When is my Disadvantaged Business Enterprise (DBE) no longer Disadvantaged? | Tucker Arensberg, PC


If you are a Woman-Owned or Minority-Owned Business (WBE or MBE), you may also have been certified as a Disadvantaged Business Enterprise (DBE) through your state’s Department of Transportation (or local agency administering the state certification program). This is a great way to boost your business as DOT-funded projects, as there are usually requirements and/or goals for including a certain percentage of DBE work in projects.

However, he is possible that at some point you will no longer be considered a DBE, regardless of your gender or minority status. This idea is troubling for many companies as they have built their business and reputation as DBEs. On the other hand, in order to lose your DBE certification, the minority owner and the business have usually experienced significant growth since they first obtained DBE certification.

While members of classes eligible for DBE certification are presumed to be at a disadvantage, this disadvantage can be refuted, with the guidance provided b 49 CFR §26.67:

  • If your personal net worth statement and supporting documents show that your personal net worth exceeds $1.32 million.
  • If your personal net worth statement and supporting documents show that you are “capable of accumulating substantial wealth”. The agency may consider:
    1. If the owner’s average adjusted gross income over the past three years was greater than $350,000;
    2. If the income was unusual and unlikely to occur in the future;
    3. Whether the gains were offset by losses;
    4. Whether the income was reinvested in the business or used to pay taxes arising from the normal course of business;
    5. Further evidence that income is not indicative of the absence of economic disadvantage; and
    6. If the total fair market value of the owner’s assets exceeds $6 million.

They will also look at transfers the owner made in the previous two years to immediate family members, trusts (when the beneficiary is an immediate family member), or the business for less than fair market value ( except for the usual gifts for such things as birthdays, weddings, graduations, etc.).

If your certifying agency notifies you or asks you to review issues regarding your disadvantaged status, you should consider hiring a competent attorney to help you with the process. A lawyer can help you understand the process and the information you need to present to remain a DBE, and assist you at the hearing. You are entitled to a hearing regarding the rebuttal of the presumption of economic disadvantage under 49 CFR §26.67.


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