DATE: May 3, 2000

FROM: Barry McVay, CPCM

SUBJECT: Department of Transportation and Small Business Administration; Update on Reciprocal Disadvantaged Business Certifications

SOURCE: Secretary of Transportation Rodney E. Slater Letter, April 26, 2000

AGENCIES: Department of Transportation (DOT), Small Business Administration (SBA)

ACTION: Notice

SYNOPSIS: In a letter to DOT financial assistance recipients in the highway, transit, and airport programs regarding the memorandum of understanding (MOU) in which DOT and SBA created a reciprocal certification process for SBA's 8(a) Business Development and Small Disadvantaged Business (SDB) programs, and DOT's Disadvantaged Business Enterprise (DBE) program, Secretary Slater announced that DOT and SBA have established "interim reciprocal certification procedures for the SBA and DOT's recipients to follow until a standard uniform application form and a certification process are in place."

EDITOR'S NOTE: 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. 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 SBA SDB certification regulations are in Title 13 of the CFR, Part 124, 8(a) Business Development/Small Disadvantaged Business Status Determinations, Subpart B, Eligibility, Certification, and Protests Relating to Federal Small Disadvantaged Business Programs. To comply with the 1995 Supreme Court decision Adarand Constructors, Inc. v. Pena, the SBA requires that concerns claiming to be SDBs be certified by the SBA or private certifiers. Guidance on the 8(a) and SDB programs is available at http://www.sba.gov/gcmed/findit.htm.

FOR FURTHER INFORMATION CONTACT: Charles Klemstine, Federal Highway Administration (FHWA) Office of Civil Rights, 202-366-6753; David Micklin, Federal Aviation Administration (FAA) Office of Civil Rights, 202-267-3270; Gloria Dixon, Federal Transit Administration (FTA) Office of Civil Rights, 816-329-3920; or Laura Aguilar, Office of the General Counsel, 202-366-0365.

SUPPLEMENTAL INFORMATION: On November 23, 1999, Transportation Secretary Slater and SBA Administrator Aida Alvarez signed a reciprocal MOU in which DOT recognizes SBA-certified SDBs as eligible for its DBE program, and vice versa. Prior to this MOU, the two certification systems were operated independently of each other. However, since most of the firms certified as 8(a) concerns and SDBs by the SBA and are in the transportation industry are qualified for the DBE program and most DBEs are qualified to be 8(a) concerns and/or SDBs, SBA and DOT decided to streamline and expedite the certification process of each respective program by eliminating duplicative application procedures.

The provisions of the MOU are not binding on DOT recipients until the DBE regulations are amended in accordance with the Administrative Procedures Act (a notice of proposed rulemaking is being drafted). Therefore, SBA and DOT have established interim reciprocal certification procedures for the SBA and DOT's recipients to follow until a standard uniform application form and a certification process are in place. DOT recipients are not required to follow these procedures until a final rule is issued to amend DOT's regulations, but they may do so voluntarily. The interim procedures apply only to currently certified 8(a), SDB, or DBE firms seeking participation in the SBA or DOT programs for which they are not currently certified. Furthermore, the interim procedures do not preclude DOT from denying DBE certification to an 8(a) or SDB applicant that is not qualified to participate in the DBE program, nor is SBA precluded from denying 8(a) or SDB certification to a DBE applicant that is not qualified to participate. The burden of proof for reciprocal certification is on the applicant.

Until the uniform procedures are in place, the following are the additional qualifications the various types of firms must meet to be eligible to participate in one of the other programs, according to the interim procedures:

Applicants should forward a complete copy (with all applicable attachments) of their current 8(a), SDB, or DBE certification application package to the SBA or to the relevant DOT recipient, and should clarify that they are requesting reciprocal certification consideration. Applicants should include a copy of their certification letter indicating program eligibility.

Forward reciprocal packages to either:

U.S. Small Business Administration
Office of Small Disadvantaged Business Certification & Eligibility
409 Third Street, SW, MC 8800, SDB, 8th Floor
Washington, DC 20416


To a recipient of DOT funds (that is, a state department of transportation, airport, and/or transit authority). A list of DBE certification officers for state departments of transportation and primary airports is available at http://osdbuweb.dot.gov.

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

Copyright 2000 by Panoptic Enterprises. All Rights Reserved.

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