The Impact of DOT's New Rule on DBEs and ACDBEs

On January 27, U.S. DOT Secretary Ray LaHood announced a final rule that would implement two major changes to the Disadvantaged Business Enterprise (DBE) certification requirements: 1) an increase in the personal net worth (PNW) standard from $750,000 to...

If good cause is shown, State B must send the company a detailed notice within 60 days from the date State B received the company’s application. Once this notice is received, the company may respond in writing or request to meet with State B’s reviewing agency. If such a meeting is requested, then the meeting must be scheduled to occur within 30 days of State B’s receipt of the request. The company bears the burden of showing by a preponderance of evidence that it meets all of the requirements of Part 26 with respect to the particular issues raised by State B’s notice. A final decision must be issued within 30 days of the company’s written response or meeting with the reviewing agency.

Compliance with the Ruling on reciprocity will not be made mandatory until January 1, 2012, in order to provide additional time for reviewing agencies to participate in training opportunities and implement any administrative procedures to carry out the ruling on reciprocity. Until then, this expedited form of interstate certification may not be available in all states.

ACDBE operators are hoping for a similar ruling whereby they are afforded reciprocity. This too is an area where, in the interim, certifying bodies are inconsistently adhering to a protocol that results in reciprocity.

There are some certifying bodies that have adopted this approach as it relates to ACDBEs and there are others that take the position that it does not yet apply, and that unless there is an additional ruling circulated, it will not apply on the effective date of January 1, 2012.

In conclusion, ACDBE operators are looking to DOT to quickly issue a corresponding ruling which addresses: 1) an increase in the personal net worth standard from $750,000 to $1.32 million for principals with an interest of 51 percent or more in an ACDBE certified company; and 2) the concept of interstate reciprocity, which would allow for ACDBE companies already certified in their home state to obtain certification in other states on an expedited basis.

A corresponding ruling would help effect a positive impact for ACDBE operators and be more closely aligned with DOT’s original intent in issuing its ruling amending the DBE regulations.

On May 27, DOT issued a notice of proposed rulemaking proposing conforming amendments to DOT’s ACDBE regulation. The comment period ends on July 26, 2011.

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