SECTION 4 CONTRACTOR COMPLIANCE
A. All MDOT compliance monitoring of all subcontractor participation will be conducted in accordance with the following:
1. Subcontractor Participation Reports: On a monthly basis, the contractor will be required to submit the subcontractor Participation Report which, at a minimum, shall include:
a. identification of the all subcontractors participating on the project;
b. type of work being done by each;
c. percentage of completion of work on project and of each subcontract;
d. dollar amount of project and each DBE/MBE contract;
e. actual monies paid during the reporting period and to date to the subcontractors;
f. work force roster of the prime contractor; and
g. comments by the contractor.
2. Fees may be counted by a contractor towards its DBE/MBE goals for the following expenditures to DBE/MBE firms that are not manufacturers or regular dealers:
a. The fees or commissions charged for providing a bona fide service, such as professional, technical, consultant or managerial services and assistance in the procurement of essential personnel, facilities, equipment, materials or supplies required for performance of the contract, provided that the fee or commission is determined by MDOT to be reasonable and not excessive as compared with fees customarily allowed for similar services.
b. The fees charged for delivery of materials and supplies required on a job site (but not the cost of the materials and supplies themselves) when the hauler, trucker, or delivery service is not also the manufacturer of or a regular dealer in the materials and supplies, provided that the fee is determined by MDOT to be reasonable and not excessive as compared with fees customarily allowed for similar services.
c. The fees or commissions charged for providing any bonds or insurance specifically required for the performance of the contract, provided that the fee or commission is determined by MDOT to be reasonable and not excessive as compared with fees customarily allowed for similar services.
3. Third tier contracting is not the usual way for a prime contractor to achieve a DBE/MBE goal. However, MDOT realizes there may be rare occasions when third tier contracting would be acceptable. Two conditions must be met before an Administration may approve a third tier contracting arrangement which may be entered into to meet a DBE/MBE goal:
a. The Administration awarding the contract must be satisfied that there is no way except by third tier contracting that a DBE/MBE goal can be achieved;
b. The prime contractor must request of the Administration, in writing, prior to the awarding of a contract, that approval be granted for each third tier contract arrangement. The request must contain the specifics as to why a third tier contracting arrangement is being requested to meet the DBE/MBE goal.
An Administration approving a third tier contract should so in writing, setting forth the parameters of the third tier contract. All records of third tier contracts will be maintained by the Administration granting approval.
Third tier contracting is to be considered the exception and not the rule. If the third tier results from a DBE/MBE subcontracting to a non-DBE/MBE third tier contractor, this participation shall not be counted as DBE/MBE participation towards goal attainment.
MBE-4.02 Non-Compliance
A. If it is determined that a contractor is not in compliance, the Administration's Representative may initiate an investigation. The Administration's Representative will notify the contractor of the results of the investigation as soon as practicable. The contractor and the Administration's Representative may meet informally to remedy any problems of compliance.
In the event conciliation fails, the Administration's Representative will inform the Administrator that the contractor is in non-compliance. The Administrator may issue a "Show Cause Notice" which will delineate the deficiencies noted in the findings, establish a compliance conference date, outline the administrative actions to be taken, and provide a forum for the contractor to show that he is in compliance. A copy of the "Show Cause Notice" will be sent to the Administration's Contract Compliance Officer.
A finding of suspected certification or DBE/MBE fraud will not be shared with the contractor, or with the DBE/MBE. The available information shall be given to the MDOT Office of MBE or the MDOT Office of General Counsel.
MBE-4.03 Contract Compliance – Trucking
A. A trucking firm, including an owner/operator trucker who wishes to participate as a DBE/MBE on any project of the Maryland Department of Transportation (MDOT), must be certified as a DBE/MBE by MDOT. Truckers, as with other subcontractors, may receive participation credit for the use of their vehicles in fulfilling contract specifications.
1. A DBE/MBE trucking company must own and have in operation at least one fully licensed, insured and operational truck to be used on a contract.
2. A DBE/MBE trucking company must perform a commercially useful function (that is, responsible for the execution of a distinct element of work of a contract and carrying out its responsibilities by performing, managing and supervising the work involved). The DBE/MBE trucker, in the light of industry practice and other relevant considerations, must have a necessary and useful role in a transaction for which there is a market outside of the context of the DBE/MBE Program. The firm's role cannot be a superfluous step added in an attempt to obtain credit goals.
3. The DBE/MBE must be responsible for the management, control and supervision of the entire trucking operation for which it is under contract on a project, without any contrived arrangement to meet DBE/MBE goals. Control includes the DBE/MBE trucker being responsible for scheduling, dispatching, paying employees, maintaining the trucks and keeping complete and accurate business records.
4. The DBE/MBE receives credit for the total value of transportation services it provides using trucks it owns, insures and operates using drivers it employs.
5. The DBE/MBE may lease trucks from another DBE/MBE firm, including owner/operators who are DBE/MBEs. Credit shall be given for total value of the transportation services the DBE/MBE provides as the subcontractor on a project.
6. The DBE/MBE may lease trucks from a non-DBE/MBE firm. When this is done, the DBE/MBE may receive credit only for the fee it receives as a result of the lease arrangement. The DBE/MBE does not receive credit for the total value of the transportation services provided since the services are not all provided by a DBE/MBE.
B. OWNER/OPERATOR
1. The DBE/MBE trucker who has ownership of one truck is an owner/operator. An owner/operator must be able to perform the contracted work items with the vehicle titled to the owner/operator.
2. The DBE/MBE trucker must have a written agreement with the prime contractor prior to performing any services on the project.
a. The written agreement shall indicate hours and/or tonnage price per load, mileage, cost of waiting time, if any, and the time of notification prior to reporting to work.
b. The written agreement should reflect the trucker's proposed goal as indicated on the prime contractor's approved Affirmative Action Plan.
c. The written agreement must be available upon the request of an Administration's Representative.
C. REGULAR DEALER
1. A DBE/MBE trucker is also a regular dealer if he or she owns and operates a warehouse or storage facility from where supplies are distributed.
2. The DBE/MBE Trucker/Regular Dealer must be recognized by the public and construction industry as a regular dealer. The DBE/MBE must also own distribution equipment to deliver bulk items too large to stockpile or store.
3. Sixty percent (60%) of the cost of supplies may be included for DBE/MBE credit (the cost should include the delivery charges) for a material hauler who is a DBE/MBE trucker who is also a regular dealer and certified as such by MDOT.
4. One hundred percent (100%) of the cost of materials is given for DBE/MBE credit when a DBE/MBE trucker is the manufacturer and operator of a material plant. A manufacturer must produce its product from raw materials. The DBE/MBE trucker must be certified as a manufacturer by MDOT.
D. LEASE/RENTAL OF VEHICLES
1. The DBE/MBE trucker may rent or lease trucks from an equipment rental firm to increase the number of trucks within the DBE/MBE firm. In this case, when the DBE/MBE trucker is responsible for the hiring and supervision of the drivers and maintenance and insurance of the trucks, these trucks are considered to be operated and controlled by the DBE/MBE trucker, therefore these trucks are counted for participation the same way as trucks owned by the DBE/MBE.
2. The DBE/MBE trucker must have a rental/lease agreement indicating the leaseholder's name, a description of the truck, including its identification number, the duration of the lease and the cost of the lease. This document shall be available for review by an Administration's Representative.
3. Any lease must indicate that the DBE/MBE has exclusive use of and control over the truck(s) under lease. The leased truck(s) may work for others during the term of the lease with the consent of the DBE/MBE as long as the DBE/MBE has absolute priority for the use of the leased truck(s). All leased trucks must display the name and identification number of the DBE/MBE firm indicating a leased truck i.e., "leased by.." A lease or written agreement includes written purchase orders.
E. MARYLANDAVIATION ADMINISTRATION REPORTING
A DBE/MBE trucker who is providing three or more trucks on a project shall submit a weekly report, "The Weekly Report of MBE Trucking Activities" to the prime contractor. The prime contractor shall submit this report to the Project Engineer as a part of the weekly payroll.
MBE-4.04 Liquidated Damages
This contract requires the Contractor to make good faith efforts to comply with the Minority Business Enterprise (“MBE”) Program and contract provisions. The State and the Contractor acknowledge and agree that the State will incur damages, including but not limited to loss of goodwill, detrimental impact on economic development, and diversion of internal staff resources, if the Contractor does not make good faith efforts to comply with the requirements of the MBE Program and MBE contract provisions. The parties further acknowledge and agree that the damages the State might reasonably be anticipated to accrue as a result of such lack of compliance are difficult to ascertain with precision.
Therefore, upon a determination by the State that the Contractor failed to make good faith efforts to comply with one or more of the specified MBE Program requirements or contract provisions, the Contractor agrees to pay liquidated damages to the State at the rates set forth below. The Contractor expressly agrees that the State may withhold payment on any invoices as a set-off against liquidated damages owed. The Contractor further agrees that for each specified violation, the agreed upon liquidated damages are reasonably proximate to the loss the State is anticipated to incur as a result of such violation.
A. Failure to submit each monthly payment report in full compliance with COMAR 21.11.03.13B (3): $23.00 per day until the monthly report is submitted as required.
B. Failure to include in its agreements with MBE subcontractors a provision requiring submission of payment reports in full compliance with COMAR 21.11.03.13B (4): $82.00 per MBE subcontractor.
C. Failure to comply with COMAR 21.11.03.12 in terminating, canceling, or changing the scope of work/value of a contract with an MBE subcontractor and/or amendment of the MBE participation schedule: the difference between the dollar value of the MBE participation commitment on the MBE participation schedule for that specific MBE firm and the dollar value of the work performed by that MBE firm for the contract.
D. Failure to meet the Contractor’s total MBE participation goal and subgoal commitments: the difference between the dollar value of the total MBE participation commitment on the MBE participation schedule and the MBE participation actually achieved.
Notwithstanding the use of liquidated damages, the State reserves the right to terminate the contract and exercise all other rights and remedies provided in the contract or by law.