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ENVIRONMENTAL PROTECTION AGENCY PUBLIC HEARING Proposed Disadvantaged Business Enterprise Utilization Rule ___________________________________________________________

November 13, 2003 Jackson Federal Building Seattle, Washington REPORTED BY: Yvonne A. Gillette, CCR No. 2129.

Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 2 *******

MS. HAGANSEN: We're beginning. Good morning everyone. I'm Julie Hagansen, assistant regional administrator for EPA, region ten. Region ten includes Washington, Oregon, Alaska, and Idaho. I was asked to give some opening remarks here, which means that I'm not really all that important to these proceedings, other than to welcome you all to Seattle. For someone like me who group up in western Washington, born and raised here, to have weather like this at this time of year is quite wonderful. I am getting to the point where any day without rain and gloom is quite nice.

Most of you know that EPA grants a lot of money every year through our granting process or cooperative agreement process to states, tribes, nonprofits, and educational institutions. In fact, these organizations in our granting process result in approximately 60 to 70 percent of our total budget for this region. And in my mind, I think that's great. I worked for many years in one of our field offices. And the work that I saw done by tribes, states, and other entities really convinced me that most of the real environmental work on the ground, environmental work gets done by others. And so I think EPA's grants and cooperative agreements are very important to environmental protection.

Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 3 You're here today to hear more about a small but important rule, that concerns MBE/ WBE, the minority business, women's business enterprise. If you work in government long enough, you finally have to have fun with all of our acronyms so. We lovingly refer to that as MBE WBE, soon to become the Disadvantaged Business Enterprise. And you'll hear more about this today.

This is your opportunity to listen and also to comment. Your concerns and ideas will be dually noted,

and considered and addressed when our final document is delivered.

Today we have David Sutton, from our office of disadvantaged and minority close enough and this is another wonderful acronym. We refer to it as OSDBU.

And he and others will be sitting up here. We also have Kim. And she will tell you more about this rule. And I hope you like the proceedings today. Thank you all for coming. It is a beautiful day. Thank you.

MR. SUTTON: Thank you. Good morning. I'm going to stand over here so that I can look at you, talk to you as well, as well as talk about what's on the slides.

Again my name is David Sutton. I'm a deputy director of the EPA office of OSDBU. Jeanette was not able to attend today. We also have Kimberly Patrick, who is one of our staff attorneys. What Kim and I are going to do Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 4 is tell you a little bit about this rule, summarize it,

give you the key points. And then we'll give you an opportunity to ask questions and give us your input.

That is the purpose of these public hearings, to make sure we get your comments on the rule. We need to know what you think about it.

Your concerns, the comments you give us will be taken down. They will be recorded. And we will get a transcription and also encourage you to give us comments in writing on the rule. And Kimberly will talk about that process.

Let's go to the first chart. Before I tell you why we're doing the rule making, let me tell you a little more about our program. Right now it's called the EPA MBE WBE program. And basically, the intent of this program is to make sure that the minority business community and the women owned small business community gets their fair share of EPA procurements coming from EPA assistance agreements. What does that mean in English? What it means is when EPA gives a grant or other type of assistance to any entity, whether that be another federal agency, a state government, or a nonprofit, we try to make sure that minority and women owned businesses get their fair share of any procurements that come from those grants or agreements.

Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 5 For example, we give a grant to the state of Washington. Washington awards contracts to get something done with that grant money. Then our program kicks in to help ensure that the minority and women owned business community gets their fair share of those procurement dollars. That's the program in a nutshell.

Why are we doing a rule making? To make sure that our program meets the strict scrutiny of the Supreme Court decision of Adarand v. Pina, which was rendered back in 1995. That particular decision mandated that any such program such as our program meet the compelling governmental interest and have strict scrutiny. In other words, it has to really be narrowly tailored to make sure it is meeting its intent. So that's the main reason we're doing a rule making, to make sure we meet the strict scrutiny of Adarand. Before this rule, we have had a series of guidance documents. And this rule will codify the process and be in strict compliance with the Adarand decision.

Okay. What are the key elements of our proposed rule? There are ten or eleven of these. Before I talk about key elements, I think maybe the charts may have gotten a little out of line. I want to talk about the overall goals for the program. EPA has two overall goals for participation of disadvantaged businesses and Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 6 women owned businesses in this program. There's a 10 percent goal and an 8 percent goal. The 10 percent goal relates to any grants or assistance agreements that relate to the Clean Air Act Amendment of 1990. The goal for everything else is 8 percent. So we have two national goals.

Before the Adarand decision, we put that percent goal of 8 or 10 percent goal in every grant. Going back to my example, we would have either put a goal in there of 10 percent or 8 percent. After the Adarand decision,

we could no longer use those goals in individual grants.

Those became national goals. But it has to be based on the availability of minority and women owned business in the geographical area. What that required us to do is hold negotiations with all of our 50 states. Even though we have those two national goals of 8 percent and 10 percent, the actual goals in every grant can range from a low of one percent in an area like Vermont, where you have few minority owned businesses, to a goal as high as 36 percent in an area like California.

That's the gist of how this program works. The goals of each grant are going to be based on the availability of minority and women owned businesses within the requisite geographical areas.

The first key element is the name change. We Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 7 talked about the MBE WBE program. But now this program is going to be the Disadvantaged Business Program, which will be all encompassing of minority owned business,

women owned businesses, or any other disadvantaged businesses. Number two, certification will now be required. In the past, if you came forward to any grant recipient and said, I'm a minority owned business, look at me, don't I look like one, that was accepted. But to make sure our program is in compliance with a lot of the SBA regulations, certification will now be required.

Number three, the six good faith efforts. I won't go into detail on these, but they relate to efforts the grant recipients will have to make to try to attract disadvantaged business. Next there are a number of contract administration provisions. Again we're going to go into more detail on those, talk about requirements on both prime contractors and on grant recipients.

I talk about the fair share goals. The example I made was 1 in Vermont and 36 in California. We're going to have to give you a little more detail in how we go about determining those goals. Submission of fair share goals. We're going to talk about how those are evaluated by the EPA, how they are negotiated, and how they are submitted. And also we're going to talk about race and gender conscious efforts. These are additional Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 8 actions that we can take if we are not able to meet our goals through race and gender neutral efforts.

There are some exemptions. We're going to go into details about those. A key area is going to be the treatment of insular areas and Indian tribes, areas like Guam, Puerto Rico. In the past, we have treated both insular areas and Indian tribes differently. We made the assumption that any grants going to those groups were one hundred percent going to minorities, we know that doesn't happen. We get a phone call from our regional offices. We gave a grant of five million dollars to the Cherokee nation to implement an environmental program. They awarded a five million dollar contract to a nonminority, nonwomen owned business, and we counted it as going to minorities.

Basically as the rule is proposed, tribes and insular areas will be treated just as everyone else. They will have to negotiate goals, have to report the actual accomplishments. And we will only report exactly what they did.

Okay. And then recordkeeping and reporting.

Grant recipients are required to submit reports to us either quarterly or annually. In the case of state recipients, they report quarterly. Nonprofits report annually. And then number eleven is waivers. We'll Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 9 talk a little bit about waivers. We can grant waivers from some of the requirements for this program. So we'll talk a bit about that. Those are the areas we're going to cover. I am now going to turn the floor over to our capable staff attorney, Kimberly Patrick, who will go into a little more detail about the proposed rule.

MS. PATRICK: I would like to say when I was speaking, I forgot to introduce somebody else. That's Marie McPeak of our staff. She's the local person here.

If you have a question, please contact Marie. Marie is a very important person to know. She is going to be your first line of contact if you have questions about the rule or if you have questions in general about the program, she's the person you are going to want to talk to initially. She's also quite a wonderful person as well.

Before I get going, I would like to drive this according to what your questions are and what you want to know, because we all know legal mumbo jumbo can get boring. I don't want anybody falling asleep on me. So does anyone have any burning questions?

MS. FLOREZ: Victoria Florez. My question is I'm certified as an MBE, WBE as a small business. How easy or difficult will it be to be certified?

Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 10 MS. PATRICK: I had a feeling this was going to get a number of questions. Currently, the way we have it proposed in the rule is that an entity we will accept certifications from SBA from DOT if you already have one, from state local and municipalities and tribal governments if they have the certification in place, as long as the criteria for those programs meet the same standard that we set up for our program. EPA does not want to be in the certification business. So to the extent possible it makes it easier for both the small business community or minority owned business community,

it makes no sense to recertify, especially if the criteria are the same. DOT, we'll accept their certifications as long as the individual or the business is a U. S. citizen, which is something that DOT doesn't currently require, but SBA does. And we drafted our regulations to be in line with SBA. That's a huge part of their purpose. So that's why our regs are sort of directed to how the SBA program is set up.

MR. TOIMIL: Does the state of Washington Minority Certification Program meet the EPA guideline?

MS. PATRICK: I did an initial review of each state's program to see generally how much certification we have to do in particular areas. Currently Washington state's program is in flux. It's been shifted away. It Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 11 was kind of hard to tell whether or not Washington state had a program to the extent that they used to, because if we looked at the old criteria, it would be in line with what we currently have. But because of some things going on, it's kind of hard to tell what shape Washington state's program is going to end up in. So the initial review of whether or not those criteria will be the same will have to take place on a case by case basis.

One more thing. Currently SBA does not certify women owned businesses. So we have already identified categories that would be certified by EPA as a matter of first impression. We know we have to certify women owned businesses. Unless your state or locality has a certification for disabled American owned businesses,

private or volunteer organizations, entities which are certified and criteria which are inconsistent with EPA criteria and any entity claiming that it is owned or controlled by socially economic disadvantaged individual. Those are the five categories that we know we would have to certify as that matter of first impression, because no one else currently does.

MR. WINSTON: My name is Willy Winston. I work with king county. If a firm is denied certification by a local entity, can they appeal that denial to the EPA?

Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 12 MS. PATRICK: They cannot appeal to us, because that is a part of a local process. And we're not going to intervene. Now, if that entity is denied certification by the local entity, if they want to then petition EPA for certification, yes, we will take that application under consideration as we would any other.

MR. KLON: My question relates to how the certification is going to interact with other certifications, specifically with the old dot two certification. If you go forward and certify someone under the EPA technically, they would have that name,

the DBE certification, and with the uniform application of SBA, how are these things going to interact, and what is your working relationship going to be with your agencies? I'm from Oregon. So we're having a huge amount of dollars coming for highway infrastructure.

And they are coming in with very creative businesses to get certified.

MS. PATRICK: I am fully aware that DOT and SBA do have a memorandum of understanding between each other.

We currently have not developed such a memorandum. So an EPA certification will only be good at EPA. However we are accepting DOT's and SBA's, as long as the citizenship requirement is met. So it is one way currently. But I am sure that's something we can look Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 13 at. It would make sense.

One of the reasons why we changed the name of the program was to be consistent using DBE. Something people are familiar with is the highway program, so we made that switch so people can recognize who we are.

UNIDENTIFIED SPEAKER: I guess I walked in a little late. I am certified as a WBE MBE. I have to also certify for EPA?

MS. PATRICK: It would depend on what the criteria were. If you meet our criteria, we would accept the certification you already have. If you looked at your certification of what the requirements were, if they are similar or the same as SBA's, then that will also meet our standards.

MR. ROSS: Good morning. I have a question about transparency for the EPA and the businesses that work for you. Is there going to be a listing of qualified businesses within the EPA? Is there going to be a listing of prime contractors that work with you? Is that information public? How do we find out about it?

MS. PATRICK: In terms of once we start certifying people, we will be maintaining a database. We do plan on the information being public. We couldn't keep it secret if we wanted to. In terms of whether or not we have a database of our current contractors we do.

Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 14 MR. SUTTON: In fact, we actually do maintain a database in our office of small business firms that have expressed an interest in doing business with EPA.

Eventually that database will be on the internet. Right now, it is only within our office. As firms give us their capability statements, we do add them to our database. That way, if anybody called in and said I'm looking for a firm to do X, whether that be IT work or whatever, we could then make a referral.

MS. PATRICK: If you are talking about contracts that have already been awarded, OAM that's available automatically.

MS. GENERRO: My question is, are you going to go through the steps that we need to do to become registered?

MS. PATRICK: Yes. I am going to go through that.

Okay. Our current criteria is that an entity must be owned and or controlled  that's very important  by a socially and economically disadvantaged individual.

There's a reason why we have and or. Most of the time with SBA, DOT it's and. It's very interesting. When the statutes were written for the Clean Air Act, I think someone wasn't quite looking at what was going on. The wording in the statute says an entity must be owned or controlled. And the 10 percent statute, the entity must Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 15 be owned and controlled, dot, dot. We can't go back and change the statute, so we have to live with what was written for us. So we have to accept both entities that are owned or controlled, one or the other, and entities that are owned or controlled by socially and economically disadvantaged individuals. And that goes to the determination of your status as being economically disadvantaged. In terms of being socially disadvantaged, there's a very long list of individuals that are considered socially disadvantaged as a matter of first impression. That includes a long list of minorities. However, if an individual can or wants to submit evidence of social disadvantage who are not a member of those groups. They are still encouraged to apply to the program. And a determination will be made as to the social disadvantage status of the individual.

Women are automatically considered on that list of socially disadvantaged individuals. So that's currently another thing that's added in with our particular criteria. And outside of that, that's pretty much it for what our criteria would be.

MS. GENERRO: I was a little confused. I was a little confused. I got on the internet to register for the Pronet. And I know that on the certification categories, it only forced me to put in certified Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 16 individually or something like that. I can't recall the details. It locked me out of being able to certify in any other way. So I was wondering if  do you belong to how does the Pronet system relate to your agency?

MS. PATRICK: As it relates to our agency, it is just an information source. It is not something that we have very much to do with. As SBA's database of certified or small businesses, we use it sometime as a resource to find small businesses that are certified.

But we have very little, almost nothing to do with that.

I have no idea.

MS. GENERRO: That's one good thing. I am sure that's how you got my name then. Not you, but the agency.

MR. SUTTON: You said you tried to enter your certification.

MS. GENERRO: Yeah. And it doesn't allow me to do it other than to self certify.

MR. SUTTON: I am thinking with the Pronet system,

the certification is probably fed by SBA. You probably can't just say I'm certified, unless my feeling is that the SBA probably populates that information based on the firms that have been certified. But that's just my

MS. GENERRO: Even with the certification Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 17 information and number and everything else and the documentation for that. If you indicate you are certified with DOT, it is not allowing you to take it.

What it is taking is hub zone and 8( a) certification,

which is something you would want to consider. It would be so nice and simplify the process. A lot of a different agencies. We're running around and trying to get on a network.

MR. SUTTON: It is a good point to be communicated.

MS. GENERRO: I don't believe that you can be SBA certified just as a woman owned business. And the hub zone thing, I have never figured it out yet. But you are saying for your program you can be a woman owned business.

MS. PATRICK: Exactly.

MS. GENERRO: I wondered if there was any plans to merge the databases with the state databases. I know here in Washington there's an extensive database of DBE and WBE participants. If that could be combined, it would be a lot simpler.

MS. PATRICK: At this time, I am not sure if we have entertained any such idea. I have no knowledge of any other agencies to do that, not that exists. I am not sure.

Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 18 MR. COLUMBA: My question relates to  I know this sounds like a bad thing. Would you be listing the state's programs that you will not accept? I know, but if you are in a state that that program does not meet par, then sort of would have to be notified. The other side, I read in the literature that you will be accepting private certifiers. I am interested to hear a little bit more about that, and will EPA have also private certifiers for their other areas of publication?

MS. PATRICK: We had a lot of discussion a lot of questions about the private certifiers during the process. And we spoke with SBA and asked them what their experience was like. And they related to us nothing but a nightmare in terms of using them. And the cost was exorbitant to use them. The reason why we left that in the regulations is to give us an option if later on we decide to do that. Our initial plans are to not use private certifiers. But currently it is not something we are going to do. If a state or whatever uses private certifiers, and you have a certification from that private certifier who has been dually commissioned by the state to do this, then we will accept that certification if it meets our criteria. But in terms of EPA having private certifiers or using them,

it's not something we plan on doing.

Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 19 MS. GENERRO: Follow up on that. Perhaps in the National Association of Women Certification, which is not a private certifiers. It is their own certification that is in line with the DBE and the SBA program.

MS. PATRICK: To be honest, that is the first time I have heard of it. I am giving you an answer off the top of my head here. I believe they would be deemed a private certifier, because they are not from a state or another federal agency. I think for all purposes, that would be classified as a private certifier.

MS. FLOREZ: I wanted to revisit the comment I heard earlier about the master license concept. And just to restate that I would much appreciate even a low tech version of that, where there was a form with, say,

DBE, SBA, State of Washington, King County, EPA,

opportunities to fill out our MBE/ WBEs on double sided sheets of paper with one document, stapled, and handed to me, would be a huge service. And I wanted to restate that. It doesn't have to be a real high tech thing.

But this would be a wealth of service in my opinion, and I would like to encourage that.

UNIDENTIFIED SPEAKER: I second it.

MR. WINSTON: Will the EPA require a unified certification process like the U. S. DOT?

MS. PATRICK: Currently we do not. Mostly because Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 20 we anticipate the numbers of certifications that the EPA will have to do itself will be extremely low.

MR. WINSTON: Are you talking about when and how would you be able to make application at EPA for certification?

MS. PATRICK: Once the rule goes final, which we are hoping there's only maybe two years until the process to get that done, once we're done in the comment period, which ends in January, we have to go back to the EPA process and get a buy in and then the approval, and then the administrator has to sign it. And then it has to go back to the federal register as a final rule.

With all that involved, at the earliest, a year and a half. At the latest, I am trying two years. At that point, once the rule is a final rule, that's when our certification program will begin.

MR. WINSTON: Just follow on. In the meantime, I think the current certification program, can you explain on that a little bit?

MS. PATRICK: What we're doing right now, people self certify. There was no program. You are whoever you say you are. If you knock on our door and say you're big bird and you want to be certified, that is fine. If you believe it, we believe it. There is no standard right now.

Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 21 MR. SUTTON: What would happen if you went to the grant recipient. Again, use the State of Washington.

And you said, okay, I want to go after this procurement,

I'm a women owned business, they take your word.

MS. PATRICK: Once in place, the state of Washington will have to ask, where's your certification?

MS. FLOREZ: Following up on that, how does one know what moneys are in this area from the EPA?

MR. SUTTON: That's a very good question. Where did Marie go? She is our region ten MBE WBE coordinator. And she is our regional point of contact for this area. If you wanted to know which state agencies or which nonprofits are getting the EPA grant dollars, Marie is the person to talk to. And we also have these people in all ten of our regions. Our business card is on the back table. If you contact us,

we can give you those.

MS. MCPEAK: And my business card is also on the back table. Give me a call and I will point you in the right direction. And we would like to get you in the database that OSDBU maintains and also on the list for direct procurements from EPA, because we have also a contact in Kansas City. We don't have a procurement office in our own region right now. So all of our direct procurements that we buy things for EPA Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 22 themselves, that's all done out of Kansas City. And then you can be notified of any procurements that would be available to you. You would have a chance to bid on those. So do get in contact with me, and I'll be able to help you with that.

MR. SUTTON: I would like to follow up about your earlier program comment. That is the federal contracting program, hub zone for historically underutilized business zones. To be hub zone certified,

you have to have a principle office of your business in one of these hub zones, and 35 percent of your employees must come from a hub zone. This is a program that relates to economic development. It is not race based,

sex based. It is looked on very favorably, because it helps economics. That's the idea. You can go to SBA's web site, key in a ZIP code or street address. You can find out whether or not your business is in a hub zone.

MS. FLOREZ: Is there a size standard for hub zone business?

MR. SUTTON: Just have to be small based on that type of work.

MS. BROWN: Being 8( a) certified also qualifies you then through the DBE for the EPA. Would you send in your application or the acceptance letter?

MS. PATRICK: You would do an EPA certification Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 23 form. It's a shorter one. You indicate that. You send in proof of that certification, and you will get our certification. So it is very, very short process. And,

yes, currently we do accept 8( a) certification.

MS. BROWN: And determination of personal worth,

net value of worth, do you do it by the tribe or by the company? Because there aren't individuals.

MS. PATRICK: The net worth only applies to individuals as we have it. In terms of determining whether or not a particular tribe is economically disadvantaged, we would go by SBA's current standards for determining that. We got a lot of questions about that. And we need to go back and clarify more exactly how that process works. Currently we say, see SBA's rules for that particular part. We're going to spell it out in our rule to make it very clear of how that works and how we determine economic disadvantage.

MS. FLOREZ: My question is about your majority contract or your majority, the people that get your money. How do you encourage them, or what is the current encouragement, and what is the future encouragement to actually hire minority and women owned businesses?

MS. PATRICK: That leads to the good faith efforts that they have talked about. The direct procurement Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 24 side of the house has its own program. This is only for people who receive contracts under grants that EPA gives. Every single grant has terms and conditions in it. One of those terms and conditions concerns our program. Those requirements are  some of the requirements are called the six good faith efforts. One thing we have done, we have merged them and are calling them all six good faith efforts. So we merged them.

This is what they are. Those efforts require a contractor to do certain things to solicit disadvantaged and women owned businesses for use under the grants they receive from EPA. It requires them to do solicitations to these businesses, making sure that the whole process is fair.

I need to point out our program is not an affirmative action program. So to that extent, we can not have quotas. What we can do is strongly encourage,

which is what we hope the six good faith efforts do. We negotiate goals. And most of the time, the recipient is very much interested in meeting their goals. And we have noticed that as we get people at least soliciting the businesses, a lot of times it's easier to say,

there's no one to do this. Once we require them to go and look, a lot of things come up. That part of the process is more of the encouragement that you are Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 25 talking about to get them to go to these businesses.

One thing we have learned once we talk about the contract administration provisions that we have in the rule, we see a lot of times a prime contractor will say we're going to use a long list of subcontractors who are minority owned businesses. Once we get the contract,

they disappear, something happens to them. One of the things we're looking at with our new contract administration provisions are designed to sort of limit the bait and switch that happens sometimes. The first is that a recipient must be notified in writing by its prime contractor prior to any termination of a DBE subcontractor. Second, when a DBE subcontractor fails to complete its work, the recipient must require a prime contractor to make good faith efforts in hiring another subcontractor. If a sub is let go for any reason, a DBE, that prime contractor has to go through the same six affirmative steps that we have talked about before that the recipient had to go through to get the prime.

And even after one is terminated, they have to do that again. The next thing is the recipient must require its prime contractor to make the good faith efforts, even if the fair share objectives are met. They do their whole contractor thing and they have met the 25 percent. What we're saying is if The state of Washington, let's say Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 26 they meet let's say it's September, October. State of Washington just got millions of dollars to do some project. Under that millions of dollars, there's 25 percent goal on that, so 250 thousand has been used with the minority owned business through one of their prime contractors who got a sub. We're saying when you go out and spend the rest of that money, your prime still has to go through those six affirmative steps.

MR. WINSTON: You in your proposal, you are saying that the contractor must notify a recipient of any change in the subcontractor with DBE. I suggest that you change that to say that a contractor must receive a recipient's approval prior to changing subcontractors.

I have been in the business for about somewhere close to 35 years. And if you don't tighten it up, it's not going to work.

MS. PATRICK: Thank you.

MS. FLOREZ: One follow up. With your majority contractors, if you find they have had a 10, 20, or zero percent participation, is there any teeth in a repeat of them receiving a grant?

MS. PATRICK: We have some teeth, but they are not very sharp. Totally honest with you. And that's primarily because we have to be extremely careful to avoid potential legal challenges, because programs like Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 27 these are just targets right now. And we can't come off as though we are making anyone do something or we are forcing them to go a particular way with the contracting. And so while there are some things we can do. For example, once a recipient gets money, they have 90 days to negotiate a goal with us. If they do not,

they can't spend their money. We can freeze the money.

That's one of the new things that we have in the provision. There is some things we can do with the recipient, but we can't reach out and touch that prime,

because that's not really a relationship that we have too much to do with, other than to say they have to go through those six good faith efforts. But that type of provision, you can't overlook this requirement, you need to do something, you have to look toward this as you are doing your procurements. So that type of provision is the thing we sort of try to give it a little more teeth.

MS. GENERRO: Following up on the question about  well, my question, what is the EPA going to do about auditing both the agencies and their accepting certification as well as the contract and contracts associated?

MS. PATRICK: You mean auditing in terms of actual financial type of audit?

MS. GENERRO: Ensuring that the contract is being Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 28 met as intended and not waiting until the end to see if they are doing it along the way. But also agencies

like when you started, you didn't know whether Washington's program would make it. Would there be a provision in the EPA's rule that would require the EPA to do an audit of the program? Federal highway does that. Every agency has to have an audit.

MS. PATRICK: One of the sort of newer trends right now with EPA is to particularly pay attention to our rates. Congress has been pushing back on us and finding great fault with the fact that we have not been going out. And we don't use the term auditing, but we do oversight reviews. One of the things we have been discussing with the grants office is that we would go along to make sure that provisions regarding our program are being met along with that process. Another one of the things we could do is we can always request a paper audit or paper review of what's going on. To the extent that people in our office can't be present for those reviews, their review checklists. And our program is on that list of things that they are supposed to look for.

So we are very aware that the oversight part is sort of missing. And we're working really hard to beef that up.

MS. GENERRO: In the program, are you planning to have some language in there to protect against false Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 29 certification?

MS. PATRICK: I think the biggest thing is you are not supposed to lie to the federal government. So all of our certifications are under the penalties that can be imposed by 18 USC 1001, which is saying it is a crime to lie or falsify things when the government is asking questions, including on forms and everything. So they would be under that same type of penalty. If we go out and find  we do plan to do more oversight. If we find out that someone has lied about their certification, we can definitely forward the case to our attorneys to look more into that. If you ask me, I used to be in suspension and debarment. I loved it. So I am very much aware of that penalty. If it is up to me, most definitely, yes, the attorney in me would love to send someone up the river for that. But that's my view on it.

MS. FLOREZ: With the idea in the vein of the win win situation here, and since we have a vested interest of getting the work with these majorities, is there anything you could do for us, a class we could attend where we get a little card, take that card to visit potential customers that we are certified with the EPA,

and that we have some kind of reporting system six months to every year, whatever, that says we work with Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 30 such and such a contractor, doing a good job, got your grant money, we have a vested interest. And they would win. We would win obviously by working for them. And that word gets back to them. And you keep a score card or whatever. Thinking low tech. Not trying to make this real difficult, but some opportunity for us to have a class or two that makes us more knowledgeable so we kind of know what the rules are and tell them we know that they need to have these goals and we're here to help them and we have a direct line to the EPA. And just gives a little bit more power. We're not a big EPA company, but we can maybe use some of your shadow.

MS. PATRICK: That's something we haven't thought about. That's one of the reasons we're having these hearings. I would think that empowering a potential subcontractor to report back and say I did work here is a good way to complete the loop for our process as well.

MS. DENEVILLE: I want to ask you question. I have a women owned business. Under the criteria, I look like I qualify as a disadvantage business. Is there going to be any kind of parallel relationship with State of Washington and their DOT program? It's painfully slow.

MS. PATRICK: The question was asked. If you have a DOT certification, we would accept that as long as you Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 31 meet the citizenship requirement. However there is no reciprocity between us and them. That's the way it currently looks. An EPA certification would only be good at EPA.

MS. GENERRO: My question also in line with having something that shows that you are certified. Are you going to do outreach? Because there will be firms that do not qualify under the state, when they do the calculations as to the utilization, if you have not been doing outreach to firms that may qualify, then you really have obscure numbers. So, I mean, so eventually there should be a database for every state. Because then there's four categories that are not being considered by most states. And they will miss out on those opportunities.

MS. PATRICK: Outreach is something that my office currently does a lot of. We realize with the advent of this rule that outreach efforts will have to be increased, particularly with the certification component. So that's a great idea. That's something that we do know we're going to be focussed on.

Okay. There was one other contract administration provision that a recipient must require its prime contractor pay its subcontractor for satisfactory performance within a certain number of days. We have Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 32 heard a lot of words back that for some reason subcontractors aren't getting paid in a timely manner,

if they are getting paid at all. This provision is in place so once the recipient has paid the contractor,

there has to be a stipulated number of days after which the sub will have to get paid.

MR. CAMPBELL: The question I have, is there retainage on these projects? Well, a lot of the public work contracts have a five percent retainage.

MS. FLOREZ: Just construction.

MR. CAMPBELL: I'm working on a project now. My work was completed in 2002. I'm still redoing the retainage.

MS. PATRICK: That's not something I am familiar with or aware of, not something we address.

MR. SUTTON: I would think these contracts that we were talking about would not be EPA contracts. They would be contracts made by a grant recipient. Therefore a contract with the State of Washington, you would need to address that issue with the entity awarding the contract. I would say however, if you were a subcontractor on a contract that was awarded EPA grant funds, if you were having a problem, you could talk to us, and we would talk to the grant recipient.

MR. CAMPBELL: I would suggest that you dictate a Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 33 you know  if you give a recipient that kind of flexibility, you are going to have some of them saying ten days and some of them saying sixty days. The other thing, I would also suggest that you take a look at some language that will address retainage because that is a big problem.

MS. PATRICK: I already talked about provisions regarding the fair share goals, concerns they have, 90 days to complete, the moneys frozen, we talked about procurement. I didn't mention the four categories,

construction, services, equipment, and supplies. And we look at those four categories. It's just about everything, which means a recipient could not go out and buy anything without our program. If a recipient is using those funds for salaries, our program does not kick in. That is the one category we can't go out and say you have got to go hire a bunch of minority people.

There's no way we could do that.

MS. FLOREZ: And services would not be labor?

MS. PATRICK: It would be hiring a consultant,

that type of thing, but it would not include salaries for employees who correctly work for you.

MR. KLON: Would the EPA support any type of assistance for insurance, especially environmental insurance, that when you are working with any firm Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 34 that's doing any type of environmental mitigation to that respect, even if you are a consultant doing whatever it may be, you are required to carry this environmental pollution insurance, because it is required by the prime in most cases.

MS. PATRICK: Currently, you asking about if our program kicks in when they go in

MR. KLON: Would there be any provisions to support any type of assistance with that type of insurance?

MS. PATRICK: We have had a lot of questions about it was phrased as bonding in others. I guess insurance in this. Same type of thing. Currently, no.

We don't have a program that would address getting assistance. We have heard a lot of complaints that's one major bar for a lot of small companies is the cost of insurance and bonding. And it prohibits them from being competitive. And so we have heard the cry, but we don't currently have a program under works or in place or developed. We haven't even thought about it in terms of assisting with that.

MR. KLON: Just to make a distinction between bonding and insurance, the reason being, a lot of firms can mitigate bonding. A prime can choose to not have a particular firm bonded. But with the insurance, a lot Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 35 of larger firms are required. They can't get away with it. And that becomes a real hardship.

MS. PATRICK: There are some exemptions that we have in the program. The exemptions would be the first one is that okay. For entity or recipient receiving 250 thousand dollars or less for any single grant or 250 thousand dollars or less as an aggregate total of grant money for one year, that particular recipient would be exempted from negotiations under our rule. That would be an exemption only from negotiating the fair share goals. That is not an exemption from reporting requirements. That is not an exemption from the fair share objectives. That's only an exemption from the negotiation if the grants are 250 thousand dollars or less for any single grant or aggregate total grants in one fiscal year.

MS. FLOREZ: Why is that, just the volume of load for you?

MS. PATRICK: Yes, pretty much just to reduce the hardship on us in terms of reducing the negotiations.

And that was borne out of some internal EPA issues sorts of things, and also we don't have the manpower to negotiate that large volume negotiations that would have to take place.

MR. SUTTON: When we had a draft rule, we had a Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 36 lot of communities with small grant recipients, farmers,

people getting small grants. And there were indications that going through the process of negotiating goals would be a hardship for these types of grant recipients when getting a one time deal. It is not a lot of money,

why should they negotiate goals.

MS. PATRICK: For the SRF and ground fields type of programs, the revolving loan type of programs for entities receiving 250 thousand dollars or less and the same aggregate total for the year, they would be exempted from applying the fair share requirements under those for the loan programs. The next exemption would only apply to tribal recipients which is that grants to tribes that are eligible to be included in PPG would be exempt from the fair share negotiations. They would be exempt from the negotiations part. But, again, not exempt from the reporting and not exempt for the fair share objectives.

Let's see, also for the insular areas and for tribes, there will be a three year phase in period for this rule. We understand that for them, negotiations are brand new. We have never had them do negotiations.

Grants recipients which are tribes, insular areas, all of them, there will be a three year phase in period for this rule. During that period, EPA, our office is going Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 37 to be under a major push for education, education,

education and to start the negotiations with some of the tribes that are larger and more able to begin that process.

Also one of the other things that we sort of didn't do in terms of the reporting, while reporting for everyone has always been a requirement under the rules that we have currently have, we haven't necessarily been enforcing that with the tribes and insular areas. So that's something that's going on now, making them report now. But most definitely under the rule, no way around it. They would have to report back.

Under recordkeeping and reporting, we are going to start requiring that a bidders list be maintained for both financial systems recipients as well as those receiving loans.

MR. WINSTON: As you know, the U. S. DOT has a requirement that recipients maintain bidding lists of all bidders and subcontractors for a bid on a DOT contract. It is the worst nightmare that the DOT ever created. It is not working. I would suggest that you take a very close look at this and be specific. If you are going to try to collect information on the apparent low bidders, that's pretty easy. The other thing is that it is so broad, when you say suppliers, you don't Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 38 say first tier subcontractors, first tier suppliers.

That list could go down three or four different steps.

Are you going to try to collect information on that? I would suggest before you follow this particular requirement that you check with the U. S. DOT and see what they are doing to address it, because it is a nightmare.

MS. PATRICK: Currently, the actual provisions of the information we want to capture is not defined. And that is something we have received comments on at some other hearings that we need to be specific, including the number of tiers. And so that's something we know that we do have to clarify. So you had something else.

MR. WINSTON: I am currently drafting language to go to our prosecutor's attorney's office that will require the information be submitted as part of the bid.

In other words, it will be a matter of responsiveness.

We know that we're going to run into a lot of problems,

because if we make it a matter of responsiveness in a bid that fails to submit the list, the bid is not responsive. That's going to create a lot of problems.

So take another look as to whether or not you will require recipients to make it a matter of responsiveness.

MS. PATRICK: I'm sure from our perspective, we Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 39 had not really thought about what you were saying in terms of the responsiveness issue. In terms of the bidders list, I don't think we envisioned it going that many tiers. So that is something we will definitely look at.

The language that you are currently drafting if you would like to submit that along with your comments to us, that would be very helpful. And before I get to that part of the  comments, question.

MS. FLOREZ: Just a follow up. At the bid stage,

all the subcontractors aren't identified by the prime.

And I am not sure that that language it would be difficult to enforce that, because many contract teams aren't put together backstage.

MR. KLON: I just want to add my two cents as well. I think you should most definitely that add a component to that. I am using a similar procedure and we are finding that the low bidder, when you ask them to list all their bids on that bid sheet, it's usually not who they would have picked originally. And that's helping the participation be a lot because you have actually the bid in front of you, and then you see how they chose it.

MS. PATRICK: The purpose of our bidders list is a little bit different. Our purpose is to help the Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 40 recipient develop as accurate a database as possible.

And so looking at that is our purpose. I am not sure exactly what form it is going to end up taking. I am getting some good information here. So it is much appreciated.

The last part before I get to how you make the comments is waivers. We're going to have a provision that would allow the director to grant waivers to any requirements that is not based on statute or executive order. What that means is we're going to for the first time have a waiver provision where the OSDBU director could waive negotiations. Reporting and fair share objectives and that sort of thing, she can't waive. And the fair share objectives are never going to go away.

That's just but for other provisions that are there,

she has the authority to, he or she, whoever it is,

OSDBU whoever it may be at the time, will have the authority to grant that.

MS. FLOREZ: Does EPA in the future have goals for LSRVs?

MS. PATRICK: Well, goals for them? Not that I know of.

MR. SUTTON: Under the federal government direct procurement now, hub zones have taken over.

MS. FLOREZ: Will you require local areas to make Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 41 efforts to do business with hub zone firms?

MR. SUTTON: No.

MS. PATRICK: Currently DBE, that name encompasses women owned, minority owned, as well as labor surplus area firms. So the extent you help this program accomplish that, they could be defined as a DBE.

MS. MCPEAK: Right now we require our recipients to try to utilize small business in rural areas. Is that still going to be a component of this category?

MS. PATRICK: That is another category that is now under the DBE umbrella. There's a provision that talks about the name change and sort of what that is going to include. I am only seeing that it's including labor surplus area firms as well as small business in rural areas.

No more hands raised. I can tell you how to submit your comments.

MR. MCKUSE: How about veteran owned or disabled veteran owned?

MS. PATRICK: That is a category that EPA will certify. Service veteran owned businesses will be certified by the EPA. We will be the only entity that certifies in that category. So that is one of those areas that we certify as a matter of first impression.

MS. FLOREZ: In the transition period, two years,

Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 42 what EPA certification should we look forward to or should we attempt to gain at this point?

MS. PATRICK: Right now, say you are who you want to be. That's what we have to currently operate under,

our current regulations as they stand, which accepts self certification. So you are whoever you say you are.

That's the standard right now.

MS. GENERRO: The proper classification would be EPA certified. So you would want an EPA certified disadvantaged business, right?

MS. PATRICK: After the rule is in place, right,

you would have an EPA certified disadvantage business.

MS. GENERRO: Is that going to be across the United States, or are you going to have separate certifications for different regions?

MS. PATRICK: No. Every region is doing the same thing.

MS. GENERRO: Will certifications be performed by headquarters?

MS. PATRICK: Yes. We are looking at perhaps having the initial package submitted to the region, but it will be headquarters doing the certification.

MR. MCKUSE: You mentioned certification, I believe, of service disabled veterans. Is that what you said?

Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 43 MS. PATRICK: Yes.

MR. MCKUSE: Is that addressed in the CFR here?

MS. PATRICK: Yes, it is.

MR. MCKUSE: Will it actually be a certification like now we get a DBE thing? Will we be getting an actual certification number like the DOT?

MS. PATRICK: It will be an actual certification after the rule is in place. Right now, whatever you say.

MR. MCKUSE: Would there be an outside component to it as there is for DBE? Usually you are getting for the DOT, someone comes out, and looks at your operation and makes sure you are who you say you are.

MS. PATRICK: We do not have the capacity to do every single one. On a case by case basis, particularly where we are the ones doing the certifying, not accepting one from DOT or SBA, occasionally we'll go out and do spot checks.

Okay. How do you submit your comments, because I know you all have a burning desire to get on the computer and give us some. Not only are we taking the transcripts back and pulling comments off of that,

there's also other ways you can submit your comments.

Back on the table there was a hand out that says Q and As. I think the cover sheet may have a letter on it Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 44 about the program. On that Q and A sheet, it lists all the many ways you could submit your comments. You could do them on line, e mail, fax, writing them in, mailing them in, and you could do them via the web site that we have set up. There are a number of ways to get your comments in. The comment period closes January 20th,

2004. Once we received all the comments, it is my lovely job to go through them all, classify them,

categorize them by topic, and then to develop a response to those comments and a disposition and how we're going to include them in the process.

I must let you know that your comments are not taken lightly. Many of the previous comments we have had resulted in a number of changes in the current documents you see there. Many of them. So we take our comments very seriously. We got some really good ideas from a lot of previous sessions that we have had already and a lot of things we know we didn't draft exactly correctly that we know we have to go back and fix. Any comments you have, please submit them.

MR. MCKUSE: Do you mean to have participation goals for disabled service veterans? You say you will be certifying firms. Will there be a goal requirement included in the DBE requirement?

MS. PATRICK: It will be included in the DBE Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 45 requirement. The service disabled veteran category is one of those entities that's considered a DBE. And so once that goal is negotiated, any of the contractors you use from that universe would be counted towards your goal. So there is no specific goal for the use of service disabled veterans, no specific goal for the use of women or minorities. It's all one goal.

MS. FLOREZ: The regional goal for Washington state, I think I heard you say 25 percent, maybe as an example. What is the EPA DBE goal for this region?

MS. MCPEAK: I can answer that. Basically what it is is all of the recipients within the state agencies,

they accept the goals that were established by the Office of Minority and Women Businesses, which is overseeing all of the state agencies within Washington I don't know exactly what the goals are right at this moment. But they negotiate goals for construction,

services, equipment, and supplies. And so they have a goal for MBEs and they have a goal for WBEs. So all of the state agencies accept those goals that are done by that one agency. Then each one of our recipients which is in the state of Washington, they have the choice. We give them the choice when we put in their goals. We give them the goals of the state. And then we tell them that they can either accept the goals of the state or Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 46 they can negotiate their own goals. So that like University of Washington, for example, could decide to negotiate their own goals. King County could decide to negotiate if they want to, or they have the choice of accepting the goals that are established for all of the state agencies within Washington. Oregon has the Office of Small and Emerging Businesses. And they set goals also. And each one of the state agencies within the state of Oregon, they each develop their own goals.

So it kind of all depends. The state agencies within Idaho, they have negotiated goals for each one of their own departments. So it kind of all depends. It is up to the agencies, whoever the recipient of the grant is to decide if they want to accept state goals,

if they want to negotiate their own goals, or if they want to take on the goals of another state agency. So we do give them all that opportunity.

MR. WINSTON: Ten and six. They have ten and six for construction. And I think a little bit over for architects and engineers. There's about four different categories. All you have to do is call the Office of Women and Minority Business Enterprise.

MS. FLOREZ: When you negotiate these goals with your recipients, are they published on your web site?

MS. MCPEAK: Yes. We have our own internal Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 47 database, and we have those goals listed. I don't think that list is available to the general public right now.

But we could tell you what the goals are if you call,

because we can give you that information. It is not private information as to what has been negotiated.

MS. FLOREZ: So after this goes into effect, will it be standard, or still anybody can do anything they want? Anybody who gets a contract or a grant  as she said now, the numerous organizations can do different things. Like King County can do what they want.

MS. PATRICK: It is not necessarily what they want to do. They can still individually negotiate goals, but those goals have to be based on something. They have to be based on the availability standard. It has to be based on what's available in that particular geographic area. So it is not an arbitrary type of number.

MR. SUTTON: As an example, the grant recipient might feel that ten and six is too low or too high. And they would submit evidence to show that that goal should be different.

MS. MCPEAK: Like with the State of Washington,

the one state agency that negotiates goals, they do a disparity study quite often. So they set the goals for the other state agencies based on that disparity study.

Most of the other state agencies just accept their goals Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 48 within Washington. Because, you know, they have that agreement with that office. So it is based on a disparity study. And you have to have the goals based on either an availability analysis or based on a disparity study, one or the other. And to show, you know, what are the total range of businesses that are available to that you can buy all this stuff from. You know, so it has to be based on the universe.

MS. GENERRO: Recommendation. It is recommended that the EPA maintain a database with all of its financial instruments and what has been negotiated as the goal for that project with contact information so small business owners can access that and determine who's in their state and what their goal is.

MS. FLOREZ: Question. Right now, in the state of Washington, not on the EPA side but overall, is anyone monitoring anything that's being done in the state of Washington? I know goals have been set. The governor has stated that the his director will do certain things.

But it is once again left up to that director to do it.

And if no one is monitoring, it is not going to be done.

Is there anyone presently  what I am hearing, are you all going to monitor this? I don't think in the state of Washington presently, no monitoring has been done,

because it is not required. Just something else to do Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 49 and not enough people to do it.

MS. PATRICK: I can't speak for the State of Washington, I don't think.

MR. SUTTON: The state of Washington has voluntary goals. And he's correct that they are narrowly monitored. They don't have any authority.

UNIDENTIFIED SPEAKER: Good morning. I would like to encourage the agency to set goals that are contract specific. I think it is highly inappropriate for the agency to solicit the number of certified firms from the Office of Women and Minority. And let's say for example, that there are 800 firms that are certified as a MBE/ WBE. From the statistical analysis, it is determined that we should be able to establish a ten percent goal. That's highly inappropriate for several contracts. For example, if we have an EPA contract that has the scope of work would be to remove and haul waste materials, based on the fact that there are probably 500 certified trucking firms, that goal for that specific contract should be 20 percent. It should represent the actually number of businesses certified to do that work as opposed to the way that the goals are established right now. And I would like for the EPA to take the goal one step further and to address contract specific goals.

Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 50 MS. PATRICK: Thank you.

MS. MCPEAK: Well, now, the goals for contracts are different than the goals we're talking about here.

What we have been talking about is the goals that recipients of EPA grants would establish. That's not the same as the goal for our direct procurement. We have different goals for direct procurements than EPA does for hiring contractors. And also when we hire a private contractor, then we set goals which are different than what I am talking about with the recipients' goals. So it's two different areas where one is direct procurement, and one is through grants to a recipient who then hires contractors or buys things.

So there's two different goals, and our own internal goals are different.

MS. FLOREZ: What I would like to point out,

internally, you may have established the goal with the intent that the exercise be taken further, the way you have described it. It seems that because within our own state, budget cuts, lack of personnel, they will simply take the EPA's overall goal and not take it the step further that you have recommended that it go that step further.

MR. SUTTON: I think in some cases, we made efforts to take it down at least one step from the Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 51 overall goal.

MS. FLOREZ: It is just not consistent. So there's more opportunity for better matches, the availability of small DBEs in the area.

MR. KLON: Will the EPA will we be required to get EPA's approval when we have contract specific goals?

In other words, if we have a five million dollar contract, and we get ready to set goals of three and four, will we have to go through Marie's office to get approval before we can advertise that particular contract?

MS. PATRICK: For your specific individual contracting processes or if the State of Washington has its own goal they want to put in that contract, we don't have too much to do that. That's the State of Washington. That doesn't mean that our goal is to replace. If we negotiated one, and that's the goal we have in place, you have to still meet our goal. If I hear you correctly, you're saying the State of Washington may have its own number that it wants to insert or whatever. As long as our goal is met, how you go about doing that goal, I don't want to be that open,

but I just think they are sort of apples and oranges.

And we can't say if Washington has a goal that's less than ours, as long in the process of using that grant Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 52 money, you still have to meet EPA's goal.

MS. MCPEAK: What I was going to say was when we award you a grant, goals are put into that particular grant. Then it's up to you whatever goals you want to put in your own contracts. That is your decision to do that. You are to try to meet the goals that are in your grant agreement. But how you go about doing that is up to you. So you could have some projects that have higher goals than other projects. If you knew there were a lot of suppliers  say you needed a whole bunch of hauling. And you knew there was a whole bunch of haulers out there that were DBEs, you might want to put higher goals on that particular one for part of the contract. But that's up to you. We just hope that you try to meet the goals that are in your grant agreement when we give you the money. But how you do that internally is up to you.

MS. FLOREZ: Are these goals aspirational? Is that what I am hearing?

MS. PATRICK: We don't want to say that. It is strongly encouraged that the goals are met. That's what I am going to say.

MS. GENERRO: Just to clarify. The certification that will eventually come, we hold both for the direct and for the grant.

Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 53 MS. PATRICK: The certifications we're talking about are for the grant program.

MS. GENERRO: So you will have two certifications,

one for direct purchase and one for grants.

MR. SUTTON: So for the direct, those are negotiated with SBA. It is only for the grant program.

Let's put it this way. If you have been certified under the direct program, that would be acceptable under the indirect program and the grant program. Let's say you were certified as a DBE under EPA's program, but not certified by SBA as a disadvantaged business, you might not meet the federal certification. You would meet the EPA certification, but not necessarily the federal. We would accept the federal. But right now, there's no reciprocity that anyone would accept ours.

MS. PATRICK: The two programs are looked at as completely separate. They are totally a hundred percent separate. The direct procurement program is directly based on SBA negotiated goals. We talked about that for the agency because SBA is the one who creates the goal for different agencies. So SBA is saying, okay, EPA,

this is what your goal is on the direct procurement side of the house. It's almost the relationship we have with our recipients, SBA has with the agency. So the agencies we're talking about that on that side are going Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 54 to be SBA certified businesses. So someone on that side of the house doing direct procurement with the EPA,

that's fantastic. You have SBA certification, 8( a),

whatever, great. Let's say you step over and say, I am going to do this contract over here with the State of Washington. That contract is being funded by EPA grant money. That's when this program we're talking about,

that rule, that kicks in. And we're going to require that you be certified or have EPA certification. As a part of the certification process, if you have been on this side of the house, and you have been working as a direct contractor and you have that certification, we'll accept that and in turn give you an EPA certification that's good under our indirect program only. But that particular certification would only be good under EPA's indirect procurement program.

MS. FLOREZ: Really the rationale is to broaden the base of participants in the program as opposed to what SBA has currently?

MS. PATRICK: Right.

MS. FLOREZ: I am going to ask a question I asked before. I am looking for a baby tooth here. In order to put teeth in your grant recipients, they come back a second time for a grant, is there any way you can put a point value, two, three, four, five points, again a baby Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 55 tooth, yes, they have met their goals. You get two extra points if you exceeded your goals, whatever, that vests those grant recipients in the program. They have no other vested interest at this point, just good will and our aspirations to meet a goal. I know we're stepping into a legality here. I am looking for a baby tooth.

MS. PATRICK: You have a very good idea. Any grants over 75 thousand dollars have to be compete, and now there's competition for the recipients, that's something we haven't thought about that before, in terms of asking that to be part of the criteria.

MR. SUTTON: It's very interesting, because we do something similar on the direct procurement side. We keep records on the past performance, and meeting small business goals is one of the things we look at. So you have a very good recommendation.

UNIDENTIFIED SPEAKER: Is there going to be a phone list or e mail source for people that got here late or were unable to be here that we can ask questions to kind of once I have done my due diligence on that, I can ask some questions that's burning inside?

MS. PATRICK: Both suggestions and questions can be submitted along with that process, on that process we have with the Q and As. We'll also accept questions and Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 56 suggestions. However, if you just got a burning question, before you make your comment, you can reach me. And my number is on the back of the business card on the back table. The front of the card says Jeanette.

I'm the point of the contact for the rule. You can call me directly, 202 564 5386. Or also by e mail, I love e mail. E mail is great. And I do answer my e mail. I and do answer the phone. So you are going to get a human most of the time.

MR. SUTTON: I am also going to pass around Marie's cards.

MS. PATRICK: Some of your questions, Marie is a fantastic resource. If you dial the number on the front of the card, that's our main office number. They can still direct you to me. Any other questions, comments?

Okay. There being none, I don't have anything else I need to say. I thank all of you for coming. We have got some great suggestions out of this. I look forward to seeing your comments in particular. Thank you so much for coming.

( Proceedings concluded.)

Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington 57 C E R T I F I C A T E State of Washington )

) Ss.

County of King )

I, the undersigned Certified Court Reporter and an Officer of the Court under my commission as a Notary Public for the State of Washington, hereby certify that the foregoing Public Hearing was taken before me on November 13,

and transcribed under my direction;

That the transcript of the Hearing is a full,

true, and correct transcript to the best of my ability; that I am neither attorney for, nor a relative or employee of,

any of the parties to the action or any attorney or counsel employed by the parties hereto, nor financially interested in its outcome.

IN WITNESS WHEREOF, I have hereunto set my hand and seal this date, November 24, 2003:

_________________________

Yvonne A. Gillette NOTARY PUBLIC in and for the State of Washington,

residing at Renton. Commission expires 6/ 9/ 2006.

Seattle Deposition Reporters 206.622.6661 600 University Street, Suite 320, Seattle, Washington BILLING MEMO Copy Room Initials_________ Yvonne A. Gillette Taken: November 13, 2003 PROMISED BY:

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