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Economics

U.S. DOT Proposes Giving Minority-Owned Firms Greater Shot at Contracts

12:20 PM PDT on May 7, 2010

Women- and minority-owned companies would have an easier
time winning federal transportation contracts under a new rule released
by the Obama administration today, which comes in the wake of complaints
from social-equity advocates that such firms had received
just 2 percent
of infrastructure contracts awarded under last
year's economic stimulus law.

PRFCN012.jpg(Photo: CA
DOT
)

The new rule would increase to $1.3 million the maximum owner's net
worth required to classify a company as a "disadvantaged business
enterprises" (DBE), qualifying it for federal assistance in winning
contracts on the state and local level. Under the existing program,
owners of DBEs were required to earn $750,000 or less per year, an
income level that was last adjusted 20 years ago.

State DOTs also would face stronger monitoring requirements to
ensure their DBE hiring targets are met, according to a release from
Transportation Secretary Ray LaHood's office.

The new rule asks states to monitor transport contractors to ensure
their promises to use DBE subcontractors are kept, and states that fail
to meet DBE hiring goals would have to submit a remedy to Washington
that would increase deals with women- and minority-owned firms.

Finally, the rule would eliminate the need for businesses to obtain
DBE status in multiple states, requiring one state DOT to accept
another's DBE certification "unless it found good reason not to," the
U.S. DOT stated.

LaHood launched
a $20 million bonding program last year, as well as a task force to
examine strategies for increasing women- and minority-owned contractors'
presence in the transport work force. But a February
report
that DBEs had won less than $1 billion in business from the
stimulus law's $48 billion infrastructure pot fueled more contention
over access.

The new rule is now in a preliminary format, with public comments
accepted by the U.S. DOT until July.

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