U.S. DOT Proposes Giving Minority-Owned Firms Greater Shot at Contracts

Women- and minority-owned companies would have an easier time winning federal transportation contracts under a new rule released by the Obama administration today, which comes in the wake of complaints from social-equity advocates that such firms had received just 2 percent of infrastructure contracts awarded under last year’s economic stimulus law.

PRFCN012.jpg(Photo: CA DOT)

The new rule would increase to $1.3 million the maximum owner’s net worth required to classify a company as a "disadvantaged business enterprises" (DBE), qualifying it for federal assistance in winning contracts on the state and local level. Under the existing program, owners of DBEs were required to earn $750,000 or less per year, an income level that was last adjusted 20 years ago.

State DOTs also would face stronger monitoring requirements to ensure their DBE hiring targets are met, according to a release from Transportation Secretary Ray LaHood’s office.

The new rule asks states to monitor transport contractors to ensure their promises to use DBE subcontractors are kept, and states that fail to meet DBE hiring goals would have to submit a remedy to Washington that would increase deals with women- and minority-owned firms.

Finally, the rule would eliminate the need for businesses to obtain DBE status in multiple states, requiring one state DOT to accept another’s DBE certification "unless it found good reason not to," the U.S. DOT stated.

LaHood launched a $20 million bonding program last year, as well as a task force to examine strategies for increasing women- and minority-owned contractors’ presence in the transport work force. But a February report that DBEs had won less than $1 billion in business from the stimulus law’s $48 billion infrastructure pot fueled more contention over access.

The new rule is now in a preliminary format, with public comments accepted by the U.S. DOT until July.

  • Kudos to the Obama administration and Transportation Secretary LaHood for responding to DBEs’ struggles to get a fair shot at federal contracts, and congratulations to Rep. Hank Johnson and the Congressional Black Caucus on their push for action. The next steps for the USDOT should be to expand the bonding assistance for DBEs it introduced last year, and to increase transparency and accountability on DBE participation — something that Good Jobs First and the Transportation Equity Network have long been advocating. That means requiring regular, publicly accessible reports on subcontracts to DBEs and the actual work hours performed by minorities and women.

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