DBE & The Infrastructure Bill: Potential to Close the Racial Wealth Gap
R&W Editor No Comments

Opportunity for Disadvantaged Business Enterprise Contractors – The Infrastructure Bill and Program Eligibility 

Key Details: The $1.2 trillion Infrastructure Investment and Jobs Act (Bipartisan Infrastructure Bill or “the Bill”) passed a vote by the House of Representatives on November 5, 2021. President Biden signed the Bill into law on Monday, November 15, enacting a key domestic spending agenda that will upgrade outdated roads, transit systems, bridges, and more. Certain provisions of the Bill will be of particular interest to the Department of Transportation (DOT) contractors who are currently, or intend on becoming, a part of the Disadvantaged Business Enterprise (DBE) Program. This Bill presents a huge opportunity for these contractors as the provisions under the Surface Transportation Division (Division A) of the Bill show substantial amounts of funds allocated specifically to DBE contractors.

Appropriation of Funds to DBE Contractors 

Under Sec. 11101 (e) of the Bill, Congress notes that considerable progress has been made through the establishment of the DBE Program. However, discrimination and other administrative barriers are still prevalent for minority and women-owned firms who seek business in federally assisted Surface Transportation Projects.

Congress has determined that these challenges merit continuation and support for the DBE Program. Thus, Sec. 11101 (e) addresses the appropriation of funds to DBEs. It provides that “10 percent of the amounts made available for any program under this division (other than section 14004), Division C, and section 403 of title 23, United States Code, shall be expended through small business concerns owned and controlled by socially and economically disadvantaged individuals”.

Under Sec. 11101 (e), Congress notes that the term “small business concerns” is defined the same as the term is used in Section 3 of the Small Business Act (15 U.S.C. 632)). Furthermore, small business concerns must not have annual gross receipts during the preceding three fiscal years that exceed $26,290,000 (adjusted annually for inflation). Lastly, socially and economically disadvantaged individuals are defined under Section 8(d) of the Small Business Act (15 U.S.C. 637(d)).

This section also notes that the Secretary will establish minimum requirements for each State Government who must report information concerning Disadvantaged Business Enterprise awards and commitments.

With this allocation of funds and the Bill in mind, it is essential for transportation contractors to understand DBE Program requirements as participation in this program may lead to worthwhile contracting opportunities.

Understanding the DBE Program

The DBE program aims to expand business opportunities for minority and women-owned businesses that work on federally funded transportation projects. Certification helps contractors compete for federally funded transportation projects in the Greater Washington, DC area. Certification also guarantees prompt payments of undisputed invoices as required by federal law. Contractors who have also received SBA (Small Business Administration) 8(a) certification within the last three years may use the SBA application to apply for DBE status. For more information regarding the 8(a) Business Development Program, please view Ryan & Wetmore’s article here.

Program Eligibility

The following lists eligibility requirements for the DBE program. These general guidelines are taken in part from 49 CFR Part 26. Contractors are encouraged to thoroughly review the DOT DBE website and 49 CFR Part 23 to understand all these requirements.

-Your business must be at least 51% owned and operated by a socially and economically disadvantaged individual(s).

  • “Disadvantaged” individuals include women, Black Americans, Hispanic Americans, Native Americans, Asian-Pacific Americans, Subcontinent Asian-Pacific Americans, or other minorities found to be disadvantaged by the SBA.
  • Contractors are encouraged to review 49 CFR Part 26 for more information regarding social and economic disadvantages.

-Your company must be a “small business” as defined by SBA standards.

-Your business does not have annual gross receipts over $23.98 million in the previous three fiscal years. This threshold is adjusted for inflation annually by the Secretary.

-You have a personal net worth of less than $1.32 million. Items that are excluded from personal net worth include individual ownership interest in the firm and equity in your primary residence.

-Your business must be independent and must not be tied to another firm in any way that will compromise this independence and control.

-You must be able to exercise enough control of the firm to direct or cause direction of the management and policies of the firm. You must also have an overall understanding of the business and managerial operations.

DBE Application Process and Resources

First-time applicants must complete this certification form and submit related materials, like the personal net worth statement to the certifying agency in your home state, this is usually the state Department of Transportation. Following this application, an on-site interview will be conducted by the agency.

The DOT has provided a helpful resource of website links for contractors to access state DBE websites and an application checklist to streamline the application process. Furthermore, the DOT has compiled resources for program best practices to guide contractors and provide further clarifications regarding program compliance.

It is important to note that the certification process takes approximately 90 days after the receipt of application materials. It is highly recommended to submit a complete application, as the lack of supporting materials will prolong processing times.

Conclusion

With increased funding through the Infrastructure Bill, the Disadvantaged Business Enterprise Program is a revitalized option for qualified owners and businesses to get a head start building their contract portfolio. Through lowered competition and set aside funding, owners will have a higher chance of working on more contracts to grow their business.

Owners who would like to learn more about the DBE program can consult official resources provided by the Department of Transportation, useful resources are linked in the paragraph above. Contractors are encouraged to thoroughly review these resources and to consider eligibility in anticipation of opportunities provided by the Infrastructure Bill.

Today’s Thought Leaders

Contact us today by calling 301-585-0506.

Peter Ryan

About Peter Ryan

Partner, Co-founder, & CPA

Peter T. Ryan co-founded Ryan & Wetmore in 1988 with business partner Michael J. Wetmore. Peter provides clients with the best strategies for success. His expertise extends across various industries, including government contracting. Peter obtained a Master of Business Administration in Finance from the University of Baltimore and a Bachelor of Arts in Accounting from the Catholic University of America.

Read Pete’s full bio.

Rosie Cheng, Finance Consultant

About Rosie Cheng

Finance Consultant

Rosie Cheng is a Finance Consultant at Ryan & Wetmore. She focuses on government contracting services and produces many of the firm’s government contracting newsletters. Rosie graduated from Georgetown University with a Master of Science in Management and from William and Mary with a Bachelor of Business Administration.