Disadvantaged Business Enterprise Certification
(DBE)
In projects where federal funds are utilized, federal law
mandates a number of requirements with respect to disadvantaged
business enterprises ("DBEs"). In terms of public
works and construction projects, federal funds are generally
used to some extent for major transportation projects in particular.
These requirements, which are under the jurisdiction of the
United States Department of Transportation, include setting
of DBE utilization goals, design and implementation of a DBE
"program", monitoring and reporting.
To qualify as a DBE, the business must be owned and controlled
by one or more socially and economically disadvantaged persons
as defined by DBE Regulation 49 CFR Parts 23 and 26. The presumption
of disadvantage is refutable. Businesses must submit evidence
indicating that:
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Minimum 51% ownership, control, and expertise of the individual(s);
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Control of the daily management and operations of the individual(s)
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The business’ size as measured by average annual gross
receipts over the most recent three years must be under the
specified dollar amounts. These size standards are set according
to the business’ North American Industry Classification
System (“NAICS”) code. Depending on the industry,
these limits can range from $2.5 million averaged per year
to $17.4 million averaged per year. Manufacturers, wholesalers
and retailers must meet an employee size standard ranging
between 500 to 1500 employees, depending on the NAICS classification
and their average three year gross sales must be less than
$17.4 million.
Recently, changes to the DBE regulations require all owner
applicants to complete a Statement of Disadvantage and a Personal
Financial Statement. All eligible owners must affirm that
they are members of a disadvantaged group (for example, an
eligible ethnic minority or female). In addition, the personal
net worth of each eligible owner applicant must be less than
$750,000, excluding the values of the applicant’s ownership
interest in the business seeking certification and the owner’s
primary residence.
Generally, SDB and DBE certification is done at the local
or regional level.
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