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

Chapter: Appendix E - Qualitative Information from Trade Association Representatives Regarding Business Success

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Suggested Citation:"Appendix E - Qualitative Information from Trade Association Representatives Regarding Business Success." National Academies of Sciences, Engineering, and Medicine. 2019. Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program. Washington, DC: The National Academies Press. doi: 10.17226/25538.
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Suggested Citation:"Appendix E - Qualitative Information from Trade Association Representatives Regarding Business Success." National Academies of Sciences, Engineering, and Medicine. 2019. Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program. Washington, DC: The National Academies Press. doi: 10.17226/25538.
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Suggested Citation:"Appendix E - Qualitative Information from Trade Association Representatives Regarding Business Success." National Academies of Sciences, Engineering, and Medicine. 2019. Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program. Washington, DC: The National Academies Press. doi: 10.17226/25538.
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Suggested Citation:"Appendix E - Qualitative Information from Trade Association Representatives Regarding Business Success." National Academies of Sciences, Engineering, and Medicine. 2019. Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program. Washington, DC: The National Academies Press. doi: 10.17226/25538.
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Suggested Citation:"Appendix E - Qualitative Information from Trade Association Representatives Regarding Business Success." National Academies of Sciences, Engineering, and Medicine. 2019. Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program. Washington, DC: The National Academies Press. doi: 10.17226/25538.
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Suggested Citation:"Appendix E - Qualitative Information from Trade Association Representatives Regarding Business Success." National Academies of Sciences, Engineering, and Medicine. 2019. Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program. Washington, DC: The National Academies Press. doi: 10.17226/25538.
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Suggested Citation:"Appendix E - Qualitative Information from Trade Association Representatives Regarding Business Success." National Academies of Sciences, Engineering, and Medicine. 2019. Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program. Washington, DC: The National Academies Press. doi: 10.17226/25538.
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Suggested Citation:"Appendix E - Qualitative Information from Trade Association Representatives Regarding Business Success." National Academies of Sciences, Engineering, and Medicine. 2019. Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program. Washington, DC: The National Academies Press. doi: 10.17226/25538.
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Suggested Citation:"Appendix E - Qualitative Information from Trade Association Representatives Regarding Business Success." National Academies of Sciences, Engineering, and Medicine. 2019. Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program. Washington, DC: The National Academies Press. doi: 10.17226/25538.
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Suggested Citation:"Appendix E - Qualitative Information from Trade Association Representatives Regarding Business Success." National Academies of Sciences, Engineering, and Medicine. 2019. Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program. Washington, DC: The National Academies Press. doi: 10.17226/25538.
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Suggested Citation:"Appendix E - Qualitative Information from Trade Association Representatives Regarding Business Success." National Academies of Sciences, Engineering, and Medicine. 2019. Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program. Washington, DC: The National Academies Press. doi: 10.17226/25538.
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Suggested Citation:"Appendix E - Qualitative Information from Trade Association Representatives Regarding Business Success." National Academies of Sciences, Engineering, and Medicine. 2019. Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program. Washington, DC: The National Academies Press. doi: 10.17226/25538.
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Suggested Citation:"Appendix E - Qualitative Information from Trade Association Representatives Regarding Business Success." National Academies of Sciences, Engineering, and Medicine. 2019. Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program. Washington, DC: The National Academies Press. doi: 10.17226/25538.
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Suggested Citation:"Appendix E - Qualitative Information from Trade Association Representatives Regarding Business Success." National Academies of Sciences, Engineering, and Medicine. 2019. Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program. Washington, DC: The National Academies Press. doi: 10.17226/25538.
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Suggested Citation:"Appendix E - Qualitative Information from Trade Association Representatives Regarding Business Success." National Academies of Sciences, Engineering, and Medicine. 2019. Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program. Washington, DC: The National Academies Press. doi: 10.17226/25538.
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133 Introduction and Methodology The study team analyzed the keys to business success of DBE- and non-DBE-certified firms. Interviewees were trade association representatives from 14 states. The qualitative information was from anecdotal interviews and survey responses of trade association representatives located in 14 states throughout the country; California, Kentucky, Louisiana, Minnesota, Mississippi, Nebraska, New Mexico, New York, North Dakota, Oregon, Tennessee, Texas, Virginia, and Washington. Trade association representatives were often quite specific in their comments. As a result, they have been reported in more general form to minimize the chance that readers could readily iden- tify them. Each trade association representative represents an interviewee and also reports the race/ethnicity and gender of the trade association representative, when possible. Each comment represents an interviewed trade association representative. Some comments were derived from survey responses by trade association representatives. Based on the qualitative information provided by many trade association representatives, it is apparent that the major factors to business success for their membership are quality work and performance, flexibility of work types, business experience, access to capital and ability to bond, certification status, and hiring of qualified employees. Background of the Trade Association Interviews with trade association representatives began with a general discussion of their membership. Background of the Association and Types of Businesses Served The study team interviewed a variety of trade associations that serve DBEs or more generally support companies that include highway-related firms. • The white male representative of a subsidiary of a national construction-related trade associa- tion in the Northwest reported that the firm meets the needs of the commercial construction industries. He said that the association serves industry suppliers. He added that professional services members of the association include lawyers, insurance companies, and financial institutions. • The white female representative of a women’s business advocacy and business development association in the West reported that they offer networking and support to promote the role A P P E N D I X E Qualitative Information from Trade Association Representatives Regarding Business Success

134 Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program of women business owners in the construction industry. She said that the association serves woman-owned firms in the construction, specialty contracting, and professional services industries. • The white male representative of a Gulf State trade association reported that they serve mem- bers in construction-related industries that are commercial builders, highway and utility con- tractors, and others. He added that the membership includes businesses in construction-related industries, including coastal levee-related contractors. • When asked about the organization’s members, the white female representative of a Midwest trade association stated, “Our members are contractors that do work [statewide]. . . .” She added that members do primarily horizontal construction, including heavy highway, and roads and bridges. • When asked about the firms his organization represents, the African American male repre- sentative of a national construction-related trade association in the Northwest reported that his organization “represents construction companies, architecture and engineering [firms], and design firms.” • The white female representative of a national trade association in the Midwest reported, “We represent [heavy] highway . . . general contractors, as well as vertical commercial construction, general contractors, subcontractors, material suppliers, and construction-affiliated industries like surety bonds [and] financers.” • The white male representative of a Gulf State trade association indicated that the organization works with most types of firms in the construction industry, including general contractors, sub contractors, material suppliers, and other associate firms such as law firms, bonding agencies, and insurance companies. • The white male representative of a national construction-related trade association in the Northeast said, “We represent contractors that build everything except for homes. . . . Our membership associates with a division depending on the type of construction that they do.” He added, “I work directly for the surface transportation contractors, so the guys that build roads, bridges, airport runways, transit systems, those kinds of things.” When asked about the types of businesses served, the same trade association representa- tive said, “Our primary membership is prime contractors, [though] the definition of a prime contractor would include a lot of specialty contractors as well. In addition to that, we also have a service provider division, so that would be bonding companies, insurance companies, equipment dealers, [and] everybody else who has an interest in construction but does not do actual construction.” • The white female representative of a Gulf State construction-related trade association said, “Our members in [our service areas] are primarily . . . smaller, or they’re headquartered in larger areas. . . . The companies here will be a little bit . . . on a smaller scale than some of the contractors you would find in some of the larger cities in the United States. . . .” She added that members work in various sectors of the construction industry. • When asked about the organization’s members, the white female representative of a trade association in the South reported, “Really, [we serve] any firm or industry that has a con- nection to road building. . . . There’s obviously contractors that move dirt, lay asphalt, build bridges, especially contractors like guardrail installers, pavement marking installers, [and] traffic control. There’s also suppliers, like aggregate suppliers, asphalt suppliers, rebar, or beams, as well as supporting services such as insurance companies, bonding agents, that kind of thing.” • When asked about the firms his organization serves, the white male representative of a trade association in the South said, “We have two membership affiliations . . . regular [and] asso- ciate member[s]. The regular members would be essentially contractors who perform work for the [state]. Specifically, in order to be a regular member, you have to be prequalified

Qualitative Information from Trade Association Representatives Regarding Business Success 135 with the [state] to perform work for them. . . . The associate members can be anything from engineering firms to suppliers, to accounting firms . . . banks . . . attorneys, bond companies, anything else.” • The African American female representative of a national engineering-related trade associa- tion in the Northeast reported that the organization works with firms and individuals in the engineering field, saying, “We are a consortium of engineers and technical professionals. And then we have what you call affiliate members, so we pretty much welcome everyone.” The same trade association representative added, “Our primary mission is to increase the number of culturally responsible Black engineers who excel academically, succeed profes- sionally, and positively impact the community. We probably have every engineering profes- sion represented. . . . We are pretty much representing most technical majors.” Types of Business Members (DBEs, Non-DBEs) and the Work Performed Trade association representatives discussed their organizations’ DBE and non-DBE member- ship, and the primary types of work performed. Comments follow: • The white female representative of a Midwest trade association reported that her organi- zation does serve a number of DBE firms. When asked about the type of work members perform, she stated, “It’s heavy highway [mainly], so everything horizontal. No vertical members. . . .” The same trade association representative continued, “They do airport work, DOT work, cities, counties, anything. [Sometimes] roads, bridges. . . .” She added, “We have prime contractors, subs, specialty, and then associates . . . service suppliers, support for the industry.” • The white male representative of a trade association in the South indicated that the orga- nization represents 12 of the state’s approximately 55 licensed and prequalified certified DBE firms. He said, “We’ve got a membership of about 155 contractor members, so roughly 10% of ours are DBEs. . . . Nearly all of them are subcontractors. . . . There are a couple that will do work and bid work as primes, but due to the nature of some of their work . . . it’s not that often of an occurrence where the work that’s left is focused enough or standalone enough for them to bid as a prime.” Regarding the types of work members perform, the same trade association representative said, “We have a large component of our members that do guardrail, we have some that provide general grate and drain work. . . . We do have at least two member companies that are striping contractors, though primarily that striping work is done behind the pavers. There’s also fencing . . . signage, sodding, erosion control . . . and some general concrete work.” • The white female representative of a national trade association in the Midwest reported that 23 out of about 360 members are DBEs and said that these firms are “specialty and affiliate, [with] two general contractors . . . roofing, consulting, engineering, trucking, underground, sheet, curb, gutter, driveway, crane, [and] apparel.” She added, “We’ve got four [heavy] high- way [contractors].” • The white female representative of a Gulf State construction-related trade association reported that they serve both DBE and non-DBE firms. She added, “We primarily specialize in commercial construction. However, a few of our contractors also dabble in highway and residential construction. . . . The majority of our membership can be categorized within general contractors, subcontractors, suppliers, service providers [and] banks. . . .” • The white female representative of a women’s business advocacy and business development association in the West reported that members include non-DBEs and DBE-certified firms. She said that the DBEs are generally small, with revenue up to $10 million.

136 Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program • The African American male representative of a national construction-related trade associa- tion in the Northwest reported that the organization serves both DBE and non-DBE firms. He went on to say that “90% or more” of his organization’s members are DBEs. • The white male representative of a Gulf State construction-related trade association indi- cated that the organization represents DBE- and non-DBE-certified firms. • The white female representative of a trade association in the South indicated that the organi- zation represents both DBE and non-DBE firms. • The white male representative of a national construction-related trade association in the Northeast indicated that membership does include some DBE-certified firms. When asked about the work they perform, he said, “We really don’t ask that question. . . . The way that [our organization] is organized, our membership comes through our chapters.” • The white male representative of a subsidiary of a national construction-related trade asso- ciation in the Northwest reported that members are primarily general contractors, specialty or subcontractors, professional services business owners, and industry associates. He added that membership, though relatively few, include DBE-certified firms. • The African American female representative of a national engineering-related trade associa- tion in the Northeast indicated that she is not familiar with the organization’s DBE member- ship. However, regarding whether or not membership includes DBE firms, she said, “Probably yes. We have what you call Special Interest Groups (SIGs) . . . where you can kind [of] find yourself as a technical professional.” She then went on to explain, “We will probably have your DBEs, MBEs, and your HUBs in our entrepreneurship SIG.” • The white male representative of a Gulf State trade association reported that he is unaware of any DBE firms or programs in his state and organization. He later commented, “We probably got five members that are highway and bridge. . . .” DBE Opportunities in the Highway Construction and Engineering-Related Industries Trade association representatives were asked about opportunities for DBE-certified members in the highway construction and engineering-related industries. Comments follow: • The white male representative of a Gulf State construction-related trade association reported that DBE-certified members that work in highway construction perform seeding and sodding, traffic control, guardrail installation on bridges, as well as electrical and mechanical engineer- ing work. He added that DBEs’ revenue “[ranges] anywhere from . . . $12 million . . . to as little as less than $1 million a year.” • Regarding the types of work that DBE-certified members are involved in, the white female representative of a Midwest trade association said, “It’s pretty diverse. We’ve got traffic control, we have a couple of worksite safety, pavement marking, signing. . . . We’ve got a seeder, he does all kinds of stuff [such as] erosion control . . . culverts, utilities, pretty much anything. . . . They’re subs. We’ve got one prime, he does sub and prime work. He’s basically a concrete paver.” • Regarding the organization’s membership, the African American male representative of a national construction-related trade association in the Northwest reported, “We have about 52 members currently, and they range in what they do. [They perform] anything from general construction, vertical or flat, landscaping, mechanical, electrical, [and] plumbing. . . .” • The white female representative of a trade association in the South said, “Normally the DBE firms in general are smaller firms,” and added, “DBE firms are specialty contractors. The ones that come to mind are in traffic control, there’s a guardrail company that I know, there’s a rebar supplier that I know, there’s a company that does underdrains, some landscaping, erosion control, those kinds of companies.”

Qualitative Information from Trade Association Representatives Regarding Business Success 137 • When asked about the types of work member firms are involved in, the white female rep- resentative of a Gulf State construction-related trade association said, “We have quite a few projects going on that have called for DBEs. We have [projects with] Exxon Mobil and Gulf Coast Joint Venture. . . . We also are building our harbor bridge and expanding our port, and there’s been a call for DBEs with all of those projects.” She added that their DBE members work primarily as subcontractors. • The white male representative of a subsidiary of a national construction-related trade associa- tion in the Northwest recalled five DBE-certified firms that performed a significant amount of work in the highway construction industry. • When asked about engineering workers and firms in the state, the white male representative of a Gulf State trade association responded, “There’s probably a lot [of them], [but] most of the engineers, if they’re specifically engineers, are not members of our association. A lot of our firms do have engineering-related services in them, that’s some of our bigger contractors. . . . [Engineers] have their own association [though]. We have a construction coalition . . . that includes architects, engineers, building contractors, concrete, asphalt pavers, and . . . most of the things that we do together are legislatively involved.” • The white male representative of a national construction-related trade association in the North- east indicated that their DBE members do perform highway construction-related work. DBEs with the Most Highway Construction and Engineering-Related or Other Work in the State Trade association representatives discussed their organizations’ DBE members that are most successful at obtaining state DOT work. For example: • When asked which DBEs get the most highway construction and engineering-related work in the state, the white female representative of a national trade association in the Midwest said, “I would say these would be non-members. . . . Most of the DBE members that we have are vertical [construction].” • When asked why these firms succeed, one trade association representative said, “[They built] the reputation of showing up and delivering on time, and [they deliver] what [they promise] in the time that’s provided and at the price that’s provided.” He went on to comment, “I think all those companies do that very well.” • When asked which DBEs get the most highway construction and engineering-related or other work in the state, the white male representative of a construction-related trade association in a southern state identified a number of DBEs. When asked if any of these DBE firms operate as primes, the same trade association representative responded, “There are instances [of it] because of the nature of contract letting. [It’s] mainly in guardrail work. Common Keys to Business Success Trade association representatives discussed the general keys to business success. Overall Business Success (Why or Why Not) Many trade association representatives reported on the importance of quality work, perfor- mance, and follow through. One representative noted the importance of municipal leadership. Comments include: • The white female representative of a trade association in the South said, “The DBEs that tend not to succeed are the ones that have difficulty scheduling [and] difficulties with follow through, [and] difficulties with performing.”

138 Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program • When asked which DBE firms find the most success in the industry, the white female repre- sentative of a Midwest trade association reported, “[They’re] DBEs that . . . stay within their means, they don’t diversify outside of what their specialty is, and then can actually perform the work.” • The African American female representative of a national engineering-related trade associa- tion in the Northeast said, “We just got a new mayor . . . after 17 years of having the same mayor, and his goal was to actually increase [MBE programs] quite a bit. So, he’s starting to hold DBE roundtables [and] actually appointed a new office here, a new person . . . who looks at contracts and subcontracts, and his DBE goal is pretty aggressive. And so, that’s what I think is . . . making more of the DBEs and MBEs and HUBs more successful, [it’s] you have someone that’s more committed at the top.” • The white male representative of a national construction-related trade association in the Northeast stated, “I think what makes a DBE successful is the same thing that makes a non-DBE business successful.” He added, “It’s a matter of finding what you’re good at and pursuing that particular line of business. . . .” The same trade association representative continued, “In construction you may call your- self a highway contractor, but that could mean you’re working on 10 different kinds of projects, which could mean a whole different mix of subcontractors, suppliers, et cetera, on any given project. And what typically happens I think is that the prime contractor, when they’re looking for subcontractors, they typically go to those businesses that they’ve . . . had success with.” • The white female representative of a women’s business advocacy and business develop- ment association in the West reported that successful DBEs must be “in the right place at the right time.” • When surveyed, the white female representative of a construction-related trade association in the Northeast responded that successful firms “are proactive in sending quotes to plan holders in advance of the bid date.” • When surveyed, the white male representative of a construction-related trade association in the Southwest responded that “quality work performed, reliability, pricing, [and] management” are factors that determine a firm’s success. • When surveyed, the white male representative of a Gulf State construction-related trade association responded that quality work, dependability, and maintaining a good reputation are factors that contribute to firms’ success. Quality Employees a Key Factor to Business Success Trade association representatives agreed that having quality, well-trained employees is a key factor to business success. Comments include: • The white male representative of a Gulf State trade association said, “The thing that I hear over and over and over is [difficulty] finding skilled labor and really operators, so workforce development and training seems to be the big thing that my members are involved in. . . . I’m sure that that would be the same for anybody involved in the construction industry.” • On the subject of the key factors for DBE firms to be successful, the white female representa- tive of a trade association in the South said, “A lot of it is just performance. I think success- ful DBEs in general [have] adequate workforce, they’ve got adequate equipment, materials. They’re able to perform. They’re able to follow through with the bids they’re submitting to the prime contractors. And I think for the most part they’re able to get the job done.” • When surveyed, the white female representative of a construction-related trade association in the Northeast responded, “[Successful firms] are solid . . . with skilled workforces. . . .”

Qualitative Information from Trade Association Representatives Regarding Business Success 139 Experience, Relationships, and Access to Capital as Keys to Business Success According to many trade association representatives, common factors to business sus- tainability and success include prior experience in the industry, relationship-building with customers and others, and access to capital. Comments include: • The white male representative of a subsidiary of a national construction-related trade asso- ciation in the Northwest commented, “[Successful DBE-certified firms must be] committed to being good contractors first of all, they have strong basic business skills and then they have broader based business skills.” He added that “[some members] have developed a reputation for being a qualified and capable contractor.” • The white male representative of a Gulf State construction-related trade association com- mented that successful firms have prior experience in the industry and access to capital. He said, “One is they grew up in the industry . . . and two is they have some kind of financial backing.” • Regarding issues that pose challenges for DBE firms, the white female representative of a trade association in the South said, “Some of the problems that I’ve heard from the prime contrac- tors are DBEs not having enough cash flow to make it through payroll, so they’re asking the prime contractors to pay them faster than how [the] DOT pays the prime. Or they don’t understand the equipment certification process, so they don’t provide the right certs and . . . don’t get paid because . . . [the state] DOT [is] not going to pay the prime if the DBE’s certs aren’t correct.” • When surveyed, the white female representative of a construction-related trade association in the Northeast responded, “[Successful firms have] solid relationships with their supply chain and [are] financially stable. They are very often members of [trade associations]. . . .” She noted, “New firms were grown by people who were craft workers. They grew up in the construction industry, so to speak.” Members’ Success at Securing Work Without DBE Contract Goals (Why/Why Not) Trade association representatives discussed their members’ ability to secure opportunities when contract goals do not exist. Many Reported That Members Are Successful at Obtaining Non-Goal Work • The white female representative of a national trade association in the Midwest indicated that some DBE-certified members may be successful at obtaining work without DBE contract goals. She went on to comment that “all of [their] state projects have goals.” • The white female representative of a trade association in the South reported that all the major DBE firms she listed do highway work without being used to meet DBE goals. She added, “They get [both] goal work and non-goal work from [the] private [and] public [sectors], [and] cities, counties, all different kinds of places.” • When surveyed, the African American male representative of a Gulf State construction- related trade association identified one DBE firm that obtains a substantial volume of state DOT contracts without the help of a DBE contract goal. – When asked if any DBEs participating in state DOT work also obtain a substantial amount of revenue from work with other public or private sector customers not operating the federal DBE Program, the same trade association representative responded that another DBE does.

140 Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program • When surveyed, the white female representative of a construction-related trade association in the Northeast responded, “I would expect that any . . . DBEs [that] provide pre-bid quotes on their scope of work on any relevant contracts gain the work when they price competitively, just as any subcontractor would.” When asked if any DBEs participating in state DOT work also obtain a substantial amount of revenue from work with other public or private sector customers not operating the federal DBE Program, the same trade association representative responded, “I cannot think of any firms in the heavy highway sector at this time who derive a lot of non-public work volume.” She added, “Any electrician subcontractors would [also] perform private work.” • When surveyed, the white male representative of a Gulf State construction-related trade asso- ciation identified DBE firms that are successful at obtaining work with customers that do not operate the federal DBE Program. • When surveyed, the male representative of a construction-related trade association in the Midwest identified certain DBEs that participate in state DOT work but also obtain a substan- tial amount of revenue from their work with other public or private sector customers that do not operate the federal DBE Program. • When asked if any DBE firms are successful at securing work without DBE contract goals, the white male representative of a trade association in the South said, “A few of those guard- rail folks would probably be in that category.” He went on to identify DBEs that would all likely still be successful without DBE contract goals. • The white male representative of a construction-related trade association in the South responded that no individual DBE firms in the state received a substantial amount of the highway work, and those who did were awarded contracts based on pricing or working relationship rather than DBE goals. • When surveyed, the white male representative of a construction-related trade association in the Southwest identified a number of DBEs that would still be successful without the DBE program. He went on to comment, “Probably every firm on the whole list generates some revenue from non-federal DBE . . . work.” A Few Representatives Indicated That Members Are Unsuccessful at Obtaining Work with No DBE Contract Goals • When asked if DBE members obtain a substantial volume of state DOT subcontracts without the benefit of a DBE or MBE/WBE goal, the white female representative of a Midwest trade association reported, “No,” and added, “The percentage of non-goal work is almost nil.” • The African American male representative of a national construction-related trade associa- tion in the Northwest indicated that he is not aware of any DBE members that obtain sub- stantial work from the state without the benefit of a DBE or MBE/WBE goal. • When asked if DBE members obtain a substantial amount of state DOT work on projects with no DBE or MBE/WBE goal, the African American female representative of a national engineering-related trade association in the South said, “I would probably say no.” However, she noted, “I think we have a really aggressive goal that is being met, especially with the DLTs here. . . .” What Makes One DBE-Certified Firm More Successful than Another Trade association representatives discussed why some DBE members are more successful than others. Comments include: • When asked what makes certain DBEs successful in obtaining subcontracts when compared to DBEs that are not as successful, the white male representative of a subsidiary of a national

Qualitative Information from Trade Association Representatives Regarding Business Success 141 construction-related trade association in the Northwest said that it comes down to “basic business skills.” He added, “[Successful DBE firms] know how to run a business. They are well-networked, they have experience somewhere in the industry or they have worked for an experienced contractor before, and they bring that to their own business.” The same trade association representative continued, “They know how to estimate, they know how to bid, they know how to keep their books, they know how to keep a payroll . . . and they’re actually really good contractors too.” He added, “In the end, they have to be good businesses. That’s really what matters in this industry.” • When asked what makes certain DBEs more successful than others in obtaining subcontracts, the African American male representative of a national construction-related trade association in the Northwest responded, “I would say [it’s] just a willingness to just learn [and having an] understanding that there’s going to be challenges along the way. . . .” The same trade association representative went on to say, “Attacking those challenges head- on and finding technical assistance [and] opportunities, when they’re available, [is impor- tant].” He added, “Really taking the time to understand the requirements typically is what will make you successful, more often than not.” • The white female representative of a Gulf State construction-related trade association said, “From the perspective of [our association] we pride ourselves in our motto of skill, integrity, and responsibility, and that really does play out in [our] region. . . . Reputation is very impor- tant within any business, and . . . I think that plays a part in it. And then there’s also just being a good, reputable company . . . in general.” • The white female representative of a national trade association in the Midwest indicated that understating capacity is advantageous to DBEs and other small firms. She stated, “The state has invested in a DBE resource center that really does business assessments [and] sort of [asks], ‘What is your true capacity?’ The highway market is . . . such a capital-intensive indus- try, [so] having realistic expectations about what’s required to get into the industry . . . is hugely important.” She expanded on this, saying, “We’ve had some pretty big failures because of those kinds of miscalculations, and so I think that that mentorship and that extra evalua- tion or assessment of a business’s capacity is really what provides a pathway to success.” • When asked what makes a DBE successful in his experience, the white male representative of a trade association in the South said, “[A successful DBE] will show up, be responsive, be accountable, perform the work, and then let the prime do what they need to do to finalize the project. So, as much as anything it’s performance based and its accountability based.” • When surveyed, the African American male representative of a Gulf State construction- related trade association responded that “diligence and prowess . . . presence in policy con- versations, and making their voice be heard” makes some DBE firms more successful than others. Regarding the successful DBEs he previously mentioned, he added, “They are very knowledgeable of the field that they are in.” • When surveyed, the male representative of a construction-related trade association in the Midwest responded that having smart business sense, knowing the industry, and being good at what they do makes some DBE firms more successful than others. • When asked what makes some DBEs more successful than others, the white male represen- tative of a construction-related trade association in the South responded, “Ultimately, they give reasonable prices and show up to do the work. . . . They perform work in accordance to the specifications and in a timely manner.” He went on to say, “Prime contractors have to meet a DBE goal, which affords DBEs a luxury in how they set their prices because the deci- sion to subcontract with them [is] not based as heavily on their price quotes.” • Regarding factors that lead to a DBE firm’s success, the white female representative of a Midwest trade association stated, “Being in the business a long time [and] just knowing what they do [is a factor].” She added that working in an area that gets “big subcontracts” is also helpful.

142 Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program Two trade association representatives discussed the importance of flexibility in work types and opportunities pursued. Comments include: • The African American female representative of a national engineering-related trade associa- tion in the Northeast had some insights into successful DBE practices, saying, “What I’ve seen that has been successful is their ability to kind [of] be flexible and open up their business to many, many types of industries, or they’re really specific and they do that really well. So, you can either take more of a shotgun approach or more of a strategic approach.” • The white female representative of a trade association in the South stated, “The DBEs that tend to be successful are [trying] to get work from all avenues, not just DBE set-asides.” She said that she encourages firms to “pursue opportunities regardless of whether they have a DBE goal attached.” Regarding successful firms, the same trade association representative said, “They just have sound business practices. They have adequate bids that cover their costs and provide a profit margin, [and] they’re able to hire competent employees. . . . [They also make] sure their accounting is done properly, their taxes are paid properly, [and] their employees are paid, [they] just . . . tend to have developed better overall business practices.” She added, “The DBE program offers so many free resources to help your business. . . . I think the DBEs that are successful also take advantage of those resources.” Range of Members’ Peak Annual Revenue Since Business Start-Up Trade association representatives discussed members’ annual gross revenue. Most annual rev- enue ranges from $1 million to $10 million, though one representative said members’ revenue can reach up to $40 million. Comments include: • The white male representative of a subsidiary of a national construction-related trade associa- tion in the Northwest commented that members’ gross income is generally “in the $1 [million to] $10 million per year range.” He added, “Some . . . are even beyond that.” • When asked about members’ gross revenue, the white female representative of a Midwest trade association said, “I would guess [it’s] a million all the way to $10 million a year, gross.” • The white female representative of a women’s business advocacy and business development association in the West reported that DBE-certified members are generally small with revenue up to $10 million. • White female representative of a trade association in the South said, “I would just be guessing, but I would guess the average size of a DBE company would be maybe 10 [to] 25 employees, probably does gross revenues of $1 million to $5 or $6 million a year. . . . [A DBE] is probably the largest DBE company that I know of that’s certified, [and] I wouldn’t be surprised if they did closer to $10 or $11 million a year.” • The white male representative of a Gulf State construction-related trade association reported that DBE-certified members’ annual revenue ranges from $12 million to less than $1 million a year. • The African American male representative of a national construction-related trade associa- tion in the Northwest said, “I would say our largest members are around the $30 million, $40 million a year mark, and some of our smaller firms are down around anywhere from half a million to $1 million . . . per year.” Knowledge of Business Assistance Programs and Business Success Most trade association representatives indicated having general knowledge of assistance pro- grams and the services that the programs provide. Some representatives reported that their organizations offer business assistance programs and support services to small businesses to assist them in their growth and success.

Qualitative Information from Trade Association Representatives Regarding Business Success 143 Business Assistance Programs That Are Offered and Useful for DBE-Certified Firms Trade association representatives discussed business assistance programs that they consider useful to DBEs and other small businesses. Many reported on assistance offered by their orga- nization, including safety training, technical assistance, and networking events, among others. For example: • The white male representative of a subsidiary of a national construction-related trade associa- tion in the Northwest reported, “We have a program . . . that is heavily focused on professional development and training.” Regarding the need for such a program, he said, “In 2007 the [legislature] amended our public contracting law . . . and added professional development requirements to the statute, and in response to that we developed a 16-module program. . . . It’s supervisory training, it’s learning how to estimate well, it’s learning how to bid. It’s every- thing it takes to become a good contractor.” • The white male representative of a national construction-related trade association in the Northeast said, “We do a lot of business development things here . . . that typically get deliv- ered by our chapters. . . . We have . . . safety training programs . . . a variety of [other] business programs, [and] we have supervisory training programs. A lot of these things we develop nationally, and then our delivery system is typically through our chapters.” The same trade association representative also said, “We have a diversity and inclusion council, which frankly is relatively new. It’s just been developed in the last year, and as its name implies it’s an attempt to have a home within the national [organization] for DBEs and other emerging small businesses.” He said this council allows DBEs participating with the organization at a national level to take part in making decisions on policy and programs. • The white male representative of a Gulf State trade association said, “Our business devel- opment programs are centered [on] workforce development training, supervisory training, management training, and then safety training.” • The white male representative of a Gulf State construction-related trade association reported that his association offers programs to help DBEs and other firms get started in the industry. He said, “We partner with [the state] and the . . . licensing board. . . . We hold a 12-part class on how to be a contractor, [focusing on] bonding, accounting, payroll, equipment . . . the whole thing.” • When asked if there are any business development or other programs offered that can help DBEs and other firms become successful, the African American female representative of a national engineering-related trade association in the Northeast said, “[The city] offers programs [like that].” She went on to say, “There are offices that are dedicated to DBE programming and ensuring that they are successful.” Regarding programs offered by the organization, the same trade association representa- tive said, “[We] probably [do have programs] with the entrepreneurship [Special Interest Group]. . . . I am not [aware of any programs specifically]. I’m over [with] more of the trans- portation SIG . . . not entrepreneurship SIG.” • When asked if the organization offers any business development or other programs that can help DBEs and other firms succeed, the African American male representative of a national construction-related trade association in the Northwest said, “[Our association] created . . . a technical assistance [program]. They support contractors with anything from back office support to estimating and bidding, learning how to read plans, all kinds of things like that.” He went on to say that the program facilitates training and workshops for member firms. • When asked if the organization has any business development programs they offer to help small businesses become successful, the white female representative of a Gulf State construction-related trade association reported, “Yes, we actually partner with our . . . local community college here with focuses in craft training. And [we partner with] the Small Busi- ness Association here, where we help . . . market and filter in new members. . . . Also, with

144 Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program our workforce solutions, we act as a liaison to get . . . people in companies interested in becoming certified. . . . We help facilitate in making that process as easy as possible for them, and we have referred quite a few people into those programs.” Regarding business assistance her organization offers that is geared specifically to DBE firms, the same trade association representative said, “We offer educational training, leader- ship training . . . bonding. . . . We offer training to give them the tools to get where they need to go.” • When surveyed, the white female representative of a construction-related trade association in the Northeast responded, “[We offer] many training courses crucial to project skills, [such as] OSHA training, superintendent courses, project manager courses . . . annual ACI concrete certification classes, [an] HMA testing course, [and] environmental certification courses. . . .” The same trade association representative continued, “We also hold an annual conference with dozens of project-specific and industry-relevant workshops [focusing on] specifications, contracts, legal, HR, and featured project topics.” • When surveyed, the white male representative of a construction-related trade association in the Southwest responded, “Our organization provides workforce training that benefits our membership, including the DBE and women-owned member firms. We also work closely with the DOT construction [and] civil rights bureau to provide networking for new and existing DBE [and] WBE firms with the major contractors who may be able to utilize them on contracts.” • The white female representative of a women’s business advocacy and business develop- ment association in the West reported that management training, leadership, and legisla- tive participation are the services that they offer. She added that the association makes sure that the state DOT is clear about its organization, and that DOT rules and regulations are implemented throughout the state. • The white female representative of a national trade association in the Midwest stated, “I think that growing programs are very successful.” When asked if the organization offers any busi- ness development programs geared towards small businesses’ success, she said, “We actually have one in development. . . . [It’s] sort of a DBE executive council that will have general con- tractors and DBE executives . . . meet periodically to interact about best practices for business relationships and mentorships.” • When surveyed, the male representative of a construction-related trade association in the Midwest responded that the organization has a DBE committee that communicates regularly with the state DOT. He noted that this keeps the line of communication open. A few representatives said that their organizations do not offer any special assistance or programs for DBEs or other small businesses. Comments include: • When asked if the organization has any business development programs they offer to help DBEs or other small businesses become successful, the white male representative of a trade association in the South indicated that they do not. He commented, “It seems redundant for us to try to do something in addition to what [government organizations] are [already] doing.” He added, “We try to be supportive of their efforts and try to partner with them when those opportunities present. . . . The [Office of] Civil Rights . . . is doing a DBE symposium . . . for lack of a better term. It’s somewhat of a job fair.” The same trade association representative continued, “They’re reaching out and advertis- ing to the DBE community for companies that could possibly provide services to [a state organization], and they’ve asked us to exhibit there . . . as well as help recruit some of our member companies to participate.” He went on to say, “Any type of event that they’re going to have to try to promote the industry . . . we certainly share that information with our membership . . . to make sure they’re aware of those opportunities as well.”

Qualitative Information from Trade Association Representatives Regarding Business Success 145 • The white female representative of a trade association in the South said, “[The association] currently doesn’t offer any specific DBE platforms, [though] being a part of [the organization] is a benefit to any business.” She added that one of her goals is to get more DBE firms to join the organization, and noted, “Overall, [it’s] just business education [that DBEs need]. One of the things that I’m working on with [the organization] is to develop a subcontractor [and] DBE technical guide. I’d like to have a compilation of expectations from the prime contractors that we can pass on to the DBEs.” • Regarding the help her organization provides for business development, the white female representative of a Midwest trade association said, “We don’t specifically work with subs or contractors on business development or anything like that, but just networking and being able to work on committees and learning specs and things like that. That’s what we offer. We don’t have trainings right now.” Number One Type of Assistance DBEs Need to Be Successful Trade association representatives were asked what the number one type of assistance is that DBEs need to be successful. Many discussed the importance of financial assistance, technical assistance, and other trainings. For example: • The white female representative of a trade association in the South reported that the biggest need she sees DBE contractors having is “business education, [specifically regarding] how to do business in [the state].” • The African American male representative of a national construction-related trade associa- tion in the Northwest reported that the number one type of assistance that DBEs need to be successful is “learning how to properly estimate and bid a project.” • The white female representative of a Midwest trade association indicated that the greatest need of firms her organization works with is general support. She commented, “[Firms need] someone they can go to [with] questions.” • The white male representative of a subsidiary of a national construction-related trade asso- ciation in the Northwest suggested that there be more programs to assist DBEs in gaining experience. He said, “[It’s important to have] experience and relationships . . . experience in actually doing the work and in running their business, and then building the relationships to sustain the work, either as subcontractors or as general contractors . . . down the road.” • The African American female representative of a national engineering-related trade associa- tion in the Northeast said, “Financial loans, maybe start-up or even more financial planning management [would be helpful]. I think that would be one way to ensure that they can still operate, pay all of their employees, and [still] make a profit.” • The white male representative of a Gulf State construction-related trade association indicated that the key factor to success would be financial assistance to increase firms’ bonding capacity. • When asked what the number one type of assistance is that DBEs need in order to be success- ful, the white female representative of a national trade association in the Midwest said, “[It’s] mentoring experiences and business acumen sort of assessments about business capacity.” • The white female representative of a Gulf State construction-related trade association stated, “At this point in time, with the issue of the nationwide . . . skilled workforce shortage, I think the number one thing that we can do is assist in marketing [for] the construction industry to educate school counselors, to educate parents [and] kids [of] the construction industry [being] an industry of opportunity. . . . The sky is the limit when you apply yourself in this industry. You can go from an intern . . . all the way up to your own company. . . . You don’t have to worry about college debt.” The same trade association representative continued, “And there are a lot of loans and grants and everything out there. It’s just . . . not easily accessible, so people don’t know about

146 Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program it as much because the industry has been forgotten about in the last couple decades. . . . Everyone was told [they] needed to go to college. So, I believe [it’s] just having access and being able to . . . find those opportunities and find facts on how successful the construction industry is, and how they can be [successful] in comparison to [a] college degree, and debt.” • When asked what the number one type of assistance is that is needed to help DBE-certified firms succeed, the white female representative of a women’s business advocacy and business development association in the West commented, “Jobs.” She added, “You have to get work before you need assistance. It’s very difficult. The right type of assistance is not provided. If it was mandated to use DBEs by large firms, it would be better.” Challenges to Business Success Trade association representatives discussed various factors that challenge future business success. Some reported that lack of equipment and materials, difficulty securing funding, limited contract opportunities, and other factors, are barriers. One representative said that becoming DBE-certified and keeping that certification is a challenge for some firms. Comments include: • The white female representative of a trade association in the South discussed an example of a difficulty she sees for DBEs and other small businesses in the industry. She said, “Some- times . . . a prime contractor will contract a job to a DBE and then they call them to perform the work, and the DBE doesn’t have the materials, doesn’t have the labor. . . . They’re not scaling their business properly. I don’t know that it’s necessarily a DBE problem, it’s more of a small business problem, but most small businesses are also DBEs.” • The white female representative of a women’s advocacy and business development association in the West commented that the biggest problem for “DBEs is getting a foot in the door.” She went on to say that primes utilize subcontractors that they already know. • The white male representative of a national construction-related trade association in the Northeast stated that “finding work” is the biggest challenge that DBE firms face. He explained, “Finding the right kind of work for their business is an important thing for them to focus on [because] the construction business is all about building a backlog [and] about chasing work. You have a contract and so you’re working to complete the contract. You always have to be looking down the line to where the next job’s coming from.” Regarding the federal DBE Program, the same trade association representative later said, “Some of the problems specific to a DBE . . . deal with certification, because you have to be certified to be a qualified DBE in the program. . . . As I’ve discovered over the last couple of years, that’s a real issue for DBEs, getting certified initially [and] keeping their certification, [and] crossing over different jurisdictions . . . from one state to another. So, you might be certified in Kentucky, but you’re not certified in West Virginia. . . . You might be right on the border and the kind of work you [want to] pursue is over in West Virginia, but you’re not certified over there.” • The white female representative of a national trade association in the Midwest said, “One of the biggest challenges we’ve discovered is . . . responding to bids [and] going through the documentation. . . . DBEs who have small staffs, that’s a big challenge for them. . . . And espe- cially in public work, we have big companies that have lots of staff that complain about all the paperwork and the red tape. And for the smaller ones it’s even more of a challenge.” • When asked what the largest barrier standing in the way of new DBE firms is, the white male representative of a trade association in the South said, “I’d say if it’s a company starting out, it’s probably just the general business and financial understanding of it. . . . It’s a capital- intensive business. You [need to] have some stability to have access to money.” The same trade association representative added that some members complain about a new policy by the state that requires DBE subcontractors to secure their own bonding. He said that

Qualitative Information from Trade Association Representatives Regarding Business Success 147 in the past prime contractors could secure bonding for the entire project while deducting the percentage of the premium covering DBE subcontractors’ portion of the work. He went on to say that the amount and size of work DBE subcontractors can do is now limited, which inhibits their ability to grow. • The African American female representative of a national engineering-related trade associa- tion in the Northeast indicated that the biggest challenge facing DBE firms is “funding.” Other Insights and Recommendations Some trade association representatives offered additional insights. One representative com- mented that there is a shortage of DBEs in the construction industry in her region. For example: • The white female representative of a women’s business advocacy and business development association in the West said that there is a huge discrepancy across the nation regarding DBE enforcement. She said that after DBEs are certified under NAICS codes, nobody checks on them, and commented, “That’s how you end up with so [many] problems.” The same trade association representative said that industry representatives “really need to clean up [their] own house,” and commented, “Change [the] reporting procedure to number of contracts versus dollars spent. It’s not about training the DBE, it’s about more work.” • The white female representative of a Gulf State construction-related trade association said, “[A business assistance organization is] coming down to try and coordinate with our DBEs. . . . They’re finding a shortage of DBEs just with the economy and infrastructure, and everything going on in [the region]. Still, being such a small community it’s growing pretty quickly and so the need for the DBEs is pretty high right now.”

Next: Appendix F - Qualitative Information from Successful DBEs Regarding Business Success »
Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program Get This Book
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Firms that have graduated from the federal Disadvantaged Business Enterprise (DBE) program or have successfully competed for state transportation agency contracts are the focus in NCHRP Research Report 913: Compendium of Successful Practices, Strategies, and Resources in the U.S. DOT Disadvantaged Business Enterprise Program.

The DBE program provides small businesses owned and controlled by socially and economically disadvantaged persons with opportunities to participate on federally assisted highway contracts. As a requirement of receiving federal highway funds, state departments of transportation (DOTs) must administer the DBE program. FHWA provides oversight of the state DOTs’ operation of the program to ensure that they are in compliance with federal regulations.

The report includes appendices that define success, profile successful DBEs, and describe state DOT initiatives for DBE success. It also explores the types of business assistance that contribute to the success of DBE firms.

The report serves as a resource for staff in state transportation agencies, U.S. DOT, and other groups implementing the DBE program or providing business assistance.

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