Disadvantaged Business Enterprise (DBE) Program

State and local transportation agencies, such as state departments of transportation, public transit agencies and airport sponsors receive DOT funds. They contract directly with private transportation construction, design and supply firms of their choice to build and maintain infrastructure projects. Recipients are required to award and administer DOT-funded contracts to small businesses in a fair manner.

History

To assist small business formation and growth, Congress enacted DOT’s DBE program in 1983 and reauthorized it in each subsequent surface and aviation authorization.

The DOT DBE program was recently reauthorized by Congress on November 15, 2021 in the Infrastructure Investment and Jobs Act (IIJA), Pub. L. 117–58, 135 Stat. 429 (23 U.S.C. 101 note), and is codified in 49 U.S.C. 47113 for aviation-funded projects.  

The program standards are found in 49 CFR Part 23 (for airport concessionaires, codified at 49 USC 47107(e)) and 49 CFR Part 26. 

The program’s objectives include, but are not limited to:

• Removing barriers to the participation of DBEs in DOT-assisted contracts;
• Promoting the use of DBEs in all types of federally assisted contracts and procurement activities conducted by the Department’s recipients;
• Ensuring that only firms fully meeting the eligibility standards are permitted to participate;
• Assisting the development of firms that can compete successfully in the marketplace outside the program; and
• Providing appropriate flexibilities to recipients of federal financial assistance in establishing and providing opportunities to DBEs.

Requirements to Participate as a DBE  

The DOT DBE and Airport Concessions DBE (ACDBE) Regulations (49 CFR Part 23 and 49 CFR Part 26) place primary responsibility for the certification process upon State Transportation Agencies, that form a “Unified Certification Program (UCP)” in each state, which provides a one-stop shop for applicant firms seeking certification.

Only small, independent businesses, owned and controlled by socially and economically disadvantaged individuals, may participate as a DBE; and most participate as subcontractors on federally assisted projects.  All DBEs must adhere to the requirements of the section 3 of the Small Business Act, the Small Business Administration regulations implementing that Act, and IIJA’s DBE size limit.  Size limits for the airport concessions DBE program are higher. 

DOT DBE regulations also prescribe ownership structure requirements for partnerships, corporations, and limited liability companies, requiring at least 51% ownership by a DBE for each type of entity. Socially and economically disadvantaged individuals must own at least a 51% interest in the firm and control management and daily business operations. 

The DOT DBE program is not limited to those who fall within the categories of persons who are presumed disadvantaged. Rather, firms that are “owned and controlled by individuals who are not presumed to be socially and economically disadvantaged (including individuals whose presumed disadvantage has been rebutted) may apply for DBE certification” by showing that they are, in fact, socially and economically disadvantaged. “Economic Disadvantage” is measured by firm owners’ personal net worth, which cannot exceed $2.047 million.

Roles and Responsibilities of State and Local Transportation Agencies and the Department’s Offices and Operating Administrations

As recipients of DOT financial assistance, state and local transportation agencies:

• Ensure that only bona fide small firms are certified to participate as DBE s/ ACDBEs  in the programs; and that these firms receive payment for work that they complete with their own forces and for the services provided;
• Establish narrowly-tailored goals (not quotas or set-asides) based on local market conditions for the participation of disadvantaged entrepreneurs;
• Meet the maximum feasible portion of its overall goal by using race- and gender-neutral means of facilitating DBE participation, typically through open contracting in which DBE contractors participate like any other bidders or when DBEs are awarded subcontracts on a prime contract that does not carry a DBE goal. (Recipients are not penalized or found in non-compliance for not meeting a goal);
• Monitor the performance of prime and subcontractors (DBE and non-DBEs) on DOT-assisted contracts throughout the year.  

The Operating Administrations (FHWA, FAA, and FTA) and various secretarial offices are responsible for overseeing the day-to-day administration of the program. Some of the activities performed by USDOT include but are not limited to:

• Conducting oversight to make sure that the program’s regulatory requirements are followed by the recipients of DOT funds;
• Reviewing recipients’ small business elements that facilitate competition by small businesses and eliminating obstacles to their participation;
• Issuing final agency decisions on appeals filed by firms challenging any adverse decision from a state/local certification agency;
• Tracking DBE and non-DBE participation on federally assisted projects;
• Training recipients, and identify opportunities to improve program efficiency and effectiveness

Assistance to Small Businesses  

The Department’s Office of Small and Disadvantaged Business Utilization (OSDBU)  offers assistance to small businesses, including DBEs, so that they may grow their capacity to compete in the transportation industries. 

OSDBU established the Small Business Transportation Resource Centers (SBTRCs) through a network of grantees across the country. The SBTRCs work closely with the transportation contracting community and other technical assistance providers to serve small transportation businesses.  Utilizing partnerships and industry expertise, SBTRCs provide business counseling that includes market research, training, certification, and procurement technical assistance. All services are provided free of charge.