Estimate of Tax Savings
Methodology

Exhibit D

The estimate of federal income tax savings to be derived by the A/E profession from the professional liability proposal was made on the basis of the survey results, published statistics of income, and other data and assumptions provided by The AIA and The ACEC.

The survey responses were used to determine the percentage of firms that can be expected to utilize a professional liability trust and the amount they can be expected to contribute to such a trust. These data were stratified by firm size and projected to the entire population of A/E firms eligible to establish a professional liability trust. An adjustment was made for the large number of firms with income below the level at which it is expected trusts will be established. Another adjustment was made for firms that would derive minimum tax deferral because of the limitation on their deduction and the significance and frequency of their claims history. Marginal tax rates were assigned by size of firms on the basis of average billings and assumed deductions. These tax rates were applied to the amount that is expected to be contributed to professional liability trusts to arrive at an estimate of tax savings.

Historical data reported on claims experience and legal fees were correlated to amounts responding firms indicated they would contribute to the trust. The claims experience and legal fees of these firms were used to estimate the amount that would be includable in income as funds are withdrawn from the trusts to pay claims and legal fees over a five-year period.

ADDITIONAL MATERIAL SUBMITTED BY CHARLES GARNEY

TO:

Personnel

FROM: Lisa Schreiber

DATE: July 1, 1981

RE:

Time and Money Spent on Each Project Requiring MBE Solicitations

So far this year we have bid 27 EPA funded projects and 12 city, state, or federally funded projects that have Minority Business Enterprise Requirements.

The process I go through is as follows:

1) A form is filled out by each estimator on every project that requires MBE solicitations. This form has all of the pertinent information I need in order to make my contacts and answer any questions the minority contractors might ask me.

2) I get from our files all of the minority directories, listings, and other minority information we have on the state in which the project is being bid.

3) I compile a list of minority contractors that do the type of work our estimators are seeking subcontracts on from the above directories.

4) If this list is not very complete or I feel some of these minority

contractors may not be bona fide, I contact a minority information center.
Sometimes this is difficult when there are no lists of information centers
in the specifications. Also, several of the organization and assistance
centers have closed down due to lack of federal funds. When I am able
to contact an information center, they usually just send me another
minority directory for that state. Sometimes these cost a small fee. I
have paid anywhere from $3.00 to $15.00 for a directory.

5) I then call all of those on the list that I have compiled.

6) I then send certified follow-up letters to all of those on the list that were interested, did not answer, were busy, the person I needed to talk to was not in, etc.

7) On projects that we know or think we will have problems showing we have made a good faith effort to reach the minority goal, we place an advertisement in the large city newspaper and a minority community newspaper if we are aware that one exists.

8)

I then follow up and talk to minority contractors that call in and have questions before the bid letting.

9) Approximately 3 days before the bid letting, or depending on when our estimator leaves for the bid letting, I write a report showing the good faith effort we have made and the results we have received, if any.

10) After the job has bid, I update all of our minority directories (names addresses, and telephone numbers) from the return receipts that are returned to me from the certified letters that were mailed.

This process can take anywhere between one and three days, depending on the size, type, and location of the job. This does not include the follow-up, final report, or updating the minority directories.

I do minority solicitations on an average of 9.07 projects each month. On each of these projects I contact by phone an average of 19.52 minority contractors. This costs approximately $1.50 - $2.00 @ each long distance phone call. I send letters to approximately 75% of those that I tried calling which is approximately 14.64 of the minority contractors. This costs $1.63 per each certified letter.

It is difficult to estimate the amount of money spent on newspaper advertisements. we have advertised only three jobs but it has cost us approximate total of $230.00. The approximate total cost of each project that requires minority solicitation is $215. This includes my salary, certified letters, and phone calls. This does not include newspaper advertisements and cost of minority directories.

The following is a list of information we are required to submit with our proposal when it is an EPA or Federally Funded Project.

1.

The number or MBE subcontractors and suppliers solicited.

2. The number of responses received from MBE's.

3.

4.

The names and numbers of MBE's we intend to use if awarded the contract. The percent and dollar volume of the work they will perform.

President's Executive Order 11246.

5. Affirmative Action Program.

6. List of Compliance Reports filed and with what Agency.

7.

8.

9.

If a local project, copy of our Kansas City Plan.

A breakdown of the total number of our employees and the
percentage of minorities employed both office and field.

List of minority craft people we intend to utilize and the approximate number.

13. List of Past Federally Assisted Project with the same
information asked for above.

14. List of Past and Current Federally Assisted Projects
outside of Region VII with the same information above.