Compliance Deep Dive: Good Faith Efforts

Overview

If the DBE commitments listed on Form 1415 are insufficient to meet the contract goal, the bidder must also submit Form 1416: Good Faith Effort Report, which will begin a process whereby CDOT will review the bidder's approach to meeting the contract goal to determine whether a good faith effort to achieve DBE participation has indeed been made.

Good faith efforts include all necessary and reasonable steps to achieve the contract goal which, by their scope, intensity, and appropriateness to the objective, could reasonably be expected to obtain sufficient DBE participation, even if not fully successful. Good faith efforts are evaluated prior to award and throughout performance of the Contract. For regulatory guidance on good faith efforts, see 49 CFR Part 26, Appendix A.

The following information is intended to provide insight into the types of factors CDOT will consider in conducting a good faith effort review, but is not intended to be a checklist. Further, addressing the items below on Form 1416 does not replace the obligation to make bona fide good faith efforts to obtain DBE participation.  The efforts employed by the bidder should be those that one could reasonably expect a bidder to take if the bidder were actively and aggressively trying to obtain DBE participation sufficient to meet the DBE contract goal. Mere pro forma efforts are not good faith efforts to meet the DBE contract requirements.

Good Faith Effort Review Considerations

A. Developing a Plan to Meet the Goal: In order to be considered “actively and aggressively” seeking to meet the contract goal, the bidder is expected to develop a plan to obtain DBE participation on the project.  The bidder should explain the plan when answering question 2(a) on the CDOT Form 1416. While this plan can take many forms, CDOT suggests the following:

  • Develop a DBE participation plan that identifies areas of the project that can reasonably be expected to meet the contract goal. The plan should identify potential work areas and projected amount of participation (in dollars and %) and provide flexibility for meeting the goal. In order to create a plan that can reasonably meet the contract goal, the bidder may need to create subcontracting opportunities from work it would traditionally self-perform.
  • Evaluate DBE availability for the work areas identified in the plan. To ensure that the plan can reasonably be expected to meet the contract goal, the bidder must determine whether there are DBEs available in the work areas identified by the plan. A listing of all currently Colorado certified DBEs can be found on the Colorado UCP DBE Directory at www.coloradodbe.org.  Multiple work codes may correlate to one work area.
  • If you cannot develop a plan that meets these objectives, explain why.

B. Making Efforts to Meet the Goal: After developing a plan, the bidder must execute a plan in a manner that demonstrates more than pro forma efforts.  The bidder’s efforts must be explained in its answer to question 2(b) of the Form 1416. CDOT suggests the following for executing your plan:

  • Solicit all available DBEs in relevant work areas for participation on the project and provide sufficient time for DBEs to respond. Solicitations may be direct communications with DBEs, distribution to relevant organizations, or postings in newspapers and other resources.  Direct communications are the most effective, but other efforts are encouraged.  Solicitations should include work areas for which the bidder is seeking participation, contact information, and plan viewing locations.  When submitting to CDOT, provide CDOT with a copy of your solicitations and proof of the distribution.  DBE contact information can be found on the UCP DBE Directory at https://coucp.dbesystem.com.
  • Follow up with DBEs to determine if they are interested in bidding on the project. Follow up may be in email or phone calls, but they should be tracked and documented.  DBE responses should also be documented.  This information should be submitted to CDOT as supporting information.
  • Track all quotes received from DBEs and non-DBEs. Include quoter name, quote work area and amount, DBE status, whether selected and, if applicable, reason for not selecting.  See the table attached to the Form 1416.  The revised DBE regulation requires CDOT to collect all quotes during a GFE review.
  • Provide full consideration to DBE quotes. The estimator should be directly involved in reviewing DBE quotes and making participation determinations.  CDOT understands that a bidder may have business reasons for not accepting DBE quotes. Such reasons for rejecting DBE quotes should be clearly explained and documented where possible.   The revised DBE regulation requires bidders to consider adjustments to schedules in order to obtain DBE participation.
  • Incur Reasonable Additional Costs to Obtain DBE Participation: Price alone is not a sufficient reason to reject a DBE.  The bidder must demonstrate that the cost is excessive and unreasonable.  Reasonableness is evaluated not only in terms of the dollar and percentage difference from one bidder to another, but also in light of the percentage of the total contract.
  • As necessary, revise the DBE participation plan in order to obtain DBE participation. In the event the contractor is unable to obtain DBE participation under the original plan or is receiving DBE quotes in other areas, it should consider revising the plan, unbundling and forgoing self-performance or portions of the contract.
  • Provide assistance to DBEs. Assistance may include providing the DBE help to understand technical and contract requirements of the project, obtain bonds and insurance for the project, and connect with others in the industry to obtain supplies, equipment or other materials for the project.  The bidder should be careful not to compromise the independence or potential commercially useful function of the DBE, therefore in no instances should bidders arrange supply purchases, negotiate on behalf of a DBE, lend equipment to DBEs, or directly pay DBE employees.
  • Other Good Faith Efforts. CDOT considers both the past efforts of the bidder and the DBE commitments of the other bidders for the project.  The bidder may submit any additional information that it believes lend to its demonstration of good faith efforts

C. Mistakes, Miscalculations and Replacements. There are times when a bidder submits a plan that appears to meet the contract goal, but upon review actually results in less eligible participation than necessary.  Such mistakes or miscalculations must be explained in response to question 2(c) on the Form 1416. In order to avoid such mistakes, the bidder should keep in mind the following:

  • The DBE must be certified in Colorado to perform the work upon submission of the Form 1414: Not only does the DBE firm need to be certified, the DBE must be certified in the particular work it is performing.  If the bidder has selected a DBE that is not certified, it will be presumed that the bidder did not make good faith efforts to meet the goal.  The contractor will need to provide justification that there was a reasonable basis to believe that the contractor was certified.
  • Good cause must be demonstrated to replace a DBE that was listed on the Form 1414: When a DBE has been listed on a Form 1414, the contractor must have good cause to replace the DBE.  Good cause is described in Section 6 of the DBE Standard Special Provision.
  • The bidder must properly count DBE participation: The bidder needs to review the DBE Standard Special Provision to ensure that DBE participation is being properly counted, particularly in the case of suppliers, brokers, and trucking firms.  If the Form 1415 reveals a deduction not previously known to the bidder that will affect the bidder’s ability to meet the contract goal, the bidder should contact the Civil Rights and Business Resource Center.

GFE Determinations & Next Steps

If CDOT determines that the bidder did not make good faith efforts to meet the contract goal, the bidder is entitled to administrative reconsideration. The CRBRC administrative reconsideration procedures can be found as Exhibit I, GFE Appeal Process in the DBE Program Manual.

CDOT may determine that the bidder made good faith efforts despite not securing sufficient commitments to meet the DBE contract goal. . Once CDOT determines that the bidder has met the contract goal, or made good faith efforts to do so, CDOT will issue an Approved DBE Participation Plan documenting the approved commitments, and the contract can be cleared for award.