Denied Disadvantaged Business Enterprise (DBE) Certification? Make Sure You Receive an Explanation!

February 12, 2021
By Danielle Dietrich
Posted in Business Services, Women and Diverse-Owned Businesses

If you are a small business where individuals who are considered socially and economically disadvantaged own at least 51% of the business and also control the management and daily business operations, you may qualify for Disadvantaged Business Enterprise (DBE) certification.  The DBE is a federal program to help provide opportunities for these individuals.  You can learn more about the program in my prior blog post: https://www.smgglaw.com/blog/what-is-a-disadvantaged-business-enterprise-how-can-my-company-become-a-dbe.

It is extraordinarily discouraging to receive a denial of your application, and even more so if it does not explain why the certifier denied your application.  However, the Code of Federal Regulations explicitly requires that a denial must provide 1) a written explanation of the reasons for the denial and 2) specific references to evidence in the record that supports the reason(s) for denial.  49 C.F.R. § 26.86(a).  The certifier is also required to make all documents and information on which its denial is based available to you to review if you so request.

The United States Department of Transportation, which decides appeals of these denials, has made it clear that explanation is required.

In once case, the certifier recounted some facts, but failed to analyze how any of those facts related to any requirement of the regulations.  As a result, the USDOT set the application back to the certifier to either certify the company or explain its rationale for the denial.  In re Tamarac Land Surveying LLC, No. 16-0017, April 28, 2016.

The USDOT has also scolded a certifier for using boilerplate language that was not tailored to the circumstances of the case.  In that case, the USDOT ordered the certifier to certify the applicant company.  In re ATS International LLC, No. 14-0066, October 29, 2014.   The USDOT also directed the same certifier to certify an applicant who had been denied for failure to cooperate.  The denial failed to point to any evidence in the record that might support that conclusion.  In re Grace & Mercy Auto Service, Inc., No. 14-0070, October 31, 2014.

 If you receive a denial of your application for DBE certification, you should consult a knowledgeable attorney who can help you determine whether the denial is proper, and whether you should appeal.

If your company needs advice on whether it is a good time to apply for DBE, MBE or WBE certification, please contact Danielle Dietrich at 412-227-0284 or ddietrich@smgglaw.com.