prime contractors and subs .”
The changes also raise the personal net worth ceilings for owners of DBEs , address prompt payment requirements on jobs and create more stringent guidelines for actual , physical participation of DBE companies on projects .
No ‘ strawman ’ companies
This participation aspect stems from cases where prime contractors paid kickbacks to DBEs to use their company names on bids , but then didn ’ t actually utilize them on jobs once they were in place .
In other words , DBE “ owners must have day-to-day and long-term control and management over the company and not merely be a strawman ,” Prosen wrote in a blog post on the new final rule .
The changes mean both prime contractors , as well as subs or others who wish to participate as DBEs , will need to sharpen their pencils during the bid and application process , as well as their attention to detail when monitoring for compliance after an award is made .
“ They can ’ t just say , ‘ We ’ re going to meet a goal ,’” said Keith Wiener , a partner who specializes in state and local government procurement law at Holland & Knight in Atlanta . “ They have to specify a plan that details what DBEs they ’ re going to use , who they ’ re going to solicit to perform , and what type of time frame is going to be involved .”
Specific aspects of the final rule include :
■ Streamlined certification : Companies can now be certified as a DBE just once , instead of needing to do so with each individual state .
■ Higher personal net worth amount : The cap for owners of DBE companies is now $ 2.047 million , up from $ 1.32 million set in 2011 . Notably , retirement assets are now excluded from this calculation , a move lawyers say should increase the pool of potential applicants .
■ Virtual certification : Certifiers can use the same processes employed during COVID-19 lockdowns , including virtual on-site visits to verify eligibility .
■ For design-build projects , contractors must submit an open-ended DBE Performance Plan with their bids . This means that instead of just saying they ’ ll employ a certain percentage of DBEs on a project , they have to outline how they plan to use them and when the subcontracts will come to fruition .
■ Stronger monitoring and prompt payment requirements that provide check ins for ongoing use of DBEs throughout a project and reporting mechanisms for DBEs when they don ’ t get paid .
Silent on ‘ rebuttable presumption ’
Perhaps surprisingly , the final rule does not explicitly address the recent legal challenges to the program in the wake of the Supreme Court ’ s decision last summer that affirmative action programs in college admissions are unconstitutional .
Piggybacking on that ruling , a handful of lawsuits have challenged DOT ’ s DBE program , using the argument that it unfairly discriminates against contractors who are not part of the groups designated by it .
Similar suits were already successful in prompting changes in the Small Business Administration ’ s 8a program , which also
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