Disadvantaged Business Enterprise Law Update
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PowerPoint Presentation on Disadvantaged Business Enterprise Law with emphasis on Bid Phase of Public Contracting
Transcript of Disadvantaged Business Enterprise Law Update
© 2014 Kraftson Caudle. All rights reserved.
Annual Transportation Construction Law and Regulatory Forum:DBE Compliance and Case Law
June 11, 2014
Jon StrawKraftson Caudle
McLean, Virginiawww.kraftsoncaudle.com
© 2014 Kraftson Caudle. All rights reserved.
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• Commercially Useful Function• Responsible vs. Responsive in Bid Evaluations• DBE False Claims Act Violations
© 2014 Kraftson Caudle. All rights reserved.
Commercially Useful Function
© 2014 Kraftson Caudle. All rights reserved.
Commercially Useful Function
• Services: perform, manage, supervise
• Materials & Supplies: negotiate price, determine quality and quantity, ordering, installing (if applicable), and pay for material.
• 49 C.F.R. 26.55(c)(1).
© 2014 Kraftson Caudle. All rights reserved.
Hypothetical: Type of Work Omitted
• Bid Form C-111 (VDOT minimum DBE requirements).
• DBE goal = 25%• Lowest bidder DBE performance = 28%• But, type of work not identified for one of three
DBE’s.• So, cannot count that DBE’s percentage.• Upon rebid, DBE’s work was furnishing and
installing only.
© 2014 Kraftson Caudle. All rights reserved.
Hypothetical: Overconcentration• Unsuccessful, Non-DBE Traffic
Controls Contractor Bidding on State Hwy Job
• Alleged overconcentration of DBEs within traffic controls industry as violation of EP Clause.
• Experts argued differently:– Compare traffic controls industry
to transportation construction industry.
– Compare other contractors in traffic controls industry.
© 2014 Kraftson Caudle. All rights reserved.
Responsible vs. Responsive
• Consider whether jurisdiction DBE component of bid submission is judged as responsive or responsible element.– Cf., Virginia, Maryland, Illinois, D.C.
© 2014 Kraftson Caudle. All rights reserved.
Hypothetical: Responsible vs. Responsive• Pre-bid goal = 25%• Prime had 7 DBE subs in bid (23%) and GFE.• Owner requested Prime revise DBE submission finding one
sub’s percentage should have been 75% instead of 100%.• Prime revised form and added another DBE sub; Owner did
not object. (25%+ now)• NOIA stated Prime was responsive and responsible.• Prime submitted another form “substituting” a DBE because
removed DBE had not submitted letter of intent. (still 25%+)• Removed DBE sub still would perform other work, just not
listed on form.• Prime argued 49 C.F.R. § 26.53(b)(3).
© 2014 Kraftson Caudle. All rights reserved.
• Contractor liable if:– Knowingly does (presents or submits); OR– Knowingly does not do (withholds or non-
verification).• See 31 U.S.C. § 3729
© 2014 Kraftson Caudle. All rights reserved.
Actual DBE FCA Violations• Manafort
Brothers, Inc. ($2.4M)– Structural Steel– Retaining Walls
© 2014 Kraftson Caudle. All rights reserved.
Actual DBE FCA Violations• Schuylkill Products, Inc. ($119M + 2 years
prison for executives)
© 2014 Kraftson Caudle. All rights reserved.
Annual Transportation Construction Law and Regulatory Forum:DBE Compliance and Case Law
June 11, 2014
Jon StrawKraftson Caudle
McLean, Virginiawww.kraftsoncaudle.com
