Disadvantaged Business Enterprises

The Disadvantaged Business Enterprises (DBE) program began in the early 1980s to extend opportunities to minority and women-owned businesses to do business within aviation. The Department of Transportation began regulating the Disadvantaged Business Enterprises process for airports that received federally funded projects. The formal Congressional changes came in 1983 in the form of statutory requirements. The trigger requiring a DBE program is $250,000 in federal funding.^[1] … Continue reading

To qualify as a DBE, a small business must have a socially or economically disadvantaged individual with 51% ownership interest of the business and have operational control of daily operations. Simply being a minority or woman does not grant you DBE status. Most states offer a registration or certification process to verify. There is a cap to qualifying. As of this writing, the individual cannot have a net worth of over $1.32 million. ^[2] https://www.transportation.gov/civil-rights/disadvantaged-business-enterprise

If a corporation is involved, the stocks must be owned by one or more individuals who qualify as socially and economically disadvantaged totaling 51% stake. Additionally, the daily business operations must be controlled by one or more of the socially and economically disadvantaged individuals who own it. The premise remains the same.

Federal Regulations of Disadvantaged Business Enterprises

49 CFR Part 26 requires airports to operate a DBE program if they plan on using more than $250,000 in federal funds. The airport will be required to set a three-year goal for the DBE percentages. If a product is not available from a DBE, the FAA may issue guidance removing that requirement. In 2011, they did such for snowplows and ARFF vehicles. ^[3]https://www.law.cornell.edu/cfr/text/49/part-26

The goal of the 49 CFR Part 26 program is to: ^[4]PARTICIPATION BY DISADVANTAGED BUSINESS ENTERPRISES IN DEPARTMENT OF TRANSPORTATION FINANCIAL ASSISTANCE PROGRAMS, 49 C.F.R. § 26 (2021).

• To ensure nondiscrimination in federally funded contracts for DOT airport assistance programs.
• To level the playing field so that DBEs can compete.
• To ensure that the program is performed in accordance with the law.
• To ensure that firms meet the requirements of DBE qualification.
• To remove barriers in the participation of DBEs.
• To promote the use of DBEs for federally funded projects.
• To help develop firms that can compete in the marketplace outside of the DBE program.
• To provide flexibility to recipients of federally funded projects in providing opportunities to DBEs.

The FAA helped to level the playing field by allowing DBEs to compete for concessions contracts in airports. 49 CFR Part 23 requires airports to have a concessions-based DBE program. The FAA regional office must approve if the airport receives federal funding and is a primary airport with commercial service. ^[5]https://www.law.cornell.edu/cfr/text/49/part-23

Components of a DBE Program

A DBE program must have:

• a Policy Statement
• a Liaison Officer
• plans to use and encourage others to use DBEs
• a DBE directory
• Prompt payment mechanisms
• a minimum of a 10% goal for DBE participation for federally funded projects

Policy Statement

The policy statement is a formal declaration that the airport has a DBE program and is typically signed by the Chief Executive of the airport to show support from the highest levels. The Department of Transportation has a sample DBE program guide on their website. ^[6] Department of Transportation (2014).  49 CFR Part 26 Sample disadvantaged business enterprise program. Retrieved from … Continue reading The policy statement is reviewed and approved by the DOT.

Liaison Officer

The DBE Liaison Officer (DBELO) is an individual designated as responsible for the DBE oversight. The airport sponsor must identify the individual, including name, address, telephone number, and email. The DBELO is the party responsible for implementing the program and ensuring compliance from the businesses qualifying under 49 CFR Part 26.

Some of the duties that the DBELO has includes, gathering reporting statistical data, reviewing contracts for compliance, working with all goals to set goals, and ensuring bid notices and requests for proposals are available for DBEs review. Other responsibilities include analyzing the recipients attainment of goals, chairing the DBE Advisory Committee, planning training seminars, certifying DBEs according to DOT standards, and providing outreach to DBEs and the community.

Using and Encourage the Use of DBEs

Airports must actually do what they say they plan on doing. Once metrics are set, the airport should make their best efforts to comply to avoid complaints and risk being in violation of Grant Assurance 37 – Disadvantaged Business Enterprises. Setting up workshops to help people understand how the process works, guide them through the paperwork, and provide resources and support are great ways to encourage the DBE process. Additionally, contracts awarded to non-DBE organizations should be encouraged (and rewarded) for using DBEs as sub-contractors within the project.

DBE Directory

There are multiple locations that a directory of DBEs could be located. The FAA operates the FAA Matchmaker System while each state’s transportation department generally maintains a directory. Some states share DBE Directories as DBE Exchanges, Kentucky and Indiana are currently in a two year trial of their exchange.

Prompt Payment Mechanisms

The airport and its prime contractors must have prompt payment mechanisms in place to ensure payment is made in a timely manner. ^[7] Section 26.29 What Prompt Payment Mechanisms Must Recipients Have?, https://www.transportation.gov/osdbu/disadvantaged-business-enterprise/final-rule-section-26-29 This applies to federally funded projects where DBEs are involved.

The DBE program should outline the steps to address delays in payments. The prime contractor must pay subcontractors within 30 days of the work performed. The airport must have a written process on how it will resolve disputes regarding payments to and performance of subcontractors. ^[8] Official Questions and Answers (Q&A’s) Disadvantaged Business Enterprise Program Regulation (49 CFR 26), … Continue reading

DBE Goal of 10% of Greater

The Department of Transportation states “the statutory 10 percent goal is a nationwide aspirational goal, which does not require that recipients set their goals at 10 percent or any other particular level“ ^[9]What’s New In The New DOT DBE Rule?, https://www.transportation.gov/civil-rights/disadvantaged-business-enterprise/whats-new-new-dot-dbe-rule ^[10] Section 26.41 What Is the Role of the Statutory 10 Percent Goal in This Program?, https://www.transportation.gov/osdbu/disadvantaged-business-enterprise/final-rule-section-26-41 Essentially, this is set to see where the nation is trending on DBE rather than any individual airport. Each airport is highly encouraged to maximize their DBE participation.