part 23—participation by mi- nority business...

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Office of the Secretary of Transportation Pt. 23

and vehicle servicing) constructed on, overor under the right-of-way of such highways.

(v) Neither the State, any other personssubject to this part, nor its contractors andsubcontractors may discriminate in theiremployment practices in connection withhighway construction projects or otherprojects assisted by the Federal Highway Ad-ministration.

(vi) The State shall not locate or design ahighway in such a manner as to require, onthe basis of race, color, or national origin,the relocation of any persons.

(vii) The State shall not locate, design, orconstruct a highway in such a manner as todeny reasonable access to, and use thereof,to any persons on the basis of race, color, ornational origin.

(3) Urban Mass Transportation Administra-tion. (i) Any person who is, or seeks to be, apatron of any public vehicle which is oper-ated as a part of, or in conjunction with, aproject shall be given the same access, seat-ing, and other treatment with regard to theuse of such vehicle as other persons withoutregard to their race, color, or national ori-gin.

(ii) No person who is, or seeks to be, an em-ployee of the project sponsor or lessees, con-cessionaires, contractors, licensees, or anyorganization furnishing public transpor-tation service as a part of, or in conjunctionwith, the project shall be treated less favor-ably than any other employee or applicantwith regard to hiring, dismissal, advance-ment, wages, or any other conditions andbenefits of employment, on the basis of race,color, or national origin.

(iii) No person or group of persons shall bediscriminated against with regard to therouting, scheduling, or quality of service oftransportation service furnished as a part ofthe project on the basis of race, color, or na-tional origin. Frequency of service, age andquality of vehicles assigned to routes, qual-ity of stations serving different routes, andlocation of routes may not be determined onthe basis of race, color, or national origin.

(iv) The location of projects requiring landacquisition and the displacement of personsfrom their residences and businesses may notbe determined on the basis of race, color, ornational origin.

(b) Obligations of the airport operator— (1)Tenants, contractors, and concessionaires. Eachairport operator shall require each tenant,contractor, and concessionaire who providesany activity, service, or facility at the air-port under lease, contract with, or franchisefrom the airport, to covenant in a form spec-ified by the Administrator, Federal AviationAdministration, that he will comply withthe nondiscrimination requirements of thispart.

(2) Notification of beneficiaries. The airportoperator shall: (i) Make a copy of this partavailable at his office for inspection during

normal working hours by any person askingfor it, and (ii) conspicuously display a sign,or signs, furnished by the FAA, in the mainpublic area or areas of the airport, statingthat discrimination based on race, color, ornational origin is prohibited on the airport.

(3) Reports. Each airport owner subject tothis part shall, within 15 days after he re-ceives it, forward to the Area Manager of theFAA Area in which the airport is located acopy of each written complaint charging dis-crimination because of race, color, or na-tional origin by any person subject to thispart, together with a statement describingall actions taken to resolve the matter, andthe results thereof. Each airport operatorshall submit to the area manager of the FAAarea in which the airport is located a reportfor the preceding year on the date and in aform prescribed by the Federal Aviation Ad-ministrator.

[35 FR 10080, June 18, 1970, as amended byAmdt. 21–1, 38 FR 5875, Mar. 5, 1973; Amdt. 21–3, 40 FR 14318, Mar. 31, 1975]

PART 23—PARTICIPATION BY MI-NORITY BUSINESS ENTERPRISE INDEPARTMENT OF TRANSPOR-TATION PROGRAMS

Subpart A—General

Sec.23.1 Purpose.23.2 Applicability.23.5 Definitions.23.7 Discrimination prohibited.

Subpart B [Reserved]

Subpart C—Department of TransportationFinancial Assistance Programs

23.41 General.23.43 General requirements for recipients.23.45 Required MBE program components.23.47 Counting MBE participation toward

meeting MBE goals.23.49 Maintenance of records and reports.23.51 Certification of the eligibility of mi-

nority business enterprises.23.53 Eligibility standards.23.55 Appeals of denials of certification as

an MBE.

Subpart D—Implementation of Section105(f) of the Surface Transportation As-sistance Act of 1982

23.61 Purpose.23.62 Definitions.23.63 Applicability.23.64 Submission of overall goals.23.65 Content of justification.

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49 CFR Subtitle A (10–1–98 Edition)§ 23.1

23.66 Approval and disapproval of overallgoals.

23.67 Special provision for transit vehiclemanufacturers.

23.68 Compliance.23.69 Challenge procedure.APPENDIX A TO SUBPART D—SECTION-BY-SEC-

TION ANALYSISAPPENDIX B TO SUBPART D—DETERMINATIONS

OF BUSINESS SIZEAPPENDIX C TO SUBPART D—GUIDANCE FOR

MAKING DETERMINATIONS OF SOCIAL ANDECONOMIC DISADVANTAGE

APPENDIX D TO SUBPART D—JUSTIFICATIONFOR REQUESTS FOR APPROVAL OF OVERALLGOALS OF LESS THAN TEN PERCENT

Subpart E—Compliance and Enforcement

23.73 Complaints.23.75 Compliance reviews of recipients.23.81 Conciliation procedures for financial

assistance programs.23.83 Enforcement proceedings for financial

assistance programs.23.85 Emergency enforcement procedure.23.87 Suspension and debarment; referral to

the Department of Justice.

Subpart F—Implementation of Section511(a)(17) of the Airport and AirwayImprovement Act of 1982, as Amend-ed

Sec.23.89 Definitions.23.91 Applicability.23.93 Requirements for airport sponsors.23.95 Elements of Disadvantaged Business

Enterprise (DBE) concession plan.23.97 Appeals of certification denials.23.99 Rationale for basing overall goals on

the number of concession agreements.23.101 Information required when none of

the overall annual goals is 10 percent ormore.

23.103 Obligations of concessionaires andcompetitors.

23.105 Privately-owned terminal buildings.23.107 Prohibition on long-term, exclusive

concession agreements.23.109 Compliance procedures.23.111 Effect on § 23.43(d).APPENDIX A TO SUBPART F—SIZE STANDARDS

FOR AIRPORT CONCESSIONAIRESSCHEDULE A—INFORMATION FOR DETERMINING

MINORITY BUSINESS ENTERPRISE ELIGI-BILITY

SCHEDULE B—INFORMATION FOR DETERMININGJOINT VENTURE ELIGIBILITY

AUTHORITY: Sec. 905 of the Regulatory Re-vitalization and Regulatory Reform Act of1978 (45 U.S.C. 803); sec. 520 of the Airport andAirway Improvement Act of 1982, as amended(49 U.S.C. APP. 2219); sec. 19 of the UrbanMass Transportation Act of 1964, as amended(49 U.S.C. 1615); sec. 106(c) of the Surface

Transportation and Uniform Relocation As-sistance Act of 1987 (49 U.S.C. App. 1601 note);sec. 505(d) and sec. 511(a)(17) of the Airportand Airway Improvement Act, as amendedby the Airport and Airway Safety and Capac-ity Expansion Act of 1987 (Pub. L. 100–223);Title 23 of the U.S. Code (relating to high-ways and traffic safety, particularly sec. 324thereof); Title VI of the Civil Rights Act (42U.S.C. 2000d et seq.); Executive Order 12265;Executive Order 12138.

SOURCE: 45 FR 21184, Mar. 31, 1980, unlessotherwise noted.

Subpart A—General

§ 23.1 Purpose.

(a) The purpose of this part is tocarry out the Department of Transpor-tation’s policy of supporting the fullestpossible participation of firms ownedand controlled by minorities andwomen, (MBEs) in Department ofTransportation programs. This in-cludes assisting MBEs throughout thelife of contracts in which they partici-pate.

(b) This part implements in part sec-tion 905 of the Railroad Revitalizationand Regulatory Reform Act of 1978 (45U.S.C. 803); section 30 of the Airportand Airway Development Act of 1970,as amended (49 U.S.C. 1730); section 19of the Urban Mass Transportation Actof 1964, as amended (Pub. L. 95–599);title VI of the Civil Rights Act of 1964(42 U.S.C. 2000d et seq.); the FederalProperty and Administrative ServicesAct of 1949 (40 U.S.C. 471 et seq.); andtitle 23 of the U.S. Code (relating tohighways and highway safety). Thisregulation supersedes all DOT regula-tions issued previously under these au-thorities, insofar as such regulationsaffect minority business enterprisematters in DOT financial assistanceprograms.

§ 23.2 Applicability.

This part applies to any DOT pro-gram through which funds are madeavailable to members of the public foraccomplishing DOT’s purposes. Con-tracts and subcontracts which are to beperformed entirely outside the UnitedStates, its possessions, Puerto Rico,and the North Mariana Islands, are ex-empted from this part.


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Office of the Secretary of Transportation § 23.5

§ 23.5 Definitions.Affirmative action means taking spe-

cific steps to eliminate discriminationand its effects, to ensure nondiscrim-inatory results and practices in the fu-ture, and to involve minority businessenterprises fully in contracts and pro-grams funded by the Department.

Applicant means one who submits anapplication, request, or plan to be ap-proved by a Departmental official or bya primary recipient as a condition toeligibility for DOT financial assist-ance; and application means such an ap-plication, request, or plan.

Compliance means the condition ex-isting when a recipient or contractorhas met and implemented the require-ments of this part.

Contract means a mutually bindinglegal relationship or any modificationthereof obligating the seller to furnishsupplies or services, including con-struction, and the buyer to pay forthem. For purposes of this part, a leaseis a contract.

Contractor means one who partici-pates, through a contract or sub-contract, in any program covered bythis part, and includes lessees.

Department or DOT means the De-partment of Transportation, includingits operating elements.

DOT-assisted contract means any con-tract or modification of a contract be-tween a recipient and a contractorwhich is paid for in whole or in partwith DOT financial assistance or anycontract or modification of a contractbetween a recipient and a lessee.

DOT financial assistance means finan-cial aid provided by the Department orthe United States Railroad Associationto a recipient, but does not include adirect contract. The financial aid maybe provided directly in the form of ac-tual money, or indirectly in the formof guarantees authorized by statute asfinancial assistance services of Federalpersonnel, title or other interest inreal or personal property transferredfor less than fair market value, or anyother arrangement through which therecipient benefits financially, includ-ing licenses for the construction or op-eration of a Deep Water Port.

Departmental element means the fol-lowing parts of DOT:

(a) The Office of the Secretary (OST);

(b) The Federal Aviation Administra-tion (FAA);

(c) The United States Coast Guard(USCG);

(d) The Federal Highway Administra-tion (FHWA);

(e) The Federal Railroad Administra-tion (FRA);

(f) The National Highway TrafficSafety Administration (NHTSA);

(g) The Urban Mass TransportationAdministration (UMTA);

(h) The St. Lawrence Seaway Devel-opment Corporation (SLSDC); and

(i) The Research and Special Pro-grams Administration (RSPA).

Joint venture means an association oftwo or more businesses to carry out asingle business enterprise for profit forwhich purpose they combine theirproperty, capital, efforts, skills, andknowledge.

Lessee means a business or personthat leases, or is negotiating to lease,property from a recipient or the De-partment on the recipient’s or Depart-ment’s facility for the purpose of oper-ating a transportation-related activityor for the provision of goods or servicesto the facility or to the public on thefacility.

Minority means a person who is a citi-zen or lawful permanent resident of theUnited States and who is:

(a) Black (a person having origins inany of the black racial groups of Afri-ca);

(b) Hispanic (a person of Mexican,Puerto Rican, Cuban, Central or SouthAmerican, or other Spanish culture ororigin, regardless of race);

(c) Portuguese (a person of Por-tuguese, Brazilian, or other Portugueseculture or origin, regardless of race);

(d) Asian American (a person havingorigins in any of the original peoples ofthe Far East. Southeast Asia, the In-dian subcontinent, or the Pacific Is-lands); or

(e) American Indian and Alaskan Na-tive (a person having origins in any ofthe original peoples of North America.)

(f) Members of other groups, or otherindividuals, found to be economicallyand socially disadvantaged by theSmall Business Administration undersection 8(a) of the Small Business Act,as amended (15 U.S.C. 637(a)).


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Minority business enterprise or MBEmeans a small business concern, as de-fined pursuant to section 3 of the SmallBusiness Act and implementing regula-tions, which is owned and controlled byone or more minorities or women. Thisdefinition applies only to financial as-sistance programs. For the purposes ofthis part, owned and controlled meansa business:

(a) Which is at least 51 per centumowned by one or more minorities orwomen or, in the case of a publiclyowned business, at least 51 per centumof the stock of which is owned by oneor more minorities or women; and

(b) Whose management and dailybusiness operations are controlled byone or more such individuals.

MBE coordinator means the officialdesignated by the head of the Depart-ment element to have overall respon-sibility for promotion of minority busi-ness enterprise in his/her Departmentalelement.

Noncompliance means the conditionexisting when a recipient or contractorhas failed to implement the require-ments of this part.

Primary recipient is a recipient whoreceives DOT financial assistance andpasses some or all of this assistance onto another recipient.

Program means any undertaking by arecipient to use DOT financial assist-ance, and includes the entire activityany part of which receives DOT finan-cial assistance.

Recipient means any entity, public orprivate, to whom DOT financial assist-ance is extended, directly or throughanother recipient for any program.

Secretary means the Secretary oftransportation or any person whom he/she has designated to act for him/her.

Set-aside means a technique whichlimits consideration of bids or propos-als to those submitted by MBEs.

[45 FR 21184, Mar. 31, 1980, as amended at 46FR 60459, Dec. 10, 1981]

§ 23.7 Discrimination prohibited.No person shall be excluded from par-

ticipation in, denied the benefits of, orotherwise discriminated against in con-nection with the award and perform-ance of any contract covered by thispart, on the grounds of race, color, na-tional origin, or sex.

Subpart B [Reserved]

Subpart C—Department of Trans-portation Financial AssistancePrograms

§ 23.41 General.(a) Responsibilities of applicants and re-

cipients. (1) All applicants and recipi-ents shall follow the requirements of§ 23.43.

(2) Applicants and recipients in thefollowing categories who will let DOT-assisted contracts shall implement anMBE program containing the elementsset forth in § 23.45 (e) through (i). Thisprogram shall be submitted for ap-proval to the DOT element concernedwith the application for financial as-sistance or project approval.

(i) Applicants for funds in excess of$250,000, exclusive of transit vehiclepurchases, under sections, 3, 5, 9, 9A, 17and 18 of the Urban Mass Transpor-tation Act of 1964, as amended, andFederal-aid urban systems.

(ii) Applicants for planning funds inexcess of $100,000 under section 6, 8, 9 or9A of the Urban Mass TransportationAct of 1964, as amended.

(iii) Applicants for Section 402 pro-gram funds of the National HighwayTraffic Safety Administration;

(iv) Applicants for funds in excess of$250,000 awarded by the Federal Avia-tion Administration to general avia-tion airports;

(v) Applicants for funds in excess of$400,000 awarded by the Federal Avia-tion Administration to non-hub air-ports; and

(vi) Applicants for planning funds inexcess of $75,000 awarded by the Fed-eral Aviation Administration.

(vii) Licensees or applicants for a li-cense under the Deepwater Port Act of1974 (33 U.S.C. 1501 et seq.).

(3) All applicants and recipients inthe following categories who will letDOT-assisted contracts shall imple-ment an MBE program containing allthe elements set forth in § 23.45. Theprogram shall be submitted for ap-proval to the DOT element concernedwith the application for assistance orproject approval.

(i) Applicants for Federal-aid high-way program funds;


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(ii) Applicants for funds in excess of$500,000, exclusive of transit vehiclepurchases, under sections 3, 5, 9, 9A, 17and 18 of the Urban Mass Transpor-tation Act of 1964, as amended, andFederal-aid urban systems;

(iii) Applicants for planning funds inexcess of $200,000 under section 6, 8, 9and 9A of the Urban Mass Transpor-tation Act of 1964, as amended.

(iv) Applicants for funds in excess of$500,000 awarded by the Federal Avia-tion Administration to large, mediumand small hub airports; and

(v) Applicants for financial assist-ance programs, including loan guaran-tees, by the Federal Railroad Adminis-tration and the U.S. Railway Associa-tion.

(b) Approval requirement. Applicationsand funding agreements are signed andauthorizations to proceed are approvedonly after the applicant’s MBE pro-gram has been approved by the Depart-mental element. This requirement ap-plies to applications, authorizations toproceed requested by Federal-aid high-way program recipients, and requestsfor draw downs from the U.S. RailwayAssociation submitted 90 days or morefollowing the effective date of thispart.

(c) Effect of agreement. The MBE pro-gram prepared by the applicant and thecommitment made by the applicant tocarry out the MBE program is incor-porated into and becomes part of thisagreement and subsequent financial as-sistance agreements. The agreementbetween the Department and the recip-ient shall contractually bind the recip-ient to the commitments made in theMBE program, as approved by the De-partment. Failure to keep these com-mitments shall be deemed noncompli-ance with this part. Once submittedand approved, an MBE program is ap-plicable to all DOT-assisted contractssolicited and let by the applicant afterthe approval date of the MBE programregardless of the approval date of thegrant or project under which the con-tracts are let.

(d) Other MBE programs. (1) Appli-cants meeting the criteria set forth inparagraphs (a)(2) and (3) of this sectionwho have formulated MBE programsunder previous requirements of DOT orother agencies shall revise these pro-

grams to conform to the requirementsof this part prior to the approval oftheir next application.

(2) An MBE program approved by oneDepartmental element is acceptable toall Departmental elements. Applicantshaving an approved MBE program arenot required to resubmit the programor to produce a new program for futureapplications, as long as all require-ments for approval continue to be metand implementation of the program isachieving compliance. The Depart-mental element reassesses its approvalof the MBE program of continuing re-cipients at least annually.

(e) Transit vehicle manufacturers.Transit vehicle manufacturers whowish to bid on UMTA-assisted transitvehicle procurement contracts shallhave a UMTA-approved MBE program.Each UMTA recipient shall requirethese manufacturers to certify thatthey have such a program as a condi-tion for bidding on UMTA-assisted con-tracts.

(f) Exemptions. The head of the De-partmental element may, under appro-priate circumstances, and with theconcurrence of the Secretary, grant de-viations or exemptions from this sub-part. A request for deviation or exemp-tion from this subpart shall be in writ-ing and shall include a showing as tohow the particular situation is excep-tional and how the modified programcomplies substantially with this part.If the applicant asserts that State orlocal law prohibits it from including aparticular provision in its program, theapplicant shall provide copies of alllegal citations supporting the claim.

[45 FR 21184, Mar. 31, 1980, as amended at 48FR 33444, July 21, 1983]

§ 23.43 General requirements for re-cipients.

(a) Each recipient shall agree toabide by the statements in paragraphs(a) (1) and (2) of this section. Thesestatements shall be included in the re-cipient’s DOT financial assistanceagreement and in all subsequent agree-ments between the recipient and anysubrecipient and in all subsequentDOT-assisted contracts between recipi-ents or subrecipients and any contrac-tor.


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(1) ‘‘Policy. It is the policy of the De-partment of Transportation that mi-nority business enterprises as definedin 49 CFR part 23 shall have the maxi-mum opportunity to participate in theperformance of contracts financed inwhole or in part with Federal fundsunder this agreement. Consequentlythe MBE requirements of 49 CFR part23 apply to this agreement.’’

(2) ‘‘MBE Obligation. (i) The recipientor its contractor agrees to ensure thatminority business enterprises as de-fined in 49 CFR part 23 have the maxi-mum opportunity to participate in theperformance of contracts and sub-contracts financed in whole or in partwith Federal funds provided under thisagreement. In this regard all recipientsor contractors shall take all necessaryand reasonable steps in accordancewith 49 CFR part 23 to ensure that mi-nority business enterprises have themaximum opportunity to compete forand perform contracts. Recipients andtheir contractors shall not discrimi-nate on the basis of race, color, na-tional origin, or sex in the award andperformance of DOT-assisted con-tracts.’’

(b) Each DOT financial assistanceagreement shall include the following:‘‘If as a condition of assistance the re-cipient has submitted and the Depart-ment has approved a minority businessenterprise affirmative action programwhich the recipient agrees to carryout, this program is incorporated intothis financial assistance agreement byreference. This program shall be treat-ed as a legal obligation and failure tocarry out its terms shall be treated asa violation of this financial assistanceagreement. Upon notification to the re-cipient of its failure to carry out theapproved program the Departmentshall impose such sanctions as noted in49 CFR part 23, subpart E, which sanc-tions may include termination of theagreement or other measures that mayaffect the ability of the recipient to ob-tain future DOT financial assistance.’’

(c) The recipient shall advise eachsubrecipient, contractor, or sub-contractor that failure to carry out therequirements set forth in paragraph (a)of this section shall constitute abreach of contract and, after the notifi-cation of the Department, may result

in termination of the agreement orcontract by the recipient or such rem-edy as the recipient deems appropriate.

(d) Recipients shall take action con-cerning lessees as follows:

(1) Recipients shall not exclude MBEsfrom participation in business opportu-nities by entering into long-term, ex-clusive agreements with non-MBEs forthe operation of major transportation-related activities or major activitiesfor the provision of goods and servicesto the facility or to the public on thefacility.

(2) Recipients required to submit af-firmative action programs under § 23.41(a)(2) or (a)(3) that have business oppor-tunities for lessees shall submit to theDepartment for approval with theirprograms overall goals for the partici-pation as lessees of firms owned andcontrolled by minorities and firmsowned and controlled by women. Thesegoals shall be for a specified period oftime and shall be based on the factorslisted in § 23.45(g)(5). Recipients shallreview these goals at least annually,and whenever the goals expire. The re-view shall analyze projected versus ac-tual MBE participation during the pe-riod covered by the review and anychanges in factual circumstances af-fecting the selection of goals. Follow-ing each review, the recipient shallsubmit new overall goals to the De-partment for approval. Recipients thatfail to meet their goals for MBE lesseesshall demonstrate to the Departmentin writing that they made reasonableefforts to meet the goals.

(3) Except as provided in this section,recipients are not required to includelessees in their affirmative action pro-grams. Lessees themselves are not sub-ject to the requirements of this part,except for the obligation of § 23.7 toavoid discrimination against MBEs.

§ 23.45 Required MBE program compo-nents.

(a) A policy statement, expressing acommitment to use MBEs in all aspects ofcontracting to the maximum extent fea-sible. (1) The applicant’s policymakingbody (Board, Council, etc.) shall issue apolicy statement, signed by the chair-person, which expresses its commit-ment to the program, outlines the var-ious levels of responsibility and states


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the objectives of the program. The pol-icy statement shall be circulatedthroughout the applicant’s organiza-tion and to minority, female, and non-minority community and business or-ganizations.

(b) The designation of liaison officer, aswell as such support staff as may be nec-essary and proper to administer the pro-gram, and a description of the authority,responsibility, and duties of the liaison of-ficer and support staff. (1) The Chief Ex-ecutive Officer of the recipient shalldesignate an MBE liaison officer andadequate staff to administer the MBEprogram. The MBE liaison officer shallreport directly to the Chief ExecutiveOfficer.

(2) The MBE liaison officer shall beresponsible for developing, managing,and implementing the MBE program ona day-to-day basis; for carrying outtechnical assistance activities forMBEs; and for disseminating informa-tion on available business opportuni-ties so that MBEs are provided an equi-table opportunity to bid on the appli-cant’s contracts.

(c) Procedures to ensure that MBEshave an equitable opportunity to competefor contracts and subcontracts. The re-cipient shall develop and use affirma-tive action techniques to facilitateMBE participation in contracting ac-tivities. These techniques include:

(1) Arranging solicitations, time forthe presentation of bids, quantities,specifications, and delivery schedulesso as to facilitate the participationMBEs.

(2) Providing assistance to MBEs inovercoming barriers such as the inabil-ity to obtain bonding, financing, ortechnical assistance.

(3) Carrying out information andcommunications programs on contract-ing procedures and specific contractingopportunities in a timely manner, withsuch programs being bilingual whereappropriate.

(d) Opportunities for the use of banksowned and controlled by minorities orwomen. (1) The recipient shall thor-oughly investigate the full extent ofservices offered by banks owned andcontrolled by minorities or women inits community and make the greatestfeasible use of these banks.

(2) Recipients shall also encourageprime contractors to use the services ofbanks owned and controlled by minori-ties or women.

(e) MBE directory. (1) The recipientshall have available a directory orsource list to facilitate identifyingMBEs with capabilities relevant togeneral contracting requirements andto particular solicitations. The recipi-ent shall make the directory availableto bidders and proposers in their effortsto meet the MBE requirements. It shallspecify which firms the Department,recipient, or the Small Business Ad-ministration has determined to be eli-gible MBEs in accordance with proce-dures set forth in this subpart. Recipi-ents subject to the disadvantaged busi-ness enterprise program requirementsof subpart D of this part shall compileand update their directories annually.The directories shall include the ad-dresses of listed firms.

(2) [Reserved](f) Procedures to ascertain the eligibility

of MBEs and joint ventures involvingMBEs. (1) To ensure that its MBE pro-gram benefits only firms owned andcontrolled by minorities or women, therecipient shall certify the eligibility ofMBEs and joint ventures involvingMBEs that are named by the competi-tors in accordance with this subpart.Recipients may, at their own discre-tion, accept certifications made byother DOT recipients.

(2) Recipients shall require theirprime contractors to make good faithefforts to replace an MBE subcontrac-tor that is unable to perform success-fully with another MBE. The recipientshall approve all substitutions of sub-contractors before bid opening and dur-ing contract performance, in order toensure that the substitute firms are el-igible MBEs.

(3) Recipients covered by the dis-advantaged business program require-ments of subpart D of this part shall,in determining whether a firm is an eli-gible disadvantaged business enter-prise, take at least the following steps:

(i) Perform an on-site visit to the of-fices of the firm and to any job sites onwhich the firm is working at the timeof the eligibility investigation;

(ii) Obtain the resumes or work his-tories of the principal owners of the


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firm and personally interview these in-dividuals;

(iii) Analyze the ownership of stockin the firm, if it is a corporation;

(iv) Analyze the bonding and finan-cial capacity of the firm;

(v) Determine the work history of thefirm, including contracts it has re-ceived and work it has completed;

(vi) Obtain or compile a list of equip-ment owned or available to the firmand the licenses of the firm and its keypersonnel to perform the work it seeksto do as part of the DBE program; and

(vii) Obtain a statement from thefirm of the type of work it prefers toperform as part of the DBE program.

(g) Percentage goals for the dollar valueof work to be awarded to MBEs. (1) Oncethe recipient has reviewed proposedcontracting to identify those contract-ing activities which have the greatestpotential for MBE participation, therecipient shall set goals that are prac-tical and related to the potential avail-ability of MBEs in desired areas of ex-pertise.

(2) The applicant/recipient shall es-tablish two types of MBE goals:

(i) Overall goals for its entire MBEprogram, for a specified period of time(e.g. one year), or for a specific project,(e.g. the construction of a facility); and

(ii) Contract goals on each specificprime contract with subcontractingpossibilities, which the bidder or pro-poser must meet or exceed or dem-onstrate that it could not meet despiteits best efforts.

(3)(i) Recipients shall submit theiroverall goals and a description of themethodology used in establishing themwith their MBE program. When theoverall goals expire, new overall goalsshall be set and submitted to the De-partment for approval. Contract goalsneed not be submitted in the appli-cant’s MBE program, but the programshall contain a description of the meth-odology to be used in establishingthem. Contract goals may require ap-proval by the Department prior to con-tract solicitation.

(ii) At the time the recipient submitsits overall goals to the Department forapproval, the recipient shall publish anotice announcing these goals, inform-ing the public that the goals and a de-scription of how they were selected are

available for inspection during normalbusiness hours at the principal office ofthe recipient for 30 days following thedate of the notice, and informing thepublic that the Department and the re-cipient will accept comments on thegoals for 45 days from the date of thenotice. The notice shall include ad-dresses to which comments may besent, and shall be published in generalcirculation media and available minor-ity-focus media and trade associationpublications, and shall state that thecomments are for informational pur-poses only.

(4) Recipients covered by the dis-advantaged business enterprise pro-gram requirements of subpart D of thispart shall establish an overall goal andcontract goal for firms owned and con-trolled by socially and economicallydisadvantaged individuals. Other re-cipients shall establish separate over-all and contract goals for firms ownedand controlled by minorities and firmsowned and controlled by women, re-spectively.

(5) The applicant shall consider thefollowing factors in setting overallgoals:

(i) Overall goals shall be based onprojection of the number and types ofcontracts to be awarded by the appli-cant and a projection of the numberand types of MBEs likely to be avail-able to compete for contracts from therecipient over the period during whichthe goals will be in effect.

(ii) Overall goals shall also be basedon past results of the applicant’s/re-cipient’s efforts to contract with MBEsand the reasons for the high or lowlevel of those results.

(6) The applicant/recipient shall re-view the overall goals at least annu-ally. The review process shall analyzeprojected versus actual MBE participa-tion during the previous year. The nec-essary revisions shall be made based onthe analysis and submitted to the De-partment for approval.

(7) Goals shall be set for specific con-tracts based on the known availabilityof qualified MBEs.

(8) Recipients and contractors shall,at a minimum, seek MBEs in the samegeographic area in which they seek


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contractors or subcontractors gen-erally for a given solicitation. If the re-cipient or contractor cannot meet thegoals using MBEs from this geographicarea, the recipient or contractor, aspart of its efforts to meet the goal,shall expand its search to a reasonablewider geographic area.

(h) A means to ensure that competitorsmake good faith efforts to meet MBE con-tract goals. (1) For all contracts forwhich contract goals have been estab-lished, the recipient shall, in the solici-tation, inform competitors that the ap-parent successful competitor will be re-quired to submit MBE participation in-formation to the recipient and that theaward of the contract will be condi-tioned upon satisfaction of the require-ments established by the recipient pur-suant to this subsection.

(i) The apparent successful competi-tor’s submission shall include the fol-lowing information:

(A) The names and addresses of MBEfirms that will participate in the con-tract;

(B) A description of the work eachnamed MBE firm will perform;

(C) The dollar amount of participa-tion by each named MBE firm.

(ii) The recipient may select the timeat which it requires MBE informationto be submitted. Provided, that thetime of submission shall be before therecipient commits itself to the per-formance of the contract by the appar-ent successful competitor.

(2) If the MBE participation submit-ted in response to paragraph (h)(1) ofthis section does not meet the MBEcontract goals, the apparent successfulcompetitor shall satisfy the recipientthat the competitor has made goodfaith efforts to meet the goals.

(i) The recipient may prescribe otherrequirements of equal or greater effec-tiveness in lieu of good faith efforts.Any recipient choosing alternative re-quirements shall inform the DOT officeconcerned by letter of the content ofthe requirements it has prescribedwithin 30 days of the effective date ofthis subsection. The recipient may putthese alternative requirements into ef-fect immediately and prior DOT ap-proval of alternative requirements isnot necessary.

(ii) If the Department determinesthat the alternative requirements arenot as or more effective than the goodfaith efforts provisions of this sub-section, the Department may requirethe recipient to use the good faith ef-forts requirements of this subsectioninstead of the requirements it has pre-scribed.

(3) Meeting MBE contract goals,making good faith efforts as providedin paragraph (h)(2) of this section, ormeeting requirements established byrecipients in lieu of good faith efforts,is a condition of receiving a DOT-as-sisted contract for which contractgoals have been established.

(i) [Reserved](j) A description of the methods by

which the recipient will require subrecipi-ents, contractors, and subcontractors tocomply with applicable MBE require-ments. (1) The recipient shall include inits MBE program a description and thespecific language of any preconditionsto subgrants or contracts pertaining tothe use of MBEs, including sub-contracting programs, it awards withDOT funds in addition to those re-quired by this section. It shall specifyon what size and/or type of contractsand subgrants it includes such pre-conditions. The description shall con-tain a summary of the ways the recipi-ent provides help to its subrecipients,contractors, and subcontractors indrafting and implementing their pro-grams for using MBEs. The descriptionshall also include the means by whichthe recipient enforces the requirementsplaced on subrecipients, contractorsand subcontractors.

(2) Any MBE subcontracting pro-grams required by the recipient in ad-dition to those required by this sectionshall be submitted to the recipient bythe apparent successful bidder/pro-poser. The bidders/proposers shall beadvised in the solicitation that failureto submit the additional MBE sub-contracting program shall make thebidder/proposer ineligible for award.

(k) Procedures by which the applicant/recipient will implement MBE set-asides.Where not prohibited by state or locallaw and determined by the recipient tobe necessary to meet MBE goals, proce-dures to implement MBE set-asidesshall be established. MBE set-asides


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shall be used only in cases where atleast three MBEs with capabilities con-sistent with contract requirementsexist so as to permit competition.

APPENDIX A TO § 23.45—GUIDANCECONCERNING GOOD FAITH EFFORTS

To determine whether a competitor thathas failed to meet MBE contract goals mayreceive the contract, the recipient must de-cide whether the efforts the competitor madeto obtain MBE participation were ‘‘goodfaith efforts’’ to meet the goals. Efforts thatare merely pro forma are not good faith ef-forts to meet the goals. Efforts to obtainMBE participation are not good faith effortsto meet the goals, even if they are sincerelymotivated, if, given all relevant cir-cumstances, they could not reasonably be ex-pected to produce a level of MBE participa-tion sufficient to meet the goals. In order toaward a contract to a competitor that hasfailed to meet MBE contract goals, the recip-ient must determine that the competitor’sefforts were those that, given all relevantcircumstances, a competitor actively and ag-gressively seeking to meet the goals wouldmake.

To assist recipients in making the requiredjudgment, the Department has prepared alist of the kinds of efforts that contractorsmay make in obtaining MBE participation.It is not intended to be a mandatory check-list; the Department does not require recipi-ents to insist that a contractor do any one,or any particular combination, of the thingson the list. Nor is the list intended to be ex-clusive or exhaustive. Other factors or typesof efforts may be relevant in appropriatecases. In determining whether a contractorhas made good faith efforts, it will usuallybe important for a recipient to look not onlyat the different kinds of efforts that the con-tractor has made, but also the quantity andintensity of these efforts.

The Department offers the following list ofkinds of efforts that recipients may consider:

(1) Whether the contractor attended anypre-solicitation or pre-bid meetings thatwere scheduled by the recipient to informMBEs of contracting and subcontracting op-portunities;

(2) Whether the contractor advertised ingeneral circulation, trade association, andminority-focus media concerning the sub-contracting opportunities;

(3) Whether the contractor provided writ-ten notice to a reasonable number of specificMBEs that their interest in the contract wasbeing solicited, in sufficient time to allowthe MBEs to participate effectively;

(4) Whether the contractor followed up ini-tial solicitations of interest by contactingMBEs to determine with certainty whetherthe MBEs were interested;

(5) Whether the contractor selected por-tions of the work to be performed by MBEsin order to increase the likelihood of meet-ing the MBE goals (including, where appro-priate, breaking down contracts into eco-nomically feasible units to facilitate MBEparticipation);

(6) Whether the contractor provided inter-ested MBEs with adequate information aboutthe plans, specifications and requirements ofthe contract;

(7) Whether the contractor negotiated ingood faith with interested MBEs, not reject-ing MBEs as unqualified without sound rea-sons based on a thorough investigation oftheir capabilities;

(8) Whether the contractor made efforts toassist interested MBEs in obtaining bonding,lines of credit, or insurance required by therecipient or contractor; and

(9) Whether the contractor effectively usedthe services of available minority commu-nity organizations; minority contractors’groups; local, state and Federal minoritybusiness assistance offices; and other organi-zations that provide assistance in the re-cruitment and placement of MBEs.(Title VI of the Civil Rights Act of 1964; sec.30 of the Airport and Airway DevelopmentAct of 1970, as amended; sec. 905 of the Rail-road Revitalization and Regulatory ReformAct of 1976; sec. 19 of the Urban Mass Trans-portation Act of 1964, as amended; 23 U.S.C.324; E.O. 11625; E.O. 12138)

[45 FR 21184, Mar. 31, 1980, as amended at 46FR 23461, Apr. 27, 1981; 52 FR 39230, Oct. 21,1987]

§ 23.47 Counting MBE participation to-ward meeting MBE goals.

MBE participation shall be countedtoward meeting MBE goals set in ac-cordance with this subpart as follows:

(a) Once a firm is determined to be aneligible MBE in accordance with thissubpart, the total dollar value of thecontract awarded to the MBE is count-ed toward the applicable MBE goals.

(b) The total dollar value of a con-tract to an MBE owned and controlledby both minority males and non-minor-ity females is counted toward the goalsfor minorities and women, respec-tively, in proportion to the percentageof ownership and control of each groupin the business. The total dollar valueof a contract with an MBE owned andcontrolled by minority women iscounted toward either the minoritygoal or the goal for women, but not toboth. The contractor or recipient em-ploying the firm may choose the goalto which the contract value is applied.


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(c) A recipient or contractor maycount toward its MBE goals a portionof the total dollar value of a contractwith a joint venture eligible under thestandards of this subpart equal to thepercentage of the ownership and con-trols of the MBE partner in the jointventure.

(d)(1) A recipient or contractor maycount toward its MBE goals only ex-penditures to MBEs that perform acommercially useful function in thework of a contract. An MBE is consid-ered to perform a commercially usefulfunction when it is responsible for exe-cution of a distinct element of thework of a contract and carrying out itsresponsibilities by actually perform-ing, managing, and supervising thework involved. To determine whetheran MBE is performing a commerciallyuseful function, the recipient or con-tractor shall evaluate the amount ofwork subcontracted, industry prac-tices, and other relevant factors.

(2) Consistent with normal industrypractices, an MBE may enter into sub-contracts. If an MBE contractor sub-contracts a significantly greater por-tion of the work of the contract thanwould be expected on the basis of nor-mal industry practices, the MBE shallbe presumed not to be performing acommercially useful function. TheMBE may present evidence to rebutthis presumption to the recipient. Therecipient’s decision on the rebuttal ofthis presumption is subject to reviewby the Department.

(e)(1) A recipient or contractor maycount toward its MBE, DBE or WBEgoals 60 percent of its expenditures formaterials and supplies required under acontract and obtained from an MBE,DBE or WBE regular dealer, and 100percent of such expenditures to anMBE, WBE, or DBE manufacturer.

(2) For purposes of this section, amanufacturer is a firm that operates ormaintains a factory or establishmentthat produces on the premises the ma-terials or supplies obtained by the re-cipient or contractor.

(3) For purposes of this section, a reg-ular dealer is a firm that owns, oper-ates, or maintains a store, warehouse,or other establishment in which thematerials or supplies required for theperformance of the contract are

bought, kept in stock, and regularlysold to the public in the usual course ofbusiness. To be a regular dealer, thefirm must engage in, as its principalbusiness, and in its own name, the pur-chase and sale of the products in ques-tion. A regular dealer in such bulkitems as steel, cement, gravel, stone,and petroleum products need not keepsuch products in stock, if it owns or op-erates distribution equipment. Brokersand packagers shall not be regarded asmanufacturers or regular dealers with-in the meaning of this section.

(f) A recipient or contractor maycount toward its MBE, DBE, or WBEgoals the following expenditures toMBE, DBE, or WBE firms that are notmanufacturers or regular dealers:

(1) The fees or commissions chargedfor providing a bona fide service, suchas professional, technical, consultantor managerial services and assistancein the procurement of essential person-nel, facilities, equipment, materials orsupplies required for performance ofthe contract, provided that the fee orcommission is determined by the recip-ient to be reasonable and not excessiveas compared with fees customarily al-lowed for similar services.

(2) The fees charged for delivery ofmaterials and supplies required on ajob site (but not the cost of the mate-rials and supplies themselves) when thehauler, trucker, or delivery service isnot also the manufacturer of or a regu-lar dealer in the materials and sup-plies, provided that the fee is deter-mined by the recipient to be reasonableand not excessive as compared withfees customarily allowed for similarservices.

(3) The fees or commissions chargedfor providing any bonds or insurancespecifically required for the perform-ance of the contract, provided that thefee or commission is determined by therecipient to be reasonable and not ex-cessive as compared with fees cus-tomarily allowed for similar services.

[45 FR 21184, Mar. 31, 1980, as amended at 52FR 39230, Oct. 21, 1987]

§ 23.49 Maintenance of records and re-ports.

(a) In order to monitor the progressof its MBE program the applicant/re-cipient shall develop a recordkeeping


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system which will identify and assessMBE contract awards, prime contrac-tors’ progress in achieving MBE sub-contract goals, and other MBE affirma-tive action efforts.

(b) Specifically, the applicant/recipi-ent shall maintain records showing:

(1) Procedures which have beenadopted to comply with the require-ments of this part.

(2) Awards to MBEs. These awardsshall be measured against projectedMBE awards and/or MBE goals. To as-sist in this effort, the applicant shallobtain regular reports from prime con-tractors on their progress in meetingcontractual MBE obligations.

(3) Specific efforts to identify andaward contracts to MBEs.

(c) Records shall be available uponthe request of an authorized officer oremployee of the government.

(d)(1) The recipient shall submit re-ports conforming in frequency and for-mat to existing contract reporting re-quirements of the applicable Depart-mental element. Where no such con-tract reporting requirements exist,MBE reports shall be submitted quar-terly.

(2) These reports shall include as aminimum:

(i) The number of contracts awardedto MBEs;

(ii) A description of the general cat-egories of contracts awarded to MBEs;

(iii) The dollar value of contractsawarded to MBEs;

(iv) The percentage of the dollarvalue of all contracts awarded duringthis period which were awarded toMBEs; and

(v) An indication of whether and theextent of which the percentage met orexceeded the goal specified in the ap-plication.

(3) The records and reports requiredby this section shall provide informa-tion relating to firms owned and con-trolled by minorities separately frominformation relating to firms ownedand controlled by women. If therecords and reports include any section8(a) contractors that are not minoritiesor women, information concerningthese contractors shall also be recordedand reported separately.

§ 23.51 Certification of the eligibility ofminority business enterprises.

(a) To ensure that this part benefitsonly MBEs which are owned and con-trolled in both form and substance byone or more minorities or women, DOTrecipients shall use Schedules A and B(reproduced at the end of this part) tocertify firms who wish to participate asMBEs in DOT under this part.

(b) Except as provided in paragraph(c) of this section, each business, in-cluding the MBE partner in a joint ven-ture, wishing to participate as a MBEunder this part in a DOT-assisted con-tract shall complete and submitSchedue A. Each entity wishing to par-ticipate as a joint venture MBE underthis part in DOT-assisted contractsshall in addition complete and submitSchedule B. The schedule(s) shall besigned and notarized by the authorizedrepresentative of the business entity. Abusiness seeking certification as anMBE shall submit the required sched-ules with its bid or proposal for trans-mission to the contracting agency in-volved.

(c) Under the following cir-cumstances, a business seeking to par-ticipate as an MBE under this subpartneed not submit schedule A or B:

(1) If a DOT recipient has establisheda different certification process thatDOT has determined to be as or moreeffective than the process provided forby this section. Where such a processexists, potential MBE contractors shallsubmit the information required by therecipient’s process.

(2) If the potential MBE contractorstates in writing that it has submittedthe same information to or has beencertified by the DOT recipient in-volved, any DOT element, or anotherFederal agency that uses essentiallythe same definition and ownership andcontrol criteria as DOT. The potentialMBE contractor shall obtain the infor-mation and certification (if any) fromthe other agency and submit it to therecipient or cause the other agency tosubmit it. The recipient may rely uponsuch a certification. Where anotheragency has collected information butnot made a determination concerningeligibility, the DOT recipient shallmake its own determination based on


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the information it has obtained fromthe other agency.

(3) If the potential MBE contractorhas been determined by the SmallBusiness Administration to be ownedand controlled by socially and eco-nomically disadvantaged individualsunder section 8(a) of the Small Busi-ness Act, as amended.

§ 23.53 Eligibility standards.(a) The following standards shall be

used by recipients in determiningwhether a firm is owned and controlledby one or more minorities or women isand shall therefore be eligible to becertified as an MBE. Businesses ag-grieved by the determination may ap-peal in accordance with procedures setforth in § 23.55.

(1) Bona fide minority group mem-bership shall be established on thebasis of the individual’s claim that heor she is a member of a minority groupand is so regarded by that particularminority community. However, the re-cipient is not required to accept thisclaim if it determines the claim to beinvalid.

(2) An eligible minority business en-terprise under this part shall be anindependent business. The ownershipand control by minorities or womenshall be real, substantial, and continu-ing and shall go beyond the pro formaownership of the firm as reflected in itsownership documents. The minority orwomen owners shall enjoy the cus-tomary incidents of ownership andshall share in the risks and profitscommensurate with their ownership in-terests, as demonstrated by a examina-tion of the substance rather than formof arrangements. Recognition of thebusiness as a separate entity for tax orcorporate purposes is not necessarilysufficient for recognition as an MBE.In determining whether a potentialMBE is an independent business, DOTrecipients shall consider all relevantfactors, including the date the businesswas established, the adequacy of its re-sources for the work of the contract,and the degree to which financial,equipment leasing, and other relation-ships with nonminority firms varyfrom industry practice.

(3) The minority or women ownersshall also possess the power to direct

or cause the direction of the manage-ment and policies of the firm and tomake the day-to-day as well as majordecisions on matters of management,policy, and operations. The firm shallnot be subject to any formal or infor-mal restrictions which limit the cus-tomary discretion of the minority orwomen owners. There shall be no re-strictions through, for example, bylawprovisions, partnership agreements, orcharter requirements for cumulativevoting rights or otherwise that preventthe minority or women owners, with-out the cooperation or vote of anyowner who is not a minority or woman,from making a business decision of thefirm.

(4) If the owners of the firm who arenot minorities or women are dispropor-tionately responsible for the operationof the firm, then the firm is not con-trolled by minorities or women andshall not be considered an MBE withinthe meaning of this part. Where the ac-tual management of the firm is con-tracted out to individuals other thanthe owner, those persons who have theultimate power to hire and fire themanagers can, for the purposes of thispart, be considered as controlling thebusiness.

(5) All securities which constituteownership and/or control of a corpora-tion for purposes of establishing it asan MBE under this part shall be helddirectly by minorities or women. Nosecurities held in trust, or by anyguardian for a minor, shall be consid-ered as held by minority or women indetermining the ownership or controlof a corporation.

(6) The contributions of capital or ex-pertise by the minority or women own-ers to acquire their interests in thefirm shall be real and substantial. Ex-amples of insufficient contributions in-clude a promise to contribute capital, anote payable to the firm or its ownerswho are not socially and economicallydisadvantaged, or the mere participa-tion as an employee, rather than as amanager.

(b) In addition to the above stand-ards, DOT recipients shall give specialconsideration to the following cir-cumstances in determining eligibilityunder this part.


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(1) Newly formed firms and firmswhose ownership and/or control haschanged since the date of the advertise-ment of the contract are closely scruti-nized to determine the reasons for thetiming of the formation of or change inthe firm.

(2) A previous and/or continuing em-ployer-employee relationship betweenor among present owners is carefullyreviewed to ensure that the employee-owner has management responsibilitiesand capabilities discussed in this sec-tion.

(3) Any relationship between an MBEand a business which is not an MBEwhich has an interest in the MBE iscarefully reviewed to determine if theinterest of the non-MBE conflicts withthe ownership and control require-ments of this section.

(c) A joint venture is eligible underthis part if the MBE partner of thejoint venture meets the standards foran eligible MBE set forth above and theMBE partner is responsible for a clear-ly defined portion of the work to beperformed and shares in the ownership,control, management responsibilities,risks, and profits of the joint venture.

(d) A joint venture is eligible to com-pete in an MBE set-aside under thispart if the MBE partner of the jointventure meets the standards of an eli-gible MBE set forth above, and theMBE partner’s share in the ownership,control, and management responsibil-ities, risks, and profits of the joint ven-ture is at least 51 percent and the MBEpartner is responsible for a clearly de-fined portion of the work to be per-formed.

(e) A business wishing to be certifiedas an MBE or joint venture MBE by aDOT recipient shall cooperate with therecipient in supplying additional infor-mation which may be requested inorder to make a determination.

(f) Once certified, an MBE shall up-date its submission annually by sub-mitting a new Schedule A or certifyingthat the Schedule A on file is still ac-curate. At any time there is a changein ownership or control of the firm, theMBE shall submit a new schedule A.

(g) Except as provided in § 23.55, thedenial of a certification by the Depart-ment or a recipient shall be final, forthat contract and other contracts

being let by the recipient at the timeof the denial of certification. MBEs andjoint ventures denied certification maycorrect deficiencies in their ownershipand control and apply for certificationonly for future contracts.

(h) Recipients shall safeguard fromdisclosure to unauthorized persons in-formation that reasonably may be re-garded as confidential business infor-mation, consistent with Federal, stateand local law.

§ 23.55 Appeals of denials of certifi-cation as an MBE.

(a) Filing. Any firm which believesthat it has been wrongly denied certifi-cation as an MBE or joint ventureunder §§ 23.51 and 23.53 by the Depart-ment or a recipient of DOT financialassistance may file an appeal in writ-ing, signed and dated, with the Depart-ment. The appeal shall be filed no laterthan 180 days after the date of denial ofcertification. The Secretary may ex-tend the time for filing or waive thetime limit in the interest of justice,specifying in writing the reasons for sodoing. Third parties who have reasonto believe that another firm has beenwrongly denied or granted certificationas an MBE or joint venture may advisethe Secretary. This information is notconsidered an appeal pursuant to thissection.

(b) Decision to investigate. The Sec-retary ensures that a prompt investiga-tion is made pursuant to prescribedDOT title VI investigation procedures.

(c) Status of certification during the in-vestigation. The Secretary may at his/her discretion, deny the MBE or jointventure in question eligibility to par-ticipate as an MBE DOT-assisted con-tracts let during the pendancy of theinvestigation, after providing the MBEor joint venture in question an oppor-tunity to show cause by written state-ment to the Secretary why this shouldnot occur.

(d) Cooperation in investigation. Allparties shall cooperate fully with theinvestigation. Failure or refusal to fur-nish requested information or otherfailure to cooperate is a violation ofthis part.

(e) Determinations. The Secretarymakes one of the following determina-tions and informs the MBE or joint


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venture in writing of the reasons forthe determination:

(1) The MBE or joint venture is cer-tified; or

(2) The MBE or joint venture is noteligible to be certified and is denied eli-gibility to participate as an MBE inany direct or DOT-assisted contractuntil a new application for certifi-cation is approved by the recipient.

Subpart D—Implementation ofSection 105(f) of the SurfaceTransportation Assistance Actof 1982

SOURCE: 48 FR 33442, July 21, 1983, unlessotherwise noted.

§ 23.61 Purpose.(a) The purpose of this subpart is to

implement section 106(c) of the SurfaceTransportation and Uniform Reloca-tion Assistance Act of 1987 (Pub. L. 100–17) and section 105(f) of the Airport andAirway Safety and Capacity ExpansionAct of 1987 (Pub. L. 100–223) so that, ex-cept to the extent the Secretary deter-mines otherwise, not less than ten per-cent of the funds authorized by the Actfor the programs listed in § 23.63 of thissubpart is expended with small busi-ness concerns owned and controlled bysocially and economically disadvan-taged individuals.

(b) The ten percent level of participa-tion for disadvantaged businesses es-tablished by section 106(c) and section105(f) will be achieved if recipientsunder the programs covered by thissubpart set and meet overall disadvan-taged business goals of at least ten per-cent.

[48 FR 33442, July 21, 1983, as amended at 52FR 39230, Oct. 21, 1987; 53 FR 18286, May 23,1988]

§ 23.62 Definitions.The following definitions apply to

this subpart. Where these definitionsare inconsistent with the definitions of§ 23.5 of this part, these definitions con-trol for all other purposes under thispart.

Act means the Surface Transpor-tation and Uniform Relocation Assist-ance Act of 1987 (Pub. L. 100–17), withrespect to financial assistance pro-

grams of the FHWA and UMTA, andthe Airport and Airway Safety and Ca-pacity Expansion Act of 1987 (Pub. L.100–223), with respect to FAA programs.

Disadvantaged business means a smallbusiness concern: (a) Which is at least51 percent owned by one or more so-cially and economically disadvantagedindividuals, or, in the case of any pub-licly owned business, at least 51 per-cent of the stock of which is owned byone or more socially and economicallydisadvantaged individuals; and (b)whose management and daily businessoperations are controlled by one ormore of the socially and economicallydisadvantaged individuals who own it.

Small business concern means a smallbusiness as defined pursuant to section3 of the Small Business Act and rel-evant regulations promulgated pursu-ant thereto except that a small busi-ness concern shall not include any con-cern or group of concerns controlled bythe same socially and economicallydisadvantaged individual or individualswhich has annual average gross re-ceipts in excess of $14 million over theprevious three fiscal years. The Sec-retary shall adjust this figure fromtime to time for inflation.

Socially and economically disadvan-taged individuals means those individ-uals who are citizens of the UnitedStates (or lawfully admitted perma-nent residents) and who are women,Black Americans, Hispanic Americans,Native Americans, Asian-Pacific Amer-icans, or Asian-Indian Americans andany other minorities or individualsfound to be disadvantaged by the SmallBusiness Administration pursuant tosection 8(a) of the Small Business Act.Recipients shall make a rebuttable pre-sumption that individuals in the fol-lowing groups are socially and eco-nomically disadvantaged. Recipientsalso may determine, on a case-by-casebasis, that individuals who are not amember of one of the following groupsare socially and economically dis-advantaged.

(a) Black Americans which includespersons having origins in any of theBlack racial groups of Africa;

(b) Hispanic Americans which includespersons of Mexican, Puerto Rican,Cuban, Central or South American, or


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other Spanish or Portuguese culture ororigin, regardless of race;

(c) Native Americans which includespersons who are American Indians, Es-kimos, Aleuts, or Native Hawaiians;

(d) Asian-Pacific Americans which in-cludes persons whose origins are fromJapan, China, Taiwan, Korea, Vietnam,Laos, Cambodia, the Philippines,Samoa, Guam, the U.S. Trust Terri-tories of the Pacific, and the NorthernMarianas; and

(e) Asian-Indian Americans which in-cludes persons whose origins are fromIndia, Pakistan, and Bangladesh.


§ 23.63 Applicability.This subpart applies to all DOT fi-

nancial assistance in the following cat-egories that recipients expend in DOT-assisted contracts:

(a) Federal-aid highway funds au-thorized by title I of the Act;

(b) Urban mass transportation fundsauthorized by title I or III of the Act orthe Urban Mass Transportation Act of1964, as amended; and

(c) Funds authorized by title I, II (ex-cept section 203) or III of the SurfaceTransportation Assistance Act of 1982(Pub. L. 97–424) and obligated on orafter April 2, 1987.

(d) Funds authorized under sectiontitle I of the Airport and Airway Safe-ty and Capacity Expansion Act of 1987(Pub. L. 100–223).

[52 FR 39231, Oct. 21, 1987, as amended at 53FR 18286, May 23, 1988]

§ 23.64 Submission of overall goals.(a) Each recipient of funds to which

this subpart applies that is required tohave an MBE program under § 23.41 ofthis part shall establish an overall goalfor the use of disadvantaged businesses.

(b) Each recipient required to estab-lish an overall goal shall calculate it interms of a percentage of one of the fol-lowing bases, as applicable:

(1) For recipients of Federal-aid high-way funds, all such funds that the re-cipient will expend in DOT-assistedcontracts in the forthcoming fiscalyear; or

(2) For recipients of urban masstransportation or airport funds, all

such funds (exclusive of funds to be ex-pended for purchases of transit vehi-cles) that the recipient will expend inDOT-assisted contracts in the forth-coming fiscal year. In appropriatecases, the UMTA or FAA Adminis-trator may permit recipients to expressoverall goals as a percentage of fundsfor a particular grant, project, or groupof grants and/or projects.

(c) Each recipient of Federal-aidhighway funds, urban mass transpor-tation funds, or airport funds shall sub-mit its overall goal to FHWA or UMTAor FAA, as appropriate, for approval 60days before the beginning of the Fed-eral fiscal year to which the goal ap-plies. An UMTA or FAA recipient cal-culating its overall goal as a percent-age of funds for a particular grant,project, or group of grants or projectsshall submit its overall goal to UMTAor FAA at a time determined by theUMTA or FAA Administrator.

(d) Recipients submitting a goal often percent or more shall submit thegoal under the procedures set forth in§ 23.45(g) of this part.

(e) If an FHWA or UMTA or FAA re-cipient requests approval of an overallgoal of less than ten percent, the recip-ient shall take the following steps inaddition to those set forth in § 23.45(g)of this part:

(1) Submit with its request a jus-tification including the elements setforth in § 23.65;

(2) Ensure that the request is signed,or concurred in, by the Governor of thestate (in the case of a state transpor-tation agency), the Mayor or otherelected official(s) responsible for theoperation of a mass transit agency; or,with respect to an airport sponsor, theelected official, head of the board, orother official responsible for the oper-ation of the sponsor, and

(3) Consult with minority and generalcontractors’ associations, communityorganizations, and other officials or or-ganizations which could be expected tohave information concerning the avail-ability of disadvantaged businesses andthe adequacy of the recipient’s effortsto increase the participation of suchbusinesses. If it appears to the Admin-istrator that the recipient has failed toconsult with a relevant person or orga-nization, the Administrator may direct


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the recipient to consult with that per-son or organization.

[48 FR 33442, July 21, 1983, as amended at 53FR 18286, May 23, 1988]

§ 23.65 Content of justification.An FHWA or UMTA or FAA recipient

requesting approval of an overall goalof less than ten percent shall includeinformation on the following points inits justification. Guidance concerningthis information is found in appendixD.

(a) The recipient’s efforts to locatedisadvantaged businesses;

(b) The recipient’s efforts to makedisadvantaged businesses aware of con-tracting opportunities;

(c) The recipient’s initiatives to en-courage and develop disadvantagedbusinesses;

(d) Legal or other barriers impedingthe participation of disadvantagedbusinesses at at least a ten percentlevel in the recipient’s DOT-assistedcontracts, and the recipient’s efforts toovercome or mitigate the effects ofthese barriers;

(e) The availability of disadvantagedbusinesses to work on the recipient’sDOT-assisted contracts;

(f) The size and other characteristicsof the minority population of the re-cipient’s jurisdiction, and the rel-evance of these factors to the availabil-ity or potential availability of dis-advantaged businesses to work on therecipient’s DOT-assisted contracts; and

(g) A summary of the views and in-formation concerning the availabilityof disadvantaged businesses and theadequacy of the recipient’s efforts toincrease the participation of such busi-nesses provided by the persons and or-ganizations consulted by the recipientunder § 23.64(f)(3).

[48 FR 33442, July 21, 1983, as amended at 53FR 18286, May 23, 1988]

§ 23.66 Approval and disapproval ofoverall goals.

(a) The Administrator reviews andapproves any overall goal of ten per-cent or more submitted by a recipientas provided in § 23.45(g) of this part.

(b) The Administrator of the con-cerned Departmental element approvesa requested goal of less than ten per-cent if he or she determines, on the

basis of the recipient’s justificationand any other information available tothe Administrator, that

(1) The recipient is making all appro-priate efforts to increase disadvan-taged business participation in itsDOT-assisted contracts to a ten per-cent level; and

(2) Despite the recipient’s efforts, therecipient’s requested goal represents areasonable expectation for the partici-pation of disadvantaged businesses inits DOT-assisted contracts, given theavailability of disadvantaged busi-nesses to work on these contracts.

(c) Before approving or disapprovinga requested goal of less than ten per-cent, the Administrator provides theDirector of the DOT Office of Smalland Disadvantaged Business Utiliza-tion with an opportunity to review andcomment on the request.

(d) If the Administrator does not ap-prove the goal the recipient has re-quested, the Administrator, after con-sulting with the recipient, establishesan adjusted overall goal. The adjustedoverall goal represents the Administra-tor’s determination of a reasonable ex-pectation for the participation of dis-advantaged businesses in the recipientsDOT-assisted contracts, and is based onthe information provided by the recipi-ent and/or other information availableto the Administrator.

(e) The Administrator may conditionthe approval or establishment of anyoverall goal on any reasonable futureaction by the recipient.

§ 23.67 Special provision for transit ve-hicle manufacturers.

(a) Each UMTA recipient shall re-quire that each transit vehicle manu-facturer, as a condition of being au-thorized to bid on transit vehicle pro-curements in which UMTA funds par-ticipate, certify that it has compliedwith the requirements of this section.This requirement shall go into effecton October 1, 1983.

(b) Each manufacturer shall establishand submit for the UMTA Administra-tor’s approval an annual percentageoverall goal. The base from which thegoal is calculated shall be the amountof UMTA financial assistance partici-pating in transit vehicle contracts to


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be performed by the manufacturer dur-ing the fiscal year in question. Fundsattributable to work performed outsidethe United States and its territories,possessions, and commonwealths shallbe excluded from this base. The re-quirements and procedures of § 23.64 (d)and (e)(1) and §§ 23.65—23.66 of this sub-part shall apply to transit vehicle man-ufacturers as they apply to recipients.

(c) The manufacturer may make thecertification called for in paragraph (a)if it has submitted the goal required byparagraph (b) and the UMTA Adminis-trator has either approved it or not dis-approved it.

§ 23.68 Compliance.(a) Compliance with the require-

ments of this subpart is enforcedthrough the provisions of this section,not through the provisions of subpart Eof this part.

(b) Failure of a recipient to have anapproved MBE program, including anapproved overall goal, as required by§ 23.64 of this subpart, is noncompliancewith this subpart.

(c) If a recipient fails to meet an ap-proved overall goal, it shall have theopportunity to explain to the Adminis-trator of the concerned Departmentelement why the goal could not beachieved and why meeting the goal wasbeyond the recipient’s control.

(d)(1) If the recipient does not makesuch an explanation, or if the Adminis-trator determines that the recipient’sexplanation does not justify the failureto meet the approved overall goal, theAdministrator may direct the recipientto take appropriate remedial action.Failure to take remedial action di-rected by the Administrator is non-compliance with this subpart.

(2) Before the Administrator deter-mines whether a recipient’s expla-nation justifies its failure to meet theapproved overall goal, the Adminis-trator gives the Director, Office ofSmall and Disadvantaged Business Uti-lization, an opportunity to review andcomment on the recipient’s expla-nation.

(e)(1) In the event of noncompliancewith this subpart by a recipient of Fed-eral-aid highway funds, the FHWA Ad-ministrator may take any action pro-vided for in 23 CFR 1.36.

(2) In the event of noncompliancewith this subpart by a recipient offunds administered by UMTA or FAA,the UMTA or FAA Administrator maytake appropriate enforcement action.Such action may include the suspen-sion or termination of Federal funds orthe refusal to approve projects, grants,or contracts until deficiencies are rem-edied.

[48 FR 33442, July 21, 1983; 48 FR 41163, Sept.14, 1983, as amended at 53 FR 18286, May 23,1988]

§ 23.69 Challenge procedure.

(a) Each recipient required to estab-lish an overall goal under § 23.64 shallestablish a challenge procedure con-sistent with this section to determinewhether an individual presumed to besocially and economically disadvan-taged as provided in § 23.62 is in fact so-cially and economically disadvantaged.

(b) The recipient’s challenge proce-dure shall provide as follows:

(1) Any third party may challengethe socially and economically dis-advantaged status of any individual(except an individual who has a current8(a) certification from the Small Busi-ness Administration) presumed to besocially and economically disadvan-taged if that individual is an owner ofa firm certified by or seeking certifi-cation from the recipient as a dis-advantaged business. The challengeshall be made in writing to the recipi-ent.

(2) With its letter, the challengingparty shall include all informationavailable to it relevant to a determina-tion of whether the challenged party isin fact socially and economically dis-advantaged.

(3) The recipient shall determine, onthe basis of the information providedby the challenging party, whetherthere is reason to believe that the chal-lenged party is in fact not socially anddisadvantaged.

(i) If the recipient determines thatthere is not reason to believe that thechallenged party is not socially andeconomically disadvantaged, the recip-ient shall so inform the challengingparty in writing. This terminates theproceeding.


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(ii) If the recipient determines thatthere is reason to believe that the chal-lenged party is not socially and eco-nomically disadvantaged, the recipientshall begin a proceeding as provided inparagraphs (b) (4), (5), and (6) of thissection.

(4) The recipient shall notify thechallenged party in writing that his orher status as a socially and economi-cally disadvantaged individual hasbeen challenged. The notice shall iden-tify the challenging party and summa-rize the grounds for the challenge. Thenotice shall also require the challengedparty to provide to the recipient, with-in a reasonable time, information suffi-cient to permit the recipient to evalu-ate his or her status as a socially andeconomically disadvantaged individual.

(5) The recipient shall evaluate theinformation available to it and make aproposed determination of the socialand economic disadvantage of the chal-lenged party. The recipient shall notifyboth parties of this proposed deter-mination in writing, setting forth thereasons for its proposal. The recipientshall provide an opportunity to theparties for an informal hearing, atwhich they can respond to this pro-posed determination in writing and inperson.

(6) Following the informal hearing,the recipient shall make a final deter-mination. The recipient shall informthe parties in writing of the final de-termination, setting forth the reasonsfor its decision.

(7) In making the determinationscalled for in paragraphs (b) (3), (5), and(6) of this section, the recipient shalluse the standards set forth in appendixC to this subpart.

(8) During the pendancy of a chal-lenge under this section, the presump-tion that the challenged party is a so-cially and economically disadvantagedindividual shall remain in effect.

(c) The final determination of the re-cipient under paragraphs (b)(3)(i) and(b)(6) may be appealed to the Depart-ment by the adversely affected party tothe proceeding under the procedures of§ 23.55 of this part.

APPENDIX A TO SUBPART D—SECTION-BY-SECTION ANALYSIS

This section-by-section analysis describesthe provisions of the final rule. This mate-rial is normally published in the preamble tothe final rule. However, the Department be-lieves that it may be useful to recipients,contractors, and the public to publish thisinformation in an appendix to the final regu-lation. As a result, this information will beavailable to users of the Code of Federal Reg-ulations as well as to persons who have ac-cess to the FEDERAL REGISTER print of theregulation.

Section 23.61 Purpose.

This section states that the purpose of sub-part D is to implement section 106(c) of theSurface Transportation and Uniform Reloca-tion Assistance Act of 1987 and section 105(f)of the Airport and Airway Safety and Capac-ity Expansion Act of 1987. The rest of thesection restates the text of the statute andstates that the ten percent level of disadvan-taged business participation established bythe statute will be achieved if recipients setand meet goals of at least ten percent. TheDepartment of Transportation is committedto carrying out section 106(c) and section105(f) and achieving its objectives, and in-tends to enforce the obligations of the recipi-ents and contractors under section 106(c) andsection 105(f) and 49 CFR part 23.

Section 23.62 Definitions.

As used in subpart D, the word Act meansthe Surface Transportation and Uniform Re-location Assistance Act of 1987 Airport andAirway Safety and Capacity Expansion Actof 1987. The definition of the term disadvan-taged business in subpart D is very similar tothe definition of the term minority businessenterprise used for other purposes in 49 CFRpart 23. A different term is employed in rec-ognition of the fact that a slightly differentset of individuals is eligible to own and con-trol a disadvantaged business than is eligibleto own and control a minority business en-terprise. In either case, at least 51 percent ofthe business must be owned by one or moreof the eligible individuals, and the firm’smanagement and daily business operationsmust be controlled by one or more of the eli-gible individuals who own it. It is importantto note that the business owners themselvesmust control the operations of the business.Absentee ownership, or titular ownership byan individual who does not take an activerole in controlling the business, is not con-sistent with eligibility as a disadvantagedbusiness under this regulation. In order to bean eligible disadvantaged business, a firm


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must meet the criteria of § 23.53 of this regu-lation and must be certified as 49 CFR part23 provides.

Small business concern is defined as a smallbusiness meeting the standards of section 3of the Small Business Act and relevant regu-lations that implement it. These regulationsare summarized in appendix B to the sub-part. It should be emphasized that any busi-ness which fails to qualify under the stand-ards as a small concern, including a firm cer-tified by SBA under the 8(a) program, cannotbe certified as a disadvantaged business,even though it is owned and controlled by so-cially and economically disadvantaged indi-viduals. Since the small business status of afirm can change over the years, we rec-ommend that recipients make a point of re-viewing periodically the small business sta-tus of firms with existing certifications peri-odically to make sure that they still qualify.

Congress determined, in order to ensurethat the DBE program meets its objective ofhelping small minority businesses becomeself-sufficient and able to compete in themarket with non-disadvantaged firms, thatDBE firms should ‘‘graduate’’ from the pro-gram once their average annual receiptsreached $14 million.

In implementing this provision, recipientsshould note that a firm is not ‘‘graduated’’from the program, and hence no longer an el-igible DBE, until its average annual gross re-ceipts over the previous three-year period ex-ceed $14 million. The fact that a firm exceeds$14 million in gross receipts in a single yeardoes not necessarily result in ‘‘graduation.’’For example, suppose a firm has the follow-ing history:1985—$11 million1986—$13 million1987—$14 million1988—$14 million1989—$15 millionThe firm makes $14 million in 1987. However,the firm’s average annual gross receipts for1985–87 are $12.67 million, so the firm remainseligible in 1988. This hypothetical firm wouldremain eligible in 1989 as well, since its aver-age annual gross receipts for 1986–88 would be$13.67 million. However, the firm’s averageannual gross receipts for 1987–89 would be$14.3 million. As a result, the firm would notbe an eligible DBE in 1990.

It should also be pointed out the $14 mil-lion ceiling, like small business size limitsunder section 3 of the Small Business Act,includes revenues of ‘‘affiliates’’ of the firmas well as the firm itself. This is the importof the ‘‘any concern or group of concerns’’language. In addition, firms still are subjectto applicable lower limits on business sizeestablished by the Small Business Adminis-tration in 13 CFR part 121. For example, ifSBA regulations say that $7.5 million aver-age gross annual revenues is the size limit

for a certain type of business, that size limit,rather than the overall $14 million ceiling,determines whether the firm qualifies interms of its size to be a DBE.

Socially and economically disadvantaged indi-viduals is the term that defines the personseligible to own and control a disadvantagedbusiness. The term includes the followingpeople: First, anyone found to be sociallyand economically disadvantaged by SBAunder the 8(a) program is regarded as so-cially and economically disadvantaged forthe purpose of DOT-assisted programs. Sec-ond, any individual who is a member of oneof the designated groups (Black Americans,Hispanic Americans, Native Americans,Asian-Pacific Americans, and Asian Indian-Americans or women) is rebuttably pre-sumed to be socially and economically dis-advantaged. By rebuttably presumed, we meanthat the socially and economically disadvan-taged status of any individual who is a mem-ber of one of the groups is normally assumedby the recipient. With the exception of per-sons whose origins are from Burma and Thai-land the members of these presumed groupsare exactly the same persons who are consid-ered to be minorities for purposes of the § 23.5definition of ‘‘minority.’’

Individuals whose origins are from Burmaand Thailand are not presumed to be sociallyand economically disadvantaged individualsfor purposes of subpart D. This means thatfirms owned and controlled by such individ-uals are eligible to be considered as MBEsfor purposes of FRA, NHTSA and other DOTfinancial assistance programs but not as dis-advantaged businesses for purposes ofFHWA, UMTA and FAA programs (unlesstheir owners are determined to be sociallyand economically disadvantaged on an indi-vidual basis). If SBA determines any addi-tional groups to be presumptively sociallyand economically disadvantaged, thesegroups will become eligible for considerationas owners of disadvantaged businesses on thesame basis as Black Americans, HispanicAmericans, and members of the other pre-sumptive groups.

A recipient may, through its certificationprogram, determine that individuals who arenot members of any of the presumptivegroups are socially and economically dis-advantaged. On this basis, for example, dis-abled Vietnam veterans, Appalachian whitemales, Hasidic Jews, or any other individualswho are able to demonstrate to the recipientthat they are socially and economically dis-advantaged may be treated as eligible to ownand control a disadvantaged business, on thesame basis as a member of one of the pre-sumptive groups. It must be emphasized thatthese individuals are not determined to besocially and economically disadvantaged onthe basis of their group membership. Rather,the social and economic disadvantage ofeach must be determined on an individual,


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case-by-case basis. Guidance for makingthese determinations is found in appendix C.

Section 23.63 Applicability.

This section provides that subpart D ap-plies to all DOT financial assistance in anumber of categories that recipients expend‘‘in DOT-assisted contracts.’’ This lastphrase is very important. The base fromwhich goals are calculated is not the totalamount of money which each recipient re-ceives from FHWA or FAA or UMTA. It isthe amount of money that the recipient ex-pends in DOT-assisted contracts. Funds thatthe recipient does not expend in contracts(i.e., funds spent by an FHWA or FAA recipi-ent to acquire right-of-way or otherwise ac-quire land or pay its own employees to su-pervise construction; funds used by anUMTA recipient to pay salaries of bus driv-ers) not part of the base from which theoverall goal is calculated. Only those fundsto be expended by the recipient in contractsare available to create contracting opportu-nities for disadvantaged businesses, so onlythese funds comprise the base from whichgoals for the use of disadvantaged businessesare calculated.

The first category of program funds towhich subpart D applies is Federal-aid high-way funds authorized by title I of the Act.The second category is urban mass transpor-tation funds authorized by title I (i.e., inter-state transfer and substitution funds) ortitle III of the Act. The third category isfunds authorized by title I, title II (exceptsection 203), or title III of the Surface Trans-portation Assistance Act of 1982 which wereobligated on or after April 2, 1987 (the enact-ment date of the STURAA). The provisionsof subpart D also apply to the FAA-adminis-tered airport funds authorized by the Airportand Airway Safety and Capacity ExpansionAct of 1987.

Section 23.64 Submission of Overall Goals.

This section concerns the procedures forsubmission of overall goals to be used by re-cipients of funds covered by this subpart.Paragraph (a) is intended to avoid the impo-sition of new administrative burdens on re-cipients of relatively low amounts of DOT fi-nancial assistance. This paragraph providesthat only those recipients who are requiredto have MBE programs under 49 CFR part 23must comply with the goal setting require-ments of subpart D. This includes all statetransportation agencies who receive FHWAfunds and UMTA recipients who receive atleast $250,000 in UMTA capital and operatingfunds, exclusive of funds for transit vehiclepurchases, or $100,000 in UMTA planningfunds. Recipients of FAA airport programfunds who receive planning funds in excess of$75,000 or more than $250,000 (general avia-tion airports), $400,000 (non-hub airports), or

$500,000 (hub airports) in FAA assistance alsomust submit overall goals. UMTA or FAA re-cipients who are not required to have anMBE program by § 23.41 need not complywith the goal setting provisions of subpartD.

Paragraph (b) describes how recipients cal-culate their overall goals. Recipients ofFHWA funds use as the base for calculatingtheir percentage goal all Federal-aid fundsthat the recipient will expend in DOT-as-sisted contracts in the forthcoming fiscalyear. Funds authorized by section 202 of theSTAA are considered to be Federal-aid high-way funds for this purpose. For UMTA orFAA funds, the base is all Federal funds (ex-clusive of funds to be expended for transitvehicle purchases) that the recipient will ex-pend in DOT-assisted contracts in the forth-coming fiscal year. The UMTA or FAA Ad-ministrator may, however, allow recipientsto base their goals on Federal funds receivedfor a particular grant, project, or group ofgrants or projects.

The Department is aware that recipientsmay not be aware of the exact amount ofFederal funds to be received or to be used inFederally-assisted contracts in the forth-coming fiscal year. However, it is reasonableto expect that recipients will have a closeenough projection so that they can deter-mine a reasonable expectation for disadvan-taged business participation expressed inpercentage terms.

Paragraph (c) provides that, with the ex-ception of UMTA or FAA recipients calculat-ing their goals on a grant or project basis,each UMTA, FHWA, or FAA recipient whichmust submit an overall goal is required to doso by the August 1 preceding the beginningof the fiscal year to which the goals apply.For example, goal submissions pertaining tofiscal year 1985 are due August 1, 1984. In thecase of Fiscal Year 1984, DOT expects recipi-ents to submit their overall goals for ap-proval as close to August 1 as possible.

Paragraph (d) provides that, if the recipi-ent is submitting a goal of ten percent ormore, the recipient simply submits the goalunder the procedures of § 23.45(g) of this part,exactly in the manner that goals have beenrequired to be submitted under the existingregulation.

Paragraph (e) concerns the situation inwhich a recipient is requesting approval ofan overall goal of less than ten percent. Sucha recipient is required to comply with thesteps set forth in § 23.45(g). However, it is re-quired to take three additional steps. First,it must submit a justification for its requestcontaining the information listed in § 23.65.

Second, it must ensure that the request issigned or concurred in by the Governor ofthe state (in the case of a state transpor-tation agency) or the Mayor or other electedofficial responsible for the operation of a


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mass transit agency. If the official respon-sible for the operation of a mass transitagency or airport sponsor is not a Mayor, an-other appropriate elected official or officialsshould provide the signature or concurrence(e.g., a County Executive, the Chairman of aBoard of Directors for a transit authorityconsisting of elected officials, etc.). The rea-son for this requirement is to ensure that arequest for a goal of less than ten percenthas the backing of the responsible elected of-ficial. This should help to prevent frivolousrequests or requests based solely on theviews of the non-elected staff of a state orlocal agency. It is also intended to protectthe Department from becoming involved in adisagreement between, for example, a statetransportation agency and a governor overdisadvantaged business policy. It will alsosignal to the Department that a request fora lower goal has the backing of the highestresponsible elected official involved with thejurisdiction.

The third requirement is that, before mak-ing a request for a goal of less than ten per-cent, the recipient must consult with minor-ity and general contracting associations,community organizations (particularly mi-nority community organizations) and otherofficials or organizations which can be ex-pected to have information concerning theavailability of disadvantaged businesses andthe adequacy of recipients’ efforts to in-crease the participation of such businesses.This consultation need not involve a formalpublic comment period. However, it shouldinvolve contact between responsible offi-cial(s) of the recipient and representatives ofthe organizations consulted, which shouldalso have the opportunity to provide writteninformation.

The provision is based on the belief thatthe organizations consulted are likely to bein a position to give the recipient useful in-formation concerning the availability of dis-advantaged businesses and the effectivenessof and problems with the recipient’s effortsto increase disadvantaged business participa-tion. The information sought in the con-sultation is intended to include the views ofthe consulted parties on the points listed inparagraph (a)—(f) of § 23.65. Such informationis important to the recipient in formulatinga request for a goal of less than ten percent,the Department in evaluating such a re-quest, and to both the recipient and the De-partment in attempting to determine whatadditional steps would be appropriate to in-crease disadvantaged business participationin the future.

There may be some circumstances in whicha recipient will have failed to consult with aparty whose information could be very usefulto the formulation and evaluation of a re-quest for a goal less than ten percent. If theAdministrator becomes aware of such a case,the Administrator has the discretion to tell

the recipient to go back and consult withthat party. Pending this further consulta-tion, the Administrator would not approvethe request for a goal of less than ten per-cent.

Section 23.65 Content of Justification.

Section 23.65 lists the types of informationthat a recipient seeking a goal of less thanten percent must provide to the Adminis-trator. The purpose of this information is toenable the Department to make an informeddetermination of what the reasonableexpection for the recipient’s disadvantagedbusiness participation level is for the forth-coming fiscal year. These items of informa-tion are discussed in greater detail in appen-dix D. In the absence of a justification, theFHWA, UMTA, or FAA Administrators willnot be able to consider a request for a goalof less than ten percent.

Section 23.66 Approval and Disapproval ofOverall Goals.

Paragraph (a) of this section concerns thesituation in which a recipient submits forapproval an overall goal of ten percent ormore. In response to such a request, the Ad-ministrator follows the review and approvalprocedure provided in § 23.45(g) of the exist-ing rule. The FHWA, UMTA, or FAA Admin-istrators will review and approve goals sub-mitted under this paragraph in the samemanner and in accordance with the samepolicies as they have reviewed and approvedoverall goals under the existing 49 CFR part23.

Paragraph (b) concerns a situation inwhich a recipient has requested approval of agoal of less than ten percent. In order to ap-prove the goal the recipient has requested,the Administrator must make two deter-minations. First, the Administrator must de-termine that the recipient is making all ap-propriate efforts to increase disadvantagedparticipation on its DOT-assisted contractsto at least a ten percent level. Second, theAdministrator must determine that, despitethe recipient’s efforts, the goal requested bythe recipient is the reasonable expectation,short of ten percent, for the participation ofdisadvantaged businesses in its DOT-assistedcontracts, given the availability of disadvan-taged businesses to work on these contracts.

Both of these determinations are very im-portant. The concept of a goal as the reason-able expectation for the recipient’s perform-ance recognizes the possibility that theremay be limits, related to the availability ofdisadvantaged businesses, that prevent theattainment of a ten percent goal. Beforegranting a request for a goal below ten per-cent, the Administrator must determine thatsuch a limit does in fact exist. However, theidea of a reasonable expectation also as-sumes that the recipient is doing everything


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it can to increase disadvantaged businessparticipation, both by seeking to increasethe availability of disadvantaged businessesand seeking to increase the ability of avail-able disadvantages businesses to work on itscontracts. If the recipient is not taking allappropriate steps to increase disadvantagedbusiness participation, then the goal it hasrequested is not its reasonable expectationfor disadvantaged business participation.

If the Administrator does not approve thegoal the recipient has requested, the Admin-istrator, after consulting with the recipient,establishes an adjusted overall goal, whichrepresents his or her determination of thereasonable expectation for recipient’s dis-advantaged business participation. This ad-justed overall goal is on information pro-vided by the recipient or any other informa-tion available to the Administrator fromother sources, including input from inter-ested groups and the past performance of therecipient or other recipients whose situationis analogous to that of the recipient in ques-tion. In approving either the goal requestedby the recipient or in establishing an ad-justed overall goal, the Administrator mayalways condition the approval or establish-ment of an overall goal on any reasonable fu-ture action by the recipient.

Section 23.67 Special Provision for TransitVehicle Manufacturers.

This section addresses the special situationof the purchase of transit vehicles by UMTArecipients. The intent of this section is toprovide a simplified method by which transitvehicle manufacturers and UMTA recipientscan meet disadvantaged business obliga-tions. The Department does not directly reg-ulate transit vehicle manufacturers, sincethey are not the recipients of Federal finan-cial assistance from UMTA. Rather, they arecontractors to UMTA recipients. Con-sequently, paragraph (a) imposes the basicobligation of this section on UMTA recipi-ents themselves.

Paragraph (a) is a requirement that UMTArecipients condition the authority of manu-facturers to bid on UMTA-assisted transitvehicle procurements on a certification bythe manufacturer that it has complied withthe other provisions of this section. In orderto permit manufacturers reasonable start-uptime, and to avoid disruption of the wholeprocurement process, this requirement doesnot go into effect until October 1, 1983.

Paragraph (b) requires that, in order tomake this certification, manufacturers haveUMTA-approved overall goal. The base forcalculating these goals is the amount ofUMTA financial assistance participating intransit vehicle contracts to be performed bythe manufacturer during the fiscal year inquestion. The Department is aware thatUMTA recipients order some vehicles fromforeign manufacturers and that the vehicles

produced by domestic manufacturers use for-eign components in some cases. The Depart-ment’s regulation does not, of course, haveextraterritorial application. Consequently,the manufacturer may exclude from the basefrom which the goal is calculated the valueof the work performed abroad. For example,suppose an UMTA recipient buys a bus froma Canadian manufacturer for $100,000. Fiftypercent of the work on the bus is performedin Canada. In this case, the amount of fundscontributing toward the base from which themanufacturer’s goal is calculated is $40,000(i.e., eighty percent of the $50,000 of thevalue of the bus attributable to work per-formed in the United States).

In submitting an overall goal for theUMTA Administrator’s approval, the manu-facturer is required to follow the same proce-dures as recipients with respect to timing,justification of goals, etc. The Administratorfollows the same criteria and has the sameauthority with respect to approval and con-ditioning of recipient’s overall goals as he orshe does with respect to recipient’s goals.The UMTA Administrator may issue addi-tional guidance with respect to proceduresfor the submission of overall goals and thecontent or justification of overall goals thattake into account special circumstances oftransit vehicle manufacturers, if this ap-pears appropriate.

Paragraph (c) provides that the manufac-turer may make the certification to recipi-ents required by paragraph (a) if it has sub-mitted the goals provided for by this sectionand the UMTA Administrator has either ap-proved them or not disapproved them. Thisprovision is intended to prevent delays intransit vehicle procurements.

Section 23.68 Compliance.

Paragraph (a) points out that compliancewith subpart D, as distinguished from com-pliance with other portions of the regula-tion, is enforced through § 23.68 rather thanthrough subpart E of the regulation. For ex-ample, a recipient’s failure to have an ap-proved overall goal as required by subpart Dwould be treated under § 23.68. A complaint ofdiscrimination against a recipient by a par-ticular disadvantaged business would be han-dled under the procedures of subpart E. Para-graphs (b) and (d)(1) list the three cir-cumstances in which a recipient may finditself in noncompliance with subpart D.These are the only three circumstances inwhich a recipient may be found in non-compliance with subpart D. While a recipientmay be in noncompliance with 49 CFR part23 for other reasons, these other types ofnoncompliance are handled through the pro-cedures of subpart E.

Paragraph (b) names the first two situa-tions in which a recipient may be found innoncompliance with subpart D. First, the re-cipient can be in noncompliance by failing to


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have an approved overall goal as required by§ 23.64. This includes not only the situationin which the recipient does not submit a goalto the Department for approval, but also sit-uations in which a recipient does not acceptan adjusted overall goal established by theAdministrator or fails or refuses to carry outconditions established by the Administratorunder § 23.66(e).

Second, a recipient may be in noncompli-ance if it does not have an approved dis-advantaged business program. Subpart Ddoes not, in itself, require the creation ofsuch a program. However, such a program, asprescribed by other provisions of 49 CFR part23, is essential if a recipient is to complywith the disadvantaged business participa-tion requirements of subpart D. Con-sequently, the failure to have a program, orfailure to have a program which fully meetsthe requirements of 49 CFR part 23, is non-compliance with subpart D.

For example, 49 CFR part 23 requires that,before a recipient awards a contract, it en-sure that the apparent successful bidder hasmet the contract goal or has demonstratedgood faith efforts to do so. If a recipient’sprogram does not provide for making this de-termination before the award of contract,but instead provides for checking the dis-advantaged business participation efforts ofthe contractor only after the award of thecontract, the recipient has a program thatdoes not conform to 49 CFR part 23. The re-cipient may therefore be found in noncompli-ance with subpart D.

Paragraphs (c) and (d)(1) concern the pro-cedure that recipients and the Departmentmust follow when a recipient is falling or hasfallen short of its approved overall goal. Thegoal-setting process is intended to deter-mine, in advance, the reasonable expectationfor the recipient’s disadvantaged businessparticipation. These paragraphs are intendedto provide for the situation in which the re-cipient’s performance does not meet this ex-pectation. At any time the Administrator re-quests it, or at the recipient’s own initiative,the recipient would make an explanation tothe Administrator concerning why the goalcould not be achieved. This explanation, if itis to be satisfactory to the Administrator,must demonstrate that recipient’s failure tomeet the goal is for reasons beyond the re-cipient’s control.

For example, if the recipient expected sub-stantial disadvantaged business participa-tion in a major project, and the project waspostponed by litigation or a natural disaster,the recipient could make a case that its fail-ure to meet the goal was attributable to fac-tors beyond its control. A situation thatmight arise more frequently concerns thefailure of contractors to meet contract goals.Under the Department’s regulation, recipi-ents may award contracts to contractorswho do not meet contract goals if these con-

tractors demonstrate to the recipient thatthey have made good faith efforts to do so. Itis conceivable that a recipient would haveset contract goals commensurate with itsoverall goal, would have given appropriatescrutiny to the claims of contractors thatthey made unsuccessful but good faith ef-forts to meet these contract goals, andawarded contracts to contractors who didnot meet contract goals in a number of in-stances. Collectively, these contract awardswould cause the recipient to fall below itsoverall goal.

The Administrator may take cir-cumstances of this kind into account in de-termining whether a recipient’s failure tomeet its overall goal was because of factorsbeyond the recipient’s control. In doing so,however, the Administrator also would con-sider the degree of scrutiny by the recipientsof contractors’ claims of unsuccessful goodfaith efforts and the efforts the recipientmade in order to make up for shortfalls inparticular contracts and prevent such short-falls in other contracts.

If the recipient’s explanation that factorsbeyond its control prevented achievement ofthe overall goal is determined by the Admin-istrator to justify the failure to reach thegoal, the matter is closed. If the recipientdoes not provide an explanation or if the Ad-ministrator determines that the recipient’sexplanation is not adequate, the Adminis-trator may take the additional step of di-recting the recipient to take appropriate re-medial action. Remedial action includes pro-spective steps to improve disadvantagedbusiness participation, such as additionaloutreach, assistance to disadvantaged busi-nesses or, where not inconsistent with stateor local law, the use of set-asides. In order totake the remedial steps which the Adminis-trator prescribes, the recipient may have todevote additional resources to the task.

Failure or refusal by the recipient to takethese remedial steps is the third form of non-compliance with subpart D. The Departmentwants to make it very clear that failure tomeet an overall goal, as such, does not con-stitute noncompliance with subpart D. How-ever, if the recipient fails to meet the goal,does not satisfactorily explain its failure tomeet the goal as being beyond its control,and then fails or refuses to take remedialsteps prescribed by the Administrator, itwould be in noncompliance.

Paragraph (e) sets forth the sources ofsanctions for recipient noncompliance undersubpart D. These sanctions are the samemeasures that are available to the FHWA,UMTA or FAA Administrator with respect tothe failure of a recipient to carry out anycondition of receiving Federal financial as-sistance.


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Section 23.69 Challenge Procedure.

The proposal in the NPRM to make thepresumption of social and economic dis-advantage rebuttable caused some confusionamong recipients who commented. Theyasked whether this meant that they had toinvestigate the social and economic status ofeach business owner that sought certifi-cation for programs covered by subpart D.They also asked by what criteria, andthrough what procedure, the rebuttable pre-sumption would be applied.

This section is intended to answer thesequestions. First, the basic meaning of a pre-sumption of social and economic disadvan-tage is that the recipient assumes that amember of the designated groups is sociallyand economically disadvantaged. In makingcertification decisions, the recipient relieson this presumption, and does not inves-tigate the social and economic status of indi-viduals who fall into one of the presumptivegroups.

However, saying that the presumption isrebuttable means that a third party maychallenge the actual social and/or economicdisadvantage of a business owner who has re-ceived or is seeking certification for his firmfrom the recipient. The procedures for mak-ing such a challenge are spelled out in thissection. They are set forth in detail in § 23.69and are basically self-explanatory. Twopoints deserve emphasis. First, the proce-dures are intended to be informal. Recipientsare not required to establish elaborate court-like tribunals, use strict rules of evidence,etc. Second, while a challenge is in progress,the presumption of social and economic dis-advantage remains in effect. Therefore, if afirm has been certified, and the social andeconomic disadvantage of its owner is underchallenge, the firm continues to be certifiedand eligible to be considered a disadvantagedbusiness for purposes of the recipient’s DOT-assisted contracting activities.

Amendments to § 23.41(a)

The NPRM proposed to make technicalamendments to § 23.41(a)(2)(i) and§ 23.41(a)(3)(ii). These amendments added ad-ditional UMTA funding sources (e.g. Section9A) to the list of sources from which fundswould contribute toward the thresholdamounts for determining whether UMTA re-cipients had to have MBE programs. Therewere no comments on these proposedchanges. These amendments are adopted un-changed from the NPRM. The final rulemakes similar amendments to § 23.41 (a)(2)(ii)and (a)(3)(iii).

Relationship Between Subpart D and theRemainder of 49 CFR Part 23

In order to prevent uncertainty, the De-partment wishes to restate the relationshipbetween subpart D and the remainder of 49

CFR part 23. Under 49 CFR part 23, certainrecipients are required to have MBE pro-grams. It is only these recipients who are re-quired to follow the provisions of subpart D.Recipients who must implement subpart Ddo so only with respect to their FHWA andUMTA programs cited in subpart D. For ex-ample, a state department of transportationreceiving funds from FHWA, UMTA, NHTSA,FRA, and FAA would be required to followthe subpart D goal procedures with respectonly to its FHWA and UMTA funds. It wouldnot be required to do so for its FAA, NHTSA,and FRA funds. The recipient would con-tinue to follow all applicable procedures of 49CFR part 23 with respect to the FAA, FRA,and the NHTSA funds.

With respect to FHWA and UMTA-assistedprograms, recipients will now set only oneDBE goal, at both the overall and contractgoal level. There are no longer separate DBEand WBE goals. Rather, the single DBE goalapplies to all DBEs, whether they are ownedand controlled by minorities or by women.

The contract award procedures of 49 CFRpart 23 apply to contracts under subpart Djust as they do to contracts under other pro-visions of 49 CFR part 23. Recipients mayaward contracts to those successful bidderswho meet contract goals or demonstratethat they made good faith efforts to do so.

Recipients must certify the eligibility offirms to participate under subpart D pro-grams just as they do with respect to pro-grams covered by other provisions of 49 CFRpart 23. For businesses owned and controlledby members of the presumptive groups listedin the definition of socially and economi-cally disadvantaged individuals in subpart D,the certification process is, with one excep-tion, exactly the same as the certificationprocess that has existed all along under 49CFR part 23. The exception is that individ-uals with origins in Burma, Thailand, andPortugal are presumed to be socially andeconomically disadvantaged. They can be el-igible under subpart D only if they success-fully demonstrate to the recipient that theyare socially and economically disadvantagedas individuals.

However, businesses owned and controlledby individuals with origins in these coun-tries continue to be eligible minority busi-nesses under other provisions of 49 CFR part23. The result is that these firms may be cer-tified for participation in FAA, FRA,NHTSA, or other DOT-assisted programs asbefore, but must make an individual showingof social and economic disadvantage in orderto be regarded as eligible to participate inFHWA and UMTA programs as disadvan-taged businesses. The same requirement foran individual determination of social andeconomic disadvantage applies to any indi-vidual who is not a member of one of the pre-sumptive groups, such as a nonminoritywoman, a handicapped person, etc.


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Decertification Procedures

Substantial concern has been expressedabout the infiltration of DOT-assisted pro-grams by ‘‘fronts’’—businesses that claim tobe owned and controlled by minorities,women, or other disadvantaged individuals,but which, in fact are ineligible for partici-pation is DOT-assisted programs as MBEs,WBEs or disadvantaged businesses.

The Department wants to take this oppor-tunity to reemphasize the importance ofscrutiny of all firms seeking to participatein DOT-assisted programs. We believestrongly that recipients should take promptaction to ensure that only firms meeting theeligibility criteria of 49 CFR part 23 partici-pate as MBEs, WBEs, or disadvantaged busi-nesses in DOT-assisted programs. This meansnot only that recipients should carefullycheck the eligibility of firms applying forcertification for the first time, but also thatthey should review the eligibility of firmswith existing certifications in order to en-sure that they are still eligible. A firm’s cir-cumstances, organization, ownership or con-trol can change over time, resulting in aonce-eligible firm becoming ineligible. A sec-ond look at a firm previously found to be eli-gible may reveal factors leading, on renewedconsideration, to a determination that it isineligible.

49 CFR part 23 does not, as presently draft-ed, prescribe any particular procedures foractions by recipients to remove theeligiblity of firms that they have previouslytreated as eligible. When a recipient comesto believe that a firm with a current certifi-cation is not eligible, the Department rec-ommends that the recipients take certainsteps before removing the firm’s eligibility.The recipient should inform the firm in writ-ing of its concerns about the firm’s eligi-bility, give the firm an opportunity to re-spond to these concerns in person and inwriting, and provide the firm a written ex-planation of the reasons for the recipient’sfinal decision. This process may be brief andinformal. For example, the firm’s oppor-tunity to respond to the recipient’s concernsneed not involve a formal court-type hear-ing. However, in the interest of ensuringthat eligibility removal decisions are madefairly, these steps should take place before afirm’s eligibility is removed. The Depart-ment believes that such a procedure in so-called ‘‘decertification’’ cases will make theprocedure fairer and better administratively,as well as help prevent unnecessary proce-dural litigation. Procedures of this kind arenot a regulatory requirement, but the De-partment believes that, as a matter of pol-icy, that they are advisable for recipients touse.

Once a recipient has made a final decisionon certification, that determination goesinto effect immediately with respect to the

recipient’s DOT-assisted contracts (see§ 23.53(g)). If a firm that has been denied cer-tification or has been decertified appeals therecipient’s action to the Department under§ 23.55, or if a third party challenges the re-cipient’s decision to certify the firm under§ 23.55, the recipient’s action remains in ef-fect until and unless the Department makesa determination under § 23.55 reversing therecipient’s action. The recipient’s action isnot stayed during the pendancy of a § 23.55appeal.

For example, if a recipient has decertifieda firm and the firm appeals the decertifica-tion to DOT, the firm remains ineligible forconsideration as a disadvantaged businesswith respect to the recipient’s DOT-assistedprograms until and unless the Departmentfinds that the firm is eligible. Likewise, ifthe recipient has certified the firm as eligi-ble, the firm remains eligible while the De-partment’s consideration of a third party’schallenge to its eligiblity is pending. The De-partment has followed this policy and inter-pretation of its regulations consistentlyunder the existing rule, and we will continueto do so with respect to subpart D.

There is only one exception to this rule.Section 23.55(c) provides that, in appropriatecases, the Secretary may deny the firm inquestion eligiblity to participate as an MBE(or disadvantaged business) on DOT-assistedcontracts let during the pendacy of the in-vestigation, after providing the firm an op-portunity to show cause by written state-ment to the Secretary why this should notoccur. This paragraph is intended, and hasbeen consistently interpreted and applied bythe Department, to cover only a situation inwhich the recipient has decided that a firmis eligible and a third party has challengedthe correctness of the recipient’s determina-tion. As a matter of policy, the Departmentbelieves that the award of contracts to ineli-gible firms is a very serious blow to the in-tegrity of the Department’s program. Con-sequently, if it appears to the Departmentthat a challenged firm’s eligibility is in seri-ous doubt, the Department, under § 23.55(c),can administratively ‘‘enjoin’’ the firm’sparticipation pending a final determinationon the merits of the challenge to its certifi-cation. This provision does not, however, au-thorize the Department to maintain a firm’scertification in effect pending the outcomeof the § 23.55 Appeal, when the recipient hasrefused to certify or has decertified the firm.


APPENDIX B TO SUBPART D—DETERMINATIONS OF BUSINESS SIZE

In determining the eligibility of businessesfor purposes of 49 CFR part 23, recipients


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must determine whether or not a business isa small business concern as defined by sec-tion 3 of the Small Business Act. If a busi-ness is not a small business concern accord-ing to these standards, then it is not eligibleto participate as an MBE, WBE, or disadvan-taged business under 49 CFR part 23. This istrue even though the business may be ownedand controlled by minorities, women, or so-cially and economically disadvantaged indi-viduals and is eligible in all other respects.Even a firm certified by the SBA under the8(a) program is not eligible under this regu-lation if it is not a small business.

In determining whether a business is asmall business concern, recipients shouldapply the standards established by the SmallBusiness Administration in 13 CFR part 121.In particular, recipients should refer to§ 121.3–8 (Definition of Small Business forGovernment Procurement) and § 121.3–12(Definition of Small Business for Govern-ment Subcontractors). This appendix liststhe most frequent applications of these sec-tions to the kinds of contracting done byFHWA and UMTA recipients. For informa-tion on types of businesses not listed in thisappendix (e.g., manufacturers), recipientsshould consult § 121.3–8 and the appendices to13 CFR part 121.

Recipients should apply the following sizestandards:

1. Subcontracts of $10,000 or less: A businessis small if, including its affiliates, it doesnot have more than 500 employees.

2. Subcontracts over $10,000 and prime con-tracts:

A business is regarded as small if it meetsthe following criteria:

(a) Construction.(1) General Construction (in which less

than 75 percent of the work falls into one ofthe categories in paragraph (2)): The firm’saverage annual receipts for the three preced-ing fiscal years do not exceed $12 million.

(2) Special trade contractors:

Type of firm

Maximum aver-age annual re-

ceipts in preced-ing 3 fiscal years

Plumbing, heating (except electric) andair-conditioning.

$5 million for alltypes of con-tractors on thislist.

Painting, paperhanging, and decorating ....Masonry, stone setting, and other

stonework.Plastering, drywall, acoustical and insulat-

ing work.Terazzo, tile, marble, and mosaic work .....Carpentering and flooring ..........................Floor laying and other floorwork ................Roofing and sheet metal work ...................Concrete work ............................................Water well drilling .......................................Structural steel erection .............................Glass and glazing work .............................Excavating and foundation work ................

Type of firm

Maximum aver-age annual re-

ceipts in preced-ing 3 fiscal years

Wrecking and demolition work ...................Installation or erection of buildings equip-

ment.Special trade contractors, not elsewhere

classified.

(b) Suppliers of manufactured goods: Thefirm, including its affiliates, must not havemore than 500 employees.

(c) Service contractors:

Type of firm

Maximum averageannual receipts inpreceding 3 fiscal

years (in millions ofdollars)

Engineering ............................................ $7.5Janitorial and custodial .......................... 4.5Computer programming or data proc-

essing ................................................. 4Computer Maintenance ......................... 7Protective Services ................................ 4.5Others not mentioned in 13 CFR

121.3–8(e) .......................................... 2

APPENDIX C TO SUBPART D—GUIDANCEFOR MAKING DETERMINATIONS OF SO-CIAL AND ECONOMIC DISADVANTAGE

Before making any determination of socialand economic disadvantage, the recipientshould always determine whether a firm is asmall business concern. If it is not, then thefirm is not eligible to be considered a dis-advantaged business, and no further deter-minations need be made.

Under the definition of ‘‘socially and eco-nomically disadvantaged individual’’ used insubpart D of this part, members of thenamed groups (Black Americans, HispanicAmericans, Native Americans, Asian PacificAmericans, and Asian-Indian Americans) andpersons certified as socially and economi-cally disadvantaged by the Small BusinessAdministration (SBA) under the SBA’s sec-tion 8(a) program are presumed to be bothsocially and economically disadvantaged.This presumption is rebuttable. This meansthat, as part of a challenge to the eligibilityof a firm a recipient has certified under§ 23.69 of this regulation, a third party maypresent evidence that the firm’s owners arenot truly socially and/or ecomonically dis-advantaged, even though they are membersof one of the presumptive groups. Recipientsmust follow the challenge procedure in § 23.69when a challenge is made, using this appen-dix for guidance in making determinationsunder that procedure.

Under the regulation, anyone who has beencertified by SBA under its 8(a) program associally and economically disadvantaged isautomatically considered to be a sociallyand economically disadvantaged individual


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for purposes of this regulation. However, theabsence of an 8(a) certification does notmean that an individual or firm is ineligibleunder this regulation.

Recipients should continue the existingpractice of making their own judgmentsabout whether an individual is in fact amember of one of the presumptive groups. Ifan individual has not maintained identifica-tion with the group to the extent that he orshe is commonly recognized as a group mem-ber, it is unlikely that he or she will in facthave suffered the social disadvantage whichmembers of the group are presumed to haveexperiences. If an individual has not heldhimself or herself out to be a member of oneof the groups, has not acted as a member ofa community of disadvantaged persons, andwould not be identified by persons in thepopulation at large as belonging to the dis-advantaged group, the individual should berequired to demonstrate social disadvantageon an individual basis.

For example, an individual could dem-onstrate that he had a Chinese ancestor.However, this hypothetical person has neverlived in a Chinese-American community, hasheld himself out to be white for driver’s li-cense or other official records purposes, hasnot previously claimed to be a Chinese-American, and would not be perceived byothers in either the Chinese-American com-munity or non-minority community to be aChinese-American (or any other sort ofAsian-Pacific American) by virtue of his ap-pearance, culture, language or associations.The recipient should not regard this individ-ual as an Asian-Pacific American.

Individuals who are not presumed to be so-cially and economically disadvantaged byvirtue of membership in one of these groupsmay, nevertheless, be found to be sociallyand economically disadvantaged on a case-by-case basis. If an individual requests thathis or her business be certified as an eligibledisadvantaged business under subpart D, therecipient, as part of its certification process,is responsible for making a determination ofsocial and economic disadvantage.

In making determinations of social andeconomic disadvantage, recipients should beguided by the following standards, whichhave been adopted from materials preparedby the SBA.

A. SOCIAL DISADVANTAGE

(1) Elements of Social Disadvantage. In orderto determine that an individual is sociallydisadvantaged, the recipient must concludethat the individual meets the followingstandards:

(i) The individual’s social disadvantagemust stem from his or her color; national or-igin; gender; physical handicap; long-termresidence in an environment isolated fromthe mainstream of American society; orother similar cause beyond the individual’s

control. The individual cannot establish so-cial disadvantage on the basis of factorswhich are common to small business personswho are not socially disadvantaged. For ex-ample, because of their marginal financialstatus, many small businesses have dif-ficulty obtaining credit through normalbanking channels. An individual predicatinga social disadvantage claim on denial ofbank credit to his or her firm would have toestablish that the denial was based on one ormore of the listed causes, or similar causes—not simply on the individual’s or the firm’smarginal financial status.

(ii) The individual must demonstrate thathe or she has personally suffered social dis-advantage, not merely claim membership ina non-designated group which could be con-sidered socially disadvantaged. This can beachieved, for example, by describing specificinstances of discrimination which the indi-vidual has experienced, or by recounting insome detail how his or her development inthe business world has been thwarted by oneor more of the listed causes or similarcauses. As a general rule, the more specifican explanation of how one has personallysuffered social disadvantage, the more per-suasive it will be. In assessing such facts, therecipient should place substantial weight onprior administrative or judicial findings ofdiscrimination experienced by the individ-ual. Such findings, however, are not nec-essarily conclusive evidence of an individ-ual’s social disadvantage; nor are they a pre-requisite for establishing social disadvan-tage.

(iii) The individual’s social disadvantagemust be rooted in treatment which he or shehas experienced in American society, not inother countries.

(iv) The individual’s social disadvantagemust be chronic, longstanding, and substan-tial, not fleeting or insignificant. Typically,a number of incidents illustrating a person’ssocial disadvantage, occurring over a sub-stantial period of time, would be necessaryto make a successful claim. Usually, only bydemonstrating a series of obstacles whichhave impeded one’s progress in the businessworld can an individual demonstrate chron-ic, longstanding, and substantial social dis-advantage.

(v) The individual’s social disadvantagemust have negatively affected his or herentry into, and/or advancement in, the busi-ness world.

The closer the individual can link socialdisadvantage to impairment of business op-portunities, the stronger the case. For exam-ple, the recipient should place little weighton annoying incidents experienced by an in-dividual which have had little or no impacton the person’s career or business develop-ment. On the other hand, the recipient


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should place greater weight on concrete oc-currences which have tangibly disadvantagedan individual in the business world.

(2) Evidence of Social Disadvantage. The re-cipient should entertain any relevant evi-dence in support of an individual’s claim ofsocial disadvantage. In addition to a per-sonal statement from the individual claim-ing to be socially disadvantaged, such evi-dence may include, but is not limited to:third party statements; copies of administra-tive or judicial findings of discrimination;and other documentation in support of mat-ters discussed in the personal statement. Therecipient should particularly consider andplace emphasis on the following experiencesof the individual, where relevant: education,employment, and business history. However,the individual may present evidence relatingto other matters as well. Moreover, the at-tainment of a quality education or jobshould not absolutely disqualify the individ-ual from being found socially disadvantagedif sufficient other evidence of social dis-advantage is presented the recipient.

(i) Education. The recipient should con-sider, as evidence of an individual’s socialdisadvantage, denial of equal access to busi-ness or professional schools; denial of equalaccess to curricula; exclusion from socialand professional association with studentsand teachers; denial of educational honors;social patterns or pressures which have dis-couraged the individual from pursuing a pro-fessional or business education; and othersimilar factors.

(ii) Employment. The recipient should con-sider, as evidence of an individual’s socialdisadvantage: discrimination in hiring; dis-crimination in promotions and other aspectsof professional advancement; discriminationin pay and fringe benefits; discrimination inother terms and conditions of employment;retaliatory behavior by an employer; socialpatterns or pressures which have channelledthe individual into non-professional or non-business fields; and other similar factors.

(iii) Business History. The recipient shouldconsider, as evidence of an individual’s socialdisadvantage, unequal access to credit orcapital; acquisition of credit under unfavor-able circumstances; discrimination in re-ceipt (award and/or bid) of government con-tracts; discrimination by potential clients;exclusion from business or professional orga-nizations; and other similar factors whichhave retarded the individual’s business de-velopment.

B. ECONOMIC DISADVANTAGE

Recipients should always make a deter-mination of social disadvantage before pro-ceeding to make a determination of eco-nomic disadvantage. If the recipient deter-mines that the individual is not socially dis-advantaged, it is not necessary to make theeconomic disadvantage determination.

As a general rule, economically disadvan-taged individuals are socially disadvantagedindividuals whose ability to compete in thefree enterprise system has been impaired dueto diminished capital and credit opportuni-ties, as compared to others in the same orsimilar line of business and competitive mar-ket area who are not socially disadvantaged.In determining the degree of diminishedcredit and capital opportunites of a sociallydisadvantaged individual, consideration willbe given to both the disadvantaged individ-ual and the applicant concern with which heor she is affiliated.

In considering the economic disadvantageof firms and owners, it is important for re-cipients to understand that they are makinga comparative judgment about relative dis-advantage. Obviously, someone who is des-titute is not likely to be in any position toown a business. The test is not absolute dep-rivation, but rather disadvantage comparedto business owners who are not socially dis-advantaged individuals and firms owned bysuch individuals.

It is the responsibility of applicant firmsand their owners to provide information tothe recipient about their economic situationwhen they seek eligibility as disadvantagedbusinesses. Recipients are encouraged to be-come as knowledgeable as they can aboutthe types of businesses with which they deal,so that they can make a reasonably informedcomparison between an applicant firm andother firms in the same line of business. Re-cipients are not required to make a detailed,point-by-point, accountant-like comparisonof the businesses involved. Recipients are ex-pected to make a basic judgment aboutwhether the applicant firm and its sociallydisadvantaged owner(s) are in a more dif-ficult economic situation than most firms(including established firms) and owners whoare not socially disadvantaged.

OTHER ELIGIBILITY CONSIDERATIONS

It is very important for recipients to real-ize that making a determination of socialand economic disadvantage, standing alone,does not mean that a firm is eligible. The re-cipient must also determine that the firm is51 percent owned by socially and economi-cally disadvantaged individuals and thatthese individuals control the firm. In mak-ing these latter determinations, recipientsshould continue to follow&σεψτ´&σεψτ´ 23.51–23.53 of subpart C of 49CFR part 23.

If a firm or other party believes that anyrecipient’s social and economic disadvantagedetermination is in error, the firm or partymay make an administrative certificationappeal to the Department as provided in 49CFR 23.55


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APPENDIX D TO SUBPART D—JUSTIFICA-TION FOR REQUESTS FOR APPROVALOF OVERALL GOALS OF LESS THANTEN PERCENT

The purpose of a justification for a requestfor approval of an overall goal of less thanten percent is to explain why the goal re-quested by the recipient is the reasonable ex-pectation for the participation of disadvan-taged businesses in the recipient’s DOT-as-sisted contracts. The justification has twobasic elements. First, the recipient shouldshow that it is doing as much as it can to in-crease disadvantaged business participationto at least a ten percent level. Second, therecipient should show that, given the avail-ability of disadvantaged businesses, the re-quested goal is the reasonable expectationfor the level of disadvantaged business par-ticipation that these efforts are likely to ob-tain.

With respect to the specific elements ofthe justification listed in &σεψτ´ 23.65, theDepartment offers the following guidance,usually in the form of questions the answersto which will help the Department make aninformed decision. It should be emphasizedthat this material is guidance, and is not in-tended to create a regulatory requirement ora mandatory list of the contents for recipi-ent’s submissions. However, it will help theDepartment to make expeditious and well-informed decisions if recipients provide rea-sonably complete and detailed information.Doing so will also facilitate suggestions bythe Department on additional ways recipi-ents can increase disadvantaged businessparticipation.

(a) Efforts to locate disadvantaged businesses.What contacts has the recipient made withsources of information about disadvantagedbusinesses (such as minority contractors, as-sociations, the Commerce Department’s Mi-nority Business Development Administra-tion, DOT Office of Small and DisadvantagedUtilization (and its Program ManagementCenters), and other recipients’ directories ofdisadvantaged businesses)? In what geo-graphic areas has it sought to locate addi-tional disadvantaged businesses? Have theseor other information sources produced addi-tional names of disadvantaged businesses po-tentially available to work on the recipient’sDOT-assisted contract? What follow-up wasdone with respect to these firms?

(b) Efforts to make disadvantaged businessesaware of contracting opportunities. What stepsdoes the recipient take through publications,advertising, pre-bid conferences, direct con-tact, putting disadvantaged businesses intouch with firms that may bid on prime con-tracts, and other means to let disadvantagedbusinesses know about specific contractingand subcontracting opportunities as theyarise? (Activity of this kind by the recipient

is important because, in many cases, dis-advantaged businesses may not be in a posi-tion to learn of contracting opportunitiesthrough informal communications networksavailable to non-disadvantaged firms.)

(c) Initiatives to encourage and develop dis-advantaged businesses. What is the recipientdoing to assist the formation and growth ofdisadvantaged firms, by means such as train-ing, technical assistance, financial assist-ance and involvement of other sources ofsupport (such as the FHWA Supportive Serv-ices Program and other Federal, state, orlocal agencies and associations)? What hasthe recipient done to facilitate the ability ofdisadvantaged businesses to perform con-tracts (e.g., splitting a large contract orproject into smaller segments that disadvan-taged businesses can more readily perform)?

(d) Legal or other barriers to disadvantagedbusiness participation. What specific barriersto disadvantaged business participation hasthe recipient identified? (Common barriersinclude bonding, prequalification and licens-ing requirements; difficulty in obtaining fi-nancing; any state or local residency re-quirement or preference, or any other formalor informal limitations on the area fromwhich disadvantaged businesses are sought;and the reluctance of some members of thenon-disadvantaged contracting communityto use firms owned and controlled by sociallyand economically disadvantaged persons.)What is the recipient doing about the bar-riers it has identified? (Examples of effortsto overcome or mitigate the effect of thesebarriers include changes to or exceptionsfrom state or local requirements as they af-fect disadvantaged businesses, technical orfinancial assistance to disadvantaged busi-nesses to help them meet existing require-ments, or cooperative efforts with financialinstitutions and non-minority contractors’associations.)

(e) The availability of disadvantaged busi-nesses. How many disadvantaged businessesare available to perform work for the recipi-ent on DOT-assisted contracts? The startingpoint for the recipient’s information shouldbe its directory or list of certified disadvan-taged businesses. The number of firms in thisdirectory may not give a complete picture,however. Disadvantaged firms in other juris-dictions, not currently certified by the recip-ient, may be willing and able to work on therecipient’s contracts. On the other hand,firms in the directory may have limitedavailability (e.g., lack of interest in the re-cipient’s work, other commitments, limita-tions of the amount of work they can han-dle). In some cases (e.g., where a state spendsa large portion of its funds on a single largeproject requiring very specialized contrac-tors), the availability of work that disadvan-taged firms can perform could be a limita-tion. The recipient, as appropriate, should


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discuss these factors as they affect a deter-mination of the reasonable expectation fordisadvantaged business participation in itsDOT-assisted contracts.

The recipient should not only advise theDepartment how many disadvantaged firmsexist, but also analyze the dollar volume ofthe recipient’s work the available firms arelikely to be able to perform in the fiscal year(or other period) in question.

(f) Size and other characteristics of the recipi-ent’s jurisdiction’s minority population. What isthe size of the minority population of the re-cipient’s jurisdiction? (In some cases, notonly the size but also the composition or res-idence pattern of the minority populationmay be relevant). Where relevant, what isthe size of the minority population of nearbyjurisdictions?

Minority population is usually not anexact index of the availability of disadvan-taged businesses. In some cases, disadvan-taged business participation levels for var-ious recipients have ranged well above orbelow the minority population of the juris-dictions involved. In any event, recipientsshould tie any assertions they make on thebasis of minority population to the effectthey believe it has on disadvantaged businessavailability.

(g) Views and information from the consulta-tion process. With whom has the recipientconsulted and what did the consulted partiessay with respect to anything in paragraph(a)–(f)? In particular, what were the views ofand information provided by the disadvan-taged business community concerning theavailability of such firms, barriers to theirparticipation and what is needed to over-come them, the efficacy of the recipient’s ef-forts to increase disadvantaged business par-ticipation and what could be done to improvethese efforts?

Subpart E—Compliance andEnforcement

§ 23.73 Complaints.

(a) Filing. Any person who believeshimself or herself, another person, orany specific class of individuals to besubjected to a violation of this partmay file a complaint in writing, signedand dated, with the Department. Thecomplaint shall be filed no later than180 days after the date of an allegedviolation or the dates on which a con-tinuing course of conduct in violationof this part was disclosed. The Sec-retary may extend the time for filingor waive the time limit in the interestof justice, specifying in writing thereason for so doing.

(b) Investigations. The Secretary en-sures that a prompt investigation ismade pursuant to prescribed DOT TitleVI investigation procedures.

(c) Cooperation in investigation. Therespondent to the complaint shall co-operate fully with the investigation.Failure or refusal by the respondent tofurnish requested information or otherfailure to cooperate is a violation ofthis part.

(d) Determinations. Upon completionof the investigation, the Secretary in-forms the recipient or contractor andcomplainant of the results of the inves-tigation in writing. If the investigationindicates a failure to comply with thispart, the conciliation procedures of§ 23.81 and, if necessary, the enforce-ment procedures of § 23.83 are followed.

(e) Intimidation or retaliation acts pro-hibited. No recipient, contractor, orother person shall intimidate, threat-en, coerce, or discriminate against anyindividual for the purpose of interfer-ing with any right or privilege securedby this part, or because he or she madea complaint, testified, assisted, or par-ticipated in any manner in an inves-tigation, proceeding, or hearing underthis part. The identity of complainantsshall be kept confidential at their elec-tion during the conduct of any inves-tigation, proceeding, or hearing underthis part. But when such confidential-ity is likely to hinder the investigationthe complainant shall be advised forthe purpose of waiving the privilege.

§ 23.75 Compliance reviews of recipi-ents.

(a) Desk audit. All compliance re-views conducted after financial assist-ance has been approved or contractshave been awarded begin with a deskaudit. The desk audit is a review of allmaterial and information concerningthe recipient’s MBE performance.

(b) On-site review. An on-site reviewincludes interviews, visits to project orfacility sites receiving DOT funds, andinspection of any statistical or docu-mentary materials relevant to the re-cipient’s performance which were notavailable for review during the deskaudit.

(c) Cooperation. The recipient shallcooperate fully with these reviews.Failure or refusal to furnish requested


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information or failure to cooperate is aviolation of this part.

(d) Determination. As a result of itsreview of the recipient, the Depart-mental element civil rights staffmakes one of the following determina-tions:

(1) The recipient is in compliancewith its MBE obligations; or

(2) There is reasonable cause to be-lieve that the recipient is not in com-pliance with its MBE obligations incertain specified respects. Proceedingsshall be begun in accordance with§ 23.81 and, if necessary, § 23.83.

§ 23.81 Conciliation procedures for fi-nancial assistance programs.

(a) Reasonable cause notice. Wheneverthe responsible office of civil rightsmakes a determination of reasonablecause to believe that a recipient is innoncompliance, a notice is sentpromptly and in writing by registeredmail, return receipt requested, describ-ing the areas of noncompliance requir-ing the applicant or recipient to showcause within 30 days why enforcementproceedings or other appropriate actionto ensure compliance should not be in-stituted and offering the recipient anopportunity to conciliate. The respon-sible office of civil rights shall pursueconciliation efforts for at least 30 daysfrom the date of the reasonable causenotice.

(1) Successful conciliation. If a concil-iation agreement is signed by the De-partmental element’s office of civilrights and recipient, it is approved ordisapproved by the head of the Depart-mental element within 20 days of re-ceiving it. If the head of the Depart-mental element disapproves the agree-ment, the reasons therefor are statedin writing. The head of the Depart-mental element may propose amend-ments to the agreement which are for-warded to the recipient, requesting therecipient’s acceptance or rejection ofthe amended agreement within 20 daysof receipt.

(2) Unsuccessful conciliation. If noagreement is signed within 120 days ofthe notice of reasonable cause enforce-ment proceedings set forth in § 23.83begin. The head of the responsible of-fice of civil rights, upon a written de-termination that an additional 30 days

are needed to complete conciliation,may extend the conciliation period for30 days. Subsequent extensions may bemade upon such written determina-tions. The determinations shall includereasons for the extension and shall beprovided to the complainant and re-spondent.

(b) Effect of conciliation agreement. If aconciliation agreement is approved,the existence of the determination ofnoncompliance does not act as a bar tothe provision of financial assistance aslong as the terms of the agreement arefulfilled. A compliance review is con-ducted by the Department elementwithin nine months of the approval ofan agreement.

§ 23.83 Enforcement proceedings for fi-nancial assistance programs.

(a) Whenever conciliation efforts pur-suant to § 23.81 are unsuccessful, en-forcement proceedings begin. Theseproceedings are conducted in accord-ance with the Department’s proceduresfor enforcing title VI (49 CFR part 21).

(b) A finding of noncompliance andthe imposition of any sanction pursu-ant to these proceedings is binding onall other Departmental elements.Sanctions are limited to the recipientwith respect to whom the noncompli-ance finding has been made and to theparticular program or activity, or partthereof, in which noncompliance hasbeen found.

§ 23.85 Emergency enforcement proce-dure.

(a) General. Whenever the Secretarydetermines that the conciliation andenforcement proceedings set forth in§§ 23.81 and 23.83 will not result in thetimely and adequate enforcement ofthe provisions of this part, he/she initi-ates special enforcement procedures toobtain compliance.

(b) Emergency reasonable cause notice.A notice is sent, registered mail, re-turn receipt requested, describing theareas of alleged noncompliance, settingforth the reasons why the normalcourse of conciliation and enforcementpursuant to §§ 23.81 and 23.83 will notresult in timely and adequate enforce-ment, and requiring the recipient toshow cause, within a specified period oftime, generally not to exceed 15 days,


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why appropriate action, described inthe notice, to ensure complianceshould not be taken. The notice statesthat the recipient must respond inwriting or orally on the record beforean official appointed by the Secretaryor the proposed action will be taken.

(c) Decision. If the Secretary, after re-viewing the recipient’s oral or writtenresponse, determines that such actionis necessary, he/she orders that all orany part of the contracting activitiesof the recipient affected by the recipi-ent’s alleged noncompliance be halteduntil the matter is resolved under§ 23.81 or § 23.83. The Secretary’s actionunder this paragraph may not affectany contract already awarded. Whenthe Secretary makes an order underthis paragraph, resolution of the mat-ter shall proceed on an expedited basis.

§ 23.87 Suspension and debarment; re-ferral to the Department of Justice.

(a) If, at any time, any person hasreason to believe that any person orfirm has willfully and knowingly pro-vided incorrect information or madefalse statements, or otherwise acted ina manner subjecting that person orfirm to suspension or debarment actionunder 49 CFR part 29, he or she maycontact the appropriate DOT elementconcerning the existence of a cause forsuspension or debarment, as providedin 49 CFR 29.17.

(b) Upon the receipt of informationindicating a violation of 18 U.S.C. 1001,or any other Federal criminal statute,the Department may refer the matterto the Department of Justice for appro-priate legal action.

[50 FR 18494, May 1, 1985]

Subpart F—Implementation ofSection 511(a)(17) of the Air-port and Airway ImprovementAct of 1982, as Amended

SOURCE: Amdt. 1, 57 FR 18410, Apr. 30, 1992,unless otherwise noted.

§ 23.89 Definitions.Affiliation has the same meaning the

term has in regulations of the SmallBusiness Administration, 13 CFR part121. Except as otherwise provided in 13CFR part 121, concerns are affiliates of

each other when, either directly or in-directly

(a) One concern controls or has thepower to control the other, or

(b) A third party or parties controlsor has the power to control both, or

(c) An ‘‘identity of interest’’ betweenor among parties exists such that af-filiation may be found.

In determining whether affiliationexists, consideration shall be given toall appropriate factors, including com-mon ownership, common management,and contractual relationships.

Concession means a for-profit busi-ness enterprise, located on an airportsubject to this subpart, that is engagedin the sale of consumer goods or serv-ices to the public under an agreementwith the sponsor, another conces-sionaire, or the owner of a terminal, ifother than the sponsor. Businesseswhich conduct an aeronautical activityare not considered concessionaires forpurposes of this subpart. Aeronauticalactivities include scheduled and non-scheduled air carriers, air taxis, aircharters, and air couriers, in their nor-mal passenger or freightcarrying ca-pacities; fixed base operators, flightschools; and sky-diving, parachute-jumping, flying guide services, and hel-icopter or other air tours.

(a) Appendix A to this subpart con-tains a listing of the types of busi-nesses that are frequently operated asconcessions.

(b) Examples of entities that do notmeet the definition of a concession in-clude suppliers, flight kitchens and in-flight caterers servicing air carriers,government agencies, industrial plants,farm leases, individuals leasing hangarspace, custodial and security contracts,individual taxis with permits, tele-phone and electric utilities, skycapservices under contract with an air car-rier, and management contracts.

(c) Concessions may be operatedunder the following types of agree-ments:

(1) Leases.(2) Subleases.(3) Permits.(4) Contracts.(5) Other instruments or arrange-

ments.Concessionaire means one who oper-

ates a concession.


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Disadvantaged business shall have thesame meaning as set forth in § 23.61 ofsubpart D of this part, except it shallbe a small business concern, as definedin this subpart, not as defined in § 23.61.

Material amendment means a substan-tial change to the basic rights or obli-gations of the parties to a concessionagreement. Examples of materialamendments include an extension tothe term not provided for in the origi-nal agreement or a substantial increasein the scope, of the concession privi-lege. Examples of nonmaterial amend-ments include a change in the name ofthe concessionaire or a change to thepayment due dates.

Primary airport means a commercialservice airport which is determined bythe Secretary to have more than 10,000passengers enplaned annually.

Small business concern means a firm,including all its domestic and foreignaffiliates, that qualifies under the ap-plicable size standard set forth in ap-pendix A to this subpart. In making asize determination, all affiliates, re-gardless of whether organized for prof-it, must be included. A firm qualifyingunder this definition that exceeds thesize standard after entering a conces-sion agreement, but that otherwise re-mains eligible, may continue to becounted as DBE participation until thecurrent agreement, including the exer-cise of options, expires.

(a) The Secretary may periodicallyadjust the size standards in appendix Ato this subpart for inflation.

(b) A firm that was certified as a mi-nority/woman/or disadvantaged busi-ness enterprise (MBE/WBE/DBE) priorto the effective date of this subpart,pursuant to a requirement in § 23.43(d)or FAA guidance implementing section511(a)(17) of the Airport and Airway Im-provement Act of 1982, as amended,that has exceeded the size standard,may be counted as DBE participationuntil the current agreement, includingthe exercise of options, expires, pro-vided that the firm remains otherwiseeligible.

Socially and economically disadvan-taged individuals shall have the samemeaning as set forth in § 23.61 of sub-part D of this part.

Sponsor means the recipient of anFAA grant.

§ 23.91 Applicability.This subpart applies to any sponsor

that has received a grant for airportdevelopment authorized by the Airportand Airway Improvement Act of 1982,as amended by the Airport and AirwaySafety and Capacity Expansion Act of1987.

§ 23.93 Requirements for airport spon-sors.

(a) General requirements. (1) Eachsponsor shall abide by the non-discrimination requirements of § 23.7with respect to the award and perform-ance of any concession agreement cov-ered by this subpart.

(2) Each sponsor shall take all nec-essary and reasonable steps to fosterparticipation by DBE’s in its airportconcession activities.

(3) The following statements shall beincluded in all concession agreementsexecuted between the sponsor and anyfirm after the effective date of thissubpart.

(i) ‘‘This agreement is subject to therequirements of the U.S. Departmentof Transportation’s regulations, 49 CFRpart 23, subpart F. The concessionaireagrees that it will not discriminateagainst any business owner because ofthe owner’s race, color, national origin,or sex in connection with the award orperformance of any concession agree-ment covered by 49 CFR part 23, sub-part F.

(ii) ‘‘The concessionaire agrees to in-clude the above statements in any sub-sequent concession agreements that itenters and cause those businesses tosimilarly include the statements infurther agreements.’’

(b) Additional requirements for primaryairports (1) Sponsors of primary air-ports shall implement a disadvantagedbusiness enterprise (DBE) concessionplan containing the elements listed in§ 23.95. Sponsors of more than one pri-mary airport shall implement a sepa-rate plan for each location that has re-ceived assistance for airport develop-ment. The plan shall be submitted tothe appropriate FAA Regional Officefor approval.

(2) The sponsor shall review and up-date the plan at least annually. Theupdated plan shall include any infor-mation required under § 23.95 that was


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not available to the sponsor when theprevious submission was made. Up-dated plans shall be submitted to theappropriate FAA Regional Office forapproval.

(c) Additional requirements for nonpri-mary airports. Sponsors of commercialservice airports (except primary), gen-eral aviation and reliever airports arenot required to implement a DBE con-cession plan but shall take appropriateoutreach steps to encourage availableDBE’s to participate as concessionaireswhenever there is a concession oppor-tunity.

§ 23.95 Elements of DisadvantagedBusiness Enterprise (DBE) conces-sion plan.

(a) Overall annual DBE goals. (1) Thesponsor shall establish an overall goalfor the participation of DBE’s in con-cessions for each 12-month period cov-ered by the plan. The goals shall bebased on the factors listed in§ 23.45(g)(5).

(2) Sponsors shall calculate the over-all DBE goal as a percentage of one ofthe following bases:

(i) The estimated gross receipts thatwill be earned by all concessions oper-ating at the airport during the goal pe-riod. (Where the terms of a concessionagreement do not provide for the spon-sor to know the gross receipts, thesponsor shall use the net payment tothe airport for such agreements andcombine these figures with the esti-mated gross receipts from other agree-ments, for purposes of making this cal-culation. The plan shall indicate whichconcession agreements do not providefor the sponsor to know the gross re-ceipts.)

(ii) The total number of concessionagreements operating at the airportduring the goal period.

(3) The plan shall state which basethe sponsor proposes to use for cal-culating the overall goals. Sponsorsproposing to use the base described inparagraph (a)(2)(ii) of this section shallsubmit a rationale as required by§ 23.99.

(4) Sponsors who will employ the pro-cedures of paragraph (a)(2)(i) of thissection shall exclude from the overallgoal any portion of a firm’s estimated

gross receipts that will not be gen-erated from a concession activity.

Example. A firm operates a restaurant inthe airport terminal which services the trav-elling public and under the same lease agree-ment, provides in-flight catering service tothe air carriers. The projected gross receiptsfrom the restaurant are included in the over-all goal calculation, while the gross receiptsto be earned by the in-flight catering serviceare excluded.

(5) Sponsors who will employ the pro-cedures of paragraph (a)(2)(i) of thissection shall use the net payment tothe airport for banks and banking serv-ices, including automated teller ma-chines (ATM) and foreign currency ex-changes.

(6) To the extent practicable, spon-sors shall seek to obtain DBE partici-pation in all types of concession activi-ties and not concentrate participationin one category or a few categories tothe exclusion of others.

(7) Airport sponsors may establish anoverall annual goal exceeding 10 per-cent.

(b) Goal methodology. (1) The planshall contain a description of the meth-odology used in establishing each ofthe overall DBE goals. The methodol-ogy shall include information on theconcessions that will operate at theairport during the period covered bythe plan and the potential for DBE par-ticipation. For each concession agree-ment, the sponsor shall provide the fol-lowing information, together with anadditional information requested bythe Regional Civil Rights Officer:

(i) Name of firm.(ii) Type of business (e.g. bookstore,

car rental, baggage carts).(iii) Beginning and expiration dates

of agreement, including options torenew.

(iv) For new agreements, method ofsolicitation proposed by sponsor (e.g.request for proposals, invitation forbids).

(v) Dates that material amendmentswill be made to the agreement (ifknown).

(vi) Estimated gross receipts for eachgoal period established in the plan.

(vii) Identification of those conces-sionaires that have been certifiedunder this subpart as DBE’s.


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(viii) An indication of those conces-sions having potential for participationby DBE’s.

(2) The plan shall include a narrativedescription of the types of efforts thesponsor intends to make, in accordancewith paragraph (h) of this session, toachieve the overall annual goals.

(3) Sponsors who will include a DBEcontract goal or other requirements insolicitations for concession agreementsshall state those requirements in theplan.

(4) If none of the overall goals setunder paragraph (a)(2)(i) or (a)(2)(ii) ofthis section is 10 percent or more, thesponsor shall submit the informationand follow the procedures outlined in§ 23.101.

(c) DBE set-asides. (1) Where not pro-hibited by state or local law and deter-mined by the sponsor to be necessaryto meet DBE goals, procedures to im-plement DBE set-asides shall be estab-lished. The DBE plan shall specify theconcessions to be set-aside.

(2) If a state or local law prohibitsthe use of set-asides in the award ofconcessions, a citation of the appro-priate authority shall be included inthe plan.

(d) Accomplishments in achieving DBEgoals. The plan shall contain an analy-sis of the accomplishments made bythe sponsor toward achieving the pre-vious year’s goal. The plan shall showthe effect of those results on the over-all level of DBE participation in theairport’s concessions.

(e) Explanation for not achieving agoal. (1) If the analysis required underparagraph (d) of this section indicatesthat the sponsor failed to meet the pre-vious year’s overall goal, the plan shallinclude a statement of the reasonsdemonstrating why failure to meet thegoal was beyond the sponsor’s control.

(2) If the FAA determines that thereasons given by the sponsor are notsufficient justification, or if the spon-sor fails to state any reasons, the FAAmay require the sponsor to implementappropriate remedial measures. Suchmeasures may include an adjustmentto the overall goals of the concessionplan.

(f) Certification procedures. (1) Thecertification procedures set forth in§ 23.51 are applicable to this subpart.

Sponsors may count toward their over-all goals only those firms that havebeen certified in accordance with theprocedures of that section.

(2) Except as provided in § 23.51(c),each business, including the DBE part-ner in a joint venture, wishing to par-ticipate as a DBE under this subpart ina concession shall complete and submitSchedule A. Each entity wishing toparticipate as a joint venture DBEunder this subpart shall in additioncomplete and submit Schedule B.(Schedules A and B are reproduced atthe end of this part.)

(3) Sponsors shall take at least thefollowing steps in determining whethera firm is an eligible DBE:

(i) Obtain the resumes or work his-tories of the principal owners of thefirm and personally interview these in-dividuals;

(ii) Analyze the ownership of stock inthe firm, if it is a corporation;

(iii) Analyze the bonding and finan-cial capacity of the firm;

(iv) Determine the work history ofthe firm, including any concession con-tracts it may have received;

(v) Obtain or compile a list of the li-censes of the firm and its key person-nel to perform the concession contractsit wishes to receive; and

(vi) Obtain a statement from the firmof the type of concession it prefers tooperate.

(4) Prior to making a certificationdetermination, the sponsor shall per-form an on-site visit to the offices ofthe firm and to any of its facilitiesthat may be necessary to validate thecertification information obtainedfrom the firm.

(5) The challenge procedure set forthin § 23.69 are applicable to this subpart.

(g) Certification standards. (1) Spon-sors shall use the same standards forownership and control as contained in§ 23.53 in determining whether a firmmay be certified as a DBE.

(2) Businesses operating under thefollowing structures may be eligible forcertification as DBE’s under this sub-part:

(i) Sole proprietorships.(ii) Corporations.(iii) Partnerships.(iv) Other structures that provide for

ownership and control by the socially


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and economically disadvantaged own-ers.

(3) A business operating under a fran-chise (or license) agreement may becertified if it meets the standards inthis section and the franchisor is notaffiliated with the franchisee.In determining whether affiliation, asdefined in § 23.89, exists, the restraintsrelating to standardized quality, adver-tising, accounting format, and otherprovisions imposed on a franchisee byits franchise agreement generally shallnot be considered, provided that thefranchisee has the right to profit fromits efforts and bears the risk of losscommensurate with ownership. Alter-natively, even though a franchisee maynot be controlled by the franchisor byvirtue of such provisions in the fran-chise agreement, control, and, thus, af-filiation could arise through othermeans, such as common managementor excessive restrictions upon the saleof the franchise interest.

(4) Joint ventures described in§ 23.53(d) are eligible for certification asDBE’s under this subpart.

(h) Businesses operating under thefollowing arrangements are not eligiblefor certification as DBE’s under thissubpart:

(1) Limited partnerships, in which anon-DBE is the general partner.

(2) Other arrangements that do notprovide for ownership and control bythe socially and economically dis-advantaged owners.

(i) Good faith efforts. The sponsorshall make good faith efforts toachieve the overall goals of the ap-proved plan. The efforts shall include:

(1) Locating and identifying DBE’swho may be interested in participatingas concessionaires;

(2) Notifying DBE’s and other organi-zations of concession opportunities andencouraging them to compete, whenappropriate;

(3) Informing competitors for conces-sion opportunities of any DBE require-ments during pre-solicitation meet-ings;

(4) Providing information concerningthe availability of DBE firms to com-petitors to assist them in meeting DBErequirements; and

(5) When practical, structuring con-tracting activities so as to encourage

and facilitate the participation ofDBE’s.

§ 23.97 Appeals of certification denials.The procedures concerning the appeal

of a denial of certification set forth in§ 23.55 are applicable to this subpart.

§ 23.99 Rationale for basing overallgoals on the number of concessionagreements.

(a) A sponsor who proposes to cal-culate the overall DBE goals as a per-centage of the number of concessionagreements shall submit informationwith the DBE plan to demonstrate thatone of the following applies to the air-port:

(1) In order to attain an overall DBEgoal of 10 percent on the basis of grossreceipts, the airport would need toaward a disproportionate percentage ofthe opportunities to DBE’s. This ra-tionale may address a time period thatextends beyond that covered by thecurrent plan; or

(2) Other circumstances at the air-port exist that do not make it feasibleto use gross receipts as the basis forcalculating the goals.

(b) If the FAA approves of the re-quest, the sponsor shall not be requiredto provide further justification duringsubsequent years of the plan, unless re-quested by the FAA to do so.

(c) If the FAA determines that theinformation submitted by the sponsorfails to justify the requested goal-set-ting procedure, the sponsor shall resub-mit the plan. The goals in the revisedplan shall be calculated as a percent-age of gross receipts, as outlined inparagraph (a)(2)(i) of § 23.95.

§ 23.101 Information required whennone of the overall annual goals is10 percent or more.

(a) A sponsor requesting approval fora concession plan in which none of theoverall annual DBE goals is 10 percentor more shall provide information onthe following points:

(1) The sponsor’s efforts to locateDBE’s in the relevant geographic areathat are capable of operating the con-cessions that will become available;

(2) The sponsor’s efforts to notifyDBE’s of concession opportunities andto encourage them to compete;


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(3) Any consideration given by thesponsor, when practical, to structuringcontracting procedures so as to encour-age and facilitate DBE participation.For example, a sponsor may considerusing competitive means to award aconcession that would otherwise be re-negotiated without competition.

(4) If appropriate, an explanation whythe nature of a particular concessionmakes DBE participation through asublease, joint venture, partnership, orother arrangement not economicallyfeasible.

(b) The FAA regional civil rights offi-cer approves a plan which does not con-tain any overall goals of at least 10 per-cent if he or she determines that basedon the information submitted by thesponsor under paragraph (a) of this sec-tion and any other available informa-tion;

(1) The sponsor is making all appro-priate efforts to increase DBE partici-pation in its concessions to a level of 10percent; and

(2) Despite the sponsor’s efforts, thegoals submitted by the sponsor rep-resent the reasonable expectation forDBE participation, given the availabil-ity of DBE’s.

§ 23.103 Obligations of concessionairesand competitors.

(a) Sponsors may impose require-ments on competitors for concessionagreements as a means of achieving theDBE goals or a portion of the goals es-tablished under paragraph (a) of § 23.91of this subpart, provided that the DBEparticipation specified in the solicita-tion or other request is an eligible ar-rangement, as defined in this subpart.

(b) Nothing in this subpart shall re-quire any sponsor to modify or abro-gate an existing concession agreement(one executed prior to the date thesponsor became subject to this subpart)during its term. When options to renewsuch agreements are exercised or whena material amendment is made to theagreement, the sponsor shall assess thepotential for DBE participation and in-clude any opportunities in the goals es-tablished under paragraph (a) of § 23.95.

§ 23.105 Privately-owned terminalbuildings.

(a) Awards of concession agreementsthat are made by private owners of ter-minal buildings are covered by thissubpart. Airport sponsors subject tothis subpart shall levy the applicablerequirements on the terminal ownerthrough the agreement with the owneror by other means, except that certifi-cation shall, in the case of primary air-ports, be performed by the airportsponsor. The sponsor shall ensure thatthe terminal owner complies withthese requirements.

(b) If the terminal building is at aprimary airport, the sponsor shall ob-tain from the terminal owner the over-all goals and other elements of theDBE concession plan required under§ 23.95. This information shall be incor-porated into the concession plan andgoals established by the sponsor andsubmitted to the FAA in accordancewith this subpart.

(c) If the terminal building is at acommercial service airport (except pri-mary), general aviation, or reliever air-port, the sponsor shall ensure that theowner complies with the requirementsin paragraph (c) of § 23.93.

§ 23.107 Prohibition on long-term, ex-clusive concession agreements.

(a) Except as provided in paragraph(b) of this section, sponsors shall notenter into long-term, exclusive agree-ments for the operation of concessions.For purposes of this section, a long-term agreement is one having a termin excess of five years. Guidelines fordetermining whether an agreement isexclusive, as used in this section, havebeen included in the FAA’s ‘‘DBE Pro-gram Development Kit for AirportGrant-in-Aid Recipients.’’ This publica-tion can be obtained from any FAA Re-gional Civil Rights Officer or from theFAA Office of Civil Rights, 800 Inde-pendence Avenue, SW., Washington, DC20591, Attention, ACR–4.

(b) A long-term, exclusive agreementis permitted under this subpart, pro-vided that;

(1) Special local circumstances existthat make it important to enter suchagreement, and


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Office of the Secretary of Transportation Pt. 23, Subpt. F, App. A

(2) The responsible FAA regionalcivil rights officer approves of a planfor ensuring adequate DBE participa-tion throughout the term of the agree-ment.

(c) Approval of the plan referenced inparagraph (b)(2) of this section relievesthe sponsor of the need to obtain an ex-emption under the procedures of§ 23.41(f) and the Notice of Policy (45 FR45281, July 3, 1980). The Notice of Pol-icy can be obtained from the FAA Of-fice of Civil Rights at the address givenin paragraph (a) of this section.

(d) Sponsors shall submit the follow-ing information with the plan ref-erenced in paragraph (b)(2) of this sec-tion:

(1) A description of the special localcircumstances that warrant a long-term, exclusive agreement, e.g., a re-quirement to make certain capital im-provements to a leasehold facility.

(2) A copy of the draft and final leas-ing and subleasing or other agree-ments. The long-term, exclusive agree-ment shall provide that:

(i) One or more DBE’s will partici-pate throughout the term of the agree-ment and account for at least 10 per-cent of the annual estimated gross re-ceipts.

(ii) The extent of DBE participationwill be reviewed prior to the exercise ofeach renewal option to consider wheth-er an increase is warranted. (In someinstances, a decrease may be war-ranted.)

(iii) A DBE that is unable to performsuccessfully will be replaced by an-other DBE, if the remaining term ofthe agreement makes this feasible.

(3) Assurances that the DBE partici-pation will be in an acceptable form,such as a sublease, joint venture, orpartnership.

(4) Documents used by the sponsor incertifying the DBE’s.

(5) A description of the type of busi-ness or businesses to be operated, loca-tion, storage and delivery space,‘‘back-of-the-house facilities’’ such askitchens, window display space, adver-tising space, and other amenities thatwill increase the DBE’s chance to suc-ceed.

(6) Information on the investment re-quired on the part of the DBE and anyunusual management or financial ar-

rangements between the prime conces-sionaire and DBE.

(7) Information on the estimatedgross receipts and net profit to beearned by the DBE.

§ 23.109 Compliance procedures.In the event of noncompliance with

this subpart by a sponsor, the FAA Ad-ministrator may take any action pro-vided for in section 519 of the Airportand Airway Improvement Act of 1982,as amended.

§ 23.111 Effect on § 23.43(d).Except for commitments made prior

to issuance of this subpart as a condi-tion of receiving an exemption from§23.43(d)(1), which prohibits certainlong-term, exclusive agreements, theprovisions of § 23.43(d) shall not applyto any airport, its lessees, conces-sionaires, or other organizations, if theairport sponsor is covered by the re-quirements in this subpart. Leasinggoals established in accordance with§ 23.43(d)(2) and approved by the FAAprior to the effective date of this sub-part shall terminate as set forth below;

(a) For primary airports, upon FAAapproval of a DBE concession plan re-quired under § 23.93(b).

(b) For nonprimary airports, at theconclusion of the period to which theleasing goal applies.

APPENDIX A TO SUBPART F—SIZESTANDARDS FOR AIRPORT CONCES-SIONAIRES

MAXIMUM AVERAGE ANNUAL GROSS RECEIPTSIN PRECEDING 3 YEARS

[In millions of dollars]

Concession Amount

Food and beverage ........................................... 30.00Book stores ........................................................ 30.00Auto rental ......................................................... 40.00Banks ................................................................. 1 100.00Hotels and motels .............................................. 30.00Insurance machines and counters .................... 30.00Gift, novelty, and souvenir shop ........................ 30.00Newstands ......................................................... 30.00Shoe shine stands ............................................. 30.00Barber shops ..................................................... 30.00Automobile parking ............................................ 30.00Jewelry stores .................................................... 30.00Liquor stores ...................................................... 30.00Travel agencies ................................................. 30.00Drug stores ........................................................ 30.00Pastries and baked goods ................................. 30.00Luggage cart rental ........................................... 30.00Coin-operated T.V.’s .......................................... 30.00


234

49 CFR Subtitle A (10–1–98 Edition)Pt. 23, Schedule A

MAXIMUM AVERAGE ANNUAL GROSS RECEIPTSIN PRECEDING 3 YEARS—Continued

[In millions of dollars]

Concession Amount

Game rooms ...................................................... 30.00Luggage and leather goods stores ................... 30.00Candy, nut, and confectionery stores ............... 30.00Toy stores .......................................................... 30.00Beauty shops ..................................................... 30.00Vending machines ............................................. 30.00Coin-operated lockers ....................................... 30.00Florists ............................................................... 30.00Advertising ......................................................... 30.00Taxicab .............................................................. 30.00Limousines ......................................................... 30.00Duty free shops ................................................. 30.00Pay telephones .................................................. 21,500Gambling machines ........................................... 30.00Other concessions not shown above ................ 30.00

1 As measured by total assets2 As measured by number of employees.

SCHEDULE A—INFORMATION FOR DETERMININGMINORITY BUSINESS ENTERPRISE ELIGIBILITY

1. Name of firm llllllllllllll

2. Address of firm lllllllllllll

3. Phone Number of firm lllllllll

4. Indicate whether firm is sole proprietor-ship, partnership, joint venture, corpora-tion or other business entity (please speci-fy) lllllllllllllllllllll

— llllllllllllllllllllll

5. Nature of firm’s business llllllll

6. Years firm has been in business llll

7. Ownership of firm: Identify those whoown 5 percent or more of the firm’s owner-ship. Columns e and f need be filled out onlyif the firm is less than 100 percent minorityowned.

a—Name

b—Race c—Sex

d—Years

of own-ership

e—Owner-ship per-centage

f—Vot-ing per-

cent-age

With firms less than 100 percent minorityowned, list the contributions of money,equipment, real estate, or expertise of eachof the owners.

8. Control of firm: (a) Identify by name,race, sex, and title in the firm those individ-uals (including owners and non-owners) whoare responsible for day-to-day managementand policy decisionmaking, including, butnot limited to, those with prime responsibil-ity for:

(1) Financial decisions llllllllll

(2) Management decisions, such as—a. Estimating lllllllllllllll

b. Marketing and sales llllllllll

c. Hiring and firing of management person-nel lllllllllllllllllllll

d. Purchases of major items or supplies l

(3) Supervision of field operations llll

9. For each of those listed in question 8,provide a brief summary of the person’s expe-rience and number of years with the firm, in-dicating the person’s qualifications for theresponsibilities given him or her.

10. Describe or attach a copy of any stockoptions or other ownership options that areoutstanding, and any agreements betweenowners or between owners and third partieswhich restrict ownership or control of mi-nority owners.

11. Identify any owner (see item 7) or man-agement official (see item 8) of the namedfirm who is or has been an employee of an-other firm that has an ownership interest inor a present business relationship with thenamed firm. Present business relationshipsinclude shared space, equipment, financing,or employees as well as both firms havingsome of the same owners.

12. What are the gross receipts of the firmfor each of the last two years?

Year ending lllllllllllllllll

$ lllllllllllllllllllllll

Year ending lllllllllllllllll

$ lllllllllllllllllllllll

13. Name of bonding company, if any: ll

— llllllllllllllllllllll

Bonding limit llllllllllllllll

Source of letters of credit, if any llllll

14. Are you authorized to do business in thestate as well as locally, including all nec-essary business licenses?

15. Indicate if this firm or other firms withany of the same officers have previously re-ceived or been denied certification or partici-pation as an MBE and describe the cir-cumstances. Indicate the name of the cer-tifying authority and the date of such cer-tification or denial.

AFFIDAVIT

‘‘The undersigned swears that the fore-going statements are true and correct andinclude all material information necessaryto identify and explain the operations of———— (name of firm) as well as the owner-ship thereof. Further, the undersigned agreesto provide through the prime contractor or,if no prime, directly to the grantee current,complete and accurate information regard-ing actual work performed on the project,the payment therefor and any proposedchanges, if any, of the foregoing arrange-ments and to permit the audit and examina-tion of books, records and files of the namedfirm. Any material misrepresentation will begrounds for terminating any contract whichmay be awarded and for initiating actionunder Federal or State laws concerning falsestatements.’’

NOTE: If, after filing this Schedule A andbefore the work of this firm is completed onthe contract covered by this regulation,


235

Office of the Secretary of Transportation Pt. 23, Schedule B

there is any significant change in the infor-mation submitted, you must inform thegrantee of the change through the primecontractor or, if no prime contractor, informthe grantee directly.

Signature lllllllllllllllll

Name lllllllllllllllllll

Title llllllllllllllllllll

Date llllllllllllllllllll

Corporate Seal (where appropriate).Date llllllllllllllllllll

State of llllllllllllllllll

County of lllllllllllllllll

On this — day of ——, 19—, before me ap-peared (Name) ————, to me personallyknown, who, being duly sworn, did executethe foregoing affidavit, and did state that heor she was properly authorized by (Name offirm) ———— to execute the affidavit and didso as his or her free act and deed.[Seal]Notary Public llllllllllllllll

Commission expires lllllllllllll

SCHEDULE B—INFORMATION FOR DETERMININGJOINT VENTURE ELIGIBILITY

(This form need not be filled in if all jointventure firms are minority owned.)

1. Name of joint venture lllllllll

2. Address of joint venture llllllll

3. Phone number of joint venture lllll

4. Identify the firms which comprise thejoint venture. (The MBE partner mustcomplete Schedule A.) llllllllll

(a) Describe the role of the MBE firm inthe joint venture. lllllllllllll

llllllllllllllllllllllll

(b) Describe very briefly the experienceand business qualifications of each non-MBE joint venturer: lllllllllll


5. Nature of the joint venture’s business l


6. Provide a copy of the joint ventureagreement.

7. What is the claimed percentage of MBEownership? llllllllllllllll

8. Ownership of joint venture: (This neednot be filled in if described in the joint ven-ture agreement, provided by question 6.)

(a) Profit and loss sharing.(b) Capital contributions, including equip-

ment.(c) Other applicable ownership interests.9. Control of and participation in this con-

tract. Identify by name, race, sex, and‘‘firm’’ those individuals (and their titles)who are responsible for day-to-day manage-ment and policy decisionmaking, including,but not limited to, those with prime respon-sibility for:

(a) Financial decisions llllllllll

(b) Management decisions, such as:(1) Estimating lllllllllllllll

(2) Marketing and sales llllllllll

(3) Hiring and firing of management per-sonnel lllllllllllllllllll

(4) Purchasing of major items or suppliesllllllllllllllllllllllll

(c) Supervision of field operations

NOTE: If, after filing this Schedule B andbefore the completion of the joint venture’swork on the contract covered by this regula-tion, there is any significant change in theinformation submitted, the joint venturemust inform the grantee, either directly orthrough the prime contractor if the jointventure is a subcontractor.

AFFIDAVIT

‘‘The undersigned swear that the foregoingstatements are correct and include all mate-rial information necessary to identify andexplain the terms and operation of our jointventure and the intended participation byeach joint venturer in the undertaking. Fur-ther, the undersigned covenant and agree toprovide to the grantee current, complete andaccurate information regarding actual jointventure work and the payment therefor andany proposed changes in any of the joint ven-ture arrangements and to permit the auditand examination of the books, records andfiles of the joint venture, or those of eachjoint venturer relevant to the joint venture,by authorized representatives of the granteeor the Federal funding agency. Any materialmisrepresentation will be grounds for termi-nating any contract which may be awardedand for initiating action under Federal orState laws concerning false statements.’’

————————— —————————Name of Firm Name of Firm

————————— —————————Signature Signature

————————— —————————Name Name

————————— —————————Title Title

————————— —————————Date Date

Date lllllllllllllllllllll

State of lllllllllllllllllll

County of llllllllllllllllll

On this — day of ——, 19—, before me ap-peared (Name) ————, to me personallyknown, who, being duly sworn, did executethe foregoing affidavit, and did state that heor she was properly authorized by (Name offirm) ———— to execute the affidavit and didso as his or her free act and deed.Notary Public llllllllllllllll


[Seal]Date lllllllllllllllllllll

State of lllllllllllllllllll

County of llllllllllllllllll


236

49 CFR Subtitle A (10–1–98 Edition)Pt. 24

On this — day of ——, 19—, before me ap-peared (Name) ————, to me personallyknown, who, being duly sworn, did executethe foregoing affidavit, and did state that heor she was properly authorized by (Name offirm) ———— to execute the affidavit and didso as his or her free act and deed.Notary Public llllllllllllllll


[Seal]

PART 24—UNIFORM RELOCATIONASSISTANCE AND REAL PROP-ERTY ACQUISITION FOR FEDERALAND FEDERALLY ASSISTED PRO-GRAMS

Subpart A—General

Sec.24.1 Purpose.24.2 Definitions.24.3 No duplication of payments.24.4 Assurances, monitoring and corrective

action.24.5 Manner of notices.24.6 Administration of jointly-funded

projects.24.7 Federal agency waiver of regulations.24.8 Compliance with other laws and regula-

tions.24.9 Recordkeeping and reports.24.10 Appeals.

Subpart B—Real Property Acquisition

24.101 Applicability of acquisition require-ments.

24.102 Basic acquisition policies.24.103 Criteria for appraisals.24.104 Review of appraisals.24.105 Acquisition of tenant-owned improve-

ments.24.106 Expenses incidental to transfer of

title to the Agency.24.107 Certain litigation expenses.24.108 Donations.

Subpart C—General RelocationRequirements

24.201 Purpose.24.202 Applicability.24.203 Relocation notices.24.204 Availability of comparable replace-

ment dwelling before displacement.24.205 Relocation planning, advisory serv-

ices, and coordination.24.206 Eviction for cause.24.207 General requirements—claims for re-

location payments.24.208 Relocation payments not considered

as income.

Subpart D—Payments for Moving andRelated Expenses

24.301 Payment for actual reasonable mov-ing and related expenses—residentialmoves.

24.302 Fixed payment for moving expenses—residential moves.

24.303 Payment for actual reasonable mov-ing and related expenses—nonresidentialmoves.

24.304 Reestablishment expenses—nonresi-dential moves.

24.305 Ineligible moving and related ex-penses.

24.306 Fixed payment for moving expenses—nonresidentia1 moves.

24.307 Discretionary utility relocation pay-ments.

Subpart E—Replacement HousingPayments

24.401 Replacement housing payment for180-day homeowner-occupants.

24.402 Replacement housing payment for 90-day occupants.

24.403 Additional rules governing replace-ment housing payments.

24.404 Replacement housing of last resort.

Subpart F—Mobile Homes

24.501 Applicability.24.502 Moving and related expenses—mobile

homes.24.503 Replacement housing payment for

180-day mobile homeowner-occupants.24.504 Replacement housing payment for 90-

day mobile home occupants.24.505 Additional rules governing relocation

payments to mobile home occupants.

Subpart G—Certification

24.601 Purpose.24.602 Certification application.24.603 Monitoring and corrective action.

APPENDIX A TO PART 24—ADDITIONAL INFOR-MATION

APPENDIX B TO PART 24—STATISTICAL REPORTFORM

AUTHORITY: 42 U.S.C. 4601 et seq.; 49 CFR1.48(cc).

SOURCE: 54 FR 8928, Mar. 2, 1989, unless oth-erwise noted.

Subpart A—General

§ 24.1 Purpose.The purpose of this part is to promul-

gate rules to implement the UniformRelocation Assistance and Real Prop-erty Acquisition Policies Act of 1970, as
