Companion Guide to Video August 2012

www.fhwa.dot.gov/federal-aidessentials

Every three years, State departments of 

transportation, or State DOTs, are required to 

establish an annual overall Disadvantaged 

Business Enterprise, or DBE goal. Establishing 

these goals helps ensure that DBEs have the 

opportunity to participate on DOT- assisted 

contracts. Each State must meet its annual goal 

each year within the three-year cycle. If you 

accept Federal-aid funds, through your State DOT, 

you are required to help meet that goal and report 

DBE participation on your Federal-aid contracts to 

the State DOT. 

Overall goals are stated as a percentage of the 

Federal-aid funds expended by your State DOT. 

For example, an overall DBE goal is stated as, 

“4.15 percent or 12.5 percent.” 

To help your State DOT meet its overall goal, 

agencies set DBE contract goals on Federal-aid 

contracts, as appropriate. It's essential that your 

local public agency, or LPA, understand how 

contract goals are established and what it can do to 

ensure good faith efforts are made to meet the 

goals. 

Let's take a look at how your LPA 

might establish, monitor and enforce 

DBE contract goals, and report DBE 

participation.

Any contract on a Federal-aid project that has 

subcontracting possibilities, such as a project that 

includes landscaping or guardrails, is a good 

candidate for a DBE contract goal. When 

establishing contract goals, your LPA will follow 

your State’s DBE plan unless directed otherwise. 

Some State DOTs set contract goals for their LPAs.

Civil Rights

Disadvantaged Business Enterprise

DBE Contract Goals

Agencies are required to help meet Disadvantaged Business 

Enterprise goals on Federal-aid projects
Federal-aid Essentials for Local Public Agencies

While there is no prescribed goal amount or 

method, factors to consider in setting contract 

goals include the location, type of work, and 

availability of DBEs that perform the type of work 

involved in the contract.

Once established, agencies publish the contract 

goal in an advertisement to all bidders. When a 

contract has a DBE goal, only a bidder that 

demonstrates adequate good-faith efforts to meet 

the goal qualifies to be awarded a federally funded 

contract.

The bidders that respond to your solicitation will 

list the DBE firms that will participate on the 

contract and the amount of the participation. This 

is typically referred to as a commitment. After the 

award, the LPA is responsible for verifying that the 

listed DBE firms were used as described—for 

example, that the firms identified as 

subcontractors have subcontracts and are 

performing the work. As part of its monitoring 

efforts, agencies might review project documents 

and accounting records, and visit the project site 

to verify DBE participation.

If 

LPA monitoring uncovers discrepancies in the 

proposed and actual use of DBE firms, LPAs are 

required to take administrative action. Your State 

DOT’s DBE plan will include the types of sanctions 

available, such as the withholding of progress 

payments.

Let’s see how DBE contract goal 

setting and monitoring work in 

practice.

Our example involves a $2 million contract to widen 

a one-mile stretch of city street. 

The LPA procurement team identifies several 

subcontracting possibilities—including striping, 

trucking, and traffic control—totaling $220,000, or 

11 percent of the contract value. 

The team searches the State DOT’s database of 

certified firms and identifies several DBE firms that 

are certified to perform these work items. 

The LPA also considers the location of the project 

and the availability of DBE firms to do the work 

which may increase or decrease the 11 percent. 

Based upon this analysis, the LPA believes that a 

contract goal of 9.5 percent is appropriate. 
Federal-aid Essentials for Local Public Agencies

This goal is published in the notice to all bidders. 

The LPA awards the contract to Prime 

Construction, Inc. The company meets the 9.5 

percent contract goal by subcontracting striping, 

trucking, sidewalk, and landscaping services to 

DBE firms. 

It is the LPA responsibility to monitor the prime 

contractor to ensure that all the DBEs listed are 

being used. As part of the LPA’s monitoring 

efforts, the project engineer visits the project site. 

The project engineer notes that the trucks used to 

haul the aggregate belong to the DBE firm. The 

project engineer also interviews the truck drivers, 

work crews and supervisors, and confirms they 

are all on the DBE firms’ payrolls.

At the end of the project, the project engineer 

reviews the project receipts and confirms that the 

payments to the DBE firms equal the amount 

identified in the subcontracts and in the prime 

contractor’s original commitment. No enforcement 

actions are necessary.

LPAs follow a standard format to report DBE 

participation on contracts with and without goals. 

DBE participation is reported as race conscious 

when the contract has a DBE goal. DBE 

participation is reported as race neutral when the 

contract does not have a DBE goal or when the 

prime contractor is a DBE. The report provides a 

breakdown of subcontracts by ethnicity and gender 

and summarizes the payments made to prime 

contractors and DBE firms. 

Agencies that receive Federal-aid 

funds contribute toward the 

attainment of their State DOT’s 

annual overall DBE goal. 

Achievement of the goal is a statewide effort, and 

as we have just seen, it requires thoughtful contract 

goal setting, proactive monitoring and enforcement. 

To help your LPA succeed in its DBE participation, 

your State DOT has developed a DBE plan that 

provides guidance and direction. LPA personnel 

must be familiar with the DBE program 

requirements. The State DOT will review your DBE 

reports. From an analysis of the results, the State 

DOT may provide additional guidance to ensure 

DBE opportunities to participate on your Federalaid contracts. 
Federal-aid Essentials for Local Public Agencies

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• Guidance from FHWA's general counsel for setting DBE goals

http://www.osdbu.dot.gov/documents/pdf/dbe/Tips_for_Goal.pdf

• The electronic DBE reporting form

http://www.osdbu.dot.gov/documents/pdf/dbe/Final%20Reporting%20Form.

pdf

• Regulations addressing the U.S. DOT's DBE program

http://ecfr.gpoaccess.gov/cgi/t/text/textidx?region=DIV1;type=boolean;c=ecfr;cc=ecfr;sid=14e071f96d5d61cb9d24

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