(Responses provided by the U.S. EPA Office of Small Business Programs)

Q. Please clarify to what contracts the new DBE rule applies.

A. The DBE Rules apply to ANY procurements made utilizing EPA assistance agreement dollars. This is no different than the previous MBE/WBE program.

Q. We still want the DBE to contact the contractor (the contractor should not pick and chose DBEs from the bidders list)?

A. Although it is required that contract opportunities should be posted on websites, and public notices/advertisements be made to MBE/WBE companies as a whole (to comply with the good faith efforts and state requirements) it is perfectly acceptable to contact a company that the recipient believes to be a viable candidate for the contract work, and ask them to bid and compete for the position or simply refer them to the public notice that has been posted. For example, perhaps a company within the bidders list was not awarded a contract previously, but would be an ideal candidate for another job.

Q. The Department of Environmental Management negotiates these goals on behalf of the State. Are these goals still acceptable under the new rule?

A. Yes, the current goals are effective until 2010.

Q. Further explain EPA's 8% statute and EPA's 10% statute. For example, when does this apply?

A. The 8% and 10% statutes serve as the statutory authority for the DBE Program, and provide an overall, national goal for all Agency assistance programs.

Q. Do Tribes and Territories have to negotiate fair share objectives?

A. Under the DBE Rule, state agencies, Tribes, and Insular Areas are required to propose and negotiate their Fair Share Objectives/goals every three years, or more frequently if MBE and WBE availability has changed significantly since the goals were last negotiated with and accepted by EPA. Under the DBE Rule, Tribes and Insular Areas have a three-year phase-in period before they must negotiate the DBE Rule (that is by May 27, 2011). However, in some cases, grant recipients and loan recipients may be allowed to adopt the fair share objectives/goals of another agency or entity in their state if that recipient has a similar relevant geographic market and purchases similar goods and services on their EPA-funded projects. Details on the Fair Share negotiations requirement and procedures are contained in EPA's DBE Rule as well as the following EPA web site address: www.epa.gov/osbp.

Q. Can a contractor exclude or reject a DBE that is not certified at the time of procurement?

A. This would be based upon the state's procurement guidelines. EPA cannot dictate the State's procurement process. But in order for the firm to be included in the MBE/WBE goals for the reported procurement, the firm must be DBE certified (for EPA assistance awards issued after May 27, 2008). If the firm is used, and it is not DBE certified, it cannot be included in the MBE/WBE reporting.

Q. Are these changes only for construction contracts, or do they include any type of contract?

A. DBE Rule Changes apply to all contracts administered with EPA assistance agreement funds (awarded after May 27, 2008).

Q. Do we still require contractors to advertise and competitively bid?

A. Yes.

Q. We really struggle with the logic/need behind this requirement in our State where, with the exception of a rarely approved sole source procurement provision, all SRF/DWRF construction contact bids have to be obtained from public advertisement - so the lists would not be used in the procurement of construction services. Can our State be excused from this element of the DBE requirements in light of our SRF/DWRF public advertisement requirement?

A. No. There is no exemption from the bidders list requirement unless they fall within the 250K threshold. The bidders list is a list of companies that actually bid on your projects... not a pre-formed list that is used to solicit bids. While we encourage you to use the bidders list of companies that actually bid on your projects for future projects, it is not required.

Q. We understand that the below are additional contract requirements that our loan recipients must follow. Is it correct for us to require that our loan participants incorporate these clauses into their contract documents?

- prime contractor must pay subcontractor within 30 days of prime contractor getting paid;

- prime contractor should notify loan recipient in writing prior to terminating DBE subcontractor;

- prime contractor must use 6 good faith efforts if soliciting a replacement subcontractor even if it has achieved its fair share objectives;

- prime contractor must provide 3 forms to subcontractors;

- loan recipient must ensure that each contract awarded contains the term and condition set forth in Appendix A (SRF must ensure that its borrowers include this term and condition).

A. Yes, it is permissible to include these requirements in your contract documents. However, with the exception of including the clause in Appendix A, it is not required.

Q. Under what conditions may an EPA recipient apply the Agency's DBE Program requirements to a particular Agency grant that was awarded prior to EPA's DBE Rule (and which includes the older MBE/WBE Program terms and conditions)?

A. Recipients may apply and follow the new DBE requirements to individual grants awarded prior to the DBE Rule, with the stipulation that ALL of the new DBE provisions would apply -- not just the new reporting frequency. The recipients cannot pick and choose which program elements to adopt (e.g., solely request to be under the new reporting frequency); they would be subject to ALL of the new requirements.

Q. What procedures must an EPA grant recipient take before it may apply the new DBE Rules to individual grants conditioned with the older MBE/WBE program requirements?

A. The choice to apply all of the DBE provisions to an individual grant under the older program would need to be formalized via a grant amendment. The provisions of the new rule are applicable to amendments only where the recipient asks that the DBE program provisions be adopted as part of their amendment request. Alternatively, where a grant recipient has the capacity to track both the old and the new programs, they can choose to do that as well. In the case where supplemental and incremental funding is added to an existing grant, the old MBE/WBE provisions will continue to apply, because these are funding actions taken on an existing grant.

Q. Where can one find DBE prime and subcontractors to satisfy the DBE outreach requirement?

A. In addition to conducting business searches using the Central Contractor Registration System (www.ccr.gov), one can find certified DBEs using numerous state, Tribal, private, and other federal sources. A partial list of sources for finding DBEs can be found at www.epa.gov/region09/funding/managing.html.

Again, it is recommended that individual DBEs be asked to provide documentation to prove that they meet EPA's DBE certification criteria and standards.

Q. What DBE Program requirements should be included in the solicitations and contracts issued by EPA grant recipients and loan recipients? Is sample language available?

A. EPA does not provide sample solicitation or contract language. (No one set of sample language could accurately and appropriately apply to the varied procurement environments of EPA's numerous and geographically diverse grant recipients).

That said, EPA solicitations and contracts should, at a minimum, address the following DBE Rule Program requirements: 1) Fair Share Objectives (MBE/WBE goals); 2) Good Faith Efforts; 3) Recordkeeping and Reporting (including MBE/WBE utilization reporting); 4) New Contract Administration Requirements and Forms; and 5) New Bidders List Requirements. All contracts should include the Fair Share goals. Solicitations, including media announcements, should note that federal EPA funding is involved and encourage MBE, WBE, and other DBE to bid as prime and subcontractors.

Q. Does a DBE have to be on the bidders list to receive a contract?

A. No. The bidders list is a list of companies that actually bid on your projects... not a pre-formed list that is used to solicit bids. While we encourage you to use the bidders list of companies that actually bid on your project for future projects, it is not required.

Q. Section 40 CFR 33.501 (b) of the new DBE rule says in part "A recipient of a Continuing Environmental Program Grant or other annual grant must create and maintain a bidders list. In addition, entities receiving identified loans must create and maintain a bidders list if the recipient of the loan is subject to, or chooses to follow, competitive bidding requirements." Does this mean that the state, as an annual grant recipient, is required to maintain a bidders list?

A. Yes. If the state contracts in the category of equipment, construction, services, or supplies using its EPA grant funds, it must create and maintain a bidders list, unless it is within the $250K exemption threshold.

Q. What benefit is there to both the State and each loan recipient maintaining a bidders list?

A. In the instance of SRF programs, the state is required to create and maintain a bidders list only if the state is contracting for construction, equipment, services, or supplies. If the state is not doing any contracting with the SRF funds, then there are no bidders. If there are no bidders, there is no list.

The bidders list is typically already a part of standard good business practices for most state procurement systems. It makes good business sense to keep an email database of all those businesses that have bid for previous contract work and continue to send out notices of upcoming contract bids - referring them to the public advertisements of the work so that they can apply. Projects are still publicly announced (as required by your state) but you are also ensuring that those MBE/WBE's (and now certified DBEs) that have shown interest in the past are continuing to stay involved and in contact with the grant recipient, while at the same time are following requirements of the DBE Rule.

The requirement is to "create and maintain" a bidders list...not to use for the purpose of soliciting. The bidders list is to include entities that bid or quote on competitive procurements. The successful bidder is the one who wins the contract; however, the bidders list should include both successful and unsuccessful bidders.

Q. How does one know whether a particular DBE satisfies EPA's DBE certification criteria? Are there lists or databases that distinguish firms that meet EPA's DBE certification criteria from those that do not?

A. The simple approach may be to request that individual firms claiming to be a DBE provide documentation proving that they meet EPA's DBE certification standards. That said, the Central Contractor Registration system (www.ccr.gov) is well-populated with 8(a)/minority owned (MBE), women-owned (WBE), and small businesses (SBE). The business profiles resulting from the Dynamic Small Business Searches of the database would show if the firm is a SBA-certified Small Disadvantaged Business (SDB), which is one of the certifications that meet EPA's certification criteria/standards established in EPA's DBE Rule. DBE lists are available from state departments of transportation but only business owned by U.S. businesses would meet EPA's certification criteria.

Q. Is a prime contractor/bidder who elects not to subcontract out any of their project work required to conduct the Good Faith Efforts (i.e., the minimum outreach to DBEs)?

A. EPA does not require that the Prime Contractor/bidders conduct the Good Faith Efforts if they choose not to subcontract out their work. However, if the successful bidder/prime contractor changes its plan and later subcontracts part of the job, EPA requires the prime to conduct such Good Faith Efforts before such subcontracting. EPA grant recipients, sub-recipients, and loan recipients have the option to make the Good Faith Effort a matter or Bid Responsiveness.

Q. When does a loan recipient negotiate its own goals?

A. When the LOAN RECIPIENT'S procurement type and relevant marketplace is different than the SRF Grant Recipient, the loan recipient negotiates the goals with the SRF Grant Recipient (not with EPA). Negotiation must be completed within 120 days, and have supporting documentation justifying the proposed goals.

Q. When does the quarterly reporting responsibility expire for the 2008 cap grant; which cap grant was signed prior to the effective date of the new DBE rule? For example, we interpret the new rule to permit quarterly reporting until the 2008 cap grant is closed out. Semi-annual reporting under the new rule would begin upon signing the new 2009 cap grant. Thus, all loans closed after the signing of the 2009 cap grant would be reported semi-annually.

A. Correct.

Q. Do the DBE rules apply to earmarks?

A. The DBE Rules apply to any and all assistance agreements, and to all procurements made utilizing EPA assistance agreement dollars...earmarks included. Even if the assistance agreement is an earmark, the grant recipient still has to abide by the requirements of the DBE Rule.

Q. May an EPA grant recipient who has quarterly MBE/WBE reporting requirements specified in the terms and conditions of an individual grant automatically apply (i.e. switch to) semiannually reporting for those grants awarded prior to the establishment of EPA's DBE Rule?

A. Less frequent reporting (i.e., semi-annual reporting) would neither be automatically allowed nor necessarily applied to all of the recipient's individual grants. As mentioned above, the grantee would need to request and receive an amendment to the individual EPA grant(s) before the reporting frequency could be modified. Furthermore, all of the DBE-Rule provisions (not just the semi-annual MBE/WBE reporting requirement) would then apply to those amended grants.

Q. What DBE Program-related requirements should a SRF grant recipient communicate/provide to its loan recipients? Is information material available that summarizes the requirements for loan program recipients?

A. When notifying SRF loan applicants about their Federal requirements under the DBE Rule, the SRF grant recipient should develop or modify their existing boilerplate language to include the following items: (a) a listing of socioeconomic cross-cutting authorities (i.e., statutes and executive orders); (b) reference to and need for compliance with EPA's DBE Rule (40 CFR Part 33); (c) compliance with the non-discrimination clause listed in Appendix A of EPA's DBE Rule; and (d) a listing and brief description of the required Federal EPA Forms 6100-3 and 6100-4 that the loan recipient must complete and submit to the SRF grant recipient.

Federal boilerplate language for SRF Consultants and Contractors may be limited to Federal Requirements in (a) through (d) above (for SRF loan recipients) plus the following additional Federal requirements: (e) full compliance by the SRF Consultants and Contractors with 40 CFR Part 33 prior to an award of a consultant or construction contract; (f) compliance with the three contract administration requirements specified in Section 33.302 of the DBE Rule.

Note: If a state SRF Program has yet to develop or modify its Federal SRF boilerplate to address EPA's DBE Rule requirements, it may wish to contact other states for model language.

Q. In the case of SRF grants, do the DBE Rule provisions (or do the older MBE/WBE Program requirements) apply to SRF loan expenditures funded solely by EPA capitalization grants awarded before the DBE Rule became effective?

A. The MBE/WBE Program requirements (not DBE Rule provisions) would apply in this case. For example, expenditures under a SRF loan issued in August 2008 but using funds only from FY 2006 EPA CAP GRANT would NOT be subject to the DBE Rule requirements.

Q. When reporting MBE/WBE utilization under the EPA State Revolving Fund Program, is it acceptable to claim MBE and WBE participation generated from sources beyond the EPA capitalization amount(s) of the EPA grant?

A. An SRF recipient may elect to claim MBE/WBE participation generated above and beyond the EPA Cap Grants. "Above and beyond the EPA Cap Grants" means all procurement monies expended for construction, equipment, supplies, and services for EPA SRF projects which EPA funds capitalizes DIRECTLY. It does NOT include expenditures for SRF projects funded by reimbursement funds (i.e., MBE/WBE expenditures paid for by principal plus interest paid back by SRF loan recipients to ALL SRF projects in a particular state for a given SRF reporting period, including but not limited to EPA loan projects). When a EPA SRF grant recipient elects to claim MBE/WBE participation "above and beyond the EPA CAP Grant", it must also submit a "Total Procurement Amount" that includes not only the "MBE/WBE participation above and beyond the EPA CAP grants" but also a corresponding NON-MBE/WBE participation amount.

Q. When will new Fair Share Goals have to be negotiated?

A. Current Fair Share Goals will remain in place until FY 2010 (expire Sept 30, 2010).

Q. The definition of DBE includes more entities than just MBE/WBEs. However, is it correct that only the MBE/WBEs count toward the fair share objectives?

A. Correct.

Q. Is it correct to say that our loan recipients do not have to negotiate fair share objectives?

A. If the loan recipient has Similar Goods/Similar Geographic procurement market, they can ACCEPT goals of the EPA grant recipient awarding the loan. If there are Different Goods and Services/Different Geographic procurement markets, the loan recipient must NEGOTIATE goals with the state issuing the loan funds before funds can be expended.

Q. Who is responsible for assuring that the DBEs contacted for outreach purposes and being reported on EPA Form 5700-52A (MBE/WBE report) satisfy EPA's DBE certification criteria?

A. For purposes of accurate DBE outreach and MBE/WBE reporting, the EPA grant recipient is ultimately responsible for assuring the DBEs are certified in accord with EPA's DBE certification requirements. Although sub-recipients, loan recipients, and Prime Contractors may "certify" that the firms they are reaching out to and utilizing are certified DBEs", the EPA grant recipient should be monitoring these lower tier entities to ensure that they are in compliance with the DBE requirements.

Q. Must all EPA grant recipients negotiate "Fair Share" objectives (MBE/WBE goals), and what is the process and timeframe for negotiating the Fair Share Objectives (MBE/WBE goals) if a grant recipient wishes to propose goals that differ from those listed in the financial assistance agreement/grant?

A. All recipients of EPA financial assistance/grants must negotiate fair share objectives with the Agency. Proposed fair share objectives and supporting documentation must be submitted within 120 days after the acceptance of the assistance award. If the Agency includes Fair Share MBE and WBE goals in the terms and conditions of the grant, the recipient of that grant is usually not required to propose and negotiate different goals for that particular financial assistance agreement/grant during that 120 day period. Acceptance of the terms and conditions implies acceptance of the Fair Share objectives listed in the financial assistance agreement. Details on the Fair Share negotiations requirement are contained in EPA's DBE Rule as well as the following EPA web site address: www.epa.gov/osbp.

Q. How will SRF verify that the entity is indeed certified under the new DBE rule?

A. EPA suggests you request the firm's certification letter with their bid documents, or reference the database of certified firms that is maintained by the firm's certifier.