Construction Law Blog
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A drastic change has been implemented by the Washington State Department of Transportation (“WSDOT”) to the Disadvantaged Business Enterprise (“DBE”) Program in Washington. Effective June 1, 2017, WSDOT has implemented a “waiver” to exclude women-owned DBEs[i] from qualifying toward Condition of Award (“COA”) Goals on federally-funded projects. This move is significant. It will likely result in long-lasting detrimental impacts on the DBE community, women-owned businesses, and the entire construction community in Washington. The construction industry should be in an uproar over this change. Instead, it has largely gone unnoticed (likely because its impacts have not yet been felt). It is a de facto exclusion of women-owned businesses from the DBE program, and the severity of this change cannot be overstated.
Section 8(a) of Small Business Act Favoring Small, Disadvantaged Businesses Upheld Under Equal Protection Clause
The Equal Protection Clause of the Fourteenth Amendment to the U.S. Constitution requires that public bodies and institutions treat similarly-situated individuals in a similar manner. The government, therefore, cannot apply a law dissimilarly to people who are similarly situated. For example, in the mid-1970s, the Medical School of the University of California Davis (a public university) reserved 16 of 100 spaces in its class for “disadvantaged” students.[i] In the seminal case of Regents of Univ. of California v. Bakke, the U.S. Supreme Court ruled that racial preference was unconstitutional under the Equal Protection Clause because an applicant’s race was an explicit factor in determining disadvantage. In other contexts, however, the U.S. Supreme Court has found that “mere awareness of race in attempting to solve the problems facing [minority groups] does not doom that endeavor at the outset.”[ii]
Ahlers & Cressman has announced the promotion of Ellie Perka and James Lynch to partner of the firm. Both attorneys have demonstrated excellence and dedication in helping the firm’s clients resolve complicated construction disputes, and the firm is pleased to announce their joining the firm as partners.
Many of our veterans returning from the wars in Iraq and Afghanistan are interested in starting or buying their own business. To support our soldiers, the U.S. Department of Veterans Affairs (“VA”) implemented the Veteran and Small Business program, which creates set-asides for Service-Disabled Veteran-Owned Small Business and Veteran-Owned Small Business (“VOSB”). However, the far more lucrative set-asides with the Department of Transportation (“DOT”) are governed by the Disadvantaged Business Enterprise (“DBE”) program. For DOT set-asides, only women-owned and minority-owned small businesses qualify as DBEs.
The Veterans Benefit Act of 2003 established a procurement program for Service-Disabled Veteran-Owned Small Business (“SDVOSB”) concerns. This program provides that contracting officers may restrict competition to SDVOSB, and award a sole source or set aside contract where certain criteria are met. The Small Business Administration (“SBA”) then issued rules establishing a SDVOSB Concern Program. The SBA’s program establishes the criteria to be used in federal contracting to determine service disabled veteran status, business ownership and control requirements, and guidelines for establishing sole source and set aside procurement opportunities in protest and appeal procedures (see Code of Federal Regulations (“CFR”) 13 CFR § 125.8-125.10).
As discussed in a previous post on November 3, 2014, revisions to the Disadvantaged Business Enterprise (DBE) regulations in the works for over two years went into effect. In addition to the revisions to the application forms and size standard discussed, there were also changes focusing on ownership, control, appeals, and good faith efforts.
On October 2, 2014, the United States Department of Transportation (USDOT) issued a final rule impacting USDOT’s Disadvantaged Business Enterprise (DBE) regulations that has been in the works for over two years. The rule, first proposed on September 6, 2012, makes several changes to both the administration and the implementation of the DBE program regulations. Given the number of changes, this post will be broken up into two parts. Part one will focus on the new application forms as well as the changes related to economic disadvantage and size standards:
Small Business Administration Updates Small Business Standards - Increasing the Definition of "Small"
If your company participates in any small business, federal government procurement program, or certain state procurement programs such as the Federal Disadvantaged Business Enterprise (DBE) Program, the 8(a) Program of the Small Business Administration (SBA), or Washington State’s Minority or Women-Owned Business Enterprise (M/WBE) Programs, your size status may have changed on July 14, 2014, as a result of an update to the SBA’s small business standards. The majority of these small business procurement programs utilize SBA’s “Table of Small Business Standards” to define the government’s limits for what constitutes a small business. As the definition of “small” varies by industry and scope of work, this Table is based on the 2012 North American Industry Classification System (NAICS), which assigns six-digit codes to businesses based on their primary activity. In turn, each NAICS code is assigned either a revenue limit (based on average annual receipts) or average employment (number of employees). For example, for the past few years (since 2008), the NAICS code for framing contractors is 238130, and provided for a $14.1 million average revenue limit. Thus, any framing business with an average revenue (over the past three years) of less than $14.1 million met the definition of a “small business.”
The Washington State Department of Transportation ("WSDOT") is moving forward with its proposal to exclude non-minority women-owned businesses from Washington's Disadvantaged Business Enterprise ("DBE") program goals for federally-funded contracts. In early March 2014, WSDOT submitted its proposal to the U.S. Department of Transportation's Federal Highway Administration ("FHWA"). If approved by FHWA, this significant change will go into effect in Washington for the rest of federal fiscal year (FFY) 2014 and remain in place through FFY 2017. WSDOT's proposal was originally reported on the Ahlers & Cressman blog on January 9, 2014. Read our original article here.
WSDOT Makes a Drastic Move by Publishing its Intent to Exclude Non-Minority Women-Owned Businesses from DBE Participation Goals for 2014
On the eve of the holiday season, the Washington State Department of Transportation (“WSDOT”) published its intent to submit a proposal to the United States Department of Transportation (“USDOT”) with two striking and drastic changes to the Disadvantaged Business Enterprise (“DBE”) Program in Washington. These changes will have a radical effect on non-minority women-owned DBEs. Women-Owned Businesses (“WBEs”) should take swift action to halt WSDOT’s proposed changes, which will have lasting detrimental impacts on small businesses in Washington and the construction industry as a whole.