Highway Contracting:

Disadvantaged Business Eligibility Guidance and Oversight Are Ineffective

RCED-92-148: Published: Sep 1, 1992. Publicly Released: Oct 14, 1992.

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Pursuant to a congressional request, GAO reviewed whether federal guidance and oversight engender effective and consistent state application of the legal eligibility standards governing the Department of Transportation's (DOT) Disadvantaged Business Enterprise Program.

GAO found that: (1) ineffective federal guidance has hindered state ability to consistently apply the eligibility criteria for the program; (2) DOT and the Federal Highway Administration (FHwA) have issued confusing and conflicting eligibility guidance; (3) DOT does not use a systematic approach for providing guidance; (4) there is no clearly designated lead office, uniform order or instruction, or procedure to develop, update, and coordinate the distribution of eligibility guidance to the states; (5) DOT and FHwA offices do not effectively coordinate their efforts to provide eligibility guidance and as a result the same firm could be certified as eligible in one state but denied eligibility in another; (6) DOT is revising the regulation governing the program to clarify eligibility guidance, but the revisions have been under way since 1988 and DOT did not meet a 1991 deadline; (7) FHwA is responsible for overseeing states' interpretation of the program, but it has not established a system to evaluate whether states correctly and uniformly apply eligibility criteria; and (8) FHwA requires its field offices to oversee state agencies' eligibility criteria, but the offices examined eligibility decisions in only 22 state agencies between 1988 and 1991.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: DOT published a notice of proposed rulemaking on December 9, 1992. Action to promulgate the final rulemaking is under way.

    Matter: In view of past delays, Congress may wish to consider legislation establishing a deadline for DOT to issue a revised Disadvantaged Business Enterprise Program regulation if the Secretary of Transportation does not establish and meet an agreed-upon deadline.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: DOT did not agree with this recommendation.

    Recommendation: The Secretary of Transportation should direct the Administrator, FHwA, to establish a monitoring system to: (1) collect and analyze state eligibility decision in order to ensure that Disadvantaged Business Enterprise Program eligibility criteria are correctly and uniformly applied among the states; and (2) identify areas where revisions or clarifications to DOT and FHwA guidance are needed.

    Agency Affected: Department of Transportation

  2. Status: Closed - Not Implemented

    Comments: DOT plans alternate measures--training and a DBE council.

    Recommendation: To improve the quality of federal guidance and the consistency of state eligibility decisions, the Secretary of Transportation should issue interim clarifying eligibility guidance on the Disadvantaged Business Enterprise Program to the states until a new regulation and uniform guidance are completed and issued.

    Agency Affected: Department of Transportation

  3. Status: Closed - Not Implemented

    Comments: DOT planned to address this recommendation as part of the proposed revisions to its Disadvantaged Business Enterprise Program regulations. Those revisions have been placed on indefinite hold pending the outcome of the ongoing executive branch review of governmentwide affirmative action programs.

    Recommendation: To improve the quality of federal guidance and the consistency of state eligibility decisions, the Secretary of Transportation should designate a lead office in DOT for developing, updating, and coordinating dissemination of Disadvantaged Business Enterprise Program guidance to the states, and establish formal coordination procedures among DOT and FHwA offices to ensure consistency.

    Agency Affected: Department of Transportation

  4. Status: Closed - Not Implemented

    Comments: DOT planned to address this recommendation as part of the proposed revisions to its Disadvantaged Business Enterprise Program regulations. Those revisions have been placed on indefinite hold pending the outcome of the ongoing executive branch review of governmentwide affirmative action programs.

    Recommendation: To improve the quality of federal guidance and the consistency of state eligibility decisions, the Secretary of Transportation should develop a uniform order or instruction delineating federal eligibility policy for state highway agencies certifying disadvantaged businesses, including procedures to update such an order or instruction in a timely manner to reflect and highlight new or revised guidance.

    Agency Affected: Department of Transportation

  5. Status: Closed - Not Implemented

    Comments: DOT's Disadvantaged Business Enterprise Program, along with all federal affirmative action programs, is the subject of an ongoing executive branch review. The purpose of the review is to determine whether the program as constituted is consistent with the Supreme Court decision Adderand v. Pena, and if not, what changes need to be made. Pending the outcome of this review, revisions to the Disadvantaged Business Enterprise Program final regulations have been placed on indefinite hold.

    Recommendation: To improve the quality of federal guidance and the consistency of state eligibility decisions, the Secretary of Transportation should work with the Senate Committee on Environment and Public Works and the House Committee on Public Works and Transportation to establish a mutually agreeable timetable and deadline for issuing a revised regulation for the Disadvantaged Business Enterprise Program.

    Agency Affected: Department of Transportation

 

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