1
Questions
and
Answers
Q­
1.
§
33.102.
Elaborate
on
procurement
under
EPA
financial
assistance
agreements.
Which
programs
does
this
include?
Is
it
just
the
programs
under
the
8
and
10
percent
statutes?

A­
1.
"
Procurement
under
EPA
financial
assistance
agreements,
including
financial
assistance
agreements
to
capitalize
revolving
loan
funds
"
refers
only
to
EPA
programs
covered
under
EPA's
8%
and
10%
statutes.

EPA's
10%
statute
relates
to
any
procurement
for
research
relating
to
the
requirements
of
the
Clean
Air
Amendments
of
1990.

EPA's
8%
statute
covers
procurements
under
all
other
EPA
financial
assistance
programs,
e.
g.,
Superfund,
the
Clean
Water
State
Revolving
Fund,
the
Drinking
Water
State
Revolving
Fund
and
the
Brownfields
Cleanup
Revolving
Loan
Fund,
as
well
as
all
other
financial
assistance
programs
established
pursuant
to
EPA's
statutes.

Q­
2.
§
33.103.
DBE
has
been
defined
to
include
a
Small
Business
Enterprise,
a
Small
Business
in
a
Rural
Area;
a
Labor
Surplus
Area
Firm,
etc.
Is
this
consistent
with
the
remaining
language
in
the
rule?
Does
this
mean
that
entities
other
than
those
owned
or
controlled
by
2
socially
and
economically
disadvantaged
individuals
would
be
considered
DBE
for
the
purposes
of
certification,
good
faith
efforts,
fair
share
objectives
etc.?

A­
2.
Yes,
it
is
consistent
with
the
remaining
language
in
the
rule
for
a
DBE
to
include
a
Small
Business
Enterprise(
SBE),
a
Small
Business
in
a
Rural
Area
(
SBRA),
a
Labor
Surplus
Area
Firm
(
LSAF),
etc.

As
defined
in
33.103
of
the
proposed
rule,
a
Disadvantaged
Business
Enterprise
(
DBE)
means
an
entity
owned
or
controlled
by
a
socially
and
economically
disadvantaged
individual
as
described
by
Public
Law
102­
389
(
42
U.
S.
C.
§
4370d)
or
an
entity
owned
and
controlled
b
y
a
socially
and
economically
disadvantaged
individual
as
described
by
Title
X
of
the
Clean
Air
Act
Amendments
of
1990
(
42
U.
S.
C.
§
7601
note);
a
Small
Business
Enterprise
(
SBE);
a
Small
Business
in
a
Rural
Area
(
SBRA);
or
a
Labor
Surplus
Area
Firm
(
LSAF),
a
Historically
Underutilized
Business
(
HUB)
Zone
Small
Business
Concern,
or
a
concern
under
a
successor
program.

In
order
to
participate
as
an
MBE
or
WBE
prime
or
subcontractor
for
EPA
recipients
under
EPA's
DBE
program,
an
entity
must
be
properly
certified
(
see
33.201,
33.202(
EPA's
8%
statute),
33.203
(
EPA's
10%
statute)).
Under
the
proposed
rule,
certification
3
would
only
be
required
for
MBEs
and
WBEs
and
not
for
SBEs,
SBRAs,
LSAFs
or
a
Historically
Underutilized
business
(
HUB)
Zone
Small
Business
Concern.
For
EPA's
10%
statute,
a
disabled
American
owned
business
would
have
to
get
certified
by
EPA
because
it
is
presumed
to
be
a
DBE
regardless
of
whether
it
in
fact
is
owned
by
a
Black
American,
Hispanic
American,
Native
American,
Asian
American
or
a
woman.
Those
types
of
businesses
are
treated
as
MBEs/
WBEs
because
contracts
awarded
to
them
are
counted
towards
meeting
the
MBE/
WBE
goals.
There
is
no
other
type
of
DBE
individual
which
is
presumed
to
be
an
MBE/
WBE
which
is
not
owned
and/
or
controlled
by
an
MBE/
WBE;
there
are
no
disabled
American
owned
business
specific
goal
requirements
which
need
to
be
negotiated.

The
good
faith
efforts
apply
to
the
utilization
of
all
DBEs
(
see
33.301).

Because
of
the
wording
of
EPA's
8%
and
10%
statutes,
EPA
for
many
years
has
required
that
numerical
fair
share
objectives
be
negotiated
for
MBEs
and
WBEs,
but
not
for
other
types
of
DBEs.
The
proposed
rule
would
continue
that
policy.

The
DBE
good
faith
efforts
requirements
apply
to
recipients
of
EPA
financial
assistance
agreements
and
their
prime
contractors,
if
they
award
subcontracts.
A
4
Non
MBE
or
WBE
entity
(
a
small
Business
Enterprise
(
SBA),
Small
Business
in
a
Rural
Area
(
SBRA),
Labor
Surplus
Area
Firm
(
LSAF)
and
Historically
Underutilized
Business
(
HUB)
Zone
Small
Business
concern
("
Hub
Zone
concern"),
or
a
concern
under
a
successor
program
are
not
specifically
tied
to
the
definitions
"
socially
and
economically
disadvantaged
individuals"
(
EPA's
10%
statute)
or
"
socially
or
economically
disadvantaged
individuals"
(
EPA's
8%
statute).
EPA's
current
Part
31
"
Uniform
Administrative
Requirements
for
Grants
and
Cooperative
Agreements
to
State
and
Local
Governments
(
Note
­
these
are
government
wide
requirements),
requires
good
faith
efforts
be
made
by
recipients
and
their
prime
contractors
to
contract
with
small,
minority,
women's
business
enterprises
and
labor
surplus
area
firms.
40
CFR
31.36(
e).

EPA
is
proposing
to
add
Historically
Underutilized
Business
(
HUB)
zone
small
business
concerns
as
well
as
Small
Businesses
in
Rural
Areas,
a
subset
of
small
businesses.
While
not
specifically
mentioned
in
the
current
40
CFR
31.36(
e),
EPA
has
for
some
time
applied
the
good
faith
efforts
requirement
to
small
businesses
in
rural
areas
as
a
result
of
the
enactment
of
Public
Law
100­
590,
the
Small
Business
Administration
Reauthorization
and
Amendment
Act
of
1988
(
SBARAA).
SBARAA
requires
Federal
agencies
(
such
as
EPA)
with
substantial
procurement
5
or
grant
making
authority
to
establish
rural
area
business
enterprise
plans.
EPA's
Rural
Area
Business
Enterprise
Plan
has
applied
the
good
faith
efforts
to
SBRAs.

We
have
included
a
HUB
Zone
concern
because
it
is
our
understanding
that
at
least
in
the
direct
procurement
area
LSAFs
are
being
phased
out
and
essentially
replaced
by
these
HUB
Zone
concerns.
Therefore,
the
good
faith
efforts
would
encompass
them.

Q­
3.
§
33.104.
What
is
the
substantive
importance
of
the
availability
of
a
waiver?
What
scenario
has
been
envisioned
that
would
make
such
an
option
applicable?
In
this
section
you
have
alluded
to
the
goal
of
"...
achieve
a
level
of
MBE
and
WBE
participation
consistent
with
the
objectives
of
this
part..."
in
apparent
conflict
to
the
underinclusiveness
concerns
in
Adarand?
What
would
be
the
purpose
of
a
larger
DBE
category
if
the
good
faith
efforts
and
fair
share
objectives
are
formulated
using
only
the
earlier
MBE
and
WBE
groups?

A­
3.
EPA
believes
that
it
is
important
from
both
a
legal
and
policy
perspective
to
allow
a
recipient
to
demonstrate
that
compliance
with
a
requirement
of
the
rule
would
be
impractical
but
that
it
could
otherwise
meet
the
objectives
of
the
program
and
is
in
accordance
with
6
law.
DOT
has
a
similar
waiver
procedure.
see
49
CFR
26.15.
The
reference
to
a
"
level
of
MBE
and
WBE
participation
consistent
with
the
objectives
of
this
part"
refers
to
the
Agency's
8%
and
10%
MBE/
WBE
goals
under
EPA's
respective
8%
and
10%
statutes.

EPA
staff
do
not
understand
the
last
question
in
Q­
3.
The
fair
share
objectives
apply
only
to
MBEs
and
WBEs
(
see
33.401).
The
good
faith
efforts
apply
to
all
DBEs
(
see
33.301).

As
provided
in
section
33.203(
e),
individuals
who
are
not
members
of
a
designated
group
can
establish
that
they
have
been
impeded
in
developing
a
business
concern
as
a
result
of
racial
or
ethnic
discrimination.
As
discussed
in
A2
above,
while
fair
share
objectives
are
negotiated
only
for
MBEs
and
WBEs,
good
faith
efforts
are
required
to
be
made
to
utilize
all
DBEs
by
recipients
and
their
prime
contractors,
if
they
award
subcontracts.

Q­
4.
§
33.105­
107.
What
are
the
remedial
actions
available
to
EPA
should
a
recipient
fail
to
comply
with
any
of
the
requirements?
How
does
EPA
plan
to
monitor
and
verify
incidents
of
intimidation
and
retaliation?

A­
4.
Remedial
actions
available
to
EPA
should
a
recipient
fail
to
comply
with
any
of
the
requirements
of
the
7
DBE
rule
include
whole
or
partial
suspension,
or
termination
of
the
recipient's
award.
See,
e.
g.,
40
CFR
31.43.

EPA
plans
to
monitor
incidents
of
intimidation
and
retaliation
through
EPA
recipient
reviews
and
investigations.
EPA
intends
to
verify
incidents
of
intimidation
and
retaliation
through
contacting
appropriate
parties
upon
receipt
of
allegations
of
such
intimidation
and
retaliation.
In
addition,
Form
6100­
2,
which
is
still
in
draft
so
we
have
not
yet
formally
submitted
it
to
you
(
and
is
not
in
current
use)
would
allow
a
DBE
subcontractor
to
describe
to
EPA
any
concerns
it
might
have,
for
example,
reasons
why
the
DBE
subcontractor
believes
it
was
terminated
by
the
prime
contractor.

Q­
5.
§
33.202
How
do
entities
seeking
certification
establish
that
they
are
socially
and
economically
disadvantaged?
Is
there
a
presumption
used
or
do
these
entities
have
to
provide
disparities?
Is
this
presumption
revisited
to
verify
its
continuing
validity?

A­
5.
To
qualify
as
an
MBE
or
WBE
under
EPA's
8%
statute,
an
entity
must
establish
that
it
is
owned
or
controlled
by
socially
and
economically
disadvantaged
individuals
who
are
of
good
character
(
e.
g.,
not
a
debarred
company)
and
U.
S.
citizens.
Historically
Black
Colleges
and
Universities
(
HBCUs)
qualify
for
8
automatic
certification
as
an
MBE.
Women
are
deemed
to
be
socially
and
economically
disadvantaged.
Thus
women
only
need
to
meet
the
ownership
or
control
requirements
of
33.203(
a)­(
c)
and
demonstrate
good
character
and
U.
S.
citizenship.
All
other
entities
must
meet
the
ownership
and
control
requirements
of
33.203(
a)­(
c),
as
well
the
socially
disadvantaged
criteria
of
33.202
(
b)
and
the
economically
disadvantaged
criteria
of
33.202(
c).
There
are
no
"
disparity"
requirements
to
meet
to
qualify
as
an
MBE
or
WBE.

Under
EPA's
10%
statute,
Black
Americans,
Hispanic
Americans,
Native
Americans,
Asian
Americans,
women
and
disabled
Americans
are
presumed
to
be
socially
and
economically
disadvantaged
individuals.
In
addition,
the
following
institutions
are
presumed
to
be
owned
and
controlled
by
socially
and
economically
individuals:
HBCUs,
Minority
Institutions
(
including
Tribal
Colleges
and
Universities
and
Hispanic­
Serving
Institutions),
and
private
and
voluntary
organizations.

As
a
result
of
the
wording
of
EPA's
10%
statute,
the
specified
entities
would
only
have
to
meet
the
ownership
and
control
requirements
of
33.203(
a)
and
demonstrate
good
character
and
U.
S.
citizenship.
As
is
the
case
with
EPA's
8%
statute,
there
are
no
"
disparity"
requirements
to
meet.
9
The
presumptions
established
under
33.203(
d)
(
for
Black
Americans,
Native
Americans,
Asian
Americans,
Women
and
Disabled
Americans)
may
be
rebutted.
33.203(
f),
33.209.

The
differing
requirements
under
EPA's
8%
and
10%
statutes
arise
as
a
result
of
the
different
wording
of
these
statutes.

EPA
MBE
and
WBE
certifications
generally
last
for
three
years
after
being
granted.
To
remain
on
EPA's
list
of
certified
MBEs
and
WBEs
(
see
33.206),
after
three
years,
an
entity
must
submit
a
new
application
and
receive
a
new
certification.
(
See
33.208).

EPA
can
initiate
a
certification
determination
whenever
it
receives
credible
information
calling
into
question
an
entity's
MBE
or
WBE
eligibility
(
see
33.209(
a))
and
can
decertify
the
entity
(
see
33.209(
b)).

Q­
6.
§
33.203.
What
practical
effect
does
the
stricter
requirement
of
ownership
and
control
have
on
DBE
certification?
With
respect
to
procurement
under
the
Clean
Air
Act,
does
EPA
draw
a
distinction
between
having
one
element
of
ownership
and
control
and
having
both.
Is
it
sufficient
to
show,
under
the
10%
statute,
that
economically
disadvantaged
individuals
both
own
and
control
an
entity
despite
being
different
individuals
or
groups
of
individuals
i.
e.
the
same
10
individuals
don't
own
and
control
the
entity.

A­
6.
The
practical
effect
of
the
stricter
requirement
under
EPA's
10%
requirement
for
an
entity
to
establish
that
it
is
both
owned
and
controlled
by
DBEs
who
are
of
good
character
and
U.
S.
citizens
is
that
unless
an
entity
can
demonstrate
both
elements,
it
cannot
get
certified
for
purposes
of
EPA's
10%
statute.
That
means
that
entities
lacking
both
of
these
elements
cannot
be
counted
towards
meeting
a
recipient's
MBE/
WBE
goals.
In
addition,
a
recipient
only
would
have
to
take
good
faith
efforts
towards
DBEs
whenever
procuring
construction,
equipment,
services
and
supplies.
Thus,
unless
an
entity
meets
both
elements,
a
recipient
would
not
be
under
any
obligation
to
make
good
faith
efforts
to
solicit
such
an
entity
whenever
procuring
one
of
the
four
categories
under
EPA's
10%
statute.
The
need
for
an
entity
to
be
both
owned
and
controlled
by
a
socially
and
economically
disadvantaged
individual(
s)
derives
from
the
wording
of
EPA's
10%
statute.

In
EPA's
view
it
would
not
be
sufficient
for
a
DBE
entity
to
show
that
it
owns
the
company
while
another
DBE
controls
it
because
EPA
can
only
certify
an
entity
for
purposes
of
its
10%
statute
if
that
entity
is
both
owned
and
controlled
by
the
DBE
seeking
certification
(
see
33.102,
definition
of
a
DBE,
33.203,
qualification
as
an
MBE
or
WBE
under
EPA's
10%
11
statute).

Q­
7.
§
33.204.
What
must
individuals
who
are
not
members
of
one
of
the
designated
groups
do
to
establish
that
they
have
been
impeded
in
developing
a
business
concern
as
a
result
of
racial
or
ethnic
discrimination.
Is
there
a
procedure
for
them
to
follow?
Who
would
make
the
determination
of
their
eligibility?
What
guidance
would
that
individual
follow?
Have
we
disregarded
the
possibility
of
small
business
eligibility
as
in
the
DOT
rule?

A­
7.
An
entity
that
wishes
to
become
certified
by
EPA
as
a
DBE
will
have
to
complete
an
EPA
Certification
Application/
[
EPA's
certification
forms
are
not
yet
finalized
­
we
will
be
sending
then
to
you
for
review
in
the
near
future].
For
example,
any
individual
claiming
social
disadvantage
who
is
not
a
member
of
a
designated
group
would
be
able
to
explain
why
it
believes
it
has
personally
suffered
social
disadvantage
and
economic
disadvantage.
The
process
for
becoming
certified
as
an
MBE
or
WBE
is
set
forth
in
33.205.
Small
businesses
(
we
are
assuming
that
you
mean
businesses
owned
and/
or
controlled
by
a
nondesignated
group
member)
could
file
for
MBE
or
WBE
certification
under
the
procedures
set
forth
in
33.205.

Q­
8.
§
33.205.
Will
entities
with
existing
certification
12
under
SBA,
DOT,
or
either
the
MBE
or
WBE
automatically
have
DBE
certification?
Would
they
have
to
apply
for
a
reciprocal
recognition?
Will
EPA
inform
entities
of
any
additional
criteria
they
would
still
need
to
meet
if
their
state,
local,
or
tribal
certifications
were
insufficient.
What
is
the
cost
to
an
individual
entity
from
seeking
certification
through
EPA
versus
another
federal
agency
or
a
state
or
local
agency?
How
applicable
would
EPA
certification
be
for
someone
who
would
later
seek
a
state,
local,
tribal,
or
other
federal
agency
certification?
Why
is
it
necessary,
if
EPA
is
willing
to
certify,
to
require
pursuit
of
alternative
certification
prior
to
applying
with
EPA?
What
is
the
enforcement
mechanism
for
currently
certified
entities
to
report
any
change
in
circumstances
that
would
affect
their
status
as
a
DBE?

A­
8.
Entities
with
existing
SBA
certifications
under
SBA's
8(
a)
Business
Development
Program
or
its
Small
Disadvantaged
Business
(
SDB)
Program
would
have
automatic
MBE
or
WBE
certification
(
SBA
requires
U.
S.
citizenship
for
eligibility.
see
13
CFR
124.101
for
8(
a)
program
requirements
and
13
CFR
124.1002(
d)
for
SDB
program
requirements)
upon
presentation
to
EPA
of
their
existing
SBA
certifications.
Entities
with
existing
DOT
certifications
would
have
automatic
DBE
certifications
so
long
as
they
are
U.
S.
citizens
(
DOT
allows
lawfully
admitted
permanent
residents
to
13
qualify
for
certification
under
its
DBE
Program
(
49
CRF
26.67)).
EPA
envisions
that
an
entity
with
a
DOT
certification
would
fill
out
the
first
part
of
a
DBE
certification
Form
(
section
A).
If
the
applicant
is
not
a
U.
S.
citizen
the
application
states
the
applicant
is
not
eligible
to
participate
as
a
DBE
under
EPA's
DBE
Certification
Program.
In
accordance
with
section
205(
b),
EPA
will
advise
each
applicant
what
additional
criteria
it
would
have
to
provide
if
its
State,
local
or
Tribal
certifications
were
insufficient.

EPA
does
not
currently
possess
information
regarding
certification
costs
for
State
or
local
agencies.
In
its
ICR
for
this
proposed
rule
EPA
estimates
the
annual
labor
burden
and
costs
for
certification
under
the
Agency's
DBE
program
to
be
25
hours
at
a
cost
of
$
1300.
These
estimates
are
derived
from
DOT's
ICR
estimates
for
certification
in
its
analysis
of
burden
hours
(
25
hours
per
certification)
and
costs
($
1300
per
certification)
under
40
CFR
Part
26.
SBA's
SDB
program
forms
were
estimated
to
take
three
hours
to
complete.
EPA
lacks
further
cost
data
regarding
SBA's
SDB
program,
as
we
have
been
unable
to
obtain
a
copy
of
SBA's
ICR
for
that
program.

EPA
certification
criteria
are
based
on
the
wording
of
EPA's
8%
and
10%
statutes.
Accordingly,
EPA
does
not
know
how
applicable
an
EPA
certification
would
be
for
someone
who
would
later
seek
a
State,
local,
14
Tribal
or
other
federal
agency
certification;
however,
EPA
believes
that
an
EPA
certification
under
its
10%
statute
requiring
both
ownership
and
control
of
a
business
should
suffice
for
most
other
entities
(
i.
e.,
it
would
meet
SBA
criteria
as
well
as
DOT
certification
criteria).
Because
EPA's
8%
statute
only
provides
for
ownership
or
control
criteria,
those
companies
which
get
certified
under
EPA's
8%
statute
that
are
not
both
owned
and
controlled
by
a
socially
and
economically
disadvantaged
individual
would
not
meet
SBA
or
DOT
Criteria.

EPA
OSDBU
has
a
small
staff
and
does
not
at
this
time
know
the
full
extent
of
resources
which
will
be
available
to
it
to
administer
the
DBE
program.
Accordingly,
in
order
to
minimize
the
administrative
burden
on
EPA,
we
are
proposing
to
require
alternative
certification
before
an
entity
applies
to
EPA.
Additionally,
at
the
public
meetings
to
discuss
the
staff
draft
rule
held
across
the
country,
EPA
representatives
were
informed
by
numerous
participants
that
their
companies
already
were
certified
(
e.
g.,
by
SBA
or
DOT).

Under
section
33.210(
a)
an
EPA­
certified
entity
must
inform
the
Agency
through
an
annual
affidavit
that
there
have
been
no
changes
in
the
entity's
circumstances
affecting
its
DBE
status.
Under
section
33.210(
b)
an
EPA­
certified
entity
must
inform
EPA
15
within
30
calendar
days
of
the
occurrence
of
any
changes
in
circumstances
affecting
its
DBE
status.
In
addition
under
section
33.209,
EPA
can
reevaluate
the
MBE
or
WBE
status
of
an
entity
after
the
Agency
has
already
certified
it
and
can
decertify
such
an
entity.

Q­
9.
§
33.206.
How
would
the
list
of
certified
MBEs
and
WBEs
on
the
EPA
OSDBU's
home
page
be
different
from
the
entire
group
that
would
qualify
as
DBEs?
Would
EPA
automatically
count
entities
that
are
certified
under
SBA
or
DOT?
Would
these
entities
have
to
apply
for
inclusion
in
these
lists?

A­
9.
EPA
will
maintain
a
list
of
EPA
certified
MBEs
and
WBEs
under
its
DBE
program.
That
list
therefore
may
not
include
all
potentially
qualified
DBEs.
It
would
include
all
entities
certified
under
SBA's
DBE
programs
if
they
wished
to
become
certified
under
EPA's
DBE
program;
DOT
certified
DBEs
would
be
included
so
long
as
they
wished
to
become
certified
under
EPA's
DBE
program
if
they
are
U.
S.
citizens.

Q­
10.
§
33.208.
Why
are
entities
required
to
submit
a
new
application
every
three
years
if
they
are
concurrently
required
to
submit
an
annual
affidavit
affirming
their
eligibility?

A­
10.
EPA
has
modeled
this
provision
after
DOT's
16
regulatory
provisions.
See
49
CFR
26.83(
h),
and
(
j).
DOJ's
Civil
Rights
Division
advised
EPA
staff
to
follow
DOT
provisions
in
this
regard.

Q­
11.
§
33.211­
214.
What
is
the
efficiency
gain
to
EPA
from
employing
private
certifiers?
What
are
the
costs
of
oversight
to
the
agency
from
monitoring
these
private
certifiers?

A­
11.
EPA
has
not
determined
whether
it
will
or
will
not
contract
with
private
certifiers
to
assist
the
Agency
in
its
determination
of
whether
an
entity
applying
for
MBE
or
WBE
certification
is
owned
and/
or
controlled
by
one
or
more
individuals
claiming
disadvantaged
status.
To
a
great
extent,
EPA's
decision
will
be
based
on
the
resources
which
will
be
available
to
it
to
implement
to
Agency's
certification
program.
EPA
currently
lacks
information
regarding
the
costs
of
oversight
to
the
Agency
from
monitoring
these
private
certifiers,
but
at
this
time
does
not
believe
the
costs
would
be
significant.

Q­
12.
§
30.301
(
Good
faith
efforts).
Number
3
requires
a
recipient
to
divide
total
requirements,
when
feasible,
into
smaller
tasks
or
quantities
in
order
to
increase
opportunities
for
DBE
participation.
First,
the
rule
text
should
read
'
economically
feasible'
in
order
to
conform
to
the
way
the
concept
is
presented
in
the
preamble.
Second,
EPA
needs
to
better
define
17
economic
feasibility
in
the
preamble.
Does
this
mean
when
no
economic
efficiency
is
lost
due
to
division
of
requirements?
Is
there
a
particular
amount
of
inefficiency
that
is
acceptable
in
order
to
achieve
DBE
participation?
How
would
the
role
of
oversight
be
handled
when
a
consortium
of
DBEs
is
awarded
the
contract?

A­
12.
We
will
change
the
rule
text
in
Section
33.301(
c)
you
have
requested,
i.
e.
to
add
"
economically"
before
the
word
"
feasible".
Leaving
out
"
economically"
in
the
rule
while
including
it
in
the
preamble
was
an
oversight
on
our
part.

The
concept
of
economic
feasibility
currently
contained
in
40
CFR
31.36(
e)
has
been
in
EPA's
Part
31
Regulations,
Uniform
Administrative
Requirements
for
Grants
and
Cooperative
Agreements
to
State
and
local
Governments
(
Note­
these
are
government­
wide
requirements)
since
March
11,
1988.
These
requirements
incorporate
provisions
of
Office
of
Management
and
Budget
revision
of
Circular
A­
102,
"
Grants
and
Cooperative
Agreements
with
State
and
local
Governments".
(
March
10,
1988).
They
also
appear
in
OMB
Circular
A­
102,
Attachment
O,
January,
1981.
We
have
been
unable
to
find
any
discussion
of
this
concept
in
these
requirements.
In
the
preamble
to
the
proposed
rule,
the
Agency
gave
guidance
in
implementing
this
provision
as
follows:
18
(
a)
perform
an
analysis
to
identify
portions
of
work
that
can
be
divided
and
performed
by
qualified
DBEs;
(
b)
scrutinize
the
elements
of
the
total
project
to
develop
economic
units
of
work
that
are
within
the
bonding
range
of
DBEs;
and
(
c)
conduct
meetings,
conferences,
and
follow­
ups
with
DBE
associations
and
minority
media
to
inform
these
groups
of
opportunities
to
provide
construction,
equipment,
services
and
supplies.

EPA
is
unable
to
elaborate
further
on
this
concept
at
this
time,
except
to
state
that
what
may
be
economically
feasible
for
a
large
construction
project,
for
example,
might
not
be
economically
feasible
for
a
separate
architect/
engineering
contract
for
that
same
project.
It
would
seem,
as
a
general
matter,
that
larger
complex
construction
projects
may
be
more
likely
to
lend
themselves
to
situations
where
it
would
be
economically
feasible
for
them
to
be
divided
into
smaller
less
complex
types
or
quantities
than
smaller
types
of
projects.

EPA
oversight
when
a
consortium
of
DBEs
is
awarded
a
contract
would
be
similar
to
its
oversight
when
a
single
entity
is
awarded
a
contract.
See
A­
4
above.

Q­
13.
§
30.302.
Does
written
notification
prior
to
termination
imply
that
recipients
may
disallow
the
prime
19
contractor
from
proceeding
with
termination
of
a
DBE
subcontractor?
What
are
the
efficiency
losses
from
repeating
the
six
good
faith
efforts
versus
alternative
methods
for
selecting
a
replacement
subcontractor?
The
preamble
discussion
of
this
part
states
that
a
recipient
must
require
its
contractor
to
continue
making
good
faith
efforts
even
after
'
fair
share'
objectives
have
been
met.
I
do
not
see
this
in
the
rule.
If
it
were
in
the
rule,
I
would
question
whether
we
want
to
take
on
additional
inefficiency
(
see
comment
above)
after
the
objectives
are
met.
For
the
moment,
I
would
recommend
striking
the
text
from
the
preamble
as
it
does
not
appear
in
the
rule.

A­
13.
The
provision
in
30.302(
b)
that
a
recipient
must
be
notified
in
writing
by
its
prime
contractor
prior
to
any
termination
of
a
DBE
subcontractor
for
convenience
does
not
imply
that
recipients
may
disallow
the
prime
contractor
from
proceeding
with
termination
of
a
DBE
subcontractor
pursuant
to
EPA
regulations.
Recipients
may
impose
various
requirements
upon
their
contractors
so
long
as
they
do
not
violate
EPA
requirements,
but
30.302
does
not
imply
that
a
recipient
may
disallow
a
prime
contractor
from
proceeding
with
termination
of
a
DBE
subcontractor.
Please
note,
however,
if
a
DBE
subcontractor
fails
to
complete
work
under
the
subcontract,
the
recipient
must
require
the
prime
contractor
to
employ
the
six
good
faith
efforts
described
in
33.301
if
soliciting
a
20
replacement
subcontractor.
In
the
absence
of
this
requirement,
if
a
recipient's
own
procurement
procedures
allow
for
a
sole
source
replacement
subcontractor,
there
would
be
some
degree
of
efficiency
lost.
EPA
lacks
sufficient
data
to
quantity
such
loss.

Section
33.302(
d)
of
the
rule
provides
that
"
a
recipient
must
require
its
prime
contractor
to
employ
the
six
good
faith
efforts
even
if
the
contractor
has
achieved
its
fair
share
objectives
under
Subpart
D."
EPA
believes
that
it
important
for
this
language
to
remain
in
the
rule
in
order
for
recipients
and
others
not
to
view
the
program
as
a
quota
program.
Indeed,
just
because
a
recipient
achieves
its
MBE/
WBE
fair
share
goals,
for
example
early
in
the
year,
conceivably
it
could
achieve
greater
MBE/
WBE
participation
as
time
progressed
later
on
that
year.

Q­
14.
§
33.405.
It
would
be
more
efficient
to
centralize
the
determination
of
base
figures
for
the
overall
objective
rather
than
have
recipients
generate
duplicative
figures
in
overlapping
regions
using
inconsistent
methodologies.
How
may
capacity
considerations
revise
the
base
figures?
If
DBEs
are
underutilized
in
regions
then
the
base
figures
which
are
based
on
availability
will
certainly
exceed
the
capacity
figures.

A­
14.
EPA
agrees
that
it
might
be
more
efficient
to
21
centralize
the
determination
of
base
figures
for
the
overall
objective
rather
than
have
recipients
generate
duplicative
figures
in
overlapping
regions
using
inconsistent
methodologies.
However,
EPA
lacks
the
resources
to
centralize
the
figures.
Furthermore,
EPA
does
not
believe
in
a
"
one
size
fits
all"
determination.
A
significant
number
of
States
and
local
governments
have
performed
disparity
studies/
availability
analyses
to
justify
their
own
MBE/
WBE
programs
using
methodologies
which
may
differ
from
each
other.
EPA
does
not
want
to
find
itself
in
a
position
of
having
to
tell
a
State
for
example,
that
its
methodology
may
be
flawed,
and
"
here
is
a
better
way
to
do
it"
when
the
Agency
does
not
believe
there
is
one
magical
format
to
fit
all.

EPA's
methodology
for
calculating
base
figures
is
derived
from
DOT's
methodology
in
its
rule
for
participation
by
DBEs
in
DOT
programs
(
see
49
CFR
26.45).
OMB
approved
DOT's
methodology.
Additionally,
due
to
the
uniqueness
of
EPA's
DBE
Program,
the
Agency
has
tried
to
accommodate
States
and
others
who
have
done
their
own
disparity
studies/
availability
analyses.

Under
33.405(
a)
a
recipient
needs
to
determine
its
fair
share
objectives
based
on
demonstrable
evidence
of
the
number
of
qualified
MBEs
and
WBEs
in
the
relevant
geographic
market
for
each
of
the
four
22
procurement
categories.
It
is
only
after
calculating
a
base
figure
that
a
recipient
needs
to
examine
the
evidence
available
in
its
jurisdiction
to
determine
what
adjustment,
if
any,
is
needed
to
the
base­
figure
in
order
to
arrive
at
the
fair
share
objective.
Included
in
such
evidence
would
be,
for
example,
the
current
capacity
of
MBEs
and
WBEs
to
perform
contract
work
under
EPA
financial
assistance
agreements,
as
measured
by
the
volume
of
work
MBEs
and
WBEs
have
performed
in
recent
years.
33.405(
c)(
A).
EPA
currently
does
not
know
whether
or
not
in
a
given
situation
where
DBEs
are
underutilized
that
the
base
figures
based
on
availability
will
exceed
the
capacity
figures.
In
general,
however,
it
would
seem
that
the
base
figures
would
exceed
the
capacity
figures
whether
DBEs
are
underutilized
or
not.

Q­
15.
§
33.408.
Could
you
explain
what
aspects
of
the
Good
faith
efforts
in
subpart
C
are
race
and/
or
gender
neutral?
Does
it
achieve
neutrality
by
incorporating
the
larger
DBE
category?
How
would
race
and/
or
gender
conscious
actions
differ?

A­
15.
All
of
the
good
faith
efforts
listed
in
subpart
C,
which
apply
to
all
DBEs,
are
race
and
/
or
gender
neutral.
Race
and
or
gender
conscious
actions
(
see
33.408)
include
actions
such
as,
among
other
things,
price
incentives
and
technical
evaluation
credits.
A
recipient
must
notify
EPA
in
advance
of
any
race
23
and/
or
gender
conscious
efforts
it
plans
to
take;
any
use
of
race
and/
or
gender
conscious
efforts
must
not
result
in
the
selection
of
an
unqualified
MBE
or
WBE.
(
See
33.408(
b)).

Q­
16.
§
33.410.
The
language
of
§
33.301
is
sufficiently
flexible
to
make
determination
of
a
sufficient
good
faith
effort
subject
to
interpretation.
There
is
substantial
discretion
for
recipients/
contractors
in
the
areas
of
outreach
and
recruitment
activities,
time
frames
for
contracts
and
delivery
schedules,
considering
whether
firms
could
subcontract
with
DBEs,
and
encouraging
contracting
with
a
consortium
of
DBEs.
This
introduces
a
level
of
uncertainty
and
unspecified
risk
of
remedial
action
to
recipients
and
prime
contractors
who
may
not
achieve
fair
share
objectives.
In
order
to
avoid
this
risk,
recipients/
prime
contractors
may
then
treat
the
objective
as
a
binding
quota
despite
the
language
of
this
rule.
Therefore,
elaborating
on
what
would
constitute
a
good
faith
effort
is
essential.

In
addition,
Please
prepare
a
side­
by
side
chart
that
compares
the
financial
assistance
DBE
approach
you
are
proposing
to
the
FAR
approach
for
procurement,
showing
the
differences.

A­
16.
Both
in
the
preamble
language
discussion
of
section
33.410,
and
in
the
rule
itself,
EPA
has
made
it
clear
24
that
a
recipient
cannot
be
penalized
solely
because
its
MBE
or
WBE
participation
does
not
meet
its
applicable
fair
share
objective.
Remedial
action
can
occur
if
the
good
faith
effort
requirements
are
not
followed.
In
section
301
of
the
preamble
EPA
offers
numerous
examples
of
what
in
the
Agency's
view
constitutes
good
faith
efforts.
Recipients
are
not
allowed
to
use
quotas
in
procurements
under
EPA's
8%
or
10%
statutes
(
see
33.409).
OMB
has
advised
EPA
staff
to
hold
off
preparing
a
side
by
side
chart.

Q­
17:
Which
State's
MBE/
WBE
certification
programs
do
not
meet
the
proposed
EPA
certification
standard?
(
This
question
was
originally
asked
by
Carol
Dennis
at
the
time
of
the
initial
OMB
briefing
and
was
not
a
part
of
the
original
written
questions).

A­
17:
The
United
States
Department
of
Transportation
(
DOT)
requires
all
states
who
receive
DOT
funding
to
implement
and
administer
its
Disadvantaged
Business
Enterprise
(
DBE)
Certification
Program
at
the
State
level.
Indeed,
all
States
have
done
so,
and
do
have
functioning
DBE
certification
programs
through
their
State
Departments
of
Transportation.
EPA's
proposed
certification
program
accepts
certifications
from
DOT,
and
therefore,
from
its
State­
implemented
and
operated
program,
as
long
as
EPA's
U.
S.
citizenship
requirement
is
met.
25
However,
aside
from
State
Departments
of
Transportation
DBE
certification
programs,
most
States
have
separate
MBE/
WBE
certification
programs
that
certify
contractors
who
wish
to
do
business
with
the
State
outside
of
the
area
of
transportation
related
contracting.
The
certification
requirements
for
States
falling
into
this
category
meet
the
proposed
EPA
standard,
in
large
part.
The
differences
occur
in
the
area
of
EPA's
personal
net
worth
limitation.
Most
of
the
State
MBE/
WBE
certification
requirements
are
silent
as
to
net
worth,
while
EPA
proposes
to
require
an
initial
and
required
personal
net
worth
limitation
of
less
than
$
750,000.
There
are
also
business
size
standard
differences.
However
those
differences
do
not
render
the
State
certification
programs
insufficient
because
the
proposed
EPA
certification
requirements
do
not
have
size
standards.
Finally,
many
of
the
States
in
this
category
were
silent
on
U.
S.
citizenship
requirements,
and
the
proposed
EPA
program
requires
U.
S.
Citizenship.

The
following
states
do
not
meet
the
proposed
EPA
certification
requirement
standards,
because
they
do
not
have
MBE/
WBE
certification
programs
outside
of
their
state
department
of
transportation
DBE
certification
programs:
26
1
Michigan
certifies
disabled­
owned
businesses
only.

2
Oklahoma
certifies
women­
owned
businesses,
only.
Minority­
owned
business
are
certified
by
private
entities.

3
South
Dakota
does
not
certify
MBE's
and
WBE's,
but
does
require
and
accept
self­
certifications
from
such
entities.
Alabama
Maine
New
Mexico
Alaska
Michigan1
North
Dakota
Arkansas
Montana
Oklahoma
2
California
Nebraska
South
Dakota
3
Hawaii
Nevada
Utah
Idaho
New
Hampshire
Vermont
Louisiana
Wyoming
*
It
is
important
to
note
that
these
are
OSDBU's
initial
findings.
A­
17
is
subject
to
review
by
EPA's
Office
of
General
Counsel.
