Appendix A to Part 26 - Guidance Concerning Good Faith Efforts
49:1.0.1.1.19.8.3.1.11 : Appendix A
Appendix A to Part 26 - Guidance Concerning Good Faith Efforts
I. When, as a recipient, you establish a contract goal on a
DOT-assisted contract for procuring construction, equipment,
services, or any other purpose, a bidder must, in order to be
responsible and/or responsive, make sufficient good faith efforts
to meet the goal. The bidder can meet this requirement in either of
two ways. First, the bidder can meet the goal, documenting
commitments for participation by DBE firms sufficient for this
purpose. Second, even if it doesn't meet the goal, the bidder can
document adequate good faith efforts. This means that the bidder
must show that it took all necessary and reasonable steps to
achieve a DBE goal or other requirement of this part which, by
their scope, intensity, and appropriateness to the objective, could
reasonably be expected to obtain sufficient DBE participation, even
if they were not fully successful.
II. In any situation in which you have established a contract
goal, Part 26 requires you to use the good faith efforts mechanism
of this part. As a recipient, you have the responsibility to make a
fair and reasonable judgment whether a bidder that did not meet the
goal made adequate good faith efforts. It is important for you to
consider the quality, quantity, and intensity of the different
kinds of efforts that the bidder has made, based on the regulations
and the guidance in this Appendix.
The efforts employed by the bidder should be those that one
could reasonably expect a bidder to take if the bidder were
actively and aggressively trying to obtain DBE participation
sufficient to meet the DBE contract goal. Mere pro forma efforts
are not good faith efforts to meet the DBE contract requirements.
We emphasize, however, that your determination concerning the
sufficiency of the firm's good faith efforts is a judgment call.
Determinations should not be made using quantitative formulas.
III. The Department also strongly cautions you against requiring
that a bidder meet a contract goal (i.e., obtain a specified
amount of DBE participation) in order to be awarded a contract,
even though the bidder makes an adequate good faith efforts
showing. This rule specifically prohibits you from ignoring bona
fide good faith efforts.
IV. The following is a list of types of actions which you should
consider as part of the bidder's good faith efforts to obtain DBE
participation. It is not intended to be a mandatory checklist, nor
is it intended to be exclusive or exhaustive. Other factors or
types of efforts may be relevant in appropriate cases.
A. (1) Conducing market research to identify small business
contractors and suppliers and soliciting through all reasonable and
available means the interest of all certified DBEs that have the
capability to perform the work of the contract. This may include
attendance at pre-bid and business matchmaking meetings and events,
advertising and/or written notices, posting of Notices of Sources
Sought and/or Requests for Proposals, written notices or emails to
all DBEs listed in the State's directory of transportation firms
that specialize in the areas of work desired (as noted in the DBE
directory) and which are located in the area or surrounding areas
of the project.
(2) The bidder should solicit this interest as early in the
acquisition process as practicable to allow the DBEs to respond to
the solicitation and submit a timely offer for the subcontract. The
bidder should determine with certainty if the DBEs are interested
by taking appropriate steps to follow up initial solicitations.
B. Selecting portions of the work to be performed by DBEs in
order to increase the likelihood that the DBE goals will be
achieved. This includes, where appropriate, breaking out contract
work items into economically feasible units (for example, smaller
tasks or quantities) to facilitate DBE participation, even when the
prime contractor might otherwise prefer to perform these work items
with its own forces. This may include, where possible, establishing
flexible timeframes for performance and delivery schedules in a
manner that encourages and facilitates DBE participation.
C. Providing interested DBEs with adequate information about the
plans, specifications, and requirements of the contract in a timely
manner to assist them in responding to a solicitation with their
offer for the subcontract.
D. (1) Negotiating in good faith with interested DBEs. It is the
bidder's responsibility to make a portion of the work available to
DBE subcontractors and suppliers and to select those portions of
the work or material needs consistent with the available DBE
subcontractors and suppliers, so as to facilitate DBE
participation. Evidence of such negotiation includes the names,
addresses, and telephone numbers of DBEs that were considered; a
description of the information provided regarding the plans and
specifications for the work selected for subcontracting; and
evidence as to why additional Agreements could not be reached for
DBEs to perform the work.
(2) A bidder using good business judgment would consider a
number of factors in negotiating with subcontractors, including DBE
subcontractors, and would take a firm's price and capabilities as
well as contract goals into consideration. However, the fact that
there may be some additional costs involved in finding and using
DBEs is not in itself sufficient reason for a bidder's failure to
meet the contract DBE goal, as long as such costs are reasonable.
Also, the ability or desire of a prime contractor to perform the
work of a contract with its own organization does not relieve the
bidder of the responsibility to make good faith efforts. Prime
contractors are not, however, required to accept higher quotes from
DBEs if the price difference is excessive or unreasonable.
E. (1) Not rejecting DBEs as being unqualified without sound
reasons based on a thorough investigation of their capabilities.
The contractor's standing within its industry, membership in
specific groups, organizations, or associations and political or
social affiliations (for example union vs. non-union status) are
not legitimate causes for the rejection or non-solicitation of bids
in the contractor's efforts to meet the project goal. Another
practice considered an insufficient good faith effort is the
rejection of the DBE because its quotation for the work was not the
lowest received. However, nothing in this paragraph shall be
construed to require the bidder or prime contractor to accept
unreasonable quotes in order to satisfy contract goals.
(2) A prime contractor's inability to find a replacement DBE at
the original price is not alone sufficient to support a finding
that good faith efforts have been made to replace the original DBE.
The fact that the contractor has the ability and/or desire to
perform the contract work with its own forces does not relieve the
contractor of the obligation to make good faith efforts to find a
replacement DBE, and it is not a sound basis for rejecting a
prospective replacement DBE's reasonable quote.
F. Making efforts to assist interested DBEs in obtaining
bonding, lines of credit, or insurance as required by the recipient
or contractor.
G. Making efforts to assist interested DBEs in obtaining
necessary equipment, supplies, materials, or related assistance or
services.
H. Effectively using the services of available minority/women
community organizations; minority/women contractors' groups; local,
State, and Federal minority/women business assistance offices; and
other organizations as allowed on a case-by-case basis to provide
assistance in the recruitment and placement of DBEs.
V. In determining whether a bidder has made good faith efforts,
it is essential to scrutinize its documented efforts. At a minimum,
you must review the performance of other bidders in meeting the
contract goal. For example, when the apparent successful bidder
fails to meet the contract goal, but others meet it, you may
reasonably raise the question of whether, with additional efforts,
the apparent successful bidder could have met the goal. If the
apparent successful bidder fails to meet the goal, but meets or
exceeds the average DBE participation obtained by other bidders,
you may view this, in conjunction with other factors, as evidence
of the apparent successful bidder having made good faith efforts.
As provided in § 26.53(b)(2)((vi), you must also require the
contractor to submit copies of each DBE and non-DBE subcontractor
quote submitted to the bidder when a non-DBE subcontractor was
selected over a DBE for work on the contract to review whether DBE
prices were substantially higher; and contact the DBEs listed on a
contractor's solicitation to inquire as to whether they were
contacted by the prime. Pro forma mailings to DBEs requesting bids
are not alone sufficient to satisfy good faith efforts under the
rule.
VI. A promise to use DBEs after contract award is not considered
to be responsive to the contract solicitation or to constitute good
faith efforts.
[79 FR 59600, Oct. 2, 2014]