WSR 19-09-070
PROPOSED RULES
DEPARTMENT OF TRANSPORTATION
[Filed April 16, 2019, 1:03 p.m.]
Original Notice.
Preproposal statement of inquiry was filed as WSR 17-04-100.
Title of Rule and Other Identifying Information: The rule would create chapter 468-17 WAC, Small and veteran-owned business enforceable goals program.
Hearing Location(s): On May 24, 2019, at 9:30 a.m., at the Transportation Building, Nisqually Room, 1D2, 310 Maple Park Avenue S.E., Olympia, WA 98504.
Date of Intended Adoption: May 24, 2019.
Submit Written Comments to: Jackie Bayne, 310 Maple Park Avenue S.E., Olympia, WA 98504-7314, email BayneJ@wsdot.wa.gov, fax 360-705-6801, 360-705-7084, by May 1, 2019.
Assistance for Persons with Disabilities: Contact Karen Engle, phone 360-704-6362, TTY 711, email Engleka@wsdot.wa.gov, by May 1, 2019.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The purpose and anticipated effects is to increase Washington state department of transportation (WSDOT) contracting opportunities for small and veteran-owned businesses. Currently, contracting opportunities are encouraged through voluntary means. The proposal would provide contracting opportunities through enforceable goals for small and veteran-owned businesses.
Reasons Supporting Proposal: Governor Inslee has published Results Washington Goals to increase contracting opportunities for minority, small, veteran, and women's business enterprises to contract with Washington state government. WSDOT is seeking to create a small and veteran-owned business enforceable goals program to increase minority, small, veteran, and women's business enterprise through race and gender neutral measures. The measures include ensuring that only eligible firms receive credit for and participate in the small and veteran-owned business enforceable goals program. As well as, augmenting the pool of qualified and competitive companies performing work on WSDOT projects, thereby increasing competition for contracts and reducing the cost of projects and creating new opportunities for firms to participate in Washington state transportation projects.
Rule is not necessitated by federal law, federal or state court decision.
Name of Proponent: Jackie Bayne, Policy Manager, WSDOT Office of Equal Opportunity, Baynej@wsdot.wa.gov or 360-705-7084, governmental.
Name of Agency Personnel Responsible for Drafting: Jackie Bayne, 310 Maple Park Avenue S.E., Olympia, WA 98504, 360-705-7084; Implementation and Enforcement: Earl Key, 310 Maple Park Avenue S.E., Olympia, WA 98504, 360-705-7091.
A school district fiscal impact statement is not required under RCW
28A.305.135.
A cost-benefit analysis is required under RCW
34.05.328. A preliminary cost-benefit analysis may be obtained by contacting Jackie Bayne, 310 Maple Park Avenue S.E., Olympia, WA 98504-7314, phone 360-705-7084, fax 360-705-6801, TTY 711, email
BayneJ@wsdot.wa.gov.
This rule proposal, or portions of the proposal, is exempt from requirements of the Regulatory Fairness Act because the proposal:
Explanation of exemptions: The cost-benefit analysis under RCW
34.05.328 satisfies the requirements of the Regulatory Fairness Act.
SMALL AND VETERAN-OWNED BUSINESS ENFORCEABLE GOALS PROGRAM COST-BENEFIT ANALYSIS
1. Introduction: RCW
47.28.030 provides that WSDOT may adopt rules to enable a larger number of small businesses and veteran contractors to compete for department contracts.
1.1. Purpose: Under the direction of the governor, WSDOT has voluntary minority, small, veteran, and women's business enterprise (MVSWBE [MSVWBE]) spending goals. WSDOT has been unable to meet the goals for minority business enterprises (MBE), veteran-owned businesses (VOB), and women business enterprises (WBE). To rectify the disparities in its spending, WSDOT's proposed rule of chapter 468-17 WAC would allow it to enact enforceable goals for small business enterprises (SBE) and VOBs. Although WSDOT has been meeting its SBE goals, WSDOT must enact race and gender neutral measures (i.e., SBE goal) before enacting race and gender conscious goals. The policy purpose is that enforceable SBE and VOB goals will increase WSDOT's diverse spend and meet the MSVWBE goals set by the governor.
1.2. Background: Under the results Washington strategic framework established in 2017 by Governor Inslee, WSDOT is expected to increase its diverse spend to:
| |
| • | Minority-owned businesses: 10% |
| • | Women-owned businesses: 6% |
| • | Veteran-owned businesses: 5% |
| • | Small businesses enterprises: 5% |
WSDOT has been unable to meet the targets for MBEs, WBEs, and VOBs. Currently, WSDOT's ability to address this is constrained by Initiative-200. However, as outlined by AGO opinion 2017 No. 2, WSDOT can enact race and gender conscious goals, such as enforceable goals for VOBs and SBEs. If those race and gender neutral enforceable goals fail to address the under-utilization of MBEs and WBEs, then WSDOT can enact enforceable race and gender conscious goals. The proposed rules follow that first step of enacting race and gender neutral goals as outlined by the attorney general's opinion.
1.3. Scope: The proposed rule will apply to all WSDOT state-funded projects including consultant services and construction.
2. Assumptions, Constraints, and Conditions: Assumptions made in this cost-benefit analysis include the following:
| |
| • | The implementation of enforceable VOB and SBE goals on state-funded projects would be comparable to the system already in place for federal-funded projects; |
| • | Recurring costs to maintaining enforceable VOB and SBE goals will likely be negligible as the infrastructure is already in place as WSDOT already sets enforceable goals on federal-funded projects. |
3. Description of Current v. Proposed: This chapter describes the current system that WSDOT already has in place versus the new system that is being proposed.
3.1. Current System: WSDOT currently sets voluntary MSVWBE goals on all state-funded projects. The voluntary goals are based on the amounts set by the governor. Enforceable goals are set for federal-funded projects. Although the proposed rules will have no effect on federal-funded projects, the existence of the enforceable goals on federal projects can serve as a comparison to what costs and benefits WSDOT can expect from enacting enforceable VOB and SBE goals on state-funded projects.
3.2. Proposed System: Under the proposed rules, WSDOT would be able to set enforceable VOB and SBE goals on state-funded projects. This proposed change would be comparable to what already is done for the enforceable goals set in federal-funded projects. Prime contractors would be expected to meet set VOB and SBE goals or show that good faith efforts to meet the goal were made. The amount of diverse spend has been shown to increase when enforceable goals are set on projects. By enacting enforceable VOB and SBE goals, WSDOT would likely increase the amount of spend with small businesses and veteran-owned businesses.
4. Cost Analysis: The chapter presents the costs for the development and operation for the proposed VOB and SBE enforceable goals. This section will calculate all costs to develop an estimate of the total costs.
4.1. Development Costs: Development costs are likely to be not significant in cost. WSDOT already has enforceable spending goals for federal-funded projects. Using the framework already established for federal-funded projects to set enforceable SBE and VOB goals will keep development costs to a minimum level.
4.2. Operational Costs: The primary costs of enacting enforceable goals would be most likely to come from any increased project costs. A potential source of increased project costs could be the result of enforceable goals increasing demand for VOB and SBE subcontractors. As a result of the increase in demand, VOB and SBE subcontractors could potentially raise their prices for primes to hire them as subcontractors. The prime contractors would then pass the extra costs off to WSDOT by raising the average amount of their bids. This in theory would increase the costs of WSDOT projects.
The best way to determine whether this scenario holds merit is to compare the costs of one hundred percent state-funded projects to one hundred percent federal-funded projects. Federal-funded projects have enforceable goals. If the theory that enforceable goals increase projects due to increased subcontractor demand is true, then one hundred percent federal-funded projects should cost significantly more than one hundred percent state-funded projects. A potential confound is that federal-funded projects have buy American and environmental requirements that state-funded projects do not. Those additional requirements could potentially confound the analysis. There is no way to separate the project costs from the costs resulting from the federal buy American and environmental conditions. Costs for federal projects could [be] due to the buy American and environmental regulations, not enforceable goals. However, this analysis is focused on whether enforceable goals will impact state project costs. Federal-funded projects having a significant probability of costing more would in fact prove the hypothesis.
A sample of state- and federal-funded projects were exported from WSDOT's office of equal opportunity's diversity management and compliance system. The sample was cleaned by removing outlier contracts greater that [than] $10 million. A quarter of projects were then randomly selected to determine whether the difference between the sample means were significant.
An F-test was used to determine whether the variances of the two samples were equal. The F value was equal to 1.88 which was larger than the one-tail F critical value of 1.67. Because the F value is larger than the F critical value, we can assume the variances of the two populations are unequal.
F-Test Two-Sample for Variances |
| Federal | State |
Mean | 1950791 | 1216715 |
Variance | 4.6E+12 | 2.45E+12 |
Observations | 52 | 40 |
df | 51 | 39 |
F | 1.879721 | |
P(F<=f) one-tail | 0.021263 | |
F Critical one-tail | 1.66513 | |
Based on the F-test results, a t-Stat assuming unequal variances could be used to determine whether the difference between the sample means were significant. The test yielded a t stat value of 1.90 which was less than the two-tail t critical value of 1.99. Based on those results, the null hypothesis that the samples are significantly different from each other cannot be rejected. Rather it appears that the presence of enforceable goals had no significant effect between the sample means. Even with the potentially confounding variables of the buy American and environmental requirements, the federal-funded sample does not significantly differ from the state-funded sample. Had the federal-funded project had a significant chance of being more expensive, additional analysis to attempt to eliminate the potentially confounding variables would be necessary to determine whether the expense was due to enforceable goals or the buy American and environmental regulations. Fortunately, that is unnecessary as the presence [of] enforceable goals with the buy American and environmental regulations do not have impact [on] the sample's lack of significance.
t-Test: Two-Sample Assuming Unequal Variances |
| Federal | State |
Mean | 1950791 | 1216715 |
Variance | 4.6E+12 | 2.45E+12 |
Observations | 52 | 40 |
Hypothesized Mean Difference | 0 | |
df | 90 | |
t Stat | 1.897913 | |
P(T<=t) one-tail | 0.030456 | |
t Critical one-tail | 1.661961 | |
P(T<=t) two-tail | 0.060913 | |
t Critical two-tail | 1.986675 | |
Since enforceable goals do not have a significant chance of increasing project costs, we can make an assumption that adding enforceable VOB and SBE enforceable goals is unlikely to result in any extra costs to WSDOT.
4.3. Project Cost Analysis: Based on the negligible development costs and the evidence that enforceable goals do not have significant effect on project costs, the total cost for enacting enforceable goals for VOB and SBE can be estimated to be approximately close to zero.
5. Benefit Analysis: This chapter describes benefits that can be assigned to enacting enforceable VOB and SBE goals on state-funded projects.
5.1. Tangible Benefits: A tangible benefit would result if the enforceable goals were likely to lower project costs. However, as described in the section on costs, the presence of or lack thereof [of] enforceable goals does not appear to have a significant effect on project costs. Since project costs are likely to remain unimpacted, there is no discernible tangible benefit to enacting enforceable VOB and SBE goals.
5.2. Intangible Benefits: The majority of benefits from enacting enforceable VOB and SBE goals is likely to [be] intangible benefits. Intangible benefits are benefits where the values are too difficult or impossible to quantify into dollars. In the table below are some likely intangible benefits to enacting enforceable VOB and SBE goals.
Intangible Benefits | Alternative 1 | Status Quo |
Increased probability of increasing VOB and SBE spend amounts. | + | - |
Following the steps outline[d] by the AGO's opinion. | + | - |
Possibility of race and gender neutral methods nullifying the need to move to race and gender conscious goals. | + | - |
Increase in the supply of VOBs and SBEs to meet the increased demand resulting from enforceable goals. | + | - |
Demonstration of WSDOT's commitment to remedying systemic forms of discrimination. | + | - |
5.3. Summary of Benefits: Overall, the tangible benefits for enacting enforceable VOB and SBE goals is likely to be zero to minimal. However, there are many intangible benefits to enacting enforceable VOB and SBE goals. WSDOT has been unable to meet diverse spending goals for veteran, minority, and women's business enterprises. Past performance has shown that diverse spend in federal projects is higher than the voluntary goals set in state-funded projects. Enforceable VOB goals will increase diverse spend with veteran-owned businesses. Before enforceable MBE and WBE goals can be enacted, WSDOT must first enact enforceable race and gender neutral goals. The proposed rules can be considered race and gender neutral. Having VOB and SBE enforceable goals will provide WSDOT the flexibility it needs to move on to enforceable race and gender conscious goals in the event that disparities in procurement remain. In conclusion, the amount of intangible benefits more than make up for the minimal tangible benefits likely to result from using enforceable VOB and SBE goals.
6. Cost and Benefit Comparison: This section compares the costs and benefits for the project. The purpose of this comparison is to identify if tangible and intangible benefits outweigh the total cost of enacting enforceable VOB and SBE goals on WSDOT projects.
6.1. Results of Tangible Benefits Comparison: Since the costs and tangible benefits are likely to be zero to minimal, there is unlikely to be a significant net or negative gain.
Benefit and Cost Comparison | Alternative 1 | Status Quo |
Total Tangible Benefits | $0 to minimal | $0 to minimal |
Total Costs | $0 to minimal | $0 to minimal |
Difference Between Costs and Benefits | $0 to minimal | $0 to minimal |
6.2. Results of Intangible Benefits Comparison: There are no intangible benefits to maintaining the status quo. In contract [contrast], there are five clear intangible benefits to enacting enforceable VOB and SBE goals.
Description | Alternative 1 | Status Quo |
Intangible Benefits | 5 | 0 |
6.3. Conclusion: Based on the amount of intangible benefits and the negligible costs associated with this proposed rule change, WSDOT can expect a net gain. Enforceable goals had no significant association with increased project costs. The infrastructure is already in place to enact enforceable VOB and SBE goals. The multiple intangible benefits are of significant value to WSDOT and the residents of Washington state.
March 14, 2019
Kara Larsen, Director
Risk Management and
Legal Services Division
Chapter 468-17 WAC
SMALL AND VETERAN-OWNED BUSINESS ENFORCEABLE GOALS PROGRAM
PART ONE
PURPOSE AND AUTHORITY
NEW SECTION
WAC 468-17-010Authority.
RCW
47.28.030 provides that the Washington state department of transportation (WSDOT) may adopt rules to enable a larger number of small businesses and veteran contractors to compete for department contracts.
NEW SECTION
WAC 468-17-020Purpose.
(1) The small and veteran-owned business enforceable goals program increases contracting opportunities for small and veteran-owned businesses with WSDOT in a race and gender-neutral fashion. The measures described in this chapter:
(a) Ensure that only eligible firms receive credit for and participate in the small and veteran-owned business enforceable goals program;
(b) Augment the pool of qualified and competitive companies performing work on WSDOT projects, thereby:
(i) Increasing competition for contracts;
(ii) Reducing the cost of public works projects;
(iii) Expanding the pool of talented and qualified consultants bidding on consultant agreements; and
(iv) Creating new opportunities for firms to participate in Washington state transportation projects.
(2) Increased participation by and opportunities for small and veteran-owned businesses, which shall be indicated by:
(a) New WSDOT subcontracts and subcontractors;
(b) New private sector contracts;
(c) Increased bonding;
(d) Increased gross receipts;
(e) Increased bidding; and
(f) Decreased disparity.
The secretary of transportation may, at his/her discretion, implement or suspend implementation of a small and veteran-owned business enforceable goals program based upon marketplace conditions.
PART TWO
GENERAL REQUIREMENTS
NEW SECTION
WAC 468-17-030Definitions.
The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
(1) "Award" means the formal decision by the department to accept a bid and the intent to enter into a contract with the bidder.
(2) "Commercially useful function" means the activity conducted by a firm responsible for the execution of the work of the contract and that is carrying out its responsibilities by actually performing, managing, and supervising the work involved. To perform a commercially useful function, the firm must also be responsible, with respect to materials and supplies used on the contract, for negotiating price, determining quality and quantity, ordering the material, and installing (where applicable) and paying for the material itself. Additional requirements are discussed in WAC 468-17-060.
(3) "Condition of award (COA)" means that a prime contractor or consultant, on a design-bid-build or consultant agreement, commits to subcontracting with a small business enterprise (SBE) or veteran-owned business (VOB). On design-build or general contractor/construction manager contracts, all SBEs and VOBs in the quarterly small and veteran business plans are considered COA firms.
(4) "Consultant agreement" means a contract entered into by a public body for architectural and engineering services (performed pursuant to chapter
39.80 RCW) with another party, i.e., an independent individual or firm, in which the other party agrees to perform a service, render an opinion, or recommendations according to the consultant's methods and without being subject to the control of the public body except as to the result of the work.
(5) "Contract goal" means a percentage of the contract award amount the prime contractor or prime consultant must meet with small, mini, micro and veteran-owned businesses in order to receive award of the contract:
(a) For design-bid-build contracts, the contract goal is a percentage of the prime contractor's total bid plus any executed change orders;
(b) For design-build and consulting agreements, the contract goal is a percentage of the original contract amount plus any executed change orders or supplements;
(c) For general contractor/construction manager contracts, the contract goal is a percentage of the maximum allowable contract cost (MACC) plus any executed change orders or supplements.
(6) "Department" means the Washington state department of transportation (WSDOT).
(7) "Design-bid-build (DBB) contract" means a contract between a public body and another party in which the public body contracts separately with a designer and a contractor for the design and construction of a facility, portion of the facility, or other item specified in the contract. Designers and contractors bear no contractual obligation to one another under a DBB contract.
(8) "Design-build (DB) contract" means a contract between a public body and another party in which the party agrees to both design and build the facility, portion of the facility, or other item specified in the contract as defined in chapter
39.10 RCW.
(9) "General contractor/construction manager (GC/CM)" means a contract between a public body and another party in which the party agrees to both build and manage the construction of the facility, portion of the facility, or other item specified in the contract as defined in chapter
39.10 RCW.
(10) "Good faith efforts (GFE)" means efforts to achieve a goal or other requirement of this chapter which, by their scope, intensity, and appropriateness to the objective, can reasonably be expected to fulfill the program requirement. GFE is not necessary when a contract goal has been met.
(11) "Mini-business" means any business that:
(a) Is owned and operated independently from all other businesses;
(b) Has a gross revenue of less than three million dollars annually as reported on its federal tax return or on its return filed with the department of revenue;
(c) Is self-certified as a "mini-business" through the Washington state department of enterprise services (DES); and
(d) Is listed as a "mini-business" on the Washington electronic business service (WEBS).
(12) "Micro-business" means any business that:
(a) Is owned and operated independently from all other businesses;
(b) Has a gross revenue of less than one million dollars annually as reported on its federal tax return or on its return filed with the department of revenue;
(c) Is self-certified as a "micro-business" through the Washington state department of enterprise services (DES); and
(d) Is listed as a "micro-business" on the WEBS.
(13) "Quarterly small and veteran business plans" means documents design-builders are required to submit which outline the strategies the organization will be utilizing to meet the established contract goals.
(14) "Small business enterprise (SBE)" means an in-state business that:
(a) Is owned and operated independently from all other businesses and has either:
(i) Fifty or fewer employees; or
(ii) A gross revenue of less than seven million dollars annually as reported on its federal income tax return or its return filed with the department of revenue over the previous three consecutive years; or
(b) Is certified with the office of minority and women's business enterprises (OMWBE) as a DBE, MBE, WBE or SBE under chapter
39.19 RCW; or is self-certified as a "small business enterprise (SBE)" through the Washington state department of enterprise services and is listed as a SBE on the WEBS.
(15) "Tiered participation" means the amount of additional contract goal credit the prime contractor or prime consultant may receive for using SBE and VOBs of different designations, as detailed in WAC 468-17-080.
(16) "Veteran-owned businesses (VOB)" means a business certified by the Washington state department of veterans affairs, pursuant to RCW
43.60A.190.
NEW SECTION
WAC 468-17-040Application of chapter.
The small and veteran-owned business enforceable goals program authorized under this chapter is limited to:
(1) Heavy construction public works contracts with a minimum engineer's or preliminary estimate of two hundred fifty thousand dollars and above.
(2) Consultant agreements with a minimum preliminary estimate of two hundred fifty thousand dollars and above.
NEW SECTION
WAC 468-17-050Condition of award goals.
On solely state-funded projects, the small and veteran business goals for participation of small and veteran-owned enterprises shall be as directed by the department or other state agencies conducting disparity studies. Presently these goals are set as follows:
(1) Veteran business goal of five percent; and
(2) Small business goal of five percent.
NEW SECTION
WAC 468-17-060Commercially useful function.
Under the enforceable goals program, commercially useful function (CUF) restrictions apply to all SBEs, mini-businesses, micro-businesses and VOBs. These businesses must perform a CUF in order for their participation to be counted against any condition of award goal. A business performs a CUF when it is both responsible for the execution of the work of the contract and it meets its responsibility under the contract by actually performing, managing, and supervising the work involved. If any materials or supplies are needed to perform the contract, the business must negotiate price, determine quality and quantity, order the material, install (if applicable), and pay for those materials or supplies itself.
Additional considerations when making a determination on a CUF are as follows:
(1) A SBE, VOB, micro-business or mini-business does not perform a CUF if its role is limited to that of an extra participant in a transaction or contract or it is involved in a project for the purposes of creating a semblance of SBE, VOB, micro-business or mini-business participation.
(2) Other relevant factors that may be considered when evaluating whether a SBE, VOB, micro-business or mini-business is performing a CUF include industry practices, the amount of work subcontracted and whether the amount the firm is to be paid under the contract is commensurate with the work it is actually performing.
(3) In addition, a business that functions as a supplier shall:
(a) Be the manufacturer of the goods or materials or assume the actual and contractual responsibility for furnishing the goods or materials and executing material changes in the configuration of those goods or materials; or
(b) Secure a contract or distributor agreement with a manufacturer to act as an independent authorized representative capable of passing on product warranties to the purchaser.
(4) Factors which may indicate that a supplier is not performing a commercially useful function include, but are not limited to, the following:
(a) A minimum amount of inventory is not maintained;
(b) Billing and shipping arrangements are performed by nonowners or staff of nonowners;
(c) A significant amount of deliveries are shipped directly from the producer or manufacturer to the end user;
(d) The firm does not take ownership of the product.
PART THREE
RACE AND GENDER NEUTRAL MEASURES
NEW SECTION
WAC 468-17-070Mandatory small and veterans' business program.
Small business enterprises and veteran-owned businesses intending to benefit from the small and veteran-owned business enforceable goals program must attain a SBE certification from OMWBE, a VOB certification from the Washington department of veteran's affairs, or be self-certified as a SBE, mini-business, or micro-business through the WEBS.
NEW SECTION
WAC 468-17-080Tiered participation in state goals.
(1) When WSDOT has determined tiered participation will be available on a contract, a prime contractor, design-builder, general contractor/construction manager or consultant may meet the small and veteran business goals by using any combination of qualified contractors or consultants (i.e., VOB or small business contractors including SBEs, mini-businesses and micro-businesses). Prime contractors may receive a multiplied credit for utilizing businesses that fall into certain categories. The categories and respective multipliers are as follows:
(a) Category A. SBEs, mini-businesses, micro-businesses and VOBs that have not worked with WSDOT in the past five years may be credited at four times the actual dollars paid.
(b) Category B. A micro-business not eligible for credit as defined in category A may be credited at three times the actual dollars paid.
(c) Category C. A mini-business not eligible for credit as defined in category A or B may be credited at two times the actual dollars paid.
(d) Category D. SBEs and VOBs that are not eligible for a credit as defined in categories A, B or C will be credited at the actual dollars paid with no additional multiplier.
(2) Prime and subcontractors are responsible for verifying their eligibility for tiered credit participation. Eligible firms submitting multiple quotes as categories A, B, C, and D firms, on multiple projects with bids due on the same week, shall be regarded as such on all projects that receive awards from quotes entered on that week.
NEW SECTION
WAC 468-17-090Small and veteran business plans.
(1) Prime contractors, design-builders, general contractors/construction managers and consultants must submit a small and veterans' business plan that specifies how the contractor will meet SBE and VOB participation goals, prior to the award of any contract. The small and veteran business plan for design-bid-build and consultant contracts must list all of the SBEs, VOBs, mini-businesses and micro-businesses that will participate in the contract; a description of the work that each SBE, VOB, micro-business or mini-business will perform; the dollar amount of the participation of each SBE, VOB, micro-business or mini-business; the contractor's written commitment to use the SBE, VOB, micro-business or mini-business submitted; and written confirmation from each SBE or VOB firm that it is participating in the contract in the kind and amount of work provided in the inclusion plan. The small and veteran business plan for design-build and general contractor/construction manager contracts must list in detail the contractor's means and methods that it will use to meet the goal and a commitment by the contractor to attempt to meet the goal. If the total SBE and VOB participation in the small and veteran business plan does not meet the condition of award goal, then the contractor must also submit evidence of good faith efforts (GFEs) to meet the contract goal. A contractor may be awarded a project only after WSDOT has approved its small and veteran business plan or confirmed its GFEs. Revisions of small and veteran business plans may be necessary prior to plan approvals.
(2) Quarterly small and veteran business plans are required for design-build and general contractor/construction manager projects. The first quarterly small and veteran business plan shall be submitted prior to contract award and must be approved by the department prior to contract execution. Subsequent small and veteran business plans must include information, as applicable, regarding:
(a) Small and veteran business goal attainment;
(b) A list all of the SBEs, VOBs, mini-businesses or micro-businesses that have been contracted to date;
(c) A description of the work that each SBE, VOB, micro-business or mini-business will perform;
(d) The dollar amount of the participation of each SBE, VOB, micro-business or mini-business;
(e) The contractor's written commitment to use the SBE, VOB, micro-business or mini-business submitted;
(f) Written confirmation from each SBE, VOB, micro-business or mini-business firm that it is participating in the contract in the kind and amount of work provided in the small and veteran business plan;
(g) Corrective actions necessary to meet the established goals;
(h) Outreach strategies;
(i) Innovative approaches to secure goal(s); and
(j) Other evidence of GFEs to meet the contract goal.
NEW SECTION
WAC 468-17-100Good faith efforts.
The efforts employed by the prime contractor, design-builder, or consultant should be commercially reasonable and should demonstrate that they are actively and aggressively trying to fulfill the established small and veteran business goals. Mere pro forma efforts are not commensurate with good faith efforts. Actions that may be considered as part of good faith efforts to achieve small and veteran business goals include, but are not limited to:
(1) Identification of interested small and veteran-owned firms that have the capability to perform the work of the contract;
(2) Providing reasonable time for SBE, VOB, mini-businesses and micro-businesses to fully and meaningfully respond to bid solicitations, that includes providing adequate information about the plans, specifications, and requirements of the contract along with timely responses to subcontractor inquiries and proposals;
(3) Apportioning contract work items into economically feasible units to facilitate SBE, VOB, micro-business or mini-business participation and where possible, establishing flexible time frames for performance to encourage participation;
(4) Effectively using the services of available veteran and small business community organizations, contractors' groups, local and state support offices, and other organizations in the recruitment and placement of targeted firms;
(5) Adequately researching interested subcontractors and their capabilities before rejecting their proposals;
(6) Not relying on price alone in the selection of subcontractors and considering reasonable quotes from SBE, VOB, micro-business or mini-business, even if other quotes are less expensive.
NEW SECTION
WAC 468-17-110Overhead reimbursement.
WSDOT shall reimburse each prime contractor or consultant five percent of the actual amount that the prime contractor or consultant paid to SBEs, VOBs, micro-businesses or mini-businesses and that is counted toward the goal. This overhead reimbursement is available only on construction projects, is to be based on actual dollars paid, excludes multiplier credits, and may not exceed one hundred thousand dollars for any prime contractor or consultant in a single calendar year. Overhead reimbursement payments will be made only after a contractor has fulfilled its small and veteran business goals. Reimbursement payments will not be paid to contractors for partial completion of aforementioned goals. No contractor may receive an overhead reimbursement if it meets the contract goal using work performed with its own forces.
NEW SECTION
WAC 468-17-120Sanctions.
(1) Upon completion of a project, a prime contractor performance report will display a contractor's goal attainment or GFE. Failure to meet the goal or provide an acceptable GFE may lead to the following sanctions:
(a) Suspension of a contractor's prequalification; or
(b) Liquidated damages as defined under RCW
62A.2-718.
(2) Failure to secure WSDOT approval on quarterly small and veteran business plans for design-build projects may also subject a prime contractor or consultant to fines, penalties, or sanctions, including:
(a) Suspension of a contractor's prequalification; or
(b) Liquidated damages as defined under RCW
62A.2-718.
NEW SECTION
WAC 468-17-130Severability.
If any provision of these regulations, or their application to any person or circumstance, is held invalid, the remainder of the regulations or the application of their provision to other persons or circumstances shall not be affected.
NEW SECTION
WAC 468-17-140Effective date.