Disadvantaged Business Enterprise Guidance

EPA policy states that DBEs must be certified by a recognized and approved agency. A business enterprise can no longer self certify that the business is disadvantaged. Certifications will be accepted from the following:

• Michigan Department of Transportation
• Suburban Mobility Authority for Regional Transportation
• U.S. Small Business Administration
• U.S. Department of Transportation
• Tribal, state and local governments, as long as their standards for certification meet or exceed the standards in EPA policy

The EPA certification requirements include:

• An entity must establish that it is at least 51% owned and controlled by socially and economically disadvantaged individuals who are of good character and are citizens of the United States.
• An individual claiming economic disadvantaged status must have an initial and continued personal net worth less than $750,000.

The Michigan Department of Transportation has a directory of all Michigan certified entities. A searchable database of Michigan certified entities is also available on the website.

The System for Award Management (SAM) database is another place to locate certified DBEs. SAM is an online business portal maintained by the federal government that helps small businesses market their goods and services to prime contractors. SAM replaces the Central Contractor Registration (CCR) database. The database will allow searches by the North American Industry Classification System (NAICS) code (i.e. water and sewer line and related structures construction –NAICS code 237110) and other criteria.

The good faith efforts are activities by a loan recipient AND its prime contractor(s) to increase DBE awareness of procurement opportunities. The Good Faith Efforts are:

1. Ensure DBEs are made aware of contracting opportunities to the fullest extent possible via outreach and recruitment activities. This includes placing DBEs on solicitation lists and soliciting the DBEs whenever they are potential sources.
2. Make information on forthcoming opportunities available to DBEs and arrange time frames for contracts and establish delivery schedules, where the requirements permit, in a way that encourages and facilitates participation by DBEs in the competitive process. This includes, where possible, posting solicitation for bids or proposals for a minimum of 30 calendar days before the bid or proposal closing date.
3. Consider in the contracting process whether firms competing for large contracts could subcontract with DBEs. This includes dividing total requirements when economically feasible into smaller tasks or quantities to permit maximum participation by DBEs in the competitive process.
4. Encourage contracting with a consortium of DBEs when a contract is too large for one DBE firm to handle individually.
5. Use the services and assistance of the Small Business Administration and Minority Business Development Agency of the U.S. Department of Commerce.
6. If the prime contractor awards subcontracts, require the prime contractor to take the steps in items 1 through 5 above.

A loan recipient is required to make the good faith efforts whenever procuring construction, equipment, services and supplies under an EPA financial assistance agreement, even if it has achieved its fair share objectives. Records documenting compliance with the Good Faith efforts must be retained by the loan recipient and its prime contractor(s).

The purpose of a bidders list is to provide the loan recipients who conduct competitive bidding with an accurate database as possible about potential MBE/WBE and non-MBE/WBE contractors. The loan recipient must create and maintain a bidders list, if the loan recipient is subject to, or chooses to follow, competitive bidding requirements. The bidders list must include all firms that bid or quote on contracts for EPA assisted projects. The bidders list must be kept until the project period for the identified loan has ended.

The bidders list will contain the following information:

1. Entity name and contact person
2. Entity’s mailing address, telephone number and email address
3. The procurement on which the entity bid or quoted and when, and
4. Entity’s status as an MBE/WBE or non MBE/WBE

The bidder list requirement applies to all loan recipients receiving more than $250,000 in any one fiscal year.

The EPA rule is intended to prevent ‘bait and switch’ tactics at the subcontractor level by prime contractors. The rule includes the following provisions:

1. A loan recipient must require its prime contractor to pay its subcontractor for satisfactory performance no more than 30 days from the prime contractor’s receipt of payment from the loan recipient.
2. A loan recipient must be notified in writing by its prime contractor prior to any termination of a DBE subcontractor for convenience by the prime contractor.
3. If a DBE subcontractor fails to complete work under the subcontract for any reason, the loan recipient must require the prime contractor to employ the Good Faith Efforts, if soliciting a replacement subcontractor.
4. A loan recipient must require its prime contractor to employ the Good Faith Efforts.
5. The loan recipient must require its prime contractor to provide the DBE Utilization Good Faith Efforts Worksheet. This form captures efforts by the prime contractor to solicit DBEs for each area of work type that will be subcontracted. The prime contractor must include completed form(s) as part of the prime contractor’s bid or proposal package to the loan recipient for each area of work type.

DBE program requirements apply to EGLE, as the recipient of the federal funds, AND then the EGLE’s loan recipients and prime contractors. Twice a year, EGLE must report on the participation of certified MBE and WBE for the clean water and drinking water programs. Semiannual reports are due to EPA within 30 days of the end of the semiannual reporting period (April 30th and October 30th). MBE/WBE data request forms are mailed to loan recipients in March and September. The semiannual reports will be completed with data submitted by the loan recipients to EGLE. The MBE/WBE firms reported by the loan recipients will be verified for certification.

Submit MBE and WBE participation data relating to procurement for goods and services related to the revolving loan project to EGLE.

Maintain a bidders list of MBE and WBE for future competitive procurements.

Submit a copy of the DBE certification letter with the MBE/WBE data request form to EGLE.

Incorporate the standard language in contract documents (see Standard Contract Language for Disadvantaged Business Enterprises) to make the following assurances:

• Prime contractor pays subcontractor within 30 days of prime contractor getting paid.
• Prime contractor notifies loan recipient in writing prior to terminating DBE subcontractor.
• Prime contractor uses the Good Faith Efforts.
• Provide the DBE Utilization Good Faith Efforts Worksheet to all loan recipients.

Obtain DBE certification, if necessary.

Make EPA form 6100-2 available at the pre-bid meeting, and emphasize the need to make three contacts per subcontract area. Show effort was made to make three contacts.

Complete EPA the DBE Utilization Good Faith Efforts Worksheet as part of the bid or proposal package to the loan recipient.

Pay subcontractor(s), if any, within 30 days of getting paid by the loan recipient.

Notify loan recipient, in writing, prior to terminating DBE subcontractor.

Use the Good Faith Efforts.

Incorporate the standard DBE language in contract documents.

This form captures efforts by the prime contractor to solicit DBEs for each area of work type that will be subcontracted out. A separate Good Faith Efforts Worksheet must be provided by the prime contractor for each area of work type to be subcontracted out. There are specific instructions that accompany this form that prescribe minimum efforts which bidders must make in order to be in compliance with the DBE requirements.

While non-certified DBEs can be used, only DBEs, MBEs, and WBEs that are certified by EPA, SBA, or MDOT (or by tribal, state and local governments, as long as their standards for certification meet or exceed the standards in EPA policy) can be counted toward the fair share goal. Proof of certification by one of these recognized and approved agencies should be sought from each DBE.

Applications for certification under MDOT can be found on the MDOT Disadvantaged Business Enterprise (DBE) webpage.

No. Federally funded highway projects utilize DBE goals, which require that a certain percentage of work be performed by DBE subcontractors. For SRF projects, there is no financial goal. However, there is a solicitation effort goal. Bidders must use Good Faith Efforts for each and every area of work to be subcontracted out to obtain DBEs. The bidders are not required to use DBEs if the quotes are higher than non-DBE subcontractors. There is no required DBE participation percentage contract goal for the SRF. However, if the SRF project is part of a joint project with MDOT, the project can be excluded from SRF DBE requirements (i.e., the Good Faith Efforts Worksheet is not required) as it would be difficult to comply with both programs’ requirements.

Yes. This is a requirement to document that the contractor has complied with the DBE requirements and the Good Faith Efforts. These compliance efforts must be done during the bidding phase and not after-the-fact. It is highly recommended that the need for these efforts and the submittal of the forms with the bid proposals be emphasized at the pre-bid meetings. Failure to show that the Good Faith Efforts were complied with during the bidding process can lead to a prime contractor being found non-responsive.

Documentation can include fax confirmation sheets, copies of solicitation letters/e-mails, printouts of online solicitations, printouts of online search results, affidavits of publication in newspapers, etc.

Due to the extent of the efforts required, a minimum of 30 calendar days is recommended between bid posting and bid opening to ensure adequate time for contractors to locate certified DBEs and solicit quotes.

The Michigan Department of Transportation has a directory of all Michigan certified entities. Additionally, the federal System for Award Management (SAM) is another place to search. SAM contains information from the former Central Contractor Registration (CCR) database.

The bidder should complete the Good Faith Efforts Worksheet with a notation that no subcontracting will be done. However, if the bidder is awarded the contract and then decides to subcontract work at any point, then the Good Faith Efforts must be made to solicit DBEs.

While the Good Faith Efforts Worksheet is important, it is more critical to confirm that the contractor complied with the DBE requirements prior to bid opening. The owner should contact the bidder as soon as deficiencies are noted for a determination/documentation of efforts taken to comply with the DBE requirements. Immediate submittal of the completed forms will be acceptable provided the Good Faith Efforts were made and it is just a matter of transferring information to the forms.

Yes, the DBE requirements still apply if the prime intends to subcontract work out. Good Faith Efforts must be used to solicit DBEs.

Copies of printouts from MDOT and SAM showing no DBEs and advertisements soliciting quotes for all subcontract areas, including the questionable areas, will be adequate if the dates on the printouts are prior to the bid or proposal closing date.