DOT Unveils Major New Rule to Boost Small Contractors

The U.S. Department of Transportation has unveiled a new proposed rule that aims to give small businesses a better chance to compete for contracts, including those associated with last year’s $1.5 trillion infrastructure law.

Transportation Secretary Pete Buttigieg told The Playbook the new DOT rule also aims to expand the nation’s contracting capacity.

“We are investing in America’s infrastructure at such a scale it’s going to test our ability as a country to supply the workforce, the materials and the business know-how to actually get it done,” Buttigieg said in an interview. “What that means is that we cannot afford to leave any talent on the table.”

Buttigieg said the DOT’s approach will involve some specific tools, including the new proposed rule.

The proposed rule includes adjustments to DOT’s Disadvantaged Business Enterprise and Airport Concession Disadvantaged Business Enterprise programs. A DBE is a business that is at least 51% owned by a socially or economically disadvantaged individual, which includes minority groups, women or those with disabilities within a certain income range.

What’s in the new DBE and Airport Concession DBE Program Implementation Modifications rule?

The proposed rule includes:

  • Adjusting the personal net worth calculation for eligibility from $1.32 million to $1.6 million and excluding retirement assets from the calculations
  • Simplifying overly prescriptive ownership and control certification eligibility requirements.
  • Simplifying the interstate certification process
  • Formally adopting Covid-19 flexibilities such as virtual onsite visits
  • Reducing reporting requirements for some Federal Transit Administration funding recipients
  • Empowering certified firms to better market themselves to prime contractors via expanded state directories
  • Helping more small businesses participate in Federal Aviation Administration-assisted airport projects by requiring airports to proactively remove obstacles and adopt more race-neutral strategies
  • Strengthening prompt payment monitoring and oversight requirements to help ensure that DBEs in all subcontracting tiers are promptly paid

The agency is accepting comments on the proposed rule through Sept. 19, 2022. The agency stressed that, after reviewing some of the issues raised by various stakeholders, many of the current rules are outdated.

“It’s just part of the work that we’ve been pursuing to make sure that we are getting real progress here, because we’re talking about a lot of money making its way through the American economy,” Buttigieg said. “Shame on us if that doesn’t create a bigger, stronger, more robust and more diverse base of businesses participating than we’ve ever had before.”

Buttigieg said the proposed rule was just the beginning of efforts to get more disadvantaged business enterprises into the pipeline. That also includes working to measure and gather data on their participation in the contracting process — as well as the role that prime contractors play in the process.

DOT resources for small businesses and DBE firms

The agency is also working on a number of other plans to bring more small businesses into the contracting pipeline, including:

  • Hosting a series of regional events that bring together multiple federal agencies, including DOT, SBA, the General Services Administration and the Minority Business Development Agency to help provide training, resources and help small-business owners navigate the contracting landscape.
  • Working with the SBA to see if it’s possible to connect DBEs with small business investment companies that are part of an SBA program to provide investments in qualified startups and businesses.
  • Working within informal channels to ensure the agency communicates better with small-business owners about potential opportunities, instead of the word-of-mouth style that may have dominated the landscape for decades before.

Buttigieg said it wasn’t just the goal to help grow small business contracting within DOT but to help create new small businesses as well. Having more businesses doing federal and state-level contracting work creates more competition.

“If we’re moving this much value through the American economy, we should see new businesses that weren’t there before,” Buttigieg said. “We should see businesses that are here today growing to a size they never have before, and we’ve got to be ready to help DBEs and the entire small business community every step of way.”

Buttigieg also mentioned the historic nature of the infrastructure bill, and how the agency is working to ensure there are the people, companies and resources to tackle all of the projects that will end up getting funded because of it.

“We’re setting out to do something at a level in the scale that hasn’t happened in my lifetime. Because of course, we’re doing it because it needs to be done and I’m looking forward to seeing how the private sector will rise to this moment,” Buttigieg said. “And I know that there will be businesses that are created, not to mention careers that are created in this moment because of this bill, that’ll be with us for decades. “

(Minneapolis/ St. Paul Business Journal)

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