spring 2019
Congresswoman
Beatty Honored by COMTO
Also in this issue Research on Successful DBEs Nashville BNA Vision for Inclusion ATL Next Remembers Maynard Jackson Jr. AGCMO Honored for Diversity Excellence
Messer Construction strives
for Excellence Novant Health
$5 million Loan Fund for Diverse Firms // spring 2019
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Your Career Journey Begins with Us The Metropolitan Washington Airports Authority (MWAA) offers small businesses and job seekers a place to grow. The Department of Supplier Diversity is strongly committed to maximizing the inclusion of small businesses in MWAA's contracting opportunities. To learn more about small business certifications, outreach events, current and upcoming contracting opportunities, the Airports Authority Small Business University, and conducting business with the Airports Authority, please visit http://www.mwaa.com/supplierdiversity.
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We hope you will choose to start your career journey with us! We believe in diversity, our workforce is our strength, comprised of an array of backgrounds, cultures and interests which only makes us stronger. We offer a competitive total rewards package. Join our team: http://www.mwaa.com/careers. Dulles Corridor Metrorail
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400+ Firms mentored by Austin have received contracts exceeding $3 billion. Austin Commercial is committed to recognizing, embracing, and supporting workplace diversity. As a construction industry leader, Austin takes pride in creating minority economic opportunities.
www.austin-ind.com
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32
26
Features
Transportation
08 Congresswoman Beatty Leads
32 Aviation
13 Messer Construction
36 Transit
COMTO's 2019 Women Who Move the Nation Honorees Sets a Standard of Excellence
18 Demographics of Successful DBEs National Study Results
22 Novant Health Provides $5 Million Loan Program For diverse companies
DBE Power Players 26 Service, Integrity, Collaboration ASLPM finds success in carefully calculated partnerships by Sarah Magargee
30 Nashville International Airport
Moving from ‘Good to Great’ by Jordan Taylor
ATL Next Honors the late Maynard Jackson Jr. at 2019 Industry Day Sound Transit Ensuring DBEs Ride on the Federal Way Link Extension
40 Civil/Highway
New Technologies Improve DBE Supportive Services
Business Development 43 Fixing the Dilemma of Creating Transferrable Value By Allen Brown
46 Understanding the Impact of 100%
Performance and Payment Bonds and Surety Premium By Karen Barbour
Other Stories 4
// spring 2019
of Missouri Receives National 48 AGC Honor for Diversity Excellence
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Branding Campaigns Copywriting & Editing Crisis Communication Graphic Design & Layout Media Coaching & Training
Spring 2019 Volume 7, Issue 2
Public Relations & Media Relations
Publisher: Shelton A. Russell
Social Media Management
Managing Editors: PR PROS, LLC
Research & Strategic Planning Strategic Communication Video Production Services
Creative Director: BRANDilly MC Digital Media: Premier Web Design Solutions Editorial: Karen Barbour Allen Brown Keen Independent Research Sarah Magargee Philip D. Russell Jordan Taylor Headquarters: 514 Daniels Street, #186 Raleigh, NC 27605 Website: www.AmericanDBE.com
About American DBE Magazine: American DBE Magazine is the premier industry resource for individuals and stakeholders who work within the federal Disadvantaged Business Enterprises program administration. American DBE Magazine is published quarterly and distributed in all 50 states — plus Puerto Rico and the U.S. Virgin Islands — to DBE program administrators, business owners, and professionals in the Aviation, Highway Construction and Public Transit industries.
Subscriptions: American DBE Magazine is published quarterly in Fall, Winter, Spring and Summer editions. The annual subscription rate is $24.99 including online editions, special industry reports, and four issues; single copy list price is $6.99 plus postage originating from Raleigh, North Carolina. Advertising Sales: editor@AmericanDBE.com | (919) 741-5233 (Office)
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From the Publisher
Promoting DBE Success
T
he effectiveness of diverse business programs, and particularly the DBE Program, has been a subject of debate for as long as I have been involved in the industry – now over 20 years. I’m sure it was a topic of considerable discussion even before then. In regards to the DBE Program, the debate usually centers around two issues: 1) the macro issue of the performance of the program related to the percentage of participation by DBE firms to the overall spending on transportation projects and airport concessions; and 2) the micro issue of the number of DBEs that perform well enough in the program to exceed the personal net worth or business revenue limits to be in the program; commonly referred to as ‘graduating the program.’ This important debate certainly keeps DBE Program stakeholders’ eyes on the prize of measuring the objective performance of the program by reviewing measurable results. However, it can also give those who love criticism more than solutions all the ammunition they need to shoot down the program, along with those who labor to make it effective. My latest assessment is this: What the DBE Program is, and is not, was baked into the purpose and goal of the program from the beginning. The program is first and foremost a subcontractor, subconsultant and concessionaire partner program. Therefore, the ability for a DBE to perform enough work as a subcontractor and to earn enough profit to exceed the business size or net worth limit is a very steep mountain to climb. My experience has been that many of the DBE firms that reach these heights do so because of considerable work outside of the DBE Program on private, municipal and non-transportation-related projects. Another reality is that the program has open enrollment to any majority business owner that meets the criteria of being socially and economically disadvantaged, as defined by the program’s defining legislation – unlike the federal SBA 8(a) program, which has a more rigorous process to
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// spring 2019
join the program, and has arguably had greater success in developing larger and more profitable firms. Therefore, the low barrier to entry and the large number of DBE firms make the competition more intense and likelihood of success less probable. As a less-than-stellar analogy, the DBE Program is like a local fitness center. At your neighborhood gym, there are likely thousands of people who get memberships. However, far fewer – probably less than 25% – of those members attend on a regular basis; and an even smaller percentage of those members ever get fit. Is it the gym’s fault? Probably not. What the DBE Program does and was intended to do is provide a greater degree of opportunity and access into an industry that previously was essentially closed to minority and women business owners. Is it as effective as it can or should be? No, far from it. Coming to grips with this reality will help all stakeholders focus on strategies and policies that make it easier for businesses to move from simply joining to becoming active members; and from becoming active members to succeeding in the program. This issue of American DBE Magazine profiles people and organizations dedicated to moving forward in the effort to level the playing field and build successful companies. Organizations like the Conference of Minority Transportation Officials (COMTO), that hosted its annual ‘Celebrating Women Who Move the Nation,’ honoring women making a difference in the industry. This issue also shares the results of a DBE Program research project funded by the Transportation Research Board, that seeks to better understand the components and factors leading to DBE success. Another story shares the best practices of Novant Health, a health care provider based in North Carolina that launched a $5 million loan program for diverse firms. In fact, this issue is filled with stories highlighting the efforts of companies and individuals striving daily to create diverse business success. I hope you enjoy it! Best wishes, Shelton A. Russell, Publisher American DBE Magazine
// spring 2019
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Feature
Congresswoman Joyce Beatty Leads Group of
COMTO ‘Women Who Move the Nation’ By American DBE Staff
2019 COMTO Celebrating Women Who Move the Nation honorees: (front row, l to r) – Jacqueline Dupont-Walker, Honorable Joyce Beatty, Jannet Walker-Ford, Carol Wise, Meshelle Howard. (Top row, l to r) – J. Somer Shindler, Gabriele Mack, Trudy Bartley, Debra Johnson, Elsa Ortiz. (Photo courtesy of COMTO)
T
he Conference of Minority Transportation Officials (COMTO) recognized the 2019 honorees of Women Who Move the Nation on March 20 in Washington, D.C. This year marked the eighth year COMTO hosted the Celebrating Women Who Move the Nation program, started in 2012 by former COMTO President & CEO, the late Julie Cunningham. The program celebrates and acknowledges the leadership roles women increasingly play in the transportation industry, and honors individual women who are making significant contributions to the
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// spring 2019
industry. Ten additional honorees in 2019 brings the total to 75 women from the public, private and nonprofit sectors who have been honored by COMTO for making a positive impact in the transportation industry. “It is a privilege to recognize such skilled and dedicated nominees,” said Tanya Adams, Celebrating Women Who Move the Nation Chair and Vice President of Community Relations & Diversity at Central US, WSP USA. “When we selected this year’s honorees, we knew that each of them had a story to tell about strength,
fairness and determination. In their stories we find the essence of equality and they help us to renew our dedication to achieving parity for all.” The Honorable Joyce Beatty, U.S. Representative (D-Ohio), led the 2019 group of honorees and provided the keynote speech to hundreds of guests during a breakfast program at the Omni Shoreham Hotel. Beatty received COMTO’s Shirley DeLibero Award, recognizing her leadership role in helping the city of Columbus, Ohio, win the U.S. Department of Transportation Smart City Challenge. Columbus received a $40 million grant from USDOT for winning the competition and is using the grant to leverage additional funding to invest $100 million in Central Ohio to become the nation's first city to fully integrate innovative technologies like self-driving and internet-connected automobiles into the transportation network. Beatty also was honored for her efforts to help the Central Ohio Transit Authority (COTA) secure a $37 million grant from the Federal Transit Administration for the CMAX Bus Rapid Transit line in the Greater Columbus area. The CMAX Bus Rapid Transit line connects more than 331,000 residents and 170,000 workers to jobs, healthcare, schools and communities. Congresswoman Beatty has been a stalwart advocate for diversity and inclusion in all aspects of society and is currently chair of the Subcommittee on Diversity and Inclusion in the U.S. House Committee on Financial Services. She is also the First Vice-Chair of the Congressional Black Caucus. Beatty’s keynote speech referenced her own journey following in the footsteps of historic women like civil rights icon Rosa Parks in leading the nation forward in transportation. She recalled the struggle of Rosa Parks taking courageous actions of protest that got her arrested for not giving up her seat on the bus, an action that led to the Montgomery Bus Boycott; a key moment in the civil rights movement of the 1950s and 1960s. Beatty encouraged women to continue to strive to make significant contributions in the industry and to ‘rise up’ to even greater heights to promote participation and equality in the industry. Beatty also shared her successful work within her congressional district to honor Parks by renaming a section of North High Street, a major thoroughfare in the center of
Congresswoman Joyce Beatty (D-Ohio, 3rd District) was presented with the Shirley DeLibero Award during the 2019 COMTO Celebrating Women Who Move the Nation awards program.
Women have been a leading force in transportation, and their stories of greatness are a significant part of American transportation history. - Congresswoman Joyce Beatty downtown Columbus, as Rosa Parks Way – as a way to commemorate the role Parks played in the nation’s history. “Women have been a leading force in transportation, and their stories of greatness are a significant part of American transportation history,” Beatty said. “Still today, women are helping ‘move the nation’ because of the dedicated efforts of COMTO and many others. That is why I was so honored to be recognized by // spring 2019
9
From left, COMTO President
& CEO A. Bradley Mims, 2019 Honoree Meshelle Howard and BWI Airport CEO Ricky Smith network after the Celebrating Women Who Move the Nation awards ceremony. (Photo courtesy of COMTO)
COMTO as a 2019 ‘Women Who Move the Nation’ honoree, and in that spirit I will continue my efforts in Central Ohio and Congress to build new roads, highways, bridges, and the like all across this great country.” COMTO’s other 2019 honorees
include a cohort of accomplished, professional women from a variety of industry segments, making their own impact on transportation. “Our advocacy organization takes great pride in honoring these notable women,” said A. Bradley
Mims, COMTO President & CEO. “Their leadership and commitment to the advancement of diversity and inclusion in the transportation industry boosts COMTO’s mission every day, all across the nation.”
2019 COMTO Honorees: Name
Title
Award
Trudy Bartley
AVP, Community Relations, Ohio State University, Office of Governmental Affairs; Chair, Central Ohio Transit Authority
Academia
Debra Johnson
Deputy CEO, Long Beach Transit
Advocacy
J. Somer Shindler
Managing Director, Planning and Development, Corporate Real Estate (CREE), United Airlines
Aviation
Elsa Ortiz
Board President, AC Transit
Chairman’s Eagle
Carol Wise Jacqueline DupontWalker Gabriele Mack Jannet Walker-Ford Meshelle Howard Honorable Joyce Beatty
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Executive Vice President, Chief Operations Officer, Dallas Area Rapid Transit (DART) Board Member, Los Angeles Country Metropolitan Transportation Authority Vice President, Economic Inclusion and Supplier Diversity, Jacobs Vice President & General Manager, Eastern Region, Americas, Cubic Transportation Systems Director of Civil Rights & Fair Practices, Maryland Transportation Authority U.S. Representative (D-OH, 3rd District)
Multimodalism Multimodalism Private Sector Private Sector Public Transportation Shirley DeLibero Award
// spring 2019
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// spring 2019
PRESIDENT & U.S. PATENT HOLDER Awarded 2016 National MBA of the Year by the National Black MBA Association
Feature
Messer Construction Sets a Standard of Excellence By American DBE Staff
Messer Construction was the contractor for the Metropolitan Nashville Airport Authority BNA/MRO Hangar Development project. The project received the 2017 AGC of Tennessee Award of Excellence in New Construction (under $50M). The 90,000-square-foot airplane maintenance hangar contains a new concrete apron and new taxiway to the existing airfield. The project exceeded the company’s 20% S/M/WBE requirement with an actual achieved participation of 40% S/M/WBE.
M
esser Construction consistently sets a standard of excellence in the construction industry as a quality builder of commercial projects. Since its inception in 1932, the company has established a successful track record in several market segments including aviation, health care, higher education, industrial, and science & technology. The company is ranked by Engineering News-Record as #75 on its 2018 listing of the Top 400 contractors across the country. The employee-owned firm surpassed $1 billion in revenues during 2018, and has more than 1,100 employees across 10 regional offices in the states of Ohio, Indiana, Kentucky, Tennessee and North Carolina.
Along with a stellar reputation in building construction projects, Messer also sets a standard of excellence for economic inclusion in the markets where it does business, both in the procurement of goods and services from diverse suppliers, and in workforce diversity across the organization. Messer’s commitment to economic inclusion is made clear through its identification of Diversity and Inclusion as one of the company’s six cultural values; and its commitment to inclusion as a key factor for continued success in the company’s 2019-2023 strategic plan. Vice President and Chief Inclusion & Diversity Officer Stanford
Williams leads Messer’s economic inclusion initiatives. Williams believes that although the company has grown over the years, it has maintained a commitment to the community – and to economic inclusion – that is led by Messer Chairman of the Board Thomas Keckeis and President & CEO Tim Steigerwald. “Our leadership communicates the importance of inclusion, and that it is a competitive advantage for us,” Williams said. “It helps us win jobs because our customers value the diversity and inclusion results that Messer brings to their projects.” In addition to winning jobs, Williams also believes that being a world-class company for inclusion // spring 2019
13
improves Messer’s overall performance in its market areas and market segments. “Diversity and inclusion is not just a good thing to do; companies that are diverse outperform those that are not diverse,” Williams said. Messer uses an organization-wide scorecard system to measure each region’s performance in all strategic areas, including economic inclusion, as a means to track the company’s key performance indicators. The scorecard ensures corporate and regional leadership stays aware of ongoing performance, and serves as peer motivation between the regional offices. “Everyone can see the scorecard and we have economic inclusion goals for every department and region of the company,” Williams said. “No one wants to have their area in the red in its strategic objectives, including economic inclusion.”
Supplier Diversity One component of Messer’s economic inclusion effort is a commitment to do business with diverse firms. The company spent more than 17% (or $154 million) with certified companies owned by minorities or women, exceeding its 15.5% goal set for fiscal year 2018. Messer established a goal to exceed 16% (or $176 million) in spending with certified minority- and women-owned firms in fiscal 2019. A key to reaching this goal comes through providing support, monitoring and tracking of the firm’s Top 60 projects throughout the year. Messer’s Economic Inclusion Vice President of Supplier Diversity, Sonya Walton, maintains a close working relationship with the regional offices and helps them create and implement strategies to find diverse firms to work on projects. To that end, Williams said: “We have a supplier diversity goal for every project we do, regardless of whether the client requires it or not. We do it because of our corporate commitment to economic inclusion.” As a result of the ongoing success of Messer’s Economic Inclusion program, the company has been recognized by several organizations in the minority and women’s business development arena. Messer was the National Minority Supplier Development Council’s 2018 runner-up for Class I Corporation of the Year, and recognized as a 2018 ‘Best of the Best’ Companies for Supplier Diversity by Professional Women’s Magazine. Messer also was named Diversity Inc. Magazine’s #8 Best Company for Supplier Diversity in 2016, and won the Ohio Minority Supplier Development Council’s Class I Corporation of the Year for three years in a row from 2014-2016.
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These and other honors were given to the company based on its strategy to be a preferred customer for diverse firms in its market areas. Messer continually looks for opportunities to work with smaller companies, especially those with the potential to become larger subcontractors in the future. “We meet companies where they are and then try to have them grow with us,” Williams said. “What causes me to lose sleep at night is thinking about where the next generation of entrepreneurs is coming from that want to grow with us.”
TriVersity Partnership Messer’s commitment to economic inclusion is further exemplified by its strategic relationship with TriVersity Construction. TriVersity is a Cincinnati-based contractor led by CEO Melvin Gravely II, with annual revenues approaching $100 million. Gravely acquired majority ownership of TriVersity in 2009 and has a 67% ownership stake in the company, while Messer owns the remaining 33%. TriVersity’s relationship with Messer began in 2005 when the company was initially founded. Messer’s leadership wondered why there were no scaled-up, minority-owned construction companies with the ability to complete larger projects. Messer’s answer was to do something about it – becoming the third investor
Stanford T. Williams Jr.
Messer Vice President & Chief Inclusion and Diversity Officer // spring 2019
Messer Senior Project Manager Mieah Turner served as on-site leader for the $35 million Metropolitan Nashville Airport Authority BNA/MRO Hangar Development Project. in the minority-owned firm. Messer’s intention was to help build a minority-owned company with the capacity needed to be a large contractor in the Cincinnati market. The TriVersity experiment had some early success as the original owners and Messer leadership worked to turn the vision into reality. “There were fits and starts in the beginning,” Gravely said. “Messer leadership had a vision for what TriVersity could become, but bringing the relationship to where it is now has taken some work.” The Messer/TriVersity venture has thrived under Gravely’s leadership. So much, in fact, that TriVersity became one of the leading construction companies in the Greater Cincinnati Area. A May 2019 listing of the Largest Greater Cincinnati General Contractors ranks TriVersity #7 – five spots behind Messer at #2 on the list. “We have been ranking between #7 and #9 for the past few years,” Gravely said. TriVersity has grown and expanded capacity through the ongoing
support of Messer’s leadership. The strategic relationship allowed TriVersity to access the latest construction processes and technologies from an industry leader, and provided an opportunity for the company to work along with Messer on numerous large projects. As a result, TriVersity staff members gained significant project management experience necessary to succeed on future projects. While the business-to-business relationship has paid dividends for both companies, it has also come with a few growing pains. As TriVersity grew and developed capacity, it led to situations of direct competition between the two companies, as they encountered projects both entities wanted to win. “There have been times where both companies see a project that we want to go after, and we’ve competed against each other … but generally, we don’t cross paths on projects,” Gravely said. When situations like this arise, the solutions are addressed seamlessly due to the close relationship between the companies. TriVersity’s
five-member board of directors includes Gravely, two members appointed by Gravely, and two members from Messer. The two Messer members are Williams and Messer President Steigerwald. “Messer has been fully engaged from the beginning,” Gravely said. “The partnership has allowed us to see the inner workings of their company, learn the latest technology and business processes, and work closely with their project managers to increase our capacity.” This type of mentoring has been invaluable to the success of TriVersity, and has allowed the company to steadily grow its organizational skill and capacity to the point where approximately 75% of the company’s work comes from prime contracts won independently, while the other 25% comes from partnering with Messer on large projects. The strategic partnership has performed so well that both companies are now considering the next step in the relationship. Since TriVersity has become a successful // spring 2019
15
company in its own right, Messer has been able to take a step back in the partnership it helped to build. “They came to trust us,” Gravely said. “But it is because of the transparency of the relationship and their commitment to seeing us succeed on our own.” This overarching commitment has allowed TriVersity to continue to access the resources of Messer, while simultaneously gaining knowledge and different business processes from new employees that join the company after working for other large firms. “We have employees that have worked for several of the largest contractors in the country,” Gravely said. “They bring skills and processes from their prior companies, so now we combine what we have gained from Messer with what our people have brought in from the other companies.” Williams has provided guidance and support for the Messer/TriVersity relationship since the initial stages and is proud of the success TriVersity is having under Gravely. “This has been a great example of Messer’s commitment to building minority-owned firms and supporting our community,” Williams said. “We know that this type of success not only grows the business, but that minority-owned firms are more likely to hire minority employees, which creates an even greater benefit.”
Forging Ahead
“Thirteen people have already attained full-time employment,” Williams said. “We have four more in the queue, and will have another eight by the end of the year.” Messer began the 2019 fiscal year with first quarter revenues of $538 million, the highest quarterly revenues in the history of the company. Williams believes the company has an excellent chance to reach the 2019 revenue goal of $1.25 billion, which will offer significant opportunities to diverse firms and potential employees across the regions where Messer does business. However, Williams insists his main focus isn't on the amount of revenues the company earns, but on the lives he has a chance to impact through these economic opportunities. He said, “It’s about more than building buildings, it’s about building lives.”
"We have a supplier diversity goal for every project we do, regardless of whether the client requires it or not. We do it because of our
corporate commitment to economic inclusion."
-Stanford Williams
Messer shows no signs of slowing down its growth in 2019 – tirelessly in constant pursuit to be among the top contractors in the industry. In 2018, the company opened a regional office in Raleigh, North Carolina, and has plans to make additional inroads in the health care and aviation industries in particular. “Aviation is a definite area of focus for us,” Williams said. “We see this as an area of growth in the future.” The company is currently completing airport projects in Nashville, Tennessee; Charlotte, North Carolina; and Cincinnati, Ohio. The company is also in the midst of its largest contract ever, a $350 million critical care building for the Cincinnati Children’s Hospital Medical Center. Williams and his economic inclusion team developed and launched a robust effort to include certified diverse companies in the project, and to create an innovative workforce diversity program to ensure members of the community near the construction site have the maximum opportunity to gain employment, and potential longterm careers with Messer. The project has the goal of creating 50 sustainable jobs for diverse candidates.
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TriVersity Construction CEO Mel Gravely speaks to company employees at the 2019 Safety Day Program.
+ 2018 - Professional Women’s magazine Best of the Best Top Supplier Diversity Programs + 2018 - NMSDC Corporation of the Year award, Class I runner-up + 2018 - TSMSDC Champion of the Year Award presented to Stan Williams, Messer Vice President, Chief Inclusion and Diversity Officer
Regional Impact. National Success. Building better communities is a key part of Messer’s purpose. We are committed to creating economic opportunities for Minority- and Women-Owned Business Enterprises (M/WBEs) across all 10 of our regions in the Midwest and Southeast.
+ Driving company purchases with M/WBEs
In 2018, Messer spent $154 million — more than 17% of our purchases — with certified M/WBE businesses.
+ Nationally-recognized best practices
To find out how you can register your organization as a subcontractor, visit messer.com/subcontractors/diverse-suppliers
+ Dedicated resources for strategic relationships
Building better lives for our customers, communities and each other
@messerwearebldg @messerei messer.com
// spring 2019
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Feature
DEMOGRAPHICS of SUCCESSFUL DBEs Results of a National Study By Keen Independent Research
W
hat makes a firm successful in the highway construction and engineering industry? How many “successful” minority- and women-owned firms are there across the country? Do firms graduate from the Federal DBE Program – and what happens to them when they do? Keen Independent Research sought to answer those questions by identifying the most successful minority- and women-owned firms working with state departments of transportation and then learning as much as possible about them. The Transportation Research Board of the National Academies of Sciences, Engineering and Medicine (TRB) commissioned the study. The full report will be published by TRB in the coming months (look for Compendium of Successful Practices, Strategies and Resources in the FHWA Disadvantaged Business Enterprise (DBE) Program). This research provides the first national examination of DBEs that have been successful working with state DOTs, including program graduates. Following identification of successful DBEs in nearly every state, Keen Independent Research compared the companies’ characteristics to a random
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// spring 2019
sample of all DBEs. The study team then conducted an online survey and indepth interviews with state DOTs and successful firms. Research results from this study will appear in two American DBE Magazine articles. The first provides a profile of successful DBEs working for state DOTs. The second will describe how they became successful and any assistance that was important along the way, including through the Federal DBE Program. Although the research focused on firms related to highway construction and engineering, including different types of subcontractors and suppliers, it has applicability to other industries as well.
was on a path toward graduating from the Federal DBE Program, among other criteria. Key facts regarding these DBEs included:
The 749 DBEs identified by state DOTs as successful represent a small share of the approximately 41,000 certified DBEs in the nation. Being certified as a DBE does not guarantee a company’s success (even when just comparing firms that specialize in highway work).
DBEs working with state DOTs do, if rarely, graduate from the Federal DBE Program. State DOTs identified about 100 companies that had graduated, but as many as one-third of those firms re-entered the program as owner net worth or business revenue changed to the point that they were eligible again.
Number of “successful” DBEs Keen Independent Research worked with state DOT staff and other groups to identify the DBEs that were most successful in working with their state DOTs. They identified 749 successful DBEs, including graduated firms, based on different criteria for “success.” For example, a firm met the criteria for “successful” if it received considerable work on state DOT contracts, competed for prime contracts, had graduated or
About one-half of the 749 successful DBEs are white women-owned firms, which is more than what one would expect given the relative number of all DBEs owned by white women. About 17 percent are Hispanic American-owned firms and 16 percent are African American-owned businesses. Table 1 shows detailed results by group.
Most successful DBEs have been in business for many years. Only 16 percent were less than eight years old at the time of the study, compared
TABLE 1
with 35 percent of DBEs nationally. Table 2 shows the age of firms identified as successful DBEs.
About one-half of successful DBEs became certified within two years of when the company started
Race, ethnicity and gender of successful DBEs and graduated firms
Race/ethnicity
Number of Successful DBEs
Percentage of Successful DBEs
Number of Graduated DBEs
Percentage of Graduated Firms
African American
122
16.3
20
19.8
Asian-Pacific American
35
4.7
7
6.9
Hispanic American
125
16.7
18
17.8
Native American
54
7.2
3
3.0
Subcontinent Asian American
44
5.9
13
12.9
MBE - unknown
5
0.7
1
1.0
White female
352
47.0
35
34.7
Majority
12
1.6
4
4.0
Total
749
100.0
101
100.0
Source: DOTs and trade associations survey responses. Excludes duplicate DBEs, ACDBEs, SBEs.
TABLE 2
Length of time in business for successful DBEs
Decade Started
"All Successful DBEs"
Graduated DBEs
"Random Sample of DBEs"
Before 1960
1.1
1.1
1960–1969
2.4
2.2
1970–1979
5.1
8.9
1980–1989
15.8
21.1
1990–1999
24.9
30.0
2000–2009
35.0
33.3
2010–2018
15.7
3.3
100.0
100.0
0.6 0.8 2.8 7.2 15.3 38.6 34.8 100.0
Total
Source: DOTs and trade associations survey responses. Excludes duplicate DBEs, ACDBEs, SBEs. Random sample of 17 DBE directories. Hoovers data
// spring 2019
19
David Keen, Principal for Keen Independent Research
There are many paths and different strategies that might help a company become a successful DBE.
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Because of the nature of state DOT work, the DBEs identified as successful were mostly construction or professional services firms (nearly one-half and onequarter, respectively). However, within those two industries, successful DBEs cut across many different specializations beyond highway construction and engineering, including fields such as electrical work and environmental consulting. This also shows that, overall, state DOT operation of the Federal DBE Program does not lead to a concentration of DBEs in any single type of work. Almost every state DOT identified at least one DBE that was successful in participating as a prime contractor in their contracts. In addition, about 80 percent of successful DBEs surveyed said that they perform work as a prime contractor at least some of the time. Almost one-third of successful DBEs had changed their primary specialization from the work performed when they started. For example, about 2 percent of successful DBEs surveyed said that they specialized in underground utility work when starting out. Less than 1 percent of successful DBEs indicated that that is now their primary line of work. However, about 8 percent of successful DBEs reported being able to perform that type of work. Eighty-six percent of successful DBEs performed more than one type of highway-related work. Ninety-five percent of all successful DBEs reported that they perform work in both the public and private sectors. About 30 percent of firms indicated that public sector work accounts for at least 90 percent of their work. Most of the other firms had a more equal mix of revenue from public and private sector contracts. When asked about the largest contract or subcontract the firm had received, almost one-half of successful DBEs surveyed indicated their biggest contract was between $1 million and $5 million. About one-in-six surveyed DBEs reported being awarded a contract over $5 million. One-half of successful DBEs said that contracts with DBE goals accounted for more than 50 percent of their revenue.
// spring 2019
Growth paths Annual revenue alone does not indicate “success.” Many DBEs identified as successful by state DOTs were well below the SBA small business size standards for their fields. Table 3 provides information about the revenue of DBEs identified as successful in this study. Most of the successful DBEs surveyed in the study indicated that they were not close to exceeding the size limits of the Federal DBE Program. Only 70 DBEs were identified by state DOTs as being on a path toward graduation.
Stay tuned for more The second article in this series will provide an in-depth look at DBE owners’ perspectives on why they became successful, the challenges they still face and how they are addressing them. Keen Independent Research also compares the types of assistance that successful DBEs see as helpful and what state DOT staff members think is most useful. Stay informed about this important research in the next issue of American DBE Magazine. TABLE 3 Annual revenue for surveyed successful DBEs. (from survey responses)
Average Annual Gross Revenue
Percentage
Up to $0.5 million
11.1
$0.6 million to $1 million
4.0
$1.1 million to $2.5 million
18.3
$2.6 million to $5 million
27.8
$5.1 million to $7.5 million
7.1
$7.6 million to $10 million
8.7
$10.1 million to $15 million
11.1
$15.1 million to $24 million
10.3
$24.1 million to $36.5 million
0.8
$36.6 million or more
0.8
Total
100%
AIRPORT MINORITY ADVISORY COUNCIL
// spring 2019
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Feature
Novant Health provides
Pictured is the Novant Health Forsyth Medical Center in Winston Salem, North Carolina. Novant Health is a fourstate integrated network of physician clinics, outpatient centers and hospitals. Its network consists of over 1,600 physicians and 28,000 employees at more than 630 locations, including 15 medical centers and hundreds of outpatient facilities and physician clinics. (By David Bjorgen - Own work)
$5 Million Loan Program TO HELP DIVERSE FIRMS BUILD CAPACITY By American DBE Staff
M
any diverse firms have the capabilities needed to grow a company to scale, but often struggle when seeking capital to reach their full potential. Novant Health Senior Director of Supplier Diversity & Performance Kevin Price had first-hand experience with this challenge when he joined the company after a career in the banking industry. Novant recruited Price to become its first supplier diversity manager in 2006, and he hoped one day to have the
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// spring 2019
opportunity help firms address the challenge of finding capital to grow a successful company. Although it took a while to bring his vision to reality, Price was able to help Novant create a program to help businesses get access to working capital in 2018. Novant Health is a $4.6 billion, four-state integrated network of physician clinics, outpatient centers and hospitals based
in North Carolina, and doing business in South Carolina, Virginia and Georgia. The company’s network consists of more than 1,600 physicians and 28,000 employees at more than 630 locations, including 15 medical centers and hundreds of outpatient facilities and physician clinics. In his current role, Price worked with M&F Bank, a minorityowned bank headquartered in Durham, North Carolina, to develop the Diverse Supplier Community Reinvestment Program, a loan program for diverse firms participating in Novant’s Supplier Diversity Program. The loan program leverages $5 million in Novant deposits at M&F Bank to serve as collateral to support a loan guaranty program providing working capital to diverse firms. “We already had the deposits with M&F Bank, so we had the assets to support the program.” Price said. He continued, “M&F President James Sills told me, ‘We need to loan some of this money out so we can pay you interest.’”
“The Diverse Supplier
Community Reinvestment Program serves our mission as a community bank very well and satisfies our credit risk criteria...” - James Sills III, President and CEO, M&F Bank
This statement provided the spark Price needed to help create one of the few loan programs in the country sponsored by a major corporation. Sills said of the program, “The Diverse Supplier Community Reinvestment Program serves our mission as a community bank very well and satisfies our credit risk criteria. It offers the potential of a very positive impact in all the communities served by M&F and by Novant Health.” Eligibility for the lending program is two-fold: 1) be a diverse business owner who is a participant in Novant’s Supplier Diversity Program; and 2) have a direct contracting relationship with Novant Health. The application process involves completing an online application on the M&F Bank website, and then completing the standard underwriting process. Once M&F reviews the loan application for approval,
Kevin Price Novant Health Senior Director, Supplier Diversity & Performance
Novant will confirm whether the applicant meets the criteria and is approved for the loan guaranty. “The program is a great opportunity for firms that have a strong company, but due to some issues like a lack of collateral or a blemish on their credit history, may not be able to get financing through a traditional bank,” Price said. The maximum loan amount for any borrower is $250,000.
Program Success Story Elite Touch Cleaning, a commercial cleaning company based in Charlotte, North Carolina, secured a $150,000 line of credit through the program in 2018. The company won its first contract with Novant in 2008, providing cleaning services to a distribution center in Kannapolis, North Carolina, and has maintained the contract since. After years of moderate growth, the company’s growth began to take off in 2017, after Novant sponsored owner Mario Mendigana to attend the Dartmouth College, Tuck Business School’s “Building a High Performing Minority Business” executive education program. The program helped Mendigana develop a plan to accelerate the company’s growth and helped clarify his path forward. “The program helped me put a strategy together and see the light at the end of the tunnel of how to grow the company,” he said. Elite Touch has doubled in size since completing the Tuck program, and the overall improvements helped the company create the necessary track record to secure a loan guaranty from Novant. “The line of credit has definitely helped us on the cash flow side,” Mendigana said. “We use the line to help cash flow // spring 2019
23
Minority businesses participate in the Dartmouth College Tuck Business School’s “Building a HighPerforming Minority Business” executive education program. Novant Health is a member of the Healthcare Alliance, sponsor of the healthcare-focused training program.
in our general operations.” Mendigana is so thrilled by the growth of his company since attending the Tuck program that he signed up at his own expense to return to the school in June 2019, for the “Growing a Minority Business to Scale” course, the second part of the program he attended in 2017.
Price also has become a leader in supplier diversity on the national stage. He serves in a leadership role of the Health Care Industry Group in the National Minority Supplier Development Council (NMSDC) and is active in a regional affiliate council of NMSDC and the Women’s Business Enterprise National Council.
Moving Forward
Novant is anticipating continued growth of its supplier diversity program in 2019 and beyond as the company prepares to launch major projects to continue its corporate growth. One upcoming project is a new $150 million hospital located in the Ballantyne area of Charlotte beginning in 2020. The company has received approval to build the facility and will begin design activities in 2019. Other ongoing opportunities are expected in the areas of facilities maintenance, supplies, equipment and services. “Our goal for major projects is 20%,” Price said. “And all of our core areas have their own goals for diversity spend. Those areas are Real Estate & Construction, Finance, Information Technology, and Supplies and Services.” He advises companies interested in joining Novant's Supplier Diversity Program to visit the program's page on their website at www.NovantHealth.org to register.
Price believes the loan program can help other businesses build capacity as well. Novant has several upcoming procurement projects that will present opportunities to do business with the corporation, based on the company’s commitment to supplier diversity. “Our supplier diversity program has grown tremendously since we started in 2006,” Price said. Novant's spend with diverse companies reached more than $111 million during 2018, approaching an increase of $100 million per year since 2006. Price has tracked the total spending with diverse companies since the start of the prorgram and says it is now approaching $1 billion. "Supplier diversity has become a part of our culture, and we have commitment from our executive leadership and our board of directors," Price said. “Supplier diversity has become a part of our culture, and we have commitment from our executive leadership and board of directors.”
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// spring 2019
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// spring 2019
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e r a y p
l
The air train station at Phoenix Sky Harbor airport was one of the projects that was a part of the ASLPM Prime Program Manager contract with Phoenix Sky Harbor International Airport from 2013-2018.
d b e
p
o w e r
Service, Integrity, Collaboration
ASLPM finds success in carefully calculated partnerships By Sarah Magargee
S
aad Ilyas’ career took an unexpected turn after he graduated from the New School of Architecture in San Diego in 1999. “I had planned to become an architect, but started running out of money to pay rent while I was looking for a job,” Ilyas said. “I knew I had to do something to keep food on my table.” Determined to remain self-sufficient, Ilyas accepted a three-month internship with ASLPM, a then-fledgling project management company providing services at the San Diego International Airport. The work, he explained, was humbling. “I am going to be honest, I had to swallow a lot of pride. My job as an intern was basically to be a ’go-fer’ fetching coffee, being introduced to very basic management concepts and rolling up drawings… but I was eager to learn, and the owner took note.”
Ilyas and ASLPM owner Gus Abadjis “clicked,” and his internship turned into a permanent position. When Ilyas’ student visa was about to expire, Abadjis agreed to sponsor him for a work visa, and Ilyas never looked back. Over the next 20 years, Ilyas learned the project management business from the ground up, absorbing every aspect of an industry that, at the time, was still developing. Ilyas explained that project management was not taught as part of the standard architecture curriculum in the 1990s, meaning he was faced with learning an entirely new career on the job. He said: “When I joined ASLPM, my peers in the field often asked questions that I was woefully unprepared for. That said, my architecture background proved an asset because it made it easy to interact with the architects and designers we were working with.”
Not one to shy away from a challenge, Ilyas worked hard and learned every aspect of project management, quickly rising into a position of leadership. “Over the years Abadjis and I built a lot of trust … so it only made sense for me to purchase the company when he was ready to retire,” Ilyas said. Today, Ilyas has rebranded ASLPM, established it as a trusted DBE/ MBE and begun expanding service offerings to new business sectors.
Roots in Aviation ASLPM manages small and largescale construction and remediation projects primarily in the aviation industries, consistently taking complex projects from concept to completion on time and under budget. “We believe in a team approach,” Ilyas said. “By working as a team with our clients and contractors, we can make sure the project is completed on schedule and under budget; safely, looks stunning and is of superior quality.” ASLPM started off as a conveyor installation outfit and morphed into a project management company with a presence at the San Diego International Airport. The services offered helped the company gain respect within the aviation industry and, in time, ASLPM grew to be a trusted name in aviation. “From baggage systems to concessions, security checkpoints to boarding bridges, we have touched anything and everything within the airport setting,” Ilyas said. ASLPM focuses heavily on excellent communication and collaboration to ensure that projects are implemented in accordance to the requirements of the client’s
stakeholders. For example, in December 2012, ASLPM completed a $75 million project at the San Diego International Airport where the company upgraded the 12KV Service & Distribution Systems. This award-winning project had a rocky start when key stakeholders not involved in the design phase created confusion on expectations. The ASLPM team brought the project team together through an aggressive stakeholder engagement and partnering plan that was monitored and implemented through meetings, site visits and design review sessions. Rita Ohaya, Small Business Officer with WSP in Sacramento, California, worked with Ilyas on acquiring his DBE certification. Ilyas, she said, consistently delivered above and beyond expectations. “Saad’s worth ethic, and that of his team, is excellent,” Ohaya said. “Saad is very handson, taking the time before a project starts to understand exactly what the client wants and what the expectations are. Then he goes above and beyond to deliver.” Today, ASLPM has 15 team members and has completed projects in the San Diego International Airport, Mineta San Jose International Airport, San Francisco International Airport, Los Angeles World Airports, and Phoenix Sky Harbor International Airport. After acquiring ASLPM, Ilyas set his sights on new areas to expand into education work at the K-12 and college levels, utilities & infrastructure, and the transportation industries. “Right now, aviation will remain our bread and butter,” he said. “But I want
ASLPM President Saad Ilyas to have something else to rely on and grow with. Breaking into new areas has been a challenge because this company has been known for aviation for so long; but we have a lot of experience that we believe can impact other industries. We are waiting for the right company to put their faith in our abilities.”
The three “pillars of service” When Ilyas acquired ASLPM, he worked with the ASLPM team to identify three “pillars of service” that would define the company. “It took us weeks to come up with these three words,” Ilyas laughed. “We didn’t want to say something that we didn’t believe in … What we came up with were: Service, Integrity and Collaboration. We take a lot of pride in these three pillars, and they hold us to the highest of standards.” Ilyas and his team are very selective in the clients they contract with. “As a DBE/MBE, a lot of companies see us as simply a box to check,” Ilyas said. “But we are much more than that. I tell prospective clients that if you are just looking for a box to check, we are not the group for you. I am looking for long-term
// spring 2019
27
relationships that will grow our company sustainably and with integrity. Bottom line, if we can’t provide the right culture and quality of work, we turn a job down.” The defined pillars of service and client selectivity have helped establish ASLPM as a leader and gain the company tremendous respect in the aviation industry. It is also Ilyas’ advice to new DBE/ MBE companies. “First, you need to have a vision and a focus for your company. Second, select clients that fit within your vision. If you decide to go after every job, it is not going to work,” he said. “As a small DBE company, you only have limited time and resources, so spend those on the projects that will really make you stand out.” Ilyas also credits ASLPM’s success to his team, explaining that as
"First, you need to have a vision and a focus for your company. Second, select clients that fit within your vision..." - Saad Ilyas, ASLPM President
a resource-based company, his employees are the greatest asset he has. Ilyas works to care for his employees by providing a top-tier benefits program and opportunities for growth. “I am only as successful as my team is,” Ilyas said. “I don’t like to call them employees; they are team members. I defined the company culture, but they are the ones who implement it and make us successful.”
Ilyas’s long-term vision for ASLPM includes expanding the company’s service areas while continuing to build lasting relationships with clients who share their values. “I am not looking to grow rapidly, or make a lot of money quickly to retire,” Ilyas said. “I approach growth differently and constantly remind myself of our three pillars -service, integrity and collaboration. These are at the core of everything we do.”
Email: info@namcnational.org
https://namcnational.org 28
// spring 2019
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.
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d b e
p r o g r a m
s p o t l i g h t
The Metropolitan Nashville Airport Authority Business Diversity Development Team members hosted the 2019 “Business Taking Off” supplier outreach and networking event in March 2019. (From left) Mark Epps, Donzaleigh Powell, Davita Taylor, Kebbyn Connell and Bryan Gleason.
Nashville International Airport
Moving from ‘Good to Great’ By Jordan Taylor
N
ashville International Airport (BNA) has a vision, and its internal Business Diversity Development team is a key part of the success of that overall vision as it relates to Diversity & Inclusion. Beyond the BNA Vision, a 5-year, $1.3 billion master plan for expansion, is also a desire for participating small businesses, women- and minorityowned companies to gain work, exposure, technical assistance, sustainability and growth – matriculating from the business development process bigger, stronger and better than when they arrived. “We want to make sure these businesses walk away better than before they got here,” said Davita Taylor, BNA chief procurement officer. Donzaleigh Powell, director of the Business Diversity Development team, said, “In this region, we just seem to have more teeth than most of the other agencies that are doing the type of work that we do. If we say ‘good faith effort,’ they need to be ‘great good faith efforts.’ One of the things that sets us apart is that there’s a real commitment to diversity and inclusion. We don’t just say it because it’s a buzz word and everybody’s talking about D&I right now.”
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Taylor said that the airport has greatly increased its diversity and inclusion efforts since 2007, a year before a disparity study was completed. At that time, the airport only spent $712,487 with MWBE firms. In 2008, a disparity study yielded numerous areas for improvement, along with updated goals for participation – and served as the impetus to grow and develop a new program. In the 10-year span since the study was completed, there has been more than $18 million in diversity spending growth. The total MWBE spend in 2018 was $19,176,450. The scope and scale of the BNA Vision expansion began in 2013, and is ongoing; encompassing three parking garages, a new international arrivals building, additional security screening lanes, expanded ticketing and baggage areas, a hotel and office plaza, and redoing an entire terminal – the new Concourse D. The BNA Vision creates thousands of jobs and pumps millions of dollars into the Middle Tennessee economy. Although a lot of the airport’s outreach is local to Nashville, it’s also statewide, inviting participation from other areas including: Chattanooga, Knoxville and Memphis, Tennessee.
In March 2019, BNA hosted its Business Taking Off event, an annual program that presents and outlines upcoming projects for the year; including timelines and estimated contract values. The program brings together prime contractors, representatives from Human Resources and Business Diversity Development, procurement agents, certifying agencies and other community partners to share bid packages, RFPs, opportunities and resources that are available for businesses to utilize and pursue. There was also
an awards program, recognizing small businesses, internal agency advocates, and large businesses committed to D&I. This year’s event was sold-out, with more than 370 participants overall. Two of the major contractors that participated in Business Taking Off were Hensel Phelps and Messer Construction Company. Hensel Phelps is managing the $500 million Concourse D and Terminal Wings expansion project, which began construction in the summer of 2018. Messer is overseeing a $144 million terminal renovation project that includes the Metropolitan Nashville Airport Authority (MNAA) Terminal Garage and Airport Administration building, along with a 3,000-car parking garage.
To encourage more ‘great good faith’ efforts, the Business Diversity Development team also partnered with a local business incubator to boost mentoring and training programs with Disadvantaged Business Enterprises (DBEs). The incubator provides classes on business basics, contract law and marketing. There are also opportunities for DBEs to receive assessments on their business operations and get connected with potential contractor partners. “Wherever you are weak, we hire consultants to help you get stronger,” Powell
said. “We take a real investment in our small businesses.” If needed, DBEs are provided office space to help launch and stabilize their professional operations. Additionally, the incubation center also tracks job creation by DBEs that participate in the program. As an example of one of the agency’s success stories, a DBE electrical company entered the program with a negative income of $7,000; received help with estimating and bidding, and then turned a $200,000 profit within 22 months of participating in the program. A realignment of how to handle airport concessions and boost Airport Concession Disadvantaged Business Enterprises (ACDBE) inclusion is also underway. BNA is migrating away from its traditional master concessionaire
program to using a third-party concessions developer, Fraport USA. By using a third-party vendor, the Nashville airport will now be able to build a concessions program with a heavy emphasis on local vendors that is more reflective of the city’s demographic population. The concessionaire program goals are 85% local businesses and 40% ACDBEs. Fraport USA has developed airport concessions programs for: BWI Airport; Cleveland Hopkins International Airport; Pittsburgh International Airport; and JFK Terminal 5. Fraport USA also has a global portfolio that includes various types of airport operations at 26 airports on three continents. Taylor said: “You’ve got to really understand procurement to do your diversity and inclusion job well. Diversity & Inclusion is important, but we also want it to be authentic.” Taylor said that MNAA Chairman Dexter Samuels has helped spark growth and momentum in the area of Diversity & Inclusion as the airport’s first African American chairman. In addition to his leadership in the area, BDD is also requesting support for workforce development and job creation, to target six Promise Zone areas that have high unemployment levels in the community. Taylor said that the great work being done by the Business Diversity Development unit is a team effort. She said it takes a strong, cohesive group to accomplish the lofty goals they have set. And the team of five, working together, is what makes it all possible in the effort to create a level playing field and to move the airport’s Diversity & Inclusion efforts from good to great. // spring 2019
31
Aviation
ATL Next Celebrates
Maynard Jackson's
Legacy at 2019 Industry Day By American DBE Staff
The legacy of the late Atlanta Mayor Maynard L. Jackson Jr. is alive and well at the Hartsfield-Jackson Atlanta International Airport. As one of the busiest airports in the world moves forward on a major capital improvement program called ATL Next, the airport is also ensuring that diverse firms owned by minorities and women are playing a significant role in the projects contained in the $6 billion program. The ATL Next program represents a variety of projects to modernize, expand and improve the
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// spring 2019
airport in order to keep pace with anticipated passenger growth and to enhance passengers’ experiences at the airport. Significant participation of diverse firms is the vision Jackson had for the airport during his three terms as mayor from 1974-1982 and 1990-1994. The airport experienced massive growth during this period as Atlanta solidified its position as the premier metropolitan area in the Southeastern United States. Jackson used his role as mayor to ensure that the airport – owned by
Hartsfield Jackson Atlanta International Airport leadership honors Valerie Jackson and the legacy of her late husband Maynard H. Jackson Jr. at the 2019 ATL Next Industry Day. (From left) ATL General Manager John Selden, City of Atlanta COO Richard Cox, Valerie Jackson, ATL Business Diversity Officer Valerie Nesbitt, and ATL Deputy General Manager Greg Richardson.
the City of Atlanta – shared the economic opportunities created by improvements with all segments of the Atlanta community, especially minority-owned businesses. His commitment to economic inclusion still sets the standard for metropolitan areas across the country for the role airport and municipal projects can play in developing thriving diverse firms and spreading opportunity to all members of a community. The airport used its third annual ATL Next Industry
Valerie Jackson,
the former first lady of Atlanta and wife of the city’s late Mayor Maynard H. Jackson Jr. delivers a keynote address during the 2019 ATL Next Industry Day.
Day to commemorate Jackson’s legacy and diversity achievements. The daylong event promoted continued diverse business participation at the airport and shared current opportunities to do business with the airport. The inaugural Maynard H. Jackson Jr. Awards Luncheon was added to the event this year to recognize companies and leaders with a demonstrated commitment to inclusion. “Maynard Holbrook Jackson, Jr. was a courageous agent of change who used his platform as Atlanta’s first African American mayor to champion access for all Atlantans,” Airport General Manager John Selden said during the March 5 event at the Georgia International Convention Center. “Mayor Jackson wasn’t deterred by the unpopularity of his bold plan to change the way the city engages minority contractors. His decisions may have been unwelcomed at the time, but were necessary.” ATL Next completed more than $400 million in projects in 2018 and plans to complete over $600 million in 2019. Projects making up the 2018 expenditures included: the North Canopy, Terminal A Modification, ATL West Parking Deck, Runway 9l Endaround Taxiway Phase 1, and the Sullivan Road Park & Ride Lot. Some of these projects will conclude in 2019, but other projects also kicking off in 2019 include: the Concourse T-North Extension/Enabling, Plane Train Tunnel West Extension, Runway 9L End-around Taxiway Phase 2, and other miscellaneous airside and landside projects. Industry Day participants received detailed information on these and other projects during breakout sessions throughout the day. Airport representatives highlighted the success of ATL Next thus far and discussed upcoming projects for 2019 to provide the maximum opportunity for firms to get involved. One of the strategies used to engage potential diverse firms was offering industry roundtable sessions. The roundtable discussions paired diverse firms that
have been successful in gaining airport contracts with firms trying to land an opportunity. Companies sharing their experiences in successfully working at the airport included H.J. Russell & Company and FS360. “Some people think it is hard to come out to the airport and get work, or that the same people get the work,” Airport Diversity Manager Valerie Nesbitt said. “But it’s really about cracking the code to get an opportunity, so we wanted businesses that have cracked the code to share their experience through candid conversations about what worked and what didn’t work when they were trying to do work at the airport.” The awards luncheon recognized four companies for their contributions to the ATL Next program since its inception in 2016. The companies range from JAT Consulting, a firm providing entrepreneurial training to small and diverse business owners and invoice compliance services, to the ATL Program Management Team, to a three-member joint venture team performing construction work at the airport. Award winners at the luncheon program were: Category
Winner
Triumph Award
JAT Consulting Services Inc.
Pinnacle Award
Robert Kelly – Kelly Construction
Leadership Award
Doretha R. Smith – C.D. Moody Construction
Soar Award
Dunn Aviation Group, a Joint Venture of JE Dunn Construction, ENVIRO AgScience Inc., and Southeastern Engineering Inc.
// spring 2019
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The luncheon also highlighted success of the city’s Small Business Development Program, a partnership between the City of Atlanta Department of Aviation and the City’s Department of Watershed Management, with assistance from JAT Consulting Services. The program prepares and develops small-, minority-, and woman-owned businesses to compete with larger firms and broaden opportunities to do business in Atlanta. Nesbitt congratulated 40 businesses that completed the program. “The work that we do allows us to be a model for the rest of our county and even those throughout the world,” Nesbitt said. “ATL’s commitment to diversity and inclusion contributes greatly to our growth and energy, allowing us to be a driving force in the aviation industry.”
that his spirit of determination and equal opportunity continues to be one of your guidelines. Yes, Maynard was a visionary … but visions and words aren’t what build dreams. It’s the ‘laying on’ of hands that really brings a dream to fruition.”
Mayor Jackson’s widow, former First Lady Valerie Jackson, gave the keynote speech at the luncheon and said it was a joy to celebrate the legacy and ATL’s growth as a result of Maynard’s vision. “I’m touched
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// spring 2019
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The Conference of Minority Transportation Officials’ (COMTO) National Meeting & Training Conference is one of the nation's premier multi-modal transportation industry events, attracting nearly 1,000 professionals, opinion leaders and policymakers. This year's theme, Intelligent Mobility – Transforming the Future of Transportation: Automated, Integrated & Data-Driven, focuses on a transportation future that accelerates toward a connected ecosystem of seamlessly integrated smart transport organization. Conference participants will be immersed in four days of education, inspiration and networking for professionals at all career levels seeking to share best practices, tools and solutions to workplace and industry challenges.
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transit
SoundTransit Ensuring
DBEs Ride
on the Federal Way Link Extension By American DBE Staff
Pictured above is a southbound light rail train at Pioneer Square station on July 24, 2009. The proposed Federal Way Link Extension will extend the rail line by 7.8 miles to Federal Way, along the west side of Interstate 5. The project is expected to begin construction in 2019 and open in 2024. (Photo Credit: Steve Morgan)
T
he Puget Sound Region of the state of Washington is home to nearly 4 million people and is one of the fastest growing regions in the country, expected to grow another 40% by 2050. This level of population growth is putting a strain on the region’s transportation systems, and congestion is becoming a way of life for people who live in the area. However, Sound Transit is making
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a concerted effort to help ease the mobility strain by undertaking one of the largest transit expansion programs in the nation, with five new light rail expansion projects either in development or under construction – and expected to be operation by the middle of the next decade. One of these expansion projects is the Federal Way Link Extension,
planned to extend light rail service further south in the Puget Sound region. The project is moving forward in development and received approval from the Federal Transit Administration to move into engineering earlier in 2019. The most recent approval by the FTA also puts the agency on track to receive a $790 million FTA Capital Investment Grant to complete the project later this year.
Peter Rogoff, Sound Transit CEO, said: “South Sound commuters critically need relief from ever-worsening traffic congestion and access to the opportunities that mass transit creates. Our partnership with the FTA is critical to getting the Federal Way Link Extension underway. We'll be working closely with the Federal Transit Administration and our Congressional delegation to obtain this funding.” Kiewit Infrastructure West has been recommended by a Sound Transit committee to be awarded a $1.41 billion contract to design and construct a 7.8-mile extension of the existing light rail line currently running from downtown Seattle to the Angel Lake station, south of Sea-Tac International Airport. This project will extend light rail from Angle Lake Station in the city of SeaTac to the Federal Way Transit Center. The committee’s selection went before the agency’s board of directors in May 2019 for final approval. The Kiewit team was scored on several criteria, including outreach efforts and commitments to small businesses; technical approach to design and construction; organization and management; schedule and risk. Additional criteria included financial capacity and capability to perform the work. The project is expected to provide significant contracting opportunities to small and DBE firms in the region as a result of a 15% small business and 5% DBE goal being placed on the project by Sound Transit. However, Kiewit’s proposal exceeds these goals and commits 20% participation to DBEs and an additional 10% to small businesses, resulting in 30%
Pictured above is a Sound Transit Express bus leaving the Federal Way Transit Center. The bus station will become the future terminus of the Federal Way Link Extension. The light rail project also will include three new stations and expanded parking at each new station.
of the project being performed by small and diverse businesses. “We had a team effort to develop the goal,” said Beverly Cobb Zahir, Sound Transit small business program manager. “We have support from all levels including administration and engineering project directors. We are all a part of authorizing and enforcing the goal on this project and met to define the areas where we are very strong with firms capable of working on this project,” she said. Cobb Zahir believes the DBE and small business community is ready, willing and able to work successfully on the project as a result of the ongoing expansion already happening in the region. “Our firms have built their capacity through having the opportunity to continually work on our projects,” she said. The agency’s Office of Small Business Development and Labor Compliance has also worked to helped DBE and small firms get ready to participate in the ongoing expansion by providing outreach, training and technical assistance programs. “We have a number of firms in all areas from construction, architecture and engineering that are ready to go to work.” Cobb Zahir said.
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The agency’s overall success in creating opportunities for small and diverse firms is reflected in the overall DBE goal achievement of 17.9 % in fiscal year 2018, surpassing the FTA-approved agency goal of 16.1 % for the three-year period from 2017-2019. The agency is currently conducting a disparity study to help determine the DBE goal for the 2020-2023 triennial period, when most of the work on the Federal Way Link Extension will occur. “We are expecting to issue a notice to proceed to the selected design/build firm in June and have some construction activity later this year,” Sound Transit Public Information Officer Scott Thompson said. “But the major construction activity will begin in 2020.” This construction activity will include adding three new stations on the transit line, constructing a new parking garage at one of the stations, and expanding parking at the other two stations. The additional rail line will combine elevated and at-grade tracks along the route, as well as roadway improvements to accompany the line. The facilities are expected to open to passengers in 2024 and the transit line is projected to carry 36,500 daily riders by 2035.
The success of the agency’s DBE and small business program can be traced to a team effort by the agency to make economic inclusion a part of the fabric of the organization. “Sound Transit established itself with guiding principles when we became an agency,” Cobb Zahir said. “And a part of our mission is to always include in our procurement and way of doing business our DBE community as well as small businesses. It has been the effort of our executive committee as well as all those that administer capital projects that they are involved and truly believe in our Disadvantaged Business Enterprise Program.”
“We have support from all
levels including administration and engineering project directors. ” -Beverly Cobb Zahir, Sound Transit Small Business Program Manager.
Colette Holt & Associates has changed its name
CH ADVISORS, INC.
CH Advisors, Inc. provides legal counsel and consulting services to governments and businesses. CH Advisors is a firm of nationally recognized experts in conducting disparity studies and designing, implementing and defending successful affirmative action programs. We welcome IT Director Glenn Sullivan and Associate Counsel Joanne Lubart to the team. Led by Colette Holt, our team has decades of experience in legal issues, statistical analysis and best practices in program administration. • Minority/Women/Disadvantaged Business Programs • Affirmative Action and Compliance Consulting and Training • Disparity and Availability Studies • Speaking and Presentation Services • Expert Witness Services • General Counsel to American Contract Compliance Association
(773) 255-6844 • colette.holt@mwbelaw.com • www.mwbelaw.com 38
// spring 2019
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.
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B2Gnow.com // spring 2019
39
civil/highway
New Technologies
Improve DBE Supportive Services By American DBE Staff
I
nnovative technologies in the current age of mobile apps, social media, websites and software programs are increasingly being used to help diverse firms succeed in the highway transportation industry. Niche companies specializing in providing supportive services to Disadvantaged Business Enterprises (DBEs) are utilizing internally developed applications to improve the range of services provided to DBEs, and the effectiveness of services that help firms succeed on highway transportation projects. The new technologies in use across the country provide services like internet-based business assessments to help firms determine their strengths and weaknesses,
40
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automated DBE certification applications and renewals, and website- and email-based bid solicitations. Automating these services is helping transportation agencies reach more potential suppliers and improving communication and engagement with firms trying to do business with the agencies. The Federal Highway Administration DBE Supportive Services (DBE/SS) program is authorized and funded by legislation in the U.S. Code of Federal Regulation. The regulations establish up to $10 million each year to be divided among the 50 states and U.S. territories receiving annual funding from the FHWA to provide services to help DBEs
succeed in the industry. The $10 million in funding is used to grant allocations to the transportation agencies. The split in funding is typically proportionate to the percentage of the FHWA’s total Surface Transportation Program funding the state or territory receives. This means that states with larger surface transportation budgets like California or Texas will usually receive greater funding than smaller states like Vermont or Delaware. The FHWA DBE/SS website states: “The primary purpose of the DBE/SS is to provide training, assistance, and services to minority, disadvantaged, and women business enterprises so as to increase their activity in the program, and to
facilitate the firm’s development into viable, self-sufficient organizations capable of competing for, and performing on federallyassisted highway projects.”
DBE Assessments Many state transportation agencies begin the business and technical assistance component of their DBE/SS programs by conducting business assessments of firms participating in the program. Most of the business assessments are performed by consultants using face-to-face interviews or a common survey instrument. While these types of assessments can be effective, due to the labor-intensive nature of the process, this method of performing assessments can be costly and time-consuming, limiting the number of firms that can participate in the program. Business Transformation Group (BTG), a consulting firm based in Washington, D.C., recognized this challenge and developed software called the ‘Management Maturity Model’ that allows DBEs to use a computer in their office to complete an online assessment that will calculate the general health and viability of the firm. This internet-based tool saves the time and expense of consultants meeting one-on-one with DBEs to conduct assessments and allows more resources to be used to help DBEs delve into improving areas of weakness and/or build upon areas of strength.
DBE Certification and Renewals The DBE certification application and renewal process are typically time-consuming and costly areas
of program administration for government agencies; and an unproductive and oftentimes inefficient necessity to access business opportunities for many DBEs. Businesses that select to become certified in multiple states often must make a full- or part-time employee responsible for maintaining certification information and sending the information necessary to remain certified in the states where the firm plans to do business. Several technology firms have developed systems to streamline and automate the DBE certification process, and some agencies have developed their own applications to reach this goal. The new software tools are allowing DBEs to store data electronically in a central location and then submit the information to an agency to complete the application process – and to update their certification information as required by the agencies. This technology is saving agencies and DBEs countless work hours, postage fees and office supplies toward the end goal of making the DBE certification process more efficient. B2GNow, a software consulting firm based in Phoenix, Arizona, has contracted with several transportation agencies across the country to make DBE certification less costly and more efficient by compiling a database of thousands of eligible DBE firms nationwide; hence, increasing the quality of DBE certification administration to the individuals and agencies using their software system. “Whether a firm holds one DBE certification or many across multiple states, providing a onestop-shop offers tangible value for
"It cannot be overstated that the smart application of technology has empowered DBEs and agencies to do more with less budget." -Justin Talbot-Stern, B2Gnow CEO
all disadvantaged firms,” Justin Talbot-Stern, B2Gnow CEO said. “With limited staff and financial resources, the cost savings is significant, while allowing DBEs to easily monitor and maintain their credentials. It cannot be overstated that the smart application of technology has empowered DBEs and agencies to do more with less budget.”
DBE Outreach and Solicitation A longstanding challenge of DBE/SS programs across the country is connecting ready, willing and able DBE firms with contracting opportunities that will help grow their businesses. One way transportation agencies have traditionally used DBE/ SS consultants is to help firms identify upcoming projects and opportunities that are good opportunities for the firm. This outreach and assistance is often provided by a DBE/SS consultant reviewing the agency’s monthly bid letting information and reaching out to prime contractors to identify their specific needs for an upcoming bid with a DBE goal. While this strategy can be effective, it can also be inefficient and timeconsuming.
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EEO Networking Solutions of Florida has developed software that makes it easier for DBEs to locate contracting opportunities on highway projects, and for prime contractors to solicit subcontractors for a project. The company has worked with the states of Alabama and Michigan to help DBEs connect with prime contractors seeking the services they provide, and to identify upcoming opportunities in their service or market area. EEO Networking Solutions’ application uses GPS technology to map the location of all upcoming projects on a state’s monthly letting list and identifies the specific line items included in the project. This information informs DBEs of the types of contracts coming up for bid and the prime contractors likely to bid on the project. The software also has an email solicitation capability allowing prime contractors to send bid solicitations directly to firms matching the location and line items they are seeking DBEs to fulfill in their bid package. “Our application sort of works like Constant Contact on steroids,” EEO Networking CEO Michael Self said. “It allows primes to see who received and opened their emails and allows DBEs to express an interest in providing a quote.”
What’s Next? The interesting thing about innovative technologies is that it’s difficult to know what’s coming next, what will catch on, or what will appeal to the masses. However, just as online education programs utilizing video or streaming content are growing across the educational landscape, technologies that allow DBEs to receive higher levels of training and assistance from their desktops or mobile devices are definitely positioned for increased growth. And while some of these tools may be costly to develop on the front end, they may be more cost-effective and efficient for years to come.
High-Quality, High-Impact Training for DBE/ACDBE/UCP Professionals
Essentials of DBE/ACDBE Program Management Training Sept. 18-19, 2019: Salt Lake City, Utah
3-DAY CLASS
Nov. 18-20, 2019: Las Vegas, Nevada
42
What You Will Learn: DBE/ACDBE Program History, Background, Purpose and Trends Duties/responsibilities of the DBELO/ACDBELO DBE/ACDBE Reporting The Airport Concession DBE Program Review of Joint Ventures for Concessions Counting DBE Participation/Commercially Useful Function (CUF) Compliance Monitoring & Reporting Goal Setting & Good Faith Efforts The Latest “Final Rule” (49 CFR Part 26, Nov. 3, 2014)
Register at www.natdbe-ti.com/registration/
National DBE Training Institute, P.O. Box 3113, Wilmington, NC 28406 Phone: 910.762.6297 | Fax: 910.762.5963 | Email: kwa-office@kwaplanning.com | Web: www.natdbe-ti.com // spring 2019
business development
Fixing the Dilemma
of
Creating Transferrable Value
By Allen Brown
T
he measure of success for a buyer when purchasing a company is the current value of a consistent stream of income, plus the potential for income growth that’s possible from increased effort, improvements and updates. The previous issue of American DBE Magazine featured an article about how transferrable value equals financial assets, plus intangible assets, times a multiple. Transferrable value is directly related to business capacity, in that the growth of business capacity is a function of the growth of a business’s financial and intangible assets. If that’s hard to envision, consider the example used by Chris Snider, certified exit planning advisor and author of Walking to Destiny: 11 Actions an Owner Must Take to Rapidly Grow Value & Unlock Wealth, using the Forbes Magazine 2018 list of Top 10 Most Valuable Companies. When looking at the list, notice a key characteristic all the companies have in common – despite representing varying industry sectors – and that is the knowledge capital derived from the strong brands. This knowledge capital, or intangible assets value, is derived from the company leader’s ability to “create, transfer, assemble, integrate, protect, and exploit knowledge assets” in ways that drive brand loyalty, also known as repeat business/ customers, resulting in significant wealth. Rank
Brand
Value
Industry
1.
Apple
$182.8 B
Technology
2.
$132.1 B
Technology
3.
Microsoft
$104.9 B
Technology
4.
$94.8 B
Technology
5.
Amazon
$70.9 B
e-Commerce
6.
Coca-Cola
$57.3 B
Beverage
7.
Samsung
$47.6 B
Technology
8.
Disney
$47.5 B
Entertainment
9.
Toyota
$44.7 B
Automotive
10.
AT&T
$41.9 B
Communication
Adapted from Walking to Destiny: 11 Actions an Owner Must take to Rapidly Grow Value & Unlock Wealth by Chris Snider
One of the major variables required in the successful transfer of company value is the ability and willingness of the existing management team to grow the business. Now, this seems pretty obvious, right? But what is often missed, is that as business owners continue to hold in their hands all the reigns to growing a successful business, they neglect to train, or sometimes even identify, someone sufficiently qualified to run the company in their absence. Generally speaking, there’s no one who understands a business better than its founder and owner. There’s no one more capable than the owner at making the day-to-day operational decisions. The owner is best at everything a business does, right? Not necessarily; but that’s how many business owners feel and act. Some business owners think, “If I can work more, work faster, focus harder; just plain and simple be more productive, the business will be better.” Right or wrong, the good news is that unlike other roles, a business owner has the authority and ability to change their role and responsibilities. It’s been said that most entrepreneurs start their businesses in order to be their own boss, get paid their full value, and live the life they’ve always dreamed of. Unfortunately, the majority of business owners are stuck in a low-paying job, trading time for money. And oftentimes the business is not capturing the full value it delivers to customers. It’s been said that you cannot manage what you don’t measure. So, in order to effectively enable the wealth exchange to occur; someone must be in place to measure, and there must be a consistent process in place to manage the long-term value of the business. The first step is to begin thinking about the interplay of the relationship between the owner, the business and the owner’s family differently. Why is this shift in thinking important? It’s because every owner of a business will eventually transfer their entire ownership interest. Some will do so voluntarily, others involuntarily; nonetheless, the transfer will occur. Resolving to accept this reality should cause most business owners and their management teams to focus their attention on continually achieving satisfactory return to shareholders.
// spring 2019
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In the book Unlocking Private Company Wealth, published in 2014, author Z. Christopher Mercer, presents the following chart that categorizes the types of ownership transfers that presently exist in
the marketplace. It’s worth the time and in the entrepreneur’s best interest to become familiar with them; and then make the decision to share the reigns of control with a management team capable of keeping the
business on the track – and one that can assist in successfully handing over control to the person leading the business.
The Ownership Transfer Matrix
Voluntary Transfer
Partial Sale/Transfer
Total Sale/Transfer
ESOP (Employee Stock Option Plan) Outside Investor(s) Sales to Relatives/Insiders Combination Merger/Cash Out Going Public Gifting Program Liquidation Buy-Sell Agreements
Sale of Business, Stock-to-Stock Exchange with Public Company Stock Cash Sake to Relatives/Insiders ESOP/Management Buyout Liquidation Buy-Sell Agreements
Involuntary Transfer
Death Divorce Forced Restructuring Shareholders Disputes Buy-Sell Agreements
Death Divorce Forced Restructuring Bankruptcy Shareholders Disputes Liquidation Buy-Sell Agreements
Adapted from Unlocking Private Company Wealth: Proven Strategies and Tools for Managing Wealth in Your Private Business. Z. Christopher Mercer, ASA, CFA. ABAR
Companies where the entrepreneurs have
created a strong and consistent cash flow make a legitimate profit. They also make hiring and growing talented people the number one priority, stay focused on consistently solving their best customers’ problems, and create systems to share and execute best practices so that the business can run itself. These companies also tend to demand a greater value in the marketplace. Why? Because potential owners are looking for assets that drive their passive income, build wealth, and allow them to spend
time doing what they enjoy outside of the business. This occurs when the reigns of managing the business have been handed over to a fully capable strong management team, making the business’s success partly independent of the new owner. As a result, the business is more valuable and saleable when the founder/owner is ready to move on to the “life after business” phase. If this scenario does not describe your business, then it’s probably not ready to be transferred – at least not successfully.
Transferring a privately held family business successfully requires the correct amount of time and attention. The underlying benefit of not procrastinating, but taking action now, is that the odds of transferring the business successfully to new owners significantly increase, and so will profits. The key concept here is that the business must be managed as an asset, and the key priority in managing this asset is preserving the family wealth inside of it, in order to systematically monetize a subjective value of the business into real cash.
Allen Brown is a South Carolina-based CEPA (Certified Exit Planning Advisor) helping entrepreneurs and executives of privately held businesses elevate their activities in order to get control of their companies while achieving their personal, business and financial goals. For more information and to download the Transferrable Value eBook go to: www. wealthexchange.com 44
// spring 2019
Atlanta | Mobile | Orlando | CertiďŹ ed MBE & DBE | 678-999-0173 | www.cerm.com
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AirportConcession Concessions Disadvantaged Business Enterprise (ACDBE) Airport Disadvantaged Business Enterprise Disadvantaged Business Enterprise Disadvantaged Business Enterprise (DBE) (DBE) HubZone(Pending) (Pending) HubZone Minority/Woman-Owned Business Enterprise Small, Women-owned and Minority-owned Business(MBE/WBE) Small Women and Minority Buiness (SWaM) Micro-SWaM Micro-SWaM
8012 Midlothian Tpke, Suite 202B Richmond, VA 23235 Charlene J. Reynolds – (804) 864-0733 cngpetroleum.com info@cngpetroleum.com // spring 2019
45
business development
Understanding the Impact of 100%
and
Payment Bonds and
Performance Surety Premium
by Karen Barbour
W
hy are 100% performance and payment bond penalties important on government projects? The reason is because if the performance bond penalty is any less than 100%, taxpayer dollars are at risk if the contractor defaults. If the payment bond penalty is less than 100%, firstand second-tier subcontractors, vendors and laborers may not be made whole if the bonded contractor defaults, fails to pay its bills, or declares bankruptcy. Since businesses cannot lien government property, recourse against the payment bond is essential. However, if the government agency elected to only require a 50% payment bond from the prime contractor, it’s important for subcontractors and vendors to make their claim quickly – first come, first served. As a matter of practice, subcontractors should always request a copy of the payment bond from the prime
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// spring 2019
contractor prior to signing their subcontract agreement. Having the payment bond information upfront is necessary in order to file a timely claim with the surety. In many states, a payment bond is not bound by “paidif ” or “paid-when” language. A firsttier subcontractor has one year to file suit against the bond. A second-tier subcontractor or vendor has 180 days (at most) to file suit, depending on each state’s lien laws. Also, businesses should be wary subcontracting work to Public Private Partnerships – P3s. If the state does not require the prime contractor to bond its at-risk work, subcontractors will be without lien rights and have no bond claim abilities. Subcontractors can lose terribly if payment from the prime contractor is delayed or denied, especially on change order work. Recently, an unfortunate trend appeared with several state departments of transportation concerning bond penalties. Several transportation agencies, including Georgia DOT and Maryland DOT, increased their bond penalty rates to 120% and 125%. Georgia DOT changed its stance and lowered the penalty back to 100% after the Office of Equal Rights advocated for the change. Maryland DOT canceled a $30 million, five-year project after emails from The Barbour Group brought key points to light. Subsequently, Maryland DOT also lowered the penalty back to 100% in spring 2019.
Many disadvantaged businesses rely on bond support from the Small Business Administration’s (SBA) Office of Bond Guarantees. Here, SBA will reinsure losses up to 90% to entice surety companies to approve the bond. However, SBA cannot approve bonds having bond penalties greater than 100%. This is also true for most surety companies, especially those that support small business contractors. It stands to reason that since bond penalties are codified in law, changing the bond penalty amounts in a solicitation would be cause for a protest; or require a change in the law. However, that isn’t necessarily the case. Large primes can gain exceptions from their sureties. Today there are still very few disadvantaged, minority or small businesses that bid as primes on highway construction work. One minority contractor lost out on nearly $2 million in bids because of this issue. With only one bidder on a Georgia DOT project shortly after this penalty increase, the price per lane mile was double the cost. Fortunately, Georgia DOT acquiesced and reversed the decision. Sources stated that Georgia DOT specified higher bond penalty amounts because the contract language was written in such a way that precluded the agency from increasing the bond penalty to accommodate change orders. If true, then it is better and more legally correct to change the contract language, as this does not require legislative action. Private sector contracts tend to address this issue by stating, “We have the right
at our sole discretion to increase the bond penalty by 20% to accommodate any change order work without notice to the surety”—or something like that. If the contract value increases as work progresses, then there is no issue because the bond penalty increases if the contract value actually increases, too. As for bond penalties and bond premium: Is bond premium reduced if the bond penalty is less than 100% of the contract value? Most state agencies representatives believe that to be true. However, surety premium is charged on the contract value or the bond penalty amount for each bond. Whichever premium is less, gets charged. There is only one contract value, but there are two bond penalties. Bond penalty rates are very high in comparison to contract value rates. After assessing the bond penalty rates against each bond, contract value rates prevail.
For the majority of surety companies, bond premium is also not reduced if only a performance bond is required. If only a payment bond is required, however, the premium may be less. Surety premium is considered an underwriting fee and fully earned. Contractors should check with their surety on their return premium policies. Typically, bond premium is returned only if the contract value on a fixed price contract is less at its completion. Bond premium on term contracts is fully earned for the base year and is not refundable unless the surety has filed an exception to their rating plan. Surety rates are filed with the states’ insurance administrations, allowing the sureties to apply debits or credits at their discretion. It is also common to hear from state agencies that if they lower the bond penalty, the bond premium will have
less impact on the contractor’s bonded backlog, allowing the contractor to take on more bonded work. However this is not true. For the most part, sureties count the full amount of the costs to complete on all jobs – bonded and un-bonded – when determining backlog. Why? Sureties analyze a contractor’s financial statement to determine how much backlog a contractor can cash flow, given bank line availability and working capital. Most sureties will treat the full contract value in backlog until the job is at least 10% underway. There is a lot of information to know and understand when it comes to performance and payment bonds and sureties. However, not knowing can be detrimental to the success of a small business looking to grow and succeed.
Karen Barbour | karen@thebarbourgroup.com Karen Barbour is the founder and president of The Barbour Group, LLC. She is a veteran of the surety bonding industry. Karen was instrumental in the creation of the State of Maryland’s Change Order Fairness Act and is working to fully-implement the legislation across the state. Karen is well-known as an innovator and expert within the surety industry.
Capacity builders advocating for contractors nationwide.
410.876.9610 • thebarbourgroup.com // spring 2019
47
AGC of Missouri (AGCMO) received the Diversity and Inclusion Excellence Award for AGC Chapter of the Year at the 2019 AGC Convention in Denver, Colorado. Pictured from left: Len Toenjes,AGCMO; Frank Wilson, BFW Contractors; Monica Bailey, McCarthy Building Companies; Steve Lewis, AGCMO; Eddie Stewart, president – AGC of America; Becky Spurgeon, Interface Construction; Bill Wagner, S. M. Wilson & Co.; and Kim Waller, Willis Towers Watson.
AGC Honors Missouri Chapter for Diversity & Inclusion Excellence By American DBE Staff
T
he Associated General Contractors of America recognized the Diversity and Inclusion accomplishments of local chapters and members at its 100th annual conference, held April 1-4, 2019, in Denver, Colorado. AGC presented “Diversity and Inclusion Excellence” awards to the Missouri chapter and five companies during a general session for conference attendees with the goal of promoting diversity and inclusion in the organization by recognizing excellence. 2019 marked the second year AGC has recognized members for this purpose at the annual conference. The awards program is led by AGC’s Diversity and Inclusion Steering Committee and was created in 2017 to champion best practices, provide education, and promote the engagement of AGC members in creating greater opportunities for diverse individuals. The committee reviewed nominations from across the country prior to selecting the award winners recognized at the conference. “These awards recognize firms that have established outstanding programs that
48
// spring 2019
have helped make the construction industry a more diverse, inclusive, and better sector in which to work," said Eddie Stewart, AGC president and president/CEO of Caddell Construction in Montgomery, Alabama. “By making our industry more diverse, we can solve a lot of our workforce challenges, and become a better, safer and stronger industry.” AGC of Missouri (AGCMO) received the Chapter Award for implementing several initiatives to support diverse companies and workers in the Missouri construction market. AGCMO is the only construction industry association in Missouri with a dedicated executive serving as the subject matter expert on diversity and inclusion. The AGC of St. Louis, which later merged with AGCMO, was also the first of 92 chapters of AGC of America to hire a Vice President to create an Inclusion Department. This department now facilitates the AGCMO Diversity Committee, whose members secure construction services and contractors, suppliers, and service providers that perform those services.
AGCMO was recognized for its outreach into the Missouri minority- and woman-owned business community through the support of several local organizations by direct participation and sponsorships. One organization supported by AGCMo is the Regional Union Construction Center (RUCC). The organization’s mission is to increase the capacity and long-term viability of emerging minority- and women-owned union construction firms in the St. Louis area. AGCMO financially supports and serves on the RUCC Board of Directors. AGCMO members also serve on the advisory boards of companies that participate in the RUCC program. Steve Lewis, AGCMO vice president said “The program is a tremendous success and companies in the program have experienced significant growth in revenue and profit.” AGCMO is an investor and also represented on the board of directors and Technical Assistance Committee of the Contractor Loan Fund, a $10.6 million private equity fund that provides financing for minority- and womenowned businesses. “AGC of Missouri’s commitment to Diversity and Inclusion
Members of the AGC of Missouri Diversity Committee. (Front row from left) Roger Spearman, A-1 Private Investigations; John VanAsdale, BSI Constructors; Sedrick Brandt, Brandt Contracting; Emily Martin, Aschinger Electric; Michael Zambrana, Pangea Group; Michael Kennedy Jr., KAI Enterprises. (Back row from left) Steve Lewis, AGC of Missouri; Roslyn Croft, Tarlton Corporation; Steve Faust, Icon Mechanical Construction & Engineering; Frank Wilson, BFW Contractors; Scott Wilson, S.M. Wilson & Co.; Monica Bailey, McCarthy Building Companies; Howard Hayes, Paric Corporation. Members not pictured: Don Buchmueller, E.M. Harris Construction; Steven Harris, RubinBrown LLP; Amy Heeger, AME Constructors; Thomas Kuhn, Millstone Weber; Vicki LaRose, Civil Design; Donald Rosenbarger, Delta Companies; Patricia Schaefer, D & S Fencing Company; Robert Taylor, Realm Construction; Ronald Wiese, Alberici Constructors.
has provided a greater understanding of the barriers that minority and women business owners experience,” Lewis said. “As a result, we have been able to respond by offering programs and resources to assist them with facilitating more opportunities for building trust and for firms working together.” Brynn Huneke, director, diversity & inclusion, member engagement for AGC of America said in a statement: “AGC of Missouri, as one of the first AGC chapters to dedicate time and resources to diverse businesses, has been a leader in advancing diversity and inclusion within the association. AGC of America was honored to present them with the 2019 Diversity & Inclusion Excellence Award for an AGC Chapter.” Other Diversity & Inclusion Excellence Award Winners United Rentals received the Service/Supply Firm Award for its efforts to promote diversity and inclusion throughout the company. United Rentals encourages its local distributors to engage with their local communities to support training and outreach programs for diverse groups, and is also a sponsor for many organizations focused on increasing diversity and inclusion in the construction industry. Chicago-based Ujamaa Construction received the Diverse Business Award. Ujamaa was honored for its vision to provide exceptional construction services in a socially responsible manner and for maintaining a balance of corporate governance and social responsibility by bringing diversity into the workplace and providing employment opportunities to underserved populations. Three firms representing large, mid-sized and small construction companies were honored for their accomplishments during the
past year. Austin Commercial, based in Austin, Texas, was the repeat winner of the Large Contractor Award for the second year in a row. The Large Contractor Award is given to companies with annual revenues greater than $200 million. Shoemaker Construction Company, located in West Conshohocken, Pennsylvania, received the Mid-Sized Contractor Award, given to companies with annual revenues between $36.5 million and $200 million. Central Builders Inc., out of San Antonio, Texas, received the Small Contractor Award for companies with annual revenues less than $36.5 million. Committee Chairperson of the Year In a separate ceremony during the conference, AGC of America honored Frank Wilson, chairman of the Diversity and Inclusion Steering Committee, as its Committee Chairperson of the Year. Wilson was recognized for his work in promoting diversity and inclusion in workforce development and contracting. He is the first African American to receive this honor in the AGC’s 100year history. Wilson is president and CEO of BFW Contractors, a company founded in 2006 that specializes in construction management, demolition and site preparation. The Diversity and Inclusion Council was established to provide a platform for members to connect with each other and assist with developing and driving AGC’s diversity and inclusion initiatives. Wilson served as the inaugural chairman of the Diversity and Inclusion Steering Committee from 2017-2019. Under Wilson’s leadership, the steering committee established the Diversity & Inclusion Awards program and developed educational sessions on diversity and inclusion; hosted an eight-part business development webinar series; and released a report titled “The Business Case for Diversity & Inclusion in the Construction Industry.” // spring 2019
49
COMMITTED TO BUILDING A WELL-TRAINED & DIVERSE business community & workforce, providing services both locally & nationally in the areas of:
50
// spring 2019
NCDOT DBE Bidding Opportunity! Archer-Wright JV is seeking quotes from DBE Subcontractors and Suppliers for two NCDOT I-26 widening projects (project #s I-4700 and I-4400 BB & C) in Buncombe County.
INTEGRITY | DRIVE | PERFORMANCE DEMOLITION SERVICES CONSTRUCTION MANAGEMENT GENERAL LABOR SERVICES TECHNICAL TRAINING & EDUCATION MBE/DBE CERTIFIED
Project #I-4700 includes 8.6 miles of I-26 extending north from NC 280 (Exit 40) to the I-40/I-240 interchange west of Asheville. The scope of work includes replacing the Blue Ridge Parkway bridge over I-26. Bid Date: Tues., July 16, 2019 Quotes Due: Wed., July 10, 2019.
Project #I-4400 BB & C includes 13.6 miles of I-26 extending north from US 25 (Exit 54) near Hendersonville to NC 280 (Exit 40). Bid Date: Tues., Sept. 17, 2019 Quotes Due: Wed., Sept. 11, 2019.
Please join us at our outreach event at the Western Carolina University Biltmore Park, 28 Schenck Parkway, Asheville, NC 28803 in Classroom 345 (3rd floor) on Friday, June 7, 2019 anytime between 11:00AM and 1:30PM to learn more about these projects. Lunchtime refreshments will be served. Please park on levels 3, 4 or 5 in the parking garage located across the street on the southwest side of the building. There is no charge for parking. Quotes should be faxed/emailed to Joana Vazquez, Fax: (919) 463-6773/ jvazquez@walshgroup.com. Please reference the project number and scope of work. Project scopes include: Trucking, Site Clearing, Erosion Control, Demolition, Drainage/Utilities, MOT Rebar, Flatwork, Pavement Markings, SOE Walls, Seeding, Deep Foundations, Fencing, Concrete, Electrical/ITS, Roadway Barrier, Guardrail, Other Scopes. For more information, please contact Tylila Pinkham (919-459-6603, tpinkham@ walshgroup.com) or Tanya Ball (423-322-8906, tball@wbcci.com
6117 Minerva Ave., Ste. A St. Louis, MO 63133
Tel: 314-502-9712 Web: bfwcontractors.com
The scopes of work included in this project have been broken out into economically feasible units to facilitate DBE participation. Archer-Wright JV will not reject any DBEs as being unqualified without sound reasons based on thorough investigations. Archer-Wright JV is committed to helping DBEs that need assistance with lines of credit, insurance, equipment or supplies. Archer-Wright JV will make efforts to assist interested DBEs in obtaining necessary equipment, supplies, materials, or related assistance or services.
Upcoming National Events Women’s Business Enterprise National Council (WBENC) – National Conference and Business Fair;
National Association of Women in Construction (NAWIC) – NAWIC Annual Conference
June 25-27, 2018; Baltimore, MD I conf.wbenc.org
August 21-24, 2019; Atlanta, GA I www.nawic.org/nawic/ Annual_Conference.asp
Conference of Minority Transportation Officials (COMTO) - 48th National Meeting and Training Conference; July 12-16, 2019; Tampa, Florida I comtonational.org/page/ conferencehome
National Minority Supplier Development Council (NMSDC) – 2019 NMSDC Conference + Business Opportunity Exchange October 13-16, 2019; Atlanta, GA I www.nmsdc.org/2019-
Southern Transportation Civil Rights Executive Council (STCREC) – STCREC Training Symposium August 19-22, 2019; Charlotte, NC
Airport Minority Advisory Council (AMAC) - 35th Annual Airport Business Diversity Conference August 20-23, 2019; Los Angeles, CA I amac-org.com/ annualconference/
conference/
National Association of Women Business Owners (NAWBO) – National Women’s Business Conference; October 13-15, 2019; Jacksonville, FL I nawbo.org/events/ national-womens-business-conference-2019
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