The National Academies

NCHRP 20-95A [Completed]

Compendium of Successful Practices, Strategies, and Resources in the FHWA Disadvantaged Business Enterprise (DBE) Program

  Project Data
Funds: $175,000
Research Agency: Keen Independent Research LLC
Principal Investigator: David Keen
Effective Date: 4/10/2017
Completion Date: 7/9/2018

The U.S. Department of Transportation Federal Highway Administration (FHWA) Disadvantaged Business Enterprise (DBE) program provides small businesses, owned and controlled by socially and economically disadvantaged persons, with opportunities to participate--both as prime and subcontractors--on federally assisted highway contracts. DBEs include both construction contractors and professional services consultants. DBEs participate as subcontractors primarily as a result of a prime contractor’s obligation to meet a DBE contract goal, i.e., subcontract a certain percentage of the contract to certified DBEs. As a requirement of receiving federal highway funds, state departments of transportation (state DOTs) are obligated to administer a DBE program. FHWA provides oversight of the state DOTs’ DBE programs to ensure they are implemented in conformance with the governing federal regulations. In addition to its oversight responsibilities, FHWA has statutory authority to allocate up to $10 million annually to provide supportive services to DBEs. The $10 million is allocated among the state DOTs by formula, and FHWA requires each state to submit a qualified statement of work prior to allocation. As of 2015, FHWA requires state DOTs accepting DBE Supportive Services funds to administer business development programs for certified DBEs. These programs are designed to evaluate participating DBEs and create programs tailored to specific firms’ strengths and weaknesses. The program goal is to increase a DBE’s ability to compete on federally assisted contracts by building capacity and successful business practices.  The U.S. General Accounting Office (GAO) found that FHWA, through the state DOTs, has successfully provided opportunities for DBEs to compete for contracts in the federal-aid highway program. Of the thousands of firms that participate in the DBE program nationally, there are a significant number of successes.  A certified DBE “graduates” from the program if its owner exceeds the regulatory personal net worth cap or if the business’s annual gross receipts exceed the regulatory small business size cap. Although it may be a good indicator, graduation from the program does not necessarily determine whether a firm will be able to successfully compete for contracts outside of the DBE program. Information is needed on the business practices and experiences of successful DBE firms that have either graduated from the program or actively participate in the program, and the role of the DBE program and/or DBE Supportive Services in contributing to that success. Additionally, there is a need to better understand: (1) good practices to promote success and create self-sufficiency within and outside of the DBE program; (2) characteristics, business practices, and behaviors of DBEs that graduate from the program; (3) whether graduates of the DBE program are able to survive on their own, without the program benefits; and (4) specific practices of state DOTs in administering the program that have contributed to a DBE’s participation in the program and ultimate success.
The objective of this research is to develop a compendium of practices that have been most beneficial to those firms that have graduated from the DBE program or have successfully competed within the program, both through the state DOTs’ implementation of the program requirements and through participating in Supportive Services such as business development programs. This research is looking for specific strategies, experiences, and resources that can be used by DBE firms; state DOTs, with the support of FHWA; and service providers in implementing a successful DBE program. This compendium will (1) document business practices and experiences of successful DBE firms and assess their potential for broad application, (2) present matrices that illustrate key features of state DOT DBE programs that contribute to the success of DBE firms, and (3) provide case studies that feature application to real-world challenges and successes in the participation and administration of DBE programs. Accomplishment of the project objective will require at least the following tasks.
STATUS: Completed; Pending Publication  

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