U.S. DOT Proposes Multiple Revisions to DBE Program

What happened: In a long-expected move, the U.S. Department of Transportation (U.S. DOT) July 21 proposed multiple revisions to the Disadvantaged Business Enterprise (DBE) program. The rulemaking covers about 20 different aspects of the program’s implementation. The department is accepting comments on these proposals until September 19.

Why it matters: For over 40 years, the DBE program has been a key area of compliance for contractors on federal-aid highway and transit projects. In the Infrastructure Investment and Jobs Act (IIJA), Congress reauthorized the program with minimal changes. The most recent significant DBE rulemaking, in which ARTBA participated extensively, was completed by the Obama administration in 2014. Given the Biden administration’s emphasis on racial equity issues, agency officials had alerted ARTBA to expect release of this proposal in mid-2022.

Aspects of particular interest to ARTBA members include:

• A number of new tests and procedures for classification of a DBE supplier or manufacturer as a ‘regular-dealer’ and related matters. These new tests and procedures will affect whether a prime contractor can count a percentage of that supplier or manufacturer’s product towards a project’s DBE goal. A 50 percent cap will be imposed on fulfilling the goal this way;
• Enhancement of information in state-level DBE directories;
• Creation of a centralized database of state bidders lists at U.S. DOT to be used for program evaluation and goal-setting;
• Instructions for state and local agencies to more aggressively monitor prompt payment and retainage issues;
• Adoption of a more flexible ‘DBE Performance Plan’ method for meeting goals on design-build projects;
• Clarifying written requirements for terminating and replacing a non-performing DBE subcontractor or supplier;
• Increasing the maximum allowable personal net worth for DBE owners from $1.32 million (dating to 2011) to $1.6 million;
• Permanent adoption of pandemic-era virtual on-site visits to DBE firms by agencies, when in-person visits are impractical; and
• Continued efforts at interstate certification of DBE firms.

What’s Next: ARTBA will continue reviewing the proposed rule revisions and prepare detailed comments in consultation with our DBE Program Policy Task Force and other interested members. ARTBA chapters and members are encouraged to submit their own comments, reflecting their priorities and views on these proposals. To provide feedback, ask questions, or get help submitting your comments, please contact ARTBA’s Rich Juliano or Nick Goldstein.