Metro REVISED EXECUTIVE MANAGEMENT COMMITTEE MAY 15, 2014 SUBJECT: DISABLED VETERAN'S BUSINESS ENTERPRISE (DVBE) BUSINESS PROGRAM
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1 Metro Los Angeles County One Gateway Plaza 2~3.9sz.zo Metropolitan Transportation Authority Los Angeles, CA gooi2-z952 metro.net REVISED EXECUTIVE MANAGEMENT COMMITTEE MAY 15, 2014 SUBJECT: DISABLED VETERAN'S BUSINESS ENTERPRISE (DVBE) BUSINESS PROGRAM ACTION: APPROVE ADOPTION OF A DVBE POLICY AND PROGRAM RECOMMENDATION A. Adopt a DVBE Policy and Program for non-federally funded competitively negotiated contracts for goods and services over $100,000, including a program goal of 3% and a DVBE Preference Program. B. Utilize the State of California's DVBE Certification Process. ISSUE At the October 17, 2013 Executive Management Committee, Director Mark Ridley- Thomas introduced a motion directing the CEO to develop a DVBE contracting procurement program incorporating the following: 1) A mandatory contract goal for DVBEs for the Board to consider after surveying other jurisdictions including, but not limited to, the Metropolitan Water District, the City of Los Angeles, the County of Los Angeles, the Los Angeles Unified School District and the Los Angeles Community College District; 2) Utilization of the State of California's Disabled Veteran Business Enterprise certification process for Disabled Veteran Business Enterprise Certification Eligibility Requirements; 3) Provide a local preference to DVBE's whose principal office is located within the County of Los Angeles to the extent allowable by State and Federal laws. DVBE Policy and Program
2 Success Yes Yes At the January 2013 Executive Management Committee (EMC), Staff presented a Receive and File, providing an update and indicating a return to the EMC with a DVBE Program recommendation within six months. DISCUSSION Metro recognizes the sacrifices made by our military personnel who valiantly serve to protect our nation. As noted in the Motion, Metro has been proactive in reaching out to the veteran community through various outreach efforts, primarily related to hiring initiatives, however now, Metro needs to expand its outreach to include entrepreneurial initiatives for disabled veterans in the contracting and procurement process. Findings DVBE Contract Goal - As directed, staff surveyed other agencies and jurisdictions to determine the presence of mandatory goals for DVBEs. As a result of SB 1517, California State agencies have a mandatory goal of 3%. The State is the only agency with a mandatory goal. The City of Los Angeles, the Metropolitan Water District, the Department of Water and Power (DWP) and the Cal State Universities have 3% goals. The County of Los Angeles does not have a goal but recently implemented a preference program, effective December 1, The Los Angeles Unified School District, The Los Angeles Community College District, Bay Area Rapid Transit (BART), and Orange County Transportation Authority (OCTA) were also contacted, and none have any DVBE specific participation goals or preference programs. The results are summarized below: ram Preference Utilize DGS Date A enc Goal Pro Rate Certification Started Varies but overall the State has exceeded the 3% State of CA (incl. 3% mandatory goal for the last 2 Caltrans a enc oal No fiscal ears Yes 1989 Ci of Los An eles 3%annual oal No Less than 1 % 1/2012 DWP 3%annual oal No Too new Yes 2/2013 County of Los An eles No oal Yes Too New Yes 12/2013 Metropolitan Water District MWD 3% overall No Less than 1% Yes 2006 Cal State Universi 3% annual No 2.1 % 1989 DVBE Policy and Program Page 2
3 En Pro Success Goal Preference Utilize DGS Date A enc Rate Certification Started Not specific to DVBE. Included Los Angeles in their overall Community College SBE goal of District 28% No 1 /2004 ram BART None No OCTA None No LA Unified School District None No Based on this survey, staff recommends a 3% overall program goal on all non-federally funded competitively negotiated contracts for goods and services over $100,000, as shown below. Applicable to Non-Federally Applicable to FTA-Funded Action T `e Funded Ac uisitions Ac uisitions Negotiated awards for Supplies, Equipment, Materials and Services includin Architecture ineerin Yes No & Contract awards under sealed bid rocedures No No DVBE Certification Eligibility Requirements Staff found that all agencies surveyed with a DVBE program utilize the State of California's DVBE certification process administered through the Department of General Services (DGS). California DGS is currently the only agency within the State of California that is certifying firms as DVBEs. The DGS has existing reciprocity agreements with the agencies utilizing their DVBE certification process. Staff recommends utilization of DGS's DVBE certification process. Staff has met with DGS's Chief of DVBE Certification, and upon Board approval, will pursue execution of a reciprocity agreement. DVBE Local Preference Of the agencies surveyed, only the County of Los Angeles has a DVBE local preference program. The County of Los Angeles' Preference Program provides for an eight percent (8%) price or scoring preference to bids and proposals from certified DVBEs, but as noted in the table above, they have no program goal. Staff recommends adopting a local DVBE Preference Program providing for a five percent (5%) preference on applicable non-federally funded competitively negotiated contracts, for DVBEs whose principal office is located within the State of California. This is consistent with the County's DVBE Local Preference Program. DVBE Policy and Program Page 3
4 Considerations Number of DVBE Firms: As part of our research, staff conducted an analysis of the availability of DVBE firms currently certified in the State, utilizing the DGS's DVBE database. Currently, there are approximately 1400 certified DVBEs in the State. However, in examining all zip codes within the County of Los Angeles, less than 150 firms were located within the County of Los Angeles. Therefore, staff's recommendation is to open participation in the DVBE Local Preference Program to all DVBEs in California. Applicability: Metro may establish goals and apply a preference on all locally funded nvrc r~r~nr~rr~.~.,.,+.e,,,,n.,,~e.~,~., fo,~or,~~., Requests for Proposals (RFPs). T" ^^^*~*~ Under current federal regulations, there is no authority that would allow Metro to impose a DVBE program on Federal Transit Administration (FTA1 funded contracts under the Department of Transportation (DOT). ""^~ Additionally, current state law prohibits use of the DVBE program on procurements awarded through an Invitation for Bid (IFB) process. Staff is in the process of seeking legislation that will allow DVBE participation on IFBs. Outreach: The implementation of a DVBE Program will require an outreach and business development component. Both are essential to a successful program. Metro will work with key organizations, such as the Los Angeles Chapter of the National Veteran's Organization, the Elite Service Disabled Veteran-Owned Network (SDVOB), to provide targeted outreach and business development. Although the goal and preference program are specific to DVBEs, our outreach will also target veteran small business owners, since many may qualify for our Small Business Enterprise (SBE) program. DETERMINATION OF SAFETY IMPACT No impact on safety. FINANCIAL IMPACT Funds in the amount of $50,000 for program implementation, monitoring, and DVBE outreach are proposed in the FY15 budget, cost center 2130, project ALTERNATIVES CONSIDERED 1. Develop a preference program for DVBEs located in the County of Los Angeles. This is not recommended because there are so few DVBEs firms in California DVBE Policy and Program Page 4
5 that further limiting the parameters to County of Los Angeles DVBEs would be less beneficial for the DVBE firms. 2. Do in-house certifications for DVBEs. This is not recommended since the State of California's certification process through the DGS is utilized by all agencies recognizing DVBE certification. NEXT STEPS In concert with County Counsel, Procurement, and applicable departments, staff will develop the procurement and contracting procedures for implementation of the DVBE Program. Additionally, staff will work with DGS to establish a reciprocity agreement for utilization of their DVBE certification process, with full implementation in 120 days. ATTACHMENTS A. DVBE Business Program Policy B. Motion # 65 October/2013 Prepared by: Dr. Irma L. Licea, Director, Finance, Certification &Business Development (213) DVBE Policy and Program Page 5
6 teph ie Wiggi Executive Director Vendor/Contract Management CU~ i. Arthur T. Leahy Chief Executive Officer DVBE Program Page 6
7 and ATTACHMENT A Disabled Veteran's Business Enterprise (DVBE) Business Program Policy 1.0 Policy The Disabled Veteran Business Enterprise (DVBE) Small Business Program was established to acknowledge disabled veterans for their service and to facilitate competition and participation for DVBEs in Metro's contracting procurement process. The DVBE Program applies to non-federally funded competitively negotiated contracts over $100,000, including a program goal of three percent (3%) and a DVBE Local Preference Program of five percent (5%). 1.1 General a) The DVBE program is race-neutral and applies to negotiated, non-federally funded acquisition for goods and services authorized in Metro's Acquisition Policy and Procedures. b) The DVBE Program Goal is three percent (3%) of non-federally funded competitively negotiated contracts over $100,000 dollars. c) The DVBE Local Preference Program will grant a five percent (5%) evaluation scoring preference. d) The DVBE Local Preference Program applies to DVBEs located and certified in the State of California. Metro will recognize the State of California's DVBE certification process administered through the Department of General Services (DGS). e) The DVBE program is administered by Metro's Diversity and Economic Opportunity Department (DEOD) and implemented by the Procurement Department in the conduct of their solicitations. 1.2 Definitions Disabled Veteran: A veteran of the United States military, naval, or air service; who has service-connected disability of at least 10% or more; and the veteran must reside in California. The definition will always defer to the latest California Military and Veterans Code. DVBE Policy Program Page 7
8 Disabled Veteran Business Enterprise (DVBE): A business enterprise certified by the State of California's Department of General Services (DGS). The enterprise must meet all DGS certifications requirements which include the following: (i) Business must be at least 51 %owned by one or more disabled veterans. (ii) DVBE limited liability companies must be wholly owned by one or more disabled veterans. (iii) Daily business operations must be managed and controlled by one or more disabled veterans. (iv) Home office must be located in California. The home office cannot be a branch or subsidiary of a foreign corporation, foreign firm, or other foreign based business. The definition will always defer to the latest California Military and Veterans code. DVBE Program Goal: Goal established by Metro for all non-federally funded competitively negotiated contracts for goods and services. Local DVBE Preference Program: A standardized adjustment percentage applied to competitive solicitations for awards proposing participation of certified California based DVBEs. 1.3 Certification Eligibility Requirements To be eligible to participate in the DVBE program a business must be certified by the State of California's Department of General Services (DGS) DVBE certification process, by the proposal due date. The certification must be valid and current. All certifications will be vetted for authenticity. 1.4 Commercially Useful Function (CUF) A DVBE must perform a CUF and provide services and goods that contribute to the fulfillment of the contract requirements. It is not a CUF if the DVBE role is limited to that of an extra participant in a transaction, contract or project through which funds are passed in order to obtain the appearance of DVBE participation. A CUF is a person or entity doing all of the following: a) Is responsible for the execution of a distinct element of the work of the contract. DVBE Policy and Program _ Page 8
9 b) Carries out the obligation by actually performing, managing or supervising the work involved. c) Performs work that is normal for its business services and function. d) Is not further subcontracting a portion of the work that is greater than that expected to be subcontracted by normal industry standards. 1.5 Exclusions f,~o~, ~~,,;+.,+;,,.,~. f r R;,~ ~~~R~. Under current federal regulations, there is no authority that would allow Metro to impose a DVBE program on Federal Transit Administration (FTA) funded contracts under the Department of Transportation (DOT) Additionally, current state law prohibits use of the DVBE program on procurements awarded through an Invitation for Bid (IFB) process. The DVBE Program requirements will not be applicable if it is determined that there are either no DVBEs available or an insufficient number of qualified DVBEs capable of meeting Metro's requirements. 1.6 Advertisement Advertisement for the DVBE program will follow existing Metro advertising policies. 1.7 Misrepresentation Suspension or debarment proceedings may be initiated against any firm that: a) Attempts to use false, fraudulent or deceitful statements or representations in order to meet eligibility for the DVBE requirements; or uses another firm that does not meet the DVBE eligibility criteria. 1.8 Implementation The Chief Executive Officer (CEO) shall develop agency-wide policies and procedures, as necessary, to implement this policy and program. DVBE Policy and Program Page 9
10 ksir their ATTACHMENT B Motion by Supervisor Mark Ridley-Thomas Metro Executive Management Committee October 17, Disabled Veteran Business Enterprise Military service to our country is an honorable act. American men and women lives to protect and defend the nation, undertaking sacrifices in service to our country. Those who suffer disabilities as a consequence of their military service frequently pay a heavy price and often face many barriers to gainful employment and economic opportunities upon their return to civilian life. According the United States Department of Labor, in August 2012, about 3.0 million veterans, or 14 percent of the total, had aservice-connected disability. Metro has been very proactive in reaching out to the veteran community, from attending veterans' job fairs all over Los Angeles County to hosting a veterans' job fair. Metro's Construction Careers Policy and Project Labor Agreement explicitly recognize veterans by incorporating them in its definition of "disadvantaged worked' and "helmets to hardhats" categories. However, Metro needs to acknowledge and address the entrepreneurial initiative of disadvantaged veterans in the contracting and procurement process. I, therefore, move, that the Chief Executive Officer: Develop a Disabled Veteran Business Enterprise (DVBE) contracting and procurement program incorporating the following: 1. A mandatory contract goal for Disabled Veteran Business Enterprises for the Board to consider after surveying other jurisdictions including, but not limited to, the Metropolitan Water District, the City of Los Angeles, the County of Los Angeles, the Los Angeles Unified School District and the Los Angeles Community College District; DVBE Policy and Program Page 10
11 65 2. Utilization of the State of California's Disabled Veteran Business Enterprise certification process for Qisabled Veteran Business Enterprise Certification Eligibility Requirements; 3. Providing preference to DVBE's whose principal office is located within the County of Los Angeles to the extent allowable by State and Federal laws. Report back to the January 2014 Executive Management Committee. F~ DVBE Policy and Program Page T1
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