According to the Department of Transportation, a disadvantaged business enterprise (DBE) is one in which "socially and economically disadvantaged individuals own at least 51%." What you may not realize, however, is that this program is often abused.
Nearly a quarter of all fraud cases investigated by the Office of the Inspector General are related to DBE program abuse.
If you want to ensure that your company stays compliant as a DBE, it's important that you first understand the program and then learn about what's needed to stay compliant with its rules.
Congress established the program in 1982. The program is organized under the Department of Transportation, meaning it applies to all businesses who pursue contracts that involve funding from the DOT.
The goal of the program is to help business owners from disadvantaged backgrounds earn government contracts to support their business.
Every federal and state department that takes money from the Department of Transportation sets their own annual goals for awarding DBE contracts. Typically 10% of DOT contracts are required to go to DBEs. These goals can also apply to subcontractors used on larger projects that require them.
To achieve DBE certification as a business owner, you must be part of a population group that fits the criteria for being disadvantaged. Groups of people who fit this description, according to the DOT, are:
Also, your personal net worth as a business owner cannot exceed $1.32 million. Your business receipts must not exceed $23.98 million.
Assuming you meet all these requirements and want to become a part of the DBE program, the next step is to apply at the local DBE office. Here in Texas, for example, the program is coordinated through TxDOT.
In order to apply for the DBE program through TxDOT, you need to fill out a form using their online diversity management system.
Once you submit your application, expect a bit of a delay for processing. About 90 days is typical, but in some cases it may happen sooner. Because of the lag time, it's best to send in your application as soon as possible so that you can start bidding on DBE-designated contracts.
There will also be an interview and examination process involved where your application will be reviewed to make sure it is correct.
Once you become a part of the DBE program, you can begin to advertise this fact and take part in the bidding process for contracts designated to DBEs.
After approval, you'll need to submit a form every year to show that there haven't been significant changes to your business that would remove your eligibility.
If you're interested in getting some help with the DBE program, get in touch with our expert team at PPG. We will walk you through each step of the DBE certification process to make sure your application goes as smoothly as possible.