The Code of Federal Regulations, Title 49, Sections 23 and 26, 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 in Fiscal Year 1992-93 and has maintained a DBE program in each subsequent year. The City currently is involved in five federally funded projects involving the Mathilda Overpass, Borregas Bicycle Corridor, Evelyn Bike Lane, Calabazas Creek Trail and the North-South Bike Route. Federal grants committed to these projects amount to approximately $3.1 million.  Establishing a DBE program is a requirement for federal reimbursement. 

The State Department of Transportation (Caltrans) has approved the City’s DBE program for Federal Fiscal Year 2004-05.  The new DBE 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.   The City’s actual DBE participation rate on federal projects over the past three years was 9.63%. The annual DBE goal is an estimate of participation based on the expected federal project activity for that year.  Project scope, scheduling and market conditions all can influence actual participation levels.  It is anticipated that the Mathilda Overpass Improvements Project will bring actual DBE attainment in line with Program goals. Federal funds continue to be made available as long as the City has a Caltrans approved DBE Program Goal each year.

BACKGROUND

Caltrans is responsible for ensuring compliance with requirements for participation by disadvantaged business enterprises when local agencies develop streets and roadways 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.

The United States Department of Transportation (DOT) issued new regulations pertaining to the participation of Disadvantaged Business Enterprises (49 CFR Part 26) in March 1999.  Caltrans issued final DBE Program Guidelines during the Summer of 2000. The City Council approved the first amended Sunnyvale DBE program on December 19, 2000.  Caltrans has informed the City that DBE goals no longer require Council approval and are approved administratively unless there is a major change in DBE regulations.

The City has established a DBE goal of 10% for Federal Fiscal Year 2004-2005. The DBE Program and goal were submitted to Caltrans at the end of June, with Caltrans approval secured in September. The City’s actual DBE participation rate on federal projects over the past three years was 9.63%.  The annual DBE goal is an estimate of participation based on the expected federal project activity for that year.  Project scope, scheduling and market conditions can influence actual participation. Federal funds continue to be made available as long as the City has an approved DBE Program Goal by Caltrans each year.

DISCUSSION

Approval 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:

1.       Designation of a DBE Liaison Officer who will be responsible for administering the Program for the City.  Michael Chan, Senior Administrator in the Public Works Department, is currently the City of Sunnyvale’s DBE Liaison.

2.       Affirmation of the Program annually by public notices in both minority and majority local media, and trade association publications. The publication shall include an overall DBE goal.

3.       Establishment of the DBE goal. The DBE goal will be established both annually (overall) and on a per-contract basis. The overall goal will be based on planned contract activity for the coming year, and would be subject to the criteria established in the federal regulations.

The annual DBE goal should be established each year to coincide with the federal fiscal year. This goal is based on an analysis of U.S. Census Bureau and Caltrans data for Santa Clara and neighboring counties. The 10% goal represents a slight change from the previous 11% goal, which was approved for Federal Fiscal Year 2003-04.  Since DBE is a federally mandated program, it is not in violation of State Proposition 209, which eliminates affirmative action programs.

FISCAL IMPACT

This annual adoption of a Disadvantaged Business Enterprise Program for federally funded projects will allow the City to receive reimbursement on approximately $3.1 million in federally funded transportation grants for the following capital projects: