Maryland’s chief financial leaders on Wednesday approved the use of outside help to reevaluate thousands of Disadvantaged Business Enterprises (DBE) at risk of permanently losing their certification status.
The review process comes due to DBE program changes under the Trump administration’s continued efforts to push back on Diversity, Equity and Inclusion (DEI) policies.
The DBE program ensures socially and economically disadvantaged small businesses receive equitable treatment when looking to contract with the state on federally funded transportation projections.
Businesses can also apply for an Airport Concession Disadvantaged Business Enterprise (ACDBE) certification, which allows firms to participate in airport concession — food vendors, retailers, etc. within an airport — opportunities and other projects funded by the U.S. Department of Transportation (USDOT).
The programs, which have been around for decades, underwent a federal rule change in October when USDOT determined “the use of race- and sex-based presumptions of disadvantage for determining DBE eligibility do not comply with constitutional requirements.”
Maryland is home to the largest number of certified firms in the country, including over 9,235 DBE firms and 479 ACDBE firms, accounting for up to 25% of certifications nationwide.
MDOT says existing state resources cannot perform reevaluation of close to 10,000 firms in a timely manner, which will have “serious negative impacts on the Maryland business community.”
The Board of Public Works — composed of Maryland’s governor, comptroller and treasurer — approved the Maryland Department of Transportation’s (MDOT) fast-tracked request to contract with firms that can help review DBE/ACDBE certifications and ensure they comply with the new updates.
“Every state now has to go through and create, recertify, reevaluate all of these firms on a case-by-case basis. And I'm certainly deeply concerned that the disruption to this framework will yield significant impacts, not just here in Maryland, but truly across the country,” Maryland Comptroller Brooke Lierman said during the board’s meeting.
Lierman called the new federal rule "irresponsible," noting all existing DBE and ACDBE certifications are now invalid and entities will have to submit updated documentation and personal narratives to support their "disadvantaged" status.
“For more than 40 years since its establishment, the DBE program has successfully provided small businesses, owned and controlled by socially and economically disadvantaged individuals, with really meaningful opportunities to compete for federally funded transportation contracts,” Lierman said “this interim final rule… really threatens to reverse decades of progress and to destabilize state financial management of federally funded projects.”
Maryland Treasurer Dereck Davis also condemned the program change, comparing the new rule to continued federal decisions that ultimately result in negative fiscal impacts to the state by no fault of its own.
“We'll be faced with the questions, ‘Why is this going on?’ or “Why are you handling that?’ And it's not state-generated. It's not actions that we've taken that have, you know, sort of destabilized the economy,” Davis said.
The firm(s) awarded the contract will assist the state’s Office of Minority Business Enterprise (OMBE) with reevaluation of DBE firms and help lessen the backlog of pending determinations.
