Current Practices to Set and Monitor DBE Goals on Design-Build Projects and Other Alternative Project Delivery Methods (2015)

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21 CHAPTER FOUR NEW APPROACHES FOR APPLYING DISADVANTEGED BUSINESS ENTERPRISE CONTRACT GOALS of bid. However, most subcontractors cannot provide quotes based on an incomplete design, so NYSDOT has modified its procurement documents to request a plan for reaching the applicable DBE contract goal and demonstration of good faith efforts before submittal of the proposal. In addition, contract documents require evidence of continuing compli- ance to be submitted after contract award. Design-builders secure DBEs as the design for each project component is completed. NYSDOT concludes that this process allows compliance with the Federal DBE Program without placing DBEs and other subcontractors at risk of bidding on incom- plete plans (NYSDOT 2011). South Carolina DOT Until May 2014, SCDOT used traditional DBE contract goal methods, in which commitments were required at time of proposal. SCDOT was unsatisfied with this approach, as were DBEs and prime contractors. On its new 385/I-85 interchange design-build project in Greenville, SCDOT is requiring proposers to submit a plan for DBE participation at time of proposal and provide DBE commitments within 180 days of project award. According to SCDOT, primes, DBEs, and agency staff have all found this method to be acceptable. SCDOT reported that it had to reject some proposals for previous design-build projects because proposers failed to meet the DBE contract goals or show good faith efforts to do so. On one project, the director of construction decided to reject all proposals and rebid the project because of one proposer’s noncompliance with the DBE contract goals. SCDOT also reported that DBEs sometimes backed out of the commitments they made at contract award because they could not do the work or could not maintain their prices by the time the work came up, which might be two years later. Prime contractors complained that it was hard to provide commitments because so little was known about project design at time of proposal. SCDOT also indicated that many proposers in South Carolina came from out of state and were not familiar with this method for design-build projects. Utah DOT UDOT reported that traditional application of DBE contract goals was unsatisfactory for the agency, prime contractors, and DBEs. The DOT found that design-build projects evolved Twenty-eight of the 33 state DOTs applying DBE contract goals to design-build contracts have deviated from tradi- tional approaches for implementing the Federal DBE Pro- gram for alternative delivery method projects. Chapter four describes variations in frequently used new approaches. BARRIERS THAT EMERGED WITH APPLICATION OF TRADITIONAL APPROACH TO DESIGN-BUILD State DOTs and others report that requiring a proposer to make DBE commitments at time of proposal creates a sub- stantial disadvantage to applying a traditional DBE contract goals approach to alternative delivery projects. The state DOTs discussed here provide examples of why many states have adopted new procedures. Colorado DOT CDOT initially began applying DBE contract goals to design- build projects by allowing proposers to decide whether to adhere to the traditional practice of submitting commit- ments to use specific firms or, alternatively, to provide gen- eral commitments by work area and explain why they could not identify individual firms. CDOT found that most pro- posers made specific commitments but then requested many changes between the time of proposal and the actual work. CDOT reported that prime contractors much prefer a sys- tem that requires commitments only for DBE engineering- related firms immediately after contract award and allows them to provide commitments for DBE construction firms closer to when those firms will be used. This method miti- gates the issue of changes in DBE commitments between proposal and actual work due to changes in the businesses or the project. For example, on one project, a DBE listed in a $7 million up-front commitment lost its certification by the time of the work. New York State DOT NYSDOT’s design-build manual discusses the difficulties of applying traditional DBE contract goals to design-build projects. In design-bid-build projects, the contractor can identify the specific work subcontractors will perform and request binding quotes to perform that work before the time

22 quickly as the design progressed, which often resulted in changes in subcontract work items. As a result, some com- mitments that were made early in the proposal period could not be fulfilled, leaving committed DBEs without work. UDOT now requires proposers simply to commit to meeting the DBE contract goal, or demonstrate that they have made good faith efforts to do so, at time of proposal. For a proposal to be considered, the proposer must select one of those two options, but so far it seems that no pro- poser has used the second option. Proposers do not need to submit DBE commitments at time of proposal or before contract execution. Instead, the winning proposer must submit DBE commitment prior to use of the subcontractor. UDOT reported that this change substantially improved the process for applying DBE contract goals to design- build contracts. Caltrans Caltrans reported more opportunities for a prime contractor to meet the DBE contract goal on a design-build project than a traditional project owing to the size and length of construc- tion time (most are 3–4 years long). To take advantage of these differences, Caltrans modified its approach to using DBE contract goals. Caltrans now requires only a plan for DBE participation from proposers. The selected design- builder then has more time to identify and involve DBEs in the contract. Some design-builders seek out new DBEs and actually help some of them get certification to count toward the DBE goal. A design-build project could allow the design- builder more flexibility to customize work components and develop smaller scopes of work to involve more DBEs. Virginia DOT VDOT has traditionally examined compliance on a pass-fail basis at the RFP evaluation stage of a design-build project. Pro- posers had to meet the contract goal or show good faith efforts. They also had to identify commitments to DBEs. VDOT reported that it tried to get industry to find DBEs up front, but this approach met resistance from design-builders. Design- build teams said that by the time they get to a DBE’s work, the DBE might be out of business or working on other jobs. To find ways to improve its approach to DBE contract goals on design-build projects, VDOT conducted a num- ber of meetings with prime contractors and DBEs. Based on their input and suggestions from VDOT divisions, the department developed a new approach to DBE contract goals that removed the requirement to identify commitments to specific DBEs at time of proposal. Beginning in February 2014, VDOT changed to a new process (Special Provisions 107.15, which is included as Appendix E to this report). VDOT still requires a statement that proposers will meet the goal or be able to show good faith efforts at time of proposal. However, it now requires that the design-builder submit a list of DBEs and dollar com- mitments after contract award. VDOT initially used this model on its P3 projects and has extended it to design-build projects. SUMMARY OF NEW APPROACHES, BY STAGE Table 3 summarizes the key differences for new approaches for each of the seven stages in the process described in chapter three. The balance of chapter four describes the use of new techniques in place of the traditional methods for each stage. 1. Identifying the Design-Build Project as Appropriate for DBE Contract Goals This step does not vary between states applying traditional methods and those applying new approaches to DBE con- tract goals on design-build contracts. 2. Incorporating DBE Program Language in RFQ, RFP, and Contract Documents Inclusion in contracts of requirements concerning DBE contract goals is specified in federal regulations (see, for example, 49 CFR Section 26.53). Incorporating appropri- ate contract language in the DBE contract goals process can be more challenging for states that use new approaches. Because the processes are new, there is a greater need to include considerable detail concerning the process and expectations of the contractor before receiving qualification statements or proposals. Appendix B shows the complete DBE provisions for a design-build project in 2013 from North Carolina DOT. Appendix F provides DBE special provisions for design- build projects from Minnesota DOT. One U.S.DOT staff person pointed out that alternative delivery methods allow state DOTs to ask for things they cannot request in a design-bid-build project. He added that the state DOTs could be working on this additional contract language for all types of alternative delivery projects, includ- ing large P3s. He urged state DOTs to be the subject matter expert on DBE contract goals and design-build contracts. He said that the law firms that draw up contracts for design- build projects are sophisticated when it comes to finance but simply copy DBE components from other states; he has seen unrelated program material from one state copied and pasted into contracts for other states. In its review of the success of a particular design-build project, Colorado DOT advised requesting proposers

23 to encourage development and opportunities, including unbundling, for DBEs and small businesses as part of their proposal preparation. CDOT advised that these efforts could be compensated through the stipends paid to propos- ers (CDOT 2012). Interviewees from state transportation departments indi- cated that engineering staff and others involved in design- build procurements may not fully understand the Federal DBE Program and its requirements. They said that impor- tant steps can be missed as a result of this lack of aware- ness. Some DBE program staff indicated that they should be involved from the beginning of these projects but were not. One person said it feels as though the DBE program is an afterthought. In the same way, state DOT and industry interviewees reported that DBE program staff may not understand alter- native delivery contracting methods. Some state transportation departments have developed committees that included DBE program staff, engineering staff, and professionals from other divisions to establish and communicate DBE program requirements to all parts of the organization involved in project contracting and delivery. Some state transportation departments have involved prime contractor and DBE representatives in these discussions. It appears that these efforts can succeed in incorporating the DBE program in each stage of the contracting and project delivery process. Minnesota DOT has developed protocols for internal communication guidelines and responsibilities in its design- build manual. The guidelines require that the design-build program manager contact the Office of Civil Rights when— • Any early design-build team communications are to take place; • A pre-RFQ meeting has been planned for a project; • An RFQ is advertised for a project; or • An RFP is advertised. Agencies have expressed concern that, with so many play- ers involved—including FHWA, U.S.DOT, state DOTs, and local agencies—there are many opportunities for failure. Cal- trans recently had difficulty with local agencies operating the goals program primarily through good faith efforts that were not adequately supported. The Caltrans representative raised the issue of who has the authority to intervene in local author- ity goal-setting. She said that Caltrans can influence this but can’t require local agencies to change a goal. In the future, Cal- trans will require its concurrence on any local agency approval of good faith efforts on projects that are $2 million or more. 3. Communicating Opportunities to DBEs and Other Small Businesses According to state DOTs, those that use new methods for DBE contract goals on alternative delivery method projects must typically expand the scope and length of their outreach efforts to DBEs and other small businesses. TABLE 3 KEY DIFFERENCES FOR NEW APPROACHES TO USING DBE CONTRACT GOALS Stage in the Process Traditional Approach to Design-Build and P3 New Approaches to Design- Build and P3 Change from Traditional Approach 1. Identifying the project as appropriate for DBE contract goals Need to involve DBE pro- gram staff early Need to involve DBE program staff early No difference 2. Incorporating DBE program language in RFQ, RFP, and contract documents Need to incorporate DBE lan- guage into all documents prior to RFQ Need to incorporate DBE lan- guage into all documents prior to RFQ Need to create custom language for innovative approach 3. Communicating opportunities to DBEs and other small businesses Outreach from project identi- fication through proposal date Outreach from project identifica- tion through construction phase Extended length of outreach 4. Establishing a DBE goal for the project Set DBE goal based on infor- mation prior to RFQ/RFP Set DBE goal based on informa- tion prior to RFQ/RFP No difference 5. Reviewing DBE proposal submissions when determining award Commitments or DBE plan Pass-fail or scoring Proposers indicate whether can meet goal or show good faith efforts Proposers provide DBE com- mitments with proposal or immediately after Typically pass-fail Proposers indicate whether can meet goal or show good faith efforts Proposers provide DBE plan Pass-fail or scoring No difference No DBE commitments with proposal Can score or conductpass-fail review of plan 6. Monitoring compliance Track DBE commitments (subcontracts, payments) Review good faith efforts Receive DBE commitments Review good faith efforts Refine/monitor DBE plan DBE commitments in construction phase Can evaluate based on plan execution Review plan execution 7. Remedying any noncompliance Apply remedies for any noncompliance Apply remedies for any noncompliance No difference

24 Continued Outreach Traditional outreach efforts end once a project is awarded. Some state DOTs have adopted outreach efforts that con- tinue throughout the duration of the design-build contract. The following are some of these state DOTs. Missouri DOT. FHWA has identified the Missouri DOT community engagement approach as a model for DBE out- reach. The approach is designed to reach out to new groups of participants. The community engagement attempts to bring all stakeholders together, including the state DOT, FHWA, contractors/bidders, prime contractors, subcontrac- tors, community-based organizations, apprentices, and pre- apprentices. Advisory committees meet monthly throughout the duration of a project to watch over the prime contractor and ensure that goals are being met. Georgia DOT. For future P3 contracts, the Georgia DOT (GDOT) begins communicating with DBEs and prime con- tractors about the work well in advance of proposal dead- lines. GDOT identifies DBEs involved in work areas that might be a part of the project to let them know about the project and the teams that might be competing for the work. GDOT does the same for potential proposers. Minnesota DOT. The following textbox presents a broad range of strategies for inclusion of DBEs and other small businesses in the Minnesota DOT’s (MnDOT’s) alternative delivery method projects. The department notifies DBEs and other small businesses of contract opportunities early in the design-build procurement process. MnDOT has a standard- ized process for notifying the Office of Civil Rights of key events (MnDOT 2013b). Retaining Consultants to Assist with Outreach Efforts At least six state DOTs interviewed retain consultants to perform intensive DBE and small business outreach efforts, from identification of the project well into construction. Sometimes the design-build team is required to hire this consultant (Caltrans has this requirement for some of its design-build contracts). The design-builder on a recent Maryland DOT project retained a consultant to assist with DBE compliance, out- reach efforts, and supportive services for DBEs, which included training on business development, joint venturing, bidding, and estimating, and referrals to bonding and insur- ance institutions. 4. Establishing a DBE Goal for the Project Most state DOTs set DBE goals using traditional methods. However, some states have established new goal-setting methodologies. Setting Separate Goals for Design and Construction Among the state DOTs using new methods, nine set separate DBE contract goals for design and construction, and 17 set a single goal combining design and construction. Two set a single goal but do not include design in it. Some states set separate goals for the design and construction portions of a design-build contract. Table 4 summarizes results for these state DOTs and the five states that use traditional methods. The traditional method for setting a DBE contract goal is one goal for the entire project. Sometimes the state DOT (e.g., NCDOT) sets a goal for the construction portion only. The following are examples of the traditional method: • Until mid-2013, Arizona DOT set a single DBE contract goal on a design-build project. Now it sets a separate DBE goal on the preconstruction portion of the contract. • Caltrans sets separate DBE contract goals for P3 projects. • Colorado DOT decided to set two goals in the future in response to the fear among DBEs that professional design DBEs do not get any work on design-build proj- ects. The goals for the two components are based on work types. For example, the design-builder submits commitments for engineering-related DBEs even if they are to be used later in the project. • Maryland DOT establishes a goal for the overall proj- ect with a separate goal for the professional services/ engineering portion. For example, the approved over- all DBE participation goal for a project is established at 15% of the total price, with a subgoal of 20% for professional services. Professional services include design, supplemental geotechnical investigations, surveying and other preliminary engineering, quality control as defined in the contract, environmental com- pliance activities, utility coordination, permitting, and public information (Maryland DOT). This method of handling dual goals is rare among state DOTs. • After gaining experience on its first few projects, Missouri DOT decided to establish separate goals for the design services and construction services on its third, fourth, and fifth design-build projects. Design-builders met the DBE goals during construction, and the agency wanted to increase DBE participation in the design phase. • NYSDOT has the option of setting separate contract goals on the design and construction phases. The department may also set separate goals for various ele- ments of the work under the contract. • Until recently, TxDOT set separate goals for design and construction. In 2014, the agency went back to set- ting a single goal. • NCDOT develops goals for the construction portion of design-build projects. NCDOT has a race-neutral program for design and excludes the design portion of the contract for any goal-setting. For a $200 million project, of which design is $10 million, NCDOT will

25 set a goal (10% for example) on the $190 million that is construction. Unlike design-build, NCDOT includes the design portion in the goal for P3 projects. Setting DBE Contract Goals for the Operations Phase of a P3 Contract Some P3 projects include an operational phase. • Caltrans is now doing its first P3 project, Presidio Parkway in San Francisco. DBE goals were set for dif- ferent phases of the contract. • Colorado DOT is going forward with a P3 project and will use DBE contract goals in the same way they are used for design-build, with the exception of the 30-year maintenance phase of the P3. For that phase, CDOT will treat the concessionaire as a local agency receiv- ing FHWA money through the department. If the con- cessionaire lets a project for maintenance work, it will submit a scope of work to CDOT, which will then set the DBE contract goal, just as for a design-bid-build project. CDOT will oversee and monitor performance. • Illinois and Virginia DOTs set a DBE goal for the oper- ations phase of P3 projects. • The Massachusetts Bay Transportation Authority (MBTA), a part of the Massachusetts DOT, set a 15% DBE goal for a 2013 P3 procurement for the operation and maintenance of its commuter rail system. MBTA set that goal by reviewing the potential subcontracted work items involved in operations and maintenance. Minnesota DOT Small Business Program Inclusion Strategies (1) Early Engagement—Identification early on of projects that have opportunities for small business or projects that have alternative delivery methods. (2) Focus on Design/Build and Large-scale Projects—These projects are more likely to yield opportunities for small businesses and account for the majority of the department’s overall DBE goal. Early identification, communication, and coordination with OCR can make a big difference in the goal and goal attainment. (3) Meet ’n’ Greets—These are important and provide opportunities for prime and small business owners to meet and network. Opportunity for the department to communicate program rules, regulations, objectives and expectations. (4) Mandatory Subcontracting—This has worked well. On projects where this option has been utilized, there has been small business participation in scopes of work that traditionally have not benefitted DBEs and other small businesses. (5) De-bundling—Even though it does not guarantee disadvantaged business enterprise/targeted group business/veteran participation, it does provide an opportunity for those businesses to compete against other small businesses. We need assistance from the district in identifying scopes that minimize the risk to the department. (6) Goal Setting—Communication with and assistance from project engineers and estimators when OCR staff have questions regarding work items, quantities and the tools we utilize when we set small business program goals. (7) Meeting the Goal vs. Good Faith Efforts—Consistent and unified message. The focus should be placed on the effort directed toward meeting the goal. It will be evident even if unsuccessful. Not meeting the goal opens up opportunities for delay and the risk of the project not being awarded on time or starting on time. When that happens, nobody wins. (8) Post-Award Activities—Communication and cooperation ensure that the small business program participation levels committed to at the time of contract clearance are achieved throughout the project and at the conclusion of the project. It also helps the department meet state and federal reporting requirements. There is not an expectation for District personnel to be civil rights specialists, but those that interact on the project on a daily basis should contact OCR if they have questions or identify possible red flags. We will take it from there. (9) Prompt Payment—Assistance with holding prime contractors accountable for possible violations of the State Prompt Payment Statute. (10) Project Managers—Key players in the department’s effort and the initiative at the federal level to expand and increase small business participation in areas other than construction. Keeping DBE/TGB/veteran firms in mind when there are opportunities for direct-select contracting. (11) Communication—Always the key to achieving program goals and objectives. Source: MnDOT 2013b.

26 “No Goals” Approach Hawaii DOT does not set DBE goals in the proposal process. At time of proposal, proposers identify the percentage of DBE participation they plan. They list the DBEs they expect to use and the planned subcontract values for those firms. The list of DBEs and values are included in the proposals. The proposed amount becomes the DBE goal for the winning proposer. There is no requirement to include additional details about how the design-builder plans to meet the DBE percentage. Proposed DBE participation is usually less than 3%. FHWA Guidance FHWA’s 2002 Final Rule for Design-Build Contracting considered state DOT and other input regarding DBE goal- setting. FHWA’s Discussion of Comments in the Final Rule indicated that state transportation departments might consider separate DBE goals for the various elements of a design-build project. At the state DOT’s discretion, “In some cases it may be appropriate to utilize separate DBE goals for design and construction services (or other services such as right-of-way acquisition, construction inspection, etc.)” (FHWA 2002). 5. Reviewing DBE Proposal Submissions to Determine Contract Award Because of the difficulties associated with committing sub- contractors before the design has been completed, FHWA permits the use of an alternative DBE compliance approach for design-build projects (FHWA 2002). Some state DOTs conduct pass-fail evaluations of submit- ted DBE plans, and others score the plans. There are differ- ences in when state transportation departments require lists of potential DBEs and individual commitments. State DOTs that use these types of approaches reported that proposers almost always indicated that they would meet the DBE contract goal set for a design-build or P3 project. The DOTs reported that design-builders almost always met those goals. Sample DBE plans are provided in Appendices C and D. Appendix C is an example of a plan submittal from a design- builder on a 2013 Texas DOT project. Appendix D contains three design-builder DBE and workforce/EEO project plan submittals for the Louisville-Southern Indiana Ohio River Bridges Project, a collaboration between the Kentucky Transportation Cabinet and Indiana DOT. Pass-Fail Evaluation of DBE Plans Many state DOTs evaluate the plans on a pass-fail basis. Any proposer that fails the evaluation of the DBE plan is not con- sidered further in the proposal process. State transportation departments using pass-fail evaluation include the following: NCDOT is involved in its first competitive P3 project. It will require reporting of DBEs on the operations phase of a P3 contract, but the department has not set a DBE goal or required any show of good faith efforts. Florida DOT reports that it is still considering how aspi- rational DBE goals will apply to the operations and mainte- nance phase of a P3 contract, but it might seek to obtain 9% DBE participation each year. TABLE 4 USE OF NEW OR TRADITIONAL METHODS FOR DESIGN- BUILD OR P3 PROJECTS (AMONG ALL STATE DOTS USING DBE CONTRACT GOALS) States That Have Applied DBE Contract Goals to D-B or P3 Projects Goal for Construction Only Single Goal for Design and Construction Separate Goals for Design and Construction Arizona • California • Colorado • Connecticut • Delaware • Georgia • Hawaii • Illinois • Indiana • Kansas • Kentucky • Louisiana • Maryland • Massachusetts • Michigan • Minnesota • Mississippi • Missouri • Nevada • New Mexico • New York • North Carolina • Ohio • Oregon • Pennsylvania • Rhode Island • South Carolina • Tennessee • Texas • Utah • Virginia • Washington • West Virginia • Total 3 20 10

27 required to identify each DBE they will use at the time of proposal submissions. Only the plan is evaluated. WSDOT reported that important early steps with design- build projects are communicating with the DBE community before the project, readying them for the amount of work to be done, and having the prime engaged with the DBE pro- gram. The new process for reviewing plans brings design- build into the same system used to review minority, women, or small business enterprise participation plans. In the future, WSDOT will confer with the winning contractor to review the plan and determine whether it can be enhanced if necessary. Virginia DOT. Like UDOT, VDOT conducts a pass-fail evaluation of proposer compliance at time of proposal with- out requiring a DBE plan (discussed in more detail later in this chapter). Point Scoring of DBE Plans Some state DOTs evaluate DBE plans and assign point scores, which are added to the scores for other elements of a proposal. Federal regulations allow scoring as long as the evaluation does not include DBE achievement beyond the stated DBE goal for a contract (explained later in this part of chapter four.) Colorado DOT. Proposals must include a plan for how a proposer will meet the goal or demonstrate good faith efforts if it cannot achieve the goal. No specific commitments to firms are required. On a recent $100 million design-build contract, plans were scored by a committee that included civil rights staff and representatives of some other depart- ments (e.g., environment, communications). At this point, CDOT does not assign evaluation criteria for what makes the best plan; each evaluator can see it differently. The highest- scoring DBE plan had specific strategies for DBE participa- tion by work area, including backup plans for meeting the DBE goals. Florida DOT. Although this provision is not currently in application, FDOT’s DBE program plan anticipates that it would use the following procedures if it used DBE contract goals on such projects: The Department would utilize preference points for subcontracting to DBEs on design-build solicitations and other similar solicitations that are awarded based on a point system as opposed to the low bid process. This would allow 5% of the total points to be awarded if the proposer submits 8.60% (or the current overall DBE goal) DBE utilization in their proposal. Additional bonus points may also be awarded if the proposer exceeds the 8.60% DBE goal. (FDOT 2013) This portion of FDOT’s plan (again, not currently in appli- cation) may run afoul of 23 CFR Section 635.107 because of Caltrans. Meeting DBE plan requirements at the time of proposal submission is pass-fail. According to a Caltrans interviewee, Caltrans looked into assigning points for exceed- ing the goal, but apparently FHWA said that was prohibited. Missouri DOT. The Missouri DOT (MoDOT) conducts a pass-fail evaluation of each proposer’s DBE and work- force plan, which outlines how a proposer intends to achieve the goal. On MoDOT’s first two design-build projects, the proposers were required to sign an agreement to meet the goal or make good faith efforts to do so. On the more recent design-build projects, proposals must include a commitment to meeting the goal and provide as much DBE participation information as possible. New York State DOT. The standard design-build procure- ment documents require proposals to include a satisfactory plan for reaching the applicable project goal and a dem- onstration of good faith efforts through submission of the proposal, as well as providing appropriate evidence of good faith efforts undertaken before submittal of the proposal (Norville and Streett n.d.). NYSDOT’s minimum requirements for DBE plans require that they— • Identify specific economically feasible work units to be performed by DBEs over the course of the project; • Describe the outreach efforts to meet the project’s DBE goals; • Include a system of reporting that will document attainment of the DBE participation schedule, achieve- ment of the project’s DBE goal, and compliance with applicable government rules; and • Include an affirmation regarding the proposer’s inten- tion to make good faith efforts to achieve the project’s DBE participation goal. Utah DOT. UDOT requires proposers to indicate only that they (1) will meet the DBE contract goal or (2) have made good faith efforts to do so. UDOT reports that, to date, no proposers have used the good faith efforts option at time of proposal. UDOT does not require proposers to submit a DBE plan, saying that requiring a plan would add no value. UDOT interviewees reported that contractors are very aware of the DBE requirement and know they should never be the cause of UDOT losing federal funding on a contract. UDOT had a scoring system for DBE plans about six years ago but changed it to pass-fail because, in practice, the scores were always the same for each proposer. Washington State DOT. Each proposer is required to sub- mit a DBE plan that the Washington State DOT (WSDOT) evaluates on a pass-fail basis. The Office of Equal Opportu- nity (OEO) is responsible for this review. Proposers are not

28 the potential consideration of “bonus points,” but it could be easily remedied by removing the reference to bonus points. Indiana DOT. INDOT sets a DBE contract goal for P3 projects, then scores the plans proposers submit for meeting the goal. Some proposers will perform outreach and hold events before developing a proposal, and can then refer to that effort in their proposals. At time of proposal, INDOT asks proposers to submit an “anticipated list” of DBEs (which does not reflect commitments). Kentucky Transportation Cabinet. On the Louisville- Southern Indiana Ohio River Bridges Project, the Kentucky Transportation Cabinet (KYTC) assigned points to the DBE portion of the proposal in place of a pass-fail evaluation. According to KYTC, this method helped emphasize the importance of the DBE goals on the project and improved the best-value selection process. Five points out of 100 were reserved for DBE and workforce plans. Proposers were evaluated on their demonstrated ability to meet or exceed DBE expenditure. The process included an evaluation team, a nonvoting advisory member, and a nonvoting FHWA par- ticipant. The three proposers’ scores for DBE were 4.8, 4.8, and 5.0. Because of the close total scores (99.2 versus 98.8 between the winning proposer and the runner-up), DBE points could theoretically have made the difference in the contractor selection if the scoring of the DBE plan had more than a 0.2-point spread. The following are examples of favorable comments in the review of DBE plans from the three proposers: • Integrated team approach; • Experience exceeding DBE goals on other projects; • Strong communications plan for DBEs; • Having already held multiple outreach events; • Providing a DBE list; • Dividing work into small packages; • Commitment to addressing any disputes within 10 days; • Assigning a subcontract manager to each firm; • Internal team training; • Offering same training to DBEs that they give to joint venture staff; and • Prompt payment policies. It is important to note that one comment was “stated goal in excess of 8%” (the DBE contract goal). Negative com- ments included these: • Didn’t identify anticipated percentage DBE participation; • Lacked detail in certain aspects of the plan; and • Weak payment explanation. Ohio DOT. Proposals for Ohio DOT megaprojects require the proposer to provide a DBE plan, which is scored as a part of the evaluation process. More comprehensive plans receive higher scores. The proposer is directed to submit a plan that clearly articulates the methods it intends to employ to meet the goal or make good faith efforts to meet the goal. Examples of innovative and aggressive good faith strategies include the use of a diversity and inclusion consultant. Pro- posals also describe efforts to reach out to DBEs and poten- tial DBEs eligible for certification that may be affected by or benefit from the project. Ohio DOT’s boilerplate for the DBE program for design- build selection criteria includes the following standard lan- guage (Ohio DOT 2011): Describe the DBT’s plan to employ an independent Diversity and Inclusion Consultant. The DBE goal for this project is set at ?????. The DBT should submit a plan that clearly articulates the methods it intends to employ to meet the goal or make good faith efforts to meet the goal. Include innovative and aggressive strategies including the use of the Diversity and Inclusion Consultant. Describe the DBT’s efforts to reach out to DBEs and potential DBEs eligible for certification that may be impacted by, or benefit from, the project. The Department will use the following criteria to distribute Outreach To The Disadvantaged Enterprise Community And On-The-Job-Training Goal points. Plan to Achieve DBE Goal of ????? 25% of points Plan Outreach to the Disadvantaged Community 25% of points Plan to Achieve ???? Trainees 25% of points Plan for Training, Retention and Tenure of Trainees 25% of points FHWA Regulations on Proposal Scoring for DBE Partici- pation. Title 23 of the CFR, Section 635.107 prohibits pro- posal scoring systems for design-build that give more points for a DBE commitment higher than the DBE goal set for the contract. Other forms of scoring related to DBE participa- tion or a DBE plan appear to be acceptable. This issue was discussed in comments on the 2002 Pro- posed Rule. FHWA received comments from the Associ- ated General Contractors of America suggesting that “DBE commitments ‘above or below’ the contractual requirements must not be used as a proposal evaluation factor in deter- mining the successful Offeror” (FHWA 2002). FHWA’s response in the Final Rule Comments was that “the degree of DBE use in excess of the goal should not be used as an evaluation factor that would provide an additional credit or preference in the selection process” (FHWA 2002). FHWA Regulations on One-Stage or Two-Stage Evalua- tion of DBE Issues. Title 23 of the CFR, Part 636 provides for proper evaluation of design-build proposals. Guidance on

29 the use of factors in a two-stage evaluation process (i.e., both an RFQ and an RFP stage) affects how state DOTs might evaluate DBE plans or commitments. Section 636.303 notes that criteria used in the first stage are not to be used again in the second stage. It might be possible to include different factors regard- ing DBE issues in the two stages. For example, a contrac- tor’s past success implementing the Federal DBE Program might be included as an evaluation factor in the prequali- fication stage, and its proposed DBE plan for the specific design-build project might be a factor in the proposal stage (for short-listed firms). This regulation caused the North Carolina Department of Transportation to change its DBE evaluation process. NCDOT once evaluated a proposer’s DBE plan at both the RFQ and the RFP stages. It now evaluates DBE plans only at the RFQ stage. Scoring of the DBE plan helps determine whether a proposer is short-listed. Contractor Feedback. When asked about a pass-fail or scoring approach to evaluating the DBE plan submitted with a proposal, one contractors’ trade association noted some advantages and disadvantages of each: • Either method is subjective and therefore somewhat perilous for the proposer, especially if evaluators do not have a full understanding of what they are evaluating; • Pass-fail has the most risk to the proposer (proposer is out if it fails the DBE plan requirement); • All-or-nothing point systems (e.g., 5 points if pass and 0 points if fail) are somewhat less draconian but still may be risky and may inadequately reflect nuances of what is being evaluated; and • Graduated point systems (e.g., 0 to 5) might be best, as they are more forgiving of evaluators who are less knowledgeable about a topic. Timing of DBE Commitments With the new approaches to DBE contract goals on design- build contracts, many state DOTs allow proposers to submit a general commitment to meet a contract goal at the time of proposal submission, followed by specific commitments to DBEs before those firms are used. State DOTs in Ari- zona, California, Colorado (for the construction phase), New Mexico, South Carolina, Utah, and Virginia are examples of agencies using this approach. Processes in some of these states are described below. Colorado DOT. CDOT requires commitments for DBE construction firms before those firms are used. Commit- ments for DBE engineering-related firms are required before the first notice to proceed. CDOT reported that primes much prefer this system. New Mexico DOT. On its current design-build project, the New Mexico DOT (NMDOT) gave the design-builder sub- stantial flexibility in the timing of individual DBE commit- ments, as long as those commitments were received before the use of the DBE. NMDOT indicated that this flexible approach to DBE commitments has been successful. The design-builder regu- larly enters DBE contract and payment information into NMDOT’s reporting system, so the agency receives timely information on DBE achievement. South Carolina DOT. SCDOT requires commitments within 180 days after project award. According to SCDOT, primes, DBEs, and the agency have all found this method to be acceptable. Virginia DOT. Proposers on VDOT design-build projects are not required to submit a DBE plan with their proposals. At the time of proposal submission, proposers are required to meet the contract goal or show good faith efforts. They are required to state in the letter of submittal that they are com- mitted to achieving the DBE goal for the project. Federal Regulations. In explaining the 2002 Final Rule for Design-Build Contracting, FHWA discussed the advan- tages and disadvantages of different timing for requiring specific DBE commitments from design-build contractors (FHWA 2002). There was some concern that allowing con- tractors to furnish DBE commitments after contract award would create issues with enforcement and weaken the use of DBE contract goals. Options discussed included requiring proposers to sign and notarize letters of subcontract intent (co-signed by the DBE) confirming that the contractor had actually discussed the project with the DBE, including spe- cific products/services at specific amounts. However, FHWA concluded that it is not always feasible to require DBE commitments before the award and left flexibil- ity for state DOTs to craft policies appropriate for their states. The level of design provided in the RFP document is often not sufficient to allow the design-builder to enter into sub- contracts. In many cases, the design-builder may not have advanced the design to a sufficient level during the proposal process to serve as a basis for negotiating subcontracts. In many cases, it will be impractical to require design-build proposers to provide DBE subcontract commitments before the award of the contract. (FHWA 2002) 6. Monitoring Compliance Under new approaches for DBE contract goals, the monitor- ing phase expands from ensuring that listed DBEs are used and paid to assessing a broad range of contractor efforts to meet the DBE contract goal.

30 Continued Good Faith Efforts State DOTs that implement new approaches to DBE contract goals on design-build contracts must ensure that, when per- forming the contract, the design-builder has met the DBE contract goal or made good faith efforts to do so. Typically, a DBE plan is required with the proposal and becomes part of the contract. Depending on the comprehensiveness and quality of the plan, monitoring good faith efforts may be as straightforward as tracking whether the design-builder fol- lows through on its DBE plan for the project. If a state DOT determines that a design-builder has not met the goal or good faith efforts requirements, that con- tractor can request administrative reconsideration [49 CFR 26.53 (d)]. Federal regulations require that the state DOT’s decision on reconsideration must be made by an official who did not take part in the original determination that the bid- der/offeror failed to meet the goal or make adequate good faith efforts to do so. Minnesota DOT. MnDOT requires that, during the term of the contract, the design-builder continues to make good faith efforts to ensure that DBEs have maximum opportu- nity to successfully perform on the contract, and that the design-builder meets its DBE goal. MnDOT’s examples of continued good faith efforts include these: • Negotiating in good faith to obtain DBE participation both before and during the life of the project; • Continuing to provide assistance to DBEs in obtain- ing bonding, insurance, and so on, if required by the contract; • Notifying a DBE in writing of any potential problem and attempting to resolve the problem before for- mally requesting approval from the MnDOT Office of Business Development to obtain a substitute DBE or a DBE participation modification; • Ensuring that all vendors, including DBEs, are paid promptly for work satisfactorily completed within the previous 30 calendar days; • Timely quarterly submission of payment statements; and • Quarterly submission of a good faith effort plan to show ongoing efforts made to achieve the DBE partici- pation goal (MnDOT 2010). Federal Regulations. Title 49 of the CFR, Section 26.53 describes the good faith efforts procedures and requirements state DOTs must follow when using DBE contract goals; 49 CFR Part 26, Appendix A defines and describes what is meant by “making good faith efforts to meet the goal.” The following textbox reproduces this description. As Appendix A points out, the list is not meant to be exhaus- tive. The list is also not meant as simply a “yes-no” checklist, “It is important for you to consider the quality, quantity and intensity of the different kinds of efforts that the bidder has made.” Appendix A summarizes the guidance in this way: “The efforts employed by the bidder should be those that one could reasonably expect a bidder to take if the bidder were actively and aggressively trying to obtain DBE participation sufficient to meet the DBE contract goal. Mere pro forma efforts are not good faith efforts to meet the DBE contract requirements” (49 CFR Part 26, Appendix A). Federal regulations in 49 CFR Section 26.53 (d) out- line the provisions for administrative reconsideration that agencies must provide to a bidder or proposer if the agency determines that the contract has failed to meet the good faith effort requirements. Some state DOTs have expanded upon these examples of good faith efforts in their DBE program plans. Oregon DOT has developed best practices for prime contractors to encourage DBE participation in CMGC contracts. The text- box above provides this list. Assessing Good Faith Efforts: WSDOT’s Alaskan Way Viaduct Design-Build Contract Seattle Tunnel Partners (STP), a joint venture of Dragados USA and Tutor Perini Corp., won the $1.35 billion Alaska Way Viaduct (AWV) design-build contract (signed in Janu- ary 2011). Washington State DOT set an 8% DBE goal on the contract, and the STP proposal agreed to meet it. The goal amounted to $91 million of work for DBEs. STP could achieve the 8% minimum contract requirement by award- ing work to DBE firms or through documented good faith efforts. As a recipient of federal transportation funds for the project, WSDOT was obligated to provide oversight of STP’s performance and to enforce its contractual commitments. As of March 2013, DBE participation on the project was less than 1%. A number of barriers to participation emerged, as demonstrated by a complaint about STP’s actions filed with FHWA by the owner of Washington State Trucking (Complaint: DOT#2012-0257). FHWA received complaints from eight other DBEs and responded with a November 1, 2013, Report of Investigation (Mathis 2013). Investigation The investigation found WSDOT in noncompliance with its obligations under the Federal DBE Program requirements. FHWA deemed that WSDOT had not provided adequate oversight of the DBE program by permitting STP “to use merely pro forma efforts to meet the Project’s 8 percent goal and report inflated DBE commitments.” The investigation addressed the following two key issues. Issue 1. Did WSDOT provide requisite DBE program oversight by ensuring that STP used adequate good faith

31 efforts when it attempted to replace an excavating company (a DBE firm that lost its certification early in the project) with another DBE? Conclusion, Issue 1. While STP ultimately hired another DBE to replace the excavating company, the procedures it fol- lowed created barriers and hardships for DBEs, which does not conform to good faith efforts requirements. WSDOT failed in its oversight responsibility to ensure that STP used good faith efforts to find other DBEs once the decision was made to replace the initial excavating company. Issue 2. Did WSDOT meet the requisite oversight and monitoring obligations to ensure DBE program compliance by STP? Specifically, did WSDOT monitor STP’s project DBE goal attainment, including whether STP’s procurement practices mitigated barriers for DBEs to allow them equal opportunities to participate on the project as subcontractors? Conclusion, Issue 2. WSDOT failed to oversee and adequately monitor STP’s efforts to achieve the DBE goal. WSDOT failed to intervene when it recognized that STP’s efforts to meet the DBE goal were not of the nature of the efforts contemplated and required under the DBE regulations. Ultimately, FHWA’s investigation found the following: 1. Noncompliance with DBE program obligations. Although WSDOT was obligated to provide over- sight and enforce STP’s contractual commitments to A. Soliciting through all reasonable and available means (e.g., attendance at pre-bid meetings, advertising and/or written notices) the interest of all certified DBEs who have the capability to perform the work of the contract. The bidder must solicit this interest within sufficient time to allow the DBEs to respond to the solicitation. The bidder must determine with certainty if the DBEs are interested by taking appropriate steps to follow up initial solicitations. B. Selecting portions of the work to be performed by DBEs in order to increase the likelihood that the DBE goals will be achieved. This includes, where appropriate, breaking out contract work items into economically feasible units to facilitate DBE participation, even when the prime contractor might otherwise prefer to perform these work items with its own forces. C. Providing interested DBEs with adequate information about the plans, specifications, and requirements of the contract in a timely manner to assist them in responding to a solicitation. D. (1) Negotiating in good faith with interested DBEs. It is the bidder’s responsibility to make a portion of the work available to DBE subcontractors and suppliers and to select those portions of the work or material needs consistent with the available DBE subcontractors and suppliers, so as to facilitate DBE participation. Evidence of such negotiation includes the names, addresses, and telephone numbers of DBEs that were considered; a description of the information provided regarding the plans and specifications for the work selected for subcontracting; and evidence as to why additional agreements could not be reached for DBEs to perform the work. (2) A bidder using good business judgment would consider a number of factors in negotiating with subcontractors, including DBE subcontractors, and would take a firm’s price and capabilities as well as contract goals into consideration. However, the fact that there may be some additional costs involved in finding and using DBEs is not in itself sufficient reason for a bidder’s failure to meet the contract DBE goal, as long as such costs are reasonable. Also, the ability or desire of a prime contractor to perform the work of a contract with its own organization does not relieve the bidder of the responsibility to make good faith efforts. Prime contractors are not, however, required to accept higher quotes from DBEs if the price difference is excessive or unreasonable. E. Not rejecting DBEs as being unqualified without sound reasons based on a thorough investigation of their capabilities. The contractor’s standing within its industry; membership in specific groups, organizations, or associations; and political or social affiliations (for example, union vs. non-union employee status) are not legitimate causes for the rejection or nonsolicitation of bids in the contractor’s efforts to meet the project goal. F. Making efforts to assist interested DBEs in obtaining bonding, lines of credit, or insurance as required by the recipient or contractor. G. Making efforts to assist interested DBEs in obtaining necessary equipment, supplies, materials, or related assistance or services. H. Effectively using the services of available minority/women community organizations; minority/women contractors’ groups; local, state, and federal minority/women business assistance offices; and other organizations as allowed on a case-by-case basis to provide assistance in the recruitment and placement of DBEs. Source: 49 CFR 26, Appendix A.

32 achieve 8% DBE participation, FHWA reported that the state agency maintained a “hands-off” approach. Hence, WSDOT did not meet its obligations to pro- vide meaningful oversight of STP’s efforts to hire DBE firms to meet the 8% DBE contract goal for the AWV design-build project. 2. Noncompliance through pro forma good faith efforts. FHWA determined that while STP held many out- reach events, these events were merely pro forma, as they rarely resulted in job opportunities for DBEs. 3. Suppression of DBE participation. STP’s procure- ment practices created artificial barriers for DBE participation by setting onerous and unfair require- ments in their RFPs that were inconsistent with DBE regulations [49 CFR Section 26.53 (g)]. For example, STP enforced a confusing electronic bid- submission process, unnecessary bonding require- ments, and a strict low-bid policy that FHWA determined negatively affected DBE participation. Requiring DBEs to submit personal and finan- cial information resulted in additional hardships, according to FHWA, as did certain specifications on truck ownership and fleet size. Apparently, none of those requirements had been applied to the initial excavating company. 4. Implied DBE participation but limited follow-through. STP also had a number of not-to-exceed contracts, which implied substantial DBE participation but did not lead to much work. FHWA found “inflated DBE participation reports based on unsubstantiated com- mitments” (FHWA 2013). FHWA’s investigation resulted in written notice directing WSDOT to— • Take all appropriate actions against STP available under its contractual agreement; • Work with STP to identify specific actions to achieve the 8% DBE goal by project completion in 2015 (now 2016); and • Revise its DBE program plan to institute effective monitoring and oversight measures for all contracts, including design-build, to ensure that contractors either meet contract goals or provide documentation of meaningful good faith efforts to do so (Mathis 2013). Achieving Compliance WSDOT agreed to comply with the FHWA directives. WSDOT began by engaging an outside consultant to moni- tor STP’s efforts and designating an AWV program DBE manager for support and oversight. Initial efforts were followed by a November 22, 2013, let- ter from Chris Dixon, STP project manager, to Lynn Peter- son, Secretary of Transportation, WSDOT (Dixon 2013), and by WSDOT’s November 27, 2013, response to FWHA, which included project and program goals and action plans, as well as a specific DBE action plan for AWV (Peterson 2013). WSDOT outlined four primary actions designed to strengthen WSDOT’s DBE program: 1. Monitoring and oversight. Identify specific monitoring and oversight mechanisms to ensure STP compliance with the goals specified in its contract with WSDOT. 2. Clarification and accountability. Clarify project- and programmatic-level roles and responsibilities for goal-setting, and establish clear lines of accountabil- ity for achieving those goals. 3. Consistent contract language. Establish consistent language for all WSDOT projects that have DBE goals, including design-build projects. 4. DBE community engagement. Increase engagement with and support of the DBE community. On January 13, 2014, WSDOT notified STP that it was in breach of contract, as it had created barriers and hardships to DBE participation. To avoid sanctions, STP had to allow monitoring by WSDOT and to meet quarterly participation targets set by WSDOT. FHWA’s letter and conciliation agreement (March 20, 2014) outline mutually agreed-upon strategies to increase oversight of DBE participation at both project and program levels (Nadeau 2014). DBE Participation Change Order WSDOT issued Change Order No. 91, withdrawing the previ- ous finding of a breach of contract but requiring STP to— • Award $96 million in work on the AWV project to cer- tified DBE firms; and • Provide specific additional resources to its subcon- tracting efforts, including establishing a third-party independent program coordinator to review DBE con- tracting procedures and verify compliance with federal and state regulations and WSDOT contractual com- mitments (WSDOT 2014). Ongoing Efforts Through February 2014, STP had reported $75 million in contracts to 82 certified DBE firms. About one-third of that amount ($26 million) is being counted toward the DBE con- tract requirement.

33 Reporting Requirements Effective monitoring requires accurate reporting of DBE participation. Caltrans. The design-builder is required to provide DBE progress reports to Caltrans with each invoice and to provide an annual report on the design-build project on or before August 1 of each year. Each report must include a narrative summary stating whether the contractor is on target with respect to the DBE goal set forth in the design-build contract or whether the goal has been exceeded or is behind target. Caltrans also holds quarterly meetings with the contractor. Colorado DOT. After the contract is awarded, design- builders must produce a work breakdown structure that identifies planned DBE participation by work area. The design-builder produces monthly reports on where it is in terms of DBE participation. If DBE participation is below the projection, the prime must explain why and describe how it will catch up. The project team has regular meetings, including a mandated in-depth review every six months. Michigan DOT. The design-builder is required to submit a good faith effort plan on a quarterly basis to the DOT’s Office of Business Development for review and approval. Minnesota DOT. Whenever a DBE is selected as a subcon- tractor, the design-builder or designated DBE liaison officer is required to provide MnDOT with the name of the subcontrac- tor, the total dollar amount of the subcontract, specific work items, estimated quantities of work, and individual unit prices. The DBE commitment is subject to evaluation and approval by MnDOT. Upon approval, the DBE commitment is incorpo- rated into the contract and considered a contract specification. The design-builder must also submit a DBE work and payment schedule that indicates the DBE firms it expects to use, the amount of payments it expects to make to DBEs, and the percentage of each DBE firm’s contract that will be com- pleted each month. The first report must be made 60 days following notice to proceed, and updates are due every 90 days for the duration of the project. If the design-builder has not met the DBE work and pay- ment schedule, MnDOT will notify it of the need for correc- tion of DBE participation levels to meet the schedule by the next quarter. The schedule is reviewed again after 90 days. Oregon DOT. The contractor’s designated DBE represen- tative meets with the state DOT monthly to review diversity submittals, including prevailing wage rate payrolls/certified statement, DBE issues, and other topics. Washington DOT. WSDOT performs formal documenta- tion reviews at approximately 25%, 75%, and 100% com- pletion of construction. Items to be reviewed are randomly selected by the documentation reviewer. These reviews are to ensure that the design-builder is maintaining all the nec- essary documentation and records. A separate review of all materials documentation is performed at the completion of the project. In addition to the formal reviews, WSDOT onsite personnel perform daily documentation reviews, including involvement of DBE subcontractors on the project. Monitoring Staff Some state DOTs appoint internal staff to administer the DBE program for alternative delivery projects. At least six of the state DOTs interviewed also require proposers to iden- tify outside consultants or DBE liaisons to manage the DBE program on behalf of the prime. Caltrans. Caltrans requires the design-build team to iden- tify a DBE liaison. As a pilot program, the liaison on half of the authorized design-build projects was an employee of the design-builder, while the liaison on the other half was an outside consultant. Caltrans reported that both methods are effective. Design-builders must update their DBE plans before they start work. The contractor is required to provide DBE progress reports to Caltrans with each invoice and to pro- vide an annual report on or before August 1 of each year of the design-build contract. Each report must include a narra- tive summary stating whether the design-builder is on target with respect to the DBE goal set forth in the contract. Kentucky Transportation Cabinet. Each contractor prequalified to perform work on KYTC projects must des- ignate a liaison officer who is responsible for administering and promoting an active program for the use of DBEs. Kansas DOT. A DBE program consultant from the Civil Rights/Contract Compliance office is taken off all other projects and made responsible for the design-build project. That person is responsible for attending weekly meetings and visiting the site once or twice a week. 7. Remedying Any Noncompliance State DOTs typically use the same remedies for noncom- pliance in both alternative delivery method projects and design-bid-build projects. CHAPTER SUMMARY Representatives of state transportation departments, con- tractors, DBEs, and FHWA report substantial difficul- ties using traditional methods for DBE contract goals on alternative delivery method projects. The principal bar- rier is the requirement for firm dollar commitments to

34 individual DBEs at time of proposal, even if the design has been completed. Twenty-eight of the 33 state DOTs applying DBE con- tract goals to design-build contracts have adopted a new approach to DBE contract goals for those projects. Twenty- two state DOTs now require a DBE plan at time of proposal. They indicated that applying new methods focusing on a DBE plan at time of proposal (rather than commitments to specific DBEs) is more sensible and more likely to achieve the objectives of the Federal DBE Program. For example, state DOTs can require or strongly urge proposers to include many different strategies in their DBE plans for assisting DBEs and other small businesses. State DOTs report that higher DBE goals can be set under the new approaches, and design-builders are better able to meet them (and consis- tently do so). Some states evaluate plans on a pass-fail basis, while oth- ers award points based on the strength of the plans. However, awarding points for exceeding a DBE goal is not allowed under federal regulations. Based on the interviews conducted, design-builders, DBEs, and state DOTs appear to be better served by these new approaches. The new approaches do require expanded monitoring methods to ensure that DBE plans are effectively carried out by the selected design-builder.