The  Surface Transportation Assistance Act of 1982 contained the first statutory  DBE provision for federal highway and transit programs, requiring that a  minimum of 10 percent of the funds provided by the act be expended with  small businesses owned and controlled by socially and economically  disadvantaged individuals, unless the Secretary of Transportation  determined otherwise. A 1995 Supreme Court decision had a significant impact on the federal DBE  program, as well as other federal programs that use race or ethnicity as  factors in decision-making. For example, under the prior regulations, states and transit  authorities were required to justify goals lower than 10 percent—the  amount identified in the statutory DBE provision. In contrast,  the new regulations require states and transit authorities to base their DBE  participation goals on demonstrable evidence of the number of “ready,  willing, and able” DBEs available in local markets relative to the number of  all businesses “ready, willing, and able” to participate in USDOT-assisted  contracts in such markets—representing the level of DBE participation  expected in the absence of discrimination. USDOT does not systematically track information on the discrimination  complaints filed by DBEs—information that could shed light on the  existence of discrimination against DBEs. In addition, USDOT could not provide the total number of investigations  launched as a result of the written discrimination complaints filed by DBEs  or information on the outcomes of these investigations. Without this information it is  impossible to define the universe of DBEs, compare them with the  transportation contracting community as a whole or gain a clear  understanding of the overall impact of the DBE program. DOT? DOT? 2. 3. What do selected sources indicate about discrimination or other factors  that may limit DBEs’ ability to compete for USDOT-assisted contracts? What is the impact of the DBE program on costs, competition, and job  creation as well as the impact of discontinuing federal and nonfederal  DBE programs? To determine how the DBE program has changed since 1999 and to identify  the characteristics of DBEs and non-DBEs that receive USDOT-assisted  contracts, we reviewed USDOT’s regulations and guidance pertaining to  the DBE program. 1. 4.
Why GAO Did This Study

The Department of Transportation's (DOT) Disadvantaged Business Enterprise (DBE) program seeks to remedy the effects of current and past discrimination against small businesses owned and controlled by socially and economically disadvantaged persons and to foster equal opportunity in transportation contracting. This report provides information on (1) important changes made to the program since 1999; (2) characteristics of DBEs and non-DBEs that receive DOT-assisted highway and transit contracts; (3) evidence of discrimination and other factors that may limit DBEs' ability to compete for DOT-assisted contracts; and (4) the programs impact on costs, competition, and job creation and the impact of discontinuing the federal and nonfederal DBE programs.

What GAO Found

GAO found that the program has changed significantly since DOT issued new regulations in 1999 in response to a 1995 Supreme Court decision that heightened standards for federal programs that use race or ethnicity as a criterion in decision-making. The new regulations overhauled the DBE goal-setting process. For example, states and transit authorities are no longer required to justify goals lower than 10 percent--the amount identified in the statutory DBE provision. Rather, goals are to be based on the number of "ready, willing, and able" DBEs in local markets. GAO was unable to determine the characteristics of DBE participants because of a lack of information. Without this information, it is impossible to define the universe of DBEs, compare them with the transportation contracting community as a whole, or gain a clear understanding of the programs impact. DOT does not systematically track information on discrimination complaints filed by DBEs. Although DOT receives written discrimination complaints filed by DBEs, it could not provide the total number of such complaints, the total number of investigations launched, or the outcomes of the investigations.