Promoting Regional Business Equity (Goal 8)

May 6, 2011

SEPTA pays out hundreds of millions of dollars in contracts for capital projects each year. These projects support tens of thousands of regional jobs, hundreds of millions of dollars in earnings, and billions of dollars in regional economic impact.

SEPTA carries out this important role as economic catalyst in a socially responsible way. As recipients of federally designated grant funding, transit agencies are required to adhere to equitable contracting practices. SEPTA's compliance with these federal regulations is overseen by its Disadvantaged Business Enterprise (DBE) Program, which establishes goals for the proportion of SEPTA's capital contracts to be awarded to small business owned by minorities and/or women. Aggregate goals for DBE participation are based on a weighted average of sector-specific goals and are updated once every three years based on anticipated projects and number of DBE eligible firms.

A One-Stop Shop

SEPTA's DBE Program is about more than just compliance. Among other things, the program has worked to streamline the DBE firm registration process. As a participating member and certifying participant of the Pennsylvania Unified Certification Program (PAUCP), SEPTA serves as a "one-stop shop" for all firms seeking DBE certification. As such, prospective DBE firms who apply for certification with SEPTA receive reciprocity with all PAUCP participating organizations across the Commonwealth.

SEPTA has worked diligently to leverage its role as a one-stop shop and expand its impact in supporting equitable business development. The DBE program office actively recruits firms and supports their progress through the registration process. Once registered, SEPTA officials educate DBE firms on the variety of contracting opportunities that may become available through the SEPTA procurement process.

These efforts have paid off. When the American Recovery and Reinvestment Act (ARRA) was signed by President Obama in February 2008, the DBE office set up information sessions on SEPTA's planned use of its $191 million share and established networking opportunities for prime contractors to engage with DBEs on project-based opportunities. The outcomes were impressive: approximately one out of every seven SEPTA-issued stimulus contract dollars were ultimately awarded to DBE firms.

Outreach & Education

Now, SEPTA's DBE Program has begun to ramp up efforts to provide technical assistance to firms looking to tap into emerging market opportunities, such as sustainable design, engineering, maintenance, and construction standards. Greater Philadelphia's position as a growing hub for "green" jobs and technologies is an opportunity for regional economic growth, and SEPTA's training and outreach efforts to help DBEs develop the requisite capacity and expertise to compete.

These efforts also benefit SEPTA, whose own emphasis on sustainability underscores the growing importance of contractor awareness of sustainable business practices. SEPTA is doing its part to keep potential third-party partners to be up-to speed. The DBE Program Office's proactive leadership in this regard has provided SEPTA planners an avenue for outreach to educate firms on SEPTA's Sustainability Program Plan. At a recent Earth Day seminar, for example, representatives from more than 70 small businesses were presented with a morning's worth of information about emerging green business opportunities, evolving federal regulations, and SEPTA's plans to leverage new sustainability-related opportunities.

A Plan to Improve Performance

SEPTA believes that these efforts will support the growth and development of DBE firms and has established a target to increase the contract success rate of newly-registered DBE firms by 10 percent by 2015. Performance will be measured based on an indicator of contract-receiving DBE firms registered for fewer than four years over all DBE firms registered for fewer than four years. Progress will be tracked against the 2010 baseline of 16.56 percent.

The DBE Program Office has developed a series of initiatives to provide additional support to DBE firms, and in particular to strengthen new DBE firms' candidacies and performance:

Automate enrollment and database management systems. SEPTA's largely manual processes for registering DBE firms is time-consuming and cumbersome. Automation would improve access for aspiring DBE firms and allow DBE officials to better manage the database for the purpose of maintaining an up-to-date and accurate summary of DBE-eligible firms.

Incorporate sustainability into contractor education and outreach. The Earth Day seminar is but one of many outreach opportunities to educate DBE firms on what sustainability means at SEPTA, what its Sustainability Program Plan entails, and the various business opportunities associated with it. Moving forward, sustainability should become a fundamental component of DBE Program outreach efforts to ensure awareness of SEPTA's heightened standards for sustainable business practices among its contractors.

Receive approval for mentor/protege relationship. The DBE program office has begun to explore the possibility of matching DBE firms with prime contractors in official mentor/protege relationships. The program, which would require approval from the Federal Transit Administration, would provide a new resource for growing DBE firms to increase capacity and improve contractor performance. Recognizing the distinct benefits of this outcome to both contractors and SEPTA, DBE officials should advocate for federal approval, while at the same time provide networking opportunities for informal relationship-building.

Proactively seek out new opportunities to enroll firms. SEPTA's federal goals for DBE participation rates are in part a factor of eligible firms. SEPTA should proactively seek out new DBE firms and recruit them to the registration process as a way of advancing this standard.

Step up contract enforcement. Regardless of participation rates, the success of the DBE program depends on the performance of its contractors. SEPTA should step up efforts to ensure that that all contractors are adhering to pre-established contracting goals and must hold prime contractors accountable in cases of non-compliance.

What's Next

With that, we have completed our summary of SEPTA's social sustainability agenda. The four goals - to integrate with livable communities; to improve access to local food via transit; to develop a highly-skilled, healthy and versatile workforce; and to support regional business equity - each feature measurable performance indicators and specific tactical initiatives to achieve ambitious targets by 2015.

The same is true for SEPTA's economic sustainability agenda. Next week, we'll begin our description of the final section of SEPTA's Sustainability Program Plan: four goals that comprise SEPTA's efforts to catalyze economic growth and promote prosperity across the region while at the same time ensuring fiscal stability in a period of increasing budgetary constraints.

Next Week: Increasing Transit Mode Share