Highway Contracting:

Disadvantaged Business Program Meets Contract Goal, but Refinements Are Needed

RCED-94-168: Published: Aug 17, 1994. Publicly Released: Aug 17, 1994.

Additional Materials:

Contact:

John H. Anderson, Jr
(202) 512-8024
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Pursuant to a legislative requirement, GAO reviewed the effectiveness of the Department of Transportation's (DOT) Disadvantaged Business Enterprise (DBE) program, focusing on whether: (1) states are meeting their DBE participation goals; (2) the Federal Highway Administration's (FHwA) efforts have been effective in ensuring state participation; (3) FHwA has effectively provided technical and business development assistance through its supportive services program; and (4) DBE program participation has resulted in business success.

GAO found that: (1) FHwA and states have successfully provided opportunities for disadvantaged businesses to compete for contracts in the federal-aid highway program; (2) between 1989 and 1993, states met or exceeded their goals for DBE participation; (3) although minority business enterprises receive the majority of DBE contract funds, states have increasingly met their DBE goals by contracting with women-owned businesses; (4) FHwA does not timely or effectively respond when states miss their DBE participation goals; (5) although FHwA has succeeded in providing contracting opportunities to DBE firms, its supportive services program is of limited effectiveness and duplicates those services available through the Small Business Administration (SBA); (6) in three of the six states reviewed, FHwA supportive services were often unavailable for lengthy periods and varied widely in scope and content; (7) FHwA efforts would be better served by helping DBE firms obtain SBA assistance because SBA programs are more established and provide assistance in several key areas that FHwA programs do not; (8) between 1988 and 1992, fewer than 1 percent of the DBE firms in the six states reviewed graduated from the program; (9) graduation from DBE programs does not indicate whether a firm will be successful or self-sufficient on the open market; and (10) DOT has not used graduation or any other performance measure to evaluate the success of the DBE program or individual DBE firms.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: Congress has not taken action on this matter for consideration, which was presented 2 years ago. In addition, 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.

    Matter: Because the FHwA supportive services program has been limited in effectiveness and duplicative of SBA programs, Congress may wish to consider terminating the program and limiting any future funding for business development assistance under the DBE program to services that address unique highway construction skill needs and do not duplicate services offered by SBA.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: DOT believed that existing procedures were functioning effectively to ensure that the problems identified in the report did not recur. In addition, 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 program regulations have been placed on indefinite hold.

    Recommendation: The Secretary of Transportation should direct the Administrator, FHwA, to issue additional guidance to the states and to FHwA field offices on procedures for following up when the states do not meet agreed DBE contracting goals. In particular, this guidance should contain explicit time frames for FHwA to: (1) respond to the states' justifications; and (2) follow up on directed corrective actions.

    Agency Affected: Department of Transportation

  2. 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 affirmative action programs governmentwide.

    Recommendation: The Secretary of Transportation, in consultation with the Administrator, SBA, should develop performance measures for evaluating the progress of the DBE program in helping disadvantaged firms develop into self-sustaining businesses capable of competing for contracts on the open market.

    Agency Affected: Department of Transportation

 

Explore the full database of GAO's Open Recommendations »

Sep 14, 2016

Sep 2, 2016

Aug 8, 2016

Jul 28, 2016

Jul 13, 2016

Jul 7, 2016

Jun 24, 2016

Jun 21, 2016

May 26, 2016

Looking for more? Browse all our products here