Have you ever heard of a DBE business? The term stands for disadvantaged business enterprise, and it refers to a for-profit small business that’s at least 51 percent owned by an individual or individuals who are socioeconomically disadvantaged. To be DBE certified, one or more of the socioeconomically disadvantaged owners must be involved in the daily management of the business. Most importantly, the term DBE applies strictly to equal opportunity in transportation contracting markets, and was created as a way to address discrimination in that field.
How It Works
In order to ensure that discrimination didn’t unfairly force out players in the field of public contracting, the U.S. Department of Transportation enacted a statute requiring at least 10 percent of the amounts allocated for work on federal highways, mass transit, and other transportation to go toward disadvantaged business enterprises. What this means is that there are guaranteed dollars set aside for transportation contracting businesses owned by women or minorities. These companies can compete among themselves for those federally assisted contracts, while non-DBE businesses cannot.
The process of being DBE certified varies from state to state, but one of the most important and constant aspects of being certified is meeting some specific requirements. One of these requirements is to belong to a socially and economically disadvantaged group, which refers to U.S. citizens or lawful permanent residents whose race is black, Hispanic, Native American, or Asian. A woman of any race also qualifies. In addition, the company must match the description of what the Small Business Administration considers a small business, which depends on the number of employees and average annual receipts of the company. Finally, socioeconomically disadvantaged individuals cannot have a net worth of greater than $1.32 million, excluding the value of their minority business enterprise and primary residence.
Aside from the obvious benefits of a category of money slated solely for DBE certified businesses, there are a number of other substantial benefits for DBEs. One is that DBE firms are listed in the state DBE directory available to prime bidders and consultants, making it easier for them to get work. They also receive exclusive access to lists of work items that are subcontracted from prime contractors, so it’s easier for them to identify and pursue work opportunities and get in touch with those who provide good work. As a general rule, DBEs are given a head start to find work above non-DBEs in order to compensate for traditional discrimination.