State and federal agencies that include a requirement to use disadvantaged business enterprises for a portion of work on a project want to see that the enterprise is doing more than just being a name on paper. The U.S. Department of Transportation, for example insists that the DBE perform a "commercially useful function."

Failure to follow guidelines can become a large headache with fines or perhaps criminal charges, so it is important to understand what your subcontractors have to do.

Some of the red flags that spark investigators' interest are DBE owners who do not have the experience necessary for their company to do the job for which you hired it, orders being placed and paid for by people other than employees of the DBE that is doing the work and using the supplies, covered-up company names on equipment and using the same DBEs on every project.

From the article:

I recently spoke to a group of highway contractors about disadvantaged business enterprise (DBE) laws and regulations and some of the different policies among the state departments of transportation. ...