Any disadvantaged commercial firms that are not recertified as DBE firms under the new U.S. Department of Transportation standards can be terminated from projects for good cause, DOT officials said in an FAQ on their new interim final rule, which removed the presumptions of race and sex as qualifying factors for the DBE program because they believe that rule is unconstitutional.
The “Frequently Asked Questions” document provides clarification on some of the points of confusion for prime contractors, DBE firms, project owners, and unified certification programs since DOT published the rule in the Federal Register on Oct. 3 to take effect immediately. The rule requires certification programs to re-evaluate all previously certified DBE firms, which DOT officials estimate at 41,000 contractors nationwide.
Project owners that receive DOT project funding and have DBE targets for their contracts that they have announced but not yet vacated should issue amendments to remove the DBE targets, according to the FAQ.
If bidding has been opened but the contract has not yet been awarded, owners must “zero” the DBE target. The DOT says owners only need to re-advertise these contracts if their respective state requires it. And contracts that were executed before October 3 do not need to be modified, but DBE participation cannot be counted until the relevant certification program has completed its revaluation. If any DBE company with a contract fails to recertify, the owner will be required to “discontinue the effect of the unconstitutional certification” or lose DOT funding for the contract.
During the reassessment period, the DBE termination regulatory provisions remain in effect, the FAQs, and prime contractors need the owner’s written consent for good cause to terminate a DBE firm’s contract. Landlords are also required to implement and document compliance with prompt payment requirements during the reassessment period.
As part of the reevaluations, certification programs will be required to review DBE firms for which they are the original certification jurisdiction, but not DBEs certified through interstate certification procedures, according to the FAQ. DBE companies that recertify will need to reapply for interstate certification.
The DOT reiterated that there is no deadline for completing the reassessments, only that the reviews should be done “as soon as possible.”
There is also no deadline for DBE businesses to submit their documentation to demonstrate eligibility under the revised standards, but businesses that have not submitted the required information will remain eligible for the program. Any company that is not certified as part of the reassessments can appeal to the DOT, officials wrote in the FAQ.
For businesses that had relied on presumptions of race and/or sex to qualify as DBEs, Wendell Stemley, president of the National Association of Minority Contractors, who spoke to ENR before the FAQs were released, said DBE owners should still be able to demonstrate financial disadvantage if their families have been personally affected by events such as slavery and limited land confiscation by their generational history and land confiscation. wealth, even if it is painful to talk about.
“Not getting any financial benefit from that generational wealth that others are thriving off of even today makes it difficult to achieve the same level of wealth that gives you the ability to go into business, sustain a business and have the necessary resources for equipment and materials,” Stemley said.
Although the rule has already gone into effect, the DOT is accepting public comments until Nov. 3. Several DBE contractors shared that they are concerned that the reevaluations could delay procurement, bidding and payment for projects, and the updated standard could prevent their companies from competing for jobs.
“These large companies already have the financial stability, extensive networks and institutional expertise to dominate public works projects,” wrote the owner of a DBE-classified small contractor. “The DBE program at least ensured that smaller businesses like mine were considered, encouraging competition and growth in the industry.”
Other commenters said they have lost opportunities as DBE participation targets have increased because their companies did not qualify.
One commenter from a geotechnical engineering firm suggested ways in which firms could “override” the program or that project owners could reduce the DBE’s participation goals. Another commenter, who owns a service-disabled veteran-owned small business, asked DOT to establish a similar target program for businesses like theirs.
