Host: If you’re applying for, or are about to receive, money from the Department of Transportation’s Federal Transit Administration, there’s something you should know. Federal law requires that you have a DBE program in place that is designed to help small businesses, especially those who are owned and operated by women and minorities.

We want these businesses to grow and thrive alongside large businesses and we’re helping them do just that with a program known as the Disadvantaged Business Enterprise – DBE - Program. During the next few minutes, you’ll learn who needs to participate in this program and the benefits of doing so. In subsequent videos, you’ll learn even more details about how to participate in the DBE program.

Why is this important? In other words, why does FTA require transit agencies to have the DBE program in place?

Peter Rogoff: The Disadvantaged Business Enterprise Program really has its roots in the Civil Rights Act of 1964. It was as part of that act, that it was determined that there was ongoing discrimination in contracting for public works projects, be them highways or transit, and this program was established to give women and minority owned businesses a fair shot at competing for those contracts.

Instructor: Let’s start by defining the program. What exactly is a Disadvantaged Business Enterprise, or DBE, and who needs to participate in the program?

Per Federal regulation, a DBE is a small business that’s owned and controlled by one or more socially and economically disadvantaged individuals. It’s up to the individual states to certify that a business qualifies as a DBE. Once they’re certified, they may compete for business funded with FTA dollars.

So, what are the criteria for participation? Let’s say you’re a transit agency and you receive money from FTA. You have to have a DBE program, if you're going to spend $250,000 or more of FTA grant money on what we consider planning, capital, and operating activities.

Let’s explore that statement in a little more detail to help define what we mean by those activities.

Many small-to-midsize recipients receive funding from FTA for use in their operations; that is, funds used to ensure they can provide a service to the public. For example, direct FTA financial assistance might be used to pay for vehicle parts or uniforms for the drivers. Often times though, recipients use their FTA financial assistance to pay for their drivers’ salaries or benefits, which are not considered operating costs outside of their organization. Does such a grantee have to participate in the DBE program? It really just depends.

Let’s say you get $250,000 or more from FTA. You decide to apply that to your labor costs. So far, you don’t have to participate, because you haven’t used the funds for contracting, just for in-house expenses. Later in the year, however, you receive an additional $500,000 and you use that money to contract with an outside party to rehabilitate a bus depot. Now you must participate in the DBE program. Bottom line: If you get more than $250,000 of FTA’s money, and you use it for anything except labor costs and purchasing new transit vehicles you need to participate in the program.

Now let’s take this concept of getting the $250,000 or more one step further. Here’s a question we often get at FTA. We’ll get a call from a local transit agency and they’ll say: “We just received a bunch of money from our state transit agency. Do we have to participate?” Good question. Let’s illustrate it.

Let’s say FTA, in Washington, D.C. gives $300,000 to the state of Ohio to rehab maintenance facilities in the state. The State of Ohio distributes the money to three cities for this specific purpose: $100,000 to Canton, $100,000 to Lancaster, and $100,000 to Middletown. Does the state of Ohio need to participate in the DBE program? Yes. Why? Because they received over $250,000 from FTA and used this funding on contracting opportunities. Do the 3 respective cities need to participate? The answer is actually no and yes. No, they do not have to participate to the full extent that the state of Ohio does. But yes, they have to follow the DBE guidelines that the Ohio state government gives them.

In a case like this, the state and the cities have different responsibilities. Ohio must participate by setting goals and reporting results every six months to FTA. The three cities participate by accepting and fulfilling the goals that Ohio has established. For example, the cities might set DBE contract goals on the contracts they issue using FTA funds.

The state of Ohio has a legal duty to make sure its three cities participate in the DBE program.

Let’s explore a little more of what triggers DBE program requirements, still using Ohio as our example. If the state receives $800,000 from FTA and uses $200,000 to purchase concrete to replace the flooring in its maintenance facility, $200,000 to purchase janitorial services, and $400,000 on salaries for employees, does Ohio have to participate in a DBE program? The answer is “yes.” Why? Because FTA considers the purchase of concrete and janitorial services to be activities for which Ohio will be contracting. Remember, Ohio received more than $250,000 from FTA for those activities. If Ohio had not received $250,000 from FTA, it would not have to participate in the DBE program.

Let’s now vary the example. Lancaster, Ohio decides it wants to provide a new transit service and is awarded a $500,000 federal grant from FTA to provide that service. Remember, Lancaster previously received FTA funds through the Ohio state government and had to follow its direction on DBE participation. But now, since Lancaster is receiving funds directly from FTA, Lancaster must have a DBE program in place before it can spend the first Federal dollar on any activity. This is an important point and comes directly from Federal regulations.

You are not eligible to receive FTA financial assistance unless FTA has approved your DBE program and you are in compliance with it.

So, Lancaster has some work to do in advance of spending any money on its new transit service. It has to develop a DBE program, submit it to FTA for approval, receive FTA’s approval, and follow what is in its DBE program as it spends FTA grant funds.

Let’s review what activities by transit agencies will trigger the requirement to have a DBE program in place.

You already know that $250,000 or more in a fiscal year is the magic number that will trigger the requirement for you to have a DBE program. What your transit agency does with that money is the other factor to consider when answering the question: “Do I need a DBE program?” If your transit agency contracts for services like building or designing a new facility, purchasing bus parts or even activities as routine as cleaning carpets, purchasing office supplies or landscaping, these are all considered by FTA as contracting opportunities that could be won by a DBE. If it can be done by a DBE, it can be won by a DBE, and your transit agency has to have a DBE program in place.

You still may be wondering why FTA puts in the effort to require transit agencies to have the DBE program in place, but most importantly how does this program benefit you?

Peter Rogoff: Well the DBE program does present an opportunity for a win-win. It’s a win for the project sponsor and a win for the community. We want the residents of those communities to be able to benefit from the public investment in that community. The majority of employment growth in the United States comes from small business and when we can give these jobs to small businesses it’s also an opportunity for people who might have been excluded from the relevant workforce to get trained and work within that workforce and have greater employment opportunities in the future. Small businesses are the economic engine of the country and when we can include them in major public works projects we should.

Host: At FTA, we know it can be daunting when you first begin the DBE process. We’re here to help. We’ll provide training to your team and answer your individual questions. We also hope you’ll use our website to find valuable information.

But don’t hesitate to reach out to us if we can address any of your issues. Because we know how important it is for transit agencies to include DBE’s in spending considerations. We’ve seen proof that the program, plan and the process work, and we look forward to your participation.