MBE Purchases (Guidance IX) by 1M8a92Y0

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									                             Purchasing Guidance #9
                   Purchases with Minority Business Enterprises
                                January 14, 2010
Ohio Revised Code Section 125.081 requires that state entities set aside 15% of eligible purchase
of goods and services for vendors certified by the Equal Opportunity Division of DAS as
Minority Business Enterprises (MBEs). Since the inception of this law, ODOT has been
working with DAS to institute plans for MBE purchases and to create a Departmental culture
that encourages opportunities to engage the MBE community.

Recently, in 2008, Governor Strickland set forth Executive Order 2008-13S wherein the
promotion of minority business opportunities and the reporting of same was to be a focus of the
administration and of this Department. In 2009, the first year that State Agencies were “scored”
under 2008-13S, most agencies did not meet their 15% set aside. ODOT’s goal is to exceed this
requirement.

In an effort to enhance ODOT’s MBE purchasing program, ODOT purchasers are directed as
follows:

1) SEEK OUT OPPORTUNITIES TO MAKE PUCHASES FROM ONLY MBEs

In the past ODOT has acquired MBE purchasing opportunities by offering portions of existing
contracts to MBEs, obtaining credit toward its 15% set aside requirement by purchasing large
ticket items from STS contracts that include MBEs, and by “setting aside” a very small portion
of the overall number of contracts for MBE only vendors. These efforts were helpful and
laudable, but, going forward, the direction for ODOT purchasers is to seek out specific
opportunities to set aside MBE-only purchases.

ODOT will coordinate with DAS to segregate traditional past purchases from “majority”
participating contracts. But to meet the 15% goal under the law, ODOT purchasers must
regularly look for new opportunities for MBE purchases, and not rely upon our past
“participation” credit on existing contracts to reach the goal.

2) SET ASIDE ELIGIBLE CONTRACTS AND QUOTES

Per Executive Order 2008-13S, DAS will annually “score” the Department on its set aside and
MBE-only contracts. ODOT purchasers must therefore attempt to find contracts that could be
eligible for set aside/ MBE only vendor competition.

The Office of Contracts has placed a list on its “Purchasing Portal” noting which contracts may
be eligible for MBE only purchases. ODOT Central Office and District purchasing professionals
should review that list and contemplate where set aside contracts and quotes can be gained.
Participation credit alone will not achieve the Department’s goal. MBE only set aside
opportunities for eligible expenditures must be acquired to meet the annual “score.” Purchasers
are encouraged to use quotes to MBE only vendors to reach the set aside requirement. If one or
more MBE vendor exists, get quotes from as many as will quote. And if just one MBE vendor
provides a quote; that is sufficient as long as it is reasonable.

3) LOOK BEYOND THE 10% “RULE OF THUMB”

The MBE program is a social interest program enacted by the General Assembly, promoted by
the Governor, overseen by DAS, and made a priority by ODOT’s Director. In the past, ODOT
purchasers have used an informal 10% rule-of-thumb for MBE purchases. That being, if the
purchase from an MBE vendor was in excess of 10% above a majority vendor, the MBE
purchase would not take place.

Going forward, ODOT purchasers are discouraged from using such a limiting rule. If the
purchase can be made and the cost to the Department is not extreme or if the MBE vendor is not
charging an excessive amount, then the purchase should be made. ODOT purchasing
professionals are encouraged to use their own best judgment on a purchase. This guidance will
not recommend a formal percentage. However, all eligible purchases that include an opportunity
to buy from a qualified MBE vendor should be evaluated, even if the cost is slightly higher than
from a majority owned company.

This document is meant to serve as guidance for purchasing professionals. Staff must still
          employ professional judgment and purchases should be reasonable.

If you have questions regarding this Guidance, please contact via email both:

       The Administrator of the Office of Contracts – Tom Pannett

              Email address: tom.pannett@dot.state.oh.us

                             AND

       The Administrator of the Office of Finance – Therese Dyer

              Email address: therese.dyer@dot.state.oh.us

								
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