Understanding the Disadvantaged Business Enterprise (DBE) Program

How do communities ensure equitable opportunities for development? Enter the Disadvantaged Business Enterprise (DBE) program.

In April 2022, to expand public transportation accessibility, Kansas City, Missouri, began construction on a $351.6 million streetcar expansion project. The Main Street Extension of the Kansas City Streetcar line will, when completed, offer new public transit access from downtown to the University of Missouri, connecting the KC region with the heart of the city. The extension will further create opportunities for commerce and business along the new route. But what opportunities are there before the ground is broken, and are they equitable? When a city selects a construction entity, are small, minority-owned businesses considered? The Disadvantaged Business Enterprise (DBE) program exists to answer these questions.

Disadvantaged Business Enterprise Program (DBE) Overview

This program was established by the federal government in 1983 to ensure some measure of equity in the distribution of funds to small businesses owned by socially and economically disadvantaged individuals.

The federal government recognized a need to level the playing field in the competition for winning federally funded transportation projects by requiring a minimum of 10 percent of all awarded funding be delegated to businesses that otherwise may lose opportunities due to gender, racial, and economic bias.

The DBE program is overseen by the U.S. Department of Transportation (DOT), and approximately 85 percent of DBE funding is allocated to construction projects and funneled through primarily three of DOT's operating administrations: the Federal Transit Administration, the Federal Highway Administration, and the Federal Aviation Administration.

Projects such as the Main Street Extension in Kansas City, which is funded in part by the FTA, have exceeded the minimum 10 percent by setting a DBE goal of 20.2 percent. As of September 2022, the city is more than halfway to its goal of contracting DBE firms for the entire project, which is scheduled for completion by 2025.

What Makes a Business DBE Eligible?

DOT's regulations specify that a DBE-eligible business must have a minimum of 51 percent ownership by a person considered socially and economically disadvantaged. This includes female-identifying persons and minorities designated as disadvantaged by the U.S. Small Business Administration (SBA).

Further, a DBE-eligible entity must meet the requirements of being a small business as outlined by the SBA; the disadvantaged person in ownership cannot have a net worth of more than $1.3 million. More information about eligibility standards and guidelines for certification as a small business DBE is available on the DOT website.

Programs like DBE are a foundation to achieve equity and fairness in the world of planning. By enforcing a minimum requirement for small businesses owned by disadvantaged individuals, DBE is merely opening the door for opportunity and access.

However, like in the case of Kansas City, the door is pushed wider by increasing DOT's DBE goal. This not only offers more opportunities for DBE-eligible entities but pushes the needle of progress further in municipalities and our communities as a whole.

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