METRO

CONTRACT COMPLIANCE MANUAL (FHWA)

PRO FORM 087B

REVISION DATE: 04.10.2026

DIVERSITY & ECONOMIC OPPORTUNITY DEPARTMENT

SECTION 100 - DISADVANTAGED BUSINESS ENTERPRISE PROGRAM

The U.S. Department of Transportation (DOT) issued an Interim Final Rule (IFR) revising the Disadvantaged Business Enterprise (DBE) regulations at 49 C.F.R. Part 26, effective October 3, 2025. During this transition period, certain provisions in this Contract Compliance Manual related to DBE contract goals, DBE enforcement, and counting of DBE participation are suspended. To the extent provisions are not impacted by the application of the IFR, such provisions shall remain effective (for example, prompt payment and subcontractor termination and substitution). LACMTA is reviewing and will amend this Contract Compliance Manual for compliance with the IFR as soon as practicable. All provisions contained in this Contract Compliance Manual shall be administered in accordance with applicable federal law, including the IFR and 49 C.F.R. Part 26, as may be amended.

100 FEDERAL OBLIGATION:

This contract is subject to the requirements of Title 49, Code of Federal Regulations, Part 26, Participation by Disadvantaged Business Enterprises in Department of Transportation Financial Assistance Programs.

101 POLICY STATEMENT:

It is Metro’s policy to provide equal opportunity for Disadvantaged Business Enterprises (DBE) firm, as defined in Part 26, receive and participate on DOT-assisted contracts. It is also our policy:

A. To ensure nondiscrimination in the award and administration of DOT-assisted contracts;

B. To create a level playing field on which DBEs can compete fairly for DOT-assisted contracts;

C. To ensure that Metro’s DBE program operates in a nondiscriminatory manner and without regard to race or sex, while maximizing efficiency of service;

D. To ensure that only firms that fully meet 49 CFR Part 26 eligibility standards are permitted to participate as DBEs;

E. To help remove barriers to the participation of DBEs in DOT-assisted contracts; and F. To assist the development of firms that can compete successfully in the market place outside the DBE program.

102 INTERPRETATION:

Any conflict, error, omission or ambiguity which may arise between these instructions and the federal regulations or the above mentioned DBE Program shall be resolved first in favor of the federal regulation and second the DBE program.

103 INCORPORATION OF THE DBE PROGRAM INTO THE CONTRACT:

49 CFR Part 26 and the DOT approved DBE Program adopted by Metro are hereby incorporated by reference into this contract as though set forth in full. Implementation of this program is a legal obligation and failure to carry out its terms shall be treated as a material breach of this contract. The Contractor and all project subcontractors are subject to the requirements of the DBE Program and to all requirements of the DOT DBE program found at 49 CFR Part 26. Metro will investigate any allegation of the Contractor, subcontractor or any other participating business failing to carry out the requirements of this DBE Program. Should this investigation find merit in the allegations, Metro may pursue legal and/or contractual remedies and/or impose sanctions as provided for in 49 CFR Part 26. In appropriate cases, Metro may also refer the matter to proper Federal authorities for enforcement under 18 U.S.C. 1001 and/or the Program Fraud Civil Remedies Act of 1986 (31 U.S.C. 3801 et seq.).

The Diversity & Economic Opportunity Department (DEOD) Contract Compliance Manual (FHWA) is a component of this contract. It describes the DBE Program requirements applicable to this Contract. The provisions and enforcement mechanisms set forth in the Contract Compliance Manual are in addition to all other provisions and enforcement mechanisms available to Metro set forth elsewhere in this Contract. The Contractor’s compliance with the DBE Program requirements will be monitored by Metro throughout the life of the contract.

104 GENERAL CONDITIONS AND SPECIAL PROVISIONS:

The General Conditions and Special Provisions of the subject Contract are incorporated by reference.

105 METRO ASSURANCE:

In accordance with 49 CFR Part 26, it is the policy of Metro to ensure that no person is excluded from participation, denied benefits, or otherwise discriminated against in connection with the award and performance of a contract on the basis of race, color, sex, religion or national origin. Metro will not directly or indirectly, through contractual or other arrangements, use criteria or methods of administration, that defeat or substantially impair the objectives of the DBE Program on the basis of an individual’s race, color, sex, religion or national origin.

106 MISREPRESENTATION:

Suspension or debarment proceedings may be initiated against any firm that:

Attempts to participate in a DOT-assisted program as a DBE and does not meet the eligibility criteria stated in the Certification Standards for DBE programs; or on the basis of false, fraudulent or deceitful statements; or under circumstances indicating a serious lack of business integrity or honesty.

Attempts to use false, fraudulent or deceitful statements or representations in order to meet its DBE administrative requirements; or uses another firm that does not meet the DBE eligibility criteria stated in the certification standards.

In accordance with 49 CFR Part 26.107 DOT may take action itself through its Fraud and Civil Remedies Program or refer the matter to the Department of Justice for prosecution under appropriate criminal statutes.

Metro may refer any false, fraudulent, or dishonest conduct to the attention of the Department of Transportation in connection with the DBE program, so that DOT can take the steps (e.g., referral to the Department of Justice for criminal prosecution, and/or referral to the DOT Inspector General, action under suspension and debarment or Program Fraud and Civil Penalties rules).

107 AUDIT AND INSPECTION:

The Contractor shall maintain records of all DBE subcontractors and suppliers including names, business addresses, and the total dollar amounts actually paid through the term of the contract for five years after contract completion. Metro reserves the right to audit records and inspect the facilities of its contractors or any subcontractor (at any tier) for the purpose of verifying the DBE participation and/or adherence to the DBE program requirements. Contractors and subcontractors shall permit access to their records at the request of Metro. Notice is hereby given that state, local, and federal authorities may initiate or cooperate with Metro in auditing and inspecting such records.

SECTION 200 - DBE PARTICIPATION

200 OVERALL DBE GOAL:

To comply with 49 CFR Part 26, Metro has set a triennial overall goal for DBE participation on its federally assisted contracts. The overall goal applies to federal-aid funds Metro expects to expend for the fiscal year. Metro will strive to meet its overall goal through race conscious and race neutral measures.

Metro supports the use of race conscious and race neutral measures to facilitate participation of DBEs and other small businesses, and encourages prime contractors to subcontract portions of their work that they might otherwise perform with their own workforce. To ascertain whether the overall DBE goal is being achieved, Metro will track payments made to all DBE firms performing work eligible for credit.

201 NOT USED:

202 DBE COMMITMENT:

The level of DBE participation, which the Contractor commits to at the time of contract award, is the commitment of record and is included in the Special Provision section of the contract. DBE participation obtained through contract goals or race-neutral measures will be monitored and enforced though the life of the contract.

203 COMMERCIALLY USEFUL FUNCTION (CUF):

DBEs must perform a commercially useful function (CUF) under 49 CFR 26.55 when performing work or supplying materials listed on the DBE Commitment form. The DBE value of work will only count toward the DBE commitment if the DBE performs a CUF. A DBE performs a CUF when it is responsible for execution of the work on the contract and is carrying out its responsibilities by actually performing, managing, and supervising the work involved. Additionally, the DBE must also be responsible, with respect to materials and supplies used on the contract, for negotiating price, determining quality and quantity, ordering the material and installing (where applicable), and paying for the material itself.

A DBE does not perform a commercially useful function if its role is limited to that of an extra participant in a transaction, contract, or project through which funds are passed in order to obtain the appearance of DBE participation. In determining whether a DBE is such an extra participant, Metro must examine similar transactions, particularly those in which DBEs do not participate.

If a DBE does not perform or exercise responsibility for at least 30% of the total cost of its contract with its own work force, or the DBE subcontracts a greater portion of the work of a contract than would be expected on the basis of normal industry practice for the type of work involved, one must presume that it is not performing a commercially useful function.

The prime contractor must perform CUF evaluation for each DBE working on a federal-aid contract, with or without a DBE goal. This also includes DBE truckers, suppliers, and other vendors where a subcontract is not required. For contracts between the first-tier DBE and the second-tier DBE, the first tier DBE must perform the CUF evaluation on the second-tier DBE following the same procedure described in this section. Perform a CUF evaluation at the beginning of the DBE’s work and continue to monitor the performance of CUF for the duration of the project.

The prime contractor must provide written notification to Metro at least 15 days in advance of each DBE's initial performance of work or supplying materials for the Contract. The notification must include the DBE's name, work the DBE will perform on the contract, and the location, date, and time of where their work will take place.

Within 10 days of a DBE initially performing work or supplying materials on the Contract, the Contractor must submit to Metro, the initial evaluation and validation of DBE performance of a CUF using LAPM 9-J: Disadvantaged Business Enterprise Commercially Useful Function Evaluation. Include the following information with the submittal:

• Subcontract agreement with the DBE

• Purchase orders

• Bills of lading

• Invoices

• Proof of payment

The prime contractor must monitor all DBE’s performance of CUF by conducting quarterly evaluations and validations throughout their duration of work on the Contract using LAPM 9-J: DBE Commercially Useful Function Evaluation. The contractor must submit to Metro these quarterly evaluations and validations by the 5th of the month for the previous three months of work.

The contractor must notify Metro immediately if the contractor believes the DBE may not be performing a CUF.

Metro will verify DBE’s performance of CUF by reviewing the initial and quarterly submissions of LAPM 9-J: DBE Commercially Useful Function Evaluation, submitted supporting information, field observations, and through any additional evaluations. Metro will evaluate DBEs and their CUF performance throughout the duration of a Contract.

Metro will provide written notice to the Contractor and DBE at least two (2) Business Days prior to any evaluation. The Contractor and the DBE must participate in the evaluation. Upon completing the evaluation, Metro must share the evaluation results with the Contractor and the DBE. An evaluation could include items that must be remedied upon receipt. If Metro determines the DBE is not performing a CUF, then the Contractor must suspend performance of the noncompliant work.

The prime contractor and DBEs must submit any additional CUF related records and documents within five (5) Business days of Metro’s request, such as:

• Proof of ownership or lease and rental agreements for equipment

• Tax records

• Employee rosters

• Certified payroll records

• Inventory rosters

Failure to submit required DBE Commercially Useful Function Evaluation forms or requested records and documents can result in withholding of payment for the value of work completed by the DBE.

204 VIOLATION OF COMMERCIAL USEFUL FUNCTION:

If the contractor and/or Metro determine that a listed DBE is not performing a CUF in performance of their DBE committed work, immediately suspend performance of the noncompliant portion of the work. Metro may deny payment for the noncompliant portion of the work. Metro will ask the Contractor to submit a corrective action plan (CAP) to Metro within five (5) Business Days of the noncompliant CUF determination. The CAP must identify how the contractor will correct the noncompliance findings for the remaining portion of the DBE’s work. Metro has five (5) Business Days to review the CAP in conjunction with the prime contractor’s review. The contractor must implement the CAP within five (5) Business Days of Metro’s approval. Metro will then authorize the prior noncompliant portion of work for the DBE’s committed work.

If corrective actions cannot be accomplished to ensure the DBE performs a CUF on the contract, then the Contractor may have good cause to request termination and replacement of the DBE. Metro decisions on CUF matters are subject to review by the DLAE. CUF determinations are not subject to administrative appeal to Metro, Caltrans and USDOT.

205 USE OF JOINT CHECKS

A joint check may be used between the Contractor or lower-tier subcontractor and a DBE subcontractor purchasing materials from a material supplier if the contractor obtains prior approval from Metro for the proposed use of joint check.

To use a joint check, the following conditions must be met:

• All parties, including the Contractor, must agree to the use of a joint check

• Entity issuing the joint check acts solely to guarantee payment

• DBE must release the check to the material supplier

• Metro must authorize the request before implementation

• Any party to the agreement must provide requested documentation within 10 days of Metro's request for the documentation

• Agreement to use a joint check must be short-term, not to exceed 1 year, allowing sufficient time needed to establish or increase a credit line with the material supplier.

A request for a joint check agreement may be initiated by any party. If a joint check is used, the DBE remains responsible for all elements of 49 CFR 26.55(c)(1). Failure to comply with the above requirements disqualifies DBE participation and results in no credit and no payment to the Contractor for DBE participation.

A joint check may not be used between the Contractor or subcontractor and a DBE regular dealer, bulk material supplier, manufacturer, wholesaler, broker, trucker, packager, manufacturer’s representative, or other persons who arrange or expedite transactions.

206 DBE’S WORK FORCE:

The DBE shall solicit, hire, place on its payroll, direct, and control all workers performing work under its contract. The DBE owner or its superintendent shall, on a full-time basis, supervise and control the work of the contract. The DBE may with the prior written consent of Metro augment its work force with personnel of another firm. Metro shall approve the request in writing only when specialized skills are required and the use of such personnel is for a limited time period.

The DBE’s utilization of labor, supervisory personnel, equipment and material in the performance of the subcontract must be consistent with industry standards and demonstrate that the DBE (and not some other business entity) is actually performing the contracted scope of work. A DBE does not perform a CUF when it associates too closely with another business entity’s work force, including the use of equipment or materials.

207 COUNTING DBE PARTICIPATION:

Metro will count DBE participation, for firms performing a CUF, in accordance with 49 CFR Part 26.55. When a DBE participates in a contract, Metro will count only the value of the work actually performed by the DBE toward the DBE contract goal(s).

A. DBE as the Prime Contractor: 100% DBE credit for that portion of the work performed by the DBE’s own forces, including the cost of materials and supplies, for a construction contract, obtained by the DBE for the work of the contract, including supplies purchased or equipment leased by DBE (except supplies and equipment the DBE subcontractor purchases or leases from the prime contractor or its affiliates). When a DBE subcontracts part of the work of its contract to another firm, the value of the subcontracted work may be counted toward DBE goals only if the DBE’s subcontractor is itself a DBE. Work that a DBE subcontracts to a non-DBE firm does not count toward DBE contract goal(s).

B. DBE as a Joint Venture Contractor: 100% DBE credit shall apply to the clearly defined and distinct portion of work performed by the DBE’s own workforce.

C. DBE as a Subcontractor: 100% DBE credit shall apply to the subcontract work performed with the DBE’s own forces, including the cost of materials and supplies (does not include: the purchase of materials and supplies or the lease of equipment by the DBE subcontractor from the prime contractor or its affiliates). Work that a DBE subcontractor subcontracts to a non-DBE firm shall not be credited towards the DBE contract goal.

D. Counting Expenditures with DBEs for Materials or Supplies:

a. If the materials or supplies are obtained from a DBE manufacturer, count 100 percent (100%) of the cost of the materials or supplies toward DBE goals.

i. A manufacturer is a firm that owns (or leases) and operates a factory or establishment that produces, on the premises, the materials, supplies, articles, or equipment required under the contract and of the general character described by the specifications. Manufacturing includes blending or modifying raw materials or assembling components to create the product to meet contract specifications. When a DBE makes minor modifications to the materials, supplies, articles, or equipment, the DBE is not a manufacturer. Minor modifications are additional changes to a manufactured product that are small in scope and add minimal value to the final product.

b. If the materials or supplies are purchased from a DBE regular dealer, count 60 percent (60%) of the cost of the materials or supplies (including transportation costs) toward DBE goals.

i. A regular dealer is a firm that owns (or leases) and-operates, a store, warehouse, or other establishment in which the materials, supplies, articles, or equipment of the general character described by the specifications and required under the contract are bought, kept in sufficient quantities, and regularly sold or leased to the public in the usual course of business. Items kept and regularly sold by the DBE are of the ‘‘general character’’ when they share the same material characteristics and application as the items specified by the contract.

1. To be a regular dealer, the firm must be an established business that engages, as its principal business and under its own name, in the purchase and sale or lease of the products in question. A DBE supplier performs a CUF as a regular dealer and receives credit for 60 percent of the cost of materials or supplies (including transportation cost) when all, or at least 51 percent of, the items under a purchase order or subcontract are provided from the DBE’s inventory, and when necessary, any minor quantities delivered from and by other sources are of the general character as those provided from the DBE’s inventory.

2. A DBE may be a regular dealer in such bulk items as petroleum products, steel, concrete or concrete products, gravel, stone, or asphalt without owning, operating, or maintaining a place of business if the firm both owns and operates distribution equipment used to deliver the products.

Any supplementing of regular dealers’ own distribution equipment must be by a long-term operating lease and not on an ad hoc or contract-by-contract basis.

3. A DBE supplier of items that are not typically stocked due to their unique characteristics (e.g., limited shelf life or items ordered to specification) will be considered in the same manner as a regular dealer of bulk items section above. If the DBE supplier of these items does not own or lease distribution equipment, as described above, it is not a regular dealer.

4. Packagers, brokers, manufacturers’ representatives, or other persons who arrange, facilitate, or expedite transactions are not regular dealers within the meaning of this section.

c. If the materials or supplies are purchased from a DBE distributor that neither maintains sufficient inventory nor uses its own distribution equipment for the products in question, count 40 percent (40%) of the cost of materials or supplies (including transportation costs).

i. A DBE distributor is an established business that engages in the regular sale or lease of the items specified by the contract. A DBE distributor assumes responsibility for the items it purchases once they leave the point of origin (e.g., a manufacturer’s facility), making it liable for any loss or damage not covered by the carrier’s insurance. A DBE distributor performs a CUF when it demonstrates ownership of the items in question and assumes all risk for loss or damage during transportation, evidenced by the terms of the purchase order or a bill of lading (BOL) from a third party, indicating Free on Board (FOB) at the point of origin or similar terms that transfer responsibility of the items in question to the DBE distributor. If these conditions are met, DBE distributors may receive 40 percent for drop-shipped items. Terms that transfer liability to the distributor at the delivery destination (e.g., FOB destination), or deliveries made or arranged by the manufacturer or another seller do not satisfy this requirement.

d. With respect to materials or supplies purchased from a DBE that is neither a manufacturer, a regular dealer, nor a distributor, count the entire amount of fees or commissions charged that you deem to be reasonable, including transportation charges for the delivery of materials or supplies. Do not count any portion of the cost of the materials and supplies themselves.

e. Metro will determine the amount of credit awarded to a firm for the provisions of materials and supplies (e.g., whether a firm is acting as a regular dealer, distributor, or a transaction facilitator) on a contract-by-contract basis.

E. DBE as a Trucker: 100% credit for trucking participation provided the DBE is responsible for the management and supervision of the entire trucking operation for which it is responsible. At least one truck owned, operated, licensed and insured by the DBE must be used on the contract. Credit will be given for the full value of all such DBE trucks operated using DBE employed drivers. DBE credit will be limited to the value of the reasonable fee or commission received by the DBE if trucks are leased from a non-DBE company. Metro uses the following six

(6) factors in determining whether to count expenditures to a DBE trucking firm, to determine if it is performing a commercially useful function:

1. The DBE must be responsible for the management and supervision of the entire trucking operation for which it is responsible on a particular contract and there cannot be a contrived arrangement for the purpose of meeting DBE goals.

2. The DBE must itself own and operate at least one fully licensed, insured and operational truck used on the contract.

3. The DBE receives credit for the total value of the transportation services it provides on the contract using trucks it owns, insures, and operates using drivers it employs.

4. The DBE may lease trucks from another DBE firm, including an owner-operator who is certified as a DBE. The DBE who leases the trucks from another DBE receives credit for the total value of the transportation services the lessee DBE provides on the contract.

5. The DBE may also lease trucks from a non-DBE, including an owner-operator.

The DBE who leases trucks from a non-DBE will be credited only for the fee or commission it receives as a result of the lease arrangement. The DBE does not receive credit for the total value of the transportation services provided by the lessee, since these services are not provided by a DBE.

6. For the purposes of determining whether a DBE trucking company is performing a commercially useful function, a lease must indicate that the DBE has exclusive use of and control over the truck. This does not preclude the leased truck from working for others during the term of the lease with the consent of the DBE, so long as the lease gives the DBE absolute priority for use of the leased truck. Leased trucks must display the name and identification number of the DBE.

208 CHANGES IN WORK LISTED TO DBE FIRMS:

The dollar amount of changes or any other contract modification, change order, or provisions sums that increase or decrease the work listed to a DBE firm(s) will be commensurately added to or subcontracted from the total contract amount used to compute actual dollars paid to DBEs. Any increase or decrease in the overall contract value does not change the Contractor’s DBE commitment. Failure to comply with this section will be cause for non-compliance and assessment of administrative sanctions.

SECTION 300 - ADMINISTRATIVE REQUIREMENTS

300 DBE STANDARDS:

The Contractor shall ensure that DBEs it has committed to in its bid/proposal have a level playing field to successfully perform their contract responsibilities and further commits to meet the DBE Goal of Record for the contract. These efforts should include but are not limited to the following:

A. Negotiate in good faith to attempt to finalize subcontract and supply agreements with

DBEs listed in its bid/proposal.

B. Continue to provide assistance to DBE subcontractors or DBE suppliers in obtaining bonding, lines of credit, or other capital financing through referral to the DOT Bond Assistance Program (800) 532-1169.

C. Issue the DBE(s) a written notice of any potential problem and provide a reasonable time frame for the DBE to remedy the problem. The Contractor shall, concurrently with the issuance of the notice to the DBE, email a copy of the notice to the Diversity & Economic Opportunity Department (DEOD) via email at sbcomplianceinquiry@metro.net. In instances where the DBE fails to remedy the problems identified in the notice, the Contractor shall within sixty (60) days of the first written notice to the DBE firm, take the steps outlined in Section 500 RESOLUTION OF DISPUTES BETWEEN CONTRACTOR AND (DBE) SUBCONTRACTORS, prior to formally requesting approval from Metro to terminate a DBE. Failure to comply with this section will be cause for non-compliance and assessment of administrative sanctions.

301 DBE CERTIFICATION STATUS:

If a subcontractor becomes a certified DBE during the life of the contract, the Contractor shall notify DEOD in writing with the date of certification to be counted toward the Contractor’s DBE commitment subject to compliance with the substitution and addition requirements, if applicable. The Prime and DBE firm shall notify Metro of any change to its certification status. If a DBE firm’s eligibility is removed, the Prime and DBE firms shall notify Metro. The counting of DBE firm participation if deemed ineligible will be determined based on 49 CFR 26.87.

302 DBE DECERTIFICATION AND SUSPENSION:

A DBE remains certified until a Notice of Decision (NOD) is issued. Decertification has the following effects on a contract and the counting of DBE participation:

1. When a prime contractor has made a commitment to use a decertified firm, but a subcontract has not been executed before a decertification notice is issued, the DBE does not count toward the contract goal and the prime contractor is directed to meet the contract goal with an eligible DBE or demonstrate it has made good faith efforts to do so.

2. When Metro has made a commitment to use a DBE prime contractor, but a contract has not been executed before a decertification notice is issued, the decertified firm does continue to receive credit toward the DBE goal for the firm’s work but does not count toward Metro’s overall DBE goal.

3. If a prime contractor has executed a subcontract with the firm before the DBE has been notified its decertification, the prime contractor may continue to use the firm and may continue to receive credit toward the DBE goal for the firm’s work.

However, the prime contractor may not extend or add work to the contract after the firm was notified of its decertification without prior written consent from Metro.

4. If Metro executed a prime contract with a DBE that is later decertified, the portion of the decertified firm’s performance of the contract remaining after the notice of decertification is issued, will not count toward Metro’s overall goal, but the DBE’s performance of the contract may continue to count toward satisfying the contract goal.

5. If a DBE is decertified solely because it exceeds the business size standard during the performance of the contract, Metro may continue to count the portion of the decertified firm’s performance of the contract remaining after the notice of decertification toward the contract goal and Metro’s overall goal.

6. If a DBE is decertified because it was acquired by or merged with a non-DBE, Metro will not continue to count the portion of the decertified firm’s performance on the contract remaining after the decertification toward either the contract goal or Metro’s overall goal, even if the prime contractor has executed a subcontract with the firm or Metro has executed a prime contract with the DBE that was later decertified. In this case, if eliminating the credit of the decertified firm will affect the prime contractor’s ability to meet the contract goal, the prime contractor must replace the decertified firm with an eligible DBE to the extent needed to meet the contract goal or demonstrate good faith efforts to do so.

7. If a DBE’s certification status is suspended, the DBE shall not be considered to meet a contract goal or count toward participation credit on contracts executed during the suspension period.

SECTION 400 - CONTRACT COMPLIANCE MONITORING

400 REVIEW AND MONITORING SYSTEM:

This section describes the review and monitoring system to ensure that all contractors, subcontractors, consultants, vendors, suppliers, dealers, brokers and other sources, and all Metro departments comply with the DBE requirements and all other contract provisions related to DBE participation.

Non-compliance by the Contractor with the DBE contract requirements or federal regulations constitutes a breach of contract, and requires, at a minimum, a written explanation and documented description of the contractor’s good faith efforts (GFE).

Failure to comply may result in: (1) mandatory participation in a DBE Program Training

Session, reviewing the performance, accountability, record keeping and reporting aspects of the DBE Program, and/or (2) termination of the contract, and/or (3) administrative sanctions, and/or (4) other appropriate remedies.

401 CREATE A LEVEL PLAYING FIELD OF OPPORTUNITY TO PARTICIPATE:

The Contractor shall ensure that DBEs have a level playing field to successfully perform the responsibilities of their contract in order to meet its DBE contract commitment.

These efforts include, but are not limited to the following:

A. Negotiate in good faith to attempt to finalize subcontract and supply agreements with

DBEs listed in its bid/proposal.

B. Continue to provide assistance to DBE Subcontractors or Suppliers in obtaining bonding, lines of credit, or other capital financing through referral to the DOT Bond Assistance Program (800) 532-1169.

C. Contractors who failed to meet the DBE goals established for the contract, but who were determined by Metro to have fulfilled the good faith effort requirements to meet the goal, shall make additional documented efforts to seek out and utilize additional first-tier DBE Subcontractors and Suppliers to increase DBE participation, during the life of the contract.

D. Contractor shall immediately inform DEOD of any problems anticipated or concerns in achieving the DBE commitment agreed upon at the time of award.

E. Issue the DBE(s) a written Cure Notice of any potential problem and provide a reasonable time frame for the DBE to cure the problem. The Contractor shall, concurrently with the issuance of the Cure Notice to the DBE, send a copy of the Cure Notice to the Diversity & Economic Opportunity Department (DEOD) via email at sbcomplianceinquiry@metro.net.In instances where the DBE fails to cure, the Contractor is then obligated to take the steps outlined in the section herein

RESOLUTION OF DBE DISPUTES BETWEEN CONTRACTOR AND DBE

SUBCONTRACTORS before formally requesting approval from Metro to substitute a

DBE.

402 PRE-CONSTRUCTION (KICK-OFF) MEETING:

Both the Contractor and the Subcontractor(s) or a representative of each firm shall attend the kick-off meeting concerning DBE requirements and other matters, prior to or immediately after Notice to Proceed (NPT) is issued. The Contractor shall be responsible for informing the Subcontractors of all DBE requirements as specified by Metro herein. The Contractor shall also participate in the DEOD Monthly DBE Compliance meeting, if applicable.

403 CONTRACT COMPLIANCE SUBMITTALS – REPORTING DBE PARTICIPATION:

Contractor and all subcontractors shall report payment details to Metro using the web-based B2Gnow system by the 15th of each month. B2Gnow allows Contractors to manage their own records, maintain accurate contract information, and report payment details online, and submit system generated report to Metro. SBCRS is mandatory for mailto:sbcomplianceinquiry@metro.net

Contractors and subcontractors to use unless Metro instructs otherwise. Metro will provide the Contractor, subcontractors, suppliers, brokers, and truckers online training, login and password information, at no cost to the Contractor or its subcontractors, suppliers, and truckers. Contractor shall have fourteen (14) Business Days from Notice to Proceed (NTP) to register and obtain login and password with the B2Gnow.

Subcontractors, at all tiers, shall register within thirty (30) Business Days of the NTP.

The Contractor is responsible for ensuring that all subcontractors, suppliers, brokers, and/or truckers (at all tiers), both DBE and non-DBE firms participate in the B2Gnow based webinar trainings to comply with the verification of payments and other related reporting requirements through the software system.

After award, Contractor will receive instructions on how to set up their account and enter required Subcontractor data. Contractor must require each of its subcontractors to enter required payment information into B2Gnow. Contractor shall submit all monthly reports, subcontractor agreements, and documents through the B2Gnow to Metro for review and approval. Failure of Contractor or its subcontractors to enter required information on a timely basis may result in delay of payment by Metro and assessment of DBE non-compliance for reporting requirements as identified in Section 800 of this Manual.

For the Small Business Programs Reporting System Contractor and Subcontractor User Guide please click on the following link:

http://media.metro.net/uploads/Metro_Connect/SBCRS%20USER%20GUIDE.pdf

Caltrans Disadvantaged Business Enterprise Running Tally of Payments Requirement

After submitting an invoice for reimbursement that includes a payment to a DBE, but no later than the tenth (10th) of the following month, the prime contractor/consultant shall complete and email the Exhibit 9-F: Disadvantaged Business Enterprise Running Tally of Payments to business.support.unit@dot.ca.gov with a copy to Metro. Exhibit 9F lists accurate payment amount, total amount paid to date, and total commitment amount for each DBE on the federal-aid highway project. It also includes contract award amount and total payment to date to the prime contractor/consultant. (Attached to CCM)

A. CONTRACTOR MONTHLY DBE PROGRESS REPORT

The Contractor shall submit timely and complete monthly progress report summarizing the overall status of commitments to DBE firms, attainments to DBE firms, and prompt payment/retainage counts to all firms (DBE and non-DBE firms) performing on this contract.

The monthly progress report shall be submitted to Metro by the 15th day following the reporting month. The monthly report shall provide, at a minimum, the following information:

1. General Contract Value Information: The following general contract value information must be provided:

a. Original Contract Amount

b. Running Total of Change Order Amount http://media.metro.net/uploads/Metro_Connect/SBCRS%20USER%20GUIDE.pdf mailto:business.support.unit@dot.ca.gov

c. Current Contract Amount

d. Amount Paid to Contractor during Month

e. Amount Paid to Contractor Inception to Date

f. DBE Contract Goal

g. Total Dollar Amount of DBE Commitment

h. DBE Commitment as Percentage of Current Contract Amount

2. Contractor/Subcontractor Information: The following general information shall be prepared for the Contractor and each subcontractor (at every tier level): Name, address, phone, DBE status, contact person, contractor(s), name, date contract agreement signed, scope of work, anticipated first date of performance and anticipated last date of performance.

3. Shortfall Mitigation Plan: Contractor may be notified to submit a Shortfall Mitigation Plan should the DBE utilization be inconsistent with DBE commitment at any time, throughout the life of the project.

a. Forecast Chart: Time-based cumulative curve showing planned vs.

actual attainment for all phases of the project.

4. Supplemental Reports: Metro reserves the right to request additional reports to evaluate the Contractor’s performance in meeting its DBE commitment and compliance with the DBE program requirements.

A. The Prime Contractor shall submit, each month (or other such time as the

DEOD, may choose), the below compliance reports. Metro has developed a series of forms that may be adopted by the Contractor to meet this requirement or the Contractor may develop its own report format and present to Metro for approval and use to meet the supplemental report requirements:

a. DBE Trucking Verification Report for Construction requiring trucking):

The Contractor must development and submit a DBE Trucking Verification Report for Metro DEOD approval prior to commencing trucking activity. The Contractor must report, by the fifth (5th) day of each month, for the preceding month trucking activity. The Contractor shall provide and submit documentation showing the amount paid to DBE and non-DBE trucking companies listed to perform on the contract. This monthly documentation shall indicate the portion of revenue paid to DBE and non-DBE trucking companies which is claimed toward DBE participation. The Contractor shall also obtain and submit documentation to the DEOD showing the amount paid by DBE trucking companies to all firms, including owner-operators, for the leasing of trucks.

b. The DBE who leases trucks from a non-DBE is to credit only for the fee or commission it receives as a result of the lease arrangement. The records must confirm that the amount of credit claimed toward DBE participation conforms with Section 207.

The Contractor shall also obtain and submit documentation showing the truck number, owner’s name, California Highway Patrol CA number and if applicable, the DBE certification letter of the owner of the truck for all trucks used during that month for which DBE participation will be claimed. The Contractor shall promptly pay DBE and non-DBE trucking companies in accordance with the prompt payment provisions prescribed in herein.

B. EXECUTED DBE SUBCONTRACT AGREEMENTS:

The Contractor shall submit copies of all executed DBE and non-DBE subcontract agreements, supplier agreements, and/or DBE purchase orders (PO) for all firms listed prior to award, within fourteen (14) Business Days after the Contractor executes their prime contract or PO with Metro. For firms added after contract award, Contractor shall submit subcontract agreements via the Request to Add a Subcontractor (RTA) process within fourteen (14) Business Days after execution of subcontract agreement.

Failure to comply with this section will be cause for non-compliance and assessment of administrative sanctions, and may include, imposing a special assessment against the Contractor.

The DBE and non-DBE subcontracts or POs should be sent via email to Metro DEOD via email at sbcomplianceinquiry@metro.net. The Contractor shall incorporate the DEOD Contract Compliance Manual (FTA) into each PO and/or Subcontract issued under this DOT-assisted contract and each subcontractor, consultant, dealer, distributor, broker, or vendor, at all tier levels. For Regular Dealer/Distributor credit, the Contractor and DBE firm must complete and submit, along with the RTA, the DEOD Form 6 – Regular Dealer-Distributor Affirmation Form to determine appropriate DBE credit. The Contractor shall immediately notify DEOD in writing, within the 14-day timeframe mentioned above, of any problems it may have in obtaining the subcontract agreements from listed DBE firms within the specified time. Failure to comply with this section will be cause for non-compliance and assessment of administrative sanctions, and may include, imposing a special assessment against the Contractor.

For the purpose of this section, contractor also means consultant, and subcontractor also includes subconsultant. For prompt payment, the following State regulations are referenced: the California Business and Professions Code (CBPC), California Public Contract Code (CPCC) and California Civil Code (CCC).

The Contractor shall include the following language verbatim in each subcontract agreement the Contractor signs with a DBE subcontractor, at all tier levels:

1. Contract Assurance: The contractor or subcontractor shall not discriminate on the basis of race, color, national origin, or sex in the performance of this contract. The contractor shall carry out applicable requirements of 49 CFR Part 26 in the award and administration of DOT-assisted contracts. Failure by the contractor to carry out these requirements is a material breach of this contract, which may result in the termination of this contract or such other remedy as the recipient deems appropriate.

Enforcement: If a contractor or subcontractor fail or refuse to include the contract assurances verbatim in all DOT-assisted contracts, subcontracts and/or purchase orders agreements, MTA may impose penalties and administrative sanctions for non-compliance as contained in Section 800.

2. Prompt Payment: (Required in all DBE and non-DBE subcontract agreements)

a. Pursuant to 49 Code of Federal Regulations (CFR) Part 26 and the California

Business and Professions Code Section 7108.5, the Contractor shall pay each subcontractor under this contract for satisfactory performance of its Work within seven (7) days for construction contracts, and within fifteen (15) days for consultant contracts, after receiving each progress payment. Any violation of these provisions shall subject the violating contractor or subcontractor to the penalties, sanctions and remedies specified in Section

7108.5 of the CBPC and Section 10262 of the CPCC for construction contracts, and Section 3321 for of the CCC for consultant contracts. Any delay or postponement of payment from the above referenced time may occur only for good cause, and only upon prior written approval by Metro.

b. This clause applies to both DBE and non-DBE. For the purpose of this section, a subcontractor’s work is satisfactorily completed when the Contractor certifies to Metro that all the tasks called in the subcontract have been satisfactorily accomplished and that the

c. (The above language is to be used verbatim, pursuant to federal regulations.)

d. After an investigation, if it is determined that the contractor is in non-compliance with prompt payment provisions, the contractor will receive written details of this deficiency. If additional clarification is required, the contractor must respond to the request within five (5) Business Days.

The DBE and Non-DBE subcontracts or PO’s should be sent to via email to the DEOD Post-Award Compliance Unit (PACU) at sbcomplianceinquiry@metro.net.

The Contractor shall incorporate the DBE Contract Compliance Manual into each subcontract and/or PO executed under this DOT-assisted contract and each subcontractor, consultant, dealer, broker, vendor or other source shall agree to the terms and conditions. The Contractor shall immediately notify DEOD in writing, within the fourteen (14) Business Days after executing its prime contract with Metro, of any problems it may have in obtaining the subcontract agreements from listed DBE and non-DBE firms within the specified time. Failure to notify DEOD may deem the Contractor in non-compliance with this requirement.

C. PROMPT PAYMENT, RETAINAGE AND RETENTION:

Contractor is referred to the General Terms and Conditions concerning Prompt Payment to Subcontractors and Prompt Payment of Withheld Funds to Subcontractors.

The Contractor shall incorporate the Prompt Payment Clause and Retention Clause, set forth above, in all subcontract, broker, dealer, vendor, supplier or PO or other source agreements issued to both DBE and Non-DBE firms. Contractor shall include a prompt payment and retention clause in all DBE and non-DBE subcontracts.

mailto:sbcomplianceinquiry@metro.net

Enforcement: If Metro determines that the prime contractor has failed to (1) include prompt payment language verbatim, (2) promptly pay its subcontractors, or (3) promptly release Retainage, Metro shall give written notice to the Contractor and the Contractor’s Surety that, if the default is not remedied within a specified period of time (at least 5 days), the contract may be terminated. The Contract may be terminated for cause in accordance with the Contract Article entitled TERMINATION FOR DEFAULT. Metro shall also impose penalties and sanctions for non-compliance with the DBE Program as referenced in Section 800 and other requirements of State law.

D. PROMPT PAYMENT OF RETENTION:

Contractor shall promptly release retention to Subcontractors (Required in all DBE and non-DBE subcontract agreements verbatim):

Metro will include the following Retainage clause in each DOT-assisted prime contract: The prime contractor agrees further to return retainage payments to each subcontractor within seven (7) days for construction contracts, or within fifteen (15) days for consultant contracts after the subcontractor’s work is satisfactorily completed. The prime contractor and Metro shall provide for prompt and regular incremental acceptances of portions of the subcontractors work to release payment of retention. The prime contractor shall pay all retainage owed to the subcontractor for satisfactory completion of the accepted work within 7 days after Metro has inspected and approved subcontractors work (at all tier levels). The prime withholding a subcontractor’s retention until the end of the project is not permitted.

Retention must be released upon completion of the DBE and non-DBE subcontractors work.

For purposes of this section, a subcontractor's work is satisfactorily completed when all the tasks called for in the subcontract have been accomplished and documented as required by Metro. When Metro has made an incremental acceptance of a portion of a prime contract, the work of a subcontractor covered by that acceptance is deemed to be satisfactorily completed. Upon completion of subcontractor’s work, the prime must inspect the work. If accepted, the prime notifies the Metro PM for inspection. When Metro and prime contractor at any tier, have made an incremental acceptance of a portion of a subcontractor’s work, the work of the subcontractor covered by that acceptance is deemed to be satisfactorily completed. After Metro’s acceptance, the primes must release retention within seven (7) Business Days.

To assure accepted work and payment, subcontractors must submit acceptable documentation (conditional and unconditional releases, certified payroll, etc.) to the prime. Any delay or postponement of prompt release of retention beyond the seven

(7) working day time limit shall be for good cause, and only upon prior written approval by Metro.

Any violation of these provisions shall subject the violating contractor or subcontractor to the penalties, sanctions and remedies specified in Section 7108.5 of the CBPC and Section 10262 of the CPCC for construction contracts, and Section 3321 for of the CCC for consultant contracts.

Any violation of these provisions shall subject the violating prime contractor or subcontractor to the penalties, sanctions and other remedies specified therein.

These requirements shall not be construed to limit or impair any contractual, administrative, or judicial remedies otherwise available to the prime contract, or subcontractor in the event of a dispute involving late payment or nonpayment by the prime contractor, deficient subcontract performance, or noncompliance by a subcontractor.

E. FOR CONTRACTS REQUIRING A CONTRACTING OUTREACH AND

MENTORING PLAN (COMP) (For Contracts Over $25 million):

A. The Contractor shall:

1) Comply with the COMP requirements as outlined herein;

2) Mentor the required number of protégés identified.

3) For Post-Award COMP Submittal Only, the Contractor must submit its COMP no later than 45 days after execution of the Contract with Metro. The post-award COMP submittal must include a competed Protégé Pre- Assessment Form (attached to this Manual) and executed Mentor Protégé Agreement (MPA) for all DBE firms…