KENTUCKY TRANSPORTATION CABINET
DBE SUPPORT SERVICES
Commonly Asked Questions
What is a Disadvantaged Business Enterprise (DBE)?
A DBE is a for-profit small business concern that is at least 51 percent owned by one or more individual(s) who are both socially and economically disadvantaged. For example, in the case of a corporation, such individuals must own at least 51 percent of the each class of voting stock outstanding and 51 percent of the aggregate of all stock outstanding. Also, the management and daily business operations of a DBE business must be controlled by one or more of the socially and economically disadvantaged individuals who own it.
What are the criteria for DBE certification?
Eligibility requirements for certification as a DBE are stated in 49 CFR, Part 26, Subpart D-Certification Standards. The following six requirements must be proved by a DBE applicant, but does not cover all the requirements found in 49 CFR, Part 26.
Social and Economic Disadvantage: A disadvantaged owner must be a U.S. Citizen (or resident alien) and meet the Federal definition of socially and economically disadvantaged as defined in 49 CFR, Part 26.67. Presumptive groups include women, Black Americans, Hispanic Americans, Native Americans, Asian-Pacific Americans, Subcontinent Asian-Americans, or other minorities found to be disadvantaged by the regulations, or any individual found to be socially and economically disadvantaged on a case-by-case basis.
Rules to determine social and economic disadvantage also include extending the treatment of assets held by married couples to include domestic partnerships and civil unions that are legally recognized under state law. It also codifies guidance regarding the treatment of assets transferred to an immediate family member, or to a trust a beneficiary of which is an immediate family member, for less than fair market value, within two years prior to the submission of an application for certification or within two years of a participant’s annual program review.
Personal Net Worth: Only disadvantaged persons having a personal net worth (PNW) of less than $1,320,000 can be considered as a potential qualified DBE. Items excluded from a person’s net worth calculation include an individual’s ownership interest in the applicant’s firm, and his or her equity in their primary residence. Also, if an individual demonstrates that he/she is able to accumulate substantial wealth, the individual’s claim of economic disadvantage may be denied, even though the individual’s PNW is less than $1.32 million.
Business Size Standard: A firm (including affiliates) must be a small business as defined by the Small Business Administration (SBA). It must not have annual gross receipts over $23,980,000 in the previous three fiscal years ($56,420,000 for airport concessions in general with some exceptions). Depending on the type of work the business performs, other lower size standards may apply
Ownership: Must be a for-profit small business where socially and economically disadvantaged individuals own at least 51 percent interest and control management AND daily business operations; ownership cannot be in name only.
Independence: The business must not be affiliated with another firm in such a way as to compromise its independence and control. These include, but are not limited to, such areas as personnel, facilities, equipment, financial and/or bonding support, and other resources. This means a business should be operational on its own, without support beyond what is applicable under normal industry standards.
Management and Control: The socially and economically DBE owner(s) must possess the power to direct or cause the direction to the management and policies of the firm and to make day-to-day decisions, as well as long-term decisions on matters of management, policy and operations. Any delegation of duties must be revocable and where state law requires the owner to have a particular license or other credential in order to own and/or control a certain type of firm, then the socially and economically disadvantaged persons who own and control a potential DBE firm of that type must possess the required license or credential. A mere change in business structure to meet DBE requirements may not be sufficient to prove management and control.
Who qualifies to be a Disadvantaged Business Enterprise?
In general, to be eligible for the DBE Program, individuals must be U.S. citizens, or lawfully admitted permanent residents; who own 51%, or more of a "small business"; establish that they are both socially and economically disadvantaged within the definition of the regulation; and show through the regulation standards they control the business. The following general guidelines, taken in part from the applicable regulation (49 CFR Part 26); will help business owners determine whether they are eligible for the DBE Program:
Ownership - The business must be 51% owned by a socially and economically disadvantaged individual(s).
"Socially Disadvantaged" - You may be eligible if you are a member of one of the following presumptive groups --- Black Americans, Hispanic Americans, Native Americans, Asian-Pacific Americans, Subcontinent Asian Americans, Women and other groups found to be disadvantaged by the Small Business Administration (SBA). Persons who are not members of one of the aforementioned presumptive groups may also be eligible if they establish their "social" and "economic" disadvantaged on an individual basis. More information on how social and economic disadvantaged is determined can be found in Appendix E of 49 CFR Part 26. A determination of whether an individual meets DBE eligibility criteria is made on a case-by-case basis.
Personal Net Worth - Only socially disadvantaged persons having a personal net worth (PNW) of less than $1.32 million will be considered economically disadvantaged. Items excluded from a person's net worth calculation include an individual's ownership interest in the applicant firm, and the equity in his or her primary residence. Additional exclusions are available for owners of airport concessionaires (See 49 CFR Part 23).
Business Size Determination - A firm, including its affiliates must be a small business as defined by SBA size standards. It must not have had annual gross receipts in excess of $22.41 million over the previous three fiscal years. The U.S. Department of Transportation periodically adjusts this threshold for inflation.
Independence - The business must not rely on another firm or firms in such a way as to compromise its independence and control.
Control - A disadvantaged owner seeking certification must possess the power to direct or cause the direction of the management and policies of the firm. The owner must also have an overall understanding of, and managerial and technical competence and experience directly related to, the type of business in which the firm is engaged.
Burden of Proof Allocation - Applicants carry the burden of proof regarding their eligibility and must demonstrate with a preponderance of evidence that they meet all requirements concerning group membership or individual disadvantaged status, business size, independence, ownership, and control.
Additional program requirements and certification procedures are found in Regulation, 49 CFR Parts 23 and 26.
What is the DBE Certification Process?
Step 1 - Application is received
Step 2 - Application is checked for completeness. If incomplete, the applicant is sent a letter requesting the missing information.
Step 3 - Once the application is complete an on-site review is scheduled and conducted at the applicant's office. During the on-site review, interviews are conducted with the owners of the firm.
Step 4 - All materials submitted by the applicant and the on-site report are reviewed by the investigator, who determines if the applicant meets the eligibility standards. The investigator also reviews the work classification(s) requested and makes a recommendation regarding the adequacy of the applicant's resources to perform in these work areas.
Step 5 - The investigator reviews the application and makes a decision on the firm's eligibility for certification in the DBE program.
Step 6 - If the application is approved, the applicant is notified, in writing, of the certification approval.
Is there a cost to become certified?
No. There is no cost for the certification process.
Where can I get a copy of the certification application?
The link to download the DBE certification application is as follows: KYTC DBE application.
Firms located outside of Kentucky Transportation Cabinet that are certified in their home state and applying for DBE certification in the state of Kentucky Transportation Cabinet must submit the interstate application, please follow link to DBE Interstate application.
How long does my DBE certification last?
Certification is ongoing, however, once certified, the business will be required to submit an annual "Annual Affidavit of No Change" and supporting documentation on the anniversary date of its original certification. This form affirms there is no change that has occurred that impacts the company’s DBE status.
Why should I apply for DBE certification?
DBE goals are established for projects funded by the federal government. If you are interested in these contracts, you should apply for KYTC DBE certification.
Must I complete the DBE Uniform Certification Application as well as a DBE Personal Net Worth Statement for each owner?
Yes, those persons who are identified as social and economic disadvantaged individuals that make up 51 percent of the firms ownership are required to complete the application. Please follow link:KYTC Net Worth Application.
What are the goals and objectives of the KYTC DBE Program?
The KYTC Equal Opportunity Office seeks to:
Ensure nondiscrimination in the award and administration of contracts.
Create a level playing field on which DBEs can compete fairly for contracts.
Ensure that the Department's DBE Program is narrowly tailored.
Ensure that only firms that fully meet the eligibility standards are permitted to participate as DBEs.
Assist in the development of firms that can compete successfully in the marketplace outside the DBE Program.
What are the benefits of being a certified DBE?
Some advantages to becoming a DBE certified business include:
DBEs may be utilized to satisfy a DBE goal on any project with funding from the U.S. Department of Transportation (i.e. airports, transit agencies).
DBEs receive statewide exposure for contracting opportunities through the DBE Directory, which provides one list of all DBE firms certified in the State of Kentucky Transportation Cabinet. Prime contractors and consultants are strongly encouraged to use the DBE Directory to identify subcontractors/sub-consultants for their projects.
DBEs may participate in a variety of supportive services such as training and technical assistance if they are construction and consulting firms involved in a road, highway or bridge construction or maintenance related business. Many of these services are at no cost or reduced cost to certified DBEs.
How can I verify if a business is a certified DBE?
The Department maintains a DBE Directory identifying all firms eligible to participate as DBEs. The DBE Directory lists the firm's name, address, telephone number, and the type of work the firm has been certified to perform as a DBE. The Kentucky Transportation Cabinet DBE UCP Directory is available to the public electronically, on the internet. The DBE UCP Directory is updated as additions/changes are made.
Can a DBE become a prime contractor?
Yes, as a DBE prime contractor, the DBE firm must also comply with the good faith efforts requirements of 49 CFR Part 26. As a DBE prime contractor, count the entire value of the work to be performed by the DBE’s own forces, as well as the work that they commit to be performed by DBE subcontractors.
DBE bidders on prime contracts will be expected to make the same outreach efforts as other bidders and to document good faith efforts in situations where they do not fully meet contract goals.
Do I have to be pre-qualified to be DBE certified?
No, a firm is not required to be pre-qualified to become DBE certified.
Contractors must be pre-qualified with the Department in order to bid for the performance of road, bridge, or public transportation construction contracts greater than $2,000,000.00. Pre-qualification is accomplished by using an application process. The Contractor Pre-qualification process results in the issuance of a Certificate of Qualification for each successful applicant which lists the approved work classes and the Maximum Capacity Rating in dollars.
As a DBE prime contractor, what does it mean to be prequalified?
The Construction Prequalification Committee shall meet at least monthly to review TC 14‐1 forms, Application for Certificate of Eligibility (Exhibit 9002), and to issue eligible applicants a Certificate of Eligibility (Exhibit 9005). The committee shall meet at other times as necessary to review new or renewal applications and to hear appeals for reconsideration of Certificates of Eligibility previously issued. When requested by an applicant desiring to bid on a federal‐aid project, the committee shall act upon the application within 15 days after its receipt.
As a DBE how do I update information in the UCP Certified DBE database? (i.e., address, phone number, email address).
The process for current DBE’ to update their information in the UCP database can be accomplished when you submit the ANNUAL “No Change” AFFIDAVIT – FOR CONTINUTING DBE CERTIFICATION” in the section of the form entitled Significant Changes: (Explain changes in the business on a separate sheet of paper and attach to this document). No Change Affidavit.
As a current DBE company, how do I request additional NAICS code(s)?
The process for current DBE’ to request additional NAICS codes for their DBE company can be accomplished when you submit the ANNUAL “No Change” AFFIDAVIT – FOR CONTINUTING DBE CERTIFICATION” in the section of the form entitled “New Work Area/Services – REQUEST ADDITIONAL NAICS CODES: (Request to add additional NAICS Code(s), submit copies of three executed contracts and include NAICS Code (if known). For further information on this, review NAICS website copy the following address: http://www.sba.gov/size/
What is the Unified Certification Program (UCP)?
The UCP provides "one-stop shopping" where disadvantaged businesses that meet the DBE certification requirements and become certified are eligible to be used to meet the DBE goal requirements on any project with funding from the U.S. Department of Transportation. The UCP eliminates the need for multiple DBE certifications with recipients of funding from the U.S. Department of Transportation.
How do I apply for Interstate Certification?
If you are an existing DBE firm, the following documentation must be provided
1. A complete copy of the application form, all supporting documents, and any other information you have submitted to your home state or any other state related to your firm's certification. This includes affidavits of no change and any notices of changes that you have submitted, as well as any correspondences concerning your application or status as a DBE firm.
2. Any notices or correspondence from states other than your home state relating to your status as an applicant or certified DBE in those states, including facts and all documentation concerning if your firm was denied certification or decertified.
3. If you have filed a certification appeal with DOT, you must provide your letter of appeal and DOTs response.
4. You must submit Interstate Affidavit sworn to by the firm's owners before a person who is authorized by State law to administer oaths executed under penalty of perjury of the laws of the United States.
Note: Firms located outside of Kentucky Transportation Cabinet that is certified in their home state and applying for DBE certification in the state of Kentucky Transportation Cabinet must complete a interstate affidavit.
The processing time is approximately 90 days from the date the completed application and support documentation is provided.
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