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DBE Final Rule
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Subpart A--General
This part seeks to achieve several objectives:
(a) To ensure nondiscrimination in the award and administration of
DOT-assisted contracts in the Department's highway, transit, and
airport financial assistance programs;
(b) To create a level playing field on which DBEs can compete
fairly for DOT-assisted contracts;
(c) To ensure that the Department's DBE program is narrowly
tailored in accordance with applicable law;
(d) To ensure that only firms that fully meet this part's
eligibility standards are permitted to participate as DBEs;
(e) To help remove barriers to the participation of DBEs in DOT-
assisted contracts;
(f) To assist the development of firms that can compete
successfully in the marketplace outside the DBE program; and
(g) To provide appropriate flexibility to recipients of Federal
financial assistance in establishing and providing opportunities for
DBEs.
(a) If you are a recipient of any of the following types of funds,
this part applies to you:
(1) Federal-aid highway funds authorized under Titles I (other than
Part B) and V of the Intermodal Surface Transportation Efficiency Act
of 1991 (ISTEA), Pub. L. 102-240, 105 Stat. 1914, or Titles I, III, and
V of the Transportation Equity Act for the 21st Century (TEA-21), Pub.
L. 105-178, 112 Stat. 107.
(2) Federal transit funds authorized by Titles I, III, V and VI of
ISTEA, Pub. L. 102-240 or by Federal transit laws in Title 49, U.S.
Code, or Titles I, III, and V of the TEA-21, Pub. L. 105-178.
(3) Airport funds authorized by 49 U.S.C. 47101, et seq.
(b) [Reserved]
(c) If you are letting a contract, and that contract is to be
performed entirely outside the United States, its territories and
possessions, Puerto Rico, Guam, or the Northern Marianas Islands, this
part does not apply to the contract.
(d) If you are letting a contract in which DOT financial assistance
does not participate, this part does not apply to the contract.
Affiliation has the same meaning the term has in the Small Business
Administration (SBA) regulations, 13 CFR part 121.
(1) Except as otherwise provided in 13 CFR part 121, concerns are
affiliates of each other when, either directly or indirectly:
(i) One concern controls or has the power to control the other; or
(ii) A third party or parties controls or has the power to control
both; or
(iii) An identity of interest between or among parties exists such
that affiliation may be found.
(2) In determining whether affiliation exists, it is necessary to
consider all appropriate factors, including common ownership, common
management, and contractual relationships. Affiliates must be
considered together in determining whether a concern meets small
business size criteria and the statutory cap on the participation of
firms in the DBE program.
Alaska Native means a citizen of the United States who is a person
of one-fourth degree or more Alaskan Indian (including Tsimshian
Indians not enrolled in the Metlaktla Indian Community), Eskimo, or
Aleut blood, or a combination of those bloodlines. The term includes,
in the absence of proof of a minimum blood quantum, any citizen whom a
Native village or Native group regards as an Alaska Native if their
father or mother is regarded as an Alaska Native.
Alaska Native Corporation (ANC) means any Regional Corporation,
Village Corporation, Urban Corporation, or Group Corporation organized
under the laws of the State of Alaska in accordance with the Alaska
Native Claims Settlement Act, as amended (43 U.S.C. 1601, et seq.).
Compliance means that a recipient has correctly implemented the
requirements of this part.
Contract means a legally binding relationship obligating a seller
to furnish supplies or services (including, but not limited to,
construction and professional services) and the buyer to pay for them.
Contractor means one who participates, through a contract or
subcontract (at any tier), in a DOT-assisted highway, transit, or
airport program.
Department or DOT means the U.S. Department of Transportation,
including the Office of the Secretary, the Federal Highway
Administration (FHWA), the Federal Transit Administration (FTA), and
the Federal Aviation Administration (FAA).
Disadvantaged business enterprise or DBE means a for-profit small
business concern--
(1) That is at least 51 percent owned by one or more individuals
who are both socially and economically disadvantaged or, in the case of
a corporation, in which 51 percent of the stock is owned by one or more
such individuals; and
(2) Whose management and daily business operations are controlled
by one or more of the socially and economically disadvantaged
individuals who own it.
DOT-assisted contract means any contract between a recipient and a
contractor (at any tier) funded in whole or in part with DOT financial
assistance, including letters of credit or loan guarantees, except a
contract solely for the purchase of land.
Good faith efforts means efforts to achieve a DBE goal or other
requirement of this part which, by their scope, intensity, and
appropriateness to the objective, can reasonably be expected to fulfill
the program requirement.
Immediate family member means father, mother, husband, wife, son,
daughter, brother, sister, grandmother, grandfather, grandson,
granddaughter, mother-in-law, or father-in-law.
Indian tribe means any Indian tribe, band, nation, or other
organized group or community of Indians, including any ANC, which is
recognized as eligible for the special programs and services provided
by the United States to Indians because of their status as Indians, or
is recognized as such by the State in which the tribe, band, nation,
group, or community resides. See definition of ``tribally-owned
concern'' in this section.
Joint venture means an association of a DBE firm and one or more
other firms to carry out a single, for-profit business enterprise, for
which the parties combine their property, capital, efforts, skills and
knowledge, and in which the DBE is responsible for a distinct, clearly
defined portion of the work of the contract and whose share in the
capital contribution, control, management, risks, and profits of the
joint venture are commensurate with its ownership interest.
Native Hawaiian means any individual whose ancestors were natives,
prior to 1778, of the area which now comprises the State of Hawaii.
Native Hawaiian Organization means any community service
organization serving Native Hawaiians in the State of Hawaii which is a
not-for-profit organization chartered by the State of Hawaii, is
controlled by Native Hawaiians, and whose business activities will
principally benefit such Native Hawaiians.
Noncompliance means that a recipient has not correctly implemented
the requirements of this part.
Operating Administration or OA means any of the following parts of
DOT: the Federal Aviation Administration (FAA), Federal Highway
Administration (FHWA), and Federal Transit Administration (FTA). The
``Administrator'' of an operating administration includes his or her
designees.
Personal net worth means the net value of the assets of an
individual remaining after total liabilities are deducted. An
individual's personal net worth does not include: The individual's
ownership interest in an applicant or participating DBE firm; or the
individual's equity in his or her primary place of residence. An
individual's personal net worth includes only his or her own share of
assets held jointly or as community property with the individual's
spouse.
Primary industry classification means the four digit Standard
Industrial Classification (SIC) code designation which best describes
the primary business of a firm. The SIC code designations are described
in the Standard Industry Classification Manual. As the North American
Industrial Classification System (NAICS) replaces the SIC system,
references to SIC codes and the SIC Manual are deemed to refer to the
NAICS manual and applicable codes. The SIC Manual and the NAICS Manual
are available through the National Technical Information Service (NTIS)
of the U.S. Department of Commerce (Springfield, VA, 22261). NTIS also
makes materials available through its web site (www.ntis.gov/naics).
Primary recipient means a recipient which receives DOT financial
assistance and passes some or all of it on to another recipient.
Principal place of business means the business location where the
individuals who manage the firm's day-to-day operations spend most
working hours and where top management's business records are kept. If
the offices from which management is directed and where business
records are kept are in different locations, the recipient will
determine the principal place of business for DBE program purposes.
Program means any undertaking on a recipient's part to use DOT
financial assistance, authorized by the laws to which this part
applies.
Race-conscious measure or program is one that is focused
specifically on assisting only DBEs, including women-owned DBEs.
Race-neutral measure or program is one that is, or can be, used to
assist all small businesses. For the purposes of this part, race-
neutral includes gender-neutrality.
Recipient is any entity, public or private, to which DOT financial
assistance is extended, whether directly or through another recipient,
through the programs of the FAA, FHWA, or FTA, or who has applied for
such assistance.
Secretary means the Secretary of Transportation or his/her
designee.
Set-aside means a contracting practice restricting eligibility for
the competitive award of a contract solely to DBE firms.
Small Business Administration or SBA means the United States Small
Business Administration.
Small business concern means, with respect to firms seeking to
participate as DBEs in DOT-assisted contracts, a small business concern
as defined pursuant to section 3 of the Small Business Act and Small
Business Administration regulations implementing it (13 CFR part 121)
that also does not exceed the cap on average annual gross receipts
specified in Sec. 26.65(b).
Socially and economically disadvantaged individual means any
individual who is a citizen (or lawfully admitted permanent resident)
of the United States and who is--
(1) Any individual who a recipient finds to be a socially and
economically disadvantaged individual on a case-by-case basis.
(2) Any individual in the following groups, members of which are
rebuttably presumed to be socially and economically disadvantaged:
(i) ``Black Americans,'' which includes persons having origins in
any of the Black racial groups of Africa;
(ii) ``Hispanic Americans,'' which includes persons of Mexican,
Puerto Rican, Cuban, Dominican, Central or South American, or other
Spanish or Portuguese culture or origin, regardless of race;
(iii) ``Native Americans,'' which includes persons who are American
Indians, Eskimos, Aleuts, or Native Hawaiians;
(iv) ``Asian-Pacific Americans,'' which includes persons whose
origins are from Japan, China, Taiwan, Korea, Burma (Myanmar), Vietnam,
Laos, Cambodia (Kampuchea), Thailand, Malaysia, Indonesia, the
Philippines, Brunei, Samoa, Guam, the U.S. Trust Territories of the
Pacific Islands (Republic of Palau), the Commonwealth of the Northern
Marianas Islands, Macao, Fiji, Tonga, Kirbati, Juvalu, Nauru, Federated
States of Micronesia, or Hong Kong;
(v) ``Subcontinent Asian Americans,'' which includes persons whose
origins are from India, Pakistan, Bangladesh, Bhutan, the Maldives
Islands, Nepal or Sri Lanka;
(vi) Women;
(vii) Any additional groups whose members are designated as
socially and economically disadvantaged by the SBA, at such time as the
SBA designation becomes effective.
Tribally-owned concern means any concern at least 51 percent owned
by an Indian tribe as defined in this section.
You refers to a recipient, unless a statement in the text of this
part or the context requires otherwise (i.e., `You must do XYZ' means
that recipients must do XYZ).
(a) You must never exclude any person from participation in, deny
any person the benefits of, or otherwise discriminate against anyone in
connection with the award and performance of any contract covered by
this part on the basis of race, color, sex, or national origin.
(b) In administering your DBE program, you must not, directly or
through contractual or other arrangements, use criteria or methods of
administration that have the effect of defeating or substantially
impairing accomplishment of the objectives of the program with respect
to individuals of a particular race, color, sex, or national origin.
under this part?
(a) This part applies instead of subparts A and C through E of 49
CFR part 23 in effect prior to March 4, 1999. (See 49 CFR Parts 1 to
99, revised as of October 1, 1998.) Only guidance and interpretations
(including interpretations set forth in certification appeal decisions)
consistent with this part 26 and issued after March 4, 1999 have
definitive, binding effect in implementing the provisions of this part
and constitute the official position of the Department of
Transportation.
(b) The Secretary of Transportation, Office of the Secretary of
Transportation, FHWA, FTA, and FAA may issue written interpretations of
or written guidance concerning this part. Written interpretations and
guidance are valid and binding, and constitute the official position of
the Department of Transportation, only if they are issued over the
signature of the Secretary of Transportation or if they contain the
following statement:
The General Counsel of the Department of Transportation has
reviewed this document and approved it as consistent with the
language and intent of 49 CFR part 26.
(a) [Reserved]
(b) You must continue to provide data about your DBE program to the
Department as directed by DOT operating administrations.
(c) You must create and maintain a bidders list, consisting of all
firms bidding on prime contracts and bidding or quoting subcontracts on
DOT-assisted projects. For every firm, the following information must
be included:
(1) Firm name;
(2) Firm address;
(3) Firm's status as a DBE or non-DBE;
(4) The age of the firm; and
(5) The annual gross receipts of the firm.
(a) Each financial assistance agreement you sign with a DOT
operating administration (or a primary recipient) must include the
following assurance:
The recipient shall not discriminate on the basis of race,
color, national origin, or sex in the award and performance of any
DOT-assisted contract or in the administration of its DBE program or
the requirements of 49 CFR part 26. The recipient shall take all
necessary and reasonable steps under 49 CFR part 26 to ensure
nondiscrimination in the award and administration of DOT-assisted
contracts. The recipient's DBE program, as required by 49 CFR part
26 and as approved by DOT, is incorporated by reference in this
agreement. Implementation of this program is a legal obligation and
failure to carry out its terms shall be treated as a violation of
this agreement. Upon notification to the recipient of its failure to
carry out its approved program, the Department may impose sanctions
as provided for under part 26 and may, in appropriate cases, refer
the matter for enforcement under 18 U.S.C. 1001 and/or the Program
Fraud Civil Remedies Act of 1986 (31 U.S.C. 3801 et seq.).
(b) Each contract you sign with a contractor (and each subcontract
the prime contractor signs with a subcontractor) must include the
following assurance:
The contractor, sub recipient or subcontractor shall not
discriminate on the basis of race, color, national origin, or sex in
the performance of this contract. The contractor shall carry out
applicable requirements of 49 CFR part 26 in the award and
administration of DOT-assisted contracts. Failure by the contractor
to carry out these requirements is a material breach of this
contract, which may result in the termination of this contract or
such other remedy as the recipient deems appropriate.
Question and Answer
(a) You can apply for an exemption from any provision of this part.
To apply, you must request the exemption in writing from the Office of
the Secretary of Transportation, FHWA, FTA, or FAA. The Secretary will
grant the request only if it documents special or exceptional
circumstances, not likely to be generally applicable, and not
contemplated in connection with the rulemaking that established this
part, that make your compliance with a specific provision of this part
impractical. You must agree to take any steps that the Department
specifies to comply with the intent of the provision from which an
exemption is granted. The Secretary will issue a written response to
all exemption requests.
(b) You can apply for a waiver of any provision of Subpart B or C
of this part including, but not limited to, any provisions regarding
administrative requirements, overall goals, contract goals or good
faith efforts. Program waivers are for the purpose of authorizing you
to operate a DBE program that achieves the objectives of this part by
means that may differ from one or more of the requirements of Subpart B
or C of this part. To receive a program waiver, you must follow these
procedures:
(1) You must apply through the concerned operating administration.
The application must include a specific program proposal and address
how you will meet the criteria of paragraph (b)(2) of this section.
Before submitting your application, you must have had public
participation in developing your proposal, including consultation with
the DBE community and at least one public hearing. Your application
must include a summary of the public participation process and the
information gathered through it.
(2) Your application must show that--
(i) There is a reasonable basis to conclude that you could achieve
a level of DBE participation consistent with the objectives of this
part using different or innovative means other than those that are
provided in subpart B or C of this part;
(ii) Conditions in your jurisdiction are appropriate for
implementing the proposal;
(iii) Your proposal would prevent discrimination against any
individual or group in access to contracting opportunities or other
benefits of the program; and
(iv) Your proposal is consistent with applicable law and program
requirements of the concerned operating administration's financial
assistance program.
(3) The Secretary has the authority to approve your application. If
the Secretary grants your application, you may administer your DBE
program as provided in your proposal, subject to the following
conditions:
(i) DBE eligibility is determined as provided in subparts D and E
of this part, and DBE participation is counted as provided in
Sec. 26.49;
(ii) Your level of DBE participation continues to be consistent
with the objectives of this part;
(iii) There is a reasonable limitation on the duration of your
modified program; and
(iv) Any other conditions the Secretary makes on the grant of the
waiver.
(4) The Secretary may end a program waiver at any time and require
you to comply with this part's provisions. The Secretary may also
extend the waiver, if he or she determines that all requirements of
paragraphs (b)(2) and (3) of this section continue to be met. Any such
extension shall be for no longer than period originally set for the
duration of the program.
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