New rules on transit projects in Minn. take effect Friday
Published: October 21, 2010
Tags: AGC, Associated General Contractors of Minnesota, DBE, disadvantaged-business enterprise, Highway Division, Holte Contracting, Minnesota Department of Transportation, minority, Office of Civil Rights
By Brian Johnson
Dolan Media Newswires
Minneapolis — The Minnesota Department of Transportation is preparing to enforce new contracting provisions aimed at boosting participation of minority- and female-owned companies on federally assisted MnDOT projects.
Under the new provisions, which take effect Friday, the apparent low bidder faces firm deadlines and more paperwork related to adding disadvantaged contractors to the project team.
The goal is to promote earlier involvement in meeting diversity goals and to maximize opportunities for Disadvantaged Business Enterprises — typically female- and minority-owned companies — to participate in projects, according to MnDOT.
“We have been trying to assist the prime contractors and help them meet their goals in the last six to nine months,” said Mary Prescott, director of MnDOT’s Office of Civil Rights.
MnDOT’s disadvantaged business participation goal is 8.75 percent and the participation rate in the first half of this construction year was 6 percent, Prescott said.
That is up from 2 percent participation during the same period of last year’s construction season, she said.
Although there appears to be general agreement about the need to increase diversity, some contractors have concerns about the new provisions.
The biggest change: The apparent low bidder has five days to prove it met MnDOT’s goal for hiring disadvantaged businesses, or that it made a good faith effort to meet the goal.
In the past, the timeline has been more flexible, according to Tim Worke, director of the Associated General Contractors of Minnesota’s Highway Division.
“But the department is saying, ‘We are going to hold to a hard-and-fast five days and then a judgment is going to be made by our staff: Did you meet the goal or did you submit documentation constituting a good faith effort?’ … That is going to be interesting to see how that plays out,” Worke said.
According to MnDOT’s Office of Civil Rights, failure to comply will result in rejection bids.
MnDOT must ensure contractors make reasonable efforts to give disadvantaged businesses chances to land jobs, according to MnDOT’s Office of Civil Rights.
Participation goals vary, depending on factors such as the type of work, the project location and the availability of disadvantaged businesses to do the work.
Contractors can show they made a reasonable effort by, among other things, submitting copies of solicitation letters, faxes and e-mails to certified Disadvantaged Business Enterprise firms, according to MnDOT.
But some contractors said they wonder what qualifies as a reasonable effort. For example, if a DBE comes in with a bid that is 8 percent higher than other bidders, is it reasonable to reject that bid?
“The contractor looks at it and says, ‘Now you are digging into my pocket … because I am supposed to meet some artificial goal in this project,’” Worke said. “That is, in a nutshell, the push-back I hear.”
Another challenge is finding enough qualified contractors to meet the goals.
“We need to concentrate on building that pool of qualified, ready-and-able DBEs that can competitively bid on MnDOT projects,” said Dianne Holte, president and CEO of Ramsey-based Holte Contracting.
“You can put all the rules in place, but you still have to develop that pool of DBEs that are qualified and capable of doing the work.”
There’s also a balance between fostering a good relationship with contractors who truly are striving to meet the goals, and lighting a fire under those who aren’t making a good effort, Holte said.
Bottom line, she said, the new provisions have pros and cons.
“Unfortunately, what this (five-day rule) does, it really puts a burden on the (general contractors) that are really trying to adhere to the rule and be inclusive,” she said. “On the flip side, it takes some GCs that don’t have a big push to be inclusive and it forces their hand to try to do something.”