American DBE Magazine - Fall 2015

// FALL 2015

1

Improving Mobility

Ferrovial is a global leader in the finance, design, build, operation and maintenance of large, complex infrastructure projects.

Providing opportunities for small, disadvantaged, minority, woman-owned and local firms is fundamental to our success and the success of our projects.

2

// FALL 2015

2013 TxDOT Office of Civil Rights “Small Business Advocacy Award� winner for outstanding service in DBE programs.

// FALL 2015

3

From the Publisher

DBE Program – A Civil Rights Issue or A Good Business Strategy?

I

recently had the opportunity to attend the 2015 Annual Legislative Conference hosted by the Congressional Black Caucus Foundation in Washington, DC. I attended two sessions during the event that caused me to re-think a question I have considered several times over the years; but one that resurfaces occasionally in need of a fresh look.

The question is this: Is the DBE Program (along with other minority & women business programs) a civil rights issue, a business competitiveness issue, or both?

The two sessions I attended were the “Diversity in Tech” session hosted by Representative G.K. Butterfield (D-NC) featuring a presentation by the Reverend Jesse Jackson; and the “Transportation Braintrust” session hosted by Representative Elijah Cummings (D-MD) featuring the Conference of Minority Transportation Officials (COMTO) moderating a panel discussion with leaders in the transportation industry.

In the Diversity in Tech session, Rev. Jackson discussed his advocacy work in Silicon Valley and throughout the technology industry addressing the lack of African American and Hispanic participation. “We don’t have an availability issue, we have an opportunity issue,” Jackson said, as he pointed out that there are African Americans and Hispanics who are qualified, but not receiving the same opportunity as others in the technology industry.

During the Transportation Braintrust session, Wendell Stemley, president of the National Association of Minority Contractors, raised a similar point when he said, “Blacks are getting shut out of the transportation industry in states like Tennessee, where DBE participation by African American contractors is almost zero.

That’s unacceptable.”

These two statements by leaders in the minority community underscore the ongoing challenge of advancing civil rights in the economic and business environment. The challenge is somewhat different than the challenges in other areas of civil rights like slavery, women’s suffrage, and Jim Crow legislation. The difference is that civil rights programs designed to address economic and business equality must be accompanied by affirmative action to reverse the damage caused by the aforementioned forms of discrimination.

4

// FALL 2015

And there lies the rub – although minorities and women now have full access to employment and contracting opportunities in today’s society, the rate of progress is virtually non-existent unless affirmative action is applied to convert the access into participation and inclusion. The former civil rights challenges required that people stop doing something (enslaving people, restricting voting, or denying access), but now economic and business inclusion programs require people to start doing something (hiring, recruiting, and contracting).

However, while the required actions are different, the potential benefits are the same – a better society. Although slavery, women’s suffrage, and Jim Crow laws were hotly contested issues at one time, no reasonable person would argue today that America is worse off because these practices were eradicated. Similarly, even though there is opposition and/or indifference by some people to programs that advance minority and women businesses, I believe time will show that these programs are the best course not only for minorities and women, but for America as a whole.

So, my answer to the question remains that the DBE program is both a civil rights issue and a good strategic business opportunity.

It is a civil rights issue, complete with all of the opposition, heartache, and difficulties faced during other civil rights struggles.

But it is also a great opportunity to advance America through the development of untapped talent and resources currently underutilized in our society.

This latest issue of American DBE delves into the conflicting challenges by looking at successful DBE program efforts at the Jacksonville Transportation Authority and in Dallas on the LBJ Expressway Project; and also looking at struggling DBE programs in Washington State and Ohio. Both of the latter programs are currently operating under a conciliation agreement with the Federal Highway Administration due to their DBE programs being found in noncompliance.

This issue also looks at four DBE firms that exemplify the capability of the DBE program to transform business owners into business and community leaders by allowing their businesses to create jobs, wealth, and role models for others to follow. Fortis Networks, eStudio Architecture, Touchstone Hospitality, and Whitman May Enterprises all represent the full potential and benefit of the DBE program. Enjoy!

Sincerely yours, Shelton A. Russell, Publisher American DBE Magazine

Fall 2015 Volume 3, Issue 2 Publisher: Shelton A. Russell Managing Editors: PR PROS, LLC Creative Director: BRANDilly MC Digital Media: Premier Web Design Solutions Editorial: Melinda D. Carter Jeff P.H. Cazeau Joy Charles Colette Holt, Esq. Philip D. Russell Shelton A. Russell Richard Shealey Jordan Taylor

“That’s The Way We’ve Always Done It” Just Doesn’t Get It Anymore.

We get that.

Headquarters: 514 Daniels Street, #186 Raleigh, NC 27605 Web site: www.AmericanDBE.com Social Media:

Does Your PR Effort Need A Fresh Approach?

We’ve Got Solutions.

About American DBE Magazine: American DBE Magazine is the premier PublicRelationsCopywritingSocialMediaManagementCrisisCommunica industry resource for individuals and stakeConnectholders Blog Link Hangout Share—REPEAT—Post Post Tweet Email Blog Pin Hangout Share—REPEAT— TweetPublish Publish EmailConnect Connect BlogLink Link Pin Hangout Share who Pin work within the federal Disadvantaged Business Enterprises proocialMediaManagementCrisisCommunicationsMediaCoachingBrandEnhancementMediaMonitoringDigitalMedia gram administration. American DBE Mag- PublicRelationsCopywritingSocialMediaManagementCrisisCommunicationsM azine is published quarterly and distributed Post Tweet Publish Email Connect Blog Link Pin Hangout Share—REPEA in all 50 states—plus Puerto Rico and the U.S. Virgin Islands—to DBE program PublicRelationsCopywritingSocialMediaManagementCrisisCommunicationsMediaCoachingBrandEnhancement PublicRelationsCopywritingSocialMed administrators, business owners, and professionals in the Aviation, Highway ConTweetPublish Publish EmailConnect Connect Postand Tweet Email Connect Blog Link Pin Hangout Share—REPEAT—Post Post Tweet Email Bl struction, PublicPublish Transit industries.

Subscriptions: American DBE Magazine is published quarterly in Fall, Winter, Spring and Summer editions. The annual subscription rate is $19.99 including online editions, special industry reports, and four issues; single copy list price is $5.99 plus postage originating from Raleigh, North Carolina.

globalPRpros.com

Advertising Sales: editor@AmericanDBE.com (919) 810-4954 office

// FALL 2015

5

B2GN

W

The Nation’s Leading Diversity Management Software

Your trusted source for contract compliance, certification, outreach, goal setting, EEO, bid compliance, OJT, spend analysis, and vendor management systems.

Visit us today at

B2Gnow.com 6

// FALL 2015

25 Featured on Cover: eStudio owners Fabricio(l) and Manuel(r) Esquivel celebrate their AMAC awards with Rhonda Arnold of the Houston Airport System

FEATURES 08 10 15

HD Supply Waterworks

HD Supply Waterworks to Pay Nearly $5 Million to Resolve Grant Fraud Allegations

WSDOT & ODOT

FHWA Investigations Expose DBE Program Challenges

Made from Scratch

Two ACDBEs Take the Independent Route to concessions ownership

TRANSPORTATION TRENDS 18

Highways

21

Aviation

25

LBJ Express Project Exemplifies Equal Opportunity AMAC Award Winner eStudio Architecture Designing Opportunity

Transit

COMTO Welcomes New CEO to the Family

21

18

DBE POWER PLAYERS 28

Fortis Networks

32

Jacksonville Transportation Authority: Taking the Lead with DBEs

Fortis Networks Mixes the Right Ingredients for Success

ALSO IN THIS ISSUE 35 36 40 42 43 45

Small Business and 21st Century Marketing The Importance of Effective Subcontractor Due Diligence How DBE Certified Businesses Can Protect Themselves from USDOT Scrunity Federal Court of Appeals Upholds Agency Finding that Prime Contractor Did Not Make Good Faith Efforts Melinda D. Carter – Industry Perspective (Opinion) NAMC Wins Big at Las Vegas National Conference

// FALL 2015

7

hd supply waterworks to Pay Nearly $5 Million to Resolve Grant Fraud Allegations Waterworks Supplied Materials on Several Federally Funded Contracts Where Invoices were Passed Through a Disadvantaged Business Enterprise in Violation of Law.

H

D Supply Waterworks (Waterworks)—the Nation’s largest supplier of water, sewer, fire protection and storm drain products—has agreed to pay the United States $4,945,000 under the False Claims Act to resolve allegations that it participated in a scheme designed to take advantage of the Disadvantaged Business Enterprise (DBE) program in order to obtain subcontracts on federallyfunded projects, announced United States Attorney Richard S. Hartunian.

The United States Department of Transportation (DOT) and the United States Environmental Protection Agency (EPA) have promulgated regulations intended to provide opportunities for businesses owned by socially and economically disadvantaged individuals to perform work on projects financed, at least in part, by the federal government.

Those agencies also administer DBE programs that require state and local governments receiving federal funding to establish goals for the participation of DBEs on federally-funded projects. A contractor may claim credit for a DBE’s participation on a project only if the DBE serves a commercially useful function. A DBE does not serve a commercially useful function if its role is limited to that of an extra participant to a transaction through which funds are passed to create the impression that one or more members of a historically disadvantaged group worked on a project.

8

// FALL 2015

In 2008, authorities began investigating prime contractors that claimed to have conducted business with the now-defunct American Indian Builders & Suppliers, Inc. (AIB), a Native American owned company certified as a DBE in New York and in other states. The investigation revealed that several prime contractors listed AIB as a subcontractor that had worked on or supplied materials for federally-funded projects when it did neither. Instead, a third party that would not itself qualify as a DBE performed the work or supplied the materials, and

received much of the financial benefit.

For its role, AIB would collect a small percentage of the subcontract amount as compensation for the fraudulent use of its name and DBE status.

The government alleges that Waterworks enabled several prime contractors to represent falsely that AIB had performed a commercially useful function on federally-funded contracts by negotiating price and other terms of sale when, in reality, the prime contractors had negotiated such terms with Waterworks

and used AIB as a pass through. Waterworks acknowledged in the settlement agreement that AIB served as a pass-through by collecting invoices from Waterworks, transferring the information from those invoices to AIB’s own invoices, adding a markup, and passing the AIB marked-up invoices on to the prime contractors. The government alleges that the conduct described above enabled prime contractors to certify falsely that AIB supplied materials when the parties—i.e., Waterworks, AIB, and the prime contractors—knew that was not the case, resulting in the submission to government entities of false or fraudulent claims for payment from federal funds.

United States Attorney Hartunian said: “Waterworks enabled prime contractors to certify falsely that American Indian Builders & Suppliers served as a subcontractor on governmentfunded projects, thwarting the program’s objective of creating a level playing field for legitimate minority and women-owned businesses to compete fairly on such projects. As this case demonstrates, my office will vigorously pursue unscrupulous contractors who engage in schemes to divert grant funds away from those for whom the money was intended.”

“Disadvantaged Business Enterprise fraud like that perpetrated

by HD Supply Waterworks harms the integrity of the DBE program and law-abiding contractors, including many small businesses, by defeating efforts to ensure a level playing field in which all firms can compete fairly for contracts,” said Douglas Shoemaker, regional Special Agent-in-Charge of the DOT Office of Inspector General (DOT-OIG). “Our agents will continue to work with the Secretary of Transportation, the Administrator of Federal Highways, and our federal, state, and local law enforcement and prosecutorial colleagues to expose and shut down DBE fraud schemes that adversely affect public trust and DOT-assisted highway programs throughout New York and elsewhere.” EPA OIG will continue to work to ensure that the Disadvantaged Business Enterprise programs are used for

their intended purposes,” said Thomas Muskett, Special Agent in Charge for the EPA Office of Inspector General’s Washington Field Office, which covers the mid-Atlantic and northeastern United States. “Our agents are pleased to have contributed to the successful resolution of this investigation.”

The investigation and settlement were the result of a coordinated effort among the United States Attorney’s Office for the Northern District of New York, DOT-OIG, EPA-OIG, and the Federal Bureau of Investigation, with the assistance of the United States Department of Justice’s Civil Division and the New York State Department of Transportation’s Investigations Bureau. The United States was represented by Assistant United States Attorney Adam J. Katz.

Subscribe to

In-Depth Industry Coverage Subscribe Online at www.AmericanDBE.com Call Today!

(919) 810-4954

// Calendar of Events National Association of Women Business Owners (NAWBO) National Women’s Business Conference September 27-29, 2015; San Antonio, Texas www.nawbo.org

National Minority Supplier Development Council 2015 Conference and Business Opportunity Exchange October 18-21, 2015; San Diego, California www.nmsdc.org/conference/

Airport Minority Advisory Council (AMAC) Southeast Regional Forum October 15, 2015; Jackson, Mississippi www.amac-org.com

Airport Minority Advisory Council (AMAC) Western Region Economic Opportunity and Policy Forum December 2-3, 2015; Los Angeles, California www.amac-org.com

Women’s Business Enterprise National Council (WBENC) 2015 National Conference & Business Fair June 23-25, 2015; Austin, TX www.conf.wbenc.org

// FALL 2015

9

WSDOT & ODOT FHWA Investigations Expose DBE Program Challenges

WSDOT’s $1.1 billion Alaskan Way Viaduct project in Seattle is on track to achieve an 8 percent DBE goal after an FHWA investigation.

R

ecent investigations by the Federal Highway Administration (FHWA), including a Title VI investigation of the Washington State Department of Transportation (WSDOT) and a DBE Compliance Review of the Ohio Department of Transportation (ODOT), have highlighted DBE program challenges and emphasized the need for stronger program oversight by federal officials. The WSDOT and ODOT DBE programs have been found noncompliant after investigators found several problem areas in both states. The problem areas include a lack proper oversight by agency leaders; a diluted DBE program structure that limits accountability and authority; a lack of effective compliance procedures for ensuring primes contractors make good faith efforts to include DBEs performing a commercially useful function; and a lack of procedures to confirm that DBE participation is accurately reported. To address these issues, the FHWA has

10

// FALL 2015

entered into conciliation agreements with both agencies requiring them to make substantial program improvements in order to be in compliance and eligible to receive federal funding for transportation projects.

FHWA’s investigation of WSDOT stemmed from a Title VI complaint alleging discrimination by WSDOT and the prime contractor on the Alaskan Way Viaduct Bored Tunnel Project (AWV) in Seattle. The complaint was filed by Elton Mason, the owner of Washington State Trucking--a DBE firm located in Kirkland, Washington.

The complaint said that WSDOT failed to provide proper oversight and administration of the DBE program on the AWV Project, which allowed discriminatory practices by Seattle Tunnel Partners (STP), the prime contractor on the project. FHWA’s subsequent investigation found Mason’s complaint to be valid, concluding that WSDOT was

noncompliant in administering the DBE program on the project and in providing proper oversight to STP. Furthermore, FHWA investigators found significant problems regarding WSDOT’s overall administration of the DBE program, and concluded that the entire program was noncompliant. These findings required WSDOT to enter a conciliation agreement with the FHWA to make improvements to the DBE Program in order to bring AWV project and the entire DBE program into compliance in order to remain eligible to receive federal funding.

WSDOT Secretary Lynn Peterson signed the conciliation agreement in March 2014. The agreement requires the agency to undertake several program improvements which were previously outlined in a letter sent by FHWA. The improvement include: a) Identifying specific monitoring and oversight mechanisms to ensure that

Seattle Tunnel Partners achieves or made a good faith effort to achieve the 8 percent DBE goal specified in their contract; b) establishing clear roles and responsibilities for goal setting at the project and programmatic levels; and establishing clear lines of accountability for achieving those goals; c) establishing consistent contract language for all WSDOT projects with DBE participation goals, including design-build projects; and d) increasing engagement with, and support of, the DBE community.

Transportation Secretary Anthony Foxx released a statement about the agreement that said: “This agreement assures that the intended ladders of opportunity for small businesses throughout the state will be real. Everyone benefits when the federal government and WSDOT take seriously their shared commitment to helping DBEs and an inclusive economy. Where we find programs out of compliance with federal requirements, we will take all necessary and appropriate steps to ensure opportunity.”

The agreement requires WSDOT to document their progress by submitting periodic reports detailing their actions and achievements throughout the term of the conciliation agreement. WSDOT was initially required to submit monthly reports, but received approval in early 2015 to switch to quarterly reports.

The reports thus far have shown improvement. The AWV project is now reported to be on track to achieve the 8 percent DBE goal. STP has achieved over $94 million in DBE commitments and $81 million has been paid to DBE firms.

The reports also show that STP has improved its outreach to various groups in the DBE community to ensure equal access to contracting opportunities. These efforts have resulted in subcontracts on the project being divided among all segments of the DBE community. Ninety-six DBEs have worked on the project so far - 32 Asian firms, 27 white woman-owned firms, 24 African American firms, 9 Hispanic firms, and 4 Native American-owned businesses.

WSDOT’s overall DBE Program is also close to meeting the agency goal of 11.6 percent. As of April 2015, year-to-date awards and commitments totaled 10.7 percent on contracts awarded this fiscal year. The report to FHWA also documents a variety of improved program monitoring, outreach, supportive services, and reporting processes that have helped improve the administration of the WSDOT’s DBE program.

However, Robert Armstead, president of the Washington State Chapter of the National Association of Minority Contracts isn’t convinced that the reports tell the whole story. “Our guys are having the same challenges and we still have issues with

Ohio Department of Transportation Director Jerry Wray

WSDOT. Since the first investigation they have had to send money back to FHWA for DBE Supportive Services since they didn’t use it, even when DBEs were asking for help. They also got another letter from the Federal Transit Authority saying that had not met their DBE goal in each of the last four years.

And in three of the four years their DBE participation was zero. What this is, more than anything, is an indication of their lack of concern and lack of effort just to comply with the requirements of the DBE program.”

Mason, who filed the Title VI complaint on the AWV Project, agrees with Armstead’s assessment. Mason said, “FHWA threw us back to the wolves after the investigation. I received a contract with STP for $800,000 after the investigation. But then, after we shook hands on it, the next day I got a call from them saying ‘this means we are all right now, so you can drop the lawsuit?’ But since I didn’t drop the lawsuit I had already filed against WSDOT, I didn’t get much work on the contract. I feel they retaliated against me.”

In Ohio, ODOT is at the beginning of its process of making DBE program improvements. A FHWA compliance review in February 2015 found the agency noncompliant in administering the DBE program. The compliance review focused on six program areas including: 1) Program structure and staffing; 2) Reporting and bidders list requirements; 3) Contract provisions and insertions; 4) Contract goal setting and counting; 5) Good faith efforts procedures applicable to contract goals; and 6) Commercially useful function monitoring. FHWA found deficiencies in all of these program areas and required ODOT to enter a conciliation agreement to commit to get its program in compliance with the federal regulation. // FALL 2015

11

The compliance review findings submitted to ODOT Director Jerry Wray in February 2015 outlined a series of corrective actions necessary to demonstrate a commitment to running an effective DBE program. First, ODOT must restructure its DBE program to ensure that its DBE Liaison Officer is independent from other business units responsible for project delivery. This will eliminate any conflicts of interest and also ensure that DBELO has the authority to provide guidance to the DBE program.

Second, ODOT must create and maintain a single bidders list that contains accurate data about all DBE and nonDBE contractors and subcontractors. The bidders list must include the firm name, address, status as a DBE or non-DBE, age of firm, and annual gross receipts.

Third, ODOT must ensure that its contracts include all of the required assurances and forms required by FHWA.

12

// FALL 2015

This includes documents regarding nondiscrimination, return of retainage, prompt payment, and overall compliance with the DBE program.

Fourth, ODOT must revise its goal setting policies to remove the ability for a prime to make up for not meeting the contract goal on a current project on subsequent projects. They must also begin setting goals on projects less than $500,000 where applicable. In addition, ODOT must begin to document its raceneutral efforts to meet the overall DBE goal.

Fifth, ODOT must make improvements to ensure that prime contractors make good faith efforts to meet contract goals.

This includes properly notifying DBEs of their inclusion in the contract to help meet the goal. ODOT must also improve its tracking and verification of DBE awards, commitments, and payments throughout the contracting process.

Finally, ODOT must restructure its contract compliance function to ensure DBEs are performing a commercially useful function (CUF) on all contracts.

This will require maintaining the appropriate staff to conduct CUF reviews on all ODOT and ODOTfunded projects, or ensuring that field personnel are trained and accountable for conducting CUF reviews.

ODOT Director Wray signed off on a final conciliation agreement in June 2015 outlining twenty-eight different actions the agency will take to get its DBE Program in compliance and remain eligible to receive federal financial assistance. Although it is too early to tell if ODOT will be successful, the motivation of potentially losing FHWA funding should prompt the agency to adhere to the terms of the agreement and make the necessary improvements.

// FALL 2015

13

U.S. Department of Transportation Small Business Transportation Resource Center

South Atlantic Region North Carolina • Kentucky • Virginia • West Virginia 114 W. Parrish Street | Durham, NC 27701 | www.ncimed.org For additional information regarding program services and support contact: Kaye Gantt, Regional Director at (919) 956-2341 | F: (919) 688-7668 | kgantt@ncimed.org

Helping Small Business Move Forward

14

// FALL 2015

How We Help • Bonding Education Program • Women & Girls in Transportation Initiative • DBE Certifications • Procurement Assistance • Short Term Lending Program • Counseling and Technical Assistance

Made from Scratch

Two ACDBEs take the independent route to concessions ownership

A

drian Beard dreamed of one day becoming an ACDBE business owner while working as a DBE consultant in North Carolina. During his career as a consultant, he had worked with hundreds of DBE and ACDBE firms completing certification reviews and compliance audits; and believed he could one day be on the other side of the table.

Beard’s dream began to take shape on March 22, 2010, although the dream initially felt more like a nightmare. On this date Beard received a letter of furlough from his employer informing him that he was being laid-off due to the economic recession. “My wife asked if I was excited,” said Beard. “I thought the question was strange at the time because I was feeling a little anxious and hopeful, but not excited. Then after about two weeks I thought about her question and felt she was right; and that this was the time I could pursue my dream to be a concessionaire.”

Beard used this opportunity to reach out to PJ Benton, an experienced and successful concessionaire in his hometown of Charlotte, NC. “I went to Ms. PJ and asked if I could assist her after I was laid off. I also wanted to learn the concessions business from someone I admired,” Beard said. “Ms. P.J. hired me and we worked out an agreement that if she needed any consulting work done, she would pay me a consultant fee; but any other time I would work in one of her restaurants at the Charlotte airport, I would get paid $10 an hour like other food service workers. I wanted to learn the business from the ground up.

While working with Benton, Beard helped bid on two unsuccessful contracts before winning an opportunity at the Raleigh-Durham International Airport. The deal was a direct lease with RDU Airport for a food concession, and Beard’s Whitman May Enterprises was part of a four-member team including Benton’s PJJD Enterprises, FDY, Inc., and Andstar, Inc. Beard combined his prior DBE consulting experience with his hands-on experience and one-on-one mentoring from Benton to acquire skills needed become a co-owner of an airport food concessions business. “We had a great team assembled, and

ACDBE Adrian Beard serves as managing partner of a Char-Grill and Salsarita’s Fresh Cantina location at Raleigh-Durham International Airport in North Carolina.

then Ms. P.J. passed away suddenly a few months after we won the bid,” Beard said. “We were able to buy out her shares; but she was my mentor and we lost 30-plus years of experience.”

Despite this major loss, the three ACDBE partners continued on to complete the deal with RDU. The final ownership structure was FDY owning 50 percent; Beard’s Whitman May Enterprises owning 30 percent; and Andstar owning the remaining 20 percent. Beard had finally achieved his dream of becoming a concessions owner. The team won a direct lease to operate a Char-Grill hamburger restaurant and Salsarita’s Fresh Cantina restaurant in Terminal 1 of the RDU Airport. Both brands are local North Carolina favorites.

In a similar fashion, Robert E. Lee, III, president of Touchstone Hospitality, LLC (Touchstone), saw a great opportunity to become an airport concessions operator in Columbus, Ohio, a city he has called home for the last 30 years. Lee had over 25 years in the hospitality industry and believed airport concessions could take his business to the next level. Although it took a while to materialize, the right opportunity came in 2011 when Tim Hortons signed an operator’s agreement with Lee for a Tim Hortons & Cold Stone Creamery concept in the Port Columbus International Airport. “I knew I wanted to be in airports, and I knew this opportunity would give me a chance to feel my way around, see how it all works, develop relationships, and prove myself.” Tim Hortons is a Canadian multinational fast casual restaurant known for its coffee and doughnuts and the Port // FALL 2015

15

Columbus location is the company’s first U.S. airport location.

Lee proved himself quite well after opening the concession in 2011; so well in-fact, that in 2013, he and business partner Curtis Jewell successfully bid on the direct leasing contract to own and operate a Donatos Pizza franchise in the airport. This concept was also to be the first airport location for Donatos, a Columbus-based local favorite. “We were involved throughout the design and construction process, although we made the decisions, we worked closely with the brand and the airport throughout the build-out process,” Lee said.

passengers coming through the terminal. The tarmac is the area where airplanes are parked, unloaded, and loaded. However, this construction project is expected to end during the fourth quarter of 2015 which Lee believes will help Touchstone finish the year with an increase in revenues from 2014.

Beard has experienced similar challenges, not related to construction, but from unexpected gate changes for departing flights. “Sometimes the airline will change which gates are used for flights, which impacts your revenues,” Beard said. “If a flight with 160 passengers moves down the terminal to another gate, you may lose 20 customers just from that change, which also impacts your staffing and food preparation.”

Both owner-operators have experienced the ups and downs of operating in an airport under a direct lease. A direct lease provides the full operational Despite these early control of the lessons and challenges, concession and the full both operators have benefit of ownership survived and are for the ACDBE turning the corner firm. However, the toward profitability agreement also brings and success. Beard is the challenge of being seeing business pick a small fish in the up at the Char-Grill big pond of airport and Salsarita’s location, concessions, along and Lee has seen with the incumbent business pick up at his financial and Donatos Pizza. “We ACDBE Robert E. Lee III serves as operating managing partner of a Tim Horton’s/Cold Stone Creamery and a Donatos Pizza at the Port Columbus International Airport in Ohio. are definitely doing operational risks that come from being an better than last year,” independent small business.

Beard said. “My not-so-secret ingredient is my faith; it compels me to believe that despite the obstacles small business owners “It was a huge learning curve,” said Beard, who is the managing will face, what appears impossible is in fact possible.” partner in the joint venture. “There is a big difference between working in the operation as an employee and being responsible Both Beard and Lee agree that their airport’s leadership and for the thousands of micro-decisions you have to make, staff have been a crucial part of their success--and great business especially in the beginning; dealing with the architect, the partners so far. Lee credits Columbus Regional Airport Authority construction company, hiring staff. It was really a whirlwind.”

CEO Elaine Roberts and VP of Business Development & Communication David Whitaker with being supportive of Although Lee had significant hospitality experience, there were Touchstone/Jewell Partnership during the early growing stages of still aspects of running an airport concession that presented their airport operation. Similarly, Beard feels that RDU Airport unexpected challenges. “One thing that was unexpected for CEO Michael Landguth and Director of Business Development us was just getting product. Our loading dock is a mile from Ingrid Hairston have been an important factor in the success of our location. We had not built those extra labor costs into our the Char-Grill and Salsarita’s operation. proforma for the Tim Hortons and Cold Stone, so we had to make staffing adjustments to be able to have the staff to get the Although they are appreciative of the support, neither operator product from the dock to the restaurant. We had to plan for that is depending on special treatment for the success of their in the Donato’s concept because it is even more challenging since concession business. Lee knows that the long-term key to success it is behind the security checkpoint, while our first location is is “providing expedient and friendly service to the customer before security,” Lee said. while delivering a quality product.” Similarly, Beard said that his operation’s goal is to strive for excellence every day. “You have Another unexpected curve experienced by Lee in year two of to operate the heck out of your restaurant; you can’t be satisfied the operation was a construction project on the tarmac near with just being OK. Our goal is to be excellent in everything his Donato’s location that had an impact on the number of that we do.”

16

// FALL 2015

// FALL 2015

17

highways

LBJ EXpress Project

Exemplifying Equal Opportunity

I

t is fitting that a project bearing the name of an important figure in the U.S. Civil Rights Movement exemplifies the power and possibilities available through the power of diversity and inclusion. The LBJ Express Project (named in honor of former President Lyndon B. Johnson) opened in September 2015 and has set a new standard in Texas for how DBE companies can participate in building large heavy highway projects and positively impact economic development in a geographic region.

The LBJ Express project demonstrates an example of what President Johnson’s Great Society programs, including the Civil Rights Act of 1964, hoped to achieve by ensuring that all citizens of the United States have equal access to all opportunities and benefits available through spending by the government.

This series of legislation gave rise to programs such as the Disadvantaged Business Enterprise program that expands opportunities in transportation contracting to minorities, women, and other disadvantaged individuals.

In accordance with DBE program regulations, the Texas Department of Transportation established a 12.12 percent goal on the LBJ Express Project and required the selected contractor to make a Good Faith Effort to achieve or exceed the goal. The LBJ Infrastructure Group, LLC was the selected company to design, construct, and manage the public-private partnership project to build the 3-phase project. The project expands 17 miles of congested highway in the Dallas-Ft. Worth area by doubling the existing capacity through the addition of six new express managed toll lanes.

Trinity Infrastructure, LLC (Trinity) was the firm selected to design/build the project. The Trinity Infrastructure organization is a partnership between Ferrovial Agroman US, a large civil

18

// FALL 2015

construction firm based in Austin, Texas; and Webber LLC, a leading Texas construction company with more than 40 years of civil engineering experience and expertise in the U.S. market. Trinity began work on the LBJ Express in 2011.

Trinity has performed in an exemplary fashion on the project by opening the first phase ahead of schedule, the second phase on schedule, and the final phase opened three months ahead of schedule. In addition, the company has excelled in its safety performance by achieving an exemplary safety record. The project only had 96 reportable incidents over the four-year project term and created jobs for more than 9,000 laborers working in excess of 17 million man-hours.

The project has also achieved exceptional performance in the area of diversity and inclusion related to the DBE program.

The success in this area is attributable to a team effort by the Texas Department of Transportation (TXDOT), Trinity, and the DBE community in North Central Texas. TXDOT began the effort by placing a DBE project goal on the project that enhanced opportunity for firms that may not have previously worked on a large heavy highway construction project. The 12.12 percent goal on the project, coupled with other multibillion-dollar mega projects going on simultaneously in the area (each with a 12.12 percent DBE participation goal), created significant opportunities for DBE firms. This situation caused Trinity to become more aggressive and creative in its efforts to achieve the DBE participation goal. TXDOT

The LBJ Express opened for business in September 2015, three months ahead of schedule.

Project Manager Maurice Pittman said, “These were aggressive project goals for us. We typically would see goals on these types of projects of between 6-8 percent, but due to the location of these projects and the types of work involved, we believed these goals were achievable.

Trinity aggressively went after these goals and did an exceptional job.”

Pittman believes that the work of DBE Manager Angela (Angie) Berry Roberson and her staff made the difference in achieving the project goal. “I think their recruiting of new DBE firms was the reason for the success on this project. They went out there and looked everywhere for new firms, and when they lost DBEs, they made every effort to replace them with other DBE firms. They made the effort not only to meet the goal, but to exceed it,” Pittman said.

Luis Munoz, CEO of Trinity Infrastructure, led the effort toward achieving exceptional results by ensuring that DBE program compliance received

the same level of effort as all other areas of the project. Therefore, while he is pleased with the results Trinity has achieved, he is not totally surprised given the emphasis placed on the project’s DBE program.

“We knew we couldn’t do this work alone, so we needed good companies to work with us. We are a young company in America and were not used to the DBE program; but we invested the resources, put the effort into it, and overcame the challenge,” Munoz said.

The Ferrovial and Trinity leadership led to a comprehensive effort to exceed the project’s 12.12 percent DBE goal.

This effort was managed and executed

by Roberson and the project’s DBE team, along with support and buy-in from Trinity’s project managers having responsibility for the different components of the project. “We knew the DBE goal was aggressive, so we needed support from all areas, both design/professional services and construction, of the project to be successful. Our entire team stepped up and met the challenge,” said Roberson.

One area achieving award-winning success was the environmental compliance team, where the Design and Construction Environmental Manager Christopher Tolar was able to exclusively utilize DBEcertified consultants in order to fulfill contractual and environmental regulatory compliance requirements on the project.

“We were able to identify key partnering opportunities working with DBEs in areas where you often don’t see much or any DBE participation. This was due to our team being open and willing to look at companies that we had not worked with before, and to the extensive outreach work of the DBE Program staff to locate and recruit new companies interested in working on the project. It was highly successful for the Developer, while also providing growth and development opportunities to the DBE firms working on this amazing undertaking.” said Tolar.

For instance, the LBJ Express project was able to introduce several DBE firms to their first contracting opportunity on a TXDOT project. DBE firm Bradley Douglas Construction Services performed // FALL 2015

19

Trinity Infrastructures hosted an appreciation luncheon for all subcontractors on the LBJ Express project. Some of the DBEs are pictured here.

its first TXDOT project removing trees in the project’s right of way in 2012. Due to their success with this contract, the firm was able to expand their services into other areas of work. As a result Bradley Douglas Construction earned over $6 million in revenues on the project. “We have been able to expand our areas of work on the project. Although we started out with just a small tree removal project, we have been able to expand into concrete work and information technologies services (ITS) work performing trenching, PVC 2” to 4” pipe-laying, ground box installs, and electrical wiring,” said Bradley Douglas CEO Sharon Douglas.

Efforts such as these have resulted in a major success for the project. The project has secured more than 200 contracts to over 125 DBE firms resulting in over $286 million in DBE participation. These results exceeded the DBE goal by nearly $100 million, thus surpassing the DBE participation DBE goal by over 50 percent. When these figures are added to Ferrovial’s similar success on the recently completed North Tarrant Express Project that opened in late 2014, DBE firms have received payments of approximately $500 million on these two projects since 2012.

Ferrovial Agroman US Vice President of Business Development Daniel Filer, P.E. said, “Having worked with other companies in the past that were concerned only with ‘how can we satisfy the requirements,’ it is good to work for a company that embraces the DBE program and its diversity to see how to improve the job and enhance the community where the job is located. This is evidenced by how we have exceeded the DBE goal. We want to make the local contractors better, and that is a fundamental principle of our company.”

20

// FALL 2015

Trinity Infrastructure CEO Luis Munoz gives thanks to subcontractors and vendors that helped make the LBJ Express project a success.

Although Munoz is happy that the project performed exceptionally well in the area of DBE participation, he is even more proud of the impact that this project has had on the Greater Dallas community in both employment and business opportunities. “People [and companies] that have been a part of this project, which are thousands of people and hundreds of companies can all be proud of what we have achieved and the lasting impact it will have on the Dallas community,” Munoz said.

aviation

Designing opportunity

AMAC Award Winner eStudio Architecture

Fabricio and Manuel Esquivel accept an award from AMAC President & CEO Shelby Scales at the 2015 Business Diversity Conference in Ft. Lauderdale, FL.

S

ome people think that opportunity is something that happens through chance and good fortune, while others believe that opportunity is something that is planned, designed, and built like a great building or structure.

Generally speaking, this latter group lives by the saying, ‘success is when preparation meets with opportunity.’ eStudio Architecture (eStudio), a Houston-based architecture firm, falls into this category; and has carefully planned, designed, and built opportunity for the company that has propelled their success in the architectural design industry. eStudio was founded by brothers Manuel and Fabricio Esquivel at the height of the recession in 2010. But this was not a strategic move; it was a move of necessity

after the brothers found themselves out of work. “My brother and I were laid off from a very big company, just because of the market honestly,” Manuel Esquivel said. “It was the bottom of the recession, there was just no work. So our choice was to either start doing something ourselves and make it a go (because nobody was hiring), or get in line and get help. Giving up was not an option, because giving up meant our family didn’t eat.”

Those were challenging times, but the brothers knew they had the knowledge and experience to succeed. This belief was based on their sound education in architecture from the University of Houston and excellent work experience in the architecture industry. Manuel said, “Our thought was – if we can’t do it, who

can?” This thought reflected on the fact that Manuel and Fabricio had completed prominent roles working on a $10 billion, 10-million-square-foot project in Saudi Arabia to design KAUST University, the largest LEED Platinum project in the world. In addition, both had extensive experience working in different segments of the architecture industry. Manuel had been a project manager and interior designer for two very large companies; and Fabricio was a former ground-up project manager and designer in the Houston area. “We understand and know what projects require, and we have been taught by the best,” Manuel said.

Armed with this knowledge, the two brothers started the company with $500 in cash; $250 from each of them. They also used the legal services of a family friend to create the initial business formation documents because “we couldn’t afford it,” Manuel said. But now, after five years in business, the company has grown to 37 employees and revenues in the multi-million-dollar range.

Manuel attributes the company’s success to not only seeing opportunities, but in having the ability to plan for, create, and take advantage of opportunities when they happen. “We knew there were great opportunities in the specialties working with large A-E (architecture & engineering) firms,” Manuel said. Specialties include services such as architecture, interiors, facility management, energy management, construction management, project management, visualization and graphics, and furniture.

// FALL 2015

21

The brothers also knew from their experience working on large projects that the willingness to be a great team player would position them for success. Finally, they knew that it was important for eStudio to build relationships with larger architectural firms as a subconsultant in order to receive repeat business and develop relationships with clients that could become direct clients. “We knew that if we built really strong friendships, created long-term relationships, and focused on serving the client, that over time we would build strong rapport, trust, and minimize the risk that owners may see in small companies,” said Manuel.

Building strong relationships and teamwork skills has worked exceptionally for eStudio. The company started off working for larger consultants on municipal projects and then began to grow into the airport industry by working as a part of contracts for the Houston Airports System (HAS). During this process, the company began to develop a stronger relationship with the City of Houston, HAS project staff, and the HAS Office of Business Opportunity. These new relationships led eStudio to its largest opportunity thus far, after Manuel and Fabricio attended the 2013 Airport Minority Advisory Council’s Business Diversity Conference in Denver, Colorado. During the conference the brothers were introduced to leadership members of SSP America, a large concession operator with restaurants in airport terminals globally.

“We went to the AMAC Conference with the goal of meeting companies that were doing concessions work, and we were able to meet SSP through an introduction by people from Houston Airport System,” Manuel said. The brothers did not just use the opportunity to exchange handshakes, business cards, and small talk; they used the opportunity to engage in meaningful conversation with the SSP representatives that kicked off a fruitful business relationship.

“SSP’s leadership was there at the conference, which is important,” Manuel said. “When the big companies attend and they bring their leadership that are decision makers, it tells you that they are willing to make introductions, serious introductions. It was like being at the right place at the right time.”

“SSP asked us how many restaurants we had done. I told them frankly that we had not done any yet, but would love the opportunity to do one; and said if they gave us an opportunity that we would promise to deliver as best we can,” Manuel said.

Since that first meeting over a year ago, eStudio not only got an opportunity, but fulfilled its promise to deliver and has since worked with SSP in six different airports. “We have helped them do concept design for about 50 different restaurants. We have done Wahlburgers, Hard Rock Cafés, Breakfast Club in Houston, Hub Cap Grille, and Osteria by Fabio Viviani Los Angeles.”

22

// FALL 2015

Although SSP initially gambled on eStudio, the gamble has paid off handsomely for both parties. The two companies recently teamed together to win one of two food group concession packages awarded by HAS. The package includes 14 restaurants at the George Bush Intercontinental Airport.

Manuel attributes the company’s rapid success over the past five years to several factors. First, he credits the partnership he and his brother brother have in business. “Business is challenging, and you have to trust your partners 150 percent.

We aren’t always together and sometimes business calls for quick decisions where we don’t have time to conference. He has my proxy and I have his. The truth is that we could never have become successful without both of us pushing forward, because we both have the same goal,” Manuel said.

Another factor Manuel credits towards the company’s success is constantly seeking to move forward and open new opportunities. This thinking led to the addition of a third business partner, Kevin Shumbera, who leads the company’s Business Information Modeling (BIM) and technology services. “We want to be the company that is forward thinking in the technologies that are used,” Manuel said.

eStudio developed expertise in the design of airport concessions facilities like Wahlburgers, by partnering with SSP America after an AMAC conference in 2014.

The final factor Manuel attributes to the company’s success is the excellent team eStudio has built in growing from two to 37 employees in five years. He is most proud that as the number of employees has grown, the cumulative experience of the organization has multiplied. Currently, the 37 employees of the company represent more than 451 years of work experience. He said, “We have been very lucky to engage into the company very good talent. We started with smart people, but now we have really smart people.”

As a testament to the company’s success in the aviation industry, the Airport Minority Advisory Council honored eStudio with the 2015 AEC (Architecture, Engineering, and Construction) Innovation and Inclusion Award. The award honors a company demonstrating excellence to advancing innovation in the airport industry while also demonstrating a commitment to inclusion.

eStudio has established a reputation as an industry leader in business information modeling (BIM) in the design of interior and exterior airport projects. // FALL 2015

23

24

// FALL 2015

transit

comto

Welcomes New CEO to the Family

T

he Conference o Of Minority Transportation Officials (COMTO) introduced Mioshi Moses as its new president and CEO at its 44th National Meeting & Training Conference in Boston held July 11-14, 2014. Moses joins COMTO to continue the legacy of strong leadership started by former president and CEO Julie Cunningham, who passed away in 2014 after a battling a long-term illness.

Moses’ selection comes as the result of a national search to find the best candidate to lead the organization into the future.

“This is an exciting time for COMTO,” said former Board Chair Robert Prince in a statement. “The Board was looking for a visionary leader and we found it in Mioshi Moses. She brings a wealth of transformative leadership experience to the position.”

COMTO President & CEO Mioshi Moses (2nd from left) celebrates a successful COMTO Day at Harvard event with Sofie Simeon, COMTO Houston; Harvard Law Professor Charles J. Ogletree; and Martini Redd, COMTO Jacksonville.

Moses arrived on the job just in time to preside over COMTO’s National Meeting where she was formerly introduced to the COMTO membership. “It’s a tremendous honor to join COMTO,” said Moses. “I look forward to

collaborating with transportation leaders and thought partners across the nation to expand the association’s impact and work to ensure diversity and excellence are inextricably linked in all levels of the transportation industry.” // FALL 2015

25

COMTO’s ongoing commitment to building youth continued on the final day of the conference where twenty-one college students received scholarship awards to help offset their education expenses at the annual Scholarship Awards Luncheon.

Scholarship dollars awarded by COMTO are raised from several sources including local chapters, corporate sponsors, and fundraising activities coordinated by the COMTO National Office.

These activities served as a precursor to the main priority and focus of the organization, which is promoting the advancement of minorities working and doing business in the transportation COMTO awarded 21 college students with scholarships at the 2015 conference in Boston, MA. industry. The conference theme of Growing America: Embracing Innovation, The conference certainly gave Moses the opportunity to begin Inspiring Leaders, and Bridging Opportunities highlighted the her efforts to engage with transportation leadership as U.S. role of transportation in the growth and success of the American Transportation Secretary Anthony Foxx kicked off its plenary economy. High-level plenary sessions, workshops, and special session with a keynote address. Foxx encouraged COMTO to events throughout the conference encouraged participants maintain and increase its leadership in promoting opportunities to become leaders in the innovative technologies and policy for minorities in the transportation industry. He especially discussions that will define transportation in the future. encouraged COMTO’s leadership to continue the push for a new transportation bill to fund needed infrastructure The Transportation Symposium session featured several industry improvements. leaders, including former U.S. Transportation Secretary Rodney Slater, discussing the three most pressing issues facing the Secretary Foxx also discussed the Obama Administration’s transportation industry. The panelists agreed that the most Ladders of Opportunity initiative. Foxx said that the initiative pressing issues are America’s rapidly aging infrastructure due to “is designed to help people move into the middle class and to a lack of investment, finding a sustainable funding mechanism help people in the middle class stay there.” He discussed several for transportation projects, and creating workforce development projects funded by the U.S. Department of Transportation to initiatives to encourage young professionals to enter the create opportunities by providing greater access through public transportation industry. transportation, safety, and workforce development. He then turned his keynote speech into a Town Hall meeting, taking and The conference concluded with the annual awards banquet answering questions from COMTO members and others in the where several COMTO local chapters, members, and corporate capacity audience. sponsors were honored for their efforts and support of COMTO. The Philadelphia Chapter received the Chapter of A key focus of COMTO is building future leaders in the the Year Award for its innovative youth programs and overall transportation industry by promoting education and exposure chapter engagement. Triunity Engineering & Management, a to college students through initiatives such as its CITY Intern Program, Emerging Leaders Program, and an annual scholarship DBE firm headquartered in Denver, received the Historically Underutilized Business of the Year award for its ongoing work in program. This year, Harvard University and Professor Charles the transportation industry in several states around the U.S. Ogletree hosted the first COMTO Leadership Institute (CLI) Moses concluded the conference by stating how the warm Day, a program to provide aspiring high school and college and generous greeting of COMTO members made her feel students the opportunity to interact with senior level industry welcomed in the organization. “I have often heard people professionals, and provide professional development training. describe organizations as a family, but I didn’t always believe Over 100 students from across the U.S. participated in a tour that was a fitting description. However, now I know what these of the Harvard University campus and attended a full day of workshops to learn about the wide variety of career opportunities people were talking about because COMTO feels like a family,” said Moses. available in the transportation industry from seasoned industry professionals.

26

// FALL 2015

THE LEWIS COMPANY U.S. Patent Inventor of the 21st Century

SMART RUNWAY SYSTEM

Worldwide Leader and Innovator in Engineering “Smart Runway” Systems which dramatically increases existing runway capacity by (15 additional takeoffs and landings an hour).

35 percent

• Airport Authorities have Advanced Technology Alternative to costly New Runway Construction • Air Carriers can increase number of daily flights and save millions of dollars in delay fuel cost.

• Air Traffic Control increace runway capacity and reduce airport congestion.

Over 30 Years of Global Air Traffic System Services • Airport Master Planning—Airside Systems and Operations • Air Traffic Systems—Architecture & Engineering • Independent Aircraft Mishap Investigation & Litigation • Independent Inspector General‚ ATC Procedures & Operations • FAA Air Traffic Control Academy—Prep Instructor

THE LEWIS COMPANY

Aviation Science, Engineering and Safety

919-612-7195

omlewisaviation@yahoo.com PO Box 232 • Morrisville, NC 27560

Oscar M. Lewis

President & U.S. Patent Inventor // FALL 2015

27

P l a y e r s P o w e r D B E 28

Fortis networks Mixes the Right Ingredients for Success

S

uccess in business is often related to an entrepreneur discovering the “secret sauce” that differentiates their business from competitors and gives the business something special that customers cannot find elsewhere.

This concept brings to mind Colonel Harland Sanders’ 11 secret herbs and spices, or Steve Jobs’ underlying mission that made Apple different from other companies: to “make a contribution to the world by making tools for the mind that advance humankind.”

Clarence McAllister, P.E. founded Fortis Networks in 2000 after a successful career in the telecommunications industry.

Clarence McAllister, founder and CEO of Fortis Networks, has discovered what all successful entrepreneurs know – That the main ingredients of any secret sauce recipe are passion, hard work, and smart

// FALL 2015

decision making. McAllister has combined these main ingredients with creating a niche product, excellent service, and the strategic use of the federal DBE Program, HUBZone and federal 8(a) Business Development Program to grow one of the largest minority-owned companies in Arizona.

McAllister initially learned the ingredients of his business’ secret sauce from his father, who owned a drugstore in Panama during the 1940s. “Watching my father in business gave me the desire to be my own boss,” McAllister said.

“But I also knew that I needed the training and education in order to be successful, so I went to school and worked for a while to maximize my opportunity for success.”

McAllister came to the U.S. to earn a bachelor’s of science and master’s degree in electrical engineering from Arizona State University, and later earned a Master of Business Administration from Nova Southeastern University. He also combined his educational training with industry work experience as an engineer with Alcatel Lucent.

This groundwork gave McAllister the tools needed to launch Fortis Networks in 2000. “My wife and I started from scratch,” McAllister said. “We had to use our credit cards for our initial financing to get the business off the ground.”

Since its beginning 15 years ago, Fortis Networks has maintained a strategy of sustained growth that has kept McAllister keenly aware

of new opportunities and markets for the business. “We started out doing a lot of transportation work with organizations like the Arizona Department of Transportation and municipalities in the Southwestern U.S., but when we got certified as an 8(a), our growth really kicked in,” he said. Since becoming an 8(a) and HUBZone certified firm in 2007, Fortis has transformed from an electrical services contractor to a full-service general contractor able to construct commercial and industrial buildings as well complete other projects as a prime contractor. The company maintains a bonding capacity of $25 million for a single project and $75 million in aggregate. In addition, McAllister is a licensed professional engineer in several states. Although Fortis is headquartered in Phoenix, the company maintains satellite offices in Yuma, AZ; El Paso, TX; San Antonio, TX and Denver, CO. The company has used the DBE Program and 8(a) Program to grow into a multimillion-dollar enterprise that performs as a prime and subcontractor in the areas of general construction, telecommunications, traffic control systems, mass transit communications, fiber optic distribution design, and others. The 8(a) Program has also helped the company branch out to become an international company through work with agencies like the U.S. Department of Defense.

To date, Fortis has performed prime contracting work in Central America and on the continents of South America, Africa, and Asia.

McAllister attributes much of his business acumen to lessons he learned from his father, who owned a drug store in his homeland of Panama.

In addition to organic growth, Fortis Networks also used the acquisition of Denver-based Linkmont Technologies to accelerate its growth strategy. The Linkmont acquisition allowed Fortis to grow its capabilities to include full system integration and turnkey telecommunications services to federal, state, local, and commercial customers.

These types of moves have propelled Fortis to the forefront of diverse businesses in Arizona and garnered several awards for the company including the 2014 Society of American Military Engineers National Business of the Year; the 2013 Technology Firm of the Year by Arizona Minority Business Development Agency (MBDA); the 2012 Minority Construction Firm of the Year by the Arizona MBDA; and the 2012 Minority General Contractor of the Year by the Arizona Associated Minority Contractors organization.

McAllister was also recently recognized for serving during the past three years as the co-chair of the Arizona Department of Transportation (ADOT) DBE Construction Task Force. “Clarence has done a tremendous job of helping to pull together DBEs in Arizona to have a voice in reducing barriers to entry and

increasing business supportive services in the state,” said Dr. Vivien Lattibeaudiere, manager of ADOT’s Business Engagement & Compliance Office.

McAllister recognizes that the company has done well since its humble beginnings 15 years ago, but he is now starting to look over the horizon to the culmination of his nine-year participation in the 8(a) Program. “I don’t want to be one of those companies that goes out of business after leaving the 8(a) Program, so we have always kept our options open and completed both 8(a) work and transportation industry work as well,” McAllister said.

While the company has kept busy maximizing its participation in the 8(a) and HUBZone programs, it has also stayed busy in the transportation industry. Recently completed project in the transportation sector includes completing work as a subcontractor to Mass Electric on the PPhoenix Valley Metro Rail (VMR) project. Fortis’ work involved installing 20 miles of fiber optic cable on the VMR project. The company also recently performed work for the Utah Transit Authority involving installing CCTV, messaging systems, and fiber optic cabling; and for Denver

RTD equipping signal houses. Finally the company is completing electrical work on the Foothills Extension Project for the Los Angeles Metropolitan County Metropolitan Transit Authority.

“Transportation work gave us access, and a vehicle to use the capabilities we already had in telecommunications. The transit projects we are working on didn’t require us to learn new skills, we were just able to use the existing skills we had already developed,” McAllister said.

An example of the secret sauce ingredients of hard work and smart decision making led McAllister to secure his pilot’s license, and as a result, to use his time more efficiently. “I stay really busy and I found that I was spending an awful amount of time driving to and from client meetings.

Here in the Southwest everything is spread out, so I decided to get my pilot’s license to cut down my travel time. It was definitely a business decision,” McAllister said. To get his pilot’s license, McAllister had to spend nearly a year taking lessons and logging the appropriate amount of flight hours to meet the requirements, but now he can rent an airplane when needed to quickly travel distances that would previously take a whole day out of his work schedule.

// FALL 2015

29

McAllister also believes that giving back to the industry and community is another key to his company’s success. He gives back by volunteering his time and experience to help other small businesses. McAllister is on the Board of Directors of the Society of American Military Engineers (SAME) as the chairman for the National Small Business Council; the Board of Directors for the Associated Minority Contractors of America (AMCA) Arizona Chapter; and the Board of Overseers of the Phoenix Symphony.

McAllister became a licensed pilot in order to efficiently move between meetings with clients in the vast Southwestern states and to visit the company’s 10 satellite offices from Washington, DC to California.

Despite his more timely and efficient travel to meetings and for business development, McAllister also knows that another key to success lies in assembling a great team of professionals in the company. “You have to surround yourself with people smarter than you, and you have to pay the right talent and quality individuals – people who can help you get to the next level.”

All of these strategies and initiatives have McAllister believing that he has the right ingredients to carry Fortis Networks into the future and into life beyond the federal 8(a) Program. “We don’t place any limits or a ceiling on how far we can go. We just want to make sure our growth is strategic,” McAllister said. “The only challenges I see are keeping the funnel full of new project opportunities and having the ability to finance our continued growth; but we have done pretty good so far and we will overcome these challenges as well.”

Colette Holt

& Associates YOUR EXPERT ON AFFIRMATIVE ACTION AND CONTRACT COMPLIANCE

Colette Holt & Associates Attorney at Law

• Disparity and Availability Studies • Review, Design and Implementation of Disadvantaged/Minority/Women/Small /Local Business Programs • Litigation and Expert Witness Services • Contracting Fraud Detection and Evaluation • Community Benefits Agreements and Project Labor Agreements • Trainings and Presentations

3350 Brunell Drive Oakland, CA 94602 Telephone - (773)-255-6844 Email - colette.holt@mwbelaw.com www.mwbelaw.com http://twitter.com/mwbelaw

30

// FALL 2015

KWM Kiewit - Weeks - Massman

Goethals Bridge Replacement

GOETHALS BRIDGE - CONSTRUCTION PARTNERING OPPORTUNITIES The Goethals Bridge Replacement Project is a design-build project for the Port Authority of New York & NewJersey (the Authority). The project will replace the existing Goethals Bridge which spans the Arthur Kill River on I-278 connecting Elizabeth, New Jersey and Staten Island, New York. KiewitWeeks-Massman, AJV (KWM) has been selected by the Authority to design and build the new Goethals Bridge.

Partnering Opportunities Concrete, Masonry, and Paving Design/Consulting Electrical Work/Utilities Fencing and Railings Maintenance of Traffic Marine Services Quality Control Services and Supplies Surveying Trucking Miscellaneous Building Bridge Demolition And many more!

If your DBE firm would like to apply to participate, please use our website as a resource, www.goethals-kwm.com.

Diversity Contract Manager, 470 Chestnut Ridge Road, Woodcliff Lake, NJ 07677 (201) 571-2571 KWMdivcontracting@kwmjv.com Kiewit-Weeks-Massman, AJV is An Equal Opportunity Employer // FALL 2015 31

DBE Program Spotlight 32

Jacksonville Transportation Authority Taking the Lead with DBEs

our mandatory pre-bid meetings for prime contractors. We always thought that having mandatory prebid meetings helped DBEs know who the prime contractors were in the bidding process. But since we changed this policy, we have seen increased competition from primes and greater willingness to meet our DBE goals in order to win the work.

So while DBEs have to make the effort to go to the plan holders list to find out who is bidding, they are seeing more opportunities to get work,” Middleton said.

JTA President & CEO Nat Ford and Manager of Diversity & Equity Ken Middleton have increased DBE participation to over 16 percent of contract dollars.

T

he Jacksonville Transportation Authority manages public transit services and builds roads and bridges in the Greater Jacksonville, Florida metropolitan area. As an important member of the Jacksonville community, JTA has a longstanding commitment to being an engaged corporate citizen and places value on its role as leader in efforts to promote diversity and inclusion in employment, contracting, and workforce development.

A key component of JTA’s commitment to diversity and inclusion is the administration of an exemplary DBE program. This commitment runs throughout the organization, starting from the Board of Directors, continuing to CEO Nat Ford, and culminating // FALL 2015

in JTA’s Diversity and Equity Office under the leadership of Ken Middleton. Based on this organization-wide commitment, Middleton is inspired to implement innovative programs to create opportunities for DBE firms in JTA contracting efforts and is empowered to make the most of the DBE program’s possibilities.

“The DBE Program has always been important to the JTA, but when Mr. Ford became CEO almost three years ago, he helped us take the program to the next level,” Middleton said.

Under Ford’s leadership and the efforts of Middleton’s team, JTA has continued to launch new strategies and initiatives to further the success of the DBE program. “One thing Mr. Ford did is make us rethink

Another initiative of JTA to create more DBE opportunities was to look at non-traditional areas of opportunity. JTA is in negotiations to assume the operation of the St. John’s River Ferry. The ferry is in need of repairs to the fender system that protects the pier when the ferry docks, and JTA assumed responsibility to have these fenders replaced. Maritime projects, traditionally, are an area with very low DBE participation. However, Ford supported challenging bidders to meet a 20 percent DBE goal on the project. After much anxiety by some prime contractors, the winning contractor submitted a bid with 28 percent DBE participation.

Ford said, “I set the tone so Middleton and his team could go out and make additional effort to push our business community to include DBEs.”

Ford’s continued support is crucial as JTA embarks on its new initiative, which is branded JTAMobilityWorks.

The JTAMobilityWorks program is designed to complete projects funded by the extension of the Local Option Gas Tax (LOGT). Leveraging the LOGT, JTA has issued bonds to cover the cost of the projects. With the $100 million generated through the bond issue, JTA will complete 13 roadway projects and projects in 14 mobility corridors in all areas of Jacksonville over the next five years.

Development Academy component, which provides DBEs with business training to help them succeed.

In preparation for JTAMobilityWorks, Middleton has created the Back-2-Work program to prepare both DBE firms and unemployed/underemployed workers for opportunities on the upcoming projects.

The Back-2-Work Program has two components: A workforce development program to provide qualified workers from the community with the skill sets to meet the labor needs of the prime contractors; and the Business

JTA’s Back-2-Work Program recently received a major shot in the arm by way of a $200,000 grant from the Federal Transit Administration’s Innovative Public Transportation Workforce Development Program. The grant award requires a 100 percent match, which will result in a total of $400,000 for the Back-2Work Program over the next two years.

Middleton is excited by the opportunity to expand the Back-2-Work Program

The Business Development Academy launched in January 2015 and provided training to more than 100 individuals in the Jacksonville area. “We have had a number of firms from the first academy class that have done work for JTA. Some have worked on construction projects and we even had a catering company attend that is now providing catering services to JTA,” Middleton said.

to serve more people. “We initially planned for the Business Development Academy to be an annual program, but based on the additional funding we are now planning to offer the Academy each quarter,” he said.

In addition to the 27 different upcoming projects contained in the JTAMobilityWorks program, JTA is preparing to build a new $30 million Jacksonville Regional Transportation Center and launch a new Bus Rapid Transit System that will provide even greater opportunities for DBEs. Middleton believes there are significant opportunities in all of these projects and hopes to continue the growth of DBE participation at JTA. Middleton said, “Our overall DBE annual goal is 16.08 percent, and we hope to exceed that percentage. Meeting the goal would equate to over $10 million in payments to DBEs this fiscal year.”

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Advertise With Learn more at: www.americandbe.com //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// // FALL 2015

33

THE AMAC AIRPORT MINORITY ADVISORY COUNCIL

FOUNDATION OPPORTUNITIES ON THE RISE

SAVE THE DEC 2-3, 2015 DATE

Airport Minority Advisory Council (AMAC) Announces its

WESTERN REGION ECONOMIC OPPORTUNITY AND POLICY FORUM To be held in Los Angeles, California AT THE SHERATON GATEWAY LAX HOTEL

Workshops with speakers discussing topics, including: legislative updates, concession and construction opportunities at the airports in the western region, how to finance your business and steps to success in the airports.

Highlights will be a behind-the-scenes tour of the newly renovated, award winning Tom Bradley International Terminal at LAX; Exhibitors’ Booths; and an evening networking reception.

Visit amac-org.com for details

34

// FALL 2015

Business development

SMALL BUSINESS AND 21st century marketing

By Richard Shealey

A

s an indication of dramatic change that has taken place in the traditional advertising business, USA Today recently reported that the New York Times has 1.5 million paying subscribers for print and digital media, the same as 20 years ago. Twenty years ago, the Times was earning $100 million per month from print advertising; today it earns a meager $14 million per month and enjoys 50 million readers.

How “times” have changed.

is the requirement that marketers incorporate mobile marketing tactics in their marketing plans. More and more shoppers want to acquire whatever products that catch their attention as they go about their work or normal daily affairs. If your product does not show up on a handheld device, you are missing a significant number of sales.

In today’s market, 52 percent of all digital advertising spending is earned by Google and Facebook. Everybody else shares the balance. All of the channels of print advertising are continuing to decline as more and more Millennials become the primary targets of a wide spectrum of product and services marketers. The shift from an “interruption marketing strategy” to branding and a comprehensive online presence targeted to meet potential customers in the online social platforms they visit most often is the new normal.

Companies not using video to educate their target market about products and services are well behind the curve.

According to comScore, 86.6 percent of American Internet users watched videos in 2013. The social media platform YouTube enjoys more than 1 billion video views per month. Experts say that online buyers are twice as likely to purchase based on a video than a text-based marketing approach. Also, 75 percent of business executives watch videos marketing various products on a weekly basis; and of equal importance is the fact that they tend to share their favored video experiences with friends and associates.

Another trend that is demanding progressively more marketing attention

Small business owners generally have frugal budgets and a limited amount of

time to devote to marketing. At the same time, a major challenge is increasing revenue through acquiring new prospect leads and converting those leads to new paying customers. Effective marketing is a critical business system that requires professional expertise to be consistently successful.

A viable strategy to overcome the challenges of too little time available, limited knowledge of marketing programs and plans, and small marketing budgets, is to outsource your marketing system.

Such a decision is more affordable than hiring a marketing staff person, and a good choice will contribute greater professionalism and more experience than a singular staff hire. Small business owners and business professionals would be wise to find a 21st Century marketing solutions partner capable of providing all of the services described above.

A retired C-Suite Executive with more than 45 years of highly successful experience as CEO, COO and General Manager, Rich Shealey is The Entrepreneurial Coach. Rich earned a Bachelor of Science in Commerce and MBA from DePaul University in Chicago, IL. Rich is all about empowering others to identify, nurture and deploy their greatness to the benefit of the world, while at the same time equipping clients to earn more money faster and advance in their career and entrepreneurial pursuits. // FALL 2015

35

The Importance of Effective Subcontractor Due Diligence

By Joy Charles, M.S. Leadership & Business Ethics

E

very Chief Executive Officer should periodically assess the veracity of information shared with clients about the effectiveness of subcontractor due diligence reviews by asking: “How is my organization ensuring that appropriate due diligence reviews are conducted?” When that client is a government agency, the question becomes more about ensuring that subcontractors meet the standards of responsibility as defined in procurement rules such as the Federal Acquisition Regulations Subpart 9.1. Of course, irrespective of whether the client is in the public or private sector, the bigger question should be: What is the organization doing to create and sustain a culture of compliance with all laws and regulations? A positive answer to this question is important to ensuring that organizations have the means to detect, prevent, and otherwise deter the possibility of fraud, waste, and abuse from infiltrating the organization.

Effective due diligence aligned with corporate values should be the standard for how companies conduct business in the marketplace. But what exactly, you may ask, is due diligence, and why is it important?

Due Diligence Due diligence in a business context speaks to an obligation to examine/investigate and otherwise assess the assets, business relationships, liabilities, net worth, reputation, business ethics and culture, leadership, industry standing, etc., of an entity in order to reach conclusions that may affect future decisions.

Government agencies conduct due diligence assessments of prospective contractors as part of what is known as a “responsibility determination.” In the world of government procurements, “due diligence” speaks to procedures, standards, practices, and or policies considered in making a responsible determination about whether to award a contract/purchase

36

// FALL 2015

order to a particular competing business entity. Whether it is a small purchase or a mega contract, contracting agencies are required--by federal and state laws and/or regulations-to make determinations about contractors’ responsibility.

Conducting effective due diligence of one’s own operations, as well as on any subcontractor to be proposed for a prospective subcontract award, could mean the difference between getting a new contract award or being deemed not responsible.

A responsibility determination is a review of a prospective awardee to shine a spotlight on the business’ operations in the areas described below as the “Elements of Responsibility.”

In this type of review, the results are usually either positive, meaning the entity has been deemed responsible; or potentially negative, meaning there may be reason(s) to reach a determination of “not responsible.” When a determination of not responsible is reached, the agency is compelled to deny the award, notwithstanding the price or overall proposal. Of course, in such cases, entities are given opportunities for due process, which could make a difference. Notwithstanding, while a deficiency in one area may not be enough to reach a determination of “not responsible,” the decision is entirely up to the agency.

The dollars involved and the agency’s risk assessment procedures determine the depth of the information dive and data collection activities. For example, a small purchase (less than $15K in some cases) may require a different approach compared to one valued at 10 times greater. Regardless of the dollars involved, contractors bear the burden of convincing procurement officers/decision makers that they are responsible. In the final analysis, it is the picture painted by an aggregate assessment of the Elements of Responsibility that

“Investing in effective due diligence reviews of each subcontractor before executing subcontracting agreements will provide the intelligence needed to spot risks associated with the elements of responsibility.” influence decisions reached regarding an entity’s responsibility and thus, its capacity to receive new contract/purchase order awards.

Elements of Responsibility • Integrity and Business Ethics • Experience • Technical Skills • Facility • Financial Capacity • Operational Controls

determinations and should be the focus of all contractors for which government contracting is an important business sector.

When a prospective awardee is deemed to be “responsible,” it means that having reviewed the prospective awardee in the Elements of Responsibility, the procurement officer/decision maker is satisfied that the business is qualified, and eligible to receive an award under applicable laws and regulations governing the acquisition decision.

• Safety Practices • Quality Assurance • Satisfactory Performance Record - Includes MWDBE The Integrity and Business Ethics responsibility elements assess compliance where applicable whether satisfactory records exist to confirm the ethics and integrity of the contractor under consideration for award. The • Equipment presence of pending criminal charges or criminal convictions, or civil actions against the business, its affiliates, or any person Each element is important, and may also include an assessment related to the firm, are considered when assessing ethics and of how a contractor’s responsibility is affected by business integrity of a business. Ethical behavior, whether by a corporate relationships maintained as part of executing its work on entity or an individual, embodies certain basic principles prospective, current, or previous contracts. For example, if in such as honesty, fairness, equitable behavior in all business order to perform the work proposed on a prospective contract, practices, respect for the property and resources of others, and a a prime contractor is relying on particular subcontractors commitment to be law-abiding citizens and to cooperate with all (making them significant subcontractors), those subcontractors’ government investigations. capacities to be deemed responsible are considered in reaching a determination about the prime contractor.

Why it’s Important Investing in effective due diligence reviews of each subcontractor In another example, the responsibility element of Satisfactory before executing subcontracting agreements will provide the Performance includes an assessment of whether contractors met intelligence needed to spot risks associated with the elements defined Minority/Women Disadvantaged Business Enterprise of responsibility. Expecting subcontractors with inadequate (M/WDBE) goals on previous contract awards. In such cases an resources, inadequate experience for the project at hand, or assessment of, for example, DBE compliance, considers whether with criminal convictions in their history, to support projects certified DBE subcontractors performing towards specified without effective due diligence and a plan to remediate ethical or DBE goals performed commercially useful functions, a tenet integrity breaches demonstrates poor judgment and weak project of compliance outlined in the governing federal regulations. management controls; but there are more dangers involved.

Overall M/WDBE compliance is critical to responsibility Sometimes the issues affecting subcontractors may be so severe // FALL 2015

37

and central to their ability to continue existing work, that it may impede the prime’s ability to move the project forward without compromising its own integrity. In such cases some project owners may even question the prime’s business ethics, integrity, as well as its present responsibility. Weaknesses in subcontractor selection and oversight are areas that leave contractors--even those with the best of intentions--vulnerable to allegations of fraud, waste, and abuse. The irony in many cases is that effective due diligence on the front end of the subcontractor retention process could have provided enough early warning signs to avoid perilous consequences.

Engaging in fraud, waste, or abuse (whether it is in having subcontractors that do not provide commercially useful functions, or by some other means) has serious consequences.

The company, its leadership, and employees that participate in any alleged schemes to defraud government contracts (whether it’s by not performing a commercially useful function in such programs or some other means) could end up, as all should, in So, what should you do? Here are some suggestions to stay on the right side of the law: 1. Having an ethics program is good, but not good enough. Having an ethics program, about which all employees are continuously trained, with defined program procedures incorporated into the business practices and culture of the organization, should be the standard.

You should strive for a best in class policy with documented proof of related training and testing to ensure compliance. If one is not in place, get started immediately on correcting that deficiency. If you already have an ethics program in place, assess compliance with its requirements. The compliance target should be 100 percent, and include top management.

serious trouble with the law. Federal charges may result from DBE fraud violations, while state charges may result from M/ WBE fraud violations.

Even if the best legal team is retained and it manages to reach a civil settlement, agree to pay hefty fines, and engage an Integrity Monitor, the resultant cost could threaten the very existence of the company; leaving an indelible mark against its reputation, and possibly becoming an impediment to being deemed responsible for a future government contract award.

In addition, this information may follow all involved parties for years, as its disclosure may be required in government qualification/responsibility documents with every bid or proposal going forward. Still, if all manage to be exonerated, they may want to ponder the question posed by a former U.S. Labor Secretary after being acquitted of fraud charges involving the construction industry; “...which office do I go to get my reputation back...?”

2. Effective due diligence reviews are critical to confirming the bona fides of all subcontractors, including those performing towards M/WDBE goals. Review of the DBE directory without assessing the responsibility of a subcontractor is not adequate due diligence.

3. A robust due diligence process for all potential subcontractors will speak volumes about a company’s commitment to being a responsible firm.

4. Just as each company should do its due diligence homework before engaging subcontractors, so too, the government will perform due diligence reviews on each prospective awardee. A firm’s reputation and future hangs on its due diligence practices.

5. Every proposer or bidder should assess its public image to identify any negative information that may pose potential risks to its reputation.

6. Be sure that selected subcontractors have the capacity and can actually provide the products or services required, particularly when M/WDBE goals are part of the equation.

7. Remember, it is illegal to submit falsified reports and other business records to government agencies.

8. M/WDBE participation should be continually tested throughout the life of the contract to ensure the program is compliant, but more importantly, that M/WDBE firms are getting a fair opportunity to participate in the marketplace.

Joy Charles is a Senior Project Manager with Armand Resource Group, Inc. (ARG). She is a contractor due diligence and risk mitigation expert, and a former investigator for the MTA Office of Inspector General for many years.

38

// FALL 2015

PROUD TO GIVE BUSINESSES A LIFT CATS is proud to provide opportunities for businesses to create local jobs through the advancement of transit projects. CATS also seeks to create an environment that gives small and socially or economically challenged local businesses the opportunity to compete for publicly funded contracts by participating in the Small Business Opportunity (SBO) and the Disadvantaged Business Enterprise (DBE) Programs.

On the LYNX Blue Line project, for example, CATS spent $42.9 million with 38 DBE firms to build the new light rail system.

As the major provider of public transportation to Charlotte and the surrounding region, CATS relies on the communities we serve to build and operate the service every day. By working together on these new opportunities, we can all keep our communities moving in the right direction.

For more information, visit ridetransit.org.

// FALL 2015

39

HOW DBE CERTIFIED BUSINESSES CAN PROTECT THEMSELVES FROM USDOT SCRUTINY

By Jeff P. H. Cazeau, Becker & Poliakoff

I

n October 2014, the U.S. Department of Transportation published its long-awaited changes to the Disadvantaged Business Enterprise Program. While some changes were welcomed and long overdue, others have injected a level of subjectivity to the certification process and given certifying agencies a level of discretion in the implementation of certain rules that may hurt some DBE-certified firms and firms seeking DBE certification.

Perhaps the most important of these changes referenced are those made to 49 CFR section 26.67, which defines the term “economic disadvantage.” For many years, individuals were considered “economically disadvantaged” if their personal net worth did not exceed $750,000 (minus the individual’s interest in his or her primary residence and the DBE business). After considerable pressure by organizations such as the

40

// FALL 2015

Airport Minority Advisory Council and others, Congress changed the threshold to $1.32 million (again, minus the individual’s interest in his or her primary residence and the DBE business). While many welcomed the change, others found it unsettling that “millionaires” could now be considered economically disadvantaged.

The fear that certain wealthy individuals could be taking unfair advantage of the DBE program is not a new one. It was only exacerbated by a change in the personal net worth requirement and continues to persist. Largely because of this fear, DOT has now given certifiers a tool to remove from the program individuals who “a reasonable person would consider to be a wealthy individual, even if one with liabilities sufficient to bring his or her personal net worth under $1.32 million.”

There are several troubling aspects of this new, subjective caveat to the certification process. First, to my knowledge, there has been no study to determine how many or what percentage of DBE firms are actually owned by “wealthy individuals” who shouldn’t be in the DBE program.

Without a study, this could simply be a solution to a problem that doesn’t exist, or a case where the cure is worse than the disease. Second, while the rule provides some guidelines on what factors to consider when one is deciding whether an individual is too wealthy to be in the program, a tremendous amount of discretion is left to the agency on when to apply this rule and against whom to apply it.

I have heard officials from federal agencies with oversight authority over the DBE Program reasoning that the rule was established to give certifiers the ability to exclude people who everyone knew

were rich but had managed to skirt the rule by hiding assets or creating liabilities.

But who is the “reasonable person” that is going to determine whether the owner of a particular DBE firm is too wealthy to be in the program? How is the rule going to be implemented? Will organizations systematically screen every DBE company, or will some firms be singled out? What if someone is certified in multiple states? A reasonable person in one part of the country might consider someone with certain assets to be wealthy, whereas a reasonable person in a different part of the country might not.

While one would hope that agencies would never use these rules unscrupulously, the potential for abuse exists. Personally, I have already seen cases where certifiers in another state informed out-of-state firms that they were being decertified under the new rule. In two examples, the owners of the firms had simply paid themselves more than $300,000 a year during the past few years. In another case that predates the rule, one agency sought to decertify a firm after a local article came out touting the owner as a “self-made millionaire.” The attempts to decertify the firm were purely based on the opinion expressed in this news article. With this level of subjectivity now a real factor in the certification process, all DBE firms must now take steps to protect themselves.

First and foremost, be mindful of what a “reasonable person” would consider to be the trappings of a wealthy person in the areas where you do business. If you do business in a large metropolis and have a second home elsewhere, that might not raise any red flags for the certifiers in your state. However, if you live in a less affluent area and own multiple properties, it may cause serious issues.

Second, these issues will most likely come up in two specific contexts: either as a result of a bid protest or during the annual review of your company’s certification. It is imperative that you maintain a relationship with the agency that certified you. One can imagine a disgruntled competitor providing your certifying agency with pictures of your home, cars, boats, and other trappings of supposed wealth and arguing your ineligibility for a contract because you’re “too wealthy” to be a DBE. Knowing someone at the certifying agency who knows you and your situation can help avoid decertification proceedings, since the decision to decertify you will be a subjective call.

Unfortunately, the most obvious suggestion to avoid running afoul of the new rule is to avoid excessive outward displays of wealth. While you may have worked hard to be a successful businessperson, be aware that the things you accumulate may cause “a reasonable person” to consider you to be a “wealthy individual,” and you could consequently have your status as a DBE questioned.

The following is not a suggestion; but because of the new rule, many business owners will opt to keep their “wealth” in their primary home and business since, as mentioned above, an individual’s primary residence and interest in the DBE business do not count toward the personal net worth calculation.

Unfortunately, while that makes sense in the context of keeping your PNW below a certain threshold, it likely is not a good investment strategy in the long run. Consult a professional before going that route or making any other important financial decisions.

Finally, be aware that even if an agency decides to decertify you on grounds that you are too wealthy to be in the program, they cannot do so without providing you with due process. This means pursuant to the regulations, the agency must provide you with written notice that they propose to find your firm ineligible. The notice must set forth the reasons for the proposed determination. The statement of reasons for the finding of reasonable cause must specifically reference the evidence in the record on which each reason is based. The agency must also give you the opportunity for a hearing.

It is very important to note that if you elect to have a hearing, the agency has the burden of proving that you are not eligible to remain in the program. This is not necessarily the time for you to argue why you should remain in the program.

If you feel that agency failed to meet its burden of proof, as part of the process, you will have the opportunity to appeal the agency’s decision to the Department of Transportation and ultimately the federal courts.

Without question, if your DBE certification is challenged, you should contact a professional to assist you as soon as possible, or you potentially risk losing your DBE certification. This is especially true if you are certified in multiple states since a successful decertification by one state can be grounds for decertification elsewhere.

Jeff P. H. Cazeau is a shareholder with law firm Becker & Poliakoff, who focuses his national practice on helping businesses of all sizes from around the country obtain, keep, and leverage minority business certifications. He may be contacted at jcazeau@bplegal.com.

// FALL 2015

41

Federal Court of Appeals Upholds Agency Finding that Prime Contractor Did Not Make Good Faith Efforts

By Attorney Colette Holt Plaintiff Dunnet Bay was the low bidder, but failed to meet the 20 percent goal.

Through a clerical error, its name was left off the list of interested bidders that DBEs might contact to seek work. Dunnet Bay’s bid exceeded IDOT’s estimate for the project, and eventually the contract was withdrawn and rebid. On the second round, plaintiff was not the low bidder.

I

n yet another win for the Disadvantaged Business Enterprise program, the federal court of appeals in Chicago in August 2015 upheld the Illinois Department of Transportation’s determination that a prime contractor failed to make good faith efforts to meet a DBE contract goal.

Unlike the majority of litigation in this area of the law, this case involved a challenge not to the overall constitutionality of the program, but to the agency’s implementation of the DBE program regulations at 49 C.F.R. Part 26. In other words, was IDOT’s implementation the program narrowly tailored? The court held that it was.

42

// FALL 2015

In rejecting the plaintiff’s first bid as non-responsive for failure to make good faith efforts, the court found IDOT’s determination that the contractor did not make all possible good faith efforts to be reasonable--because Dunnet Bay failed to seek the assistance of the agency’s DBE office in contacting DBEs. Further, although a high-ranking official in the governor’s office had stated publicly that the state had a “no waivers” policy, such statements did not amount to an official policy for the agency. Further, IDOT’s annual and contract goal setting methods were reasonable and met the requirements of Part 26.

Regardless of IDOT’s implementation of the program, Dunnet Bay did not have “standing” to bring the lawsuit.

First, it can compete on an equal footing with other general contractors who similarly have to meet the goal or

make good faith efforts to do so. Second, even if the DBE program removed the presumption of social disadvantage afforded to racial and ethnic minorities and white females, Dunnet Bay would still not be eligible because it exceeds the business size limits and its owner’s personal net worth is too high. Finally, there was no “injury in fact” because the award was canceled and the project rebid.

The lesson for agencies is that a sound and well documented goal setting methodology and good faith efforts policy and procedures will likely be upheld. The decision also suggests that future plaintiffs may be limited to only those small nonDBE firms that can meet the personal net worth test. Last, agencies should make sure all officials have at least a rudimentary understanding of the legal standards governing race-conscious contracting programs, so unnecessary issues are not created by uninformed comments.

Subscribe to

In-Depth Industry Coverage Subscribe Online at www.AmericanDBE.com Call Today!

(919) 810-4954

INDUSTRY PERSPECTIVE (Opinion)

By Melinda Carter, City of Columbus

O

ver the past several months, I have been engaged on an exploration of the impact of workforce policies that require a diverse workforce on city funded projects.

While the City of Columbus has had a long commitment to ensuring that minority and female owned businesses are utilized as contractors and suppliers by the city, that has not been the case with respect to requiring businesses that have contracts with us to employ a diverse workforce.

The Mayor’s Office of Equal Business Opportunity Office has long collected information from all contractors about the race and gender of their workforce; however that information was simply collected and stored. We did not monitor or issue reports regarding our findings or use the information to inform policy recommendations. The State of Ohio does monitor workforce information and has graciously allowed us to access that information.

While I certainly thought the information was worthwhile, I had not made the connection between a diverse workforce and its impact on minority- and women-owned business creation. During the recession of 2008 and lingering economic downturn well into 2011, I came to appreciate and understand the importance of work availability. A job represents stability in so many ways. A good job means that a family is able keep their home, food insecurity is not their reality, and the stress of financial strain does not burden parents and children. But it is also important to recognize that work opportunities are often limited for people who are marginalized. Minorities and women are often the last hired and the least skilled and therefore oftentimes expendable on a public job that is being scaled back because of budget cuts. Unfortunately, marginalized groups are often not as mobile as others so moving temporarily to where the “work is� may not be a viable option.

When public dollars are involved, it only makes sense that the workforce of a public project would reflect the community who funds it. It certainly increases the likelihood of future support by citizenry (otherwise known as taxpayers) when seeking additional funds to support important public projects.

But what really got me going about the importance of workforce was the realization that minority business programs cannot succeed or grow without a pipeline of new businesses. As an unflinching advocate of M/W/DBE certifications, I have been forced to begrudgingly admit that availability is an issue. There are not enough M/W/DBE firms in some fields, which makes it impossible, illegal, and irresponsible to require M/W/DBE // FALL 2015

43

project goals. When availability is a real issue it serves as a testament to the opponents of inclusion who claim that there are not any or “enough” qualified M/W/DBEs, so the few that are available are getting special treatment. Although a cursory review of the history of M/W/DBE utilization in our country would belie that assertion, it does not help inclusion advocates in our quest to ensure that all businesses have an opportunity to compete fairly.

Also, in light of the ocean of legal landmines that race- and gender-based utilized programs have faced over the last 20 years, most of the attention has focused on contracting with M/W/ DBEs and not on the race and gender of employees. This lack of attentiveness has had a substantial impact on the number of M/W/DBE businesses created. If not addressed, the lack of M/W/DBE creation will render inclusion programs obsolete.

A diverse supplier network is a critical economic engine, and a workforce program that is enforced and monitored is a direct driver of supplier diversity success.

Most often business births are born out of experience. A construction worker is likely to one day aspire to own a construction company; an employed electrician may see that she has a special skill that will allow her to create a company that offers that expertise; a technology experts realizes that he has marketable skills as a sole proprietor.….the list goes on and on. While some ambitious entrepreneurs start a business when they cannot find a job, statistics confirm that startups are much

more likely to fail. They are typically undercapitalized, and any unforeseen financial costs can be devastating.

The importance of workforce is multi-faceted. It provides jobs, provides a pathway to business ownership, increases wealth in marginalized communities, and allows public agencies/entities to positively impact the lives of those it serves. Workforce monitoring can be labor intensive but the investment is well worth it. The process can serve as the underpinning for the increase in the numbers of M/W/DBEs, force majority businesses to appreciate the vast talents and depth minorities and women; and address the nationwide problem of a diminishing available workforce.

In the coming months, I will continue to explore workforce programs across the country--the agencies that enforce them and their impact on M/W/DBE programs in the public sector. That information will be used to make a sound recommendation to our City of Columbus leadership about the direction of a measureable workforce program in our city. As the city grapples with our workforce policy, I have every intention of using the information gathered to facilitate discussion with industry colleagues around best practices around workforce requirements.

As advocates, we should leave no stone unturned in our efforts to support the growth and sustainability of M/W/DBEs. If workforce programs are a tool that can be used to impact change, it cannot be overlooked. A discarded tool may result in the words of the great African American poet, Langston Hughes, a “Dream Deferred.”

Take ZOBO To-Go On Your Next Flight

ZOBO All Natural Hibiscus Drink and ZOBO All Natural Ginger Mint Tea

Coming Soon To An Airport Near You www.ZoboLove.com 44

// FALL 2015

Hilton Smith (left), SVP of Turner Construction and Joe Coello, president of New York NAMC Chapter, congratulate Gloria Shealey on her induction into the NAMC Hall of Fame.

NAMC Wins Big

at Las Vegas National Conference

T

he National Association of Minority Contractors placed its bet on a successful conference at the Caesars Palace Resort and Casino in Las Vegas and scored big wins in relationship building, networking, and training.

NAMC celebrated the theme “Empowered to Succeed in a New Economy,” and presented numerous speakers and sessions geared toward advancing the success of minority contractors attending the event from across the United States.

The 46th national conference featured sessions on a wide variety of topics of interest to contractors such as: Alternative Project Delivery Methods, Green Building and Green Business Practices, Legal and Legislative Updates, Current Technology Trends, and a special session for women in the construction industry titled, “How She Leads.”

The event also signaled a changing of the guard as former president Gloria Shealey completed her term as president and passed the leadership to long-time member and NAMC Hall-

Steve Lamar of Kaiser Permanente leads a workshop during the NAMC conference. // FALL 2015

45

of-Famer Wendell Stemley. After serving as a member of the board of directors for many years, Stemley is ready for the challenge of leading the organization.

“I believe Gloria has left us in a good position after a successful term as our president. We have a great foundation of strong local chapters and great corporate partners we can build upon as we move forward,” Stemley saisd. “This has truly set the stage for building on our legacy of having some of the top minority constructors in the nation with over a billion dollars of project capacity. NAMC stands ready to meet the challenges of the new design and build national markets.”

The signature event of the three-day conference was the annual Hall of Fame Gala where the newest members were inducted into NAMC’s most prestigious grouping along with other trailblazers

and leaders in the minority business community. Previous inductees include leaders such as the late Herman J. Russell, Sr., Lewis R. Smoot, and Turner Construction’s Hilton O. Smith.

The Hall-of-Fame inductee at this year’s event was Shealey, who was honored due to her success as President & CEO of The Daniele Company., a Durham, NCbased general contracting company; and also for her service during a three-year tenure as NAMC’s first woman president from 2012-2015. During her tenure, Shealey successfully led the organization to new or expanded strategic relationships and alliances with major corporate partners such as CVS/Caremark, Wells Fargo Bank, Whiting-Turner Construction, and Lend Lease. She also led the organization to increased strategic partnerships with the Airport Minority Advisory Council, the National Minority

Supplier Development Council, and the Conference of Minority Transportation Officials.

President Stemley has hit the ground running since the conference in July and has already engaged with members of the Congressional Black Caucus to discuss the needs of minority contractors and strategies to increase minority business opportunities in government contracting-especially on projects funded by the U.S. Department of Transportation. “We are having productive discussions now,” Stemley said. “But at some point, we have to turn the discussions into meaningful legislation that will help minority contractors succeed.”

New England Wheels Public Notice for FY 2016 DBE Goal New England Wheels Inc. located in Billerica, MA hereby announces its Federal FY 2016 goal for awarding Disadvantaged Business (DBE) contract of 4.11%, as required by 49 CFR 26.45 and 26.49. The DBE goal along with a description of how the goal was developed is available for public viewing and comments from 9:00am to 3:30pm Monday through Friday, at 33 Manning Rd, Billerica, MA 01821 for 90 days following the date of this notice.

Comments for informational purposes will be accepted for 90 days following the date of this notice, and should be sent to the DBE Liaison Office at the address above.

New England Wheels is a modifier of commercial passenger vans actively seeking vendors who qualify as a DBW’s and WBE’s to supply goods and services at a fair market price. All interested parties should contact Jerry Dann by telephone at 978-600-0490 or Email at; gdann@newenglandwheels.com. Qualified DBE and WBE owners are encouraged to apply.

46

// FALL 2015

DBE Program Experts-All Phases, All Modes 26 Years of continuous quality service       

The Best Professional DBE/ACDBE/DBELO Training!

DBE and ACDBE Programs and Goal Methodologies DBE-ACDBE Certification Support DBE Accomplishments Reporting

BETTER PROFESSIONALS—BETTER PROGRAMS

Compliance Monitoring and Report Development Training via the National DBE Training Institute Joint Venture Agreements Disparity Studies-Anecdotal Data

Ken Weeden & Associates, Inc. (KWA) is a national consulting firm that is 100% minority owned .

Ken Weeden & Associates, Inc. (KWA) has prepared FAA, FTA and FHWA DBE plans and goals for more than 150 transportation entities in 33 states and the U.S. Virgin Islands. WE CAN HELP YOU! www.kwaplanning.com (888) 762-6296 kenneth-weeden@kwaplanning.com

Wilmington NC

 Raleigh NC  Atlanta GA

    

The National DBE Training Institute provides comprehensive training for: DBE and ACDBE Administration Professionals (49 CFR 26 and 23) DBE/ACDBE Program Liaison Officers and Administrative Support Staffs M-WBE or HUB Program Certification Professionals for UCP-Modeled Programs Procurement Specialists with DBE MWBE\HUB responsibilities ACDBE and DBE Business owners

Register online NOW for our next classes!— $495/person Visit www.natdbe-ti.com or call 888.762.6296 Visit our website for our 2015 Schedule and Training Site Locations!

(888) 762-6296 kenneth-weeden@kwaplanning.com

Our Recipe for success:

team up with

ACDBE Partners DBE Program Like Experts-All Phases, All Modes 26 Years of continuous quality service

      

Chip Joyner

DBE and ACDBE Programs and Goal Methodologies DBE-ACDBE Certification Support DBE Accomplishments Reporting

The Best Professional DBE/ACDBE/DBELO Training!

The Real Chow Baby at Hartsfield-Jackson Atlanta International Airport

HMSHost and Chip JoynerBETTER teamPROFESSIONALS—BETTER up to bring The Real Chow Baby PROGRAMS National DBE Training Institute provides comprehensive training for: to Hartsfield-JacksonTheAtlanta International Airport.

Compliance Monitoring and Report Development

Training via the National DBE Training Institute A staple of the Atlanta restaurant scene 2005, The RealProfessionals Chow Baby (49 partners  DBE andsince ACDBE Administration CFR 26with and 23) Joint Venture Agreements HMSHost to open its first concourse location at the world’s biggest airport.

“HMSHost is a Staffs  DBE/ACDBE Program Liaison Officers and Administrative Support great company to work with. They were a mentor of mine for a number of years while I was Disparity Studies-Anecdotal Data  M-WBE or HUB Program Certification Professionals for UCP-Modeled coming up in the restaurant business.

HMSHost has really been a fantastic partner,” says Chow Programs Ken Weeden & Associates, Inc. (KWA) is aco-owner nationalChip Joyner. The Real Chow Baby offers a hearty menu of farm-fresh produce, Baby  Procurement Specialists with DBE MWBE\HUB responsibilities consulting firm that is 100% minority owned . meats and seasonal fish, sizzled in zesty Asian-inspired sauces. For more information, contact  ACDBE and DBE Business owners busdev@hmshost.com.

Ken Weeden & Associates, Inc. (KWA) has prepared FAA, FTA and FHWA DBE Register online NOW for our next classes!— $495/person

plans and goals forThe more than 150 Baby transportation entities in 33 states and the Real Chow co-owner Chip Joyner U.S. Virgin Islands.

WE CAN HELP YOU! www.kwaplanning.com (888) 762-6296

Visit www.natdbe-ti.com or call 888.762.6296 Visit our website for our 2015 Schedule and Training Site Locations!

HMSHost is the recipient of six Airport Revenue News Awards kenneth-weeden@kwaplanning.com for Outstanding Food & Beverage Operator.

(888) 762-6296

www.hmshost.com

Wilmington NC

Joyner_SM.indd 1

 Raleigh NC  Atlanta GA

kenneth-weeden@kwaplanning.com 5/15/13 1:38 PM

// FALL 2015

47

Under The Leadership Of Mayor Michael B. Coleman, We Have Awarded Over One Half A Billion Dollars To Minority And Female Firms, since the year of 2000. The City Of Columbus Equal Business Opportunity Office Currently Has A Directory Of Nearly 500 Certified Minority And Female Owned Businesses. EBO Grants Reciprocal Certification For The State Of Ohio, The Ohio Department Of Transportation, And The Ohio Minority Supplier Devolvement Council. “Small Businesses Are Important Economic Engines That Create Jobs And Opportunities For Many Of Our Residents, Enriching Our Families And Neighborhoods!�

- Melinda Carter, Executive Director

Contact EBO, at 614-645-4764, or visit us online, at Columbus.gov to learn how quick and easy it is to get your business ready, willing, and able to do business with the City of Columbus.

We look forward to you Joining Us!

1393 E. Broad Street Columbus, OH 43205 Phone: (614) 645-4764 Fax: (614) 645-6669 Columbus.gov

48

// FALL 2015