ACI-NA SMALL AIRPORTS CONFERENCE FAA CIVIL RIGHTS - DBE REGULATORY UPDATE. Federal Aviation Administration

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1 ACI-NA SMALL AIRPORTS CONFERENCE FAA CIVIL RIGHTS - DBE REGULATORY UPDATE Presented to: 2011 Small Airports Conference By: Wilbur Barham Director, National Airports Civil Rights Policy and Compliance Date:

2 Overview New Rule Part 26 Follow-on NPRM Part 26 Notice of Proposed Rule Making (NPRM) Part 23 Goal Setting Proposed Guidance - Long Term and Exclusive Lease Agreements 2

3 New Rule Published January 28, 2011 Effective February 28, 2011 See: pdf 3

4 New Rule - Continuing Compelling Need for the DBE Program Confirms the continuing compelling need for race and gender conscious programs such as the DOT DBE program 4

5 New Rule Improves the administration of the DBE Program increases accountability for meeting overall goals modifies and updates certification requirements adjusts personal net worth (PNW) for inflation provides for expedited interstate certification adds provisions to foster small business participation improves post-award oversight 5

6 New Rule - Counting Purchases From Prime Contractors No Change to general rule: DBE sub and its prime count for DBE credit for items that the DBE subcontractor purchases or leases from a third party Exception: DBE and its prime can t count items DBE purchases or leases from its own prime 6

7 New Rule - Termination of DBE Firms No Terminations for Convenience Primes can t terminate DBE sub without sponsor s prior written consent Termination requires good cause 7

8 New Rule - Termination of DBE Firms (Cont.) Good Cause 49 CFR 26.53(f)(3) DBE sub fails/refuses to execute contract perform work consistent with normal industry standards to meet reasonable bond requirements. DBE sub ineligible to work on public works projects to receive DBE credit for the type of work DBE firm unable to complete work Other documented good cause DBE sub not a responsible contractor DBE sub voluntarily withdraws from the project 8

9 New Rule - Termination of DBE Firms (Cont.) Good cause does not exist: If the failure/refusal of DBE sub to perform work results from bad faith or discriminatory action of prime If prime seeks to terminate DBE to selfperform the DBE s portion of work, or to substitute another DBE or non-dbe after contract award 9

10 New Rule: Certification Impact PNW Cap Increase (DBE only) Interstate Certification States to accept DBE certification from other states unless there is good cause not to accept it No Limit to Number of NAICS Firm must demonstrate it can do the work and owner must demonstrate control 10

11 New Rule: Certification Impact Interstate Certification State A State B MADE EASIER 11

12 New Rule: Certification Impact PREVIOUSLY DENIED OR DECERTIFIED FIRMS (due to PNW) If Within One Year of Effective Date of New Rule (2/28/2011), Okay to Re-Submit Without Further Waiting Period (formerly 12 months) 12

13 New Rule: Certification Impact Interstate Certification Provisions Become Mandatory January 1, 2012 Don t Make Firms Get Out-of-State License Before Certification Decision Consider Cost to Firm 13

14 New Rule - PNW Transition Guidance Pending actions on date amendment is published, but before effective date Use new standards, decisions should not take effect until effective date All actions as of effective date must be based on the revised PNW standard, even if action pertaining to PNW began before this date 14

15 New Rule - Interstate Certification Revised rule enhances ability of UCP to protect integrity of DBE program and affords DBE s right to pursue business outside home state January 1, new section effective provides sponsors and UCPs time to train and establish administrative mechanisms provides DOCR time to make database for denials and decertifications operational Will address improvements in certification application and PNW forms in NPRM 15

16 New Rule - Interstate Certification (cont.) Process Home State (State A) certified firm submits application to State B State B has 60 days to raise specific objections to firm s eligibility and advise firm Firm may respond to State B concerning the specific objections in writing, at an in-person meeting, or both Firm has burden of proof to issues raised by State B State B must issue a written decision within 30 days of the receipt of written response or meeting 16

17 New Rule - Interstate Certification (cont) UCP deny, reject or decertify must make an entry in DOCR s Ineligibility Determination Online Database UCP must check DOCR Website at least monthly 17

18 New Rule - Interstate Certification (cont.) Good Cause determination that State A s certification is erroneous or should not apply if: Evidence of fraud New information Factually erroneous or inconsistent with Part 26 State law requires different result Information did not meet 26.85(c) 18

19 New Rule - Other Certification- Related Issues On-site reviews: No mandated particular schedule Sponsors and UCPs should conduct updated on-site reviews of certified firms on regular and reasonably frequent basis Information sharing can be done electronically to reduce costs 19

20 New Rule - Other Certification-Related Issues REMINDER: Firms remain certified until and unless removed through procedures 20

21 New Rule - Other Certification-Related Issues Evaluate eligibility on basis of present circumstances Firm eligible if meets disadvantaged, size, ownership, and control requirements Must not refuse to certify based solely on historical information Must not refuse to certify a firm solely on basis that it is newly formed firm, has not completed projects or contracts, has not realized profits, or has not demonstrated potential for success 21

22 New Rule - Other Certification-Related Issues NAICS: DBE work must be described in terms of most specific available NAICS code UCP may not limit NAICS codes to a certain number UCP may also apply a descriptor from a classification scheme DBE Directory - list DBE work using most specific NAICS code available 22

23 New Rule - Accountability and Goal Submissions No Quotas - No sanction for failing to hit the number If the awards and commitments are less than overall goal for that year, you must: Analyze the reasons for difference Establish specific steps and milestones to fully meet the goal for the new fiscal year 23

24 New Rule - Accountability and Goal Submissions If the awards and commitments are less than overall goal for that year, you must: (cont.) Operational Evolution Partnership Plan airport or other airport designated by the FAA must submit, within 90 days of the end of the fiscal year, the analysis and corrective actions developed to FAA DBE Team All other airports must retain analysis and corrective actions in records for three years and make it available to FAA on request 24

25 New Rule - Accountability and Goal Submissions Clarifications to three year goal setting process: Permits sponsor to make informational projections of expected DBE achievements during each year for three years covered by overall goal 25

26 New Rule - Program Oversight Monitoring and enforcement mechanism: Must include a written certification that sponsor reviewed contracting records and monitored work sites May be conducted in conjunction with monitoring of contract performance for other purposes 26

27 New Rule - Small Business Provisions DBE Program must include element to facilitate competition by small business concerns: Take all reasonable steps to eliminate obstacles to participation Must actively implement program elements to foster small business participation Doing so is a requirement of good faith implementation of DBE program Rule references these means as race-neutral measures 27

28 New Rule - Small Business Provisions (cont.) Element must be submitted to FAA DBE Team for approval as part of DBE program by February 28, 2012, and may include: Establishing race-neutral small business set-aside for prime contracts under a stated amount In large contracts requiring bidders to specify elements that are of a size that small businesses can reasonably perform On prime contracts with no DBE contract goals, require prime to provide subcontracting opportunities of a size that small businesses can reasonably perform Structuring procurements to facilitate joint ventures consisting of small businesses to compete for prime contracts For race-neutral portion of goal, ensuring that a reasonable number of prime contracts are of a size that small businesses can reasonably perform 28

29 Follow-on NPRM Certification and PNW issues, including forms, duplicative and excessive bonding, and joint check requirements 29

30 NPRM Part 23 May 27, 2011 from Fanny Rivera to Airport Sponsors and Industry Stakeholders Adjust PNW to $1.32 million Comment on the $3 million exemption for recourse loans (retain, modify, or delete) Add new monitoring, compliance, and enforcement provisions regarding the actual performance of work by ACDBEs 30

31 NPRM Part 23 May 27, 2011 from Fanny Rivera to Airport Sponsors and Industry Stakeholders (cont.) Add new accountability provisions concerning meeting concessions overall goals Incorporate the recent revisions to the January 2011 Part 26 rule describing the process of interstate certification for an ACDBE firm Comments due by July 26,

32 WHEN ARE GOALS DUE? Due August 1, 2010 (FY 11-13) Large Hub Primary airports in any region Medium Hub Primary airports in any region Non-Primary Airports in Great Lakes, Eastern and Alaskan regions 32

33 WHEN ARE GOALS DUE? Due August 1, 2011 (FY 12-14) Small Hub Primary airports in any region Non-Primary airports in Southern, New England and Northwest Mountain regions 33

34 WHEN ARE GOALS DUE? Due August 1, 2012 (FY 13-15) Non-Hub Primary in any region Non-Primary airports in Southwest, Western-Pacific and Central regions 34

35 WHAT YOU NEED TO KNOW Increased scrutiny will be given to the goal submissions Sponsors should develop systems to collect and analyze data needed to support goal-setting activities Until 3-year goal is due, continue to use FAAapproved goals If there are significant changes, you should submit a revised overall goal for approval 35

36 ADJUSTMENTS Different NAICS Codes New and significantly different projects Any situation that may significantly alter the goal 36

37 Long-term and Exclusive Leases - guidance (draft) Purpose Provide information and guidance Explain the prohibition against long-term and exclusive lease agreements Explain the process to request FAA approval Assist airports in structuring lease agreements to allow full participation Does not create new legal mandates 37

38 Long-term and Exclusive Leases - guidance (draft) Background 49 CFR section Enforcing Title VI of the Civil Rights Act Nondiscrimination because of race, color, or national origin Concerns regarding long-term leases to a single business concern Excluded ACDBE businesses Led to a prohibition against long-term and exclusive lease agreements unless approved by FAA 38

39 Long-term and Exclusive Leases - guidance (draft) Definitions Exclusive An entire category (lodging, retail, food service, dining services, transportation, parking, advertising, etc.) The entire airport or individual terminal Long-term 49 CFR section More than 5 years Combination of base term and options 39

40 Additional FAA dbe-connect System The FAA in partnership with B2Gnow - created and is expanding an electronic web based DBE/ACDBE information system The system is an electronic national repository of certified DBEs and ACDBEs Available on the FAA civil rights web site at provides a centralized resource of current information FAA s dedicated site, named FAA dbe-connect System, contains connections to FAA specific DBE and ACDBE program information The three main parts of the system are a directory with direct and current information from State UCPs, a listing of contracting and concessions opportunities, and a job board 40

41 Additional The Directory currently contains 42,000 certified DBE/ACDBE/MBE/WBE/SBE firms from dozens of certifying agencies. Multiple recipients have used the information in their goal-setting process, and prime contractors are increasingly leveraging the networking capabilities The Opportunities Directory is a nationwide listing of active and upcoming bid opportunities. About 1,000 opportunities are listed per year representing opportunities for DBEs and ACDBEs to find subcontracting and small prime contract opportunities The Job Board includes job openings with governments and contractors across the country, including a link to FAA careers 41

42 Questions 42

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