Local Public Works Law

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Local Public Works Law

• By Wei Shi

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Local Public Works Law of 1977

• Local Public Works Law of 1977 a stipulation
  added to construction projects supported in part
  by federal funds that required 10 percent of the
  funds be diverted to minorities business
  enterprises (MBEs). Initially, MBEs were broadly
  defined to include minorities and women. Similar
  requirements are in common use on all public
  works projects, but the percentages may be
  different for MBEs and WBEs. The federal
  government currently refers to both groups as
  disadvantaged business enterprises (DBEs). These
  requirements are referred to as set-asides and
  continuing to experience considerable change.

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Disadvantaged Business Enterprise
(DBE)Definitions

• means a for profit small business concern that is
  at least 51 owned by one or more individuals who
  are both socially and economically disadvantaged
  or in the case of a corporation, in which 51 of
  the stock is owned by one or more such
  individuals and whose management and daily
  business operations are controlled by one or more
  socially and economically disadvantaged
  individuals who own it.

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Personal Net Worth

• the net assets of an individual after total
  liabilities are deducted. A person's net worth
  does not include the individual's equity in their
  primary residence and the ownership interests in
  the applicant firm.

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Small Business Concern

• means a small business as defined pursuant to
  section 3 of the Small Business Act and Small
  Business Administration regulations implemented
  in 13 CFR part 121 that also does not exceed the
  cap on average annual gross receipts specified in
  26.65.

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Socially Economically Disadvantaged Individuals

• any individual who is a citizen or lawfully
  admitted permanent resident of the United States
  whom is
  
• 1. Any individual who the HDOT finds to be
  socially and economically disadvantaged.
  
• 2. Any individual in the following groups,
  members which are reputably presumed to be
  socially and economically disadvantaged
  
• a. "Black Americans," which includes
  persons having origins in a Black racial groups
  in Africa
  
• b. "Hispanic Americans," which includes
  persons having of Mexican, Puerto Rican, Cuban,
  Dominican, Central or South American, or other
  Spanish or Portuguese culture or origin
  regardless of race
• c. "Native Americans" which includes
  persons who are American Indians, Eskimos,
  Aleuts, or Native Hawaiians
  

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Socially Economically Disadvantaged Individuals
(Cont.)

• d. "Asian-Pacific American," which includes
  person whose origin are from Japan, China,
  Taiwan, Korea, Burma (Myanmar), Vietnam, Laos,
  Cambodia (Kampuchea), Thailand, Malaysia,
  Indonesia, the Philippoines, Burnei,Samos, Guam,
  the U.S. Trust Territories of the Pacific
  Islands, (Republic of Tonga, Kiribati, Juvalu,
  Nauru, Federated States of Micronesia or Hong
  Kong
• e. "Subcontinent Asian American," which
  includes person whose origins are from India,
  Pakistan, Bangladesh, Bhutan, the Maldives
  Islands, Nepal or Sri Lanka
• f. Women
• g. Any other group whose members are
  designated as socially and economically
  disadvantaged by the SBA.
  

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The goal of the DBE Program

• The goal of the DBE Program is to ensure that
  firms owned and controlled by minorities, women,
  and other socially and economically disadvantaged
  persons have the opportunity to grow and become
  self-sufficient so that they are able to
  complete, on equal basis, with non-disadvantaged
  businesses for contracts and subcontracts in the
  transportation industry.

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Certified as a DBE

• To be certified as a DBE, a firm must be a small
  business owned and controlled by socially and
  economically disadvantaged individuals.
  Recipients get information about firms through
  on-site visits, personal interviews, reviews of
  licenses, stock ownership, equipment, bonding
  capacity, work completed, resume of principal
  owners, financial capacity, and type of work
  preferred.

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The DOT Disadvantaged Business Enterprise (DBE)
Program

• The Department of Transportation (DOT) has had in
  effect for more than 20 years a policy of helping
  small businesses owned and controlled by socially
  and economically disadvantaged individuals,
  including minorities and women, in participating
  in contracting opportunities created by DOT
  financial assistance programs. The Department,
  through its Operating Administrations,
  distributes in excess of 20 billion annually to
  help finance thousands of projects across the
  country. Approximately 85 of the assistance
  dollars is for construction. The major portion of
  the construction funds is allocated to State
  highway and transportation agencies for highway
  construction. The balance is provided to local
  public transit and airport authorities for mass
  transit and airport facilities.

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Gains

• According to the study, the goal program has had
  dramatic positive effects on DBE firms.
  
• The number of DBE contracts tripled between 1982
  and 1984 to nearly 12,000 and dollar volume rose
  from 430 million to 1.36 billion in constant
  1984 dollars.
• During that period, federal highway funding grew
  61.5 to 12.6 billion.

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Losses

• none of the constructors, subs and state
  officials with felt that the current DBE
  participation level has been consolidated in ways
  that suggest permanency.
• One problem is the fronts and illegal brokering
  that is used to meet the goals
  
• DBE contracting problems increased the cost of
  federal highway construction by 120 million, or
  0.65, between April 1983 and September 1984.
  Administrative costs added another 60 million

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Thanks?!