DISADVANTAGED BUSINESS ENTERPRISES: EFFECT OF DECERTIFICATION AND COMPETING IN THE GEORGIA TRANSPORTATION CONSTRUCTION MARKETPLACE

Abstract

The U.S. Department of Transportation (DOT) allocates billions of dollars annually for transportation projects. State Departments of Transportation (SDOT) that receive federal assistance for transportation contracting must meet the requirements of the Code of Federal Regulations (CFR) Title 49: Transportation Part 26 (ECFR, 2016). This regulation ensures that all business enterprises have fair opportunities for federally funded transportation contracting. Therefore, SDOTs are mandated to develop DBE goals for participation of firms, certification of DBE firm eligibility, evaluation of their DOT-assisted contracts for compliance with goals to ensure nondiscrimination in federally assisted procurement. There are eight primary objectives for the DBE program. One of which is to assist the development of firms that can compete successfully in the marketplace outside the DBE program. The DBE program has been a source of controversy since its inception (La Noue, 2008). Research shows that both DBE and non-DBE firms have grievances with the effectiveness of the overall program. Some also believe that the program creates a dependency of its participant and that inputs of knowledge would assist with the growth and development of firms to become independent contractors outside of the program (Beliveau et al., 1991). A number of factors have been presented by prior research that hinder the growth and development of certified DBE firms with a focus on performance, internal impediments, and external impediments of the program. However, there is minimal data on the preparation of DBE firms by SDOTs and their ability to compete in the open market outside of the DBE program. There is value in a study that evaluates the DBE program to determine if it is meeting the referenced objective. This research analyzes the participants of the DBE program and factors that contribute to the decertification of firms and affect their growth and development. Evaluation of certified DBEs, decertified DBEs and program administrators on this specific program objective contributes new data to the body of knowledge. The objective of this study is to evaluate the GDOT DBE program and that of similar SDOTs to determine if the DBE program in Georgia is assisting with the development of firms to compete in the marketplace. The main contribution of this research is to identify factors that assist the growth and development of DBE construction firms who voluntarily decertify and compete independently in the open market and explore the issues of certified firms that prohibit graduation. There are three outcomes of this study that contribute to the body of knowledge: regression models, development and decertification factors, and program administrator recommendations. The results of this research reveal if the program is meeting this objective for Georgia construction transportation projects based on factors obtained from the data analysis. The findings offer improvement to policy regarding the DBE program and government contracting for construction transportation projects.