There are many alarming stories about Disadvantaged Business Enterprise (DBE) firms, also known as sub‐contractors, and prime contracts where the DBEs were not getting paid, being underpaid and prime contractors not performing or failing to submit proper documentation. The Office of Business Development (OBD) at the Greater Cleveland Regional Transit Authority (GCRTA) wanted to take a different approach to increase the number of qualified DBEs, expand the areas of expertise and help them be successful sub‐contractors.
To do this, OBD focuses on five areas of concentration:
- Certification, eligibility and compliance
- Contract compliance and monitoring
- Goal setting
- Small business participation plan
Certification, Eligibility and Compliance
Once a DBE firm completes the Ohio Department of Transportation (ODOT) Uniform Certification Application submission form, and the DBE eligibility is reviewed, the Office of Business Development receives the information and plans an on‐site visit. This on‐site visit is conducted with the owners of the firm and completes a desk audit, including products, equipment and any machinery depending upon the type of expertise. OBD will also perform on‐site visits with current DBEs, building a good relationship with the firm and checking to see if they have expanded their expertise. While most of the application process is within ODOT, OBD staff at the authority will contact other DBE firms to provide support. This support includes education about the entire program including ownership, eligibility and the authority’s process. GCRTA’s process includes contract opportunities, procurement and engineering processes.
Contract Compliance and Monitoring
Once a DBE is selected for a procurement, OBD will work closely with the project manager to monitor the compliance of the prime contractor. OBD staff will travel to a job site, unannounced, at least two times per week. They will count the number of workers on the job site, compare this to the project schedule log, ask workers for a paystub or proof of income and ask the foreman for the workforce utilization. The OBD staff will review the prevailing wage received by workers against the Department of Labor’s wage schedule. If there are discrepancies, GCRTA will report this to the authority’s project manager, and payments to the prime contract will cease until the workers receive the required backpay. With a staff of four, including the director, weekly meetings with staff on the progress of each project is vital.
There have been times when a prime contractor will pay a worker the wage where the worker lives rather than where the work is being done. The authority’s OBD staff need to ensure the DBE is receiving payment, and if not, hold prime contractors accountable. Once everything is verified by the prime contractor by submitting certified payroll reports, invoices, compliance reports and DBE payment confirmation, the project can then continue.
Goal Setting and Changing the Culture
Procurements of $25,000 and above will be reviewed for a DBE participation goal. This goal encompasses all certified DBEs that are ready, willing and able to perform. The prime contractors will then receive the DBE goal with the project information, which is sent in a mass email to all available DBEs. A pre‐bid conference is held virtually with all prime contractors and DBEs present. Once procurement and the project manager review the project, OBD asks the DBEs to address the audience on how they can perform in the contract. This encourages and assists the prime contractors to identify DBEs that are available to participate. OBD also tracks which DBEs attend and participate in these virtual pre‐bid meetings.
During the procurement process, the prime contractor must identify which DBEs will be part of the project when submitting a proposal. An affidavit from the DBE, as a letter of intent, must be submitted with the project proposal, ensuring that the DBE percentage goal will be met with good faith effort. If a prime contractor is unable to find a DBE, the prime can contact the OBD staff to assist in identifying sub‐contractors.
Once a prime contractor is selected, and DBEs are not identified in the proposal, OBD will send a certified letter to the prime regarding their non‐compliance. The prime contractor has three business days to comply with the DBE goal and identify certified DBEs to work on the project. If the prime replies, a letter of intent and the DBE affidavit must be received by OBD within the specified timeframe. If the prime contractor does not adhere to the timeframe, the contractor is ruled out of compliance, and the next contractor in line will be selected for the project.
When a project begins, project meetings are held monthly with the project manager, OBD staff, other staff from the authority, prime contractor and sub‐contractors (DBEs). Issues and concerns are addressed, bottlenecks are identified, and if a project is off schedule, a plan is put in place to get it back on track. If a prime contractor is not paying the DBEs, payment to the prime contractor can be withheld until the problem is resolved, as specified under the Contract Compliance and Monitoring section. If the prime contractor remains non‐compliant, the authority’s project manager can shut the project down completely. The authority has ensured that compliance and procedures are followed as specified in CFR 49, part 26.
The authority’s procurement staff and OBD staff conduct a monthly “Learn to do Business” virtual training program for small businesses, potential DBEs and currently certified DBEs. Mass emails are sent to all certified DBEs and encourage them to bring other small businesses to these sessions. This program highlights construction, fleet purchase and professional service projects, and how these small businesses can participate. The training programs highlight the certification process, procurement opportunities, contract compliance, payment policies and how to monitor project progress. GCRTA partners with various agencies in Northeast Ohio such as the Greater Cleveland Partnership, City of Cleveland, Cuyahoga County, area universities and colleges, Jumpstart and Economic & Community Development Institute (ECDI) providing an awareness of the small businesses and DBEs to the community and networking opportunities for these businesses. This also enables the seasoned DBEs to assist the newer businesses and learn how to participate in a procurement as a prime contractor.
Small Business Participation Plan
In addition to the outreach and goal setting opportunities for DBE firms, the Office of Business Development (OBD) reaches out to all businesses that can bid on any procurement. The authority’s Procurement Department and OBD conduct a “Learn to do Business” seminar for these firms. This enables the small businesses that are not part of the DBE program to learn how they can propose on the authority’s procurements and network with the other firms that are attending. This has become a bit harder during the virtual meetings since the COVID‐19 pandemic. Now that the economy is more relaxed on face‐to‐face meetings, OBD hosts these meetings twice a year and collaborates with their partners on the other two meetings.
This program gives small businesses an opportunity to gain revenue during a three‐year period. To participate in this program, a small business cannot exceed three‐year gross revenues of $28.48 million at the end of Federal Fiscal Year (FY) 2021. For Federal Fiscal Year (FY) 2021, GCRTA’s Office of Business Development has certified 16 new DBE businesses, completed 67 no change certifications for existing DBE businesses, conducted four on‐site visits, conducted 58 goal settings, certified 62 payroll reports and either held or attended 30 outreach sessions. Since 2019, the authority’s Office of Business Development has certified 49 new DBE firms. These efforts have helped to ensure that the Greater Cleveland Regional Transit Authority maintains a healthy and robust DBE program.
Carl Kirkland is the director of the Office of Business Development for GCRTA.
Kay Sutula is the director of the Office of Management and Budget for GCRTA.