Federal program for disadvantaged businesses could see changes

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The U.S. Department of Transportation recently released a long-awaited notice of proposed rulemaking to modernize the Disadvantaged Business Enterprise (DBE) program regulations. This blog is part of a series looking at some of the significant proposed changes. A copy of all proposed changes is available here.

One of the proposed changes is a revision of the definition of “disadvantaged business enterprise” to mean “a small, for-profit enterprise engaged in transport-related industries.” (emphasis added). Previously, the definition of disadvantaged business enterprise made no mention of industry.

The proposed regulations do not define which industries are considered “transportation-related” and the term “transportation-related” does not appear elsewhere in the regulations. While in some ways it makes sense to limit certification to industries involved in transportation in some way (it’s a U.S. Department of Transportation program, after all), the lack of definition is likely to sow confusion.

With dozens of certification bodies across the country, the interpretation of what is included will vary widely. There are countless potential interpretations of “transport related”. Companies that provide transportation. Companies that work directly on transport projects. But what about other more marginal companies? Where will the line be drawn?

Also, where does that leave minority-owned small businesses? Women-owned small businesses can be certified through the WOSB program, but there is no equivalent program for minority-owned small businesses separate from the 8(a) and HubZone programs.

The proposed rule amending the definition is not yet final. You can comment on the proposed rule by going here.

©2022 Strassburger McKenna Gutnick & GefskyNational Law Review, Volume XII, Number 208

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