Counting DBE (MBE/WBE) Participation in the U.S. EPA DBE Program

The U.S. Environmental Protection Agency revised its Minority Business Enterprise (MBE) and Women’s Business Enterprise (WBE) program in May 2008. The new program is now the EPA Disadvantaged Business Enterprise (DBE) Program. The new program continues to require separate fair share targets for MBEs and WBEs. For purposes of counting participation, the term DBE applies to both MBE and WBE.

A. If a firm is not currently certified as a DBE at the time of the execution of the contract, the firm’s participation toward any DBE goals will not be counted.

B. The dollar value of work performed under a contract with a firm after it has ceased to be certified will not be counted toward the overall goal.

C. The participation of a DBE subcontractor toward the prime contractor’s DBE achievements or the overall goal will not be counted until the amount being counted toward the goal has been paid to the DBE.

D. When a DBE participates in a contract, the value of the work actually performed will be counted as follows:

1. The entire amount of that portion of a construction contract that is performed by the DBE’s own forces. Included is the cost of supplies and materials obtained by the DBE for the work of the contract, including supplies purchased or equipment leased by the DBE (except supplies, and equipment the DBE subcontractor purchases or leases from the contractor or its affiliate).

2. The entire amount of fees or commissions charged by a DBE firm 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 work toward DBE goals, provided that the Council determines the fee to be reasonable and not excessive as compared with fees customarily allowed for similar services.

3. When a DBE subcontracts part of the work of its contract to another firm, the value of the subcontract work may be counted toward DBE goals only if the DBE’s subcontractor is itself a DBE. Work that a DBE subcontracts to a non-DBE firm will not count toward DBE goals.

4. A recipient may not count expenditures to a MBE or WBE that acts merely as a broker or passive conduit of funds, without performing, managing or supervising the work of its contract or subcontract in a manner consistent with normal business practices.

E. When a DBE performs as a participant in a joint venture, the Council will count a portion of the total dollar value of the contract equal to the distinct, clearly defined portion of the work of the contract that the DBE performs with its own forces toward DBE goals.

F. The Council will count expenditures to a DBE contractor toward DBE goals only if the DBE is performing a commercially useful function on that contract:

1. A DBE performs a commercially useful function when it is responsible for execution of the work of the contract and is carrying out its responsibilities by actually performing, managing and supervising the work involved. To perform a commercially useful function, the DBE 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. To determine whether an DBE is performing a commercially useful function, the Council will evaluate the amount of work subcontracted, industry practices, whether the amount the firm is to be paid under the contract is commensurate with the work it is actually performing and the DBE credit claimed for its performance of the work, and other relevant factors.

2. A DBE does not perform a commercially useful function if its role is limited to that of an extra participant in a transaction, contract or project through which the funds are passed in order to obtain the appearance of DBE participation. In determining whether a DBE is such an extra participant, the Council will examine similar transactions, particularly those in which DBEs do not participate.

3. If a DBE does not perform or exercise responsibility for at least 50% of the total cost of its contract with its 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 involved, the Council will presume that it is not performing a commercially useful function, and no credit will be awarded to the recipient.

4. When a DBE is presumed not to be performing a commercially useful function as provided in this program, the DBE may present evidence to rebut this presumption. The Council may determine that the firm is performing a commercially useful function, given the type of work involved and normal industry practices.

G. The Council will use the following factors in determining whether a DBE trucking company is performing a commercially useful function:

1. The DBE must be responsible for the management and supervision of the entire trucking operation for which it is responsible on a particular contract, and there cannot be a contrived arrangement for the purpose of meeting DBE goals.

2. The DBE must itself own and operate at least one fully licensed, insured and operational truck used on its contract.

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

4. The DBE may lease trucks from another DBE firm, including 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 provides on the contract.

5. The DBE may also lease trucks from a non-DBE firm, including an owner-operator. The DBE who leases trucks from a non-DBE is entitled to credit only for the fee or commission it receives as a result of the lease
arrangement. The DBE does not receive credit for the total value of the transportation services provided by the lessee, since these services are not provided by the DBE.

6. For purposes of this section, a lease must indicate that the DBE has exclusive use of and control over the truck. This does not preclude the leased truck from working for others during the term of the lease with the consent of the DBE, so long as the lease gives the DBE absolute priority for the use of the leased truck. Leased trucks must display the name of the DBE.

H. The Council will count expenditures with DBEs for materials or supplies toward DBE goals as provided in the following:

1. The Council will count 100% of the cost of the materials or supplies toward DBE goals if the materials or supplies are obtained from a DBE manufacturer. For purposes of this paragraph, a manufacturer is a firm that operates or maintains 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 in the specifications.

2. The Council will count 60% of the cost of the materials or supplies toward DBE goals if the materials or supplies are purchased from a DBE regular dealer. For purposes of this section, a regular dealer is a firm that owns, operates or maintains a store, warehouse or other establishment in which the materials, supplies, articles or equipment of the general character described by the specifications and required under the contract are bought, kept in stock, and regularly sold to or leased to the public in the usual course of business.

I. To be a regular dealer, the firm must be an established, regular business that engages, as its principal business and under its own name, in the purchase and sale or lease of the products in question.

J. A person may be a regular dealer in such bulk items as petroleum products, steel, cement, gravel, stone or asphalt without owning, operating or maintaining a place of business if the person both owns and operates distribution equipment for the products. Any supplementing of regular dealers’ own distribution equipment shall be by a long-term lease and not on an ad hoc or contract-by-contract basis.

K. Packagers, brokers, manufacturers’ representatives or other persons who arrange or expedite transactions will not be considered regular dealers.

L. With respect to materials or supplies purchased from a DBE which is neither a manufacturer nor a regular dealer, the Council will count the entire amount of fees or commissions charged for assistance in the procurement of the
materials and supplies, or fees or transportation charges for the delivery of materials or supplies required on a job site, toward DBE goals, provided that the Council has determined the fees to be reasonable and not excessive as
compared with fees customarily allowed for similar services. The Council will not count any portion of the cost of the materials and supplies themselves toward DBE goals, however.

Completing Form 00480

All DBE firms which are listed in Part A of Document 00480 Disadvantaged Business Enterprise (DBE) WBE & MBE Information and Certifications must be: at time of contract award, designated as a DBE by the Minnesota Unified Certification Program (MnUCP). The MnUCP consists of professionals from the Metropolitan Airports Commission (MAC)/Minnesota Department of Transportation (Mn/DOT)/Metropolitan Council (Council). A searchable DBE directory is updated on a biweekly basis.

NOTE: The MnUCP directory does not specifically identify whether a business is women or minority owned. The bidder is responsible to determine the DBE’s appropriate category. For DBE’s that are both minority and women owned, the bidder can choose which category − MBE or WBE − they are applying the utilization. It is not permissible to split or divide a minority/women-owned DBE percentage between both categories.

If no DBE participation is proposed, the bidder must indicate so on the form. If no DBEs are listed, the bidder must complete Part B of form 00480.

The bidder’s response to the questions in Part B, and any requested support documents, will help determine if the bidder made good faith efforts for the contract.