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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: August 29, 2000

FROM: Barry McVay, CPCM

SUBJECT: Department of Transportation; Inflation Adjustment of Size Limits on Participants in the Disadvantaged Business Enterprise (DBE) Program

SOURCE: Federal Register, August 29, 2000, Vol. 65, No. 168, page 52470

AGENCIES: Department of Transportation (DOT)

ACTION: Notice

SYNOPSIS: To participate in the DBE program, a firm's average annual receipts for the previous three years must be below a specific dollar amount. DOT is adjusting the DBE limitation from $16,600,000 to $17,420,000 to compensate for inflation since July 22, 1998, when the Transportation Equity Act for the 21st Century (TEA-21), Public Law 105-178, was enacted. TEA-21 established $16,600,000 as the statutory DBE limitation.

EDITOR'S NOTE: The DOT's DBE program requires that concerns be certified as eligible and qualified for contracting opportunities offered through transportation projects developed with the assistance of federal financing, such as projects by state and local highway, transit, airport and port authorities ("recipients"). Guidance on the DBE program (including application procedures) is at http://osdbuweb.dot.gov/business/dbe/index.html.

The DOT DBE program regulations are in Title 49 of the Code of Federal Regulations (CFR), Part 23, Participation by Disadvantaged Business Enterprise in Airport Concessions, and Part 26, Participation by Disadvantaged Business Enterprises in Department of Transportation Financial Assistance Programs. However, this notice only applies to DBEs under Part 26, and does not address the DBE program for airport concessions under Part 23. The maximum size standards for airport concessionaires under that program are in 49 CFR Part 23, Subpart F, Appendix A.

Recently, DOT and the Small Business Administration (SBA) created a reciprocal certification process in which DOT recognizes SBA-certified small disadvantaged businesses as eligible for its DBE program, and vice versa. For more on the process, see the May 3, 2000, FEDERAL CONTRACTS DISPATCH "Department of Transportation and Small Business Administration; Update on Reciprocal Disadvantaged Business Certifications."

EFFECTIVE DATE: August 29, 2000.

FOR MORE INFORMATION CONTACT: Laura Aguilar, Office of the Assistant General Counsel for Environmental, Civil Rights, and General Law, Department of Transportation, 400 Seventh Street, SW, Room 10102, Washington, DC 20590, 202-366-0365.

SUPPLEMENTAL INFORMATION: The DBE program is a program intended to provide contracting opportunities for small disadvantaged concerns in DOT's highway, mass transit and airport financial assistance programs. To restrict the program to small businesses, TEA-21 set $16,600,000 as the statutory limit on a firm's average annual gross receipts over the preceding three fiscal years. However, TEA-21 authorizes DOT to adjust the limitation to compensate for inflation.

The Department of Commerce's Bureau of Economic Analysis prepares constant dollar estimates of state and local government purchases of goods and services. The inflation rate on purchases by state and local governments since enactment of TEA-21 is calculated by dividing the price deflator for the first quarter of 2000 (109.56) by 1998's third quarter price deflator (104.40). The result of the calculation is 1.0494, which represents an inflation rate of 4.94% from the third quarter of 1998 through the first quarter of 2000. Multiplying $16,600,000 by 1.0494 equals $17,420,040, which is rounded off to the nearest $10,000, or $17,420,000. "Therefore, until further notice, if a firm's average gross annual receipts over the preceding three years do not exceed $17,420,000, it does not exceed the small business size limit contained in the statutes."

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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