Case 47:
(2.4) FHWA's SAMPLE DECISION DOCUMENT for Use by States in Justifying "Race-Conscious" Contract Awards

Racial Preferences = Discrimination

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FHWA has helpfully provided these "model documents" for the states to use in justifying their DBE programs.  In its cover letter to the states, FWHA states:
"We ask that you use the samples provided because they have been carefully crafted [by government attorneys] to document FHWA action. It is important to note that the sample approval letter requires that you clearly identify the approved annual overall DBE goal and the race-conscious and race-neutral breakdown. All approval letters should contain this information."
MAIN: Western States

This is a copy of the FHWA's "Sample Decision Document" for the states to use in obtaining FHWA approval for their DBE goals.
Additional documents: see index, below.Down: Additional documents.
This document sets forth our reasons for approving [insert state DOT's name] DBE goal methodology and the portion of the goal to be attained by race- and gender-neutral means for FY [insert year], and [if applicable] for approving modifications to its DBE program.

Goal Setting Methodology Section 26.45

The regulations require recipients to set overall goals based on demonstrative evidence of the availability of ready, willing and able DBEs relative to all businesses ready, willing and able to participate on DOT-assisted contracts.

A. Step One- Base Figure-Section 26.45(c)
Under the regulations, the State must begin the process by determining the base figure for the relative availability of DBEs.
1. Method Selected- The regulations set forth several acceptable examples and allows for alternatives. You must identify which examples the State used or describe the alternative that was used and explain why it is acceptable.
2. Description of Data Used- The regulations allow for a variety of information to be used, including: DBE Directories and Census Bureau Data, data from a disparity study, a bidders list, goal of another DOT recipient or any other approved alternative method. Section 26.45 (c)(1)-(5). You must describe the data used, and explain how the data is adequate to determine availability of ready, willing, and able DBEs and ready, willing, and able contractors. You should also explain how the data was refined, e.g. which SIC codes were selected from the Census Bureau and why and, where appropriate, how information was collected, e.g. how did the state "create" a bidders list?
3. Description of Calculation Performed- You must describe how the calculation which established the relative availability was performed. This should include an explanation of how the factors in the calculation were established and why the State's calculation is appropriate.
4. Resulting Baseline Goal- You must describe what the State's resulting baseline goal is.

Step Two Adjustments- Section 26.45(d)

Once a base figure has been calculated, the State must examine all of the evidence available in its jurisdiction to determine if an adjustment is needed to the base figure to arrive at the overall goal. In your decision, you must list all of the evidence considered by the State under Step 2, and explain the State's reasons for making an adjustment or for deciding that an adjustment was not appropriate:

1. List types of evidence considered when adjusting the base figure- The regulations state that there are many types of evidence that must be considered when adjusting the base figure. These include: the current capacity of DBEs to perform work in the state's DOT-assisted contracting program, as measured by the volume of work DBEs have performed in recent years; evidence from disparity studies conducted anywhere within the state's jurisdiction, to the extent it is not already accounted for in the base figure; and, if the base figure is the goal of another recipient, the State must adjust it for differences in their local market and contracting program. Section 26.45 (d)(1)(i)-(iii). You must explain whether and how the state took this information into account, including an explanation of any adjustment made or why the state thought an adjustment was not necessary.
2. Describe other evidence considered- When adjusting the base figure, the State may consider available evidence from related fields that affect the opportunities for DBEs to form, grow and compete. This evidence can include: statistical disparities in the ability of DBEs to get the financing, bonding and insurance required to participate in your program; data on employment, self-employment, education, training and union apprenticeship programs, to the extent it can be related to the opportunities for DBEs to perform in the state's program; and, if the state attempts to make an adjustment to the base figure to account for the continuing effects of past discrimination or the effects of an ongoing DBE program, the adjustment must be based on demonstrable evidence that is logically and directly related to the effect for which the adjustment is sought. If any such information is available, the State must consider it, and your decision must include a discussion of the type of information available and how the State took that information into account. This includes an explanation of any adjustment made or why the State thought an adjustment was not necessary.
Public Participation Section 26.45 g
The regulation requires that the State must provide for public participation when establishing its overall goal:
A. Consultation- Describe the consultation process the State used. If possible, list which minority, women's and general contractor groups, community organization and other officials or organizations took part in the consultation process.
B. Published Notice- State the date the notice was published and the method used by the State to publish the notice.
C. Comments- Summarize briefly the comments received through the public participation process, and explain any adjustments to the goal that the State made as a result of these comments.
Race and Gender- Neutral and Conscious Measures Section 26.51
The regulations require that the State must meet the maximum feasible portion of its overall goal by using race and gender- neutral means of facilitating DBE participation. You are required to specifically approve the race and gender- neutral, race and gender- conscious division in addition to your approval of the goal setting methodology. (Hereafter, these terms are simply referred to as "race-neutral" and "race-conscious.")
A. Race-Neutral and Race-Conscious Division- In the overall goal, you must describe the projection of the portion of the goal that is expected to be met through race-neutral means and the basis for that projection. You must also describe the remaining amount of its goal that the State intends to meet through race- conscious measures.
B. Description of Information Relied Upon- You must also explain the basis for the State's race-neutral/race-conscious division and why it is the State's best estimate of the maximum amount of participation that can be achieved through race-neutral means. There are a variety of types of information that can be relied upon when determining a recipient's race-neutral/race-conscious division. Appropriate information should give a sound analysis of the recipient's market, the race-neutral measures it employs and information on contracting in the recipient's contracting area. Information that could be relied on includes: the extent of participation of DBE's in the recipient's contracts that do not have contract goals; past prime contractors achievements; excess DBE achievements over past goals; how many DBE primes have participated in the state's programs in the past; or information about state, local or private contracting in similar areas that do not use contracting goals and how many minority and women's businesses participate in programs without goals.
C. Description of the Types of Race-Neutral Measures Implemented by the State- The regulations provide guidance on what race-neutral means includes. For example: (1) arranging solicitations, times for the presentations of bid quantities, specifications and deliver schedules in ways that facilitate DBE, and other small businesses, participation, (2) providing technical assistance and other services, (3) providing assistance in overcoming limitations such as inability to obtain bonding or financing, (4) carrying out information and communications programs on contracting procedures and specific contract opportunities, (5) implementing a supportive services program to develop and improve immediate and long-term business management, record keeping, and financial and accounting capability for DBEs and other small businesses, (6) providing services to help DBEs and other small businesses, improve long-term development, increase opportunities to participate in a variety of kinds of work, handle increasingly significant projects and achieve eventual self-sufficiency, (7) establishing a program to assist new, start-up firms, particularly in fields in which DBE participation has historically been low, (8) ensuring distribution of the State's DBE directory, through print and electronic means, to the widest feasible universe of potential prime contractors, and (9) assisting DBEs, and other small businesses, to develop their capability to utilize emerging technology and conduct business through electronic media. Section 26.51 (b)(1)-(9). You must describe any or all of the race-neutral means that the State intends to utilize in meeting the race-neutral portion of its goal.
D. Description of the Types of Race-Conscious Measures the State Intends to Use- You must also identify the types of race-conscious means that the State intends to use if necessary to meet its overall goal. The measure typically used is contract goals.
Changes to The Program (Since Prior FHWA Approval)
When there has been a change to the State's program, you need to provide: (1) a description of the change, (2) which relevant part of the regulation it corresponds with, and (3) an explanation of how the change complies with the relevant portions of 49 CFR 26. Note, the detail and scope of this discussion might vary depending on the nature of the change. For States which were approved previously with a condition attached to future approvals, you should identify the condition and include the action taken by the State to address the reasons for any change to address the condition or the conditions or reasons why no action was necessary.
You should conclude with a statement to the effect that "For the above reasons, [State DOT's] goal setting methodology and race-neutral/race-conscious division for FY [Year] is approved."
Division Administrator
Attachment: copy of goal methodology approved
cc: Charles Klemstine
Civil Rights, FHWA, HQ

This page last modified on January 23, 2006

Last known link to the original FHWA memo:

END Case 47:
(2.4) FHWA Memo: State DBE Goal Setting Process


Western States Paving PAGE INDEX:
Overview 2.0 2.1 2.2 2.3 2.4 2.5 News
Intro and Summary: Western States Paving Co. Legal Case Feds' DBE Goal Setting Approval Process Memo
and overview of documents
Legal Advice:
Feds' DBE Compliance Guide to the States
Pro Forma Letter:
Feds'  Acknow-
ledgement of Receipt of State DBE Goal Plan
Pro Forma Letter:
Feds' Approval of State DBE Plan
Pro Forma Legal Document:
Feds' Detailed Long Form Approval of State DBE Plan
Feds' Questions and Answers: Impact of the Western States case on DBE Programs News Stories

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*  We use the term reverse discrimination reluctantly and only because it is so widely understood.  In our opinion there really is only one kind of discrimination.