REPORT HIGHLIGHTS ILLINOIS DEPARTMENT OF TRANSPORTATION’S CERTIFICATION OF BUSINESSES AS DISADVANTAGED BUSINESS ENTERPRISES PERFORMANCE AUDIT Release Date: April 10, 2024 State of Illinois, Office of the Auditor General FRANK J. MAUTINO, AUDITOR GENERAL To obtain a copy of the Report contact: Office of the Auditor General, 400 West Monroe, Suite 306, Springfield, IL 62704-9849 (217) 782-6046 or TTY (888) 261-2887 This Report Digest and Full Report are also available on the worldwide web at www.auditor.illinois.gov REPORT HIGHLIGHTS BACKGROUND: On September 1, 2021, the Legislative Audit Commission adopted Resolution Number 160, which directed the Office of the Auditor General to conduct a performance audit of the Illinois Department of Transportation’s (IDOT) certification of businesses as Disadvantaged Business Enterprises (DBEs) through the Illinois Unified Certification Program (IL UCP) (see Appendix A). The Disadvantaged Business Enterprise (DBE) program is a federally mandated program intended to provide nondiscriminatory contracting opportunities for small businesses owned and controlled by socially and economically disadvantaged individuals. KEY FINDINGS: • For federal fiscal years 2019 through 2023 (contract awards for 2023 are to March 31, 2023), nearly $5.7 billion was awarded to all contractors for Federal Highway Administration (FHWA) projects. During that period, nearly $846 million, or 14.9 percent was awarded to DBE contractors. • Auditors found certification files maintained by IDOT to be well organized and to contain a large amount of documentation. Auditors reviewed 25 randomly selected files from firms certified between January 1, 2023, and June 30, 2023. These files were requested for review to ensure verification procedures regarding socially and economically disadvantaged status, business size, ownership, and control were adequate. Initial certification applications for all approved DBE certified firms were kept on file, and auditors found all required documentation in each of the files reviewed. • Auditors also reviewed 25 randomly selected files from firms certified between July 1, 2020, and June 30, 2023, in order to identify those with No Change Affidavits. These files were requested annually to determine whether the firms continued to be qualified for participation. All No Change Affidavits requested by auditors were made available for testing through IDOT, and all files were properly organized and labeled. Auditors found all files selected for review contained the required documentation. • The United States Department of Transportation (USDOT) noted that other than for some timeliness issues due to a lack of staffing, IDOT was in compliance with all aspects of the DBE certification process. It was also noted that there have been no issues identified during site visits at IDOT or with the No Change Affidavit process. • According to documentation provided by IDOT, it has not met its aspirational DBE goals. According to the FHWA, IDOT has never met its DBE goals. Per 49 CFR Part 26.47, IDOT cannot be penalized or treated as being in noncompliance because its DBE participation falls short of its overall goal, unless it has failed to administer its program in good faith. For Federal Fiscal Year 2022, IDOT’s DBE goal was 20.27 percent, and IDOT reported 15.83 percent, which was 4.44 percent below the goal. Although IDOT has not met its goal, there have been no penalties according to an FHWA official. • New certification employees are required to complete USDOT mandated training within 30 days of being hired and biennially (once every two years) thereafter. Auditors found that all certification employees had the required training. Additionally, the FHWA noted that IDOT was in compliance with all training requirements. Key Recommendation: The audit report contains one recommendation: • The Illinois Department of Transportation should continue working to meet its aspirational DBE goals in accordance with 49 CFR Part 26.45. This performance audit was conducted by the staff of the Office of the Auditor General.