Differentiates Using Diversity Infrastructure Engineering Plans for
Making a Difference
-------------------------------------------------LUXURY BRANDS --------------------------------------------------
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Winter 2019 //
08 Corliss Stone-Littles (CSL)
13 Austin Commercial
18 WTS International
21 Infrastructure Engineering
39 Seeking Change Order Fairness
25 Current Issues Facing the USDOT
41 Creating Transferable Value
Carves Out Luxury Brands Niche
Makes Diversity a Differentiator Making a Difference in Transportation
Attributes Success to Planning, Persistence and a Proven Track Record
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Leon Watkins, a Trailblazer in the Airport Industry DART Cotton Belt Project Picks Up Steam Maryland Traffic Relief Plan to Provide Opportunity
43 Upcoming Events
Branding Campaigns Copywriting & Editing Crisis Communication Graphic Design & Layout
Winter 2019 Volume 7, Issue 1 Publisher: Shelton A. Russell Managing Editors: PR PROS, LLC Creative Director: BRANDilly MC
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About American DBE Magazine: American DBE Magazine is the premier industry resource for individuals and stakeholders who work within the design, construction and transportation industries. American DBE Magazine is published quarterly and distributed in all 50 states â&#x20AC;&#x201D; plus Puerto Rico and the U.S. Virgin Islands â&#x20AC;&#x201D; to diverse business program administrators, business owners and professionals in the design, construction and transportation industries.
Subscriptions: American DBE Magazine is published quarterly in Winter, Spring, Summer and Fall editions. The annual subscription rate is $24.99 including online editions, special industry reports, and four issues; single copy list price is $6.99 plus postage originating from Raleigh, North Carolina.
Advertising Sales: editor@AmericanDBE.com | (919) 741-5233 (Office) Winter 2019 //
From the Publisher
Lessons from ‘Silent Sam’ Speak Volumes
have been intrigued by the dialogue surrounding the Confederate monument at the University of North Carolina at Chapel Hill, commonly known as Silent Sam. What’s been educational for me is how the issue has played out over the past several years and how it got to where it is today. This process has much to teach about the progress of civil rights in America and insightful reflections for Black History Month.
about change. Third: just like in the case of the Underground Railroad, the Civil Rights Movement, or the pulling down of a Confederate monument, sometimes people have to ignore and violate discriminatory laws in order to change them. This issue of American DBE Magazine shares stories about pulling down barriers and overcoming obstacles.
After a series of protests dating back to the 1960s, in August 2018, black and white protesters broke the law and were subsequently arrested for toppling a monument that people have pleaded lawfully for the administration of UNC-Chapel Hill to remove for decades; due to the racist message it did, and was intended to, share with anyone approaching the front entrance of the campus.
This issue features a cover story on Corliss Stone-Littles, who has overcome obstacles as the founder of a woman-owned DBE firm, to thrive in the airport concessions industry –and is still growing a thriving company in new airports across the country. Another story profiles Infrastructure Engineering, an African American-owned engineering firm, started by owner Michael Sutton purchasing the engineering division of a larger company. Sutton has used his ownership to make giving back to the community a core part of the company culture. This issue also honors the life and legacy of Leon Watkins, a former associate administrator for civil rights at the Federal Aviation Administration, who was a driving force behind the creation of an annual conference to promote business diversity in the airport industry and to provide training to airports on better administering the DBE and ACDBE Programs. This conference is now called the Airport Business Diversity Conference.
In this time of celebrating black history, stories and situations like these now provide education just as important as the notable exploits of historic figures such as George Washington Carver, Carter G. Woodson, or Harriet Tubman. Why? Because the logic and motivations present in situations like the Silent Sam statue protest provide lessons about the path forward that we must face in America.
There are many other stories in this issue promoting and supporting the success of diverse companies in the engineering, construction and transportation industries. These articles demonstrate that despite ongoing challenges from forces resistant to change and institutions beholden to outdated mindsets and actions, undeterred companies continue to thrive and topple down these unsustainable beliefs.
The series of events at UNC-Chapel Hill regarding this issue provide three crucial lessons that the diverse business community can take away. First: discriminatory attitudes, beliefs and structures still exist today; and there are many people –including those with political power and influence –still supporting their existence. Second: it often takes years (over 59 years in the case of Silent Sam) to eventually bring
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Members of the Corliss Stone-Littles team meet at a MAC Store at DFW Airport. Pictured left to right: Vanessa Terrazas, Shannon Chandler, Corliss Stone-Littles and Shambreka Ward.
Carves Out Luxury Brands Niche By Jordan Taylor
brands include: Sunglass Hut, Johnston & Murphy, Hudson News, Swarovski, baggallini and MAC Cosmetics.
CSL, LLC is a national aviation retail concessionaire that not only provides unique products in airport retail shops, but also provides the customer with a buying experience that enhances their entire travel itinerary. The company has a long track record and a strong presence in some of the nation’s largest and busiest airports. Familiar store
Company founder Corliss StoneLittles grew up in the northern part of Louisiana. She graduated high school and went on to attend Michigan State, majoring in business administration, for her undergraduate degree. She is also a graduate of Harvard Law School – with an emphasis on business law – and began her career focusing on public finance for housing development and then corporate consulting. In the mid 1980s, she worked as a senior properties
hances are that any traveler passing through a major airport in the United States has encountered one of the many high-end international luxury brands, represented by airport concessionaire Corliss Stone-Littles, LLC.
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manager at a major airline and helped develop a $650 million terminal at Chicago’s O’Hare International Airport, including its then-new concessions program. Stone-Littles’ entrepreneurial journey began as a Disadvantaged Business Enterprise (DBE) contractor, providing legal services and consulting. After her professional success in development projects at Chicago O’Hare International Airport, she realized that a lot of clients wanted to implement a similar DBE and participation program, which had the support and backing of the Federal Aviation Administration (FAA). Stone-Littles
said the defining moment that fueled her transition into entrepreneurship came after spending four years helping to develop the Denver International Airport, along with its concessions program. During that process, she realized that more airport revenues were coming in from concessionaire tenants – not just the airline fees. “I was fascinated by the concessions business.” She said that airports and airport revenue streams were in a state of transition, with many airlines consolidating or filing for bankruptcy. Additionally, there was a noticeable shift in the source of airport revenues; traditionally with 60 to 70 percent coming from payments from the airlines to the current model where 60 to 80 percent of revenues are coming from concessions. From the beginning, partnerships were a strong business model for CSL, LLC. Earnings from partnerships were reinvested back into the business, which allowed the company to begin branching out geographically. She learned early-on that success in airport concessions would come from strong partnerships. “Someone else has an interest in your success,” she said. Once the core business began to grow, Stone-Littles employed a new growth strategy: micro-target marketing. She targeted the Top 25 airports as potential locales for high-end international brands that customers could not easily find in competing stores. “Know the airport first and what the needs of the passengers are,” she said. She said her company’s formula for growth and success was the right balance of: passenger mix in a particular airport; demographic makeup of the travelers; a unique product mix with no duplication of items within four or five airport gates; well-known international name brands; and focusing on out-bound passengers only. “People come to an airport to fly, not to shop,” she said. Hence, CSL, LLC products tend to be small, unique and portable – catching a busy traveler’s eye, without complicating or hindering their travel experience. Stone-Littles started the company in Chicago, Illinois in 1988. Today, CSL, LLC operates in 12 of the nation’s busiest airports, including: Charlotte-Douglas, Chicago O’Hare, Dallas/Fort Worth, Denver, Detroit Metropolitan Wayne County, George Bush Intercontinental, HartsfieldJackson Atlanta, LaGuardia, Miami, Orlando, Philadelphia and San Francisco International airports. CSL, LLC is a certified Airport Concessions Disadvantaged Business Enterprise (ACDBE) in 15 jurisdictions across the United States, with annual revenues in excess of $6 million garnered through its interest in more than 60 airport stores. The company is headquartered in Colleyville, Texas with over 60 employees in its various retail locations in airports across the country.
Although she doesn’t have a favorite retail brand, the longest partnership for CSL, LLC is with Sunglass Hut. She said her favorite brand categories are those that require expertise and detailed product knowledge. Stone-Littles said that as a successful DBE, her responsibility now is to provide excellence – as proof that the DBE Program works. She said: “We run the risk of watching the program disappear. We have to show airlines that we produce. If we all create a path to success, then we all succeed.”
‘Best in Class’ As the market for travelers with discerning tastes continued to expand CSL, LLC seized the opportunity to create a niche within the ‘Best in Class’ shopping arena. This designation refers to products that rank highly in terms of quality and their appeal to discerning shoppers. The company expanded through numerous partnerships with Best in Class specialty retailers; and was buoyed by excellent in-store training, product knowledge expertise and customer service skills for CSL, LLC employees. Stone-Littles said when she started her business three decades ago, product lines for airport concessions were limited to things like T-shirts and shot glasses. Now,
Corliss Stone-Littles, managing member of Corliss Stone-Littles, LLC
Winter 2019 //
after decades of a concerted effort to broaden their reach and expand their market, she said that she and other ACDBEs are able to access international brands that appeal to customers and benefit the surrounding community. “That was unthinkable before.” She noted that one of the greatest challenges CSL, LLC and other airport concessionaires face is being accepted into the industry as professionals and as consistent providers of quality products and services. “The biggest change is acceptance,” she said. A 2017 consumer trends article published on stores.org underscores the significant opportunity for luxury shopping. The article stated: “While traditional bricks-and-mortar retail has been showing low single-digit growth for the past few years, there’s a drastically different story happening in airports. With growing passenger volumes, airport retailers are seeing surging demand for luxury brands and stores in terminals. The airport retail market is expected to reach $90 billion by 2023, according to a recent report from Credence Research, and will experience ‘significant growth’ as more middle class families from emerging countries take to the skies. [The research report from] Credence said fashion and accessories are the largest product categories and account for more than half of all revenues in the global airport retail market. Luxury brands and retailers are battling for space and market share in airports around the world, showing growth in every subsector from jewelry and apparel to upscale dining and services.” According to the stores.org article, luxury retail in airports is here to stay, concluding that: “A growing demographic of people with high
Corliss Stone-Littles, LLC staff serve a customer at a DFW International Airport location.
incomes still fly on commercial flights; with money to spend and confinement in secure areas for hours at a time, those consumers are a lucrative market looking for unique products. And they’re often more interested in exclusivity than price.” In 2018, CSL, LLC celebrated 30 years in business. Over those years, Stone-Littles said that one of the biggest business lessons she learned was that “there’s always a tomorrow.” She urged new entrepreneurs to embrace the necessity to say ‘No’ to opportunities that aren’t a good fit. “Don’t say yes to everything – be willing to say no,” Stone-Littles said.
“Don’t say yes to everything – be willing to say no” Corliss Stone-Littles, founder
“One of the greatest pleasures and risks is that the industry continues to change,” Stone-Littles said. “The ACDBE future is exciting!”
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W W W. A M E R I C A N D B E . C O M
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400+ Firms mentored by Austin have received contracts exceeding $3 billion. Austin Commercial is committed to recognizing, embracing, and supporting workplace diversity. As a construction industry leader, Austin takes pride in creating minority economic opportunities.
Winter 2019 www.austin-ind.com //
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Participants in the Austin Commercial Mentor-Protege program celebrate graduation in Dallas, Texas.
Austin Commercial MAKES DIVERSITY A DIFFERENTIATOR By American DBE Staff
any prime contractors approach Diversity and Inclusion from a compliance perspective with the goal of only taking the actions necessary to meet the contractual obligations of their clients. In these organizations, inclusion initiatives occur only when a client makes it a part of the solicitation or contractual process. However, there are a few contractors that take the next step to make diversity and inclusion a business imperative; and thereby cultivate a true differentiator in the marketplace. Austin Commercial (Austin) has taken this approach to create an award-winning diversity
program for subcontractors that is regarded as a leader in the construction industry. This paradigm shift has not gone unnoticed in the marketplace. Over the past two years, Austin has received national awards from construction and transportation industry organizations like the Associated General Contractors of America (AGC), Airport Minority Advisory Council (AMAC), American Contract Compliance Association (ACCA), Conference of Minority Transportation Officials (COMTO), and Federation of Women Contractors (FWC).
Austin’s recognition stems primarily from the company’s successful diversity efforts on several highprofile airport construction projects across the country. Austin has completed – or is currently working on – projects that include: Chicago O’Hare International Airport, Los Angeles International Airport, San Francisco International Airport, Charleston International Airport, Tampa International Airport, among many others. These projects have set a standard for the application of innovative and authentic strategies to expand business opportunities for diverse Winter 2019 //
Monica Schoenemann received from the Regional Hispanic Contractors Association in Dallas. Schoenemann was named RHCA’s 2018 Outstanding Executive at the LUNA Awards ceremony in November 2018. This award recognizes a woman senior executive in construction, architecture or engineering in the North Texas area, and celebrates the achievements of women in the industry by honoring women-owned businesses and advocates who encourage, promote and develop women at all levels.
Monica Schoenemann, Austin Commercial Vice President of Project Controls, accepts the 2018 Outstanding Executive Award from the Regional Hispanic Contractors Association in Dallas.
companies and expand employment opportunities for diverse individuals. “We want to go beyond just meeting a goal,” said Simeon Terry, Austin vice president of diversity affairs. “We see these projects as an opportunity to have an impact on the community.” Terry, who reports directly to the president of Austin, said the commitment to diversity is a part of the company culture at Austin. This culture helps motivate his team in the Diversity Affairs Department to succeed in administering programs and initiatives to foster inclusion of diverse populations on various projects. By design, this approach brings the Diversity Affairs team into the core of project operations and ensures inclusion is valued throughout the organization from top to bottom. Terry recognizes the importance of making sure his internal colleagues understand the value diversity and inclusion brings to the company. “You have to show why and how you impact the bottom line,” Terry said. “Once you do that, the attitudes and the mindsets change because they see the value – versus just something they have to do. I did that several years ago internally, and everyone from top to bottom came on board. Now they are a big part of how we are successful on projects. It’s really not a black or white thing, it’s about green.” One example of the internal colleagues recognizing the importance of diversity and inclusion is the recent recognition Austin Vice President of Project Controls
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Brad Brown, president of Austin Commercial said: “What a tremendous recognition for a near 25-year employee owner. Monica had already established a distinguished legacy with both project leadership success and enterprisewide improvements she has driven that make Austin bestin-class in the services we provide. This award helps honor those contributions and her standing as a role model for our industry.” Austin’s commitment to diversity and inclusion is also represented by an effective Mentor/Protégé Program. The program works with minority-owned, women-owned and disadvantaged businesses to help advance their companies through the sharing of best practices, networking and contracting opportunities with Austin. Small businesses participating in the program complete training seminars that address such topics such as contracts, insurance and bonding, bid and award processes, administrative and site logistics, how to get paid, lien rights and claims avoidance, safety, marketing and technology. The program also helps under-capitalized firms with innovative cash management strategies. As a result of the Mentor/Protégé program, Austin has entered into joint ventures, partnerships and staff augmentation agreements with many of the protégé firms. The company also encourages its partner prime contractors and first-tier subcontractors to do business with protégés as well. So far, more than 400 firms have completed the Mentor/ Protégé program and received contracts on Austin projects, exceeding $3 billion. The program began in the Dallas area, but its success has led the company to offer the program at the regional offices in Austin, Texas and Phoenix, Arizona. Terry looks forward to continuing Austin’s leadership and success in the industry on two major projects ramping up in 2019. In 2018, the Los Angeles World Airport awarded Austin a “Terminal APM Cores Interphase” contract consisting of new and upgraded facilities that will be built in key locations around the terminal area to provide staircases, escalators, elevators and walkways that will connect LAX's terminals with the new Automated People Mover (APM). The new structures also will provide space that can be used for offices, baggage claims, restrooms, airport lounges or
“We establish relationships with our contractors and the communities where we do business to have an overall collaboration. It’s not just a ‘here’s our program and here’s what it’s going to be’ type of approach.” Simeon Terry, Austin vice president of diversity affairs
other airport uses, as determined by LAWA and its airline partners. “This project will ultimately connect our guests to our regional transportation system, and it will also create
construction jobs, ensuring that the local workforce is part of building the future of LAX,” LAWA CEO Deborah Flint said in a statement.
Terry said Austin is also preparing for a major terminal renovation project at the Eppley Airfield in Omaha, Nebraska, and expects to begin recruitment efforts for local subcontractors in 2019. “Our success is because of our relationships,” Terry said. He continued: “We establish relationships with our contractors and the communities where we do business to have an overall collaboration. It’s not just a ‘here’s our program and here’s what it’s going to be’ type of approach. What we do in L.A. is different than what we do in Orlando or Chicago. Every community and owner is different, so while we may have our base program, there are some things that we have to do to address the hot buttons in that community. It’s establishing relationships and understanding what is needed, and how to utilize the resources available.”
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.
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Winter 2019 //
WTS International Making a Difference By Peggy Beach
WTS International board members discussed leadership and mentoring at the 2018 Transportation Research Board Annual Conference in Washington, D.C. Pictured left to right: Lisa Loftus-Otway, University of Texas at Austin; Paula Hammond, WSP; Carolyn Flowers, AECOM: Maggie Walsh, HDR; Jannet Walker Ford, Cubic; Bridgette Beato, Lumenor.
omen working in the transportation industry don’t have to go it alone. They have a tremendous resource – WTS (Women’s Transportation Seminar) International. The international organization, which began in 1977, has 57 professional chapters and 22 student chapters in the United States, Canada and the United Kingdom, with more than 6,500 members. Every year the organization expands with more chapters in formation stages. WTS is committed to shaping future generations of transportation leaders by offering top quality training programs and professional development opportunities for members and guests. In an interview with Maggie Walsh, board chair for WTS International and vice president at HDR, she talked
// Winter 2019
about the many reasons women and men are drawn to the organization and their appreciation for what the membership offers. “Diversity and inclusion are important goals for our industry,” Walsh said. “In recent years, WTS has reached out and is connected to more women in the private and public sectors. Women really value the power of networking.” Mentoring is an important part of the WTS experience. The organization also provides scholarships for young women who plan to enter the transportation industry.
Leadership Development for Women Walsh said: “WTS is focused on creating opportunities for women to get professional development training at all
levels of their career. For example, each chapter has its own board of directors. This creates a platform for women to learn and develop skills they need for board leadership.” WTS has two leadership programs for its members. Every November, the organization hosts chapter leader training where members learn about board and foundation governance. WTS has a Signature Leadership training program that targets midcareer and executive-level women. Recently, 85 women went through the application-based program. The program was revamped a few years ago and now it’s known as one of the best training programs in the industry because it attracts modal and career diverse applicants. One of the women who has benefited from her WTS membership is Bridgette Beato, owner of Lumenor Consulting Company in Atlanta, and a WTS member since 2008. “I am in the middle of my career,” she said. “I really want to develop more mentors for women in transportation. That is what is so phenomenal about WTS. Everyone is committed to helping others, and to everyone having a voice.”
Men Can Be Members Beato and Walsh both mentioned that men are important members of WTS. “Decision-making produces best results when there is a balance in gender contribution,” Walsh said. “Women want to have an impact in the industry. Men can help women achieve that goal.” Beato agreed. “How do you effect change? If you want to help women in transportation, men need to be involved,” she said. Walsh said that WTS has established partnerships with a number of
Maggie Walsh Chair of WTS International and vice president at HDR
corporate sponsors as well as Memorandums of Understanding (MOU) with professional organizations, including the Transportation Research Board (TRB); American Public Transit Association (APTA); and the American Road and Transportation Builders Association (ARTBA).
Helping Disadvantaged Business Enterprises (DBEs)
WTS is committed to helping DBEs, with a special emphasis on helping women starting their own companies. The organization hosts an Executive Women’s Roundtable and a Women’s Business Owners Roundtable at the annual conference in May. The Executive Women’s Roundtable is geared to high-level executive women within the transportation industry. Invitees include executives from the public sector, such as Secretaries of Transportation, agency or authority heads (state or local) and boards of director members; as well as private sector executives, such as C-suite leaders and corporate board members. A portion of the daylong experience involves members from both roundtables interacting in a session facilitated by a professional trainer.
“Women want to have an impact in the industry. Men can help women achieve that goal.” Maggie Walsh, WTS board chair
Sessions at these roundtables often include topics such as ownership succession planning, fostering company culture, strategic planning, navigating personal challenges unique to owning your own business, leading major businesses, or running an agency. Attendees for the Executive Roundtable are invited to participate by the Chair of the International Board, and there is an application process to participate in the Women Business Owners roundtable. WTS recently began an international sponsorship level, with Pillar Sponsors, for these programs Winter 2019 //
Distinguished panelists share information on building a successful transportation career at a WTS Conference.
to enable more DBEs to participate and to receive recognition for their leadership. Beato is a Pillar Sponsor as is Mary Ellen Eagan, owner of HMMH, a consulting company based in Boston. Eagan said: “The Women’s Business Owners Roundtable has been helpful to me because I have connected with firm owners who have the same challenges I have had. How do you transition into ownership, retain talent and navigate the DBE process? Those are challenges for owners and it helps to understand that I am not on my own.” Walsh said, “The roundtables create a comfortable atmosphere where women can talk about best practices, what they are working on, [and] how they are having an impact in our industry.”
2021 Strategic Plan Walsh will continue serving as board chair through May 2020. She said that the 2017-2021 WTS Strategic Plan includes six priorities: diversity/inclusion, financial stability for all WTS entities, marketing/branding (including a brand and website refresh), clarification on rules of governance, an increase in partnerships, member retention and increasing membership. The board also wants an emphasis on better communications with chapters and regions. Walsh said that her life is richer and better because of her membership in WTS and her participation in leadership roles. She has served as a chapter president in Chicago and is working hard to now lead the entire organization as chair of the board. She said: “With my national role at HDR, I am fortunate to travel often and can take the time to connect with WTS chapters. I have made friends all over the country. It’s been an amazing journey.”
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WTS International Annual Conference The 2019 conference will be a “Hub of Ingenuity”– an interactive, three-day session, where transportation leaders can exchange ideas and learn about the latest developments in the industry. More than 700 corporate and governmental transportation leaders worldwide will be in attendance, and a multitude of thoughtful and engaging topics will be covered. The event will bring together transportation professionals to share their experiences and insights in a place well known for its ingenuity.
WTS International Annual Conference May 15-17, 2019 Westin Copley Place Hotel, Boston Theme: “The Hub of Ingenuity.” www.wtsinternational.org
S t o r y
Michael Sutton, president and CEO of Infrastructure Engineering (right), and members of the Infrastructure Engineering team celebrate a donation to the Chicago Parks Foundation.
Planning for Success
D B E
S u c c e s s
Minority-Owned Engineering Firm Attributes Success to
planning, persistence and a proven track record By Sarah Magargee
nfrastructure Engineering Inc. (IEI) grew from humble beginnings in 1997, when Michael Sutton acquired then UBME Inc., a small engineering firm with a modest portfolio of work. “I was working as vice president of UBME Inc. at the time, and they offered to sell me the engineering portion,” he said. “I didn’t have any money at the time, so of course, I said yes,” laughed Sutton, who today serves as president and Chief Executive Officer of IEI. With a little luck, a lot of hard work and a well-researched business plan, Sutton has grown IEI into a leading consulting engineering firm with nearly 80 employees. With capital from a loan, and cash from the sale of his home, Sutton acquired the company and went to work preparing for success. “It is strange, but sometimes the right people walk into your life,” he said. “When I was starting, I met a man who gave me a bunch of manuals about the business. I read them all and learned every aspect of going into business on my own. I learned everything about accounting, pro forma statements, venture capital, our competitors, and more. I ate it all up. When I felt ready, I wrote a detailed five-year business plan and stuck with it. I still look back at that first business plan today.”
IEI started with just two employees: Sutton and a CAD operator. During the first year, Sutton hired a recent civil engineering graduate and his daughter, who had an accounting degree. Initially, the company took whatever work came its way. Sutton explained that IEI’s early jobs were not exciting. He said: “We would get things like a water sampling job, but I took it. My business philosophy was to make money doing the things we didn’t necessarily want to do forever, and then reinvest into doing what we did.” By 2005, IEI had grown to 50 employees; and in 2006, the company opened a second office in Indianapolis, Indiana. Today, IEI has four offices, including headquarters in Chicago, Illinois; Indianapolis; Peoria, Illinois; and New York City – and has grown revenue from $200,000 in 1997 to $12 million in 2015. The company’s portfolio includes work in airport, highway/roadway, site development, traffic management, harbor, mass transit/railway, structural and water management.
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Michael Sutton, PE, president and CEO of Infrastructure Engineering
Roots in Transportation IEI has expertise in delivering projects as a prime consultant, sub-consultant and joint venture partner. Today, more than 60 percent of the firm’s work is as a prime consultant – a business move that helped establish IEI as a leader, especially in the highway and bridge sector. Highway and bridge work, Sutton explained, are at the heart of IEI. “I worked for the Illinois Department of Transportation (IDOT) for 10 years before taking a leadership position at UBME Inc.,” Sutton said. “Transportation work is where our roots are, and we love it; even if it’s the sort of stuff that most people take for granted. It’s not glamorous work, but it is necessary.” Currently, IEI’s Chicago office is working with C*NET, a joint venture of IEI and Civiltech Engineering Inc., to implement numerous transportation improvements around the South Lakefront Framework Plan, which includes the Obama
// Winter 2019
“I have always said that you treat people like you want to be treated. And I want to be treated GOOD.” Michael Sutton
Presidential Center in Jackson Park. This $60 million project is slated to be completed in 2022. This year, IEI will complete a $16 million road rehabilitation project in Indianapolis, and in 2020 the company will finish the KensicoEastview Connection Project in New York City, a massive project supplying clean drinking water to nearly 10 million New York residents. Sutton said that IEI is known for delivering innovative solutions to complex challenges. One highly
visible example of this ingenuity is the massive Maggie Daley Park in Chicago. This world-class park was constructed atop an existing parking garage, meaning the design was restricted by the structural capacity of the garage slab. IEI worked on the project, addressing numerous challenges in designing the foundations for the playground equipment, including: 14 55-foothigh specially designed steel light masts; a 55-foot-tall expert climbing wall; a 55-foot bouldering climbing wall; a 125-foot suspension bridge; and more.
IEI provided resident engineering and construction inspection services for the advanced relocation of public utilities required prior to the reconstruction of the Wacker Drive Viaduct project, a reinforced concrete multi-span structure in the heart of downtown Chicago.
Persistence Since the initial acquisition 22 years ago, Sutton has grown IEI organically, opening new offices and building client portfolios from scratch. Sutton explained that this organic model comes with risks. He said: “I’m not afraid to admit that some worked and some didn’t. This is just part of being a business person. You have to be comfortable with taking risks, and you have to be OK to fail. In the end, if you are making money and satisfying clients, then everything should be OK.” Sutton graduated from the Disadvantaged Business Enterprise Program just as the great recession of 2008 hit, and IEI was forced to downsize half of its workforce. Despite uncertain times, Sutton and his team stuck to their business plan, continuing to offer innovative solutions and exceptional customer service. Together, the firm survived and thrived, eventually rebuilding the staff to pre-recession numbers. “Don’t let your failures derail your ultimate goal,” Sutton said. “Always go back to that business plan.” Sutton’s business focus has always been rooted in company growth and providing growth opportunities for his employees. “If you don’t grow, where is the opportunity for your employees to grow?” he asked. “If you have young, eager employees and don’t provide growth opportunities, then they will leave and go elsewhere.” This focus has fostered employee longevity at IEI, with many of his employees staying with the company for more than a decade. Also encouraging employee loyalty is Sutton’s focus on treating his employees well.
“I have always said that you treat people like you want to be treated. And I want to be treated GOOD,” Sutton said with a laugh. “I want to have a good salary, work on good projects and have opportunities for advancement. I want to work in a comfortable office with furniture that is ergonomic. If I want all of this for myself, I need to make sure all my employees have it, too.”
Proven Track Record Sutton and IEI have a proven track record of success and are known throughout the industry for their innovation and excellent customer service. Sutton explained that differentiating themselves from the competition is an essential element of his business plan. “In an Indycar race, a car only wins by a fraction of a second. Our competition is that stiff,” Sutton said. “With that in mind, we are constantly analyzing every aspect of our operations to see how we can improve. Constantly tweaking every element of our business helps us keep ahead of the competition by that necessary fraction of a second.” Giving back to the community is also at the heart of IEI’s work – and is another way the company stands out. In 2009, Sutton established Universal Agape Foundation (UAF), a charitable organization that gives back to economically challenged communities. UAF provides toys for children with economically-challenged families in Chicago at “Christmas in the 9th Ward” and Peoria at “Heart of Christmas.” UAF also supports a food pantry for students at SENSE Charter School in Indianapolis.
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Sutton is particularly passionate about supporting and inspiring other minority engineering firms throughout the country. In 2011, Sutton founded the National Organization of Minority Engineers (NOME) to promote the advancement of minority-owned and operated engineering firms. Through NOME, Sutton holds an annual speaker series and a leadership summit that mentor and support other minority-owned firms. When asked what his advice is for fledgling engineering firms, he encouraged hard work and never “resting on your laurels.” He said: “I heard a quote somewhere that the only place where success comes before work is the dictionary. You have to be ready to work hard for what you want and always looking for ways to improve.” As for Sutton, he is still looking for ways to improve IEI, having revised the
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company’s mission and vision statements to guide future growth. “They are funny things, mission and vision statements. Once you write them down, they become a part of you and everything you do,” he said. “For IEI, we want to spread our brand globally and develop more new offices.” “When I look back at the last 22 years and see everything we have
accomplished, I’m pretty content; but it is not over yet,” he said. “My goal is to work another five years. Some people would say I could coast into retirement, but I don’t think that is in my DNA. I am a dreamer. I am a visionary. Someone has to dream, right? ... I am excited to see how much I can accomplish during the next five years compared to the last 22.”
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Facing the USDOT DBE Program By Colette D. Holt, Esq, regular contributor
he United States Department of Transportationâ&#x20AC;&#x2122;s (USDOT) Disadvantaged Business Enterprise (DBE) Program was enacted in response to the welldocumented history of race and sex discrimination in the market for USDOT-assisted contracts. The program regulations at 49 C.F.R. Part 26 for Federal Highway Administration (FHWA) and Federal Transit Administration (FTA) and 49 C.F.R. Part 23 for Federal Aviation Administration (FAA) contracts are designed to ensure that small firms owned by socially and economically disadvantaged individuals have full and fair opportunities to compete for FHWA-, FTA- and FAAassisted contracts. Revisions to the regulations since 1999, have codified
the legal standards governing raceand gender-conscious programs and provided best practices so that the program achieves its objectives without unduly burdening nonDBEs. The result has been that Part 26 has been repeatedly and unanimously upheld by the federal courts. Three key challenges remain for the program in 2019: uniformity of practice; program resource allocation and oversight; and counting DBE utilization toward contract goals.
Uniformity of Practice Since the DBE Program is national in scope, it encourages uniformity of practice. However, certain factors work against this objective.
Recipients have substantial discretion in structuring their programs. Despite the availability of DOT sample templates and guidance, as well as training available through a variety of channels, the end result is programs that differ markedly from one another. Differences range from how trucking firm dollars are counted, to exclusion of entire industries from contract goals (for example consulting contracts) to (questionable) disparity study results that lead to certain racial/ ethnic groups or white females being dropped for goal credit. This is a source of frustration to firms working or even seeking to work in multiple jurisdictions. Further, distrust between recipients concerning DBE certification and Winter 2019 //
differing program requirements create difficulties for DBE and non-DBE firms. Varying oversight practices increase the likelihood that ineligible firms will be certified as DBEs and allowed to conduct work on DBE contracts. Litigation against the program has resulted in a different standard for setting contract goals for recipients in the Ninth Circuit Court of Appeals. While this Circuit, like all other Federal Courts, upheld the program’s constitutionality, it court created two conditions not found in the regulations or imposed by other courts on recipients outside the Ninth Circuit. 1First, despite finding that Congress met the compelling interest test through national findings, Ninth Circuit recipients must independently establish that discrimination exists in their market area. In practice, this means overall goals must be based on a disparity study. Second, even when discrimination impacts the market, the recipient must narrowly tailor contract goal credit to only those specific presumptively disadvantaged groups found to suffer barriers. This means that if a disparity study finds that white women and Hispanics were not underutilized, but Black Americans and Native Americans were, then race-conscious goals are supportable for the latter, but not for the former. The Western States decision has resulted in most Ninth Circuit recipients ceasing to set DBE contract goals. Disparity studies are expensive and take at least one year to conduct, and many smaller agencies have chosen to rely only on race-neutral measures such as outreach to meet their annual DBE goals. For larger agencies such as state DOTs, some studies have failed to find sufficient evidence of discrimination and recommended eliminating certain groups for credit toward DBE contract goals (e.g.
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2012 Washington State Department of Transportation Disparity Study). Both approaches have diminished opportunities for DBEs; for example, white female-owned DBEs in Washington state are reporting drastically fewer subcontracts, and several are now closing their doors.
Resource Allocation and Oversight Resources constitute an essential component in the effective administration of the DBE Program. DOT envisions that its state and local recipients will scrupulously adhere to the program and provide the necessary resources. In reality, many recipients are understaffed and underfunded. While the state DOTs generally have larger staffs to fulfill the requisite program elements, smaller recipients – including many airports and transit authorities – may employ only one or two individuals to discharge program responsibilities, in addition to performing a variety of other duties. Moreover, since the program only affects federalaid contracts, and many recipients also administer state and local programs, they often draw upon the same resources for functions beyond the scope of the federal DBE Program. In many cases, resource allocation is heavily weighted toward the certification process, thereby reducing resources available for critical contract goal setting and post-award monitoring of contract performance. This has made programs vulnerable to charges of arbitrary administration and fraud. One of the most important ways of buttressing post-award monitoring is to train and deploy contracting officers, inspectors and other noncivil rights office personnel to assist with DBE compliance. Only as DBE Program matters are fully
integrated into the procurement and project management processes – and monitored with the same gravity as costs and technical performance – will the program achieve its full potential. Leaving compliance solely to overstretched core civil rights staff does little to advance the cause, and sends the signal that compliance is not important. Program administration would benefit from more efforts by DOT recipients to add knowledgeable staff to their DBE Programs.
DBE Counting and Crediting Suppliers and Regular Dealers One of the keys to the continuing success of the DBE Program is proper counting and crediting of DBE participation. Counting is done on a contract-by-contract basis and is separate and apart from certification. Under Part 26, contractors may count toward goals only the value of work actually performed by DBEs. One of the most vexing issues involves counting materials supplied by DBEs on “furnish and install” contracts, in which a DBE will both obtain and install materials, often a substantial portion of the contract price. Pursuant to Section 26.55(c)(1), in order to get credit for the materials purchased from a DBE supplier, the DBE must do ALL of the following four tasks: negotiate the price; determine qualities and quantities; order the material; and install and pay for the material. Some recipients have denied DBE credit because a DBE failed to do one or more of these four tasks, even if non-DBE subcontractors may not typically do all four. It is important to remember that activities that may be legitimate business practices in many contexts are not permitted in the
In response, DOT received more than 50 public comments. Many voiced the need for additional clarification of, or changes to, the terms used to describe regular dealers or middlemen. DBE universe, at least for DBE credit. This can have the unintended consequence of limiting DBE opportunities and distorting the market for their services. Recently, contractors and recipients have queried whether a DBE regular dealer must physically stock a product or material, or whether it may be permitted to dropship specialty items. In response, the USDOT Office of General Counsel issued official institutional guidance in 2011 that there must be extenuating circumstances, other than being out of stock, for the contractor to receive credit for the value of materials that the DBE supplier orders for the contractor. The DOT does not recognize dropshipping as an activity that merits DBE credit. The preamble to the 2014 Part 26 amendments invited comments about whether the regular dealer concept should be changed in light of modern business models; the appropriate measure for the value added by a DBE that does not act as a traditional regular dealer or middleman in a transaction; and whether the policy considerations behind the current 60 percent regular dealer credit limitation influence more use of DBEs as contractors that
receive 100 percent credit. In response, DOT received more than 50 public comments. Many voiced the need for additional clarification of, or changes to, the terms used to describe regular dealers or middlemen. Others addressed the changing business environment, arguing that the best method of delivering supplies ordered from a non-DBE manufacturer is drop-shipping, as opposed to delivery by a regular dealer using its own trucks, so the requirement for an inventory or storefront only for DBEs is an outmoded concept that fails to reflect todayâ&#x20AC;&#x2122;s standard industry practices (to the detriment of minority- and women-owned firms). Some respondents either argued for eliminating regular dealers and brokers from the rule; or that eliminating regular dealer participation would reduce the pool of DBEs. Others opined that the DOT should keep the regular dealer concept but consider increasing the counting percentage due to the value added by the services provided. A different group maintained that a complete overhaul or revamping of the regular dealer provisions is necessary to recognize decades of change in the construction industry. In response to these comments, DOT indicated that more analysis is necessary.
Conclusion Despite its complexity and its challenges, the DBE Program provides a viable tool to remediate the effects of past and current discrimination in federal transportation contracting. Like most programs, it stands to benefit from improvements. Those of us deeply involved with the DBE program hope that more guidance will be forthcoming soon. Western States Paving Co., Inc. v. Washington State Department of Transportation, 407 F. 3d 983 (9th Cir. 2005), cert. denied, 546 U.S. 1170 (2006). 1.
Colette Holt represents public agencies and private firms on issues related to disadvantaged, minority, women and small business programs and other civil rights issues. Her firm conducts defensible disparity studies, drafts legislation and policies, provides expert witness consulting services and works with clients to ensure best practices for supplier diversity initiatives. Ms. Holt received her BA from Yale University and her JD from the University of Chicago Law School. Winter 2019 //
AIRPORT MINORITY ADVISORY COUNCIL
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Colette Holt & Associates has changed its name
CH ADVISORS, INC.
CH Advisors, Inc. provides legal counsel and consulting services to governments and businesses. CH Advisors is a firm of nationally recognized experts in conducting disparity studies and designing, implementing and defending successful affirmative action programs. We welcome IT Director Glenn Sullivan and Associate Counsel Joanne Lubart to the team. Led by Colette Holt, our team has decades of experience in legal issues, statistical analysis and best practices in program administration. • Minority/Women/Disadvantaged Business Programs • Aﬃrmative Action and Compliance Consulting and Training • Disparity and Availability Studies • Speaking and Presentation Services • Expert Witness Services • General Counsel to American Contract Compliance Association
(773) 255-6844 • email@example.com • www.mwbelaw.com
Hampton Roads Bridge-Tunnel
HRBT EXPANSION: A REGIONAL VISION FOR TRAVEL TIME RELIABILITY The Hampton Roads Bridge-Tunnel Expansion Project, The Next Connection, will be the Virginia Department of Transportation’s largest-ever construction project at 3.6 billion dollars. It includes twin two-lane tunnels to be built just west of the existing eastbound crossing using a bored-tunnel construction method, which significantly reduces environmental impacts to marine wildlife. To address congested corridors along Interstate 64, the project widens the landside four-lane sections of I-64 in Hampton and Norfolk. The project includes variably priced High Occupancy Toll (HOT) lanes, in addition to free General Purpose lanes. Anticipated contract award: March 2019 • Construction completion: 2025 To learn more about the Project and opportunities visit www.HRBTExpansion.org
ANTICIPATED OPPORTUNITIES: • Trucking • Reinforcing steel • Mechanical • Electrical • Lighting • Fencing • Welding/steel fabrication • Pavement markings • Sign erection • Slipforming • Seeding • Traffic control • Drainage • Diving • Surveying • Design engineering • Printing services • Office supplies • Janitorial services • Security
The late Leon Watkins (middle) celebrates a proclamation from Dade County, Florida for staging the 1984 FAA Minority Business Seminar. Pictured with Watkins from left to right are: Clark Sharpe, FAA Atlanta; Barbara Carry, Dade County; Esterlene Lewis, Miami Airport; and Richard Judy, Miami Airport.
Leon Watkins Leaves Airport Industry A legacy of
Service, Advocacy and Cooperation By American DBE Staff
railblazers rarely start with the goal of achieving fame or notoriety. In most cases, the individual simply has a vision and a desire to reach a destination for which there is no road map available; so they must create their own path. And so it was for the trailblazer Leon Watkins and a small group of other Federal Aviation Administration (FAA) officials and airport professionals who set out to clear a path for businesses owned by minorities and women to fully access business opportunities in the airport industry. During his tenure at FAA, Watkins helped develop the USDOT Disadvantaged Business Enterprise (DBE) Program and the Airport Concessions Disadvantaged Business Enterprise (ACDBE) Program; and led the programsâ&#x20AC;&#x2122; implementation in the airport industry during the initial stages.
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Watkins leveraged his leadership position as the FAA director of the Office Civil Rights, and later as associate administrator for civil rights, to set in motion strategies to clear a path toward the unprecedented participation of minority- and womanowned businesses in airport contracts. He was a passionate civil rights leader, with a special interest in ensuring that DBE and ACDBE firms had an equal opportunity to do business in the airport industry. Watkins also knew the importance of diversity in the workplace and spent his career opening doors so that women and minorities could have a seat at the table. In the fall of 1983, Watkinsâ&#x20AC;&#x2122; FAA Civil Rights Office hosted the first strategic meeting to discuss the successful implementation of the DBE Program in U.S. airports. This meeting and subsequent planning gave birth to the first FAA Minority Business Seminar, an event held to educate airport professionals and entrepreneurs on viable actions and strategies
to increase minority participation in airport opportunities across the nation. The conference was held in Miami, Florida and hosted 74 participants. The conference has continued annually and eventually became what is now the Airport Minority Advisory Council (AMAC) Annual Business Diversity Conference. The conference attendance in 2018, in Seattle, Washington exceeded 800 participants, and the event is now the premier conference for ACDBE firms seeking business opportunities in U.S. airports. The conference will celebrate its 35th anniversary in August 2019, in Los Angeles, California. After recognizing the need for a national trade organization for minorities in the airport industry, Watkins became one of the founders of AMAC in 1988, and helped foster a partnership between the FAA Office of Civil Rights and AMAC that still thrives today. Many people who were involved in the early stages of the creation and implementation of the DBE and ACDBE Programs believe Watkins’ work to create partnerships and collaboration between the various stakeholders in the airport industry helped the program succeed. One of those individuals is Robert “Bob” Ashby, retired deputy assistant general counsel for Regulation and Enforcement in the Office of the Secretary of the U.S. Department of Transportation. Ashby was a chief architect of the USDOT DBE and ACDBE Program regulations in the 1980s when Watkins led the FAA Office of Civil Rights. Ashby believes Watkins’ leadership set an atmosphere of partnership and collaboration that still exists today. Ashby said: “FAA's involvement under the leadership of Leon Watkins in the early years of the ACDBE program helped create a more cooperative interaction between the various players in the industry – large concession companies, airports and DBEs. FAA’s Civil Rights team with Watkins and Clark Sharpe – as well
as others like Dave Micklin and Irene Mields – helped everyone work together to move the program forward. And this culture of cooperation still exists today.” Clark Sharpe worked closely with Watkins during his tenure at FAA, serving as the civil rights administrator for the southeast region. Sharpe was instrumental in planning the FAA’s annual conference in the early years and credits Watkins for his commitment and leadership. “The most important thing that took place in the administration time of Leon Watkins was that he wasn’t protective of his federal career, at the expense of changing the condition of female and minorities,” Sharpe said. “He allowed us to take a federal rule and vigorously enforce it … not many federal administrators would have done what he did.” Watkins was born on February 24, 1934, in Danville, Virginia and graduated from John M. Langston High School in Danville, Virginia in 1952. He went on to obtain his Bachelor of Arts degree in Psychology from Johnson C. Smith University in North Carolina in 1957. He earned his Master of Arts degree in Government from George Washington University in Washington, D.C. in 1962, during the dawn of the Civil Rights movement. He also did further studies at Yale University. Watkins launched his career with the federal government in 1963, working for multiple federal agencies – including the Department of Labor, the Department of Interior and the Federal Highway Administration. He worked in employee relations and recruitment during his time with these agencies. ln 1970, Watkins transitioned his career to the FAA where he worked until he retired in 1995. During his time with the FAA, he mastered the skills of negotiation and diplomacy, and under his leadership, numerous entrepreneurs realized their dream of starting businesses in airports across the United States.
After retiring from the FAA, Watkins later worked at Hudson Group as director of airport relations before his final retirement from the industry in 2015. At Hudson Group’s 13th Annual Management Seminar and Vendor Show, then Hudson President & CEO Joe DiDomizio announced a proclamation declaring February 24, 2016, “Leon C. Watkins Appreciation Day,” honoring his role in promoting diversity and inclusion for businesses in the nation’s airports. “Leon’s wisdom, persistence, and his warm, approachable demeanor was the perfect equation to build relationships needed to create opportunities for women and minorities through AMAC,” DiDomizio said in a press release. “As associate administrator for civil rights in the Federal Aviation Administration in the 1980s, he understood the industry and what it would take to open doors.” Watkins passed away on December 15, 2018, in Windermere, Florida. At the request of the Watkins family, AMAC has used donations sent in lieu of flowers to establish a scholarship in the name of Leon Watkins, due to his unwavering support and advocacy for minorities and women in the airport industry. “We’ve received so much support, and we are still getting in contributions,” AMAC President and CEO Krystal Brumfield said. “He meant so much to so many people and organizations, that they are still honoring his name today.” AMAC plans to award the first scholarship in the name of Leon Watkins at the 2019 Annual Business Diversity Conference in Los Angeles. Brumfield said: “We don’t want this to be a one-time award; we want the scholarship to live on year after year, to continue to honor his name and his contributions to the industry. This will be the beginning of a scholarship that continues on as a symbol of what he meant to AMAC and the airport industry.” Winter 2019 //
Capacity builders advocating for contractors nationwide.
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High-Quality, High-Impact Training for DBE/ACDBE/UCP Professionals
Essentials of DBE/ACDBE Program Management Training What You Will Learn: DBE/ACDBE Program History, Background, Purpose and Trends March 17-18, 2019: Charleston, SC
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Duties/responsibilities of the DBELO/ACDBELO DBE/ACDBE Reporting The Airport Concession DBE Program Review of Joint Ventures for Concessions Counting DBE Participation/Commercially Useful Function (CUF) Compliance Monitoring & Reporting Goal Setting & Good Faith Efforts The Latest “Final Rule” (49 CFR Part 26, Nov. 3, 2014)
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National DBE Training Institute, P.O. Box 3113, Wilmington, NC 28406 Phone: 910.762.6297 | Fax: 910.762.5963 | Email: firstname.lastname@example.org | Web: www.natdbe-ti.com
DART Cotton Belt Project
Picks Up Steam By American DBE Staff
Dallas Area Rapid Transit has approved a contract for Archer Western and joint venture partner Herzog Contracting Group to design and build the Cotton Belt commuter rail line with assistance from lead designer Jacobs Engineering.
fter years of planning, the Dallas Area Rapid Transit (DART) Cotton Belt Corridor Regional Rail Project is now on track, and diverse firms are preparing to provide some of the fuel to move it toward completion. A big boost for the project came in December 2018, when DART secured a $908 million Railroad Rehabilitation & Improvement Financing (RRIF) direct loan
from the U.S. Department of Transportation. The loan enabled DART to move the project forward with plans to break ground on construction in 2019. The loan provides most of the funding needed for the project, while other local resources will provide the remainder of the funds needed for the $1.1 billion project. “This financing demonstrates the department’s commitment to serving as a
trustworthy partner to regional and local agencies, which are at the forefront of developing infrastructure solutions to meet the needs of their communities,” United States Secretary of Transportation Elaine Chao said. The Cotton Belt Corridor Regional Rail Project is a 26-mile passenger railroad extending from DallasFort Worth (DFW) International Winter 2019 //
“We will hit that 45 percent goal for DBE and M/WBE firms, and also to bring in new businesses and people of color on this project.” Marvin Jackson, Archer Western D/M/WBE Compliance Officer talks about the Cotton Belt Regional Rail project at an outreach meeting for the project in 2017. Airport eastward to the Plano/Richardson area, covering three counties and seven cities and will be constructed primarily within the existing DART-owned railroad right-of-way. The project scope includes upgrading the existing track to meet passenger rail standards, converting single-track configuration to doubletrack, building 10 new stations, and acquiring eight vehicles. The goal of the project is to improve mobility, accessibility and system linkages to major employment, population and activity centers in the northern part of Dallas. DART recently approved a $783 million contract for the Archer Western Herzog Joint Venture team to design and build the Cotton Belt commuter rail line with assistance from lead designer Jacobs Engineering. Construction on the line will begin in 2019, with project completion anticipated in 2022. “North Texas is booming, and this reliable, local transit option will be a welcomed addition for many residents,” said David Casey, president of Archer Western's heavy civil division in a news release. He said, “We are thrilled to partner with DART and connect the communities of North Texas via Cotton Belt's high-quality transit service.” DART has issued a 7 percent goal for the use of Disadvantaged Business Enterprises and a 38 percent goal for Minority- and Woman-Owned Businesses on the Cotton Belt line, amounting to 45 percent of the project being performed by diverse companies. The Archer Western Herzog JV team began outreach efforts in 2017 and has already achieved the DBE and M/WBE goals for the design portion of the project. “There is a big push for diversity and inclusion on this project,” Archer Western D/M/WBE Compliance Officer Marvin
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Marvin Jackson, Archer Western D/M/WBE Compliance Officer
Jackson said. “We will hit that 45 percent goal for DBE and M/WBE firms, and also to bring in new businesses and people of color on this project.” Jackson is also working to increase workforce diversity by partnering with Historically Black Colleges and Universities (HBCUs) in the area to identify young engineers who can work on the project. Jackson said, “It’s a four-year project, so you could literally start on this project and be ready to get your P.E. (Professional Engineer license) by the end of the project.” The Archer Western and Herzog collaboration has already established a track record of success on rail projects in the Dallas area by recently completing the Trinity Metro’s $1.034 billion TEXRail system. TEXRail is a new 27-mile commuter transit line connecting downtown Fort Worth and Dallas/Fort Worth (DFW) International Airport. The project broke ground in August 2016, and officially opened to the public on January 10, 2019. Although the JV team has identified its consultants for the design portion of the contract, construction opportunities will begin to take shape in 2019. The team will begin to finalize construction plans in the first part of the year and then solicit bids from contractors with the goal of starting construction in the summer or fall. “The construction side is still wide open,” Jackson said. Companies interested in contracting opportunities on the Cotton Belt line should visit www. awhcottonbelt.com to register as a subcontractor and sign up to receive notifications of upcoming bids.
A JOINT VENTURE
NCDOT Triangle Expressway Project 540 R-2721A ATTENTION SUBCONTRACTOR: This is a request for quote notification for the NCDOT Triangle Expressway project 540 R-2721A (Wake County) proposal-due date Wednesday, April 5, 2019 (Turn-In Date). The Lane-Blythe Construction Joint Venture is bidding on this project and is seeking quotes from subcontractors and suppliers on portions of the work. This project consists of roadway, bridge and structures scopes of work: earthwork/grading, clearing, trucking of materials, asphalt paving, subgrade/base, concrete paving, pavement related hauling, saw & seal, diamond grinding, demolition of bridges/walls/ buildings, MSE walls, masonry, sound walls, geotech fabrics, erosion/seeding, landscaping, pavement markings, MOT/ traffic control, traffic signs (overhead and ground mounted), signals, ITS, lighting, utilities/water/sewer, jack & bore, pipe cleaning and inspections, pavement subdrains, antigraffiti coatings, waterproofing, drainage pipe materials, concrete flatwork, box culverts, aggregates/rip rap, guardrail, concrete barrier, and temporary barrier. Bridge work includes rebar tying and SIP metal decking installations, as well as many other opportunities. The Lane-Blythe Construction Joint Venture welcomes participation from NCDOT certified DBEs on this design-build project. The DBE goal for this project is 12%. We welcome participation from certified NCDOT DBE/MWBE/SBE/HUB and SPSF subcontractors and professionals. We request that quotes for this projects be sent to our office on the April 1, 2019 To receive a formal invitation to bid, please contact Wes Peace at JWPeace@laneconstruct.com or (704) 679-0542. Quantities will be sent out in February and March for this project. A non-disclosure agreement must be signed and returned to me prior to receiving bid packages.
Why Bonding Matters Surety Bonds Protect
In 2017, the surety industry spent over $1.3 billion to pay subcontractors and suppliers, and to advance the completion of bonded projects.
Surety Bonds Empower
Bonds are available and contractors who focus on increasing their bonding capacity build solid and sustainable businesses. If you are looking for bonds under $400,000 and have good credit, you can get bonds through various Quick Application or Fast-Track Programs. The SBA Surety Bond Guarantee Program also is available to help contractors establish a relationship with a surety company and helps to provide additional backing for contractors.
The Surety & Fidelity Association of America Supports Contractors
The Model Contractor Development Program (MCDP) provides small, minority and women contractors with education that supports growth and sustainability, and an individually customized plan to achieve bondability. US DOT Bonding Education Program (BEP) in partnership with SFAA helps small businesses become bond ready. The BEP is a hands-on, multi-component program designed to address what businesses need to do to become bondable businesses. Bondable Businesses = Sustainable Businesses
Maryland Traffic Relief Plan to Provide Opportunity By American DBE Staff
aryland's Department of Transportation Traffic Relief Plan will offer opportunity to diverse firms based on a commitment and goal by the agency to provide outreach and assistance to firms with the desire to participate. Secretary Pete Rahn believes success in fostering DBE and MBE participation will have lasting positive impact on businesses in the Greater Washington, D.C. area that can be similar to results achieved on the I-64 project in St Louis, Missouri that is now called “The Missouri Model" by the Conference of Minority Transportation Officials (COMTO). The Greater Washington, D.C. area is widely known as one of most congested metropolitan areas in U.S., rivaling cities like New York, Los Angeles, Chicago and Atlanta for choking traffic both on the areas highways and main thoroughfares. This longstanding problem has existed for decades, but Maryland Governor Larry Hogan and Transportation Secretary Rahn believe it is finally time to tackle this problem. “The time is now,” Rahn said. “This will break loose the choking congestion the D.C. area in Maryland is experiencing. This is part of an overall plan to free up roadways and improve quality of life; and keep the region economically viable as an attractive place to locate businesses.” MDOT is making plans for a massive public-private partnership as Phase I of a recently developed traffic relief
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plan. The plan is a comprehensive study of mobility in the region and will include strategies to improve traffic on major highways and roadways. Rahn expects the initial P3 project to result in $3 to $5 billion in improvements along Interstates 495 and 270, as well as other system improvements. The project will also make use of innovative technologies such as intelligent signaling and tolling systems. Concurrent to Phase I, MDOT will also forge ahead on Phase II of the plan which will certainly stretch the civil construction industry thin in the region. “This will be a huge demand on the construction industry within the region and there will be opportunities for the diverse contracting community.” Rahn said. Key aspects of the Traffic Relief Program will include major improvements to I-495 and I-270. These are two of the most congested highways on the Maryland side of the Washington D.C. area, and are two of the busiest highways in the country. Planned improvements along these highways include new express toll lanes, new interchanges and expanded general traffic lanes. Similar improvements are also planned on the BaltimoreWashington Parkway, where MDOT has assumed control of the parkway from the federal government. MDOT is at the beginning stages of preparing to implement the Traffic Relief Program and plans to finalize
Maryland Department of Transportation Secretary Pete Rahn announces the Maryland Traffic Relief Plan to reduce congestion on Maryland highways.
a contract with a private partner in 2020. “This gives us time to outreach to the industry and the MBE/WBE community; and to help them gain the skills to be ready for the opportunities,” Rahn said. A component of MDOT’s strategy to help prepare the industry for the program was hosting a International Industry Forum event in December 2018. The goal was to inform participants of the results of the Traffic Relief study and the next steps the agency will take to address the strategies recommended by the study. The international industry forum filled the BWI Marriott Hotel Ballroom to capacity, while another 50 firms were wait-listed contingent on no-shows for the event. “It gave us a chance to outreach to proposers on the Traffic Relief Plan,” Rahn said. “It was also the first step in expanding opportunity. Over forty percent of the companies at the event were MBE and DBE firms.”
“This gives us time to outreach to the industry and the MBE/WBE community; and to help them gain the skills to be ready for the opportunities.” Pete Rahn, Maryland Transportation Secretary
The Maryland Model Secretary Rahn envisions a tremendous potential for diverse businesses and diverse workers to participate in the economic impact the Traffic Relief Plan will bring to Maryland and the D.C. area. This vision is based on his experience leading a similar major highway improvement program in 2006 on the new I-64 Expansion project in St. Louis, Missouri. Rahn was the Director of Missouri Department of
Transportation and was approached by the minority religious community advocating for increased opportunities for businesses and workers on this major highway project. Rahn and the MoDOT staff worked with the Conference of Minority Transportation Officials (COMTO) to design and implement a community outreach and engagement process that led to increased collaboration, job opportunities and significant Winter 2019 //
DBE participation on the project. The successful I-64 project surpassed DBE participation targets and on-thejob training goals, leading to minority workers achieving journeyman status through the hours worked on the project. “The project was hugely successful,” Rahn said. “We brought together churches, ministries, contractors, labor unions and trade schools; and were able to work together to have an incredible successful diverse workforce and DBE participation program that exceeded everyone’s expectations.” Rahn believes this type of success is possible in Maryland on the Traffic Relief Program and wants to update his participation in the Missouri Model and become a new “Maryland Model,” setting a new standard for the involvement of diverse businesses and workers on the upcoming opportunities to ease congestion in the Maryland and D.C. areas. “We have that opportunity here,” Rahn said. “A program of this size, construction of this size, means that whoever is the successful proposer and team will have to draw upon resources from across the region. Given the anticipated size and scope of the Maryland program, Rahn says the existing DBE and MBE community is probably not large enough to meet the demand the projects will place on the current industry. Therefore,
Helping Small Business Move Forward
Maryland Transportation Secretary Pete Rahn talks with Brad Mims, president of the Conference of Minority Transportation Officials (COMTO) at the MDOT International Industry Forum for the I-495 and I-270 Public-Private Partnership (P3) Program. he is encouraging diverse firms interested in upcoming opportunities to connect with the MDOT State Highway Administration and get prepared to go to work. “I think that for those that are willing to put up with the process of going through certification, which we all know is not easy, there will be opportunities to collaborate in a number of areas,” Rahn said.
How We Help • • • • • •
Bonding Education Program Women & Girls in Transportation Initiative DBE Certifications Procurement Assistance Capital Access Program Counseling and Technical Assistance
South Atlantic Region
DC Metro Area • Kentucky • North Carolina • Virginia • West Virginia
For additional information contact: Alyssa Mako, Project Director amako@TheInstituteNC.org (919) 956-2331 U.S. Department of Transportation Small Business Transportation Resource Center
Change Order Fairness Law for Maryland Subcontractors By Karen Barbour
he number one downfall for small and disadvantaged businesses is the inability to collect on change orders, especially at their full amount. For example, on a large project that can take upwards of three years, any subcontractor performing work early in the process may find the approval timeline for change orders unbearable; as a consequence of the change order, retention on the project is at a standstill â&#x20AC;&#x201C; even after the work has been performed. The risk increases if the prime contractor or project owner declares bankruptcy and the job is not bonded. And even if it is a bonded project, the time frame for filing suit against the payment bond can expire due to the lengthy process. Until change orders are approved, they appear as stagnant underbillings on a companyâ&#x20AC;&#x2122;s balance sheet. Once the surety gets wind that the change order costs are not billable, they become omitted assets that can directly impact bond capacity and banking ability. This example or similar
scenarios can quickly submerge a small business contractor that simply needs to get paid on time for work that is completed. In the State of Maryland, after two years of research and significant lobbying efforts funded by the Coalition for Contracting Fairness, the Change Order Fairness Act achieved final passage in 2016. Maryland Senate Bill 826 passed the Senate 46-0; and its counterpart, House Bill 403, passed the House 135-0. This was a big deal and not a happy moment for many of the Maryland state agencies that
fought against it, such as the transportation agencies. While a few agencies were exempted along with privatepublic partnerships, under the new guidelines, the State of Maryland can no longer issue unilateral change orders for state-directed changes. With a state-directed change order, the state and the prime contractor must first agree on price prior to commencement of work. The general contractor must flow down the provisions of the bill to its subcontractors and provide subcontractors a copy of the Winter 2019 //
approved change order confirming the subcontractor’s price within five days. If the subcontractor does not receive such confirmation, then the change order work required of the subcontractor by the general contractor is not state-directed and approved. This flow down provision is not enforced by the state agencies, but it is the current law. Consequently, if the state agency and general contractor cannot agree on price, the state shall issue a Construction Change Directive and agree to partially fund the change order and then negotiate on price 30 days after commencement of the work. The law also requires that state agencies publish guidelines for the new law. However, very few have complied with this provision of the law. Currently there are no sanctions imposed on state agencies for non-compliance with the law, despite its addition to the statutes. Despite recent passage, it has not made it into the Code of Maryland (COMAR). COMAR 21.07.02.02 still references unilateral change orders and is in direct conflict with the statutory provisions. As a result, many contractors are unaware of the new law. Although the Coalition for Contracting Fairness initiated the bill, Champe McCulloch, president and CEO of Maryland AGC, ignited and fueled success of the bill. Several others worked tirelessly behind the scenes to maneuver the bill, including: Ike Casey, executive director of American Subcontractors Association of Metro Washington; Wayne Frazier, president of Metropolitan Washington Minority Contractors Association; Steve Weissenberger, vice president of the Mechanical Contractors Association of Maryland; and representatives from the Alliance
for Construction Excellence. They relentlessly tried to inform Maryland state leaders that this new law signed by the governor with an effective date of July 1, 2016, has yet to be embraced in COMAR. Maryland Department of General Services has issued its guidelines and to date appears to be the only agency that is fully embracing the new law. There is optimism that this issue will be resolved soon, but in the meantime, getting the message out about the new law is paramount. If a state – or for that matter – the federal government, mandates minority and small business participation on contracts, timely approval and payment for change orders is essential. It is rare that such contractors, especially economically disadvantaged contractors, can finance large change orders; unfortunately causing many companies to implode due to lack of cash flow. For more information about the issues that can arise with state-directed change orders, see the Maryland State Board of Contract Appeals case involving appeal from M. Luis Construction Co. Inc. under SHA Contract No: BA6885184, wherein the state for the first time decided (October 29, 2015) on the impact of cumulative delays caused by state-directed change orders, which greatly assisted in passage of the new law.
Karen Barbour is the founder and president of The Barbour Group, LLC – and a veteran of the surety bonding industry. Karen was instrumental in the creation of the State of Maryland’s Change Order Fairness Act and is working to fully implement the legislation across the state. Karen started her career in surety as a home office bond underwriter in 1985. Karen is well known as an innovator and expert within the surety industry. Karen Barbour, email@example.com
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TransferableVALUE By Allen Brown
he Fall 2018 issue of American DBE Magazine published an article titled “Transferring DBE Ownership,” which discussed how to transfer a certified ACDBE/DBE firms to new owners, while maintaining the company’s certification as a Disadvantaged Business Enterprise.
These are not the only questions, but by starting with these, a business owner can get to where they need to be to ensure the transfer is most successful. Remember, success is contingent upon the degree to which a person accomplishes their goals; and there are several goals to achieve when transferring a business to new owners.
This article offers some additional considerations when transferring the ownership of a business to new owners. For that process, here are six questions that need to be answered:
For most business owners, the equity in their privately held businesses is between 70 and 90 percent of the assets held in their total personal portfolio. According to John Brown, author of “How to Run Your Business So You Can Leave it in Style,” owners often ask the wrong question when seeking to leave their business. Instead of asking what is the most they can get -- under the most favorable terms and conditions – they continually ask, ‘How much is my business worth?’ Asking the wrong question is the outcome of having a clear, but misguided perception of what’s important; and this can be called an honest mistake. The business owner
1. Why are you transferring the company? 2. Who are you transferring the company to? 3. When should the transfer take place? 4. How should the transfer be completed? 5. How much of the business will be transferred?
often presupposes what they’ve built is more valuable than it actually is, and then seeks validation of this belief. But spending the appropriate time focused on creating and increasing transferable value will result in a higher business valuation. It also will accelerate the total value of the business, resulting in what is the true measure of success when an entrepreneur is selling a business – net cash after tax. Transferable value includes both the value of the business assets and current contracts; it also includes the future value of the business based on its goodwill and future capabilities. The measure of success for a buyer when purchasing a company is the current value of a consistent stream of income, plus the potential for income growth that’s possible from increased effort, improvements and updates. Therefore, while selling the current assets of a business may provide a nice Winter 2019 //
lifestyle for the business owner and their family, focusing on the business assets alone may hinder the actual transferable value of the business. Value is defined as “the numerical amount denoted by an algebraic term; a magnitude, quantity, or number. The worth of something, compared to the price paid or asked for it, the material or monetary worth of something.” When discussing or considering the concept of value as it applies to your business, there are two aspects or categories of value. The first (and most obvious) is the value provided to clients and or customers in the marketplace. This form of value is required if the business is to remain a viable ongoing concern. The second form of value, and the type that is the focus of this article, is that of transferrable value. Transferable value is at the center of every owner exit. Why is this? It is because the presence or absence of transferable value, and how this value is determined, will have a significant impact on the amount of cash an owner is able to secure in the sale, or will impact the continued income they can receive from the new owners. This value can be calculated as: Transferable Value = Financial Assets (Cash, PPE, etc.) + Intangible Assets X Multiple (intangible assets: examples include goodwill, strategic relationships, proprietary processes & information and others). For example, imagine three companies that are initially judged as equal, each engaged in building and maintaining specialized medical facilities for their clients. They all have a national presence, $5 million in EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortization), and about $50 million in annual revenue. It would be logical to assume that they all have about the same value.
EBITDA), producing an average value; while company #3 sold for $27.5 million (5.5 times its EBITDA), which is considered a best-in-class business. The difference in value between company #2 and #3 was $10 million, representing values of $17.5 million to $27.5 million, respectively. That’s a significant difference. Yet, leaving $24.25 million on the table – the difference between the selling price for company #1 and company #3 – is discouraging; it’s called the value gap. Even if a company is not as large as these firms, the process for determining transferable value is the same. So, what’s causing the difference in value? It was the combination of EBITDA (income) and the multiple that determined the prices and terms of these deals. The key to the differences in purchase prices was the presence (or absence) of transferable value consisting of both the tangible and intangible capital. Why is this of importance? It is because transferable value is directly related to business capacity. When a business focuses on taking actions that increase stakeholder engagement and happiness; drives sustainable revenue growth that flows through to profit margins; and documents and implements processes that drive profitability and consistently generate the cash needed for growth – the business has effectively developed transferable value through increasing capacity. All entrepreneurs are moving closer to the day where they will exit their company. Whether the exit is through a sale of the company, retirement, gift, closing or death; at some point the ownership will change. The savvy entrepreneur prepares and plans for this day by taking steps to maximize the value of the company when the day comes for a transfer. It’s inevitable. The best thing an owner can do is to prepare for that day by determining what they want to happen, and then communicating this information to those who need to know.
However, the transferrable value of the three companies is very different. The transferable value of company #1 was only the liquidation value of the assets, $3.25 million. Company #2 sold for $17.5 million (3.5 times its
Allen Brown is a South Carolina-based CEPA (Certified Exit Planning Advisor) adviser helping entrepreneurs and executives of privately held businesses elevate their activities in order to get control of their companies while achieving their personal, business and financial goals. For more information and to download the Transferrable Value eBook, visit: www. wealthexchange.com 42
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2019 Upcoming National Events AIRPORT MINORITY ADVISORY COUNCIL (AMAC)
2019 AMAC Leadership Summit on Capitol Hill March 12, 2019 in Washington, D.C. I www.amac-org.com/ leadershipsummit
SOUTHERN TRANSPORTATION CIVIL RIGHTS EXECUTIVE COUNCIL (STCREC)
STCREC Training Symposium August 19-22, 2019 in Charlotte, NC
CONFERENCE OF MINORITY TRANSPORTATION OFFICIALS (COMTO)
AIRPORT MINORITY ADVISORY COUNCIL (AMAC)
Celebrating Women Who Move the Nation
35th Annual Airport Business Diversity Conference
March 20, 2019 in Washington, D.C. I www.comtonational.org/page/ womenwhomove
August 20-23, 2019 in Los Angeles, CA I amac-org.com/ annualconference
WOMEN’S TRANSPORTATION SEMINAR (WTS)
NATIONAL ASSOCIATION OF WOMEN IN CONSTRUCTION (NAWIC)
WTS Conference 2019
NAWIC Annual Conference
May 15-17, 2019 in Boston, MA I www.wtsinternational.org/ networking/annual-conference
August 21-24, 2019 in Atlanta, GA I www.nawic.org/nawic/Annual_ Conference.asp
NATIONAL ASSOCIATION OF MINORITY CONTRACTORS (NAMC)
NATIONAL MINORITY SUPPLIER DEVELOPMENT COUNCIL (NMSDC)
NAMC 50th Anniversary National Conference
2019 NMSDC Conference + Business Opportunity Exchange
June 12-14, 2019 in Oakland, CA I namcnational.org/namc-50thanniversary-national-conference
AIRPORT MINORITY ADVISORY COUNCIL (AMAC)
National Conference and Business Fair June 25-27, 2018 in Baltimore, MD I conf.wbenc.org
October 13-16 in Atlanta, GA I www.nmsdc.org/2019-conference
NATIONAL ASSOCIATION OF WOMEN BUSINESS OWNERS (NAWBO)
National Women’s Business Conference October 13-15, 2019 in Jacksonville, FL I www.nawbo.org/events/ national-womens-business-conference-2019
CONFERENCE OF MINORITY TRANSPORTATION OFFICIALS (COMTO)
48th National Meeting and Training Conference July 12-16, 2019 in Tampa, Fl I www.comtonational.org/page/ conferencehome
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