HomeMy WebLinkAbout10-06-2015 Item 07 - SLO Transit DBE Goal and Methodology
Meeting Date: 10/6/2015
FROM: Daryl Grigsby, Director of Public Works
Prepared By: Gamaliel Anguiano, Transit Manager
SUBJECT: SLO TRANSIT DBE GOAL AND METHODOLOGY
RECOMMENDATION
Authorize staff to establish the 1.7% Disadvantaged Business Enterprise (DBE) goal for federal
funds related to SLO Transit enterprise fund.
DISCUSSION
Background
As a federal funding recipient, the City of San Luis Obispo’s fixed-route bus system (SLO
Transit) must establish Disadvantaged Business Enterprise (DBE) goals for expenditures and
services. The SLO Transit DBE goal must be updated. Staff is recommending that the City
establish our DBE goal as 1.7% for all U.S. Department of Transportation (DOT), Federal
Transit Administration (FTA) assisted contracts for Federal Fiscal Year1 (FFY) 2015 through
FFY 2017.
The DOT DBE Program seeks to ensure nondiscrimination and increase participation to
disadvantaged businesses in the award and administration of DOT-assisted contracts in the
Department’s highway, transit, and airport financial assistance programs. It also looks to create a
level playing field on which DBEs can compete fairly for DOT-assisted contracts with larger
firms. The FTA Office of Civil Rights is responsible for monitoring FTA recipients' DBE
programs and ensuring their compliance with DOT's DBE regulations. The program was
established to ensure a level playing field and foster equal opportunity in federally assisted
contracts and reduce burdens on small businesses. Certified DBEs include minority and/or
woman-owned businesses.
The DBE program is a requirement for all agencies receiving FTA planning and/or capital
assistance that will award prime contracts exceeding $250,000 in FTA funds in a federal fiscal
year.
Goal Methodology
The Code of Federal Regulations, Title 49 Section 26 (49 CFR 26) describes several methods to
calculate a DBE goal. The simplest method (the one utilized by staff to develop SLO Transit’s
FFY15 through FFY17 goal) specifies that a simple percentage of DBE can be calculated by
1 The Federal Fiscal Year is October 1 thru September 30
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determining vendors in the contracted types of work be weighted in proportion of total contract
opportunities in that type of work during an overall budget period. This proportion is then used
to determine a base goal. Once calculated, the base goal can be further adjusted, as appropriate,
to reflect the recipient’s actual experience or other qualifying factors such that the goal reflects
area market conditions. The final goal is expressed as both the percentage of the federal dollars
in DBE contract opportunities for the agency.
SLO Transit’s goal will be reached by doing all of the following:
1) Obtaining DBE participation through a prime contract which a DBE obtains through
customary competitive procurement procedures;
2) Obtaining DBE participation through a subcontract on a prime contract that does not
carry DBE goals;
3) Obtaining DBE participation on prime contract exceeding a contract goal; and
4) Obtaining DBE participation through a subcontract from a prime contract that did not
consider a firm’s DBE status in making the award.
In previous years, SLO Transit adopted annual goals of 2% DBE participation. Attachment A
shown a full description of the calculations used by Staff to arrive at a 1.7% DBE participation
goal for this cycle. The following is a summary of that process:
1) Assess how much Federal funding will be used in the DBE timeframe (FFY 15 through
FFY 17).2
2) Identify our market area where we may draw contract or service providers that could
include DBE businesses.3
3) Review State list of total registered contractors or service providers that exist within the
market area and percentage of DBEs.
4) Of the total amount of Federal funds to be used, determine how much is used in each of
the four major Federal major use categories. Due to the makeup of SLO Transit, all
federal funds for FFY 15 – 17 will be only in the service contract.4
5) Apply the DBE % in each of the four major categories of Federal expense to determine
DBE goals.
6) Adjust final DBE goal based upon past performance and success rate in meeting DBE
goals.5
2 It is projected that SLO Transit will receive approximately $1.4 million per year in FTA funding for the FFY15 -
FFY17 period.
3 DBE goals for direct labor cost, fuel and vehicle acquisition costs are not req uired by FTA for the City to access
federal funding.
4 SLO Transit has only one major projected contract for the operations and maintenance associated with providing
the service. This contract is due to expire on June 30th, 2016. As in the past, SLO Transit will include in the RFP and
contract language that if awarded to a non-DBE vendor, such primary vendor must also adopt the City’s DBE goal
or demonstrate a good faith effort in achieving it.
5 SLO Transit attempted to achieve 2% DBE goal but was not successful in achieving this goal due to limited
opportunities of construction projects. And with the calculated rate falling well below the goals of the last three
years, the calculated goal has been determined to be 1.7%.
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SLO Transit’s proposed DBE Goal for FFY15 through FFY17 and supporting documents for
SLO Transit’s DBE Program are available for public inspection through October 30, 2015 at
SLO Transit’s Administrative Offices (919 Palm St.) and on our website at www.slotransit.org.
SLO Transit will adjust its DBE goal, if necessary, as future budgets are established or if
contracting opportunities increase due to new capital federal funding sources.
FISCAL IMPACT
There is no fiscal impact in establishing these goals.
ALTERNATIVE
Do not approve the goal. This is not recommended because it will prevent SLO Transit’s ability
to receive Federal dollars.
Attachments:
a - SLO DBE Goal Methodology - FFY15-FFY17
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Methodology For Calculating the Proposed DBE Goal for
Federal Fiscal Year 2015 through Federal Fiscal Year 2017 (FFY15-FFY17)
The City of San Luis Obispo’s SLO Transit fixed-route bus system (SLO TRANSIT) is proposing
an overall Disadvantaged Business Enterprise (DBE) goal of 1.7% for U.S. Department of
Transportation, Federal Transit Administration (FTA) assisted contracts in federal fiscal years 2015
through 2017 (FFY15 through FFY17).
Prior to FFY15, the FTA required that any recipient of greater than $250,000 in FTA funds annually
must establish a DBE goal. Recently, the FTA shifted from a requirement to calculate annually the
DBE goal to calculating it every three years. As such, SLO TRANSIT is herein complying with this
new requirement.
SLO TRANSIT will receive approximately $1.1 million in FTA funding in FFY15 through FFY 17.
Staff calculated the three-year DBE goal based upon the proposed SLO TRANSIT FY14-15 budget.
SLO TRANSIT will adjust its DBE goal, if necessary, when future budgets are known or if
contracting opportunities increase due to new capital federal funding sources.
The Code of Federal Regulations, Title 49 Section 26 (49 CFR 26) describes several methods to
calculate a DBE goal. The method staff chose to develop SLO TRANSIT’s FFY15 through FFY17
goal specifies that a simple percentage of DBE vendors in the contracted types of work be weighted
by the proportion of total contract opportunities in that type of work as shown in the overall budget
to determine a base goal. The base goal is to be further adjusted, as appropriate, to reflect the
recipient’s actual experience or other qualifying factors to narrowly tailor the goal to local market
conditions. The final goal is expressed as both the percentage and the amount of federal dollars in
DBE contract opportunities.
SLO TRANSIT’s goal will be reached through race neutral means by doing the following: DBE
participation through a prime contract a DBE obtains through customary competitive procurement
procedures; DBE participation through a subcontract on a prime contract that does not carry DBE
goals; DBE participation on prime contract exceeding a contract goal; and DBE participation
through a subcontract from a prime contract that did not consider a firm’s DBE status in making the
award. SLO TRANSIT will not reach its goal through race conscious contract goals.
To calculate SLO TRANSIT’s proposed FFY15 through FFY17 DBE Goal, staff used data from the
proposed SLO TRANSIT FY14-15 budget, the latest (2008) US Bureau of Census County Business
Patterns (CBP) database, and the California Department of Transportation (Caltrans) database of all
statewide certified DBE vendors. Both the CBP and Caltrans DBE vendor database offer vendor
groupings according to the type of work they perform as categorized by the North American
Industry Classification System (NAICS), which provides a two to six-digit number corresponding to
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every known type of work performed by businesses in North America. In order to compare data
from all three data sources using a common classification, staff identified all of the goods and
services that SLO TRANSIT typically contracts by a corresponding NAICS code. The following
text and tables describe the steps taken to calculate the goal.
First, staff examined the proposed SLO TRANSIT FY14-15 budget to determine the type and
amount of contracts which could be awarded from the operating and capital sections of the budget.
From an operating and capital budget of $3,633,658, potential contract opportunities equal
$3,068,203 outside of vehicle procurement. The FTA provides an estimated $1,189,140 in operating
and capital funding assistance. The following table shows the calculations for the first step.
(A) (B)(C)(D)(E)
Total $ Procurement
in Operating &
Capital Budget
$ Procurement in
Operating &
Capital Budget
(B)/(A)
$ FTA
Operating &
Capital
Assitance
$ FTA
Operating &
Capital
Assitance in
Procurement
(C)*(D)
FY15 Operating Budget 3,633,658$ 3,068,203$ 84%1,189,140$ 1,004,091$
FY15 Capital Budget 199,740$ 199,740$ 100%199,740$ 199,740$
Total: 3,833,398$ 3,267,943$ 1,388,880$ 1,203,831$
Step 1: SLO Transit FY15 Operating & Capital Budget Contract Opportunities
Second, staff identified every piece of potential contract work in the FY14-15 budget by a
corresponding NAICS code. Staff aggregated the types of work into the four broader Procurement
Groups of Construction, Transportation, Wholesale and Services identified in the Step 2 Table
below. The four Procurement Groups derived from all contract opportunities are shown in the
following table by dollar amount and percentage of total contract opportunities in each Procurement
Group.
Procurement Group Construction Transport Wholesale Services Total
$in Group (FY15 Budget)-$ -$ -$ 1,589,580$ 1,589,580$
% of All Procurements in Group 0.0%0.0%0.0%100.0%100%
$ FTA in Group {(1)%* $ Step 1. (E)}-$ -$ -$ 1,203,831$ 1,203,831$
Step 2. SLO Transit’s FY15 Operating & Capital Budget Contract Opportunities by Procurement Group
Third, staff determined the market area from which vendors who bid on SLO TRANSIT contracts
would likely be chosen. Since it is conceivable that a vendor may come from as far north as
Sonoma, or as far south as Santa Barbara for the award of a large contract, staff included all of
Caltrans Districts 04 and 05 when conducting its DBE calculation. In addition, staff included any
DBE vendor in the state that indicated that they perform work in Districts 04 and 05, regardless of
the vendor’s location. The following fourteen counties fall within Caltrans Districts 04 and 05,
creating SLO TRANSIT’s market area:
Alameda County
Contra Costa County
Marin County
Monterey County
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Napa County
San Benito County
San Francisco County
San Luis Obispo County
San Mateo County
Santa Barbara County
Santa Clara County
Santa Cruz County
Solano County
Sonoma County
After determining the market area, staff extracted a count of all vendors in the market area from the
County Business Patterns (CBP) database by using the same NAICS code attached to each piece of
potential contract work in the SLO TRANSIT FY-1415 budget. Next, staff performed exactly the
same operation on the Caltrans DBE vendor directory to obtain a count of DBE vendors in the SLO
TRANSIT market area. The count of all vendors, DBE vendors and the percentage DBE vendors by
Procurement Group in SLO TRANSIT’s market area are shown in the following Step 3 Table.
Procurement Group Construction Transport Wholesale Services # of Firms
2382 485991 221210,323110,
423120,423130,
424120,424720,
8112
522190,5241,
541, 561612,
561720,562112,
621111,8111,
812332
In NIACS
Caltrans District 4
Alameda 671 17 1,492 7,612 9,792
Contra Costa 471 6 734 5,040 6,251
Marin 181 7 260 2,353 2,801
Napa 85 1 106 692 884
San Francisco 377 18 573 7,448 8,416
San Mateo 427 20 743 4,179 5,369
Santa Clara 797 16 1,448 10,822 13,083
Solano 190 6 318 1,047 1,561
Sonoma 393 6 461 2,383 3,243
Caltrans District 5
Monterey 219 325 1,448 1,992
San Benito 29 33 135 207
San Luis Obispo 210 267 1,486 1,963
Santa Barbara 260 4 371 2,201 2,836
Santa Cruz 173 1 210 1,358 1,742
TOTAL: 4,483 102 7,341 48,204 60,140
Step 3. SLO Transit's Market Area Firms by NAICS in Procurement Group
Total Firms and Certified DBEs
Construction Transport Wholesale Services #DBE's
NAICs NAICs NAICs NAICs in NAICs
Distrist 04 & 05 & Statewide DBE's 155 6 77 824 1062
% DBE's 3.46%5.88%1.05%1.71%1.77%
Sources: US Bureau of the Census, County Business Patterns, 2008
CA Dept. of Transportation, UCP Directory of DBEs, 5/1/14
Certified DBE's
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Fourth, staff used the DBE percentage obtained above for each Procurement Group and multiplied
that by the percentage (weight) of the total work to be performed in that Procurement Group as
determined in Step 2. This produced the base DBE goal for FFY15 through FFY17.
Construction Transport Wholesale Services Total
% DBE's in Market Area 3.45%5.88%1.05%1.71%1.77%
% Contract $ in Group 0.0%0.0%0.0%100.0%100%
Weighted %DBE(% Contracts*%DBE)0.00%0.00%0.00%1.71%1.71%
$ FTA Assistance -$ -$ -$ 1,388,880$ 1,856,244$
$ FTA in DBE Contracts
%DBE * Total $ FTA Assistance - - - 23,741.54 23,742
Step 4: SLO Transit's FFY15-FFY 17 DBE Goal for FTA Assisted Contracts
To obtain the final DBE goal using the chosen method prescribed by 49 CFR 26.45, staff examined
the actual rate of DBE participation during the last three years relative to the adopted DBE goals to
determine if the FFY15 through FFY17 base goal should to be adjusted. Although SLO TRANSIT
didn’t need to set a DBE goal due to the fact that the only projects was direct labor cost, fuel and
vehicle cost that was purchase with FTA funding, SLO TRANSIT attempted to achieve 2% DBE
goal and was not successful in achieving this goal. SLO TRANSIT had no large construction
contracts available to bid during the analysis period. Due to an increase in FTA funding and an
increase in current contract opportunities, SLO TRANSIT therefore the need to adjust the base goal
down.
In previous years, SLO TRANSIT adopted annual goals of 2% DBE participation. SLO
TRANSIT’s FY14-15 capital budget has no significant contract opportunities as it relates to large
construction projects, which would warrant an upward adjustment to the FFY15 through FFY17
goal. SLO TRANSIT’s capital contracting funds have been on a consistent decline since 2008. And
with the calculated rate falling well below the goals of the last three years, staff decided that the
calculated goal needed to be adjusted down to 1.7%.
SLO Transit has only one major contract for the operations & maintenance associated with
providing the service. This contract is due to expire on June 30th, 2016. As in the past, SLO Transit
will be sure to include in the RFP and contract language that if awarded to a non -DBE vendor, such
primary vendor must also adopt the same DBE goal and or demonstrate a good faith effort in
achieving it.
If approved by the City Council, SLO TRANSIT will establish a DBE Goal of 1.7% for FFY15
through FFY17. SLO TRANSIT’s proposed DBE Goal for FFY15 through FFY17 and supporting
documents for SLO TRANSIT’s DBE Program are available for public inspection trhough August
6, 2015 at SLO TRANSIT’s Administrative Offices, 919 Palm St. and on our website at
www.slotransit.org.
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