American DBE Magazine Feature Story: Equity in Infrastructure Project Promoting Wealth Creation for Historically Underutilized Businesses

Equity in Infrastructure Project Promoting Wealth Creation for Historically Underutilized Businesses

Federal regulations creating programs to increase business opportunities for small and diverse businesses have traditionally focused on participation as the key metric of success. The assumption, or hope, in these programs, is that increased participation by historically underutilized businesses in contracting opportunities will result in economic advancement and greater wealth creation for these entrepreneurs, ultimately leading to the advancement of underserved communities.

Programs such as the U.S. Department of Transportation Disadvantaged Business Enterprise Program use overall program goals and contract goals to measure the percentage of contracting dollars paid to diverse businesses, but wealth creation is not included as a measure of success. In fact, some business owners argue that the program creates provides a disincentive for wealth creation; because as a diverse business creates wealth, they are in danger of becoming ineligible to participate in the program—in some ways a conflicting measure of success.

Equity in Infrastructure Project Cofounder John Porcari (far right) welcomes additional state transportation agencies to the Equity in Infrastructure Project after leaders of each agency signed the Equity in Infrastructure Pledge at the American Association of State Highway Transportation Officials (AASHTO) Washington Briefing Conference in March 2023.

Transportation leaders Phillip A. Washington and John D. Porcari recognized the potentially transformative impact of the $1.2 trillion Infrastructure Investment and Jobs Act and the commitment of the Biden-Harris Administration to make equity a priority and cofounded the Equity in Infrastructure Project (EIP) in April 2022. EIP’s goal is ensuring historically underutilized businesses have the maximum opportunity to access the wealth creation opportunities that will come from transportation and infrastructure projects happening over the next five years, Washington is CEO of Denver International Airport and has a distinguished career in the transportation industry, including leading Los Angeles County Metropolitan Transportation Authority and Denver Regional Transportation Authority. Porcari previously served as United States deputy secretary of transportation and has served as secretary of the Maryland Department of Transportation.

Washington and Porcari are two of 5 leaders of the Biden-Harris Administration Advisory Committee on Transportation Equity (ACTE). Their role includes providing advice and recommendations to the Secretary of Transportation on comprehensive, interdisciplinary issues related to transportation equity from a variety of stakeholders involved in transportation planning, design, research, policy, and advocacy in pursuit of the Department’s equity goals. One of the committee’s key objectives is advising Transportation Secretary Pete Buttigieg on wealth creation, including strategies to help small and disadvantaged businesses build capital, expand business networks, and attain new skills and experience through increased USDOT contracting opportunities. These efforts are in line with advancing the Biden-Harris Administration’s Justice40 Initiative, ensuring that underserved populations receive at least 40% of the benefit of infrastructure investments, and Executive Order 13985—Advancing Racial Equity and Support for Underserved Communities. “Wealth creation is our North Star,” Washington said.

To operationalize the policy and advisory work on the ACTE, Washington and Porcari cofounded the Equity in Infrastructure Project to take practical and deliberate steps to effect change in the infrastructure contracting industry. “We are committed to taking an important part of the Biden-Harris Administration’s Equity Policy, which is the creation of generational wealth through this generational infrastructure opportunity and building some facts on the ground,” Porcari said.

Denver International Airport Chief Executive Officer and Equity in Infrastructure Project Cofounder Phillip A. Washington.

EIPs mission is to increase generational wealth in underserved communities through business opportunities on infrastructure investments completed by transportation agencies funded by the Infrastructure Investment and Jobs Act. EIP works in parallel with the contracting equity and diversity program of transportation agencies to expand opportunity, increase capacity and increase the wealth-building capability of companies owned by minorities and women.

EIP adds the critical component of promoting prime contracting, joint venture participation, and equity participation to the traditional metrics of subcontracting participation. This added component adds a turbo charge to the wealth-building ability of companies participating at higher levels in the contracting process of transportation agencies. “To increase generational wealth, this can not be all subcontracting. It has to be an increase in prime contracts with the expectation that if historically underutilized firms are awarded prime contracts, they will hire other diverse workers that will increase generatitonal wealth in underserved communities,” Washington said.

Advancing the Mission—The Pledge

EIP is built on the fundamental belief that committed CEO leadership is the key determinant of success in creating organizational change. Therefore, the first step for an organization joining the effort is the chief executive officer to sign a pledge to lead the agency in expanding opportunities for diverse firms through prime contracting, joint ventures, and equity partnerships in major infrastructure projects.

The pledge includes a commitment by executive leaders of organizations to take several steps: 1) increase the number, size, and proportion of contracting opportunities going to HUBs; 2) increase the number, size, and proportion of contracting opportunities going to HUBs as prime contractors; 3) streamline the administration of contracting with HUBs to centralize certification; 4) improve payment time, and standardize transparent data collection; 5) increase the amount and type of appropriate financing available to HUBs aiming to meet infrastructure contracts by working with private and public partners; and 6) expand the number of signatories to this pledge.

Former U.S. Deputy Transportation Secretary and Equity in Infrastructure Project Cofounder John D. Porcari.

Five industry executives became the first-mover agencies to take the pledge in June 2022, including Chicago Transit Authority (CTA) President Dorval R. Carter, Jr.; Denver International Airport CEO Phillip A. Washington, Port of Long Beach Executive Director Mario Cordero, Metropolitan Water District of Southern California General Manager Adel H. Hagekhalil, and Southeastern Pennsylvania Transportation Authority (SEPTA) General Manager and CEO Leslie S. Richards.

“At CTA, we understand that every dollar we spend, every investment we make and every decision we execute impacts our customers and the communities we serve,” said Chicago Transit Authority President Dorval R. Carter, Jr. “It’s important that we all govern ourselves accordingly when providing job and contracting opportunities, to ensure an equitable process.”

As of March 1, 2023, executive leaders of eighteen state transportation agencies (STAs) have signed the pledge to become partners in the EIP. The first six STAs signed the pledge in November 2022 at the American Association of State Highway Transportation Officials Conference in Las Vegas, Nevada. The signers included California State Transportation Agency Secretary Dr. Toks Omishakin, District Department of Transportation Director Everett Lott, Illinois Department of Transportation

Secretary Omer Osman, Kansas Department of Transportation Secretary Julie Lorenz, Louisiana Department of Transportation and Development Secretary Dr. Shawn Wilson, and Michigan Department of Transportation Director Paul C. Ajegba, P.E. Twelve additional executive leaders of STAs signed the pledge on March 1 during the American Association of State Highway and Transportation Officials 2023 Washington Briefing in Washington, D.C.

Fulfilling the Mission—Making the change

As more executive leaders sign the pledge, Washington and Porcari are working to ensure EIP develops concrete actions and best practices to help agencies maximize the impact in their contracting and procurement process. EIP established an advisory committee comprised of industry leaders from leading engineering and construction firms, historically underutilized businesses, and procurement officers to discuss strategies to remove practical impediments to success for diverse firms. “The committee is looking at issues such as certification, access to capital, capacity building, insurance & bonding, and metrics to best operationalize the effort “The petri dish for innovation is at the local level and changes made there by committed individuals aggregate into national policy,” Porcari said.

Signers of the pledge commit to reviewing their past performance in contracting with historically underutilized businesses to establish a baseline and then establish selfimposed goals for improvement by December 2026. An important component of the goal-setting process is reviewing projected procurement activities to determine ways to structure contracts to encourage historically underutilized businesses to compete for prime contracts, or to be members of joint venture teams that are leading major infrastructure projects.

Washington envisions historically underutilized firms first serving as joint venture partners to large firms, but then pursuing roles as the lead member of a joint venture team in the future, with larger firms working as supporting partners. “This is not about taking one piece of pie from one firm and giving it to another, this is about a bigger pie. This industry has capacity issues, and we need to create more firms that can help complete contracts,” Washington said.

Moving forward

EIP is continuing efforts to recruit more organizations to sign the pledge and commit to expanding contracting opportunities for historically underutilized firms. In addition to transportation agencies receiving federal funding through the Infrastructure Investment and Jobs Act, EIP expects major construction and engineering firms to join the initiative to maximize the impact on the industry. Washington’s goal is for all 50 state departments of transportation to sign the pledge.