DBE & SL/DBE Programs

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Commercially Useful Function (CUF) and Good Faith Efforts (GFE) Guidelines

Commercially Useful Function (CUF)

The DBE Office evaluates the amount of work subcontracted, industry practices, whether the amount the firm is to be paid is commensurate with the work it is actually performing and the DBE credit claimed for the performance of the work, and other relevant factors.

For the entire rule, refer to: 49 CFR 26.55(c), (d).

Items of note:

  • "A DBE performs a commercially useful function when it is responsible for execution of the work of the contract and is carrying out its responsibilities by actually performing, managing, and supervising the work involved."
  • "If a DBE does not perform or exercise responsibility for at least 30 percent of the total cost of its contract with its own work force, or the DBE subcontracts a greater portion of the work of a contract than would be expected on the basis of normal industry practice for the type of work involved, you must presume that it is not performing a commercially useful function."
  • A firm is not providing a CUF "if its role is limited to that of an extra participant in a transaction, contract or project through which funds are passed in order to obtain the appearance of DBE participation."
  • "The DBE must be responsible for the management and supervision of the entire trucking operation for which it is responsible on a particular contract..."
  • "The DBE must itself own and operate at least one fully licensed, insured, and operational truck used on the contract."
  • "The DBE may lease trucks without drivers from a non-DBE truck leasing company. If the DBE leases trucks from a non-DBE truck leasing company and uses its own employees as drivers, it is entitled to credit for the total value of these hauling services."

Good Faith Efforts (GFE)

Good faith efforts are efforts to obtain participation by certified DBEs on the contract. Efforts to include firms not certified as DBEs in the state where the contract is being let are, consequently, not good faith efforts to meet a DBE contract goal. This is true even if a non-certified firm is owned by minorities or women or is certified in another state.

For the entire rule, refer to: 49 CFR 26.53.

If Prime is requested to provide a Schedule of Contract Participation, and the set contract goal will not be met, attach this Documentation of Good Faith Efforts Form to the Schedule of Contract Participation submission.

The DBELO must determine if a bidder/respondent has made good faith efforts. Following are examples of such:

  • Documents that it has obtained enough DBE participation to meet the goal; or
  • Documents that it made adequate good faith efforts to meet the goal, even though it did not succeed in obtaining enough DBE participation to do so.
  • In the event of any post-bid, pre-award, or post-award request for substitution or removal, before transmitting to you its request to terminate and/or substitute a DBE subcontractor, the prime contractor must give notice in writing to the DBE subcontractor, with a copy to you, of its intent to request to terminate and/or substitute, and the reason for the request. The prime contractor must give the DBE five days to respond to the prime contractor's notice and advise you and the contractor of the reasons, if any, why it objects to the proposed termination of its subcontract and why you should not approve the prime contractor's action.
  • When a DBE subcontractor is terminated or fails to complete its work on the contract for any reason, the prime contractor must make good faith efforts to find another DBE subcontractor to substitute for the original DBE.

 

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