us. Department
of li"msportation
Federal Highway
Administration
Massachusetts Division
November 29,2010
55 Broadway, 101n Floor
Cambridge, MA 02142
617.494-3657
617.494.3355 (fax)
www.fhwa.dot.gov/madiv
In Reply Refer To:
HDA-MA
Mr. Jeffrey B. Mullan, Secretary & CEO
Massachusetts Department of Transportation
10 Park Plaza, Room 3510
Boston, MA 02116-3973
Subject: DBE Program Goal-setting Methodology Approval, FFY 2011-2013
Dear Secretary Mullan:
In accordance with the provisions of 49 CFR 26.45, we have reviewed the overali goal submitted
by the Massachusetts Department of Transportation (MassDOT) in connection with its
Disadvantaged Business Enterprise (DBE) Program for Federal fiscal years 2011 through 2013.
Relative to the expected level of participation in the Federal-aid Highway Program for these
years, MassDOT submitted an overall annual goal of 11.68% (6.32% of which it projects to meet
through race-neutral (RN) means, and 5.36% through race-conscious (RC) means). Our review
considered the overall goal as well as the description of the data and methodology used as a basis
for MassDOT's goal, including the base figure calculation and supporting evidence; adjustments
made to the base figure and the evidence supporting these adjustments; a summary of relevant
evidence in your jurisdiction; the projections for each portion of the overall goal that will be met
through RN and RC means and the basis for these projections; and evidence· of public
participation in establishing your overall goal.
After reviewing this information, we have determined that the goal-setting -methodology
MassDOT has employed is consistent with the requirements of 49 CFR 26.45. More
specifically, we have approved the RN and RC projections of MassDOT's overall goal. In
accordance with 49 CFR 26.51, these portions should be closely monitored throughout each year
of the three year goal period to determine the extent to which contract goals should be applied in
meeting the annual overall goal. The basis for our approval and further instructions regarding the
implementation ofMassDOT's overall goal are set forth more fully in the attached document.
Please note that MassDOT must submit a separate overall DBE goal for programs funded by the
Federal Transit Administration (FTA) and the Federal Aviation Administration (FAA), based
upon the goal-setting approach outlined in the DBE Program document. MassDOT should
contact its regional FTA and FAA Regional I Offices for further guidance and assistance on
these matters.
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MassDOT's DBE Program was last approved on July 10,2003. However, MassDOT's Program
currently requires revision in many areas. Based on MassDOT's continued good faith in meeting
the delivery dates set forth in its most recent Corrective Action/Work Plan submission, FHWA
shall consider MassDOT to be compliant with the requirements of 49 CFR Part 26.
I would like to take this opportunity to express my appreciation for the diligence and efforts of
your staff in advancing this program to the approval stage.
If you have any questions, please contact Mr. David Chandler at (617) 494-2542.
Sincerely Yours,
t
Cc: ~w~/hv.t't)
Rick J. Marquis
Acting Division Administrator
John Lozada, MassDOT Director of Civil Rights
Miguel Fernandez, MassDOT Director of Contract Compliance
Angela Rudikoff, MassDOT Director of Civil Rights - External Operations
Enclosure (1)
EXPLANATION FOR APPROVAL OF MASSACHUSETTS DBE PROGRAM
GOAL-SETTING PROCESS FOR FFY 2011-2013
This document sets forth FHWA's justification for approving the Massachusetts Department of
Transportation (MassDOT) DBE goal methodology and the portion of the goal to be attained by
race- and gender- neutral means for FY 2011 to FY 2013.
Goal Setting Methodology Section 26.45
The regulations require recipients to set overall goals based on demonstrative evidence of the
availability of ready, willing and able DBEs relative to all businesses ready, willing and able to
participate on DOT -assisted contracts.
A. Step One- Base Figure-Section 26.45(c)
Under the regulations, the State must begin the process by determining the base figure for
the relative availability ofDBEs.
1. Method Selected- MassDOT utilizes a Bidders List.
2. Description of Data Used- Data used in its calculation included prime and sub­
contractors, DBEs and non-DBEs, that were seeking work on FHWA-assisted
construction contracts in the local market area during the period of October 1, 2008
to September 30, 2009. The local market area was determined to be the state of
Massachusetts. This area was designated based on the geographic distribution of
contracting dollars and areas in which a majority of contractors participated.
Specifically, MassDOT determined that 86.4% of its contract awards/commitments in
FY 2009 went to construction firms located in Massachusetts. MassDOT also
determined that the vast majority of construction firms (94.6%) that participated in
FY 2009 were located in Massachusetts. The following data was considered in
determining the local market area:
Data Description
Total Prog-ram
A w:trdsZCommitmen Is
FY­ 2009
Geographic distribution of
Contract$
Geographic Distribution of
Participating Prime Contractors
Geographic Distribution of all
Participating Contractors
Amount Represented by
J'assachuseiL~ Firm.
Massachusetts Mat·ket
Portion(%)
FY 2~09
FY 2009
$ 565,919,877
$488,842,685
86.4%
133
114
85.7%
240
227
94.6%
The Bidders List data was collected from each prime bidder on a quarterly basis. In
this process, MassDOT provides written notification to each prequalified prime
bidder along with a response form. Comprehensive responses were received from all
prime bidders, including a list of the subcontractors that provided bids/quotes relative
to FHWA-contracts. The information obtained by MassDOT resulted in a statistically
sound estimate of the universe of all bidders, including DBE and non-DBE
subcontractors.
For A & E contracts, a separate bidders list was established covering the same period.
Since MassDOT requires annual prequalification by all prime- and sub-consultants,
DBEs and non-DBEs, that seek work on FHWA-assisted A & E contracts,
MassDOT's list ofPrequalified A & E Consultants was considered appropriate and
constitutes a complete listing of ready, willing and able (RWA) firms that seek
participation in this area.
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3. Description of Calculation Performed- From the data collected in A.2., MassDOT
determined that there were 87 RWA DBEs and a total universe of 1,091 RWA
highway construction firms, including prime and subcontractors, DBEs and non­
DBEs. For A & E contracts, MassDOT identified 45 RWA DBEs and a total
universe of 190 prime and sub A & E consultants, including DBEs and non-DBEs.
MassDOT calculated its relative availability in each contracting area, determined its
program composition (construction and A & E), and applied the appropriate
percentages that make up each portion of its FHWA-assisted contracting program.
The weighted values were based on program spending in each contracting area.
Relative availability for construction contracts:
Relative availability for A & E contracts:
87/1,091 = 8.00%
45/190=23.7%
MassDOT's FHWA-assisted contracting program is comprised of 99.6% construction
contracts and .4% consultant contracts. Accordingly, the following calculations were
performed to derive an appropriately weighted baseline goal:
Construction contracts:
A & E contracts:
8%*.996 = 7.96%. 23.7%*.004 = .09% 4. Resulting Baseline Goal- MassDOT determined its Baseline Goal to be 8.05%
(7.96% + .09%)
B. Step Two Adjustments- Section 26.45(d)
1. List types of evidence considered when adjusting the base figureMassDOT examined and considered the following data and evidence as a basis for its
upward adjustment to the Baseline Goal:
a. MassDOT examined the current capacity ofDBEs to perform work on FHWA­
assisted contracts based on the value of work performed in the last five (5) federal
fiscal years (FY2005-FY2009). The chart below shows total DBE participation
relative to total participation on closed contracts over the 5 year period examined:
Data Description
Total Value of Payments on Closed
Contracts
FY2009
FYZOOS
FY2007
FY2006
$994,179,337
Total DBE Participation
$183, 524,394
DBE Race/Gender- Neutral
DBE Race/Gender- Conscious
FYZOOS
$648, 207,857
$349, 235, 384
$165,712.476
$100,824.482
$99, 204,030
$45, 622,223
$21,708,589
$28,760,738
$378,819,974
$76,977,197
$31,996,742
$17,344,179
$10,469,479
$25,493,739
$162, 281,336
$106,547,197
$67,207,288
$28,278,044
$11,239,110
$3, 266,999
$216,538,638
5 Year total
$2,258,159,536
MassDOT noted a significant difference between the current capacity of DBEs to perform work and the relative availability as indicated in the Baseline Goal. To adjust for the impact of a substantially higher level of capacity in contrast to what is indicated by the Baseline Goal, MassDOT seeks the following adjustment: Step 1 Baseline Goal
8.05% Median Past DBE Participation
15.30% (FY 2008) Adjustment to Step 1 Baseline Goal 23.35% /2 =11.68% 3
b. MassDOT did not use evidence from its 1994 Phase I Disparity Study conducted by D.J. Miller and Associates, Inc. This disparity study was for the purpose of identifying discrimination or underutilization in transportation contracting across the state. In addition to being outdated, the scope and results of this study were too general and not supported by sufficient quantitative evidence. No other studies were found to exist in MassDOT' s jurisdiction. MassDOT has prepared a scope of work for an updated disparity study scheduled to be conducted within the next three years. c. MassDOT also sought additional evidence in related fields within its jurisdiction that may affect opportunities for DBEs to form, grow, and compete, such as statistical disparities for DBEs to obtain finance, bonding, insurance, employment, education and training. MassDOT's search produced no relative evidence in this area. Based on its review of available data, MassDOT found no demonstrable evidence that logically or directly impacts any significant areas affecting DBE participation. Therefore, MassDOT seeks no further adjustments. Based on the adjustments noted above, MassDOT has set an overall goal of 11.68%. Public Participation Section 26.45 (g)
A. Consultation- On July 12, 2010, MassDOT conducted a public information meeting to
explain its goal-setting methodology and to solicit feedback from program stakeholders.
Representatives from the following groups were present: material suppliers, professional
services providers, disadvantaged business enterprises, prime contractors, the
Massachusetts Minority Contractor Association, the Women's Transportation Seminar,
and the Construction Industries of Massachusetts. During this meeting, further
discussion was held regarding the use of a bidders list method and the prospect of
applying another method that may yield higher relative availability. Further discussion
led to inquiries regarding the availability of supportive services offerings to DBEs.
MassDOT responded to these concerns by articulating the reliability and specific nature
of its data, as well as the supportive services currently offered that potentially impact the
goal.
B. Published Notice- MassDOT published notice ofthe proposed goal and availability of its
methodology in the Boston Globe and Boston Herald on June 14, 2010. The notice was
also posted in the following newspapers and publications: Lawrence Eagle Tribune
(6/16/2010), Lowell Sun (6/16/2010), The Berkshire Eagle (6/16/2010), Salem Evening
News (6/16/2010), Patriot Ledger (6/16/2010), Springfield Republican (6/16/2010), The
Standard Times (6/16/2010), Worcester Telegram & Gazette (6/16/2010), Cape Cod
Times (6/16/2010), Bay State Banner (6/17/2010), El Mundo (6/17/2010), Construction
Industries ofMassachusetts Construction Journal (6/20/2010), and Sampan Newspaper
(6/25/2010).
C. Comments- MassDOT's 45-day comment period ended on August 9, 2010 (based on
date of the last notice published). No requests to review the goal-setting methodology or
comments were received.
Race and Gender- Neutral and Conscious Measures Section 26.51
A. Race-Neutral and Race-Conscious Division- MassDOT has projected the race-neutral (RN)
portion of its 11.68% overall goal to be 6.32%. It is projected that the remaining 5.36% of
the overall goal will be achieved through race-conscious (RC) participation. MassDOT
determined its RN projection based on a review of data from a 5-year period (FY 2005- FY
2009). The level ofRN participation indicated by the data from FY 2006 represents the
4
median. MassDOT has selected this figure to represent the maximum feasible portion of the
overall goal that can be reasonably expected. MassDOT determined its median RN
participation based on the data shown in the table below:
Data Description
Total Value of Payments on
Closed Projects
RN Participation
% RN Participation
FY 2009
FY 2008
FY 2007
FY 2006
FY2005
$994,179,337
$76,977,197
$648,207,857
$31,996,742
$349,235,384
$17,344,179
$165,712,476
$10,469,479
$100,824,482
$25,493,739
7.74%
4.93%
4.97%
6.32%
25.3%
B. Description of Information Relied Upon- MassDOT uses the Equitable Business
Opportunities (EBO) software, as supported by other data compiled and maintained by
the MassDOT Office of Civil Rights, to manage and report its awards/commitments and
payments. MassDOT analyzed past DBE participation using payment information for the
5-year period from 2005 to 2009. This data was based on prime contracts awarded to
DBEs, the extent of DBE participation on contracts without goals, and DBE participation
in excess of goals. MassDOT's estimate of the maximum feasible portion of the goal
(6.32%) achievable through RN participation is based on past participation and is
supported by race-neutral measures noted in the following paragraph .
C. Description of the Types of Race-Neutral Measures Implemented by the State­
Current services available to all small business through MassDOT include Online
advertising schedules, bid tabulations, and up-to-date information on prime contractors
that have taken out plans and specifications during a project's advertising period. A
"How to Do Business" guide is currently being developed under the scope of the DBE/SS
Program and will soon be available to all small businesses. This informative guide will
notify small business of their specific federal contract requirements and how to access
opportunities in government contracting. MassDOT has previously provided and will
continue to offer technical assistance to firms, including training and seminars on
prequalification, contracting opportunities and the use of Online business tools .
Implementation MassDOT is required to make every good faith effort to meet its overall goal for each year of the three-year period. FHWA may direct MassDOT to undertake a mid-cycle review of its methodology to ensure its goal continues to reflect the conditions that exist within the local transportation contracting market. MassDOT may also request a mid-cycle adjustment to its methodology due to changes in circumstances that have a significant impact on the established goal during any year. Mid-cycle adjustments shall not take effect until approved by FHWA. MassDOT is required to submit its next goal-setting methodology for FY 2014 through FY 2016 by August 1, 2013. Conclusion For the reasons stated above, MassDOT's goal-setting methodology and race-neutral/ race­
conscious d~vision for FY 2011 through FY 2013 is hereby approved. Cc:
John Lozada, MassDOT Director of Civil Rights
Miguel Fernandes, MassDOT Director of Contract Compliance
Angela Rudikoff, MassDOT Director of Civil Rights -External Operations