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Contract Compliance - Overview

Program Overview:

By a prime signing the bid, the bidder certifies that on work proposed to be sublet, the bidder has taken or will take affirmative steps to seek out and consider Disadvantaged Business Enterprises as potential subcontractors on highway construction projects were DBE goals are established. The Contractor shall contact DBEs to solicit their interest, capability, and prices in sufficient time to allow them to respond effectively, and shall retain, on file, proper documentation to substantiate its good faith efforts. As part of DBE Contract Compliance Program, NCDOT will monitor the Contractor's DBE involvement during performance of the contract.

DBE prime bidders shall make the same outreach efforts as non-DBE bidders and to document good faith efforts in situations where they do not fully meet contract goals. When a DBE participates in a contract, only the value of the work actually performed by the DBE is counted toward DBE goals.

"Commercially Useful Function" Requirement:

Expenditures to a DBE contractor are counted toward DBE goals only if the DBE performs a commercially useful function on the contract.

A DBE performs a commercially useful function when:

  • The DBE is responsible for execution of the work of the contract and is carrying out its responsibilities by actually performing, managing, and supervising the work involved.


  • The DBE shall also be responsible, with respect to materials and supplies used on the contract, for negotiating prices, determining quality and quantity, ordering the material, and installing where applicable and paying for the material itself.

A DBE does not perform a CUF if its role is limited to that of an extra participant in a transaction, contract, or project through which funds are passed in order to obtain the appearance of DBE participation. If it is determined that the DBE is an extra participant, particularly those in which DBEs do not participate will be examined. The DBE may be requested to present evidence to support its position of performing a commercially useful function.

A DBE Trucking Company will be determined to be performing a CUF by using the following factors:

  • The DBE will be responsible for the management and supervision of the entire trucking operation for which it is responsible on a particular contract, and there cannot be a contrived arrangement for the purpose of meeting DBE goals.


  • The DBE will itself own and operate at least one fully licensed, insured, and operational truck used on the contract.


  • The DBE may lease trucks from another DBE firm, including on owner-operator who is certified as a DBE. The DBE who leases trucks from another DBE receives DBE credit for the total value of the transportation services the lessee DBE provides on the contract.


  • The DBE who leases trucks from a non-DBE is entitled to credit for the total value of the transportation services provided by non-DBE lessees not to exceed the value of the transportation services provided by the DBE owned trucks on the contract.

Materials and suppliers must perform the following to be counted toward DBE goals:

  • If the materials or suppliers are obtained from a DBE manufacturer, count 100 percent of the cost of materials and supplies toward DBE goals.


  • If the materials or supplies are purchased from a DBE regular dealer, 60 percent of the cost of the materials or supplies is counted toward DBE goals.

Labor Compliance:

  • Davis Bacon Act of 1931 requires the payment of local prevailing wages and fringe benefits to laborers and mechanics on federal-aid projects.


  • Certified Payrolls must be submitted weekly to NCDOT by contractors and subcontractors on all federal-aid projects.


  • Payroll statements are reviewed for completeness and certification. Work classifications, hourly rates, overtime hours and rates, authorized deductions, fringe benefits and net wages paid are reviewed.


  • NCDOT has the authority to withhold funds from the contractor, as may be deemed necessary to pay employees of the contractor.
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