Compliance News Blog

The following is an interview conducted on 3 March 2008 by Compliance News with Mr Morris Caugle, the Small Business Enterprise (SBE) liaison officer for the California Department of Transportation (Caltrans). It provides more background on the 2008 DVBE incentive program.

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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.

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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

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.

The city of Fresno in California and the Economic Development Department held the Inaugural Business Matchmaking and Networking Event from 8:30 a.m. to 4 p.m. on August 31, 2007.

The gathering held at the Fresno Convention Center Exhibit Hall brought together a diverse segment of disabled veterans and their advocates. The City of Fresno is one of fifteen incorporated cities in Fresno County, in north-central California. The area around Fresno is known for rich soil and farming.

Veterans and small business owners with the aid of the state and local institutes had the opportunity to bid for providing goods and services to state government agencies in the Fresno area and attend one-to one meetings with state procurement officials and agency buyers. DVBE representatives were also on hand to teach non-certified DVBE veterans on how to create companies and obtain and utilize DVBE certification. The entire program was free.

The Fresno County website boasts, “In the year 2000, Fresno County growers grossed over 3.4 billion dollars from the production of more than 200 commercial crops.”

In recent years Fresno city has worked to increase the involvement of disabled veterans in the economic affairs of the community.

Members of the Disabled American Veterans (DAV) will be launching a mobile service office in San Jose, CA on May 26, 2007. Arthur H. Wilson, a national adjutant for the organization, writes, “Our highly trained DAV National Service Officer will be available to personally provide you the best counseling and claim filing assistance you and your family can get.”

The DAV, along with other veterans organizations, is stepping up efforts to aid veterans returning home. They offer services free of charge and are well versed in regards to the benefits and services offered to veterans. Compliance News supports the DAV in lobbying for all the government benefits that veterans and disabled veterans deserve.

For more information see the website for DAV’s Chapter 11.

Throughout March news stories on veterans and disabled veterans have increased awareness on veterans’ issues.

A veteran of the U.S. Army, Ed Acevedo, is currently biking across the United States, from Florida to California, to raise awareness and money to help disabled veterans. Through his Web site, www.bike4vets.org, contributions can be made to seven designated charities that help disabled veterans and their families. Acevedo told Compliance News that “Disabled veterans have learned to overcome many obstacles on their road to recovery. They already possess far more tools than they realize. The experience, discipline, and resourcefulness they have acquired makes them ideally suited to excel in today’s business environment.”

During the first week of his ride, Acevedo wrote, “At the beginning of the trip, I am joined by my old friend from High School, Diego Mera. He is an Army veteran and now works for the Navy in Orlando. Diego has taken three days to cycle with me on my trip.” He encourages other veterans to join the ride across the country.

In some states, new facilities to aid veterans are opening but more must be done. On Sunday, Veterans Affairs Secretary R. James Nicholson opened the National Disabled Veterans Winter Sports Clinic in Colorado. He told the assembled audience of 100 veterans of operations in Iraq and Afghanistan, “There is controversy about this war, but there is no controversy about you.” We owe tremendous gratitude to all of those who have worn the uniform.

The House of Representatives has also acted to provide more support for veterans with a Wounded Warrior Assistance Act, approved 426 to 0. Reacting to the Walter Reed Army Medical Center scandal, the bill creates a group of case managers, advocates and counselors for injured troops returning from Iraq and Afghanistan.

Our young men and women returning from service need our support in making the transition back home and to V.A. programs.

The California Department of General Services “Small Business and DVBE Collaboration Conference” was held at Los Angeles’ Westin Bonaventure Hotel on Thursday the 26th of October, 2006.

The Governor’s Secretary of Consumer Services, Rosario Marin was our keynote speaker and mused, “Our Governor’s goal is to have at least 25 per cent of all procurement services devoted to our SB’s and DVBE’s.” Which paraphrasing her a bit, potentially translates into having a significant slice of the $9 billion procurement pie.

Of special note was that we were finally privileged to have actual buyers and/or directors of procurement there from several campuses of the CSU, LA Unified School District, Alameda Corridor East Construction Authority, LA Community College District and numerous other agencies to brief us at the breakout seminars regarding how to actually bid on state-sponsored construction projects armed with the know-how to successfully jump over all potential pitfalls.

Of special note was the excellent interface given by Mark Hovatter, director of facilities contracts with LAUSD.

Hovatter stated that his district is the largest in the US with 727,000 students encompassing 850 campuses all within 700 square miles and earmarks spending $19.3 billion in school construction and renovation in the near term. 150 new schools are in the works which will cost-out at almost $12 billion. Twenty-nine major projects are in the bidding stages within one calendar year of today’s date amounting to practically $1 billion.

Repair and modernization projects can be expected to run up to another $8 billion so one could say that now is probably the best opportunity to sign up for their seminars… the first of which will begin on the sixth of November, 2006. The subject being the “New Inspection Issue Resolution Process and Change Order” methodologies. These seminars will be available once per month for five months and are vital if one wants to partake of doing biz with an outstanding agency.

And as we mentioned in an earlier article, LAUSD is offering at no-cost an eight-week boot camp for small contractors which will potentially enable a firm to gain access to performance bonding, estimating and how to bid amongst other relevant issues. Hovatter additionally alludes that… “We’ve awarded over $23 million to these graduates.” Wow…. What are you waiting for?

LAUSD’s “Small Business Enterprise Program” goal is 25 per cent on all contracts with 60 per cent SBE participation.

LAUSD’s Director of Facilities Contracts, Mark Hovatter may be reached at (213) 241-5128.

Here’s another golden opportunity brought to you by the State of California Governor’s Office… please avail yourselves of it, if need be as space is limited.

However, it is up to you if one wishes seek some rich rewards, guys and gals….

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Don Zweifel is a registered lobbyist

The U.S. General Services Administration has a brand new strategic plan for contracting SDVOSB’s….

Our ultimate goal as a certified “Service Disabled Veteran-Owned Small Business” if this pertains, ought to be doing business with GSA’s contracting officers since this agency spends almost $45 billion per year for commodities, equipment and services related to federal procurement…. Of that amount which was eligible for consideration approximately 42 per cent or $4.2 billion went to small businesses in 2004. However the GSA would like to target up to $13 billion depending on whether “schedules” are included or not.

The US Census Bureau reports there are more than 4.2 million veteran-owned businesses nation-wide with only 320,000 of those designated as SDVOSB’s. On the other hand only a small fraction of those are on the “Central Contracting Registry” and on “vet.biz.gov” as federal government contractors, with an even smaller number of those listed on GSA schedules.

However, “Public Law 108-183” establishes a preference for these firms which is three per cent of the total value of all prime contract and subcontract awards by the feds… Oh boy….

As the fifth largest procurement organization of the federal government, a GSA spokesperson in essence alludes that… “This agency is ready, willing and able to assist SDVOSB’s to sell their products and services to the government as well as assisting federal agencies in identifying and utilizing those firms under GSA contract.”

And in regard to SDVOSB “set-asides.” This category was created to help a segment of veteran-owned businesses become more competitive in the federal marketplace according to GSA’s strategic plan for contracting with these fellow firms.

Of special interest may be “Presidential Executive Order 13360” which provides the framework and emphasis to jumpstart GSA’s internal initiatives as well as an opportunity for this agency to become a preferred provider in its three business lines: The “Federal Supply Service,” the “Federal Technology Service” and the “Public Building Service.”

In summation may we iterate that in the last ten months GSA has quadrupled the number of SDVOSB’s on the “FSS” schedules, rising from 98 to more than 425 small businesses.

The GSA is now asking us to identify and catalogue our needs so that they can have a database which truly reflects those requirements on a national, regional and local basis. Present “DB’s” only contain a small number of SDVOSB’s and the topics are skewed towards “IT” plus also the databases are not geographically dispersed…. Note: “CN” plans on alleviating this situation soon.

And on an added note, go to www.gsa.gov and do a search for “SDVOSB” if one wants to begin having an opportunity to bid on a slice of this very lucrative pie, guys and gals. Remember GSA is ordering its “FSS” or “Federal Supply Service” acquisition centers to prioritize positioning our certified firms ‘on schedule.’ Note: “DVBE” firms must be recertified by the feds in order to play….

And lastly on a rather important matter, “Federal Acquisition Regulation/FAR Part 19” requires prime contractors to flow-down the “best effort” clause which is “FAR 52.219.8” for contracts over the “Simplified Acquisition Threshold” or “SAT” for subcontracts, i.e., over $100K.

This may appear to be rather complicated, but if one plays their cards right it should be a gravy train for everyone willing to bite the admin bullet a bit….

Their ultimate goal by the way is to cast a wider net in hopes of acquiring more ‘tier one’ and ‘tier two’ $$ for SDVOSB’s….

Remember GSA wants to foster competitiveness amonst the prime vendors looking to maintain or enhance their public image….

What’s this you say? They’ve dropped the ball again? Well, what else is new?

Let’s take a good look at who did what to whom.

CSU Long Beach had $58 million worth of contracts for FY 2004-05 and only thought of us to the tune of $192K. or 0.33% DVBE participation. However, CSU Los Angeles had $68 million and did $2.5 million or 3.7% of their business with us. A special kudo goes to those resolute guys and gals soldiering on in CSU LA procurement.

On the other hand why one may ask, is there such a wide disparity?

We could allude to some ostensibly good evidence that there are many in certain procurement divisions who believe the people of the state of California owe an on-going vote of thanks to our mostly unsung disabled vets, but there are others who frankly just don’t give a damn and would rather pull the plug on all DVBE opportunities.

Golly gee, then maybe the situation with CSU Long Beach is just a fluke. Think so? O.K., CSU San Jose did over a fifth of a billion $$ and set aside just $83K. or 0.04% for the guys and gals at the bottom of the totem pole….

However, the Franchise Tax Board spent almost a quarter of a billion $$ and included us in $7.8 million or 3.7% of their contracts.

A very hearty accolade therefore, to those good joes at FTB.

But CalPoly San Luis Obispo had almost $300 million to spend and ended up giving us just 0.02% or $47K. of the pie.

Gosh, how did DGS do then, we should query? They had $319 million in the kitty and gave us $6.1 million or only 1.93% of the take. And these are the folks heading up the lead agency for the entire kit n’ kaboodle?

These are also those very same people that appear to talk the talk but just quite can’t walk the walk….

Ah, but what about the Dept. of Corrections? They always have a ton of bucks to spend. DOC spent almost three quarters of a billion $$ and remembered us with practically $16 million or 2.14%. They’re beginning to close in on the magic three per cent.

But they are a heckuva lot closer than most, therefore a significant amount of kudo’s go to DOC.

And CalTrans? They had over half a billion $$ to work with and gave us over $23 million or 4.13%. Finally…. An agency we can highly praise and thank with Will Kempton at the helm and Olivia Fonseca as deputy director of the Civil Rights Division.

Now to end our bitter-sweet swan song on a not so positive note regarding CalPers. Well they went through almost half a billion $$ and did just $2.4 million or 0.49% with the little guys…. And these are the fellows that keep saying that they’re advocates for the struggling, teeming masses of state employees and our downtrodden DVBE’s….

Actually attaining the DVBE participation goal could conceivably boil down to nothing but an act for some state agencies, consisting mostly of smoke and mirrors ladies and gentlemen.

FY June 30 2004 thru July 1st 2005 DVBE participation report from DGS.

Click here to download 10-page pdf DVBE STATEWIDE STATISTICAL ANNUAL REPORT

Santa Rosa, Ca CSU PSSOA 2006 Conference.

From questions and answers between USU buyers and DGS spokesperson the following is true:

The DVBE points program is essentially a “PREFERENCE” program…even though its called a DVBE participation points advantage program.

Examples of winning/loosing bidders:

1. Two non-certified primes submit bids. Prime A submits a price of $1,000,000 and has no DVBE participation. Prime B submits a price of $1,100,000 but has full 3% DVBE participation.

Prime B wins the bid.

2. Two primes submit bids. Prime A is a certified SB with a bid of bid price of $1,050,000. Prime B with a bid price of 1,000,000 is not a SB but has full 3% DVBE participation. Prime A wins because they can use their 5% SB bid advantage. Prime B’s DVBE points advantage do not count when bidding against a SB certified prime.

3. Two primes submit bids. Prime A is not certified anything and has no DVBE participation and submits a bid of $1m. Prime B submits a bid of $1,150,000. Prime B is certified SB and has full 3% DVBE participation.

Prime B wins because SB and DVBE bid advantage is stackable.

If you require special efforts to find and contract with a DVBE beyond the CN Good Faith Effort (GFE) call Compliance News and speak with Henry at ext 103.

-Click here to see the first colored brochure issued by DGS regarding the DVBE points program.

-Click here for back side of brochure.