Proposed rule broadens DBE Program inclusions

Small businesses would benefit from a proposed rule that would help more economically and socially disadvantaged businesses participate in federal highway, transit and airport construction projects, while making the states and agencies that run the Disadvantaged Business Enterprise (DBE) Program more accountable, U.S. Transportation Secretary Ray LaHood said today.

“When we help small businesses, we’re helping get the economy going,” LaHood said in a press release. “This is an important rule that can help small businesses owned and controlled by women and minorities.”

The proposed rule would require greater accountability from state and local transportation agencies. Those that fail to meet established goals to include disadvantaged business enterprises in their spending plans must analyze the reasons for the short-fall and offer corrective actions.

In addition, the proposed rule would prevent DBEs from being removed from the program prematurely. It would raise the personal net worth limit for DBE owners from the present $750,000, to an inflation-adjusted $1.3 million. This personal net worth limit was set in 1989 and has not been adjusted since.

The proposed rule would also add safeguards to make sure that prime contractors fulfill commitments to use DBE subcontractors. State and local agencies would have to conduct post-award monitoring of each contract for this purpose, and prime contractors could not dismiss DBE subcontractors without good cause.

Among the other provisions, the proposal would reduce burdens on small businesses seeking DBE certification in more than one state. Any state would have to accept another’s existing certification, unless it found good reason not to. Currently DBEs must seek certification in each state in which they wish to do business.

The U.S. Department of Transportation’s DBE Program helps for-profit small businesses in which socially and economically disadvantaged individuals own at least a 51 percent interest and control management and daily business operations to compete for government contracts. It does this by requiring state and local transportation agencies to establish goals for DBE participation.

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Recently, LaHood created a high level task force to look at the DBE program and develop recommendations to improve the administration of the program. LaHood praised the efforts of the task force.

“The Department’s Office of Small and Disadvantaged Business Utilization has done great work leading this initiative so far. And we hope to achieve even more.”

The U.S. Department of Transportation’s proposed rule to improve the DBE Program appeared in the Federal Register May 10. Public comment can be received through July 11, 2010.