Programmatic Addendum Letter 2024.06.13_signed.pdf

www.VirginiaDOT.org

WE KEEP VIRGINIA MOVING

DEPARTMENT OF TRANSPORTATION

1401 EAST BROAD STREET

RICHMOND, VIRGINIA 23219-2000

Stephen C. Brich, P.E.

Commissioner

June 13, 2024

Order No.: All

Project: All

FHWA: All

District: All

County: All

Route: All

Bids: June 26, 2024

July 24, 2024

To Holders of Bid Proposals:

Please make the following changes in your copy of any bid proposal with an FHWA project code currently advertised as of today’s date.

BID PROPOSAL

Please find attached the updated SP107-001510-04, C-48, and C-111. Please utilize them in your bid preparation accordingly. The updated special provision will be reflected in the final executed contract.

SP107-001510-04 replaces SP107-001510-03. An updated C-111 form with the project information and goal will be generated and placed with the proposal documents. Please use the updated C-111 for the submission of the bids.

The updated C-111 must be submitted as a paper copy for the June 26, 2024, and July 24, 2024, lettings while the BidX program is being updated.

David B. Coaker, P.E.

State Contract Engineer

Construction Division

Enclosures

James L. Swanson, P.E. for

SP107-001510-04

VIRGINIA DEPARTMENT OF TRANSPORTATION

SPECIAL PROVISION FOR

DBE REQUIREMENTS

June 5, 2024

SECTION 107 – LEGAL RESPONSIBILITIES of the Specifications is revised as follows:

Section 107.15 – Use of Small, Women-Owned, and Minority-Owned Businesses (SWaMs) is replaced in its entirety with the following:

Section 107.15 – Use of Disadvantaged Business Enterprises (DBEs)

(a) Disadvantaged Business Enterprise Program Requirements

Bidders, the Contractor, and all subcontractors, suppliers, and contract sureties involved in the performance of work on this federal-aid contract shall comply with the terms and conditions of this Special Provision and the United States Department of Transportation (USDOT) DBE Program in Title 49, Part 26 of the Code of Federal Regulations, as amended, (USDOT DBE Program), which are incorporated by reference into this Special Provision. The Contractor shall physically include this same Special Provision in every subcontract that it makes or executes with a subcontractor or supplier for which it intends to claim DBE credit.

Disadvantaged Business Enterprise (DBE) means a small business concern that is certified as such in accordance with this Special Provision, and includes the Contractor, subcontractors, suppliers, or manufacturers performing work, or furnishing materials, supplies, equipment, or services necessary for the Contract.

The Contractor, for itself and for its subcontractors and suppliers, whether certified DBE firms or not, shall commit to complying fully with the auditing, record keeping, confidentiality, cooperation, and anti-intimidation or retaliation provisions contained in USDOT DBE Program and the Contract. By bidding on this Contract, and by accepting and executing this Contract, the Contractor agrees to assume these contractual obligations and to bind the Contractor’s subcontractors contractually to the same at the Contractor’s expense.

The Contractor and its subcontractors and suppliers shall not discriminate on the basis of race, color, sex, sexual orientation, gender identity, or national origin in the performance of this Contract. The Contractor shall carry out applicable requirements of USDOT DBE Program and the Contract in the award, administration, and performance of this Contract. Failure by the Contractor to carry out these requirements is a material breach of this Contract, which will result in the termination of this Contract or other such remedy, as VDOT deems appropriate, which may include, but is not limited to: (1) withholding monthly progress payments; (2) assessing sanctions; (3) assessing liquidated damages;

and/or (4) disqualifying the contractor from future bidding.

All administrative remedies noted in this Special Provision will be imposed unless the Contractor exercises the right of appeal within the required timeframe(s) specified herein. Appeal requirements, processes, and procedures are stated herein. Where applicable, the Department will notify the Contractor of any changes to the appeal requirements, processes, and procedures after receiving notification of the Contractor’s desire to appeal.

(b) DBE Prequalification and Certification

To be eligible to perform work on this federal-aid contract firms must be prequalified in accordance with the requirements of Section 102.01 of the Specifications. To receive credit toward meeting the Contract DBE goal, firms must be certified as DBEs by the Virginia Department of Small Business and Supplier Diversity (DSBSD) or the Metropolitan Washington Airports Authority (MWAA) in accordance with the USDOT DBE Program and this Special Provision. Eligibility to receive credit also requires that DBEs identified as participating in the Contract to meet the goal are certified in a North American Industry Classification System (NAICS) code applicable to the specific types of work the DBE would perform. A directory listing of eligible certified DBEs and their assigned NAICS codes for the types of work they are certified to perform as DBEs can be obtained from the DSBSD website:

www.sbsd.virginia.gov.

(c) Bank Services

The Contractor and each subcontractor are encouraged to use the services of banks owned and controlled by socially and economically disadvantaged individuals. Such banking services and the fees charged for services typically will not be eligible for DBE Program contract goal credit. Such information is available from the VDOT’s Internet Civil Rights Division website:

https://www.vdot.virginia.gov/media/vdotvirginiagov/doing-business/programs-for-businesses/dbe-program/VDOT_DBE_Program_Plan.pdf

(d) DBE Program-Related Certifications Made by Bidders and Contractors

By submitting a bid, by signing this Contract, and by signing each subcontract with a subcontractor incorporating this Special Provision, the Contractor and subcontractors certify to each of the following DBE-related conditions and assurances:

1. That they have complied and will comply with the requirements of the USDOT DBE Program and the Contract in submitting the bid, that they shall comply fully with these requirements in the bidding, award, execution, performance, and administration of the Contract and subcontracts, and that failure to comply may result in disqualification or other legal sanctions.

2. That all reasonable steps were and will be taken to ensure that DBEs had and will have a full and fair opportunity to compete for and perform work on the Contract. Any agreements between a bidder and a DBE whereby the DBE promises not to provide quotations for performance of work to other bidders are prohibited.

3. That they shall not discriminate on the basis of race, color, age, sex, sexual orientation, gender identity, or national origin in the performance of the Contract or in the award and performance of any subcontract.

4. That they made and shall make good faith efforts to seek out and consider DBEs as potential subcontractors to obtain DBE participation in the proposed contract at or above the goal for DBE participation established by VDOT by contacting DBEs to solicit their interest, capability, and prices in sufficient time to allow them to respond effectively; and, if necessary, they have submitted as a part of its bid true, accurate, complete, and detailed documentation of the good faith efforts it performed to meet the DBE goal.

5. That once awarded the Contract, the Contractor shall utilize the DBEs listed in Form C-111 to perform the work designated at or above the amount or percentage of the dollar value specified in the bidding documents, and shall not unilaterally terminate, substitute for, or replace any listed DBE in whole or in part with another DBE, any non-DBE firm, or with the Contractor's own forces or those of an affiliate of the Contractor without the prior written consent of VDOT as set out within the requirements of this Special Provision.

http://www.sbsd.virginia.gov./ https://www.vdot.virginia.gov/media/vdotvirginiagov/doing-business/programs-for-businesses/dbe-program/VDOT_DBE_Program_Plan.pdf https://www.vdot.virginia.gov/media/vdotvirginiagov/doing-business/programs-for-businesses/dbe-program/VDOT_DBE_Program_Plan.pdf

6. That once awarded the Contract, they shall designate and make known to the Department a liaison officer who is assigned the responsibility of administering and promoting an active and inclusive DBE program as required by the USDOT DBE Program and this Special Provision. The designation and identity of this officer need be submitted only once by the Contractor during any twelve (12) month period at the preconstruction conference for the first contract the Contractor has been awarded during that reporting period. The Department will post such information for informational and administrative purposes at VDOT’s Internet Civil Rights Division website.

7. That once awarded the Contract, they shall comply fully with all regulatory and contractual requirements of the USDOT DBE Program and this Special Provision, and that each DBE participating in the Contract shall fully perform the designated work items with the DBE’s own forces and equipment under the DBE’s direct supervision, control, and management.

8. That in the event a bond surety assumes responsibility for completion of work for any reason, including without limitation when the Department terminates the prime Contractor, the surety shall be obligated to meet the same DBE contract terms and requirements as were required of the original prime Contractor in accordance with the requirements of the USDOT DBE Program and this Special Provision.

Failure by the Contractor, DBE, any other subcontractor or supplier retained by the Contractor, or surety to comply with all requirements of the USDOT DBE Program and/or this Special Provision is a material breach of this Contract. The Department has the authority and discretion to determine the extent to which these requirements have not been met, and will assess against the Contractor any remedies available at law or provided in the Contract in the event of such a contract breach, which may result in termination of the Contract or such other remedy as the Department deems appropriate, which may include, but is not limited to: (1) withholding monthly progress payments; (2) assessing sanctions; (3) assessing liquidated damages; and/or (4) disqualifying the Contractor from future bidding as non-responsible.

(e) DBE Requirements

The Contract will only be awarded to a bidder and Contractor who makes a good faith effort to meet or exceed the DBE goal. After award of the Contract, the Contractor must comply with the requirements of this Special Provision and make a good faith effort to meet or exceed the DBE goal in the performance of the Work. DBE Forms can be obtained from the VDOT website at:

https://vdotforms.vdot.virginia.gov/.

Good faith efforts means all necessary and reasonable steps that the bidder or Contractor takes to achieve the DBE goal or comply with the requirements of this Special Provision which, by their scope, intensity, and appropriateness to the objective, can reasonably be expected to obtain sufficient DBE participation, even if not fully successful.

The following requirements shall apply to the Contract for DBE compliance purposes.

1. Contract Goal, Good Faith Efforts Specified: Bidders and the Contractor shall evidence attainment of DBE participation equal to or greater than the DBE goal by submission of the forms specified below to the Department within the time required.

A. During Bidding: A bidder has made good faith efforts if the bidder does either of the following things:

(1) The bidder documents that it has attained DBE participation equal to or greater than the DBE goal established for the project by submitting a completed Form C-111, Minimum https://vdotforms.vdot.virginia.gov/

DBE Requirements, and Form C-48, Subcontractor/Supplier Solicitation and Utilization, as a part of the bid documents.

Form C-111 and Form C-48 must be received no later than 10:00 a.m. the next business day after the date and time stated in the Invitation for Bids for receipt of bids, or the bid will be rejected as non-responsive. These forms may be submitted electronically via Bid Express or by email to: vdotcontracts@vdot.virginia.gov.

(2) If the bidder is unable to attain sufficient DBE participation to meet the DBE goal, the bidder must show the amount of DBE participation that it commits to attain in its Form C- 111 submitted in accordance with subsection (A), above, then submit Form C-49, DBE Good Faith Efforts Documentation, to document its good faith efforts to meet the DBE goal. Form C-49 must be submitted within two (2) business days after the bid opening, or the bid will be rejected as non-responsive. The form may be submitted electronically via Bid Express or by email to: vdotcontracts@vdot.virginia.gov.

A Form C-49 shall also be required when, after review of the apparent lowest bid, VDOT determines the bidder failed to meet the DBE goal or other requirements. The form must be received by the State Contract Engineer within two (2) business days after official notification of such failure.

The bidder must attach additional pages to Form C-49, if necessary, in order to fully document specific good faith efforts made to obtain the DBE participation specified in the proposed contract work.

B. Post-Bid: In addition, the apparent low bidder must submit within five (5) days after bid opening the following forms, properly executed, or the bid will be rejected as a matter of responsibility:

(1) Form C-112, Certification of Binding Agreement providing confirmation from each

DBE listed in the Form C-111 that it is participating in the Contract in the kind and amount of work designated. DBEs bidding as prime contractors are not required to submit Form C-112 unless they are utilizing other DBEs as subcontractors.

(2) Form C-110, DBE Regular Dealer/Distributor Affirmation must be submitted when a

DBE listed on Form C-111 is a regular dealer or distributor, as defined below to provide confirmation of the DBE’s participation according to the requirements of this section. The Department will make a preliminary counting determination to assess the DBE’s eligibility for 60 or 40 percent credit, respectively, of the cost of materials and supplies based on the DBE’s demonstrated capacity and intent to perform as a regular dealer or distributor under the Contract. The Department’s preliminary determination shall be made based on the DBE’s written response to relevant questions and the DBE’s affirmation that its subsequent performance of a commercially useful function will be consistent with the preliminary counting of such participation. Where the DBE supplier does not affirm that its participation will meet the specific requirements of either a regular dealer or distributor, the Department shall make adjustments in counting such participation toward the DBE goal. The bidder is responsible for verifying that the information provided by the DBE supplier is consistent with the counting of such participation toward the goal.

2. Good Faith Efforts Described

A. The Department will determine if the bidder or Contractor made good faith efforts by considering the quality, quantity, and intensity of the different kinds of efforts that the bidder or Contractor has made and, if given all relevant circumstances, the efforts were those that one could reasonably expect a bidder or a contractor to take if they were actively and aggressively trying to meet the DBE goal. Efforts to obtain DBE participation are not good faith efforts if they could not reasonably be expected to produce a level of DBE participation sufficient to meet the DBE goal.

B. The following list contains examples of good faith efforts that may be taken to obtain DBE participation. This is not intended to be a mandatory checklist, nor is it intended to be exclusive or exhaustive. Other factors or types of efforts of similar intent may be relevant in appropriate cases:

(1) Soliciting through reasonable and available means, such as but not limited to, attendance at pre-bid meetings, advertising, and written notices to DBEs who have the capability to perform the work of the Contract. Examples include: advertising in at least one daily/weekly/monthly newspaper of general circulation, as applicable; phone contact with a completely documented telephone log, including the date and time called, contact person, or voice mail status; and internet contacts with supporting documentation, including dates advertised. The bidder shall solicit this interest no less than five (5) business days before the bids are due so that the solicited DBEs have enough time to reasonably respond to the solicitation. The bidder shall determine with certainty if the DBEs are interested by taking reasonable steps to follow up initial solicitations as evidenced by documenting such efforts as requested on Form C-49, DBE Good Faith Efforts Documentation.

(2) Selecting portions of the work to be performed by DBEs in order to increase the likelihood that the DBE goals will be achieved. This includes, where appropriate, breaking out contract work items into economically feasible units to facilitate DBE participation, even when the Contractor might otherwise prefer to completely perform all portions of this work in its entirety or use its own forces;

(3) Providing interested DBEs with adequate information about the plans, specifications, and requirements of the Contract in a timely manner, which will assist the DBEs in responding to a solicitation;

(4) Negotiating for participation in good faith with interested DBEs;

i. Evidence of such negotiation shall include the names, addresses, and telephone numbers of DBEs that were considered; dates DBEs were contacted; a description of the information provided regarding the plans, specifications, and requirements of the Contract for the work selected for subcontracting; and, if insufficient DBE participation seems likely, evidence as to why additional agreements could not be reached for DBEs to perform the work;

ii. A bidder using good business judgment should consider a number of factors in negotiating with subcontractors, including DBE subcontractors, and should take a firm’s price, qualifications, and capabilities, as well as contract goals, into consideration. However, the fact that there may be some additional costs involved in finding and using DBEs is not sufficient reason for a bidder’s failure to meet the Contract goal for DBE participation, as long as such costs are reasonable and comparable to costs customarily appropriate to the type of work under consideration.

Also, the ability or desire of a bidder to perform the work of a contract with its own organization does not relieve the bidder of the responsibility to make diligent good faith efforts. Bidders are not, however, required to accept higher quotes from DBEs if the bidder can show the price difference to be excessive, unreasonable, or greater than would normally be expected by industry standards;

(5) A bidder cannot reject a DBE as being unqualified without sound reasons based on a thorough investigation of the DBE’s capabilities. The DBE’s standing within its industry, membership in specific groups, organizations, associations, and political or social affiliations, and union versus non-union employee status are not legitimate causes for the rejection or non-solicitation of bids in the bidder’s efforts to meet the project goal for DBE participation;

(6) Making efforts to assist interested DBEs in obtaining bonding, lines of credit, or insurance as required by VDOT or by the bidder or Contractor;

(7) Making efforts to assist interested DBEs in obtaining necessary equipment, supplies, materials, or related assistance or services subject to the restrictions contained in this Special Provision;

(8) Effectively using the services of appropriate personnel from VDOT and from DSBSD;

available minority/women community or minority organizations; contractors’ groups;

local, state, and Federal minority/ women business assistance offices; and other organizations as allowed on a case-by-case basis to provide assistance in the recruitment and utilization of qualified DBEs.

C. In addition, the Department will scrutinize the bidder’s documented efforts, and will review the efforts of other bidders in meeting the DBE goal. For example, if the apparent low bidder fails to meet the goal, but other bidders meet it, a question may be raised as to whether, with additional efforts, the apparent low bidder could have met the goal. Alternatively, if the apparent low bidder fails to meet the goal but meets or exceeds the average DBE participation obtained by other bidders, the Department may view this, in conjunction with other factors, as evidence of the apparent successful bidder having made good faith efforts.

The Department will also require the bidder to submit copies of each DBE and non-DBE subcontractor quote submitted to the bidder when a non-DBE subcontractor was selected over a DBE for work on the contract to review whether DBE prices were substantially higher;

and contact the DBEs listed on a contractor's solicitation to inquire as to whether they were contacted by the bidder. Pro forma mailings to DBEs requesting bids are not alone sufficient to satisfy good faith efforts.

D. A bidder’s promise to use DBEs after contract award is not considered to be responsive to the contract solicitation or to constitute good faith efforts.

3. Bid Rejection: The failure of a bidder to submit the required documentation within the timeframes in accordance with this Special Provision will be sufficient cause for rejection of that bidder’s bid as non-responsive or non-responsible, as applicable. In such event, the Department may award the contract to the next lowest bidder, cancel the award and re- advertise the proposed contract at a later date, or proceed otherwise as determined by Department. The required forms and instructions for submitting them can be obtained from the VDOT website at:

https://vdotforms.vdot.virginia.gov/.

4. Administrative Reconsideration of Good Faith Efforts

Where the Department upon initial review of the bid results determines the apparent low bidder has failed or appears to have failed to meet the requirements of this Special Provision, that bidder upon notification of the Department’s initial determination will be offered the opportunity for administrative reconsideration before VDOT rejects that bid and awards the contract to the next lowest bidder. The bidder shall submit such request for reconsideration in writing to the State Contract Engineer within five (5) business days of receipt of notification by the Department and shall be given the opportunity to provide written documentation or argument concerning the issue of whether the bidder met the DBE goal or made adequate good faith efforts to do so to the https://vdotforms.vdot.virginia.gov/

Administrative Reconsideration Panel (Panel), either in person or by telephone or video conference as the Panel chooses. The Panel will be made up of VDOT Division Administrators or their designees, none of whom took part in the initial determination that the bidder failed to meet the goal or make adequate good faith efforts to do so. After reconsideration, the Panel shall notify the bidder in writing of its decision and explain the basis for finding that the bidder did or did not meet the goal or make adequate good faith efforts to do so.

If, after reconsideration, the Panel determines the bidder failed to meet the requirements of the Contract goal and has failed to make adequate good faith efforts to achieve the level of DBE participation as specified in the bid proposal, the bidder’s bid will be rejected.

If after reconsideration, the Panel determines sufficient documented evidence was presented to demonstrate that the apparent low bidder made reasonable good faith efforts, the Department will award the Contract and reduce the DBE requirement to the bidder’s actual commitment shown in the bidder’s Form C-111 submitted at the time of its bid. However, such action will not relieve the Contractor of its responsibility for complying with the reduced DBE requirement during the life of the Contract or any administrative sanctions as may be appropriate. The Contractor is still encouraged to seek additional DBE participation during the life of the Contract.

5. Contract Changes: During construction there may be changes in the Work necessary for the satisfactory completion of the Project. The DBE Contract goal applicable to the Contract includes change orders that have more than a minimal impact on the overall Contract amount or the expected DBE participation, regardless of whether the Department or the Contractor initiates the change order.

A. Increases in Contract Amount

To meet the DBE Contract goal as applied to a Change Order increasing the overall Contract amount, the Contractor must make good faith efforts to obtain additional DBE participation to meet the DBE Goal on the increase in the overall Contract amount. The Contractor may meet this obligation either by obtaining additional work from DBE subcontractors or suppliers or by documenting good faith efforts to do so.

For example, if a project has a 10% DBE participation goal, and during the project the Department issues a change order that will add $500,000 to the overall Contract amount, the 10% goal applies to this additional $500,000. To meet the DBE Contract goal as applied to the Change Order, the Contractor must make good faith efforts to obtain an additional $50,000 in DBE participation.

If the Contractor obtains additional DBE participation from existing or additional DBEs sufficient to meet the increased DBE Contract goal, the Contractor shall submit a revised Form C-111 exhibiting the DBE participation it commits to attain. If after making good faith efforts the Contractor is unable to obtain additional DBE participation, it shall document its good faith efforts by submitting a revised Form C-111 and Form C-49. If the Department determines that these Forms demonstrate that the Contractor made reasonable good faith efforts, the Department will reduce the DBE Goal to the Contractor’s actual commitment shown in the revised Form C-111. The Contractor is still encouraged to seek additional DBE participation during the life of the Contract.

The Contractor may notify the Department if it believes that a change order has such a minimal impact on the final net Contract amount or the expected DBE participation that it would not be sensible to apply the goal to the Change Order. The Department will contact the FHWA for guidance on whether it is necessary to alter DBE requirements affecting the Contract.

B. Decreases in Amount of DBE Work

If changes in the Work eliminate or decrease the amount of work designated to be performed by DBEs, the Contractor must follow the procedures for Termination of DBE, and must make good faith efforts to meet the Contract DBE goal by finding additional work for DBEs to perform or finding additional DBEs to perform work under the Contract to the extent needed to meet the Contract DBE goal.

(f) Compliance with DBE Requirements

1. Contractor Compliance

The District Civil Rights Office (DCRO) will monitor progress being made toward meeting the DBE goal based on Forms C-63 that the Contractor submits during the designated quarterly reporting period.

If the Contractor fails to conform to the schedule of DBE participation as shown on the progress schedule, or if at any point it is clearly evident that the remaining dollar value of allowable credit for performing work is insufficient to obtain the scheduled participation, and the Contractor has not taken the actions required when a DBE is unwilling or unable to perform, the Contractor may be disqualified from bidding as provided in the section on Disqualification of Contractor of this Special Provision (i) for a period up to ninety (90) days, (ii) until such time as conformance with the schedule of DBE participation is achieved, or (iii) until the Contractor has taken the required actions when a DBE is unwilling or unable to perform; whichever occurs last. Disqualification may be avoided if either of the following occurs: (1) the DBE is unable or unwilling to complete their portion of the work, and the Contractor shows reasonable good faith effort to achieve the DBE goal otherwise; or (2) the Department has eliminated or delayed work, or there have been quantitative underruns in work, which the Contractor as shown on the progress schedule had planned to sublet to a DBE firm.

2. DBE Non-Performance: If a DBE, through no fault of the Contractor, is unable or unwilling to fulfill their agreement with the Contractor, the Contractor shall immediately notify VDOT in writing and provide all relevant facts. If a Contractor intends to terminate, relieve a DBE subcontractor of the responsibility to perform work under their subcontract, substitute the certified DBE, or otherwise change the scope of work of the DBE, the Contractor is required to comply with the Termination of DBE section of this Special Provision.

3. Project Completion: If the Contractor fails upon completion of the project to meet the DBE goal or otherwise comply with the requirements of this Special Provision, the Contractor may be disqualified as provided in the section on Disqualification of Contractor of this Special Provision for a period of ninety (90) days. Disqualification may be avoided if the Contractor submits documentation to the State Contract Engineer substantiating that (1) the failure was due solely to quantitative underrun(s), elimination of items subcontracted to DBEs, or circumstances beyond their control; and (2) all feasible means have been used to obtain the required participation. The State Contract Engineer upon evaluation of such documentation shall make a determination whether or not the Contractor has met the requirements of the Contract in accordance with this Special Provision.

(g) Counting DBE Participation Toward Contract Goal

A DBE’s participation in the Contract will count toward meeting the Contract goal in accordance with the following.

1. DBE Participation: When a DBE participates in the Contract, only the value of the work, goods, or services that are performed or provided by the DBE will count toward the Contract DBE goal as provided below:

A. Count the entire amount of that portion of the construction contract (or other contract not covered by paragraph (B) below) that is performed by the DBE’s own forces, including the cost of the work, supplies, materials, equipment, or services performed or provided by the DBE and equipment leased by the DBE for the work of the contract, but excluding supplies and equipment a DBE subcontractor purchases or leases from the prime Contractor or its affiliates.

B. Count the entire amount of fees or commissions charged by a DBE for providing a bona fide service, such as professional, technical, consultant or managerial services, or for providing bonds or insurance specifically required for the performance of the Contract toward DBE goals, provided that the fee is reasonable and not excessive as compared with fees customarily allowed for similar services.

C. When a DBE subcontracts part of the work of its contract to another firm, the value of that subcontracted work may be counted toward the DBE goal only if the DBE’s subcontractor is itself a certified DBE. Work that a DBE subcontracts to a non-DBE firm does not count toward the DBE goal.

D. Commercially Useful Function (CUF): The Contractor may count expenditures to a DBE toward the DBE goal only if the DBE performs a Commercially Useful Function (CUF) on that contract as provided in the section on Performing a Commercially Useful Function (CUF) of this Special Provision.

E. Payment Required: A DBE subcontractor’s participation will not count toward the Contractor’s final compliance with its DBE obligations on the Contract until the Contractor has paid the DBE the amount being counted.

F. Joint Ventures: When a DBE performs work as a member of a joint venture with a non-DBE firm, the Contractor may count toward the DBE goal only that portion of the total dollar value of the Contract equal to the distinctly defined portion of the Contract work that the DBE has performed with the DBE’s own forces or in accordance with the provisions of this Section.

The Department shall be contacted in advance regarding any joint venture involving both a DBE firm and a non-DBE firm to coordinate Department review and approval of the joint venture’s organizational structure and proposed operation where the Contractor seeks to claim the DBE’s credit toward the DBE goal.

G. Cost-plus subcontracts will not be considered to be in accordance with normal industry practice and will not normally be allowed for DBE credit.

2. Suppliers: Expenditures with DBEs for materials or supplies will be counted toward DBE goals as follows:

A. DBE Manufacturers: the Contractor may count one hundred (100) percent of the cost of the materials or supplies obtained from a DBE manufacturer. For the purposes of this Special Provision, 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 project specifications. Manufacturing includes blending or modifying raw materials or assembling components 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. DBE Regular Dealers

(1) The Contractor may count 60 percent of the cost of materials or supplies (including transportation costs) purchased from a DBE regular dealer. For the purposes of this Special Provision, a regular dealer is defined as 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 and used 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.

(2) The Department will determine if a DBE is a regular dealer as described in this section, when the DBE over a reasonable period of time, keeps sufficient quantities and regularly sells the items in question. The Department will also ensure that a regular dealer of bulk items as described in this section owns or leases and operates the distribution equipment for the product it sells. The Department will determine whether each DBE supplier has the demonstrated capacity to perform a commercially useful function (CUF) as a regular dealer prior to its participation. The Department’s system will be maintained and used to identify all DBE suppliers with the capacity to be eligible for 60 percent credit, contingent upon performance of a CUF.

i. To be a regular dealer, the DBE firm shall 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 or equipment 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: at least 51 percent of the items under a purchase order or subcontract are provided from the DBE’s inventory; and when necessary, any of the other items under such purchase order or subcontract that are delivered from and by other sources are of the general character of those items provided from the DBE’s inventory.

ii. 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 where it keeps such items in stock if the DBE both owns and operates distribution equipment used to deliver the products;

provided further that the DBE is certified with an appropriate North American Industry Classification System (NAICS) code for supply of such bulk items. Any supplementation of a regular dealer’s own distribution equipment must be by a long-term operating lease and not on an ad hoc or contract-by-contract basis to be eligible for credit to meet the DBE contract goal.

iii. 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) should be considered in the same manner as a regular dealer of bulk items as described in this section. If, however, the DBE supplier of these items does not own or lease distribution equipment, as described above, it is not a regular dealer.

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

(3) If a DBE regular dealer is used for DBE contract goal credit, no additional credit will be given for hauling or delivery to the project site goods or materials sold by that DBE regular dealer. Those delivery costs shall be deemed included in the price charged for the goods or materials by the DBE regular dealer, who shall be responsible for their distribution.

C. DBE Distributors: If 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, the Contractor may count forty (40) percent of the cost of the materials or supplies (including transportation costs). 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, the Contractor may receive 40 percent credit for items drop-shipped by a DBE firm. 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. DBE Truckers or Haulers: A Contractor may count toward the DBE contract goal one hundred (100) percent of the fees paid to a DBE trucker or hauler for the delivery of material and supplies required on the project job site, but not for the cost of those materials or supplies themselves, provided that the trucking or hauling fee is determined by VDOT to be reasonable, as compared with fees customarily charged by non-DBE firms for similar services. A Contractor shall not count costs for the removal or relocation of excess material from or on the job site when the DBE trucker or hauler is not the manufacturer of or a regular dealer in those materials and supplies. The DBE trucker or hauler shall also perform a Commercially Useful Function (CUF) on the project and not operate merely as a pass through for the purposes of gaining credit toward the DBE goal. Prior to submitting a bid, the Contractor shall determine, or contact the VDOT Civil Rights Division or its district offices for assistance in determining, whether a DBE trucker or hauler will meet the criteria for performing a CUF on the project. See section on Performing a Commercially Useful Function (CUF); Factors Used to Determine if a DBE Trucking Firm is Performing a CUF.

E. DBE Brokers: If materials or supplies are purchased from a DBE who is not a manufacturer, a regular dealer, nor a distributor, as defined above, the Contractor may count the entire amount of fees or commissions charged that the Department deems to be reasonable, including transportation charges for the delivery of materials or supplies. The Contractor may not count any portion of the cost of the materials and supplies toward DBE goals. For the purposes of this Special Provision, a broker is a packager, manufacturer’s representative, or other person or firm who arranges, facilitates, or expedites delivery of materials, supplies, and equipment, or regularly arranges for, expedites, or facilitates the providing of project services as a course of routine business but does not own or operate the delivery equipment necessary to transport materials, supplies, or equipment to or from a job site.

F. The Department will determine the amount of credit awarded to a DBE for the provision of materials and supplies (e.g., whether a firm is acting as a regular dealer, distributor, or broker) on a contract-by-contract basis.

3. DBE Decertification: When the DSBSD or MWAA (referred to in this section individually or together as certifier) decertifies a DBE its participation will be counted toward the DBE goal as follows:

A. When the Contractor has made a commitment to use a decertified subcontractor, but a subcontract has not been executed, the decertified subcontractor’s work does not count toward the DBE goal. The Contractor must meet the DBE goal with an eligible DBE to the extent needed to meet the DBE goal, or must demonstrate that it has made good faith efforts to do so.

B. When the Contractor has executed a subcontract before the certifier notified the subcontractor of its decertification, the Contractor may continue to use the subcontractor and may continue to receive credit toward the DBE goal for the subcontractor’s work. In such case, however, the Contractor may not extend or add work to the subcontract after the subcontractor was notified of its decertification without the Department’s prior written consent.

C. When the Department has awarded a contract to a DBE prime Contractor, but the Contract has not been executed before decertification, the decertified Contractor’s work does not count toward the DBE goal. The Contractor must meet the DBE goal with an eligible DBE to the extent needed to meet the DBE goal or must demonstrate that it has made good faith efforts to do so.

D. When VDOT has executed a prime contract with a DBE firm that is later decertified, the portion of the decertified Contractor’s performance of the Contract remaining after the certifier issued the notice of decertification may continue to count toward satisfying the DBE goal.

E. The following exceptions apply to this section on Decertification:

(1) When a certifier decertifies a DBE solely because it exceeds the business size standard during the performance of the Contract, the Department will continue to count the portion of the decertified DBE’s performance of the Contract remaining after the firm received the notice of its decertification toward the DBE goal.

(2) When the DBE’s decertification is because it was acquired by or merged with a non-DBE, the Department will not continue to count the portion of the decertified DBE’s performance on the Contract remaining after the certifier decertified the DBE toward the Contract goal, even if the Contractor has executed a subcontract with the DBE or the Department has executed a prime contract with the DBE that was later decertified. If eliminating the credit of the decertified DBE firm will affect the Contractor’s ability to meet the DBE goal, the Contractor must subcontract to an eligible DBE to the extent needed to meet the DBE goal, or must demonstrate that it has made a good faith effort to do so.

(h) Performing a Commercially Useful Function (CUF)

No credit toward the DBE goal will be allowed for payments or expenditures to a DBE if that DBE does not perform a CUF on the Contract. A DBE performs a CUF when the DBE is solely responsible for execution of a distinct element of the Contract work and the DBE actually performs, manages, and supervises the work involved with the DBE’s own forces or in accordance with the provisions of the DBE Participation for Contract Goal Credit section of this Special Provision. To perform a CUF the DBE alone shall be responsible and bear the risk for the material and supplies used on the Contract, selecting a supplier or dealer from those available, negotiating price, determining quality and quantity, ordering the material and supplies, installing those materials with the DBE’s own forces and equipment where applicable, and paying for those materials and supplies itself. A determination as to whether the DBE is performing a CUF will be based on the amount of work subcontracted, industry practices, whether the amount the DBE firm is to be paid is commensurate with the work the DBE actually performs and the DBE credit claimed for the DBE’s performance, and other relevant factors.

1. Monitoring CUF Performance: It shall be the Contractor’s responsibility to ensure that all DBEs selected for subcontract work on the Contract, for which the Contractor seeks to claim credit toward the DBE goal, perform a CUF. Further, the Contractor is responsible for and shall ensure that each DBE fully performs the DBE’s designated tasks with the DBE’s own forces and equipment under the DBE’s own direct supervision and management or in accordance with the provisions of the DBE Participation for Contract Goal Credit section of this Special Provision.

For the purposes of this provision the DBE‘s equipment will mean either equipment directly owned by the DBE as evidenced by title, bill of sale or other such documentation, or leased by the DBE, and over which the DBE has control as evidenced by the leasing agreement from a firm not owned in whole or part by the prime Contractor or an affiliate of the Contractor.

VDOT will monitor the Contractor’s DBE involvement during the performance of the Contract.

However, VDOT is under no obligation to warn the Contractor that a DBE’s participation will not count toward the goal.

2. DBEs Must Perform a Useful and Necessary Role in Contract Completion: A DBE does not perform a CUF if the DBE’s 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, the Department will examine similar transactions, particularly those in which DBEs do not participate.

3. DBEs Must Perform the Contract Work With Their Own Workforces: If a DBE does not perform and exercise responsibility for at least thirty (30) percent of the total cost of the DBE’s contract with the DBE’s 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 involve, VDOT will presume that the DBE is not performing a CUF and such participation will not be counted toward the Contract goal. In such event, the DBE may present evidence to rebut the presumption. The Department may determine that the DBE is performing a CUF given the type of work involved and normal industry practices. If the DBE does not rebut the presumption, no DBE credit will be given for the work.

4. Final Determination On Whether a CUF Is Performed: The Department has the final authority to determine whether a DBE has performed a CUF on the Contract. To determine whether a DBE is performing or has performed a CUF, VDOT will evaluate the amount of work subcontracted by that DBE or performed by other firms and the extent of the involvement of other firms’ forces and equipment. Any DBE work performed by the Contractor or by employees or equipment of the Contractor shall be subject to disallowance, unless the independent validity and need for such an arrangement and work is demonstrated.

5. Factors Used to determine if a DBE Trucking Firm is performing a CUF

A. To perform a CUF the DBE trucking firm must be responsible for the management and supervision of the entire trucking operation for which the DBE is responsible by subcontract on the Contract. There cannot be a contrived arrangement for the purpose of meeting the DBE goal, including, but not limited to, any arrangement that would not customarily and legally exist under regular construction project subcontracting practices;

B. The DBE must own and operate at least one fully licensed, insured, and operational truck used in the performance of the Contract work. This does not include a supervisor’s pickup truck or a similar vehicle that is not suitable for and customarily used in hauling the necessary materials or supplies;

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

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

E. The DBE may also lease trucks from a non-DBE firm, including from an owner-operator. The DBE who leases trucks from a non-DBE is entitled to credit for the total value of the transportation services provided by non-DBE leased trucks equipped with…