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Notice to Industry: DBE Commitments and PN 013

Background: Per Proposal Note 013, when bidding on a contract with a DBE contract goal, bidders are required to make a number of DBE-related decisions and to report these decisions to ODOT in the form of DBE Utilization Plans and, for the Apparent Low Bidder (ALB), DBE Affirmation Forms. Upon contract award, the Awarded Contractor’s DBE Utilization Plan/DBE Affirmation Forms become commitments to be honored, changeable only if consent is obtained from the Division of Opportunity, Diversity, & Inclusion (ODI) in advance, and then only with good cause. Failure by an Awarded Contractor to honor its DBE commitments may lead to sanctions, including reduced compensation. ODOT will be strictly monitoring and requiring complete compliance with this requirement starting March 1, 2022. This notice is an effort to not only remind the industry of this contractual requirement, but also communicate ODOT’s requirement, as a recipient of Federal funds, to fully monitor and ensure compliance with PN 013 on ODOT-let projects. 

PN 013 requirements: By including a DBE on its DBE Utilization Plan, a bidder is making a commitment (a commitment that is valid only if the bidder becomes the Awarded Contractor) to that DBE for a specific dollar amount. This dollar amount need not be the DBE’s entire quote amount. If selected as the ALB, the bidder must include, on the DBE Affirmation Form, specific details about work to be performed by the DBE/items to be supplied by the DBE. If awarded the contract, the details included on the DBE Affirmation Form become part of the DBE commitment.

To be considered for contract award, the ALB must either have made enough DBE commitments to meet the goal at bid time, or else have made Good Faith Efforts (GFEs) towards obtaining enough DBE commitments to meet the goal (even though it was unsuccessful in doing so). GFEs are subject to approval by ODOT’s GFE Committee, which reviews the completeness of the GFE documentation (including, but not limited to, attachments such as change order approvals, emails, phone logs, event logs, etc.) as well as the thoroughness of the ALB’s efforts.

ODOT is verifying and monitoring overall project goal attainment as well as ensuring individual DBE commitments from the DBE Utilization Plan are honored. If a DBE commitment cannot be honored, it is extremely critical from a compliance perspective that the proper paperwork and approval process is followed in advance of the Awarded Contractor making any changes to that DBE commitment.

ODOT strongly recommends the Awarded Contractor review its individual DBE commitments regularly, watching for any issues (including, but not limited to, ODOT-directed non-performances and market price reductions) that might prevent them from being honored. If the Awarded Contractor finds itself unlikely to fully honor a DBE commitment, it must submit a Request for Consent to Terminate/Reduce a DBE Commitment form to seek ODI’s consent to reduce or terminate the commitment. (This form will only be accepted if submitted through the process using OneSpan Sign.) ODOT will only grant consent to reduce or terminate a DBE commitment if it finds the Awarded Contractor has good cause for the reduction/termination. Good cause does not exist if the reduction/termination has already taken place (e.g., if the DBE already finished its work); if the Awarded Contractor seeks to self-perform work committed to a DBE (absent mitigating circumstances); or if the Awarded Contractor seeks to reassign work committed to a DBE to another DBE or non-DBE (absent mitigating circumstances). Mitigating circumstances might include cases where a DBE fails to perform its work per normal industry standards, or where a DBE voluntarily withdraws from the project. Good cause does not include any time or money savings that the Awarded Contractor may wish to achieve by reducing or terminating a DBE commitment.

If the Awarded Contractor self-performs work committed to a DBE, or reassigns work committed to a DBE to another DBE or non-DBE, without first obtaining ODOT’s consent, ODOT will determine the amount of the commitment that was not honored and deduct that amount from the Awarded Contractor’s total compensation for the project in accordance with PN 013 and the Code of Federal Regulations. 

The Awarded Contractor may need to continuously try to make additional DBE commitments to ensure its total DBE commitments equal or exceed the DBE contract goal amount (i.e., the current contract amount multiplied by the DBE contract goal percentage) if the Awarded Contractor did not meet the contract goal at bid time, or if the Awarded Contractor made commitments that met or exceeded the contract goal at bid time, and now finds that it cannot honor a commitment, and the remaining commitments are not enough to meet or exceed the contract goal amount. Furthermore, the Awarded Contractor must try to make additional DBE commitments if its contract amount increases due to change orders and its existing DBE commitments do not equal or exceed the new DBE contract goal amount. All efforts (GFEs) made towards making these additional DBE commitments must be documented by the Awarded Contractor. If, upon substantial completion of the project, the Awarded Contractor was not successful in getting its total DBE commitments to equal or exceed the DBE contract goal amount, the Awarded Contractor’s documented GFEs must be submitted to ODI for review by ODOT’s GFE Committee. The Awarded Contractor is subject to sanction for failure to make adequate GFEs and/or failure to adequately document the GFEs made.

If, at the end of a contract, the Awarded Contractor was not successful in fully honoring all of its existing DBE commitments on that contract, an explanation for each shortfall along with steps the Awarded Contractor will take to prevent future such shortfalls must be submitted to ODI for review by ODOT’s GFE Committee. The Awarded Contractor is subject to sanction, including, but not limited to, a letter of reprimand or damages equivalent to the shortfall, for failure to adequately explain the shortfall.

Any dollars paid to a DBE that is not on the DBE Utilization Plan and without a DBE Affirmation Form cannot and will not be counted towards the DBE contract goal. A DBE that is not on the DBE Utilization Plan can be added to the plan, but only future payments to that DBE will count towards the DBE contract goal. To add a DBE to the DBE Utilization Plan, the Awarded Contractor simply needs to submit a DBE Affirmation Form for that DBE (and a C-92 and subagreement, if the DBE is not already participating in the project) to DOT.ContractsLettingMgr@dot.ohio.gov for review and approval.

Anyone may visit www.dot.state.oh.us/CRL and click on Summary of Payment Records Entered in AASHTOWare Project for a Contract to see a project’s DBE Contract Goal, current commitments, and preliminary DBE contract goal attainment (based on payments).
PN 013 revisions: PN 013 will be updated soon to clarify ODOT’s DBE compliance requirements. This update will also enhance ODOT’s ability to issue sanctions in the event PN 013 processes are not followed. ODOT will keep the industry apprised of its progress and will share the revised version in 2022.  

ODOT appreciates the industry’s continued cooperation and effort to help ensure ODOT’s DBE Program is compliant. We look forward to our continued work together to maintain the success of ODOT’s DBE Program.

If there are questions about ODOT’s expectations, or if additional information is needed, feel free to contact Deborah Green, Administrator, Office of Business & Economic Opportunity, deborah.green@dot.ohio.gov, or David Walker, Accountability Manager, david.walker@dot.ohio.gov