American DBE Magazine Spring 2015

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Fluor is steadfast in its ongoing focus of diversity and inclusion.

Fluor understands the impact teamwork has on achieving superior business results and incorporates programs that drive diversity and inclusion into its global operations as an integrated solutions provider.

In Northern Virginia, the Fluor-led joint venture of Fluor-Lane 95, design-builder of the 95 Express Lanes, is proud to have infused more than $217 million into the local disadvantaged, small, women-owned, and minority business enterprises.

More than 170 DBE and SWaM firms contributed to the successful completion of the 95 Express Lanes.

For more information, visit www.Fluor.com.

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Š 2015 Fluor. All Rights Reserved. ADGV120915

Follow us on Twitter @FluorCorp.

U.S. Department of Transportation Small Business Transportation Resource Center

South Atlantic Region North Carolina • Kentucky • Virginia • West Virginia 114 W. Parrish Street | Durham, NC 27701 | www.ncimed.org For additional information regarding program services and support contact: Kaye Gantt, Regional Director at (919) 956-2341 | F: (919) 688-7668 | kgantt@ncimed.org

Helping Small Business Move Forward

How We Help • Bonding Education Program • Women & Girls in Transportation Initiative • DBE Certifications • Procurement Assistance • Short Term Lending Program • Counseling and Technical Assistance

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KWM Kiewit - Weeks - Massman

Goethals Bridge Replacement

GOETHALS BRIDGE - CONSTRUCTION PARTNERING OPPORTUNITIES The Goethals Bridge Replacement Project is a design-build project for the Port Authority of New York & NewJersey (the Authority). The project will replace the existing Goethals Bridge which spans the Arthur Kill River on I-278 connecting Elizabeth, New Jersey and Staten Island, New York. KiewitWeeks-Massman, AJV (KWM) has been selected by the Authority to design and build the new Goethals Bridge.

Partnering Opportunities Concrete, Masonry, and Paving Design/Consulting Electrical Work/Utilities Fencing and Railings Maintenance of Traffic Marine Services Quality Control Services and Supplies Surveying Trucking Miscellaneous Building Bridge Demolition And many more!

If your DBE firm would like to apply to participate, please use our website as a resource, www.goethals-kwm.com.

Diversity Contract Manager, 470 Chestnut Ridge Road, Woodcliff Lake, NJ 07677 // spring 2015 4 (201) 571-2571 KWMdivcontracting@kwmjv.com Kiewit-Weeks-Massman, AJV is An Equal Opportunity Employer

Spring 2015 Volume 3, Issue 1 Publisher: Shelton A. Russell Managing Editors: PR PROS, LLC Creative Director: BRANDilly MC Digital Media: Premier Web Design Solutions Editorial: Ted Edwards, Esq. David L. Fitts, Jr. Colette Holt, Esq. Martin V. Johnson, Jr. Franklin Lee, Esq. Philip D. Russell Jordan Taylor

“That’s The Way We’ve Always Done It” Just Doesn’t Get It Anymore.

We get that.

Headquarters: 514 Daniels Street, #186 Raleigh, NC 27605 Web site: www.AmericanDBE.com Social Media:

Does Your PR Effort Need A Fresh Approach?

We’ve Got Solutions.

About American DBE Magazine: American DBE Magazine is the premier PublicRelationsCopywritingSocialMediaManagementCrisisCommunica industry resource for individuals and stakePost Tweet Email Blog Pin Hangout Share—REPEAT— Connectholders Blog Link Hangout Share—REPEAT—Post TweetPublish Publish EmailConnect Connect BlogLink Link Pin Hangout Share who Pin work within the federal Disadvantaged Business Enterprises proocialMediaManagementCrisisCommunicationsMediaCoachingBrandEnhancementMediaMonitoringDigitalMedia gram administration. American DBE Mag- PublicRelationsCopywritingSocialMediaManagementCrisisCommunicationsM azine is published quarterly and distributed Post Tweet Publish Email Connect Blog Link Pin Hangout Share—REPEA in all 50 states—plus Puerto Rico and the U.S. Virgin Islands—to DBE program PublicRelationsCopywritingSocialMediaManagementCrisisCommunicationsMediaCoachingBrandEnhancement PublicRelationsCopywritingSocialMed administrators, business owners, and professionals in the Aviation, Highway ConTweetPublish Publish EmailConnect Connect Postand Tweet Email Connect Blog Link Pin Hangout Share—REPEAT—Post Post Tweet Email Bl struction, PublicPublish Transit industries.

Subscriptions: American DBE Magazine is published quarterly in Fall, Winter, Spring and Summer editions. The annual subscription rate is $19.99 including online editions, special industry reports, and four issues; single copy list price is $5.99 plus postage originating from Raleigh, North Carolina.

globalPRpros.com

Advertising Sales: editor@AmericanDBE.com (919) 810-4954 office

// spring 2015

5

From the Publisher

Shining Stars

S

cientists have confirmed that there are more stars in the universe than grains of sand on the earth.

While this fact is somewhat hard to wrap one’s mind around, what’s even more amazing to me is that the vast number of stars doesn’t keep any single star from shining bright. The universe is just that big, and there is just that much darkness, which can be filled with light.

In the same way, although there are more than 40,000 DBE and ACDBE firms, and over 200 USDOT recipients operating DBE programs across the U.S., each firm and program has the unique opportunity to shine in the DBE program universe.

Likewise, while there are indeed dark places where firms and recipients don’t shine, there are others that shine brightly and show the potential of the DBE program to transform businesses and communities.

This issue of American DBE highlights some shining stars in the program. Our cover story on Atlanta’s Jones Worley highlights the perseverance and determination of Cynthia Jones Parks not only to survive the Great Recession, but to emerge and shine even brighter as a result of the experience. We also highlight two great projects in this issue. First is Fluor-Lane 95’s DBE success on the 95 Express Lanes project in Northern Virginia; and second, Kwame Building Group’s success administering DBE participation on the CityArchRiver project in St. Louis, MO. Additionally, this issue highlights the Orlando International Airport and the Dallas-Fort Worth International airport; two major airports shining brightly in leveling the playing field for DBE and ACDBE firms.

Both airports have achieved success by ensuring leadership’s engagement and support for the program, combined with passion and commitment from the program administrators.

There are also organizations that shine in helping DBE firms reach their full potential and this issue of American

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DBE highlights their work. The Federation of Women Contractors (FWC) in Illinois, the Airport Minority Advisory Council (AMAC) and the Conference of Minority Transportation Officials (COMTO) have all been diligent in their efforts to promote issues that are crucial to the advancement of DBE firms across the country. These and other organizations remain important advocates for policies, legislation and compliance efforts to ensure all DBEs have a chance to shine.

Finally, this issue of American DBE continues to publish business development articles to keep DBEs and industry professionals up-to-date on legal trends and strategies to maximize success. Attorneys Franklin Lee and Ted Edwards have contributed articles discussing the new DBE program rules and the importance of DBEs understanding contracting agreements; while financial expert Martin Johnson provides excellent advice on investment strategies.

Our goal with American DBE is never to minimize or sugarcoat the many issues of fraud, recipient noncompliance, or lack of legitimate good faith efforts in the DBE program. These issues are prevalent in many places across the country. However, there are places and instances where the program works well and we are pleased to highlight those shining stars.

Best Wishes, Shelton A. Russell, Publisher American DBE Magazine

Subscribe to

In-Depth Industry Coverage Subscribe Online at www.AmericanDBE.com Call Today!

(919) 810-4954

www.AmericanDBE.com

20 26

8 FEATURES 08 20 26

Illinois Women Rock

FWC champions women who are rocking the construction industry

Refined by Time & Pressure Jones Worley shines bright after the great recession

Achieving the Vision

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Kwame Building Group

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DBELO Spotlight

DFW Scores High in Diversity and Inclusion

TRANSPORTATION TRENDS 10

DBE POWER PLAYERS

Highways: Fluor-Lane 95 Opens Express Lanes to Inclusion on I-95

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Aviation: PFCs and AIP

23

Transit: COMTO Celebrates Women

AMAC’s top priority is DBE inclusion in airport funding strategies

COMTO honors thirteen women for contributions to the transportation industry

Kwame Building Group leads successful DBE effort on CityArchRiver project in St. Louis Michelle Tatom, A.A.E. of Orlando International Airport

ALSO IN THIS ISSUE 30

New Blessings & Old Courses

32

Navigating Contract Negotiations

34

Midwest Fence, Corp v. U.S. Department of Justice

USDOT Issues Long-Awaited DBE Program Final Rule With Mixed Results (Part II)

Construction law attorney Ted Edwards shares contract negotiation strategies

Attorney Colette Holt gives an update on an important case for the DBE program

36

Dirty Little Secrets

Financial expert Martin V. Johnson, Jr. provides wealth building strategies and Inclusion // spring 2015

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Women Contractors Rock Illinois!

The Federation of Women Contractors supports woman-owned contracting firms in Illinois through advocacy, training, and networking.

T

he Federation of Women Contractors (FWC) was incorporated in 1989 by a group of entrepreneurial women contractors who recognized the need for an organization that would support women contractors in the maledominated field of construction. Over the past 26 years, FWC has grown to be recognized as the largest and strongest local organization of women construction owners in the Chicagoland area. “We have an acute focus, locally as well as nationally, on issues that impede or help women and minority businesses to become established, grow and prosper in this environment,” said Executive Director Beth Doria.

FWC provides a variety of services and benefits for its 136 members including advocacy, training, networking and support.

Although it is a local grassroots organization, Doria ensures that the membership is active and abreast of issues arising in the state of Illinois and at the federal level, especially relating to the federal DBE program. “We’re a relatively small organization, but we are definitely a very powerful organization,” Doria said. “We have a lot of people, even in Washington D.C., who will call to get us engaged on issues, recognizing that we do have a broad reach and a good handle on the issues.”

She emphasized the fact that: “While FWC’s focus is on Illinois, when looking at national legislation, particularly with the DBE program, we look at it from a broader sense. We look at

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// spring 2015

how legislation will impact DBEs across the country. For instance, USDOT recently announced new rule changes.

There are issues in there we believe are problematic for all DBEs. So we are focusing on how USDOT will implement these rules and how they will deal with training. Oftentimes they write rules that are not very detailed, so that means it is up for interpretation; and not standardized across the board. That often can cause a lot of problems.”

FWC is specifically concerned about the part of the new DBE rule that says minorities and women with an adjusted gross income of more than $300,000 per year would no longer be presumed to be disadvantaged. Doria said: “If a company is an S corporation, obviously that is a whole new ballgame. Their adjusted gross income may very well show $900,000. That doesn’t mean the owner of that company pocketed that money, it may very well have gone back into the company. Oftentimes USDOT recipients, the people from the different agencies, aren’t really well-versed on financials and aren’t really well-versed on accounting principles. So they are going to look at that and may, as a blanket rule, be looking for anything over $300,000 and say ‘OK, that is out and that is out.’ They may not really pay attention to the fact that it is an S corp, understanding how you have to pull a lot of those numbers out. That is one of the things we are hoping to talk with USDOT about and find out how they are going to address

Beth Doria, Executive Director of The Federation of Women Contractors (FWC)

this issue with the recipients. They have to do it quickly because the recipients are already out there looking at this stuff.”

FWC is also actively engaged in local issues in the state of Illinois by working with private and non-profit organizations to increase their inclusion of women and minority contractors in procurement opportunities. The organization began this effort with the utility industry; advocating for large utilities to report their results of women and minority business utilization. This request resulted in an ongoing dialogue between FWC and a major utility company to develop strategies to increase participation. “We started in the utility industry, but after we have seen participation go up in

FWC Board Members unite for photos after a training program for members.

this industry, we have started to engage hospitals and private universities to do the same thing,” Doria said. “We have seen great success when we place a focus on women and minority business inclusion in these organizations.”

FWC is more that an advocacy organization. Every year the organization sponsors the “Women Rock!” event in Chicago. The event is a networking opportunity for members and supporters to honor organizations and individuals who embrace FWC’s mission of advancing women in the construction industry. The event is hosted at the “House of Blues” in Chicago and is the organization’s signature event. “We

buy out the place and have a great time supporting women in the construction industry and people who help make us successful,” Doria said.

Although FWC’s membership and focus is on women in construction, the organization also recognizes that FWC plays a larger role in the entire diverse business arena. Doria said, “These M/ WBE and DBE programs have been good at trying to level the playing field for people who have been historically disenfranchised. It has been the way that many contractors have been able to get work. So when we speak, it is not only about women, it is about the entire M/ WBE community.”

// Calendar of Events Airport Minority Advisory Council (AMAC) 2015 Annual Airport Business Diversity Conference June 12-16, 2015; Ft. Lauderdale, FL http://amac-org.com/2015_AnnConf.html

Southern Transportation Civil Rights Executive Council (STCREC) 2015 Training Symposium August 3-6, 2015; Fort Lauderdale, FL http://www.stcrectraining.com/

National Association of Minority Contractors (NAMC) NAMC 46th Annual National Conference June 17-19, 2015; Las Vegas, NV http://namcnational.org/namc2015/

American Contract Compliance Association (ACCA) 2015 ACCA National Training Institute August 25-30, 2015; West Palm Beach, FL www.accaweb.org

Women’s Business Enterprise National Council (WBENC) 2015 National Conference & Business Fair June 23-25, 2015; Austin, TX www.conf.wbenc.org

National Association of Women in Construction 60th Annual Meeting and Education Conference September 2-5, 2015; Nashville, TN http://www.nawic.org/assnfe/ev.asp?ID=11

Conference of Minority Transportation Officials (COMTO) 44th National Meeting & Training Conference July 11-14, 2015; Boston, MA www.comto.org

National Minority Supplier Development Council 2015 Conference and Business Opportunity Exchange October 18-21, 2015; San Diego, California http://www.nmsdc.org/conference/

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Transportation trends

Fluor-Lane 95 Opens express lane to inclusion

The Virginia Department of Transportation’s (VDOT) 95 Express Lanes project has not only provided improved access and opportunity to the traveling public, but it also has provided access and opportunity for disadvantaged and small firms in the region. To date, VDOT certified Disadvantaged Business Enterprise (DBE) and Small, Women and Minority (SWaM) firms have earned over $217 million in payments on the $726 million project, equating to over 33 percent of the project’s total costs.

(L-R) Charlie Kilpatrick, VDOT Commissioner; Jeff Taylor, Fluor Deputy Project Director; and Wendell Point, DBE/ SWaM Program Manager receive VDOT’s 2014 Prime Contractor of the Year Award for DBE/SWaM program excellence

I

nterstate 95 in Northern Virginia is regarded as one of the most congested regional corridors in the United States. As the main corridor on the East Coast from New England to Florida, I-95 in the Northern Virginia area bears the brunt of both Metro D.C. traffic and travelers passing through on the way to other locations on the Eastern Seaboard. In the past, high-occupancy vehicle lanes helped alleviate some of the congestion near Washington, D.C.; and now the recently-opened 95 Express Lanes provides managed lanes, offering travelers a safer, faster and more reliable trip through the 29-mile stretch from Garrisonville Road in Stafford County to Edsall Road on I-395 in Fairfax County.

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These results helped the joint venture team of Fluor-Lane 95 LLC (a joint venture of Fluor Corporation and Lane Construction Corp.) surpass VDOT’s project goals for 10 percent DBE participation and 19 percent SWaM participation, prompting VDOT leadership to honor Fluor-Lane 95 as the 2014 Prime Contractor of the Year for its exemplary efforts in the area of diversity and inclusion on the project.

The 95 Express Lanes Project is a publicprivate partnership between the Virginia Department of Transportation, the Virginia Department of Rail and Public Transportation, the Federal Highway Administration, and Transurban DRIVe USA Investments LLC. Transurban is a private concessionaire that provided project financing in exchange for the right to maintain and operate the 95 Express Lanes for a 76-year period.

Fluor-Lane 95 LLC is a company created specifically for the design and construction of the project.

The 95 Express Lanes opened for business in December 2014 and by all accounts had been a successful project across the board, including in the area of diversity and inclusion. Fluor-Lane 95’s DBE/SWaM program success is the result of a comprehensive approach to diverse business inclusion. This approach includes a commitment from the leadership of Fluor Corporation, which serves as the managing partner for FluorLane 95; and an investment in the staff necessary to execute the plan through strategies and initiatives to make the commitment a reality. Deputy Project Director Jeff Taylor, P.E. said there was a simple reason for the high priority placed on DBE/SWaM inclusion on the project.

“We like to make our customers happy and we like repeat business. While it is definitely the right thing to do, when your client places an emphasis on the program, it’s our job to carry it out.”

Implementing a successful program has taken a sustained effort from FluorLane 95 leadership, field staff and DBE/ SWaM Program Manager Wendell Point.

Due to the project’s size and complexity, Fluor-Lane 95 team members needed to

Fluor-Lane 95 contractors put finishing touches on the I-95 Express Lanes project in Northern Virginia

develop innovative outreach methods to ensure that ready, willing and able DBE/ SWaM firms had maximum opportunity to participate in the project. Point said: “We did a number of outreach programs to help get firms involved. This included sessions to assist firms with DBE certification and prequalification processes, trade-specific outreach sessions with Fluor-Lane 95 field staff to discuss the exact requirements of particular trades, and even outreach meetings with dump truck hauling firms on Saturdays to teach them pricing methods, requirements and the opportunities on this project.”

The seeds for DBE/SWaM success on the 95 Express Lanes project were sown from the lessons learned on the Capital Beltway (I-495) Express Lanes Project that the Fluor-Lane joint venture team completed in 2012. Fluor-Lane 95’s DBE/SWaM program success on this previous mega-project allowed the company to develop several DBE/SWaM partners and to implement successful

outreach strategies that were duplicated for the 95 Express Lanes Project. Taylor said, “We were able to work with many of the same firms that worked on the Capital Beltway project. So they knew us, and knew our processes. In fact, many of the DBE/SWaM firms that worked on this project were able to take on larger scopes of work this time.”

Success on the project required the full engagement of Fluor-Lane 95 field personnel, who also took ownership of the DBE/SWaM program by recommending eligible firms for certification and encouraging engineering consultants and subcontractors to help meet the project’s goals by bringing second tier DBE/SWaM participation to the table to help complete contracts.

Taylor said, “We encouraged all of our consultants and subcontractors to hire DBE/SWaM firms. We not only discussed DBE/SWaM participation during our meetings with subcontractors, we were also available to assist // spring 2015

11

them with referrals when they needed to find capable firms.”

As of March 2015, the Fluor-Lane 95 team has made actual payments to DBE totaling 15.1 percent of the $928 million project and actual payment to SWaM firms totaling 18 percent of the project. These percentages total $99 million in payments to DBEs and $118 million in payments to SWaM firms.

“DBE and SWaM commitments are great, but it’s the actual payments where the rubber meets the road,” Point said.

“Our DBE and SWaM participation was the largest contributor to VDOT’s overall DBE goal in 2014. That’s all from just one project.”

Two other areas where Fluor-Lane 95 has succeeded on the project are the areas of safety and On-The-Job (OJT) training. As of February 28, 2015, project employees, including Fluor-Lane 95 and subcontractors, have recorded over 4 million work hours with no cases of lost work days due to injury. This safety record far exceeds OSHA standards for a project of this size. Fluor-Lane 95 used several

safety strategies to achieve success on the project. For instance, any person working on the project was required to undergo safety orientation. In addition, all truck drivers were required to complete a driver awareness program.

This was especially important due to the heavy ongoing traffic and tight working conditions associated with the project.

Although VDOT established an OJT training goal of 24 enrollees on the project, Fluor-Lane 95 exceeded this number by 16 participants to provide training to 40 OJT participants who have now received extensive training in highway construction career fields. Jamie Breme, Fluor-Lane 95 Communication Manager said, “Fluor has an organization-wide commitment to diversity and inclusion. If you look across our projects nationwide, like our Eagle P3 Rail Project in Denver, you will see a similar focus on making sure our projects are inclusive of the community.”

In addition to Fluor-Lane 95’s recognition as the Prime Contractor of the Year, VDOT also honored several

Type

#

%

DMBE

38

22%

DWBE

29

17%

SBE

61

34%

MBE

19

11%

WBE

27

16%

Total

174

100%

Fluor Lane 95 Percentage Breakdown of DBE and SWaM Contracts DBE firms that made significant contributions on the project. SP Trucking LLC was recognized as the 2014 Outstanding DBE Transportation of Materials Firm of the Year; Morgan Oil was recognized as the 2015 Outstanding DBE Supplier of the Year; Tavares Concrete was recognized as 2015 DBE Trailblazer of the Year; and Quinn Consulting Services was recognized as the 2015 DBE Consultant of the Year. “It was great to see DBEs get recognition for their hard work on the project. They really deserved it,” Taylor said.

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DBE Success Story

Kwame Building Group Reports 50% DBE Participation on Central Riverfront Project

M

inority-owned and women-owned businesses received more than half of the contract dollars for the $33 million Central Riverfront Project of the CityArchRiver renovation at the Gateway Arch, according to Kwame Building Group, the construction management firm monitoring and reporting Disadvantaged Business Enterprise participation.

For this portion of the CityArchRiver renovation at the Gateway Arch in St. Louis, four DBE firms hold six of 10 contracts that Great Rivers Greenway issued, with a total value of approximately $27 million. Minority Business Enterprises (MBEs) received 31.8 percent of the work, and Women Business Enterprises (WBEs) received 18.7 percent for a total 50.5 percent DBE participation. Local St. Louis companies were awarded $23 million in contracts.

The $380 million CityArchRiver 2015 renovation will link downtown St. Louis, the Gateway Arch and the Mississippi River riverfront into one destination by connecting, invigorating and expanding the park’s grounds and museums. The project was split into 10 project packages to encourage local and DBE companies to bid. DBE goals for the 10 bid packages included: • • • • • • • • • • •

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Demolition/Earthwork – 12 percent Asphalt Paving – 19 percent Landscaping – 20 percent Concrete Base Bid – 19 percent Pavers (Historic Cobbles) – 12 percent Metals/Rails Base Bid & Bid Alternate – 19 percent Signage – 20 percent Sewage/Plumbing – 19 percent Electrical Base Bid – 22 percent Electrical Bid Alternate – 26 percent Temporary Flood Protection – 8 percent // spring 2015

Rendering of a completed portion of the CityArchRiver renovation at the Gateway Arch in St. Louis

Workforce diversity goals for the project followed the Department of Labor Federal Workforce goals for the City of St. Louis, which are 14.7 percent minority workers and 6.9 percent female workers per craft.

CityArchRiver is a collaboration of the CityArchRiver Foundation, the National Park Service, Great Rivers Greenway District, the Missouri Department of Transportation and the City of St. Louis. Kwame Building Group’s contract is with Great Rivers Greenway. The project began in December 2013 and is expected to be completed by August 31, 2015. Kwame Building Group is monitoring DBE contracts and subcontracts as well as minority and female workforce participation on the project, providing periodic summary reports on monitoring and outreach efforts, and recommending actions to achieve or exceed established DBE goals.

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// spring 2015

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S p o t l i g h t D B E L O 16

Michelle Tatom, A.A.E. Orlando International Airport A

thorough knowledge of the airport industry and a sincere passion for helping small, women and minority businesses succeed lie at the heart of Michelle Tatom’s excellence as the director of the Orlando Airport Authority’s (OIA) Small Business Development Program.

Michelle Tatom, A.A.E., OIA Director of Small Business Development

In her role at OIA, Tatom manages six programs that create business opportunities for diverse firms in the Central Florida region in airport concessions, purchasing, airport planning, engineering and construction.

Tatom acquired a comprehensive knowledge base in airport management as one of the first African American women to earn the Accredited Airport Executive (A.A.E.) designation from the American Association of Airport Executives (AAAE). // spring 2015

The A.A.E. designation required Tatom to complete a course of study in the areas of financial management and accounting, capital development, and safety and security. In addition, Tatom is required to complete continuing education training to maintain her accreditation. She said, “The accreditation process was tough, but it helped me have a full understanding of what goes into running an airport and helps me better advocate for diverse businesses, because I understand the business from the ground up.”

Since becoming accredited in 2004, Tatom has remained involved in AAAE by teaching the Certified Member Training course for the organization.

Her thorough industry knowledge helps Tatom and her five-person staff manage OIA’s Disadvantage Business Enterprise, Airport Concessions Disadvantage Business Enterprise, Local Developing Business, Minority/ WomenOwned Business Enterprise, Small Business Enterprise and Service Disabled Veteran Owned Business progrms. These programs ensure that the airport provides significant opportunities to small and diverse firms in the community. “Our executive leadership and board are very supportive of our programs and my office’s efforts to create opportunity,” Tatom said.

OIA is also partnering with several agencies in Orange County, Florida to commission the Orange County Multi-jurisdictional Disparity Study. The study is led by MGT

of America and is scheduled to be completed in fall 2015.

Tatom serves as a member of the leadership team for the study, providing insight, feedback and direction to the consultants to ensure a successful study.

OIA will use the results of the study to reaffirm its diverse business programs as the agencies prepares for one of the biggest capital improvement efforts in the airport’s history. The upcoming projects include over $2 billion in development for the airport to maintain its existing facilities and construct a new terminal to serve anticipated growth at the airport.

The $2 billion in development is divided into a $1.1 billion project for the South Terminal Expansion and another $1 billion to follow in the future for a new terminal building. The new terminal project will begin when passenger growth necessitates the addition of another terminal building.

The South Terminal Expansion is already underway with over $853 million in projects in progress or set to begin in 2015. The projects have M/WBE and DBE goals in excess of 30 percent. Contracts associated with this project include new roads, parking and infrastructure improvements that connect to a large intermodal transportation facility being built on the south side of the airport that will accommodate commuter rail stations. The project also includes an expansion of the airport’s Automated People Mover (APM) and a parking garage.

said, “In the Rental Car Program we have been able to increase opportunities in areas like body shop repair, car transport, and oil change operations. This has helped us meet our Rental Car Program goals and has provided great opportunities for DBE firms.”

Michelle Tatom (2nd from left) hosted the AMAC Economic Opportunity and Policy Forum at the OIA in December 2014.

OIA anticipates completion of the South Terminal Expansion in the summer of 2017. “This project represents a major opportunity for our small and diverse firms,” Tatom said.

The OIA South Terminal Expansion project is currently underway, with M/ WBE and DBE goals in excess of 30 percent.

“

This has been a great program for us to help vendors get over the major hurdle of having the capital necessary to start larger projects.”

In addition to the major capital improvement activities at OIA, Tatom’s office also manages an impressive ACDBE program. She said, “We have 57 in-line retail units and our three-year ACDBE goal is 27.5 percent, with 24.5 percent being race-conscious. We also have an 8 percent goal for our DBE Rental Car Program.”

Tatom believes that OIA’s innovative and diligent approach to the concessions program has helped create success. She

Another innovative program developed

by OIA is the Designated Mobilization Program (DMP) for firms in the Local Developing Business Program. The DMP allows firms with a fully executed agreement to borrow 5-10 percent of the contract amount from the local McKoy Federal Credit Union at the low interest rate of 5.2 percent. Then when the LDB firm begins work on the associated project, joint checks payable to both the LDB vendor and McKoy Federal Credit Union are issued to allow for repayment of the mobilization loan. “This has been a great program for us to help vendors get over the major hurdle of having the capital necessary to start larger projects,” Tatom said.

Tatom attributes her success to her own three Ps of patience, persistence and perception. She said, “To be successful as a DBE professional, you need to know your airport and need to be able to understand what is involved in all aspects and projects.

You can’t be afraid to ask questions and you must know your community. Finally, you have to pick your battles and win your wars.

You can’t fall on a sword for every issue.”

//////////////////////////////////////////////////////////////////////////////////////////////////////////

Advertise With Learn more at: www.americandbe.com

////////////////////////////////////////////////////////////////////////////////////////////////////////// // spring 2015

17

Aviation

PFC s and AIP Become Top Priorities for AMAC M

embers and advocates for the Airport Minority Advisory Council (AMAC) gathered to learn about key issues and to meet one-onone with members of Congress on March 25, designated as AMAC Industry Day on Capitol Hill. Industry Day provides attendees exclusive access to the Members of Congress, senior congressional staff, and other policy makers who have legislative or regulatory responsibilities regarding the Airport Disadvantaged Business Enterprise (ADBE) and Airport Concessions Disadvantaged Business Enterprise (ACDBE) programs. Two primary topics up for discussion throughout the day were Passenger Facility Charges (PFCs) and the Airport Improvement Program (AIP).

The Airport Improvement Program is a $3.2 billion federal grant program, used to cover airport capital improvement projects. The AIP includes a small business development program known as the Airport Disadvantaged Business Enterprise (ADBE) program that incorporates a 10 percent goal for inclusion of certified DBEs on contracting opportunities. The DBE program is regulated and administered by the U.S. Department of Transportation and by the Federal Aviation Administration (FAA). The Passenger Facility Charge program authorizes airports to implement a per passenger fee up to $4.50 to meet infrastructure demands. The PFC program is not subject to federal spending requirements for minority-, women- or disadvantaged-owned businesses.

The daylong series of events kicked off with an overview about AMAC’s legislative

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priorities, followed by a program policy panel that reviewed existing regulations, and pending legislative agendas, along with a discussion about federal budget projections. AMAC’s position and planned approach to address President Barack Obama’s 2015 budget proposal include: opposition to cuts within the Airport Improvement Program; support of increases to Passenger Facility Charges with DBE and ACDBE participation goals; and airport development programs that are inclusive for minority- and women-owned businesses.

The Industry Day event concluded with a “Salute to Congressional Transportation Leaders” reception, honoring Chairman Bill Shuster of the House Transportation and Infrastructure Committee. Attendees were encouraged to be proactive in support of AMAC based on the following information: AMAC’s Official Statement of Position: Background.

Prior to 1990, Federal Aviation Administration (FAA) Airport Improvement Program (AIP) grants were the primary source for airports capital projects. A key grant condition is the requirement for an airport grant recipient to establish fact-based participation goals for small firms certified as “disadvantaged business enterprises” (DBEs) or “airport concessions disadvantaged business enterprises” (ACDBEs)—and make good faith efforts to achieve the goals with respect to the airport’s capitol development projects and concessions contracting. DBE/ ACDBE participation goal requirements

were enacted by Congress to address discrimination and barriers to small business participation in airport contracting based on race and gender.

At the urging of the airport community, “passenger facility charges” (PFCs) were established by Congress in 1990 (in the Aviation Safety and Capacity Expansion Act) to help pay for capital development projects at commercial service airports.

Airports must apply to the Federal Aviation Administration (FAA) for authority to collect PFCs for use on approved projects and if approved by FAA, airlines collect the PFCs and remit them to the respective airport recipient. However, unlike the AIP program, the PFC statute does not obligate an airport to establish participation goals for approved projects and exercise good faith efforts to meet them.

The Issue.

PFCs are eclipsing AIP grants as the substitute and primary funding source of airport capital projects. However, DBE/ ACDBE participation goal provisions were not incorporated in the original PFC statute when it was first enacted in 1990 because— as further explained below—as a practical matter it was not thought necessary. With the increasing use of PFCs and PFC-only funded projects, Congressional intent to prevent barriers to the participation of small

About

AMAC Left to right: AMAC Chairman Darryl Daniels, Congressman Peter DeFazio (D-OR 4th District), AMAC Director Rhonda Arnold, and AMAC President & CEO Shelby M. Scales at 2015 Industry Day Program

businesses in airport contracting on account of the ethnicity or gender of the business owners will not be fulfilled unless the PFC statute is amended to incorporate such participation goals.

The Airport Minority Advisory Council (AMAC) supported establishment of the PFC program in 1990, because of its support for airport development to meet pressing national needs but also in the reasonable belief (like the rest of the airport community) that funding for airport capital projects would be a blend of AIP grant funds and PFC revenue —and as a consequence DBE and ACDBE participation goals would be part of these projects. As noted above, this is increasingly not the case.

Moreover, this is a serious concern whether or not Congress authorizes a PFC increase as is being advocated by airport representatives.

In fact, a PFC increase without addressing the adverse effects on DBE and ACDBE participation goals would be very harmful and further undermine the Congressional concern for equity and inclusion. For example, according to a recent GAO report from 1990 through August 2014, the FAA approved airports’ request to collect a total of approximately $89 billion in PFCs—with about a third of collecting airports approved to collect PFCs to at least 2024 or later. Moreover nearly threefourths of all approved uses involve construction (e.g., terminals, runways and taxiways), and

airport access such as roads and rail connecting to airports.

The Airport Minority Advisory Council is dedicated to the promotion and participation of minority-owned, womenowned and disadvantaged business enterprises (DBEs) in airport contracting.

AMAC has two goals: to eliminate the barriers to minority and women participation in the airport industry and to capitalize on the opportunities available in the multibillion-dollar airport industry. Since its inception, AMAC has been at the forefront of nearly every national policy initiative impacting the participation of DBEs in airport contracting. AMAC and its affiliates represent thousands of members that include airport operators, government officials, corporations and entrepreneurs.

Data from a soon-to-be-released AMAC commissioned study presents compelling evidence that DBEs and ACDBEs are being adversely impacted because of the lack of participation goals. The rate of DBE participation in PFC-only financed projects is substantially lower than the rate for AIP financed projects. The adverse effect and lost opportunity cost is exacerbated when state law prohibitions on race-conscious contracting goals is factored in. In six states—Washington, California, Arizona, Nevada, Michigan and New Mexico—race-conscious contract goals are prohibited by State mandate unless federal dollars are part of the project and/or a specific federal requirement preempts state law.

To address this problem and the potential exclusion of small women-owned and minorityowned firms from airport capital development contracting are being adversely opportunities, Congress must enact an amendment to the impacted because of the PFC statute that applies DBE/ lack of participation ACDBE participation goal goals. -- AMAC setting and good faith efforts to airport projects financed by PFC revenue.

DBEs and ACDBEs

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19

Jones WOrley Refined by Time and Pressure T

he adage about time and pressure creating diamonds is an appropriate analogy for the situation Cynthia Jones Parks faced at the height of the recession in 2009.

“Everything was drying up. It was a horrible time for us,” Parks said. “The faucet didn’t just turn down, it turned off.”

As president and CEO of Jones Worley, an Atlanta-based marketing communications firm specializing in strategic branding, messaging, wayfinding and sign design, Parks knew she had to do something to turn her company around. “The debt was so deep, I couldn’t even do the math,” she said. “I prayed to God for help. I needed a miracle. And one night, in the middle of the night, I sat straight up in my bed and God spoke into my spirit and said ‘I have already blessed you… go do something with it.’”

Parks awoke the next morning with a renewed determination not to let the pressure of the recession destroy her business; but to find a way for the pressure to transform her company and make it better than before. This decision led to Parks going further into debt to renovate her office building in historic Midtown near Downtown Atlanta, which was her most valuable asset at the time.

“We had to lay people off due to the recession. The empty workstations were depressing. I knew we couldn’t afford to do it [renovate], but we couldn’t afford not

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to,” Parks said. Using credit accounts from various vendors, she charged $100,000 to renovate her studio into a multipurpose facility used for corporate and non-profit meetings, design charrettes and other events. This decision not only turned vacant office space into useable meeting space, it also changed Parks’ thinking. “Once we finished the renovation, I asked myself – ‘What other “it” do I have that people are willing to pay for in this market?’”

The other “it” transformed Jones Worley from a struggling consulting business fighting to stay alive, to a vibrant enterprise that has emerged from the recession sparkling like a high quality diamond. Parks said, “In 2004 we branded and planned the launch of the “Breeze Card” for MARTA (the Metropolitan Atlanta Rapid Transit Authority), which was the first 100 percent transit smart card conversion in North America. I knew we could package that service with the transportation projects we had completed at Hartsfield-Jackson International Airport, Charlotte Transit, and in other cities and have a strong portfolio.

So we began to change our focus to transportation.”

The smart card is a plastic card with an embedded chip that replaces traditional tokens and paper transit tickets, allowing customers to add money onto their card to pay for transit fares to use public transportation. The success of the MARTA Breeze Card led to Jones Worley being awarded seven other smart card contracts at transit authorities from California to Florida. Today, Jones Worley has the distinction of guiding the implementation of more smart cards than any other marketing firm in the world.

Parks proved to be right in 2009 when the Obama Administration and the U.S. Congress passed an economic stimulus bill that poured funding into transportation projects to resuscitate U.S. infrastructure and to support economic development initiatives. Jones Worley was awarded 16

transportation projects between 2009 and 2010 in cities including San Francisco, Pittsburgh, South Florida, St. Louis, Sacramento, Jacksonville and Birmingham. “The smart card and other transportation projects redefined and reinvigorated the direction we were going in, and probably saved our business,” Parks said. “I went into a valley and came out better than I was when I went in.”

way to rise again. “It’s all about excellence and relationships… and a lot of favor from the Lord,” Parks said. “Some people think we are expensive, but I don’t think so. Our clients love the service we provide and the talent on our team. In order to maintain high caliber service and staff,

Jones Worley has emerged from the recession—having worked on more than 20 airports and at 15 transit properties—poised and ready to thrive in the transportation industry; and Parks is ready for whatever challenges lie ahead.

Notably, this was not the first time transportation had created a transformation for Parks. “Transportation is a space I love,” she said. “I’m passionate about it. I rode MARTA when I was a young girl growing up on a dirt road in the outskirts of Atlanta. Having access to public transportation—because I didn’t have a car—transformed me from who I was to who I wanted to become.

Transit transforms people’s dreams, hopes and aspirations by providing access to education, work and healthcare. It’s vital!”

As a young woman, Parks used public transportation to get to her part-time job while attending Georgia State University as a full-time student majoring in Visual Arts. After graduating, Parks worked for two architectural firms in the late 1980s before she started Jones Worley in 1990. Both of Parks’ former employers became Jones Worley’s first two clients.

After being laid off during a company downsizing, Parks learned valuable lessons from the leadership of those organizations that have sustained her throughout her career: be the best, nurture your relationships, and engage in strategic teaming.

“My former business partner, Barry Worley, and I had an amazing decade in the 90s,” Parks said. “We worked on projects for Hartsfield-Jackson Airport, the CDC, The Coca-Cola Company; and Jones Worley was the only woman-owned business on the “look” team that branded the Centennial Olympics Games.”

Parks can now reflect proudly on her journey of rising in business, then enduring a downturn, and then finding a

COMTO National Chair Robert H. Prince, Jr. (l) and 2nd Vice Chair Freddie Fuller (r) congratulate Cynthia Jones Parks for receiving the COMTO Women Who Move the Nation Award.

we have to charge appropriate fees. And they come back, because we create a great customer experience while bringing value to their bottom line.”

Parks also believes relationships are crucial to success. She said, “During the recession I would call my colleagues and say ‘I need a project. I don’t care about the size, but when I finish I need you to pay me.’”

And they did. “Fostering the principles I learned early in my career has sustained Jones Worley, so 25 years later, firms from across the country are still calling us to be members of their multi-disciplinary teams pursuing multimillion-dollar projects.

They keep calling us because we are committed to excellence, we honor our relationships through our performance, and we are a strategic partner that brings value to their team.”

“My goal is to be the communications expert and professional who owns this space. When people think of transportation, I want them to think of Jones Worley. We work with transportation CEOs, executive leaders and marketing teams as an extension of their staff to help them strategically brand and promote their organizations and services. We have been a trailblazer and a “first” in launching initiatives that have transformed the way people look at and think about public transportation across this country. We are making a real difference in the lives of the people who need it the most.”

// spring 2015

21

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Oscar M. Lewis

President & U.S. Patent Inventor

Transit

COMTO Celebrates Women Who Move The Nation

I

n 1876, Elizabeth Bragg Cumming became the first woman in the United States to receive a civil engineering degree, a full 42 years after the first male received this designation. Since that time, women have continued to strive to make their mark in the male-dominated transportation industry. Despite the challenges, women have carved out an undeniably significant history in transportation that continues through today.

The Conference of Minority Transportation Officials (COMTO) honors the contributions of Women in Transportation by hosting the annual Celebrating Women Who Move the Nation (CWWMN) Awards breakfast to acknowledge women who are making a significant impact COMTO’s recipients of the 2015 Celebrating Women Who Move the in the transportation industry. On March 11, COMTO Nation Award recognized 13 women from various facets of the industry whose contributions are moving transportation ahead. 2015 was the fourth year of the awards program and, with the addition of this year’s honorees, 47 women have been recognized for outstanding contributions to the transportation industry.

The annual event began under the leadership of former COMTO President & CEO Julie Cunningham, who passed away in 2014 after a long-term illness. Cunningham’s vision was for the event to both recognize the contributions of women in the transportation industry and support COMTO’s National Scholarship program, which provides scholarships to college students pursuing transportation careers. The event takes place each year in March to coincide with Women’s History Month. Linda Jacobs Washington, interim president and CEO embraced the mission of the event. Washington said, “This event was Julie’s brainchild and she believed it was important to honor the great contributions women have made in the transportation industry and how far women have come in making significant impact in the industry—especially during Women’s History Month.”

The CWWMN event has gained momentum since its inception in 2012 and this year represented a new high mark for the program. COMTO Board President Robert Prince said, “My heart is really taken away because I could see Julie in the background at today’s event. That was important to me, to

Award recipient Congresswoman Eleanor Holmes Norton talks with former Transportation Secretary Rodney Slater

make sure that this event was the best we could do; and we did that today.”

Women honorees are selected by a committee consisting of COMTO members who gather recommendations from COMTO board members and staff. Washington said, “We seek to recognize women who are well respected in the industry; and who also embrace COMTO’s mission of inclusion and giving back to the community.” // spring 2015

23

The 2015 honorees received their awards at a breakfast event held at the J.W Marriott Hotel in Washington, D.C., where each winner had the opportunity to share remarks with more than 300 guests. “I am absolutely honored to be a recipient of one of this year’s awards,” said Ysela Llort, director of Miami Dade Transit. “I always dreamed that I would have something to do with improving my community, and my position gives me that opportunity. It’s a wonderful, wonderful job.”

Since beginning the National Scholarship Program, COMTO has raised over $300,000 for deserving students seeking careers in the transportation industry. Scholarships range in amount from $2,500 to $6,000 and are awarded to students nationwide. Scholarship selections are made annually by a team of industry professionals and representatives from the academic community. The scholarship program supports the mission of COMTO by promoting, strengthening and expanding the roles of minorities in all aspects of transportation. A total of six scholarships were awarded to students in 2014; and 2015 recipients will receive scholarship awards at COMTO’s National Conference in July.

The 2015 COMTO Celebrating Women Who Move the Nation honorees are: 1. Ms. Marcia Ferranto, President and CEO, Women’s Transportation Seminar International for Advocacy 2. Ms. Chellie Cameron, Chief Operating Officer, Philadelphia International Airport for Aviation 3. The Honorable Eleanor Holmes Norton, Congresswoman District of Columbia for Legislator 4. Ms. Deborah Hersman, President and CEO, National Safety Council for Multimodalism 5. Ms. Cynthia Jones-Parks, President and CEO, Jones-Worley Communications for Private Sector 6. Dr. Joy Rohadfox, President and CEO, Rohadfox Construction Control Services Corporation for Private Sector 7. Ms. Ann Dawson-August, Executive Director, Birmingham-Jefferson County Transit Authority for Public Transportation 8. Ms. Ysela Llort, Director, Miami-Dade Transit for Public Transportation 9. Ms. Carolyn Flowers, Senior Advisor Federal Transit Administration for Public Transportation/Federal 10. Ms. Polly Trottenberg, Commissioner, New York City Department of Transportation for State Government 11. Senator Barbara Boxer, U.S. Senate, California (D) for Lifetime Achievement 12. Ms. Paralee Shivers, Professor, Speech Division, Houston Community College for the Shirley A. DeLibero Woman Who Moves The Nation 13. India Birdsong, Chairman’s Eagle Award

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PROUD TO GIVE BUSINESSES A LIFT CATS is proud to provide opportunities for businesses to create local jobs through the advancement of transit projects. CATS also seeks to create an environment that gives small and socially or economically challenged local businesses the opportunity to compete for publicly funded contracts by participating in the Small Business Opportunity (SBO) and the Disadvantaged Business Enterprise (DBE) Programs.

On the LYNX Blue Line project, for example, CATS spent $42.9 million with 38 DBE firms to build the new light rail system.

As the major provider of public transportation to Charlotte and the surrounding region, CATS relies on the communities we serve to build and operate the service every day. By working together on these new opportunities, we can all keep our communities moving in the right direction.

For more information, visit ridetransit.org.

// spring 2015

25

DFW honors recipients of the “Trailblazer Award” at a recent Champions of Diversity Awards program.

DFW Airport Scores High in Diversity and Inclusion

By David Fitts Jr. For more than 40 years, since its first flight departed in 1974, the Dallas-Fort Worth International Airport (DFW) has been committed to increasing opportunities for disadvantaged, small, minority and women-owned businesses (D/S/M/WBEs) in all of its airport contracting and concession opportunities.

DFW’s commitment is exemplified in its diversity vision statement to “create and sustain a business environment that enables minority and women-owned business enterprises to compete equitably for business opportunities and achieve economic success, contributing to DFW’s overall mission of expanding economic benefits.”

The process of achieving this vision is led by DFW’s Board of Directors and leadership team. Their efforts have made diversity and inclusion the responsibility of every airport employee. Since his arrival in 2013, CEO Sean Donohue has continued to ensure that DFW strives to achieve annual organization goals, one of which is for the achievement of metrics in the area of diversity and inclusion.

Therefore, every department’s annual goals include diversity metrics that roll up to

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the airport’s overall goal, and are tied to incentives for the entire organization.

Tamela Lee, vice president of Business Diversity and Development, leads DFW’s programs for the inclusion of small and diverse businesses and believes that support from leadership drives DFW’s success. Lee said, “This program is one of the [airport’s] goals. Our yearly goals, which include diversity goals, are carried out through the entire airport. This ensures buy-in from all departments, because achieving our goals takes involvement from everyone involved in making purchases.”

Tamela Lee – DFW, Vice President of Business

Diversity and Development DFW uses a scorecard system and a software-based program management system to track its success in contracting the department to help them improve with small, minority and women-owned their goal achievement. “We don’t use businesses. Lee said that everyone who has the scorecard to beat people up, but to a contract at DFW gets a scorecard that identify where our assistance may be is ultimately reviewed by the executive needed to help us meet our goals,” Lee management every quarter, indicating said. “At the end of the year, if we don’t whether or not they are meeting the make our goal, no one makes the goal. desired goals. If, for example, the report Being that this directive originates from says that the department has met the the top and is an airport-wide goal, goals, they are in good standing; but if everybody has to meet it, or we’re all not, Lee and her team meet with impacted by it,” Lee said.

In addition to the internal efforts to increase diversity, DFW also reaches out to the community to create partnerships that lead to success. This includes partnerships with area minority chambers and advocacy organizations. Lee and her team members regularly work with organizations representing women, Asian Americans, Hispanics, and African American businesses. One example of DFW’s partnerships with the community was Lee’s work with the Dallas and Fort Worth chapters of the Black Contractors Association. The two organizations voiced concern that black contractors were being excluded from airport opportunities, although prime contractors were meeting DBE goals set by DFW. Lee worked with the Black Contractors Association to develop policies requiring greater diversity in the contracting process to ensure that all types of minority firms have opportunities at the airport. Lee said, “We require that teams be diversified in their minority inclusion. They can’t be homogeneous. You can’t come with all women, you can’t come with all Hispanics, you can’t come with all African Americans. You have to show some diversity on the team.”

Lee believes that this policy will cause prime contractors to go wide and deep to identify DBE partners. This will include looking at a wider range of firms; and also considering new trades and industries for DBE participation, resulting in opportunities for firms that have not worked at DFW in the past, and opportunities for firms possessing unique skills that can help DFW achieve its goals.

DFW offers several business diversity programs that facilitate opportunities for disadvantaged and small firms including the federal Disadvantaged Business Enterprise and Airport Concessions Disadvantaged Business Enterprise (DBE/ ACDBE) program, a Small Business Enterprise (SBE) program, and a Minority & Women Business Enterprise (M/WBE) program for locally-funded projects. DFW’s DBE program currently has a three-year goal of 28 percent for 2014-2016. Based on anticipated federal

grants of $31 million over this period, DBEs should receive approximately $8.8 million in contracts. In 2014, DFW’s total S/M/W/DBE expenditures were $693 million, representing 38.6 percent participation, and ACDBE/MBE concessions revenues totaled $343.7 million for 52 percent participation.

DFW is also in the midst of a Terminal Renewal and Improvement Program (TRIP). The TRIP is a seven-year, $2.3 billion project that will enhance Terminals A, B, C and E at DFW. The project has achieved a 43 percent goal for the inclusion of D/S/M/WBE firms and resulted in contracts valued at $167.5 million.

One DBE that has experienced growth as a result of DFW’s DBE program is Chambers Engineering, a firm based in Lubbock County that provides runway reconstruction and repair services to the airport. Like all major airports, DFW’s runways require routine maintenance.

Since 2005, Chambers Engineering has repaired the concrete that routinely supports the weight of 350-ton airplanes.

“Overall, working with DFW has been a lift for our company,” said co-owner Gary Chambers. Due to the opportunities offered by DFW, his business was able to grow and expand their services to the airport. Their services now include environmental projects and work on DFW’s new corporate headquarters. By employing companies such as Chambers Engineering, DFW’s DBE construction contracting achieved 36.4 percent, surpassing the goal of 32 percent set for the entire airport.

Another reason for DFW’s success creating an organizational culture that values inclusion in its contracting activities is a similar commitment to workforce inclusion. Over the past 40 years, DFW has increased its overall minority workforce representation to 46 percent.

The airport’s senior management minority representation is now at 40 percent, and DFW finished 2014 with a workforce where women and minorities comprise 61 percent.

Maintaining DFW’s success in its business diversity programs demands an ongoing commitment to innovative programs and solutions that move the program forward.

Since joining DFW in 2012, Lee has built on prior success by creating strategies to improve the monitoring, tracking, and reporting systems that allow DFW employees to know how they are doing with meeting program goals. This has led to improvements in the organization’s balanced scorecard process since departments now have more accurate and timely reports to track their progress.

DFW has developed an incentive program for prime contractors to expedite payments to D/S/M/WBE subcontractors.

This program has improved cash flow for contractors working on DFW projects by prompting primes to pay their subcontractors within seven days of receiving an invoice; and also provided a financial benefit for primes that implement the program.

Finally, DFW has helped fix another issue faced by D/S/M/WBE firms; obtaining insurance and bonding. DFW operates the Capital Assistance and Bonding Program as part of a Rolling OwnerControlled Insurance Program. The program provides firms with education, training and assistance in completing the necessary elements of a bond application package. This assistance extends to include a review of completed bond packages for thoroughness and accuracy and assistance with finding underwriters to consider the application.

DFW has experienced great success as one of the largest economic drivers in the Dallas-Fort Worth region, with even greater impact planned for the future.

The airport’s focus and commitment to diversity and inclusion serves to position the organization well to capitalize on the vast human and business resources in their region, and to stand as a community partner that is engaged in the growth and prosperity of the entire Dallas-Fort Worth area.

// spring 2015

27

PROPELLING

BUSINESS FORWARD

At Dallas/Fort Worth International Airport, the variety of our business partnerships contributes to the regions economic growth. We believe that connecting the world in today’s economy requires creating opportunities for small businesses to flourish. It’s this belief that drives us to seek out partnerships with new small, minority, and women-owned businesses.

Connect with DFW Airport and find out how your business can grow with us.

DFW Airport - Business Diversity and Development www.dfwairport.com/bdd

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TITLE SPONSOR NAMC Golf Tournament — Rio Secco Welcome Reception Plenary Session Women in Construction Luncheon Workshops — Chapter Development, Green Building & Green Business, Legislative Updates, Access to Corporate Partners, Contracting Opportunities, Insurance & Financials, Current & Future Trends in Technology, How She Leads: Women in Construction • Trade Fair NATION BUILDER • Hall of Fame Gala SPONSOR • Silent Auction

For questions, please contact the NAMC National Headquarters at 202.296.1600 or email at info@namcnational.org Visit our event website at www.namcnational.org/NAMC2015 for individual and sponsor// spring registration 2015 29

Business development

New Blessings & Old Curses: USDOT Issues Long-Awaited DBE Program Final Rule With Mixed Results (Part II)

By Franklin M. Lee, Esq.

I

n the winter edition of this publication, Part I of this article briefly summarized the major changes to DBE program implementation and “new blessings” arising out of key provisions of USDOT’s recently issued and long-awaited Final Rule, “Disadvantaged Business Enterprise: Program Implementation Modifications.”

In addition, Part I lamented USDOT’s missed opportunity to address an “old curse” through the new rule by elimination of long-standing ambiguities and inequities in the basic presumptions underlying the meaning of “economic disadvantage.”

Instead of providing much-needed clarity, the new rule keeps us in the dark regarding the quantum and nature of probative evidence that state recipients should rely upon when objectively determining whether a presumption of economic disadvantage has been adequately rebutted. Here in Part II of this article, we advance several alternative industry-based objective criteria for determining economic disadvantage that we suggest for the consideration of USDOT and state recipients.

In our view, the term “economic disadvantage” is necessarily a relative term.

To be successful, any business owner, including owners of disadvantaged business enterprises, must have somewhat greater access to capital than the ordinary working stiff. The problem is that racial and gender discrimination has made it more difficult for certain segments of our population to accumulate the level of wealth and assets that are necessary to be viable mainstream

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competitors in the marketplace. Thus, the DBE program is intended to provide remedial relief to offset those social and economic disadvantages that impair the competitive viability of DBE firms. The following proposed objective standards and criteria suggest measures for appropriately comparing market-related indicators of wealth and competitiveness among and between DBE firm owners and competing non-disadvantaged business owners. These objective standards and criteria are offered as reasonable and sound alternatives to USDOT’s very circular, stereotype-laden, and subjective guidance that we so severely criticized in Part I of this article.

Proposed Indicia of Economic Disadvantageof Business Owners 1. Maximum Bonding Level Achieved.

Sureties and their underwriters typically look beyond the assets of the business to also evaluate the assets of the business owner in approving the issuance of bonds. They may also require the business owner to pledge recourse to his or her personal assets if necessary to recover losses in the event of a default. Credit risk and creditworthiness in paying suppliers is a big part of the equation in setting bond limits and bond fees. So, the largest payment and performance bond issued to a contractor is a good objective indicator and proxy for the degree of economic disadvantage that a firm is encountering. The comparison

then needs to be between the DBE firm’s largest bond and the largest bond issued to mainstream nondisadvantaged businesses that compete with the DBE firm for DOT contracts.

All of the required information for this analysis should be readily available to the DOT as bonds are typically required by, and posted with, the State for all construction contracts.

2. Gross Annual Revenues of DBE Firms as Compared to Nondisadvantaged Competitors. Identify the NAICS codes that the DBE firm has been certified to compete under, and then compare total gross revenues that the DBE firm has received from DOT in a given year to the average total gross revenues from DOT contracts for non-disadvantaged firms that are competing under the same NAICS codes. Gross annual revenues reflect market access, and market access is largely affected by access to capital.

Access to capital is largely affected by the business owner’s financial condition.

This criterion is therefore a good indirect proxy for relative economic disadvantage of business owners. Larger non-disadvantaged firms that have enhanced access to credit will typically get volume discounts and better unit prices and delivery terms from suppliers that make their bid prices more competitive. So, you would expect them to win more bids, which then leads to more average gross revenue

than the typical DBE firm. Again, this revenue data should be readily available to any State DOT. 3. Gross Annual Revenues of a DBE Firm as Compared to the Gross Annual Revenues of Other DBE Firms Competing Under Similar NAICS Codes for DOT Contracts. While this analysis is not as relevant as that proposed under the second proposed criteria above, if a DBE firm’s revenues are not dominant within its market as compared to the revenues of other certified disadvantaged businesses with whom it regularly competes, this is a strong indication that the DBE firm (and the DBE firm’s owner) is still economically disadvantaged to the extent that it continues to need the remedial relief provided by the DBE program. (This would especially be so in the case of DBE firms where one socially and economically disadvantaged individual owns 100 percent of the company, and/or the company is a Subchapter S Corporation where profits and losses of the company flow through directly to the owner.)

4. Significant Reduction or Elimination of DBE Awards Upon Temporary Decertification or Suspension from the Program.

USDOT guidance on when it is appropriate to decertify a DBE business owner from being eligible for participation in the program due to lack of economic disadvantage makes it clear that it has to be shown that the DBE business owner has been successful enough in accumulating wealth that it no longer needs the benefits of the DBE program. In instances where there has been temporary decertification or suspension of the DBE firm, the question becomes whether the social and economic disadvantage of that business owner has been sufficiently overcome such that the owner’s business can continue to successfully compete for DOT contracts. If the business continues to thrive following such decertification or suspension, then the answer is yes, the business owner has sufficiently overcome economic disadvantage such that it no longer needs the program. However, if there is a significant drop-off or elimination of subcontract awards following decertification or suspension from the program, the answer to this question is clearly negative and the firm should not be decertified due to lack of economic disadvantage.

5. Compare the Personal Net Worth of the DBE Firm Owner to the Personal Net Worth of Owners of Non-Disadvantaged Business That Compete With the DBE Firm for DOT Contracts. If the Personal Net Worth of the owner of the DBE firm is similar to that of the average Personal Net Worth of business owners of non-disadvantaged businesses with whom it competes, then the DBE firm owner is not economically disadvantaged regardless of whether the Personal Net Worth is

below the eligibility threshold of $1.32 million. On the other hand, if the Personal Net Worth of the DBE firm’s owner is substantially lower, then it likely has competitive disadvantages based upon reduced access to capital and bonding capacity and should be considered to be economically disadvantaged.

6. Compare the Personal Net Worth of the DBE Firm Owner to the Personal Net Worth of Owners of Competing Certified DBE Firms. While this analysis is not as relevant as the comparison suggested under criteria five above, if a DBE firm’s owner has a Personal Net Worth that is substantially below that of other fellow certified DBE firm owners with whom he or she competes regularly, then clearly the DBE business owner will also be more economically disadvantaged when compared to the Personal Net Worth of larger more successful non-disadvantaged business owners. Although obtaining the Personal Net Worth information from noncertified non-disadvantaged business owners may prove problematic, DOT will have access to PNW info for all owners of DBE firms and may therefore be able to rule out the loss of economic disadvantage status in many cases using these indicia.

By comparison, the USDOT guidance, while not binding, is woefully inadequate. It encourages the use of inappropriate common stereotypes about “lifestyles of the rich and famous” as a means of rebutting meaningful presumptions of economic disadvantage that have been established pursuant to objective measures of Personal Net Worth. It also invites very subjective determinations based upon a recipient’s own personal views about the size of a house, the affordability of a certain model of a car, and the number of furs and diamond pendants that a so-called wealthy person would own. The greatest danger in using such subjective standards is that they will inevitably lead to widely varying and inconsistent results in economic disadvantage determinations based upon personal life experiences and views. More importantly, such subjective standards will make a complete mockery of the presumption of economic disadvantage status, as there is nothing to prevent DBE Certification Committee members from arbitrarily deciding that if they personally could not afford to live in a big house and to buy the possessions of the DBE firm owner, that owner must not be economically disadvantaged and must be too “wealthy” for the program. In our view, rebuttals of this legal presumption should be based upon probative evidence that addresses relative economic disadvantage of one business owner as compared to another nondisadvantaged business owner with whom he or she competes; not upon some subjective opinion about the “richness” of someone’s personal belongings. Only time will tell if USDOT has heard our plea when we find occasion to count our blessings once again…

Franklin Lee, a partner in the Baltimore-based law firm of Tydings & Rosenberg LLP, represents DBE firms in certification applications and appeals. In addition, he counsels state and local governments in the establishment of economically inclusive contracting policies, and urban economic development strategies. As former Chief Counsel to the Minority Business Enterprise Legal Defense & Education Fund (“MBELDEF”), he frequently defended the DBE Program on behalf of minority-owned firms against constitutional legal challenges, and advised USDOT regarding post-Adarand reforms to the DBE Program. Mr. Lee can be reached at flee@tydingslaw.com. // spring 2015

31

Navigating Contract negotiations

By Ted Edwards

A

ll commercial contracts determine for yourself whether or are negotiable. If you are a not there is room for negotiation. subcontractor, you should Subcontractors have the right to always remember this fact. All too see any flow-down provisions to often subcontractors are told that which they are contractually bound. the general contractor (GC) has All too often, they do not exercise no negotiating room this right and are left with subcontractor guessing as to what agreements because their contractual their hands have been responsibilities actually tied by owner. Don’t are. believe it. While it is true that certain Subcontractors often provisions of the owner’s fear that they will contract with the GC lose work if they Attorney Ted Edwards often flow down to the attempt to negotiate of Durham, NC subcontractors on the contracts. This has not project, in my 20 years been my experience. practicing law, I have never seen General contractors know that their a contract in which there were so attorneys have drafted their form many flow-down requirements that contracts to favor their interests. there was no room for meaningful They expect savvy subcontractors to negotiation between the general negotiate the terms of those form contractor and the subcontractors. subcontractor agreements, and they respect those who do. It is the The terms of your contract same thing that they would do if are negotiable, and if you are they were the subcontractor. The just signing the standard form general contractors understand that subcontractor agreement that the negotiation is necessary on every general contractor presents, you are deal, but they do not volunteer this costing your company money and information. Simply put, if you increasing your company’s risk of don’t ask, you don’t get. There are failure. Rest assured that general some provisions in subcontractor contractors carefully negotiate agreements that are standard, which the terms of their contract with the general contractor is unlikely to the owners; so how could it be change; while there are others that reasonable for them to expect that the general contractor routinely you would not do the same? If a changes when asked. Experienced general contractor tells you that counsel should be able to review the it cannot negotiate the terms of agreements the general contractors your contract due to its contract present to you and advise your with the owner, ask the GC for company regarding which provisions a copy of its contract so you can are likely to be negotiable.

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// spring 2015

Here are some of the most common provisions that subcontractors should consider negotiating: Pay-When-Paid / Several states have laws that prevent

the enforcement of “pay-when-paid” clauses. Nevertheless, these clauses are still found in most subcontract agreements.

Regardless of whether pay-when-paid clauses are enforceable in your state, I recommend that subcontractors attempt to negotiate them out of the contract in favor of a provision making payment due to the subcontractor within 30 days of invoice. Subcontractors should not be expected to finance construction projects. If the general contractor is unable to pay for the work that is done, the subcontractor should have the right to stop work on the project.

Payment Timing / Every construction contract will have a provision that addresses the time allowed for review and processing. If you can shorten this time period, do it. General contractors are used to requests for quick pay agreements and it is always better to have your money sooner rather than later.

Indemnification / Never agree to a one-sided

indemnification. If you agree to indemnify the Owner and General Contractor for your negligent acts, the general contractor should agree to indemnify you for its negligent acts. Never agree to indemnify anyone for the negligence of another party that is not under your control. For example, you should not indemnify the general contractor for the acts of other subcontractors unless they are subcontracted to you.

Don’t take responsibility for the negligence of other people.

Overtime/Accelerated Work / Most form subcontracts contain a provision that provides that general contractor with a unilateral right to demand that the subcontractor work overtime or add additional workers to meet deadlines without any additional compensation for the extra work. This provision should be removed from the subcontract. If extra work or overtime is required for the project, your company should be compensated for it unless your company caused the problem that resulted in a delay to the project.

Change Orders/Extras Clause / Most construction

contracts require change orders to be in writing. In practice, however, the subcontractor is often instructed to proceed without a change order. If you are ever instructed to proceed without a change order, be sure that, at a minimum, you get either a fax or an email from the GC instructing you to move forward before you do any extra work. It is amazing how often people develop amnesia after a verbal instruction to proceed with a change order has been given. When it comes times to pay the bill, no one can remember telling the subcontractor to do the work, and the owner and GC will then go back to the contract and cite clauses requiring all change orders to be in writing.

Good construction contracts lead to good construction projects. Each party needs to understand their responsibilities and their risks before the work begins so that they can be sure that they are being adequately compensated for the work and the risks that they are undertaking. As a subcontractor, if you are being asked to accept additional risk, you should be allowed to increase your compensation to cover your increased risk. If you do not take care to carefully negotiate the terms of your contracts, you will eventually be faced with unexpected liabilities and losses that could threaten the viability of your business.

// spring 2015

33

Business development

Midwest fence . U.S. Department of Justice, Illinois Department vs

of Transportation and Illinois Tollway

By Atty. Colette Holt

Good news for the DBE Community!

An Illinois federal court recently upheld the DBE programs of the U.S. Department of Transportation, the Illinois Department of Transportation and the Illinois Tollway. First, the court found ample evidence of discrimination against firms owned by minorities and women in the Illinois construction market. Second, the agencies’ programs are narrowly tailored to that evidence and do not over-burden non-DBEs. Plaintiff Midwest Fence is a fencing and guardrail contractor owned and controlled by White males. From 20062010, Midwest generated average gross sales of approximately $18 million per year. Midwest argued that the agencies lacked proof of discrimination, and the company bears an undue burden under the programs as a specialty trade firm

34

// spring 2015

that directly competes with DBEs for prime and subcontractors. In addition to its claim that the DBE program regulations at 49 C.F.R. Part 26 are facially unconstitutional, Midwest’s main argument was that the studies relied upon by all three agencies failed to account for “capacity” when measuring DBE availability and underutilization.

The district court granted summary judgment in favor of all defendants on all claims. First, like every prior decision and for the same reasons, the judge held that the DBE program regulations at 49 C.F.R. Part 26 are facially constitutional.

Second, IDOT’s implementation of the federal regulations was narrowly tailored because it was in conformance with the regulations, and its program for statefunded contracts—modeled on Part 26—was based upon ample evidence of discrimination as proved through several disparity studies over many years. Third, the Tollway’s DBE program “substantially mirrors that of Part 26” and was based on studies similar to those relied upon by IDOT. Regarding the evidence of discrimination, the judge held that Midwest failed to come forward with “credible, particularized evidence” of its own, such as a neutral explanation for the

disparity, or contrasting statistical data.

It cannot rely on speculation about the possible results of some other approach.

Further, the programs were transparent and flexible. Finally, Midwest was not overly burdened by the programs, and remained able to compete for and secure agency work.

In addition to another win for the USDOT DBE regulations and their application, this case is important because its discussion of the Tollway’s program–which receives no federal funds and therefore is not covered by Part 26– lays out the framework that state and local governments should follow when considering and developing a race- and gender-based program. The opinion discusses at length the strong evidence of discrimination upon which the Tollway relied, and the ways in which the Tollway’s program mirrors Part 26, including narrowly tailored eligibility standards, contract-by-contract goal setting procedures, provisions for waivers of goals, etc. Local agencies would therefore be wise to hew as closely as possible to Part 26.

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35

Business development

Dirty little secrets of mutual funds

By Martin V. Johnson Jr.

F

or the successful completion of any project agreement, there must be transparency and integrity in the organization wishing to complete the project earlier than expected, with quality execution and under budget. These practices secure a long-term, value-added and synergistic client relationship. This rings true when it comes to building your life savings, which you will hopefully have available to rely on during your retirement years. To help make certain that you get there, please take note of these mutual fund secrets to avoid on your quest to build and safeguard a solid retirement foundation.

If returns on investments in your account over the next 35 years average 7 percent and fees and expenses reduce your average returns by 0.5 percent, your account balance will grow to $227,000 at retirement, even if there are no further contributions to your account. If fees and expenses are 1.5 percent, however, your account balance will grow to only $163,000. The 1 percent difference in fees and expenses would reduce your account balance at retirement by 28 percent.” When it comes to retirement planning, most people remain in the dark about how many fees their 401(k) providers are charging them – and just how much money they are losing as a result.

Nine out of 10 Americans underestimate hidden 401(k) fees and may not know that mutual funds cost more to own than index funds – a lot more – according to the American Association of Retired Persons (AARP). A typical active mutual fund charges a fee between 1.5and 2 percent while exchange traded funds (ETF) and index funds can run as low as 0.04 percent. Knowledge of these fees is critical because they can eat away at large amounts of families’ savings over time.

Where are all these fees coming from, and how can those saving for retirement minimize the expenses eating away at their returns? The 2012 Department of Labor rule regarding Service Provider Disclosures under Section 408(b) (2) states that all of your 401(k) fees must be disclosed in your annual prospectus statement.

It’s very hard to gauge whether or not you’re being given a good deal without also being given industry averages for context and comparison.

In addition, many don’t even know that 401(k) providers charge fees at all. A 2011 AARP survey found that seven out of 10 typical 401(k) holders didn’t know they were paying any fees to their 401(k) plan providers. The expense ratio, which measures a fund’s total annual operating expenses, is the most well-known fee you will encounter in your fund selection process, but it would be a mistake to believe this is the only fee you’re being charged within your 401(k) plan. Expense ratio is the fee displayed most prominently by each mutual fund because these types of fees do not vary much year to year; this is a static fee listed in each fund’s annual report.

Just how much can these fees add up over time?

A retirement savings model created by researchers from the University of Virginia and Virginia Tech calculated that, over a lifetime, all 401(k)related fees can cost a median-income two-earner household almost $155,000 – almost a third of their total investment returns. Meanwhile, a case study from the U.S. Department of Labor finds the potential for staggering losses in savings due to these fees. The study provides the following example: “Assume that you are an employee with 35 years until retirement and a current 401(k) account balance of $25,000.

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// spring 2015

While fee structures vary widely from plan to plan, the following three layer 401(k) fee structure is most standard. The first two fee types are associated with the funds within your plan, while the plan level fees consist of the fees and costs of the 401(k) plan provider and administrators.

Editor’s Note: Martin V. Johnson Jr., president and founder of Johnson’s Global Advisors Corp., has been a securities professional for over 25 years.

He covers high net worth clients; he is also a global generalist stock and bond institutional sales/trader. He is a general securities licensed series 7, uniform securities agent blue sky state law license series 63 registered.

This is the full list of fees you can expect to see, and the rough averages you can expect each fee to take of your returns: Management Fees include: • Fees to fund’s investment advisor for managing the fund’s portfolio • Administrative fees due to the investment advisor Distribution/Service Fees include: • Marketing fees • Sales charges • Shareholder service fees Other Administrative Expenses include: • Custodial expenses • Legal expenses • Accounting expenses • Transfer agent expenses • Any additional shareholder service expenses MUTUAL FUND-LEVEL FEES NOT INCLUDED IN EXPENSE RATIO (Average around 1 percent of assets) Transaction/Trading Costs include:

• Brokerage Commissions • Bid/Ask Spreads Shareholder Fees can include: • Sales loads • Redemption fee • Exchange fee • Account fee • Purchase fee • Maintenance fee 401(K) PLAN-LEVEL FEES Highly variable range: median ‘all-in fee’ averages 0.72 percent of assets (Of the service provider) Plan-level Investment Fees include: • Plan set-up • Portfolio management fees • Advising plan sponsor fees – either by record keeper or portfolio manager • Educational materials and services expenses Plan-level Administrative Fees include:

meetings, paperwork, etc.

• Customer service – e.g. phone and web support • Legal advice to employer • Compliance testing expenses – e.g. audits Plan-level Service Fees include: • Fees for additionalfeatures or services – e.g. investment advice, loan fees The Securities and Exchange Commission (SEC) provides full definitions of each type of fee and the Financial Industry Regulatory Authority (FINRA) has a useful tool for looking them up.

Technically, these are not so much hidden fees—most should be listed out in any fund’s prospectus under “Shareholder Fees”—as they are difficult to understand fees. However, it is incredibly important to know how the money is being spent, because all of these fees, whether directly or indirectly, are passed on to holders of IRAs and 401(k) plan participants.

• Recordkeeping services • Employee enrollment services –

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