Government Removes Race & Gender-Based Presumptions of Economic Disadvantage: What Businesses Need to Know

What Happened? 

The United States Department of Transportation (DOT) recently issued an Interim Final Rule (IFR) that removes race- and gender-based presumptions of social and economic disadvantages in the Disadvantaged Business Enterprise (DBE) and Airport Concession Disadvantaged Business Enterprise (ACDBE) programs.  

Who Is Impacted? 

Current DBE/ACDBE firms will need to be recertified under the revised requirements. Minority and/or Women Owned Business Enterprise (MWBE) programs are also expected to be impacted by these changes. 

Construction, engineering, and architecture firms should pay particular attention to these changes, as these sectors are among the most impacted. 

What Changed? 

Prior to the IFR, there was a presumption that certain minority groups and women were socially and economically disadvantaged for purposes of determining DBE and ACDBE eligibility.  

DBE and ACDBE eligibility will now be based on the following:  

• Demonstrate that the owner is socially and economically disadvantaged based on his or her own experiences and circumstances that occurred within American society, and without regard to race or sex 
• Submit to the certifier a Personal Narrative establishing the existence of disadvantage by a preponderance of the evidence based on individualized proof regarding specific instances of economic hardship, systemic barriers, and denied opportunities that impeded the owner’s progress or success in education, employment, or business. This includes obtaining financing on terms available to similarly situated, non-disadvantaged persons. A Personal Narrative must:  
• State how and to what extent the impediments caused the owner economic harm, including a full description of type and magnitude, and establish that the owner is economically disadvantaged in fact relative to similarly situated non-disadvantaged individuals 
• Explain how and to what extent the impediments caused the owner economic harm, including a complete description of the type and magnitude 
• Include a current personal net worth statement and any other financial information the owner considers relevant 

Still Have Questions? 

You can review the IFR and guidance from DOT for more. Additionally, the team at EisnerAmper is available to discuss these major changes and how they impact you and your business specifically.