In 1989, the DOT limit on personal net worth for owners of Disadvantaged Businesses Enterprises was set at $750,000. Owners whose net worth rose beyond that threshold would have their businesses removed from our DBE program. Until last week, it had not changed for 21 years.
But on Friday, the Obama Administration proposed a new rule that would raise that limit to $1.3 million, adjusted for inflation. That change was part of an overhaul of our DBE program that--if enacted--will bring broader inclusion to women and minority-owned businesses.
DOT's Office of Small and Disadvantaged Business Utilization helps small businesses that are majority-owned and managed by socially and economically disadvantaged individuals. Through a range of services like bonding-assistance and matchmaking--we help these DBEs compete for contracts on federal highway, transit, and airport construction jobs.
We also require state and local transportation agencies to establish goals for small business participation. So, another provision of our proposed changes is to ask states that fail to meet their goals analyze the reasons for low DBE participation and initiate remedial actions to raise that participation.
After all, if you don't meet your goals, it makes sense to figure out why and take action to fix that problem.
Now, a lot of the work small businesses secure through our program comes as sub-contracts. Generally, this means that a larger business gets the contract for a transportation project. Then, that large contractor--the 'prime'--hires other companies to do different kinds of work on the components of that project.
The goal of our program is to make sure that DBEs have the chance to compete on an equal footing with larger businesses for those subcontracts and that prime contractors consider these enterprises when looking for subcontractors.
Among the proposed changes are safeguards to ensure that prime contractors honor their commitments to consider small and disadvantaged businesses for subcontracts. States will have to do a better job of monitoring primes, and primes will need good reasons for passing over DBEs.
We're also proposing that businesses that have qualified in one state be more easily accepted into the programs of other states.
Yes, these are important changes that can help small businesses owned and controlled by women and minorities. But when we help small businesses, we help get the economy going.
And that's good for all of us.