SECTION II. Collection and Analysis of Metro Contract Data

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1 SECTION II. Collection and Analysis of Metro Contract Data Section II describes the procurement areas and the relevant geographic market area defined for the Metro disparity study. BBC also identifies two key time periods for the analysis: contracts before and after October 1, 2006, which is when Metro converted to race- and gender-neutral implementation of the Federal DBE Program for FTA-funded contracts. Collection and Analysis of Metro Prime Contract and Subcontract Data The BBC team examined Metro prime contracts and subcontracts according to the following guidelines. The study period was January 1, 2003 through December 31, Individual procurements of more than $2,500 were examined. BBC first focused on FTA-funded contracts. BBC utilized Metro s records of whether or not a contract was treated as FTA-funded. 1 With a few exceptions, BBC determined contract dollars for procurements that included subcontracts based on dollars at time of contract award. 2 For all other contracts, BBC determined contract dollars based on amount paid-to-date from Metro procurement data. For all contracts BBC determined contract date based on award date. BBC examined dollars going to prime contractors and to subcontractors. Subcontract dollars are the dollar amounts to subcontractors listed at time of award. If a contract involved subcontracting, the dollars counted toward the prime contractor was calculated as the total contract amount less the dollars for listed subcontractors/suppliers. In total, BBC identified 26,032 Metro procurements that were FTA-funded within the study period. These procurements represented $2.5 billion. Only a portion of these procurements were suitable for analysis in the disparity study, as described below. BBC also analyzed 4,072 locally-funded procurements representing $2.8 billion. 1 In most cases, $1 dollar of FTA funding caused Metro to treat a contract as FTA-funded. In rare cases, Metro awards contracts using FHWA funds. These contracts were not included in this study. The 2007 California Department of Transportation Availability and Disparity Study examines FHWA-funded transportation contracts awarded by the State and by local agencies. Caltrans issues instructions concerning implementation of the Federal DBE Program to local governments in California that use FHWA funds. Metro should follow these instructions for any future FHWA-funded contracts. 2 BBC examined invoice data for the Goldline Eastside Extension project. BBC RESEARCH & CONSULTING DRAFT REPORT SECTION II, PAGE 1

2 Procurement areas. BBC coded functional area of work for each prime contract/subcontract or firm receiving Metro work during the study period. The subindustries describing these types of work are referred to as procurement areas in this study. Electrical work and petroleum products are two examples of specific procurement areas that were included in the Metro study. BBC coded Metro work into more than 80 specific procurement areas. BBC identified the procurement area for a contract or subcontract based on information such as the primary line of work identified for the contractor or vendor from Dun & Bradstreet, information contained within the contract or other Metro records, phone calls with or other research on firms obtaining the work, and review by Metro and other Consortium agency staff. Several types of procurement areas were not included in the Metro study, as discussed below. Procurement typically not included in a BBC disparity study. Once total dollars for FTA-funded contracts were aggregated by procurement area, BBC identified and excluded procurements areas that were in any of the following six groups: Government, not-for-profit agencies or associations; Periodicals, books, software, or other types of purchases that are typically copywrited and produced by one national or international source; Real estate or other real property (purchases or leases), legal services (which are often dollars for real property) or financial services/insurance; Educational, social or medical services; Utilities, broadcast and communications services, and other regulated industries; and Travel- and hospitality-related expenditures. These procurement areas are typically not included in a BBC disparity study. BBC also excluded Metro transit operations contracts, which for Consortium agencies are primarily contracts for labor with the agencies owning the transit equipment and facilities. BBC identified over $450 million in Metro transit operations contracts during the study period. Vendors for the largest contracts were Access Services Incorporated, Transportation Concepts Incorporated and Southland Transit Incorporated. Types of purchases primarily made from TVMs. FTA independently implements the Federal DBE Program for transit vehicle manufacturers (TVMs). Transit vehicle manufacturers work directly with FTA to establish their overall annual goals for DBE participation. Metro should not include FTAfunded procurements from TVM firms when developing an overall DBE goal, per 49 CFR Section Therefore, types of Metro purchases (buses and bus engines, locomotives and railroad equipment) made primarily from TVMs are not included in this study. BBC identified over $650 million in purchase made primarily from TVM vendors including buses purchased from North American Bus Industries and light-rail vehicles purchased from Ansaldobreda. BBC RESEARCH & CONSULTING DRAFT REPORT SECTION II, PAGE 2

3 Metro should continue to require bidders on these types of purchases to comply with FTA s national program for TVMs. Areas of relatively small dollar volume. The Consortium disparity studies focused on procurement areas with the highest aggregate dollars of FTA-funded contracts (individually for each agency and in total across agencies). Goods or services were also included that were highly specific to transit facilities or operations, or were included in other BBC disparity studies that examined Southern California (the 2009 OCTA, Metrolink, SANDAG or MTS studies, the 2007 Caltrans study or the 2009 San Diego County Regional Airport Authority study). Unless otherwise specified above, procurement areas totaling less than $13 million in FTA-funding for Metro were not included in BBC s final analysis of Metro utilization. These smaller procurement areas included marketing, office supplies and office equipment, miscellaneous professional services, and miscellaneous other services. In total, these areas account for $122 million in Metro FTA-funded contract dollars over the five-year study period, substantially less than the $1 billion in Metro procurement areas included in the final utilization analysis. Procurements made from outside the local area. BBC examined the relevant geographic market area for Metro and other Consortium agency procurement based on dollars of prime contracts and subcontracts. Contractors and vendors providing construction, engineering, and other services to Metro are typically located in Southern California, which for purposes of this study consists of the federally-defined Los Angeles Consolidated Metropolitan Statistical Area 3 and San Diego Metropolitan Statistical Area. 4 Firms located in Central or Northern California without Southern California offices receive a relatively small dollar volume of Metro construction, engineering or other services contracts and subcontracts. Figure II-1 shows a map of Southern California as defined in this study. 3 Defined by the U.S. Bureau of the Census as Los Angeles, Orange, San Bernardino, Riverside and Ventura counties. 4 Defined by the U.S. Bureau of the Census as San Diego County. BBC RESEARCH & CONSULTING DRAFT REPORT SECTION II, PAGE 3

4 Figure II-1. Southern California Note: Source: Includes the Los Angeles Consolidated Metropolitan Statistical Area and the San Diego Metropolitan Statistical Area. BBC Research & Consulting. Based on dollars of procurements, some types of Metro goods purchases are primarily made with firms outside Southern California. These include: Vehicle parts and supplies; Electrical equipment and supplies; Computer equipment; Paint; and Miscellaneous goods purchases. These types of procurements were not included in the final utilization analysis for Metro. Final procurement areas for Metro analysis. Figure II-2 lists the 33 procurement areas employed to analyze Metro utilization of MBE/WBEs and availability of MBE/WBEs for Metro contracts. Together, these procurement areas account for $1.3 billion of Metro FTA- and locally-funded contracts from 2003 through BBC RESEARCH & CONSULTING DRAFT REPORT SECTION II, PAGE 4

5 Figure II-2 Dollars of Metro prime contracts and subcontracts for procurement areas examined in disparity study, Funding source ($ in thousands) Sub-industry/procurement area FTA Non-FTA Total Construction Eastside $218,176 $0 $218,176 Heavy construction 228,612 16, ,390 Railroad construction 116,916 3, ,925 Water, sewer, and utility lines 4, ,653 Excavation Other heavy construction 2, ,156 Building construction 20,980 51,569 72,549 Elevator installation and repair 35, ,612 Electrical work 25,412 8,498 33,910 Wrecking and demolition 4, ,795 Other building construction 10,443 2,306 12,749 Concrete and related products Asphalt/paving mixtures Structural steel 16,681 1,134 17,815 Heavy construction equipment rental 2, ,988 Transportation signaling 3,463 1,600 5,063 Other construction materials 16,656 2,173 18,829 Trucking 11,233 5,600 16,833 Other construction services 21, ,192 Construction total $739,939 $94,158 $834,097 Engineering and professional services Engineering $75,366 $81,555 $156,920 Environmental and transportation planning 10,227 17,270 27,497 Construction management 8,311 2,370 10,681 Surveying and mapmaking 3, ,029 Landscape architecture 9, ,532 Testing services 1, ,375 Engineering total $108,487 $102,548 $211,035 Other goods and services Ticket counting and fare collection $77,277 $66,541 $143,818 Petroleum products 32,207 1,179 33,386 Industrial equipment and machinery 24,568 7,237 31,805 Communications equipment 16,197 7,668 23,865 Security services 11,149 10,704 21,853 Cleaning and janitorial services 6,847 7,478 14,325 Industrial hydraulic equipment Vehicle body repair Other goods and services total $169,323 $100,815 $270,138 Total $1,017,748 $297,521 $1,315,269 Source: BBC Research & Consulting. BBC RESEARCH & CONSULTING DRAFT REPORT SECTION II, PAGE 5

6 Geographic Distribution of Metro FTA-funded Contract and Subcontract Dollars Figure II-3 shows the distribution of contract dollars by firm location after excluding the types of purchases identified above. As shown, more than 92 percent of contract dollars for Metro s construction, engineering and other services procurements went to firms with locations in Southern California. Figure II-3. Percentage of Metro FTAand locally-funded prime contract and subcontract dollars awarded to firms located in Southern California, Purchase from non-local firms (8%) Purcha non-lo Note: For those procurement areas examined in the Metro utilization and availability analysis. Source: BBC Research & Consulting. Purchases from local firms (92%) Analysis of FTA-Funded Contracts with and without DBE Goals BBC s disparity analysis for Metro examines FTA-funded contracts before and after Metro changed its implementation of the Federal DBE Program on October 1, FTA-funded contracts January 2003 through September For contracts advertised prior to October 1, 2006, Metro set DBE contract goals on FTA-funded contracts. As part of developing the request for bid or request for proposals, Metro examined FTA-funded construction contracts larger than $25,000 and non-construction contracts larger than $40,000 for potential subcontracting opportunities and established DBE participation goals for certain contracts. Bidders had to meet the DBE goals by showing DBE participation as subcontractors or show that they had made good faith efforts to do so. Larger construction and professional services contracts typically had DBE goals. Some other services contracts had DBE goals, but contracts for commodities typically did not. Each bidder on an FTA-funded contract with a DBE goal needed to submit appropriate program compliance forms at time of bid. The study team analyzed a total of 3,524 FTA-funded contract elements and purchases in the studied procurement areas (listed in Figure II-2) from January 2003 through September 2006, totaling $987 million. BBC RESEARCH & CONSULTING DRAFT REPORT SECTION II, PAGE 6

7 FTA-funded contracts after October 1, For FTA-funded contracts advertised on or after October 1, 2006, Metro has established anticipated levels of participation for DBEs (known as DALPs ). Bidders do not need to meet goals or supply documentation of good faith efforts to meet the goals. Only the apparent awardee is required to complete DBE forms on FTA-funded contracts since October Within the procurement areas that BBC studied, there were 1,115 FTA-funded contract elements (for $31 million) awarded after October 1, Analysis of Locally-funded Contracts BBC also examined Metro s non-federally-funded contracts if they pertained to the final procurement areas previously discussed in this section. BBC collectively refers to these non-federally-funded contracts as locally-funded even though it is possible that they included some state funds. Figure II-1 shows locally-funded contract dollars by procurement area for 2003 through Although there were no significant changes in the programs applied to locally-funded contracts during the study period, it is important to examine what MBE/WBE or small business contract goals were applied to different types of locally-funded contracts. BBC analyzed 800 locally-funded contract elements and purchases in the studied procurement areas totaling $298 million. Application of the Metro MBE/WBE Program. Metro locally-funded contracts are also examined for subcontracting opportunities prior to issuing invitations to bid. For construction contracts of $25,000 or more and non-construction contracts of $40,000 or more, Metro can establish voluntary anticipated levels of participation (VALPs) for minority- and women-owned firms. Participation in the program is voluntary contractors are not required to meet the goal or show good faith efforts to do so. Metro initiated the MBE/WBE program in Application of the Metro Small Business Enterprise Program. Metro applies small business enterprise (SBE) goals for professional services and other locally-funded contracts awarded through a competitively negotiated procurement process. Metro implemented the SBE program in 1997 after passage of Proposition 209 by California voters limited state and local agencies ability to operate race- or gender-based programs. Contractors are evaluated for their responsiveness on meeting SBE goals. BBC RESEARCH & CONSULTING DRAFT REPORT SECTION II, PAGE 7

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