Best practices in keeping up with VDOT's contract compliance program
In Virginia, the EEO Contractor Compliance Program protects contractors, subcontractors, vendors, consultants and suppliers of materials from discrimination based on race, color, sex, religion, national origin, disability or age, as well as provide equal opportunity through affirmative action, when necessary. The program mandates ongoing review and monitoring of prime and subcontractor EEO compliance and compliance with Disadvantaged Business Enterprise reporting. Prime contractors are turning to smart tools to track and manage evidence over the course of a project to provide a paper trail for regulators.
Disadvantaged Business Enterprises Must Be Performing a “Commercially Useful Function”
Disadvantaged Business Enterprises (DBE’s) are businesses that are at least 51% owned and controlled by “socially and economically disadvantaged” individuals. The VDOT and the prime contractor receive credits for including DBE’s in a project, but only if they are performing a “commercially useful function” or (CUF). Under Federal Law 49 CFR §26.55 a DBE is performing a CUF when they are “responsible for execution of the work of the contract or a distinct element of the work . . . .by actually performing, managing and supervising the work.” These measures come in response to contractors using DBE’s “in name only” or for trivial projects, undermining the purpose of the tax credit incentives.
Key Factors For Compliance
Federal regulations require that the following factors be used to determine whether DBE’s are performing a CUF.
● Is the DBE’s amount of work consistent with normal industry practice?
● Is the amount the DBE is paid commensurate with the work they are actually doing?
● Is the DBE responsible for choosing materials, ordering them and paying for them?
● Is the DBE merely an “extra participant” in a contrived arrangement that does not benefit the project?
● Is the DBE’s work integral to the project, or is is just a superfluous step added to obtain a credit?
Vetting every DBE in this manner is cumbersome, so a growing number of contractors are using software with document checklists such as TargetDocs to ensure that all DBE contracts are monitored for compliance in a timely manner, and readily available for inspection.