House Committee Asked to Propose New Improvements to USDOT Disadvantaged Business Enterprise Program
On Wednesday, September 23, the House Committee on Transportation and Infrastructure held a hearing to discuss the impacts of – and potential improvements to – the U.S. Department of Transportation’s Disadvantaged Business Enterprise (DBE) program. With the growing concerns surrounding race and equity in America – coupled with the economic turmoil amid the COVID-19 pandemic – minority and women owned business leaders came in to testify the importance of USDOT’s DBE program, and their continued experiences with discrimination within the transportation field.
While the Committee emphasized that the current DBE program is not a perfect, all members found it an essential program made to create a leveling playing field for disadvantaged and socioeconomically at-risk individuals. However, the hearing showcased just how much the program can better meet the needs of minority and women owned small businesses to have equal chance gaining USDOT contracts for transportation projects.
The department’s current DBE program was initiated in 1983, with the intent that 10 percent of federal DOT procurement funds for highway and transit assistance be used and spent through DBEs. The program was reauthorized once in 1987 to also include women-owned businesses as a measure to further curb inequity and discrimination but has not been readdressed since.
Witnesses included the following (testimonies linked):
- Evalynn Williams, President, Dikita Enterprises, On behalf of the Conference of Minority Transportation Officials (COMTO), Testimony
- Geri Boyer, President, Kaskaskia Engineering Group, On behalf of the American Council of Engineering Companies, Testimony
- Mary Lerdahl, Owner, Emerald Consulting Services, Testimony
- Farad Ali, At-Large Board Director, Airport Minority Advisory Council, Testimony
- Sandy-Michael McDonald, Director, Office of Economic and Small Business Development, Broward County, Florida, Testimony
- Sandra Norman, Administrator, Civil Rights Division, Virginia Department of Transportation, Testimony
- Jon Wainwright, Affiliated Consultant, NERA Economic Consulting, Testimony
Rep. Eleanor Holmes Norton (D-DC) presided over the full committee hearing, emphasizing the importance of DBEs now more than ever in this unprecedented time in history. She said “over the last few months the vulnerability of African American, Latinx, and other minority groups have been shown due to the growing concerns of COVID pandemic, national racism, and an economic downfall.” She also made note that “according to a 2018 MDOT Disparity Study, 69% of African American owned firms responded that they were seldom or never solicited to work on contracts without goals win place and 74% were seldom or never hired to work on contracts with goals.” “These measures also accounted 47% and 52% for Hispanics, 56% and 61% for Asians, 82% and 70% for Native Americans, and 54% and 53% for non-minority women.”
A wide array of concerns were offered by the witnesses which gave the Committee some insight on ways to not only to improve USDOT’s DBE program moving forward, but to ease complications that give minority and women run businesses a fair chance at garnering federal assistance. Evalynn Williams stated that her company has had blatant encounters of being rejected offers with no minority goals stated or addressed when applying for projects. “One recommendation she suggested was to exclude retirement savings from the network calculation, as some contracts include restricted funds like 401k which often disincentives business owners to save for retirement.
Geri Boyer addressed three key areas she found leading a DBE which include the fact that DBE programs are essential for helping businesses compete for work, securing certifications in different states and jurisdictions can be burdensome, and for professional engineering and design related services, it’s important to balance DBE considerations with qualification based selection procedures. “One challenge is a lack of unified approach to DBE certification” Boyer noted “increasing the weight of DBE selection criterion or setting aside specific quotas or mandates will diminish qualifications-based selections (QBS) and the successful project delivery it promotes.”
An published study assessed by Jon Wainwright also revealed some staggering evidence regarding the effects of discrimination on minority and women-based organization. Dr. Wainwright’s original research dissected key sources of empirical evidence to emphasize his plea for the DBE’s reauthorization. He said that his analysis of the most recent ACS data revealed that the rate of business formation for African Americans would be 120 percent higher if not for discrimination, and 44 percent higher for women.
Other recommendations were also raised regarding airport concessionaires, improvements to the DBE certification process, and increasing joint venture and teaming partnerships. “It is important in these public private partnerships to not only provide resources for airports, such as the Idle Loan Program, but also provide resources to Airport Concessions Disadvantaged Business Enterprise (ACDBEs) to be able to get minimal guaranteed fees abated. We need relief for concessionaires.” said Farad Ali in response to Rep. Hank Johnson’s (D-GA) question on challenges facing airport concessions.
In response to a universal certification process, Boyer explained that DBEs just don’t have the bandwidth in support or opportunities to move across state line. “In our case we have to get a business license, then start a certification process, and then finally we have to get a pre-qualification with the state we want to do business in. A unified DBE certification in the United States will make our businesses more nimble and effective across the country.” Williams highlighted a numbing final point, exclaiming that the DBE program is vital not only for her own firm, but for the prosperity of our country’s most deprived population. “This program is not a handout; it is a leg-up. Without the DBE program we would probably be out of business at the end of our contract’s lifetime.”