What is the DBE Program? That is today’s topic. DBE stands for Disadvantaged Business Enterprise. It is a government contracting program administered by the U.S. Department of Transportation. Before we go any further let’s talk about why the DBE program was created.
Why Congress Created the DBE Program?
Congress created the DBE Program to minimize discrimination and like obstacles on federal transportation contracts. These obstacles restrict access to government transportation contracts. Therefore, eliminating contract opportunities to disadvantaged businesses.
Next, we will review the DBE program objectives.
DBE Program Objectives
The first is to eliminate discrimination in DOT contracts. The second is to create a level playing field for DBEs. The third is to ensure that the program is managed according to the law. Thus allowing only eligible firms to participate in the program is the fourth objective.
Next objective is to remove obstacles to contracts allowing more DBE participation. The Six is to promote the use of DBEs in all types of federally contract and procurement activities. The Seventh is to assist in the development of DBEs small businesses so they can successfully compete in the marketplace outside of the program. Eighth is to provide opportunities for DBEs to participate in.
What Percentage of Funds Go To This Program?
Did you know that at least 10% of the funds authorized for the highway and transit financial assistance program must go to DBEs? That right! This provision required the Department to ensure that at least 10% of the funds authorized for the highway and transit financial assistance programs be expended with DBEs. Since 1987 DOT has established a single DBE goal, encompassing both firms owned by women and minority group members.
Which Agencies Administer The DBE Program?
There are three major DOT operating administrations involved in the DBE Program. The first agency is the Federal Highway Administration. The second agency is the Federal Aviation Administration. The third agency is the Federal Transit Administration.
Now that we have talked about the eight objectives let’s look at the regulations governing the program.
DBE Regulations
As with all federal programs there are regulations governing the program. These regulations ensure that only qualified businesses can enter into the program. The DBE program is covered in the Code of Federal Regulations (CFR). For airport concessionaires see 49 CFR 23 and DOT’s is in 49 CFR 26.
Next we will go over the roles that state transportation agencies play in the DBE program.
State Transportation Agencies Roles
State Transportation agencies are responsible for the DBE certification process. Therefore, when seeking more information regarding this program contact your state transportation department. In fact, this should be a simple task such as contacting your local PTAC, SBA or a Google.
In fact, state agencies ensure that only eligible businesses participate in the DBE program. Furthermore, they are responsible for establishing goals on DBE contracts. These goals ensure that a certain percentage of work must be performed by DBE businesses. In addition, state agencies establish specific DBE subcontracting goals. In fact, these subcontracting goals can very throughout the year but by the end of the year they must be consistent with the overall goal.
Also, the DBE program like the 8(a) BD program only applies to contracts issued within the United States and its territories. It does not apply to contracts outside the United States.
Lastly, you can find your local transportation agency here.
Now, let’s look at the roles and responsibilities of the U.S. DOT.
Roles & Responsibilities of U.S. DOT.
There are three roles and responsibilities for the US Department of Transportation. They are responsible for developing the rules and regulations for the National DBE Program. Secondly, the federal DOT provides guidance and oversight to the program. Thus, ensuring that only qualified businesses are receiving DOT funds. Lastly, they review DBE appeals from state and local agencies decisions. This ensures that each state or local agency is applying the regulations the same across the nation.
Next, we will look at the DBE Program eligibility requirements.
DBE Eligibility Requirements
The eligibility requirements for the DBE program are similar to the 8(a) BD program. A small business needs to be for-profit. The business must be owned by individuals that are socially and economically disadvantaged. In addition, they must own a minimum of 51% in the business. Furthermore, the disadvantaged individual must control and manage the business operations on a daily basis. Next, we will define which groups are presumed socially and economically disadvantaged.
Socially Disadvantaged
Like the 8(a) BD Program, the DBE program presumes that the following groups are socially and economically disadvantaged. These groups are African Americans, Hispanics, Native Americans, Asian-Pacific, Subcontinent Asian Americans, and women are socially disadvantaged. Next, we will look at the other program qualifications.
Program Requirements
Program participation requires that the small business apply to the program and receive their DBE certification from their local state DOT office. In addition, a site visit from the local agency will need to take place. This site visit will happen prior to the small business becoming certified.
Next we will discuss the economically disadvantaged business qualifications.
Economically Disadvantaged Qualifications
To meet the economically disadvantaged qualifications, the disadvantaged individuals personal net worth must not exceed $1.32 million. In addition, the small business must not exceed SBA size standards. To see if your business is qualified as small check out SBA’s free size standard tool at https://www.sba.gov/size-standards/. Furthermore, the small business’s average annual gross receipts cannot exceed $23.98 million. However, the size limits for airport concessions in the DBE program are higher.
Next we will go over the downside of the program.
Applying To The Program
Small businesses wishing to become DBE certified must complete an application along with supporting documents to their certifying agency. Remember that the certifying agency will perform a site visit prior to approving your application. Check with your certifying agency and see if they can provide you with a checklist to assist you when filing your application. Hence if you fail to submit the required documents your application could be delayed or denied.
Lastly, remember that the U.S. Department of Transportation does not review your DBE application. You must work with your local state agency. You can find their information at this website.
Downside to the Program
Any program has its upsides and downsides. The downside to this program is that you have to apply to each state separately. In this program you are only DBE certified for the state that you received your certification in. If you want to get certified in another state you will have to submit your application to that state agency. I wish there were a national database so you only had to apply once.
Remember that the U.S. Department of Transportation does not review your DBE application. You must work with your local state agency. You can find their information at this website.
Assistance May Be Available?
State Departments of Highways and Transportation (SDH&T) receive supportive services funds from the Federal Highway Administration to help increase DBE participation in Federal-aid highway contracts. The SDH&T may decide to use the funds in-house to provide the supportive services or hire consultants. Supportive services whether done by the State agency or consultants help DBE’s to compete in winning contracts. The services include research and development, training and on site-technical assistance, business management assistance, estimating assistance, and assistance in obtaining necessary financing and bonding.
To Certify or Not To Certify, that is the Question?
The answer to this question will not be written here. Only you, the business owner can make the determination if it is worth it to enter into this program. However, DBE businesses are more likely to be hired by prime contractors. Why? Because Prime Contractors can count your participation towards their contract goal. In addition, you may receive assistance in such as transiting into a new business area, or assistance on writing better proposals. Lastly, your business name will be on a state database that will be available to prime contractors across the state.
Summary
In Summary, the U.S. Department of Transportation’s DBE Program is another tool available too socially and economically disadvantaged businesses to assist them in obtaining federal contracts.
If you have a concession stand or do horizontal construction work then this is a great program for you. Many small businesses have been able to capitalize on this program. This has allowed them to grow their business. In fact, many small businesses have gone from being a subcontractor to a prime contract using this program.
Finally, if you are interested in this program please contact your local state agency using the links provided. Now is the time to act. Call your local agency today.
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