On several occasions, clients and potential clients have approached me to ask how they can challenge another company’s Disadvantaged Business Enterprise Certification. For example, they may believe that the owner exceeds the personal net worth limitations, the business exceeds SBA size standards or the purported disadvantaged owner does not actually control the firm.
The federal DBE regulations do have a procedure in place for reporting another DBE. They provide that any person can file a written complaint with the certifying agency (usually a state-level department of transportation or airport authority) that a currently-certified DBE is not actually eligible. 49 C.F.R. § 26.87(a). The complainant must specify the reasons why they believe the company is ineligible- a general allegation that the company is not eligible is not enough. 49 C.F.R. § 26.87(a).
Often, the reporter wants to remain anonymous, for fear of retaliation or other fallout. Please be forewarned that the certifying agency does not have to accept anonymous complaints. There is some level of confidentiality for the complaining party. 49 C.F.R. § 26.109(b)(b) provides that the identity of the complainant shall be kept confidential, at the complainant’s election. However, the same provision also realizes that there are circumstances where that confidentiality could hinder the investigation. If the complainant does not waive the confidentiality, the investigation into their complaint could be closed.
The regulations are also clear that as a complainant, the company that you are complaining about cannot “intimidate, threaten, coerce, or discriminate” against you because you made a complaint against them. 49 C.F.R. §26.109(d).
Once a report is made, the certifying agency must review the complaint and any materials submitted by either the complainant or the subject firm, and any other information. The agency may ask for additional information and/or conduct an investigation. 49 C.F.R. §29.87(a)(2).
If the agency determines that a firm is ineligible, it must provide written notice to the firm that the agency proposes to find the firm ineligible and set forth the reasons why. Similarly, if it finds that the firm remains eligible, it must notify the complainant and the firm in writing of the determination. Either way, the agency must also reference evidence in the record supporting its decision.