(DBE) goal
FEDERAL FISCAL YEARS 2014-2016 DISADVANTAGED BUSINESS ENTERPRISE PROGRAM METHODOLOGY FOR THE
INDIANAPOLIS AIRPORT AUTHORITY INDIANAPOLIS, INDIANA SEPTEMBER 2013
METHODOLOGY for Establishing the Overall Disadvantaged Business Enterprise (DBE) Goal for FFY 2014-2016 for: Indianapolis International Airport, Indianapolis IN In fulfillment of the requirements of Title 49 Code of Federal Regulations Part 26 (49 CFR Part 26), the Indianapolis Airport Authority has developed a proposed Overall Goal for FFY 2014-2016 for Airport Improvement Program (AIP)-funded projects at the six airports operated by the Airport Authority. The methodology used to establish this goal is described herein.
I.
Detailed Methodology: Specific Steps A. Amount of Goal The overall DBE goal for FFY 2014-2016 for the Indianapolis Airport Authority (the ‘Airport Authority’) is 13.7%. The overall goal represents the percentage of federal financial assistance that will be expended in United States Department of Transportation (USDOT)-assisted contracts with DBE firms. The Airport Authority expects to let approximately $54,801,228 in federally-funded projects over the next three years. This means that the Airport Authority has set a goal of expending approximately $7,531,698 with DBEs over the next three years. B. Determination of the Market Area of the study The normal market area is derived by determining where the substantial majority of contracting dollars for AIP-funded projects were spent, and from where the majority of bidders over a given period of time have come. Based on discussions with the Airport staff, and reviewing recent projects bid at the Airport, the normal market area for the Airport Authority is detailed in Table 1. The market area was established using the counties from where the substantial majority of bidders (83.7%) in the past three (3) fiscal years have come for previous construction projects and where the substantial majority of dollars (82.3%) have been spent for previous projects.
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Table 1a: Counties in the Local Market Area by expenditures COUNTY
Expenditures $1,339,061 $180,270 $97,957 $10,082,123 $11,699,411 $2,519,368 $14,218,778
Hamilton Hendricks Johnson Marion SUBTOTAL Others TOTAL
Percentage of dollars Expended 9.4% 1.3% 0.7% 70.9% 82.3% 17.7% 100.0%
Source: Indianapolis International Airport
Table 1b: Counties in the Local Market Area by number of bidders COUNTY Boone Hamilton Hancock Hendricks Johnson Marion Shelby Subtotal Other Counties TOTAL
Number of Bidders
% of Bidders
2 3 1 4 1 75 1 87 17 104
1.9% 2.9% 1.0% 3.8% 1.0% 72.1% 1.0% 83.7% 16.3% 100.0%
Source: Indianapolis International Airport
C. Determination of relevant North American Industry Classification System (NAICS) codes Based on information provided by the Airport Authority concerning the proposed projects for FFY 2014-2016, a list of NAICS codes corresponding to these projects was developed and is shown below:
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Table 2: Indianapolis International Airport—FFY 2014-2016 Projects & Activities FFY 2014 Projects PROJECT INDIANAPOLIS INTERNATIONAL AIRPORT Rehabilitate Taxiway B Rehabilitate Runway 5L-23R Phase I Rehabilitate Taxiways A & D Stormwater and Deicing Controls and Capacity Phase 2 Rehabilitate Apron at Old Terminal 2014 Aircraft rescue and firefighting (ARFF) 3000 Replacement1
ACTIVITY
NAICS CODE
Heavy construction
237310
Concrete contracting
238110
Electrical
238210
Plumbing/pipe installation
238220
Site work
238910
Water samplers/flow meters
334513
HENDRICKS COUNTY AIRPORT-GORDON GRAHAM FIELD Fuel Farm Expansion (Jet Fuel)
Electrical apparatus and equipment
423610
Communications/software
443142
INDIANAPOLIS REGIONAL AIRPORT Runway 7-25 & Taxiway Extension Phase III Construction
Engineering design services
541330
Geotechnical/testing
541380
Security services
561612
Seeding/mulching/topsoil
561730
EAGLE CREEK AIRPARK Airport Layout Plan (ALP) Update
METROPOLITAN AIRPORT Rehabilitate Runway & Taxiway Connectors A1, A2, A3 and A4 (design only)
Due to the limited number of ARFF vehicle manufacturers, none of which are DBE firms, the ARFF vehicle will not be included in the calculation of the overall DBE goal.
1
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FFY 2015 Projects PROJECT INDIANAPOLIS INTERNATIONAL AIRPORT Rehabilitate Taxiway B Rehabilitate Runway 5L-23R Phase II Deicing Control Facilities Improvements - 20152018 Rehabilitate Apron at Old Terminal
DOWNTOWN HELIPORT Replace Aviation Fuel Farm Update Heliport Layout Plan HENDRICKS COUNTY AIRPORT-GORDON GRAHAM FIELD Install Perimeter Fencing Phase 4 INDIANAPOLIS REGIONAL AIRPORT Rehabilitate T-Hangar Taxilanes METROPOLITAN AIRPORT Rehabilitate Runway & Taxiway Connectors A1, A2, A3 and A4 Replace Airfield Lighting
ACTIVITY
NAICS CODE
Heavy construction
237310
Concrete contracting
238110
Electrical/airfield lighting
238210
Site work
238910
Fence contracting
238990
Electrical apparatus and equipment Electronic Parts and Equipment Merchant Wholesalers
423610 423690
Engineering/design
541330
Geotechnical/testing
541380
Security services
561612
Seeding/mulching/topsoil
561730
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FFY 2016 Projects PROJECT INDIANAPOLIS INTERNATIONAL AIRPORT Rehabilitate Taxiway B Construct High Speed Taxiway Exits Stormwater and Deicing Controls and Capacity Phase 2 Deicing Control Facilities Improvements - 20152018 Preliminary Design/Site Assessment For Replacement of Building 2 Snow Equipment Replacement Program - Blower2 EAGLE CREEK AIRPARK Rehabilitate Northwest T-Hangar Taxilanes DOWNTOWN HELIPORT Environmental Assessment for Heliport Improvements HENDRICKS COUNTY AIRPORT-GORDON GRAHAM FIELD Install Perimeter Fencing Phase 4 INDIANAPOLIS REGIONAL AIRPORT Rehabilitate East & West Apron Pavement Rehabilitate Runway 7-25 (design only) Replace Ramp Lights METROPOLITAN AIRPORT Rehabilitate Apron Pavement
ACTIVITY
NAICS CODE
Heavy construction
237310
Concrete contracting
238110
Electrical
238210
Plumbing/pipe installation
238220
Site work
238910
Fence contracting
238990
Water samplers/flow meters
334513
Electronic Parts and Equipment Merchant Wholesalers
423690
Communications/software
443142
Engineering design services
541330
Geotechnical/consulting
541380
Environmental consulting
541620
Security services
561612
Seeding/mulching/topsoil
561730
SOURCE: Indianapolis International Airport
Due to the limited number of snow blower manufacturers, the snow blower will be excluded in the calculation of the overall DBE goal. 2
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D. Determination of Relative Availability of DBEs in Market Area, compared to all firms
NAICS CODES 237310 238110 238210 238220 238910 334513 423610 443142 541330 541380 561612 561730
NAICS CODES 237310 238110 238210 238910 238990 423610 423690 541330 541380 561612 561730
Table 3a: DBEs by relevant NAICS Codes—FFY 2014 DBE All DBE Ratio of Dollar Firms Firms availability Dollar Amount per Amount NAICS Code 18 4 10 7 8 0 2 0 32 2 0 15
$2,040,278 $9,222,753 $195,889 $468,409 $2,127,353 $234,205 $218,500 $187,364 $2,861,673 $515,254 $338,846 $124,411 $18,534,936 WEIGHTED STEP 1 DBE BASE FIGURE =
8.2%
Table 3b: DBEs by relevant NAICS Codes—FFY 2015 DBE All DBE Ratio of Dollar Firms Firms availability Dollar Amount per Amount NAICS Code
Weighted DBE Availability
18 4 10 8 2 2 0 32 2 0 15
43 134 343 486 153 4 73 52 383 46 79 619
43 134 343 153 146 73 88 383 46 79 619
41.9% 3.0% 2.9% 1.4% 5.2% 0.0% 2.7% 0.0% 8.4% 4.3% 0.0% 2.4%
41.9% 3.0% 2.9% 5.2% 1.4% 2.7% 0.0% 8.4% 4.3% 0.0% 2.4%
0.11 0.50 0.01 0.03 0.11 0.01 0.01 0.01 0.15 0.03 0.02 0.01
Weighted DBE Availability
0.26 0.50 0.02 0.00 0.01 0.01 0.02 0.11 0.03 0.03 0.00
$4,510,417 $8,608,872 $303,070 $71,864 $216,218 $225,498 $257,500 $1,838,403 $574,360 $501,616 $25,509 $17,133,326 WEIGHTED STEP 1 DBE BASE FIGURE =
4.6% 1.5% 0.0% 0.0% 0.6% 0.0% 0.0% 0.0% 1.3% 0.1% 0.0% 0.0%
11.0% 1.5% 0.1% 0.0% 0.0% 0.0% 0.0% 0.9% 0.1% 0.0% 0.0% 13.7%
Table 3c: DBEs by relevant NAICS Codes—FFY 2016
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NAICS CODES 237310 238110 238210 238220 238910 238990 334513 423690 443142 541330 541380 541620 561612 561730
DBE Firms
All Firms 18 4 10 7 8 2 0 0 0 32 2 12 0 15
43 134 343 486 153 146 4 88 52 383 46 72 79 619
DBE availability 41.9% 3.0% 2.9% 1.4% 5.2% 1.4% 0.0% 0.0% 0.0% 8.4% 4.3% 16.7% 0.0% 2.4%
Ratio of Dollar Amount
Dollar Amount per NAICS Code
0.18 0.33 0.02 0.03 0.14 0.01 0.02 0.01 0.01 0.14 0.02 0.02 0.05 0.01
$3,397,229 $6,367,996 $442,449 $621,925 $2,651,763 $216,218 $310,963 $265,225 $248,770 $2,661,959 $449,080 $373,967 $879,524 $245,899 $19,132,966 WEIGHTED STEP 1 DBE BASE FIGURE =
Weighted DBE Availability 7.4% 1.0% 0.1% 0.0% 0.7% 0.0% 0.0% 0.0% 0.0% 1.2% 0.1% 0.3% 0.0% 0.0% 10.9%
SOURCES: 1. 2011 County Business Patterns, U.S. Census Bureau, April 2013. 2. Indiana Department of Transportation DBE Directory, August 2013.
NOTE: The County Business Patterns data were used as the source to determine the denominator, or the number of all firms in the market area. The DBE directories listed above were used to determine the numerator, or the number of DBE firms in the market area.
E. Determination of the DBE Base Figure The Step 1 DBE Base Figure was derived by using a weighting process by which the percentage of dollars spent on various activities (represented by NAICS codes) were multiplied by the percentage of relevant DBE firms to all relevant firms as indicated in Table 3 above. The Step 1 DBE Base Figure for FFY 2014 is 8.2%. The Step 1 DBE Base Figure for FFY 2015 is 13.7%. The Step 1 DBE Base Figure for FFY 2016 is 10.9%.
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II. Adjustments to the DBE Base Figure After the DBE Base Figure has been developed, the regulations (49 CFR Part 26) require that: “…additional evidence in the sponsor’s jurisdiction be considered to determine what adjustment, if any, is needed to the base figure in order to arrive at your overall goal” (26:45(d)). A. Adjustment Factors to Consider The regulations further state that there are several types of evidence that must be considered when adjusting the base figure. These include: “(i) The current capacity of DBEs to perform work in your USDOT-assisted contracting program, as measured by the volume of work DBEs have performed in recent years. The historical overall DBE goals and accomplishments for the Airport Authority in recent years were examined relative to the above consideration. Specifically, the annual ‘Uniform Report of DBE Goal Accomplishments’ for the reporting periods listed below was assessed. Table 4: Indianapolis International Airport Historic DBE Accomplishment Data Fiscal year
DBE goal
Accomplishment
Over/under
FY 2007
14.0%
14.59%
0.59%
FY 2008
14.0%
5.69%
-8.31%
FY 2009 FY 2010
14.0%
18.65%
4.65%
12.0%
9.3%
-2.66%
FY 2011
12.0%
24.9%
12.90%
FY 2012
12.0%
23.4%
11.41%
MEDIAN
16.6%
2.62%
SOURCE: Indianapolis International Airport
The median DBE accomplishment for previous AIP-funded activities as shown above is 16.6%, compared to the Step 1 DBE base figure of 8.8%, 14.2%, and 10.5% for FFY 2014, FFY 2015, and FFY 2016, respectively. It should be noted that the data are based on historical participation that is substantially similar to the proposed activities. B. Consultations
In accordance with 49 CFR Part 26.45, consultations were held with various agencies to gather: “(ii) Evidence from disparity studies conducted anywhere within your jurisdiction, to the extent it is not already accounted for in your base figure… Indianapolis Airport Authority – DBE program update FFY 2014-2016
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(iii) Data on employment, self-employment, education, training and union apprenticeship programs to the extent you can relate it to the opportunities for DBEs to perform in your program” (26:45, d.) A disparity study was conducted in 2010 for the State of Indiana that included agencies such as the Indiana Department of Transportation (INDOT), the Indiana Department of Administration and several colleges and universities in Indiana. The disparity discussed the findings of several court cases that dealt with challenges to the DBE program and to MWBE programs. The study focused on procurements of the above-mentioned agencies. The Airport Authority was not included in the data collected for this disparity study. INDOT is a recipient of federal funds, and, as such, is the closest comparable entity to the airport for this analysis. Per the disparity study, the availability of MBE and WBE firms in the state of Indiana is 10.2%. The disparity study analyzed a number of factors, including current capacity of firms, disparity in terms of business ownership by minorities and women versus non-minorities, and made a recommendation for a DBE goal of 13.4%. The market area includes the entire state of Indiana, whereas the DBE goal for the airport reflects a more narrowly tailored market area. Therefore, the DBE goal for the Airport Authority will not be adjusted based on data from the disparity study. Regarding access to capital, bonding and insurance, the disparity study did indicate that there existed evidence that there are barriers to access to capital for minority- and women-owned firms in the state of Indiana, but that the data could not be quantified. Therefore, no adjustment will be made to the DBE goal for the Airport Authority. Regarding employment, training and educational opportunities, the Indiana Small Business Development Center (ISBDC) has offices throughout the state, including in Indianapolis. The ISBDC offers seminars and online workshops in business development and other topics. The ISDBC may also be a resource for information on small business loans. Other resources for small businesses to utilize include the National Association of Women Business Owners, Indianapolis Chapter; the Indiana Economic Development Corporation; and the Greater Indianapolis Chamber of Commerce. C. Adjustment to Step 1 DBE Base Figure: Indianapolis International Airport,
FFY 2014-2016 With the adjustment factors considered to this point, the Airport Authority will adjust the Step 1 base figure for each fiscal year by adding to it the median DBE participation noted in Table 4 (16.6%). By averaging the total, the Airport will calculate a final overall goal. Indianapolis Airport Authority – DBE program update FFY 2014-2016
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FFY 2014 DBE base figure (8.2%) + median of past participation (16.6%) = 24.8% 24.8% ÷ 2 = 12.4% FFY 2015 DBE base figure (13.7%) + median of past participation (16.6%) = 30.3% 30.3% ÷ 2 = 15.2% FFY 2016 DBE base figure (10.9%) + median of past participation (16.6%) = 27.5% 27.5% ÷ 2 = 13.8% The Airport Authority expects to expend approximately $18,534,936 for AIPfunded projects for FFY 2014. Since the goal is 12.4%, this means that the Airport Authority expects to expend approximately $2,302,036 with DBEs in FFY 2014. The Airport Authority expects to expend approximately $17,133,326 for AIPfunded projects for FFY 2015. Since the goal is 15.2%, this means that the Airport Authority expects to expend approximately $2,596,773 with DBEs in FY 2015. The Airport Authority expects to expend approximately $19,132,966 for AIPfunded projects for FFY 2016. Since the goal is 13.8%, this means that the Airport Authority expects to expend approximately $2,632,889 with DBEs in FFY 2016.
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FISCAL YEAR FFY 2014 FFY 2015 FFY 2016 TOTAL
TOTAL DOLLARS $18,534,936 $17,133,326 $19,132,966 $54,801,228
Projected DBE expenditure $2,302,036 $2,596,773 $2,632,889 $7,531,698
DBE goal by fiscal year 12.4% 15.2% 13.8% 13.7%
The Airport Authority expects to expend a total of $54,801,228 for AIP-funded projects (excluding an ARFF vehicle and the snow blower) over the next three years, of which $7,531,698 is projected to be expended with DBEs. $7,531,698/$54,801,228= 13.7% overall DBE goal III. Breakout of Estimated Race-Conscious/Race-Neutral Participation
The Airport Authority will meet the maximum feasible portion of its overall goal by using race-neutral means of facilitating DBE participation. The Airport Authority will use a combination of the following race-neutral means to increase DBE participation: 1. Arranging solicitations, times for the presentation of bids, quantities, specifications,
and delivery schedules in ways that facilitate DBE, and other small businesses participation (e.g., unbundling large contracts to make them more accessible to small businesses, encouraging prime contractors to subcontract portions of work that they might otherwise perform with their own forces); 2. Disseminating information and communications on contracting procedures and
specific contract opportunities (e.g., ensuring the inclusion of DBEs, and other small businesses, on recipient mailing lists for bidders, ensuring the dissemination to bidders on prime contracts of lists of potential subcontractors). 3. Providing assistance in overcoming limitations such as inability to obtain bonding or
financing (e.g. simplifying the bonding process, reducing bonding requirements, eliminating the impact of surety costs from bids, and providing services to help DBEs, and other small businesses, obtain bonding and financing). 4. Ensuring distribution of the Indiana DBE directory, through print and electronic
means, to the widest feasible universe of potential prime contractors. The Airport Authority estimates that, in meeting its overall goal of 13.7%, it will obtain 2.62% using race-neutral means, and 11.08% using race-conscious means. The reason for the breakout is because Table 4 shows that the median amount by which goals were exceeded is 2.62%. It is projected that the Airport will meet 2.62
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points of its goal using race-neutral means, and the remainder will be met utilizing contract goals. The Airport will adjust the estimated breakout of race-neutral and race-conscious participation as needed to reflect actual DBE participation (26.51(f)) and it will track and report race-neutral and race-conscious participation separately. For reporting purposes, race-neutral DBE participation includes, but is not necessarily limited to, the following:
DBE participation through a prime contract a DBE obtains through customary competitive procurement procedures; DBE participation through a subcontract on a prime contract that does not carry a DBE goal; DBE participation on a prime contract exceeding a contract goal; and DBE participation through a subcontract from a prime contractor that did not consider a firm's DBE status in making the award.
IV. Process
The Airport will normally submit its overall goal to the FAA by August 1 prior to the commencement of the next three-year period. Before establishing the overall goal, the Airport will consult with various minority trade organizations and small and/or minority business development agencies to obtain information concerning the availability of disadvantaged and nondisadvantaged businesses, the effects of discrimination on opportunities for DBEs, and the Airport’s efforts to establish a level playing field for the participation of DBEs. Following this consultation, the Airport Authority will publish a notice of the proposed overall goal, informing the public that the proposed goal and its rationale are available for inspection during normal business hours at the Airport’s administrative office for 30 days following the date of the notice, and informing the public that the Airport would accept comments on the goals for 45 days from the date of the notice. The notice will be published in the Indianapolis Star and Indianapolis Recorder newspapers. The notice will include addresses (including offices) to which comments can be sent and addresses where the proposal can be reviewed. The Airport’s overall goal submission to the FAA includes a summary of information and questions and comments received during this public participation process and its responses. The summary can be found in Appendix A. The Airport will begin using the overall goal on October 1 of each year, unless the Airport has received other instructions from USDOT/FAA (or, if the goal is Indianapolis Airport Authority – DBE program update FFY 2014-2016
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established on a project basis) by the time of the first solicitation for a USDOT/FAAassisted contract for the projects. V. Contract Goals
The Airport Authority will use contract goals to meet any portion of the overall goal that it does not project being able to meet using solely race-neutral means. Contract goals are established so that, over the period to which the overall goal applies, they will cumulatively result in meeting any portion of its overall goal that is not projected to be met through the use of race-neutral means. The Airport Authority will establish contract goals only on those USDOT-assisted contracts that have subcontracting possibilities. The Airport Authority does not need to establish a contract goal on every such contract, and the size of contract goals will be adapted to the circumstances of each such contract (e.g., type and location of work, availability of DBEs to perform the particular type of work). The Airport Authority will express its contract goals as a percentage of the total share of a USDOT-assisted contract.
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APPENDIX A: PUBLIC COMMENTS
Indianapolis Airport Authority FY 2014-2016 Overall DBE Goal Methodology Stakeholder Input meeting Tuesday, August 13, 2013, 3:00 p.m. Board Meeting Room, Indianapolis International Airport The Indianapolis Airport Authority held a consultation meeting on Tuesday, August 13, 2013 at 3:00 pm. The purpose of the meeting was to solicit information from interested stakeholders about the draft goal, as well as information on the availability of potential DBEs for the Indianapolis International Airport and the other 5 airports administered by the Airport Authority; the effects that discrimination has on opportunities for DBEs; and comments on the Airport’s effort to increase DBE participation. A summary of the meeting and list of attendees are shown below. The meeting was hosted by Corey L. Wilson, Director of Supplier Diversity and IND AeroVision Committee for the Airport. Mr. Wilson introduced two consultant representatives of Ken Weeden & Associates, the firm that assisted in preparing the goal document. They were Kevin D. Weeden, and Kenneth Weeden. Total attendance was about 18 persons. Mr. Wilson explained the background and purpose of the meeting, after which Kevin D. Weeden explained the process in detail, with the aid of a PowerPoint presentation. At the end of the presentation, the floor was open for questions and discussion: 1. How much of the money projected to be spent is federal dollars? a. About 75% 2. Is any of the projected funds “bond money”? a. Yes, some. 3. Do any of the proposed projects include professional services? a. Yes, for most of the projects there is engineering, design, testing, construction management, etc. b. Also there is another set of projects that utilize these professional services, which are not supported with federal funds. 4. For professional services, since A&E firms don’t bid on the basis of “lowest cost”, how is this accounted for in setting goals? a. In overall goal setting, the projects are examined as a whole, and then “weighted” by NAICS codes, including codes for professional services, and the weight of the code’s cost as part of the total project, is compared to the weight of available DBE’s in the same codes. All major work codes are considered, including those for professional services.
5. Why is the draft goal now, less than the previous goal? a. Part of the reason is the different methodology and perhaps the different “average annual attainment” of DBE participation in recent years. 6. Since this whole program is a good faith effort program, then why wouldn’t the goal be higher? a. The goal setting is based on a methodology, not by arbitrarily choosing a “higher” goal. 7. How does this DBE goal reflect non-federal, capital projects, i.e. the MWBE goal? a. It doesn’t. The DBE overall goal is for federally funded projects only. The MWBE goals are still there for non-federal projects and are established separately. 8. With this draft overall DBE goal being less than the previous year’s attainment, is that an indication that the City (Airport) doesn’t want to work with DBE primes? a. No, it doesn’t. The airport encourages all firms to participate in federallyfunded projects. 9. Just a thought, but I think the goal should be maintained at about 12%. (Note: The draft goal that was presented at the meeting was an unweighted goal of 10.5%. Upon further review of the methodology, including a review of the airport market area, weighting, and revisiting the NAICS codes for specific projects, the overall DBE goal was revised to 13.7%).
APPENDIX B:
NOTICE TO THE PUBLIC The notice below was published in the August 15, 2013 editions of the Indianapolis Recorder Newspaper and Indy Star Newspaper.
INDIANAPOLIS AIRPORT AUTHORITY INDIANAPOLIS, INDIANA SEPTEMBER 2013
METHODOLOGY for Establishing the Overall Disadvantaged Business Enterprise (DBE) Goal for FFY 2014-2016 for: Indianapolis International Airport, Indianapolis IN In fulfillment of the requirements of Title 49 Code of Federal Regulations Part 26 (49 CFR Part 26), the Indianapolis Airport Authority has developed a proposed Overall Goal for FFY 2014-2016 for Airport Improvement Program (AIP)-funded projects at the six airports operated by the Airport Authority. The methodology used to establish this goal is described herein.
I.
Detailed Methodology: Specific Steps A. Amount of Goal The overall DBE goal for FFY 2014-2016 for the Indianapolis Airport Authority (the ‘Airport Authority’) is 13.7%. The overall goal represents the percentage of federal financial assistance that will be expended in United States Department of Transportation (USDOT)-assisted contracts with DBE firms. The Airport Authority expects to let approximately $54,801,228 in federally-funded projects over the next three years. This means that the Airport Authority has set a goal of expending approximately $7,531,698 with DBEs over the next three years. B. Determination of the Market Area of the study The normal market area is derived by determining where the substantial majority of contracting dollars for AIP-funded projects were spent, and from where the majority of bidders over a given period of time have come. Based on discussions with the Airport staff, and reviewing recent projects bid at the Airport, the normal market area for the Airport Authority is detailed in Table 1. The market area was established using the counties from where the substantial majority of bidders (83.7%) in the past three (3) fiscal years have come for previous construction projects and where the substantial majority of dollars (82.3%) have been spent for previous projects.
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Table 1a: Counties in the Local Market Area by expenditures COUNTY
Expenditures $1,339,061 $180,270 $97,957 $10,082,123 $11,699,411 $2,519,368 $14,218,778
Hamilton Hendricks Johnson Marion SUBTOTAL Others TOTAL
Percentage of dollars Expended 9.4% 1.3% 0.7% 70.9% 82.3% 17.7% 100.0%
Source: Indianapolis International Airport
Table 1b: Counties in the Local Market Area by number of bidders COUNTY Boone Hamilton Hancock Hendricks Johnson Marion Shelby Subtotal Other Counties TOTAL
Number of Bidders
% of Bidders
2 3 1 4 1 75 1 87 17 104
1.9% 2.9% 1.0% 3.8% 1.0% 72.1% 1.0% 83.7% 16.3% 100.0%
Source: Indianapolis International Airport
C. Determination of relevant North American Industry Classification System (NAICS) codes Based on information provided by the Airport Authority concerning the proposed projects for FFY 2014-2016, a list of NAICS codes corresponding to these projects was developed and is shown below:
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Table 2: Indianapolis International Airport—FFY 2014-2016 Projects & Activities FFY 2014 Projects PROJECT INDIANAPOLIS INTERNATIONAL AIRPORT Rehabilitate Taxiway B Rehabilitate Runway 5L-23R Phase I Rehabilitate Taxiways A & D Stormwater and Deicing Controls and Capacity Phase 2 Rehabilitate Apron at Old Terminal 2014 Aircraft rescue and firefighting (ARFF) 3000 Replacement1
ACTIVITY
NAICS CODE
Heavy construction
237310
Concrete contracting
238110
Electrical
238210
Plumbing/pipe installation
238220
Site work
238910
Water samplers/flow meters
334513
HENDRICKS COUNTY AIRPORT-GORDON GRAHAM FIELD Fuel Farm Expansion (Jet Fuel)
Electrical apparatus and equipment
423610
Communications/software
443142
INDIANAPOLIS REGIONAL AIRPORT Runway 7-25 & Taxiway Extension Phase III Construction
Engineering design services
541330
Geotechnical/testing
541380
Security services
561612
Seeding/mulching/topsoil
561730
EAGLE CREEK AIRPARK Airport Layout Plan (ALP) Update
METROPOLITAN AIRPORT Rehabilitate Runway & Taxiway Connectors A1, A2, A3 and A4 (design only)
Due to the limited number of ARFF vehicle manufacturers, none of which are DBE firms, the ARFF vehicle will not be included in the calculation of the overall DBE goal.
1
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FFY 2015 Projects PROJECT INDIANAPOLIS INTERNATIONAL AIRPORT Rehabilitate Taxiway B Rehabilitate Runway 5L-23R Phase II Deicing Control Facilities Improvements - 20152018 Rehabilitate Apron at Old Terminal
DOWNTOWN HELIPORT Replace Aviation Fuel Farm Update Heliport Layout Plan HENDRICKS COUNTY AIRPORT-GORDON GRAHAM FIELD Install Perimeter Fencing Phase 4 INDIANAPOLIS REGIONAL AIRPORT Rehabilitate T-Hangar Taxilanes METROPOLITAN AIRPORT Rehabilitate Runway & Taxiway Connectors A1, A2, A3 and A4 Replace Airfield Lighting
ACTIVITY
NAICS CODE
Heavy construction
237310
Concrete contracting
238110
Electrical/airfield lighting
238210
Site work
238910
Fence contracting
238990
Electrical apparatus and equipment Electronic Parts and Equipment Merchant Wholesalers
423610 423690
Engineering/design
541330
Geotechnical/testing
541380
Security services
561612
Seeding/mulching/topsoil
561730
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FFY 2016 Projects PROJECT INDIANAPOLIS INTERNATIONAL AIRPORT Rehabilitate Taxiway B Construct High Speed Taxiway Exits Stormwater and Deicing Controls and Capacity Phase 2 Deicing Control Facilities Improvements - 20152018 Preliminary Design/Site Assessment For Replacement of Building 2 Snow Equipment Replacement Program - Blower2 EAGLE CREEK AIRPARK Rehabilitate Northwest T-Hangar Taxilanes DOWNTOWN HELIPORT Environmental Assessment for Heliport Improvements HENDRICKS COUNTY AIRPORT-GORDON GRAHAM FIELD Install Perimeter Fencing Phase 4 INDIANAPOLIS REGIONAL AIRPORT Rehabilitate East & West Apron Pavement Rehabilitate Runway 7-25 (design only) Replace Ramp Lights METROPOLITAN AIRPORT Rehabilitate Apron Pavement
ACTIVITY
NAICS CODE
Heavy construction
237310
Concrete contracting
238110
Electrical
238210
Plumbing/pipe installation
238220
Site work
238910
Fence contracting
238990
Water samplers/flow meters
334513
Electronic Parts and Equipment Merchant Wholesalers
423690
Communications/software
443142
Engineering design services
541330
Geotechnical/consulting
541380
Environmental consulting
541620
Security services
561612
Seeding/mulching/topsoil
561730
SOURCE: Indianapolis International Airport
Due to the limited number of snow blower manufacturers, the snow blower will be excluded in the calculation of the overall DBE goal. 2
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D. Determination of Relative Availability of DBEs in Market Area, compared to all firms
NAICS CODES 237310 238110 238210 238220 238910 334513 423610 443142 541330 541380 561612 561730
NAICS CODES 237310 238110 238210 238910 238990 423610 423690 541330 541380 561612 561730
Table 3a: DBEs by relevant NAICS Codes—FFY 2014 DBE All DBE Ratio of Dollar Firms Firms availability Dollar Amount per Amount NAICS Code 18 4 10 7 8 0 2 0 32 2 0 15
$2,040,278 $9,222,753 $195,889 $468,409 $2,127,353 $234,205 $218,500 $187,364 $2,861,673 $515,254 $338,846 $124,411 $18,534,936 WEIGHTED STEP 1 DBE BASE FIGURE =
8.2%
Table 3b: DBEs by relevant NAICS Codes—FFY 2015 DBE All DBE Ratio of Dollar Firms Firms availability Dollar Amount per Amount NAICS Code
Weighted DBE Availability
18 4 10 8 2 2 0 32 2 0 15
43 134 343 486 153 4 73 52 383 46 79 619
43 134 343 153 146 73 88 383 46 79 619
41.9% 3.0% 2.9% 1.4% 5.2% 0.0% 2.7% 0.0% 8.4% 4.3% 0.0% 2.4%
41.9% 3.0% 2.9% 5.2% 1.4% 2.7% 0.0% 8.4% 4.3% 0.0% 2.4%
0.11 0.50 0.01 0.03 0.11 0.01 0.01 0.01 0.15 0.03 0.02 0.01
Weighted DBE Availability
0.26 0.50 0.02 0.00 0.01 0.01 0.02 0.11 0.03 0.03 0.00
$4,510,417 $8,608,872 $303,070 $71,864 $216,218 $225,498 $257,500 $1,838,403 $574,360 $501,616 $25,509 $17,133,326 WEIGHTED STEP 1 DBE BASE FIGURE =
4.6% 1.5% 0.0% 0.0% 0.6% 0.0% 0.0% 0.0% 1.3% 0.1% 0.0% 0.0%
11.0% 1.5% 0.1% 0.0% 0.0% 0.0% 0.0% 0.9% 0.1% 0.0% 0.0% 13.7%
Table 3c: DBEs by relevant NAICS Codes—FFY 2016
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NAICS CODES 237310 238110 238210 238220 238910 238990 334513 423690 443142 541330 541380 541620 561612 561730
DBE Firms
All Firms 18 4 10 7 8 2 0 0 0 32 2 12 0 15
43 134 343 486 153 146 4 88 52 383 46 72 79 619
DBE availability 41.9% 3.0% 2.9% 1.4% 5.2% 1.4% 0.0% 0.0% 0.0% 8.4% 4.3% 16.7% 0.0% 2.4%
Ratio of Dollar Amount
Dollar Amount per NAICS Code
0.18 0.33 0.02 0.03 0.14 0.01 0.02 0.01 0.01 0.14 0.02 0.02 0.05 0.01
$3,397,229 $6,367,996 $442,449 $621,925 $2,651,763 $216,218 $310,963 $265,225 $248,770 $2,661,959 $449,080 $373,967 $879,524 $245,899 $19,132,966 WEIGHTED STEP 1 DBE BASE FIGURE =
Weighted DBE Availability 7.4% 1.0% 0.1% 0.0% 0.7% 0.0% 0.0% 0.0% 0.0% 1.2% 0.1% 0.3% 0.0% 0.0% 10.9%
SOURCES: 1. 2011 County Business Patterns, U.S. Census Bureau, April 2013. 2. Indiana Department of Transportation DBE Directory, August 2013.
NOTE: The County Business Patterns data were used as the source to determine the denominator, or the number of all firms in the market area. The DBE directories listed above were used to determine the numerator, or the number of DBE firms in the market area.
E. Determination of the DBE Base Figure The Step 1 DBE Base Figure was derived by using a weighting process by which the percentage of dollars spent on various activities (represented by NAICS codes) were multiplied by the percentage of relevant DBE firms to all relevant firms as indicated in Table 3 above. The Step 1 DBE Base Figure for FFY 2014 is 8.2%. The Step 1 DBE Base Figure for FFY 2015 is 13.7%. The Step 1 DBE Base Figure for FFY 2016 is 10.9%.
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II. Adjustments to the DBE Base Figure After the DBE Base Figure has been developed, the regulations (49 CFR Part 26) require that: “…additional evidence in the sponsor’s jurisdiction be considered to determine what adjustment, if any, is needed to the base figure in order to arrive at your overall goal” (26:45(d)). A. Adjustment Factors to Consider The regulations further state that there are several types of evidence that must be considered when adjusting the base figure. These include: “(i) The current capacity of DBEs to perform work in your USDOT-assisted contracting program, as measured by the volume of work DBEs have performed in recent years. The historical overall DBE goals and accomplishments for the Airport Authority in recent years were examined relative to the above consideration. Specifically, the annual ‘Uniform Report of DBE Goal Accomplishments’ for the reporting periods listed below was assessed. Table 4: Indianapolis International Airport Historic DBE Accomplishment Data Fiscal year
DBE goal
Accomplishment
Over/under
FY 2007
14.0%
14.59%
0.59%
FY 2008
14.0%
5.69%
-8.31%
FY 2009 FY 2010
14.0%
18.65%
4.65%
12.0%
9.3%
-2.66%
FY 2011
12.0%
24.9%
12.90%
FY 2012
12.0%
23.4%
11.41%
MEDIAN
16.6%
2.62%
SOURCE: Indianapolis International Airport
The median DBE accomplishment for previous AIP-funded activities as shown above is 16.6%, compared to the Step 1 DBE base figure of 8.8%, 14.2%, and 10.5% for FFY 2014, FFY 2015, and FFY 2016, respectively. It should be noted that the data are based on historical participation that is substantially similar to the proposed activities. B. Consultations
In accordance with 49 CFR Part 26.45, consultations were held with various agencies to gather: “(ii) Evidence from disparity studies conducted anywhere within your jurisdiction, to the extent it is not already accounted for in your base figure… Indianapolis Airport Authority – DBE program update FFY 2014-2016
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(iii) Data on employment, self-employment, education, training and union apprenticeship programs to the extent you can relate it to the opportunities for DBEs to perform in your program” (26:45, d.) A disparity study was conducted in 2010 for the State of Indiana that included agencies such as the Indiana Department of Transportation (INDOT), the Indiana Department of Administration and several colleges and universities in Indiana. The disparity discussed the findings of several court cases that dealt with challenges to the DBE program and to MWBE programs. The study focused on procurements of the above-mentioned agencies. The Airport Authority was not included in the data collected for this disparity study. INDOT is a recipient of federal funds, and, as such, is the closest comparable entity to the airport for this analysis. Per the disparity study, the availability of MBE and WBE firms in the state of Indiana is 10.2%. The disparity study analyzed a number of factors, including current capacity of firms, disparity in terms of business ownership by minorities and women versus non-minorities, and made a recommendation for a DBE goal of 13.4%. The market area includes the entire state of Indiana, whereas the DBE goal for the airport reflects a more narrowly tailored market area. Therefore, the DBE goal for the Airport Authority will not be adjusted based on data from the disparity study. Regarding access to capital, bonding and insurance, the disparity study did indicate that there existed evidence that there are barriers to access to capital for minority- and women-owned firms in the state of Indiana, but that the data could not be quantified. Therefore, no adjustment will be made to the DBE goal for the Airport Authority. Regarding employment, training and educational opportunities, the Indiana Small Business Development Center (ISBDC) has offices throughout the state, including in Indianapolis. The ISBDC offers seminars and online workshops in business development and other topics. The ISDBC may also be a resource for information on small business loans. Other resources for small businesses to utilize include the National Association of Women Business Owners, Indianapolis Chapter; the Indiana Economic Development Corporation; and the Greater Indianapolis Chamber of Commerce. C. Adjustment to Step 1 DBE Base Figure: Indianapolis International Airport,
FFY 2014-2016 With the adjustment factors considered to this point, the Airport Authority will adjust the Step 1 base figure for each fiscal year by adding to it the median DBE participation noted in Table 4 (16.6%). By averaging the total, the Airport will calculate a final overall goal. Indianapolis Airport Authority – DBE program update FFY 2014-2016
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FFY 2014 DBE base figure (8.2%) + median of past participation (16.6%) = 24.8% 24.8% ÷ 2 = 12.4% FFY 2015 DBE base figure (13.7%) + median of past participation (16.6%) = 30.3% 30.3% ÷ 2 = 15.2% FFY 2016 DBE base figure (10.9%) + median of past participation (16.6%) = 27.5% 27.5% ÷ 2 = 13.8% The Airport Authority expects to expend approximately $18,534,936 for AIPfunded projects for FFY 2014. Since the goal is 12.4%, this means that the Airport Authority expects to expend approximately $2,302,036 with DBEs in FFY 2014. The Airport Authority expects to expend approximately $17,133,326 for AIPfunded projects for FFY 2015. Since the goal is 15.2%, this means that the Airport Authority expects to expend approximately $2,596,773 with DBEs in FY 2015. The Airport Authority expects to expend approximately $19,132,966 for AIPfunded projects for FFY 2016. Since the goal is 13.8%, this means that the Airport Authority expects to expend approximately $2,632,889 with DBEs in FFY 2016.
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FISCAL YEAR FFY 2014 FFY 2015 FFY 2016 TOTAL
TOTAL DOLLARS $18,534,936 $17,133,326 $19,132,966 $54,801,228
Projected DBE expenditure $2,302,036 $2,596,773 $2,632,889 $7,531,698
DBE goal by fiscal year 12.4% 15.2% 13.8% 13.7%
The Airport Authority expects to expend a total of $54,801,228 for AIP-funded projects (excluding an ARFF vehicle and the snow blower) over the next three years, of which $7,531,698 is projected to be expended with DBEs. $7,531,698/$54,801,228= 13.7% overall DBE goal III. Breakout of Estimated Race-Conscious/Race-Neutral Participation
The Airport Authority will meet the maximum feasible portion of its overall goal by using race-neutral means of facilitating DBE participation. The Airport Authority will use a combination of the following race-neutral means to increase DBE participation: 1. Arranging solicitations, times for the presentation of bids, quantities, specifications,
and delivery schedules in ways that facilitate DBE, and other small businesses participation (e.g., unbundling large contracts to make them more accessible to small businesses, encouraging prime contractors to subcontract portions of work that they might otherwise perform with their own forces); 2. Disseminating information and communications on contracting procedures and
specific contract opportunities (e.g., ensuring the inclusion of DBEs, and other small businesses, on recipient mailing lists for bidders, ensuring the dissemination to bidders on prime contracts of lists of potential subcontractors). 3. Providing assistance in overcoming limitations such as inability to obtain bonding or
financing (e.g. simplifying the bonding process, reducing bonding requirements, eliminating the impact of surety costs from bids, and providing services to help DBEs, and other small businesses, obtain bonding and financing). 4. Ensuring distribution of the Indiana DBE directory, through print and electronic
means, to the widest feasible universe of potential prime contractors. The Airport Authority estimates that, in meeting its overall goal of 13.7%, it will obtain 2.62% using race-neutral means, and 11.08% using race-conscious means. The reason for the breakout is because Table 4 shows that the median amount by which goals were exceeded is 2.62%. It is projected that the Airport will meet 2.62
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points of its goal using race-neutral means, and the remainder will be met utilizing contract goals. The Airport will adjust the estimated breakout of race-neutral and race-conscious participation as needed to reflect actual DBE participation (26.51(f)) and it will track and report race-neutral and race-conscious participation separately. For reporting purposes, race-neutral DBE participation includes, but is not necessarily limited to, the following:
DBE participation through a prime contract a DBE obtains through customary competitive procurement procedures; DBE participation through a subcontract on a prime contract that does not carry a DBE goal; DBE participation on a prime contract exceeding a contract goal; and DBE participation through a subcontract from a prime contractor that did not consider a firm's DBE status in making the award.
IV. Process
The Airport will normally submit its overall goal to the FAA by August 1 prior to the commencement of the next three-year period. Before establishing the overall goal, the Airport will consult with various minority trade organizations and small and/or minority business development agencies to obtain information concerning the availability of disadvantaged and nondisadvantaged businesses, the effects of discrimination on opportunities for DBEs, and the Airport’s efforts to establish a level playing field for the participation of DBEs. Following this consultation, the Airport Authority will publish a notice of the proposed overall goal, informing the public that the proposed goal and its rationale are available for inspection during normal business hours at the Airport’s administrative office for 30 days following the date of the notice, and informing the public that the Airport would accept comments on the goals for 45 days from the date of the notice. The notice will be published in the Indianapolis Star and Indianapolis Recorder newspapers. The notice will include addresses (including offices) to which comments can be sent and addresses where the proposal can be reviewed. The Airport’s overall goal submission to the FAA includes a summary of information and questions and comments received during this public participation process and its responses. The summary can be found in Appendix A. The Airport will begin using the overall goal on October 1 of each year, unless the Airport has received other instructions from USDOT/FAA (or, if the goal is Indianapolis Airport Authority – DBE program update FFY 2014-2016
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established on a project basis) by the time of the first solicitation for a USDOT/FAAassisted contract for the projects. V. Contract Goals
The Airport Authority will use contract goals to meet any portion of the overall goal that it does not project being able to meet using solely race-neutral means. Contract goals are established so that, over the period to which the overall goal applies, they will cumulatively result in meeting any portion of its overall goal that is not projected to be met through the use of race-neutral means. The Airport Authority will establish contract goals only on those USDOT-assisted contracts that have subcontracting possibilities. The Airport Authority does not need to establish a contract goal on every such contract, and the size of contract goals will be adapted to the circumstances of each such contract (e.g., type and location of work, availability of DBEs to perform the particular type of work). The Airport Authority will express its contract goals as a percentage of the total share of a USDOT-assisted contract.
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APPENDIX A: PUBLIC COMMENTS
Indianapolis Airport Authority FY 2014-2016 Overall DBE Goal Methodology Stakeholder Input meeting Tuesday, August 13, 2013, 3:00 p.m. Board Meeting Room, Indianapolis International Airport The Indianapolis Airport Authority held a consultation meeting on Tuesday, August 13, 2013 at 3:00 pm. The purpose of the meeting was to solicit information from interested stakeholders about the draft goal, as well as information on the availability of potential DBEs for the Indianapolis International Airport and the other 5 airports administered by the Airport Authority; the effects that discrimination has on opportunities for DBEs; and comments on the Airport’s effort to increase DBE participation. A summary of the meeting and list of attendees are shown below. The meeting was hosted by Corey L. Wilson, Director of Supplier Diversity and IND AeroVision Committee for the Airport. Mr. Wilson introduced two consultant representatives of Ken Weeden & Associates, the firm that assisted in preparing the goal document. They were Kevin D. Weeden, and Kenneth Weeden. Total attendance was about 18 persons. Mr. Wilson explained the background and purpose of the meeting, after which Kevin D. Weeden explained the process in detail, with the aid of a PowerPoint presentation. At the end of the presentation, the floor was open for questions and discussion: 1. How much of the money projected to be spent is federal dollars? a. About 75% 2. Is any of the projected funds “bond money”? a. Yes, some. 3. Do any of the proposed projects include professional services? a. Yes, for most of the projects there is engineering, design, testing, construction management, etc. b. Also there is another set of projects that utilize these professional services, which are not supported with federal funds. 4. For professional services, since A&E firms don’t bid on the basis of “lowest cost”, how is this accounted for in setting goals? a. In overall goal setting, the projects are examined as a whole, and then “weighted” by NAICS codes, including codes for professional services, and the weight of the code’s cost as part of the total project, is compared to the weight of available DBE’s in the same codes. All major work codes are considered, including those for professional services.
5. Why is the draft goal now, less than the previous goal? a. Part of the reason is the different methodology and perhaps the different “average annual attainment” of DBE participation in recent years. 6. Since this whole program is a good faith effort program, then why wouldn’t the goal be higher? a. The goal setting is based on a methodology, not by arbitrarily choosing a “higher” goal. 7. How does this DBE goal reflect non-federal, capital projects, i.e. the MWBE goal? a. It doesn’t. The DBE overall goal is for federally funded projects only. The MWBE goals are still there for non-federal projects and are established separately. 8. With this draft overall DBE goal being less than the previous year’s attainment, is that an indication that the City (Airport) doesn’t want to work with DBE primes? a. No, it doesn’t. The airport encourages all firms to participate in federallyfunded projects. 9. Just a thought, but I think the goal should be maintained at about 12%. (Note: The draft goal that was presented at the meeting was an unweighted goal of 10.5%. Upon further review of the methodology, including a review of the airport market area, weighting, and revisiting the NAICS codes for specific projects, the overall DBE goal was revised to 13.7%).
APPENDIX B:
NOTICE TO THE PUBLIC The notice below was published in the August 15, 2013 editions of the Indianapolis Recorder Newspaper and Indy Star Newspaper.
