[Federal Register Volume 65, Number 221 (Wednesday, November 15, 2000)]
[Rules and Regulations]
[Pages 68949-68951]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-29100]



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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

49 CFR Part 26

[Docket OST-2000-7640]
RIN 2105-AC89


Participation by Disadvantaged Business Enterprises in Department 
of Transportation Financial Assistance Programs; Threshold Requirements 
and Other Technical Revisions

AGENCY: Office of the Secretary, DOT.

ACTION: Interim final rule; request for comments.

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SUMMARY: This interim final rule revises the Department's regulations 
for its Disadvantaged Business Enterprise (DBE) program. This document 
changes threshold requirements for Federal Transit Administration 
recipients and Federal Aviation Administration recipients to establish 
DBE programs and submit overall goals. In addition, this document 
corrects and clarifies misleading language in the DBE final rule. This 
correction document adds examples of ways to collect information 
required for bidders lists. This document adds language clarifying that 
in order to verify whether a DBE firm actually performed the work they 
were committed, both commitments and attainments must be tracked and 
reported. Finally, this document corrects potentially misleading 
language regarding evidence that must be considered when setting 
overall goals.

EFFECTIVE DATE: This interim final rule is effective November 15, 2000. 
Comments concerning this document are due no later than January 2, 
2001.

ADDRESSES: Interested persons should send comments to Docket Clerk, 
Docket No. OST-2000-7640, Department of Transportation, 400 7th Street, 
SW, Room PL-401, Washington, DC 20590. We request that, in order to 
minimize burdens on the docket clerk's staff, commenters send three 
copies of their comments to the docket. Commenters wishing to have 
their submissions acknowledged should include a stamped, self-addressed 
postcard with their comments. The docket clerk will date stamp the 
postcard and return it to the commenter. Comments will be available for 
inspection at the above address from 10 a.m. to 5 p.m., Monday through 
Friday. Comments also may be sent electronically to the Dockets 
Management System (DMS) at the following Internet address: http://dms.dot.gov/ at any time. Commenters who wish to file comments 
electronically should follow the instructions on the DMS web site.

FOR FURTHER INFORMATION CONTACT: Laura Aguilar, Attorney, Office of 
General Counsel for Environmental, Civil Rights, and General Law, 
Department of Transportation, 400 Seventh Street, SW, Room 10102, 
Washington, DC 20590; Telephone: (202) 366-0365.

SUPPLEMENTARY INFORMATION:

1. Substantive Changes

DBE Programs

    In Section 26.21(a)(2) of the rule, the Department states that 
Federal Transit Administration (FTA) recipients who receive $250,000 in 
a fiscal year in various forms of FTA assistance must have a DBE 
program. Similarly, subsection (a)(3) requires Federal Aviation 
Administration (FAA) recipients who receive grants of $250,000 or more 
in a fiscal year for airport planning and development to have a DBE 
program. The Department is changing the threshold to $250,000 in 
contracting opportunities. The change requires FTA recipients who 
project awarding more than $250,000 in prime contracts in a Federal 
fiscal year from FTA assistance to have a DBE program. Similarly, FAA 
recipients who project awarding more than $250,000 in prime contracts 
in a fiscal year from grants for airport planning and development are 
required to submit a plan. Prime contracts include goods as well as 
contracts for services.
    The Department is making these changes to decrease the 
administrative burden on small airport and transit authorities. Many of 
these transit authorities and small airports receive more than $250,000 
in FTA or FAA funds but only have a small amount of funding for actual 
contracting opportunities. For example, FAA grants funds for land 
acquisition projects. While many of these grants exceed $250,000, the 
value of contracting opportunities covered by the DBE program (e.g., 
real estate appraisal and survey) is frequently well below $250,000. 
The major portion of the grant funds is generally for the land purchase 
itself, which is not a ``DOT-assisted contract'' under the definition 
of section 26.5.
    Therefore, FTA and FAA recipients who reasonably anticipate 
awarding $250,000 or less in prime contracts in a fiscal year are not 
required to submit a DBE plan. This change affects new recipients or 
recipients who do not have a DBE program. The rule would also reduce 
burdens on recipients who already have DBE programs. If such a 
recipient anticipates awarding $250,000 or less in prime contracts it 
would not have to submit a DBE overall goal for that year.

Goal Setting

    Section 26.45 requires recipients to submit new goals on August 1 
of each year. Section 26.45 is being revised to exempt FTA or FAA 
recipients with existing DBE programs from setting updated overall 
goals when they do not project awarding prime contracts exceeding 
$250,000 (excluding vehicle transit purchases).
    If a recipient is administering a DBE program, but is a FAA or FTA 
recipient who anticipates awarding $250,000 or less in prime contracts 
in a Federal fiscal year, the recipient is not required to develop 
overall goals for that fiscal year. However, the recipient's existing 
DBE program must remain in effect. For example, the recipient would 
still perform certification functions such as processing applications 
and obtaining no-change affidavits. If the recipient expects to award 
prime contracts exceeding $250,000 in the following fiscal year, it 
would be required to timely publish the proposed goal and submit the 
goal to the applicable DOT Operating Administration by August 1. 
Although not required, a FAA or FTA recipient who anticipates awarding 
$250,000 or less in prime contracts may submit a goal for that fiscal 
year. However, if a recipient chooses to submit a goal, it must meet 
all the requirements set forth in Sec. 26.45. Of course, recipients 
must still seek to meet the objectives of Sec. 26.1 of this part.
    Many recipients may have already submitted their fiscal year 2001 
goal to the applicable Operating Administration. If you are a recipient 
who submitted your goal, but under the revisions to this part are not 
required to submit a goal, your Operating Administration will contact 
you to ask whether you wish to have your goal in effect.

2. Technical Changes

Clarification Concerning Bidders Lists

    Section 26.11(c) requires recipients to create and maintain a 
bidders list containing information about DBE and non-DBE contractors 
and subcontractors who seek work on a recipient's Federally-assisted 
contracts. The Department has received a number of questions regarding 
the appropriate method to collect the required information. Recipients 
have also expressed concern with collecting the annual gross receipts 
of firms, saying

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that firms have sometimes been reluctant to share this information.
    In discussing this requirement in the DBE final rule, the 
Department recognized the difficulty in identifying subcontractors, 
particularly non-DBEs and all subcontractors that were unsuccessful in 
their attempts to obtain contracts. Consequently, the Department did 
not impose any procedural requirements for how the data is collected. 
The Department still believes that a recipient's data collection 
process should remain flexible. However, we are amending Sec. 26.11(c) 
to emphasize the purpose of the bidders list and by providing examples 
of ways in which recipients may choose to collect the required data.
    The Department is amending Sec. 26.11(c)(1) to state that the 
purpose of maintaining a bidders list is to provide the most accurate 
data possible about the universe of DBE and non-DBE contractors and 
subcontractors who seek to perform work under a recipient's Federally-
assisted contracts, for use in setting overall goals. We are also 
adding language stating that a recipient may collect the required data 
from all bidders, before or after the bid due date. They may also 
choose to conduct a survey that will result in a statistically sound 
estimate of the universe of DBE contractors and non-DBE contractors and 
subcontractors who seek to perform work under the recipient's 
Federally-assisted contracts. Additionally, we are clarifying that the 
data need not come from the same source. For example, a recipient may 
collect name and address information from all bidders, while conducting 
a survey with respect to age and gross receipts information. The 
Department believes that the approach should remain flexible so that 
recipients can choose the least burdensome and intrusive method.
    With regard to a firm's annual gross receipts, we are amending the 
language in Sec. 26.11(c) to clarify that recipients are not required 
to collect the exact dollar figure from the bidders. Recipients may ask 
a firm to indicate into what gross receipts bracket they fit (e.g., 
less than $500,000; $500,000-$1 million; $1-2 million; $2-5 million; 
etc.) rather than requesting an exact figure from the firms. We note 
that this information on the size of a firm, as well as information 
collected about the firm's age, should be helpful to recipients in 
formulating narrowly tailored overall goals.

Clarification Concerning Monitoring and Counting DBE Participation

    Section 26.37(b) requires recipients to have a mechanism to verify 
that the work committed to DBEs at contract award is actually performed 
by the DBEs. The language in the final rule states that recipients must 
provide for a running tally of actual DBE attainments. The preamble to 
the rule states, ``Under the final rule, recipients would keep a 
running tally of the extent to which, on each contract, performance had 
matched promises.'' Verifying whether a DBE actually performed the work 
to which they were committed, necessarily requires the recipient to 
track both commitments and attainments.
    We are rewording the language in Sec. 26.37(b) to state that a 
recipient's DBE program must include a monitoring and enforcement 
mechanism to ensure that work committed to DBEs at contract award is 
actually performed by DBEs. In addition, we are adding a new paragraph 
(c) to clarify that a recipient's mechanism for providing a running 
tally of actual DBE attainments must include a means of comparing the 
attainments to commitments. We are also clarifying that both awards or 
commitments and attainments must be contained in a recipient's reports 
of DBE participation to the Department. In the forthcoming DOT uniform 
reporting form, we will provide a format for these reports.
    Section 26.37(b) requires the mechanism providing for a running 
tally of actual DBE attainments to include a provision ensuring that 
the DBE participation is credited toward overall or contract goals only 
when payments are actually made to DBE firms. Since this requirement is 
already stated in Sec. 26.55(h), we are removing it from Sec. 26.37(b). 
Furthermore, we believe the wording of Sec. 26.55(h) is confusing and 
we are, therefore, revising it. The point of the revised language is to 
emphasize that actual payment of committed funds to DBEs is a key 
element in determining whether a prime contractor has met its contract 
obligations.

Clarification Concerning Goal Setting

    In setting overall goals, step 2 requires that recipients examine 
all evidence available in the jurisdiction to determine what 
adjustment, if any, is needed to the base figure. Sec. 26.45(d)(1) 
specifies information that must be considered when adjusting the base 
figure. Sec. 26.45(d)(2) lists additional information to be considered, 
but uses the language ``you may also consider.'' The permissive 
language may be misleading. A narrowly tailored program requires that 
all relevant information be considered. We are merely clarifying that 
if the information is available, then it must be considered. Therefore, 
to avoid misleading language, we are changing the wording in 
Sec. 26.45(d)(2) to say, ``if available, you must consider evidence 
from related fields that affect the opportunities for DBEs to form, 
grow and compete.''

3. Interim Final Rule

    This rule is being published as an interim final rule, without 
prior notice and opportunity to comment. The Department believes there 
is good cause for finding that providing prior notice and comment in 
connection with this rulemaking action is impracticable, unnecessary 
and contrary to the public interest since it concerns actions required 
to be taken on or around August 1, 2000. See 5 U.S.C. 553(b)(B).
    The Department believes it is important to expedite these revisions 
in order to benefit DOT recipients this year. Under the DBE 
regulations, recipients who set their goals on a fiscal year basis are 
required to submit their goals on or around August 1 each year. In 
order to reduce administrative burdens on FTA and FAA entities 
receiving $250,000 or less in contracting opportunities, the rule must 
be effective as soon as possible, since August 1 has passed and 
recipients are still in the process of formulating goals and programs. 
Therefore, the Department finds good cause that compliance with notice 
and comment procedures in adoption of this interim final rule would be 
impractical, unnecessary and contrary to the public interest. See 5 
U.S.C. 553(b)(B). For the same reasons, pursuant to 5 U.S.C. 553(d), it 
is determined that there is good cause for the interim final rule to 
become effective immediately upon publication. In addition, this 
interim final rule relieves a restriction.
    All comments received will be filed in the docket. The docket is 
available for public inspection before and after the comment closing 
date. All comments received on or before the comment closing date will 
be considered before taking final action on this rulemaking. Comments 
filed late will be considered as far as possible without incurring 
expense or delay. The provisions of this interim final rule may be 
changed in light of comments received.

Regulatory Analyses and Notices

    These revisions to part 26 are not a significant rule under 
Executive Order 12866 or the Department's regulatory policies and 
procedures. While the Regulatory Flexibility Act does not, as such, 
apply to rules that do not involve a notice of proposed rulemaking, the 
Department has determined that the revisions will not have significant 
economic impacts on a substantial number of small entities. In fact, 
these revisions decrease costs to some small

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entities. Further, these revisions do not have Federalism impacts 
sufficient to warrant the preparation of a Federalism impact statement.

List of Subjects in 49 CFR Part 26

    Administrative practice and procedure, Airports, Civil rights, 
Government contracts, Grant--programs--transportation, Mass 
transportation, and Minority businesses.

    Issued this 6th Day of November, 2000, at Washington, DC.
Rodney E. Slater,
Secretary of Transportation.

    For the reasons set forth in the preamble, the Department amends 49 
CFR part 26 as follows:

PART 26--PARTICIPATION BY DISADVANTAGED BUSINESS ENTERPRISES IN 
DEPARTMENT OF TRANSPORTATION FINANCIAL ASSISTANCE PROGRAMS

    1. The authority citation for 49 CFR part 26 continues to read as 
follows:

    Authority: 23 U.S.C. 324; 41 U.S.C. 2000d, et seq.; 49 U.S.C. 
1615, 47107, 47113, 47123; Sec. 1101(b), Pub. L. 105-178, 112 Stat. 
107, 113.


    2. In Sec. 26.11, revise paragraph (c) to read as follows:


Sec. 26.11  What records do recipients keep and report?

* * * * *
    (c) You must create and maintain a bidders list.
    (1) The purpose of this list is to provide you as accurate data as 
possible about the universe of DBE and non-DBE contractors and 
subcontractors who seek to work on your Federally-assisted contracts 
for use in helping you set your overall goals.
    (2) You must obtain the following information about DBE and non-DBE 
contractors and subcontractors who seek to work on your Federally-
assisted contracts:
    (i) Firm name;
    (ii) Firm address;
    (iii) Firm's status as a DBE or non-DBE;
    (iv) Age of the firm; and
    (v) The annual gross receipts of the firm. You may obtain this 
information by asking each firm to indicate into what gross receipts 
bracket they fit (e.g., less than $500,000; $500,000-$1 million; $1-2 
million; $2-5 million; etc.) rather than requesting an exact figure 
from the firm.
    (3) You may acquire the information for your bidders list in a 
variety of ways. For example, you can collect the data from all 
bidders, before or after the bid due date. You can conduct a survey 
that will result in statistically sound estimate of the universe of DBE 
and non-DBE contractors and subcontractors who seek to work on your 
Federally-assisted contracts. You may combine different data collection 
approaches (e.g., collect name and address information from all 
bidders, while conducting a survey with respect to age and gross 
receipts information).
    3. In Sec. 26.21, revise paragraphs (a)(2) and (a)(3) to read as 
follows:


Sec. 26.21  Who must have a DBE program?

    (a) * * *
    (2) FTA recipients receiving planning, capital and/or operating 
assistance who will award prime contracts (excluding transit vehicle 
purchases) exceeding $250,000 in FTA funds in a Federal fiscal year;
    (3) FAA recipients receiving grants for airport planning or 
development who will award prime contracts exceeding $250,000 in FAA 
funds in a Federal fiscal year.
* * * * *

    4. In Sec. 26.37, revise paragraph (b), and add paragraph (c) to 
read as follows:


Sec. 26.37  What are a recipient's responsibilities for monitoring the 
performance of other program participants?

* * * * *
    (b) Your DBE program must also include a monitoring and enforcement 
mechanism to ensure that work committed to DBEs at contract award is 
actually performed by DBEs.
    (c) This mechanism must provide for a running tally of actual DBE 
attainments (e.g., payments actually made to DBE firms), including a 
means of comparing these attainments to commitments. In your reports of 
DBE participation to the Department, you must display both commitments 
and attainments.

    5. Amend Sec. 26.45 as follows:
    a. Revise paragraph (a); and
    b. In paragraph (d) (2) at the beginning of the sentence, remove 
``You may also consider available'' and substitute ``If available, you 
must consider'' in its place. The revised text reads as follows:


Sec. 26.45  How do recipients set overall goals?

    (a)(1) Except as provided in paragraph (a)(2) of this section, you 
must set an overall goal for DBE participation in your DOT-assisted 
contracts.
    (2) If you are a FTA or FAA recipient who reasonably anticipates 
awarding (excluding transit vehicle purchases) $250,000 or less in FTA 
or FAA funds in prime contracts in a Federal fiscal year, you are not 
required to develop overall goals for FTA or FAA respectively for that 
fiscal year. However, if you have an existing DBE program, it must 
remain in effect and you must seek to fulfill the objectives outlined 
in Sec. 26.1.
* * * * *

    6. In Sec. 26.55, revise paragraph (h) to read as follows:


Sec. 26.55  How is DBE participation counted toward goals?

* * * * *
    (h) Do not count the participation of a DBE subcontractor toward a 
contractor's final compliance with its DBE obligations on a contract 
until the amount being counted has actually been paid to the DBE.


Sec. 26.89  [Amended]

    7. In Sec. 26.89(a)(3), remove ``Room 2401'' and add ``Room 5414'' 
in its place.

[FR Doc. 00-29100 Filed 11-14-00; 8:45 am]
BILLING CODE 4910-62-U