Dive Brief:

• The White House and DOT have proposed updates to regulations for the Disadvantaged Business Enterprise Program, which aims to prevent discrimination and remedy ongoing effects of past discrimination against small firms owned and controlled by disadvantaged individuals. The Notice of Proposed Rulemaking was published on July 21.
• The goal of the updates is to further level the playing field for disadvantaged businesses that want to compete for federal aviation, highway and transit contracts.
• The changes would update personal net worth and program size limits for inflation, modernize rules regarding material suppliers, make technical corrections that have led to substantive misinterpretations of the rules and more.

Dive Insight:

If approved, the DOT’s DBE program updates would come at a critical time as small construction firms will help build federal projects funded through the $1.2 trillion Infrastructure Investment and Jobs Act. The IIJA stipulates that at least 10% of federal transportation and transit project funds go to DBE enterprises, and it also places an emphasis on prompt payment to DBE subcontractors.

“For far too long, small and disadvantaged businesses have faced discrimination that costs them economic opportunities,” said Transportation Secretary Pete Buttigieg in a press release. “These critical updates would help ensure that small and disadvantaged businesses continue to have a fair chance to compete for federally assisted contracts.” 

Proposed updates to the DBE program regulations include:  

• Increase the personal net worth limit from $1.32 million to $1.6 million and exclude retirement assets from personal net worth calculations. 
• Amend overly prescriptive ownership and control certification eligibility requirements.   
• Simplify the interstate certification process.   
• Formally adopt COVID-19 flexibilities, such as virtual on-site visits.   
• Reduce reporting requirements for certain Federal Transit Administration funding recipients.   
• Empower certified firms to better market themselves to prime contractors via expanded state directories.  
• Help more small businesses participate in Federal Aviation Administration-assisted airport projects by requiring airports to proactively remove obstacles and adopt more race-neutral strategies. 
• Strengthen prompt payment monitoring and oversight requirements to ensure that DBE subcontractors are paid promptly.   

DOT’s Office of Civil Rights and counterparts at the FAA, FTA and Federal Highway Administration drew from internal research and stakeholder feedback to craft the new rules, according to the agency. The updates also include changes to the Airport Concession Disadvantaged Business Enterprise Program.

The DOT welcomes contractor feedback on the proposed rules; written comments to the Federal Register must be submitted online by Sept. 19. After the agency has reviewed and analyzed the comments received, it will decide whether to proceed with the changes