50-State Construction Licensing Compliance Guide
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Guide Contents
Overview

Disadvantaged Business Enterprise Program

The Environmental Protection Agency oversees the Disadvantaged Business Enterprise Program. Learn about the program, its requirements, and whether your business qualifies.

What Is a Disadvantaged Business Enterprise?

Established in the 1980s, the Disadvantaged Business Enterprise (DBE) Program is a government program that sets aside ten percent of the transportation-related federal budget for minority- and women-owned businesses.

The primary objectives of the DBE Program are to:

  • Ensure nondiscrimination in the award of contracts under EPA financial assistance agreements
  • Help remove barriers to the participation of DBEs in the sectionof contractors under EPA financial assistance agreements
  • Provide appropriate flexibility to recipients of EPA financial assistance in establishing and providing contracting opportunities for DBEs
  • Operate harmoniously with the United States Supreme Court’s decision in Adarand Constructors, Inc. v. Pena, 515 U.S. 200 (1995)

Whether you already participate in the DBE Program or you wish to own and operate a certified DBE, you need to understand the rules of the system and how to remain compliant with requirements and qualifications.

Qualifying as a DBE

To qualify as a DBE, a business must be at least 51% owned and controlled by one or more social and economically disadvantaged individuals. The disadvantaged owner must hold the highest position in the company and have the ability to manage the day-to-day affairs of the business.

In terms of the definition of socially disadvantaged, the DBE Program targets owners based on their net worth and the value of their interest in the firm that is seeking certification. The disadvantaged status needs to be based on the totality of the circumstances rather than individual factors. Historically, women and minorities are presumed to be socially disadvantaged.

A socially and economically disadvantaged individual is:

  • A person subjected to racial or ethnic cultural bias or prejudice within American society because of their identity as a member of a group as a result of circumstances outside their control.
  • A person whose ability to compete in business is or has been impiared because of diminished capital and credit opportunities compared to others in the same or similar line of business who are not disadvantaged.

Firms must also be considered small to qualify as a DBE. Firm size is based on the number of employees or total sales in its primary area of business. Size standards are determined by the Small Business Administration (SBA), based on the North American Industry Classification System (NAICS) code for the firm’s primary area of business.

Frequently Asked Questions

How do businesses maintain their status under DBE?

Maintaining DBE status involves entities proving and renewing their status as socially and economically disadvantaged with the EPA, and proving the owner is of good character and a citizen of the United States. There are six good faith efforts that must be taken and reporting and recordkeeping requirements that need to be fulfilled.

What are the required six good faith efforts?

Whenever businesses procure construction, equipment, services, or supplies under an EPA financial assistance agreement, the prime contractor is required to follow the following six good faith efforts:

  1. Ensure DBEs are aware of contracting opportunities to the fullest extent through outreach and recruitment activities.
  2. Make information on forthcoming opportunities available to DBEs to encourage and facilitate participation in the competitive process.
  3. Consider whether firms competing for large contracts could subcontract with DBEs.
  4. Encourage contracting with a consortium of DBEs when a contract is too large for one firm to handle individually.
  5. Use the services and assistance of the SBA and the Minority Business Development Agency of the Department of Commerce.
  6. The prime contractor must complete steps one through five if they award subcontracts.

How should businesses document their good faith efforts?

Examples of good faith documentation include:

  • How DBEs were made aware of the solicitation
    • Providing a sample of advertisement/posting
    • Use of current bidders/solicitation list or databases that includes DBEs
    • Participation date of last DBE procurement outreach conference
  • Where and when was solicitation posted
    • How long/frequency of advertisement/posting
  • Evidence of good faith efforts of contractors;
    • Sample of letters or records of communication with DBEs, SBA, Minority Business Development Agency
  • The process used to determine if large requirements could be divided into smaller requirements
  • A list or database of unsuccessful bidders

Who is required to report good faith efforts to the EPA?

Business owners are required to report good faith efforts if the combined total of funds budgeted for procuring supplies, equipment, construction, and services exceeds the Simplified Acquisition Threshold. The Simple Acquisition Threshold is $250,000, but the specific dollar amount changes over time to incorporate inflation. Where you submit your report depends on your region and the awarding office.

What are the recordkeeping requirements for DBE-eligible businesses?

DBE businesses are required to maintain records documenting their compliance with the program’s requirements. For all prime and subcontractors, the following information must be collected:

  • Entity’s name with the point of contact
  • Entity’s mailing address, email address, and telephone number
  • The procurement on which the entity bid or quoted, and when they bid
  • Entity’s status as a disadvantaged business

Explore Certification Requirements

In some instances, businesses must meet state requirements to be certified as a disadvantaged business enterprise. If you need specific licenses to operate within your state as a DBE, you will need to ensure you remain compliant with those requirements, as failing to do so could jeopardize your DBE status. Click on a link below to view licensing information in your state.

If you are currently running a construction company eligible for the DBE Program and are looking to outsource your maintenance and renewal duties, Harbor Compliance can help. We are available to review your business status, ensure you are in good standing in the state where you operate, and explain what steps you need to take in order to ensure you remain compliant with state and federal regulations. Contact out licensing experts today to learn more.

Associated General Contractors of America
Professional association providing advocacy and organization for construction firms and workers.

National Association of Home Builders
National association for the promotion of the housing industry.

National Association of State Contractors Licensing Agencies
National organization that represents and promotes the interests of state level contractor licensing agencies.

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