The Code of Federal Regulations, Title 49, Section 23, requires local agencies administering federal aid projects to establish and maintain a Disadvantaged Business Enterprise (DBE) Program. The City Council first adopted a DBE program on February 2, 1993, and has renewed this program in all subsequent federal fiscal years. The City currently is involved in three federally funded projects involving seismic retrofit of bridges, widening of Wolfe Road, and a traffic signal at Bernardo and El Camino Real. Federal grants committed to these projects amount to approximately $2.3 million. Establishing a DBE program is a requirement for federal reimbursement. The State Department of Transportation (Caltrans) has approved the City’s DBE program format. The program contains an annual goal of 10% DBE participation on all projects funded in whole or in part by the United States Department of Transportation. Staff is recommending that Council approve this program for federal fiscal year 1999-2000 and authorize the filing of all appropriate documents with Caltrans.

It is important to note that new federal DBE regulations have been issued from the United States Department of Transportation (USDOT). The new regulations (49 CFR Part 26) will require City Council to approve a new DBE program once Caltrans receives approval from USDOT. It is anticipated that this approval should be received no later than the end of the calendar year.

Caltrans has proposed an incremental approach to implementing the new regulations. For the first year (10/1/99-9/30/00) they have proposed that local agencies be allowed to simply adopt Caltrans’ overall goal and program. After this grace period, the City will need to adopt its own participation goal, based on the availability of DBE contractors in the local area. The new DBE program will also require additional duties of the DBE Liaison Officer, new contract clauses, and more monitoring and enforcement activities during the construction period. These new responsibilities will be discussed in greater detail in the new DBE program RTC.

Caltrans is responsible for ensuring compliance with requirements for participation by disadvantaged business enterprises when local agencies develop streets and roads projects using federal funds. The City is required to implement a DBE program and establish goals for participation by disadvantaged business enterprises before a request for reimbursement is approved by Caltrans, the state oversight agency. The City adopted a formal DBE program on February 2, 1993 and has renewed this program in all subsequent federal fiscal years. (see "Exhibit A")

A renewal of the City’s DBE program is required in order to apply for federal reimbursement. The City's DBE program was prepared by staff on the basis of Caltrans guidelines. The main elements of the program are:

The annual DBE goal should be established each year to coincide with the federal fiscal year. Council is being asked to approve a DBE program for the period of October 1, 1999 through September 30, 2000. The overall DBE goal was established in federal fiscal year 1993-94 and renewed in all subsequent years using a ten percent DBE participation goal. This goal is based on an analysis of the ethnic mix in Sunnyvale and a review of the DBE requirements in surrounding jurisdictions. Since DBE is a federally mandated program, it is not in violation of State Proposition 209, which eliminates affirmative action programs.

This annual adoption of a Disadvantaged Business Enterprise Program for federally funded projects will allow the City to receive reimbursement on approximately $2.3 million in federally funded transportation grants for three capital projects. Adoption of the required DBE program would also facilitate the approval of federal funds for any other qualifying capital projects that may be approved during the federal fiscal year.

Posting of the City Council Agenda. After Council approval, a public notice of the City’s DBE Program will also be published in a local minority and majority newspaper.

1. Adopt the attached DBE Program for the current federal fiscal year.

2. Reject a renewal of the City’s existing DBE program.

Staff recommends alternative #1, adoption of the DBE program for the current federal fiscal year.