Regulatory Alert: AAAE Responds to DOT's Proposed Rule to Update DBE and ACDBE Programs
November 1, 2022
On October 31, AAAE filed comments in response to the U.S. Department of Transportation's (DOT) proposed rule that would make a wide range of changes and updates to the regulations governing the Disadvantaged Business Enterprise (DBE) program and the Airport Concession Disadvantaged Business Enterprise (ACDBE) program. DOT's 231-page proposal, which is the first update to these programs since 2014, is part of the Biden Administration's broader effort to advance equity and expand opportunities for DBE firms in government funding programs. 
In our comments, AAAE emphasized the importance of the DBE and ACDBE programs and supported efforts to increase and promote firm participation, such as increasing the personal net worth (PNW) cap—which is currently set at $1.32 million for firm owners—to account for rising inflation and costs and establishing a reasonable mechanism to allow for interstate certification and reciprocity. However, we also relayed concerns that we received from most of our members over a series of new requirements that would be imposed on airports in the areas of reporting, monitoring, and fostering small business participation, and how these proposals would strain already limited staffing that is available at airports to implement these programs. We urged DOT to take a performance-based approach, where possible, and provide desired objectives rather than mandating prescriptive requirements that dictate how airports comply with their responsibilities under the programs.
You can read AAAE's comments here, which includes responses to nearly 60 different proposed regulatory changes. We appreciate everyone who shared feedback with us regarding the proposal, including those who completed our survey. 
Background. As part of their federal grant obligations, airports are required to administer DBE and ACDBE programs in accordance with the regulations outlined in 49 C.F.R. Parts 23 and 26. Since the 1980s, DOT has made occasional updates to the regulations governing the DBE and ACDBE programs, with the last notable revision coming in 2014. Over the past 8 years, DOT has held listening sessions with industry stakeholders, conducted internal research, reviewed feedback, and revised procedures to accommodate the coronavirus pandemic emergency. In July, DOT released its proposed rule, which proposed a wide range of changes to both programs for the purpose of removing outdated provisions and promoting firm growth and participation. 
Areas of AAAE Support. In our comments, AAAE supported initiatives and efforts of DOT to increase and promote participation in the DBE and ACDBE programs and lower the burdens and compliance costs for airports. Some of these proposed changes included: 
• Increasing the PNW cap, which is currently set at $1.32 million and applies to owners that are the basis for a firm's eligibility in the program, to account for rising inflation and costs;
• Permitting certifiers to conduct virtual on-site visits during certification and virtual decertification hearings;
• Establishing a reasonable mechanism to allow for interstate certification and automatic reciprocity;
• Allowing the use of unsworn declarations under penalty of perjury over sworn affidavits and notarization; and
• Removing the requirement for airports to consult with stakeholders regarding ACDBE goals when no opportunities for new concession agreements are available during the goal period.
DOT also sought comment on whether to revise the definition of “long-term, exclusive (LTE) agreement.“ Airports are currently prohibited from entering into LTE agreements—defined as an agreement with a term longer than 5 years—with concessions absent FAA approval. AAAE supported increasing the term to 10 years after many members consistently cited the need for longer term leases to attract potential bidders. 
Concerns over New Requirements. Most AAAE members expressed significant concerns over a series of proposed changes that would impose new mandates on the airport community, citing limited staffing and other resource challenges that would result if implemented. In relaying airport concerns, we urged DOT to take a more performance-based approach, where possible, and outline desired objectives rather than mandating prescriptive requirements, recognizing that what may work for one airport may not work for another. 
Member concerns were raised over new requirements that included:
• Expanding the amount of data that must be reported by airports in the “Uniform Report of DBE Awards or Commitments and Payments;“
• Requiring airports to create and maintain an active participants list as part of their ACDBE program and provide all data from their DBE bidders list and ACDBE active participants list to DOT through a centralized database;
• Expanding the “running tally“ requirement by requiring that airports maintain an accounting of each contractor's progress in attaining a contract goal;
• Requiring airports to “proactively“ monitor and conduct oversight to ensure a prime contractor's compliance with prompt payments to subcontractors;
• Requiring airports to monitor the prime contractor's adherence to a newly proposed DBE Performance Plan (DPP) that must be submitted by a prime contractor to the airport during the bidding process for design-build contracts;
• Requiring airports to establish a system to determine, prior to an award, whether a DBE supplier—submitted by the bidder as a “regular dealer“—qualifies for that designation under Part 26; and
• Requiring airports to implement a new “small business element“ to promote and foster small business participation as part of its ACDBE program and submit annual reports to DOT regarding the success of the new “element.“
What's Next? DOT will begin to review and adjudicate over 440 comments that the Department received from airports, state transportation agencies, DBE and ACDBE firms, and members of the public. We believe that DOT will move ahead with a final rule to update the DBE and ACDBE program regulations. We will remain engaged with DOT to relay airport concerns and keep members apprised of any meaningful updates. 
Resources on DOT's Proposal
• AAAE's October 31 Response to Proposed Rule 
• DOT's September 1 Extension of Proposed Rule Comment Period 
• DOT's July 21 Proposed Rule on DBE/ACDBE Program Updates 
• DOT's July 21 Summary of Proposed Rule 
• DOT Recordings of Public Meetings on Proposed Rule 
• DOT Website on DBE/ACDBE Proposal 
• Rulemaking Docket for DBE/ACDBE Proposal (DOT-OST-2022-0051) 
• AAAE's July 20 Regulatory Alert on Proposed Rule 
On October 31, AAAE filed comments in response to the U.S. Department of Transportation's (DOT) proposed rule that would make a wide range of changes and updates to the regulations governing the Disadvantaged Business Enterprise (DBE) program and the Airport Concession Disadvantaged Business Enterprise (ACDBE) program. DOT's 231-page proposal, which is the first update to these programs since 2014, is part of the Biden Administration's broader effort to advance equity and expand opportunities for DBE firms in government funding programs. 
In our comments, AAAE emphasized the importance of the DBE and ACDBE programs and supported efforts to increase and promote firm participation, such as increasing the personal net worth (PNW) cap—which is currently set at $1.32 million for firm owners—to account for rising inflation and costs and establishing a reasonable mechanism to allow for interstate certification and reciprocity. However, we also relayed concerns that we received from most of our members over a series of new requirements that would be imposed on airports in the areas of reporting, monitoring, and fostering small business participation, and how these proposals would strain already limited staffing that is available at airports to implement these programs. We urged DOT to take a performance-based approach, where possible, and provide desired objectives rather than mandating prescriptive requirements that dictate how airports comply with their responsibilities under the programs.
You can read AAAE's comments here, which includes responses to nearly 60 different proposed regulatory changes. We appreciate everyone who shared feedback with us regarding the proposal, including those who completed our survey. 
Background. As part of their federal grant obligations, airports are required to administer DBE and ACDBE programs in accordance with the regulations outlined in 49 C.F.R. Parts 23 and 26. Since the 1980s, DOT has made occasional updates to the regulations governing the DBE and ACDBE programs, with the last notable revision coming in 2014. Over the past 8 years, DOT has held listening sessions with industry stakeholders, conducted internal research, reviewed feedback, and revised procedures to accommodate the coronavirus pandemic emergency. In July, DOT released its proposed rule, which proposed a wide range of changes to both programs for the purpose of removing outdated provisions and promoting firm growth and participation. 
Areas of AAAE Support. In our comments, AAAE supported initiatives and efforts of DOT to increase and promote participation in the DBE and ACDBE programs and lower the burdens and compliance costs for airports. Some of these proposed changes included: 
• Increasing the PNW cap, which is currently set at $1.32 million and applies to owners that are the basis for a firm's eligibility in the program, to account for rising inflation and costs;
• Permitting certifiers to conduct virtual on-site visits during certification and virtual decertification hearings;
• Establishing a reasonable mechanism to allow for interstate certification and automatic reciprocity;
• Allowing the use of unsworn declarations under penalty of perjury over sworn affidavits and notarization; and
• Removing the requirement for airports to consult with stakeholders regarding ACDBE goals when no opportunities for new concession agreements are available during the goal period.
DOT also sought comment on whether to revise the definition of “long-term, exclusive (LTE) agreement.“ Airports are currently prohibited from entering into LTE agreements—defined as an agreement with a term longer than 5 years—with concessions absent FAA approval. AAAE supported increasing the term to 10 years after many members consistently cited the need for longer term leases to attract potential bidders. 
Concerns over New Requirements. Most AAAE members expressed significant concerns over a series of proposed changes that would impose new mandates on the airport community, citing limited staffing and other resource challenges that would result if implemented. In relaying airport concerns, we urged DOT to take a more performance-based approach, where possible, and outline desired objectives rather than mandating prescriptive requirements, recognizing that what may work for one airport may not work for another. 
Member concerns were raised over new requirements that included:
• Expanding the amount of data that must be reported by airports in the “Uniform Report of DBE Awards or Commitments and Payments;“
• Requiring airports to create and maintain an active participants list as part of their ACDBE program and provide all data from their DBE bidders list and ACDBE active participants list to DOT through a centralized database;
• Expanding the “running tally“ requirement by requiring that airports maintain an accounting of each contractor's progress in attaining a contract goal;
• Requiring airports to “proactively“ monitor and conduct oversight to ensure a prime contractor's compliance with prompt payments to subcontractors;
• Requiring airports to monitor the prime contractor's adherence to a newly proposed DBE Performance Plan (DPP) that must be submitted by a prime contractor to the airport during the bidding process for design-build contracts;
• Requiring airports to establish a system to determine, prior to an award, whether a DBE supplier—submitted by the bidder as a “regular dealer“—qualifies for that designation under Part 26; and
• Requiring airports to implement a new “small business element“ to promote and foster small business participation as part of its ACDBE program and submit annual reports to DOT regarding the success of the new “element.“
What's Next? DOT will begin to review and adjudicate over 440 comments that the Department received from airports, state transportation agencies, DBE and ACDBE firms, and members of the public. We believe that DOT will move ahead with a final rule to update the DBE and ACDBE program regulations. We will remain engaged with DOT to relay airport concerns and keep members apprised of any meaningful updates. 
Resources on DOT's Proposal
• AAAE's October 31 Response to Proposed Rule 
• DOT's September 1 Extension of Proposed Rule Comment Period 
• DOT's July 21 Proposed Rule on DBE/ACDBE Program Updates 
• DOT's July 21 Summary of Proposed Rule 
• DOT Recordings of Public Meetings on Proposed Rule 
• DOT Website on DBE/ACDBE Proposal 
• Rulemaking Docket for DBE/ACDBE Proposal (DOT-OST-2022-0051) 
• AAAE's July 20 Regulatory Alert on Proposed Rule 
