Just Formed a Company? Learn When You Should Apply for DBE Certification

February 5, 2021
By Danielle Dietrich
Posted in Business Services, Women and Diverse-Owned Businesses

Frequently new business owners ask me if there is a waiting period or a certain amount of time that they must be in business before they can apply for Disadvantaged Business Enterprise certification.  Technically, the answer is no. The regulations provided in 49 C.F.R. 26.73(b)(2) say that your company cannot be denied certification just because it is brand new, if it hasn’t completed any jobs or made any profits if it meets the other requirements.

However, the U.S. Department of Transportation has pointed out that if a company is new and does not have any work yet, it can make it hard for the applicant company to meet their burden of proof for certification.

For instance, a start up business applied for certification, but it did not yet have work or own any equipment.  The owner worked full time for another construction company (where he was previously an owner).  The applicant represented to the certifying agency that he had to keep working to have an income, and that he would quit his other job when the start up took off.  He also said that when he got work, he would rent equipment.  The certifier denied the application.

On appeal, the USDOT acknowledged that a company should not be denied certification just because it is new and doesn’t have any work.  However, the owner’s representations about what he would do in the future to run the business did not support a finding regarding the owner’s current control of the business.  Because the regulations provide that certification decisions are based on present, not future, circumstances, the USDOT upheld the denial.  In re Nash Contracting LLC No. 20-0074 July 31, 2020.

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.