U.S. DOT Answers Additional DBE Questions

What happened: The U.S. Department of Transportation (U.S. DOT) Dec. 1 released additions to a previous series of “frequently asked questions” (FAQs) intended to provide “clarity to the public” on its Interim Final Rule (IFR) for the Disadvantaged Business Enterprise (DBE) program.

Effective Oct. 3, the IFR ended the use of race- and gender-based participation and goals for the program. Compliance with DBE requirements on federal-aid highway and transit projects has been suspended in each state, subject to a “reevaluation process,” in which previous DBE firms must reapply for certification and submit a personal narrative of disadvantage.

ARTBA’s summary of the IFR is available here. The association also sent comments to the Department Nov. 3 requesting additional information and cautioning against project delays during this process.

Highlights of the revised FAQs include…

Goal and contracting issues:

• State DOTs must continue efforts to facilitate small business participation in their federal-aid projects, but not based on race or gender.
• When a prime contractor properly terminates a subcontractor that had been certified as a DBE prior to Oct. 3, it need not undertake good faith efforts to find a DBE replacement during this reevaluation period, as there are no certified DBE firms until that process is completed.
• For a contract executed before Oct. 3, a state DOT may issue a change order resetting the DBE goal to zero percent.
• The suspension of DBE goals and participation also applies to Indefinite Delivery Indefinite Quantity (IDIQ) and Job-Order-Contracting (JOC) contracts.
• For projects not meeting DBE goals and completed prior to Oct. 3, state DOTs must terminate any shortfall analysis and may not apply any remedies.

On reevaluation of previous DBE firms:

• The newest FAQs provide additional detail on the content of personal narratives. This document must holistically establish “the existence of disadvantage by a preponderance of the evidence” relating to “economic hardship, systemic barriers, and denied opportunities,” although it need not address all three categories.
• As previously stated, the personal narrative must not address race or gender.
• Firms seeking recertification must submit new personal net worth statements.
• U.S. DOT plans to revise the DBE program’s Declaration of Eligibility form.
• A state’s Unified Certification Program (UCP) must reach out to all previous DBEs with an opportunity to apply for recertification. To help facilitate completion of this process in a state, U.S. DOT will permit the UCP to set a deadline for responses from the previous DBE firms.

What’s next: ARTBA reiterates for its chapters and members to stay in touch with questions and feedback as this process continues. Rich Juliano and Prianka Sharma are the contacts.