This is a follow-up to my June 27, 2017 article regarding the Washington State Department of Transportation’s (WSDOT) decision to exclude non-minority woman-owned businesses to meet Disadvantaged Business Enterprise (DBE) goals on federally funded contracts.

As reported, on June 1, WSDOT implemented a waiver from the United States Department of Transportation (USDOT) that excluded from consideration non-minority woman-owned businesses from meeting DBE contract goals on WSDOT projects. WSDOT requested the waiver in 2014 because a study performed by BBC Research and Consulting (BBC) concluded that non-minority woman-owned businesses did not face disparities in performing work on WSDOT projects.

Yet, less than four months later, in a September 13 letter, WSDOT asked USDOT to rescind the waiver because a new study showed that non-minority woman-owned businesses were actually facing disparities on WSDOT contracts. The initial DBE study analyzed “data from federal fiscal years 2009 through 2011 and demonstrated that non-minority women-owned DBEs did not face substantial disparity. Based on the results of this study, and in order to maintain a legally defensible and narrowly tailored DBE Program, WSDOT requested a waiver to remove non-minority woman owned DBEs from the race and gender-conscious component of the DBE Program.” In April 2016, WSDOT hired Colette Holt & Associates (CHA) to conduct an updated “DBE Program Disparity Study.” This new study analyzed contracts between federal fiscal years 2012 through 2015. CHA concluded that “the survey results strongly suggest that minorities and women continue to suffer discriminatory barriers to full and fair access to contracts and associated subcontracts.” In addition, the study published the following findings from their anecdotal survey, in which 78 minority- and women-owned firms participated:  

• 64.10% answered yes to the question “Do you experience barriers to contracting opportunities based on race and/or gender?”
• 64.10% answered yes to the question “Do you have access to informal and formal networking information and have the same access to the same information as other non-DBE firms in your industry?”
• 64.10% answered yes to the question “Do you have access to informal and formal networking information and have the same access to the same information as other non-DBE firms in your industry?”
• 56.41% answered yes to the question “Is your competency questioned based on your race and/or gender?”
• 11.6% reported they have unequal access to insurance; 16.67 % reported they have unequal access to surety bonding services; and 29.49% reported they have unequal access to financing and business capital.
• 65.38% reported they are solicited for WSDOT or government projects with DBE goals.
• 56.41% reported they are solicited for private projects and projects without DBE goals.
• 48.72% stated that WSDOT and/or prime contracts pay them promptly.
• 48.72% reported they experience job-related sexual or racial harassment or stereotyping.
• 24.36% stated they experience discrimination from suppliers or subcontractors because of their race and/or gender.
• 40.26% had accessed some type of supportive services or other program to assist DBEs and small firms:
  • 7.79% had participated in financing or loan programs;
  • 9.09% had accessed bonding support programs;
  • 12.99% had participated in a mentor-protégé program or relationship;
  • 18.18% had received support services such as assistance with marketing, estimating, information technology, etc.; and
  • 20.78% had joint ventured with another firm.

BBC’s study (which had been heavily criticized by many organizations as being fundamentally flawed) analyzed contracts between federal fiscal years 2009 and 2011, but reached a wholly different conclusion—non-minority woman-owned businesses should be excluded from satisfying DBE goals on WSDOT projects. The waiver was valid until 2020 and allowed WSDOT to extend it at its request or “until it is no longer necessary.” The waiver apparently became no longer necessary within just a few months after it was implemented.

Although the CHA study comes just five years after BBC performed its study, WSDOT claims that the waiver to preclude non-minority woman-owned businesses from meeting DBE goals “is no longer reflective of current marketplace conditions in Washington State.” WSDOT has asked USDOT to expedite the handling of the rescission so that non-minority woman-owned businesses can be used to meet DBE goals on WSDOT contracts.

Since the waiver has not been rescinded by USDOT, the waiver is still in effect for WSDOT projects that receive federal funding. Contractors should carefully review the language in the contracts that they are bidding to ensure that they are complying with the DBE requirements. 

Column first appeared in the Daily Journal of Commerce on November 20, 2017.