In some cases, not all of the money paid to a DBE can count toward the DBE goal. In trucking for instance, if the DBE leases additional trucks (including operators) from another DBE, the total value of the transportation services counts toward the DBE goal. However, if the DBE leases additional trucks (including operators) from a non-DBE, credit towards the DBE goal is earned by the additional trucks only up to an equivalent amount to that earned by the DBE-owned trucks. For additional trucks leased from non-DBE companies, only the fee or commission paid to the DBE as a result of the lease agreement is counted toward the DBE goal.
For example, if Firm X (a DBE) owns and operates two trucks and leases three trucks from Firm Y (a non-DBE), then the costs for the trucks from Firm X and two trucks from Firm Y would count toward the DBE goal. For the additional truck from Firm Y, only the commission paid to the DBE as a result of the lease agreement would count toward the DBE goal.
For suppliers, 100 percent of the cost of materials and supplies is credited toward the DBE goal if they are obtained from a DBE manufacturer. However, if the materials are purchased from a DBE regular dealer (essentially an firm which regularly buys, stores, and sells supplies but does not manufacture them), only 60 percent of the cost of materials and supplies is credited. The cost of materials purchased from a DBE that is neither a manufacturer nor a regular dealer does not count toward the DBE goal, although the fees and commissions charged by the DBE to procure and supply those materials do count.
DBE credit for supplying paving grade asphalt and other asphalt products will only be permitted for standard industry hauling costs, and only if the DBE is owner or lessee of the equipment and trucks. Leases for trucks must be long term (extending for a fixed time period and not related to time for contract performance) and must include all attendant responsibilities such as insurance, titling, hazardous waste requirements, and payment of drivers.
In general, the entire amount of a contract that is performed by the DBE’s own forces, including the cost of supplies and materials purchased by the DBE for the work on the contract and equipment leased by the DBE will be credited toward DBE participation. However, supplies and equipment the DBE subcontractor purchases or leases from the prime contractor or an affiliate of the prime contractor will not be counted toward DBE participation.
A DBE subcontractor may enter into second-tier subcontracts that are consistent with normal industry practices. However, items that are second-tier subcontracted by a certified DBE subcontractor will not be counted toward the participation goal unless the work is subcontracted to another certified DBE or no more than 30 percent of the DBE subcontract is second-tier subcontracted to a non-DBE.
If a DBE is deemed ineligible (decertified) or suspended by the department, the DBE may not be considered to meet a contract goal on a new contract, but may be considered to meet the contract goal under a subcontract that was executed before the DBE suspension or decertification is effective.
When a committed DBE firm or a DBE prime contractor loses its DBE eligibility and a subcontract or contract has not been executed before a decertification notice is issued to the DBE firm by its certifying agency, the ineligible firm does not count toward the contract goal. In this case, the contractor must meet the contract goal with an eligible DBE firm or firms or demonstrate good faith effort. However, when a subcontract is executed with the DBE firm before the Department notified the firm of its ineligibility, the contractor may continue to use the firm on the contract and may continue to receive credit toward the DBE goal for the firm’s work.