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

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42 GLOSSARY OF TERMS AND ACRONYMS Alternative procurement: “Innovative contracting practices, undertaken by state highway agencies, that have the potential to reduce the life cycle cost of projects, while at the same time maintain product quality” (FHWA 2014d). Alternative technical concepts (ATCs): “A procedure [in which] the designers and/or contractors are asked to fur- nish alternative design solutions for features of work des- ignated by the agency in its design-build Request for Proposals (RFP)” (Carpenter 2010). Contract goals: A contract goal must be based on demon- strable evidence of the availability of ready, willing, and able DBEs relative to all businesses that are ready, will- ing, and able to participate in federally funded DOT con- tracts. The goal must reflect the expected level of DBE participation in the absence of discrimination. U.S.DOT does not approve contract goals but does review and approve the methodology used to establish the goal. Con- tract recipients are not required to achieve a minimum goal but are required to make good faith efforts to achieve the goal (FTA 2007). Construction manager at risk or construction manager/gen- eral contractor (CMAR or CMGC): The CMGC project delivery method allows an owner to engage a construc- tion manager during the design process to provide con- structability input. The construction manager is generally selected based on qualifications, past experience, or a best-value basis. During the design phase, the construc- tion manager provides input regarding scheduling, pric- ing, phasing, and other project components that helps the owner design a more constructible project. At 60% to 90% design completion, the owner and the construction manager negotiate a guaranteed maximum price for the construction of the project based on the defined scope and schedule. If this price is acceptable to both parties, they execute a contract for construction services, and the con- struction manager becomes the general contractor. The CMGC delivery method is called the CMAR method in some states (FHWA 2014a). Design-bid-build (DBB): “The ‘traditional’ project delivery approach [in which] the owner commissions a designer to prepare drawings and specifications under a design ser- vices contract, and separately contracts for construction, by engaging a contractor through competitive bidding or negotiation” (DBIA 2009). Design-build (DB): Design-build is a project delivery method that combines two usually separate services into a single contract. With design-build procurements, own- ers execute a single, fixed-fee contract for both architec- tural/engineering services and construction. The design-build entity may be a single firm, a consortium, a joint venture, or an organization assembled for a particu- lar project (FHWA 2014b). Disadvantaged business enterprise (DBE): A small for-profit business concern that is at least 51% owned and con- trolled by one or more socially and economically disad- vantaged persons. DBE certification is made on the basis of onsite visits, personal interviews, reviews of licenses, stock ownership, equipment, bonding capacity, work completed, resumes of principal owners, and financial capacity. Certification is handled at the local or regional level (U.S.DOT 2014). Disadvantaged Business Enterprise Program: A legislatively mandated U.S.DOT program that applies to federal-aid highway dollars expended on federally assisted contracts issued by U.S.DOT recipients such as state DOTs. The DBE program is carried out by state and local transporta- tion agencies under the rules and guidelines in the Code of Federal Regulations (Title 49, Part 26).The program is designed to ensure nondiscrimination in the award and administration of DOT-assisted contracts, help remove barriers to the participation of DBEs in DOT-assisted contracts, and assist in the development of firms that can compete successfully in the marketplace outside the DBE program (U.S.DOT 2014). General provisions: Laws or regulations that apply to all contracts of a certain type. Regulations applicable only to a particular contract are called special provisions. Good faith efforts: The efforts made by bidders to meet a DBE contract goal. Bidders can demonstrate these efforts in one of two ways that are equally valid. First, they can meet the goal by documenting that they have obtained sufficient commitments for DBE participation. Second, even though they have not met the goal, they can docu- ment that they have made good faith efforts to do so. The Department emphasizes strongly that this requirement is an important and serious one. A refusal by a recipient to accept valid showings of good faith is not acceptable under this rule (U.S.DOT 2013). Minority-owned business enterprise (MBE): A for-profit enterprise, regardless of size, that is at least 51% owned, operated, and controlled by a U.S. citizen who is Asian, Black, Hispanic, or Native American. Certification is handled at the local or regional level (“Certification Overview” 2014). Operating administrations: Agencies responsible for administering the Federal DBE Program, including the Federal Highway Administration, the Federal Aviation Administration, and the Federal Transit Administration (FTA 2007).

43 Procurement: The combined functions of purchasing, inven- tory control, traffic and transportation, receiving, inspec- tion, store keeping, and salvage and disposal operations (Minnesota 2011). Public-private partnerships: “Public-private partnerships (P3s) are contractual agreements formed between a pub- lic agency and a private sector entity that allow for greater private sector participation in the delivery and financing of public facilities” (FHWA 2014c). Race-conscious: A measure or program focused specifically on assisting only DBEs, including women-owned DBEs, that involves setting specific goals for the use of DBEs on individual contracts (U.S.DOT 2013). Race-neutral: A measure or program that can be used to increase opportunities for all small businesses, not just DBEs, and does not involve setting specific goals for the use of DBEs on individual contracts (U.S.DOT 2013). Request for proposals (RFP): “A solicitation for offers under negotiation procedures” (Shields 1998). Request for qualifications (RFQ): “The document issued by the Owner prior to the RFP that typically describes the project in enough detail to let potential proposers deter- mine if they wish to compete and forms the basis for requesting Qualifications Submissions in a ‘two-phase’ or ‘prequalification’ process” (DBIA 2009). Reconsideration of good faith efforts: In the event that a bid- der’s good faith effort (GFE) showing is found to be inad- equate by the operational administration, the bidder can request an administrative review of the decision to ensure that attempts to show GFE were not arbitrarily dismissed and to respond to allegations of a quota-like administra- tion of the program. Reconsideration of GFE is adminis- tered by the operating administration. The process must be completed within a brief period (e.g., 5–10 days) to minimize any potential delay in procurements. The bid- der has an opportunity to meet with the reconsideration official, but a formal hearing is not required. To ensure fairness, the reconsideration official must be someone who did not participate in the original decision to reject the bidder’s showing. The operating administration must provide a written decision on reconsideration, and there is no provision allowing for administrative appeals to U.S.DOT (U.S.DOT 2013). Small business enterprise (SBE): SBEs adhere to industry size standards established by the U.S. Small Business Administration. For most industries, a small business is defined either in terms of the average number of employ- ees over the past 12 months or the average annual receipts over the past 3 years. In addition, SBA defines a U.S. small business as a concern that is organized for profit; has a place of business in the United States; operates pri- marily within the United States or makes a significant contribution to the U.S. economy through payment of taxes or use of American products, materials, or labor; is independently owned and operated; and is not dominant in its field on a national basis. The business may be a sole proprietorship, partnership, corporation, or any other legal form. In determining what constitutes a small busi- ness, the definition will vary to reflect industry differ- ences, such as size standards. Certification is handled at the local or regional level (Small Business Administra- tion 2014). Special Experimental Projects-14 (SEP-14): An FHWA pro- gram established in 1990 that has allowed state DOTs to evaluate nontraditional contracting techniques. The orig- inal contracting practices approved for evaluation were cost-plus-time bidding, lane rental, design-build con- tracting, and warranty clauses. After a period of evalua- tion, FHWA decided that all four practices were suitable for use as operational practices (nonexperimental). The title of SEP-14 was changed from Innovative Contracting to Alternative Contracting in 2002 (FHWA 2014d). Traditional procurement: Methods of procuring contracts for goods and services that involve the separation of design and construction services, the qualifications-based pro- curement of designers, and a competitive low-bid system for construction (Trauner Consulting Services, Inc. 2007). Women-owned business enterprise (WBE): A for-profit enter- prise, regardless of size, that is at least 51% woman owned, operated, and controlled. Certification is handled at the local or regional level (“Certification Overview” 2014).