • When asked why some DBEs are successful at obtaining prime contracts, an interviewed rep- resentative of the Nebraska DOT said that NEDOT offers small enough contracts for them to bid. He added, “We set the stage for them to bid on small work. Before this, NEDOT didn’t use funds to help DBEs through supportive services. This will be the first year we execute this.” • An interviewed representative of the South Dakota DOT reported that his state has a prequali- fication application for DBEs choosing to work as primes on projects over $250,000. He added that after DBEs submit their financials and other related documents, a panel reviews the appli- cations to ensure that the DBE can perform and complete the work. He added, “I think it’s very effective.” • An interviewed representative of the Iowa DOT reported knowledge of two DBE construction firms that have secured large prime contracts. She added that one firm is a family business, and commented, “Family continuity in management seems to be a common factor. . . .” • An interviewed representative of the Louisiana DOT reported that successful DBEs operating as subs and/or primes “are strategic in going after SBE dollars for projects that range from $150,000 to $500,000.” After building capacity, she said they seek higher budget jobs of over $500,000. • An interviewed representative of the Wisconsin DOT stated that the DBEs successful as primes have found a specialized niche and have proven themselves. She said that DBEs explain to her that it is difficult to compete in a low-bid environment, so they seek projects as primes where they don’t need to be low bid. She added that this might be through other agencies’ programs that promote MBE/WBE utilization as primes, or on consultant contracts. • An interviewed representative of the Montana DOT reported that early this year MDT only awarded projects that were “shovel-ready.” Because of this, she said that more than one-half of the contracts were under $250,000. She commented, “SBEs can compete for those.” – The same DOT representative said that one business does a lot of bridge repair work and has received three prime contracts this year, and noted that there is a fair number of small contracts in that area. She added that a traffic control firm that does a lot of safety sign upgrades has received four prime contracts this year. She also reported on a third firm that is now out of business because they tried to expand too fast and won contracts by bidding too low, causing them to take on significant debt. – Regarding DBE firms that receive a lot of non-state DOT work, this same DOT representa- tive indicated that one business does a lot of work on airport contracts. She later noted that they do receive some MDT work.

112 Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program • An interviewed representative of the Hawaii DOT reported that the most successful DBEs today, serving as primes and/or subs, are regular participants in HDOT’s networking and business-to-business events. She said the successful DBEs “are there,” and added, “They are hitting the pavement . . . they show up for events, they come to workshops . . . [they know] the public participation process . . . they are more proactive in marketing them- selves.” She gave one example of a supplier that attends networking events and is often put on primes’ teams. The same DOT representative went on to say that DBEs serving as primes are the firms that typically demonstrate “capacity” to perform work and bonding ability. She noted that “rising primes” included those DBEs in “road safety and integrated security.” • An interviewed representative of the Minnesota DOT noted 10 DBEs that received prime contracts, mostly one or two each, in fiscal years 2015 through 2017. She went on to comment, “Very few DBEs bid as a prime.” The same DOT representative said that MnDOT recently launched efforts to include small firms as prime contractors in its state-funded construction maintenance contracts. Examples of this work, she noted, include guardrail repair, fencing, landscaping, and ADA improve- ments. She added that MnDOT provides training to firms interested in bidding on mainte- nance contracts and recalled a firm that moved from traffic control to guardrail work after receiving training and “guardrail certification” from MnDOT. • An interviewed representative of the New Hampshire DOT stated that DBEs successful at obtaining work as prime contractors are “large specialty firms.” Work with DBEs Preparing to Leave the Program State DOT representatives were asked about any special efforts by their state’s DOT to prepare DBEs for leaving the program. Most Indicated That Their State’s DOT Does Not Operate a Program Focused Specifically on Preparing DBEs for “Graduation” • An interviewed representative of the Iowa DOT reported, “We are not working with any- one specifically to graduate. There are a small number of DBEs in Iowa. There are 275 total DBEs, 50 are in construction. Out of the 50 only 25 regularly bid on IADOT projects. The others are certified via interstate [as they] don’t have offices in Iowa. It’s such a small number of firms that we know them personally.” • An interviewed representative of the Arizona DOT indicated that ADOT does not have specific measures or practices in place to prepare DBEs for leaving the program. • When asked what her state does to prepare DBEs to leave the program, an interviewed rep- resentative of the Delaware DOT said that they “don’t have any that are preparing to leave.” When asked how they track DBEs preparing to leave the program, she said, “[They’re] tracked in reports.” Some Representatives Discussed Challenges DBEs Face That Prevent or Postpone Their “Graduation” from the Federal DBE Program • An interviewed representative of the Ohio DOT said, “There is no incentive [for primes] to help other DBEs get into the mix.” She added, “CUF reviews prevent some firms from expanding into new areas. . . . How does the DBE get the relationship with primes to begin with? These companies don’t go to matchmaker events. [Instead], someone knew someone. They did business with the primes prior to forming the company.” She also said that “it’s rare” for a prime to take a chance on a sub it doesn’t know, and commented, “DBEs need equip- ment and capital to handle larger work.”

Qualitative Information from Surveys and In-Depth Interviews with State DOTs 113 • An interviewed representative of the Nebraska DOT said, “I’m a little more than 2 years in, and I’ve [realized that] the number one goal [should be] to give DBEs the opportunity to perform. I’ve found that primes go with the devil they know. Essentially, primes are more hesitant to work with new firms, [and] I’ve seen DBEs in the program for decades [that] haven’t grown financially or in headcount, [or in] expansion into new NAICS codes. I’m afraid you get DBEs [where] their presence or niche makes it harder for new DBEs to enter those markets.” The same DOT representative added, “The DBEs that have existed in the program for a long time have developed strong relationships with primes. Primes want the job done on time [and] on budget, and with [as] little headaches as possible. It’s hard to expect that when working with new DBEs.” • According to an interviewed representative of the Arizona DOT, a common complaint from DBEs is that they “don’t get work,” bid on subcontracts but don’t hear back, or don’t hear why they don’t win. Or, she added, they report that their bids are shopped. She commented, “They get disillusioned.” The same DOT representative later said that some DBE owners “expect the DBE program to bail them out.” For example, she discussed one DBE that received an indefinite quantity contract with a prime and assumed that their firm would get all of that type of work. She said that the owner expanded their firm and was put in a bad position when they did not get all the work they had counted on. She went on to say that she met with the owner to explain that they needed to make good business decisions and shouldn’t expect “the DBE Program to make [them] whole.” • An interviewed representative of the Tennessee DOT reported that a lack of trust in the DOT among DBEs limits their participation in the DOT’s supportive services. He stated that some DBEs are reluctant to share sensitive information with the state DOT and therefore aren’t willing to engage the services of his consulting team. Knowledge of “Graduated” DBEs That Are No Longer Certified as DBEs A number of state DOT representatives discussed “graduated” DBEs no longer in the pro- gram. Most indicated that, since leaving the program, former DBEs see continued success. Comments include: • An interviewed representative of the Tennessee DOT reported on two graduated firms. He said that one white woman-owned firm grew to be a successful specialty contracting sub- contractor and had continued success post-graduation. He said that the second firm, also white woman-owned, grew from a specialty contracting subcontractor to a prime contractor. Post-graduation, he noted that this firm had success as a non-DBE prime and expanded its business to multiple states. The same DOT representative went on to say that both of these success stories include busi- ness owners with “top-notch service.” He noted that the two graduated firms worked in niche industries with limited competition, and that each had the knowledge to manage, successfully grow a business and secure repeat work. He said that many primes “took a hit” when one of these firms graduated, because “[the subcontractor] did not need to be babysat . . . [they] wanted to do a good job.” • An interviewed representative of the Missouri DOT reported knowledge of three graduated firms. One of these firms, he said, graduated and re-entered the program; another graduated and retired; and a third graduated and is still in operation. He added that the third busi- ness continues to get “lots of” work post-graduation and operates successfully as a prime contractor.

114 Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program • An interviewed representative of the Florida DOT indicated that 13 DBEs had graduated, though she noted it’s difficult to know because firms are not required to tell FDOT when they don’t renew their certification. • An interviewed representative of the New Hampshire DOT said, “We had someone that graduated from the program, [and] they are just as successful with or without the help of the DBE program. We are race-neutral, so they can still bid.” When asked what contributes to the continued success of this firm, he said, “They bid competitively and do good work.” • An interviewed representative of the Wisconsin DOT reported that she is aware of four suc- cessful firms, three of which have graduated from the federal DBE Program. The ungraduated firm, she noted, performs as a DBE throughout the state. She went on to say that one of the successful DBE firms is “tribally owned” and “a superstar” in the area. • An interviewed representative of the Hawaii DOT stated that she is not currently aware of any DBEs that are nearing graduation. • An interviewed representative of the Georgia DOT reported that no DBEs were particularly successful or were near graduating from the federal DBE Program. She noted that a few ACDBEs had graduated, however. Circumstances for DBEs That Leave the Program Some state DOT representatives discussed the circumstances that lead to some firms’ “graduation” from the DBE program. Most cited the exceeding of personal net worth stan- dards as a reason for leaving the program. Comments include: • An interviewed representative of the Montana DOT said that a graduated firm has been out of the program for a long time after exceeding the personal net worth threshold. She noted that they are focused on work with tribes and do not do much MDT work. She said that another firm will not recertify as they exceeded the personal net worth threshold. • An interviewed representative of the Wisconsin DOT reported knowledge of three firms that graduated from the federal DBE Program after exceeding personal net worth standards. How- ever, she noted that one of the firms is currently not doing well due to staff turnover and an insurance problem. • An interviewed representative of the Hawaii DOT reported that she knows of only two DBEs that graduated from the federal DBE Program since 2002. She said that both left the program after exceeding the personal net worth threshold. • An interviewed representative of the Arizona DOT reported that one IT firm gets some ADOT work and a lot of work at the Phoenix airport. She said that they are likely to exceed the personal net worth threshold in the future. • An interviewed representative of the Delaware DOT noted, “One firm is quickly approaching the revenue limits.” A few representatives reported on firms that left the program after acquiring other firms or being “bought out” by competition. Comments include: • An interviewed representative of the Minnesota DOT reported that one vender graduated from the DBE program after acquiring a manufacturing firm. • Regarding the circumstances for firms graduating from her state DOT’s DBE program, an interviewed representative of the Florida DOT said that some “just grew,” some were bought out, and some may have exceeded the personal net worth threshold. • When asked how firms manage to leave the DBE program, an interviewed representative of the South Dakota DOT commented, “One example . . . is [that] a supplier bought out the other largest competitor. . . . I believe once they combined into one large company, their net worth became $40 million.”

Qualitative Information from Surveys and In-Depth Interviews with State DOTs 115 Perceptions About Whether Some DBEs Develop a Business Model to Stay in the Program Some state DOT representatives discussed whether DBEs sometimes develop a business model to stay in the federal DBE Program. A few representatives indicated firsthand knowledge of the practice. For example: • An interviewed representative of the Ohio DOT reported that the Ohio DOT tried a capacity- building program where a total of 10 firms participated. She said that it wasn’t successful, and commented, “DBE don’t want to graduate.” She added that there is a rebar company that graduated from the program only to return. • An interviewed representative of the Louisiana DOT said that she cannot recall any firms that stayed graduated from the DBE program. She reported knowledge of a few firms that have been in and out of the program based on their annual revenue and said that all of them prefer to stay under the DBE size requirement. • An interviewed representative of the Tennessee DOT commented that a number of high- performing DBEs resist graduation because they rely on DBE certification to secure work. • An interviewed representative of the South Dakota DOT said that some DBE firms “don’t want to grow” because they would rather “stay in the program.” • An interviewed representative of the New Mexico DOT reported that DBEs don’t want to leave the program as they anticipate that there will be DBE contract goals again. He said that NMDOT tells DBEs, “We’re not setting DBE goals this year, but they could come back.” He added that there are fewer DBE certification applications since implementing the program on a neutral basis in 2015 after exceeding its overall DBE goal. • An interviewed representative of the Montana DOT reported that while there are currently no DBEs preparing to graduate, none of the DBEs manage their workload so as to not graduate from the DBE program. Work Types as a Key to Success Some state DOT representatives discussed the importance of varied work types to DBE success. One representative reported an overconcentration of DBE trucking firms in her state and noted the DOT’s efforts to encourage more diverse work types for DBEs. Comments include: • An interviewed representative of the Nebraska DOT identified two construction firms that are successful DBEs because they do not “[restrict] themselves to a specific work type.” • An interviewed representative of the Wisconsin DOT reported knowledge of a specialty services firm that was a second-generation female-owned business. She said that the type of work performed also helped make them successful, and commented, “You need traffic control on every highway project.” • An interviewed representative of the Georgia DOT said that she has been pushing for primes to diversify the work types available to DBEs on GDOT projects. She said they typically only use DBEs for traffic control, erosion control, miscellaneous concrete work, and trucking. She added that GDOT has identified overconcentration of DBEs in trucking and has requested approval from FHWA to lower the credit given for DBE truckers. The same state DOT representative later said that she identified 65 areas of nontradi- tional work and how they might be incorporated into different types of GDOT contracts. Drone photography, pest control, medical supplies, and office furniture were four exam- ples she gave. • An interviewed representative of the Arizona DOT said that DBE firms need to be able to offer a wide range of services. Firms that get used as subs most often, she said, are those that

116 Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program provide work such as trucking, rebar, and landscaping. She commented, “They get used a lot [to meet goals]. . . . It’s easy [to use these disciplines].” The same DOT representative later reported that DBEs on the P3 South Mountain Free- way project include many that are involved in nontraditional types of work. • An interviewed representative of the Louisiana DOT reported that some successful DBEs developed their firms in industry “niches,” or “narrowed markets” where work often goes to small businesses, usually as subcontractors. In Louisiana, she added, these industry niches include striping, guard rail work, and traffic control. • An interviewed representative of the Missouri DOT said that, typically, successful DBEs find a “very specialized niche and perfect it” to establish repeat work. He added that primes may exclusively use these niche DBE subcontractors when goals are applied. The same DOT representative later said that specialty contracting where DBEs are most likely to succeed include fencing, traffic control, and guard rail work. However, he noted that these industries may broaden for successful DBEs statewide. • An interviewed representative of the Montana DOT indicated that the most successful DBEs in her region “perform the types of work that Montana needs.” Experience and Business Longevity as Keys to Success A few state DOT representatives commented on the importance of experience and longevity to DBE firms’ success. For example: • Regarding an experienced DBE firm, an interviewed representative of the Wisconsin DOT said, “They have more than 20 years in the program, so people know their work. They use [on-the-job training] programs and are union. They also have a unique geography.” The same DOT representative added that some of the engineering and other professional services firms that were successful had an owner or staff person who used to work with the state DOT. She commented, “There is a confidence and trust in them and they know what the state DOT wants.” She said that this was above-board and did not involve former high- level state DOT staff, though the familiarity with the DOT was an advantage. • An interviewed representative of the Montana DOT indicated that the most successful DBE firms are “established companies.” She noted that many of the successful firms’ owners already worked in the industry and were already “known” before starting their firms. Relationships and Reputation as Keys to Success Most state DOT representatives agreed that meaningful business relationships and a good reputation play heavily on DBE firms’ success. DBEs’ relationships with prime contractors, according to representatives, are as important as those with public agencies. Comments include: • Regarding firms that receive a large portion of the work going to DBE subcontractors when DBE goals are applied, an interviewed representative of the Minnesota DOT said, “The top 10 DBEs have established networks in the industry.” She added, “All have been around a long time. Primes know these companies. . . . There is a predictability [of] performance [with these firms].” She went on to comment that she has heard primes say, “[It’s] easier to go with that which you know.” • Regarding the DBEs that get the most state DOT work, an interviewed representative of the Arizona DOT said, “Primes know they are dependable, they don’t need to take [on] any changes [with] new firms.” She added that a lot of newer firms were formed by individuals who used to work for a prime or at ADOT, and commented, “It’s who you know.” • Regarding the importance of relationships, an interviewed representative of the Ohio DOT said that “relationships” are the reason DBEs receiving the Ohio DOT work are successful.

Qualitative Information from Surveys and In-Depth Interviews with State DOTs 117 She commented that “primes are used to using certain firms,” and noted, “They are able to build capacity because they are getting opportunities.” • Regarding DBEs she knows of that are successful at obtaining work, even with no DBE con- tract goals, an interviewed representative of the Delaware DOT stated, “Their reputation pre- ceded them. They also performed the job on time, on budget, [and] without issues. Their reputation is known among the DOT and the project managers.” • An interviewed representative of the Tennessee DOT said that successful DBEs make efforts to build relationships on job sites and through other self-generated means. He said that less successful DBEs may wait for opportunities “to fall in their laps,” and ask, “What are you, [the state DOT], doing [for us]?” He commented that when a DBE has those expectations, “success will not happen.” The same DOT representative later commented that the majority of DBEs getting state DOT work are white woman-owned firms. He said that at this time few minority-owned firms are getting state DOT work. • An interviewed representative of the Wisconsin DOT reported that one of the successful DBEs that she is knowledgeable of is a Native American-owned firm with connections to tribes. She went on to comment that some of the successful firms have “developed a reputation with local agencies as being reputable.” The same DOT representative also said that some of the successful DBEs are members of the statewide heavy contractors’ association, which she says builds familiarity and cred- ibility with primes and others. She recommended that DBEs be active in such groups, and said it is especially beneficial for minority business owners. • An interviewed representative of the Hawaii DOT indicated that relationships are a key to business success. She said that former UDBE firms established relationships that led to new subcontracting opportunities. • An interviewed representative of the Georgia DOT said that two minority female-owned DBEs specializing in construction-related work have had some recent success with GDOT, both as subs and primes. One of these two firms, she added, now wins about 75% of the small routine maintenance contracts for this type of work. She commented, “They are suc- cessful because they have a reputation for doing work well, being timely, and [being] on budget.” She noted that this firm used to focus on local government contracts but recently moved into the routine maintenance work for GDOT. • An interviewed representative of the Missouri DOT reported that relationship-building is a key factor to DBE firms’ success. He indicated that the most successful DBEs build a reputation based on “do[ing] good business . . . do[ing] a good job,” which facilitates callbacks. Other Contributing Factors to DBE Business Success State DOT representatives discussed other factors that contribute to DBE businesses’ success. A few representatives reported on the importance of having knowledge of bidding/proposing processes and cooperating with primes. A few reiterated the weight of a good reputation. For example: • When asked what factors contribute to DBEs eventually leaving the program, an interviewed representative of the Delaware DOT indicated that it comes down to ample subcontracting opportunities. She said, “Prime contractors notice the DBEs that do good work and have a good reputation.” The same DOT representative later commented that having knowledge of bidding/ proposal processes also contributes to the likelihood of DBE business success. She said, “Preparing bids and proposals is really important.”

118 Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program • The representative of the Washington, D.C. DOT commented that effective DBEs actively work their businesses, proactively seek out contracting opportunities, and do what is required to make their businesses successful, regardless of DBE certification. • Responding to a survey, a representative of the Indiana DOT, commented that the DBE pro- gram is a “springboard to success.” He added that DBEs that view certification as a marketing tool and establish their reputation on performance achieve greater success. • A representative of the Alaska DOT, responding to a survey, commented that key factors to DBE success are “knowing [your] role” on a project and the importance of performance and understanding the contract. She also commented that “strong, trusting relationships with contractors” is a key to success. • An interviewed representative of the Arizona DOT explained how one DBE “broke in” to secure work as a prime. She explained that a prime had a DBE that had failed to perform the job when this firm said that they would pick up the work, and if they were late in delivering it, they wouldn’t charge for it. She noted that it was a successful strategy for them. – Regarding the large P3 South Mountain Freeway project that ADOT is currently building, the same DOT representative reported that the prime has given small “test” subcontracts to DBEs and gives more work if they do well. She said this is a way for newer firms that have not been substantially used in the past to “break in,” and noted that this is the prime’s system, not ADOT’s. • An interviewed representative of the Wisconsin DOT indicated that marketing efforts are a key to business success. She said that DBEs need to market themselves, and commented, “Don’t just go for state DOT work.” She went on to say that DBEs need to work with other local agencies too. • An interviewed representative of the South Dakota DOT commented, “The companies that are well known do great work, bid lower than their competitors, [and] have a good reputation in the industry.” • Commenting about successful DBEs, an interviewed representative of the New Mexico DOT said, “They have their stuff together and have been around a long time. . . . They work well with primes.” • An interviewed representative of the Louisiana DOT said that the most successful DBEs likely had prior financing or were well-established firms that passed from one generation to another. For example, she identified one successful DBE that was an “old establishment” and “inherited by the descendants” after the original owner’s passing. She went on to say that successful DBEs use smaller projects to build relationships that are long-lasting. State DOT Business Assistance to Help Successful DBEs The study team asked state DOT representatives about the assistance they provide. Supportive Services Programs State DOT representatives discussed supportive services programs offered by their state’s DOT. Most reported on offered one-on-one trainings and networking events. One representa- tive said that successful DBEs rarely take advantage of the services offered. Comments include: • An interviewed representative of the Delaware DOT stated, “We offer different supportive services and ask the firms to be familiar with the contracting process. . . . We try to educate [the DBEs]. We offer specific training in a classroom setting [too].” She added, “We typically only offer services as a training academy, but a DBE can request a one-on-one [session] if they have specific questions.”

Qualitative Information from Surveys and In-Depth Interviews with State DOTs 119 When asked if she can think of any DBEs that directly benefited from these services, the same DOT representative said, “Each year we have a DBE summit where we ask a successful DBE to come and be a keynote speaker. Typically, the DBEs that speak are primes.” When asked if more or different supportive services would contribute to the success of DBEs, she indicated that it would, and commented, “If there is more to do, then we will try and do it. I want it to be effective.” She noted, “They are very well supported.” • A representative of the Kansas DOT reported that a DBE supportive services vendor provides one-on-one assistance to DBEs and holds monthly training opportunities for bonding assis- tance, marketing, strategic planning, and other trainings. • An interviewed representative of the Minnesota DOT reported that MnDOT spends about $1 million to $1.2 million per year on supportive services and noted that most services are used by business owners in a “young” stage of business development (typically less than 10 years’ development). She said that MnDOT now offers one-on-one counseling but indi- cated that many adolescent firms are not aware of that assistance. The same DOT representative added that MnDOT’s Equity Select program helps minority- and woman-owned firms get exposure to the DOT as a prime consultant and helps them learn how to contract directly at the state level. She went on to say that some firms that work as subconsultants on FHWA-funded contracts have received prime contracts through this program. • An interviewed representative of the Tennessee DOT reported that TDOT has an annual supportive services budget of $500,000. He said that a free small group or one-on-one sup- portive services program is offered for minority- and woman-owned firms, and other small businesses. However, he noted that participation in the free program is somewhat stunted by a perception that the program can’t be “good” because it’s free. • An interviewed representative of the Arizona DOT (ADOT) reported that ADOT spends about $400,000 per year on supportive services, $150,000 of which are state funds. It used to be a larger budget, she noted. She went on to say that she has attempted to restructure the assistance to focus, and pay, based on measurable outcomes. She reported that ADOT offers one-on-one assistance along with ADOT Business Coach On Demand, an online training. • An interviewed representative of the South Dakota DOT reported that they offer supportive services consulting to assist DBEs. He said that consultants can meet with DBEs one-on- one and review business plans and financials. He added that the consultants offer training academies if multiple DBEs are in need of supportive services. • An interviewed representative of the Louisiana DOT reported that LaDOT has an annual supportive services budget that combines $500,000 of state dollars with $200,000 in federal support. She indicated that successful DBEs do not usually take advantage of the supportive services offered, and said that LaDOT’s supportive services mostly serve “backyard busi- nesses” that do not have the business acumen required to sustain a firm. Regarding the services offered, the same DOT representative reported that LaDOT orga- nizes sub/prime meet-and-greet sessions. However, she noted that the same three to four primes participate, and commented, “[Other primes are] hard to come by.” She said LaDOT also offers a one-on-one consultant-delivered training and now planned to expand from one centralized program to two, north and south, regionally based programs. • A representative of the Alaska DOT reported that AKDOT developed the “Map to Success” technical assistance program, which provides an in-depth analysis of DBEs’ business infra- structure. As part of this program, she said that DBEs are provided reports of their strengths and weaknesses, then monitored and provided coaching to ensure that recommendations are implemented. • A representative of the Maryland DOT said that MDOT currently operates the Business Development Accelerator Program (BDAP) which is a collaboration between State Highway

120 Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program Administration and the College of Southern Maryland. He added that the program tailors individual training to DBEs’ specific needs. The same DOT representative went on to say that if a DBE has challenges hiring personnel, they are paired with a human resources consultant that provides further advice and training. He added that at the beginning of BDAP each business is assessed to pinpoint deficient areas and paired with a subject matter expert for one-on-one training. • An interviewed representative of the Montana DOT stated that MDT’s supportive services program budget is $140,000. She said that MDT offers training classes which are popular with small firms. She noted that MDT does a survey of its DBEs each year to determine the training topics to cover, which is helpful in ensuring “there are no flops” in the trainings offered. She added that firms are always interested in classes related to marketing. The same DOT representative added that MDT is working on networking events where the subs can spend more time with individual primes. She noted that DBE program staff are trying to participate in events and conferences, such as an event that provides required EEO training, that bring a broad set of subs and primes. She added that MDT is also trying to partner with groups that hold relevant events and training such as the Governor’s Office of Indian Affairs. • An interviewed representative of the Florida DOT reported that FDOT’s total budget for supportive services is $1.5 million. She said that a mix of DBEs use supportive services, and that it’s up to the DBE to make use of the assistance. She added, “You can only hold their hands so far.” • Regarding supportive services spending, an interviewed representative of the Ohio DOT reported that the Ohio DOT spends $400,000 in federal money and matches that with its own $400,000. She added that consultants use many of the supportive services offered by the Ohio DOT. The same DOT representative said that the Ohio DOT has DBE boot camps for specific industries, including trucking, consulting, construction, and supply, to provide specialized training for those industries. She said that new DBEs attend these boot camps and noted that the Ohio DOT also holds meetings to introduce DBEs to district staff. • An interviewed representative of the Georgia DOT stated that GDOT assistance includes introducing firms to GDOT staff who are involved in contracts. She said this is helpful to DBEs “because [they] now have a name and a face.” She went on to say that their business resource help center assists companies in developing prequalification applications that can be approved, and noted that without the help, contractors often do not properly fill out the application. The same DOT representative added that a prequalified company receives a GDOT master service agreement that extends for 5 years. She explained that they then compete with other prequalified firms for those projects, without any advantage for DBEs or small businesses, and noted that this program has had some success in increasing DBE participation as prime contractors. She later reported that GDOT spends $600,000 per year on its supportive services pro- gram for federally funded contracts and $600,000 per year on supportive services for its state-funded contracts. She said newly certified firms are the ones that most often take advantage of GDOT supportive services, as firms that have been DBE-certified for many years that have seen little benefit from the program are less likely to use supportive services. • An interviewed representative of the Wisconsin DOT said that WISDOT’s supportive services consultants do one-on-one services through a cadre of different specialists, including lawyers and accountants. She added that WISDOT spends about $500,000 per year on supportive services.

Qualitative Information from Surveys and In-Depth Interviews with State DOTs 121 Many Representatives Discussed Mentor-Protégé Opportunities at Their DOT • Regarding a mentor-protégé program for construction and professional services firms, an interviewed representative of the Minnesota DOT reported that mentors are reimbursed by MnDOT for their provided services, though they often choose not to submit invoices. She noted that this leads to a low-cost program for MnDOT. She went on to say that MnDOT holds events to encourage firms to participate as mentors and protégés. • A representative of the Illinois DOT reported that IDOT offers a DBE supportive services program focusing on business development assistance, a mentor-protégé program and a revolving loan program, as well as an annual DBE conference. • An interviewed representative of the Missouri DOT reported that MoDOT has an annual supportive services budget of $300,000. Regarding supportive services, he said that MoDOT offers pre-bid/pre-construction meetings and a mentor-protégé program that is most often informally applied between primes/subs, or subs joining together as a bidding team. • An interviewed representative of the Tennessee DOT reported that TDOT hosts a mentor- protégé program. • Regarding WISDOT’s mentor-protégé program, an interviewed representative of the Wisconsin DOT said that only professional services mentors and protégés signed up, commenting, “It didn’t work for construction. . . . [Construction primes] can’t get past remembering something in the past that went wrong.” • An interviewed representative of the Florida DOT reported that FDOT’s Bridging the Gap program matches mentors and protégés and has already involved three primes and three subs. • According to a representative of the Washington DOT, WSDOT currently has a DBE sup- portive services program, business development program, and mentor-protégé program. • Regarding ADOT’s attempt to develop a mentor-protégé program, an interviewed represen- tative of the Arizona DOT said, “We tried to set up a program to match people. Firms entered into an agreement for 6 months. Subs identified their needs. And, we offered an incentive, either pay for the prime’s time or perhaps lower the DBE goal for a project. Associated General Contractors (AGC) and contractors were against it.” She reported that contractors say “they already do this” and noted that ADOT is now trying to build mentorship into the business development program where primes would mentor subs in an 18-week commitment. She explained that in the program the DBEs get to meet with primes, a video is produced about their business, and in sum, “firms get work out of it.” However, she said that ADOT “has to fight to get 10 to 12 DBEs to go through it” each time it’s offered, and indicated that 18 weeks may be too long. She added that ADOT has built a “flag” into its DBE directory that lets others know if a firm is a graduate of the business development program. She said that primes say they like it and indicate that they would also like to know what equipment DBEs own or have access to. • When asked about any mentor-protégé programs, an interviewed representative of the New Mexico DOT reported that they don’t have one. However, he said that NMDOT has met with the Albuquerque Hispano Chamber of Commerce regarding their successful program, and noted that one of NMDOT’s contractors, Valley Fence, is a mentor in the program. • Regarding mentor-protégé programs, an interviewed representative of the Louisiana DOT reported that LaDOT does not provide any as they are “too difficult to monitor.” She later commented that LaDOT staff are interested in providing specialized programming and strategically going after DBEs to participate. She added that LaDOT has built relationships with services providers and industry associations in the area.

122 Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program A Few Representatives Reported on Services Offered by Their DOT That Help DBEs with Estimating and Bidding • A representative of the Arkansas DOT, responding to a survey, commented that ARDOT provides business development courses and workshops in basic/advanced plans and specifica- tions, estimating, bidding, work zone safety, and many other topics. • An interviewed representative of the Iowa DOT reported offering two different supportive services. She said, “One is an engineering consultant . . . who works with DBEs or potential DBEs. . . .” She remarked that the engineering consultant provides a monthly blog with news and tips on preparing bids and networking with primes. The same DOT representative added, “The second is the Institute of Transportation offered from Iowa State University. They provide DBEs with business development assistance, marketing [assistance], and website development. They also have tutorials on using technol- ogy more effectively.” • In describing services offered, an interviewed representative of the Tennessee DOT said that a consultant team meets with a prime or sub in person or on a job site to provide customized training. He indicated that supportive services have helped businesses that “are headed off a cliff.” For example, he said that one training helped a firm in bankruptcy learn how to bid and delegate work more effectively. This firm, he added, is now doing well and was recently recognized with a business award from TDOT. • An interviewed representative of the Florida DOT reported that FDOT offers a Construction Management Development Program that includes week-long courses on how to do business with FDOT, with focus on estimating, bidding, project planning, and other topics. Some courses are online, she added, while some are in a classroom and some are training in the field. Some Representatives Commented on the Helpfulness of Financing Assistance-Related Services and Programs Offered by Their DOT • When asked about any supportive services offered to DBEs, an interviewed representative of the Hawaii DOT explained that they host a consultant-delivered workshop series in partner- ship with the Small Business Administration. She added that the business development series focuses on bonding, financing, “how to grow a business,” and “how to think like an owner.” She went on to say that contractors and subcontractors are offered one-on-one technical assistance as part of these workshops. Regarding financing assistance, the same DOT representative said that one access to capital workshop provides training on accessing bonding, loans and nontraditional loans and lines of credit. She added that this two-part workshop includes “a practice run . . . pitch to banks.” She said participants “learn to speak the [banker’s] language” and get “prepared [with what they need] to go to a bank” to secure financing. • The representative of the Oregon DOT reported that the Ohio DOT partners with SBDC to offer reimbursement for DBEs if they are enrolled in small business programs through com- munity colleges. She also reported that the Ohio DOT offers an accessing capital course that is reimbursed to both DBEs and ESBs. • A representative of the Pennsylvania DOT said that PennDOT utilizes DBE supportive services by Cheyney University to develop and manage a business development program which pro- vides intensive and frequent coaching on specific DBE goals and milestones. The same DOT representative added that firms in this group are encouraged to attend training, increase industry specific certifications, and make long-term goals for company growth. • An interviewed representative of the Florida DOT reported that they have a bond guarantee program that covers up to 90% of the bond for projects under $250,000, and 80% of the bond for projects between $250,000 and $500,000. She went on to note that FDOT sees a need for more access to capital and bonding.

Qualitative Information from Surveys and In-Depth Interviews with State DOTs 123 • Responding to a survey, a representative of the Colorado DOT commented that a key to success for DBEs is “access to capital.” • An interviewed representative of the Montana DOT said that classes on profit maximizing and other finance-related classes are popular. She added that bonding is a hot topic with DBEs and noted that “they would like more help on [that].” • An interviewed representative of the Georgia DOT reported that access to capital and bond- ing services are among those available from GDOT. She said that she brings financing and bonding professionals to DBE training sessions where they provide practical assistance with financing and bonding applications. She said that some DBEs are able to leave with a letter indicating that they will receive bonding. The same DOT representative went on to say that she has seen success through this “prac- tical approach.” For example, she reported that prior to this assistance, a small African American-owned company that does asphalt work was unable to get bonding. She stated, “Firm owners may be wonderful at brick and mortar work, but back office administrative tasks are much more difficult.” She added that GDOT supportive services focusing on admin- istrative tasks are valuable. • Regarding her state DOT’s loan mobilization program, an interviewed representative of the Wisconsin DOT said that WISDOT works with banks to extend working capital loans to DBEs using the state DOT contract as collateral. She also said that their supportive services program allows bankers to talk with DBEs directly. She noted, “A lot of banks don’t know about financing for construction firms. . . . [For example], if the firm is not paid in 30 days, banks couldn’t count that money.” • An interviewed representative of the Missouri DOT reported that MoDOT offers “prepara- tory” training in financing and bonding, and other technical assistance. • An interviewed representative of the Louisiana DOT reported that LaDOT offers some bonding/capital assistance by serving as a liaison to banks, though they’re not always able to make successful matches between firms and banks. • When asked about any supportive services offered by his state’s DOT, an interviewed repre- sentative of the New Hampshire DOT stated, “We . . . have financial evaluation assistance to see if they’re using their assets properly, or taking advantage of the supportive services.” • An interviewed representative of the Nebraska DOT said that supportive services offered by NEDOT are recent additions. He commented, “We didn’t have supportive services in the past.” • A representative of the Delaware DOT said that a loan program would be helpful for DBEs with working capital so they can invest in new equipment and software. He commented, “That way, they can take the risk on new work.” A Few Representatives Discussed Services Offered by Their DOT That Assist with Prequalification • An interviewed representative of the New Mexico DOT reported that NMDOT has a pre- qualification program that measures the quality of performance of contractors on state DOT projects. He said that NMDOT measures performance throughout the contract, and based on the scoring of performance, a contractor gets an overall prequalification score that can be used as a price preference when determining low bids on future NMDOT projects. Regarding this program, the same DOT representative said that prompt payment of subs is one of the evaluation factors and that contractors “take it very seriously . . . [as] a hot button topic.” He added that this new program started in 2016 after receiving special per- mission from FHWA to try it. He went on to say that in the past NMDOT had to suspend a contractor for violating prompt payment guidelines. • An interviewed representative of the Georgia DOT reported that GDOT opened a busi- ness resource help center in 2016 to help DBEs and registered small and veteran-owned businesses in responding to state-funded contracts. Staff from the center, she added, work

124 Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program with individual companies to help them become prequalified for that work and learn about those opportunities. She said that this includes hands-on assistance navigating the web- based application. • An interviewed representative of the Arizona DOT reported that she is developing a “prime/ DBE academy” to help DBEs win prime contracts. She said that this will include help getting prequalified and obtaining bonding, and in the near future may include phone notifications for bid invitations. Some Representatives Commented on Supportive Services Programs Geared Towards Professional Services Firms • When asked if the DOT offers any supportive services geared towards professional services firms, an interviewed representative of the Hawaii DOT said that some professional services firms attend the business-to-business networking meetings, though participation from them is limited. She went on to say that success for a professional services firm is mostly based on “reputation.” • An interviewed representative of the Minnesota DOT said that MnDOT operates the Equity Select program for its state-funded professional services contracts. This relatively new pro- gram, she explained, allows for direct selection of targeted businesses for professional services procurements under $25,000. • While he indicated that there are no supportive services geared specifically to professional services firms, an interviewed representative of the Missouri DOT reported newly setting DBE goals for consulting services with some early successes. He also indicated knowledge of DBEs in professional services serving as both primes and subs. • An interviewed representative of the Tennessee DOT reported that although TDOT’s sup- portive services are open to all businesses, those in highway construction industries are given preference when registration is limited. He recalled a few engineering firms that had taken advantage of some supportive services and explained that TDOT does not set goals on profes- sional services contracts, causing somewhat limited participation among professional services firms. He went on to say that goal setting for professional services contracts is planned for the future. • An interviewed representative of the Louisiana DOT said that while supportive services offered by LaDOT focus mainly on the construction industry, they’ve made attempts to target some professional services associations and prime consultants who are architects and engineers. Feedback on Program Effectiveness State DOT representatives were asked about specific business development programs cur- rently offered by the state DOT and programs’ effectiveness. Comments include: • When asked how her state decides to implement its programs, an interviewed representative of the Delaware DOT said, “We send a survey out to DBEs to show them what supportive programs are available at that time.” Regarding how they track the effectiveness of the pro- grams, she said, “The DBE summit brings in about 200 to 250 firms regularly. After the summit is over, we send out a follow-up survey to get their responses on the relevance and quality of the event. We analyze the results then implement change for the next event the following year.” When asked if DBEs themselves have given feedback on programs’ effectiveness, the same DOT representative stated, “Yes, we obtain a 50% response rate from our surveys after the DBE summit. Our administrator will send out notifications to get the DBEs to respond. They are very busy, so it takes a few [instances] of reaching out. It’s a very engaging process that we look forward to.”

Qualitative Information from Surveys and In-Depth Interviews with State DOTs 125 • An interviewed representative of the Missouri DOT reported a strong commitment to inclu- sion and over 10 years of experience implementing programs as primary contributors to MoDOT programs’ effectiveness. He reported a “seriousness” to what MoDOT does with facilitating relationship-building as a primary goal. He added that annual updates, checks, and rechecks also contribute to their successful programs. • A representative of the Wyoming DOT, responding to a survey, commented that “race-neutral” programs help DBEs upon “graduation” by requiring them to learn to “bid competitively” against other DBEs to secure opportunities. • A representative of the South Carolina DOT, responding to a survey, said that in order to help DBEs pay for equipment and software, “[There should be] a goal of no less than 13 to 15% on all state and federal projects.” He also suggested there be more on-site monitoring of the program. • An interviewed representative of the Tennessee DOT indicated that firms are pleased with the supportive services offered by TDOT and said that successful DBEs serving as subs and/or primes typically take advantage of the supportive services offered. He stated, “Success- ful DBEs . . . they are going to meetings, annual meetings, and [other] supportive services [events].” He emphasized that the most successful DBEs are “engaged and know the value of supportive services.” The same DOT representative also reported on a DBE advisory committee consisting of primes, subs, DOT and legal staff and others giving input on sustaining and improving sup- portive services. He said that the committee keeps current on what other non-reciprocal cer- tifying agencies in the state are doing, and evaluates stakeholder perceptions of the state DOT DBE program, contract goals, and supportive services. He went on to say that he believes supportive services contribute to the success of DBE firms. • When responding to a survey, a representative of the Connecticut DOT suggested setting “term limits” on certification. She said that it’s important for DBE firm owners to set realistic goals for themselves and develop strong leadership skills. • When asked about the effectiveness of supportive services offered by his state’s DOT, an inter- viewed representative of the New Hampshire DOT said, “We looked at their bid and quote process [and] looked at if they were bidding high or within range. We received positive feed- back from this process.” • When asked if the DOT receives feedback or tracks participation, an interviewed represen- tative of the South Dakota DOT remarked that their supportive services consultant sends monthly reports. He added that only 20 to 30 DBEs out of 125 respond to any tracking or feedback on the supportive services. Tiers of Programs Assisting DBEs of Different Sizes State DOT representatives were asked if their state offers “tiers” of programs that are designed for new or very small companies as well as other assistance geared towards more established DBEs. Comments follow: • An interviewed representative of the Minnesota DOT reported that MnDOT is working on supportive services for both “adolescent” and “mature” firms. She said that due to older firms outgrowing QuickBooks and looking for more sophisticated accounting systems, she is trying to design relevant training and assistance for more sophisticated products. She went on to say that MnDOT is forming a cohort group of firms in similar situations with similar issues and is looking to develop more sophisticated assistance geared towards them. • An interviewed representative of the Louisiana DOT indicated that LaDOT does offer some services geared towards bigger and more established DBEs. She said that even the most successful DBEs sometimes lack the technical skills, primarily related to payroll/tax com- pliance, to move to the next level and could benefit from the agency’s supportive services.

126 Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program • An interviewed representative of the Missouri DOT reported that they support more estab- lished and successful DBEs by offering an advanced contractor training program. He said that while the program is not intended to graduate successful DBEs, it helps businesses learn about how to expand services or grow revenue. • An interviewed representative of the Delaware DOT said, “We offer DBE services . . . [and] 15 successful firms wanted to work with smaller DBEs on business plans. The primes wanted to help the newer, smaller firms get up to speed on the processes.” • An interviewed representative of the Iowa DOT reported that they have a DBE “U” program set up in phases for DBE participation. • An interviewed representative of the New Hampshire DOT stated, “Our directory is not very large, [but] we have a practice where if a DBE needs certification we still help because we serve the people of New Hampshire. If DBEs need assistance, we will help. We do not have tiers of assistance.” • When asked if there are “tiers” of programs offered by his state’s DOT, an interviewed repre- sentative of the South Dakota DOT replied, “No, we don’t have any tiers, as long as they are certified as a DBE in the state of South Dakota, we will work with them and help them in any way we can.” Small Contracts Open to DBEs and Other Small Businesses as Primes State DOT representatives discussed opportunities for DBEs and other small businesses to perform small contracts as prime contractors. Some State DOTs Encourage DBE Participation as Prime Contractors or Consultants on Small Contracts • An interviewed representative of the New Hampshire DOT stated, “We ask if [the DBEs] have the capacity to do jobs as a prime, [then] we try to get them started on small projects. Those primes are looking to take a chance on someone new, [and] they are given the opportunity to bid on [Local Project Administration] work. There are federal dollars in that program as well.” When asked if they track any data on the effectiveness of this practice, he reported that they do not. • An interviewed representative of the Florida DOT reported that FDOT operates an SBE pro- gram that reserves bidding on contracts under $1.5 million for SBEs. She said that they define an SBE as a company with annual revenue under $6.5 million and that there is no personal net worth aspect to eligibility. • An interviewed representative of the Georgia DOT indicated that GDOT encourages small business participation by limiting certain contracts to $2 million and under. She said that $200,000 to $2 million are “right-sized for small business[es],” according to one of the GDOT Commissioners. The same DOT representative later said that until recently, GDOT performed small routine maintenance projects with its own forces. She said they now contract this work out using state funds and noted that these projects include small paving and repair jobs. She went on to say that DBE program staff have made a concerted effort to include DBEs and other small busi- nesses as prime contractors for those contracts. • An interviewed representative of the Nebraska DOT reported that NEDOT offers small con- tracts for DBEs to bid on as prime contractors. • An interviewed representative of the New Mexico DOT reported that a few DBEs have been successful competing as primes, mainly because the construction projects in New Mexico are usually smaller than those in other states. He added that there are some DBE bridge firms to

Qualitative Information from Surveys and In-Depth Interviews with State DOTs 127 compete for the many bridge-related projects, and commented, “On the smaller projects, DBE primes can compete and win.” • An interviewed representative of the Wisconsin DOT reported that WISDOT does not cur- rently have a small contracts program for small businesses, but commented, “I would love to do [that].” A Few Representatives Noted That Unbundling Large Contracts Contributes to DBEs’ Success • An interviewed representative of the Montana DOT said that unbundling contracts is impor- tant to the advancement of successful DBEs. • Responding to a survey, a representative of the Rhode Island DOT commented that increased unbundling of projects would be helpful to DBEs’ ability to bid and perform as primes. • Responding to a survey, a representative of the Texas DOT said that unbundling large con- tracts and restricting contract types by NAICS code would benefit DBEs in Texas. Other Supportive Services Programs to Help DBEs Some state DOT representatives reported on additional supportive services programs offered by the DOT and/or its partners to help DBEs succeed and “graduate” from the federal DBE Program. One representative reported on supportive services to be offered in the future. For example: • A representative of the Virginia DOT said that VDOT has revamped its business opportunity and workforce development center to offer the DBEs a one-stop shop service to diversify their business through a flexible delivery model. • An interviewed representative of the Georgia DOT said that GDOT has identified 18 areas of work on projects where primes could better involve DBEs. She said that GDOT provides names and capability statements of DBEs to prime contractors to encourage them to break out of the standard work types for DBE participation. However, she noted that the primes have not been responsive. The same DOT representative added that GDOT has been more successful in diversifying DBE work on P3 projects. Regarding the proposal process, she noted that GDOT asks propos- ers to identify how they will provide opportunities to DBEs outside of the traditional types of work, with good results. She said that GDOT has also had success on its Major Mobility Investment Projects (MMIPs) as it has been able to spread work between pre-construction and construction phases. • A representative of the Nevada DOT described their planned “collaborative” that will inte- grate the various community resources into a single supportive group that will enable small businesses to grow in the current and future local and state markets. • An interviewed representative of the Arizona DOT reported that ADOT has implemented the “Just One More” campaign to encourage primes to include more DBEs than necessary to meet a DBE contract goal. However, she noted, “Primes view it as a big risk,” and added, “If a DBE starts doing poor work, then it won’t be used.” • An interviewed representative of the Montana DOT noted that reimbursement for assis- tance received by DBEs for conferences and travel is very popular. She added that about 25 firms, both contractors and consultants, have used reimbursement this year. The same DOT representative also said that MDT is “switching up their business devel- opment program” because they want to help companies get a business plan set up and take reimbursement-eligible trainings of their choice. She said that firms will get to meet with MDT staff, and added, “Through the [business development plan], we help firms set goals and project what the future looks like.”

128 Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program • A representative of the California DOT, responding to a survey, reported that they have plans to offer subcontractor training workshops, a mentoring program, and other outreach pro- grams in all 12 Caltrans districts to inform DBEs about Caltrans projects. • Regarding other supportive services offered by FDOT, an interviewed representative of the Florida DOT reported that they help firms prepare an online resume. One of FDOT’s sup- portive services providers, she added, holds outreach events where DBEs can introduce them- selves to primes. She said that primes are not required to enter DBE commitments, but are encouraged to do so, and are not required to retain those DBEs. • An interviewed representative of the Ohio DOT said that the Ohio DOT is exploring a pro- gram to incentivize primes into using DBEs that they haven’t used before. Regarding this potential program, she said, “If you use new DBEs, you [could] give a percentage off a prime’s price to account for those DBEs when you determine low bid.” She also mentioned the idea of lowering the current 8% DBE contract goal to 5% if the prime uses new DBEs. She said they would like to do a pilot program, but commented, “The [regulations] limit us.” She went on to say that she is working on an RFP for a mentor-protégé program. • When asked to elaborate on specific programs for DBEs, an interviewed representative of the Iowa DOT said, “We tried to work with consultants to connect them to DBEs. There are a lot of skilled [DBE construction firms] out there who decide they want to work for themselves, but they didn’t see a necessity for a business plan. I’ve noticed people in the Midwest tend to be bootstrappers, meaning they do things by themselves.” • The representative of the Oklahoma DOT indicated that they offer business training in Excel, QuickBooks, OSHA, website design, marketing, and are currently in the process of hiring a consultant to help DBE firms with negotiating contracts and bidding skills. • The representative of the Georgia DOT has attempted to involve DBEs on projects where primes could better involve DBEs. She added that GDOT, through the proposal process, encourages opportunities for DBEs outside of traditional types of work. The GDOT Major Mobility Investment Projects (MMIPs) spreads work between the pre-construction and con- struction phases of projects where DBEs perform. Some representatives reported that their DOT sometimes provides services alongside local industry associations. Comments include: • Regarding supportive services or other factors that help DBEs prepare to leave the pro- gram, an interviewed representative of the Missouri DOT reported that MoDOT partners on others’ events, such as AGC meet-and-greet sessions and similar networking events. He added that there is a state statute for prompt payment and that MoDOT has relaxed bonding requirements. • An interviewed representative of the New Mexico DOT reported that it’s difficult for con- tractors to recruit construction labor in the current environment. Because New Mexico is non-union except for electricians, he said that contractors say, “Just get us the people and we will train them.” He said that NMDOT is partnering with AGC on workforce initiatives to improve recruitment, and noted that there is a pilot program at University of New Mexico Gallup (UNM Gallup) to train truckers, though he believes it has not been as successful as anticipated in getting people jobs. • An interviewed representative of the South Dakota DOT reported, “Our consultant does a really good job. They go to many events and set up a booth to get the word out about what the DOT can do for DBEs.” He added, “I’m working with our local AGC to get them to present. . . . It’s a win-win.” • An interviewed representative of the Louisiana DOT indicated that successful DBEs likely seek assistance from or may be active in local industry associations and services providers such as AGC and SBDC.

Qualitative Information from Surveys and In-Depth Interviews with State DOTs 129 Unneeded or Underutilized Supportive Services Programs A few state DOT representatives commented on programs or supportive services offered by the DOT not often utilized by DBEs. For example: • An interviewed representative of the New Hampshire DOT stated, “It’s much different to get people to come to training . . . possibly due to the increase in the use of webinars or video conferences. We do needs assessments, but it’s [still] something we need to look into.” • An interviewed representative of the New Mexico DOT said, “Supportive services have not been successful. The awareness [among DBEs] just isn’t there. We do a poor job of bring[ing] them in.” He said that participation in supportive services for architecture and engineering firms is particularly low. The same DOT representative said that NMDOT is trying to bring in more Native American-owned DBEs because the state is 9% Native American. He added, “Several firms are aging, and once sold off or the owners retire, [it] will reduce the DBE participation [that NMDOT gets].” He indicated that one of the successful DBEs, Hasse Contracting Company, may leave the program after its owner retires. • An interviewed representative of the Arizona DOT reported that very few DBEs use the one- on-one assistance ADOT offers even though it’s actively promoted by ADOT. • An interviewed representative of the South Dakota DOT commented, “DBEs are not taking advantage [of programs] to grow. Some DBEs don’t want to grow. They want to stay in the program.” • According to the representative of the West Virginia DOT, at one time WVDOT aggres- sively worked with certified DBEs to prepare them for when they exit the DBE program. They offered an Entrepreneurial Development Institute (EDI) several times a year in dif- ferent locations throughout the state covering many business industry-related topics such as submitting job quotes to prime contractors, requirements for a subcontractor to bid as a prime contractor, prequalification, and others. He added, “At this time, I am not aware of any programs that offer these supportive services.” Helpfulness of DBE Goals to Success State DOT representatives discussed whether or not DBE goals help to make DBEs successful. Comments include: • An interviewed representative of the Missouri DOT reported that the strength of MoDOT’s DBE program and project goals contribute to DBEs’ success statewide. He added that MoDOT has “intentional and inclusive” outreach to foster connections between subs, primes, and the DOT staff. • When asked if DBE goals contribute to DBE firms’ success, an interviewed representative of the South Dakota DOT stated, “Yes, I think they do. In fact, our goal was 6.47% and we hit 17%. Some firms got some big projects [and] I think our state can do well without a goal.” • An interviewed representative of the Ohio DOT indicated that DBE goals contribute to DBE firms’ success. She reported that the Ohio DOT assigns a “developmental goal” on certain contracts and said primes need to propose how they will mentor or otherwise help the DBE sub gain experience and get prequalified, et cetera. She said they implemented this type of program 2 years ago with positive response. The same DOT representative added that the Ohio DOT set different types of goals on the first two phases of a $300 million construction project in Cleveland that included state funds. She said they set goals for new, small, local, and EDGE businesses, with “new” businesses being those no more than 3 years old. She noted that the Ohio DOT did not use this program for the third phase of the project, as it involved no state funds.

130 Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program • Regarding whether or not DBE goals contribute to DBEs’ success, an interviewed repre- sentative of the Hawaii DOT reported that DBEs only get work when goals are in place. However, she noted that even when goals are applied many DBEs do not secure work. • An interviewed representative of the New Hampshire DOT commented, “DBEs can’t use goals as a crutch.” He added, “There is a carrot and the stick situation going on. What we do is send out a newsletter and include a section about goals, and say, ‘Hey primes, make sure you get DBE bids for projects,’ [and] this usually sorts out the issue.” • An interviewed representative of the Iowa DOT reported, “We look at how many firms graduated from the program, but it’s only one aspect of success. There is a firm I know of that has been in business for over 20 years. This owner does not want to grow out of the program, but he’s been able to keep the lights on. I think that’s success.” • Regarding the helpfulness of DBE goals for small, disadvantaged firms, an interviewed rep- resentative of the Delaware DOT said, “I don’t think they make them successful. I think that DBE goals are an indicator of success, but not [success] in and of itself.” She continued, “Some firms like to be the go-to guy on a job for specific work. I know a company that does one specific kind of job, [and] he’s been in the program for 20 years. He doesn’t have a desire to become a prime. As long as he’s putting food on the table to feed his family, then he’s happy.” Other Comments About How to Improve State DOT Operation of the Federal DBE Program State DOT representatives discussed how their state’s operation of the federal DBE Program could be improved. Many representatives suggested improvements to better prepare DBEs to leave the program, such as promoting mentor-protégé relationships. Other suggestions for improvement are better dissemination of business assistance information, financial assistance, small business set-asides and safety training, among others. Examples include: • When asked for any suggestions on how to improve her DOT’s operation of the federal DBE Program, an interviewed representative of the Hawaii DOT said that although there have been improvements in the agency’s goal-setting process, there is still “room for more.” She said that HDOT “can do better in actually using an online tracking system.” The current tracking system, she noted, is “mostly hard copy . . . horrendous [and] obsolete.” The same DOT representative added that reporting and compliance need to be improved. She said that when working with the divisions, their monitoring of CUF compliance is defi- cient, despite having forms available to make the process easier. She also indicated a lack of assistance from USDOT, saying that HDOT is small and largely ignored. She said, for exam- ple, she requested federal assistance with an issue regarding a prime contractor’s noncompli- ance but was informed that the federal government had “bigger fish to fry.” She commented that this led her to feel “defeated.” She went on to say that a mentor-protégé program is on her wish list, though their sup- portive services funding, only $53,000, goes largely to consultant services and room rental for meetings, which does not leave resources for such a program. For a mentor-protégé program to be successful, she said that HDOT would have to incentivize prime contractors to get buy-in. • When surveyed, an interviewed representative of the Georgia DOT stated that she would like to see a set-aside program for small businesses. She said a local university is looking into the value and feasibility of such a program and noted that their findings can help GDOT get authorization from the state legislature. • An interviewed representative of the Arizona DOT said that she would like to see an ADOT program where anything under a certain dollar level would be reserved for bidding by small

Qualitative Information from Surveys and In-Depth Interviews with State DOTs 131 businesses. One of the negative impacts of the current rules, she added, is that companies are barred from competing as a prime for an on-call contract if they are a sub on another team. • An interviewed representative of the Missouri DOT identified a need for creative strategies that help primes meet contract goals. For instance, he suggested that a prime be able to use DBEs that perform “pre-work” to meet contract goals. He gave the example of a DBE rock crusher that performs what he called “pre-work,” which is work conducted prior to contract award/signature and therefore not eligible to be used to meet contract goals. He explained that a prime purchasing that rock should be able to apply the rock crushing “pre-work” to meet the contract goal. He went on to recommend the development of a federal bonding program open to DBEs. • When asked if she has any ideas on how her state can improve its operation of the federal DBE Program, an interviewed representative of the Delaware DOT said, “Some DBE firms want to work on new projects, [so] perhaps a loan program to help DBEs float the cash while they purchase equipment and software [would be helpful]. That way, they can take the risk on new work.” However, she commented, “I don’t think banks would go for that.” • An interviewed representative of the Tennessee DOT reported a growing need for a “guide for DBEs.” A DBE guide, he explained, could disseminate business information on how to work with supportive services, improve business operations, and comply with state and federal regu- lations. He also indicated the need for a best practices document that state DOTs could use to improve consistency among DOTs in addressing issues of contract and regulatory compliance. • An interviewed representative of the Wisconsin DOT discussed why she marked “safety train- ing” as something that would be helpful once a DBE is successful. She said there are require- ments for having staff at a contractor trained in safety, and noted that WISDOT has an owner controlled insurance program (OCIP) on some projects. She added that they need to make sure the contractor is doing things to minimize risk and liability. • An interviewed representative of the Minnesota DOT said, “The program struggles with how it is perceived . . . and this affects the way it operates.” She said it would be beneficial to some- how “situate the program within the project delivery model,” and noted, “It’s now seen as an administrative function . . . part of department overhead.” The same DOT representative said that state DOTs need to shift the program to be “another part of how the construction project gets delivered . . . and creates value.” She added, “Just like environmental requirements . . . small business involvement should be just like that. It should be obvious, just like environmental.” She noted that this would make the DBE program go from compliance to being of value on its own. She later commented that a state DOT’s success with the federal DBE Program is a reflec- tion of its executive leadership. Speaking of the current MnDOT Commissioner, she said, “It’s important to him.” She added that the reason MnDOT puts so much focus on awarding small maintenance contracts is simply because “[it] is important.” • When asked for any other comments or suggestions, an interviewed representative of the Iowa DOT commented that “there is a lack of a broad definition of success” within the federal DBE Program. • An interviewed representative of the Louisiana DOT said that a recent “shift in permanent staff to temps in Washington” has impacted issues of DBE certification and compliance. She said that she has observed trends at the federal level in the resolution of appeals decisions that differ from how those issues were addressed in the past. She indicated a need for re-evaluation of current processes to expand collaboration between the federal government and the certify- ing agency. She recommended, for example, that the certifying agency be given an opportu- nity to provide input throughout the appeals process. • The representative of the Idaho Transportation Department, when responding to the survey, commented that ITD “setting race-gender project goals for the first time in nearly 12 years is a big, [positive] step.”

132 Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program Two Representatives Suggested That the DBE Program Implement an “End Date” or “Time Limit” for Firms’ Participation • Regarding how his state’s DOT could improve its operation of the federal DBE Program, an interviewed representative of the Nebraska DOT stated, “[There] could [be] a data-driven number to drive DBE firms from formation to benchmarks within the program and an end date somewhere along the way. At this point, this would be an arbitrary number, but let’s say it [could be] 10 years.” • An interviewed representative of the Ohio DOT said it would be a good idea to institute a time limit on how long a company can participate as a DBE in the program. A Few Representatives Compared Their State DOT’s Operation of the Federal DBE Program to Neighboring States and Indicated Room for Improvement in Their Own States • An interviewed representative of the New Mexico DOT reported that NMDOT is trying to learn from Arizona DOT regarding how to contract for supportive services in a way that achieves desired results. He said that they recently retained an Arizona firm to perform these services. • An interviewed representative of the New Hampshire DOT said, “Federal work is a lot of paperwork, [like record-keeping]. It’s a business decision to do federal work. . . . The word on the street is New Hampshire has a lot more rules compared to neighboring states.” • An interviewed representative of the South Dakota DOT commented, “I would like to see what other states are doing to be effective in the program. There is always opportunity to learn and grow from others.”