Construction Legislative Week in Review
www.agc.org January 2, 2014
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TRANSPORTATION
AGC Urges DOT to Drop Proposed DBE Program Changes and Focus on Program Intent
APPROPRIATIONS
AGC Weighs in on Spending Bill
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TRANSPORTATION
AGC Urges DOT to Drop Proposed DBE Program Changes and Focus on Program Intent
 

AGC submitted supplemental comments to the U.S. Department of Transportation (DOT) on its Sept. 6, 2012, proposal to make significant changes in the administration of its Disadvantaged Business Enterprise (DBE) program. The original comment period closed in 2012, but because of the outpouring of negative criticism from the industry, DOT decided to hold a listening session in early December and extend the comment period.  Moreover, the agency has chosen to seek specific comments on the costs associated with the proposed changes.  Along with AGC of America, many chapters and individual members also submitted comments and participated in the listening session.

AGC’s supplemental comments focused primarily on the proposed changes to the procurement process, which would require prime contractors to submit a list of the DBEs to be used on that project with their bids, specifying the scope of work the DBEs will perform, subcontract price, and a letter of verification from the DBEs confirming this. The proposed changes would also require prime contractors unable to meet goal requirements to submit, along with the bid documentation, a report detailing the “good faith efforts” or steps they have undertaken including quotes from all subcontractors.

AGC’s supplemental comments reemphasized that this proposed rule modification is a major change from current requirements that will have significant ramifications on how this program is administered and will result in significant cost impacts on federal-aid highway construction projects. The comments questioned whether the agency has produced sufficient data to support the need to make the proposed changes and whether the proposed changes will in any way help achieve the program’s objective. AGC also pointed out that DOT’s Office of Inspector General (OIG) issued a report on April 23, 2013, that criticized the program’s administration, which should encourage the agency to rethink how the program has been implemented over the past 30 years, what it has accomplished and what changes should be made to focus the program on what the OIG says is one of its primary objectives: “Assisting in the development of DBE firms so that they can compete outside the DBE program.”

AGC said that, “Without question there will be cost increases should the proposed revisions to the DBE regulations be implemented.”  AGC and the American Road and Transportation Builders Association (ARTBA) cooperated in a survey of our memberships to determine if costs could be identified. The results from the approximately 300 responses are being submitted for the record. The results show that 75 percent of respondents indicate costs would increase at least by $25,000 per contract to comply with the extensive new DBE information that must be submitted with the bid as well as the expanded good faith efforts documentation. Over 9 percent of respondents said costs would increase as much as $100,000 per contract. To put that into perspective, there are currently 130,000 active federal-aid highway contracts.  At $25,000 additional cost per contract the cost increase is nearly $3 billion.

AGC recommended that the proposed changes be dropped and, instead, DOT focus on improving the outcomes of the program. There should be less emphasis on achieving numbers of firms participating in the program and on dollar amounts awarded and more emphasis on the business success of the firms that are participating.

For more information, please contact Brian Deery at (703) 837-5319 or deeryb@agc.org Return to Top

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APPROPRIATIONS
AGC Weighs in on Spending Bill
 

As the majority of Congress spent the holidays back home, House and Senate Appropriations staff were working to finalize an omnibus spending bill for the remainder of fiscal year 2014.   In order to avoid another government shutdown on Jan. 15, the appropriators must agree to spending priorities at the funding levels established in the December budget agreement.  

AGC sent a letter to House Appropriations Chairman Harold Rogers (R-Ky.) and Senate Appropriations Chairwoman Barbara Mikulski (D-Md.) urging them to enact adequate levels of investment for federal construction program in 2014, instead of relying on another continuing resolution that would continue to prohibit new federal construction starts and allow further cuts through sequestration.  AGC is hopeful that with the budget deal, the opportunity for Congress to return to a traditional appropriations process will be provided and that the deal will allow a full analysis of federal spending priorities.  The breakdown of the traditional budget and appropriations process of the past three years has had a direct impact on the construction industry – this includes, but is not limited to, a prohibition on new start construction projects and $4 billion in cuts to federal construction programs through sequestration.

AGC will continue to educate Members of Congress as to the importance of investing in our nation’s critical infrastructure and work to ensure that federal construction programs receive adequate funding levels in fiscal years 2014 and 2015.

For more information, please contact Sean O’Neill at (202) 547-8892 or oneills@agc.org Return to Top

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