EXHIBIT D - DEOD CONTRACT COMPLIANCE MANUAL (SET-ASIDE).pdf

EXHIBIT D - DIVERSITY & ECONOMIC OPPORTUNITY DEPARTMENT

CONTRACT COMPLIANCE MANUAL (SET-ASIDE)

SECTION 100 - SMALL BUSINESS REQUIREMENTS

100 LACMTA POLICY STATEMENT:

It is LACMTA's policy to provide equal opportunity for Small Business Enterprise (SBE) firms on contracts funded with Federal Transit Administration (FTA) funds subject to the requirements of Title 49, Code of Federal Regulations (CFR) Part 26. and non-federally funded contracts subject to the LACMTA Small Business Enterprise Program. The LACMTA Small Business Set-Aside Policy complies with the 49 CFR Part 26.39, Fostering Small Business Participation Element.

The Set-Aside program seek to facilitate the participation of small business concerns in our contracting activities; to meet the maximum feasible portion of LACMTA's overall DBE and SBE goal through race-neutral means; and are active, effective steps to foster competition for LACMTA's contracts by increasing the capacities of small businesses.

LACMTA shall take all necessary and reasonable steps to:

A. Ensure nondiscrimination in the award and administration of federally funded contracts.

B. Create a level playing field on which SBEs can compete fairly for LACMTA contracts.

C. Ensure that only firms that fully meet the eligibility requirements of the LACMTA SBE Program are permitted to participate as SBEs.

D. Help remove barriers to the participation of SBEs in LACMTA contracts.

E. Assist the development of firms that can compete successfully in the marketplace outside the DBE program.

F. Assist the development of firms that can compete successfully in the marketplace outside the SBE program.

101 INTERPRETATION:

For non-federally funded contracts if any conflict, error, omission or ambiguity which may arise between these instructions, California law and LACMTA's SBE Program shall be resolved first in favor of California Law and second in favor of LACMTA's SBE program. For FTA funded contracts if any conflict, error, omission or ambiguity which may arise between this Manual, and the federal regulations or the DBE Program, shall be resolved first in favor of the federal regulations and second the DBE Program. Failure of a bidder or its subcontractors, consultants, suppliers or other entities to carry out these requirements may be grounds for LACMTA to implement administrative penalties or other remedies imposed by LACMTA.

102 NON DISCRMINATION:

LACMTA's policy ensures that SBE firms have an equal opportunity to receive and participate on projects that are FTA funded and non-federally funded LACMTA contracts. It is also

LACMTA's policy to ensure that there is no discrimination in the award and participation on the basis of race, color, national origin, or sex.

103 SUSPENSION OR DEBARMENT:

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

A. Attempts to participate in the LACMTA SBE Program or DBE Program as a SBE if the firm does not meet the eligibility criteria stated in the Certification Standards for SBE programs and if it attempts to participate on the basis of false, fraudulent or deceitful statements or representations or under circumstances indicating a serious lack of business integrity or honesty.

B. In order to be eligible for a Set-Aside contract award, meet the SBE subcontracting goals or other SBE program requirements uses or attempts to use on the basis of false, fraudulent or deceitful statements or representations, another firm that does not meet the SBE eligibility criteria stated in the certification standards.

In either case, LACMTA shall take action through the Diversity & Economic Opportunity Department, LACMTA Office of Inspector General and/or Federal Department of Justice for further action and may refer the matter for prosecution under appropriate state an and federal criminal statutes.

104 AUDIT AND INSPECTION:

The Contractor shall maintain records of all subcontracts entered into with SBE firms and records of materials purchases from SBE suppliers. Such records shall show the name and business address of each SBE subcontractor or suppler and the total dollar amount actually paid to each SBE subcontractor or supplier. LACMTA reserves the right to audit the records and inspect the facilities of its contractors and any subcontractors of any tier for the purpose of verifying the SBE participation and/or adherence to the SBE program requirements. Contractor records shall be maintained for five years from contract completion and be made available upon request for LACMTA contracting studies. Contractors and subcontractors shall permit access to their records at the request of LACMTA. Notice is hereby given that state, local, and federal authorities may initiate or cooperate with LACMTA in auditing and inspecting such records.

SECTION 200 - SBE PARTICIPATION

200 SBE PARTICIPATION:

After contract award, SBE participation percentage(s) for SBE subcontractors, consultants or suppliers, listed by the Offeror at time of bid or proposal will be monitored and enforced from contract inception through the term of contract. Failure to meet the SBE commitment may result in penalties and/or administrative sanctions.

201 LACMTA OVERALL DBE GOAL:

LACMTA has set an overall goal for DBE participation. The overall DBE goal applies to federally funded contracts LACMTA expects to expend for the fiscal year. LACMTA supports the use of race neutral measures to facilitate participation of SBEs and other small businesses, and encourages prime contractors to subcontract portions of their work that they might otherwise perform with their own forces.

202 LACMTA OVERALL SBE GOAL:

LACMTA has set an overall goal for SBE participation. The overall SBE goal applies to non-federally funded contracts LACMTA expects to expend for the fiscal year. LACMTA will strive to meet its overall goal through race neutral measures. LACMTA supports the use of race neutral measures to facilitate participation of SBEs and other small businesses, and encourages prime contractors to subcontract portions of their work that they might otherwise perform with their own forces. To ascertain whether the overall SBE goal is being achieved, LACMTA will track the dollar amount paid to all certified SBE firms performing work called for in this contract that is eligible to be credited toward LACMTA's overall goal.

203 CHANGES IN WORK LISTED TO SBE FIRMS:

If LACMTA or the Contractor proposes changes for work contracted to an SBE, the Contractor is required to notify the SBE firm in writing within 10 working days prior to execution of the proposed change, reduction, or deletion of any work listed at time of contract award or after contract award. The dollar amount of changes as a result of contract modifications, change orders, or provisions sums, that increase or decrease the work commitment to a SBE firm(s) will be commensurately added to or subtracted from the total contract amount used to compute actual dollars paid to SBEs. Failure to comply with Section 205 ("Crediting and Counting SBE Participation") will be cause for non-compliance and assessment of administrative sanctions.

204 COMMERCIAL USEFUL FUNCTION (CUF):

To receive SBE participation credit towards the SBE contract commitments, SBE firms must perform a commercially useful function (CUF). An SBE must perform at least 30% of its listed work with its own workforce or must not subcontract a greater portion of the work than would be expected on the basis of normal industry practices for that type of work. An SBE performs a CUF when the SBE is responsible for a clearly defined and distinct scope of work. SBE firms must be responsible for the execution of the work, is carrying out its responsibilities by actually performing, managing, and supervising the work involved

On-site visit reviews will be used to ascertain whether the SBE is actively performing, managing, and supervising the work. SBE firms shall employ a labor force which is separate and apart from individuals employed by the prime, and independently recruited by the SBE in accordance with standard industry practice.

205 VIOLATION OF COMMERICAL USEFUL FUNCTION:

If an investigation reveals that there is a violation of the CUF provisions, that portion of the work found to be in violation will not be counted toward achievement of the SBE contract commitment, nor LACMTA's overall SBE goal. When a SBE is presumed not to be performing a CUF as described in this section, the SBE may present evidence through the Contractor to LACMTA to rebut that presumption no later than fifteen (15) days after receipt of notice of violation(s). If after review of the evidence presented by the SBE does not meet the CUF provisions herein, the Contractor will be required to cure deficiencies found. LACMTA's CUF decisions are not appealable.

206 CREDITING AND COUNTING SBE PARTICIPATION:

LAMCTA is only able to count toward the achievement of the SBE commitment percentage the value of actual dollar paid for CUF work actually performed by SBE firms. There will be no credit for work performed by a non-SBE prime and/or subcontractor. SBE participation listed in the bid or proposal must comply with the provisions of this section.

A. SBE as the Prime Contractor: 100% SBE credit for that portion of the work performed by the SBE's own forces, including the cost of materials and supplies. Work that a SBE prime subcontracts to a non-SBE firm will not count toward the SBE commitment.

B. SBE as a Joint Venture Contractor: 100% SBE credit for that portion of the total dollar value of the contract equal to the distinct, clearly defined portion of the work performed by the SBE's own forces.

C. SBE as a Subcontractor: 100% SBE credit for the work of the subcontract performed by the SBE's own forces, including the cost of materials and supplies, excluding the purchase of materials and supplies or the lease of equipment by the SBE subcontractor from the prime contractor or its affiliates. Work that a SBE subcontractor in turn subcontracts to a non-SBE firm does not count toward the SBE commitment.

D. SBE as a Material Supplier or Broker:

1. 60% SBE credit for the cost of the materials or supplies purchased from a SBE regular dealer.

2. 100% SBE credit for the cost of materials or supplies obtained from a SBE manufacturer.

3. 100% SBE credit for the value of reasonable fees and commissions for the procurement of materials and supplies if not a regular dealer or manufacturer.

E. SBE as a Trucker: 100% SBE credit for trucking participation provided the SBE 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 SBE must be used on the contract. Credit will be given for the full value of all such SBE trucks operated using SBE employed drivers. SBE credit will be limited to the value of the reasonable fee or commission received by the SBE if trucks are leased from a non-SBE company. LACMTA uses the following six (6) factors in determining whether to count expenditures to a SBE trucking firm, to determine if it is performing a commercially useful function:

1. The SBE 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 SBE goals.

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

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

5. SBE firms that lease trucks from non-SBE firms are entitled to credit only for the fee or commission it receives from the lease arrangement. SBE firms are not eligible to receive full credit for the total value of transportation services.

6. To perform a commercially useful function reference Section 203 ("Commercial Useful Function") an SBE trucking company shall have exclusive use of and control of the day-to-day trucking operation. This does not preclude the leased truck from working for others during the term of the lease with the consent of the SBE, so long as the lease gives the SBE absolute priority for use of the leased truck. Leased trucks must display the name and identification number of the SBE firm.

7. SBE firms that leases trucks from a prime contractor during the performance of contract, is considered a violation of the commercial useful function requirement.

207 THE SBE (AND NOT OTHER BUSINESS ENTITITIES) SHALL ACTUALLY PERFORM

THE SUBCONTRACT:

The SBE's utilization of labor, supervisory personnel, equipment and material in the performance of the subcontract, shall be consistent with industry standards and shall demonstrate that the SBE, and not some other business entity is actually performing the subcontract. If a SBE associates itself too closely with another business entity or entities, in acquiring labor force, supervisors, equipment, or materials to an extent inconsistent with industry standards, the SBE can no longer be said to be actually performing a commercially useful function (reference §203)the subcontract.

208 SBE CONTRACTOR'S WORK FORCE:

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

SECTION 300 - CONTRACT COMPLIANCE MONITORING

300 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 LACMTA departments comply with the SBE requirements and all other contract provisions related to SBE participation.

Non-compliance by the Contractor with the SBE 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 GFE. Failure to comply may result in: (1) mandatory participation in a SBE Program Training Session, reviewing the performance, accountability, record keeping and reporting aspects of the SBE or DBE Program, and/or (2) termination of the contract, and/or (3) administrative sanctions, and/or (4) other appropriate remedies.

301 CREATE A LEVEL PLAYING FIELD OF OPPORTUNITY TO PARTICIPATE:

Contractors shall ensure that SBEs have a level playing field to successfully perform the responsibilities of their contract in order to meet its SBE 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 SBEs listed in its bid.

B. Continue to provide assistance to SBE Subcontractors or Suppliers in obtaining bonding, lines of credit, or other capital financing.

C. Contractor shall immediately inform DEOD of any problems anticipated or concerns with SBE participation or CUF during the performance of the contract.

D. Issue the SBE(s) a written Cure Notice of any potential problem and provide a reasonable time frame for the SBE to cure the problem. The Contractor shall, concurrently with the issuance of the Cure Notice to the SBE, send a copy of the Cure Notice by First Class mail, postage prepaid, to the assigned Contract Compliance Officer, DEOD Contract Compliance Manager and to the Contract Administrator. In instances where the SBE fails to cure, the Contractor is then obligated to take the steps outlined in the section herein RESOLUTION OF SBE DISPUTES BETWEEN CONTRACTOR AND SBE SUBCONTRACTORS before formally requesting approval from LACMTA to substitute a SBE.

302 NOTIFICATION OF REPORTING REQUIREMENTS:

For SBE contracting requirements, Contractors shall refer to the SBE Contract Compliance Manual, the General Conditions and the Special Provisions sections of the executed contract.

Contractors are advised of prompt payment provisions and retention covering all SBE and Non SBE subcontracts, implemented pursuant to the California Business and Professions Code

7108.5 and 49 CFR Part 26.

303 KICK-OFFMEETING:

Contractors and subcontractor(s) or designees shall be notified of the scheduled project kick-off meeting, if applicable, prior to or immediately after Notice to Proceed is issued. The Contractor shall be responsible for informing the SBE subcontractors of all requirements.

304 CONTRACT COMPLIANCE SUBMITTALS – REPORTING SBE PARTICIPATION:

Contractor and all subcontractors shall report payment details to LACMTA using the web-based Small Business Programs Compliance Reporting System (SBCRS) by the 15th of each month.

SBCRS allows Contractors to manage their own records, maintain accurate contract information, and report payment details online. SBCRS is mandatory for Contractors and subcontractors to use unless LACMTA instructs otherwise. LACMTA will provide the Contractor, subcontractors, suppliers, brokers, and truckers initial online training, login and password information, at no cost to the Contractor or its subcontractors, suppliers, and truckers.

Contractor shall have fourteen (14) days from Notice to Proceed (NTP) to register and obtain login and password with the SBCRS, Subcontractors, at all tiers, shall register within thirty (30) days of the NTP. The Contractor is responsible for ensuring that all subcontractors, suppliers, brokers, and/or truckers (at all tiers), both SBE and non-SBE firms participate in the SBCRS 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 (SBE and non- SBE) to enter required payment information into SBCRS. Failure of Contractor or its subcontractors to enter required information on a timely basis may result in delay of payment by LACMTA and assessment of SBE non-compliance for reporting requirements as identified in Section 314 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

A. CONTRACTOR MONTHLY SBE PROGRESS REPORT (Design/Build Only): The Contractor shall submit timely and complete monthly progress report summarizing the overall status of commitments to SBE firms, attainments to SBE firms, and prompt payment/retainage for all firms (SBE and non-SBE firms) performing on this contract.

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

1. The following general contract value information must be provided:

a. Original Contract Amount

b. Running Total of Change Order Amount

c. Current Contract Amount

d. Amount Paid to Contractor during the each month

e. Amount Paid to Contractor from inception to Date

f. SBE Contract Goal

g. Total Dollar Amount of SBE Commitment

h. SBE Commitment as Percentage of Current Contract Amount

2. The following general information shall be prepared for the Contractor and each subcontractor (at every tier level): Name, address, phone, SBE 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. Supplemental Reports (Design/Build Only): Prime contractors shall submit, each month (unless otherwise instructed by LACMTA's).

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

Contractor may develop their own reporting format (subject to LACMTA's approval) to meet the following supplemental report requirements:

a. SBE Attainment and Commitment Report, a monthly listing of SBE and non-SBE subcontractors with current and anticipated participation. This report shall include a current SBE attainment and commitment tallies from each subcontractor (at any tier) listing of all its subcontractors.

b. "Prompt Payment" Report listing its immediate subcontractors and the "Prompt Payment" activity from each subcontractor subcontracting at each tier listing their immediate subcontractors, to the Contract Compliance Officer, documenting the status of each subcontractor's retainage account with the Prime Contractor engaged in subcontracting and their compliance with the return of the retainage regulations.

c. The Prime Contractor's "Prompt Payment and Retainage" Report for the month (or the period of time designated by DEOD), listing its immediate subcontractors and the prompt payment and retainage activity from each subcontractor (at any tier).

B. MONTHLY EXPENDITURE PLAN (FOR CONSTRUCTION WORK ONLY):

An expenditure plan in calendar format for each of its approved SBE Subcontractors/Suppliers shall be submitted 14 working days after the Contractor executes a contract or purchase order with LACMTA, and submitted each month thereafter. The planned expenditures shall equal the dollars committed to each SBE Subcontractor/Supplier and shall be developed according to the approved project schedule.

The plan shall be updated to incorporate any schedule changes and executed Changed Notices and Work Authorization Change Notices affecting the SBE's work. The original plan must be approved and each revision must be approved by the, "Construction Manager's Resident Engineer," prior to being submitted to the assigned Contract Compliance Officer and the Contract Administrator. Revised plans shall be submitted within 30 days from the incorporation of the change.

C. SBE TRUCKING VERIFICATION REPORT

When trucking is listed to be performed, the Contractor shall provide to LACMTA, by the fifth (5th) day of each month, the preceding month's trucking activity. The Contractor shall submit documentation showing the amount paid to SBE trucking companies listed to perform on the contract. This monthly documentation shall indicate the portion of revenue paid to SBE trucking companies which is claimed toward SBE participation. The Contractor shall also obtain and submit documentation to the DEOD showing the amount paid by SBE trucking companies to all firms, including owner-operators, for the leasing of trucks. The SBE who leases trucks from a non-SBE is entitled 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 SBE participation conforms to Subsection 205, referenced above.

The Contractor shall also obtain and submit documentation showing the truck number, owner's name, California Highway Patrol CA number and if applicable, the SBE certification letter of the owner of the truck for all trucks used during that month for which SBE participation will be claimed. The Contractor shall promptly pay SBE trucking companies in accordance with the prompt payment provisions prescribed in Section 300, Subsections 304 through 312.

D. EXECUTED SBE SUBCONTRACT AGREEMENTS: The Contractor shall submit copies of all executed SBE subcontract agreements and/or SBE purchase orders (PO) within 14 days (working) after the Contractor executes their contract or PO with LACMTA. For Design/Build contracts, subcontract agreements are require for all Design and Construction firms known and listed at time of bid within 14 days of issuance of NTP. Other Design/Build construction subcontract agreements are due to LACMTA 14 days from date to request to add firm. DBE firms are not to start work without a signed subcontract agreement, unless Contractor has received written approval from subcontractor to start work without a signed 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 SBE subcontract or PO should be sent to the attention of the assigned Contract Compliance Officer. The Contractor shall incorporate the SBE Program document and this SBE Contract Compliance Manual into each PO and into each Subcontract issued 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 14-day timeframe mentioned above, of any problems it may have in obtaining the subcontract agreements from listed SBE firms within the specified time. Failure to notify DEOD may deem the Contractor in non-compliance with this requirement and subject to imposed administrative sanctions. Contractor must document all efforts taken to with subcontractor to executive subcontract agreements.

E. CONTRACT ASSURANCE: The Contractor shall include the following language in each subcontract agreement the Contractor signs with a SBE subcontractor:

The contractor, sub-recipient, 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 SBE requirements 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.

305 PROMPT PAYMENT:

The prime contractor is required to incorporate the Prompt Payment Clause referenced in Section 302 above, in all subcontract, broker, dealer, vendor, supplier or other source agreements or Purchase Orders (at all tiers) issued to both SBE and non-SBE firms. Contractor shall reference the following contract clauses: General Terms and Conditions concerning Prompt Payment to Subcontractors and Prompt Payment of Withheld Funds to Subcontractors.

306 PROGRESS PAYMENTS:

Prompt Payment and Progress Payment language must be included in all non-SBE and SBE subcontract agreements verbatim. Pursuant to the California Business and Professions Code Section 7108.5, the Contractor shall pay each subcontractor under this Contract for satisfactory performance of its subcontract work no later than seven (7) days after its receipt of each Progress Payment from LACMTA.

307 FINAL PAYMENT TO SUBCONTRACTOR (RELEASE OF RETAINAGE):

The Contractor and all subcontractors shall pay to each subcontractor all amounts it has retained from payments under the Subcontractor within seven (7) days after the Subcontractor's Work is satisfactorily completed.

Prompt Payment of Retention to Subcontractors (Required in all SBE and non-SBE subcontract agreements verbatim):

With respect to retention that LACMTA withholds from the Contractor, LACMTA shall make prompt and regular incremental inspection(s) and upon approval of the Contractor's work at various stages of the Project, LACMTA shall pay a percentage of retention to the Contractor.

The Contractor shall, within 30 days after LACMTA has made such payment, promptly pay all retention owed to Subcontractor(s) who has satisfactorily completed all of its work and whose work is covered by LACMTA inspection(s) and approval(s). For the purposes of this section, a subcontractor's work is satisfactorily completed when the Contractor certifies to LACMTA that all the tasks called for in the subcontract have been satisfactorily accomplished and that subcontractor's retention may now be paid. Any delay or postponement of prompt release of retention beyond the 30 day time limit shall be for good cause, and only upon prior written approval by LACMTA.

308 WORK SATISFACTORILY COMPLETED:

Satisfactory completion of a subcontractor's work is when all the tasks called for in the subcontract have been accomplished and documented as required by LACMTA.

309 DELAY OR POSTPONEMENT OF PAYMENT:

Any delay or postponement of payment beyond the 7-day time limit shall take place only for good cause, and only upon prior written approval of LACMTA.

310 NON—PROGRESS OR RETAINAGE PAYMENT INQUIRIES:

If Subcontractor (at any tier) is not paid within 7 days according to prompt payment and or retainage. The subcontractor must notify the prime contractor in writing within 30 calendar days from the time payment should have been received. The subcontractor shall copy the LACMTA DEOD Representative and Contract Administrator. The prime contractor (or lower tier direct subcontractor) has 7 calendar days to respond in writing back to the inquiring subcontractor.

The prime contractor shall also copy the LACMTA DEOD Representative and Contract Administrator.

311 VIOLATION OF PROMPT PAYMENT:

The Contractor and all subcontractors, consultants and suppliers shall comply with all prompt payment requirements in the Contract. Any violation of the prompt payment provision shall subject the violating contractor or subcontractor to the penalties, sanctions, and other remedies specified in Section 7108.5 of the California Business and Professions Code. This requirement shall not be construed to limit or impair any contractual, administrative, or judicial remedies, otherwise available to the contractor or subcontractor in the event of a dispute involving late payment or nonpayment by the contractor, deficient subcontractor performance, and/or noncompliance by a subcontractor. In addition, failure to comply with Prompt Payment and or Release of Retainage provisions may be subject to assessment of administration sanctions as provided in Section 700 Sanction s for SBE or DBE Program Violations.

312 FAILURE TO COMPLY WITH PROMPT PAYMENT:

If it is determined that the contractor is non-compliant with prompt payment provisions, the contractor will receive written notification from LACMTA with details of this deficiency. If additional clarification is required, the contractor must respond to the request within five (5) working days. Failure to comply may result in the assessment of appropriate administrative sanctions and/or penalties. Failure of the Contractor and/or its listed subcontractors to comply with any part of the mentioned may result in non-compliance determination and administrative sanctions may be imposed as prescribed in SBE Assessment of Non-compliance and Administrative Sanctions.

313 FINAL REPORTING:

Contractor shall submit to LACMTA, along with invoice for final payment, a signed and notarized statement that the Contractor will pay all outstanding payments including retention 10 days after it receives final payment from LACMTA. Please see General Terms and Conditions concerning "Prompt Payment to Subcontractors and Prompt Payment of Withheld Funds to Subcontractors."

314 ASSESSMENT FOR SBE NON-COMPLIANCE:

If the Contractor fails to comply with the SBE Program or DBE Program requirements, contract payments shall be reduced by one or more of the following methods:

A. A penalty of five thousand dollars ($5,000) per day, from the date the Contractor is determined to be in non-compliance with the SBE Program requirements until compliance is determined.

B. Penalties of ten percent (10%) of the total contract value, including any approved change orders, for failure to meet SBE commitments or to demonstrate good faith efforts.

C. Penalties may be deducted from payments due the Contractor, from any funds retained.

315 DISPUTE RESOLUTION:

The Contractor must include in its SBE Subcontract Agreement(s) the Dispute Resolution provisions in Section 5.0 of the Contract Compliance Manual (non-Federal) for disputes arising out of or related to this contract between Contractor and any lower tier Subcontractors which cannot be settled by discussions between the parties involved. The Contractor and Subcontractor, in the event of a dispute to their contract, agree to proceed through informal meetings, mediation, or arbitration, or any combination thereof.

Disputes between the Contractor and any lower tier SBE subcontractors, which cannot be settled by discussions between the parties involved, shall be settled as described herein.

Contractor shall notify LACMTA of such dispute within ten 10 days of failure to resolve through written cure notice process described above.

These provisions shall not apply to disputes between the Contractor and LACMTA. These provisions do not alter in any way or waive compliance with any provisions in Section GC36 "Submittal of Claims" included in the Contract Documents.

The Contractor and Subcontractors shall include the dispute resolution provision in their contract. Both parties shall agree to proceed through informal meetings, mediation, or arbitration, or any combination thereof. Dispute submittals shall include terms and timeframes and the service or assistance to be employed.

401 INFORMAL MEETINGS:

The Diversity and Economic Opportunity Department will coordinate informal meeting requests, to assist in the resolution of disputes between Contractor and subcontractor. The assigned Diversity and Economic Opportunity Representative will conduct the informal meetings with parties in dispute. All parties must agree to the procedure.

402 MEDIATION:

The parties to a contract may agree to endeavor to settle a dispute through informal mediation under independent third party organizations. LACMTA's Diversity and Economic Opportunity Department is considered an independent third party. Submission to informal mediation is voluntary; is not binding and offers advisory opinions.

403 ARBITRATION:

Should the parties fail to resolve any SBE related dispute arising out of or related to the contract via informal meetings or mediation, the parties are contractually obligated to submit the claims for arbitration within 120 days from date LACMTA is notified of dispute. Arbitration conducted pursuant to the contract shall be binding upon all parties to the arbitration. All arbitration is to be conducted in a manner consistent with section 1020 et seq. of the Public Contract Code and Section 1296 of Code of Civil Procedure.

Available mediation and arbitration services include:

The American Arbitration Association (213) 362-1900 Dispute Resolution Center (818) 793-7174

The Contractor shall incorporate this Section into each SBE subcontract related to work arising under this contract and shall not incorporate by reference.

Only when resolution of SBE disputes attempted through informal meetings, mediation, and/or arbitration has failed may the Contractor formally request substitution of a SBE subcontractor.

SECTION 400 - RESOLUTION OF DISPUTES BETWEEN LACMTA CONTRACTOR

AND SUBCONTRACTORS

400 DISPUTES:

Should the parties proceed to arbitration, moneys due, if any, shall be placed in a trust account. Such funds shall be released to the appropriate party within five (5) working days of a determination being issued by the arbitrator.

NOTE: Arbitration findings are binding upon the parties. However, the findings do not in any way relieve the contractor of its obligation to meet the SBE goals.

SECTION 500 - ADDING OR SUBSTITUTING OR TERMINATING A SBE

Contractors shall obtain written approval from DEOD prior to adding, substituting, or terminating SBE subcontractors.

500 ADDING SBE SUBCONTRACTORS:

If contractors determine that there are additional opportunities for SBEs not originally listed, they may exercise good faith efforts by requesting to add SBE firm(s) to their contract. LACMTA shall authorize the addition of SBE subcontractor(s) for credit toward the contract commitment upon verification of certification. Prior to adding SBE subcontractors, written requests must be submitted to DEOD and Contract Administration for approval. This request must include the Request to Add SBE or Non-SBE Subcontractor form (reference Appendix B) specifying the scope of work, dollar amount, period of performance, and applicable North American Industry Classification System (NAICS) codes, with a SBE certification letter attached.

The request to add a new certified firm to the contract is to be submitted to DEOD and approved, prior to any commencement of work. In addition to the Request to Add SBE or Non- SBE Subcontractor form, the prime contractor request must include the following documentation:

A. Written justification for adding additional firm(s) to contract team;

B. Provide subcontract agreement for added firm(s) with dollar amount of scope of work, period of performance, and required flow down provisions;

C. Provide certified letter evidencing certification status of firm(s) to be added;

D. Documentation of prime contractor outreach efforts and selection process undertaken for the scope of work to be performed by the proposed added firm(s);

E. Identify if the added firm(s) replacing another originally listed certified firm or is a result of reducing scope of work originally listed. (The prime contractor shall comply with substitution requirements when making changes to originally scope committed to another certified firm).

Enforcement: Failure by the contractor to comply with the “request to add requirements,” shall constitute a material breach of the contract and may result in termination of contract or imposition of administrative sanctions for non-compliance.

After formal approval by LACMTA, the contractor must provide a copy of the Subcontract Agreement.

404 TIMELINESS:

7. It was determined that the work performed by the listed subcontractor is substantially unsatisfactory and is not in accordance with the plans and specifications, or that the subcontractor is substantially delaying or disrupting the progress of the work

8. The SBE is ineligible to work because of suspension and debarment.

9. It has been determined that the SBE is not a responsible contractor.

10. The SBE voluntarily withdraws, with written notification, from the contract.

11. The SBE is ineligible to receive credit for the type of work required.

12. The SBE owner dies or becomes disabled resulting in the inability to perform the work on the contract.

13. Other documented compelling reasons.

501 SUBSTITUTING OR TERMINATING SBE SUBCONTRACTORS:

Pursuant to 49 Code of Federal Regulations (CFR) Part 26, LACMTA SBE Program and the California Public Contract Code Section 4100, no contractor at any tier may terminate a SBE subcontractor for convenience and then perform that work with its own workforce or that of its affiliate. The contractor shall provide written request to DEOD to substitute a SBE subcontractor.

A. LACMTA shall only authorize the substitution of a subcontractor for one or more of the following reasons:

1. The listed SBE, after having had a reasonable opportunity, fails or refuses to execute a written contract.

2. The listed SBE becomes bankrupt or has credit unworthiness.

3. The listed SBE fails or refuses to perform his subcontract with normal industry standard.

4. The listed SBE subcontractor, after having had a reasonable opportunity, fails or refuses to meet the contractor's non-discriminatory bond requirements.

5. The prime contractor demonstrates to LAMCTA, pursuant to Public Contract Code, Section 4107.5, that the name of the subcontractor was listed as the result of an inadvertent clerical error.

6. The listed subcontractor is not licensed pursuant to the Contractors License Law.

B. DEOD shall send written notice to the listed SBE subcontractor of the Contractor's request for substitution, including the reasons for the request. The SBE subcontractor shall have five (5) working days to submit written objections to the substitution to DEOD. Failure to respond to a written objection may constitute the listed SBE subcontractor's consent for substitution.

Contractor(s) shall replace a SBE subcontractor with another SBE firm, after following dispute resolution procedures, pursuant to the provisions of the California Public Contracts Code.

A. The Contractor shall not make any falsification of subcontractor information, up to and including Subcontractor's name, subcontract amount and/or actual work to be performed by SBE firms.

B. The Contractor shall utilize SBEs according to the participation levels committed to at the time of contract award, and demonstrate an adequate and positive good faith effort to do so throughout the life of the contract.

C. The dollar amount of change orders, contract modifications, or provisions sums for design, construction, operations and maintenance, that increases or decreases the scope of work committed to SBEs, shall be commensurately added to or subtracted from the total contract amount used to compute actual dollars paid to SBEs regardless of who performed the work.

D. All contract amounts revised as a consequence of a change order, contract modification or provisional sum, shall be reflected in the Contractor's monthly referenced herein in Diversity and Economic Opportunity Submittals, herein.

C. If written objections are filed by a SBE subcontractor, LACMTA shall give written notification within at least five (5) working days, to the prime contractor and the listed subcontractor of an informal mediation regarding the request for substitution.

D. If no written objections are filed by the SBE subcontractor, the prime's request to substitute shall be approved. A new SBE listing shall include the commitment amount and the type of work covered by each Subcontractor. All substitutions and additions are subject to LACMTA's approval.

E. If substitution with another SBE firm is not viable, the Contractor shall submit a written request for a substitution with a non-SBE. This request must include documentation of good faith efforts demonstrating the contractor's attempt to substitute the SBE firm with another SBE firm for LACMTA's review and approval.

The Contractor shall obtain the written consent prior to making any substitutions. If adding SBE firms for credit toward the goal, verification of certification is required prior to receiving credit toward the contract specific goal. SBEs must be certified at the time of the substitution or addition.

Failure to comply with this or any other SBE requirement may result in assessment of appropriate administrative sanctions.

SECTION 600 - GOAL ATTAINMENT DURING LIFE OF CONTRACT

E. All submittal forms, containing any contract value, revised as a consequence of a Change Order, contract modification, provisional sums shall be accompanied with copy of relevant support documentation.

F. The Contractor shall submit the final SBE report within 14 calendar days of final payment, retention, and acceptance of the contract work by the LACMTA as prescribed in Section 3.6.

G. Listed first-tier subcontractors shall enter into subcontract agreements with the Contractor within the specified time frame of fourteen (14) working days following NTP. Failure to execute subcontract agreements in a timely manner shall be considered a violation of the SBE Program requirements.

SBE or DBE program requirements, during the performance of the contract, shall be required to "correct" its deficiency or be subject to the Administrative Sanctions listed in this Section. Being subject to appropriate administrative remedies or sanctions does not preclude LACMTA from invoking other contract and/or legal remedies available under federal, state or local law

C. Appropriate Administrative Remedies: Appropriate administrative remedies will be imposed on Contractors deemed non-compliant to the SBE Program requirements. Contractors' failure to provide documentation of good faith efforts, as requested, will also be subject to appropriate administrative remedies. Contractor notifications shall be made by certified mail.

The appropriate administrative remedies shall include, but is not limited to the following:

1. Mandatory SBE Training Session(s) for Contractor(s) found in violation of SBE program requirements (SBE Training will be coordinated by DEOD, and all associated expenses, including, but not limited to, travel, lodging, meals and etc., will be the responsibility of the Contractor.)

H. When a SBE subcontracts part of the work of its contract to another firm, the value of the subcontracted work may be counted toward SBE goals only if the SBE's subcontractor is itself a SBE. Work that a SBE subcontracts to a non-SBE firm does not count toward SBE goals.

I. When a SBE performs in a joint venture, only the percentage of the SBE joint venture is eligible for credit. Work must be performed by the SBEs own work forces.

J. Failure to adhere to any of the requirements of this Section shall constitute a breach of contract and may result in the LACMTA's terminating the contract for default and/or imposing appropriate sanctions as outlined in the section entitled Remedies for Breach of SBE Requirements.

SECTION 700 – SANCTIONS FOR SBE PROGRAM VIOLATIONS

A. Failure to Comply: Failure to adhere to any of the SBE or DBE Program requirements shall constitute a breach of contract and may result in LACMTA terminating the contract for default and/or imposition of appropriate sanctions as outlined in this section.

B. Remedies for Breach of SBE Requirements: Contractor(s) found in violation of LACMTA's

2. Penalties as described in the, "Assessment for SBE Non-Compliance," (referenced in Sub-Section D)

3. Suspension of payment(s) to the Contractor LACMTA

4. Termination of the Contract for default.

5. Debarment (49 CFR 107).

D. Assessment for SBE Non-Compliance

If the Contractor fails to comply with the SBE Program requirements, contract payments shall be reduced by one or more of the following methods:

firms participate in LACMTA contracting. If not, that firm's participation may not be counted as SBE participation in the contract. Bidders shall ensure SBE firms are certified in the North American Industry Classification System (NAICS) codes for the work in which the SBE firm is listed to perform and for which the Bidder seeks SBE credit towards its SBE commitment.

Certifications as a LACMTA SBE firm, means the firm met the SBE certification requirements and eligibility standards described in LACMTA's SBE Program.

801 SBE CERTIFICATION STANDARDS:

LACMTA follows the standards and procedures defined by LACMTA SBE Program Subpart E to determine whether an applicant is eligible for SBE certification. These standards and procedures are described in detail in the Certification Instructions, provided with the Application for Certification. Interested individuals or companies will start the process by obtaining a copy of the SBE Application and SBE Certification Instructions.

END OF SECTION

1. A penalty of five thousand dollars ($5,000) per day, from the date the Contractor is determined to be in non-compliance with the SBE Program requirements until compliance is determined.

2. Penalties of ten percent (10%) of the total contract value, including any approved change orders, for failure to meet SBE commitments or to demonstrate good faith efforts.

3. Penalties may be deducted from payments due the Contractor, from any funds retained.

SECTION 800 - SMALL BUSINESS ENTERPRISE CERTIFICATION

800 CERTIFICATION REQUIREMENTS:

A firm only holding a current certification as an eligible LACMTA SBE may participate in the LACMTA SBE Program. Firms listed by Bidders to meet an established SBE subcontracting goal must be certified by bid due date. LACMTA has a responsibility to ensure that eligible SBE

APPENDIX A – DEFINITIONS

Change Order (CO): A written order by LACMTA's Contracting Officer directing Changed Work.

Changed Work (or Change): Additions, deletions or other revisions to the Work within the general scope of the Contract. Changed Work must be directed by LACMTA by a Change Order or agreed to by the parties in an Amendment or other Modification. Includes Work that does not involve an adjustment in the Contract Price and/or Contract Time. Does not include Work performed or time spent by Contractor to correct any Deficiency.

Commercially Useful Function: Work performed by a SBE firm in a particular transaction that in light of industry practices and other relevant considerations, has a necessary and useful role and the firm's role is not a superfluous step added in an attempt to obtain credit toward goals.

If, in LACMTA's judgment, the firm (even though an eligible SBE) does not perform a commercially useful function in the transaction, no credit toward the goal may be awarded.

Contractor: The individual, firm, partnership, corporation, joint venture, or combination thereof, which may also be referred to by the term "it", that has entered into the Contract with LACMTA.

Includes Contractor's successors, assigns, employees, officers, Contractor's Representatives, and agents. In context may also include Subcontractors, Suppliers and any other persons for whom the Contractor may be legally or contractually responsible.

Contracting Opportunity: Any decision by LACMTA or its contractors to institute a procurement action to obtain a product or service commercially (as opposed to intergovernmental actions).

Department: Functional unit of LACMTA, responsible for management and administration of specific projects included within the capital and operating budget.

Small Business Enterprise (SBE): A SBE firm is, generally, one that has demonstrated to LACMTA, by a preponderance of the evidence, that it meets the requirements of LACMTA's Small Business Enterprise Program, Subpart E, Certification Standards and Procedures, concerning Business Size, Owners Economic Disadvantage(Personal Net Worth), Quality of Ownership and Ownership Discretion and Control. It is a firm that:

A. Is owned by Individuals who can demonstrate, by a preponderance of the evidence, that they are…