Are you a business owner who wants to participate in the Disadvantaged Business Enterprise (DBE) or Airport Concession Disadvantaged Business Enterprise (ACDBE) programs? If so, you need to know how the U.S. Department of Transportation (DOT) determines your business size for eligibility purposes. Here is a summary of the main rules and criteria that apply, based on the final rule issued by the DOT on April 9, 2024 and that went into effect on May 9, 2024.
First, your business must be a small business as defined by the Small Business Administration (SBA). The SBA has different size standards for different industries, based on the North American Industry Classification System (NAICS) codes. You can find the NAICS code that corresponds to your primary industry on the SBA website. The size standards are usually expressed as the maximum average annual gross receipts that your business and its affiliates can have over the previous five fiscal years. For a few codes it is by maximum number of employees.
Second, if you want to do DBE work on contracts assisted by the Federal Highway Administration (FHWA) or the Federal Transit Administration (FTA), you must meet an additional size limit. Your business and its affiliates cannot have average annual gross receipts exceeding $30.72 million over the previous three fiscal years. This amount is adjusted annually by the DOT and posted on its website. For ACDBE, the size limit is $56.42 million over the previous five fiscal years, with other specific limits for certain types of businesses. However, since the same personal net worth limits apply to ACDBE as to DBE, it is rare that a company would be able to grow to that size and still have an disadvantaged owner within the personal net worth limits.
Third, you must include the gross receipts of your affiliates in your size calculation, unless they are part of a joint venture with your business. Affiliates are businesses that are controlled by or have the power to control your business, or that are controlled by the same person or entity as your business. Control can be based on ownership, management, or other factors. Gross receipts are the total amount of money your business receives or accrues from any source during its fiscal year, before any deductions or expenses, calculated on a cash basis (which means you report income when you receive it and expenses when you pay them).
If you meet these size criteria, you may be eligible to apply for DBE or ACDBE certification, which also requires that you meet other requirements such as personal net worth, social and economic disadvantage, ownership, and control.
