By Nick Goldstein, vice president of regulatory and legal issues, ARTBA
The U.S. Department of Transportation (U.S. DOT) says it will broaden eligibility for firms to participate in the Disadvantaged Business Enterprise (DBE) program by raising its gross receipts cap. Under one of the program’s certification requirements, a DBE firm’s three-year average of gross receipts may not exceed the cap. U.S. DOT will raise this limit from $23.98 million to $26.29 million, effective Jan. 13, 2021. In reauthorizing the DBE program through surface transportation legislation such as the current Fixing America’s Surface Transportation (FAST ) Act, Congress has instructed U.S. DOT to periodically adjust the cap for inflation.
The department’s Dec. 14 announcement only applies to DBE eligibility under the federal-aid highway and transit programs. In work relating to airports, the DBE program is now operating under a different eligibility rule. In its 2018 reauthorization of the Federal Aviation Administration (FAA), Congress removed the DBE gross receipts cap entirely for work on airport projects and programs. Therefore, as U.S. DOT states, “DBE firms working on FAA-assisted projects must meet the size standard(s) appropriate to the type(s) of work based solely on the applicable NAICS [North American Industry Classification System] code(s) size standard(s).” This refers to size limits under which the Small Business Administration considers a firm eligible for its own programs.
In recent years, there have been several proposals in Congress and within the industry to abolish the DBE gross receipts cap and default to the NAICS size standards for DBE eligibility on federal-aid highway and transit projects. In the case of DBE firms doing highway, street, bridge or other heavy civil construction, the annual volume cap would be $39.5 million under that scenario. This is well above the current gross receipts cap of just under $24 million (or $26.3 million effective next year). Conversely, the NAICS limit for certain specialty contracting trades is currently $16.5 million, although DBE program administrators have already been requiring such specialty firms to fall under that “small business” limit for continued DBE eligibility.
With the likelihood policymakers will be considering these issues in 2021, ARTBA would appreciate member feedback on DBE size standards. ARTBA’s DBE Program Policy Task Force is also exploring consensus principles on the issue. Please contact me with questions or comments.