Good Faith Efforts
The Contract Compliance Division is tasked with ensuring all companies contracting with the City of Minneapolis provide equal access to contracting and employment opportunities. The Small Underutilized Business Program (SUBP) ordinance ensures women and persons of color are involved in the contracting process by: (1) regularly assessing the need and availability of women-owned businesses (WBEs) and minority-owned businesses (MBEs) and setting participation goals for contractors to meet.
Depending on the dollar size of the project and its scope of work, the CCD sets MBE and WBE goals to ensure contractors receiving City funding make every reasonable and necessary effort to subcontract work to MBEs and WBEs. This process is similar to the Small Business Administration's good faith efforts review process and the Minnesota Department of Human Rights.
What are good faith efforts (GFE)?
Per the Minneapolis Code of Ordinances, Chapter 423.90(g), the SUBP Ordinances states that if a bidder or proposer has not fully met the project goal, then it shall demonstrate its good faith efforts to do so. The bidder or proposer must make every necessary and reasonable effort to subcontract work to MBEs/WBEs in advance of the dates specified for submitting and opening of bids or requests for proposals. The bidder or proposer must furnish to the director at the time of bid or proposal any forms that the director deems appropriate, which may include, but not be limited to, the SUBP Participation form, bidders list and certificate of good faith efforts and an affidavit of good faith. The department may consider the following list of actions when reviewing if a business solicited in good faith:
1. Soliciting through all reasonable and available means (attendance at pre-bid meetings, advertising and/or written notices) the interest of all MBEs/WBEs certified in the scopes of work of the contract. The bidder or proposer must solicit MBEs/WBEs in sufficient time prior to bid opening or the proposal deadline to allow MBEs/WBEs to respond to solicitations. The bidder or proposer must determine with certainty if the MBEs/WBEs are interested by taking appropriate steps to follow up on initial solicitations.
2. Selecting portions of the work to be performed by MBEs/WBEs in order to increase the likelihood that the project goals will be achieved. This includes, where appropriate, breaking out contract work into smaller units to facilitate MBE/WBE participation, even when a contractor might otherwise prefer to perform these work items with its own forces.
3. Providing interested MBEs/WBEs with adequate information about the plans, specifications, and requirements of the contract in a timely manner to assist them in responding to a solicitation.
4. The bidder or proposer must negotiate in good faith with interested MBEs/WBEs and provide written documentation of such negotiation with each such business. In determining whether the bidder or proposer negotiated in good faith, the department may consider a number of factors including price, scheduling and capabilities as well as the contract goal.
5. The fact that there may be some additional costs involved in finding and using MBEs/WBEs is not itself sufficient reason for a bidder's or proposer's failure to meet the project goals as long as such costs are reasonable.
6. If requested by a solicited MBE/WBE, the bidder or proposer must make reasonable efforts to assist such MBEs/WBEs in obtaining bonding, lines of credit or insurance as required by the city or by the bidder or proposer, provided that the bidder or proposer need not provide financial assistance toward this effort.
7. Effectively using the services of minority/woman community organizations; minority/woman contractors' groups; local, state and federal business assistance offices; and other organizations as allowed on a case-by-case basis to provide assistance in the solicitation and placement of MBEs/WBEs.
How is a good faith efforts (GFE) review conducted?
All general contractors are required to fill out a Pre-Construction Booklet which demonstrates the names of the MBE, WBE and Section 3 businesses it has reached out to in order to promote diversity and inclusion. Should a general contractor fail to meet the SUBP goals, a contract compliance officer (CCO) will conduct a good faith efforts review.
First, the CCO confirms with all the W/MBEs listed in the pre-construction booklet that: (1) the general has, in fact, requested for them to bid on the City project; (2) the WBE, MBE or Section 3 business is certified in the MN/UCP (please note the NSP and HOW programs still accept CERT certified businesses); (3) the certified W/MBE is performing in the contract under their certified NAICS code or scope of work; and (4) the general stated the correct subcontract amount in the pre-construction booklet.
Second, the CCO confirms the calculations in the Pre-Construction Booklet. If the SUBP goals are not met, the CCO will send a Good Faith Efforts Request letter to the general contractor, along with three (3) forms: a bidder's list, a Certificate of Good Faith Efforts; and a Good Faith Efforts Affidavit. These documents must be submitted to the CCO within three (3) business days along with documentation demonstrating the general contractor made every necessary and reasonable effort to reach out to W/MBEs and Section 3 businesses.
Examples of documentation and materials that may be helpful int the GFE review include: written phone logs to subcontractors, copies of MN/UCP (or CERT, if applicable) lists the contractor used to find businesses, copies of e-mails sent to subcontractors requesting bids, communication with community organizations regarding reaching out to M/WBEs, and any other documentation evidencing the contractor reached out to SUBPs.
Third, once this information is received, the CCO evaluates whether the documentation meets the above ordiannce criteria. If a CCO and the Assistant Director determine a contractor failed to make good faith efforts, the contract will be rejected.
In the alternative, if a CCO determines the contractor made every reasonable and necessary effort to reach out to M/WBEs, the project may be approved even if it failed to meet City goals.
The CCD welcomes your inquiries, comments or suggestions. Please contact email@example.com.
Last updated Apr. 30, 2013