In February 1985, I wrote my first column for Roads & Bridges magazine. The title was Support DBE, but change existing program. In that column I suggested that we get away from a numbers-driven program and instead focus on ways to lend a helping hand to disadvantaged business enterprises (DBEs) so that the number of viable, successful DBEs would increase. It is now over 21 years since I made those suggestions. Many DBEs whom I personally know had potential to make it in highway construction are long out of business in part because they were not given the same kind of help non-DBE contractors have been given for generations.
Instead, DBEs have been disadvantaged in part by the DBE regulations themselves, how some officials have interpreted them and the focus more on preventing fraud than on helping DBEs. I do not question the sincerity of any of the officials, but I do question whether their approach has helped legitimate DBEs.
In September 1983, the then Federal Highway Administrator, Ray Barnhart, suggested the establishment of mentor-protégé relationships, where a prime contractor assists an existing or newly formed DBE firm. He correctly noted that many prime contractors owe their success to the experience gained as a subcontractor/protégé. He was right. I personally know many prime contractors who owed their very existence to getting help from a former employer or mentor.
Before the DBE program, the mentors typically helped former employees or younger protégés get started. They helped them get financing, guaranteed their bond and provided equipment when it was needed. They sometimes made advance payments to help with cash flow. If the protégé subcontractor was not bonded, they made payments by joint checks to the subcontractor and material supplier. In most instances at the beginning, the protégé subcontractor worked exclusively with the mentor while he was being provided with financial support and other assistance. I bet many prime contractor readers owe their start to this kind of relationship.
Even though Barnhart was on to something in 1983, the mentor-protégé concept never really got off the ground. Shortly after he issued the memorandum, there were seven DBE conferences across the country during which other government officials essentially undermined the whole idea. Prime contractors became afraid to formally help DBEs.
Not much has changed since. Some government officials believe that the DBE regulations prohibit a DBEs exclusive relationship with a prime contractor, its use of the prime contractor's crane, it being furnished copies of quotes received by the prime contractor for materials (steel, concrete) and payment made by joint checks. If the DBE regulations do in fact prohibit the very things that enabled non-DBE firms to get started successfully, we need to focus on the goal of the DBE program, which is to create a level playing field.
I am not suggesting the government ignore fraud. A few contractors have purposely violated the DBE rules by "pass-throughs," paying a DBE for its status while a non-DBE actually does the work. Those contractors are guilty of fraud and should be punished. But, I believe very, very few contractors are in that category. The vast majority of contractors I know have tried for 25-plus years to meet DBE goals they believed were not realistic. In the process they have been forced to be innovative. This large group of contractors has attempted to assist DBEs along the way because it helped get the work done. They are not guilty of fraud. The type of assistance they give has been done for years in the industry and in many cases been given to the company now offering it to a DBE.