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.

Background:

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 was most recently reauthorized by MAP-21, Moving Ahead for Progress in the 21st Century Act (P.L. 112-141). The program is administered by the three modal administrations (i.e., FHWA, FTA, and FAA) with the Federal Highway Administration (FHWA) maintaining a significant stewardship role for the program. Implementation of the DBE program is guided by USDOT regulations found at 49 CFR Part 26 (Part 23 for airport concessions).

Every three years, 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. STAs that do not meet their goal in any given year, must submit a document to their operating administrations, such as FHWA, identifying and analyzing the reasons why the goal was not met and creating specific steps to correct the problems going forward.

The U.S. Court of Appeals for the Ninth Circuit rendered a decision in 2005 that significantly impacted the ability of within that Circuit to set race-conscious measures in implementing their DBE programs. As a result, USDOT issued guidance advising STAs in the Ninth Circuit to suspend the use of race-conscious contract goals until they could be supported by sufficient evidence of discrimination or its effects in the state's contracting market. All the STAs in the Ninth Circuit now have completed disparity and/or availability studies. Some STAs received DBE program waivers from USDOT to set DBE contract goals that include only those groups for whom significant disparities were shown based on evidence in their studies. At this time, Idaho is the only Ninth Circuit state that continues to implement a wholly race neutral program.

Key FHWA Stewardship/Oversight Responsibilities:

• Ensure that all FHWA recipients have an approved DBE program that is being implemented in accordance with regulations and reflects progress in meeting program objectives;
• Reduce fraud and ensure that the program benefits only qualified businesses;
• Ensure that recipients receive appropriate training and technical assistance; and
• Manage emerging risks associated with DBE Program delivery, such as ensuring DBEs to which a prime contractor has made a commitment are actually used and performing a commercially useful function on federally-assisted projects.