Disadvantaged Business Enterprise Program: Assessing Use of Proxy Data Would Enhance Ability to Know If States Are Meeting Their Goals
Published: 2011-10-13T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The U.S. Department of Transportation's (DOT) Disadvantaged Business Enterprise (DBE) program aims to increase the participation of small businesses owned and controlled by socially and economically disadvantaged individuals--known as DBEs--in highway contracting. In 2009, U.S. DOT awarded, through state and local governments, about $4 billion to DBEs nationwide. State DOTs are required to establish DBE programs and implement them on federal-aid highway projects. This report responds to a congressional request to examine U.S. DOT's Federal Highway Administration's (FHWA) oversight of state DOT DBE programs. It examines how FHWA (1) oversees state DOTs to ensure they implement their DBE programs according to applicable regulations, (2) assesses whether state DOTs have met their DBE goals, and (3) oversees organizations that certify businesses as DBEs. GAO analyzed FHWA data; reviewed relevant laws and regulations; and interviewed FHWA, and state DOT officials from five states, selected to obtain variation in, among other things, the methods state DOTs use to meet DBE goals..
section_title: What GAO Found
paragraphs: FHWA uses a risk-based approach, which includes conducting risk assessments and day-to-day monitoring, to oversee DBE programs that state DOTs implement. In response to FHWA's designation of the DBE program as an agencywide high-risk area from 2007 through 2010 and other reasons, FHWA recently increased its oversight of state DOT DBE programs. For example, in 2010, FHWA hired a full-time DBE Program Manager and required FHWA division offices in each state to explain to FHWA headquarters how they oversee their state DOTs' DBE programs. While these steps could help FHWA ensure state DOT compliance with regulations, it is too early to assess their effectiveness. Although FHWA has increased its oversight, FHWA faces two fundamental problems with the DBE data it collects from state DOTs to assess whether state DOTs have met their DBE goals. First, the data that FHWA collects from state DOTs on actual spending on DBEs can cover multiple fiscal years and cannot be meaningfully compared to state DOTs' DBE goals, which reflect the percent of federal-aid highway funds state DOTs will expect to spend on DBEs for one fiscal year. Thus, FHWA may not be able to effectively track whether state DOTs have met their goals as required by federal internal control standards. Second, data on committed spending on DBEs--the proxy measure that FHWA uses instead to measure whether goals were met--shows that about half of the state DOTs met their DBE goals each fiscal year from fiscal years 2006 through 2010; however, FHWA has not conducted a nationwide analysis comparing committed to actual spending to know whether committed spending reflects actual spending for DBEs in all state DOTs. Thus, FHWA does not know whether its data on committed spending can be relied on to evaluate a state DOT's progress in meeting DBE goals. Ensuring that committed spending data are a reasonable proxy is important because state DOTs and FHWA make program decisions based on this information. U.S. DOT's working group that considers various improvements to the administration of the DBE program could provide FHWA with an opportunity to identify options it can use to evaluate its proxy data. Also, while FHWA uses committed spending data to facilitate timely reporting of whether state DOTs have met their goals, FHWA's reporting of data on committed spending to describe progress towards DBE goals does not include statements about potential limitations of the data--namely that the data on committed spending on DBEs might not reflect actual spending. FHWA oversees the certification activities of state DOTs, which certify that DBEs primarily working on federal-aid highway projects meet federal eligibility requirements. Other U.S. DOT administrations--the Federal Aviation Administration and the Federal Transit Administration--oversee other certifying organizations, such as local airport authorities and state transit agencies, that certify DBEs for work primarily in those areas; such DBEs might also have the skills required (e.g., paving) to work on highway projects. FHWA divisions use their discretion to determine how much and how often to oversee state DOT DBE certification activities.
section_title: What GAO Recommends
paragraphs: GAO recommends that FHWA (1) evaluate its committed spending data to determine if it is a reasonable proxy and (2) include statements in information provided to decision makers about potential data limitations. U.S. DOT provided comments on the draft recommendations; GAO clarified the recommendations based on U.S. DOT's comments. U.S. DOT agreed to consider the recommendations.

section_title: Letter
paragraphs: The U.S. Department of Transportation’s (DOT) Disadvantaged Business  Enterprise (DBE) program aims to increase the participation of small  businesses owned and controlled by socially and economically  disadvantaged individuals—known as DBEs—on certain contracts for  which U.S. DOT provides financial assistance. According to U.S. DOT’s  regulations on the program, the DBE program also aims to, among other  things, create a level playing field for DBEs so that they can compete  fairly on these contracts. In 2009, U.S. DOT—through its Federal  Highway Administration (FHWA), Federal Aviation Administration (FAA),  and Federal Transit Administration (FTA)—awarded about $4 billion (or  about 9.4 percent of U.S. DOT’s total assisted contracting) to DBEs  nationwide. While recipients, such as state DOTs, of certain types of U.S.  DOT funds are responsible for implementing the DBE program, federal  oversight of these recipients is critical for ensuring that the objectives of  the program are achieved, federal funds are spent appropriately, and the  program benefits qualified businesses. Furthermore, transparency in how  federal dollars are spent in the DBE program is critical for ensuring  accountability in the program and ensuring the effective and efficient  performance and management of the program.
FHWA, FAA, and FTA—which are operating administrations within U.S.  DOT—are responsible for overseeing recipients’ implementation of the  DBE program. Specifically, FHWA is responsible for overseeing how state  DOTs implement the DBE program on federal-aid highway projects and  whether state DOTs comply with the requirements set forth in statute and  U.S. DOT’s regulations. A number of offices within FHWA are involved in  helping oversee the DBE program. For example, at the national level,  FHWA’s Office of Civil Rights monitors nationwide progress in meeting  DBE goals. FHWA’s division offices—located in each state, the District of  Columbia, and Puerto Rico—oversee state DOTs’ day-to-day  implementation of the DBE program. Given FHWA’s role in overseeing  the state DOTs’ implementation of the DBE program, this report examines  how FHWA  1.  oversees state DOTs to ensure that they are implementing their DBE  programs in accordance with applicable regulations,  2.  assesses whether state DOTs are meeting their DBE goals, and 3.  oversees organizations that certify DBEs that work on federal-aid  highway projects.
To address our three objectives, we reviewed relevant laws and  regulations pertaining to the DBE program. We also reviewed  documentation and interviewed officials from U.S. DOT’s and FHWA’s  Offices of Civil Rights, as well as officials and representatives from five  states:  Florida, Minnesota, Missouri, Washington, and Wisconsin. We  judgmentally selected the five states to obtain variation in, among other  areas, the extent to which state DOTs met their DBE goals, the number of  certifying organizations in the state, and geographic location. Specifically,  in each of the states, we reviewed documentation and interviewed  officials from FHWA divisions and state DOTs about FHWA’s oversight of  state DOTs’ DBE activities. In each state, we also reviewed  documentation and interviewed officials from organizations that certify  DBEs that work on federally funded highway projects—such as state  DOTs and local transit agencies—and judgmentally selected these  organizations based on, among other things, their geographic location  and whether they certified DBEs that work on highway projects. We  compared FHWA’s oversight of state DOTs’ DBE activities to GAO  reports on oversight and accountability, including GAO guidance on  internal controls. Additionally, to address the three objectives, we  reviewed the findings of the National Review Team (NRT) that FHWA  established to oversee DBE program implementation on American  Recovery and Reinvestment Act of 2009 (Recovery Act) projects.  Separately, to examine how FHWA assesses whether state DOTs are  meeting their DBE goals, we analyzed FHWA’s national data on state  DOTs’ committed and actual spending and how FHWA determined  whether state DOTs achieved their DBE goals for fiscal years 2006  through 2010. We conducted selected quality checks of the data,  compared FHWA’s national data to the data in the Uniform Report of DBE  Awards or Commitments and Payments (commonly referred to as the  Uniform Report) for the five state DOTs that we contacted, and resolved  inconsistencies with the appropriate agency officials. Given our review of  the data provided to us by FHWA, we identified problems with the data  FHWA uses to assess whether state DOTs achieved their DBE goals,  which we discuss in this report.
We conducted this performance audit from September 2010 to October  2011 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives. See appendix I for more  information about our scope and methodology.
subsections: section_title: Background
paragraphs: U.S. DOT established a minority and women’s business enterprise  program for its highway, airport, and transit programs by regulation in  1980. The Surface Transportation Assistance Act of 1982 (STAA)  contained the first statutory DBE provision authorizing a U.S. DOT DBE  program. As amended, the provision requires that not less than 10  percent of the amounts made available by the act be expended through  small businesses owned and controlled by socially and economically  disadvantaged individuals—known as disadvantaged business  enterprises or DBEs—unless the Secretary of Transportation determines  otherwise. Following STAA, the DBE program continued to be  reauthorized, and was last reauthorized in the Safe, Accountable,  Flexible, Efficient Transportation Equity Act: A Legacy for Users  (SAFETEA-LU).
49 C.F.R. § 26.45(g). goals.18, 19 Each contract goal on an individual U.S. DOT-assisted  contract is expressed as the percentage of federal-aid highway funds th state DOT will expend on DBEs on the individual contract.
When a state DOT sets DBE contract goals on individual U.S. DOT- assisted contracts, bidders on those contracts must make good faith  efforts to meet those goals. The bidder can meet this requirement in  one of two ways:  (1) meet the goal on the individual U.S. DOT-assisted  contract, or (2) document that it made adequate good faith efforts— meaning that the bidder took the necessary and reasonable steps to  achieve the goal even though it did not succeed in obtaining enough DBE  participation to do so. State DOTs are responsible for evaluating  whether bidders made good faith efforts to meet their goals, and  according to U.S. DOT officials, this evaluation is subject to FHWA review  as appropriate.
49 C.F.R. § 26.51(d). State DOTs must meet as much of their DBE participation goal as  possible using race-neutral methods—actions that assist all small businesses without  consideration of DBE status. When a state cannot achieve its goal using race-neutral  methods, it must use race-conscious methods—actions used to assist only DBEs—to  meet the remaining portion of the goal. The primary race-conscious method is setting  contract goals on individual U.S. DOT-assisted contracts. 49 C.F.R. § 26.51. See also 49  C.F.R. § 26.5. According to FHWA officials, most states use a combination of race-neutral  and race-conscious methods to meet their state goals.
FHWA approval of each contract goal is not necessarily required; however, FHWA may  review and approve or disapprove any contract goal established. 49 C.F.R. § 26.51(e)(3). to FHWA two types of data on spending on DBEs:  committed spending  on DBEs and actual spending on DBEs. Committed spending on DBEs is  the total amount of federal funds that state DOTs award or commit to  DBEs in the fiscal year.23,  Committed spending data on contracts  awarded in the fiscal year include data on contracts that will be completed  in the fiscal year as well as ongoing contracts. These data include  completed and ongoing contracts because some highway contracts can  be relatively short and can be awarded and completed within the same  fiscal year, whereas other highway contracts can cover multiple years  between award and completion. Actual spending on DBEs is the total  amount of actual payments that state DOTs make to DBEs using federal  funds on contracts that are completed in the fiscal year. Actual spending  includes spending on contracts completed in the fiscal year and can  include contracts that were awarded in previous years.
State DOTs award contracts to prime contractors, which may be DBEs, and prime  contractors award subcontracts to DBE subcontractors, or commit to provide funds to DBE  subcontractors. For each reporting period, the DBE regulations require state DOTs to  provide data on the total amount of federal funds that are awarded to DBEs on U.S. DOT- assisted prime contracts, and the total amount of federal funds that are awarded or  committed to DBEs on U.S. DOT-assisted subcontracts. 49 C.F.R. part 26, appendix B.  Although applicable regulations refer to this as “Awards/Commitments,” for purposes of  this report, we refer to this as “committed spending” or “committed spending on DBEs.”
For certification of DBEs, U.S. DOT requires DBEs to be certified in each  state where they want to bid on or participate in U.S. DOT-assisted  contracts. DBEs are certified according to U.S. DOT’s regulatory eligibility  requirements and certification procedures. Specifically, DBEs must be  small businesses that are at least 51 percent owned by one or more  individuals who are socially and economically disadvantaged, and that  are managed, operated, and controlled by these owners. (See app. II  for more details on the eligibility requirements.) Organizations that certify  DBEs must take many steps to ensure that a DBE firm meets certification  requirements—this includes, among other things, reviewing firms’  applications for certification; conducting on-site visits and interviews; and  reviewing licenses, stock ownership, equipment, work completed,  resumes of principal owners, and the bonding and financial capacity of  the firm. Furthermore, DBEs are certified only in the type or types of work,  such as paving, that they can perform. According to U.S. DOT, in 2009,  about 27,000 DBEs were certified under its program.
Generally, organizations within each state that receive DOT funds decide  which organizations within the state can certify DBEs. While some states  have multiple organizations certifying DBEs, others have one certifying  organization. For example, in the five states we focused on as part of this  review, four states (Florida, Minnesota, Missouri, and Wisconsin) have  multiple organizations within the state that certify DBEs, and the  remaining state (Washington) has one organization that certifies DBEs for  the entire state. Each state is required by DBE regulations to have a  unified approach to certification so that the certification decisions of one  organization are honored by all the organizations receiving U.S. DOT  funds in the state. This essentially allows for a “one-stop shop” for DBE  firms seeking certification, meaning that a DBE only needs to apply for  certification with one organization in the state, rather than apply for  certification from all the organizations in the state with which the DBE  wants to conduct work. The organizations that certify DBEs may include  the state DOT, local airport authorities, state and local transit agencies,  and city and county governments. For example, Florida has 13  organizations that certify DBEs—including Florida DOT, the Greater  Orlando Aviation Authority, and Miami-Dade County. See figure 1 for  examples of organizations that certify DBEs.
The type of work a DBE performs and the DBE’s geographic location can  play a role in some states in determining which organization in the state  reviews a firm’s application for certification and certifies the firm as a  DBE. State DOTs primarily review applications and certify DBEs that work  on highway projects, while local airport authorities and state and local  transit agencies primarily review applications and certify DBEs that work  on airport and transit projects, respectively. Nevertheless, the DBEs  certified by organizations other than state DOTs (such as local airport  authorities and state and local transit agencies) can also work on highway  projects if the type of work they are certified to perform can be applied to  both airport or transit and highway projects. For example, if a DBE is  certified to do paving, this DBE may be able to do paving work on both  highway and airport projects. Geographic location may also play a role in  determining which organization reviews a firm’s application for  certification and certifies DBEs. For example, a county government in  Wisconsin certifies DBEs from six nearby counties in the state, regardless  of whether the DBE is interested in working on federal highway, transit, or  airport projects.
section_title: FHWA’s Oversight of State DOT DBE Programs
subsections: section_title: FHWA Uses a Risk-Based Approach to Oversee State DOT DBE Programs and Has Identified the DBE Program as a Risk Area
paragraphs: Federal agencies should perform a number of oversight activities to  safeguard against fraud and to ensure that federal programs meet their  objectives and comply with federal regulations. FHWA oversees the  DBE program as part of its oversight of state DOTs’ implementation of  federal-aid highway programs. FHWA offices—including FHWA’s Office  of Civil Rights, a program office located in the agency’s headquarters  office, and FHWA’s 52 division offices, which are located in each state,  the District of Columbia, and Puerto Rico—oversee the DBE program.  FHWA’s Office of Civil Rights is responsible for a number of civil rights  programs, including the DBE program, and the division offices perform  primary oversight of state DOT activities. In general, these offices  oversee the DBE program through risk assessments, day-to-day  monitoring of state DOT activities, and program reviews.
FHWA’s annual risk assessments identify and assess risks across all  federal-aid highway programs, including the DBE program. FHWA uses  the results of these risk assessments to help it determine how to focus its  oversight. Both FHWA’s program offices and division offices conduct  these assessments and use the results to take actions to address the  risks they identify, which have recently included the DBE program. In  addition, FHWA uses the results of the program office and division office  risk assessments to identify agencywide risk.
Program office risk assessments. In 2010 FHWA’s Office of Civil  Rights identified the DBE program as a risk area because of the  potential for, among other things, a significant increase in fraud and  abuse, improper program implementation, and costly litigation.  Furthermore, the office identified specific risk areas within the DBE  program, including DBE goals and DBE certifications. Given the Office  of Civil Rights’ identification of the DBE program as a risk area, the  office has taken actions, such as hiring a full-time DBE Program  Manager, to help address the potential problems identified (e.g.,  fraud, improper program implementation, and other risks).
Division office risk assessments. In 2010, 23 of 52 FHWA division  offices identified the DBE program as a risk area. These divisions  identified the DBE program as a risk area because of, among other  things, challenges related to the stewardship and administration of  state DOTs’ DBE programs and to contractor compliance with DBE  program requirements. For example, one division office identified the  DBE program as a risk area because of concerns regarding the  stewardship and oversight of a state DOT’s DBE program that could  lead to, among other things, confusion and lack of understanding  about how to properly implement the DBE program requirements,  increasing the opportunity for fraud and abuse. To address these  risks, the division planned to provide training to state DOT officials on  requirements specified in the DBE regulations and planned to conduct  a program review of the state DOT’s implementation of specific DBE  regulations, such as those related to monitoring and achieving  contract goals.
Agencywide risk identification. Based on the results of program office  and division office risk assessments, FHWA identifies risks that are  relevant for the entire agency. These risks become key drivers in  developing FHWA’s strategic implementation plan, which reflects the  administration’s priorities for the upcoming year. According to FHWA  officials, FHWA first identified the DBE program as an agencywide  high-risk area in 2007 because the DBE program accounted for 50  percent of the risks identified in the entire civil rights area. This  designation as a high-risk area continued through 2010. In response  to the agencywide designation of the DBE program as a high-risk  area, FHWA has recently increased its oversight of the DBE program.
FHWA division officials we interviewed from all five of the states we  focused on said that they monitor state DOT activities on an ongoing  basis to help oversee all federal-aid highway programs implemented by  state DOTs, including the DBE program, and to help identify areas that  need increased oversight attention. For example, one division official we  interviewed said that as a part of his day-to-day oversight, he reviews the  state DOT’s process for setting contract goals. In some instances, this  division official said that he found that the state DOT had set all contract  goals too low to meet the state DOT’s DBE goal. Furthermore, officials  from all five of the division offices said that they participate in meetings  with state DOTs and/or receive reports from state DOTs that help them  identify areas where there may be problems and where they need to  focus their attention. For example, one division office that we focused on  as part of our review requires its state DOT to provide quarterly progress  reports on DBE contract goals. The official we interviewed from this  division office said that these reports help her identify issues, such as  issues related to goals on individual U.S. DOT-assisted contracts, which  she may not otherwise hear about from her daily interactions with the  state DOT.
In 2007 and 2008, FHWA conducted program reviews of all its federal-aid  highway programs, including the DBE program. FHWA conducted these  reviews to determine which federal highway programs required greater  federal oversight and assistance. For the DBE program reviews, FHWA  officials—including those from the divisions—reviewed each state DOT’s  implementation of the DBE regulations to determine if the state DOT  needed more federal oversight and assistance in implementing the  regulations. Based on the results of the 2007 and 2008 reviews,  FHWA’s Office of Civil Rights decided to conduct the DBE program  reviews again in 2010 and 2011. Like the 2007 and 2008 reviews, the  2010 and 2011 reviews assessed how state DOTs implemented the DBE  regulations. The 2010 and 2011 program reviews assessed, for example,  whether a state DOT provided opportunities for public participation when  establishing its DBE goal, as required by the DBE regulations. An official  from FHWA’s Office of Civil Rights said that based on the results of the  recent program reviews, the office plans to compile all the concerns and  problems identified in the reviews in a report for FHWA division and state  DOT leadership, and also implement improvements in state DOTs’ DBE  programs. Officials from FHWA’s Office of Civil Rights said that they are  still collecting the results of the program reviews from FHWA divisions  and state DOTs and, as a result, have not yet completed an initial report  that compiles all the concerns or problems identified nor implemented any  improvements in state DOT DBE programs.
section_title: FHWA Has Recently Increased Its Oversight to Help Ensure State DOTs’ Compliance with DBE Regulations
paragraphs: In response to the current administration’s focus on small business  programs (such as the DBE program), U.S. DOT’s interest in increasing  accountability in DBE program implementation, and FHWA’s continued  designation of the DBE program as an agencywide high risk area, FHWA  and U.S. DOT have taken a number of steps in the past 2 years to  increase its oversight of state DOT DBE programs. Some of the more  significant actions are as follows:
DBE Program Manager. FHWA hired a full-time National DBE  Program Manager in 2010 to help oversee state DOTs’  implementation of the DBE program.
Action Plans. Starting in 2010, FHWA’s Office of Civil Rights required  that all FHWA divisions develop and submit action plans that, in part,  describe division office oversight activities, identify areas in state DOT  DBE programs that need improvement, and identify actions the  division offices will take to improve their and the states’ leadership  and management of the DBE program. The Office of Civil Rights also  required that FHWA divisions submit quarterly reports that provide an  update on what they are doing to implement the actions the divisions  have identified to improve the leadership and management of the  DBE program.
Regulations. In January 2011, U.S. DOT updated its DBE regulations  to, among other things, add a requirement for state DOTs to analyze  in detail the reasons for any difference between their state DOT DBE  goal and the amount of federal funds the state DOT committed to  spend on DBEs for each fiscal year. State DOTs must then establish  specific steps and milestones to correct the problems they identified in  their analysis and to fully meet its DBE goal in the next fiscal year.  These requirements went into effect in February 2011. According to  U.S. DOT, the added requirement will help state DOTs understand,  when applicable, why their DBE goals are not being met, and will  increase state DOTs’ accountability for meeting DBE goals. Based on  FHWA’s most recent data, 54 percent of state DOTs did not meet  their DBE goals in fiscal year 2010 and would have been subject to  this requirement in fiscal year 2010 if it had been in effect. See  appendix III for further information on the number and percent of state  DOTs meeting their DBE goals based on committed spending.
National Review Team (NRT). In response to FHWA’s 2009 risk  assessment, FHWA established the NRT to review six areas,  including the DBE program, that posed a nationwide risk of misuse of  Recovery Act funds. FHWA used the results of the NRT review to  identify areas for improved oversight and training. For example, the  NRT identified concerns about the process that some state DOTs  were using to evaluate whether prime contractors bidding on contracts  made adequate good faith efforts to meet DBE contract goals.  Specifically, in one of these states, the NRT found that the state DOT  awarded a majority of its contracts to prime contractors who did not  meet the DBE contract goals, but provided documentation that they  made good faith efforts to do so. While DBE regulations allow state  DOTs to award contracts based on bidders’ good faith efforts and do  not limit the number of contracts that can be awarded in this way,  FHWA officials explained that awarding a high number of contracts on  the basis of good faith efforts might be a reason state DOTs do not  meet their state DBE goals. To address these concerns, the FHWA  division in this state trained state DOT staff on this issue, tracked the  number of contracts that the state DOT awarded based on good faith  efforts on a monthly basis, and further reviewed the state DOT’s  process for evaluating prime contractor good faith efforts to ensure  that the state DOT was complying with the DBE regulations.  Furthermore, on a nationwide level, FHWA’s Office of Civil Rights  increased its training to FHWA’s division officials on this issue.
In addition to these steps, FHWA took a number of other actions. For  example, it increased its training on the DBE program for FHWA division  offices. FHWA also increased its focus on the DBE program during  national seminars and conferences. Furthermore, FHWA included the  DBE program, along with other civil rights areas, in its 2011 strategic  implementation plan. According to FHWA officials, the significance of this  is that the 2011 plan marked the first time that civil rights programs,  including the DBE program, were given agencywide attention.
It is too early to determine the effectiveness of the recently implemented  oversight activities described above. But each of the oversight activities  could help FHWA protect against fraud in the DBE program, ensure that  the DBE program is meeting its objectives, and identify areas where state  DOTs may not be in compliance with the regulations. According to FHWA  officials, if they find that a state DOT has fallen short in meeting any part  of the DBE regulations, the FHWA division will work with the state DOT to  bring the state DOT back into compliance. According to officials at  FHWA’s Office of Civil Rights, should a state DOT refuse to comply with  any part of the regulation without seeking a waiver from the Secretary of  Transportation, FHWA would then consider other options, including  withholding federal funds from the state DOT pursuant to regulations.45,   For example, one of the divisions we spoke with said that because of  noncompliance with parts of the DBE regulations, it presented a letter of  possible funds withholding to a state DOT. Subsequently, the state DOT  took steps to comply with the regulations as required.
section_title: FHWA Faces Fundamental Problems in Its Use of DBE Data
paragraphs: FHWA faces two fundamental problems with the DBE data it collects from  state DOTs to assess whether state DOTs have met their DBE goals.  First, actual DBE spending data reported by state DOTs cannot be  meaningfully compared to state DOTs’ DBE goals to measure whether  goals were met. Second, the proxy data that FHWA uses to measure  whether goals were met—data on committed spending on DBEs—may or  may not be a reasonable proxy of state DOTs’ actual spending on DBEs.
49 C.F.R. § 26.101(a). See also 49 C.F.R. § 26.103.
As a result, FHWA does not know whether its data on committed  spending can be relied on to evaluate state DOTs’ progress in meeting  goals or whether state DOTs would benefit from FHWA assistance to  meet their goals. Also, FHWA’s reporting of data on committed spending  to describe progress towards DBE goals does not include statements  about potential limitations of the data—namely that the data on committed  spending on DBEs might not reflect actual spending. Including statements  about the potential limitations of committed spending data could help  FHWA increase transparency in the reporting of DBE spending data.
subsections: section_title: FHWA Data on Actual Spending on DBEs Does Not Allow for Comparison to DBE Goals
paragraphs: Federal internal control standards call for an agency to track major  achievements, such as spending, and compare these to its goals.  FHWA is unable to make this comparison using data on actual spending  on DBEs because the actual spending data that FHWA collects in the  Uniform Reports reflect different time frames and, therefore, different data  from state DOTs’ DBE goals. Actual spending data are based on  completed contracts—some of which could have been awarded in  previous fiscal years—while a state DOT’s DBE goal reflects what state  DOTs will expect to spend on DBEs on contracts that are awarded or  committed in the current fiscal year. This difference in time frames and  when contracts are awarded makes it difficult to compare the state DOTs’  actual spending with its DBE goals. FHWA officials roughly estimate  about 50 percent of contracts are completed in the fiscal year in which  they were awarded. Actual spending for the remaining estimated 50  percent of contracts cover multiple years between award and completion,  and are not included in Uniform Reports until these contracts are  completed. Without comparing actual spending on DBEs to a state  DOT’s DBE goals, FHWA may not be able to effectively track whether a  state DOT has met its DBE goals as called for by internal controls.
section_title: FHWA’s Use of Committed Spending Data May Not be a Reasonable Proxy
paragraphs: FHWA uses committed spending on DBEs as a proxy for actual spending  on DBEs to determine if state DOTs are meeting their DBE goals.  According to U.S. DOT officials, FHWA’s practice of using committed  spending is a convention necessary to provide timely reporting; if FHWA  used actual spending to determine whether DBE goals were met, it would  have to wait several years for some contracts to be completed. Based on  the committed spending data in the Uniform Reports, about half of the  state DOTs met their DBE goals each fiscal year from fiscal years 2006  through 2010. See appendix III for the number and percentage of state  DOTs meeting their DBE goals from fiscal years 2006 through 2010,  based on committed spending data.
FHWA has not conducted a nationwide analysis comparing committed  spending to actual spending to know whether it is a reasonable proxy for  actual spending. Thus, committed spending on DBEs may or may not  definitively show whether state DOTs met their DBE goals. According to  FHWA and state DOT officials, committed spending could be similar to  actual spending, or it could differ from actual spending. Specifically, an  FHWA headquarters official told us about two cases where she personally  compared committed to actual spending, and found that the committed  spending was close to actual spending. The headquarters official said  that in one of the two cases, she compared committed to actual spending  on individual contracts and in the second case, she compared committed  to actual spending on completed contracts historically, over a period of  time. Separately, FHWA and state DOT officials we contacted said that  committed spending could be lower or higher than actual spending. For  example, an FHWA official from one state we focused on said prime  contractors’ committed spending on DBEs may be higher than actual  spending on some projects because of changes to the contract that  reduce the amount of work performed by DBEs. In another state, a state  DOT official said a prime contractor’s committed spending on DBEs at the  start of a contract may be 8 percent, but the actual spending on DBEs at  the end of the contract may be only 2 percent. The official said in fiscal  year 2008 the state DOT did not meet its fiscal year 2008 DBE goal  because the prime contractor on a highway project spanning multiple  years spent less on DBEs than committed.
FHWA’s NRT also found that committed spending may not match actual  spending and thus may not provide a complete picture of whether state  DOTs are meeting their DBE goals. The NRT offered findings and  recommendations to two of the five state DOTs that we contacted during  our review pertaining to the issue of data on committed and actual  spending. For example, the NRT found that one state DOT did not require  a prime contractor to provide information to the state DOT on actual  spending on DBEs if the contractor provides work to a DBE after the DBE  goal on the contract is met. Thus, according to the NRT report, the state  DOT may not accurately capture or report all actual spending to DBEs,  and as a result may spend more on DBEs than committed. In another  state, the NRT recommended that the state DOT compare committed to  actual spending on DBEs on completed DBE subcontracts to help ensure  that the DBE program was compliant at the project level. Furthermore, in  addition to the NRT’s findings, the U.S. DOT Office of Inspector General  recommended in another state that the state DOT capture all actual  spending on DBEs regardless of whether the DBE goal on a contract had  already been met.
Without a nationwide analysis comparing committed spending to actual  spending, FHWA cannot be certain whether committed spending reflects  actual spending for DBEs in all state DOTs. Therefore, FHWA does not  know whether its data on committed spending can be relied on to  evaluate state DOTs’ progress in meeting goals; hold state DOTs  accountable for meeting their DBE goals, as emphasized in U.S. DOT’s  update to its regulations; make program decisions based on whether  state DOTs are meeting their DBE goals on an annual basis; or provide  assistance to state DOTs that are not meeting their goals. Furthermore, if  committed spending data on DBEs do not reflect actual spending on  DBEs, then state DOTs might potentially take inappropriate action or  inaction, depending on whether the data show a state DOT has met its  DBE goal. For example, if the data on committed spending show a state  DOT is meeting its goal, it might, as one state DOT said it does,  discontinue setting DBE contract goals, which are DBE goals on  individual U.S. DOT-assisted contracts. If the data on committed  spending do not reasonably match actual spending, however, then the  state DOT might stop its use of DBE contract goals prematurely.
U.S. DOT has a departmentwide working group that, according to a U.S.  DOT official, considers various improvements to the administration of the  DBE program, including improvements to the various reporting forms  used in the DBE program.  As part of its efforts, this working group is  considering revising the form—the Uniform Report—that state DOTs use  to report committed and actual spending on DBEs. In February 2011,  the members reviewing the Uniform Report held their first meeting but did  not determine what changes to recommend. This working group could  provide an opportunity for FHWA to identify options it can use to evaluate  whether the committed spending data it uses to determine if state DOTs  have met their DBE goals is a reasonable proxy for actual spending and  whether this data can be relied on to measure progress towards goals.  For example, on a nationwide basis, FHWA could compare committed to  actual spending—using historical data on committed and actual spending  on completed contracts—to determine whether committed spending  reflects actual spending on DBEs.
section_title: Reporting of Committed Spending Does Not Include Statements about Potential Limitations
paragraphs: We have previously reported that while no data are perfect, agencies  need to report any limitations of performance data to provide transparent  information on government operations so that decision makers, such as  members or committees of Congress and program managers, can use  the information appropriately. In addition, recent initiatives, such as a  June 2011 Executive Order on accountable government and the GPRA  Modernization Act of 2010 (GPRAMA) have placed increased emphasis  on transparency, including enhancing the transparency of federal  spending. Transparency of DBE spending data is important because it  helps stakeholders oversee and monitor progress of the DBE program.  However, FHWA’s reporting of data on committed spending to describe  progress towards DBE goals does not include statements about potential  limitations of the data—namely that the data on committed spending on  DBEs might not reflect actual spending. For example, in a March 2009  hearing on the DBE program, U.S. DOT reported to the House of  Representatives Committee on Transportation and Infrastructure that  DBEs were awarded $3.3 billion in contracts, representing more than 11  percent of the total federal amount provided through U.S. DOT-assisted  contracts in fiscal year 2008.59,  In this example, U.S. DOT did not  explicitly state that “awarded contracts” (committed spending) might not  be the same as actual spending, and that it was using “awarded  contracts” as a convention to facilitate reporting. Including statements  about potential limitations of committed spending data in the information it  provides to decision makers, including Congress, could help FHWA  increase transparency in the reporting of DBE spending data.
The $3.3 billion reflects awards to DBEs performing work on all U.S. DOT-assisted  contracts (i.e., FHWA-, FAA-, and FTA-assisted contracts). Although the $3.3 billion is for  all U.S. DOT-assisted contracts, this dollar amount is relevant for our report—which  focuses on only FHWA—because it includes awards to DBEs on FHWA-assisted  contracts.
section_title: FHWA Oversight of Certifying Organizations
paragraphs: U.S. DOT and three of its operating administrations—FHWA, FTA, and  FAA—oversee, review, and monitor the certification activities of all the  organizations that certify DBEs in a state. Officials we interviewed from  U.S. DOT’s and FHWA’s Offices of Civil Rights described an oversight  approach in which the oversight of the certification activities of the  organizations that certify DBEs is delegated to one of the  administrations—depending on which administration provides federal  funding to the organization. For example, FHWA is responsible for  overseeing the certification activities of state DOTs—which primarily  certify DBEs that work on highway projects—because these state DOTs  receive federal-aid highway funds. FTA and FAA are responsible for  overseeing certifying organizations, such as state transit agencies and  local airport authorities, that receive federal transit and aviation funds,  respectively. Defining roles and responsibilities in this way can help  federal agencies effectively oversee programs, particularly when multiple  federal entities are involved in oversight. In addition to FHWA’s, FAA’s,  and FTA’s responsibilities for certification oversight, officials from U.S.  DOT’s Office of Civil Rights said that their role, prior to the 2011 update to  the DBE regulations, was and continues to be to review and make  decisions on DBE certification appeals. According to officials, under the  updated DBE regulations that went into effect in February 2011, U.S.  DOT’s Office of Civil Rights will have additional responsibilities to enforce  and oversee DBE certifications.
FHWA officials we interviewed said that their responsibilities for  overseeing state DOT DBE programs included overseeing the state  DOTs’ certification activities. As discussed earlier in this report, FHWA  oversees state DOTs’ implementation of the DBE program—including  how state DOT’s certify DBEs—using risk assessments and program  reviews. For example, in conducting their annual risk assessments,  FHWA’s Office of Civil Rights and FHWA division offices consider risks  related to the DBE program, including how state DOTs certify DBEs.  Furthermore, in the 2010 and 2011 program reviews, FHWA division  offices assessed whether state DOTs were following U.S. DOT’s  regulatory eligibility requirements and certification procedures when they  certified DBEs. In addition to these activities, U.S. DOT’s Inspector  General’s Office (IG) has a role in overseeing DBE certifications. In April  2011, the IG announced that it would conduct an audit of the DBE  program, and officials from the IG indicated that they plan to review  certifications of DBEs as part of this audit.
In addition to risk assessments and program reviews, all five FHWA  division offices we focused on conducted additional oversight activities to  oversee the certification activities of state DOTs. As is the case with the  oversight of other aspects of the DBE program and other federal-aid  highway programs, FHWA divisions use their discretion to determine how  much and how often to carry out these additional oversight activities. For  example, one FHWA division participates in annual reviews of the state’s  DBE certification processes, procedures, and activities—which includes  conducting spot-checks of selected certification files and interviewing  personnel engaged in managing, supervising, and performing certification  activities. Another division official said that because DBE certifications  are not a high-risk area in his state, he oversees the state DOT’s  certification activities when there are questions or concerns with a specific  certification decision.
Furthermore, FHWA officials in three of the four states that have multiple  certifying organizations said that they rely on FAA and FTA to oversee the  certification activities of organizations other than the state DOT (such as  transit agencies and airport authorities). FTA’s and FAA’s oversight of  these organizations is relevant for federal-aid highway projects because  these organizations certify DBEs that can work on highway projects. For  example, officials from one certifying organization we interviewed said  that while it is a transit agency, about 40 percent of the DBEs it certifies  could work on transit projects as well as other types of projects, such as  highway projects, because the skills needed for transit and highway  projects are similar. According to U.S. DOT officials, it is common for a  DBE to work on more than one type of project, such as on airport and  highway projects. In general, FAA and FTA officials we obtained  information from said that they conduct compliance reviews to oversee  the certification activities of these other organizations. See appendix IV  for more information on the actions FAA and FTA take to oversee the  certification activities of the organizations they are responsible for  overseeing.
section_title: Conclusions
paragraphs: U.S. DOT’s DBE program has existed for more than 30 years and  provided billions of dollars to DBEs across the country. FHWA’s oversight  of how state DOTs implement their DBE programs is critical for ensuring  that the programs are implemented according to U.S. DOT’s DBE  regulations. FHWA has taken several steps, some of which have been  recently implemented, which could help ensure state DOTs’ compliance  with DBE regulations. However, FHWA faces fundamental problems in  the data it uses to oversee DBE participation. Knowing whether a  program is meeting its goals and ensuring that data accurately reflects  federal dollars spent is a primary responsibility of oversight. Without  addressing its fundamental data problems, FHWA cannot effectively  make program decisions and implement DBE regulations. For example, if  the extent to which state DOTs are meeting their goals is unclear, FHWA  will not be able to effectively hold state DOTs accountable for meeting  their DBE goals, as emphasized in U.S. DOT’s update to its regulations.   Further, without addressing its data problems, FHWA cannot be sure that  the data that shows that about half of the state DOTs are meeting their  DBE goals from fiscal years 2006 through 2010 is accurate.  U.S. DOT’s  working group that considers various improvements to the administration  of the DBE program provides FHWA with an opportunity to identify  options it can use to evaluate whether the committed spending data it  uses to determine if state DOTs have met their DBE goals is a  reasonable proxy for actual spending and whether this data can be relied  on to measure progress towards goals. Additionally, including statements  about the potential limitations of committed spending data in information it  provides to decision makers could help FHWA increase transparency in  the reporting of DBE spending data.
section_title: Recommendations for Executive Action
paragraphs: To know whether its data on committed spending can be relied on to  determine state DOTs’ progress in meeting goals, to enhance FHWA’s  ability to know whether state DOTs meet their DBE goals, and to help  increase transparency in the reporting of spending on DBEs, the  Secretary of Transportation should direct the FHWA Administrator to take  the following two actions:  1.  Evaluate whether its committed spending data is a reasonable proxy  for determining whether state DOTs are meeting their DBE goals.  2.  In the information it provides to decision makers, including Congress,  include statements about potential limitations of the data it uses to  determine state DOTs’ progress towards goals.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to the Department of Transportation for  review and comment.  We received e-mail and oral comments on the  draft report from U.S. DOT through the department’s liaison.  Our draft  report recommended that (1) FHWA identify and use data that are reliable  and accurately reflect whether state DOTs have met their DBE goals, and  (2) FHWA clearly note in reports to decision makers, including Congress,  that FHWA’s data might not represent actual DBE spending until FHWA  identifies and uses reliable data.  U.S. DOT’s comments on our draft  recommendations covered two broad areas: the reliability of committed  spending data and data limitations. Specifically, U.S. DOT commented  that the committed spending data that FHWA is using is the most reliable  and accurate data available to determine on a timely basis whether state  DOTs are meeting their DBE goals.  U.S. DOT also commented that the  information presented in our report on committed spending does not  relate to the reliability of the committed spending data but rather relates to  the reporting of these data.  However, as stated in our report, FHWA may  or may not be able to rely on committed spending data to measure  progress towards goals because FHWA does not know whether  committed spending is a reasonable proxy for actual spending. We  clarified our first recommendation to better reflect the need for FHWA to  evaluate if the proxy data can be relied on to determine whether state  DOTs are meeting their DBE goals. U.S. DOT agreed to consider our  modified recommendation.  Regarding the second recommendation, U.S.  DOT officials commented that ensuring that the appropriate  methodological disclosures are included in their reporting was not enough  of an issue to warrant a recommendation.  As we note in our report,  including statements about the potential limitations of spending data is  important because it improves transparency of the data so that decision  makers can oversee and monitor progress of the DBE program  appropriately.  Consequently, we retained this recommendation with  slightly revised language.  U.S. DOT officials noted that they would re- evaluate their disclosures with regard to the data used to determine if  DBE goals are met.  Finally, U.S. DOT provided technical comments,  which we incorporated as appropriate throughout the report.
As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date.  At that time, we will send copies to the U.S. Department of  Transportation and other interested parties. In addition, the report is  available at no charge on the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-2834 or stjamesl@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix V.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: This report focuses on the Federal Highway Administration’s (FHWA)  oversight of the U.S. Department of Transportation’s (DOT)  Disadvantaged Business Enterprise (DBE) program on federally assisted  highway projects. Specifically, the objectives of this report were to  examine how FHWA (1) oversees state DOTs to ensure that they are  implementing their DBE programs in accordance with applicable  regulations, (2) assesses whether state DOTs have met their DBE goals,  and (3) oversees organizations that certify DBEs that work on federal-aid  highway projects.
To address all three of our objectives, we reviewed relevant laws,  regulations, U.S. DOT and FHWA documents on the DBE program, and  GAO and other reports. Specifically, we reviewed the Safe, Accountable,  Flexible, Efficient Transportation Equity Act: A Legacy for Users  (SAFETEA-LU) and other relevant legislation, such as the Surface  Transportation Assistance Act of 1982 (STAA), which authorized U.S.  DOT’s DBE program. In addition, we reviewed the GPRA Modernization  Act of 2010 (GPRAMA) and Executive Order 13576 on delivering an  efficient, effective, and accountable government. We also reviewed U.S.  DOT’s regulations on the DBE program that describe state DOTs’  requirements for implementing the DBE program, as well as proposed  and final rules that U.S. DOT published in the Federal Register which  recently amended DBE regulations. We also reviewed and analyzed  U.S. DOT, FHWA Office of Civil Rights, and FHWA division office  documents on the DBE program, including procedures and guidance on  DBE goals, certifications, DBE program implementation, and oversight of  the DBE program. Furthermore, we reviewed and analyzed prior GAO  reports and other reports on the DBE program, oversight, and  accountability in the federal government, including GAO standards and  guidance on internal controls. We used some of these reports to assess  FHWA’s oversight of the DBE program.
Furthermore, we conducted semistructured interviews on topics related to  our objectives. In particular, we reviewed documentation and interviewed  officials from U.S. DOT and FHWA in headquarters, including officials  from U.S. DOT’s Office of General Counsel, U.S. DOT’s Office of Civil  Rights, and FHWA’s Office of Civil Rights. In addition, we conducted  semistructured interviews with representatives from associations,  including the American Association of State Highway and Transportation  Officials, Associated General Contractors of America, American Road &  Transportation Builders Association, Conference of Minority  Transportation Officials, and National Association of Minority Contractors.  We interviewed officials from these associations because they are  national associations knowledgeable about the DBE program, and  because these national associations represent various stakeholders  involved in the DBE program, such as state DOT officials and contractors.  We also reviewed documentation from and interviewed officials in five  states:  Florida, Minnesota, Missouri, Washington, and Wisconsin. We  judgmentally selected these states to obtain variation in geographic  location, state population, state DOT use of race-conscious and/or race- neutral methods to meet DBE goals, whether state DOTs met their overall  DBE goals, and number of certifying organizations within the states. We  also considered whether the state used a disparity study to determine its  DBE participation goal, whether the state was involved in litigation  regarding the DBE program, whether the state was located within the  jurisdiction of the U.S. Court of Appeals for the Ninth Circuit, and  recommendations from stakeholders who are familiar with the DBE  program. We visited Florida because it was the only state mentioned by  stakeholders that met its goal by using only race-neutral methods. In each  of the selected states, we interviewed FHWA division officials and state  DOT Civil Rights and DBE Program managers. Finally, in Florida,  Wisconsin, and Washington, we interviewed prime contractors and DBE  firms, or organizations in the state that represented the DBE firms.
In addition to these efforts, to describe how FHWA oversees state DOT  DBE programs to ensure that the state DOTs are complying with DBE  regulations, we reviewed and analyzed information related to FHWA’s  oversight activities. For example, we obtained and reviewed  documentation from FHWA’s Office of Civil Rights and FHWA divisions  on FHWA’s risk assessment process and DBE program reviews. We also  conducted semistructured interviews with the National Review Team  (NRT) that FHWA established to assess DBE program implementation on  Recovery Act projects. We also reviewed the findings of the NRT’s  review, which provided a programmatic assessment of oversight at a  national level while also providing insights for the specific states we  selected for this review. We also reviewed the Action Plans from our five  selected states to see how those divisions explained how they oversee  state DOT DBE programs.
To determine how FHWA assesses whether state DOTs have met their  DBE goals, we reviewed and analyzed FHWA’s national data on state  DOTs’ committed and actual spending and how FHWA determined  whether state DOTs achieved their DBE goals over a 5-year period (fiscal  years 2006 through 2010) for state DOTs in all 50 states, the District of  Columbia, and Puerto Rico. FHWA officials said they compiled the  national data from state DOTs’ Uniform Report of DBE Awards or  Commitments and Payments (commonly referred to as the Uniform  Report). To help ensure the accuracy of the national data, we conducted  selected quality checks of the data and we discussed and resolved any  inconsistencies in the data we identified with the appropriate agency  officials. We also compared FHWA’s national data to the data in the  Uniform Reports for the five state DOTs that we contacted, and resolved  inconsistencies with FHWA and the state DOTs. Given our review of the  data provided to us by FHWA, we identified problems with the data  FHWA uses to assess whether state DOTs achieved their DBE goals.  These issues are discussed in this report. Even so, our review of FHWA’s  national data provided us with a perspective on how FHWA compiled and  used these data. Additionally, because data on actual spending on DBEs  cannot be used to determine if state DOTs met their DBE goals, in  appendix III, we determined the number and percentage of state DOTs  meeting overall DBE goals based on committed spending data on DBEs  for all state DOTs to illustrate orders of magnitude. We did not evaluate  the appropriateness of the state DOT DBE goals.
Finally, to determine how FHWA oversees organizations that certify  DBEs, we obtained information or interviewed officials from U.S. DOT’s  and FHWA’s Offices of Civil Rights, and the Federal Aviation  Administration’s (FAA) and Federal Transit Administration’s (FTA) Offices  of Civil Rights. Although our report focuses on FHWA’s oversight of the  DBE program, we obtained information from officials at FAA and  interviewed an official from FTA since DBEs can be certified to work on  highway, airport, and transit projects, and since FAA and FTA, in addition  to FHWA, can be involved in overseeing the certifications of DBEs that  work on federal-aid highway projects. We did not examine FAA’s or FTA’s  oversight of the DBE program on federally funded airport and transit  projects, or airport concessions contracts. We reviewed how FHWA  oversaw the certification activities of the organizations in the state. In  addition, in each of the states selected, we interviewed state or local  officials from at least two organizations that certify DBEs within each  state, if such existed—such as state transit agencies and local airport  authorities. We judgmentally selected the certifying organizations based  on their geographic location, whether they certified DBEs that work on  highway projects, and whether the organization was a state DOT.
We conducted this performance audit from September 2010 to October  2011 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
section_title: Appendix II: Summary of Key DBE Regulatory Eligibility Requirements
paragraphs: To be a Disadvantaged Business Enterprise (DBE), firms must meet  certain regulatory eligibility requirements concerning socially and  economically disadvantaged status, business size, ownership, and  control. Table 1 summarizes the key elements of each of the eligibility  requirements.
subsections: section_title: DBE Goals Based on Committed Spending Data from
section_title: Uniform Reports, Fiscal Years 2006 through 2010
paragraphs: The U.S. Department of Transportation’s (DOT) Disadvantaged Business  Enterprise (DBE) regulations require that each state DOT set an annual  goal for DBE participation in federal-aid highway projects, expressed as  the percent of federal-aid highway funds it will expect to spend on DBEs  for contracts that are awarded or committed in a fiscal year. The  regulations also require that all state DOTs report to the Federal Highway  Administration (FHWA) the total amount of federal funds they commit to  spend on DBEs using a form called the Uniform Report of DBE Awards or  Commitments and Payments (commonly referred to as the Uniform  Report). FHWA uses this data on committed spending on DBEs to  determine whether state DOTs are meeting their DBE goals each fiscal  year. Based on the committed spending data in the Uniform Reports,  about half of the state DOTs met their DBE goals each fiscal year from  fiscal years 2006 through 2010. See table 2.
section_title: Appendix IV: How FAA and FTA Oversee the Certifying Organizations for Which They Are Responsible
paragraphs: The Federal Aviation Administration (FAA) and the Federal Transit  Administration (FTA) oversee the certification activities of organizations  they provide funding to, such as airport and transit organizations. While  this report does not focus on these administrations’ oversight of  Disadvantaged Business Enterprise (DBE) certifications, we obtained  information from officials at FAA and interviewed an FTA official to obtain  a general understanding of their involvement in overseeing DBE  certifications. Some of their oversight activities are described in the  following sections.
FAA officials said that they oversee the certification activities of airport  authorities when they conduct compliance reviews of these authorities.  These compliance reviews can include an analysis of an airport  authority’s responsibilities for DBE certifications or the airport authority’s  capacity as a certifying organization. FAA officials also indicated that they  may also ask the airport authorities and other certifying organizations in  the state to review particular certification decisions or procedure as a  result of a complaint, investigation, compliance review, U.S. Department  of Transportation Office of Inspector General finding, or court  determination.
An FTA official we interviewed explained that although FTA usually does  not oversee the certification activities of any organizations that certify  DBEs, including certification decisions made by transit agencies, it  provides technical assistance to the organizations on certification issues.  In addition, FTA reviews the DBE program during its triennial reviews  and, when funding is available, conducts certification compliance reviews.  In 2009, FTA began conducting compliance reviews of each state’s  certification procedures and standards to ensure that their activities align  with the U.S. Department of Transportation’s DBE regulations on  certifications. According to an FTA official, FTA has completed between  six to ten certification compliance reviews to date and has plans to  conduct more reviews in subsequent years.
section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Catherine Colwell, Assistant  Director; Lauren Calhoun; Colin Fallon; Roshni Davé; Peter Del Toro;  Leia Dickerson; Joseph Fread; Sara Ann W. Moessbauer; Josh Ormond;  Lisa Shibata; and Sandra Sokol made key contributions to this report.