Companion Guide to Video August 2012

www.fhwa.dot.gov/federal-aidessentials

The use of contract goals is an important part of 

the Disadvantaged Business Enterprise, or DBE, 

Program. Contract goals are the value of DBE 

work stated as a percentage of total contract 

value. For example, a contract DBE goal is stated 

as, “4.15 percent or 12.5 percent.”

When a contract has a DBE goal, only a bidder 

that demonstrates adequate good-faith efforts to 

meet the goal qualifies to be awarded a federally 

funded contract. 

How does your agency evaluate 

good-faith efforts?

As you might expect, a contractor that commits to 

meet the DBE goal automatically demonstrates 

good-faith efforts. However, an agency should 

have good criteria to evaluate the efforts of the 

contractor that does not meet the goal. Otherwise, 

the agency runs the risk of misjudging the 

adequacy of good-faith efforts and inviting a 

challenge to its award decision. By using evaluation 

techniques that comply with DBE regulations, 

agencies can better defend the award decisions 

they make.

When a bidder fails to meet the goal, an evaluation 

of good-faith efforts is necessary. An evaluation 

starts with the bidder’s own documentation that 

typically includes: 

• The DBE commitment – a list of DBE firms 

that the bidder obligates itself to use and a 

summation of their bid values. The 

commitment may be expressed as a 

percentage of the total bid value. For 

example, a commitment may state that “7% 

of the bid value is to be performed by 

DBEs."

• Outreach efforts, including a contact log, 

copies of any ads and letters, and if 

professional assistance was offered.

• A list of rejected DBE bids and the reasons 

for rejection.

No two evaluations are alike, so the level of effort 

for each one is dictated by the individual situation. 

Civil Rights

Disadvantaged Business Enterprise

Evaluating Good-Faith Efforts

Bidders must make good-faith effort to meet the contract Disadvantaged 

Business Enterprise goal to be awarded a federally funded contract
Federal-aid Essentials for Local Public Agencies

Let's look at some considerations 

when evaluating good-faith efforts 

including:

• The DBE goal and 

commitments of the low 

bidders

• The work type solicited

• Outreach efforts

• Rejected DBE bids

First, evaluators compare how close the low 

bidder’s DBE commitment is to the goal and the 

commitment of other bidders. 

If the difference between the low bidder’s 

commitment and the goal is within one percentage 

point of a 10-percent goal, a brief review might be 

sufficient.

However, a fuller review of the documentation is 

expected when the commitment falls significantly 

below the goal.

The evaluator compares the DBE firms solicited 

for the work types needed in the contract and 

removes from consideration outreach to 

unnecessary DBEs. If, for example, landscaping 

is not part of the contract, do not evaluate 

outreach efforts made to landscaping companies.

When assessing outreach efforts, the evaluator 

looks for a large number of DBE bids and a good 

variety of work to be performed by them. 

Advertisements for DBEs, written solicitations sent 

to all qualified firms, offers of assistance, and 

follow-up phone calls support an effective outreach 

campaign. 

Lastly, the evaluator considers the rejected DBE 

bids and the reasons for the rejection. For 

example, 

• Did the bidder reject a marginally higher 

DBE bid that could have allowed the bidder 

to meet the goal?

• Did the bidder reject a DBE bid that 

another bidder accepted?

• Did the bidder forgo a reasonable bid to do 

the work himself?

A “yes” answer may suggest an inadequate goodfaith effort.

To see how these techniques work 

in practice, let’s follow the evaluation 

of the good-faith efforts of First 

Construction, the low bidder on an 

asphalt resurfacing and safety 

upgrades project.
Federal-aid Essentials for Local Public Agencies

The DBE commitment of First Construction is 7 

percent. The goal is 10 percent and the 

commitment of the second low bidder is 10.2 

percent. 

Because the difference between First 

Construction’s commitment and the goal is three 

percentage points, the evaluator decides to 

conduct a fuller review.

To start, the evaluator turns to the DBE contact log 

and notices that First Construction solicited

landscaping, electrical contractors, striping,

trucking, and safety hardware firms. 

Because no electrical work is on the contract, the 

evaluator disregards any outreach efforts made to 

electrical contractors.

While considering outreach efforts, the evaluator 

notices that First Construction sent letters to 70 

DBE firms. First Construction also made two 

follow-up calls to unresponsive DBE firms. A 

search of the State’s DBE database confirms that 

First Construction contacted every qualified firm. 

The evaluator sees that First Construction also 

placed several timely ads and offered to assist 

with the bond premium. 

These outreach efforts resulted in 10 DBE bids for 

four types of work. 

In reviewing the list of rejected bids, the evaluator 

discovers that First Construction used a DBE for 

landscaping, striping and trucking but rejected the 

bids of the safety hardware DBEs. Instead, First 

Construction chose to perform the work itself. 

Why did they reject the bid? Was it unreasonable?

To answer this question, the evaluator looks into 

the documentation of Solid Construction, the 

second low bidder.

It turns out that Solid Construction used Safety R 

US. Had First Construction done the same, they 

would have met or exceeded the contract goal of 

10 percent. 

The evaluator concludes that First Construction’s 

good-faith efforts were inadequate.

When an agency determines that the low bidder did 

not make adequate good-faith efforts, then it must 

provide the low bidder an opportunity to seek 

reconsideration. During the reconsideration 

process, the low bidder provides arguments to an 

impartial official, one not involved in the original 

decision. The official either upholds or overturns 

the initial decision and may determine which prime 

contractor is awarded the contract. 

Your State department of transportation is an 

excellent source for procedures and guidance. 

Additionally, your State’s database of DBE firms is 

an essential tool for conducting an evaluation. 

Make sure your evaluation team 

knows how to access these resources.
Federal-aid Essentials for Local Public Agencies

The content of this 

document is not a 

substitute for 

information obtained 

from State departments 

of transportation, 

appropriate FHWA 

Division Offices, and 

applicable laws. 

Scenarios have been 

simplified for emphasis 

and do not necessarily 

reflect the actual range of 

requirements applicable 

to the scenario or this 

topic. This document

was created under 

contract number

DTFH61-11-D-00025 by 

the Federal Highway 

Administration, U.S. 

Department of 

Transportation, and is 

offered to the public to 

heighten and focus 

awareness of Federal-aid 

requirements within the 

local public agencies 

community and 

reinforces the 

importance of these 

necessary policies, 

procedures, and 

practices.

This companion resource 

is the script content for 

the video production of 

the same name. 

Web Resources

• Federal regulation that includes Appendix A to Part 26, Guidance 

Concerning Good Faith Efforts

http://www.ecfr.gov/cgi/t/text/textidx?c=ecfr&sid=db367ac566eb4573914c71cf580ebaae&rgn=div6&view=te

xt&node=49:1.0.1.1.20.6&idno=49

• Federal regulation concerning good-faith efforts procedures when there are 

contract goals

http://www.ecfr.gov/cgi/t/text/textidx?c=ecfr&sid=3f69a1003468f04292e7fe864899b8b7&rgn=div5&view=tex

t&node=49:1.0.1.1.20&idno=49#49:1.0.1.1.20.3