Legal Minute

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May
15
2017

Navigating Your DBE Certification

By Jackie Unger

The Department of Transportation’s (“DOT”) Disadvantage Business Enterprise (“DBE”) program is not as well-known as the Small Business Administration’s (“SBA”) 8(a) and other small business programs, but it offers an excellent opportunity for eligible small businesses to expand their reach into state and local markets. The DOT requires that state and local agencies that receive DOT funding spend at least 10 percent of funds for certain projects on contracts with certified DBEs, which include woman- and minority-owned businesses. The DOT regulations establish uniform criteria which each state must follow in carrying out the DBE program. Small business contractors interested in participating in the DBE program should be aware of the key criteria for the program, some of which differ from requirements under the SBA’s small business programs.

For instance, there are three different criteria related to size that must be met under the DOT’s DBE program. First, the owner of the concern whose ownership and control are relied upon for DBE certification must have a personal net worth (not including the value of the personal residence or the business) that does not exceed $1.32 million. Second, the business must qualify as small – according to SBA’s regulations – under the NAICS Codes corresponding to the types of work the firm seeks to perform under the DBE program. Finally, even if the business qualifies as small under the relevant NAICS Codes, it also must have had average annual gross receipts, as defined by SBA’s regulations, over the firm’s three previous fiscal years, no higher than $23.98 million. 

Once a concern is certified, it remains certified until and unless the certification is removed. However, a DBE has an obligation to inform the state agency in charge of the DBE program of any change in circumstances affecting the DBE’s ability to meet size, disadvantaged status, ownership, or control requirements, or any material change in the information provided in its application form. A firm’s eligibility may be removed if changes in the firm’s circumstances render the firm unable to meet the eligibility standards. If the business has any contracts currently in place at the time it is found ineligible under a particular NAICS Code by the state agency, its participation on those contracts will continue to count toward meeting DBE goals. Further, even if the business becomes ineligible for contracts under one NAICS Code, it still would remain an eligible DBE for work in any other NAICS Codes for which it had been certified by the state agency.

These are just a few of the DOT’s many criteria regulating firms’ eligibility to participate in the DBE program. To learn more about how the DBE program works, including initial certification and continuing eligibility requirements, join us for our webinar, Taking Advantage of the DBE Program in Today’s Environment, on May 24th, 2017.

About the Author: Jackie Unger is an associate with PilieroMazza in the Government Contracts Group. She may be reached at junger@pilieromazza.com.



 
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