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Getting to know California's DBE program

Most businesses involved in bidding on public contracts in California will encounter disadvantaged business enterprise (DBE) participation goals and good faith effort requirements.

In California, the DBE program is administered by the California Department of Transportation (Caltrans), which in addition to establishing DBE participation goals also certifies firms that want to participate in the DBE Program. Typically, firms that qualify as DBE are over 51% owned by an individual considered disadvantaged, which includes women, Black Americans, Hispanic Americans, Native Americans, Asian-Pacific Americans, Subcontinent Asian-Pacific Americans, or other minorities found to be disadvantaged by the U.S. Small Business Administration (SBA). In addition to being owned by a disadvantaged individual, the business must be under a certain size, its owners must have less than a particular net worth, be independent of other firms, and demonstrably under the control of the disadvantaged individual.

According to the Caltrans, the main objectives of the DBE Program are:

• To ensure that small, disadvantaged business enterprises can compete fairly for federally funded transportation-related projects.
• To ensure that only eligible firms participate as DBEs.
• To assist DBE firms in competing outside the DBE Program.

The program began in 1983, when Congress enacted the first Disadvantaged Business Enterprise (DBE) statutory provision. The provision required the federal Department of Transportation (USDOT) to ensure that at least 10% of the funds authorized for the highway and transit federal financial assistance programs be awarded to DBE firms in the hopes of creating a level playing field for contractors seeking access to government contracts. Congress re-authorized and amended the statutory DBE program in 1987, which had the major effect of adding women to the groups presumed to be disadvantaged. Since 1987, the USDOT has established a single DBE goal which encompasses both firms owned by women and minority group members.

The three major DOT Operating Administrations are involved all involved in the DBE program. They are the Federal Highway Administration, the Federal Aviation Administration and the Federal Transit Administration. The USDOT DBE program is carried out by state and local transportation agencies accepting funds from any of the three Operating Agencies under the rules and guidelines in the Code of Federal Regulations (Title 49, Part 26.) The FAA also maintains a separate DBE program for concessions in airports under (Title 49, Part 23).