AAAE Survey on DOT’s Proposed Changes to the DBE and ACDBE Programs
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1. DOT proposes to change the scope of entities that qualify as an ACDBE. Under the proposal, a firm that has no previous experience with a particular type of work would now qualify. The department believes that firms should not be limited to those with past or current experience in a specific field. Do you agree with this proposal? Why or why not?
2. DOT proposes to adjust the definition of a “concession” for purposes of ACDBE regulations. Currently, a concession is considered a business, located on an airport, that is engaged in the sale of consumer goods or services to the “public.” Under the proposal, DOT would adjust the definition to define a concession as a business that serves the “traveling public.” This may limit the scope of concessions and exclude businesses such as gas stations or convenience stores. Do you agree with this proposal? Why or why not?
3. DOT addresses “long-term, exclusive agreements” under the ACDBE regulations. Currently, airports cannot enter into such agreements without FAA approval. Under the proposal, DOT would amend the definition to provide that lease agreement options are subject to the regulation’s requirements if the options (when exercised) result in a lease period of more than 5 years. DOT also requests comment on (a) whether to retain the existing regulation that defines “long term” to be 5 years or extend it to 10 years, and (b) how to address holdover tenancies that result in short-term agreements becoming long-term without FAA oversight. Do you have feedback on the proposed change and/or the department’s request for comment?
4. DOT proposes to expand reporting requirements for airports receiving grants. For Uniform Reports, airports would have to include additional data such as the names of companies winning contracts, field of works for each firm, and value of each contract, among others. For the DBE Bidder Lists, airports would have to enter into an online DOT system the names of companies bidding on and winning contracts, fields of work, and NAICS codes. For ACDBEs, DOT would create a new “active participants list” where airports would have to report all firms that have participated or attempted to participate in airport concession programs in previous years. Do you agree with these proposals? Why or why not?
5. DOT proposes a new “small business element” requirement for airports as part of their ACDBE program that is designed to foster small business participation. DOT would require airports to take reasonable steps to eliminate obstacles for small businesses, including unnecessary and unjustified bundling of concession opportunities that may preclude their participation. The element must be submitted to FAA for approval. Do you agree with this proposal? Why or why not?
6. DOT proposes to require prime contractors to submit an open-ended DBE Performance Plan (DPP) to airports when responding to a Request for Proposal on a design-build procurement project. DPPs would detail the type of work the prime will solicit DBEs to perform and a projected timeframe in which actual subcontracts will come to fruition. Parties may agree to make revisions throughout the project, but airports would have to monitor the prime contractor’s adherence to the plan. Do you agree with this proposal? Why or why not?
7. DOT proposes to limit the total allowable credit for a prime contractor’s expenditures with DBE suppliers to no more than 50% of the contract goal but allows exceptions to be granted on a contract-by-contract basis with FAA approval. It would also require airports to establish pre-award procedures to determine whether a DBE supplier submitted by a contractor/bidder as a regular dealer has demonstrated the ability and intent to perform as a regular dealer during the contract. Do you agree with this proposal? Why or why not?
8. DOT proposes new monitoring requirements for airports. First, airports would have to keep an accounting of each contractor’s progress in attaining a contract goal through progressive payments to the committed DBEs. Second, DOT clarifies that airports must have mechanisms to proactively monitor prime contractor’s compliance with subcontractors’ prompt payment and return of retainage requirements. Do you agree with these proposals? Why or why not?
9. DOT proposed several changes to the DBE firm certification process. First, a firm would have to have operations in the type of business it seeks to perform before it can apply for certification. Second, it would reduce the time a certifier has to extend a certification review from 60 to 30 days. Third, a firm could obtain automatic certification in another state if such firm has already obtained certification in one state (i.e., reciprocity). Fourth, DOT would reduce the time a firm has to appeal an in-state certification denial from 90 to 45 days. Do you agree with these proposals? Why or why not?
10. DOT proposes to increase the personal net worth (PNW) cap for DBE and ACDBE owners from $1.32 to $1.6 million, excluding retirement assets. It also would establish a mechanism for continual upward adjustments without formal rulemaking. Do you agree with this proposal? Why or why not?
11. DOT proposes to change the current standard for determining DBE firm ownership, which currently requires a socially and economically disadvantaged individual’s ownership in a firm to be “real, substantial, and continuing”—going beyond pro forma ownership of the firm—and include proof of capital contributions. Under the proposal, DOT would replace this with a “reasonable economic sense” (RES) standard. This means that the individual’s acquisition and maintenance of his/her ownership interest makes RES if ownership was acquired ownership at a fair value; he/she does not derive undue benefit relative to other owners; and he/she does not derive benefits or bear burdens that are clearly disproportionate to their ownership shares. Do you agree with this proposal? Why or why not?
12. DOT proposes to change how airports assess the extent to which disadvantaged individuals control their businesses. The proposed revisions would shift the focus from the actions and experience of the non-disadvantaged owner to those of the socially and economically disadvantaged individual. Airports would have to assess whether the disadvantaged owner “runs the show,” is the ultimate decision maker, has present control of the board of directors, understands the firm’s operations, and makes independent and major decisions that affect the firm’s operations and activities. Do you agree with this proposal? Why or why not?
13. DOT proposes to change the method by which airports would rebut a presumption that an individual is economically disadvantaged. Currently, airports examine a range of factors to determine if the individual has the “ability to accumulate substantial wealth.” Under the proposal, airports would have to determine whether a “reasonable person” would consider the owner economically disadvantaged, considering factors such as ready access to wealth, a lavish lifestyle, income or assets of a type or magnitude inconsistent with disadvantage, or other circumstances that such individuals do not typically enjoy. Do you agree with this proposal? Why or why not?
14. DOT proposes several changes to the DBE firm decertification process. First, an airport would be able to issue a final decertification notice without offering the firm a hearing if the firm does not provide its eligibility declaration within 15 days of the notice of intent to decertify. Second, only the socially and economically disadvantaged owner would be permitted to answer questions related to his or her control of the firm during an informal decertification hearing. Third, an airport would have to render a final decision within 30 days following a hearing or receiving written information from a DBE during the decertification process. Do you agree with these proposals? Why or why not?
15. DOT clarifies how to count DBE participation after decertification or other loss of eligibility (after it has entered into a subcontract with the prime contractor). Under the proposal, a prime contractor could add work or extend a completed subcontract with a decertified firm only if it obtains prior, written consent from the airport. Continued credit toward a contract goal would be disallowed under the proposal if the DBE’s ineligibility or decertification is the result of a purchase by, or merger with, a non-DBE firm. Do you agree with this proposal? Why or why not?
16. Do you have any recommendations for additional changes that DOT should make to DBE and/or ACDBE regulations? Please explain.
17. Please provide us with any additional feedback on DBE and ACDBE programs that may be helpful for us to consider as we respond to DOT’s proposal (e.g., potential benefits, challenges, or impacts associated with changes that have been proposed).
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