TASK B: EVALUATION OF GDOT\u2019S OVERCONCENTRATION IN CERTAIN PROCUREMENT CATEGORIES

2015Final Report, December 2013 - September 2015PDFTech ReportFHWA-GA-16-1329GEORGIA DOT RESEARCH PROJECT 13-290012889BusinessesTruckingProcurementState departments of transportationGovernment fundingContractingDisadvantaged Business Enterprise ProgramDBEUnited StatesGeorgiaGeorgia. Dept. of Transportation. Office of ResearchBoston, Thomas D.Georgia Institute of TechnologyGeorgia. Dept. of Transportation. Office of ResearchUnited States. Federal Highway AdministrationUS Transportation CollectionThe Georgia Department of Transportation (GDOT) is a recipient of federal funds from the U.S. Department of Transportation (U.S. DOT). Therefore, it must implement a Disadvantaged Business Enterprise (DBE) Program in compliance with Federal Regulation 49 C.F.R. Part 26. To meet the legal and regulatory requirements for operating a Disadvantage Business Enterprise (DBE) Program, GDOT commissioned a Disparity Study in 2012. The study found statistical and anecdotal evidence suggesting that DBEs encountered discrimination when pursuing GDOT contracts. However, in one industry (trucking and hauling), the Disparity Study determined that 72% of the contract work went to DBEs. One implication of the finding is that the DBE Program, which was designed to remedy the effects of discrimination, may have caused an undue concentration of DBE subcontractors in the trucking industry. If true, such overconcentration could adversely affect the ability of non-DBEs to bid successfully in the industry. The Federal Regulation and legal decisions require State Departments of Transportation (State DOTs) to assess situations where overconcentration may exist and make appropriate adjustments. This report examined GDOT\u2019s contracting activity in the trucking and hauling industry exclusively. The study found that non-DBEs comprised 82.6% of all available contractors to GDOT. They accounted for 91.2% of all prequalified prime contractors, 62.8% of all registered subcontractors and 87.9% of prequalified consultants. In comparison, DBEs comprised 8.8% of prime contractors, 37.2% of subcontractors and 12.1% of consultants. However, the distribution is quite different when one focuses only on the trucking and hauling industry. That is, non-DBEs comprised 28.6% of prime contractors and 6.7% of subcontractors in the trucking industry. In contrast, DBEs in the industry made up 71.4% of prime contractors and 93.3% of subcontractors. In all other industries except trucking and hauling, DBEs made up 7.7% of prime contractors and 26.7% of subcontractors. These results suggest that over-concentration may have occurred in trucking and hauling. Unfortunately, the issue could not be investigated in detail with the data available at GDOT. That is, GDOT\u2019s data contain no information on non-DBEs that perform "off project" trucking work. In fact, most State DOTs have not collected data to execute analyses of overconcentration. The U.S. DOT recognized this gap in data in a recent national assessment. It concluded that data on overconcentration are insufficient and inconclusive, and, therefore, definitive conclusions about the issue cannot be made. This research examined nine State DOTs and found that only one had taken steps to address overconcentration and that its action created adverse impacts. The study also examined secondary industries in which DBE truckers at GDOT operated. It found that the secondary industries were so closely related to the trucking industry that DBE subcontractors would find it difficult to diversify away from trucking. The study makes numerous recommendations. The most important is that GDOT should implement a procedure to collect \u201coff project\u201d trucking activity data. It should also monitor and evaluate annually all trucking and hauling contracting