The Department of Transportation (DOT) has established a Disadvantaged Business Enterprise (DBE) program to provide a vehicle for increasing the participation by Minority Business Enterprises (MBEs) in state and local procurement. DOT's DBE regulations require state and local transportation agencies that receive DOT financial assistance, to establish goals for the participation of DBEs. Each DOT-assisted State and local transportation is required to establish annual DBE goals, and review the scopes of anticipated large prime contracts throughout the year and establish contract-specific DBE subcontracting goals.
In addition to establishing goals, state and local recipients also certify the eligibility of DBE firms to participate in DOT-assisted projects. Some groups are presumed to be socially and economically disadvantaged for the purposes of participation in this program. For example, women-owned businesses are presumed to be disadvantaged for the purposes of participation in this program.
To be certified as a DBE, a firm must be a small business owned and controlled by socially and economically disadvantaged individuals. Certifiers make the determinations based upon on-site visits, personal interviews, reviews of licenses, stock ownership, equipment, bonding capacity, work completed, resume of principal owners and financial capacity.
Last week, the Department of Justice announced a settlement of allegations of false claims related to this program. The company agreed to pay more than $140 thousand to settle allegations it submitted false records to the Washington State Department of Transportation related to a federally-funded interstate highway improvement project.
The contractor claimed that from 2010 to 2014, it was leasing specialized equipment used to process and clean waste water generated by construction projects from a certified DBE. In fact, the machine was owned by the contractor who used a lease/purchase agreement to make it appear, consistent with DBE set-aside requirements for federally-funded highway projects, that a subcontractor (or supplier) owned the machine.
In paying the $140 thousand to settle allegations, the contractor did not admit to misconduct. The DoJ press release did not state the source of the allegations - whether from a whistleblower or someone within a transportation agency doing their job.