ADOT DBE Program Specifications Contractor Training April 28

ADOT DBE Program Specifications Contractor Training April 28, 2017 Presented by: Terri Spencer, Pima County Victoria Cortinas, City of Tucson ADOT BECO 1

Objectives Introductions & Audience Engagement § Good Faith Effort (GFE) Overview § Contract DBE Requirements: ü Pre-Bid ü Pre-Award ü Post-Award v Prompt Pay ü Closeout § System Access & Technical Support § Business Engagement & Compliance Office 2

DBE Program Overview ADOT as a condition to receive federal funds is required to implement a Disadvantaged Business Enterprise (DBE) Program under 49 CFR Part 26. Ø ADOT has a DBE Program Plan Ø ADOT DBE Policy Ø ADOT DBE Specifications (LPA EPRISE) Ø ADOT LPA DBE System Business Engagement & Compliance Office 3

DBE Program Overview ADOT DBE Goals FHWA: 8. 90% FTA: 7. 25% FAA: 4. 87% Business Engagement & Compliance Office 4

DBE Program Overview Program Updates 2012 and 2014 DOT revisions to federal regulations Ø FHWA official guidance on prompt pay and related issues Ø USDOT audits, studies and investigative findings of the DBE program Ø Experience working with the program since 2011 Ø Business Engagement & Compliance Office 5

DBE Program Overview Specifications Changes Revised Stored Specifications: • DBE Special Provisions - LPA EPRISE 10/1/2016 • Prompt Pay Specifications • Effective date for projects advertised after October 1, 2016 Contracts executed prior to this date will not require amendments. Contract Management is required for all federal-aid contracts Business Engagement & Compliance Office 6

Good Faith Efforts Overview A Good Faith Effort (GFE) is a continual process that starts well before a bid is submitted and goes to the end of a Federally funded project. Only bidders that demonstrate adequate GFE to meet the contract goal are eligible to be awarded federal contracts. GUIDELINES OPPORTUNITY Good Faith Effort RESEARCH DOCUMENTATION EPRISE Section 15. 0 Business Engagement & Compliance Office 7

Good Faith Efforts (continued) GFE is demonstrated two ways: 1. Meeting the goal: Identifying the DBEs § Dollars ($) § 2. Demonstrating diligent and honest effort to meet goal, but falling short of the goal: Contacting BECO for assistance § Identifying and advertising for opportunities § Contacting, negotiating, and following up with DBEs § Business Engagement & Compliance Office 8

Good Faith Efforts (continued) Examples of Contractor GFEs include: Ø Conducting market research to identify small business contractors and suppliers § § Pre-bid meetings Business matchmaking meetings and events Advertising and/or providing written notices Posting of RFPs or notices for sources sought at reasonable places to all DBEs Business Engagement & Compliance Office 9

Good Faith Efforts (continued) Ø Making work more feasible by including flexible timeframes for performance and delivery of work Ø Mailings to DBEs alone are not sufficient GFE Ø Promise to use DBEs after contract award is not considered responsive Business Engagement & Compliance Office 10

Good Faith Efforts Guide ADOT Good Faith Effort Guide All bidders must perform good faith efforts § The activities for pre-bid good faith efforts are done before bid submission. § See GFE Guide § See 49 CFR Part 26, Appendix A for specific Guidance Concerning GFEs Business Engagement & Compliance Office 11

ADOT Resources DBE Supportive Services § § § Assistance to Contractors and DBEs Locating DBEs Assist in certifying potential DBEs Business Development Program Conferences, events, ADOT EXPO Business Engagement & Compliance Office 12

Pre-Award Requirements § § § DBE Document Submissions Timeframe DBE Goal Assurance (All Primes) AZ UTRACS Registration (All Primes/Subs) Online Bidders List (All Primes) DBE Affidavits (ALB) Business Engagement & Compliance Office 13

Pre-Award Requirements DBE Document Submittals Effective October 1, 2016: • Bidders list • DBE Affidavits • GFE Documentation Documents are due on the 5 th calendar day, by 4: 00 PM, after bids are opened. § Contractors and subcontractors must also be registered in AZ UTRACS by that same timeframe EPRISE Section 13. 0 Business Engagement & Compliance Office 14

Pre-Award Requirements AZ UTRACS Registration § A Centralized database for companies that seek to do business with LPA's & ADOT § Prime contractors and all subcontractors including DBEs must be registered on the AZ UTRACS web portal www. azutracs. com EPRISE Section 11. 0 Business Engagement & Compliance Office 15

Pre-Award Requirements Online Bidders List § All Bidders must complete the On-Line Bidders List at www. azutracs. com § Bidder will receive an email confirmation of submitted On-Line Bidder’s List § Bidder will submit copy of email confirmation to Agency no later than 4: 00 pm on the 5 th calendar day following bid opening EPRISE Section 11. 0 Business Engagement & Compliance Office 16

Pre-Award Requirements DBE Affidavits EPRISE Section 14. 0 Business Engagement & Compliance Office 17

At Time of Bid Submittal DBE Goal Assurance § Contractor must select one of two options at bid time: o Meet the established contract DBE goal or o Does not meet DBE goal but made Good Faith Efforts (GFE) This declaration cannot be changed after bid submission § Arrangements for DBE utilization must be made prior to bid submittal § EPRISE Section 13. 0 Business Engagement & Compliance Office 18

Pre-Award Requirements DBE Goal Assurance – Form 3102 C Business Engagement & Compliance Office 19

Pre-Award Requirements DBE Affidavits DBE Intended Participation Affidavit - Individual Form 3105 C § Completed by DBE firms, Prime submits one Affidavit for each DBE. Select the correct Trade: contractor, trucker, broker, supplier, manufacturer § NAICS Code – NAICS code for work to be performed on the project must match DBE certification § List Bid Item numbers § Committed value of line item on affidavit must be equal to or less than the prime’s bid price for that item, cannot be higher value for DBE utilization credit EPRISE Section 14. 0 Business Engagement & Compliance Office 20

Pre-Award Requirements DBE Affidavits DBE Intended Participation Affidavit – Individual Form 3105 C § Work included in a force account line item cannot be listed on the DBE Intended Participation Affidavit § Trucking – List number of trucks owned and to be used by DBE on the project § DBE Subletting work § Form includes the DBE Confirmation/Signature Instructions for completing form have been added to a second page of this document EPRISE Section 14. 0 Business Engagement & Compliance Office 21

Pre-Award Requirements DBE Intended Participation Affidavit – Form 3105 C Completed by DBE Subcontractor and submitted by Prime Business Engagement & Compliance Office 22

Pre-Award Requirements DBE Affidavits DBE Intended Participation Affidavit – Summary Form 3106 C Agency reviews the following compliance requirements: § Identify required DBE goal § Prime Contractor AZUTRACS Registration Number § DBE Liaison’s Name § Identify all DBEs utilized to meet goal § Calculate percentages to two decimal places See instructions for completing form on second page Affidavits are reviewed/approved by the Agency and sent to BECO for concurrence. Agency obtains Bid Verification Notice from BECO prior to contract award. Business Engagement & Compliance Office 23

Pre-Award Requirements DBE Intended Participation Affidavit Summary – Form 3106 C Completed by Prime Contractor enters the DBE Liaison contact info Business Engagement & Compliance Office 24

Award – Contract Execution § Subcontract Agreement Provisions All subcontracts § DBE subcontracts § Business Engagement & Compliance Office 25

Award – Contract Execution Required Provisions for Subcontracts • Agency enters contract in LPA DBE System • Prime enters all subcontractor (DBE/non-DBE) data in the LPA DBE System Business Engagement & Compliance Office 26

Award Required Provisions for All Subcontracts All subcontracts shall include: • LPA Prompt Pay and Payment Reporting Provisions: http: //www. azdot. gov/docs/default-source/beco-library/lpa-prompt-pay-andpayment-reporting-provisions. pdf? sfvrsn=2 § Assurances of Non-Discrimination • FHWA Form 1273: http: //www. fhwa. dot. gov/programadmin/contracts/ Business Engagement & Compliance Office 27

Award Required Provisions for DBE Subcontracts All DBE subcontracts shall include as a physical attachment: • LPA DBE Subcontract Compliance Assurances: http: //www. azdot. gov/docs/default-source/beco-library/construction-lpa-dbesubcontract-compliance-assurances. pdf? sfvrsn=2 Business Engagement & Compliance Office 28

Post-Award Requirements § Payment Reporting – LPA DBE System § § Sanctions for Inadequate Reporting Prompt Payment § Sanctions for Prompt Pay Non-Compliance Commercially Useful Function (CUF) § Contract DBE Modification: § § DBE Termination/Substitution Good Faith Effort (GFE) § Contract Closeout § Business Engagement & Compliance Office 29

Post-Award Requirements Payment Reporting – LPA DBE System Prime must enter Reportable Contracts into LPA DBE System. § Reportable Contracts mean: any subcontract, of any tier (DBE or non-DBE) by which work shall be performed on behalf of the Contractor and any contract of any tier with a DBE material supplier. Business Engagement & Compliance Office 30

Post-Award Requirements Payment Reporting – LPA DBE System All subcontractors (DBE and non-DBE) must be added in the LPA DBE System: § No later than 15 calendar days after preconstruction conference § Contractor must enter information in the Subcontractor tab in the LPA DBE System § Any additional subcontracts shall be added within 5 days of Agency approval Business Engagement & Compliance Office 31

Post-Award Requirements Payment Reporting – LPA DBE System Payments must be reported by prime contractors and subcontractors with lower-tiers in the LPA DBE System: § No later than the last day of the month for the prior month § If no payment made, zero dollar value must be entered § Prime must use Comments section to explain why invoices weren’t fully paid or any other issues concerning payment Primes should resolve payment discrepancies with subs PROMPT PAY Business Engagement & Compliance Office 32

Post-Award Requirements Payment Reporting – LPA DBE System Subcontractor Payment Verification § § Subcontractors must verify payment within 15 days of receipt of electronic payment notification Contractor shall actively monitor LPA DBE System to ensure verifications were completed Agency actively monitors LPA DBE System to ensure subcontractor verifications are being completed If subcontractors do not verify payments within 45 days of Prime reporting payment, Agency will accept that prompt payment was made Business Engagement & Compliance Office 33

Post-Award Requirements Payment Reporting LPA DBE System § The key is for contractors to report payments monthly! § When payments are reported, and primes encourage subs to verify payments… Contractor will be in compliance! Business Engagement & Compliance Office 34

Post-Award Requirements Sanctions for Inadequate Reporting § Agency monitors the LPA DBE System monthly to ensure accurate Contractor / Subcontractor payment reporting § Agency communicates with Contractors if non-compliance issues to provide an opportunity to correct § If issues are not corrected in a timely manner (within a month), sanctions will be applied. Business Engagement & Compliance Office 35

Post-Award Requirements Sanctions for Inadequate Reporting If payments are not reported monthly, the following sanctions will apply: § $1000 retained (Liquidated damages) § § Deducted each month for each reportable contract the Contractor fails to submit payment information for $2000 retained (Liquidated damages) after 90 consecutive days of non-reporting § Deducted each month for each reportable contract that Contractor fails to submit payment information for Business Engagement & Compliance Office 36

Post-Award Requirements Prompt Payment § Partial Payment Contractor to submit monthly pay estimate (certified pay application) to the Agency § No Set-offs Contractor cannot reduce or withhold payments from subcontractor for disputes on another contract § Partial and Final Payment Contractor must pay subcontractors within 7 calendar days of payment from the Agency § Retention If the Agency contracts do not provide for retention– subcontracts cannot include retention Business Engagement & Compliance Office 37

Post-Award Requirements Sanctions for Prompt Pay Non-Compliance Liquidated Damages for prompt pay non-compliance: § § § Two times the dollar amount not paid to each subcontractor. If full payment is made within 30 days of the Agency’s payment to the Contractor, 100% of the funds withheld will be released. If full payment is made after 30 days of the Agency’s payment to the Contractor, 75% of the funds will be released. Agency retains 25% of the monies withheld as liquidated damages. LPA Prompt Pay and Payment Reporting Provisions: http: //www. azdot. gov/docs/default-source/beco-library/lpa-prompt-pay-andpayment-reporting-provisions. pdf? sfvrsn=2 Business Engagement & Compliance Office 38

Post-Award Requirements Sanctions for Prompt Pay Non-Compliance Egregious prompt payment non-compliance is defined as: § 3 consecutive months of failure to pay subs promptly § 4 months of not paying promptly over the course of a single project § Sanctioned for prompt pay issues on 2 or more projects in a 24 month time period Business Engagement & Compliance Office 39

Post-Award Requirements Sanctions for Prompt Pay Non-Compliance Remedies for egregious lack of prompt payment may include: § Withhold monthly progress payments until payments made § Terminate contract for default § Disqualify from future bidding (temporarily or permanently) § Sanctions are assessed by the Agency § The Contractor may, within 15 calendar days of receipt of the decision of the Agency, escalate the decision according to the contract’s escalation process. Business Engagement & Compliance Office 40

Post-Award Requirements Commercially Useful Function (CUF) A DBE firm performs a CUF when it is: “Responsible for execution of the work of the contract or a distinct element of the work…by actually performing, managing, and supervising the work involved. ” The prime Contractor can receive credit toward the DBE goal only if the DBE performs a CUF “CUF begins at the time of Contract Award“ EPRISE Section 18. 06 Business Engagement & Compliance Office 41

Post-Award Requirements Commercially Useful Function (CUF) § DBE firm must perform at least 30 percent of its contract using its own employees, equipment, materials and resources § All DBE work performed counts toward the DBE goal § Work subcontracted to non-DBE firms does not count toward the goal EPRISE Section 18. 06 Business Engagement & Compliance Office 42

Contract Modification DBE Termination/Substitution • • • Contractor must immediately notify the PM and the Agency DBE compliance officer The Agency will immediately notify BECO Continue to make a Good Faith Effort to meet DBE goal Not required to take work committed to another subcontractor and assign it to a DBE subcontractor to meet the committed DBE percentage The agency, with BECO’s concurrence, will take into account who made change in determining if Contractor met DBE goal EPRISE Section 19. 0 Business Engagement & Compliance Office 43

Contract Modification DBE Termination/Substitution General Requirements: § The contractor shall make all reasonable efforts to avoid terminating or substituting a DBE listed on the DBE Intended Affidavit Summary § Negotiate with DBE in good faith § Give timely notices and/or extend deadlines § Apply reasonable methods to resolve performance disputes before attempting substitution or termination § Communicate issues early! EPRISE Section 24. 01 Business Engagement & Compliance Office 44

Contract Modification DBE Termination/Substitution Contractor shall: § Not terminate a DBE listed on the Affidavit without the Agency’s written consent and concurrence from BECO § Contact PM/Agency Compliance staff within 24 hours of the first sign of potential termination/substitution § Not complete DBE work with its own forces or with a non. DBE firm without the Agency and BECO written approval § Notify DBE in writing of anticipated termination/substitution request § DBE has five (5) calendars days to respond in writing to Contractor EPRISE Section 24. 02 Business Engagement & Compliance Office 45

Contract Modification DBE Termination/Substitution Contractor must submit to the Agency: § DBE Termination/Substitution Form § DBE’s written response § Other supporting documentation The Agency and BECO considers: § § § Contractor’s request DBE’s response Explanation PM/Field Office statements/documentation Good cause EPRISE Section 24. 03 Business Engagement & Compliance Office 46

Contract Modification DBE Termination/Substitution What is Good Cause? § Fails/refuses contract § Fails/refuses to perform industry practice work § Fails/refuses Contractor’s bond/insurance requirements § DBE bankrupt, insolvent, exhibits credit unworthiness § DBE suspended/debarred from public works projects § Not a responsible subcontractor § DBE voluntarily withdraws with written notice to the agency and ADOT BECO § Ineligible to receive DBE credit for type of work required § DBE owner dies or becomes disabled resulting in inability to work EPRISE Section 24. 04 Business Engagement & Compliance Office 47

Contract Modification DBE Termination/Substitution Good Faith Effort (GFE) • Contractor's must make efforts to find a replacement DBE • Contractor must provide to the Agency within seven (7) calendar days from request to terminate/substitute • Required even when the Agency eliminates a work item § Contractor submits DBE Affidavits with new DBE to the Agency for approval § Agency will confer with BECO § Agency must approve, with BECO concurrence, before new DBE starts work EPRISE Section 24. 05 Business Engagement & Compliance Office 48

Contract Modification DBE Termination/Substitution Unacceptable GFE reasons: • Unable to match original price • Prime Contractor able to perform work Prior Agency/BECO approval before terminating / substituting DBE is essential for Contractor compliance Failure to obtain prior approval will lead to sanctions EPRISE Section 24. 05 Business Engagement & Compliance Office 49

Contract Modification DBE Termination/Substitution Sanctions Liquidated Damages for DBE termination/substitution non-compliance: § The dollar amount of the wrongfully substituted/replaced DBE subcontract plus 25% of the DBE contract balance. § This in addition to all other retention or liquidated damages provided for in the contract. EPRISE Section 24. 06 Business Engagement & Compliance Office 50

Contract Closeout Certification of Final DBE Payments (COP) § Form to be completed by the prime contractor and DBE subcontractor to indicate the total final dollar amount paid to each DBE firm on a project § Contractor must submit COPs to Agency no later than 30 days after the DBE completes work § Agency submits COPs to BECO when received EPRISE Section 25. 00 Business Engagement & Compliance Office 51

Contract Closeout Meeting DBE Goal § § Meeting DBE goal at the end of a project keeps contractor in compliance Suggest contractor use DBEs above contract goal to ensure goal is met if extenuating circumstances occur during project The Agency will take contractor GFE and all circumstances in consideration in determining if DBE goal was met Sanctions will be applied if DBE goal is not met at the end of project and GFE not demonstrated EPRISE Section 26. 00 Business Engagement & Compliance Office 52

Contract Closeout Sanctions for not meeting DBE Goal § Liquid Damages of two times the amount of the unattained portion of established DBE goal from monies due or becoming due to the contractor § The Agency will make the decision with concurrence from BECO § Appeal can be made to ADOT State Engineer EPRISE Section 26. 00 Business Engagement & Compliance Office 53

Agency Resources Terri Spencer, C. P. M. Pima County Procurement Design & Construction Division Manager P: 520. 724. 3722 F: 520. 724. 3646 E: terri. spencer@pima. gov Victoria Cortinas, C. P. M. , CPPB City of Tucson Procurement Contract Administrator P: 520. 837 -4140 F: 520. 791. 4217 E: victoria. cortinas@tucsonaz. gov Business Engagement & Compliance Office 54

ADOT Resources References: § AZUTRACS § ADOT DBE Program § ADOT DBE FHWA Plan § 49 CFR Part 26 § History of the DOT Program Videos: § Federal Aid Essentials for Local Public Agencies Video Library § DOT’s Disadvantaged Business Enterprise Program Business Engagement & Compliance Office 55

Questions and Answers Business Engagement & Compliance Office 56