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The California High-Speed Rail Authority (CHSRA) needs to step up its efforts to involve small- and minority-owned businesses when issuing contracts, according to a ruling issued yesterday by the Federal Railroad Administration (FRA).

In December 2010, the Associated Professionals and Contractors — a non-profit organization the aims to encourage, develop and support Disadvantaged Business Enterprises (DBE) — issued a compliant against CHSRA, alleging the authority has funneled nearly all contracting dollars to large firms, according to the FRA ruling.

In the months since, the FRA has conducted an investigation into the allegation. Among the claims made to FRA investigators by representatives of small- and minority-owned businesses: CHSRA did not conduct adequate outreach and many businesses were unaware of bidding opportunities until it was too late; contracts were not bundled into smaller packages that small and disadvantaged businesses would be equipped to handle as prime contractors; and those companies that did obtain contracts experienced difficulties with prime contractors, the FRA ruling said.

CHSRA officials told the FRA that the authority is abiding by state of California contracting laws for DBEs, that it is integrating DBEs into the tracking system to monitor compliance with existing California laws, and that it is developing by-laws, working with the California Department of Transportation and considering working with the California Small Business Roundtable to develop a Business Advisory Council to better communicate DBEs’ issues and concerns to the CHSRA board, according to the FRA ruling.

The FRA was not able to establish whether CHSRA violated the Civil Rights Act of 1964. However, “continued business practices such as those employed by CHSRA in implementing the project, coupled with a failure to formulate a coherent policy for small and disadvantaged business utilization and inclusion, could potentially result in a violation in the future,” the FRA said in its ruling.

As a result, the FRA is requiring CHSRA to:

• specify an officer that is responsible for the authority’s DBE program within the next 60 days;
• conduct an availability and disparity study within one year;
• establish, maintain and make available to interested parties a directory identifying all firms eligible to participate as small or disadvantaged businesses in its program within 60 days;
• establish a small and disadvantaged business development program within 60 days to help firms successfully compete in the marketplace; and
• establish a business advisory council within 60 days to better communicate issues and concerns of the small and disadvantaged businesses to the CHSRA board.