development

Roads, harbors, and airports are economic engines, not just because of the commerce they convey but thanks to the capital invested in their construction. For this reason, the Alaska Department of Transportation and Public Facilities (DOT&PF) is, perhaps surprisingly, one of the more robust business development agencies in the state. With millions, and sometimes billions, of state and federal dollars to spend on contractors, DOT&PF wields enormous leverage that it uses to help small firms grab a piece of the infrastructure pie.

Among the eleven divisions within DOT&PF, the Civil Rights Office (CRO) has the potential to benefit small businesses through its affirmative action programs. These programs are designed to provide small businesses owned and operated by socially and economically disadvantaged individuals with a fair opportunity to compete for federally funded transportation contracts.

Leveling the Playing Field

In 1980, the US Department of Transportation (USDOT) created

By Rachael Kvapil

a flagship program to remedy discrimination by attaching conditions to federally funded highway, transit, and airport contracts. Title VI of the Civil Rights Act of 1964 and other nondiscrimination statutes provided the framework for financial assistance programs. The Disadvantaged Business Enterprise (DBE) program has four main objectives: to let DBEs compete for federally-funded transportation projects, to verify that only eligible firms participate as DBEs, to ensure that contractors comply with DBE laws and requirements, and to provide assistance so that companies can eventually compete outside the DBE program.

Aaron Nickols, business development and On-the-Job Training (OJT) program manager for DOT&PF, says applying as a DBE is a multi-step process. First, an applicant must meet specific criteria such as business status (including size), social and economic disadvantage, ownership, independence, and management and control. Though there are general guidelines defining these criteria, Nickols suggests speaking with a CRO representative or another support partner, such as the Alaska Small Business Development Center, Alaska APEX Accelerator (previously the Alaska Procurement Technical Assistance Center), or the US Small Business Administration.

“We always recommend that you look at the application and talk to us,” says Nickols. “The application process is not easy and requires a lot of documentation. The Civil Rights Office and our partner organizations can help with the process.”

DBE certification is awarded once a company completes the application and eligibility is determined. At that point, a DBE company qualifies for transportation-related contracts with federal funding, and information about a certified firm is listed in the DBE directory. To maintain eligibility, participating businesses must update their certification annually by providing an affidavit that no changes in their circumstances affect their DBE status.

Though DOT&PF runs the DBE program, Nickols says participating companies include more than just contractors and construction companies. He says the business categories that participate in the program consist of transportation companies, manufacturers, supply companies, administration services, retail and food establishments, vehicle rentals and repairs, consultants, and more. Since these business categories aren’t the type to bid on highway construction projects, contracts are sometimes written to require a percentage of DBE involvement, whether by allocating a percentage of funds to hire DBE firms or another requirement. Most of all, DBEs hired under these agreements must perform a “commercially useful function,” meaning that the company is responsible for a distinct scope of work outlined in the contract; carries out its responsibilities by actually performing, managing, and supervising the scope of work involved; and furnishes its own supervision, labor, tools, equipment, materials, and supplies necessary to perform that distinct scope of work. It’s the responsibility of the contractor to maintain DBE compliance.

Government vs. Commercial Contracting

Alaska APEX contract specialist Jody King says the DBE program is often small businesses’ first step into government contracting. Alaska APEX’s primary mission is to help businesses navigate all aspects of the government contract process, including the DBE program. As a partner organization with the CRO, they help promote the DBE program and assist applicants and existing certified companies. By working with an APEX representative, King says businesses can save a lot of time and frustration understanding the differences between working with government agencies and commercial businesses.

“In all aspects, we provide assistance from start to finish,” says King. “We are an educational bridge.”

King says the biggest hurdle businesses face when getting started is understanding the multi-step, indirect process of government contracts versus the more direct process of commercial contracts. With commercial contracts, a business builds a relationship with another person or company, provides a service quote, and negotiates an agreement. The person or business receiving the service has the financial authority to commit to a contract because funds come from private and commercial sources like banks and investors. However, a government contract requires more stringent requirements and additional steps because taxpayer money is involved. Only businesses certified for government contracts can enter the competitive procurement process before receiving a contract award. Eligible businesses do this by submitting proposals as part of a bidding process.

“The language of government contracts is daunting,” says King, “and many people say there is too much red tape. But once businesses become familiar with the process and the language, they find it much easier.”

As a publicly funded organization, services provided by Alaska APEX are free. King says it’s a great way for businesses to receive assistance and acquire resources without paying a small fortune.

Accomplishments and Potential Changes

At the 20th annual DBE and Subcontractor Conference held in March, the CRO highlighted several accomplishments from 2022. At the top of the list was a program participation rate of 9.5 percent, which exceeded the office’s annual goal of 8.3 percent. Furthermore, the CRO officially became one of seven race-neutral programs in the country, meaning that DBEs are able to procure prime or subcontracts that do not carry specific DBE contract goals. Additional 2022 accomplishments include thirty new DBE firms, hiring additional program staff, and increased outreach efforts by the CRO and its multiple partners.

“We track all participation in the DBE program,” says Nickols. “This includes direct interaction and work with a company in addition to the degree they experience success in the program.”

Nickols adds that there are potential changes to the program on the horizon. Last year, the Biden-Harris administration and the USDOT issued a Notice of Proposed Rulemaking to modernize the DBE and Airport Concession DBE program regulations. Though nothing is yet set in stone, some of the proposed updates include increased personal net worth limits from $1.3 million to $1.6 million and excluding retirement assets from the calculation; amending overly prescriptive ownership and control certification eligibility requirements; simplifying the interstate certification process; and reducing reporting requirements for some of the Federal Transit Administration funding recipients.

Ultimately, a business can exceed the parameters of the DBE program, whether through increased receipts beyond the limit, a change in ownership, or some other factor that results in ineligibility. Nickols considers it a significant success when a business becomes strong enough to thrive outside the program.

Other DOT&PF Programs

Though the DBE program is top of the list for the CRO, they also offer other programs that benefit Alaska businesses. One frequently used by contractors is DOT&PF’s OJT program, which provides minorities and women with increased participation in the highway construction industry. The program is implemented through contractors of selected federally funded highway projects that provide the necessary training to OJT apprentices. DOT&PF approves training programs before the contract award, and contractors are encouraged to work with the CRO after the contract award to ensure that training continues to meet the federal guidelines for their selected project. Since the OJT program is part of the contractor’s affirmative action requirements, the outcomes are further reviewed during the federal contract compliance process.

“We want to increase access and job opportunities for women and minorities while we also increase the labor pool in the construction industry so we can meet future demands,” says Nickols.

Other proposed changes include formally adopting COVID-19 flexibilities such as virtual on-site visits, allowing certified firms to better market themselves through expanded state directories, proactively removing obstacles that may hinder small businesses from participating in Federal Aviation Administrationassisted airport projects, and strengthening prompt payment monitoring and oversight requirements. The comment period on these proposals ended October 31, and there is no definitive timeline for integrating any of the proposed updates.

Though the DBE and OJT programs have specific criteria for women, minorities, and other socially and economically disadvantaged populations, Nickols says that all of Alaska benefits when small businesses can compete fairly for government contracts: “When we’re able to grow Alaska’s economy and provide job opportunities that keep our residents from moving out of state, then it is a win for everybody across the board.”

Information about both the DBE and OJT programs is available on the DOT&PF Civil Rights Office webpage: dot.alaska.gov/cvlrts. For further information about multiple ways to get started in government contracting, visit the APEX website: ptacalaska.org.