Biden and DOT offer updates to Disadvantaged Business Enterprise program

Diving brief:

  • The White House and DOT have proposed updates to the regulations of the Disadvantaged Business Enterprise Program, which aims to prevent discrimination and address the lingering effects of past discrimination against small businesses owned and controlled by disadvantaged people . The Notice of Proposed Rulemaking was released on July 21.
  • The goal of the updates is to further level the playing field for disadvantaged companies wishing to compete for federal aviation, highway and mass transit contracts.
  • The changes would update personal net worth and program size limits for inflation, modernize rules regarding material suppliers, make technical fixes that have led to substantial misinterpretations of the rules and more.

Overview of the dive:

If approved, DOT’s DBE program updates would come at a critical time as small construction companies help build federal projects funded through the Infrastructure Investment and Jobs Act of $1.2 trillion. The IIJA stipulates that at least 10% of federal funds for transportation and transit projects go to DBE companies, and it also emphasizes prompt payment to DBE subcontractors.

“For too long, disadvantaged small businesses have faced discrimination that costs them economic opportunity,” Transportation Secretary Pete Buttigieg said in a statement. Press release. “These essential updates would help ensure that disadvantaged small businesses continue to have a fair chance to compete for contracts receiving federal assistance.”

Proposed updates to the DBE program rules include:

  • Increase the personal net worth limit from $1.32 million to $1.6 million and exclude retirement assets from personal net worth calculations.
  • Change overly prescriptive ownership and control certification eligibility criteria.
  • Simplify the interstate certification process.
  • Formally adopt COVID-19 flexibilities, such as virtual on-site visits.
  • Reduce reporting requirements for some Federal Transit Administration funding recipients.
  • Enable certified companies to better market themselves to prime contractors through expanded state directories.
  • Help more small businesses participate in Federal Aviation Administration-supported airport projects by requiring airports to proactively remove barriers and adopt more racially neutral strategies.
  • Strengthen prompt payment control and monitoring requirements to ensure DBE contractors are paid promptly.

The DOT’s Civil Rights Office and its counterparts in the FAA, FTA and Federal Highway Administration drew on internal research and stakeholder feedback to craft the new rules, according to the agency. The updates also include changes to the Airport Concessions Disadvantaged Business Program.

DOT welcomes contractor comments on the proposed rules; written comments to the Federal Register must be submitted online by September 19. Once the agency has reviewed and analyzed the comments received, it will decide whether or not to proceed with the changes.