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The U.S. Department of Transportation (USDOT) issued a final rule that modernizes the Disadvantaged Business Enterprise (DBE) program regulations. Created over 40 years ago to address and remedy the effects of discrimination against small businesses owned by minorities, women, and other socially and economically disadvantaged individuals, the program is implemented by 53 state transportation departments and over 500 transit agencies. There are more than 43,000 certified DBEs, and many participate in federally assisted transit projects across the country.
USDOT addressed many of the challenges DBEs have faced over the years through this rule change. Updates to the DBE program include:
- streamlining the DBE certification and eligibility process
- adjusting the personal net worth cap for small business owners, including excluding retirement assets from the calculation
- formalizing guidance establishing successful COVID-19 flexibilities, such as virtual on-site visits
- modernizing the rules to facilitate eligibility across state lines
As part of the USDOT updates, there is now a tiered system for FTA grant recipients. This new system will result in data collection from more FTA recipients and clarity around prohibited discriminatory practices, which will help FTA ensure that contractors working on transit projects are not subjected to discrimination in the award and administration of FTA-funded contracts.
Beginning in FY 2025, FTA will move to this tiered system for DBE program compliance.
- Tier I Recipients: FTA grant recipients who award more than $670,000 in FTA funds annually in 3rd party contracts are subject to all provisions
- Tier II Recipients: FTA grant recipients who award $670,000 or less in FTA funds annually are subject to a subset of provisions, such as the reporting requirements and the small business element
USDOT will host trainings and informational sessions on the final rule in the coming weeks.
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