February 25, 2022
The U.S. DOT Disadvantaged Business Enterprise Program
The Department of Transportation (DOT) Disadvantaged
 meet SBA size standards, defined by the annual gross
Business Enterprise (DBE) program seeks to offer small
receipts or employee number caps outlined for each
disadvantaged businesses a fair opportunity to compete for
North American Industry Classification System code;
federally funded transportation contracts. Small
and
disadvantaged businesses are small businesses that are
owned and controlled by socially and economically
 have average annual gross receipts over the preceding
disadvantaged individuals, and have been certified as such
three fiscal years that do not exceed $26.29 million
by the state where they wish to operate as a DBE. The
(although the Federal Aviation Administration (FAA)
program is implemented through DOT regulations
Reauthorization Act of 2018 removed the gross receipts
published at Title 49, Parts 23 and 26, of the Code of
cap for FAA-assisted work). DOT set the gross receipts
Federal Regulations (C.F.R.).
cap and adjusts it annually to account for inflation.
Program Purpose
To be considered socially and economically disadvantaged,
The DBE program aims to prevent discrimination against
a firm’s owners must either demonstrate disadvantage or be
DBEs by providing them equal opportunity to compete for
presumed as such. DOT presumes social and economic
federally funded transportation contracts. Although DOT,
disadvantage for citizens of the United States (or lawfully
like all executive agencies, establishes agency procurement
admitted permanent residents) who are women; Black
goals for contracting with small disadvantaged businesses
Americans; Hispanic Americans; Native Americans; Asian-
(P.L. 100-656), this program is distinct from that effort
Pacific Americans; Subcontinent Asian Americans; or other
because it applies to the contracts awarded by state and
minorities found to be disadvantaged by the SBA (49
local governments that receive DOT grant assistance.
C.F.R. §26.67). If not presumed disadvantaged by DOT, an
Funding for transportation projects flows through grant
owner must demonstrate social and economic disadvantage
assistance, making the contracts awarded by grant
by meeting conditions explained in Appendix E to 49
recipients relevant to DOT policy.
C.F.R. Part 26. Note that the DOT definition of “socially
and economically” disadvantaged differs from that of the
Program objectives related to ensuring non-discrimination
SBA for its programs, found at 13 C.F.R. §124.1001.
include the following:
In addition to meeting the DOT definition of disadvantaged,

each socially and economically disadvantaged owner must
removal of barriers to the participation of DBEs in
not have a personal net worth in excess of $1.32 million.
DOT-assisted contracts;
The net worth cap excludes ownership interest in the

owner’s

firm, equity in their primary residence, and assets
a level playing field on which DBEs can compete fairly
held in vested pension plans, IRAs, 401(k) accounts, or
for DOT-assisted contracts;
other retirement savings or investment programs (49 C.F.R.

§26.67(a)(2)).
promotion of the use of DBEs in all types of federally
assisted contracts and procurement activities conducted
Program Origin and Guiding Goal
by grant recipients; and
Congress has regularly reauthorized the DBE program for

highway and transit projects in surface transportation bills
development of firms that can compete successfully in
since 1983, most recently in the Infrastructure Investment
the marketplace outside the DBE program.
and Jobs Act (P.L. 117-58). DBE programs for airport
DBE Qualifications
projects and airport concessionaires were authorized by the
Airport and Airway Safety and Capacity Expansion Act of
A DBE is defined by criteria from both Small Business
1987 (P.L. 100-223). As early as 1969, DOT imposed a
Administration (SBA) and DOT regulations. A DBE must
requirement on federal-aid highway construction projects to
be (1) a for-profit small business, and (2) at least 51%
make their best effort to use minority-owned firms, and
owned by socially and economically disadvantaged
established a Minority Business Enterprise program through
individuals. A firm must also must be organized so that the
agency regulations in 1980.
disadvantaged individuals hold the highest positions in the
company or, in the case of corporations, control the board
Since the first DBE program authorizing legislation in
of directors (49 C.F.R. §26.69, 49 C.F.R. §26.69, and 49
1983, Congress has maintained a cumulative national goal
C.F.R. §26.71).
of at least 10% contracting by DBEs where federal
highway, transit, or airport project assistance is used. State
To be a small business, a firm must:
and local transportation agencies that receive DOT grants
are required to develop aspirational DBE contracting goals
https://crsreports.congress.gov

---

The U.S. DOT Disadvantaged Business Enterprise Program
of their own. These goals are based on the share of DBEs
means are informational programs on contracting
ready, willing, and able to perform the contracts a grantee
procedures and opportunities, unbundling large contracts to
expects to award. Grantees are not required to use the same
make them more accessible, and offering business support
10% goal that DOT uses to guide program policy at the
services. Grantees are not permitted to use quotas or set
national level (49 C.F.R. §26.41).
aside contracts for DBEs (49 C.F.R. §26.43).
Program Structure
Certification of DBE Firms
DBE contracting goals apply to the projects funded by
While contracting goals vary by grantee, the requirements
federal grants from the following DOT agencies: the
for DBE certification do not. DOT regulations lay out the
Federal Highway Administration (FHWA), National
“certification standards” to be used when certifying DBE
Highway Traffic Safety Administration (NHTSA), Federal
firms (49 C.F.R. Part 26 Subpart D). Only certified firms
Transit Administration (FTA), and the Federal Aviation
are eligible for a contract award as a DBE and states must
Administration (FAA).
establish Unified Certification Programs (UCP) that handle
state-wide firm certification. UCPs make certification
All direct recipients of FHWA financial assistance must
decisions on behalf of all DOT grant recipients in a state,
implement DBE programs regardless of anticipated contract
and maintain a state’s directory of DBE firms.
award size; recipients of aid from other DOT agencies are
required to implement DBE programs when they anticipate
A business seeking DBE certification submits an
awarding prime contracts of more than $250,000 per fiscal
application to the state UCP in order to be eligible for
year with those funds.
contracts throughout the state. Certification decisions are
made through on-site visits to firms and personal
Although projects are necessarily funded by nonfederal
interviews, as well as reviews of licenses, stock ownership,
sources in addition to federal grants, only the federal funds
equipment, bonding capacity, work completed, financial
from the FHWA, NHTSA, FTA, and FAA are subject to
capacity, and type of work preferred (49 C.F.R. §26.83(c)).
DBE contracting goals. However, contracts for the purchase
DBEs wishing to do business in multiple states generally
of transit vehicles are not subject to DBE goals regardless
need to recertify themselves with all applicable UCPs but
of federal assistance.
states can accept certification from other states. Once
certified, a DBE is eligible for inclusion in a state’s DBE
State and Local Program
directory and may bid for contracts as a DBE.
Implementation
Grantees implement DBE programs using their own locally
Program Outcomes
developed DBE contracting goals. The goal setting process
In FY2020, nationwide awards and commitments to DBEs
focuses on estimating the level of contracting to DBE firms
totaled approximately $6.2 billion, as reported by grantees
that would take place in the absence of discrimination.
required to implement DBE programs. Key factors that
Grantees set their goals based on the market conditions and
affect DBE contracting include the type and scale of
upcoming projects in their location. Regulations specify
projects undertaken in any fiscal year and the federal share
how to create goals using data on the availability of DBEs
of funds allocated to projects. In addition, the availability of
relative to contracts to be awarded in a given fiscal year (49
DBEs able to perform the needed work in a given location,
C.F.R. §26.45). Grantees set goals for three-year periods
as well as the number of DBEs that ultimately bid on
and submit them, along with the “determining
contracts there, affect annual DBE awards and
methodology,” to the FAA, FHWA, or FTA for review and
commitments.
approval. In some cases, DOT permits DBE goal-making
for a particular grant or project rather than on a fiscal year
Considerations for Congress
basis (49 C.F.R. §26.45(e)(3)).
Due to the significant amount of funding provided through
DOT grants from FHWA, NHTSA, FTA, and FAA,
Grantees cannot be penalized for noncompliance with the
particularly with the passage of the Infrastructure
program so long as they administer their programs in good
Investment and Jobs Act (P.L. 117-58), Congress may be
faith (49 C.F.R. §26.47). Nevertheless, eligibility for DOT
interested in the DBE program’s structure and
financial assistance depends on DOT approval of grantee
implementation when considering its outcomes and overall
DBE programs (49 C.F.R. §26.21(c)). Grantees must also
effectiveness. Congress may also consider program impacts
maintain records of data on DBE firm participation in
on the execution and management of transportation
federally funded projects and report it to DOT; specifically,
projects. Moreover, Congress may be interested in program
FHWA and FTA grant recipients must submit a report
impacts on business concerns in the transportation sector, as
twice per fiscal year, and FAA recipients must submit a
well as diversity among businesses in transportation
report once per fiscal year (49 C.F.R. §26.11).
contracting markets. Information provided by grant
recipient reporting to DOT agencies may inform Congress’s
In order to attain approved DBE contracting goals, grant
considerations and shed light on this program’s
recipients utilize state directories of certified DBE firms
significance.
and might provide technical assistance to area DBE firms.
Grantees are required to use “race-neutral” and “gender-
R. Corinne Blackford, Analyst in Small Business and
neutral” means to meet their goals to the extent possible,
Economic Development Policy
without using criteria favoring DBEs over non-DBEs (49
C.F.R. §26.5 and 49 C.F.R. §26.51). Examples of neutral
IF12055
https://crsreports.congress.gov

---

The U.S. DOT Disadvantaged Business Enterprise Program


Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.

https://crsreports.congress.gov | IF12055 · VERSION 1 · NEW

---