Disadvantaged Business Enterprise (DBE) Program
The Disadvantaged Business Enterprise Program (DBE) is a legislatively mandated USDOT program that applies to Federal-aid highway dollars expended on federally-assisted contracts issued by USDOT recipients such as State Transportation Agencies (STAs). The U.S. Congress established the DBE program in 1982 to:
- Ensure nondiscrimination in the award and administration of DOT-assisted contracts.
- Help remove barriers to the participation of DBEs in DOT-assisted contracts, and
- Assist the development of firms that can compete successfully in the marketplace outside of the DBE program.
The DBE program ensures that federally assisted contracts for highway, transit and aviation projects are made available for small business concerns owned and controlled by socially and economically disadvantaged individuals. The DBE Program has recently been reauthorized in the Infrastructure Investment and Jobs Act (IIJA), also known as the Bipartisan Infrastructure Law (BIL) and, as in previous legislation, the United States Congress has specifically called out the importance of prompt payment, stating, "The Secretary should take additional steps to ensure that recipients comply with the prompt payment provisions of the law. (Sec.1101 (e)(8))" Implementation of the DBE program is guided by USDOT regulations found at 49 CFR Part 26 (Part 23 for airport concessions).
Every three years, FHWA recipient STAs are required to set an overall DBE goal that they must either meet or show that they used good faith efforts to meet, annually. This goal is in the form of a percentage of federal funds apportioned annually to each STA and is calculated based upon the relative availability of DBE firms as compared to all firms in the relevant geographic market area. The goal represents the amount of participation one would expect DBEs to achieve in the absence of current discrimination or the continuing effects of past discrimination. STAs submit their goal to FHWA to ensure their methodology used to establish the goal is legally sufficient. STAs must maximize the use of race neutral efforts to achieve their overall goal. Race neutral efforts are those that assist all small businesses and do not use DBE contract goals.
STAs must submit a Uniform Report of their DBE Awards, Commitments, and Payments semi-annually to determine if they achieved their DBE goal. STAs that do not meet their goal in any given year, must submit a document to FHWA, identifying and analyzing the reasons why the goal was not met and creating specific steps to correct the problems going forward.
Key FHWA Stewardship/Oversight Responsibilities:
- Ensure that all FHWA recipients have an approved DBE program that is being implemented in accordance with regulations and official Departmental guidance and reflects progress in meeting program objectives
- Ensure STAs are monitoring and overseeing their DBE program to mitigate fraud by, among other things, certifying only small businesses that qualify for the program and ensuring those DBEs committed by prime contractors in response to a contract goal are actually used and performing a commercially useful function on federally assisted projects
- Ensure that recipients receive appropriate training and technical assistance
- Ensure STAs are effectively monitoring and enforcing DBE contract requirements such as prompt payment and return of retainage, termination and replacement of DBE firms, and properly crediting DBE participation toward contract and overall goals.
- Respond promptly to DBE complaints
- Conduct compliance reviews as may be required