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FHWA Triennial DBE Goal Setting & Methodology 2022-2024 1 INTRODUCTION The Virgin Islands Department of Public Works (DPW) is a recipient of federal financial assistance from the Federal Highway Administration (FHWA), a modal agency under the U.S. Department of Transportation (USDOT). Pursuant to Title 49 Code of Federal Regulations (CFR) Part 26, DPW operates a Disadvantaged Business Enterprise (DBE) program for which it triennially sets an overall DBE goal. Using the following methodology, DPW proposes an overall DBE goal of 25.94% for the Federal Fiscal Year (FFY) period of 2022-2024 (October 1, 2021 – September 30, 2024). DPW calculates achieving 10.44% of the goal through race neutral means and 15.50% by establishing contract goals. Therefore, in accordance with 49 CFR § 26.45(a)(1), VIDPW will established an overall goal based on the availability of ready, willing and able DBEs relative to the availability of all ready, willing and able firms within the Virgin Islands who are interested in VIDPW’s highway projects. VIDPW proposed an overall goal for federal fiscal years 2021-2024 is 25.94% which it expects to meet 10.44% through race neutral means and 15.50% through race conscious means. OVERVIEW OF THE GOAL SETTING PROCESS The regulations at 26.45 prescribe how DPW calculates the proposed goal. In addition, DPW adheres to USDOT guidance in its Tips for Goal Setting in the Disadvantaged Business Enterprise (DBE) Program, as well as key US Supreme Court decisions that frame constitutional requirements for minority business contracting programs. The triennial goal must reflect the level of DBE participation expected absent the effect of discrimination. In the first step of calculating the goal, DPW establishes a base figure for the relative availability of DBEs and non-DBEs in the relevant market area; describing the evidence with which the availability was calculated. In the second step, DPW considers adjustments to the base figure, attempting to reach the most precise goal possible by using past achievements and any other evidence that may impact the market or business availability. Another aspect of step two is to identify what portion of the overall goal can be achieved through race and gender-neutral means (race neutral) and that which will require contract goals (race conscious). The final step describes how DPW shared the proposed goal with all interested parties, and summarizes questions or comments received from the public, as well as DPW’s response and any resulting changes to the proposed goal. U.S. Virgin Islands Department of Public Works Disadvantaged Business Enterprise (DBE) Triennial Goal for FHWA-assisted Contracts Federal Fiscal Years 2022-2024 FHWA Triennial DBE Goal Setting & Methodology 2022-2024 2 METHODOLOGY DBE goals are based on demonstrable evidence of the availability of ready, willing and able DBEs relative to all road and bridge firms ready, willing and able to participate on USDOT- assisted contracts in the relevant market area. While DPW collects as a matter of responsiveness a bidders list from all firms submitting proposals for FHWA-assisted projects, successful and unsuccessful, it does not currently have the means to use this list for goal setting. Therefore, after examining all available options, DPW determined that the following sources provided the most accurate and reliable information: The USVI DBE Directory; Internal discussions with the DPW Office of Highway Engineering (OHE); the VI Department of Licensing & Consumer Affairs business database; the DPW goals for FFY 2018, 2019 2020; and the DPW Uniform Reports for 2017, 2018, 2019, 2020 and 2021 (to date). STEP ONE –Base Figure Calculations Relative Availability of DBE Firms (§ 26.45(c)) Determination of the Geographic Market Area Consistent with USDOT regulations and guidance for setting a narrowly tailored goal, DPW must define its geographic market area. US Virgin Islands is situated in the eastern Caribbean and shares no borders with the mainland US. Contract awards suggest that the entirety of contract dollars go to firms domiciled or with presence in Virgin Islands. Therefore, DPW defines its relevant market area as collected islands of US Virgin Islands. Determination of Step One Base Line Figure To establish the DBE goal, DPW reviewed its DBE directory, identifying certified firms ready, willing and able to perform road and bridge work items. It then filtered business information provided by the Department of Licensing & Consumer Affairs to identify all businesses licensed in USVI to perform work items on road and bridge projects. The following table shows the results of DPW’s research and the relevant availability of firms in the primary DPW road and bridge contracting categories. NAICS Code NAICS Description Number of DBEs available to perform this work Number of all firms available (including DBEs) Relative Availability 237310 Highway Street & Bridge Construction 32 176 0.1818 238140 Masonry Contractors 9 75 0.1200 238210 Electrical Contractors 9 24 0.3750 238220 Plumbing Contractors 3 15 0.2000 238250 Carpentry Contractors 2 100 0.0200 238320 Painting Contractors 21 104 0.2019 238910 Site Preparations 17 55 0.3091 238990 All Other Specialty Trade Contractors 20 25 0.8000 324121 Asphalt Paving Mix/Manufacture 4 18 0.2222 423390 Brick, Stone and Related Materials 2 17 0.1176 FHWA Triennial DBE Goal Setting & Methodology 2022-2024 3 444190 Other Building Contractors 12 25 0.4800 483211 Inland Water Transport 2 13 0.1538 484110 General Freight Trucking 34 87 0.3908 532412 Heavy Equipment Rental 26 19 1.3684 541310 Architectural Services 4 21 0.1905 541330 Engineering Services 4 97 0.0412 541618 Other Management Consulting Services 5 106 0.0472 561621 Security Services 3 26 0.1154 561720 Janitorial Services 7 71 0.0986 561730 Landscaping Services 10 15 0.6667 562111 Solid Waste Collection 5 30 0.1667 562112 Hazardous Waste Treatment Disposal 3 6 0.5000 541611 Legal Services 1 13 0.0769 Combined Totals 235 1138 0.2065 The relative availability of DBEs is calculated by dividing all firms by DBE firms: Ready, Willing, Able DBE Firms 235 All Ready, Willing Able Firms 1138 Weighting Though not a requirement, USDOT recommends the use of weighting when possible as a means of improving the accuracy of the base figure. OHE estimated the percentages of contract dollars likely to be spent in the major road and bridge categories over the next three years, multiplying the relative availability by these projected expenditures. The table below shows relative availability and weighting NAICS Code Project Weight x Availability Weighted Base Figure 237310 Highway Street & Bridge Const. 0.35000 x 0.18182 0.0636 238140 Masonry Contractors 0.05000 x 0.12000 0.0060 238210 Electrical Contractors 0.03000 x 0.37500 0.0113 238220 Plumbing Contractors 0.00070 x 0.20000 0.0001 238250 Carpentry Contractors 0.00300 x 0.02000 0.0001 238320 Painting Contractors 0.00030 x 0.20192 0.0001 238910 Site Preparations 0.04000 x 0.30909 0.0124 238990 Other Specialty Trade Contractors 0.01788 x 0.80000 0.0143 324121 Asphalt Paving/Block Manufacture 0.40303 x 0.22222 0.0896 444190 Other Building Contractors 0.00070 x 0.48000 0.0003 484110 General Freight Trucking 0.00030 x 0.15385 0.0000 20.65% Relative Availability .2065 FHWA Triennial DBE Goal Setting & Methodology 2022-2024 4 483211 Inland Water Transport 0.01000 x 0.15380 0.0015 532412 Heavy Equipment Rental 0.01000 x 1.36842 0.0137 541310 Architectural Services 0.00250 x 0.19048 0.0005 541330 Engineering Services 0.05000 x 0.04124 0.0021 541618 Other Mngmnt Consulting Services 0.02000 x 0.04717 0.0009 561621 Security Services 0.00030 x 0.11538 0.0000 561720 Janitorial Services 0.00030 x 0.09859 0.0000 561730 Landscaping Services 0.00070 x 0.66667 0.0005 562111 Solid Waste Collection 0.00500 x 0.16667 0.0008 562112 Hazardous Waste Disposal 0.00500 x 0.50000 0.0025 541611 Legal Services 0.00030 x 0.07692 0.0000 Total 0.2203 Expressed as a % (*100) 22.03% The weighted base figure is calculated by multiplying projected expenditures by the relative availability of DBEs: Step 2: Adjustment of the DBE Base Figure (§ 26.45(d)) Upon establishing a base figure, the regulations require that DPW examine any additional evidence that might warrant an adjustment in establishing the overall goal. DPW is unaware of any disparity studies or other that could alter its calculations. However, DPW believes the past five years of DBE participation reflect volatility, both in available funding and external market influences. The hurricanes of 2017 caused a drop in participation, while during the pandemic, several DBEs obtained large contracts as the prime, pushing participation to historical highs. As these same DBEs may graduate from the program due to these larger contracts, DPW estimates that the median participation from the past five years establishes a reasonable and accurate foundation for goal adjustment. Federal FY DBE Goal Total FHWA-assistance Total to DBEs DBE % 2017 19.00% $17,600,00 $ 4,520,759 25.60% 2018 19.00% $43,100,000 $ 10,357,958 24.03% 2019 25.75% $15,600,000 $ 4,655,040 29.84% 2020 25.75% $17,600,000 $ 13,256,320 75.32% 2021 25.75% $43,100,000 $ 40,014,040 92.84% Projected Expenditures by Primary Road/Bridge Categories Relative Availability .2065 .2203 22.03% Weighted Base Figure FHWA Triennial DBE Goal Setting & Methodology 2022-2024 5 The median or ‘middle’ DBE participation figure from the past five years of FHWA-assisted contracting is 29.84%. To adjust the goal, DPW averaged the weighted base figure arriving at an upward adjusted goal of 25.94%: 22.03% Base 29.94% Past Participation 51.87 2 Race Conscious versus Race Neutral Projection (§ 26.45(f)) To ensure narrow tailoring, 26.51(c) requires that USDOT recipients achieve the maximum portion of the overall DBE goal through race neutral methods. DPW makes every effort to meet the maximum feasible portion of its overall goal by using race-neutral means of facilitating DBE participation, including the following: • Arranging solicitations, times for the presentation of bids, quantities, specifications, and delivery schedules in ways that facilitate DBEs, and other small business’, participation • Providing assistance in overcoming limitations such as inability to obtain bonding or financing (e.g., by simplifying the bonding process, reducing bonding requirements, and providing services to help DBEs and other small businesses obtain bonding and financing) • Providing technical assistance and other services upon requested or identified need • Implementing a supportive services program to develop and improve immediate and long-term business management, record-keeping, and financial and accounting capability for DBEs and other small businesses • Ensuring that Prime contractors are aware of and know how to obtain the approved DBE listing from the Virgin Islands Department of Public Works. As part of the goal methodology, the regulations direct DPW to project how much of its goal can likely be achieved through ordinary procurement methods without DBE goals on individual contracts. The regulations further state that, where DPW exceeds its overall goals for two consecutive years, it must proportionately reduce the use of contract goals. DPW examined its goal achievement for the past three consecutive years, finding that it exceeded its overall goal of 25.75% by 4.09% in FY 2019, by 49.57% in FY 2020, and by 67.09% thus far in FY2021; an average of 40.25% overachievement. This suggested a reduction in the use of contract goals by that amount. Therefore, DPW projects that for FFY 2022 – 2024, DPW will meet its overall goal with the following split: 10.44% - Race Neutral/15.50% - Race Conscious DPW will establish contract goals to meet any portion of the overall goal that it does not anticipate meeting by using race-neutral means. Contract goals are established on individual projects so that over the period to which the goal applies, it will cumulatively result in meeting any portion of the overall goal that is not projected to be met using race-neutral means. However, DPW will establish contract goals only on the FHWA-assisted contracts that have subcontracting opportunities. 25.94% Adjusted Goal FHWA Triennial DBE Goal Setting & Methodology 2022-2024 6 DPW will also monitor the performance of its DBE program and will make adjustments to its race neutral/race conscious measures if needed to ensure regulatory compliance. DPW will also separately track race neutral and race conscious measures to reflect actual DBE participation, demonstrate a running tally (26.37(c)) and reporting commitments/payments biannually (Appendix B to Part 26). Finally, if during any fiscal year VIDPW finds that its achievements fail to meet the established goal of 25.94%, it will determine the reason(s) and develop a specific action plan for achieving the goal in the following fiscal year. VIDPW will submit this plan to FHWA for its review and acceptance (26.47(c)). PUBLIC OUTREACH & CONSULTATION