Federal highway law requires state highway agencies to spend at least 10% of their federal-aid highway program funds to contract with firms participating in the Disadvantaged Business Enterprise Program. Since 1988, state agencies have received thousands of new applications for participation in the Disadvantaged Business Enterprise Program for federal highways each year. For each application, state agencies must determine whether the firms meet the eligibility standards contained in federal law and regulations. These standards require that the firms be small businesses owned and controlled by socially and economically disadvantaged individuals. To interpret and apply the legal and regulatory standards, states rely on more specific and detailed supplementary eligibility guidance provided by the Department of Transportation (DOT) and the Federal Highway Administration (FHWA). The General Accounting Office (GAO) was requested to evaluate whether federal guidance and oversight engenders effective and consistent state application of the eligibility standards contained in the law governing the Disadvantaged Business Enterprise Program. Briefly, GAO found the following: Ineffective federal guidance has hindered states from consistently applying the eligibility criteria for the Disadvantaged Business Enterprise Program. Despite varying state interpretations, DOT has not clarified its guidance. Revisions have been under way since 1988, and although DOT informed a congressional committee that it planned to publish a draft regulation by early 1991, the deadline was not met. DOT has since stated that it plans to issue a notice of proposed rule-making before November 1, 1992, and estimated that it would publish a final regulation in early August 1993. While FHWA is responsible for overseeing states' implementation of the Disadvantaged Business Enterprise Program for federal highways, it has not established a system to evaluate whether the eligibility criteria are being correctly and uniformly applied. Although FHWA does require its field offices to oversee the state agencies' application of the eligibility criteria in the 50 states, the District of Columbia, and Puerto Rico, field offices examined eligibility decisions in only 22 state agencies between 1988 and 1991.

  • Supplemental Notes:
    • Report to Congressional Requesters.
  • Corporate Authors:

    U.S. General Accounting Office

    441 G Street, NW
    Washington, DC  United States  20548
  • Publication Date: 1992-9


  • English

Media Info

  • Features: Appendices;
  • Pagination: 24 p.

Subject/Index Terms

Filing Info

  • Accession Number: 00625245
  • Record Type: Publication
  • Report/Paper Numbers: GAO/RCED-92-148
  • Files: TRIS
  • Created Date: Oct 29 1993 12:00AM