New federal rules change DBE certification process
A few months ago I found myself in conversation with an older man who told me, owner of a woman-owned small business, that minority- and women-owned businesses “get all the advantages.” He proceeded to tell me that even though he’s a Republican, he’s glad for the program because his daughter is a business owner. I’m guessing his daughter would agree when I told him we don’t actually get many advantages. Becoming certified as a small disadvantaged business owner offers some benefits, but it’s still extremely difficult for us to claim our share of the pie in government contracts. The vast majority of the work still goes to large firms with big business development budgets and resources.
It was just a matter of time before the administration would come after the Disadvantaged Business Enterprise (DBE) program. The U.S. Department of Transportation (USDOT) is taking a hatchet to the DBE programs,* affecting those of us already certified and anyone who seeks certification in the future.
The administration is trying to strip any perceived advantages for anyone in a disadvantaged category: that applies to individuals as well as businesses. The Supreme Court has sided with the administration in most of these cases (for example, recent decisions affecting college admissions).
What has changed
Previously, if you owned and operated a small business and were a minority or a woman, you could become certified as a DBE. Congress created the program in 1982 to ensure small businesses owned by socially and economically disadvantaged individuals can fairly compete for federally funded transportation contracts. The program applies to state and local transportation agencies that receive USDOT funds, including highway, transit, and airport projects. Certified DBE firms are included in contracting opportunities, and agencies set DBE participation goals to increase access. State organizations offer additional opportunities to small certified firms.
Now race and gender will no longer serve as the sole basis for DBE eligibility. All firms will have to now submit documentation showing they have a social and economic disadvantage. How that will be determined is uncertain. In addition, state programs will have to evaluate the eligibility of all currently certified DBEs.
What the numbers actually show
Research consistently shows that women- and minority-owned firms face significant barriers in federal contracting:
In 2020, minority-owned small businesses received 9.4 percent of federal contracting dollars, while women-owned small businesses received 4.9 percent, far below their share of U.S. business ownership.
Hispanic-owned firms received 1.78 percent, Black-owned firms 1.67 percent, and Native American firms 2.69 percent of small business contract dollars that year.
Researchers estimate women- and minority-owned firms would have received an additional $141 billion in contracts if awards reflected their share of business ownership.
A 2024 study of STEM-related contracts found women-owned firms were 3.5 times less likely and minority-owned firms 3.7 times less likely than others to win awards, even when equally qualified.
Over a ten-year span, women- and minority-owned firms won just 14 percent of federal advertising contracts, despite representing a far higher proportion of small businesses in that sector.
These gaps prove women and minorities face structural disadvantages, including limited access to capital and bonding, exclusion from large bundled contracts, and fewer relationships with prime contractors. Yet the administration has shown repeatedly they don’t care about disadvantages faced by women and minorities.
What we can expect
Individual states are reviewing the new guidance. An email from the Oregon COBID office said we do not have to do anything at this time. They have pledged to provide updates, answers, and tools as federal guidelines evolve and states align practices.
Moving forward
It’s one more crack in the safety net and structural programs to create a space at the table and open up opportunities for folks who are not rich, powerful white men. It’s discouraging for sure. I still have hope that all of this can be fixed someday. Without hope, what do we have? I recommend we all contact our legislators to express our opinions on the matter.
I’m standing by alongside you, waiting for updates, and I will share what I learn.
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