The U.S. Department of Transportation (U.S. DOT) October 2 published its revisions to the Disadvantaged Business Enterprise (DBE) program rule, the culmination of a 25-month rulemaking process. The 58-page document encompasses numerous changes to the way U.S. DOT and state and local transportation agencies will administer the program on federal-aid highway, transit and airport construction projects. The DBE program is perennially a key area of compliance for prime contractors and subcontractors on these projects. The changes will take effect on November 3, 2014.
Since initial release of U.S. DOT’s proposal in September 2012, ARTBA submitted two sets of detailed comments, participated in a listening session with senior U.S. DOT officials, coordinated a national survey of 300 contractors, and assisted numerous chapters and members who submitted their own comments to the department on this matter.
While the rule revisions cover wide-ranging issues within the DBE program, ARTBA and its contractor-members expressed the most concern over proposals that were likely to add costs and shrink competition on projects, as well as impede the ability of state and local agencies to work cooperatively with industry to administer the DBE program for the benefit of all. In many cases, U.S. DOT scaled back the severity of its original proposals in this regard. Notable such provisions include:
- If it chooses, a state or local department of transportation will be able to allow prime contractors to submit DBE information and good faith effort documentation up to a maximum of seven (7) days after bid. The permissible window will be shortened to five (5) days in 2017. U.S. DOT’s original proposal would have required all prime contractors to submit this material with their bids, or at most one day afterward. ARTBA strongly opposed this provision and obviously prefers the 5/7-day limit to the original version.
- State and local agencies may continue to use bidders, prequalification or plan holders lists as part of the goal-setting process, although U.S. DOT will require additional market data to be considered. The original proposal explored the possibility of prohibiting any of these lists from being used for goal-setting. ARTBA argued this would have been contrary to the DBE program’s stated policy of enabling state and local agencies to adapt the program to their respective markets.
- State and local agencies will need to determine “on a contract-by-contract basis” if a particular DBE subcontractor is acting as a regular-dealer or a transaction expediter. Initially, DOT had discussed abolishing the regular-dealer designation entirely. ARTBA opposed this possible change as misunderstanding the important role regular-dealers continue to play on many projects.
In its narrative, U.S. DOT explicitly stated that it changed some aspects of its original proposal in response to comments received. It also referenced comments from ARTBA and its chapters in several instances, as well as the ARTBA-coordinated survey in which an overwhelming majority of contractors anticipated U.S. DOT’s proposals would add costs to federal-aid projects. ARTBA wishes to thank all of its chapters, members and colleague associations who participated in this important process and truly made a difference.
These are just a few highlights from the final rule, which is extensive. ARTBA staff is currently reviewing the final rule and will have a comprehensive summary available shortly. We will also remain in close contact with U.S. DOT as it develops guidance relating to the new provisions.