Interview with SBE liaison officer for Caltrans on 2008 DVBE Incentive Program
Compliance News: I was wondering if the new 2008 DVBE “Incentive Program” will be part of and explained at the Pre-bid meeting in Fresno regarding 06-307004 (State Route 63, Mooney Boulevard 6-Lane in Tulare County, estimated at $17 million in construction costs.)? Caugle: No Henry, this project was published before Feb 28, 2008 and therefore will not include the new DVBE 5% Incentive Program. All projects after February 28, 2008 will include the new 2008 DVBE incentive program. Sorry but 06-307004 will still have the old 3% or Good-Faith Effort program. Compliance News: I noticed you enclude the ‘non-sbe’ 5% program, spelled out in the bid documents. Does that mean, if a larger contractor, that does not qualify as a SBE, can still receive the SBE 5% $50,000 bid advantage? Caugle: Yes, but only if the winning contractors bid, has a 25% participation with certified (in good standing), SBE sub and/or vendors. If you don’t reach 25%...no non-sbe bid advantage. Compliance News: Wow! Does this mean the ‘non-sbe’ 5% California program can be part of all statewide construction related projects over $5000?...I notice it’s not in many bid packages. Caugle: Yes, it does and you’re right. You don’t see it often. Compliance News Wow! So it’s like a best-kept-secret. Humm Caugle: Yes, It sure is that way.
Jobs such as this will provide DVBE’s with more incentive in California. Bid items for the Fresno 06-307004 include: · Construction area signs · Remove and replace chain link fencing · Remove and construct bus shelters · Modify and install signal, lighting, and traffic monitoring system · Highway planting and irrigation · Asphalt concrete · Minor concrete · Traffic striping/pavement markers · Clearing and grubbing · Roadway excavation · Remove and install culverts · Adjust and install manholes
California: Caltrans Increases DVBE Contract Goals on Highway Projects to 5%
The California Department of Transportation (CALTRANS) has failed to meet the annual DVBE goal of 3 percent in each of the past 3 years for its goals in Highway projects.
In response to this shortfall, CALTRANS has decided to increase the DVBE goal on all contracts and implement new bidding award procedures, attempting to ensure that the goal is met. As of February 11, 2008, CALTRANS has started to implement the new bid award procedures.
In order to meet this increased goal, contractors will be required to contact more DVBE firms on Caltrans projects.
To meet the 3% annual DVBE goal, CALTRANS is initiating a temporary increase in their DVBE contract goals to 5%, which is to remain in effect until July 2008. This is an effort by Caltrans to move ahead of the curve in meeting its DVBE participation obligations for 2008. As a result, firms bidding on Caltrans projects must attempt to subcontract at least 5% of the contract work to DVBE certified firms. This percentage increase also means that contractors will need to contact more DVBE firms on each project they plan to submit a bid.
When bidders are unable to procure DVBE participation, they are required to provide evidence that they made a good faith effort to obtain the necessary percentage of DVBEs for the project, as is currently the standard procedure. In the past, the lowest bidders who made a good faith effort without including DVBEs in their bid were often awarded the contract; however, the bid award procedures to be employed by Caltrans will make it more difficult for bidders who only use good faith efforts and reward those contractors that actually plan to utilize DVBEs on their project.
The new Caltrans bid award procedures stipulate that bidders who secure over 1% DVBE utilization on a contract will be entitled to bid incentives. In this process, the Department will consider the three lowest bidders if the second and third lowest bids are within 5 percent or $100,000 from the lowest bid. Once this is determined, Caltrans will then apply the DVBE incentive to the three lowest evaluated bid amounts and determine if the bid ranking changes.
For example, the lowest bidders on a contract are businesses A, B, and C, who have bid $100,000, $102,000, and $103,000, respectively, and have obtained DVBE participation of 0%, 3%, and 5%, respectively. Business A, who has not included a DVBE firm, will receive no incentive and have a net bid of $100,000. Business B, who has secured 3% DVBE participation on the same contract, will receive a $3,000 incentive and have a net bid of $99,000. Business C, who has 5% DVBE utilization, receives the maximum 5% incentive which in this case equals $5,000. Subsequently, Business C has the lowest net bid, $98,000, and wins the contract. Even though Business C initially had the highest bid amount of the three contractors, the fact that it met the contract’s DVBE goal allowed it to win the project.
For more information on this increase, please view the announcement at the Caltrans website here.
View the most recent verified Caltrans bid results (for the last 6 weeks) here.
