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Metropolitan Transportation Authority

@ Metro

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EXECUTIVE MANAGEMENT AND AUDIT COMMITTEE APRlL 45,2040

SUBJECT: DISADVANTAGED BUSINESS ENTERPRISE AND SMALL BUSINESS ENTERPRISE GOAL DEVELOPMENT PROCESS

ACTION: RECEIVE AND FILE PERFORMANCE AUDIT REPORT

Receive and file results of Thompson, Cobb, Bazilio and Associates (TCBA) performance audit report related to Disadvantaged Business Enterprise and Small Business Enterprise goal development and participation process.

ISSUE

At the December 2009 Executive Management and Audit Committee meeting, a motion was made requesting that we conduct an independent performance audit of our Disadvantaged Business Enterprise (DBE) and Small Business Enterprise (SBE) Programs including: evaluating the adequacy of goals and desired levels of participation; evaluating actual DBE participation versus goals and peer entities in California; determining whether our DBE Certification Review Process is based on best practices and, if not, recommending improvements; conducting a comparative analysis of goal setting, outreach, and program management methodologies employed by other public agencies; evaluating the effectiveness of our outreach efforts; and evaluating whether our current staffing levels and resources are comparable to those of other countywide federal funding recipients.

In order to have a timely response to the requests made in the motion we contracted two firms to conduct two separate audits. We retained TCBA to perform the audit on the efficiency and effectiveness of our DBE and SBE goal development and participation process. Macias Consulting Group (MCG) was retained to conduct a performance audit on the efficiency and effectiveness of our DBE and SBE certification and outreach process.

The board report presents the results of TCBA's performance audit report on the efficiency and effectiveness of Metro's DBE and SBE goal development and participation process. The audit provides the results of an evaluation on the adequacy

DBE and SBE Goal Development Process

of goals and desired levels of participation, actual DBE participation versus goals and a comparative analysis of goal setting, outreach, and program management methodologies employed by other public agencies in the United States and their participation results and reporting procedures, including but not limited to CALTRANS, the City of 10s Angeles, the County of Los Angeles, other transit agencies, MWD, LAUSD, San Francisco Muni, BART and other applicable agencies.

DISCUSSION

TCBA reviewed our procedures for establishing SBE/DBE goals, prior audits or reviews made of our SBE/DBE program, applicable laws, regulations and directives, procedures for reporting and monitoring SBEIDBE participation and our outreach procedures for SBE/DBE participation on contracts. TCBA also met with Metro officials to obtain an understanding on how SBElDBE goals are established and discuss how they monitor and report SBElDBE participation. In addition, TCBA contacted other local government agencies and obtained data on DBE/SBE goals and participation levels for FY 2005- 201 0. Finally, TCBA conducted a comparative analysis of DBEfSBE goal setting, outreach and program management methodologies employed by other public agencies.

The performance audit found that:

1. Our DBE annual goal development process is in compliance with federal regulations under 49 C.F.R. Part 26, but that we should explore other goal development alternatives permitted under the regulations.

2. The required change from a race-conscious to a race-neutral DBE program has significantly reduced DBE commitments and utilization in our contracts.

3. SBE participation in our contracts could be significantly increased through the aggressive expansion of the SBE program.

4. Diversity and Economic Opportunity Department (DEOD) has implemented many outreach activities to increase DBElSBE participation in Metro contracts with limited resources, but more can be done.

5. Based on TCBA's SBE program survey results of other agencies, our SBE program was found to be more restrictive.

In response to these findings, TCBA made the following recommendations:

1. DEOD should prioritize its workload and continue its efforts to create a database on bidders to comply with 5 26.1 1 and for possible annual goal setting.

2. Given the significant decrease in the percentage of DBE contract commitments and anticipated participation levels in our federally-funded contracts, DEOD


should aggressively explore other ways to increase small business participation in our contracts such as expanding our existing SBE program.

3. We should consider expanding the SBE program eligibility criteria by increasing the owner's personal net worth limitation from $250,000 to $750,000 and adopting the SBA size standards.

4. We should consider expanding the SBE program to include state and locally funded low bid construction contracts and federally-funded contracts.

5. We should consider re-establishing a shared responsibility program for the DBE program and SBE program.

6. We should explore implementing additional outreach and support activities.

Management agreed with all of the recommendations identified above from TCBA and is already implementing several of the corrective actions.

TRANSPORTATION BUSINESS ADVISORY COUNCIL COMMENTS

We provided TBAC TCBA's audit as well as MCG's for review. TBAC is in agreement with the findings in both audits but did have a few modifications regarding the recommendations. TBAC suggested the following modifications:

1. The Audit recommendations are implemented immediately. 2. Metro staff reports to and updates TBAC monthly on the progress of all of the

recommendations. 3. Metro increases the personal maximum net worth of the owner requirement to

$1 million instead of the proposed $750,000. The $750,000 maximum net worth requirement is based on the US SBA program. The SBA is already in the process of re-evaluating the net worth requirement.

4. The SEE net worth change is expedited and that we not wait until 201 1 as many contracts will be awarded in the immediate future in 201 0.

5. Metro accepts SBE certifications from other agencies within the State including California's DGS small business certification.

TBAC's response has been included as Attachment B to this report.

NEXT STEPS

Management Audit Services will follow-up on the recommendations to verify they are implemented.


A. Thompson, Cobb Bazilio and Associates - Performance Audit of the Small Business Enterprise (SBE) and Disadvantaged Business Enterprise (DBE) Goal Development and Participation Process

B. Letter from Transportation Business Advisory Council regarding audits from Thompson, Cobb, Bazilio and Associates and Macias Consulting Group

Prepared by: Ruthe Holden, Chief Auditor


e Hotden Chief Auditor

Arthur T. Leahy Chief Executive Officer


Attachment A

Prepared by:

T H O M P S O N . C O B B , B A Z I L I O & A S S ~ E I A T E S , P . C . CerPiad Public Acc~undipn~s & ManagremenP Sysfems ;abldB'Pndnc8'al ConsuiganB 2 t 250 Hawthorne Bfvd. Suite 150 Torrance, U4 90503 PHI 310.792.4640 . FX 310.792 4140 . www.tcba.com

March 22,2010

Ms. Ruthe Holden, Managing Director Los Angeles County Metropolitan Transportation Authority Management Audit Services Department One Gateway Plaza Los Angeles, CA 90012

Dear Ms. Holden:

We have completed ow performance audit of Metro's Small Business Enterprise (SBE) and Disadvantaged Business Enterprise (DBE) goal development and participation process. Our engagement was performed in accordance with our Contract No. PS02S-2510-15-l6A; Task Order No. 17. We conducted our audit in accordance with Generally Accepted Government Auditing Standards.

Background Concerned about ensuring that DBEs, minority- and women-owned Bms and other small contractors have fbll and fair access to its contracts and the effect of the required change from a race-conscious DBE program to a race-neutral DBE program for its federally-assisted contracts, Metro's Board of Directors directed management to conduct an independent performance audit of Metro's DBE and SBE goal development and participation process. This process is administered by Metro's Diversity and Economic Opportunity Department (DEOD).

Scope of our work In response to this audit request, Metro's Management Audit Services Department (MASD) contracted with Thompson, Cobb Bazilio and Associates (TCBA) to conduct this performance audit. TCBA subcontracted with DBE and SBE subject matter experts Colette Holt & Associates and Sabal Expert Consulting to assist with this performance audit. As part of the audit, TCBA reviewed data and records for the period 2005 to 2010. The audit was designed to address the following objectives from the request for proposal:

Evaluate the adequacy of goals and desired levels of participation; Evaluate actual DBE participation versus goals and compare to peer entities in California; and Conduct a comparative analysis of goal setting, outreach, and program management methodologies employed by other public agencies in the United States and their participation results and reporting procedures, including but not limited to Caltrans, the City of Los Angeles, the County of Lus Angeles, other transit agencies, MWD, LAUSD, San Francisco Mumi, BART and other applicable agencies.

Ms. Ruthe Holden March 22,2010 Page Two

h addition to the above objectives, this performance audit focused on how Metro can increase DBE and SBE participation in both federally-funded and state and locally-hnded projects.

Results of our work From January 201 0 to March 201 0, TCBA executed the audit plan designed for answering the objectives above. Based on infomatian gathered using data analytics, interviews, testing and benchmarking, we identified findings and leveraged ow subject matter resources to provide recommendations to Metro's DEOD. DEOD management agreed with all of the report's findings and recommendations.

Restrictions on the use of the report TCBA assumes no responsibility to any user of the report other than Metso. Any other persons who choose to rely on our report do so entirely at their own risk.

We appreciate the cooperation and assistance provided to us by DEOD during the course of our work. If you have any questions, please call Michael deCastro at 3 20 792-4640 ext. 1 10.

Best regards,

TABLE OF CONTENTS

Paae

Transmittal Letter ............................................................................................................... i

A . Executive Srrmmary ...................................................................................................... 1

.............................................. .............................................. . B Introduction ... 3

C . Objectives. Scope and Methodology ....................................................................... 4

. ................................................,....*..,.........,......................................,....,... D Audit Results 6

Attachment A . Small Business Enterprise (SBE) Survey Results

Attachment B . Disadvantaged Business Enterprise @BE) Survey Results

LOS ANGELES COUNTY METROPOLITAN TRANSPORTATION AUTHORITY

PERFORMANCE AUDIT OF THE SrWALL BUSINESS ENTERPRISE (SBE) AND

DISADVANTAGED BUSINESS ENTERPNSE @BE) GOAL DEVELOPMENT AND PARTICIPATION PROCESS

- - - - - - - -

Concerned about ensuring that Disadvantaged Business Enterprises (DBEs), minority- and women-owned firms and other small contractors have full and fair access to its contracts and the effect of the required change fkom a race-conscious DBE program to a race-neutral DBE program for its federally-assisted contracts, Metro's Board of Directors directed management to conduct an independent performance audit of Metro's DBE and Small Business Enterprise (SBE) goal development and participation process. This process is administered by Metro's Diversity and Economic Opportunity Department (DEOD). In response to this audit request, Metro's Management Audit Services Department (MASD) contracted with Thompson, Cobb Baziliu and Associates (TCBA) to conduct this performance audit. TCBA subcontracted with DBEJSBE subject matter experts Colette Holt & Associates and Sabal Expert Consulting to assist with this performance audit.

The primary objectives of this performance audit included: 1) evaluating the adequacy of DBE/SBE goals and desired levels of participation, 2) evaluating actual DBE/SBE participation versus goals and comparing those results to peer entities in Califbrnia, 3) conducting a comparative analysis of DBEISBE goal setting, outreach, and program management methodologies employed by other public agencies, and 4) evaluating ways that Metro c m increase DBE/SBE participation in both federally-funded and state- and locally- funded projects,

The following is a brief sumary of the results of this performance audit. More complete details and discussion are included in the body of this report.

P Metro's DBE annual goal development process was found to be in compliance with federal regulations under 49 C.F.R. Part 26, but Metro should explore other goal development alternatives permitted under the regulations. (See pages 6-7)

> The required change from a race-conscious to a race-neutral DBE pmgram has significantly reduced DBE commitments and utilization in Metro's contracts. (See pages 7-9)

> SBE participation in Metro's contracts could be significantly increased through the aggressive expansion of the SBE program. (See pages 9-1 1)

9 Metro's DEOD has implemented many outreach activities to increase DBE/SBE participation in Metro contracts with limited resources, but more can be done. (See pages 12- 14)

P Based on our SBE program survey results of other agencies, Metro's SBE program was found to be more restrictive. (See pages 15-1 6)

The report provides the following 6 recommendations:

1) Metro's DEOD should prioritize its workload and continue its effosts to create a database of bidders to comply with 49 C.F.R. 8 26.1 1 and for possible amual goal setting.

2) Given the significant decrease in the percentage of DBE contract cmmitments and anticipated participation levels in federally-funded Metro contracts, Metro DEQD should aggressively explore other ways to increase small business participation in Metro contracts such as expanding Metro's existing SBE program.

3) Metro should consider expanding the SBE program eligibility criteria by increasing the owner's personal net worth limitation £rum $250,000 to $750,000 and adopting the U.S. Small. Business Administration (SBA) size standards.

4) Metro should consider expanding the SBE program to include state- and locally- funded low bid construction contracts and federally-funded contracts.

5) Metro should consider re-establishing a shared responsibility program for the DBE program and establishing a shared responsibility program for the SRE program.

6) Metro should explore implementing additional outreach and support activities as described in detail on pages 13-14.

In November 1996, the California voters approved Proposition 209l that prohibited state and local agencies fkom implementing preferential treatment programs based on race, sex, color ethnicity, or national origin for state and locally-fhded contracts. After Proposition 209 was upheld by the U.S. Court of Appeals for the Ninth Circuit, Metro implemented a race-and gender-neutral Small Business Enterprise (SBE) program. The SBE program sets subcontract participation percentage goals in solicitations for non- federally funded negotiated contracts.

To be eligible as a SBE a firm must meet two criteria: 2) it cannot exceed the U.S. Small Business Administration (SBA) small business size standards2, and in no case can the firm's average annual gross receipts exceed $22,410,000 averaged over the past three years, and 2) the owner's personal net worth cannot exceed $250,000, excluding his or her interest in a principal residence and equity in the firm seeking certification.

For federally-assisted contracts administered by the U.S. Department of Transportation (USDOT), Metro must implement a Disadvantaged Business Enterprise (DBE) Program in compliance with 49 C.F.R. Part 26. Metro must develop an annual goal for DBE participation on federally-funded contracts and provide information about the implementation of its DBE program to the Federal Transit Administration (FTA) and the Federal Highway Administration (FHWA).

Metro's DBE program was modified in 2006 in accordance with the decision by the Ninth Circuit Court of Appeals that changed the case law interpreting 49 CFR Part 26.3 In compIiance with a directive fiom the USDOT's General Counsel that recipients in the Ninth Circuit suspend the use of race-conscious means to obtain Df3E participation until they have gathered evidence of whether such remedies are necessary to address identified discrimination within their contracting markets, Metro limited its remedies to race-neutral measures4 in its DBE program. Metro now sets DBE Anticipated Levels of Participation (DALP) on contracts. However, meeting the DALP is not a condition of bid responsiveness or contract award.

To be eligible as a B E , a firm must be a small business, as defined by the SBA, and at least 51% of the ownership must be by socially disadvantaged individuals5 whose personal net worth is less than $750,000, excluding his or her interest in a principal residence and equity in the firm seeking certification, and the firm's average annual gross receipts must be less than $22,410,000 over the past three years.

' Art. II, Sec. 3 1, CA. Constitution. 13 C.F.R. Part 121. W i t e r n States Paving Co., hc. v. Washington Sfate Department of Transportation et a l , 407

F.3d 983 (9th Cir. 2005). 4 A "race-neutral measure is one that is, or can be, used to assist all small businesses." 49 C.F.R. 5 26.3. "Socially disadvantaged" individual are members of various racial and ethnic minority groups

and women. Other individuals may seek certification on an individual basis. 49 C.F.R. 5 26.3.

C. OW€C7TWS, SCOPE AND MElWODOLOGY

Concerned about enswing that DBEs have full and fair access to its contracts and the effect of the required change from a race-conscious DBE program to a race-neutral DBE program, Metro's Board of Directors directed management to conduct an independent performance audit of Metro's DBE/SBE goal development and participation process.6

For this performance audit, Metro's Board specifically requested that the following be performed:

Evaluate the adequacy of goals and desired levels of participation; Evaluate actual DBE participation versus goals and compare to peer entities in California; and Conduct a comparative analysis of goal setting, outreach, and program management methodologies employed by other public agencies in the United States and their participation results and reporting procedures, including but not limited to CALTRANS, the City of Los Angeles, the County of Los Angeles, other transit agencies, MWD, LAUSD, San Francisco Muni, BART and other applicable agencies.

In response to this audit request, Metro's Management Audit Services Department (MASD) contracted with Thompson, Cobb Bazifio and Associates to conduct this performance audit. In addition to the above objectives, this performance audit focused on how Metro can increase DBEJSBE participation in both federally-funded and state and focally-knded projects.

To accompiish our audit objectives, we:

Reviewed Metro's procedures for establishing SBElDBE goals. Met with Metro's officials to obtain an understanding on how SBEJDBE goals are established. Reviewed changes made to the transition from race-neutral to race-conscious goals and any difficulties encountered. Reviewed prior audits or reviews made of Metro's SBEDBE program. Reviewed applicable laws, regulations and directives. Reviewed Metro's procedures for reporting and monitoring SBE/DBE paxticipation. Met with Metro's officials to discuss how they monitor and report SBEDBE participation. Reviewed Metro's outreach procedures for SBEDBE participation on contracts. Contacted other local government agencies and obtained data on DBEjSBE goals and participation levels for FY 2005- 201 0.

The Metro Board also requested a performance audit of the DBElSBE certification process. This audit was performed separately by Macias Consulting Group.

Conducted a comparative analysis of DBE/SBE goal setting, outreach aod program management methodologies employed by other public agencies.

We began this performance audit on January 8, 2010 and completed fieldwork on March 5, 2010. TCBA conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conctusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for oul. findings and conclusions based on ow audit objectives.

D. AUDIT RESULTS

Finding I: Metro's DBE annual goal development process was found to be in compliance with federal regulations under 49 C.F.R. Part 26, but Metro should explore other goal development alternatives permitted under the regulations.

We found that Metro's procedures for establishing FTA and FHWA annual DBE goals were consistent with 49 C.F.R. Part 26. For its "step I" estimate of the base figure of DBE availability under 49 C.F.R. $ 26.45(c), Metro identifies federally-funded projects in its budget and then identifies the North American Industrial Classification System (NAICS) codes associated with the scopes of work in those projects to be accoqlished by contract. Metro then computes ratios of DBEs to all businesses in the identified NAICS codes in the counties of Los AngeZes, Orange, Riverside, San Bernardino, Ventura and San Diego. The mera to r , DBE availability for the six counties, is obtained from the California Unified Certification Program (CUCP) data base on certified DBEs. The denominator is all businesses from the U.S. Census Bureau's County Business Patterns (CBP) database located in the six counties. This ratio is then weighted by the federal contract dollars under identified projects and NAfCS codes.

As required by 49 C.F.R. 5 26.45(d), Metro considers whether to make a "step 2" adjustment to reflect the current capacity of DBEs as reflected in the volume of work they have received in recent year's program and the effects of discrimination. To meet this requirement, Metro determines the median goal attainment over previous years. For example, in the adjustment for its Federal Fiscal Year (FFY) 2009 FTA submittal, Metro added one half of the difference between the step 1 estimate and the median attainment level for the past four years. The attainment level is defined as the percentage of commitments achieved on contracts awarded under federally funded projects.

DEE annual goals have been in the single digits

As shown below, dwing the past 6 years, Metro's DBE annual goals have generally been less than 10 percent. A zero goal means that Metro anticipated no federal funds for that year.

DmeZopment of DBE annuccl goals utt'lizing Metro's bidders list could yield different goals

Year/DBE AmuaI. Goal Percentage

49 C.F.R. fj 26.45@)(2), allows recipients to develop DBE annual goals based on the number of businesses that have bid or quoted on prime contracts or subcontracts in

Agency FFY 2005 FFY 2006 1 FFY 2007 1 FFY 2008 / FFY 2009 1 FFY 2010 FTA I 9% FHWA

8% f 13% I 6Yo t 7% I 8% 0% 0% 0% 0% 1 4% 12%

previous years, commonly referred to as a bidders list Metro must create and maintain a bidder's list pursuant to 49 C.F.R. 4 26.1 1. Metro's DEOD has begun to collect infmation on bidders, but has not completed the entry of the information into its database. We were told that efforts to create a bidders list database were curtailed due to stafing limitations. fn view of the limitations of the current approach, the bidder's list should be considered for the goals for FFY 201 1.

Recommendation No. P

Metro's DEOD should prioritize its workload and continue its efforts to create a database of bidders to comply with 49 C.F.R. 9 26.11 a d for possible annual goal setting.

DEOL) Management Response:

Agreed. The auditor suggested that DEOl) shotlld prioritize its workload to allow time for staff to create a database on bidders and assist with annual goal setting. Admhistrative Services has requested temporary assistance to "cutch up" certiJcations which will free up staff to work on the bidder's database. Additionally, DEOD is considering using an external contractor to assist with the certification process which will allow staff the time to complete the database on bidders. If we are succesful in securing the additional help requested to update our certijication list, we anticipate completing the database hy December 22010.

Finding 2: The required change from a race-conscious to a race-neutral DBE program has significantly reduced DBE commitments and utiliiation in Metro's contracts.

Metro rnust report its DBE contract commitment percentages to FTA using the "Uniform Report of DBE Commitmentshards and Payments". Commiitments reflect estimated payments to DBE prime contractors and subcontractors at contract award during the 6 month8 period. As shown on the following page, DBE contract commitments for FFY 2009 are significantly lower than in previous years. No data are shown for DBE participation on FHWA contracts because FHWA does not require such a report to he filed by Metro.

' We note, however, the recent guidance for USDOT recipients from the Transportation Research Board of the National Academy of Sciences strongly recommends against the use of the bidder's list methodology for goal setting, as it may be over- or under-inclusive and will reflect the results of a discriminatory marketplace. It also recommends against the use of Metro's current method, dividing the DBE Directory by County Business Pattern Data because of the use of incomparable data sets that also reflect the results of a discriminatory marketplace. See ''Guidelines for Conducting a Disparity and Availability Studj for the Federal DBE Program", Transportation Research Board of the National Academies, N C W Report, Issue No. 644,2010.

Metro reports DBE contract commitment percentages to FTA on a semi-annual basis, as required by Part 26. Semi-annual reports were combined to show yearly contract commitment percentages.

According to DEOD management, the significant decrease in DBE contract commitments for FFY 2009 is primarily due to the change from a race-conscious to a race-neutral DBE program, which relieved prime contractors of the obligation to make good faith efforts to subcontract to DBEs and therefore permitted more prime contractor self-performance. DEOD also believes that the economic recession contributed to prime contractors performing more of the work themselves. Given the time constraints of this audit, we were unable to verify whether these statements were indeed the cause of the lower commitment percentage in FFY09. In fact, we note that the change from a race-conscious to a race-neutral DBE program occurred in mid-2006.

YeaslContract Com~vlitment Percentage

DBE actual prtrticipation levels in federally-funded completed contracts as repopted by Metro to FTA over the past five years are anticipated to decease significantly in the future

Actual contract payments made to DBE contractors on federally-hded completed contracts over the last five years shows that actual DBE contract participation levels averaged 33 percent, but DBE participation levels are expected to show significant decreases on completed contracts since the change to a race-neutral DBE program. The reported DBE participation percentages are based on actual payments to DBE prime contractors and subcontmctors divided by the final contract value for contracts completed during the reporting period. We note that the majority of the federally-funded completed contracts for the periods s h o w n below were awarded prior to October 2006 when Metro had a race-conscious program in place and required good faith efforts to achieve DBE participation.

Metro reports DBE participation percentages in its "'Uniform Report of DBE Cummitments/Awards and Payments" report to FTA. Shown below are the DBE participation percentages as reported by Metro to FTA for FFY 2005 through 2009.

FEY 2008 11.10%

Agency ETA

FFU 2006 8.95%

FFV 2009 1.45% -

FFY 2005 13.80%

Our fkrther analysis of the federally-funded completed contracts for the periods shown above for those contracts awarded after the change from a race-conscious program to a race-neutral program in October 2006 found that the actual participation percentage decreased significantly as shown on the following page, For FFY 2005, 2006 and 2009, no completed federally-funded contracts awarded after October 2006 were reported.

FFY 2007 10.07%

YeadPaxticipation Percentage

DBE participation for FFY 2009 is anomalously high because 85 percent of the DBE dollars paid were paid to DBE prime contractors.

Agency FTA

FEY2009 61 .92xY

FFY 2007 / FFY 2008 29.61% 29.42%

FFY 2005 23,68%

FFY 2006 20.70%

Year/Participation Percentage FFY 2006 1 FFY 2007 1 FFY 2008 FFY 2009

Furthermore, the decrease in DBE commitments discussed above indicates that hture DBE participation levels will be indeed lower than shown above.

Reconamendart-ion No. 2

Given the significant decrease in the percentage of DBE contract comifnzerats and anticipated participation levels in federally-funded Metro contracts, Metro DEOD should aggressively explore other ways to increase small business participation ia Metto contracts such as expanding Metro's existing SBE program, as disertssed below.

DEOD Management Response:

Agreed Metro will work with County Counsel to provide the most appropriate SBE program allowed under California law. If changes can be made to our mesting program, they will be brought to the Boardfor approval in the 2'd quarter of FYI].

Finding 3: SBE participation in Metro's contracts could be significantly increased through the aggressive expansion of the SBE program.

Since 1997, Metro has administered a race-neutral SBE program to provide greater opportunity for small businesses to compete for Metro's non-federally funded negotiated contracts. For such procurements, Metro establishes SBE contract specific goals based on the level of §BE contracting opportunities identified in the contract's scope of work. Bidders or proposers must meet the SBE goals or demonstrate their good faith efforts to do so, In addition, contractors are required to submit monthly SBE utilization reports and must request approval for substitution of SBE subcontractors.

Metro's SBE eligibility criteria restrict SBE participation in Mdra contracts

Metro's criteria for SBE certification limit compmy gross revenues and owner personal net worth more than the small business programs established by many other local government agencies in the southem California area. Under Metro's program, a SBE's annual average gross receipts averaged over three years cannot exceed $22,410,000 and the owner's personal net worth cannot exceed $250,000. In contrast, the SBA size standards are industry specific (e.g., the standard for heavy civil construction companies is $33.5 million) and the personal net worth limit in the DBE program is $750,000, exclusive of equity in the owner's principal residence and the firm seeking certification. The State of California's small business program caps annual gross sales at $14 million and has no owner net worth limitations. Out of 7 local agencies surveyed, 6 had small

business participation programs. No agency had a personal net worth limit or an annual average gross sales limit that was more restrictive than the State or the SBA standards.

Our analysis shows that if Metro's SBE program's personal net worth limit was increased from $250,000 to $750,000, 106 currently certified DBEs would qualify as SBEs. As of February 2,2010, Metro's internal database contained 429 SBEs and 454 DBEs. Of the 454 DBEs, 106 were not certified as SBEs because the company owner's personal net worth exceeded $250,000. Increasing the SBE net worth cap to $750,000 would permit these 106 DBEs to qualify as SBEs, thereby raising Metro's pool of SBEs from 429 to 53 5, approximately a 25% increase.

Metro should consider expanding the SBE program eligibility criteria by increasing the owner's personal net worth limitation from $250,000 to 5750,000 and adopting the SBA size standards.


Agreed. Metro is currently exploring our ability to raise the PNW requirement on the SBE program from $250,000 to $1,000,000. jElowwer, Metro will review current SBA standads for applicability and will engage discussions with the small Business community on the Metro SBE Program. We will bring program changes to the Board for approval in the Td Quarter ofFYlL

SBE participation in Metro contracts can be significantly increased by expanding the types of contracts eligible for SBE goals

Based on DEOD intemaf reports for the past four years, only about 9% of the dollar value of contracts reviewed by DEOD for subcontract opportunities was available for SBE participation because the program applies only to non-federally funded negotiated procurements. Expanding coverage to state- and locally-funded low bid contracts and federally-funded contracts would significantly increase the opportunities for SBE participation. For example, based on DEOD internal reports, federally-funded contracts comprise 87% of the dollar value of contracts awarded over the past four years.

Requiring bidders and proposers to make good faith efforts to include SBE participation in federally-funded contracts would require FTA approval. We note that a SBE program would be a race-neutral measure that can be implemented in the absence of a disparity study; for example, the San Francisco Metropolitan Transit Authority's SBE program applies to its federally-funded FTA contracts without reference to a study. For state and locally-funded low bid contracts, our research of State of California contracting laws did not find any prohibitions against a SBE subcontracting goal. Moreover, 5 of the 6 agencies we surveyed that administer a SBE program included SBE participation for state- andor locally-hded construction projects as well as negotiated procurements.

Metro plans to expend over $5 billion of local Measure R funds on capital projects over the next 10 years. Expanding the SBE program to include Iow bid construction contracts and negotiated design-build construction contracts would greatly improve SBE contract opportunities.

Re~omrne~dation No. 4

Metro should consider expanding the SBE program to include state- and locally-funded low bid construction contracts and federally-funded contracts.


Agreed* Metro will review SBEprograrn application to state and locally-funded low bid construction contracts as part of the SBE program review with County Cornsel as noted in response to Recommendation No. 2. Changes to our existingpmgram will be brought to the Board for approval in the 2*d quarter of FYII.

Netro established a "shared DBE responsibility" program for DBE participation on Metro contracts

On October 1, 2003, at the direction of the Metro Board, DEOD implemented a "shared responsibility" program for its DBE program. The directors of each Strategic Business Unit were to be held accountable for meeting their unit's DBE goal. The objective was to make the success of the DBE program a "shared responsibility" within the agency, not just the purview oEDEOD. We verified that this program was implemented by obtaining annual shared responsibility reports of DBE utilization prepared by DEOD and submitted to the Board annually for FY2004-06. These reports provided DBE attainment data under the program. According to DEOD management, this program ceased on September 30, 2006 when Metro implemented its race-neutral DBE program.

We believe re-establishing the shared responsibility program for the DBE program and establishing a shared responsibility program for the SBE program could increase DBE and SBE participation in Metro contracts by making everyone, especially the user departments that develop the project parameters and administer contracts day-to-day, accountable for program results.

Recommendation No. 5

Metro should consider re-establishing a shared responsibility program for the DBE program and establishing a shared responsibility program for the SBE program.

DEOD Miz~agemertt Resportse:

,.igreed DEOD will re-establish the shared respsibility program fur both the DBE program and SBE program by making the user departhzeptts accountable for program results. This program will be estczblished with the FYI1 budget.

Finding 4: DEOD has implemented many outreach activities to increase DBE and SBE participation in Metro contracts with limited resources, but more can be done.

Considering that Metro's DEOD has only one individual1' solely dedicated to DBE and SBE outreach efforts, we found such activities were significant. However, we have identified additional outreach efforts or programs that Metro should consider to increase SBE and DBE participation.

Metro DEOD's Outreach Activities

Outreach activities discussed in this report are those designed to increase SBE and DBE participation exclusive of efforts to increase certification of SBE and DBEs. Review of certification outreach is part of a separate audit. Below are some of BEOD's more significant outreach activities:

DEOD hosts a monthly meeting of the Transportation Business Advisory Council (TBAC). TBAC is a 15 member advisory council of multi-cultural business and professional organizations that advocates on behalf of small, disadvantaged, and minority- and women-owned businesses. DEOD provides information on business opportunities at these meetings. The results of these meetings are sent to the members ' organizations. DEOD has organized an annual 'Meet the Rimes" event for the past two years. This event provides access and significant opportunity for small businesses to develop subcontract relationships with large prime contractors. Twenty-two prime contractu~s participated in the 2010 event. The 2010 event, unlike the previous year's event, expanded beyond contractors working on Metro contracts to include firms who had not yet done business with Metro but were involved with other major projects such as the Foothill Extension, Expo LRT, Crenshaw Corridor and the Toll Systems Integrator projects. DEOD holds "Meet the Buyers" events two to three times per year to permit small businesses to meet the buyers and ask questions about doing business with Metro. Businesses may also talk to the appropriate people about how to register as a Metro vendor and become DBE or SBE certified. DEOD hosts monthly workshops for small and disadvantaged businesses. Workshops include information on Metro's diverse business programs and on how to do business with Metro.

lo Although one individual is solely dedicated to outreach efforts, we were told that another DEOD staff person spends about 50% of his/her time on outreach efforts.

DEOD representatives attend vendor fairs of sister agencies to provide information on how to do business with Metro and information on upcoming contract opportunities. DEOD staff has memberships in various contracting organizations and attend membership meetings and events where they provide information on how to register as a Metro vendor and become DBE or SBE certified.

0 DEOD posts bidding opportunities and contract "look aheads" that list upcoming contract work on its website. These opportunities and look aheads are also provided to TBAC. DEOD attends events sponsored by Board members for small businesses to share information on how to become a Metro vendor and how to do business with Metro. DEOD sponsors and participats in training for small and disadvantaged firms conducted by a local contractor. This event has been held annually. The training covers cost estimating and other basic information on how to respond to public bids and requests for proposals (RFPs). DEOD attends events and provides workshops at events that TBAC members conduct, such as the Black Business Procurement fair. DEOD recently presented a surety broker panel on bonding. In response to the challenges faced by small businesses in obtaining bonding, Metro sought to assist these firms by providing information and reputable providers. Metro's Risk Management Department issued a RFP for brokers that were interested in providing surety bonds to small businesses under Metro contracts, and researched the respondents to ensure the f m s were licensed and had no complaints against them. As a result, 6 companies were selected and that list is made available to small businesses.

Additional outreach activities or practices to be considered

We have identified additional activities or practices that may contribute to increasing DBE and SBE participation on Metro's contracts:

Review and revise current contracting policies and procedures to ensure that no unnecessary barriers impede fit11 and fair access to Metro contracting opportunities. These should include:

o Unbundling large contracts to increase opportunities for small firms to compete, where feasible;

o Reducing i n s u m e requirements to the minimum necessary levels; and

o Reviewing qualifications criteria to ensure that small firms are not unduly restricted from bidding or proposing.

Hire supporiive services consultants to implement a DBE and SBE Business Development Program ("BDP") as described in Appendix C to 49 C.F.R. Part 26. While FTA will not provide new funds for this activity, it is a reimbursable

federal expense. Such a program would work directly with DBEs and SBEs to develop their capacities. These services would include, but not be limited to, providing assistance with the following:

o Quality control systems; o Bonding and loan applications; o Bidding and estimating; o Marketing; o Accounting services, including bookkeeping and invoicing; and o Legal services, including contract reviews and tax advice.

Develop and implement new race-neutral SBE initiatives, including:

o A surety bond guarantee program, whereby firms that successfully complete the program are assured access to bonding. This goes beyond providing the names of surety company representatives or making referrals to other agencies' programs, It would require the participation of a surety company, a lender and a consultant to facilitate the participants' access to the sewices. This usually involves developing an assessment of the DBE's and SBE's current work capacities and financial strength, then working to improve those business aspects so that the participating surety and lender have confidence that the firm can perform as required. The City of Baltimore has a successful program that has significantly increased small firms' abilities to perform as prime contractors and large subcontractors.

o A financing program, whereby fimns awarded prime Metro contracts could use the receivables as contract financing from participating lenders.

a A linked deposit program, whereby the Metro's depository banks would agree to make loans to Metro's DBE and SBE prime contractors and subcontractors.

o A mentor-prot6g6 program, whereby mentors would receive credit towards meeting SBE contract goals (and DBE contracts goals should Metro adopt a future race-conscious program) and protkgis would receive support to increase their experience and capacities. Such an initiative is specifically authorized by 49 C.F.R Part 26 and described in its Appendix D and is a reimbursable federal expense.

o Targeted mobilization payments to SBE prime contractors to reduce cash flow barriers; and

o If permitted under state law, adopt a Small Business Enterprise Target Market Program, whereby certain smaller contracts would be set aside for bidding only by SBEs. Such initiatives have received the support of USDOT, so long as they do not provide for any local eligibility criterion or preference.

Recommendation No. 6

iMetro sZlouZd explore implementing additional outreach and support activities described above, given current resources.

DBQD Management Response:

Agreed. Metro witl continue to explore new ways to reach a d to the small bccsiness commanity. Although the FYI1 o~treacla budget has bee^ reduced, we will contincce to tcse TBAC as a valuable resoarca Addi~onalZy? we ure cumsidering a new program where we reward contractors for supplyi~g tts with certifiedfirms. This activity will be ongohag lhrough FYII, but due to financial concerns will probably not show appreciable gains until the end of FYI2.

SBE Survey Results

Based on our SBE program survey results of other agencies, Metro's SBE program was found to be more restrictive. We surveyed seven public agencies that administer SBE programs: Metropolitan Water District (MWD), Port of Long Beach (POLB), San Diego County Water Authority (SDCWA), Port of Los Angeles (POLA), San Francisco Municipal Transportation Agency (SFMTA), County of Los Angeles (LA County), and the Los Angeles Unified School District (LAUSD).

The following agencies were also contacted, but do not currently administer a SBE program: Los AngeXes World Airports, City of Los AngeIes, Orange County Transportation Authority, SCRRtZ, and Santa Barbara Municipal Transit District.

The points below include a narrative summary of key SBE program elements among the 7 agencies surveyed in comparison with Metro's SBE program. For complete survey results, please refer to Attachment A.

* Six of the 7 agencies have SBE participation programs, which include setting annual and/or conh-act-specific SBE goals to increase small business participation on contracts and/or procurements. These include MWD, POLB, SDCWA, POLA, SFMTA, and LAUSD. One agency (L.A. County) has a Local SBE preference program in lieu of a participation program.

Of the 6 agencies with SBE participation programs, MWD, POLB, SDCWA, POLA, and LAUSD include state and locally-funded professional services and construction contracts as being applicable to their SBE Program. These agencies include MWD, POLB, SDCWA, POLA, and LAUSD, Metro does not include state- and locally- funded construction and low bid contracts in its SBE Program.

For one of the 6 agencies- SFMTA- the SBE program applies only to FTA-assisted federal contracts. SFMTA uses its SBE program as a race-neutral means to increase DBE participation such contracts.

Of the 6 agencies with SBE participation programs, 5 (MWD, POLB, SDCWA, POLA, and LAUSD) utilize the SBA small business size standards and one (SFMTA) uses State of California srnafl business size standards. The SBA standards are industry specific by detailed NAICS codes. Small business size standards are based on annual gross sales averaged over the past three fiscal years, number of employees or, in rare instances, both. The State of California small business size standard limits annual average gross sales to $14 million and number of employees to 100.

In conformance with the DBE standards, Metro imposes an absolute cap of $22,410,000 regardless of industry rather than the SBA limit, which may be higher.

None of the 6 agencies with SBE participation programs imposes a personal net worth limit as part of their SBE eligibility criteria. Conversely, Metro imposes a personal net worth limit of $250,000 on its SBE firm owners.

* Three of the 6 agencies with SBE participation programs have mandatory SBE participation requirements, while 3 agencies have a Good Faith Effort (GFE) option if the bidderiproposer does not meet the contract-specific SBE goal. Metro currently allows proposers to submit a GFE if the proposes cannot demonstrate its commitment to meet the contract-specific SBE goal.

llBE Survey Results

Based on our DBE program survey results of other agencies, Metro's DBE annual goals and DBE participation percentages appear to be comparable to other agencies. Eight public agencies, including transit agencies, that administer DBE programs for FTA- assisted contracts were surveyed: California Department of T~ansportation (CalTrans), San Diego Association of Governments (SANDAG), San Diego Metropolitan Transit System (SDMTS), Santa Clarita Transit (SCT), Orange County Transportation Authority (OCTA), San Francisco Municipal Transportation Agency (SFMTA), Santa Barbara Metropolitan Transit District (SBMTD), and the Southern California Regional Rail Authority (SCRIM).

We attempted to contact other agencies, but these agencies were not responsive to our request for specific DBE information: Bay Area Rapid Transit (BART), Los Angeles Department of Transportation (LADOT), and City of Los Angeles (Public Works).

The following agencies were also contacted, but we found that they do not receive FTA or FHWA litnds or do not administer their own DBE Programs for ETA or FHWA assisted contracts: Metropolitan Water District (MWD), San Diego County Water Authority, Port of Los Angeles (POLA), and the Los Angeles Unified School District (LAUSD).

The agencies were asked to provide the following specific information relative to their DBE program. Some agencies provided detailed information, and some provided partial information.

o Annual FTA and FWWA goals for FFYs 2005 through 2010; o The dollar value of cumulative contract awards applicable to the DBE annual

goals and o DBE utilization on FTA and FHWA assisted contracts for FFYs 2005 through

2009.

The agencies were also asked to submit copies of their annual goal submittals to the FTA andor FHWA so that we could compare their agency goal-setting methodology with Metro's goal-setting methodology.

The points below provide a summary of the annual DBE goals and DBE utilization percentages of other agencies in comparison to Metro. For complete survey results, please refer to Attachment £3.

* Annual DBE goals for FTA-assisted contracts ranged from 1.6% (SDMTS) to 29% (SFMTA); Metro's annual DBE goals ranged from 6% to 13%.

* Annual DBE goals for FHWA-assisted contracts ranged fiom 0.42% (OCTA) to 16.8% (SCT); Metro's annual DBE goals ranged from 4% to 12%.

DBE utilization on FTA-assisted contracts ranged from 0.0 1% (SBMTD) to 84.7% (OCTA - partial data from three completed contracts); Metro's DBE utilization was 20.7% to 29.4%.

* DBE utilization on FWWA-assisted contracts ranged from 2.1% (SANDAG) to 33.3% (OCTA - partial data and median DBE participation aver multiple years); Metro does not report FHWA utilization data.

Lastly, several agencies used total contract dollars subject to FTA or FHWA assistance, rather than the percentage of FTA or FNWA funds, in weighting the annual goals. Metro correctly applied the percentage of federal funds, in each work category or NAICS code, as the weighting factor for setting its annual goals.

SURVEY OF AGENClES WlTH SBE PROGRAMS ATTACHMENT A

Page l of 3

Name of Agency LOS ANDELES COUNTY FOS ANGEFES UNIFIED SCHOOL DISTRICT (LAUSD}

METROPOLITAN TRANSPORTATLON AUTHORIN {MTAI

FY 2010: 25%

FY 2009: 1'5% 18% (25% 11% \2S% 29% 25%

FY 2008: f 15% 18% '25% It% 125% 25% 25%

Local Small Business Enterprise Program

Preference: certified LSBE gets 5% bid preference on contracts, however, bid preference cannot exceed 050%. FY 2002

Name of Prosram 'Smail Business Enterprise (SBE) Program

FY 2007: 115%

FY 2006: 115%

FY 2005: 1'5%

METROPOLITAN WATER DISTRICT {MWD)

'Small Business Program

participation program - agency sets annual andlor contract-specific SBE goals

FY 2004

Type of Program {set-aside - l ist Oh), prefennce (flst YO), participation, other (define)

SBE DefinitionlEligibilrly Criteria:

FederaUSBA, State, Other (explain):

SAN DIEGO COUNTY WATER AUTHORITY (SDCWA)

PORT OF LONG BEACH (POLE)

RegionallSmall Business Program

participation program - agency sets annual andlor contract-specific SBE goals

FY 2002

participaiwn program - agency sets annual andior contract-specific SBE goals

18%

18% 25%

FederaUSBA size standards wladdional limlations

Small Business Enterprises1 Very Small Business Enterprises (SBWSBE) Program participation program - agency sets annual andlor contract-specific SEE ~ o a l s

FY 2005 Lorn1 B State-assisted construction and professional services contracis

Is there a geographic criterion! requirement for bidderslproposers?

SBE Program

participation program - agency sets annual andlor contract- specific SBE goals

PI 2007

FTA-assisted construction and professional services contracts and FTA-assisted purchases of durable goods

Any contracVpurchase NOT assiStecl FTA funds

PORT OF LOS AHGELES [POLA)

SCOOP - Subcontractor Outreach & Opportunities Program

participation program - agency sets annuat andlor cantcad-specilic SBE goals

FY 1999

Local & State-assisted construction and professional sewices ConIracts

Federafly-assisted contracts

FlsCal year of pragram's inception \FY 1997

'Local 8 State-assisted cons~nrction and professional semices conlrects, now professional services contracts, and purchases of products, materials B supplies.

2596

No

23%

.Reciprocity witb Any Other Certifying Agencies? tf yes, whlch onw?

SAN FRANCISCO MUNICIPAL TRANSPORTATION AGENCY ISFMTA)

'SmaW Business Program

participation program - agency sets annual andlor contract-speck SBE goals

FY 2007

Local B State-assisted construction and professional sewices contracts

Lease agreements, federal grants .% federaly-assisted contracts, and purchases of materialslsuppties

What types of procurements are applicable to the Program?

Local 8 State-asslsted construction '(acai & State-assisted and professional services contracts 'construction and pmfescional

I

no

1 No INo

'Local B Siate-assisted professional services contracts

n/a - do not receive federal assistance

National contracts, purchase card purchases, non-agreement purchases (c$SK), and federa\ procurements

18%

23%

No

25%

No

services contracts, non- professional services contracts, and purchases of produc~s. materials & supplies. Federally-assisted contracts, contractd procurements under Ciy-wide contracts and P.0.s.. some highly

tAUSD does not receive federak funds. so all procurements are applicable to their Small Business Wogram.

25% NIA - do not set participation goals

specialized Port contracts

NON-APPLICABLE IFHWAIFTA-~SS~S~~~

20%

nla

no

Procurements:

Yes -firm mud reside in LA County f No for one year to be etigible for "locas' component of Locat SEE preference

contraclstprproturements; IocaUState funded con$tmction contracts

21 46

26%

I FederailSBA size standards (atso see "reciprocity with other certifying agencies")

Accepts any State of Ck or federal certification (State small & microbusiness certification, CUCP DEE certification, SEA smal business certification)

+.-

FederaVSBA size standards

Accepts State of CA Microbusiness and DVBE certification (biddef~lproposets can meet SBE

nfa

FederaKSBA size standards for SEE; State Micmbusiness size standards for VSBE

- firm must becertified through the Port

FederaVSBA size standards

Port of LA does not have its own certification system - firm may submit other agencfs certification that uses federalJSBA size standards or submit an amdavit confirming its SEE status.

goals with an SEE or DVBE firm)

data not provtded

25%

25%

FederaltSBA size standards State of CA S3E size standards. Firm can be Slate of CA certified

State of California S3E size standards

SBE or Microbusiness, DBE certified by CUCP, or Local business under CBy &County of San Francisco, but firm's gross sales cannot exceed State limit ($14M). Accepts State of CA $BE and Microbusiness certifications, as well as CUCP DEE certifications, but firm must also sign an affidavit.

Uses State of CA SBE certification for SBE portion of Local SBE preference

'LAUSD accepts 5BE or DEE certifications from any agency, including the State of CA

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SURVEY OF AGENCIES WITH SBE PROGRAMS ATTACHMENT A

Page 3 of 3

LOS ANGELES UNIFIED SCHOOL DISTRICT ltnUSD)

Name o f Agency METROPOLITAN TRANSPORTATION AUTHORiTY (MSAI

1 Primelsubcontractor network;ng/matching

METROPOLITAN WATER DISTRICT (MWO}

PORT OF LOS ANGELES (POLA)

Yes - on a project-specific basis, i.e,, over the last two years, held six prlmekub networkinglmatching events for the subway project.

Small business boot cemp

t

Mentorlprotegi program

Agency mentoring progtam

Other Pis!)

L

PORT OF LONG BEACH (POLB)

SAN FRANCISCO MUNICIPAL TRANSPORTATlON AGENCY ISFWITA)

'Periodicaliy hod project- specific primelsub neworking meetings. Lest two events %ere in 2008.

SAN DIEGO COUNTY WATER AUTHORITY (SDCWA)

DonP sponsor, but do attend other agency-sponsored events within Los Angeies County, such as www.businessmatchmaking.com.

LOS ANGELES COUNTY

annually "Meet the Primes" - twice 'Conned 2 Met. presentations by ' 'Each training forum begins

t no

MWD staffte~ecs, primelsubcontractor networking, exhibillon booths hosted by MWD and other invited agencies. Also, primelsub matching events are omred through MWD's Business Development Series.

with f hour of primelsubcontractu~ networking.

Small business sk iL training in see above no

no

no

The County also has a Smal! Business Commission (SBC). The

various disciplines above and beyond contracting with the SDCWA: smafl biz marketing, bidding. estimating, bonding 8 insurance, internet-based classes, etc.

Mentor-Protbgt! Program for construction contractors, in conjunction with Association of Generaf Contractors & City of San Diego. SrnaIl business participants are limited fo firms within San Diego County. Mentors and Proteges agree on ONE area in which they'il work together, and then set goals together fur a one-year period. At their joint request and SDCWA's approval, they can exlend for an additional year to wrk on another area togelhef. SDCWA has a pilot mentoring program for consultants. SmaD business participants must be located in San Diego County, must have completed at ieast three 'Gel the SCOOP" trahring classes, must be aMs to provlde services as

1

Boot camp was Iaunched in 2003, to assist interested contractors in teaming about public contracting. Geared toward contractors that never bid on pubk works; resulted in cultlvating a new pool of contractors who had never done business with public agencies. Boot camps are held twlce per year h three fotal workshops locations simultaneously per year. = 48

Contractor Academy was launched in 2008 - 25 workshops per year: goal is to educate contractors on IAUSD procedures, i.e., payment rppticatjon process, change orders. informal cuntracts. epayment process for lob order contracting, scheduling, safety, best practims, etc.

9oneyWarks was launched in '200612007- foruses on financial

no

subconsultants in A & E disciplines, and must be regtstered in SDCWA's vendor & smatl business database - The Network.

\ \

no Not yet, but thls is inctuded in the N 2020 Program goal% Wil4 be implementing before the end of this fiscal year.

"Meet the Buyers" - twice annually

~ o s t monthly TBAC

no

Board of County Supervisors created the SBc, which is an appointed body made up mostly of small businesses, to suppod, advise and recommend on small business policies/issues. The SBC meets quarterly.

In0

literacy. Five workshops are held once annually, to help contractors build capacity, clean uplimprove their credit, comply with federaYState tax regulations, et6.

meetings: create "upcoming apportunities look-ahead" and share at TBAC meetings; emphasize NAlCS codes needed for upcoming projects.

MWD-sponsored mentoring (coaching) program. ModuIes include: Orientation. Technical Kno-#ledge Enhancement. One-on- One Mentoring, and tntroduction lo MWD OpportunAies. Also, the Business Deve3opment Series is offered to SBEs r h o are certified in the Netconnect database and who have participated in the Mentoring Program. The Business Development Series raises the visibifity of SBEs to MWD buyers and prime contractors.

/

'no

SURVEY OF AGENCIES WITH FTNFHWA DBE PROGRAMS ATTACHMENT 6

L A . County San Dlego San Diego San Francisco Santa Barbara Metropolitan California Dept. Association of Metropolitan City of Santa Clarital Orange County Municipa! Metropolitan

Transportation of Transportation Governments Transit System Santa Ctarita Transportation Transportation Transit District SCRRA

FY 2010 Goal 8% 4% 6% 1.72% 11% 8% 22% 2% 6%

FY 2009 Goal

FY 2008 Goal

FY 2007 Goal

FY 2006 Goal

FY 2005 Goal 4% 12.7% 13.8% 7.7% * data unavailable

29% I .9% 8%

25% 3.7% f3%

25% 6Oh 1'l0h

26% 6% 11%

26% data unavailable 10%

* Same goal set for FfSZ and FHWA for both years

'* Same project as in N 2005; did not bid in 2005

L.A. County San Diego San Diega San Francisco Santa Barbara Metropolitan California Dept. Association of Metropolitan City of Santa Clarital Orange County Municipal Metropolitan

Transportation of Transporfation Governments Transit System Santa Clarita Transportation Transportation Transit District SCRRA

FY 2010 Goal

FY 2009 Goal

FY 2008 Goal

FY 2007 Goal

FY 2006 Goal

FY 2005 Goal

13,5% (6.75% RN, 5% (1% RN, 13% (9.4% RN, 6% 6.75'ii RC) 4% RC) 0% * 3.6% RC)

13.5% (6.75% RN, 6% (6% RN, 2 2% 6.75'' RC) 0% RC) 0% * 15.3%

13.5% (6.75% RN, 4% 6.75Oh RC) 60/0 0% *

7.1% (5.6% RN, 0% 10.5% 1.5% RC) 0% *

11.4% 16% RN, 0% 10.5% 5.4% RC) 8.2%

9.5% (3.1% RN, NfA - NO FHWA NIA - NO FHWA 0% 6.4% RC) FUNDING FUNDING

7% data unavailable data unavailable

7.7% * data unavailable data unavailable

7.7% " data unavailable data unavailable

* Stopped receiving " FHWA assistance -

funds transferred to SANDAG

' Same goal set for FTA anei FHWA for both fiscal years

Page I of 2

Attachment €3

Transportation Business Thursday, March 25, 2010 Advisory Council

American Indian Chamber of Commerce of California

Asian American Dear MS. Ruthe Holden, CPA ClSA Architects & Engineers Chief Auditor, Management Audit Services Association

Asian Business TBAC is in receipt of the 2 Board reports, one for Goal Development Association Process - audit done by Thompson, Cobb, Bazilio & Associates and one for

Certification/Outreach programs - audit done by Macias Consulting Group. Black Business Association

Chinese American Construction Professionals

Greater Los Angeles African America11 Cl~amnber of Cominerce

Latin Business Association

Latino Business Contractors of Greater California Associatio~~

Latino Business Chamber of Cominerce

National Association of Minority Contractors

National Association of Women Business Owners - Los Angeles

Regional Hispanic Chamber of Commerce

Society of Hispa~iic Professional Engineers -- Los Angeles Chapter

In general TBAC feels the audit reports are fine. They show that: I Metro has problems of outreach and certification which are important

elements of a DBE or SBE program. 2. The recommendations tend to support that adequate staff is needed 3. Metro's certification model needs to be reorganized,

TBAC members have read the reports and generally are in favor of the recommendations with a few modifications as follows:

1, The Audit recommendations are implemented as immediate as possible.

2. That a Metro staff reports and updates to TBAC monthly on the progress of all of the recommendations.

3. That Metro increases the personal maximum net worth of the owner requirement to $1 million instead of the proposed $750,000. The $750,000 maximum net worth requirement is based on the US SBA program, The SBA is already in the process of re-evaluating the net worth requirement.

4. That such SBE net worth change is expedited and not wait until 201 1 as many contracts will be awarded in the immediate future in 2010.

5. That Metro accepts SBE certifications from other agencies within the State including California's DGS small business certification.

TBAC is looking forward to working with Metro in the improvement of participation of small minority and disadvantaged businesses in DBE and SBE programs. Let's work together towards that goal.

women construction Res~ecffuIJ Y Yours; Owners & Executives USA d W & @ ZLfb Women's Transportation Coalition Lucia Tam

Metro TBAC Chair Women's Transportation 626-221 -2888 Seminar

LOS Angeles Cotlnty Metropolitan Transportation Authority

Metro

one los gooiz-zg52 metro

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