The Disadvantaged Business Enterprise (DBE) Program of the US Department of Transportation (DOT) is undergoing significant reforms that will modernize, streamline, and clarify current rules, tighten implementation, and increase reporting requirements. 

Through the DOT's DBE Program, small businesses owned by people who are socially and economically disadvantaged can get access to contracting opportunities worth millions of dollars offered at the federal, state, and local levels through federally supported infrastructure projects. 

On July 21, 2022, the DOT published a notice of proposed rulemaking, representing the DBE Program's biggest potential modifications since 2014. This happens at a time when significant new federal funds are being put into infrastructure across the United States, though being hindered by inflation.

In the context of government construction, "good faith efforts" refers to the documented efforts made to:

1. Select tasks for DBEs or other government-certified contractors.
2. Contact and follow up with these businesses.
3. Negotiate with interested contractors.
4. Make plans available and perhaps help with bonding.
5. Get in touch with or use government directories of certified subcontractors and suppliers. If this sounds like a lot of work, don't worry. The tech platform “Compliance News” is one tool that can help contractors conduct their outreach efficiently and at low cost.

Federally funded design and build projects would require a DBE Performance Strategy (DPP), which is essentially a subcontracting plan. A DPP would specify the precise dollar and percentage goals for subcontracting to DBEs. Before a contract is granted, a strategy of this nature would be established. 

According to Washington DC-based law firm Piliero Mazza, “The DOT also believes the current Rule, as it relates to design-build contracts, unnecessarily limits the participation of DBEs because it requires contractors to commit to specific DBE subcontractors before contract award when the ability to define the project’s needs and identify a particular DBE firm may be difficult to do. The Rule instead would require prime contractors on design-build contracts to submit DBE Performance Plans (DPPs) with their proposals rather than committing to specific DBEs or submitting good faith efforts at the time of the proposal."

Piliero Mazza adds "This is akin to Small Business Subcontracting Plans required by other-than-small businesses for federal government prime contracts. To increase compliance, the Rule would also require ongoing monitoring and oversight of the contractor to evaluate its good faith efforts to comply with the DPP. This change will result in greater opportunities for DBEs to participate in design-build contracts.”

The DOT mandates the following for design-build contracts:

• Requests that open-ended DBE Performance Plans (DPPs) be included with proposals from primes in response to a request for proposals for a design-build project.
• DPPs must include information on the tasks the prime contractor will look to DBEs for and an estimated period when actual subcontracts will be awarded.
• Prime contractors may only add work or extend a completed subcontract with a decertified firm with the recipient's prior written consent. Counting after decertification. Continued credit toward a contract goal is disallowed if the DBE’s ineligibility after the subcontract is signed the result of a purchase by, or a merger with, a non-DBE firm (in which case the prime contractor would be required to use good faith efforts to replace the DBE if additional credit is needed to meet the contract goal).
• Recipients monitor the prime’s adherence to the plan throughout the contract's life to evaluate good faith efforts, and parties may agree to make written DPP revisions throughout the project's life.
• Reiterates those car rental companies are obligated to make good faith efforts to meet ACDBE goals.

The Bipartisan Infrastructure Law's recent funding boom will undoubtedly impact the DOT's suggested modifications. The rising number of certified small firms, in particular, appears to create a more competitive environment for federally funded opportunities. Prime contractors as well as DBE subcontractors and suppliers attempting to access these funds need to keep aware of the changes being implemented.

Follow Contractor News for the latest updates on government construction and the DBE program.