METRO Board of Directors · Friday, September 25, 2026, 9:00 AM · Item 9.8 · Consent Agenda

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Proposed 0% Disadvantaged Business Enterprise goal for federal contracts

In plain English

As a condition of receiving Federal Transit Administration money, METRO must set a target every three years for how much of its federally funded contract work goes to certified "Disadvantaged Business Enterprises" (small for-profit firms at least 51% owned and controlled by socially and economically disadvantaged individuals). Staff calculated a target of 0% for federal fiscal years 2027 through 2029 because METRO expects to spend all of its roughly $1,545,054 in federal funds on buses, and bus manufacturers set their own participation goals directly with the Federal Transit Administration, so those purchases are excluded from the calculation. A yes vote accepts the proposed 0% goal and starts a 45-day public comment period on October 6, 2026, ending November 20, 2026, with comments brought back to the Board and a public hearing on November 20, 2026.

Small and disadvantaged contractors in METRO's 14-county market area would have no federally required participation target on METRO's federal contracts for three years, though staff say METRO will keep doing outreach and will continue applying its small-business and disadvantaged-business efforts to contracts paid for with other funding sources.

Key facts

  • Proposed overall Disadvantaged Business Enterprise goal: 0% for federal fiscal years 2027–2029 (contracts awarded October 1, 2026 through September 30, 2029).
  • METRO expects about $1,545,054 in Federal Transit Administration funding over the three years, all of it planned for transit vehicle purchases, which are exempt from this goal-setting process.
  • 45-day public comment period runs October 6, 2026 to November 20, 2026; a public hearing to finalize the goal is set for November 20, 2026.
  • Notices will be published in English and Spanish in the Santa Cruz Sentinel and the Register-Pajaronian, posted at all four transit centers and on METRO's website; outreach costs are not expected to exceed $1,500.
  • Goal-setting was delayed because a U.S. Department of Transportation Interim Final Rule issued October 3, 2025 removed race- and sex-based presumptions of disadvantage and required recertification of all existing firms; California's Unified Certification Program finished that recertification as of July 20, 2026.

Reasons to support

  • Staff describe the goal as a fixed calculation, not a measure of effort: with all federal dollars going to buses, there are no federally funded contracting opportunities subject to the rule, so the two-step formula in federal regulation 49 CFR Part 26 produces a base figure of zero and no adjustment.
  • Staff state there is no alternative — METRO must start this process or jeopardize its federal grant funding — and the cost is limited to roughly $1,500 in publication and outreach expenses.
  • METRO says it will keep soliciting small and disadvantaged business participation regardless of funding source, including sending solicitations to certified firms, holding pre-bid networking conferences, unbundling large contracts, and referring firms to bonding assistance.

Reasons to oppose or change it

  • A 0% goal means no contract-specific participation requirements on METRO's federal contracts for three years; the only support for disadvantaged and small firms during that period is voluntary outreach that staff say is "not reflected in the proposed DBE goal."
  • The goal rests on projections of future grant awards; staff acknowledge that if awards are not received or differ significantly from what is projected, the goal would have to be adjusted mid-course, so contracting opportunities could arise without a target in place.
  • METRO would spend up to $1,500 on bilingual newspaper ads and outreach to collect comments on a goal that staff describe as a fixed calculation with no alternative.

Official wording

APPROVE: ACCEPT THE PROPOSED OVERALL DISADVANTAGED BUSINESS ENTERPRISE (DBE) GOAL OF 0% FOR FEDERALLY FUNDED PROCUREMENTS FOR FFY27–FFY29 AND OPEN THE PUBLIC COMMENT PERIOD BEGINNING OCTOBER 6, 2026 Chuck Farmer, Disadvantaged Business Enterprise Liaison Officer
Official agenda

Summary written by claude-opus-5 from the agenda and the Staff report (agenda packet, pages 137-166). It can contain mistakes. The official documents govern.