DOT Set to Release DBE Rule Revisions – Many of AGC Concerns Addressed

The U.S. Department of Transportation (DOT) is about to release revisions to its disadvantaged business enterprise utilization (DBE) rules. The new rules were first proposed in September 2012 and, while considered by DOT to be “minor” adjustments, they will have a significant impact on the highway construction industry. Among the changes, as proposed, prime contractors on Federal-aid highway contracts with DBE goals would have been required to submit with their bid a list of all DBE subcontractors to be used on the project, including the scope of work to be performed, the value of the subcontract and a letter from the DBE verifying these facts. In addition, if the prime contractor did not meet the contract goal, information on all quotes from both DBE and non-DBE subcontractors would have to be submitted with the bid to demonstrate “good faith efforts.” AGC objected vocally to these proposed changes, submitted extensive written comments for the record and held several meetings with top DOT officials to explain the real world impact of these changes if adopted. AGC members also responded and submitted over 100 letters on the proposal. AGC received an advance copy of the new rules and we are pleased to announce that the new rules drop this onerous requirement and instead will allow a 7 day window following bid submittal for the apparent low bidder to submit the list of proposed DBE utilization. This time limit will be reduced to 5 days in January 2017. AGC’s comments also addressed numerous other proposed rule changes and many of AGC’s suggestions were adopted. The new rules adopted AGC’s comment that “race neutral” activities that can be counted by states to meet their annual DBE goals should include participation by DBEs that are awarded contracts as prime contractors, and DBE subcontractors that are awarded subcontracts on contracts that do not have a goal. AGC also recommended that states be allowed to use a list of DBE businesses that have actually participated or submitted bids on contracts as a basis for establishing annual goals. The final rules have been presented to Secretary Foxx for his signature which is expected and then will be published in the Federal Register within the next two weeks. Contractors can expect to see these new requirements show up in bid solicitations in the coming months. AGC will provide a detailed explanation of the rules when they are formally released.