[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


 DRIVING EQUITY: THE U.S. DEPARTMENT OF TRANSPORTATION'S DISADVANTAGED 
                      BUSINESS ENTERPRISE PROGRAM

=======================================================================

                                (116-64)

                             REMOTE HEARING

                               BEFORE THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 23, 2020

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure
             
             
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                             transportation
                             
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                    U.S. GOVERNMENT PUBLISHING OFFICE                    
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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

  PETER A. DeFAZIO, Oregon, Chair
SAM GRAVES, Missouri                 ELEANOR HOLMES NORTON,
DON YOUNG, Alaska                      District of Columbia
ERIC A. ``RICK'' CRAWFORD, Arkansas  EDDIE BERNICE JOHNSON, Texas
BOB GIBBS, Ohio                      RICK LARSEN, Washington
DANIEL WEBSTER, Florida              GRACE F. NAPOLITANO, California
THOMAS MASSIE, Kentucky              DANIEL LIPINSKI, Illinois
SCOTT PERRY, Pennsylvania            STEVE COHEN, Tennessee
RODNEY DAVIS, Illinois               ALBIO SIRES, New Jersey
ROB WOODALL, Georgia                 JOHN GARAMENDI, California
JOHN KATKO, New York                 HENRY C. ``HANK'' JOHNSON, Jr., 
BRIAN BABIN, Texas                   Georgia
GARRET GRAVES, Louisiana             ANDRE CARSON, Indiana
DAVID ROUZER, North Carolina         DINA TITUS, Nevada
MIKE BOST, Illinois                  SEAN PATRICK MALONEY, New York
RANDY K. WEBER, Sr., Texas           JARED HUFFMAN, California
DOUG LaMALFA, California             JULIA BROWNLEY, California
BRUCE WESTERMAN, Arkansas            FREDERICA S. WILSON, Florida
LLOYD SMUCKER, Pennsylvania          DONALD M. PAYNE, Jr., New Jersey
PAUL MITCHELL, Michigan              ALAN S. LOWENTHAL, California
BRIAN J. MAST, Florida               MARK DeSAULNIER, California
MIKE GALLAGHER, Wisconsin            STACEY E. PLASKETT, Virgin Islands
GARY J. PALMER, Alabama              STEPHEN F. LYNCH, Massachusetts
BRIAN K. FITZPATRICK, Pennsylvania   SALUD O. CARBAJAL, California, 
JENNIFFER GONZALEZ-COLON,            Vice Chair
  Puerto Rico                        ANTHONY G. BROWN, Maryland
TROY BALDERSON, Ohio                 ADRIANO ESPAILLAT, New York
ROSS SPANO, Florida                  TOM MALINOWSKI, New Jersey
PETE STAUBER, Minnesota              GREG STANTON, Arizona
CAROL D. MILLER, West Virginia       DEBBIE MUCARSEL-POWELL, Florida
GREG PENCE, Indiana                  LIZZIE FLETCHER, Texas
MIKE GARCIA, California              COLIN Z. ALLRED, Texas
                                     SHARICE DAVIDS, Kansas
                                     ABBY FINKENAUER, Iowa
                                     JESUS G. ``CHUY'' GARCIA, Illinois
                                     ANTONIO DELGADO, New York
                                     CHRIS PAPPAS, New Hampshire
                                     ANGIE CRAIG, Minnesota
                                     HARLEY ROUDA, California
                                     CONOR LAMB, Pennsylvania

                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................     v

                 STATEMENTS OF MEMBERS OF THE COMMITTEE

Hon. Peter A. DeFazio, a Representative in Congress from the 
  State of Oregon, and Chairman, Committee on Transportation and 
  Infrastructure:

    Opening statement............................................     1
    Prepared statement...........................................     4
Hon. Sam Graves, a Representative in Congress from the State of 
  Missouri, and Ranking Member, Committee on Transportation and 
  Infrastructure:

    Opening statement............................................     4
    Prepared statement...........................................     5
Hon. Eleanor Holmes Norton, a Delegate in Congress from the 
  District of Columbia, and Chairwoman, Subcommittee on Highways 
  and Transit:

    Opening statement............................................     5
    Prepared statement...........................................     6
Hon. Rodney Davis, a Representative in Congress from the State of 
  Illinois, and Ranking Member, Subcommittee on Highways and 
  Transit:

    Opening statement............................................     7
    Prepared statement...........................................     8
Hon. Eddie Bernice Johnson, a Representative in Congress from the 
  State of Texas, prepared statement.............................   133
Hon. Rick Larsen, a Representative in Congress from the State of 
  Washington, and Chairman, Subcommittee on Aviation, prepared 
  statement......................................................   133

                               WITNESSES

Evalynn Williams, President and Chief Executive Officer, Dikita 
  Enterprises, Inc., on behalf of the Conference of Minority 
  Transportation Officials:

    Oral statement...............................................    10
    Prepared statement...........................................    11
Geri E. Boyer, P.E., President, Kaskaskia Engineering Group, LLC, 
  on behalf of the American Council of Engineering Companies:

    Oral statement...............................................    14
    Prepared statement...........................................    16
Mary T. Lerdahl, President, Emerald Consulting Services, LLC:

    Oral statement...............................................    22
    Prepared statement...........................................    24
Farad Ali, Chairman, Government Affairs Committee, Airport 
  Minority Advisory Council:

    Oral statement...............................................    27
    Prepared statement...........................................    29
Sandy-Michael E. McDonald, Director, Office of Economic and Small 
  Business Development, Broward County, Florida:

    Oral statement...............................................    32
    Prepared statement...........................................    33
Sandra D. Norman, Division Administrator, Civil Rights, Virginia 
  Department of Transportation:

    Oral statement...............................................    36
    Prepared statement...........................................    37
Jon S. Wainwright, Ph.D., Affiliated Consultant, NERA Economic 
  Consulting:

    Oral statement...............................................    38
    Prepared statement...........................................    40

                       SUBMISSIONS FOR THE RECORD

Submissions for the Record by Hon. Peter A. DeFazio:

    Ten Disparity Studies........................................     3
    Letter of June 25, 2020, from Geri E. Boyer, P.E., President, 
      Kaskaskia Engineering Group, LLC...........................    95
    Letter of July 13, 2020, from Lawrence T. Green, President, 
      Divine Cement, Inc.........................................   134
    Letter of July 15, 2020, from Linda Moen, P.E., LEED BD+C, 
      President and Managing Member, EFK Moen....................   136
    Letter of July 1, 2020, from Carla M. Williams, DBELO, 
      Director of Community and Business Engagement, Hillsborough 
      Area Regional Transit Authority, and President, COMTO 
      Central Florida Chapter....................................   137
    Letter of September 19, 2020, from Colette Holt, Colette Holt 
      & Associates...............................................   138
    Letter of June 16, 2020, from Katherine M. Cloonen, 
      President, JK Steel Erectors, Inc..........................   142
    Letter of June 24, 2020, from Carol L. Kwan, Carol Kwan 
      Consulting LLC.............................................   143
    Letter of May 26, 2020, from Sarah Imberman, S. Levy Foods...   144
    Letter of June 17, 2020, from Constance Macolino, President, 
      Puget Sound Steel Co., Inc.................................   144
    Letter of September 9, 2020, from Robert S. Bright, Founder 
      and President, Talson Solutions, LLC.......................   145
    Letter of September 8, 2020, from Lorenzo Thompson, 
      Principal, Thompson Civil, LLC.............................   146
    Letter of July 1, 2020, from Katey Doman, President, TyE Bar 
      LLC........................................................   147
    Statement of Joann Payne, President, Women First National 
      Legislative Committee......................................   147
Submissions for the Record by Hon. Sam Graves of Missouri:

    Statement of the American Road & Transportation Builders 
      Association................................................   151
    Letter of October 7, 2020, from James V. Christianson, Vice 
      President, Government Relations, Associated General 
      Contractors of America.....................................   155
Statement of the Airport Restaurant and Retail Association, 
  Submitted for the Record by Hon. Rick Larsen...................   159

                                APPENDIX

Question from Hon. Troy Balderson to Sandy-Michael E. McDonald, 
  Director, Office of Economic and Small Business Development, 
  Broward County, Florida........................................   163
Questions from Hon. Peter A. DeFazio to Jon S. Wainwright, Ph.D., 
  Affiliated Consultant, NERA Economic Consulting................   164

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                           September 18, 2020

    SUMMARY OF SUBJECT MATTER

    TO:         LMembers, Committee on Transportation and 
Infrastructure
    FROM:      LStaff, Committee on Transportation and 
Infrastructure
    SUBJECT:  LHearing on ``Driving Equity: The U.S. Department 
of Transportation's Disadvantaged Business Enterprise Program''
_______________________________________________________________________


                           PURPOSE OF HEARING

    The Committee on Transportation and Infrastructure will 
meet on Wednesday, September 23, 2020, at 10:00 am, in room 
2167 Rayburn House Office Building and remotely via Cisco 
WebEx, to receive testimony regarding ``Driving Equity: The 
U.S. Department of Transportation's Disadvantaged Business 
Enterprise Program.'' The Committee will hear from 
representatives of the Virginia Department of Transportation; 
Broward County, Florida, Office of Small Business and Economic 
Development; the Airport Minority Advisory Council (AMAC); the 
Conference of Minority Transportation Officials (COMTO); 
Emerald Consulting Services; NERA Economic Consulting; and the 
American Council of Engineering Companies (ACEC).

                               BACKGROUND

    The U.S. Department of Transportation's (DOT) Disadvantaged 
Business Enterprise (DBE) Program was established to remedy 
discrimination against minority and women-owned businesses.\1\ 
The DBE program seeks to ensure those businesses are provided 
equal opportunities to compete for contracts assisted by 
certain DOT funds administered by the Federal Highway 
Administration (FHWA), the Federal Aviation Administration 
(FAA), the Federal Transit Administration (FTA), and the 
National Highway Traffic Safety Administration (NHTSA).\2\
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    \1\ DOT Office of Civil Rights. Disadvantaged Business Enterprise 
(DBE) Program. US Department of Transportation. Retrieved September 18, 
2020, from https://www.transportation.gov/civil-rights/disadvantaged-
business-enterprise
    \2\ 49 CFR 26.3.
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    First established by Federal regulation in 1980 as a 
minority and women's business enterprise program, the DBE 
program was later statutorily authorized for surface 
transportation programs in 1983 by the Surface Transportation 
Assistance Act of 1982 (P.L. 97-424) to aid small businesses 
owned and controlled by minorities facing historic and 
continuing discriminatory barriers to participation in the 
highways and transit programs.\3\
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    \3\ DOT Office of Civil Rights. Disadvantaged Business Enterprise 
(DBE) Program.
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    DBE programs for women-owned businesses and the FAA's 
airport DBE program were primarily implemented by regulation 
until Congress passed the Surface Transportation and Uniform 
Relocation Assistance Act of 1987 (P.L. 100-17) and the Airport 
and Airway Safety and Capacity Expansion Act of 1987 (P.L. 100-
223), which expanded statutory authorization for surface and 
airport transportation construction DBE programs to include 
women-controlled small businesses and codified the airport DBE 
program, respectively. The Airport and Airway Safety and 
Capacity Expansion Act also established a separate Airport 
Concession Disadvantaged Business Enterprise (ACDBE) Program 
administered by the FAA for airport concessions and related 
contracts.\4\ Since P.L. 100-223 codified the airport 
construction DBE program and the ACBDE program, these programs 
do not require statutory reauthorization in the same manner as 
surface transportation DBE programs.
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    \4\ Id.
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    Though not codified like the airport programs, Congress has 
regularly reauthorized the DBE program for highways and transit 
in successive surface transportation bills, most recently with 
the enactment of the Fixing America's Surface Transportation 
(FAST) Act (P.L. 114-94). In addition, the U.S. House of 
Representatives passed H.R. 2, the Moving Forward Act, which 
aims to reauthorize the surface DBE program with some 
amendments.
    Both the surface DBE program and the aviation construction 
DBE program are implemented pursuant to regulations established 
under 49 CFR part 26. The ACDBE program is implemented pursuant 
to regulations established under 49 CFR part 23.

I. WHAT IS A DBE?

    For eligibility purposes, a DBE is defined as a small, for-
profit business where socially and economically disadvantaged 
individuals (1) own at least 51 percent of the economic 
interests of the entity, and (2) control and manage the 
business operations of the firm.\5\ A firm and its minority 
and/or women owners seeking certification as a DBE must meet: 
(1) an ownership and control test, (2) a personal net worth 
test, and (3) a size standard test, requirements for which are 
described in regulation.\6\
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    \5\ 49 CFR 26.5.
    \6\ 49 CFR 26; 49 CFR 23.
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    To be regarded as socially disadvantaged means to face 
historic and ongoing discrimination, such as racial or ethnic 
prejudice or cultural bias due to membership in a particular 
group.\7\ Consistent with DOT implementing regulations, 
minorities and women are presumed to be socially disadvantaged 
(although that presumption is rebuttable).\8\ Others may 
qualify as socially disadvantaged on a case-by-case basis.\9\
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    \7\ 13 CFR 124.103.
    \8\ 49 CFR 26.67(a) and (b).
    \9\ 49 CFR 26.67(d).
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    To be regarded as economically disadvantaged, an individual 
must, among other things, have a personal net worth that does 
not exceed $1.32 million, excluding the equity in the 
individual's primary residence and the value of their ownership 
interest in the firm seeking certification.\10\
    To meet size standards for DBE eligibility and be regarded 
as a small business in the surface transportation sector, a 
business must meet the qualifications of a small business 
defined by the Small Business Administration (SBA) in 
accordance with the North American Industry Classification 
System (NAICS) codes relevant to the business and as defined by 
the annual gross receipts or employee number caps outlined for 
each industry code.\11\ In addition, the small business must 
not have average annual gross receipts over the firm's previous 
three fiscal years in excess of $23.98 million, regardless of 
the relevant NAICS code qualification.\12\
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    \10\ 49 CFR 26.67(a).
    \11\ 49 CFR 26.65(a).
    \12\ 49 CFR 26.65(b).
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    Until the FAA Reauthorization Act of 2018 (P.L. 115-254), 
size standards for DBE eligibility in the aviation construction 
sector reflected the same requirements as the surface DBE 
program. With that Act, however, Congress removed the separate 
$23.98 million gross receipts cap requirement for businesses in 
the aviation construction sector, tying eligibility 
requirements directly to the SBA's definitions of small 
businesses.\13\
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    \13\ 49 USC Sec. 47113(a)(1).
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    In addition, H.R. 2, the Moving Forward Act, proposes to 
remove the $23.98 million gross receipts cap from the surface 
transportation DBE program as well, so the SBA would determine 
business size standards for DBEs. This proposed change would 
result in a uniform standard for determining small business 
size for both the surface and aviation construction DBE 
programs, set by the SBA.
    To be certified under the FAA's ACDBE program, a business 
must meet different size standards reflective of the diversity 
of industries present in airport concessions.\14\
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    \14\ 49 CFR 23.33.
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II. HOW ARE FIRMS CERTIFIED?

    Recipients of DOT financial assistance (such as state 
departments of transportation, local governments, transit 
agencies, and port authorities) are required to establish a 
Unified Certification Program (UCP) in their state.\15\ The 
purpose of a UCP is to ensure DBEs and applicants (including 
airport concessionaires) will have ``one-stop shopping'' on all 
certification matters with respect to these recipients. If a 
business wants to be certified as a DBE, it must submit an 
application to the state UCP for approval.\16\ Determinations 
as to whether a firm meets the DBE criteria are made by the UCP 
using various means, including on-site visits, personal 
interviews, reviews of licenses, stock ownership, equipment, 
bonding capacity, work completed, resume of principal owners, 
financial capacity, and type of work preferred.\17\ Once a DBE 
is certified through the UCP, that certification must be 
honored by all recipients of DOT funds within the state.\18\
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    \15\ 49 CFR 26.81.
    \16\ Id.
    \17\ 49 CFR 26.83(c).
    \18\ 49 CFR 26.81(b).
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    While some state UCPs maintain certification reciprocity 
agreements with other state UCPs, each state exercises its own 
discretion as to whether it will accept certification from 
other states.\19\ DBEs wishing to do business in multiple 
states must generally recertify with all applicable UCPs.\20\
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    \19\ 49 CFR 26.81(e) and (f).
    \20\ 49 CFR 26.85.
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III. HOW DOES THE DBE PROGRAM WORK?

    Under the authorizing statues for the various DBE programs, 
Congress set a national 10 percent participation goal for firms 
certified as DBEs in surface transportation programs, in 
airport federally assisted contracting (i.e., procurement, 
construction, or professional services contracts), and in 
airport concessions.\21\
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    \21\ See P.L. 114-94 Sec. 1101(b)(3) for surface, and 49 USC 
Sec. 47113(b) for aviation.
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    DOT regulations require recipients of federal financial 
assistance that anticipate awarding prime contracts of more 
than $250,000 to establish an annual aspirational DBE 
participation goal that reflects what DBE participation in 
federally-assisted projects would look like in the absence of 
discrimination.\22\ Recipients must base their goals on how to 
achieve a level playing field in their individual programs, 
regardless of the 10 percent national goal.\23\ These goals 
must be based on demonstrable evidence of the availability of 
ready, willing, and able DBEs relative to the DOT-assisted 
contracts that will be available that fiscal year (FY).\24\
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    \22\ 49 CFR 26.21(a)(1) requires all FHWA ``primary recipients'' of 
Federal financial assistance to establish a DBE program, regardless of 
contract size. Subrecipients are governed by the prime recipient's DBE 
program.
    \23\ 49 CFR 26.45(b).
    \24\ 49 CFR 26.45.
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    The two-step process for goal-setting in accordance with 
this demonstrable evidence is laid out in 49 CFR 26.45. 
Demonstrable evidence may come from several sources, including, 
but not limited to: census data, established DBE directories, 
past bidder lists, determinations by other DOT recipients with 
substantially similar market areas, and statistical DBE 
availability and disparity studies covering recipients' market 
areas.\25\ The recipient of DOT funds must establish its goal 
for a three-year period and submit that goal with the 
determining methodology to the FAA, FHWA, or FTA for review and 
approval.\26\
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    \25\ 49 CFR 26.45.
    \26\ Id.
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    It is important to note that a recipient's goal is 
aspirational only; quotas and set-asides are generally not 
permitted. In addition, DOT does not assess penalties for not 
meeting DBE goals as long as good faith efforts are 
demonstrably made.\27\ Furthermore, recipients are required to 
use race-neutral means to meet as much of their overall goal as 
possible (in this context, ``race-neutral'' refers to both race 
and gender, i.e., without application of any criteria favoring 
DBEs over non-DBEs).\28\ Examples of ``race-neutral means'' 
include: providing assistance to small businesses in overcoming 
issues such as the inability to obtain bonding or financing; 
unbundling large contracts to make them more accessible to 
small businesses; informational and communication programs on 
contracting procedures and specific contract opportunities; and 
other business support services.\29\
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    \27\ 49 CFR 26.47.
    \28\ See 49 CFR 26.5 and 49 CFR 26.51.
    \29\ 49 CFR 26.51(b).
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    If a recipient is unable to meet its overall DBE 
participation goal through race-neutral means, then a recipient 
must establish contract goals (which are deemed race-conscious) 
for DBE participation.\30\ This means the recipient has 
determined that, without the use of race-conscious measures, a 
level playing field for DBE businesses could not be achieved. 
Contract goals require that prime contractors employed by DOT 
recipients make good-faith efforts to award a certain 
percentage of their total contract work to certified DBEs in 
order to meet the race-conscious portion of their overall DBE 
participation goal.\31\ There are no Federally-mandated 
penalties for failing to meet these goals as long as good-faith 
efforts are made.
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    \30\ 49 CFR 26.51(d).
    \31\ 49 CFR 26.51(e)(2).
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    Importantly, as discussed further in section VI below, 
states under the jurisdiction of the Ninth Circuit Court of 
Appeals must use evidence from statistical disparity studies 
during their goal-setting process before DOT recipients in 
those states are allowed to set race-conscious goals for DBE 
participation.\32\
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    \32\ Case No. C00-5204 RBL (W.D. Wash. June 23, 2006)
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V. WHAT MUST RECIPIENTS REPORT TO DOT MODAL ADMINISTRATIONS?

    Recipients of DOT funds must maintain accurate records of 
data related to the participation of DBEs on projects and 
report these records regularly to DOT modal 
administrations.\33\ FHWA and FTA recipients must submit a 
uniform report of DBE contract awards, commitments, and 
payments twice per FY, and FAA recipients must submit such a 
report once per FY.\34\
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    \33\ 49 CFR 26.11.
    \34\ Id.
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    These uniform reports break down awards, commitments, and 
payments of federal financial assistance in terms of, among 
other things: (1) number of contracts awarded to DBEs as a 
percentage of total contracts, (2) dollar amount of contracts 
awarded to DBEs as a percentage of total contract dollars, (3) 
a breakdown of number of contracts awarded to DBEs 
disaggregated by race, gender, or other applicable categories, 
and (4) a breakdown of contract dollar amounts awarded to DBEs 
disaggregated by race, gender, or other applicable 
categories.\35\
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    \35\ 49 CFR 26, Appendix B.
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VI. HOW HAS THE DBE PROGRAM BEEN REVIEWED BY THE COURTS?

    Numerous court cases dealing with the DOT's DBE program or 
questions of race or gender-based discrimination have affected 
the implementation of the program over time. Some have involved 
the program directly and others indirectly. Below is a brief 
overview of a few of the most relevant cases.

A. CITY OF RICHMOND V. J.A. CROSON CO., 488 U.S. 469 (1989)

    In 1989, the United States Supreme Court held in City of 
Richmond v. J.A. Croson Co. (Croson) that a Richmond, Virginia, 
set-aside program giving preference to minority businesses in 
the awarding of municipal contracts was unconstitutional on the 
grounds that the city had failed to adequately demonstrate its 
compelling interest in establishing such a program on the basis 
of relevant, measurable evidence.\36\ With this holding, the 
Court established an outline of what would constitute a 
permissible program for race-based awarding of public contracts 
by requiring that such programs be subject to a ``strict 
scrutiny'' standard (the most stringent standard) of judicial 
review.\37\ Under the strict scrutiny standard, a public entity 
must prove: (1) that it has a ``compelling interest'' in 
remedying discrimination based on ``a strong basis in 
evidence,'' and (2) that the measures employed to remedy such 
discrimination are ``narrowly tailored'' to the scope of the 
evidence presented.\38\
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    \36\ 488 U.S. 469 (1989).
    \37\ Id.
    \38\ Id.
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B. ADARAND V. PENA, 515 U.S. 200 (1995)

    In 1995, in Adarand v. Pena (Adarand), a case dealing with 
DOT funds expended in the state of Colorado, the United States 
Supreme Court held that the strict scrutiny standard previously 
applied in Croson applies to the Federal government in the 
establishment of race-based programs.\39\ While the Court did 
not specifically determine the constitutionality of DOT's DBE 
program in Adarand, the Administration undertook a review of 
Federal programs, including the DBE program, that used race or 
gender as a basis for decision-making to ensure compliance with 
the strict scrutiny standard.\40\ In 1998, Congress 
reauthorized the surface DBE programs with the Transportation 
Equity Act for the 21st Century (TEA-21, P.L. 105-178). In 
1999, the DOT finalized new rules for both the surface and 
aviation DBE programs to ensure compliance with Adarand, and 
new rules for the ACDBE program were issued in 2005.\41\ Since 
the new rules were adopted, courts considering the 
constitutionality of the DBE program have consistently upheld 
the program against facial challenges.\42\
---------------------------------------------------------------------------
    \39\ 515 U.S. 200 (1995).
    \40\ See Affirmative Action Review Report to the President. 
Retrieved September 18, 2020, from https://
clintonwhitehouse2.archives.gov/WH/EOP/OP/html/aa/aa-index.html
    \41\ See 54 Fed. Reg. 5,096 (February 2, 1999), and 70 Fed. Reg. 
14,496 (March 22, 2005)
    \42\ See Adarand Constructors, Inc. v. Slater, 228 F.3d 1147 (10th 
Cir. 2000), cert. granted, 532 U.S. 941, then dismissed as 
improvidently granted, 534 U.S. 103 (2001) (Adarand VII); Sherbrooke 
Turf, Inc. v. Minnesota Department of Transportation, and Gross Seed 
Co. v. Nebraska Department of Roads, 345 F.3d. 964 (8th Cir. 2003), 
cert. denied, 541 U.S. 1041 (2004); Western States Paving Co., Inc. v. 
Washington Department of Transportation, 407 F.3d 983 (9th Cir. 2005), 
cert. denied, 546 U.S. 1170 (2006); Northern Contracting, Inc. v. 
Illinois Department of Transportation, 473 F.3d 715 (7th Cir. 2007) 
(Northern Contracting III); Orion Insurance Group v. Washington OMWBE, 
U.S. DOT, 2018 WL 6695345 (9th Cir. 2018), cert. denied, June 24, 2019.
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C. WESTERN STATES PAVING CO, INC. V. WASHINGTON STATE DEPARTMENT OF 
                    TRANSPORTATION, CASE NO. C00-5204 RBL (W.D. WASH. 
                    JUNE 23, 2006)

    In 2005, the U.S. Court of Appeals for the Ninth Circuit 
decided in Western States Paving Co, Inc. v. Washington State 
Department of Transportation (Western States) that DOT's DBE 
program was facially constitutional, however was 
unconstitutional ``as applied'' by Washington State's DOT 
(WashDOT), because WashDOT had failed to meet the strict 
scrutiny requirement that the program be narrowly tailored.\43\ 
The court held WashDOT had not established with sufficient 
statistical evidence that it needed race-conscious measures to 
meet WashDOT's DBE participation goals.\44\ In response to this 
ruling, the DOT advised all states within the jurisdiction of 
the Ninth Circuit Court to implement only race-neutral program 
goals until statistical disparity studies could be completed to 
meet strict scrutiny standards for race-conscious contracting 
goals.\45\
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    \43\ Case No. C00-5204 RBL (W.D. Wash. June 23, 2006).
    \44\ Id.
    \45\ DOT Office of Civil Rights. Western States Paving Company Case 
Q&A. US Department of Transportation. Retrieved September 18, 2020 from 
https://www.transportation.gov/osdbu/disadvantaged-business-enterprise/
western-states-paving-company-case-q-and-a
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VII. WHAT ARE DISPARITY STUDIES AND HOW DO THEY IDENTIFY DISCRIMINATION 
                    IN MARKETS?

    Disparity studies are complex statistical analyses of 
relevant marketplaces for Federal contracts. Study methodology 
can vary, but studies generally aim to present policymakers 
with a ``disparity ratio,'' the relative percentage of Federal 
contract dollars awarded to minority groups and women in 
comparison with the percentage such groups would be expected to 
receive in a marketplace where discrimination is not 
present.\46\ Disparity studies conducted for DOT funding 
recipients may include, among other factors, analysis such as: 
(1) an empirical determination of the appropriate market area 
and appropriate product markets relevant to the recipients 
contracting activity; (2) an estimate of the fraction of DBEs 
compared with non-DBEs in the relevant market area and product 
markets (DBE availability); (3) an estimate of the percentage 
of the recipient's contract dollars earned by DBEs (DBE 
utilization); (4) a statistical comparison of DBE availability 
and utilization; (5) econometric analysis of the relative 
success of DBEs in the recipients public sector market as well 
as the corresponding private sector market; and (6) econometric 
analysis of DBE access to capital in the relevant marketplace.
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    \46\ National Academies of Sciences, Engineering, and Medicine, 
Transportation Research Board, & National Cooperative Highway Research 
Program. (2010). Guidelines for Conducting a Disparity and Availability 
Study for the Federal DBE Program. The National Academies Press. 
Retrieved September 18, 2020, from https://www.nap.edu/catalog/14346/
guidelines-for-conducting-a-disparity-and-availability-study-for-the-
federal-dbe-program
---------------------------------------------------------------------------
    As noted, recipients of DOT funds may use, and recipients 
under the jurisdiction of the Ninth Circuit Court generally 
must use pursuant to Western States, statistical disparity 
studies to aid in the establishment of goals for DBE 
participation on Federal-aid contracts. Since the Croson 
decision, many public agencies across the country, including 
DOT funding recipients, have relied upon disparity studies to 
establish accurate, empirically-based goals for minority 
participation in public contracting programs, including the 
DOT's DBE program.

                               WITNESSES

     LMr. Farad Ali, Airport Minority Advisory Council
     LMs. Geri E. Boyer, P.E., American Council of 
Engineering Companies
     LMs. Mary Lerdahl, Emerald Consulting Services
     LMr. Sandy-Michael McDonald, Broward County, 
Florida, Office of Economic and Small Business Development
     LMs. Sandra Norman, Virginia Department of 
Transportation
     LMr. Jon Wainwright, Ph.D., NERA Economic 
Consulting
     LMs. Evalynn Williams, Conference of Minority 
Transportation Officials

 
 DRIVING EQUITY: THE U.S. DEPARTMENT OF TRANSPORTATION'S DISADVANTAGED 
                      BUSINESS ENTERPRISE PROGRAM

                              ----------                              


                     WEDNESDAY, SEPTEMBER 23, 2020

                  House of Representatives,
    Committee on Transportation and Infrastructure,
                                            Washington, DC.
    The committee met, pursuant to call, at 10:01 a.m., in room 
2167 Rayburn House Office Building and via Cisco Webex, Hon. 
Peter A. DeFazio (Chairman of the committee) presiding.
    Mr. DeFazio. The committee will come to order.
    I ask unanimous consent that the chair be authorized to 
declare recess at any time during today's hearing.
    Without objection, so ordered.
    Before proceeding further, I would first like to make a few 
comments about how we intend to proceed today. We had 
previously covered these issues, but I want to briefly remind 
Members for this hearing; it has been a while.
    Today's hearing is being held in the committee's hearing 
room, as well as remotely by Cisco Webex. For Members and staff 
in the hearing room, I do have an announcement based on 
guidance from the Attending Physician, dated June 16, 2020. 
Members, staff, and all those physically present are informed 
that, in accordance with recent guidance from the Office of the 
Attending Physician, masks must be worn at all times during 
today's proceeding, except when a Member is speaking at a 
microphone.
    The chair views this as a safety issue and, therefore, an 
important matter of order and decorum, and will assert his 
responsibility to preserve order and decorum with respect to 
the wearing of masks. The chair's authority to enforce the 
preservation of order and decorum during committee proceedings 
derives from the Speaker's enforcement authority under clause 2 
of rule I. Pursuant to clause 1 of rule XI, the rules of the 
House are the rules of its committees and subcommittees, as far 
as applicable.
    The committee chair has long been responsible for the 
enforcement of general decorum in their respective committees. 
The chair would greatly prefer that all present simply uphold 
the decorum of the committee by complying with reasonable 
safety standards that are recommended by the Attending 
Physician and are respectful of all the occupants in the room. 
However, failing that, enforcement would include denial of 
recognition toward Members who refuse to uphold standards of 
decorum.
    As this is a hybrid hearing, I also want to remind Members 
of key regulations from the House Committee on Rules to ensure 
the hearing goes smoothly. Members must be visible--hello--on 
screen for purposes of identification when joining this 
hearing. Members must also continue to use the video function 
software platform, Cisco Webex, as lame as it is, for the 
remainder of the time they are attending this hearing, unless 
experiencing connectivity issues or other technical problems.
    If a Member is experiencing any connectivity issues or 
other technical problems, please inform committee staff as soon 
as possible so you can receive assistance. The chat function is 
available for Members on the Webex site platform for this 
purpose. Members can also call the committee's main phone line, 
202-225-4472, for technical assistance by phone.
    Members may not participate remotely in any other 
proceeding that may be occurring simultaneously.
    It is the responsibility of each Member seeking recognition 
to unmute their microphone prior to speaking. To avoid any 
inadvertent background noise, I request every Member to keep 
their microphone muted when not seeking recognition to speak. 
Should I hear any inadvertent background noise, I will request 
the Member to please mute their microphone.
    Finally, despite this being a hybrid hearing, I want to 
emphasize that all the standard rules of decorum apply.
    As the chair of today's hearing, I will make a good faith 
effort to provide every Member experiencing connectivity issues 
an opportunity to participate fully.
    Members will have the standard 5 minutes to ask questions.
    To insert a document into the record, please have your 
staff email it to the committee's clerk, Mike Twinchek.
    This hearing is also being livestreamed for the public to 
view.
    And I would now recognize myself for my opening statement.
    Today's hearing is focused on the United States Department 
of Transportation's Disadvantaged Business Enterprise program, 
DBE program, for short. It is an essential program that seeks 
to remedy discrimination and its effects on women- and 
minority-owned businesses as they compete for federally 
assisted transportation contracts. It seeks to ensure all 
businesses can compete for Federal transportation dollars on a 
level playing field.
    I am proud to follow in the footsteps of my friend, the 
former chairman of this committee, Jim Oberstar--there is Jim, 
right there [indicating portrait]--who was the last chairman to 
convene a hearing on this subject, 11 years ago, in 2009.
    I am also disturbed that, in the 11 years since that 
hearing, discrimination has continued to plague women and 
minorities in this country in the transportation sector. 
Discrimination is still terribly real in America. And if the 
events of 2020 have not proven that convincingly enough, I am 
confident the overwhelming evidence we have examined for this 
hearing will at least shut the door on the question, as it 
relates to federally assisted transportation projects.
    Our committee planned to hold this hearing more than 5 
months ago, but our plans were delayed by the rapid spread of 
the COVID-19 pandemic. Sadly, the continuing pandemic only 
underscores the need for this hearing and for the DBE program. 
It is increasingly clear minority communities and minority-
owned businesses have been disproportionately devastated by the 
virus.
    Almost 2 months ago, during debate before the passage of 
H.R. 2 on the House floor, I submitted 30 high-quality 
disparity studies into the Congressional Record, including many 
hundreds of pages of rigorous empirical evidence testifying to 
the reality of discrimination and its effects on the 
transportation sector.
    Today I ask unanimous consent to insert into this 
committee's record an additional 10 studies, for a total of 40 
studies, only a sampling of the mountain of evidence this 
committee has seen over the years testifying to the reality of 
discrimination in the transportation sector.
    Without objection, so ordered.
    [The information follows:]

                                 
   Ten Disparity Studies, Submitted for the Record by Hon. Peter A. 
                                DeFazio
    The full text of each report is held on file electronically with 
the Committee on Transportation and Infrastructure.

Dallas Fort Worth International Airport Disparity Study 2019, Colette 
Holt & Associates, 2019

Washington State Airports Disparity Study 2019, Conducted for the 
Washington State Department of Transportation, Colette Holt & 
Associates, 2019

City of South Bend Disparity Study 2019, Colette Holt & Associates, 
2019

2017 Minnesota Joint Disparity Study, Metropolitan Airports Commission, 
Draft Report, Keen Independent Research, January 2018

2015 Disadvantaged Business Enterprise Disparity Study, John Wayne 
Airport, County of Orange, California, MGT of America, Inc., December 
2016

2015 Procurement Disparity Study, City of Portsmouth, Virginia, MGT of 
America, Inc., 2015

Tampa International Airport 2015 Disparity Study Update, MGT of 
America, Inc., August 2015

The State of Minority- and Women-Owned Business Enterprise: Evidence 
from Memphis, Prepared for the Memphis-Shelby County Airport Authority, 
NERA Economic Consulting, December 2013

The State of Minority- and Women-Owned Business Enterprise: Evidence 
from Mississippi, Prepared for the Jackson Municipal Airport Authority, 
NERA Economic Consulting, December 2012

The State of Minority- and Women-Owned Business Enterprise: Evidence 
from Missouri, Prepared for the Missouri Department of Transportation, 
NERA Economic Consulting, August 2012

    Mr. DeFazio. I repeatedly pointed to these disparity 
studies to demonstrate the reality of discrimination and its 
effects. But it is equally important to note that our committee 
has received qualitative evidence of discrimination, as well. 
Letters from DBE-certified business owners and other 
stakeholders from across the country have come to this 
committee in the last few months, testifying to the importance 
of the program and to the reality of discrimination faced by 
women and minority business owners. Some of those business 
owners and stakeholders are before us, virtually, today to 
share their stories, and I thank them for their testimony.
    The DBE program has been narrowly constructed to combat the 
discrimination laid out in the evidence from across this 
country. It is not a perfect program; I am sure we will hear 
more about that today. But I believe it is an essential 
program, if we want to ensure a level playing field for all 
American businesses wishing to compete for Federal 
transportation dollars.
    Once again, I want to thank all the witnesses for taking 
the time to be with us today, particularly in this rather 
awkward virtual format. This is a profoundly important topic, 
and I look forward to hearing your testimony.
    [Mr. DeFazio's prepared statement follows:]

                                 
   Prepared Statement of Hon. Peter A. DeFazio, a Representative in 
     Congress from the State of Oregon, and Chairman, Committee on 
                   Transportation and Infrastructure
    Today's hearing is focused on the U.S. Department of 
Transportation's Disadvantaged Business Enterprise, or DBE, Program. 
This essential program seeks to remedy discrimination and its effects 
on women- and minority-owned businesses as they compete for Federally-
assisted transportation contracts. It seeks to ensure all businesses 
can compete for Federal transportation dollars on a level playing 
field.
    I am very proud to follow in the footsteps of my friend, the former 
Chairman of this Committee, Jim Oberstar, who was the last Chairman to 
convene a hearing on this subject eleven years ago in 2009. But I am 
also disturbed that in the eleven years since that hearing 
discrimination has continued to plague women and minorities in this 
country and in the transportation sector.
    Discrimination is still terribly real in America, and if the events 
of 2020 have not proven that convincingly enough, I'm confident the 
overwhelming evidence we have examined for this hearing will at least 
shut the door on the question as it relates to Federally-assisted 
transportation contracts.
    Our Committee planned to hold this hearing over five months ago, 
but our plans were delayed by the rapid spread of the COVID-19 
pandemic. Sadly, the continuing pandemic only underscores the need for 
this hearing and for the DBE program. It is increasingly clear minority 
communities and minority-owned businesses have been disproportionately 
devastated by the virus.
    Almost two months ago, during debate before the passage of HR 2 on 
the House floor, I submitted thirty, high-quality disparity studies 
into the Congressional Record including many hundreds of pages of 
rigorous empirical evidence testifying to the reality of discrimination 
and its effects in the transportation sector. Today, I ask unanimous 
consent to insert into this Committee's Record an additional ten 
studies, for a total of forty studies--only a sampling of the mountain 
of evidence this Committee has seen over the years--testifying to the 
reality of discrimination in the transportation sector.
    I have repeatedly pointed to these disparity studies to demonstrate 
the reality of discrimination and its effects, but it is equally 
important to note that our Committee has received qualitative evidence 
of discrimination as well. Letters from DBE-certified business owners 
and other stakeholders from across the country have come to this 
committee in the last few months testifying to the importance of the 
program, and to the reality of discrimination faced by women and 
minority business owners. Some of those business owners and 
stakeholders are before us today to share their stories, and I thank 
them for being here.
    The DBE program has been narrowly constructed to combat the 
discrimination laid out in the evidence from across this country. It is 
not a perfect program, and I'm sure we will hear more about that today. 
But I believe it is an essential program if we want to ensure a level 
playing field for all American businesses wishing to compete for 
Federal transportation dollars.
    Once again, I want to thank all the witnesses for taking the time 
to be with us today, particularly in this virtual format. This is a 
profoundly important topic, and I look forward to hearing your 
testimony.

    Mr. DeFazio. With that, I would recognize the ranking 
member, Sam Graves, for an opening statement.
    Mr. Graves of Missouri. Thank you, Chairman DeFazio, and I 
want to thank you for calling today's hearing to review the 
Department of Transportation's Disadvantaged Business 
Enterprise, or DBE, program.
    We are all here today to examine the DBE program and 
determine what, if anything, can be done to improve the 
program, moving forward.
    It has been 37 years since Congress first created the DBE 
program, which was intended to help small businesses owned and 
controlled by those facing discriminatory barriers in the 
transportation, construction, and airport concessions industry. 
Congress has recognized the success of the DBE program by 
continuing to keep it in place, and making adjustments as 
needed.
    I look forward to hearing from today's witnesses as to the 
progress that we have made towards realizing the goals of the 
DBE program, and what recommendations they have.
    And with that, I yield back.
    [Mr. Graves of Missouri's prepared statement follows:]

                                 
  Prepared Statement of Hon. Sam Graves, a Representative in Congress 
     from the State of Missouri, and Ranking Member, Committee on 
                   Transportation and Infrastructure
    We are here today to examine the DBE program and determine what, if 
anything, can be done to improve the program going forward.
    It has been 37 years since Congress first created the DBE program, 
which was intended to help small businesses owned and controlled by 
those facing discriminatory barriers in the transportation construction 
and airport concession industries.
    Congress has recognized the success of the DBE program by 
continuing it and making adjustments as needed.
    I look forward to hearing from today's witnesses as to the progress 
that we have made toward realizing the goals of the DBE program, and 
what recommendations they have.

    Mr. DeFazio. I thank the gentleman. I now recognize the 
chair of the Subcommittee on Highways and Transit, 
Congresswoman Norton, for a statement.
    Ms. Norton. Thank you, Mr. Chairman. I very much appreciate 
your holding this important hearing, especially this year.
    We are at a pivotal moment in our Nation's history, we are 
shining a long-overdue light on the lived realities of people 
of color in this country, despite our pledge of liberty and 
justice for all. Over the last few months, the vulnerability of 
African Americans, Latinos, Native American, and other Black 
and Brown people has been unmistakably demonstrated as we ride 
wave after wave of crisis, a global pandemic, a tanking 
economy, and systemic racism repeatedly manifesting itself.
    The way in which our Nation has failed and marginalized 
large populations of our citizens, while unbearable to watch 
over and over again, comes as no surprise to those of us who 
feel the prevalence of racism in our experience.
    I have spent my entire career--in Congress, and as chair of 
the U.S. Equal Opportunity Commission before that--fighting for 
equality and seeking to break down barriers so that all 
citizens have the same opportunities to participate and thrive 
in our economy and our society.
    One of the most powerful tools in the field of 
transportation and construction to assist people who have been 
routinely left out is the Disadvantaged Business Enterprise 
program. This program, when properly administered and enforced, 
ensures that businesses owned by women and minorities have a 
fair chance to compete for federally assisted transportation 
contracts. The need for this program is ongoing, and stronger 
than ever, as income inequality in this country, with a 
pandemic helping it to grow, continues.
    Today's panel will provide mountains of statistical 
evidence that show discrimination in transportation and 
construction projects. Mr. Wainwright's testimony documents, 
through rigorous statistical analysis and survey data collected 
by various agencies, the continued need for the DBE program. We 
are also joined today by individual business owners who have 
participated in the DBE program to provide some context for why 
these surveys and statistical studies matter.
    But let me point to a 2018 study conducted for the Maryland 
Department of Transportation, whose geographic market includes 
Washington, DC. The study looked at, among other things, 
whether prime contractors who work with minority- and women-
owned firms as subcontractors on contracts with DBE-type goals 
ever solicit or hire those same firms to work on contracts 
without such goals.
    The answers were stark and stunning: 69 percent of African-
American-owned firms responded that they were seldom or never 
solicited to work on contracts without goals in place, and 74 
percent of African-American-owned firms were seldom or never 
hired to work on contracts without goals. For Hispanic 
Americans, the results were 47 percent and 52 percent. For 
Asian Americans, the results were 56 percent and 61 percent. 
For Native Americans, the results were 82 percent and 70 
percent. And for nonminority women, the results were 54 percent 
and 53 percent. This is just one regional example, but this 
pattern repeats itself across the country.
    In closing, I remind my colleagues that this hearing 
presents a welcome opportunity to elevate the realities of 
minority- and women-owned business owners. By holding this 
hearing today, we ensure that the DBE program and the business 
owners it lifts up will receive thorough consideration by our 
committee.
    We also have the opportunity to learn what policy changes 
Congress should consider for the continued success of the DBE 
program.
    And I look forward to hearing from today's witnesses, as 
well as from my fellow members of this committee.
    Thank you very much, Mr. Chairman.
    [Ms. Norton's prepared statement follows:]

                                 
    Prepared Statement of Hon. Eleanor Holmes Norton, a Delegate in 
Congress from the District of Columbia, and Chairwoman, Subcommittee on 
                          Highways and Transit
    Thank you, Mr. Chairman. I cannot overstate the importance of this 
hearing on the U.S. Department of Transportation's Disadvantaged 
Business Enterprise program. I thank Chairman DeFazio, Ranking Member 
Graves, and all the Members participating today for your time and 
attention to this critical topic.
    We are at a pivotal moment in our Nation's history. We are shining 
a long overdue light on the lived realities for people of color in this 
country, despite our pledge of ``liberty and justice for all''. Over 
the last few months, the vulnerability of African American, Latinx, 
Native American, and other black and brown people has been unmistakably 
demonstrated as we ride wave after wave of crisis--a global pandemic, a 
tanking economy, and systemic racism repeatedly manifesting as physical 
violence.
    The ways in which our Nation has failed and marginalized large 
populations of our citizens--while unbearable to watch over and over 
again--comes as no surprise to those of us who can feel the prevalence 
of racism in our bones. I have spent my entire career--in Congress, and 
as Chair of the U.S. Equal Opportunity Commission before that--fighting 
for equality and seeking to break down barriers so that truly all 
citizens have the same opportunities to participate and thrive in our 
economy and our society.
    One of the most powerful tools in the field of transportation and 
construction to assist people who have routinely been left out or left 
behind is the U.S. Department of Transportation's Disadvantaged 
Business Enterprise (DBE) Program. This program, when properly 
administered and enforced, ensures that businesses owned by women and 
minorities have a fair chance to compete for federally assisted 
transportation contracts.
    The need for this program is ongoing, and stronger than ever, as 
income inequality in this country with the pandemic helping it to grow. 
Today's panel will provide mountains of statistical evidence that shows 
discrimination on transportation construction projects is, 
unfortunately, alive and well.
    Mr. Wainwright's testimony documents, through rigorous statistical 
analysis and survey data collected by various public agencies, the 
continued need for the DBE program.
    We are also joined today by individual business owners who have 
participated in the DBE program and will share their personal stories 
of how this program affirmatively created opportunities that did not 
exist in its absence. I would like in particular to thank Ms. Lerdahl, 
Ms. Williams, and Ms. Boyer for sharing your experiences with the 
Committee.
    To provide some context for why these surveys and statistical 
studies matter, let me point to a 2018 study conducted for the Maryland 
Department of Transportation, whose geographic market area includes 
Washington, D.C. The study looked at, among other things, whether prime 
contractors who work with minority- and women-owned firms as 
subcontractors on contracts with DBE-type goals ever solicit or hire 
those same firms to work on contracts without such goals. The answers 
were stark and stunning--69 percent of African American owned firms 
responded that they were seldom or never solicited to work on contracts 
without goals in place, and 74 percent of African American owned firms 
were seldom or never hired to work on contracts without goals. For 
Hispanic Americans the results were 47 percent and 52 percent; for 
Asian Americans the results were 56 percent and 61 percent; for Native 
Americans the results were 82 percent and 70 percent; and for non-
minority women, the results were 54 percent and 53 percent. This is 
just one regional example but this pattern repeats itself across the 
country.
    In closing, I remind my colleagues that this hearing presents a 
welcome opportunity to elevate the realities of minority and women-
owned business owners. By holding this hearing today, we ensure that 
the DBE program and the business owners it lifts up receive thorough 
consideration by this Committee. We also have the opportunity to learn 
what policy changes Congress should consider for the continued success 
of the DBE program in the future.
    I look forward to hearing from today's witnesses, as well as my 
fellow Members, on the DBE program.

    Mr. DeFazio. Thank you, Ms. Norton. I now call on the 
ranking member of the Subcommittee on Highways and Transit, Mr. 
Davis.
    Mr. Davis. Thank you, Chairman DeFazio. I want to thank the 
witnesses for participating in this important hearing. I want 
to give a special welcome to my friend, Ms. Geri Boyer, who is 
in southern Illinois right now.
    I understand Congressman Bost is going to be providing us 
with your full introduction today, so I won't steal his 
thunder, unless he screws it up.
    So I am watching you right now, Mike.
    But it is great to see you. I appreciate the work you do 
for Illinois and across the Midwest.
    The Disadvantaged Business Enterprise program, administered 
by the Department of Transportation, applies to airport 
construction, airport concessions, and surface transportation 
construction programs. The program addresses discrimination 
against minority- and women-owned businesses, and provides 
those businesses within the transportation industry an equal 
opportunity to participate in billions of dollars of DOT-
assisted highway, transit, and airport contracts each year.
    The DBE program has been successful, and this committee has 
demonstrated a bipartisan commitment to this program and to 
promoting full and fair access to transportation contracting 
opportunities.
    I commend the chairman and the ranking member for holding 
this hearing today. This is an important discussion, important 
to all of us in the room, and those connecting remotely, and to 
the Nation, as a whole.
    Mr. Chair, I yield back the balance of my time.
    [Mr. Davis' prepared statement follows:]

                                 
 Prepared Statement of Hon. Rodney Davis, a Representative in Congress 
    from the State of Illinois, and Ranking Member, Subcommittee on 
                          Highways and Transit
    I want to thank the witnesses for participating in this important 
hearing, and I want to give a special welcome to Ms. Geri Boyer. It is 
great to see you and I appreciate the work you do for Illinois and 
across the Midwest.
    The Disadvantaged Business Enterprise program, administered by the 
Department of Transportation, applies to airport construction, airport 
concessions, and surface transportation construction programs. The 
program addresses discrimination against minority and women-owned 
businesses and provides those businesses within the transportation 
industry an equal opportunity to participate in billions of dollars of 
DOT-assisted highway, transit, and airport contracts each year.
    The DBE program has been successful, and this Committee has 
demonstrated a bipartisan commitment to this program and to promoting 
fair and full access to transportation contracting opportunities.
    I commend you for holding this hearing today. This is an important 
discussion--important to all of us in the room and those connecting 
remotely, and to the Nation as a whole.

    Mr. DeFazio. I thank the gentleman.
    I would now like to welcome the witnesses on our panel: Ms. 
Evalynn Williams, president, Dikita Enterprises, on behalf of 
the Conference of Minority Transportation Officials; Ms. Geri 
Boyer, president, Kaskaskia Engineering Group, on behalf of the 
American Council of Engineering Companies; Ms. Mary Lerdahl, 
owner, Emerald Consulting Services; Mr. Farad Ali, at-large 
board director, Airport Minority Advisory Council; Mr. Sandy-
Michael McDonald, director, Office of Economic and Small 
Business Development, Broward County, Florida; and Ms. Sandra 
Norman, administrator, civil rights division, Virginia 
Department of Transportation; and Mr. Jon Wainwright, Ph.D., 
affiliated consultant, NERA Economic Consulting.
    Thank you all for participating today. We are looking 
forward to your testimony.
    Without objection, our witnesses' full statements will be 
included in the record.
    Hearing none.
    Since your written testimony has been made part of the 
record, the committee requests you limit your oral testimony to 
5 minutes. Summarize as best as possible.
    Before we hear from our panel of witnesses, I recognize 
Representative Johnson to introduce Ms. Evalynn Williams.
    Representative Johnson?
    Ms. Johnson of Texas. Yes, thank you very much. And I want 
to thank all of the witnesses for being present.
    I want to say that I am pleased to introduce Ms. Evalynn 
Williams, who is a constituent in Dallas, Texas. She has served 
as the chief financial officer for Dikita for 26 years, prior 
to transitioning to the president and CEO in 2010. Following 
and guided by her father, the company has grown to 
unprecedented heights. Under her leadership, the company has 
continued to thrive in new markets and obtain large and notable 
projects. Dikita's largest client is Dallas Area Rapid Transit, 
where the company has managed transit and NTD data for the last 
28 consecutive years. Recently, Dikita completed a prime role 
as a 49-percent JV partner designing and managing the 
construction of DART's last 3 miles of light rail, and I look 
forward to her testimony.
    And thank you very much for being here.
    Mr. DeFazio. Thanks, Representative Johnson. I now 
recognize Representative Bost to introduce Ms. Geri Boyer, 
under threat by Rodney Davis.
    Mr. Bost. Thank you, Mr. Chairman. You know, I am happy to 
have the opportunity to introduce our constituent, Geri Boyer 
from Belleville, Illinois, as a witness for today's hearing.
    Ms. Boyer is a founder, owner, and president of Kaskaskia 
Engineering Group. Kaskaskia Engineering Group is a civil 
engineering and contracting firm that has been recognized on 
the list of St. Louis Business Journal's largest women-owned 
businesses over the past decade. Ms. Boyer has also won 
multiple awards for her leadership. She is an active member of 
the American Council of Engineering Companies, Associated 
General Contractors of Illinois, Illinois Association of County 
Engineers, and the Illinois Association of Highway Engineers. 
Ms. Boyer is also an active member within our community, 
working with the Belleville CEO Program and is the civil 
chairperson for the Belle-Scott Committee of the Greater 
Belleville Chamber of Commerce.
    I am excited to have her give her testimony on the 
Department's Disadvantaged Business Enterprise program, and 
look forward to the insight that she can offer, given her years 
of success in business. She is one of the most qualified 
witnesses, I believe, that is on the panel today, and I 
appreciate her being here, and I appreciate the opportunity to 
introduce her.
    And Rodney, I hope that was good enough for you, because I 
think Geri is going to do a great job.
    And with that, I yield back.
    Mr. DeFazio. Rodney stepped out, but I am sure he is in 
accordance. I think that was very well done. So thank you.
    We will now move to witness testimonies.
    Ms. Williams, you may proceed. You are recognized for 5 
minutes.

 TESTIMONY OF EVALYNN WILLIAMS, PRESIDENT AND CHIEF EXECUTIVE 
OFFICER, DIKITA ENTERPRISES, INC., ON BEHALF OF THE CONFERENCE 
  OF MINORITY TRANSPORTATION OFFICIALS; GERI E. BOYER, P.E., 
 PRESIDENT, KASKASKIA ENGINEERING GROUP, LLC, ON BEHALF OF THE 
  AMERICAN COUNCIL OF ENGINEERING COMPANIES; MARY T. LERDAHL, 
    PRESIDENT, EMERALD CONSULTING SERVICES, LLC; FARAD ALI, 
   CHAIRMAN, GOVERNMENT AFFAIRS COMMITTEE, AIRPORT MINORITY 
 ADVISORY COUNCIL; SANDY-MICHAEL E. McDONALD, DIRECTOR, OFFICE 
  OF ECONOMIC AND SMALL BUSINESS DEVELOPMENT, BROWARD COUNTY, 
   FLORIDA; SANDRA D. NORMAN, DIVISION ADMINISTRATOR, CIVIL 
   RIGHTS, VIRGINIA DEPARTMENT OF TRANSPORTATION; AND JON S. 
    WAINWRIGHT, Ph.D., AFFILIATED CONSULTANT, NERA ECONOMIC 
                           CONSULTING

    Ms. Williams. Good morning, and I want to thank you for 
allowing me the opportunity to testify in support of the DBE 
program. My name is Eve Williams, president of Dikita 
Enterprises, a 40-year-old African-American engineering firm 
located in Dallas, Texas. And today I speak on behalf of COMTO, 
as well as all the DBEs across the Nation.
    I also sit on the APTA board of directors, where next month 
I will become the first African-American female to chair its 
distinguished Business Members Board of Governors.
    My company has been a part of the DBE program since its 
beginning, and is the oldest black engineering firm in north 
Texas.
    Being a female, Black, and a small business in the 
construction industry has many challenges. Programs such as the 
DBE program provide us a chance to participate in lead roles, 
which affords us the opportunity to create majority-minority 
teams. One success story I would like to share.
    Dikita was a 49-percent partner in a team where we designed 
the last 3 miles of the rail system for Dallas Area Rapid 
Transit. We saved the agency over $4 million, and began revenue 
service 2 months ahead of schedule. The icing on the cake is 
that 60 percent of the project was designed by DBE firms.
    Being called disadvantaged is not a privilege, nor does it 
sound like a company's goal. And quite frankly, it was 
embarrassing, explaining that to my 25-year-old millennial. 
What an engaging conversation that followed.
    The public sector is where firms like Dikita has its 
greatest opportunity. But please note, if majority companies 
and public agencies are not incentivized to include firms like 
mine, they won't. Let me give you a case in point.
    We were going after a project in a small suburban community 
near Dallas. I knew about the proposal because of my strong 
relationships in the community. The project was much in our 
wheelhouse, but since there were parts of the work that others 
could do better, we reached out to a nationally known, local 
firm that we had worked with in the past. They were not aware 
of the opportunity. What happened next was shocking, but not 
surprising.
    In an email thread that was inadvertently sent to me, I 
read a discussion that went something like this. Of course, I 
changed the names here. So I called John to ask if they'd be 
interested in teaming with us. John informed his boss, Ted. 
John explained the services, and thought Dikita and their 
company could do well, since we had a relationship.
    Ted asked about the minority participation goal. John told 
him there was no minority goal. Ted asked John, ``Then why 
would we sub to Dikita?'' John reminded Ted that Dikita was the 
best at what they were doing.
    Ted told him that, since there was no minority 
participation goal, ``Dig into the opportunity, and we will 
just do it ourselves.''
    When John questioned Ted again, Ted told them, ``Hey, we're 
bigger, just reject the offer.''
    This is when John sent me an email rejecting our offer, and 
inadvertently included the entire thread. The email was so 
painful and disappointing.
    There are so many sad storybook episodes regarding blatant 
discriminatory practices, especially against Black firms. In 
fact, if you look closer at the minority goals being met today, 
you more than likely will find that African Americans who the 
DBE program was first written for will have the smallest 
percentages, while other groups have benefitted more. Black 
professional firms are starting to be an endangered species, 
like the bald eagle was.
    I do want to bring one barrier that you have the power to 
change. That is the formula in determining personal net worth. 
It took 22 years before an inflationary adjustment was made to 
the personal net worth statement in 2011. It is now almost 
another 10 years and counting. The lack of regular inflationary 
adjustments could prematurely remove small businesses from the 
program.
    One idea I have is to exclude retirement savings from the 
net worth calculation. Currently, it includes restricted funds 
such as 401(k), which disincentivizes a business owner to save 
for retirement. So here I am, respectfully asking for your 
consideration to remove retirement savings from the personal 
net worth calculation.
    In conclusion, this program is not a handout. It is a leg 
up. It forces big companies and public agencies to play fair. 
And, quite frankly, without the DBE program, we would be out of 
business at the end date of the last contract in our pipeline. 
We should be protected like----
    [Microphone unmuted.]
    Mr. DeFazio. Somebody is transmitting. Just conclude, then, 
Ms. Williams. Thank you, sorry about that.
    [No response.]
    Mr. DeFazio. OK?
    Ms. Williams. Yes, thank you.
    [Ms. Williams' prepared statement follows:]

                                 
 Prepared Statement of Evalynn Williams, President and Chief Executive 
   Officer, Dikita Enterprises, Inc., on behalf of the Conference of 
                   Minority Transportation Officials
    My name is Evalynn Williams. I am the President and CEO of Dikita 
Enterprises, Inc., a family-owned minority consulting engineering and 
architectural firm headquartered in Dallas, Texas. We celebrated our 
40th year in business last November. We provide civil design, program 
and construction management, and transit market research as it relates 
to public transit planning. We have 40-50 people typically and employ 
all nationalities of which many are skilled professionals who are 
either woman or are of a minority group. My father, Lucious Williams, 
founded the firm in 1979 in Milwaukee Wisconsin and branched to Dallas, 
where I was attending college in 1983. I promised him 2 years as his 
CFO in exchange for paying off my college loans, which was only $5,000 
at the time. That was 36 years ago. We've been partners ever since. 
Over the years, especially in the 80 and 90's we have many times been 
the first African American firm to be awarded . . . and you can fill in 
the blank. Even today, I'm amazed that we continue to be the first 
African American engineering firm to prime a contract with public 
entities. Many of the firms we began with in the early 80s no longer 
exist for various reasons, but mostly because of the lack of 
opportunities and resources. We are the oldest African American 
professional engineering firm in North Texas.
    We offer our services to mainly the governmental sectors, that are 
federally, state or locally funded. Our industries include public 
transit, highways, aviation, public educational institutions, including 
K-12 and higher education, municipalities for roadway and 
infrastructure projects. We have worked on multi-billion dollar 
projects as well as those under $100,000. We have worked across the 
nation providing a variety of services, typically transit planning. We 
are certified in 19 locations across the nation. Being certified in 
these many areas allow us to participate with transit properties and 
provide transit market research. We typically are precluded from 
offering engineering services as a DBE in other states because of 
certain state laws. Neither my father nor I have a professional 
engineering license. We excel in management, marketing and financial 
expertise.
    I have a BBA degree in information systems and an MBA in 
accounting. I serve on several civic boards and have won my share of 
awards. I am currently a member of COMTO and the American Public 
Transportation Association (APTA), where, in October, I will become the 
first African American female to chair APTA's distinguished Business 
Members Board of Governors. APTA membership includes at least 90% of 
all public transit organizations in North America and practically every 
large national commercial firm that does business with public transit 
authorities. COMTO, which is the Conference of Minority Transportation 
Officials, is the leading national advocate for employment diversity, 
inclusion and contracting opportunities in the multi-modal, multi-
billion-dollar transportation industry. Their mission is to eliminate 
barriers to maximum participation for minority individuals, veterans, 
people with disabilities and certified MWDBE businesses.
    In 2010, I became President and CEO of Dikita and my father has 
remained active as the Chairman of the Board and Director of Government 
Affairs. He owns 51% of the firm and I own 47%, while my oldest 
daughter owns 2%. Being trained in accounting and finance, running an 
engineering firm has its challenges in of itself. Being a female, an 
African American, and a small business in the construction industry has 
had many challenges. There are certain systemic stereotypes that are 
associated with all the classes of categories I've mentioned, but 
typically they all have one thing in common. The idea that women, 
African Americans, small businesses, engineering companies ran by non-
engineers--produce an inferior work product. These certainly create 
barriers for successfully contracting and being relevant in the 
industry. Of all these labels, I think being African American, however, 
presents the biggest challenge when competing for work.
    Being a disadvantaged business has certainly helped level the 
playing field. As the CEO of a 2nd generation African American 
engineering and architectural firm, we would never have sustained had 
it not been for disparity programs such as the Federal DBE Program. 
Competition for prime contracts with the Department of Transportation, 
Federal Aviation and Federal Transit is difficult at best, and out of 
reach for most minority and women owned businesses (M/WBE).
    It is almost impossible for DBE firms to compete with large 
national and international firms. They have the capacity and depth 
within their workforce and can pull from global office locations. And 
over the last 15 years, they have gotten even larger; which makes the 
reauthorization of the DBE Program is so extremely critical to firms 
such as Dikita Enterprises, Inc. It provides us with opportunities to 
join a team as a subcontractor, a prime or joint venture partner, which 
in turn helps to build financial capacity and workforce resources. It's 
because of this program, Dikita led a joint-venture team with a huge 
majority firm to design and build the last 3 miles of rail line for the 
Dallas Area Rapid Transit system (DART), saving the agency over $4 
million. DART was able to open for revenue service 2 months ahead of 
schedule. Sixty-one percent of the team were DBE firms.
    The truth is . . . if not for the DBE Program, large corporations 
would not share the work and would self-perform 100% of contract-work. 
Being called ``disadvantaged'' is not a privilege nor does it sound 
like a goal that a company would strive to be. The reality is, without 
the program we would not have a chance at fair competition. Quite 
frankly, it was embarrassing explaining to my 21-year-old millennial, a 
few years ago, why we were considered a disadvantaged business. I can 
tell you that an engaging conversation and history lesson spun from 
this revelation. Nevertheless, the DBE program is necessary for the 
continuing survival of firms such as mine--to feed our families, 
educate our youth, and build our communities.
    I know for a fact that if it wasn't for the federal and local 
equity programs, we would not be able to compete or obtain contracts. 
That is evident when you look at private vs. public work. In the public 
sector, the large firms that are considered primes, contract with us 
only to the extent that it will help them win the project. If the goal 
is 25%, then they will typically subcontract only that minimum amount, 
even though we are a proven entity. Case in point. We were going after 
a project in a small suburban community near Dallas. I found out about 
the request for proposal because I had very strong relationships in 
that community. Much of the project was within our wheelhouse and we 
felt certain we could successfully propose and win. Since there were 
parts of the work that others could do better, we reached out to a 
nationally known local firm that we had worked with in the past. They 
were not aware of the opportunity. What happened later was shocking but 
not surprising. In an email thread that was inadvertently sent to me, I 
read a discussion that went something like this (all names are 
fictitious and are here to make the conversation easier to understand):
      John informed his boss Ted that Dikita had inquired about 
XYZ company providing service on an upcoming proposal.
      Ted asked about the services to be performed and John 
explained the services and thought Dikita and XYZ could do well since 
they have worked together in the past.
      Ted asked about the minority participation goal.
      John told him that there was no minority goal.
      Ted asked John why they would sub to Dikita.
      John reminded Ted that Dikita was very good at providing 
these type of specialty services
      Ted told John that XYZ was bigger and to dig into the 
opportunity.
      When John asked about participating with Dikita, Ted told 
him that since there was no minority participation, they would just do 
the project themselves.
      When John questioned Ted again, Ted told him that XYZ was 
bigger and to reject our offer.
      This is when John sent us an email rejecting our offer 
and inadvertently included the entire thread.

    This kind of conversation among large majority firms is not unusual 
and is a matter of practice. And often we only suspect or hear about 
why we were rejected from a third party. However, this was played out 
in an email and was so painful and disappointing.
    There are many story-book episodes regarding blatant discriminatory 
practices that occur to either keep minority firms small or run them 
out of business, especially African American firms. Everyone knows that 
DBE businesses often live month to month unless we have been successful 
in backfilling our pipelines with future projects. One of the most 
disheartening feelings is to know that you are only as good as the 
current project. We have had many relationships with larger firms and 
have provided excellent service, but it's never quite the excellent 
services in which you are remembered. We are the token DBE checkbox 
that fulfilled the requirement. This I say because I have witnessed the 
less than genuine relationships we have forged. We can perform 
exceptionally well for many years on a 5-year large project. However, I 
notice that when that same large firm is going for the exact project-
type in another state, they will not invite us to the team. When I've 
asked about being on the team, the reply is the same, ``we needed you 
in Dallas, we will `use' someone else in Houston''. When I question 
why, the answer is always ``because you are only useful in Dallas and 
taking you to other cities or states doesn't help us to win'', even if 
we are the best in providing the services required. It's political. 
Well that mentality keeps firms like mine small and confines us to our 
own neighborhoods. For us to grow, we need not only to be able to work 
in other states, but to work in the private industry. Working for 
private developers is typically not an option, hence the need for DBE 
program for government projects.
    I'd like to talk about another challenge I see with the DBE 
Program. While I appreciate the nature of the DBE program, there seems 
to be a lack of attention to some of the challenges we face. Still in 
existence are discriminatory and other related barriers that pose 
significant obstacles for minority and women-owned businesses competing 
for federally funded contracts. One such barrier is the lack of regular 
inflation-adjustments to the Personal Net Worth requirement for DBE 
certification. Unlike the Business Revenue Cap, (which is reviewed and 
adjusted periodically by the Secretary of Transportation) it was 22 
years before an inflation-adjustment was made to the Personal Net 
Worth, increasing the 1989 cap of $750K to $1.3M in 2011. It is 
important to note that much like the economy, the personal net worth of 
DBE owners and their companies are fluid. The lack of regular 
inflation-adjustments stops DBE businesses from growing and could 
prematurely remove businesses such as mine from the program. Some folks 
think that this $1.3M net worth is vast. If you are a successful 
business, you must accumulate a net worth that will allow banks to loan 
you money in order to continue upward growth and mobility. But more 
importantly, you must save money for retirement. While the formula for 
calculating personal net worth excludes our homestead, it does include 
your retirement savings. By including restricted retirement savings 
into the calculation, it acts to disincentivize a business owner from 
saving adequately for retirement. At the end of the day, we all should 
have a transition plan and be able to retire comfortably. However, if 
most of the dollars I save become retirement assets and those assets 
count against me in the certification process, then I'm likely not 
encouraged to save but to spend. So, I am asking that the program 
exclude retirement savings from the Personal Net Worth calculation.
    In conclusion, the disparity and the inequities of our capitalistic 
society, coupled with the injustices from America's history of 
discriminatory practices against African Americans specifically, are 
reasons that DBE program must continue to exist and expand. My dad, my 
daughters and I depend on the program to stay in business. This program 
is not a handout, it's a leg up. It forces the big companies to play 
fair, and quite frankly, if we graduated from the program (and its 
sister M/WBE local programs) or the program is dissolved, we would be 
out of business at the expiration date of the last contracts in our 
pipeline.

    Mr. DeFazio. OK, thank you for your testimony and your 
suggestion.
    Ms. Boyer, you may proceed.
    Ms. Boyer. Chairman DeFazio and Ranking Member Graves, 
thank you for the opportunity to testify before the committee 
today. It is an honor to represent my firm and my colleagues in 
the Nation's engineering industry.
    And thank you, Representative Davis and Representative 
Bost, for that kind introduction.
    As you heard, my name is Geri Boyer. I am president and 
sole owner of Kaskaskia Engineering Group, headquartered in 
Belleville, Illinois. We have DBE certifications in Illinois, 
Iowa, Indiana, Kentucky, Missouri, Minnesota, and Wisconsin.
    I am testifying today on behalf of the American Council of 
Engineering Companies, the business association of the Nation's 
engineering industry. ACEC represents nearly 5,500 engineering 
companies, nationwide. Our members include very large firms 
with tens of thousands of employees as well as hundreds of 
small businesses like mine.
    I want to communicate three main points to you today: first 
of all, DBE programs are essential for helping businesses like 
mine compete for work; second, securing certifications in 
different States and different jurisdictions can be burdensome; 
and three, for professional engineering and design-related 
services, it is important to balance DBE considerations with 
qualification-based selection procedures.
    DBE programs have provided me the opportunity to diversify 
and grow my company within the engineering and construction 
industry throughout the Midwest. I still encounter 
discrimination and the historic effects of discrimination, and 
DBE certification gives me the opportunity to compete for 
contracts and expand my business opportunities.
    If we are going to be able to sustain our profession and 
continue to support the transportation clients we serve, it is 
imperative that we continue these efforts. Diversification 
makes our companies and our industry stronger, and it makes us 
more appealing to the next generation of professionals which we 
desperately need to recruit. Federal DBE programs are one tool 
to bring these goals forward.
    However, one challenge for DBE firms like mine that work in 
multiple jurisdictions is the lack of a unified approach to DBE 
certification. The changes made in MAP-21 to implement a 
uniform certification application and reporting forms have been 
helpful. All the States I mentioned before use the uniform 
application, but they require the entire application again at 
different times of the year. The application must be current to 
equipment, purchases, loans, and anything else a business uses 
to run their day-to-day operation. This creates unnecessary 
work for the DBE firm and the public agency, who both have 
limited time and budget pressures.
    I submitted for the hearing record a white paper I helped 
develop with the ACEC Illinois Business Practices Committee. It 
goes into greater detail on certification challenges and 
potential solutions to streamline and simplify the process.
    Lastly, I want to note the intersection of DBE 
certification with Federal and State procurement requirements 
for contracting for engineering services. Current laws require 
agencies using Federal funds to follow QBS, qualification-based 
selection procedures, for procuring engineering and design-
related services. Under QBS, agencies select firms based on 
their experience, expertise, and demonstrated competence. These 
rules apply to federal-aid highway, transit, and airport 
improvement programs through various pieces of legislation 
approved by this committee over many years, which ACEC strongly 
supported.
    Current regulations strike an effective balance between the 
QBS framework and DBE program goals. Contracting agencies are 
required to give consideration to DBEs, but without set-aside 
contracts or quotas. State and local agencies set their own DBE 
program participation goals and the method for achieving them, 
subject to DOT approval, of course. Agencies may use an 
evaluation criterion for DBE participation limited to 10 
percent of the overall qualifications-based selection criteria, 
or they can establish DBE participation goals, which can be 
satisfied through good-faith efforts.
    ACEC supports this approach. It helps to achieve DBE 
program goals, while still emphasizing qualifications as the 
preeminent factor in selecting engineering firms. Increasing 
the weight of DBE as a selection criterion, or adding specific 
set-asides, quotas, or mandates will diminish QBS and the 
successful project delivery that it promotes.
    Thank you again for the opportunity to testify today. I 
will be happy to answer any questions later.
    [Ms. Boyer's prepared statement follows:]
                                 
    Prepared Statement of Geri E. Boyer, P.E., President, Kaskaskia 
     Engineering Group, LLC, on behalf of the American Council of 
                         Engineering Companies
    Chairman DeFazio and Ranking Member Graves:
    Thank you for the opportunity to testify before the committee 
today. It's an honor to represent my firm and my colleagues in the 
nation's engineering industry to you and the members of the committee.
    My name is Geri Boyer. I am the President and sole owner of 
Kaskaskia Engineering Group, a civil engineering, environmental, and 
contracting firm headquartered in Belleville, Illinois.
    I am testifying today on behalf of the American Council of 
Engineering Companies (ACEC)--the business association of the nation's 
engineering industry. ACEC member firms drive the design of America's 
infrastructure and built environment. Founded in 1906, ACEC is a 
national federation of 52 state and regional organizations representing 
nearly 5,500 engineering firms and 600,000+ engineers, surveyors, 
architects, and other specialists nationwide.
                              Firm Profile
    I founded Kaskaskia Engineering Group, LLC (KEG) in 2006 with the 
mission of making the world a better place through the practice of 
engineering. Through partnerships with our clients and regulatory 
agencies, we plan, design, and build projects that enhance communities, 
spur economic development, and respect the environment. From the 
beginning, we have recruited highly skilled employees from a variety of 
public and private sector backgrounds. Armed with good experience, a 
great reputation and the Disadvantaged Business Enterprise Program, I 
have built an impressive portfolio of federal, state, local, and 
private project experience. Since 2006, KEG has earned over $100 
million in revenue and provides engineering services in Illinois, Iowa, 
Indiana, Kentucky, Michigan, Minnesota, Missouri, North Dakota, Ohio, 
Oklahoma, and Wisconsin.
    KEG specializes in transportation engineering, traffic engineering, 
geotechnical engineering, structural engineering, environmental 
science, infrastructure analysis and planning, water resource 
management, right-of-way acquisition, and general highway construction.
                 DBE Certifications and DOT Experiences
    KEG is a certified DBE through the Illinois Unified Certification 
Program, Iowa Department of Transportation, Indiana Department of 
Transportation, Kentucky Transportation Cabinet, Missouri Regional 
Certification Committee, Minnesota Unified Certification Program, and 
Wisconsin Unified Certification Program.
    KEG is a certified Women Business Enterprise (WBE) through the 
Illinois Central Management Services, Indiana Department of 
Administration, Minnesota Central CERT Certification Program, Missouri 
Office of Equal Opportunity, Metropolitan Water Reclamation District of 
Greater Chicago, and the Women Business Enterprise National Council.
    KEG is a certified Small Business Enterprise (SBE) through the 
Kentucky Transportation Cabinet and Minnesota Central CERT 
Certification Program.
    KEG is a self-certified Women Owned Small Business (WOSB) and 
Economically Disadvantaged Women Owned Small Business (EDWOSB) through 
the Small Business Administration.
    In an ever changing and volatile business market, corporate growth 
and stability rely on diversification strategies, which often include 
providing services to multiple federal, state, and local agencies, as 
well as private corporations across regional, national, and 
international markets. Diversification has long been a successful 
strategy for large businesses, and it is just as important for the 
survival and development of small firms.
    Using the opportunities that the DBE program has provided, I have 
diversified my company within the engineering and construction industry 
throughout the Midwest. It's this diversification that has helped me 
grow and weather economic storms. But it takes all these certification 
programs in multiple states in order for me to have the same 
opportunities as non-DBE firms.
    One challenge for DBE firms like mine that work in multiple 
jurisdictions is the lack of a unified approach to DBE certification. 
The amended 49 CFR Part 26 which was included in MAP-21 implemented a 
revised uniform certification application and reporting forms. However, 
even though there is a uniform process, there is not a uniform 
certification. All the agencies I mentioned before use the uniform 
application but require the entire application again at different times 
of the year. The application must be current to equipment purchases, 
loans, and anything else a business uses to run their day-to-day 
operation. This creates unnecessary work for the DBE firm and the 
public agency who both have limited time and budget pressures. And with 
the rising problem of identity theft, it's stressful to be sending all 
your personal information to multiple agencies in multiple states.
    I encourage the committee to consider additional reforms to 
streamline and simplify the DBE certification process, creating a 
program that is more efficient and effective for women and minority 
firms working for multiple agencies across multiple states.
                     Qualifications-Based Selection
    It's important to note the intersection of DBE program goals with 
federal and state procurement requirements for the contracting of 
engineering and design-related services. Current laws require agencies 
using federal funds to follow Brooks Act qualifications-based selection 
(QBS) procedures for procuring engineering and design services. These 
rules apply to federal-aid highway, transit, and airport improvement 
programs through various pieces of legislation approved by this 
committee dating back to 1987. ACEC applauds this committee's 
consistent and historic leadership in protecting and expanding QBS 
requirements on federal infrastructure programs. Most states have a 
``Mini Brooks Act'' that apply the same selection procedures to state 
programs.
    Under QBS, agencies select firms based on their experience, 
expertise, and demonstrated competence for the types of professional 
services required. They first evaluate and rank submitting firms' 
statements of qualifications, performance data, and information 
regarding the proposed project or services. The contracting agency then 
selects and ranks firms based on those qualifications in accordance 
with the established/advertised criteria for the project and negotiates 
with the most highly qualified firm to arrive at a fair and reasonable 
price for the solicited services.
    QBS is the gold standard for procurement of professional 
engineering and design services. It helps small and DBE firms compete 
for work by providing us a forum to demonstrate the advantages we often 
have, including niche market expertise, ability to be nimble to meet 
deadlines, local knowledge, and involvement of senior level management. 
Quantitative studies have shown that QBS lowers total project costs and 
results in more satisfactory outcomes for owners.
    Current Federal Highway Administration (FHWA) regulations strike an 
effective balance between the QBS procurement framework and DBE program 
goals. Contracting agencies are required to give consideration to DBE 
consultants in the procurement of engineering and design related 
services contracts using federal-aid funds, but without set-aside 
contracts or quotas for DBE participation. State and local agencies set 
their own DBE program participation goals, as well as the method for 
achieving them, subject to FHWA approval. To the extent practical, a 
contracting agency must achieve DBE program participation goals through 
race and gender-neutral measures. DBE participation on all contracts 
funded with federal funds, whether for professional or construction 
services, may be counted toward overall DBE program participation 
goals.
    FHWA regulations provide that when overall DBE program 
participation goals cannot be met through race-neutral measures, 
additional DBE participation on engineering and design-related services 
contracts may be achieved through either (1) the use of an evaluation 
criterion for DBE participation in the qualifications-based selection 
of firms, or (2) establishment of a contract DBE participation goal. 
Prime contractors can satisfy these measures through good-faith efforts 
to engage DBE participation.
    In its policy guidance, FHWA states that in order to ``harmonize'' 
QBS rules and DBE program implementation, a contracting agency may 
establish the use/participation of certified and qualified DBE firms as 
an evaluation criterion of no more than ten (10) percent of the total 
evaluation criteria in assessing the qualifications of firms/teams to 
perform the solicited services.
    ACEC supports this current approach. It helps to achieve DBE 
program goals while still respecting the importance of emphasizing 
qualifications as the preeminent factor in selecting engineering firms. 
Increasing the weight of DBE as a selection criterion or adding 
specific set-asides, quotas, or mandates will diminish QBS and the 
successful project delivery that it promotes.
                ACEC Diversity and Inclusion Initiatives
    Lastly, I want to draw the committee's attention to the new 
Strategic Plan that ACEC approved in October 2019. Embodying inclusion 
and diversity is one of the five pillars of the new plan. Our express 
goal is that the Council is recognized as a welcoming organization 
where all members are included, involved and can achieve their full 
potential. The objectives include improving the diversity of ACEC 
leadership, enhancing the diversity of our membership, and increasing 
engagement of diverse individuals from member firms.
    If we're going to be able to sustain our profession and continue to 
support the transportation clients we serve, it's imperative that we 
deliver on these goals. Diversity makes our companies and our industry 
stronger, and it makes us more appealing to the next generation of 
professionals who we need to recruit. Federal DBE programs, as explored 
by this hearing today, are one tool to help firms like mine bring those 
goals forward.
    I want to close by inserting here the statement that the Council 
made earlier this year, which encapsulates how I personally feel and 
what I strongly support about the engineering industry.

          ``ACEC is committed to an inclusive and diverse engineering 
        industry.
          The engineering profession has always been grounded in 
        integrity, fairness, and service to community. Engineers build 
        communities. We create space and by extension, we create social 
        experience. We support equality and respect for all humankind. 
        We believe in providing equitable opportunities within our 
        profession to support untapped potential both within our 
        workforce and within the communities we serve. And we have the 
        power to foster progress by breaking down the physical barriers 
        that can inhibit economic and social equity.
          Those are the principles that have guided our community 
        through this difficult time. Through ACEC we will embrace 
        inclusion and diversity and continue to focus our members on 
        ways to lift people up to become their best selves and to make 
        our companies models of the values we embrace.''

    Thank you again for the opportunity to testify.
                               attachment
               National Unified DBE Certification Program
                     a white paper by ACEC Illinois
               Business Practices--DBE/WBE/MBE Committee
Authored by: Geri E. Boyer, P.E., Kaskaskia Engineering Group, LLC
June 2016
Last update: 6/25/2020
                              Introduction
    In an ever changing and volatile business market, corporate growth 
and stability rely on diversification strategies, which often include 
providing services to multiple federal, state, and local agencies, as 
well as private corporations across regional, national, and 
international markets. Diversification has long been a successful 
strategy for large businesses, but it is just as important for the 
survival and development of small firms.
    Firms owned by women and minority group members that want to employ 
diversification strategies are encumbered by the current DBE 
Certification process. Public agencies and small business owners have 
limited time and continued budget pressures. Time and budget 
constraints have significantly affected DBE certification in Illinois 
and its surrounding states. This white paper discusses how a national 
unified program could strengthen, streamline, and simplify the DBE 
certification program, creating a program that is more efficient and 
effective for women and minority firms working for multiple agencies 
across multiple states.
                               Background
History of DBE Program
    A policy of helping small businesses owned and controlled by 
socially and economically disadvantaged individuals, including 
minorities and women, participating in contracting opportunities 
created by Department of Transportation (DOT) financial assistance 
programs, has been in effect for more than 20 years. The Department, 
through its Operating Administrations, distributes billions of dollars 
annually to help finance thousands of projects across the country. 
Approximately 85 percent of the assistance dollars is for construction. 
The major portion of construction funds are allocated to state highway 
and transportation agencies for highway construction. The balance is 
provided to local public transit and airport authorities for mass 
transit and airport facilities.
    In 1983, Congress enacted the first Disadvantaged Business 
Enterprise (DBE) statutory provision, which applied primarily to small 
minority-owned firms. This provision required the Department to ensure 
that at least 10% of the funds authorized for the highway and transit 
Federal financial assistance programs be expended with DBE's. In 1987, 
Congress re-authorized and amended the statutory DBE program to, among 
other changes, add women to the groups presumed to be disadvantaged. 
Since 1987, the DOT has established a single DBE goal, encompassing 
both firms owned by women and minority group members.
    Primarily three major DOT Operating Administrations (OA's) are 
involved in the DBE program. They are the Federal Highway 
Administration, the Federal Aviation Administration, and the Federal 
Transit Administration. The DOT DBE program is carried out by state and 
local transportation agencies under the rules and guidelines in the 
Code of Federal Regulations (Title 49, Part 26). The FAA also maintains 
a separate DBE program for concessions in airports (Title 49, Part 23).
    Title 49, Part 26 of the Code of Federal Regulation (49 CRF part 
26) required all agencies in each state receiving DOT funds to 
participate in a state Unified Certification Program (UCP). Within 
three years of March 4, 1999, recipients of DOT funding had to sign an 
agreement establishing the UCP for that state and submit the agreement 
to the Secretary for approval. The agreement provided for the 
establishment of a UCP, which met all the requirements. The agreement 
had to specify that the UCP would follow all certification procedures 
and standards; that the UCP would cooperate fully with oversight, 
review, and monitoring activities of DOT and its operating 
administrations; and that the UCP would implement DOT directives and 
guidance concerning certification matters. The agreement also committed 
recipients to ensuring that the UCP has sufficient resources and 
expertise to carry out the requirements.
DBE Unified Certification Program (UCP)
    The purpose of the UCP is to provide ``one-stop shopping'' to 
applicants for certification. The program was designed so that if a 
firm was certified using a UCP agency in a state, they would only have 
to apply to one federally-funded agency within that state to work with 
all UCP member agencies. In Illinois, the UCP is made up of five US 
DOT-funded agencies, the Illinois Department of Transportation (IDOT), 
City of Chicago, Chicago Transit Authority (CTA), Metra, and Pace. The 
Regional Transportation Authority (RTA) is also part of the IL UCP, but 
is a non-certifying agency. Other states have very similar programs 
made up of all agencies that receive federal funds.
Non-DOT-funded Certifying Agencies
    Within every state, there are also non-DOT-funded agencies. Some 
will accept the DOT's state implemented DBE Certification Program, and 
some have their own certification process. Several non-DOT-funded 
agencies have chosen to certify women business enterprises (WBE), 
minority business enterprises (MBE), and Business Enterprise owned by 
People with Disabilities (BEPD). In Illinois, the non-DOT-funded 
certifying agencies are Central Management Services (CMS), City of 
Chicago, and Cook County.
Interstate Certification Rule
    While the DBE program was always a national program, state specific 
administrative requirements tended to impair a DBE firm's ability to 
fully compete for business opportunities in other states. In response 
to longstanding concerns from the DBE community, the USDOT issued a 
proposed rule aimed at breaking down these barriers. On January 1, 
2012, the interstate certification provision (49 CRF 26.85) went into 
effect. Its intent was to clear up administrative obstacles to 
certification that were undermining important program objectives. The 
rule furthered the following fundamental objectives of the DBE program.
    (1)  Facilitated the ability of DBE firms to compete for DOT-
assisted contracting.
    (2)  Reduced administrative burdens and costs on small businesses 
that sought to pursue contracting opportunities in other states.
    (3)  Fostered greater consistency and uniformity in the application 
of certification requirements, while maintaining program integrity.

    The ultimate purpose of the interstate certification rule was to 
facilitate certification of currently certified firms in other 
jurisdictions. Interstate certification was not meant to be an 
automatic reciprocity in the sense that each state must honor the other 
states' certification decisions without review. Rather, the rule 
created a rebuttable presumption, such that a firm certified in its 
home state is eligible to be certified in other states to which it 
applies.
    The Department once again amended 49 CFR Part 26, which went into 
effect on November 3, 2014. The final rule improved DBE program 
implementation in the following three major areas.
    (1)  Revised the uniform certification application and reporting 
forms and created a uniform personal net worth form for use by 
applicant owners, which collect the data required by the Department's 
Surface Transportation Reauthorization, Moving Ahead for Progress in 
the 21st Century Act (MAP-21).
    (2)  The rule strengthened the certification-related program 
provisions, which includes adding a new section authorizing summary 
suspensions under specified circumstances.
    (3)  The rule modified several other program provisions concerning 
such subjects as overall goal setting, good faith efforts, transit 
vehicle manufacturers, and counting for trucking companies.
                                Problems
    Over the last several years, the DOT has made a concerted effort to 
improve the DBE program. Many hurdles have already been overcome, but 
there are still problems to be solved to make this program even more 
useful to small businesses owned and controlled by socially and 
economically disadvantaged individuals. Problems that are burdensome 
and limit the success of a DBE company are 1) Confusion between DBE 
Certification and Prequalification, 2) Duplication of Applications for 
DBE Certification, and 3) Slow Responsiveness of Reviewing Agencies.
    The following are a few examples to support the need for additional 
changes to the DBE program.
1) Confusion between DBE Certification and Prequalification
    The Bureau of Small Business Enterprises administers IDOT's DBE 
program. IDOT, like all other state DOT's, is tasked with the 
certification of DBE firms and the prequalification of firms wanting to 
bid on contracts and/or offer their services to the department. DBE 
certification and DOT prequalification are performed by two different 
units within IDOT. While there is some overlap in the certification and 
prequalification processes for DBE firms, the certification process is 
generally concerned with establishing if a business qualifies as 
``disadvantaged,'' and the prequalification process confirms if an 
applicant has resources and experience to self-perform each specific 
service. If you are a DBE engineering/architectural consultant, you are 
certified as a DBE through the Bureau of Small Business Enterprises and 
prequalified through the Bureau of Design and Environment. The Bureau 
of Design and Environment prequalifies firms in multiple categories of 
service.
    If you are a DBE contractor, you are certified as a DBE through the 
Bureau of Small Business Enterprises and prequalified through the 
Bureau of Construction. The prequalification process of a contractor is 
governed by Title 44 Illinois Administrative Code Section 650. The 
prequalification process does not apply to subcontractors. However, DBE 
subcontractors are required to be certified through the Bureau of Small 
Business Enterprises but only need to be registered through the Bureau 
of Construction to perform work for IDOT.
    Currently, the Bureau of Small Business Enterprises utilizes the 
uniform certification application and forms required in the final rule. 
These forms require the applicant to fill out a listing of NAICS codes 
for which they are able to self-perform. The NAICS codes are used on 
the UCP online directory and generally correlate with the 
prequalification categories. However, the Bureau of Small Business 
Enterprises has taken on the responsibility of prequalifying 
subcontractors through the certification process. Instead of verifying 
NAICS codes, they are verifying the resources and experience of a DBE 
subcontractor to complete an IDOT specific contract pay item. They are 
also certifying DBE subcontractors/contractors in work classifications 
that are not in alignment with the Bureau of Construction. These 
additional requirements are limiting the expansion of DBE 
subcontractors/contractors.
2) Duplication of Applications for DBE Certification
    The Illinois Department of Central Management Services (CMS) 
Business Enterprise Program (BEP) is now certifying businesses owned by 
women, minorities, and persons with disabilities. They claim that with 
their certification a company will have the opportunity to participate 
in the State's 20% minority, female, and persons with disabilities 
goal. Also, a company would be listed in their BEP directory that is 
used by state agencies, universities, and other large firms when they 
are looking for businesses owned by females, minorities, and persons 
with disabilities. This program's eligibility is available to companies 
whose gross annual sales are less than $75 million, which far exceeds 
the limit of $23.98 million in gross annual receipts required by the 
new federal form and exceeds the Small Business Administration size 
standard for all transportation-related industries.
    CMS states that if a firm is currently certified with the City of 
Chicago, Cook County, Chicago Transit Authority, METRA, PACE, IDOT, 
Women Business Development Council, or Chicago Minority Business 
Development Council, you can complete the Recognition Certification 
Application to qualify for the ``limited'' Business Enterprise 
Certification. CMS also offers the BEP Full Certification Application, 
which effectively requires the same information as the UCP, but with 
different forms. Both of these application processes certify businesses 
as MBE, FBE, Female and Minority Business Enterprise (FMB), and/or 
Persons with Disability Business Enterprise (PBE). Although a firm may 
choose to be certified by CMS using the recognition certification, this 
certification is not considered a valid certification by agencies in 
other states.
    For example, the Indiana Department of Administration only 
recognizes CMS as the official M/WBE certifying agency for the State of 
Illinois. As part of their application, the Illinois firm must provide 
a copy of the Illinois certification conducted by CMS. If the firm was 
initially awarded certification by IDOT and the firm used the CMS 
Recognition Certification, the firm cannot apply for M/WBE 
certification with the State of Indiana through the Indiana Department 
of Administration. Also, the Indiana Minority & Women's Business 
Enterprise Division does not accept onsite reports from the City of 
Chicago, PACE, Metra, the Chicago Transit Authority, or the Chicago 
Minority Business Development Council, making the ability for an 
Illinois DBE firm to work in Indiana as an M/WBE firm very difficult.
    The City of Chicago is a member of the IL UCP, which certifies DBE 
firms.
    The City also has the following certifications:
      MBE
      WBE
      Business Enterprise owned by People with Disabilities 
(BEPD)
      Airport Concession Disadvantaged Business Enterprise 
(ACDBE)

    The MBE/WBE/BEPD certification is needed to work on city-funded 
contracts and the DBE/ACDBE certification is needed to work on state 
and federally funded contracts. If a woman-owned DBE firm that is 
already certified through the IL UCP and CMS wants to work on a city-
funded project, the firm must also apply to the City of Chicago's WBE 
program.
3) Slow Responsiveness of Reviewing Agencies
    The goal of the DBE program is to give individuals who own 
disadvantaged businesses the opportunity to grow their business. DBE 
firms are taking advantage of the goals of the DBE program and looking 
for opportunities to expand their businesses outside of their home-
based state. A single firm could apply to as many as 50 DBE offices, 
which places additional burden on certifying offices. Additionally, as 
state DOTs replace and/or reduce staff the burden increases.
    State personnel are struggling to review the applications for home-
based firms in a timely manner. Adding a maximum 60 day determination 
period for non-home-based firms set forth in 49 CRF 26.85 is creating 
an impossible situation for reviewing agencies. There have been cases 
in which it has taken over a year to issue a DBE certification.
                                Solution
    A proposed solution is to create a National Unified DBE 
Certification Program (National UCP) to serve as a ``one-stop 
shopping'' to applicants for certification. Any state agency using the 
unified certification application could be a coordinating member of the 
National UCP, and its certification would be recognized as a National 
UCP. Under a National UCP, the firm applies one time for certification 
as DBE with their participating cognizant agency or a national 
organization. If approved, that certification would be honored by all 
recipients of federally funded and non-federally funded projects in all 
states. The National UCP would only certify firms using the unified 
certification application. Prequalification, determination if an 
applicant has the requisite resources and experience to complete the 
service/category as required, would remain with the contracting agency.
    The certification and record would be held by a national agency/
organization, such as the Small Business Administration (SBA). The SBA 
already have systems in place to review a standard application, 
evaluate its compliance with federal regulations, and certify its 
credibility. It currently is certifying Women Owned Small Business 
(WOSB), 8(A), and HUBZone. It has the capacity for the upload of 
documents necessary for annual renewal (Affidavit of Continued DBE 
Certification). This process would significantly reduce the time and 
effort necessary to become licensed in multiple states.
    B2GNow, a cloud-based software system for real-time collection, 
tracking and analysis of compliance data, currently maintains 
compliance of DBE firms with federal, state, and local diversity 
programs. It is a tool that could serve as a DBE certification record 
holder for federal and state agencies to utilize.
    Certifying agencies that do not use unified certification 
application or do not choose to be a coordinating member of the 
National UCP could continue to certify DBE. If a firm does not intend 
to work with multiple agencies in multiple states, it might not be 
advantageous to certify with a national organization. A certified firm 
that had been certified by a non-coordinating local certifying agency 
could still apply to have their record held by the national 
organization.
    Although this White Paper is focused on DBE firms certified to do 
engineering and contracting, any type of DBE business could benefit 
from a National UCP.
                                Sources
``Disadvantaged Business Enterprise (DBE) Program.'' United States 
Department of Transportation, n.d. Web. 08 March 2015.

``Final Rule Changes Effective as of November 3, 2014.'' United States 
Department of Transportation--Departmental Office of Civil Rights, n.d. 
Web. 8 March 2015.

Indiana Department of Administration Division of Supplier Diversity, 
Application for Certification, n.d. Web. 1 March, 2015

``Small Business Size Standards'' US Small Business Administration, 
n.d. Web. 1 March, 2015

    Mr. DeFazio. Thank you, Ms. Boyer.
    Ms. Lerdahl, you may proceed.
    Ms. Lerdahl. Good morning, Chairman DeFazio and committee 
members. My name is Mary Lerdahl, currently the owner of 
Emerald Consulting Services in the Seattle area.
    Prior to starting my firm to help DBEs navigate the 
challenges of the construction industry, I was an electrical 
contractor for 22 years. I started my firm, DBE Electric, in 
2009 during the Great Recession, after losing my share of 
another company as the result of a marital dissolution. The 
firm DBE Electric performed 122 projects valued at over $80 
million over the course of 9 years, until I was forced out of 
business as a result of WSDOT, Washington State Department of 
Transportation's, waiver to exclude White women from the DBE 
program.
    The waiver was approved by U.S. DOT in 2016 after, in my 
opinion, a faulty disparity study that included projected 
revenue from the two largest mega-projects in Washington State 
history.
    From the time the waiver was enacted in June 2017 to mid-
2018, my firm's revenues went from $9 million a year to zero. 
Without the designation of a DBE, I couldn't win a single 
project, even with my successful track record. I was the only 
female contractor in the State that performed complex, heavy 
highway electrical projects, traffic signals, illumination, 
intelligent transportation, and tolling systems.
    By September of 2017, a new disparity study showed that 
White women were not over-represented, and WSDOT asked U.S. DOT 
to rescind the waiver on September 11, 2017.
    I personally made two trips to Washington, DC, to meet with 
U.S. DOT, the Federal Highway Admnistration, and Terence 
Coleman of the Department of Assistant General Counsel, all to 
no avail. When U.S. DOT finally denied WSDOT's request to 
rescind the waiver on December 13, 2019, it was far too late to 
save my business and the businesses of other White women in our 
State.
    Because of the DBE program, I participated in building the 
SR 520 floating bridge, the longest floating bridge in the 
world, with Kiewit. The contract was a design-build project, 
and my contract value was $14 million. It was a great example 
of how a small DBE firm like mine could work together with a 
large prime contractor to grow, learn, and build a project that 
all contractors could be proud of.
    At the same time as I was building the bridge project, I 
was also working on the SR 99 Bored Tunnel project, valued at 
$1.6 billion, with Seattle Tunnel Partners, the joint venture 
with Dragados and Tutor-Perini. I have experienced many 
incidents, overt and subtle, of discrimination in many years, 
but this one was the worst. Shortly after winning the tunnel 
project, Tutor-Perini purchased Fisk Electric, a large firm out 
of Houston.
    At an initial DBE outreach meeting, a Fisk representative 
blatantly stated that they were only interested in receiving 
labor-only bids from DBE firms, thus exposing the DBE firms to 
more risk and less profit from the less risky material 
purchases portion of the work. A local subcontractor, JH 
Kelley, was brought in to sub out to the two electrical firms 
owned by the joint venture--Fisk being owned by Tutor-Perini, 
and SICE, being owned by Dragados in Spain--to minimize the 
appearance of self-dealing.
    While my firm ultimately performed $977,246 of work on the 
project, public records show that SICE performed $34,315,556, 
and Fisk performed $106,057,656. STP solicited bids from DBE 
firms like mine in order to show good faith efforts, only to 
self-perform much of the work.
    I experienced sexual advances while on the project site, 
while supervising my crews.
    Getting paid was slow and difficult, and begging was 
necessary, as they always had some excuse. They needed two 
signers, who were rarely both there, for example.
    Finally, while my firm was working on a change order to 
convert temporary generator power to permanent power feeding 
refrigerated shipping containers, I experienced discrimination 
at the hands of Mike Kerschner, a project manager for Tutor-
Perini. He was pressuring me to proceed with ordering expensive 
Siemens electrical gear, but my change order hadn't yet been 
signed for that work, and STP owed me over $80,000. It was very 
past due.
    I put in a call to the local electrical union for an 
electrician to do the power cutover, but the union wouldn't 
fill my call for labor. I met with Mike Kerschner face to face 
to discuss the ongoing failure of the union to respond to my 
call. And after looking me up and down in a sexually suggestive 
manner, he informed me that if I didn't have labor on the job 
the next day, he would take over my work.
    The next day my crews were shut out of the job, and my 
equipment was taken over. I also received a letter from the 
union that day, pulling manpower from all of my jobs, including 
the bridge project. Fortunately, Kiewit intervened, and didn't 
allow that to happen, so my company lived to see another day. I 
later learned that Fisk took over my work, and that Tutor-
Perini had colluded with the union to make this happen.
    My firm finally got paid the $80,000 owed by STP, only 
because of a Federal Highway Administration investigation into 
WSDOT's mishandling of the DBE program and the project.
    Tutor-Perini has been found guilty of DBE fraud on several 
occasions across the country, and has paid millions of dollars 
in fines. In my opinion, the only reason Tutor-Perini hasn't 
been disbarred from Federal contracting is because of the 
powerful connection between this company and a certain U.S. 
Senator.
    In closing, the DBE program is essential to allow small 
firms owned by women and minorities to compete for a few 
pennies of the highway dollar. However, it must be administered 
with strict compliance, starting with the Federal Highway 
Administration's enforcement of CFR part 26.
    State and local programs' field compliance need to start 
from the bottom up, listening to the DBE firms and the field 
inspectors from each agency, instead of from the top down, so 
the issues can be resolved as soon as possible to avoid 
business failure due to nonpayment and discrimination during 
disputes.
    Waivers should never again destroy a DBE firm, separating 
the DBE communities.
    Unfortunately, due to human nature, discrimination will 
probably always be with us. But this program is effective, and 
the committee has an opportunity to strengthen it and make it 
more accountable and transparent to participating firms and 
taxpayers. Thank you for the opportunity to share my story, and 
I would be happy to share any other information you would like. 
Thank you.
    [Ms. Lerdahl's prepared statement follows:]

                                 
 Prepared Statement of Mary T. Lerdahl, President, Emerald Consulting 
                             Services, LLC
    Good morning Chairman DeFazio and members of the Committee:
    My name is Mary Lerdahl and I formerly owned an electrical 
contracting firm in the Seattle area named DBE Electric. I started the 
firm in November 2009 during the ``Great Recession'' after losing my 
share of a similar firm as a result of a marital dissolution. 
Altogether I had been an electrical contractor since 1996, for a total 
of 22 years before I was driven out of business as a result of WSDOT's 
(Washington State Department of Transportation) decision to waive white 
women out of the federal DBE program. My company focused exclusively on 
highway electrical projects; traffic signal systems, illumination, 
Intelligent Transportation Systems. From 2009 to 2018 (the year the 
company closed) my firm successfully completed 122 projects valued at 
nearly $80 million. My firm never failed to complete a project on time 
and finished all contracted projects with the exception of two, which 
were the result of blatant discrimination, which I will explain later 
in greater detail. The typical size of projects performed were 
$500,000-$2,000,000.
    The highlight of my career was building the SR 520 Floating Bridge 
project, a design build project with Kiewit, the longest floating 
bridge in the world. The overall project was about five years long; 
about 2 years in design and 3 years in actual construction. The initial 
contract was $8.9 million with the final contract value being $14 
million. This project had an 8% mandatory DBE goal, which is why my 
firm had a ``place at the table'', along with my company's proven track 
record of projects with Kiewit and other firms. I learned so much from 
that project, both technically as well as what it was like to ``work 
with the big boys''. As doors opened to me because of my certification 
as a DBE firm, I could see a bright future ahead for my company after 
the successful completion of the project.
    Kiewit treated me fairly and with respect and was a good example of 
how a mega firm and a small, DBE firm could work together to build a 
great project that all parties could be proud of.
    At the same time I was working on the design portion of the bridge 
project, I was working on the SR 99 Bored Tunnel project with Seattle 
Tunnel Partners, (STP) a joint venture between Tutor-Perini and 
Dragados.
    The project had a value of $1.6 Billion and a 8% DBE Condition of 
Award goal.
    Initially my firm worked as a second tier subcontractor to one of 
the larger local general contractors, and then directly for STP. The 
contrast between Kiewit and STP couldn't be more stark. My firm faced 
discrimination in many ways throughout my 2 year experience on the 
tunnel project, finally culminating in a meeting required by WSDOT as a 
result of the Conciliatory Change Order required by FHWA after an 
investigation by FHWA showed widespread discrimination by STP against 
DBE firms. Some of the specific instances of discrimination that I 
personally suffered and my firm experienced are as follows:
    1.  Initial DBE ``outreach'' meetings in which Fisk Electric, a 
large electrical contracting firm purchased by Tutor-Perini shortly 
after winning the project, stated outright that they were only 
interested in ``labor only'' bids from DBE firms, thereby denying DBE 
firms the opportunity for profit on the less risky material purchases 
portion of the project.
    2.  Sexual advances made directly to me by STP supervisors while I 
was in the field supervising operations.
    3.  Slow payment processing and a feeling of ``begging'' to get 
paid during the direct visits to STP's offices because of intentionally 
slow payment processing; for example, two check signers who were hard 
to track down, no option for ACH payments, delayed processing of change 
orders while being demanded to perform work by STP supervisors prior to 
the change orders being executed.
    4.  Invitations to bid electrical systems inside the tunnel that 
were virtually identical to the work I was performing on the bridge 
project just to provide ``good faith efforts'' and allow SICE, an 
electrical firm owned by Dragados, to self-perform the work. My firm 
wasted countless hours bidding this design-build work when STP knew all 
along that they would never use my firm to build the work.
    5.  The final incident occurred when my firm was working to convert 
electrical power from temporary diesel generators to provide power to 
the refrigerated containers being unloaded at the Seattle waterfront to 
permanent power. Since my crews primarily worked on signal systems, I 
put in a call to the local IBEW (electrical workers) union for a call 
for a journey level electrician with experience with such work; the 
union failed to fill my call for labor and after a week without getting 
my call for labor filled I had a meeting with the project 
superintendent, Mike Kerschner to discuss the situation. At this time 
there was a pending change order for $200,000 with specialized Siemens 
equipment that I wasn't going to order the equipment until the change 
order was approved. Mike Kerschner had been pressuring me to order it 
anyway without a change order but I refused. When I met with him 
regarding the power conversion issue due to the union's continued 
failure to supply the requested labor, he was openly hostile to me 
while at the same time giving me unwanted top to bottom looks that were 
sexual in nature. He informed me that if I didn't get the needed labor 
that he would take over my work. The next day I received a letter from 
the IBEW stating that they were pulling all manpower off ALL of my jobs 
because I had failed to make a trust payment, which was only two weeks 
late due to STP's failure to pay my company. The union was colluding 
with STP and Fisk Electric to drive my firm off the tunnel job, and 
there were other large electrical contractors who were hoping to take 
over my SR 520 Floating Bridge Project. Fortunately Kiewit didn't allow 
that to happen, so the outright destruction of my business didn't 
happen at that time. In retrospect I realize that my firm was a threat 
to the assertion that DBE firms didn't have the technical expertise to 
perform on such a large, technically challenging projects because I was 
doing just that across the water. By the time I was locked out of the 
job STP owed my firm over $80,000 and I am certain that the only reason 
I eventually got paid was because of the focus of FHWA's investigation 
into STP and WSDOT's administering of the DBE program. Public records 
show that SICE, Inc. did $34,315.556.53 on the project and Fisk 
Electric did $106,057,656.02, while my firm, DBE Electric did 
$977,246.59. Both SICE and Fisk were hired by a local company, JH 
Kelley, in order to minimize the appearance of the self-dealing by 
STP's ownership of Fisk and SICE. It is widely known that Tutor-Perini 
has been found guilty of DBE fraud in other areas of the country and 
has paid millions of dollars in fines; our state simply wasn't prepared 
to handle the assortment of dirty tricks that Tutor-Perini pulled in 
order to line their own pockets while appearing to be employing ``good 
faith efforts'' among the DBE firms who were hoping for a piece of the 
pie.

    While the SR 99 Bored Tunnel was one of the worst examples of 
discrimination I experienced, it certainly wasn't the only one. I could 
spend hours citing examples, but since my time for testimony before the 
committee is limited, I will share just one more in detail. My firm was 
working on a city project that had federal funds administered through 
WSDOT Local Programs. The contract value was approximately $1.2 
million. The general contractor was falling behind the critical path 
schedule as originally submitted and approved by the city, and changed 
the schedule to place the blame for the delays on my firm. When I 
challenged the project manager and eventually the company president 
regarding the disputed schedule and delays, they didn't want to meet 
with me, only with my male project superintendent. The dispute few 
uglier by the day, and resulted in the general contractor failing to 
pay my firm nearly $300,000 at one point. The general contractor sought 
to have my contract terminated, and WSDOT became involved in their 
request in accordance with CFR Part 26 rules. In the interim, the 
general contractor contacted my main pole supplier and threatened not 
to pay for the $500,000 pole order if they placed it with my firm. Due 
to the on-going hostilities WSDOT allowed the contract to be 
terminated, but only for convenience, not for cause. I then brought 
suit again the contractor and eventually was awarded the $300,000 owed 
and attorney's fees after 3 years of legal battles. I know that the 
only reason this situation wasn't able to be resolved without 
litigation was because I am female and stood up for my company. I had 
done business with this company before when I was in business with my 
ex-husband, and when issues came up as they do in construction, they 
were able to be resolved, ``man to man''. Not so when I was the 
principal. The general contractor even stated in front of WSDOT 
attorney's during meetings to resolve the issues that ``the only reason 
he hired me was because he had to make the goal''. I'd also like to 
mention that this man himself was a minority and had been in the DBE 
program before graduating from the program. He was openly hostile to 
women in the construction industry, unless they worked in the office, 
not in the field and certainly not being an owner herself.
    There are many other instances of outright and subtle 
discrimination that I could cite, but unfortunately the worst was when 
the agency that was supposed to help firms like mine actually caused 
the destruction of my business by enacting the waiver to exclude white 
women from the federal DBE program in Washington State. When the waiver 
was enacted in June 2017 after being approved by Secretary Foxx on 
December 16, 2016, my firm was doing approximately $8,000,000 in 
revenue. After June 2017 when my firm was no longer considered eligible 
for ``Condition of Award'' projects with DBE goals, I did not win one 
single bid, including several that I knew I was the low bidder for. 
This is when the full knowledge of the level of discrimination in the 
highway construction industry really sunk in. I had fought battle after 
battle for years, but surely I thought that my company's proven track 
record of successful projects would see me through this unfortunate and 
unfair period, but I was dead wrong. I did everything I could to get 
work, begging contractors to use me on their projects. I had been the 
only female electrical contractor doing major highway electrical 
projects, and now the ``good ole boys'' were making up for lost time 
getting on projects that I formerly might have won. When WSDOT excluded 
my firm from participation, those project dollars didn't go to another 
DBE firm; they went to larger firms in our region doing $50-600 million 
in annual revenues! In the space of 18 awful months, my company died a 
death of a thousand cuts as I watched my firm die, month after month. I 
had to lay off my daughter, whom I had hoped to pass the company on to, 
along with other family members and employees. Word spread at the IBEW 
union that my company was going to go under, so getting quality labor 
dispatches to finish my jobs was extremely difficult. I could have 
easily filed for bankruptcy but I wanted to finish my projects and 
cause as least amount of collateral damage as possible for my 
employees, general contractors with which I had project backlog with, 
and the public agencies who were counting on the projects to be 
finished. By the fall of 2018 it was finished and there was nothing 
left to show for my years of hard work except exposure to creditors due 
to the personal guarantees typically required by DBE firms due to 
credit discrimination. During the period of the demise of my business I 
made two trips to Washington DC to meet with FHWA and USDOT to plead 
for WSDOT's request to rescind the waiver dated September 13, 2017. I 
met with Terence Coleman of the Department of Assistant General Counsel 
to share how this delay in responding affirmatively to WSDOT's request 
to rescind the waiver was causing my business failure, along with many 
other women in the region, all to no avail.
    Finally on December 13, 2019 USDOT denied WSDOT's request to 
rescind the waiver; while the reasons cited speak for themselves, there 
is no mention whatsoever of the skewing of the 2009-2011 data included 
in the flawed study, which included both the DBE awarded dollars of the 
two largest projects in Washington state history (SR 99 Bored Tunnel 
and SR 520 Floating Bridge) as well as documented DBE fraud purported 
by a white woman trucking firm that was eventually decertified as a DBE 
firm by WSDOT.
    In summary, while I am a positive person, I am also a realist. I 
had hoped to see discrimination end during my lifetime, unfortunately 
it seems to be getting worse in our society. While one can only change 
oneself to be a fair and just person, we can't change human nature. 
This committee through the federal DBE program has an opportunity to 
make a big difference in small DBE firms. I don't think it's realistic 
to expect to ``level the playing field'', but it is realistic to make a 
significant impact and hold to account the large general contractors 
who complain about the DBE contracting community getting a few pennies 
of the federal contracting dollar. While it is too late for my firm to 
benefit from the return of white women as Condition of Award as of 
October 1, 2020, I am determined to do all that I can to coach and 
mentor DBE firms as they navigate the difficult construction industry 
and avoid being used and abused by some of the unethical prime 
contractors who seek to abuse ``good faith efforts'' for their own 
gain.
    I had hoped to participate in building the Interstate Bridge 
Replacement program, replacing the aging bridge connecting Washington 
and Oregon after my successful completion of the SR 520 Floating 
Bridge. When I left Oregon as a young girl in 1968 to move to 
Washington with my mother and younger siblings she related that I said 
``Seattle is my town'' when I saw the Space Needle. Now instead of 
helping to build a physical bridge, I hope that I can use my experience 
to build a bridge between DBE firms and the good general contractors 
like Kiewit that do believe in this program to help empower DBE firms 
to grow in the way that the DBE program was intended for.
    Thank you for your time.

    Mr. DeFazio. Thank you, Ms. Lerdahl.
    Mr. Ali, you may proceed for 5 minutes.
    [Pause.]
    Mr. DeFazio. You have to unmute.
    Mr. Ali. Oh, sorry. Oh, am I unmuted?
    Mr. DeFazio. You are unmuted now.
    Mr. Ali. I apologize for that, Chairman. I have my own 
feelings about Cisco.
    Chairman DeFazio, thank you, and members of the committee. 
My name is Farad Ali, chairman of the advisory Government 
Affairs Committee for the Airport Minority Advisory Council. I 
am also the immediate past chairman of the Raleigh Durham 
International Airport Authority. Thank you for providing AMAC 
the opportunity to participate in the committee's hearing 
today.
    AMAC was founded 36 years ago to combat discrimination in 
the airport industry. Since its founding, AMAC has been in the 
forefront of every national policy discussion concerning this 
ubiquitous nature of discrimination in the transportation 
industry, and in particular, concerning airport contracting 
opportunities for small and disadvantaged business enterprises.
    AMAC's members include DBEs and airport concessionaire 
DBEs, non-DBEs, airports, and airport officials, and all others 
who are committed to promoting diversity and inclusion in the 
airport industry.
    The DBE authorization by Congress is vitally needed to 
combat conscious and unconscious bias and institutional 
discrimination that, regrettably, minority and women 
entrepreneurs too often face. To be sure, steady progress has 
been made. However, our DBEs and ACDBE members regularly attest 
that, without the DBE program, they would be locked out of 
contracting opportunities.
    Having served in many capacities with AMAC, as board chair, 
and committee chair, and as an airport commissioner, I too have 
had my own direct observation about the additional work to be 
done.
    In addition, anecdotal accounts, like academic papers and 
data from recent disparity studies, further document the 
continuing challenge of racial and/or gender bias barriers to 
full participation. They also point to the ongoing need for a 
DOT DBE program.
    AMAC works consistently with Congress, the U.S. DOT, 
Federal Aviation Administration, aviation trade organizations, 
and others, as a resource to provide education and guidance 
concerning these public policies and best practices to redress 
discrimination and further diversity and inclusion issues.
    Often we are unwilling to, really, have candid 
conversations and discussion about discrimination. But its 
ongoing present-day manifestations are real.
    With regard to the Government's interest in battling 
discrimination, equality is a core value of our Constitution, 
and fairness also yields great societal benefits.
    Although there has been growth in a number of minority- and 
women-owned firms in the United States, they continue to 
experience both direct and indirect discrimination. Examples of 
this is clear when you look at prime contractors and suppliers, 
unequal access to capital, bias in bonding decisions, how 
contracts are structured, and RFP experience requirements. The 
Government has a powerful fundamental interest in addressing 
these forms of discrimination.
    The DBE program allows minority- and women-owned firms to 
participate in federally assisted contracts worth millions of 
dollars and, as you have heard earlier, these businesses are 
only receiving pennies. But we really do appreciate all the 
work that has been going on so far, and I would like to make a 
few comments on the disparity studies that have been presented 
for a fact of evidence.
    While it was clear progress has been made, and many policy 
battles have been won, it is also clear there is a continuing 
and compelling need for the DBE program. There are far too many 
instances when women and minorities are denied equal access to 
opportunities in the transportation space. As noted, we 
continue to see extreme, compelling statistical evidence of 
discrimination, and its effect in disparity studies are really 
clear, and we will present other ideas.
    For a number of years, this committee has worked in a 
bipartisan manner to shore up this program by monitoring 
current discrimination and present-day effects on the past 
discriminations, as well as legislation modifications for the 
current program. These efforts have been really important, and 
I want to let Members know that these policy gains have been 
great.
    But the COVID-19 epidemic has really created even more 
problems for our diverse businesses. Although in response to 
the pandemic Congress has provided a lot of assistance to small 
business, they are hindered by these discrimination policies. 
As I said earlier, these businesses have unique challenges that 
can't be solved by short-term programs like the Paycheck 
Protection Program, and other funding decisions.
    ACDBEs will find themselves ill-equipped to participate in 
programs like the Main Street Lending Program, and the airport 
concessionaires, unlike passenger air carriers, air cargo 
carriers, and associated contractors, received no explicit 
assistance in phase 3 of the CARES Act. So I would like to ask 
you to look at issues surrounding the DBE program, that you 
look at what could be done in the short term to protect and 
sustain these businesses that are under this current economic 
crisis.
    I thank you for the opportunity to testify before the House 
Committee on Transportation and Infrastructure, and on behalf 
of our group and the thousands of airport concessionaires, I 
would like to say thank you. And if there are any other 
questions, I will be happy to answer those at the appropriate 
time.
    [Mr. Ali's prepared statement follows:]

                                 
     Prepared Statement of Farad Ali, Chairman, Government Affairs 
              Committee, Airport Minority Advisory Council
    Chairman DeFazio, Ranking Member Graves, and members of the 
Committee, my name is Farad Ali, and I am the Chairman of the 
Government Affairs Committee for the Airport Minority Advisory Council 
(AMAC). I am also the immediate past Chairman of the Raleigh Durham 
International Airport Authority. Thank you for providing AMAC with the 
opportunity to participate in the Committee's hearing today.
    AMAC was founded thirty-six (36) years ago to combat discrimination 
in the airport industry. Since its founding AMAC has been at the 
forefront of nearly every national policy discussion concerning the 
ubiquitous nature of discrimination in the transportation industry and, 
in particular, concerning airport contracting opportunities for small 
and disadvantaged businesses enterprises (DBEs). AMAC's members include 
DBEs--and airport concessions DBEs (ACDBEs), non-DBEs, airports and 
airport officials and others who are committed to promoting diversity 
and inclusion in the airport industry. As a result, AMAC occupies a 
unique vantage point concerning the purpose of this hearing.
    The DBE program authorized by Congress is vitally needed to combat 
conscious and unconscious bias and institutional discrimination that 
regrettably minority and woman entrepreneurs too often experience. Too 
be sure, steady progress has been made; however, our DBE and ACDBE 
members regularly attest that without the DBE program they would be 
locked out of contracting opportunities. Having served in many 
capacities with AMAC (as a board chair and committee chair) and as an 
airport commissioner I too have my own direct observations about the 
additional work to be done. In addition, anecdotal accounts, academic 
papers, and data from recent disparity studies--many of them undertaken 
by AMAC members who are consultants and researchers--further document 
the continuing challenge of racial and/or gender based barriers to full 
participation. They also point to the ongoing need for the DOT DBE 
program.
    AMAC works consistently with Congress, the US Department of 
Transportation, the Federal Aviation Administration, aviation trade 
associations, and others as a resource for information, education and 
guidance concerning public policies and best practices to redress 
discrimination and further diversity and inclusion. On a bi-partisan 
basis this Committee and the Congress has shown great leadership in 
affirming the government's continuing interest in remedying 
discrimination and its effects. As we are aware, Congressional efforts 
to monitor ongoing evidence of discrimination undergird the statutory 
and regulatory framework of the DBE program--and give airports a 
targeted, narrowly tailored, evidence based ``tool'' to promote equity, 
fairness, participation. Again, Mr. Chairman, AMAC thanks you and the 
Committee for your ongoing leadership and collaborative approach with 
industry stakeholders.
    Often we are unwilling to have candid discussions about 
discrimination and its ongoing present day manifestations. With regard 
to the government's interest in combatting discrimination, equity is a 
core value of our Constitution and fairness also yields other important 
societal benefits. Although there has been growth in the number of 
minority businesses in the United States, they continue to experience 
both direct and indirect discrimination. Examples of indirect 
discrimination include: direct discrimination by prime contractors or 
suppliers, unequal access to capital, bias in bonding decisions, how 
contracts are structured, RFP experience requirements in RFPs, and the 
like. The government has a powerful and fundamental interest in 
addressing these forms of discrimination and the DBE program is part of 
that effort.
    Minority-owned businesses remain underrepresented as a share of the 
total U.S. business ownership. Moreover, these businesses when compared 
to their non-minority counterparts typically have fewer employees and 
lower revenues. This underrepresentation in large measure has its basis 
in racial discrimination and addressing it is a critical reason why 
Congress must continue to support initiatives like the DBE program.
    The program allows women and minority-owned companies to 
participate in federally-assisted transportation contracts worth 
billions of dollars a year. The program is an essential entry point for 
many DBE firms into the transportation space and there is a large and 
growing body of evidence that shows that the DBE program enables women 
and minority owned firms the opportunity to play in a space that would 
otherwise be off limits to them. Simply put, this program works and as 
noted previously, it is narrowly tailored to meet the constitutional 
standard set out by the U.S. Supreme Court. A fact that has been 
affirmed by many federal District and Courts of Appeal.
    I'd like to offer a few more comments on disparity studies and 
other fact based evidence that discrimination continues to a problem in 
the transportation sector. While it's clear that progress has been made 
and many policy battles have been won, it is also clear that there is 
still a continuing and compelling need for the DBE program. In far too 
many instances women and minorities are being denied equal access to 
opportunities in the transportation space. As noted previously, we 
continue to see extremely compelling statistical evidence of 
discrimination and its effects from a variety of disparity studies that 
are produced by state and local governments. These studies are backed 
up by countless accounts from women and minority owned firms that show 
that they continue to operate on an uneven playing field. AMAC 
continuously works with its members to monitor ongoing discrimination, 
and we will submit some examples to the Committee. AMAC believes that 
these accounts show that this problem is not specific to any one 
county, state, or group. Rather, it exists throughout the country and 
effects countless individual businesses.
    In the aggregate, these studies show us that women and minority 
owned firms continue to face discrimination and that without 
initiatives like the DBE program, these firms would receive far fewer 
opportunities to successfully compete for contracts in the 
transportation sector. AMAC commends the work that the Committee has 
done in this area and I would personally like to thank all of the 
Committee Members and their staff for working to ensure that the DBE 
program continues to create a fairer marketplace in which women and 
minority owned businesses are able to find opportunities in 
transportation sector. For a number of years, this Committee has worked 
in a bipartisan manner to shore up and maintain this program by:
      Monitoring Current Discrimination and the Present Day 
Effects of Past Discrimination: Holding hearings like this one permit 
the Committee to hear directly from DBEs and ACDBEs and their 
representatives about the discrimination they experience as they 
attempt to establish and grow their businesses. It is critically 
important that Congress and the public have a full understanding of the 
types of discrimination that persist across the nation so that they can 
support and improve the programs intended to address such 
discrimination.. We are grateful to this Committee for the work it has 
done in this area.
      Legislative Modifications to the Current Program that 
Foster a Fairer Marketplace: Similarly, this Committee has also worked 
to incorporate needed statutory modifications into legislation that has 
moved through this committee. Again, for example, in the 2018 FAA 
Reauthorization, the Committee addressed a long-standing discriminatory 
small business ``size standard'' barrier to DBEs involved in FAA-
assisted contracting. The legislation rectified this matter by 
conforming the DBE size standard for programs authorized by the FAA 
bill to those set by the U.S. Small Business Administration. The prior 
definition had not used size tests that are generally applicable under 
the Small Business Act, but instead imposed an arbitrary rule that 
reduced the size standard for DBEs by approximately 30% as compared to 
the size standard set in the Small Business Act. We note as well that 
H.R. 2, which recently passed the House of Representatives, would 
eliminate the discriminatory small business standard with respect to 
all DOT modes--highways, transit, and rail.

    These efforts have been substantive and helpful in ensuring that 
the DBE program continues to be a success. However, while I and AMAC 
applaud the Committee for its efforts in assisting women and minority 
owned businesses, I want to take some time to let Members know that 
many of these policy gains (particularly in airport concessions space) 
will likely be lost as a result of the COVID-19 Pandemic--if Congress 
does not provide direct and immediate assistance to concessionaires.
    The COVID crisis has absolutely decimated women and minority owned 
airport businesses. From the vantage point of the airport sector, I can 
say that this crisis and the resulting economic downturn has been 
absolutely devastating. Airport concessionaires including Disadvantaged 
Business Enterprises (ACDBEs) are the third major partner in an 
ecosystem that serves air travelers. Concessionaires take empty airport 
terminals and turn them into vibrant shopping and dining destinations 
that generate important revenues for themselves and fees that are paid 
to airports. These concessionaires are major sources of employment and 
taxes for surrounding communities and they help to grow the airports in 
which they are located by providing (in aggregate and pre-COVID times) 
approximately $2.5 billion in non-aeronautical revenue to airports. 
This revenue fuels new airport growth by underpinning airport bond 
financing, development, and growth.
    However, as airport concessionaires, these businesses are uniquely 
dependent on the flow of passengers in and around airports. Our 
revenues rise and fall based on Airline passenger traffic. If there is 
no traffic, we cannot survive. With COVID-19, we have seen this traffic 
fall sharply in some cases up to 95% of pre-pandemic totals. This 
dramatic fall in potential customer traffic has already caused many 
ACDBEs to close their doors permanently. Those that are still open are 
barely surviving and have seen their revenues drop by 95 percent or 
more. Unlike the rest of the economy, industry experts don't expect 
this industry to bounce back quickly. Instead these experts expect 
passenger traffic (and subsequently business sales) to remain depressed 
for at least 18-36 months. Prior to this pandemic, ACDBE program had 
created several success stories of businesses that not only scaled 
within their home airport but were able to open new operations in 
airports across the country. This program saw businesses that had begun 
to setup joint ventures with larger businesses to grow their 
operations, and had also seen older ACDBEs act as mentors to other 
businesses that had just entered this space. COVID-19 could undo all of 
this progress. I don't want to sound alarmist, but the industry and 
ACDBEs in particular are at a crossroads.
    Although in response to the pandemic Congress has enacted programs 
intended to assist small businesses, they are not well suited to the 
airport environment. As a result, concessionaires continue to struggle 
to secure adequate resources to survive the COVID crisis. ACDBEs, which 
are already hindered by discrimination in many aspects of their work, 
are even more vulnerable to the pandemic. As I said earlier, these 
businesses have unique challenges that can't be solved by short term 
programs like the Paycheck Protection Act and often need more funding 
than what is currently available under the Economic Injury Disaster 
Loan. ACDBEs also find themselves ill-equipped to participate in 
programs like the Main Street Lending Program and airport 
concessionaires unlike the passenger air carriers, air cargo carriers, 
or associated contractors received no explicit assistance in Phase III 
of the CARES Act.
    Although DBEs and ACDBEs, in particular, are severely impacted by 
the pandemic, this economic devastation is not limited to the aviation 
sector. Minority businesses in general have been decimated by the 
pandemic. All across the country, minority businesses are shutting down 
permanently. Lacking pre-existing relationships with banks, many of 
these businesses were unable to access loans from the first round of 
the PPP. Many of these companies simply folded, taking jobs and 
potential revenues with them. This country can't afford to lose a 
generation of minority entrepreneurs. These businesses are sources of 
income, skills training, and development for many minority communities. 
I ask that as you look into the issues surrounding the DBE program that 
you also look at what can be done in the short-term to protect and 
sustain businesses under the current economic climate. This Committee 
and the DBE program has done an amazing job of helping to build a 
transportation marketplace that is more equitable and fairer than it 
would have been without your efforts. To protect and maintain these 
efforts, I ask that Members continue to not only support the DBE 
program, but to also work to support the ACDBEs and DBEs as they seek 
to get back on their feet.
    Thank you for this opportunity to testify before the House 
Committee on Transportation and Infrastructure on behalf of AMAC. Our 
group and the thousands of Airport Concessionaires that we represent 
look forward to working with the Committee to advance policies that 
will continue to protect and enhance the DBE program.

    Mr. DeFazio. Thank you for your testimony.
    Ms. Norman, you may proceed.
    Oh, wait, I am sorry, I skipped someone.
    Mr. McDonald, you may proceed.
    Mr. McDonald. Thank you, Chairman DeFazio, and good 
morning, committee members. My name is Sandy McDonald, and I am 
the director of the Office of Economic and Small Business 
Development in Broward County. I am also here on behalf of 
COMTO, the Conference of Minority Transportation Officials, 
this morning. And my office is also a member of the Airport 
Minority Advisory Council.
    It was an excellent start in 1983, when the provision was 
made to authorize highway and Federal assistance programs to 
allocate at least 10 percent of the funds to be spent with 
DBEs. In 1987 the program progressed, and included women during 
the reauthorization.
    The DBE program, as we know it today, is one of the most 
significant tools for guaranteeing the participation of 
minority-owned and women-owned businesses in the Federal 
procurement of goods and services in the arenas of highway, 
aviation, and transit. But we also know we can do more.
    In Broward County alone, the DBE program accounts for 408 
businesses, of which 210 are women-owned. Throughout the State 
of Florida, there are over 4,000 certified DBEs documented. The 
significance of the number of DBEs in my county and State is 
only one important factor to consider. Equally as important are 
the number of jobs these DBEs provide and account for 
throughout the State and the country. But yet we know we can do 
more.
    Broward County believes the success of our DBEs comes from 
the additional assistance we are willing to offer in our 
program. All DBE program administrators are required to meet 
eight objectives of the DBE program under part 26. However, the 
following specific objective, ``to assist the development of 
firms that can compete successfully in the marketplace outside 
the DBE program,'' is one we put extra emphasis on and apply to 
grow our minority and women participation and, yes, grow our 
overall economy.
    The DBE program in Broward County develops and directly 
affords our minority- and women-owned businesses the chance to 
perfect their craft, realize their growth, build capacity, and 
nurture relationships that can carry them far beyond a single 
contract. Going through the process for a DBE is invaluable. 
Whether they win or lose a specific bid, it allows them to 
create relationships that lead to partnerships that have the 
potential to result in future contracting opportunities. And it 
is that potential with our firms we want to build on even more.
    Providing this opportunity through Department of 
Transportation contracting for minority- and women-owned 
businesses goes far beyond the one single contract. It is 
imperative that a DBE program achieves the outlined objectives. 
It is these objectives that provide opportunities for DBEs, and 
are the standard that DBELOs--Disadvantaged Business Enterprise 
Liaison Officers--such as myself, govern our programs by. We 
recognize that there is always room for improvement. We accept 
the challenges that arise as opportunities to expand on the 
original intent, and to continue the purpose of the program.
    I have seen the professional growth of DBEs over time. I 
have witnessed the evolution of business owners with an idea 
who started operations in small residential markets, and then 
expanded to commercial markets, and prepared themselves for 
Government procurement. I have certified businesses who met all 
the eligibility criteria for DBE participation, but were not 
familiar with Government bidding or establishing professional 
relationships. I have worked with established DBE businesses 
who have used their talents and experiences to grow their 
business beyond my county, and beyond my State, and to provide 
their service in multiple States.
    I have also, unfortunately, seen those businesses who were 
not given the opportunity this program should allow. We can 
actually do more.
    The DBE program affords minority- and women-owned 
businesses the chance to start, develop, and master their 
abilities, and grow beyond their initial footprint and the 
program. For this reason and many more, the DBE program needs 
to continue for an additional 37 years and beyond.
    While my office in Broward County continues to find more 
ways to increase our DBE participation while focusing on 
successful contracting awards to DBEs, we also pay attention to 
the areas where there are opportunities to grow, and embrace 
the challenges that could make this program even better. The 
success of our program and the impact it has on the local and 
State economy is an ideal example of the importance of the DBE 
program to drive equality in the field of transportation.
    And yes, I will say without question, COVID has impacted 
our community in the worst way, and we believe the DBE program 
will be one of those starts that helps us to bring our 
community back and support the minority- and women-owned 
businesses.
    Thank you for this opportunity.
    [Mr. McDonald's prepared statement follows:]

                                 
 Prepared Statement of Sandy-Michael E. McDonald, Director, Office of 
    Economic and Small Business Development, Broward County, Florida
    Greetings Chairman DeFazio and Committee Members:
    My name is Sandy-Michael E. McDonald and I am the Director of the 
Office of Economic and Small Business Development for Broward County, 
Florida. I also serve as the Disadvantaged Business Enterprise Liaison 
Officer (DBELO) and Airport Concession Disadvantaged Business 
Enterprise Liaison Officer (ACDBELO) for the administering of the DBE 
and ACDBE programs under 49 CFR Parts 26 & 23. As the DBELO/ACDBELO, it 
is my responsibility, and that of my office, to ensure that the 
objectives of the Disadvantaged Business Enterprise (DBE) and the 
Airport Concessions Disadvantaged Business Enterprise (ACDBE) programs 
are adhered to. This includes certifying eligible applicants and 
confirming that program activities and projects are monitored and 
reported accurately. As this Committee on Transportation and 
Infrastructure convenes to hear testimony on the topic of ``Driving 
Equality: The U.S. Department of Transportation's Disadvantaged 
Business Enterprise Program'', I would like to share some of my 
thoughts, professional experiences, and observations of my daily role 
in driving equality and using the DBE program to do so.
                           Opening Statement
    It was an excellent start in 1983 when the provision was made to 
authorize highway and federal financial assistance programs to allocate 
at least 10% of the funds to be spent with DBEs to ensure that 
minorities would have an opportunity to participate and compete. In 
1987, as the program progressed, it included women during the 
reauthorization. The DBE program as we know it today, is one of the 
most significant tools for guaranteeing the participation of minority-
owned and women-owned businesses in the federal procurement of goods 
and services in the arenas of Highway, Transit and Aviation. However, 
it also serves as a foundation for other federal procurement programs 
and contracting opportunities.
    In Broward County alone, the DBE program accounts for 408 
businesses; of which 210 are women-owned. Throughout the State of 
Florida there are over 4,043 certified DBEs documented. The 
significance of the number of DBEs in my county and state is only one 
important factor to consider. Equally as important, are the number of 
jobs these DBEs provide and account for throughout the state and 
country. The implications and impact on labor and economics of these 
combined factors are not singular, but exponential. As an office, we 
are excited about growing the number of DBEs in the county, and 
throughout the state. We are even more excited about developing DBEs to 
participate successfully in the process, and then, preparing them to 
win contracts. That is the true value of the program.
    Broward County believes the success of our DBEs comes from the 
additional assistance we are willing to offer in our program. All DBE 
program administrators are required to meet the eight objectives of the 
DBE Program under 49 CFR Part 26.1. However, the following specific 
objective: ``To assist the development of firms that can compete 
successfully in the marketplace outside the DBE program'', is the one 
we apply to grow our minority and women participation, and to grow our 
overall economy. We support this by preparing minority and women owned 
businesses to contract and provide services in all areas of government, 
private industry, national and international markets, as well as to 
produce more entrepreneurs and startup businesses.
                   Need of the Program--Then and Now
    Broward County clearly understands the importance and the need for 
the DBE program since its inception to the present. Through the 
projects and procurement of our Aviation and Transit Departments, our 
DBEs are given the opportunity to not only participate as a 
subcontractor, but to also serve as Prime Contractors (Primes). Due to 
our unbundling and small business development, our DBEs can serve as 
Primes on contracts and offer additional opportunities to other DBEs as 
subcontractors. The DBE program in Broward County develops and directly 
affords our minority and women owned businesses the chance to perfect 
their craft, realize their growth, build capacity, and nurture 
relationships that carry them far beyond a single contract. Going 
through the process for our DBEs is invaluable. Whether they win or 
lose a specific bid, it still allows them to create relationships that 
lead to partnerships that have the potential to result in future 
contracting opportunities outside of the government. Providing this 
opportunity through DOT contracting for minority and women owned 
businesses goes far beyond the contract.
    It is imperative that a DBE program achieves the following 
objectives:
    a)  To ensure nondiscrimination in the award and administration of 
DOT-assisted contracts in the Department's highway, transit, and 
airport financial assistance programs;
    b)  To create a level playing field on which DBEs can compete 
fairly for DOT-assisted contracts;
    c)  To ensure that the Department's DBE program is narrowly 
tailored in accordance with applicable law;
    d)  To ensure that only firms that fully meet this part's 
eligibility standards are permitted to participate as DBEs;
    e)  To help remove barriers to the participation of DBEs in DOT-
assisted contracts;
    f)  To promote the use of DBEs in all types of Federally assisted 
contracts and procurement activities conducted by recipients.
    g)  To assist the development of firms that can compete 
successfully in the marketplace outside the DBE program; and
    h)  To provide appropriate flexibility to recipients of Federal 
financial assistance in establishing and providing opportunities for 
DBEs.

    It is these objectives that provide opportunities for DBEs, and are 
the standard that DBELOs, such as myself, govern ourselves and the 
program. These along with the principles of professionalism and 
personal compassion, commitment, interest in growing and sustaining 
minority and women owned businesses, and striving for a greater 
economy, is why my office and Broward County supports and takes 
seriously our role and responsibility.
    We recognize that there is always room for improvement. We accept 
the challenges that arise as opportunities to expand on the original 
intent, and to continue the purpose of the program. Broward County uses 
the DBE program and county contracting funded by DOT to stabilize and 
grow our economy and workforce. Now, more than ever, due to the COVID-
19 public health crisis, industries such as aviation and transit have 
been adversely impacted, and to a degree, completely shut down in some 
locations for 5 months or more. Broward is identifying opportunities 
through Master Plans and through previously dedicated funding sources, 
to continue projects that will put some of our DBEs back to work and 
assist in the rejuvenation of our economy. We also realize that for the 
DBEs we have certified over the years, a significant part of developing 
them is also making sure they have the necessary access to capital. 
DBEs must be able to not only win a contract, but also to execute the 
contract over time. They must be able to meet all their financial 
obligations as they await payment. Clearly, this is a priority for all 
small businesses, especially minority and women owned businesses. 
Broward County is committed to leveraging resources to assist our 
businesses in being prepared financially. Another key element of 
developing our DBEs is making sure they have examples of best practices 
and access to information sharing. We continue to grow in that area; 
this includes building Mentor-Protege relationships, as well as 
business development workshops on topics and areas of need and demand.
                            Closing Remarks
    I have seen the professional growth of DBEs over time. I have 
witnessed the evolution of business owners with an idea who started 
operations in small residential markets and then expanded to commercial 
markets and prepared themselves for government procurement. I have 
certified businesses who met all the eligibility criteria for DBE 
participation but were not familiar with government bidding or 
establishing professional relationships. I have worked with established 
DBE businesses who have used their talents and experiences to grow 
their business beyond my county and beyond my state to provide their 
services in multiple states.
    The DBE program affords minority and women owned businesses the 
chance to start, develop, master their abilities, and grow beyond their 
initial footprint and the program. For these reasons, and many more, 
the DBE program needs to continue for an additional 37 years and 
beyond. While my office and Broward County continues to find more ways 
to increase our DBE participation numbers, while focusing on the 
successful contracting awards to DBEs, we will also pay attention to 
the areas where there are opportunities to grow and embrace the 
challenges that could make this great program even better. We will 
continue to work to make sure that more than our county office and 
staff are aware of the success of the DBE program and its participants. 
The participants themselves and their businesses are the best way to 
tell the story, and to have a voice for recruitment of new DBEs. 
Existing DBEs are the best trainers to share what the best business 
practices are. Existing DBEs are the demonstrators of how to contribute 
to the economic vitality, success, and a growing economy. Broward 
County will continue to do its part to meet and exceed all the 
objectives of the 49 CFR to maintain a successful DBE program. The 
success of our program and the impact it has on the local and state 
economy is an ideal example of the importance of the DBE program to 
drive equality in the field of transportation. Broward County 
exemplifies what DBEs, in partnership with government, working within a 
federal program that is committed to utilizing a target group, can 
produce.
    Thank you for this opportunity to share my knowledge and experience 
with the DBE program. The impact the program has historically had on 
the economy, and the effect it continues to have should not be 
minimized. I am in full support of the continuation of the program in 
the interest of driving equality.

    Mr. DeFazio. Thank you, Mr. McDonald. While you are 
testifying, if you wonder why I am looking over there, somehow 
some people show up on that screen, and some people only show 
up over there. So I don't know--I would hope, if our tech 
person is listening, when someone is speaking, if we could pop 
them up on the main screen, so we can just look forward.
    With that, Ms. Norman, you may proceed.
    Ms. Norman. Thank you very much, Mr. Chairman and members 
of the Transportation and Infrastructure Committee. Thank you 
all so much for allowing me to be a part of this process, and I 
am very honored and pleased to appear before you today. My name 
is Sandra D. Norman. I am division administrator for civil 
rights with the Virginia Department of Transportation.
    As director, I know firsthand of the DBE program's 
importance that is within your jurisdiction. I am very 
supportive of the DBE program that assists minority- and women-
owned businesses who are ready, willing, and able to compete 
and perform contract work as either a prime contractor or 
subcontractor. I believe it is the right thing to do. It 
continues to drive equality and inclusiveness.
    The DBE program for the United States meets constitutional 
tests. Every court has held that the DBE program regulations 
and 49 CFR 26 are constitutional.
    Why is the DBE program important? Here are some of my 
thoughts for you to consider.
    The DBE program has its roots in the Civil Rights Act of 
1964. It has been regulated through a series of reauthorization 
legislative initiatives. The DBE program applies to airport and 
surface transportation, highway, transit, and aviation. The DBE 
program has been enacted by Congress to address historical 
discrimination against minority-owned firms in the 
transportation industry, and to ensure that minority- and 
women-owned businesses have a fair chance to participate in 
contracting opportunities made possible by Federal financial 
assistance.
    The DBE program, with its rigid certification requirements, 
presents an excellent opportunity for a win-win for all 
parties.
    It is a success for VDOT, and a success for the community. 
We want the residents of those communities to benefit from the 
public investment in that community. The majority of employment 
growth in the United States comes from small businesses. When 
small businesses are allowed to do contract work, it is an 
opportunity for people who might have been excluded from the 
relevant workforce to showcase their talents and skills, get 
training, and work within the transportation industry to have 
more employment opportunities in the future.
    Advancing diversity and making money are not conflicting 
goals. It is good for business and good for society.
    DOT's DBE program is as relevant today as ever to level the 
playing field in transportation for individuals, businesses, 
and communities of race, color, and gender. Our country suffers 
when talented people who have new ideas and who want to work 
hard are denied the opportunity to compete because of their 
ethnic background, race, or gender. And that is why there is a 
continuing need for the Disadvantaged Business Program, a need 
to ensure that small businesses can compete fairly for Federal-
funded, transportation-related projects.
    The DBE program, independent of the inherent challenges and 
the nature that comes with those challenges, has provided 
opportunities for minorities and women-owned small businesses 
and other contractors to participate in an arena that has 
historically not seen such participation. It has allowed people 
to create jobs, and give their employees a quality of life 
which they would not have been able to do before the DBE 
program.
    So, independent of all the challenges, the right part of 
the program is access, access to many construction projects 
that use governmental money that will have a requirement with a 
designated percentage of the total contract values awarded, 
making sure they are awarded to the DBEs. This allows access to 
DBE businesses that may not have been able to compete on price 
with larger operations to win contracts on projects.
    In addition to the financial benefit, contacts are made 
with respective industries that may lead to additional work. It 
is about people.
    It is about jobs. And too often we forget that our 
industry's golden nuggets are the people who participate in the 
DBE program, our small businesses and the thousands upon 
thousands of people they employ.
    Oftentimes we forget that the faces behind the businesses 
also want to leave a legacy for their children, grandchildren, 
and for generations yet unborn.
    In closing, the success of DOT's DBE program depends on the 
rich diversity, skills, and talents of our DBEs. VDOT, as an 
agency, will continue to serve as a model DBE program to ensure 
that minority- and women-owned businesses have a fair 
opportunity to participate in contracting opportunities at 
VDOT. Therefore, we are committed to championing and 
strengthening our DBE program.
    It is the real-life stories of discrimination for minority 
and women business owners that are vital to assisting courts, 
policymakers such as yourselves, and the public to understand 
the need to preserve and improve the Government DBE program 
that helps to drive equality and inclusiveness within the U.S. 
DOT DBE program.
    Again, I am honored, and thank you so much for your time 
and consideration.
    [Ms. Norman's prepared statement follows:]

                                 
 Prepared Statement of Sandra D. Norman, Division Administrator, Civil 
             Rights, Virginia Department of Transportation
    Thank you very much, Mr. Chairman, and members of the 
Transportation and Infrastructure Committee. Thank you all so much for 
allowing me to be a part of this process and I am very honored and 
pleased to appear before you today.
    My name is Sandra D. Norman, Division Administrator for Civil 
Rights for the Virginia Department of Transportation (VDOT). As 
Director, I know firsthand of the DBE Program's meaning that is within 
your jurisdiction. I am very supportive of the DBE program that assists 
minority and women-owned businesses who are ready, willing, and able to 
compete and conduct contract work as either a Prime Contractor or 
Subcontractor. I believe it is the right thing to do.
    The Disadvantaged Business Enterprise (DBE) program for the U.S. 
meets constitutional tests. Every court has held that the DBE program 
regulations at 49 CFR Part 26 are constitutional.
    Why is the DBE Program Important, great question Mr. Chairman? Here 
are my thoughts for Transportation and Infrastructure (T&I):
    The Disadvantaged Business Enterprise Program (DBE) has its roots 
in the Civil Rights Act of 1964. It has been regulated through a series 
of reauthorization legislative initiatives. The DBE program applies to 
airports and surface transportation (Highway and Transit). The DBE 
Program has been enacted by Congress to address historical 
discrimination against minority-owned firms in the transportation 
industry and to ensure that minority and women-owned businesses have a 
fair opportunity to participate in contracting opportunities made 
possible by Federal financial assistance
    The DBE program, with its rigid certification requirements, 
presents an excellent opportunity for a win-win for all parties. It is 
a success for VDOT and a success for the community. We want the 
residents of those communities to benefit from the public investment in 
that community. The majority of employment growth in the United States 
comes from small businesses. When small businesses are allowed to do 
contract work, it is also an opportunity for people who might have been 
excluded from the relevant workforce to showcase their talents and 
skills, get trained and work within the transportation industry to have 
more employment opportunities in the future. Advancing diversity and 
making money are not conflicting goals; it is good for business and 
good for society.
    Our DBE Program is as relevant today as ever: to level the playing 
field in transportation for individuals, businesses, and communities of 
race, color, and gender. Our Country suffers when talented people, who 
have new ideas, and who want to work hard, are denied the opportunity 
to compete because of their ethnic background, race, or gender. And 
that is why there is a continued need for the Disadvantaged Business 
Program, a need to ensure that small disadvantaged business enterprises 
can compete fairly for federal funded transportation related projects.
    The DBE program, independent of the inherent challenges and the 
nature that comes with those challenges, has provided opportunities for 
minorities and women-owned small businesses and other contractors to 
participate in an arena that had historically not seen such 
participation. It has allowed people to create jobs and give their 
employees a quality of life, which they would not have been able to do 
before the DBE program. So independent of all the challenges we have, 
the right part of the program is ACCESS. Access to many construction 
projects that use governmental money that will have a requirement with 
a designated percentage of the total contract values awarded are 
awarded to DBEs. This allows access to DBE businesses that may not be 
able to compete on price with larger operations to win contracts on 
projects that such businesses may not traditionally be able to win on 
price alone. In addition to the financial benefit, contacts are made 
with respective industries that may lead to additional work. It is 
about people, it is about jobs, and too often, we forget that our 
industry's golden nuggets are the people who participate in the DBE 
program and the thousands upon thousands of people they employ. 
Oftentimes we forget that the faces behind the businesses also want to 
leave a legacy for their children, grandchildren, and for generations 
yet unborn.
    The success of VDOT's DBE Program depends on the rich diversity, 
skills and talents of our DBEs. VDOT will continue to serve as a model 
DBE Program to ensure that minority and women-owned businesses have a 
fair opportunity to participate in contracting opportunities at VDOT. 
Therefore, we are committed to championing and strengthening our DBE 
Program. It is the real life stories of discrimination from minority 
and women business owners that are vital to assisting courts, 
policymakers such as yourselves, and the public to understand the need 
to preserve and improve the government disadvantaged business programs 
that help to DRIVE EQUALITY.
    Again, I am honored, and thank you very much for your time and 
consideration.

    Mr. DeFazio. Thank you, Ms. Norman.
    Dr. Wainwright, you may proceed for 5 minutes.
    Mr. Wainwright. Thank you, Chairman DeFazio, Ranking Member 
Graves, members of the committee. Good morning. I appreciate 
the invitation to appear here today. My name is Jon Wainwright. 
I hold a Ph.D. in economics from the University of Texas at 
Austin. Until my recent retirement after 24 years, I served as 
a managing director at NERA Economic Consulting. My primary 
career focus has been analyzing the effects of discrimination 
on minorities and women.
    My written testimony contains 90 pages of analysis 
conducted and compiled for this hearing. I will attempt to 
summarize. I have performed extensive original research using 
95 existing disparity studies, as well as data covering 
millions of firms from the Census Bureau Survey of Business 
Owners, the Annual Business Survey, and the American Community 
Survey. My testimony is a continuation of similar research I 
have performed over the course of my career as an economist.
    I conclude that there is strong evidence, both past and 
present, of large, adverse, and statistically significant 
disparities facing minority-owned and women-owned business 
enterprises in the United States. Moreover, these disparities 
cannot be explained solely or even primarily by differences in 
factors that are untainted by discrimination. In other words, 
these disparities are primarily due to discrimination and its 
destructive effects.
    I reached this conclusion from three main sources of 
empirical evidence.
    First, disparity studies overwhelmingly demonstrate adverse 
findings for minority- and women-owned businesses. The vast 
majority of the 95 disparity studies I reviewed in my testimony 
identified large, adverse disparities affecting minority- and 
women-owned businesses in both construction and professional 
services like architecture and engineering. In construction, 72 
percent of disparities were adverse, and 81 percent of those 
were large and adverse. In construction-related professional 
services, 77 percent were adverse and 97 percent of those were 
large and adverse. I am confident that, if a similar analysis 
were conducted with additional studies such as the 40 that have 
been introduced into the record here today, it would reveal 
similar results.
    Second, census data shows large, adverse, and statistically 
significant disparities. The most recent complete census showed 
that, for every dollar of sales and receipts earned by 
nonminority male-owned firms, African Americans earned just 
$.34, Hispanics just $.47, and Asians just $.47. American 
Indian and Alaska Native-owned firms earned just $.43. Native 
Hawaiian and other Pacific Islander owned firms earned just 
$.49, and women earned just $.41.
    Third, statistical regression analysis shows that 
historical and current disparities are largely due to 
discrimination. The most recent American Community Survey shows 
that the rate of business formation for African Americans would 
be 120 percent higher in the absence of discrimination. For 
Hispanics, the figure is 41 percent; for Asians, 30 percent 
higher; for American Indians and Alaska Natives, 43 percent 
higher; for Native Hawaiians and other Pacific Islanders, 58 
percent higher; for women, 44 percent higher, in the absence of 
discrimination.
    In closing, there is still some good news. As my testimony 
shows, and as you have heard today from the other witnesses, 
although severe disparities persist, we are making progress, 
thanks primarily to public efforts like the DBE and ACDBE 
programs. Still, now is not the time to reduce our efforts to 
eliminate business discrimination and its effects. Indeed, the 
evidence is overwhelming that, if we eliminate or reduce these 
programs, much greater disparities will very quickly occur.
    The best metaphor I can offer is to consider someone like 
myself, who takes blood pressure medication: if you take my 
blood pressure while I am on my meds, it will read close to 
normal. Obviously, that does not mean that any responsible 
doctor will say it is time to stop taking my medicine. This is 
precisely why I and other researchers in this area try to 
examine both public-sector contracting markets, where 
affirmative measures like the DBE program are found, as well as 
private-sector contracting markets, where such programs are 
rare and, consequently, discrimination remains almost totally 
undermediated.
    The bottom line is this: despite admirable progress, 
discrimination and its destructive effects are deeply rooted in 
the American economy. Such discrimination makes it immeasurably 
harder for women and minorities to form and grow their own 
firms. This reality has innumerable harmful consequences for 
our economy and for our Nation. For all these reasons, I 
strongly urge you to reauthorize the DBE program. Thank you 
very much.
    [Mr. Wainwright's 55-page prepared statement follows. The 
transcript resumes on page 95.]

                                 
Prepared Statement of Jon S. Wainwright, Ph.D., Affiliated Consultant, 
                        NERA Economic Consulting
    Chairman DeFazio, Ranking Member Graves, and Members of the 
Committee:
    Thank you for the invitation to appear here today. My name is Jon 
Wainwright. I hold a Ph.D. in economics from the University of Texas at 
Austin. Until my recent retirement after 24 years, I served as a 
Managing Director at NERA Economic Consulting in Austin, Texas and 
Chicago, Illinois. NERA is a national and international economic 
consulting firm dedicated to applying economic, finance, and 
quantitative principles to complex business and legal challenges. One 
of my primary areas of interest as a professional economist has been 
documenting and analyzing the effects of discrimination on minorities, 
women, and other disadvantaged groups.
    I would like to ask the Committee's permission to include my entire 
testimony in the record as if read in full and to supplement my 
testimony with additional material if needed.
                            A. Introduction
    I have been asked to provide a statistical overview of the 
historical and current state of Minority-Owned and Women-Owned Business 
Enterprise (M/WBE) in the United States, for the economy as a whole and 
particularly in those industry sectors relevant to Federal surface and 
aviation transportation funding.
    My findings are drawn from evidence in numerous studies of M/WBE 
participation in public sector contracting activity that have been 
performed in the wake of the U.S. Supreme Court's ruling in City of 
Richmond v. J. A. Croson Company,\1\ many of which I conducted myself. 
These disparity studies examine statistical evidence of M/WBE 
participation in public sector and private sector business activity 
compared to M/WBE representation in the relevant business populations, 
and offer explanations for the disparities observed between these 
factors. They also include qualitative, or anecdotal, accounts from 
both M/WBEs and non-M/WBEs regarding these disparities.
---------------------------------------------------------------------------
    \1\ 488 U.S. 469 (1989).
---------------------------------------------------------------------------
    Additionally, I have drawn findings from the few primary sources of 
statistical evidence that exist regarding M/WBEs, namely the Census 
Bureau's historical Survey of Business Owners, its new Annual Business 
Survey, and its ongoing American Community Survey. The Survey of 
Business Owners and its recent successor, the Annual Business Survey, 
provide information regarding the total number of M/WBEs in the 
country, their gross sales and receipts, and their employment and 
payroll, both in absolute terms as well as relative to their 
nonminority, male-owned counterparts. The American Community Survey is 
an annual version to the old decennial census long form and provides 
evidence regarding patterns of business formation by minority and 
female entrepreneurs and associated business earnings relative to their 
nonminority, male-owned counterparts.
    In preparing this testimony, I conducted extensive original 
research using all of the above-mentioned sources of evidence. This 
research is a continuation of similar research I have performed over 
the course of my career as an economist. Based on the findings 
presented below, I conclude that there is strong evidence, both past 
and present, of large, adverse, and statistically significant 
disparities facing minority-owned and women-owned business enterprises 
in the United States. Moreover, these disparities cannot be explained 
solely, or even primarily, by differences between the relevant 
populations in factors untainted by the effects of discrimination. 
These disparities are primarily due to discrimination and its effects, 
in the economy as a whole, as well as in the markets such as 
construction, architecture, and engineering that most relevant to 
Federal surface and aviation transportation funding.
1. Qualifications
    I hold a Ph.D. in economics from the University of Texas at Austin. 
My graduate curriculum included advanced courses in statistics, 
econometrics and labor economics, among others. Prior to joining NERA 
in 1995, I served as a Research Associate Professor at the Lyndon B. 
Johnson School of Public Affairs at the University of Texas at Austin 
and also headed my own economic consulting firm. While at NERA, I 
conducted economic and statistical studies of discrimination for 
attorneys, corporations, governments and non-profit organizations. I 
also conducted research and advised clients on adverse impact and 
economic damage issues arising from contracting activities, hiring, 
termination, performance assessment, compensation, and promotion. I 
have extensive experience producing, processing, and analyzing large 
and complex statistical data bases, including public sector contracting 
and purchasing data, as well as with myriad socioeconomic and 
demographic datasets produced by the Census Bureau and other official 
statistical agencies.
    Over the course of my career, I have conducted economic and 
statistical research and assisted in litigation concerning the minority 
and female participation in public contracting activities. From 2004 
through 2018, I directed NERA's national discrimination consulting 
practice. In that capacity, I served as the project director and 
principal investigator for more than 40 studies of business 
discrimination, and prior to that time as principal or co-principal 
investigator on approximately a dozen additional business 
discrimination studies. I have authored two peer-reviewed monographs 
and several articles and white papers on this and related subjects, 
including Guidelines for Conducting a Disparity and Availability Study 
for the Federal DBE Program, published in 2010 by the Transportation 
Research Board of the National Academy of Sciences.
    Between 2010 and 2013 I served as the principal economic and 
statistical expert on behalf of the U.S. Department of Justice, 
testifying in four cases challenging Federal policies to promote 
participation by minority-owned and/or women-owned businesses in 
Federal contracting activities. These were:
      Kevcon, Inc. v. The United States (United States Court of 
Federal Claims), concerning the Small Business Administration's 8(a) 
minority business set-aside program.\2\
---------------------------------------------------------------------------
    \2\ Wainwright, Jon S. (2010).
---------------------------------------------------------------------------
      Geyer Signal, Inc. and Kevin Kissell v. Minnesota 
Department of Transportation, et al. (United States District Court for 
the District of Minnesota), concerning the USDOT Disadvantaged Business 
Enterprise Program.\3\
---------------------------------------------------------------------------
    \3\ Wainwright, Jon S. (2012).
---------------------------------------------------------------------------
      Midwest Fence Corporation v. United States Department of 
Transportation, et al. (United States District Court for the Northern 
District of Illinois, Eastern Division), concerning the USDOT 
Disadvantaged Business Enterprise Program.\4\
---------------------------------------------------------------------------
    \4\ Wainwright, Jon S. (2013b), (2013c).
---------------------------------------------------------------------------
      Rothe Development, Inc. v. Department of Defense and 
Small Business Administration (United States District Court for the 
District of Columbia), concerning the Small Business Administration 
8(a) minority business set-aside program.\5\
---------------------------------------------------------------------------
    \5\ Wainwright, Jon S. (2013a).

    I have been repeatedly qualified as an expert economic and 
statistical witness in both Federal and state courts and have testified 
in these and related matters on 20 occasions. I have also testified 
before the U.S. Congress on these matters on five previous occasions.
    My current curriculum vitae is attached to this testimony. The 
source material relied on in reaching my findings and conclusions are 
noted below in the body of my testimony.
2. Discrimination and its Effects, Historically and Currently, 
        Consistently Disadvantages Minority- and Women-Owned Business 
        Enterprises
    As other researchers have noted, and as demonstrated in many of the 
studies, reports, and other testimony submitted to Congress, minorities 
and women have been historically and consistently disadvantaged by the 
effects of discrimination in business enterprise.\6\ Despite progress 
in some areas, these disadvantages are still present in business 
markets.\7\ As my testimony demonstrates, although severe disparities 
persist between non-minority male owned firms and minority- and women-
owned firms, we are making progress thanks to programs like the 
Disadvantaged Business Enterprise Program. Still, now is no time to 
reduce our efforts to eliminate business discrimination and its 
effects. Indeed, much of the progress that has been achieved is due to 
the effect that programs like the DBE program have had. The evidence is 
overwhelming that, were we to eliminate or reduce these programs, much 
greater disparities would very quickly occur. The best metaphor I can 
think of is the person who takes blood pressure medicine. If we take 
that person's blood pressure while they are taking their medicine, 
their blood pressure will appear normal but that does not mean that any 
responsible doctor would argue that the person should stop taking their 
blood pressure medicine. This is precisely why I and other researchers 
in this area try to examine both the public sector contracting markets 
where affirmative measures like the DBE program are found as well as 
the private sector contracting markets where such programs are much 
more rare. This is also why, although my testimony includes voluminous 
data from public sector sources like disparity studies, I also include 
a great deal of information from Census sources which examine markets 
that are largely unremediated by programs like the DBE program.
---------------------------------------------------------------------------
    \6\ See, e.g., U.S. Department of Commerce (2015); Lowrey (2010a); 
Lowrey (2010b); Marshall (2002); Wainwright (2000).
    \7\ See, generally, U.S. Small Business Administration (2010).
---------------------------------------------------------------------------
    African Americans are 13.3 percent of the general population, 12.6 
percent of the civilian labor force, and 12.2 percent of total 
employment. However, at last count, African Americans owned only 9.5 
percent of the nation's businesses, and earned a mere 1.26 percent of 
all business sales and receipts.\8\
---------------------------------------------------------------------------
    \8\ General population statistics are from the U.S. Census Bureau 
(2017a); civilian labor force and total employment figures are from the 
Bureau of Labor Statistics (2018a, 2018b, 2018c); business enterprise 
statistics are from the 2012 Survey of Business Owners, U.S. Census 
Bureau (2018b). Note: Publicly owned companies have been excluded from 
all calculations in this report that use Survey of Business Owners or 
Annual Business Survey statistics.
---------------------------------------------------------------------------
    Hispanics are 18.2 percent of the general population, 17.1 percent 
of the civilian labor force, and 17.0 percent of total employment. 
However, at last count Hispanics owned only 12.2 percent of the 
nation's businesses, earned less than 4.0 percent of all business sales 
and receipts.
    American Indians and Alaska Natives are 1.3 percent of the general 
population, but they are only 1.0 percent of the business population 
and earned just 0.32 percent of business sales and receipts.
    Asians and Pacific Islanders represent 6.1 percent of the general 
population, 6.2 percent of the civilian labor force, and 6.2 percent of 
total employment. While Asians own 7.1 percent of the nation's 
businesses, they earned only 5.9 percent of business sales and 
receipts.
    Women represent 50.9 percent of the general population, 46.9 
percent of the civilian labor force, and 46.9 percent of total 
employment. However, they are only 36.4 percent of the business 
population and earn only 11.9 percent of business sales and receipts.
    Even those minorities and women who manage against the odds to 
start their own businesses must compete in a business enterprise system 
that has long been dominated by non-minority male-owned firms.\9\ The 
advantages enjoyed by non-minority males in this context are borne out 
in the statistics. In a groundbreaking pair of studies of employer 
business closure rates, Professor Ying Lowrey documented that existing 
African American-owned, Hispanic-owned, Asian and Pacific Islander-
owned, and women-owned businesses across a wide variety of industry 
groups suffered substantially higher closure rates during the 2002-2006 
period than did their nonminority male counterparts.\10\ More recently, 
Professor Rob Fairlie has shown that African American, Hispanic Asian, 
American Indian and Alaska Native, and female small businesses closed 
at higher rates than their non-minority male counterparts during the 
first month of widespread COVID-19 induced shelter-in-place 
restrictions in April of this year.\11\
---------------------------------------------------------------------------
    \9\ See, e.g., Wainwright (2000), pp. 17-22, and the studies cited 
therein.
    \10\ Lowrey, Ying (2010a), pp. 20-21; Lowrey, Ying (2010b), p. 16. 
The comparison was between non-publicly held establishments that were 
in business in 2002 but had closed by 2006 versus all non-publicly held 
establishments in business in 2002.
    \11\ Fairlie, Robert (2020). p. 16.
---------------------------------------------------------------------------
    Even among larger firms, such as those with one or more paid 
employees, the disparities between minorities and women, on the one 
hand, and non-minority males, on the other, are stark. In 2017, for 
every dollar in sales and receipts earned by non-minority male-owned 
employers, African American-owned employers earned 45 cents, Hispanic-
owned employers earned 57 cents, Asian and Pacific Islander-owned 
employers earned 63 cents, American Indians and Alaska Native-owned 
employers earned 67 cents, and women-owned employers earned 61 
cents.\12\
---------------------------------------------------------------------------
    \12\ U.S. Census Bureau (2020a). For employer firms, the most 
recent data are from the 2017 Annual Business Survey, released in May 
2020.
---------------------------------------------------------------------------
    The overwhelming majority of businesses have less than 10 
employees, and only a small fraction have more than 500 employees. 
Minority- and women-owned firms are over-represented in the former 
category and under-represented in the latter. For the smallest firms in 
2017 (the most recent data available), 78 percent of non-minority male-
owned firms had less than 10 employees, compared to 82.1 percent of 
African American-owned firms, 82.3 percent of Hispanic-owned firms, 
81.2 percent of Asian and Pacific Islander-owned firms, 82.2 percent of 
American Indian and Alaska Native-owned firms, and 82.2 percent of 
women-owned firms.\13\ For the largest firms in 2017, 0.21 percent of 
nonminority-owned male firms had 500 or more employees, compared to 
0.12 percent of African Americans, 0.1 percent of Hispanics, 0.07 
percent of Asians and Pacific Islanders, 0.11 percent of Native 
Americans, and 0.1 percent of women.\14\
---------------------------------------------------------------------------
    \13\ U.S. Census Bureau (2018b, 2018c 2018d).
    \14\ Ibid.
---------------------------------------------------------------------------
B. Studies Conducted Since 2000 Provide Strong Evidence of Disparities 
              Against Minority- and Women-Owned Businesses
    As mentioned above, between 2010 and 2013 I served as an expert 
witness on behalf of the U.S. Department of Justice in its defense of 
two challenges to the SBA 8(a) Program and two challenges to the USDOT 
DBE Program. As part of this work, I collected and reviewed every known 
study of M/WBE disparities published since 2000.
1. Data and Methods
    Table 1 identifies 95 studies of minority and female business 
enterprise completed between 2000 and 2012. These studies examined M/
WBE participation in public contracting and procurement for 127 
different public entities and/or funding sources. The studies span 32 
different states that collectively account for over 80 percent of the 
general population of the United States.\15\ Of the 95 studies, 21 were 
conducted under my direction. Over the course of these studies, I 
personally examined and analyzed tens of billions of dollars worth of 
public sector spending across tens of thousands of contracts and 
subcontracts. The remaining 74 studies covered an even larger number of 
public contracts and public dollars.
---------------------------------------------------------------------------
    \15\ U.S. Census Bureau (2011e).
---------------------------------------------------------------------------
    All of the disparity studies in Table 1 examined minority-owned 
business enterprises as well as non-minority women-owned business 
enterprises. Typically, M/WBEs include businesses owned by African 
Americans, Hispanics, Asians and Pacific Islanders, American Indians 
and Alaska Natives, and non-minority women.
    A wide variety of government types are represented as well in these 
disparity studies. Some studies encompassed the entire state (i.e., 
Indiana, Maryland, Minnesota, New York, Texas, and Virginia), others 
were performed for single state agencies (i.e., Department of 
Transportation studies in Alaska, Arizona, California, Colorado, 
Georgia, Hawaii, Idaho, Illinois, Kansas, Maryland, Minnesota, 
Missouri, Montana, Nevada, North Carolina, Oklahoma, Oregon, Virginia, 
and Washington and the Division of Capital Asset Management and the 
Housing Finance Agency in Massachusetts), others were done for cities 
(i.e., Atlanta, Augusta, Austin, Baltimore, Boston, Charlotte, 
Cincinnati, Columbia, Dayton, Denver, Durham, Fort Worth, Houston, 
Kansas City, Memphis, Milwaukee, Minneapolis, Nashville, Philadelphia, 
Phoenix, Portland, San Antonio, St. Louis, St. Paul, Tallahassee, 
Tucson, and Tulsa), others covered counties (i.e., Pima, AZ; Broward, 
FL; Leon, FL; Richmond, GA; Wyandotte, KS; Durham, NC; Davidson, TN), 
and still more were for a variety of special districts including 
schools, public utilities, housing authorities, airports, and transit 
agencies.
    All 95 studies identified included contracts and procurements for 
public works in construction, and a large majority also included 
contracts in the construction-related professional services (``CRS'') 
sector, which includes architecture, engineering, and related services. 
Construction and CRS activities include the public works performed by 
highway departments, transit agencies, and airports under USDOT 
jurisdiction.\16\
---------------------------------------------------------------------------
    \16\ Construction prime contractors and subcontractors also 
purchase a variety of supplies and materials (e.g., steel, concrete, 
asphalt), as well as trucking services.
---------------------------------------------------------------------------
    Many of the disparity studies in Table 1 encompass public 
contracting and purchasing activities in other industry sectors as 
well. This reflects the fact that state and local governments, and 
their prime contractors and vendors, purchase goods and services from 
practically every major industry. In addition to construction and CRS, 
these include agriculture, mining, utilities, transportation, wholesale 
trade, retail trade, finance and insurance, real estate, professional 
and technical services, administrative and support services, waste 
management services, educational services, health care and social 
assistance services, food services, and others. NERA's most recent 
study for the State of Maryland, for example, encompassed 695 distinct 
industries.\17\
---------------------------------------------------------------------------
    \17\ NERA Economic Consulting (2017), p. 45. However, public sector 
spending is not typically distributed evenly among industries. In the 
State of Maryland's case, 261 industries (38 percent) accounted for 99 
percent of all spending over the study period.
---------------------------------------------------------------------------
    In addition to covering construction, CRS, and other industries, 
the 95 studies in Table 1 span the country geographically, representing 
all four Census Regions and all nine Census Divisions. In all, 32 
states plus the District of Columbia are represented here, as well as 
53 of this Committee's 67 members.
    As part of my work on behalf of USDOJ, I reviewed all of 95 studies 
identified in Table 1. Typically, these studies include an Executive 
Summary, a review of case law pertaining to M/WBEs, a review of the 
government's purchasing and contracting policies as they pertain to M/
WBEs, a chapter estimating the availability of M/WBEs, a chapter 
estimating the utilization of M/WBEs, a chapter comparing availability 
and utilization to assess disparities, and a chapter examining 
anecdotal evidence of discrimination. Often, these disparity studies 
also included one or more chapters examining evidence of disparities 
and discrimination in the wider market area, surrounding a particular 
government's jurisdiction. These are referred to as ``private sector'' 
or ``economy-wide'' analyses.
2. Findings
    Each study is different. They were prepared by different 
consultants, for different governments, in different parts of the 
country, with differing levels of resources. They examined different 
periods of time and used a variety of methods for assessing 
utilization, availability, and disparity, and for gathering anecdotal 
information.\18\
---------------------------------------------------------------------------
    \18\ A detailed discussion of the differences in methods employed 
by different consultants is provided in Wainwright and Holt (2010), pp. 
29-53.
---------------------------------------------------------------------------
    Nevertheless, the striking similarities among these studies 
strongly outweigh the differences. Foremost among these is an almost 
universal finding that historical and contemporary discrimination 
adversely impacts all different types of M/WBEs throughout the United 
States, in the construction sector, the CRS sector, and in other 
industry segments as well.
    To begin to see this, Table 2 presents specific statistical 
findings from the studies listed in Table 1. One primary function of a 
disparity study is to gather information on a government entity's prime 
contracting and subcontracting activity during the time period being 
studied. Since the Federal DBE Program applies to both prime 
contracting and subcontracting, I focused my review on the combined 
utilization of M/WBEs as both prime contractors and subcontractors.\19\
---------------------------------------------------------------------------
    \19\ Depending on how any given study's statistics were presented, 
I had to carry out certain additional calculations in order to present 
the information in Table 2 in a consistent manner. For example, a study 
might show the total number of prime contract construction dollars 
accruing to M/WBEs in one table, the total number of subcontract 
construction dollars accruing to M/WBEs in another table, and the total 
number of construction dollars overall in yet another table. 
Calculating overall M/WBE prime contract and subcontract utilization 
thereby required adding the figure in the first table to the figure in 
the second table and dividing the sum by the figure in the third table. 
These figures, in turn, might then be combined with availability 
statistics from one or more tables in the study in question to form the 
relevant disparity index.
---------------------------------------------------------------------------
    I reviewed each study's findings concerning:
      The percentage utilization of M/WBEs in construction 
spending,
      The percentage availability of M/WBEs for construction 
spending,
      The percentage utilization of M/WBEs in CRS spending, and
      The percentage availability of M/BEs for CRS spending.

    Several appear more than once in Table 2 since they provided 
statistical evidence in more than one relevant category. Columns (1) 
and (2) in Table 2 identify the state and political subdivision for 
which each disparity study was performed. Columns (3) and (6) present 
the utilization statistics for construction and CRS, respectively. 
Columns (4) and (7) present the availability statistics for 
construction and CRS, respectively. Columns (5) and (8) present the 
disparity indexes for construction and CRS, respectively. Column (9) 
indicates the years covered by each study. Column (10) provides the 
page citations for the statistical data presented.
    The disparity indexes presented in column (5) for construction and 
column (8) for CRS are formed by dividing the M/WBE utilization 
percentage by the M/WBE availability percentage, and multiplying the 
result by 100. A disparity index of 100 or more indicates that M/WBEs 
are being utilized at or above their market availability level. A 
disparity index of less than 100 indicates that M/WBEs are being 
utilized at or below their market availability level. A disparity index 
of 80 or lower is commonly taken as an indicator that discrimination is 
adversely affecting M/WBEs.\20\
---------------------------------------------------------------------------
    \20\ Although not the same as statistical significance, the ``four-
fifths rule'' says that a disparity index of less than or equal to 80 
(on a scale of zero to 100, zero being perfect disparity and 100 being 
perfect parity), because it is large, or ``substantively'' significant, 
indicates the presence of discrimination. See 29 C.F.R. Sec. 1607.4(d).
---------------------------------------------------------------------------
    The substantial majority of the disparity studies reviewed and 
presented in Table 2 identified large adverse disparities affecting M/
WBEs in both construction and CRS.\21\ There are 206 disparity indexes 
altogether--127 for the construction sector and 79 for the CRS sector.
---------------------------------------------------------------------------
    \21\ In Table 2, disparity indexes of 80 or lower are highlighted 
in boldface type. Disparity indexes above 80 but still less than 100 
(which would indicate parity with non-M/WBEs) are highlighted in 
boldface italicized type.
---------------------------------------------------------------------------
      In construction, 74 of 127 disparity indexes, or 58 
percent, fall at or below 80; and 91 of 127, or 72 percent, are less 
than 100.
      In CRS, 59 of 79 disparity indexes, or 75 percent, fall 
at or below 80; and 61 of 79, or 77 percent, are less than 100.
      Combining the results from both industry sectors, 133 of 
206 disparity indexes, or 65 percent, fall at or below 80; and 152 of 
206, or 74 percent, are less than 100.

    Notably, the general consistency of these results occurs despite 
these studies having been undertaken by different consultants, using 
differing methods, at different points in time, with different budgets, 
and for a wide variety of state and local government agencies in a wide 
variety of geographic locations. Perhaps most notably, these 
disparities exist despite the fact that, in the overwhelming majority 
of studies there was a strong, mature MBE or DBE program in place aimed 
at eliminating disparities. In other words, these disparities are so 
powerful and so severe that even strong efforts to level the playing 
field are simply not enough to eradicate them.
    Eleven different consultants produced the studies in Table 2. 
However, just four firms produced 75 percent of these studies: MGT of 
America, NERA Economic Consulting, BBC Research & Consulting, and Mason 
Tillman Associates.
      Of the 34 construction disparity indexes from MGT of 
America, 20 (59 percent) are less than or equal to 80 and 26 (76 
percent) are less than or equal to 100. Of the 15 CRS disparity indexes 
from MGT, 12 (80 percent) are less than or equal to 80 and 12 (80 
percent) are less than or equal to 100.
      Of the 24 construction disparity indexes from NERA 
Economic Consulting, 16 (67 percent) are less than or equal to 80 and 
17 (71 percent) are less than or equal to 100. Of the 20 CRS disparity 
indexes from NERA, 10 (50 percent) are less than or equal to 80 and 11 
(55 percent) are less than or equal to 100.
      Of the 23 construction disparity indexes from BBC 
Research & Consulting, 13 (57 percent) are less than or equal to 80 and 
17 (74 percent) are less than or equal to 100. Of the 20 CRS disparity 
indexes from BBC, 17 (85 percent) are less than or equal to 80 and 17 
(85 percent) are less than or equal to 100.
      Of the 17 construction disparity indexes from Mason 
Tillman Associates, 13 (76 percent) are less than or equal to 80 and 16 
(94 percent) are less than or equal to 100. Of the 12 CRS disparity 
indexes from Mason Tillman, 10 (83 percent) are less than or equal to 
80 and 10 (83 percent) are less than or equal to 100.
      Of the 29 construction disparity indexes from the balance 
of consulting firms in Table 2, 12 (41 percent) are less than or equal 
to 80 and 15 (52 percent) are less than or equal to 100. Of the 12 CRS 
disparity indexes from the balance of consulting firms, 10 (83 percent) 
are less than or equal to 80 and 11 (92 percent) are less than or equal 
to 100.

    Some specific results in Table 2 are highlighted below:
      Of the 33 state DOT construction disparity indexes, 26 
(79 percent) are less than or equal to 80 and 29 (88 percent) are less 
than or equal to 100. These include Alaska, Arizona, California, 
Colorado, Georgia, Hawaii, Idaho, Illinois, Kansas, Minnesota, 
Missouri, Nevada, North Carolina, Oregon, Texas, Virginia, and 
Washington.
      Of the 24 state DOT CRS disparity indexes, 23 (96 
percent) are less than or equal to 80 and 23 (96 percent) are less than 
or equal to 100. These include Arizona, California, Colorado, Georgia, 
Idaho, Illinois, Missouri, Montana, Nevada, North Carolina, Oklahoma, 
Oregon, Virginia, and Washington. Only Hawaii was found to have 
consistently utilized M/WBEs at or above their estimated availability 
in CRS.
      Of the 11 statewide (excluding DOTs) construction 
disparity indexes, 7 (64 percent) are less than or equal to 80 and 10 
(91 percent) are less than or equal to 100. Of the 4 statewide 
(excluding DOTs) CRS disparity indexes, 3 (75 percent) are less than or 
equal to 80 and 4 (100 percent) are less than or equal to 100.
      Of the 41 city or county construction disparity indexes, 
19 (46 percent) are less than or equal to 80 and 25 (61 percent) are 
less than or equal to 100. Of the 22 city or county CRS disparity 
indexes, 13 (59 percent) are less than or equal to 80 and 13 (59 
percent) are less than or equal to 100.
      Of the 39 special district (e.g., transit agencies, 
airports, housing authorities, school districts) construction disparity 
indexes, 23 (59 percent) are less than or equal to 80 and 27 (69 
percent) are less than or equal to 100. Of the 28 special district CRS 
disparity indexes, 20 (71 percent) are less than or equal to 80 and 21 
(75 percent) are less than or equal to 100.

    Finally, in almost all of the studies presented, the statistical 
findings are accompanied by anecdotal evidence of discrimination 
against M/WBEs.\22\ Many of these studies also include statistical 
evidence of disparities in the surrounding private sector--in minority 
and female business formation rates, business owner earnings, and 
access to commercial loans and capital. This type of statistical 
evidence is especially important since it helps explain why the large 
and adverse disparities observed for M/WBEs can be attributed to 
discrimination rather than to other, non-discriminatory factors.
---------------------------------------------------------------------------
    \22\ See also, e.g., U.S. Small Business Administration (2010), 
Aparicio (2009), Asian American Justice Center (2008), Lau (2009), Quon 
(2008), U.S. Congress (2007), (2008), (2009a), (2009b), and (2009c).
---------------------------------------------------------------------------
3. Conclusions from the Disparity Study Data
    According to my records, there are at least another 150 disparity 
studies that have been completed since I finished my work for USDOJ in 
2013. There is no doubt in my mind that were I to conduct a comparable 
analysis on these latest studies, I would find similar results--large 
and adverse disparities that continue to face M/WBEs throughout the 
country. In the next two sections of my testimony, I examine the most 
recent Census Bureau data with respect to M/WBEs.

      Table 1. Selected Disparity and Availability Studies Performed in the United States Between 2000-2012
----------------------------------------------------------------------------------------------------------------
                                                                                                          Year
               State                     Subdivision              Author             Type of Study     Completed
----------------------------------------------------------------------------------------------------------------
AK................................  Department of          D. Wilson Consulting  Disparity...........       2007
                                     Transportation and     Group, LLC.
                                     Public Facilities.
AZ................................  Arizona Department of  MGT of America, Inc.  Disparity...........       2009
                                     Transportation.
AZ................................  City of Phoenix......  MGT of America, Inc.  Disparity...........       2005
AZ................................  City of Tucson.......  D. Wilson Consulting  Disparity...........       2008
                                                            Group, LLC.
AZ................................  Pima County..........  D. Wilson Consulting  Disparity...........       2008
                                                            Group, LLC.
CA................................  Bay Area Rapid         Mason Tillman         Disparity...........       2009
                                     Transit (BART).        Associates, Ltd..
CA................................  California Department  BBC Research &        Disparity...........       2007
                                     of Transportation.     Consulting.
CA................................  Los Angeles County     BBC Research &        Disparity...........       2010
                                     Metropolitan           Consulting.
                                     Transportation
                                     Authority.
CA................................  Metrolink--Southern    BBC Research &        Disparity...........       2009
                                     California Regional    Consulting.
                                     Rail Authority.
CA................................  Orange County          BBC Research &        Disparity...........       2010
                                     Transportation         Consulting.
                                     Authority.
CA................................  San Diego Association  BBC Research &        Disparity...........       2010
                                     of Governments.        Consulting.
CA................................  San Diego              BBC Research &        Disparity...........       2010
                                     Metropolitan Transit   Consulting.
                                     System.
CA................................  San Mateo County       CRA International...  Disparity...........       2008
                                     Transit District.
CA................................  Santa Clara Valley     CRA International...  Disparity...........       2007
                                     Transportation
                                     Authority.
CO................................  City and County of     NERA................  Disparity...........       2006
                                     Denver, Denver
                                     International
                                     Airport.
CO................................  Colorado Department    MGT of America, Inc.  Disparity...........       2001
                                     of Transportation.
CO................................  Colorado Department    D. Wilson Consulting  Disparity...........       2009
                                     of Transportation.     Group, LLC.
CT................................  Metropolitan District  M3C.................  Disparity...........       2009
                                     Commission.
DC................................  Washington Suburban    Mason Tillman         Disparity...........       2011
                                     Sanitary Commission.   Associates, Ltd..
FL................................  Broward County.......  MGT of America, Inc.  Disparity...........       2001
FL................................  Broward County.......  NERA................  Disparity...........       2010
FL................................  City of Tallahassee..  MGT of America, Inc.  Disparity...........       2004
FL................................  Leon County..........  MGT of America, Inc.  Disparity...........       2009
FL................................  School District of     Mason Tillman         Disparity...........       2007
                                     Hillsborough County.   Associates, Ltd..
GA................................  City of Atlanta......  Griffin & Strong....  Disparity...........       2006
GA................................  Consolidated           NERA................  Disparity...........       2009
                                     Government of
                                     Augusta-Richmond
                                     County.
GA................................  Georgia Department of  Boston Research       Disparity...........       2005
                                     Transportation.        Group, Inc..
GA................................  Georgia Department of  BBC Research &        Disparity...........       2012
                                     Transportation.        Consulting.
HI................................  Hawai'i Department of  NERA................  Disparity...........       2010
                                     Transportation.
ID................................  Idaho Transportation   BBC Research &        Disparity...........       2007
                                     Department.            Consulting.
IL................................  Illinois Department    Mason Tillman         Disparity...........       2011
                                     of Transportation.     Associates, Ltd..
IL................................  Illinois State Toll    Mason Tillman         Disparity...........       2011
                                     Highway Authority.     Associates, Ltd..
IL................................  Illinois State Toll    NERA................  Disparity...........       2006
                                     Highway Authority.
IN................................  Indiana Department of  BBC Research &        Disparity...........       2010
                                     Administration,        Consulting.
                                     Indiana DOT, Ball
                                     State Univ., Indiana
                                     State Univ., Indiana
                                     Univ., Ivy Tech
                                     Comm. College,
                                     Purdue Univ., Univ.
                                     of Southern Indiana,
                                     Vincennes Univ..
KS................................  Kansas Department of   MGT of America, Inc.  Availability........       2003
                                     Transportation.
KS;...............................  City of Kansas City;   Mason Tillman         Disparity...........       2006
MO                                   Wyandotte County,      Associates, Ltd..
                                     KS; Kansas City Area
                                     Transit Authority;
                                     Kansas City School
                                     District, MO.
MD................................  City of Baltimore....  MGT of America, Inc.  Disparity...........       2000
MD................................  City of Baltimore....  NERA................  Disparity...........       2007
MD................................  State of Maryland....  NERA................  Disparity...........       2006
MD................................  State of Maryland....  NERA................  Disparity...........       2011
MA................................  City of Boston.......  Mason Tillman         Disparity...........       2003
                                                            Associates, Ltd..
MA................................  Division of Capital    NERA................  Disparity...........       2006
                                     Asset Management.
MA................................  Massachusetts Housing  NERA................  Disparity...........       2006
                                     Finance Agency.
MN................................  City of Minneapolis..  NERA................  Disparity...........       2010
MN................................  City of St. Paul and   MGT of America, Inc.  Disparity...........       2008
                                     the St. Paul Housing
                                     Authority.
MN................................  Metropolitan Airports  MGT of America, Inc.  Disparity...........       2009
                                     Commission.
MN................................  Metropolitan Council.  MGT of America, Inc.  Disparity...........       2009
MN................................  Minnesota Department   MGT of America, Inc.  Disparity...........       2009
                                     of Administration.
MN................................  Minnesota Department   NERA................  Availability........       2005
                                     of Transportation.
MN................................  Minnesota Department   MGT of America, Inc.  Disparity...........       2009
                                     of Transportation.
MO................................  Bi-State Development   NERA................  Disparity...........       2005
                                     Agency (St. Louis
                                     Metro).
MO................................  City of St. Louis,     MGT of America, Inc.  Disparity...........       2001
                                     The St. Louis
                                     Housing Authority,
                                     The Metropolitan St.
                                     Louis Sewer District.
MO................................  Missouri Department    NERA................  Disparity...........       2012
                                     of Transportation.
MT................................  Montana Department of  D. Wilson Consulting  Disparity...........       2009
                                     Transportation.        Group, LLC.
NV................................  Nevada Department of   BBC Research &        Disparity...........       2007
                                     Transportation.        Consulting.
NY................................  State of New York....  NERA................  Disparity...........       2010
NC................................  City of Charlotte....  MGT of America, Inc.  Disparity...........       2011
NC................................  City of Durham and     Mason Tillman         Disparity...........       2000
                                     Durham County.         Associates, Ltd..
NC................................  Durham County........  Griffin & Strong....  Disparity...........       2007
NC................................  North Carolina         MGT of America, Inc.  Disparity...........       2004
                                     Department of
                                     Transportation.
NC................................  North Carolina         Euquant.............  Disparity...........       2009
                                     Department of
                                     Transportation.
OH................................  City of Cincinnati...  Griffin & Strong....  Disparity...........       2002
OH................................  City of Dayton.......  MGT of America, Inc.  Disparity...........       2008
OH................................  Northeast Ohio         NERA................  Disparity...........       2010
                                     Regional Sewer
                                     District.
OK................................  City of Tulsa........  MGT of America, Inc.  Disparity...........       2010
OK................................  Oklahoma Department    BBC Research &        Disparity...........       2010
                                     of Transportation.     Consulting.
OR................................  City of Portland.....  BBC Research &        Disparity...........       2011
                                                            Consulting.
OR................................  Oregon Department of   MGT of America, Inc.  Disparity...........       2007
                                     Transportation.
OR................................  Port of Portland.....  MGT of America, Inc.  Disparity...........       2009
OR................................  Portland Development   BBC Research &        Disparity...........       2011
                                     Commission.            Consulting.
PA................................  City of Philadelphia.  Econsult Corporation  Disparity...........       2007
PA................................  City of Philadelphia.  Econsult Corporation  Disparity...........       2008
PA................................  City of Philadelphia.  Econsult Corporation  Disparity...........       2009
PA................................  City of Philadelphia.  Econsult Corporation  Disparity...........       2010
PA................................  City of Philadelphia.  Econsult Corporation  Disparity...........       2011
PA................................  City of Philadelphia.  Econsult Corporation  Disparity...........       2012
SC................................  City of Columbia.....  MGT of America, Inc.  Disparity...........       2006
TN................................  City of Memphis......  Griffin & Strong....  Disparity...........       2010
TN................................  Consolidated           Griffin & Strong....  Disparity...........       2004
                                     Government of
                                     Nashville and
                                     Davidson County.
TN................................  Memphis International  NERA................  Disparity...........       2008
                                     Airport.
TN................................  Nashville              Griffin & Strong....  Disparity...........       2007
                                     International
                                     Airport.
TX................................  City of Austin.......  NERA................  Disparity...........       2008
TX................................  City of Fort Worth;    Mason Tillman         Disparity...........       2010
                                     City of Arlington;     Associates, Ltd..
                                     DFW Airport; Fort
                                     Worth Independent
                                     School District;
                                     Fort Worth
                                     Transportation
                                     Authority; North
                                     Texas Tollway
                                     Authority [North
                                     Central Texas
                                     Council of
                                     Governments].
TX................................  City of Houston......  NERA................  Disparity...........       2012
TX................................  City of San Antonio,   MGT of America, Inc.  Disparity...........       2009
                                     Alamo Regional
                                     Mobility Authority,
                                     Brooks Development
                                     Authority, CPS
                                     Energy, Edwards
                                     Aquifer Authority,
                                     Port Authority of
                                     San Antonio, San
                                     Antonio Housing
                                     Authority, San
                                     Antonio Water
                                     System, University
                                     Health System.
TX................................  Dallas Area Rapid      Mason Tillman         Disparity...........       2003
                                     Transit Authority      Associates, Ltd..
                                     (DART).
TX................................  State of Texas.......  Mason Tillman         Disparity...........       2007
                                                            Associates, Ltd..
TX................................  State of Texas.......  MGT of America, Inc.  Disparity...........       2010
UT................................  Salt Lake City         NERA................  Disparity...........       2009
                                     International
                                     Airport.
VA................................  Commonwealth of        MGT of America, Inc.  Disparity...........       2004
                                     Virginia.
VA................................  Commonwealth of        MGT of America, Inc.  Disparity...........       2010
                                     Virginia.
VA................................  Virginia DOT.........  MGT of America, Inc.  Disparity...........       2004
WA................................  Washington Department  NERA................  Availability........       2005
                                     of Transportation.
WI................................  City of Milwaukee....  Mason Tillman         Disparity...........       2007
                                                            Associates, Ltd..
WI................................  City of Milwaukee....  D. Wilson Consulting  Disparity...........       2010
                                                            Group, LLC.
----------------------------------------------------------------------------------------------------------------


                    Table 2. M/WBE Utilization, Availability, and Disparity: Selected Studies Performed in the U.S. Between 2000-2012
--------------------------------------------------------------------------------------------------------------------------------------------------------
                    State                                 Subdivision             U-CON    A-CON     D-CON    U-CRS    A-CRS    D-CRS    Years    Page
-----------------------------------------------------------------------------------------------------------------------------------------------   Spec.
                                                                                                                                               ---------
                     (1)                                      (2)                  (3)      (4)       (5)      (6)      (7)      (8)      (9)     (11)
--------------------------------------------------------------------------------------------------------------------------------------------------------
AK...........................................  Department of Transportation and    10.52    14.26     73.73                              2002-      4-9,
                                                Public Facilities.                                                                        2006     4-11,
                                                                                                                                                   5-10,
                                                                                                                                                    5-13
--------------------------------------------------------------------------------------------------------------------------------------------------------
AZ...........................................  Arizona Department of                7.03    15.61     45.03     5.39    27.07    19.90   2002-      4-47
                                                Transportation.                                                                           2007
--------------------------------------------------------------------------------------------------------------------------------------------------------
AZ...........................................  City of Phoenix.................    11.37    21.48     52.94                              2000-     4-29,
                                                                                                                                          2004      4-33
--------------------------------------------------------------------------------------------------------------------------------------------------------
AZ...........................................  City of Tucson..................    24.55     5.76    426.21                              2002-      4-9,
                                                                                                                                          2006     4-10,
                                                                                                                                                   5-10,
                                                                                                                                                    5-19
--------------------------------------------------------------------------------------------------------------------------------------------------------
AZ...........................................  Pima County.....................    19.51     9.43    206.83    19.25    25.10    76.71   2002-      4-9,
                                                                                                                                          2006     4-10,
                                                                                                                                                   5-13,
                                                                                                                                                   5-16,
                                                                                                                                                   5-28,
                                                                                                                                                    5-32
--------------------------------------------------------------------------------------------------------------------------------------------------------
CA...........................................  Bay Area Rapid Transit (BART)...    19.34    34.42     56.20                              2002-      4-8,
                                                                                                                                          2007      5-5,
                                                                                                                                                    7-20
--------------------------------------------------------------------------------------------------------------------------------------------------------
CA...........................................  California Department of            14.34    17.00     84.36    18.90    25.50    74.11   2002-     Figs.
                                                Transportation (federal funds).                                                           2006  E-26, 29
--------------------------------------------------------------------------------------------------------------------------------------------------------
CA...........................................  California Department of            11.41    18.70     61.00    12.04    28.20    42.68   2002-     Figs.
                                                Transportation (state funds).                                                             2006  E-69, 70
--------------------------------------------------------------------------------------------------------------------------------------------------------
CA...........................................  Los Angeles County Metropolitan     15.01    13.70    109.54    14.44    29.65    48.69   2003-     E-42,
                                                Transportation Authority                                                                  2007     E-20,
                                                (federal funds).                                                                                    E-21
--------------------------------------------------------------------------------------------------------------------------------------------------------
CA...........................................  Los Angeles County Metropolitan     12.20    20.80     58.65    17.81    28.80    61.84   2003-     E-13,
                                                Transportation Authority (local                                                           2007      E-22
                                                funds).
--------------------------------------------------------------------------------------------------------------------------------------------------------
CA...........................................  Metrolink--Southern California      10.71    16.00     66.97    62.54    24.58   254.40   2003-     E-42,
                                                Regional Rail Authority                                                                   2007     E-20,
                                                (federal funds).                                                                                    E-21
--------------------------------------------------------------------------------------------------------------------------------------------------------
CA...........................................  Metrolink--Southern California       8.60    30.00     28.65    24.73    40.40    61.22   2003-     E-13,
                                                Regional Rail Authority (local                                                            2007      E-22
                                                funds).
--------------------------------------------------------------------------------------------------------------------------------------------------------
CA...........................................  Orange County Transportation        36.77    26.70    137.70    13.42    23.77    56.47   2003-     E-42,
                                                Authority (federal funds).                                                                2007     E-20,
                                                                                                                                                    E-21
--------------------------------------------------------------------------------------------------------------------------------------------------------
CA...........................................  Orange County Transportation        52.24    30.00    174.13    24.97    31.90    78.27   2003-     E-13,
                                                Authority (local funds).                                                                  2007      E-22
--------------------------------------------------------------------------------------------------------------------------------------------------------
CA...........................................  San Diego Association of             8.49    23.60     35.97    27.59    23.54   117.22   2003-     E-42,
                                                Governments (federal funds).                                                              2007     E-20,
                                                                                                                                                    E-21
--------------------------------------------------------------------------------------------------------------------------------------------------------
CA...........................................  San Diego Association of             0.45    22.50      1.99    18.20    27.70    65.69   2003-     E-13,
                                                Governments (local funds).                                                                2007      E-22
--------------------------------------------------------------------------------------------------------------------------------------------------------
CA...........................................  San Diego Metropolitan Transit      27.66    33.20     83.30    19.75    26.56    74.37   2003-     E-42,
                                                System (federal funds).                                                                   2007     E-20,
                                                                                                                                                    E-21
--------------------------------------------------------------------------------------------------------------------------------------------------------
CA...........................................  San Diego Metropolitan Transit      26.75    36.90     72.49     0.00    32.90     0.00   2003-     E-13,
                                                System (local funds).                                                                     2007      E-22
--------------------------------------------------------------------------------------------------------------------------------------------------------
CA...........................................  San Mateo County Transit             5.56    21.40     26.00                               2002   26, 104
                                                District.
--------------------------------------------------------------------------------------------------------------------------------------------------------
CA...........................................  Santa Clara Valley                  17.10    21.40     79.88                              2001-  28, 104,
                                                Transportation Authority.                                                                 2006       112
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO...........................................  City and County of Denver,          12.86    21.92     58.67    25.41    14.97   169.74   2000-       190
                                                Denver International Airport.                                                             2005
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO...........................................  Colorado Department of              10.56    20.21     52.25     4.69    24.07    19.48   1996-      3-20
                                                Transportation.                                                                           2000
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO...........................................  Colorado Department of              16.58    23.17     71.58    21.21    41.37    51.28   2002-      4-5,
                                                Transportation.                                                                           2007      4-6,
                                                                                                                                                    4-7,
                                                                                                                                                    5-8,
                                                                                                                                                   5-10,
                                                                                                                                                    6-6,
                                                                                                                                                     6-7
--------------------------------------------------------------------------------------------------------------------------------------------------------
CT...........................................  Metropolitan District Commission    30.68    19.66    156.07     8.35    18.70    44.64   2005-    V-112,
                                                                                                                                          2008    V-114,
                                                                                                                                                  V-116,
                                                                                                                                                  V-117,
                                                                                                                                                  V-119,
                                                                                                                                                  V-121,
                                                                                                                                                  V-123,
                                                                                                                                                   V-125
--------------------------------------------------------------------------------------------------------------------------------------------------------
DC...........................................  Washington Suburban Sanitary        29.57    68.38     43.24    31.49    61.12    51.52   2003-     1-15,
                                                Commission.                                                                               2009     1-17,
                                                                                                                                                    2-5,
                                                                                                                                                    2-7,
                                                                                                                                                   4-21,
                                                                                                                                                   4-23,
                                                                                                                                                   4-36,
                                                                                                                                                    4-38
--------------------------------------------------------------------------------------------------------------------------------------------------------
FL...........................................  Broward County..................    35.70    40.57     87.99    16.04    44.95    35.68   1991-     4-18,
                                                                                                                                          1999     4-21,
                                                                                                                                                   4-28,
                                                                                                                                                   4-31,
                                                                                                                                                   4-33,
                                                                                                                                                    4-37
--------------------------------------------------------------------------------------------------------------------------------------------------------
FL...........................................  Broward County..................    28.62    24.10    118.76    26.86    25.87   103.83   2005-       284
                                                                                                                                          2009
--------------------------------------------------------------------------------------------------------------------------------------------------------
FL...........................................  City of Tallahassee.............    28.50    34.03     83.74                              1996-     4-13,
                                                                                                                                          2000     4-17,
                                                                                                                                                    4-19
--------------------------------------------------------------------------------------------------------------------------------------------------------
FL...........................................  Leon County.....................    19.56    11.92    164.04                              2004-     4-10,
                                                                                                                                          2008     4-12,
                                                                                                                                                    4-13
--------------------------------------------------------------------------------------------------------------------------------------------------------
FL...........................................  School District of Hillsborough     30.49    37.58     81.12    24.69    42.99    57.45   2001-      2-5,
                                                County.                                                                                   2004      2-7,
                                                                                                                                                    3-4,
                                                                                                                                                    3-6,
                                                                                                                                                   5-21,
                                                                                                                                                   5-23,
                                                                                                                                                   5-32,
                                                                                                                                                    5-34
--------------------------------------------------------------------------------------------------------------------------------------------------------
GA...........................................  City of Atlanta.................    34.02    57.63     59.04    35.03    56.30    62.21   2001-   Vol. I,
                                                                                                                                          2005   19, 21,
                                                                                                                                                 22, 30,
                                                                                                                                                 46, 59,
                                                                                                                                                      62
--------------------------------------------------------------------------------------------------------------------------------------------------------
GA...........................................  City of Atlanta (Airport, local     59.17    57.63    102.66                              2001-   Vol. I,
                                                dollars).                                                                                 2005   19, 70,
                                                                                                                                                  73, 80
--------------------------------------------------------------------------------------------------------------------------------------------------------
GA...........................................  City of Atlanta (Airport,           26.30    57.63     45.63                              2001-   Vol. I,
                                                federal dollars).                                                                         2005   19, 83,
                                                                                                                                                      86
--------------------------------------------------------------------------------------------------------------------------------------------------------
GA...........................................  City of Atlanta (Watershed          23.72    57.63     41.16                              2001-   Vol. I,
                                                Management).                                                                              2005   19, 21,
                                                                                                                                                 22, 88,
                                                                                                                                                  91, 95
--------------------------------------------------------------------------------------------------------------------------------------------------------
GA...........................................  Consolidated Government of           5.91    32.37     18.26    28.65    44.93    63.77   2003-       225
                                                Augusta-Richmond County.                                                                  2007
--------------------------------------------------------------------------------------------------------------------------------------------------------
GA...........................................  Georgia Department of                8.46    11.03     76.67                              1999-      111,
                                                Transportation.                                                                           2004      119,
                                                                                                                                                123, 130
--------------------------------------------------------------------------------------------------------------------------------------------------------
GA...........................................  Georgia Department of               13.23    21.50     61.52     9.31    24.40    38.17   2009-      K-6,
                                                Transportation (federal                                                                   2011       K-9
                                                dollars).
--------------------------------------------------------------------------------------------------------------------------------------------------------
GA...........................................  Georgia Department of                4.81    25.50     18.87    12.26    26.50    46.27   2009-      K-7,
                                                Transportation (state dollars).                                                           2011      K-10
--------------------------------------------------------------------------------------------------------------------------------------------------------
HI...........................................  Hawai'i Department of               32.17    54.78     58.70    62.01    51.79   119.73   2003-       331
                                                Transportation.                                                                           2008
--------------------------------------------------------------------------------------------------------------------------------------------------------
ID...........................................  Idaho Transportation Department.    14.36    16.90     84.95     6.79    12.90    52.63   2002-     Figs.
                                                                                                                                          2006  E-11, 20
--------------------------------------------------------------------------------------------------------------------------------------------------------
IL...........................................  Illinois Department of              11.00    27.33     40.25    21.22    29.82    71.18   2006-     4-10,
                                                Transportation.                                                                           2008     4-11,
                                                                                                                                                    5-3,
                                                                                                                                                    5-4,
                                                                                                                                                   7-18,
                                                                                                                                                   7-19,
                                                                                                                                                   7-21,
                                                                                                                                                    7-22
--------------------------------------------------------------------------------------------------------------------------------------------------------
IL...........................................  Illinois State Toll Highway         11.43    19.56     58.44    23.58    19.03   123.91   2000-   49, 50,
                                                Authority.                                                                                2005    61, 63
--------------------------------------------------------------------------------------------------------------------------------------------------------
IL...........................................  Illinois State Toll Highway         11.38    39.39     28.89    16.42    41.02    40.04   2006-      4-8,
                                                Authority.                                                                                2009     4-10,
                                                                                                                                                    5-4,
                                                                                                                                                    5-6,
                                                                                                                                                   7-15,
                                                                                                                                                   7-17,
                                                                                                                                                   7-20,
                                                                                                                                                    7-22
--------------------------------------------------------------------------------------------------------------------------------------------------------
IN...........................................  State of Indiana (INDOT and         10.03    10.90     92.03                              2006-       O-2
                                                INDOA).                                                                                   2009
--------------------------------------------------------------------------------------------------------------------------------------------------------
IN...........................................  State of Indiana (Higher Educ.).    10.69    15.10     70.79                              2006-       M-2
                                                                                                                                          2009
--------------------------------------------------------------------------------------------------------------------------------------------------------
KS;..........................................  City of Kansas City, KS.........    18.34    25.31     72.44    15.34    36.21    42.37   2002-      3-5,
MO                                                                                                                                        2004      3-7,
                                                                                                                                                    4-4,
                                                                                                                                                    4-6,
                                                                                                                                                   6-21,
                                                                                                                                                   6-23,
                                                                                                                                                   6-30,
                                                                                                                                                    6-32
--------------------------------------------------------------------------------------------------------------------------------------------------------
KS;..........................................  Kansas City School District, MO.    34.20    25.60    133.58                              2002-      3-5,
MO                                                                                                                                        2004      4-4,
                                                                                                                                                   6-21,
                                                                                                                                                    6-28
--------------------------------------------------------------------------------------------------------------------------------------------------------
KS...........................................  Kansas Department of                10.31    13.75     75.01                              2000-     2-10,
                                                Transportation.                                                                           2001     2-12,
                                                                                                                                                    3-2,
                                                                                                                                                     3-3
--------------------------------------------------------------------------------------------------------------------------------------------------------
MD...........................................  City of Baltimore...............    23.02    36.63     62.84    30.14    21.60   139.51   1990-     4-20,
                                                                                                                                          1998     4-26,
                                                                                                                                                   4-29,
                                                                                                                                                   4-31,
                                                                                                                                                   4-33,
                                                                                                                                                    4-34
--------------------------------------------------------------------------------------------------------------------------------------------------------
MD...........................................  City of Baltimore...............    25.85    22.88    112.98    31.88    27.32   116.69   2000-       217
                                                                                                                                          2005
--------------------------------------------------------------------------------------------------------------------------------------------------------
MD...........................................  State of Maryland...............    15.81    24.00     65.88    24.52    28.46    86.16   2000-       206
                                                                                                                                          2004
--------------------------------------------------------------------------------------------------------------------------------------------------------
MD...........................................  State of Maryland...............    23.45    30.26     77.51    22.31    41.34    53.97   2005-       328
                                                                                                                                          2009
--------------------------------------------------------------------------------------------------------------------------------------------------------
MA...........................................  City of Boston..................    23.76    24.23     98.08    10.26    47.02    21.83   1999-      1-5,
                                                                                                                                          2001      1-7,
                                                                                                                                                    2-4,
                                                                                                                                                    2-6,
                                                                                                                                                   4-22,
                                                                                                                                                   4-24,
                                                                                                                                                   4-29,
                                                                                                                                                    4-31
--------------------------------------------------------------------------------------------------------------------------------------------------------
MA...........................................  Division of Capital Asset           19.44    10.39    187.10    33.79    17.86   189.19   1999-       199
                                                Management.                                                                               2004
--------------------------------------------------------------------------------------------------------------------------------------------------------
MA...........................................  Massachusetts Housing Finance       25.80    10.86    237.57                              2000-       203
                                                Agency.                                                                                   2004
--------------------------------------------------------------------------------------------------------------------------------------------------------
MN...........................................  City of Minneapolis.............     7.57    19.54     38.73    13.65    19.08    71.51   2003-       234
                                                                                                                                          2007
--------------------------------------------------------------------------------------------------------------------------------------------------------
MN...........................................  City of St. Paul................    15.23    15.05    101.17                              2002-     4-21,
                                                                                                                                          2006     4-22,
                                                                                                                                                   4-28,
                                                                                                                                                    4-29
--------------------------------------------------------------------------------------------------------------------------------------------------------
MN...........................................  St. Paul Housing Authority......     6.33    10.43     60.67                              2002-      6-6,
                                                                                                                                          2006     6-12,
                                                                                                                                                    6-18
--------------------------------------------------------------------------------------------------------------------------------------------------------
MN...........................................  Metropolitan Airports Commission     2.05    11.28     18.21                              2004-      3-8,
                                                                                                                                          2007     3-10,
                                                                                                                                                   3-12,
                                                                                                                                                    3-13
--------------------------------------------------------------------------------------------------------------------------------------------------------
MN...........................................  Metropolitan Council............     0.16     3.63      4.41                              2003-      3-8,
                                                                                                                                          2007     3-10,
                                                                                                                                                    3-13
--------------------------------------------------------------------------------------------------------------------------------------------------------
MN...........................................  Minnesota Department of              3.42     2.74    124.97                              2002-      3-8,
                                                Administration.                                                                           2007     3-10,
                                                                                                                                                    3-14
--------------------------------------------------------------------------------------------------------------------------------------------------------
MN...........................................  Minnesota Department of              5.55    15.18     36.56                              2000-       69,
                                                Transportation (federal funds).                                                           2004        72
--------------------------------------------------------------------------------------------------------------------------------------------------------
MN...........................................  Minnesota Department of              2.92    15.18     19.24                              2000-       69,
                                                Transportation (state funds).                                                             2004        75
--------------------------------------------------------------------------------------------------------------------------------------------------------
MN...........................................  Minnesota Department of              2.40     3.52     68.06                              2002-      3-7,
                                                Transportation.                                                                           2007      3-9,
                                                                                                                                                    3-12
--------------------------------------------------------------------------------------------------------------------------------------------------------
MO...........................................  Bi-State Development Agency (St.    21.16    20.14    105.06    18.98    15.29   124.13   1997-       167
                                                Louis Metro).                                                                             2003
--------------------------------------------------------------------------------------------------------------------------------------------------------
MO...........................................  City of St. Louis...............    19.06    15.89    119.97    17.44    27.46    63.52   1995-   Ex. pp.
                                                                                                                                          1999  2, 4, 7,
                                                                                                                                                  9, 11,
                                                                                                                                                      12
--------------------------------------------------------------------------------------------------------------------------------------------------------
MO...........................................  The Metropolitan St. Louis Sewer    13.91    15.89     87.54    15.42    27.46    56.16   1995-   Ex. pp.
                                                District.                                                                                 1999   84, 86,
                                                                                                                                                 89, 91,
                                                                                                                                                  93, 94
--------------------------------------------------------------------------------------------------------------------------------------------------------
MO...........................................  Missouri Department of              13.35    20.37     65.56    13.05    21.52    60.66   2005-       220
                                                Transportation (federal funds).                                                           2009
--------------------------------------------------------------------------------------------------------------------------------------------------------
MO...........................................  Missouri Department of               6.49    20.19     32.16    12.28    21.48    57.16   2005-       224
                                                Transportation (state funds).                                                             2009
--------------------------------------------------------------------------------------------------------------------------------------------------------
MT...........................................  Montana Department of               11.32     2.01    563.36    11.68    16.09    72.58   2000-      4-6,
                                                Transportation.                                                                           2006      4-8,
                                                                                                                                                   5-18,
                                                                                                                                                   5-29,
                                                                                                                                                   5-53,
                                                                                                                                                    5-64
--------------------------------------------------------------------------------------------------------------------------------------------------------
NV...........................................  Nevada Department of                 8.70    15.60     55.79     3.03     7.80    38.89   2000-     Figs.
                                                Transportation (federal funds).                                                           2006  E-11, 20
--------------------------------------------------------------------------------------------------------------------------------------------------------
NV...........................................  Nevada Department of                 8.34    12.90     64.65     3.05    10.80    28.26   2000-     Figs.
                                                Transportation (state funds).                                                             2006  E-38, 47
--------------------------------------------------------------------------------------------------------------------------------------------------------
NY...........................................  State of New York...............    12.39    22.74     54.48    19.43    24.53    79.21   2004-       292
                                                                                                                                          2008
--------------------------------------------------------------------------------------------------------------------------------------------------------
NC...........................................  City of Charlotte...............    19.28    35.74     53.95    13.66    18.55    73.66   2005-     3-11,
                                                                                                                                          2010     3-13,
                                                                                                                                                   3-15,
                                                                                                                                                   3-16,
                                                                                                                                                   3-19,
                                                                                                                                                   3-20,
                                                                                                                                                    3-23
--------------------------------------------------------------------------------------------------------------------------------------------------------
NC...........................................  City of Durham and Durham County    12.79    27.38     46.72                              1996-      3-4,
                                                                                                                                          1999      3-6,
                                                                                                                                                    5-9,
                                                                                                                                                    5-11
--------------------------------------------------------------------------------------------------------------------------------------------------------
NC...........................................  Durham County...................     6.24    72.85      8.57    20.23    27.30    74.13   2001-   76, 78,
                                                                                                                                          2005   82, 85,
                                                                                                                                                 94, 118
--------------------------------------------------------------------------------------------------------------------------------------------------------
NC...........................................  North Carolina Department of        13.41    12.70    105.59                              1999-     4-16,
                                                Transportation (divisionally-                                                             2003     4-26,
                                                let).                                                                                              4-49,
                                                                                                                                                   4-72,
                                                                                                                                                    4-90
--------------------------------------------------------------------------------------------------------------------------------------------------------
NC...........................................  North Carolina Department of         9.83    29.92     32.87    14.41    20.00    72.06   1999-     4-52,
                                                Transportation (centrally-let,                                                            2003     4-56,
                                                state funds).                                                                                      4-70,
                                                                                                                                                   4-76,
                                                                                                                                                   4-80,
                                                                                                                                                    4-90
--------------------------------------------------------------------------------------------------------------------------------------------------------
NC...........................................  North Carolina Department of        11.43    29.92     38.22     4.86    20.00    24.30   1999-     4-62,
                                                Transportation (centrally-let,                                                            2003     4-66,
                                                federal funds).                                                                                    4-70,
                                                                                                                                                   4-84,
                                                                                                                                                   4-88,
                                                                                                                                                    4-90
--------------------------------------------------------------------------------------------------------------------------------------------------------
NC...........................................  North Carolina Department of         8.65    24.98     34.62                              2004-   89, 90,
                                                Transportation.                                                                           2008       138
--------------------------------------------------------------------------------------------------------------------------------------------------------
OH...........................................  City of Cincinnati..............    16.41    18.33     89.51    12.20    22.48    54.28   1995-   44, 45,
                                                                                                                                          2001    49, 50
--------------------------------------------------------------------------------------------------------------------------------------------------------
OH...........................................  City of Dayton..................     4.73    23.91     19.80                              2001-     4-11,
                                                                                                                                          2006     4-17,
                                                                                                                                                   4-19,
                                                                                                                                                   4-20,
                                                                                                                                                    4-24
--------------------------------------------------------------------------------------------------------------------------------------------------------
OH...........................................  Northeast Ohio Regional Sewer       24.44    22.31    109.55    23.78    22.03   107.94   2004-       263
                                                District.                                                                                 2008
--------------------------------------------------------------------------------------------------------------------------------------------------------
OK...........................................  City of Tulsa...................     4.72    20.77     22.73    24.70    22.51   109.71   2002-      4-8,
                                                                                                                                          2008     4-13,
                                                                                                                                                   4-14,
                                                                                                                                                   4-15,
                                                                                                                                                   4-20,
                                                                                                                                                   4-22,
                                                                                                                                                    4-23
--------------------------------------------------------------------------------------------------------------------------------------------------------
OK...........................................  Oklahoma Department of              19.47    12.40    156.99     3.96    19.10    20.73   2004-      K-6,
                                                Transportation (federal funds).                                                           2009       K-9
--------------------------------------------------------------------------------------------------------------------------------------------------------
OK...........................................  Oklahoma Department of              19.82    15.40    128.70     5.00    19.90    25.13   2004-      K-7,
                                                Transportation (state funds).                                                             2009      K-10
--------------------------------------------------------------------------------------------------------------------------------------------------------
OR...........................................  City of Portland................     7.49     5.10    146.85    34.98    14.60   239.62   2004-      L-5,
                                                                                                                                          2009       M-2
--------------------------------------------------------------------------------------------------------------------------------------------------------
OR...........................................  Oregon Department of                19.07    27.55     69.20     3.84    46.31     8.30   2000-     4-12,
                                                Transportation.                                                                           2007     4-21,
                                                                                                                                                   4-25,
                                                                                                                                                  4-111,
                                                                                                                                                  4-120,
                                                                                                                                                  4-123,
                                                                                                                                                   4-124
--------------------------------------------------------------------------------------------------------------------------------------------------------
OR...........................................  Port of Portland................    18.59    15.16    122.66     9.94    27.97    35.53   2002-     4-11,
                                                                                                                                          2007     4-13,
                                                                                                                                                   4-15,
                                                                                                                                                    4-19
--------------------------------------------------------------------------------------------------------------------------------------------------------
OR...........................................  Portland Development Commission.     9.29    12.37     75.06                              2004-      L-2,
                                                                                                                                          2009       L-5
--------------------------------------------------------------------------------------------------------------------------------------------------------
PA...........................................  City of Philadelphia............    12.90    10.80    119.44                               2006    17, 21
--------------------------------------------------------------------------------------------------------------------------------------------------------
PA...........................................  City of Philadelphia............    13.80    10.80    127.78                               2007    36, 51
--------------------------------------------------------------------------------------------------------------------------------------------------------
PA...........................................  City of Philadelphia............    12.70    10.80    117.59                               2008    vi, 45
--------------------------------------------------------------------------------------------------------------------------------------------------------
PA...........................................  City of Philadelphia............     9.30    10.80     86.11                               2009  viii, 41
--------------------------------------------------------------------------------------------------------------------------------------------------------
PA...........................................  City of Philadelphia............    17.40    14.90    116.78                               2010   vi, vii
--------------------------------------------------------------------------------------------------------------------------------------------------------
PA...........................................  City of Philadelphia............    13.30    11.40    116.67                               2011    v, vii
--------------------------------------------------------------------------------------------------------------------------------------------------------
SC...........................................  City of Columbia................     3.42    19.03     17.96    18.15    17.14   105.90   2002-     4-10,
                                                                                                                                          2005     4-15,
                                                                                                                                                   4-16,
                                                                                                                                                   4-17,
                                                                                                                                                   4-24,
                                                                                                                                                    4-26
--------------------------------------------------------------------------------------------------------------------------------------------------------
TN...........................................  City of Memphis.................    18.77    18.84     99.62                              2002-      112,
                                                                                                                                          2007  116, 129
--------------------------------------------------------------------------------------------------------------------------------------------------------
TN...........................................  Consolidated Government of           0.37     6.25      5.90     0.04     2.39     1.63   1999-   57, 65,
                                                Nashville and Davidson County                                                             2003   66, 68,
                                                (Metro Purchasing).                                                                                   69
--------------------------------------------------------------------------------------------------------------------------------------------------------
TN...........................................  Consolidated Government of           0.02     4.27      0.40     3.30     7.24    45.58   1999-   58, 98,
                                                Nashville and Davidson County                                                             2003  99, 100,
                                                (Nashville Public Schools).                                                                          102
--------------------------------------------------------------------------------------------------------------------------------------------------------
TN...........................................  Consolidated Government of          12.70    12.70    100.00     0.20     7.97     2.50   1999-   60, 76,
                                                Nashville and Davidson County                                                             2003    77, 79
                                                (Metro Nashville Airport).
--------------------------------------------------------------------------------------------------------------------------------------------------------
TN...........................................  Consolidated Government of          20.70    16.56    125.03    29.33    10.41   281.71   1999-   61, 85,
                                                Nashville and Davidson County                                                             2003   86, 88,
                                                (Metro Development and Housing                                                                        89
                                                Authority).
--------------------------------------------------------------------------------------------------------------------------------------------------------
TN...........................................  Memphis International Airport...    18.69    27.99     66.77    13.88    34.32    40.44   1999-       229
                                                                                                                                          2005
--------------------------------------------------------------------------------------------------------------------------------------------------------
TN...........................................  Nashville International Airport.     9.81     9.68    101.37     7.53     8.87    84.84   2003-   36, 38,
                                                                                                                                          2006   39, 40,
                                                                                                                                                  47, 49
--------------------------------------------------------------------------------------------------------------------------------------------------------
TX...........................................  City of Austin..................    29.83    27.54    108.32    39.39    31.79   123.91   2002-       206
                                                                                                                                          2006
--------------------------------------------------------------------------------------------------------------------------------------------------------
TX...........................................  City of Arlington...............    10.94    66.58     16.43    13.11    54.03    24.27   2002-      2-9,
                                                                                                                                          2007     2-11,
                                                                                                                                                    3-5,
                                                                                                                                                    3-7,
                                                                                                                                                    3-9,
                                                                                                                                                   5-24,
                                                                                                                                                   5-26,
                                                                                                                                                   5-33,
                                                                                                                                                   5-35,
                                                                                                                                                    5-37
--------------------------------------------------------------------------------------------------------------------------------------------------------
TX...........................................  City of Fort Worth..............    38.41    60.28     63.72    60.81    54.05   112.51   2002-      2-9,
                                                                                                                                          2007     2-11,
                                                                                                                                                    3-5,
                                                                                                                                                    3-7,
                                                                                                                                                   5-26,
                                                                                                                                                   5-28,
                                                                                                                                                   5-37,
                                                                                                                                                    5-39
--------------------------------------------------------------------------------------------------------------------------------------------------------
TX...........................................  DFW Airport.....................    50.72    62.82     80.74    57.53    53.80   106.93   2002-      2-9,
                                                                                                                                          2007     2-11,
                                                                                                                                                    3-5,
                                                                                                                                                    3-7,
                                                                                                                                                   5-26,
                                                                                                                                                   5-28,
                                                                                                                                                   5-37,
                                                                                                                                                    5-39
--------------------------------------------------------------------------------------------------------------------------------------------------------
TX...........................................  Fort Worth Independent School       27.75    66.06     42.01    28.91    53.89    53.64   2002-      2-9,
                                                District.                                                                                 2007     2-11,
                                                                                                                                                    3-4,
                                                                                                                                                    3-6,
                                                                                                                                                   5-26,
                                                                                                                                                   5-28,
                                                                                                                                                   5-37,
                                                                                                                                                    5-39
--------------------------------------------------------------------------------------------------------------------------------------------------------
TX...........................................  North Texas Tollway Authority...    18.60    58.34     31.88    14.75    53.56    27.54   2003-      2-9,
                                                                                                                                          2007     2-11,
                                                                                                                                                    3-4,
                                                                                                                                                    3-6,
                                                                                                                                                   5-26,
                                                                                                                                                   5-28,
                                                                                                                                                   5-37,
                                                                                                                                                    5-39
--------------------------------------------------------------------------------------------------------------------------------------------------------
TX...........................................  City of Houston.................    29.87    34.74     85.97                              2005-       191
                                                                                                                                          2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
TX...........................................  City of San Antonio.............    35.19    28.14    125.09                              2004-      3-9,
                                                                                                                                          2007     3-15,
                                                                                                                                                   3-16,
                                                                                                                                                    3-17
--------------------------------------------------------------------------------------------------------------------------------------------------------
TX...........................................  Dallas Area Rapid Transit           31.44    68.38     45.98                              1996-      3-5,
                                                Authority (DART).                                                                         2001      4-5,
                                                                                                                                                    4-7,
                                                                                                                                                   6-22,
                                                                                                                                                   6-29,
                                                                                                                                                    6-31
--------------------------------------------------------------------------------------------------------------------------------------------------------
TX...........................................  State of Texas..................    13.71    51.57     26.58    18.27    55.74    32.79   2002-      3-8,
                                                                                                                                          2005     3-10,
                                                                                                                                                    4-6,
                                                                                                                                                   4-12,
                                                                                                                                                   6-21,
                                                                                                                                                   6-23,
                                                                                                                                                   6-37,
                                                                                                                                                    6-39
--------------------------------------------------------------------------------------------------------------------------------------------------------
TX...........................................  State of Texas (TxDOT)..........     7.07    10.14     69.67                              2006-     4-10,
                                                                                                                                          2008     4-19,
                                                                                                                                                    5-11
--------------------------------------------------------------------------------------------------------------------------------------------------------
TX...........................................  State of Texas (State Agencies).    24.04    22.10    108.78                              2006-     4-10,
                                                                                                                                          2008     4-20,
                                                                                                                                                   4-21,
                                                                                                                                                    5-11
--------------------------------------------------------------------------------------------------------------------------------------------------------
TX...........................................  State of Texas (Universities)...    21.66    22.10     98.01                              2006-     4-10,
                                                                                                                                          2008     4-20,
                                                                                                                                                   4-21,
                                                                                                                                                    5-11
--------------------------------------------------------------------------------------------------------------------------------------------------------
TX...........................................  State of Texas (Medical             21.95    22.10     99.29                              2006-     4-10,
                                                Institutions).                                                                            2008     4-20,
                                                                                                                                                   4-21,
                                                                                                                                                    5-11
--------------------------------------------------------------------------------------------------------------------------------------------------------
UT...........................................  Salt Lake City International         5.32    17.03     31.24     0.79    18.25     4.33   2001-       258
                                                Airport.                                                                                  2006
--------------------------------------------------------------------------------------------------------------------------------------------------------
VA...........................................  Commonwealth of Virginia........     3.39    15.55     21.78                              2006-     4-10,
                                                                                                                                          2009     4-12,
                                                                                                                                                   4-20,
                                                                                                                                                    4-26
--------------------------------------------------------------------------------------------------------------------------------------------------------
VA...........................................  Commonwealth of Virginia........     1.35    14.66      9.19                              1998-     4-16,
                                                                                                                                          2002     4-23,
                                                                                                                                                   4-27,
                                                                                                                                                    4-32
--------------------------------------------------------------------------------------------------------------------------------------------------------
VA...........................................  Virginia DOT (federal funds)....     6.59    10.26     64.21     9.53    15.89    59.99   1998-   11, 15,
                                                                                                                                          2002   18, 22,
                                                                                                                                                  26, 29
--------------------------------------------------------------------------------------------------------------------------------------------------------
VA...........................................  Virginia DOT (state funds)......     8.52    10.26     82.99     5.41    15.89    34.08   1998-   34, 38,
                                                                                                                                          2002   41, 45,
                                                                                                                                                  49, 52
--------------------------------------------------------------------------------------------------------------------------------------------------------
WA...........................................  Washington Department of            14.32    19.59     73.10    10.44    14.88    70.16   1999-   63, 66,
                                                Transportation (federal funds).                                                           2003        72
--------------------------------------------------------------------------------------------------------------------------------------------------------
WA...........................................  Washington Department of             2.97    19.59     15.16    10.66    14.88    71.64   1999-   63, 69,
                                                Transportation (state funds).                                                             2003        75
--------------------------------------------------------------------------------------------------------------------------------------------------------
WI...........................................  City of Milwaukee...............    18.94    40.91     46.29                               2005     5-11,
                                                                                                                                                    6-5,
                                                                                                                                                    6-26
--------------------------------------------------------------------------------------------------------------------------------------------------------
WI...........................................  City of Milwaukee...............    31.21    13.77    226.74                              2005-      4-7,
                                                                                                                                          2008      4-9,
                                                                                                                                                    5-2,
                                                                                                                                                     5-7
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Disparity indexes of 80 or lower are highlighted in boldface type. Disparity indexes above 80 but lower than 100 are highlighted in boldface
  italic type.

  C. There is Strong Evidence of Disparities Between Utilization and 
      Availability in Aggregate U.S. Business Enterprise Activity
    A key rationale for the advent of public sector policies such as 
the USDOT DBE Program was the Federal Government's desire to prevent 
its own passive participation in private sector discrimination in 
business enterprise activity.\23\ Therefore, it is important to examine 
the best available evidence regarding how minorities and women fare in 
the economy as a whole with respect to business enterprise activity. In 
order to do this, I present evidence from the U.S. Census Bureau's past 
and present data collection efforts dedicated to M/WBEs.
---------------------------------------------------------------------------
    \23\ City of Richmond v. J. A. Croson Company, 488 U.S. 469, at 492 
(``Thus, if the city could show that it had essentially become a 
'passive participant' in a system of racial exclusion practiced by 
elements of the local construction industry, we think it clear that the 
city could take affirmative steps to dismantle such a system.'').
---------------------------------------------------------------------------
    The Survey of Business Owners and Self-Employed Persons (SBO) 
collected data on the number, sales, employment, and payrolls of 
businesses owned by minorities, women, and non-minority males. This 
survey was conducted every 5 years from 1972 to 2012 as part of the 
Economic Census program. Data from the 2012 SBO, the most recent 
available, were released in December 2015. In mid-2018, the Census 
Bureau announced that the SBO would be discontinued and only partially 
replaced with a new survey called the Annual Business Survey (ABS).\24\ 
Unfortunately, the ABS is restricted to firms with paid employees only, 
as opposed to the SBO that also included nonemployer firms.\25\ Data 
from the 2017 ABS, the most recent available, were released in May 
2020.\26\ The SBO and ABS cover women and five groups of minorities: 
(1) African Americans, (2) Hispanics, (3) Asians, (4) Native Hawaiians 
and Other Pacific Islanders, and (5) American Indians and Alaskan 
Natives. Comparative information for non-minority male-owned firms is 
also included.\27\
---------------------------------------------------------------------------
    \24\ U.S. Census Bureau (2018e).
    \25\ U.S. Census Bureau (2018f). In 2012, according to the SBO, 
there were about 5.1 million firms with paid employees and more than 22 
million nonemployer firms.
    \26\ U.S. Census Bureau (2020c).
    \27\ In the American Community Survey Public Use Microdata Samples 
(ACS PUMS), discussed below, the unit of analysis is the business 
owner, or self-employed person. In the SBO and ABS data, the unit of 
analysis is the business itself rather than the business owner. 
Furthermore, unlike most other business statistics, including the other 
components of the Economic Census, the unit of analysis in the SBO and 
ABS is the firm, rather than the establishment.
---------------------------------------------------------------------------
    The SBO and ABS contain a wealth of information on the character of 
minority and female business enterprise in the U.S. as a whole as well 
as in individual states and sub-state divisions.\28\ In the remainder 
of this section, I present national evidence from the 2012 SBO and the 
2017 ABS for the economy as whole, as well as for the construction and 
architecture/engineering industries that are the main beneficiaries of 
Federal surface and aviation transportation funding.
---------------------------------------------------------------------------
    \28\ Appendix A, below, provides state-level data from the 2017 
ABS. Appendices B, C and D, below, provide state-level data from the 
2012, 2007 and 2002 SBO.
---------------------------------------------------------------------------
1. Results from the 2012 Survey of Business Owners
            a. Economy-Wide Results
    I begin with the 2012 SBO--the most recent and last data from this 
important survey. Table 3 contains data for the U.S. as a whole and the 
economy-wide (i.e. all industries combined). Panel A in this table 
summarizes the SBO results for each race and/or sex grouping. For 
example, Panel A shows a total of 27.18 million firms in the U.S. in 
2012 (column 1) with overall sales and receipts of $11.964 trillion 
(column 2). Of these 27.18 million firms, 5.14 million had one or more 
employees (column 3) and these 5.14 million firms had overall sales and 
receipts of $10.965 trillion (column 4). Column (5) shows a total of 
56.059 million employees on the payroll of these 5.14 million firms and 
a total annual payroll expense of $2.096 trillion (column 6).
    The remaining rows in Panel A provide comparable statistics for 
nonminority male-owned, women-owned, and minority-owned firms. For 
example, Table 3 shows that there were 2.6 million African American-
owned firms counted in the SBO, and that these 2.6 million firms 
registered $150.2 billion in sales and receipts. It also shows that 
109,137 of these African American-owned firms had one or more 
employees, and that they employed a total of 975,052 workers with an 
annual payroll total of $27.69 billion.
    Panel B in Table 3 converts the figures in Panel A to percentage 
distributions within each column. For example, Column (1) in Panel B of 
Table 3 shows that African American-owned firms were 9.51 percent of 
all firms in the U.S. and women-owned firms were 36.35 percent. 
Additionally, 12.16 percent of firms were Hispanic-owned, 7.06 percent 
were Asian-owned, 1.0 percent were American Indian- and Alaska Native-
owned, and 0.20 percent were Native Hawaiian- and Other Pacific 
Islander-owned.
    Column (2) in Panel B provides the same percentage distribution for 
overall sales and receipts. Table 3, for example, shows that 
nonminority males owned 45.18 percent of all firms and earned 73.45 
percent of all sales and receipts. In contrast:
      Although African Americans owned 9.51 percent of all 
firms in the U.S. in 2012, they earned only 1.26 percent of all sales 
and receipts.
      Although Hispanics owned 12.16 percent of all firms, they 
earned only 3.96 percent, of all sales and receipts.
      Although Asians owned 7.06 percent of all firms, they 
earned only 5.85 percent, of all sales and receipts.
      Although American Indians and Alaska Natives owned 1.0 
percent of all firms, they earned only 0.32 percent of all sales and 
receipts.
      Although Native Hawaiians and Other Pacific Islanders 
owned 0.20 percent of all firms, they earned only 0.07 percent of all 
sales and receipts.
      Although women owned firms 36.35 percent of all firms, 
they earned only 11.87 percent of all sales and receipts.

    These disparities between the availability and utilization of 
minority- and women-owned firms can be viewed directly from the 
disparity indexes in Panel C of Table 3. For example, Panel C shows 
that African American-owned firms in 2012 received just 13.2 percent of 
what would be expected based on their availability in the market. Panel 
C shows as well that women-owned firms received just 32.65 percent of 
what would be expected based on their availability in the market. For 
Hispanics, the figure was 32.55 percent. For Asians, the figure was 
82.85 percent. For American Indians and Alaska Natives, the figure was 
32.33 percent, and for Native Hawaiians and Other Pacific Islanders, 
the figure was 33.76 percent. These disparities are all adverse, and 
statistically significant. The disparities are all large as well, with 
the exception of Asian-owned firms.
    We can also compare sales and receipts per firm among all firms in 
2012. In Table 3, for example, average per firm sales and receipts for 
non-minority male-owned firms was $715.6 thousand. In contrast:
      For African American-owned employer firms, average per 
firm sales and receipts was $58.1 thousand. In other words, for every 
dollar of sales and receipts earned by non-minority male-owned firms, 
African American-owned firms received just 8 cents.
      For Hispanic-owned firms, average per firm sales and 
receipts was $143.3 thousand. In other words, for every dollar of sales 
and receipts earned by non-minority male-owned firms, Hispanic-owned 
firms received just 20 cents.
      For Asian-owned firms, average per firm sales and 
receipts was $364.7 thousand. In other words, for every dollar of sales 
and receipts earned by non-minority male-owned firms, Asian-owned firms 
received just 51 cents.
      For American Indian- and Alaska Native-owned firms, 
average per firm sales and receipts was $142.3 thousand. In other 
words, for every dollar of sales and receipts earned by non-minority 
male-owned firms, American Indian- and Alaska Native-owned firms 
received just 20 cents.
      For Native Hawaiian- and Other Pacific Islander-owned 
firms, average per firm sales and receipts was $148.6 thousand. In 
other words, for every dollar of sales and receipts earned by non-
minority male-owned firms, Native Hawaiian- and Other Pacific Islander-
owned firms received just 21 cents.
      For women-owned firms, average per firm sales and 
receipts was $143.7 thousand. In other words, for every dollar of sales 
and receipts earned by non-minority male-owned firms, women-owned firms 
received just 20 cents.

    Turning to employer firms, we see from column (3) in Table 3, that 
although nonminority male-owned firms were 57.11 percent of all 
employer firms, they accounted for 74.98 percent of all employer firm 
sales and receipts. In contrast:
      Although African Americans owned 2.12 percent of all 
employer firms in the U.S. in 2012, they earned only 0.94 percent of 
all sales and receipts.
      Although Hispanics firms 5.6 percent of all employer 
firms, they earned only 3.47 percent of all sales and receipts.
      Although Asians owned 9.37 percent of all employer firms, 
they earned only 5.72 percent of all sales and receipts.
      Although American Indians and Alaska Natives owned 0.51 
percent of all employer firms, they earned only 0.29 percent of all 
sales and receipts.
      Although Native Hawaiians and Other Pacific Islanders 
owned 0.09 percent of all employer firms, they earned only 0.06 percent 
of all sales and receipts.
      Although women owned 20.16 percent of all employer firms, 
they earned only 10.86 percent of all sales and receipts.

    The economy-wide employer firm disparity indexes for 2012 appear in 
Panel C of Table 3. Panel C shows that African American-owned firms in 
2012 received just 44.4 percent of what would be expected based on 
their availability in the market. Women-owned firms received just 53.85 
percent of what would be expected based on their availability in the 
market. For Hispanics, the figure was 61.91 percent. For Asians, the 
figure was 61.11 percent. For American Indians and Alaska Natives, the 
figure was 56.64 percent, and for Native Hawaiians and Other Pacific 
Islanders, the figure was 64.40 percent. These disparities are all 
large, adverse, and statistically significant.
    Considering sales and receipts among employer firms in 2012. Table 
3 shows a figure of $2.8 million for non-minority male-owned employer 
firms. In contrast:
      For African American-owned employer firms, average per 
firm sales and receipts was $947.9 thousand. In other words, for every 
dollar of sales and receipts earned by non-minority male-owned firms, 
African American-owned firms received just 34 cents.
      For Hispanic-owned firms, average per firm sales and 
receipts was $1.32 million. In other words, for every dollar of sales 
and receipts earned by non-minority male-owned firms, Hispanic-owned 
firms received just 47 cents.
      For Asian-owned firms, average per firm sales and 
receipts was $1.3 million. In other words, for every dollar of sales 
and receipts earned by non-minority male-owned firms, Asian-owned firms 
received just 47 cents.
      For American Indian- and Alaska Native-owned firms, 
average per firm sales and receipts was $1.21 million. In other words, 
for every dollar of sales and receipts earned by non-minority male-
owned firms, American Indian- and Alaska Native-owned firms received 
just 43 cents.
      For Native Hawaiian- and Other Pacific Islander-owned 
firms, average per firm sales and receipts was $1.37 million. In other 
words, for every dollar of sales and receipts earned by non-minority 
male-owned firms, Native Hawaiian- and Other Pacific Islander-owned 
firms received just 49 cents.
      For women-owned firms, average per firm sales and 
receipts was $1.15 million. In other words, for every dollar of sales 
and receipts earned by non-minority male-owned firms, women-owned firms 
received just 41 cents.

    The problem of minority- and women-owned firms earning less has 
important consequences that ripple throughout the economy. Because 
these firms make less, they have to pay their employees less. This 
obviously compounds race and gender disparities to the extent that 
minority- and women-owned firms hire proportionately more minority and 
female employees. In addition, it reduces the wealth accruing to 
minorities and women and thus hinders any would-be minority and women 
entrepreneurs in their efforts to create and grow their own firms thus 
reinforcing the negative consequences of social and economic 
disadvantage. Table 3 shows that average payroll per employee at non-
minority male-owned employer firms in 2012 was $40,573. In contrast:
      For African American-owned employers, average payroll per 
employee was just $28,398. In other words, for every $1 in wages earned 
by employees at non-minority male-owned firms, employees at African 
American-owned firms earned only 70 cents.
      For Hispanic-owned employers average payroll per employee 
was just $30,416. In other words, for every $1 in wages earned by 
employees at non-minority male-owned firms, employees at Hispanic-owned 
firms earned only 75 cents.
      For Asian-owned employers average payroll per employee 
was just $30,942. In other words, for every $1 in wages earned by 
employees at non-minority male-owned firms, employees at Asian-owned 
firms earned only 76 cents.
      For American Indian- and Alaska Native-owned employers 
average payroll per employee was just $33,599. In other words, for 
every $1 in wages earned by employees at non-minority male-owned firms, 
employees at American Indian- and Alaska Native-owned firms earned just 
83 cents.
      For Native Hawaiian- and Other Pacific Islander-owned 
employers, average payroll per employee was just $36,681. In other 
words, for every $1 in wages earned by employees at non-minority male-
owned firms, employees at Native Hawaiian- and Other Pacific Islander-
owned firms earned just 90 cents.
      For women-owned employers average payroll per employee 
was just $31,278. In other words, for every $1 in wages earned by 
employees at non-minority male-owned firms, employees at women-owned 
firms earned only 77 cents.

                            Table 3. Disparity Ratios from the 2012 Survey of Business Owners, United States, All Industries
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Number of      Sales and       Employer      Sales and      Employees       Payroll
                                                                    Firms         Receipts        Firms         Receipts    -------------     ($000s)
                                                                -------------     ($000s)     -------------     ($000s)                  ---------------
                                                                             -----------------             -----------------     (5)
                                                                     (1)            (2)            (3)            (4)                           (6)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Panel A. Levels....................................................................................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
All Firms......................................................   27,179,380   11,964,077,871    5,136,203   10,964,584,749   56,058,563   2,096,442,212
Non-minority male..............................................   12,280,591    8,787,915,377    2,933,198    8,221,010,815   37,750,711   1,531,662,394
African American...............................................    2,584,403      150,203,163      109,137      103,451,510      975,052      27,689,957
Hispanic.......................................................    3,305,873      473,635,944      287,501      379,994,999    2,329,553      70,855,704
Asian..........................................................    1,917,902      699,492,422      481,026      627,532,399    3,572,577     110,543,615
Native Hawaiian/Pac. Islander..................................       54,749        8,136,445        4,706        6,469,957       39,001       1,430,591
Am. Indian & Alaska Native.....................................      272,919       38,838,125       26,179       31,654,165      208,178       6,994,509
Female.........................................................    9,878,397    1,419,834,295    1,035,655    1,190,586,438    8,431,614     263,720,252
--------------------------------------------------------------------------------------------------------------------------------------------------------
Panel B. Column Percentages...............................................................................................--------------------------------------------------------------------------------------------------------------------------------------------------------
All Firms......................................................      100.00%          100.00%      100.00%          100.00%      100.00%         100.00%
Non-minority male..............................................       45.18%           73.45%       57.11%           74.98%       67.34%          73.06%
African American...............................................        9.51%            1.26%        2.12%            0.94%        1.74%           1.32%
Hispanic.......................................................       12.16%            3.96%        5.60%            3.47%        4.16%           3.38%
Asian..........................................................        7.06%            5.85%        9.37%            5.72%        6.37%           5.27%
Native Hawaiian/Pac. Islander..................................        0.20%            0.07%        0.09%            0.06%        0.07%           0.07%
Am. Indian & Alaska Native.....................................        1.00%            0.32%        0.51%            0.29%        0.37%           0.33%
Female.........................................................       36.35%           11.87%       20.16%           10.86%       15.04%          12.58%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Panel C. Disparity Ratios                                                         (2) vs. (1)                   (4) vs. (3)  (5) vs. (3)     (6) vs. (3)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Non-minority male...........................................................
African American............................................................
Hispanic....................................................................
Asian.......................................................................
Native Hawaiian/Pac. Islander...............................................
Am. Indian & Alaska Native..................................................
Female......................................................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Author's calculations using 2012 SBO. Notes: (1) Figures are rounded. Rounding was performed subsequent to any mathematical calculations; (2)
  Excludes publicly owned, foreign-owned, and not-for-profit firms; (3) Totals for ``All Firms'' includes firms that were equally nonminority-minority
  owned; (4) Statistically significant disparity indexes are italicized; (5) ``n/a'' indicates that data were not disclosed due to confidentiality or
  other publication restrictions.

            b. Results for the Construction Sector
    Table 4 shows comparable 2012 SBO data for the construction sector 
in the U.S. as a whole.
    Column (2) in Panel B of Table 4 shows that nonminority males owned 
62.85 percent of all firms and earned 78.02 percent of all sales and 
receipts. In contrast:
      Although African Americans owned 4.67 percent of all 
firms in the U.S. in 2012, they earned only 0.93 percent of all sales 
and receipts.
      Although Hispanics owned 16.24 percent of all firms, they 
earned only 4.65 percent, of all sales and receipts.
      Although Asians owned 2.63 percent of all firms, they 
earned only 1.28 percent, of all sales and receipts.
      Although American Indians and Alaska Natives owned 1.23 
percent of all firms, they earned only 0.62 percent of all sales and 
receipts.
      Although Native Hawaiians and Other Pacific Islanders 
owned 0.19 percent of all firms, they earned only 0.13 percent of all 
sales and receipts.
      Although women owned firms 9.08 percent of all firms, 
they earned only 7.75 percent of all sales and receipts.

    The associated 2012 disparity indexes for firms in the construction 
sector can be viewed directly in Panel C of Table 4. Panel C shows that 
African American-owned firms in 2012 received just 19.88 percent of 
what would be expected based on their availability in the market. Panel 
C shows as well that women-owned firms received 85.37 percent of what 
would be expected based on their availability in the market. For 
Hispanics, the figure was 28.64 percent. For Asians, the figure was 
48.74 percent. For American Indians and Alaska Natives, the figure was 
50.19 percent, and for Native Hawaiians and Other Pacific Islanders, 
the figure was 66.26 percent. These disparities are all adverse, and 
statistically significant. The disparities are all large as well, with 
the exception of women-owned firms.
    We can also compare sales and receipts per firm among all firms in 
construction in 2012. In Table 4 average per firm sales and receipts 
for non-minority male-owned firms was $508.9 thousand. In contrast:
      For African American-owned employer firms, average per 
firm sales and receipts was $81.5 thousand. In other words, for every 
dollar of sales and receipts earned by non-minority male-owned firms, 
African American-owned firms received just 16 cents.
      For Hispanic-owned firms, average per firm sales and 
receipts was $117.4 thousand. In other words, for every dollar of sales 
and receipts earned by non-minority male-owned firms, Hispanic-owned 
firms received just 23 cents.
      For Asian-owned firms, average per firm sales and 
receipts was $199.8 thousand. In other words, for every dollar of sales 
and receipts earned by non-minority male-owned firms, Asian-owned firms 
received just 39 cents.
      For American Indian- and Alaska Native-owned firms, 
average per firm sales and receipts was $205.8 thousand. In other 
words, for every dollar of sales and receipts earned by non-minority 
male-owned firms, American Indian- and Alaska Native-owned firms 
received just 40 cents.
      For Native Hawaiian- and Other Pacific Islander-owned 
firms, average per firm sales and receipts was $271.7 thousand. In 
other words, for every dollar of sales and receipts earned by non-
minority male-owned firms, Native Hawaiian- and Other Pacific Islander-
owned firms received just 53 cents.
      For women-owned firms, average per firm sales and 
receipts was $350 thousand. In other words, for every dollar of sales 
and receipts earned by non-minority male-owned firms, women-owned firms 
received just 69 cents.

    Turning to employer firms, we see from column (3) in Table 4, that 
although nonminority male-owned firms were 69.87 percent of all 
employer firms, they accounted for 79.09 percent of all employer firm 
sales and receipts. In contrast:
      Although African Americans owned 1.19 percent of all 
employer firms in the U.S. in 2017, they earned only 0.77 percent of 
all sales and receipts.
      Although Hispanics firms 6.07 percent of all employer 
firms, they earned only 3.59 percent of all sales and receipts.
      Although Asians owned 1.66 percent of all employer firms, 
they earned only 1.19 percent of all sales and receipts.
      Although American Indians and Alaska Natives owned 0.76 
percent of all employer firms, they earned only 0.57 percent of all 
sales and receipts.
      Native Hawaiians and Other Pacific Islanders owned 0.11 
percent of all employer firms, and they earned 0.12 percent of all 
sales and receipts, essentially at parity.
      Although women owned 8.55 percent of all employer firms, 
they earned only 7.86 percent of all sales and receipts.

    The employer firm disparity indexes for construction in 42012 
appear in Panel C of Table 4. Panel C shows that African American-owned 
firms in 2012 received just 64.51 percent of what would be expected 
based on their availability in the market. Women-owned firms received 
just 91.88 percent of what would be expected based on their 
availability in the market. For Hispanics, the figure was 59.14 
percent. For Asians, the figure was 71.94 percent. For American Indians 
and Alaska Natives, the figure was 74.52 percent, and for Native 
Hawaiians and Other Pacific Islanders, the figure was 101.89 percent. 
The disparities for African Americans, Hispanics, Asians and American 
Indians and Alaska Natives are all large, adverse, and statistically 
significant. The disparity for women is adverse, and statistically 
significant. The disparity for Native Hawaiians and Other Pacific 
Islanders is not statistically significant.
    Considering sales and receipts among employer firms in 2012, Table 
4 shows a figure of $1.92 million for non-minority male-owned employer 
firms. In contrast:
      For African American-owned employer firms, average per 
firm sales and receipts was $1.1 million. In other words, for every 
dollar of sales and receipts earned by non-minority male-owned firms, 
African American-owned firms received just 57 cents.
      For Hispanic-owned firms, average per firm sales and 
receipts was $1.01 million. In other words, for every dollar of sales 
and receipts earned by non-minority male-owned firms, Hispanic-owned 
firms received just 52 cents.
      For Asian-owned firms, average per firm sales and 
receipts was $1.22 million. In other words, for every dollar of sales 
and receipts earned by non-minority male-owned firms, Asian-owned firms 
received just 64 cents.
      For American Indian- and Alaska Native-owned firms, 
average per firm sales and receipts was $1.27 million. In other words, 
for every dollar of sales and receipts earned by non-minority male-
owned firms, American Indian- and Alaska Native-owned firms received 
just 66 cents.
      For Native Hawaiian- and Other Pacific Islander-owned 
firms, average per firm sales and receipts was $1.73 million. In other 
words, for every dollar of sales and receipts earned by non-minority 
male-owned firms, Native Hawaiian- and Other Pacific Islander-owned 
firms received just 90 cents.
      For women-owned firms, average per firm sales and 
receipts was $1.56 million. In other words, for every dollar of sales 
and receipts earned by non-minority male-owned firms, women-owned firms 
received just 81 cents.

    As discussed above, these disparities extend to the employees of 
minority- and women-owned firms as well and thus cause a ripple effect 
that further damages women and minorities. Table 4 shows that average 
payroll per employee at non-minority male-owned employer firms in 2012 
was $48,736. In contrast:
      For African American-owned employers, average payroll per 
employee was just $42,824. In other words, for every $1 in wages earned 
by employees at non-minority male-owned firms, employees at African 
American-owned firms earned only 88 cents.
      For Hispanic-owned employers average payroll per employee 
was just $37,977. In other words, for every $1 in wages earned by 
employees at non-minority male-owned firms, employees at Hispanic-owned 
firms earned only 78 cents.
      For Asian-owned employers average payroll per employee 
was just $45,450. In other words, for every $1 in wages earned by 
employees at non-minority male-owned firms, employees at Asian-owned 
firms earned only 93 cents.
      For American Indian- and Alaska Native-owned employers 
average payroll per employee was just $44,763. In other words, for 
every $1 in wages earned by employees at non-minority male-owned firms, 
employees at American Indian- and Alaska Native-owned firms earned just 
92 cents.
      For Native Hawaiian- and Other Pacific Islander-owned 
firms, on the other hand, was $49,870. In other words, for every $1 in 
wages earned by employees at non-minority male-owned firms, employees 
at Native Hawaiian- and Other Pacific Islander-owned firms earned 
$1.02--essentially at par with non-minority male-owned firms.
      For women-owned employers average payroll per employee 
was just $46,509. In other words, for every $1 in wages earned by 
employees at non-minority male-owned firms, employees at women-owned 
firms earned only 95 cents.

                             Table 4. Disparity Ratios from the 2012 Survey of Business Owners, United States, Construction
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Number of      Sales and       Employer      Sales and      Employees       Payroll
                                                                    Firms         Receipts        Firms         Receipts    -------------     ($000s)
                                                                -------------     ($000s)     -------------     ($000s)                  ---------------
                                                                             -----------------             -----------------     (5)
                                                                     (1)            (2)            (3)            (4)                           (6)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Panel A. Levels....................................................................................................--------------------------------------------------------------------------------------------------------------------------------------------------------
All Firms......................................................    2,928,015    1,200,413,658      637,296    1,083,093,941    4,764,280     225,039,336
Non-minority male..............................................    1,840,218      936,510,929      445,288      856,603,507    3,581,982     174,571,576
African American...............................................      136,729       11,141,919        7,594        8,325,857       39,883       1,707,968
Hispanic.......................................................      475,472       55,830,007       38,704       38,900,840      222,161       8,437,113
Asian..........................................................       76,883       15,362,433       10,567       12,919,296       54,404       2,472,635
Native Hawaiian/Pac. Islander..................................        5,551        1,507,949          724        1,253,656        4,803         239,527
Am. Indian & Alaska Native.....................................       35,969        7,401,462        4,836        6,124,399       29,700       1,329,464
Female.........................................................      265,733       93,002,152       54,511       85,116,364      435,718      20,264,904
--------------------------------------------------------------------------------------------------------------------------------------------------------
Panel B. Column Percentages...............................................................................................--------------------------------------------------------------------------------------------------------------------------------------------------------
All Firms......................................................      100.00%          100.00%      100.00%          100.00%      100.00%         100.00%
Non-minority male..............................................       62.85%           78.02%       69.87%           79.09%       75.18%          77.57%
African American...............................................        4.67%            0.93%        1.19%            0.77%        0.84%           0.76%
Hispanic.......................................................       16.24%            4.65%        6.07%            3.59%        4.66%           3.75%
Asian..........................................................        2.63%            1.28%        1.66%            1.19%        1.14%           1.10%
Native Hawaiian/Pac. Islander..................................        0.19%            0.13%        0.11%            0.12%        0.10%           0.11%
Am. Indian & Alaska Native.....................................        1.23%            0.62%        0.76%            0.57%        0.62%           0.59%
Female.........................................................        9.08%            7.75%        8.55%            7.86%        9.15%           9.01%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Panel C. Disparity Ratios....................................................................................................--------------------------------------------------------------------------------------------------------------------------------------------------------
Non-minority male...........................................................
African American............................................................
Hispanic....................................................................
Asian.......................................................................
Native Hawaiian/Pac. Islander...............................................                                         101.89        88.74           93.69
Am. Indian & Alaska Native..................................................
Female......................................................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source and Notes: See Table 6.

            c. Results for the Professional, Scientific, and Technical 
                    Services Sector
    Table 8 shows comparable 2012 SBO data for the professional, 
scientific, and technical services sector in the U.S. as a whole.
    Column (2) in Panel B of Table 8 shows that nonminority males owned 
47.45 percent of all firms and earned 66.95 percent of all sales and 
receipts. In contrast:
      Although African Americans owned 5.35 percent of all 
firms in the U.S. in 2012, they earned only 1.79 percent of all sales 
and receipts.
      Although Hispanics owned 7.19 percent of all firms, they 
earned only 3.82 percent of all sales and receipts.
      Although Asians owned 7.16 percent of all firms, they 
earned 7.72 percent of all sales and receipts.
      Although American Indians and Alaska Natives owned 0.8 
percent of all firms, they earned only 0.36 percent of all sales and 
receipts.
      Although Native Hawaiians and Other Pacific Islanders 
owned 0.16 percent of all firms, they earned only 0.11 percent of all 
sales and receipts.
      Although women-owned firms were 34.5 percent of all 
firms, they earned only 15.81 percent of all sales and receipts.

    The associated 2012 disparity indexes for firms in the construction 
sector can be viewed directly in Panel C of Table 8. Panel C shows that 
African American-owned firms in 2012 received just 33.42 percent of 
what would be expected based on their availability in the market. Panel 
C shows as well that women-owned firms received 45.82 percent of what 
would be expected based on their availability in the market. For 
Hispanics, the figure was 53.17 percent. For Asians, the figure was 
107.9 percent. For American Indians and Alaska Natives, the figure was 
45.12 percent, and for Native Hawaiians and Other Pacific Islanders, 
the figure was 65.32 percent. With the exception of Asians, these 
disparities are all large, adverse, and statistically significant.
    We can also compare sales and receipts per firm among all firms in 
professional services in 2012. In Table 8, average per firm sales and 
receipts for non-minority male-owned firms was $319.9 thousand. In 
contrast:
      For African American-owned employer firms, average per 
firm sales and receipts was $75.8 thousand. In other words, for every 
dollar of sales and receipts earned by non-minority male-owned firms, 
African American-owned firms received just 24 cents.
      For Hispanic-owned firms, average per firm sales and 
receipts was $120.6 thousand. In other words, for every dollar of sales 
and receipts earned by non-minority male-owned firms, Hispanic-owned 
firms received just 38 cents.
      For Asian-owned firms, average per firm sales and 
receipts was $244.78 thousand. In other words, for every dollar of 
sales and receipts earned by non-minority male-owned firms, Asian-owned 
firms received just 76 cents.
      For American Indian- and Alaska Native-owned firms, 
average per firm sales and receipts was $102.3 thousand. In other 
words, for every dollar of sales and receipts earned by non-minority 
male-owned firms, American Indian- and Alaska Native-owned firms 
received just 32 cents.
      For Native Hawaiian- and Other Pacific Islander-owned 
firms, average per firm sales and receipts was $148.1 thousand. In 
other words, for every dollar of sales and receipts earned by non-
minority male-owned firms, Native Hawaiian- and Other Pacific Islander-
owned firms received just 46 cents.
      For women-owned firms, average per firm sales and 
receipts was $103.9 thousand. In other words, for every dollar of sales 
and receipts earned by non-minority male-owned firms, women-owned firms 
received just 32 cents.

    Turning to employer firms, we see from column (3) in Table 8, that 
although nonminority male-owned firms were 59 percent of all employer 
firms, they accounted for 69.13 percent of all employer firm sales and 
receipts. In contrast:
      Although African Americans owned 1.85 percent of all 
employer firms in the U.S. in 2012, they earned only 1.52 percent of 
all sales and receipts.
      Although Hispanics firms 3.95 percent of all employer 
firms, they earned only 3.45 percent of all sales and receipts.
      Asians owned 6.79 percent of all employer firms, and they 
earned 7.9 percent of all sales and receipts.
      Although American Indians and Alaska Natives owned 0.48 
percent of all employer firms, they earned only 0.3 percent of all 
sales and receipts.
      Native Hawaiians and Other Pacific Islanders owned 0.08 
percent of all employer firms, and they earned 0.1 percent of all sales 
and receipts.
      Although women owned 22.1 percent of all employer firms, 
they earned only 13.81 percent of all sales and receipts.

    The employer firm disparity indexes for construction in 42012 
appear in Panel C of Table 8. Panel C shows that African American-owned 
firms in 2012 received just 82.26 percent of what would be expected 
based on their availability in the market. Women-owned firms received 
just 62.47 percent of what would be expected based on their 
availability in the market. For Hispanics, the figure was 87.16 
percent. For Asians, the figure was 116.31 percent. For American 
Indians and Alaska Natives, the figure was 60.94 percent, and for 
Native Hawaiians and Other Pacific Islanders, the figure was 116.31 
percent. The disparities for women and American Indians and Alaska 
Natives are large, adverse, and statistically significant. The 
disparities for African Americans and Hispanics are adverse and 
statistically significant. The disparities for Asians is not adverse 
and is statistically significant. The disparity for Native Hawaiians 
and Other Pacific Islanders is not statistically significant.
    Considering sales and receipts among employer firms in 2012, Table 
8 shows a figure of $1.16 million for non-minority male-owned employer 
firms. In contrast:
      For African American-owned employer firms, average per 
firm sales and receipts was $816.2 thousand. In other words, for every 
dollar of sales and receipts earned by non-minority male-owned firms, 
African American-owned firms received just 70 cents.
      For Hispanic-owned firms, average per firm sales and 
receipts was $864.9 thousand. In other words, for every dollar of sales 
and receipts earned by non-minority male-owned firms, Hispanic-owned 
firms received just 74 cents.
      For Asian-owned firms, average per firm sales and 
receipts was $1.15 million. In other words, for every dollar of sales 
and receipts earned by non-minority male-owned firms, Asian-owned firms 
received just 99 cents, just slightly below parity.
      For American Indian- and Alaska Native-owned firms, 
average per firm sales and receipts was $604.7 thousand. In other 
words, for every dollar of sales and receipts earned by non-minority 
male-owned firms, American Indian- and Alaska Native-owned firms 
received just 52 cents.
      For Native Hawaiian- and Other Pacific Islander-owned 
firms, average per firm sales and receipts was $1.27 million. In other 
words, for every dollar of sales and receipts earned by non-minority 
male-owned firms, Native Hawaiian- and Other Pacific Islander-owned 
firms received just $1.10, slightly above parity.
      For women-owned firms, average per firm sales and 
receipts was $619.9 thousand. In other words, for every dollar of sales 
and receipts earned by non-minority male-owned firms, women-owned firms 
received just 53 cents.

    Considering the employees of minority- and women-owned employer 
firms in the professional services sector, Table 8 shows that average 
payroll per employee at non-minority male-owned employer firms in 2012 
was $63,240. In contrast:
      For African American-owned employers, average payroll per 
employee was just $54,911. In other words, for every $1 in wages earned 
by employees at non-minority male-owned firms, employees at African 
American-owned firms earned only 88 cents.
      For Hispanic-owned employers average payroll per employee 
was just $51,813. In other words, for every $1 in wages earned by 
employees at non-minority male-owned firms, employees at Hispanic-owned 
firms earned only 78 cents.
      For Asian-owned employers average payroll per employee 
was just $66,788. In other words, for every $1 in wages earned by 
employees at non-minority male-owned firms, employees at Asian-owned 
firms earned only 93 cents.
      For American Indian- and Alaska Native-owned employers 
average payroll per employee was just $44,013. In other words, for 
every $1 in wages earned by employees at non-minority male-owned firms, 
employees at American Indian- and Alaska Native-owned firms earned just 
92 cents.
      For women-owned employers average payroll per employee 
was just $49,128. In other words, for every $1 in wages earned by 
employees at non-minority male-owned firms, employees at women-owned 
firms earned only 95 cents.

    Payroll per employee for Native Hawaiian- and Other Pacific 
Islander-owned firms, on the other hand, was $69,386. In other words, 
for every $1 in wages earned by employees at non-minority male-owned 
firms, employees at Native Hawaiian- and Other Pacific Islander-owned 
firms earned $1.10--slightly above par with non-minority male-owned 
firms.

                         Table 5. Disparity Ratios from the 2012 Survey of Business Owners, United States, Professional Services
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Number of      Sales and       Employer      Sales and      Employees       Payroll
                                                                    Firms         Receipts        Firms         Receipts    -------------     ($000s)
                                                                -------------     ($000s)     -------------     ($000s)                  ---------------
                                                                             -----------------             -----------------     (5)
                                                                     (1)            (2)            (3)            (4)                           (6)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Panel A. Levels....................................................................................................--------------------------------------------------------------------------------------------------------------------------------------------------------
All Firms......................................................    3,868,657      877,237,881      748,444      742,626,210    4,652,991     277,172,802
Non-minority male..............................................    1,835,748      587,306,112      441,573      513,381,557    3,050,082     192,887,690
African American...............................................      206,942       15,682,967       13,822       11,281,769       81,170       4,457,109
Hispanic.......................................................      278,066       33,525,181       29,582       25,584,292      170,953       8,857,606
Asian..........................................................      276,960       67,766,453       50,834       58,666,210      345,376      23,067,037
Native Hawaiian/Pac. Islander..................................        6,292          931,973          600          764,525        3,680         255,342
Am. Indian & Alaska Native.....................................       30,966        3,168,244        3,627        2,193,127       17,882         787,037
Female.........................................................    1,334,561      138,669,937      165,437      102,552,393      774,717      38,060,358
--------------------------------------------------------------------------------------------------------------------------------------------------------
Panel B. Column Percentages...............................................................................................--------------------------------------------------------------------------------------------------------------------------------------------------------
All Firms......................................................      100.00%          100.00%      100.00%          100.00%      100.00%         100.00%
Non-minority male..............................................       47.45%           66.95%       59.00%           69.13%       65.55%          69.59%
African American...............................................        5.35%            1.79%        1.85%            1.52%        1.74%           1.61%
Hispanic.......................................................        7.19%            3.82%        3.95%            3.45%        3.67%           3.20%
Asian..........................................................        7.16%            7.72%        6.79%            7.90%        7.42%           8.32%
Native Hawaiian/Pac. Islander..................................        0.16%            0.11%        0.08%            0.10%        0.08%           0.09%
Am. Indian & Alaska Native.....................................        0.80%            0.36%        0.48%            0.30%        0.38%           0.28%
Female.........................................................       34.50%           15.81%       22.10%           13.81%       16.65%          13.73%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Panel C. Disparity Ratios....................................................................................................--------------------------------------------------------------------------------------------------------------------------------------------------------
Non-minority male...........................................................
African American............................................................
Hispanic....................................................................
Asian.......................................................................
Native Hawaiian/Pac. Islander...............................................                                         128.42        98.66          114.92
Am. Indian & Alaska Native..................................................
Female......................................................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source and Notes: See Table 6.

2. Results from the 2017 Annual Survey of Businesses
            a. Economy-Wide Results
    Turning now to the 2017 ABS, Table 6, below, presents results for 
all industries combined (i.e. economy-wide) and for the United States 
as a whole. Panel A summarizes the ABS results for each race and/or sex 
group. For example, Panel A shows a total of 5.47 million employer 
firms in the U.S. in 2017 (column 1) with overall sales and receipts of 
$12.689 trillion (column 2). These 5.47 million firms had a total of 
62.99 million employees (column 3) and a total annual payroll expense 
of $2.618 trillion (column 4).
    The remaining rows in Panel A provide comparable statistics for 
non-minority male-owned, women-owned, and minority-owned firms. For 
example, Table 6 shows that there were 124,004 African American-owned 
employer firms counted in 2017, and that these 124,004 firms registered 
$127.851 billion in sales and receipts. It also shows that these 
African American-owned firms employed a total of 1.21 million workers 
with an annual payroll total of $36.105 billion.
    Panel B in Table 6 converts the figures in Panel A to percentage 
distributions within each column. For example, Column (1) in Panel B of 
Table 6 shows that African Americans owned just 2.27 percent of all 
employer firms in the U.S. and women owned just 15.62 percent. 
Additionally, 5.88 percent of employer firms were Hispanic-owned, 10.15 
percent were Asian-owned, 0.45 percent were American Indian- and Alaska 
Native-owned, and 0.13 percent were Native Hawaiian- and Other Pacific 
Islander-owned.
    Column (2) in Panel B provides the same percentage distribution for 
overall sales and receipts for employer firms. Table 6, for example, 
shows that non-minority males owned 52.08 percent of all employer firms 
and earned 70.71 percent of all sales and receipts. In contrast:
      Although African Americans owned 2.27 percent of all 
employer firms in the U.S. in 2017, they earned only 1.01 percent of 
all sales and receipts.
      Although Hispanics firms 5.88 percent of all employer 
firms, they earned only 3.33 percent of all sales and receipts.
      Although Asians owned 10.15 percent of all employer 
firms, they earned only 6.42 percent of all sales and receipts.
      Although American Indians and Alaska Natives owned 0.45 
percent of all employer firms, they earned only 0.3 percent of all 
sales and receipts.
      Although Native Hawaiians and Other Pacific Islanders 
owned 0.13 percent of all employer firms, they earned only 0.07 percent 
of all sales and receipts.
      Although women owned 15.62 percent of all employer firms, 
they earned only 9.6 percent of all sales and receipts.

    These disparities between the availability and utilization of 
minority- and women-owned firms can be viewed directly from the 
disparity indexes in Panel C of Table 6. For example, Panel C shows 
that African American-owned employer firms in 2017 received just 44.48 
percent of what would be expected based on their availability in the 
market.\29\ Panel C shows as well that women-owned firms received just 
61.44 percent of what would be expected based on their availability in 
the market. For Hispanics, the figure was 56.6 percent. For Asians, the 
figure was 63.27 percent. For American Indians and Alaska Natives, the 
figure was 66.89 percent, and for Native Hawaiians and Other Pacific 
Islanders, the figure was 53.09 percent. These disparities are all 
large, adverse, and statistically significant.
---------------------------------------------------------------------------
    \29\ The disparity index is derived by dividing the share of sales 
and receipts from Panel B column (2) by the share of firms in Panel B 
column (1) and multiplying the result by 100.
---------------------------------------------------------------------------
    Another way to look at these disparities is by comparing sales and 
receipts per firm. In Table 6, for example, average per firm sales and 
receipts for non-minority male-owned employer firms was $3.15 
million.\30\ In contrast:
---------------------------------------------------------------------------
    \30\ Per firm sales and receipts is derived by dividing the sales 
and receipts amount in Panel A column (2) by the number of employer 
firms in Panel A column (1).
---------------------------------------------------------------------------
      For African American-owned employer firms, average per 
firm sales and receipts was $1.03 million. In other words, for every 
dollar of sales and receipts earned by non-minority male-owned employer 
firms, African American-owned employer firms received just 33 cents.
      For Hispanic-owned employer firms, average per firm sales 
and receipts was $1.31 million. In other words, for every dollar of 
sales and receipts earned by non-minority male-owned employer firms, 
Hispanic-owned employer firms received just 42 cents.
      For Asian-owned employer firms, average per firm sales 
and receipts was $1.47 million. In other words, for every dollar of 
sales and receipts earned by non-minority male-owned employer firms, 
Asian-owned employer firms received just 47 cents.
      For American Indian- and Alaska Native-owned employer 
firms, average per firm sales and receipts was $1.55 million. In other 
words, for every dollar of sales and receipts earned by non-minority 
male-owned employer firms, American Indian- and Alaska Native-owned 
employer firms received just 49 cents.
      For Native Hawaiian- and Other Pacific Islander-owned 
employer firms, average per firm sales and receipts was $1.23 million. 
In other words, for every dollar of sales and receipts earned by non-
minority male-owned employer firms, Native Hawaiian- and Other Pacific 
Islander-owned employer firms received just 39 cents.
      For women-owned employer firms, average per firm sales 
and receipts was $1.42 million. In other words, for every dollar of 
sales and receipts earned by non-minority male-owned employer firms, 
women-owned employer firms received just 45 cents.

    As discussed above, these severe disparities in firm earnings have 
a direct negative and compounding effect on the employees of minority- 
and women-owned firms. Table 6, for example, shows that average payroll 
per employee at non-minority male-owned employer firms in 2017 was 
$45,555.\31\ In contrast:
---------------------------------------------------------------------------
    \31\ Average payroll per employee is derived by dividing total 
payroll in Panel A column (4) by total number of employees in Panel A 
column (3).
---------------------------------------------------------------------------
      For African American-owned employers, average payroll per 
employee was just $29,882. In other words, for every $1 in wages earned 
by employees at non-minority male-owned firms, employees at African 
American-owned firms earned just 66 cents.
      For Hispanic-owned employers average payroll per employee 
was just $31,674. In other words, for every $1 in wages earned by 
employees at non-minority male-owned firms, employees at Hispanic-owned 
firms earned just 70 cents.
      For Asian-owned employers average payroll per employee 
was just $34,137. In other words, for every $1 in wages earned by 
employees at non-minority male-owned firms, employees at Asian-owned 
firms earned just 75 cents.
      For American Indian- and Alaska Native-owned employers 
average payroll per employee was just $39,756. In other words, for 
every $1 in wages earned by employees at non-minority male-owned firms, 
employees at American Indian- and Alaska Native-owned firms earned just 
87 cents.
      For Native Hawaiian- and Other Pacific Islander-owned 
employers it was just $35,386. In other words, for every $1 in wages 
earned by employees at non-minority male-owned firms, employees at 
Native Hawaiian- and Other Pacific Islander-owned firms earned just 78 
cents.
      For women-owned employers average payroll per employee 
was just $36,926. In other words, for every $1 in wages earned by 
employees at non-minority male-owned firms, employees at women-owned 
firms earned just 81 cents.

          Table 6. Disparity Ratios from the 2017 Annual Business Survey, United States, All Industries
----------------------------------------------------------------------------------------------------------------
                                                         Employer      Sales and      Employees       Payroll
                                                          Firms         Receipts    -------------     ($000s)
                                                      -------------     ($000s)                  ---------------
                                                                   -----------------     (3)
                                                           (1)            (2)                           (4)
----------------------------------------------------------------------------------------------------------------
Panel A. Levels.................................................................................................
----------------------------------------------------------------------------------------------------------------
All Firms............................................    5,474,721   12,689,937,307   62,990,475   2,618,191,164
Non-minority male....................................    2,851,098    8,972,454,223   38,973,541   1,775,434,267
African American.....................................      124,004      127,850,815    1,208,270      36,105,467
Hispanic.............................................      322,076      422,573,589    2,872,550      90,985,526
Asian................................................      555,638      814,806,324    4,649,688     158,725,110
Native Hawaiian/Pac. Islander........................        6,847        8,426,209       55,413       1,960,819
Am. Indian & Alaska Native...........................       24,503       37,992,217      221,193       8,793,842
Female...............................................      855,136    1,217,743,211    7,863,653     290,375,358
----------------------------------------------------------------------------------------------------------------
Panel B. Column Percentages.....................................................................................
----------------------------------------------------------------------------------------------------------------
All Firms............................................      100.00%          100.00%      100.00%         100.00%
Non-minority male....................................       52.08%           70.71%       61.87%          67.81%
African American.....................................        2.27%            1.01%        1.92%           1.38%
Hispanic.............................................        5.88%            3.33%        4.56%           3.48%
Asian................................................       10.15%            6.42%        7.38%           6.06%
Native Hawaiian/Pac. Islander........................        0.13%            0.07%        0.09%           0.07%
Am. Indian & Alaska Native...........................        0.45%            0.30%        0.35%           0.34%
Female...............................................       15.62%            9.60%       12.48%          11.09%
----------------------------------------------------------------------------------------------------------------
Panel C. Disparity Ratios                                               (2) vs. (1)  (3) vs. (1)     (4) vs. (1)
----------------------------------------------------------------------------------------------------------------
Non-minority male.................................................
African American..................................................
Hispanic..........................................................
Asian.............................................................
Native Hawaiian/Pac. Islander.....................................
Am. Indian & Alaska Native........................................
Female............................................................
----------------------------------------------------------------------------------------------------------------
Source: Authors calculations from the 2017 ABS. Notes: (1) Figures are rounded. Rounding was performed
  subsequent to any mathematical calculations; (2) Excludes publicly owned, foreign-owned, and not-for-profit
  firms; (3) Totals for ``All Firms'' includes firms that were equally nonminority-minority owned; (4)
  Statistically significant; disparity indexes are italicized; (5) ``n/a'' indicates that data were not
  disclosed due to confidentiality or other publication restrictions.

            b. Results for the Construction Sector
    Table 7 provides comparable 2017 information for the construction 
sector, which, along with architecture, engineering, and related 
professional services, is a major recipient of Federal surface and 
aviation transportation funding.
    Although non-minority males owned 68.52 percent of all employer 
firms in the construction sector, they earned 77.92 percent of all 
sales and receipts. In contrast:
      Although African Americans owned 1.17 percent of all 
employer firms in the U.S. in 2017, they earned only 0.72 percent of 
all sales and receipts. This yields a disparity index of 61.05.
      Although Hispanics owned 7.16 percent of all employer 
firms in the U.S. in 2017, they earned only 4.1 percent of all sales 
and receipts. This yields a disparity index of 57.26.
      Although Asians owned 2.02 percent of all employer firms 
in the U.S. in 2017, they earned only 1.37 percent of all sales and 
receipts. This yields a disparity index of 67.73.
      Although Native Hawaiians and Other Pacific Islanders 
owned 0.16 percent of all employer firms in the U.S. in 2017, they 
earned only 0.1 percent of all sales and receipts. This yields a 
disparity index of 62.97.
      Although American Indians and Alaska Natives owned 0.69 
percent of all employer firms in the U.S. in 2017, they earned only 
0.52 percent of all sales and receipts. This yields a disparity index 
of 76.15.

    As a group, women fared much better in construction in 2017 
compared to other disadvantaged groups. Women owned 7.15 percent of all 
employer firms in the U.S. in 2017, and they earned an equivalent share 
of sales and receipts--7.26 percent, yielding no adverse disparity 
index. But remember, this new ABS data does not include emerging firms 
that have yet grown sufficiently large to hire employees.
    When we consider per firm sales and receipts for employer firms in 
2017, we see that non-minority male-owned firms averaged $2.51 million. 
In contrast:
      For African American-owned employer firms, average per 
firm sales and receipts was 1.35 million. In other words, for every 
dollar of sales and receipts earned by non-minority male-owned employer 
firms, African American-owned employer firms received just 54 cents.
      For Hispanic-owned employer firms, average per firm sales 
and receipts was 1.26 million. In other words, for every dollar of 
sales and receipts earned by non-minority male-owned employer firms, 
Hispanic-owned employer firms received just 50 cents.
      For Asian-owned employer firms, average per firm sales 
and receipts was 1.49 million. In other words, for every dollar of 
sales and receipts earned by non-minority male-owned employer firms, 
Asian-owned employer firms received just 60 cents.
      For American Indian- and Alaska Native-owned employer 
firms, average per firm sales and receipts was 1.68 million. In other 
words, for every dollar of sales and receipts earned by non-minority 
male-owned employer firms, American Indian- and Alaska Native-owned 
employer firms received just 67 cents.
      For Native Hawaiian- and Other Pacific Islander-owned 
employer firms, average per firm sales and receipts was 1.39 million. 
In other words, for every dollar of sales and receipts earned by non-
minority male-owned employer firms, Native Hawaiian- and Other Pacific 
Islander-owned employer firms received just 55 cents.
      For women-owned employer firms, average per firm sales 
and receipts was 2.24 million. In other words, for every dollar of 
sales and receipts earned by non-minority male-owned employer firms, 
women-owned employer firms received just 89 cents.

    Considering the employees of these minority- and women-owned firms, 
Table 7 shows that average payroll per employee at non-minority male-
owned employer firms the construction sector in 2017 was $54,984. In 
contrast:
      For African American-owned employers, average payroll per 
employee was just $45,869. In other words, for every $1 in wages earned 
by employees at non-minority male-owned firms, employees at African 
American-owned firms earned just 83 cents.
      For Hispanic-owned employers average payroll per employee 
was just $41,881. In other words, for every $1 in wages earned by 
employees at non-minority male-owned firms, employees at Hispanic-owned 
firms earned just 76 cents.
      For Asian-owned employers average payroll per employee 
was just $50,307. In other words, for every $1 in wages earned by 
employees at non-minority male-owned firms, employees at Asian-owned 
firms earned 91 cents.
      For American Indian- and Alaska Native-owned employers 
average payroll per employee was just $51,723. In other words, for 
every $1 in wages earned by employees at non-minority male-owned firms, 
employees at American Indian- and Alaska Native-owned firms earned 94 
cents.
      For Native Hawaiian- and Other Pacific Islander-owned 
employers it was just $46,120 male-owned firms, employees at Native 
Hawaiian- and Other Pacific Islander-owned firms earned just 84 cents.
      For women-owned employers average payroll per employee 
was just $53,318. In other words, for every $1 in wages earned by 
employees at non-minority male-owned firms, employees at women-owned 
firms earned 97 cents.

           Table 7. Disparity Ratios from the 2017 Annual Business Survey, United States, Construction
----------------------------------------------------------------------------------------------------------------
                                                         Employer      Sales and      Employees       Payroll
                                                          Firms         Receipts    -------------     ($000s)
                                                      -------------     ($000s)                  ---------------
                                                                   -----------------     (5)
                                                           (3)            (4)                           (6)
----------------------------------------------------------------------------------------------------------------
Panel A. Levels.................................................................................................
----------------------------------------------------------------------------------------------------------------
All Firms............................................      700,453    1,544,490,456    6,120,046     324,999,296
Non-minority male....................................      479,971    1,203,446,334    4,504,618     247,682,903
African American.....................................        8,218       11,062,034       54,093       2,481,191
Hispanic.............................................       50,187       63,362,420      327,799      13,728,565
Asian................................................       14,169       21,160,223       82,746       4,162,689
Native Hawaiian/Pac. Islander........................        1,093        1,517,730        7,795         359,508
Am. Indian & Alaska Native...........................        4,821        8,095,145       35,355       1,828,684
Female...............................................       50,075      112,156,157      508,141      27,092,808
----------------------------------------------------------------------------------------------------------------
Panel B. Column Percentages.....................................................................................
----------------------------------------------------------------------------------------------------------------
All Firms............................................      100.00%          100.00%      100.00%         100.00%
Non-minority male....................................       68.52%           77.92%       73.60%          76.21%
African American.....................................        1.17%            0.72%        0.88%           0.76%
Hispanic.............................................        7.16%            4.10%        5.36%           4.22%
Asian................................................        2.02%            1.37%        1.35%           1.28%
Native Hawaiian/Pac. Islander........................        0.16%            0.10%        0.13%           0.11%
Am. Indian & Alaska Native...........................        0.69%            0.52%        0.58%           0.56%
Female...............................................        7.15%            7.26%        8.30%           8.34%
----------------------------------------------------------------------------------------------------------------
Panel C. Disparity Ratios                                               (2) vs. (1)  (3) vs. (1)     (4) vs. (1)
----------------------------------------------------------------------------------------------------------------
Non-minority male.................................................
African American..................................................
Hispanic..........................................................
Asian.............................................................
Native Hawaiian/Pac. Islander.....................................
Am. Indian & Alaska Native........................................
Female............................................................           101.58       116.14          116.61
----------------------------------------------------------------------------------------------------------------
Source and Notes: See Table 6.

            c. Results for the Professional, Scientific, and Technical 
                    Sector
    Table 8 provides comparable 2017 information for the professional, 
scientific, and technical sector (which includes architecture, 
engineering, and related professional services). This sector, along 
with construction, is a major recipient of Federal surface and aviation 
transportation funding.
    Although non-minority males owned 56.31 percent of all employer 
firms in the construction sector, they earned 66.39 percent of all 
sales and receipts. In contrast:
      Although African Americans owned 2.06 percent of all 
employer firms in the U.S. in 2017, they earned only 1.6 percent of all 
sales and receipts. This yields a disparity index of 77.65.
      Although Hispanics owned 4.32 percent of all employer 
firms in the U.S. in 2017, they earned only 3.2 percent of all sales 
and receipts. This yields a disparity index of 74.09.
      Although Asians owned 7.67 percent of all employer firms 
in the U.S. in 2017, they earned only 8.84 percent of all sales and 
receipts. This yields a disparity index of 115.31.
      Although Native Hawaiians and Other Pacific Islanders 
owned 0.12 percent of all employer firms in the U.S. in 2017, they 
earned only 0.1 percent of all sales and receipts. This yields a 
disparity index of 84.87.
      Although American Indians and Alaska Natives owned 0.52 
percent of all employer firms in the U.S. in 2017, they earned only 
0.52 percent of all sales and receipts. This yields a disparity index 
of 99.76.
      Although women owned 19.1 percent of all employer firms 
in the U.S. in 2017, they earned only 12.4 percent of all sales and 
receipts. This yields a disparity index of 64.91.

    When we consider per firm sales and receipts for employer firms, we 
see that non-minority male-owned firms averaged $1.37 million in 2017. 
In contrast:
      For African American-owned employer firms, average per 
firm sales and receipts was $902 thousand. In other words, for every 
dollar of sales and receipts earned by non-minority male-owned employer 
firms, African American-owned employer firms received just 66 cents.
      For Hispanic-owned employer firms, average per firm sales 
and receipts was $861 thousand. In other words, for every dollar of 
sales and receipts earned by non-minority male-owned employer firms, 
Hispanic-owned employer firms received just 63 cents.
      For Asian-owned employer firms, average per firm sales 
and receipts was $1.34 million. In other words, for every dollar of 
sales and receipts earned by non-minority male-owned employer firms, 
Asian-owned employer firms received just 98 cents.
      For Native Hawaiian- and Other Pacific Islander-owned 
employer firms, average per firm sales and receipts was $986 thousand. 
In other words, for every dollar of sales and receipts earned by non-
minority male-owned employer firms, Native Hawaiian- and Other Pacific 
Islander-owned employer firms received just 72 cents.
      For American Indian- and Alaska Native-owned employer 
firms, average per firm sales and receipts was $1.16 million. In other 
words, for every dollar of sales and receipts earned by non-minority 
male-owned employer firms, American Indian- and Alaska Native-owned 
employer firms received just 85 cents.
      For women-owned employer firms, average per firm sales 
and receipts was $754 thousand. In other words, for every dollar of 
sales and receipts earned by non-minority male-owned employer firms, 
women-owned employer firms received just 55 cents.

    Considering the employees of these minority- and women-owned firms, 
Table 8 shows that average payroll per employee at non-minority male-
owned employer firms the professional services sector in 2017 was 
$70,546. In contrast:
      For African American-owned employers, average payroll per 
employee was just $59,033. In other words, for every $1 in wages earned 
by employees at non-minority male-owned firms, employees at African 
American-owned firms earned just 84 cents.
      For Hispanic-owned employers average payroll per employee 
was just $56,567. In other words, for every $1 in wages earned by 
employees at non-minority male-owned firms, employees at Hispanic-owned 
firms earned just 80 cents.
      For Asian-owned employers average payroll per employee 
was $75,179--somewhat higher than non-minority male-owned employers. 
Thus, for every $1 in wages earned by employees at non-minority male-
owned firms, employees at Asian-owned firms earned $1.07 cents, 
slightly better than parity.
      For American Indian- and Alaska Native-owned employers 
average payroll per employee was just $60,884. In other words, for 
every $1 in wages earned by employees at non-minority male-owned firms, 
employees at American Indian- and Alaska Native-owned firms earned 86 
cents.
      For Native Hawaiian- and Other Pacific Islander-owned 
employers it was just $63,009 male-owned firms, employees at Native 
Hawaiian- and Other Pacific Islander-owned firms earned just 89 cents.
      For women-owned employers average payroll per employee 
was just $55,606. In other words, for every $1 in wages earned by 
employees at non-minority male-owned firms, employees at women-owned 
firms earned 79 cents.

  Table 8. Disparity Ratios from the 2017 Annual Business Survey, United States,PProfessional, Scientific, and
                                               Technical Services
----------------------------------------------------------------------------------------------------------------
                                                         Employer      Sales and      Employees       Payroll
                                                          Firms         Receipts    -------------     ($000s)
                                                      -------------     ($000s)                  ---------------
                                                                   -----------------     (5)
                                                           (3)            (4)                           (6)
----------------------------------------------------------------------------------------------------------------
Panel A. Levels.................................................................................................
----------------------------------------------------------------------------------------------------------------
All Firms............................................      794,235      922,698,077    5,339,009     362,594,623
Non-minority male....................................      447,254      612,610,502    3,281,827     231,520,629
African American.....................................       16,392       14,787,229       96,267       5,682,935
Hispanic.............................................       34,292       29,514,634      185,395      10,487,211
Asian................................................       60,907       81,592,941      432,567      32,520,040
Native Hawaiian/Pac. Islander........................          971          957,403        6,118         385,489
Am. Indian & Alaska Native...........................        4,142        4,800,227       29,953       1,823,661
Female...............................................      151,694      114,396,323      751,207      41,771,294
----------------------------------------------------------------------------------------------------------------
Panel B. Column Percentages.....................................................................................
----------------------------------------------------------------------------------------------------------------
All Firms............................................      100.00%          100.00%      100.00%         100.00%
Non-minority male....................................       56.31%           66.39%       61.47%          63.85%
African American.....................................        2.06%            1.60%        1.80%           1.57%
Hispanic.............................................        4.32%            3.20%        3.47%           2.89%
Asian................................................        7.67%            8.84%        8.10%           8.97%
Native Hawaiian/Pac. Islander........................        0.12%            0.10%        0.11%           0.11%
Am. Indian & Alaska Native...........................        0.52%            0.52%        0.56%           0.50%
Female...............................................       19.10%           12.40%       14.07%          11.52%
----------------------------------------------------------------------------------------------------------------
Panel C. Disparity Ratios                                               (2) vs. (1)  (3) vs. (1)     (4) vs. (1)
----------------------------------------------------------------------------------------------------------------
Non-minority male.................................................
African American..................................................
Hispanic..........................................................
Asian.............................................................
Native Hawaiian/Pac. Islander.....................................            84.87        93.73           86.96
Am. Indian & Alaska Native........................................            99.76       107.58           96.44
Female............................................................
----------------------------------------------------------------------------------------------------------------
Source and Notes: See Table 6.

3. State-Level Results from 2002-2017
    The state-level disparities observed in the 2017 ABS are documented 
below in Appendix A, Tables A.1 through A.18. Data from the 2012 SBO is 
presented in Appendix B, Tables B.1 through B.18. Data from the 2007 
SBO is presented in Appendix C, Tables C.1 through C.18. Data from the 
2002 SBO is presented in Appendix D, Tables D.1 through D.18.
    The most noticeable aspect of the statistics presented in Tables 
A.1 through D.18 below is how many of the disparity indexes are large, 
adverse, and statistically significant.\32\ This is true for African 
Americans, Hispanics, Asians and Pacific Islanders, American Indians 
and Alaska Natives, and non-minority women. It is true in the 
construction sector, it is true in the professional services sector, 
and it is true when considering all industries combined. It is true in 
all 50 states and the District of Columbia. While there is certainly 
variation by race, sex, industry, geography, and time, the similarities 
vastly outweigh the differences. Table 9 provides a high-level summary 
of the findings of disparity from the 2007 SBO in Tables A.1 through 
A.18.
---------------------------------------------------------------------------
    \32\ I have measured statistical significance here using the ``two 
standard deviation'' or ``5%'' level of significance typically used in 
disparate impact litigation in employment and related areas.

                Table 9. Prevalence of Disparities in the 2017 Annual Business Survey and the 2012, 2007 & 2002 Survey of Business Owners
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                 Fraction of  Fraction of
                                                                                                                  Disparity    Disparity    Fraction of
                                                                        Number of                                  Indexes      Indexes      Disparity
                  Year                              Industry            Disparity          Race/Sex Group         Less than    Less than    Indexes that
                                                                        Indexes in                               or Equal to  or Equal to       are
                                                                          Table                                       80          100      Statistically
                                                                                                                                            Significant
--------------------------------------------------------------------------------------------------------------------------------------------------------
2017....................................  All Industries.............           48  AfrAmer....................          98%         100%           88%
2012....................................  All Industries.............           96  AfrAmer....................          97%          98%           92%
2007....................................  All Industries.............           96  AfrAmer....................          93%          97%           90%
2002....................................  All Industries.............          100  AfrAmer....................          98%         100%           98%
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
2017....................................  Construction...............           39  AfrAmer....................          77%          82%           46%
2012....................................  Construction...............           84  AfrAmer....................          88%          93%           80%
2007....................................  Construction...............           84  AfrAmer....................          85%          90%           82%
2002....................................  Construction...............           69  AfrAmer....................          86%          88%           72%
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
2017....................................  Professional Services......           41  AfrAmer....................          73%          80%           49%
2012....................................  Professional Services......           92  AfrAmer....................          78%          90%           70%
2007....................................  Professional Services......           92  AfrAmer....................          76%          88%           73%
2002....................................  Professional Services......           86  AfrAmer....................          94%          98%           80%
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
2017....................................  All Industries.............           52  Hispanic...................          87%          94%           79%
2012....................................  All Industries.............          101  Hispanic...................          87%          94%           84%
2007....................................  All Industries.............          101  Hispanic...................          82%          90%           86%
2002....................................  All Industries.............          102  Hispanic...................         100%         100%          100%
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
2017....................................  Construction...............           49  Hispanic...................          86%          92%           61%
2012....................................  Construction...............           95  Hispanic...................          89%          96%           79%
2007....................................  Construction...............           95  Hispanic...................          87%          93%           78%
2002....................................  Construction...............           85  Hispanic...................          88%          91%           81%
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
2017....................................  Professional Services......           48  Hispanic...................          42%          65%           29%
2012....................................  Professional Services......           97  Hispanic...................          63%          79%           54%
2007....................................  Professional Services......           97  Hispanic...................          65%          75%           57%
2002....................................  Professional Services......           84  Hispanic...................          93%          94%           74%
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
2017....................................  All Industries.............           52  Asian......................          98%          98%           96%
2012....................................  All Industries.............          104  Asian......................          68%          89%           73%
2007....................................  All Industries.............          104  Asian......................          75%          96%           80%
2002....................................  All Industries.............          102  Asian......................         100%         100%          100%
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
2017....................................  Construction...............           40  Asian......................          72%          75%           38%
2012....................................  Construction...............           84  Asian......................          70%          75%           57%
2007....................................  Construction...............           84  Asian......................          71%          77%           54%
2002....................................  Construction...............           58  Asian......................          74%          90%           53%
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
2017....................................  Professional Services......           49  Asian......................          14%          29%           16%
2012....................................  Professional Services......          100  Asian......................          21%          33%           34%
2007....................................  Professional Services......          100  Asian......................          15%          28%           32%
2002....................................  Professional Services......           88  Asian......................          64%          77%           51%
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
2017....................................  All Industries.............           36  NHPI.......................          81%          86%           58%
2012....................................  All Industries.............           71  NHPI.......................          86%          86%           70%
2007....................................  All Industries.............           71  NHPI.......................          86%          93%           72%
2002....................................  All Industries.............           48  NHPI.......................         100%         100%           96%
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
2017....................................  Construction...............           11  NHPI.......................          73%          73%           45%
2012....................................  Construction...............           33  NHPI.......................          76%          79%           74%
2007....................................  Construction...............           33  NHPI.......................          73%          79%           58%
2002....................................  Construction...............           10  NHPI.......................          70%          80%           50%
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
2017....................................  Professional Services......           13  NHPI.......................          69%          77%           46%
2012....................................  Professional Services......           31  NHPI.......................          68%          75%           73%
2007....................................  Professional Services......           31  NHPI.......................          52%          58%           39%
2002....................................  Professional Services......           13  NHPI.......................          92%          92%           85%
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
2017....................................  All Industries.............           49  AIAN.......................          76%          88%           55%
2012....................................  All Industries.............           94  AIAN.......................          89%          97%           82%
2007....................................  All Industries.............           94  AIAN.......................          91%          98%           82%
2002....................................  All Industries.............           96  AIAN.......................          99%          99%           98%
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
2017....................................  Construction...............           39  AIAN.......................          59%          72%           23%
2012....................................  Construction...............           74  AIAN.......................          72%          81%           53%
2007....................................  Construction...............           74  AIAN.......................          73%          85%           54%
2002....................................  Construction...............           74  AIAN.......................          81%          91%           64%
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
2017....................................  Professional Services......           33  AIAN.......................          52%          67%           27%
2012....................................  Professional Services......           79  AIAN.......................          79%          92%           51%
2007....................................  Professional Services......           79  AIAN.......................          68%          80%           43%
2002....................................  Professional Services......           71  AIAN.......................          90%          92%           76%
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
2017....................................  All Industries.............           52  NMF........................         100%         100%           98%
2012....................................  All Industries.............          104  NMF........................          98%          99%           98%
2007....................................  All Industries.............          104  NMF........................          98%         100%          100%
2002....................................  All Industries.............          104  NMF........................         100%         100%          100%
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
2017....................................  Construction...............           52  NMF........................          21%          54%            2%
2012....................................  Construction...............          103  NMF........................          30%          56%           16%
2007....................................  Construction...............          103  NMF........................          36%          67%           23%
2002....................................  Construction...............           42  NMF........................          71%          86%           50%
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
2017....................................  Professional Services......           52  NMF........................          92%         100%           83%
2012....................................  Professional Services......          103  NMF........................          97%         100%           94%
2007....................................  Professional Services......          103  NMF........................          99%          99%           94%
2002....................................  Professional Services......           54  NMF........................         100%         100%           98%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Author's calculations from the 2017 ABS, and the 2012, 2007 and 2002 SBO. Note: ``NHPI'' stands for Native Hawaiians and Other Pacific
  Islanders, ``AIAN'' stands for American Indians and Alaska Natives, and ``NMF'' stands for non-minority female.

            a. Conclusions from the Survey of Business Owners/Annual 
                    Business Survey Data
    While the exact proportions vary, large and statistically 
significant disparities are observed in the U.S. as a whole, in all 50 
states and the District of Columbia, for all minority groups--African 
Americans, Hispanics, Asians and Pacific Islanders, and American 
Indians and Alaska Natives--as well as for non-minority women. These 
disparities are found in the Construction sector, the Professional, 
Scientific and Technical Services Sector (which includes Architecture, 
Engineering and related industries), and in the economy as a whole.
   D. There is Strong Evidence of Disparities and Discrimination in 
       Minority and Female Business Formation Rates and Earnings
    It is fair to ask whether the disparities documented in most 
disparity studies and in the SBO and ABS data result primarily from 
discrimination, or whether they result from other, potentially non-
discriminatory, factors.
    This question can be tested directly using the American Community 
Survey 5-year Public Use Microdata Sample (ACS PUMS), which allows us 
to examine business outcomes for different race, ethnic, and gender 
groups in great detail while holding constant a wide variety of other 
demographic and economic variables.
1. Discrimination Impacting Business Formation
            a. Methods
    To assess the extent of discrimination in business formation, I 
developed three different statistical regression models.\33\ In ``Model 
A'', the only independent variables included in the analysis are 
indicators for race and sex and survey year. This model identifies the 
raw differences in business formation rates between minorities, women, 
and non-minority males, holding only time constant.
---------------------------------------------------------------------------
    \33\ Regression analysis is a type of statistical analysis that 
examines the correlation between two variables (``regression'') or 
three or more variables (``multiple regression'' or ``multivariate 
regression'') in a mathematical model by determining the line of best 
fit through a series of data points. In simpler terms, regression 
analysis is a statistical technique allowing the comparison between 
certain business outcomes, such as business formation, business 
earnings, or loan denials, and minority or female status, while holding 
other, potentially non-discriminatory factors, such as geographic 
location, industry affiliation, education, age, or balance sheets, 
constant.
---------------------------------------------------------------------------
    Next, ``Model B'' adds to the regression equation several 
independent variables that are indicators of qualifications and 
capacity, including schooling, state of residence, and age.\34\ This 
allows us to compare individuals that are similarly situated in terms 
of their educational attainment, their geographic location, and their 
labor market experience.
---------------------------------------------------------------------------
    \34\ A person's age is a widely used proxy for their labor market 
experience and enters the regression equation quadratically.
---------------------------------------------------------------------------
    Finally, ``Model C'' adds to the regression equation a large number 
of independent variables that have been shown to be related to the 
propensity to become a business owner. These include proxies for 
individual financial assets (interest and dividend income, home 
ownership status, and home property value), family structure (spouse 
present in the household, number of children in the household), 
mobility (lived in the same house last year), immigration status 
(foreign born, years in the U.S., English proficiency), military status 
(veteran), and local macroeconomic conditions by state (general 
population level, unemployment rate, number of full-time government 
employees, per capita personal income).\35\
---------------------------------------------------------------------------
    \35\ Interest and dividend income and per capita personal income 
are included in the model in their logarithmic forms.
---------------------------------------------------------------------------
    Taken together, these three models allow us to test whether 
discrimination is the primary explanation for observed business 
disparities for minorities and women. If disparity indexes remain 
adverse, large, and statistically significant throughout Models A, B 
and C, then the answer is ``Yes.''
            b. Data
    The data used for the analyses in this section are the most recent 
2014-2018 American Community Survey 5-year Public Use Microdata Sample 
(ACS), which allows us to examine business outcomes for different race, 
ethnic, and gender groups in great detail while holding constant a wide 
variety of other demographic and economic variables.\36\
---------------------------------------------------------------------------
    \36\ These ACS data were released in January 2020. See U.S. Census 
Bureau (2020d).
---------------------------------------------------------------------------
    The analyses undertaken in this section require individual-level 
data (i.e., ``microdata'') with relevant information on business 
ownership status and other key socioeconomic characteristics. The 
American Community Survey is an ongoing annual survey covering the same 
type of information that was formerly collected in the decennial census 
``long form.'' The ACS is sent to approximately 3.5 million addresses 
annually, including housing units in all counties in the 50 states and 
the District of Columbia.\37\ The PUMS file from the ACS contains 
records for a subsample of the full ACS. The data used here are the 
multi-year estimates combining the 2014 through 2018 ACS PUMS records. 
The combined file contains over six million person-level records. The 
2014-2018 ACS PUMS provides the full range of population and housing 
information collected in the annual ACS and in the decennial census. 
Business ownership status is identified in the ACS PUMS through the 
``class of worker'' variable, which distinguishes the unincorporated 
and incorporated self-employed from others in the labor force. The 
presence of the class of worker variable allows us to construct a 
detailed cross-sectional sample of individual business owners and their 
associated earnings. The ACS PUMS universe for all of the analyses 
presented below includes all prime age (16-64) private sector labor 
force participants.
---------------------------------------------------------------------------
    \37\ U.S. Census Bureau (2013).
---------------------------------------------------------------------------
            c. Economy-Wide Findings
    I estimated Models A, B and C across four different industry 
groupings in the U.S.: (1) the entire economy, (2) the construction 
sector, and (3) the Architecture/Engineering sector. These results are 
reported below in Tables 10-12.
    For the economy as a whole, the results are presented in Table 10. 
Model A identifies large, adverse, and statistically significant 
disparities in business formation rates in 2014-2018 for all minority 
groups and for women. The results for Model A show:
      For African Americans, the observed self-employment rate 
is 5.7 percent and the model predicts that it would be 6.7 percentage 
points higher--12.5 percent--if African Americans faced the same market 
outcomes as non-minority males. This yields a disparity index of 46.
      For Hispanics, the observed self-employment rate is 9.2 
percent and the model predicts that it would be 3.8 percentage points 
higher--13 percent--if Hispanics faced the same market outcomes as non-
minority males. This yields a disparity index of 70.9.
      For Asian and Pacific Islanders, the observed self-
employment rate is 10 percent and the model predicts that it would be 3 
percentage points higher--13 percent--if Asian and Pacific Islanders 
faced the same market outcomes as non-minority males. This yields a 
disparity index of 76.8.
      For American Indians and Alaska Natives, the observed 
self-employment rate is 8.7 percent and the model predicts that it 
would be 3.7 percentage points higher--12.4 percent--if American 
Indians and Alaska Natives faced the same market outcomes as non-
minority males. This yields a disparity index of 70.3.
      For minorities as a group, the observed self-employment 
rate is 8.3 percent and the model predicts that it would be 4.8 
percentage points higher--13.1 percent--if minorities as a group faced 
the same market outcomes as non-minority males. This yields a disparity 
index of 63.2.
      For non-minority females, the observed self-employment 
rate is 9 percent and the model predicts that it would be 4 percentage 
points higher--13 percent--if non-minority females faced the same 
market outcomes as non-minority males. This yields a disparity index of 
69.1.

    For minorities and women as a group, the observed self-employment 
rate is 8.6 percent and the model predicts that it would be 4.9 
percentage points higher--13.4 percent--if minorities and women as a 
group faced the same market outcomes as non-minority males. This yields 
a disparity index of 63.7.Despite the addition of important 
qualifications and capacity variables, the results for Model B show 
that, for the economy as a whole, disparities in business formation 
rates remain large, adverse, and statistically significant even when we 
compare individuals that are similarly situated in terms of their 
educational attainment, their geographic location, and their labor 
market experience. Specifically, the results for Model B show:
      For African Americans, the observed self-employment rate 
is 5.7 percent and the model predicts that it would be 5.9 percentage 
points higher--11.6 percent--if African Americans faced the same market 
outcomes as non-minority males. This yields a disparity index of 49.5.
      For Hispanics, the observed self-employment rate is 9.2 
percent and the model predicts that it would be 3.3 percentage points 
higher--12.5 percent--if Hispanics faced the same market outcomes as 
non-minority males. This yields a disparity index of 73.9.
      For Asian and Pacific Islanders, the observed self-
employment rate is 10 percent and the model predicts that it would be 
3.2 percentage points higher--13.1 percent--if Asian and Pacific 
Islanders faced the same market outcomes as non-minority males. This 
yields a disparity index of 75.9.
      For American Indians and Alaska Natives, the observed 
self-employment rate is 8.7 percent and the model predicts that it 
would be 3.5 percentage points higher--12.2 percent--if American 
Indians and Alaska Natives faced the same market outcomes as non-
minority males. This yields a disparity index of 71.4.
      For minorities as a group, the observed self-employment 
rate is 9 percent and the model predicts that it would be 3.6 
percentage points higher--12.5 percent--if minorities as a group faced 
the same market outcomes as non-minority males. This yields a disparity 
index of 71.6.
      For non-minority females, the observed self-employment 
rate is 8.3 percent and the model predicts that it would be 4.3 
percentage points higher--12.6 percent--if non-minority females faced 
the same market outcomes as non-minority males. This yields a disparity 
index of 65.7.
      For minorities and women as a group, the observed self-
employment rate is 8.6 percent and the model predicts that it would be 
4.3 percentage points higher--12.9 percent--if minorities and women as 
a group faced the same market outcomes as non-minority males. This 
yields a disparity index of 66.5.

    In Model C, numerous additional variables are included that measure 
individual financial assets, family structure, mobility, immigration 
status, military status, and local macroeconomic conditions. Despite 
the inclusion of all these additional explanatory variables, the 
results still show that disparities in business formation rates remain 
large, adverse, and statistically significant when we compare 
individuals who are also similarly situated in terms of these 
additional measures. The specific results for Model C show:
      For African Americans, the observed self-employment rate 
is 5.7 percent and the model predicts that it would be 5.4 percentage 
points higher--11.2 percent--if African Americans faced the same market 
outcomes as non-minority males. This yields a disparity index of 51.5.
      For Hispanics, the observed self-employment rate is 9.2 
percent and the model predicts that it would be 4.3 percentage points 
higher--13.5 percent--if Hispanics faced the same market outcomes as 
non-minority males. This yields a disparity index of 68.4.
      For Asian and Pacific Islanders, the observed self-
employment rate is 10 percent and the model predicts that it would be 5 
percentage points higher--14.9 percent--if Asian and Pacific Islanders 
faced the same market outcomes as non-minority males. This yields a 
disparity index of 66.7.
      For American Indians and Alaska Natives, the observed 
self-employment rate is 8.7 percent and the model predicts that it 
would be 3.2 percentage points higher--11.9 percent--if American 
Indians and Alaska Natives faced the same market outcomes as non-
minority males. This yields a disparity index of 73.3.
      For minorities as a group, the observed self-employment 
rate is 9 percent and the model predicts that it would be 3.5 
percentage points higher--12.4 percent--if minorities as a group faced 
the same market outcomes as non-minority males. This yields a disparity 
index of 72.1.
      For non-minority females, the observed self-employment 
rate is 8.3 percent and the model predicts that it would be 5.1 
percentage points higher--13.4 percent--if non-minority females faced 
the same market outcomes as non-minority males. This yields a disparity 
index of 61.9.
      For minorities and women as a group, the observed self-
employment rate is 8.6 percent and the model predicts that it would be 
4.5 percentage points higher--13.1 percent--if minorities and women as 
a group faced the same market outcomes as non-minority males. This 
yields a disparity index of 65.6.

  Table 10. Actual and Potential Minority and Female Business Formation
                    Rates, 2014-2018, All Industries
------------------------------------------------------------------------
                                        Current    Expected    Disparity
                                       Business    Business      Index
                                       Formation   Formation -----------
           Race, Location              Rate (%)    Rate (%)
                                     ------------------------     (3)
                                          (1)         (2)
------------------------------------------------------------------------
Regression Model A......................................................
------------------------------------------------------------------------
African American....................        5.74       12.48
Hispanic............................        9.21       12.99
Asian and Pacific Islander..........        9.96       12.97
American Indian and Alaska Native...        8.70       12.38
Two or More Races...................        8.87       12.66
Minority............................        8.27       13.08
Non-minority female.................        8.95       12.96
DBE.................................        8.56       13.44
Non-minority male...................       13.09
------------------------------------------------------------------------
Regression Model B......................................................
------------------------------------------------------------------------
African American....................        5.74       11.60
Hispanic............................        9.21       12.46
Asian and Pacific Islander..........        9.96       13.12
American Indian and Alaska Native...        8.70       12.18
Two or More Races...................        8.87       11.06
Minority............................        8.27       12.58
Non-minority female.................        8.95       12.50
DBE.................................        8.56       12.87
Non-minority male...................       13.09
------------------------------------------------------------------------
Regression Model C......................................................
------------------------------------------------------------------------
African American....................        5.74       11.15
Hispanic............................        9.21       13.46
Asian and Pacific Islander..........        9.96       14.93
American Indian and Alaska Native...        8.70       11.87
Two or More Races...................        8.87       11.06
Minority............................        8.27       13.35
Non-minority female.................        8.95       12.41
DBE.................................        8.56       13.05
Non-minority male...................       13.09
------------------------------------------------------------------------
Source and Notes: Calculations by the author from the 2014-2018 ACS
  PUMS. Disparity Indexes in italics are statistically significant at a
  95 percent probability level or better.

            d. Findings for Construction
    When the scope of the inquiry is limited to just the construction 
industries, the results appear in Table 11. When we examine just the 
construction industry, Model A identifies large, adverse, and 
statistically significant disparities in business formation rates in 
2014-2018 for all minority groups and for women. The results for Model 
A show:
      For African Americans, the observed self-employment rate 
is 17.8 percent and the model predicts that it would be 8.9 percentage 
points higher--26.6 percent--if African Americans faced the same market 
outcomes as non-minority males. This yields a disparity index of 66.7.
      For Hispanics, the observed self-employment rate is 17.9 
percent and the model predicts that it would be 8.7 percentage points 
higher--26.6 percent--if Hispanics faced the same market outcomes as 
non-minority males. This yields a disparity index of 67.3.
      For Asian and Pacific Islanders, the observed self-
employment rate is 23.6 percent and the model predicts that it would be 
3.9 percentage points higher--27.5 percent--if Asian and Pacific 
Islanders faced the same market outcomes as non-minority males. This 
yields a disparity index of 85.9.
      For American Indians and Alaska Natives, the observed 
self-employment rate is 19.1 percent and the model predicts that it 
would be 9.1 percentage points higher--28.2 percent--if American 
Indians and Alaska Natives faced the same market outcomes as non-
minority males. This yields a disparity index of 67.9.
      For minorities as a group, the observed self-employment 
rate is 18.3 percent and the model predicts that it would be 8.5 
percentage points higher--26.8 percent--if minorities as a group faced 
the same market outcomes as non-minority males. This yields a disparity 
index of 68.2.
      For non-minority females, the observed self-employment 
rate is 17.9 percent and the model predicts that it would be 9 
percentage points higher--26.9 percent--if non-minority females faced 
the same market outcomes as non-minority males. This yields a disparity 
index of 66.5.
      For minorities and women as a group, the observed self-
employment rate is 18.2 percent and the model predicts that it would be 
8.9 percentage points higher--27.1 percent--if minorities and women as 
a group faced the same market outcomes as non-minority males. This 
yields a disparity index of 67.3.

    Despite the addition of important qualifications and capacity 
variables, the results for Model B show that, for the economy as a 
whole, disparities in business formation rates remain large, adverse, 
and statistically significant even when we compare individuals that are 
similarly situated in terms of their educational attainment, their 
geographic location, and their labor market experience. Specifically, 
the results for Model B show:
      For African Americans, the observed self-employment rate 
is 17.8 percent and the model predicts that it would be 8.7 percentage 
points higher--26.5 percent--if African Americans faced the same market 
outcomes as non-minority males. This yields a disparity index of 67.2.
      For Hispanics, the observed self-employment rate is 17.9 
percent and the model predicts that it would be 5.6 percentage points 
higher--23.5 percent--if Hispanics faced the same market outcomes as 
non-minority males. This yields a disparity index of 76.1.
      For Asian and Pacific Islanders, the observed self-
employment rate is 23.6 percent and the model predicts that it would be 
2.9 percentage points higher--26.5 percent--if Asian and Pacific 
Islanders faced the same market outcomes as non-minority males. This 
yields a disparity index of 89.1.
      For American Indians and Alaska Natives, the observed 
self-employment rate is 19.1 percent and the model predicts that it 
would be 7.9 percentage points higher--27 percent--if American Indians 
and Alaska Natives faced the same market outcomes as non-minority 
males. This yields a disparity index of 70.9.
      For minorities as a group, the observed self-employment 
rate is 17.9 percent and the model predicts that it would be 10 
percentage points higher--27.9 percent--if minorities as a group faced 
the same market outcomes as non-minority males. This yields a disparity 
index of 64.1.
      For non-minority females, the observed self-employment 
rate is 18.3 percent and the model predicts that it would be 6.1 
percentage points higher--24.3 percent--if non-minority females faced 
the same market outcomes as non-minority males. This yields a disparity 
index of 75.
      For minorities and women as a group, the observed self-
employment rate is 18.2 percent and the model predicts that it would be 
7.5 percentage points higher--25.7 percent--if minorities and women as 
a group faced the same market outcomes as non-minority males. This 
yields a disparity index of 71.

    In Model C, numerous additional variables are included that measure 
individual financial assets, family structure, mobility, immigration 
status, military status, and local macroeconomic conditions. Despite 
the inclusion of all these additional explanatory variables, the 
results still show that disparities in business formation rates remain 
large, adverse, and statistically significant when we compare 
individuals who are also similarly situated in terms of these 
additional measures. The specific results for Model C show:
      For African Americans, the observed self-employment rate 
is 17.8 percent and the model predicts that it would be 7.5 percentage 
points higher--25.3 percent--if African Americans faced the same market 
outcomes as non-minority males. This yields a disparity index of 70.4.
      For Hispanics, the observed self-employment rate is 17.9 
percent and the model predicts that it would be 9 percentage points 
higher--26.9 percent--if Hispanics faced the same market outcomes as 
non-minority males. This yields a disparity index of 66.5.
      For Asian and Pacific Islanders, the observed self-
employment rate is 23.6 percent and the model predicts that it would be 
6.8 percentage points higher--30.5 percent--if Asian and Pacific 
Islanders faced the same market outcomes as non-minority males. This 
yields a disparity index of 77.6.
      For American Indians and Alaska Natives, the observed 
self-employment rate is 19.1 percent and the model predicts that it 
would be 7.9 percentage points higher--27.1 percent--if American 
Indians and Alaska Natives faced the same market outcomes as non-
minority males. This yields a disparity index of 70.7.
      For minorities as a group, the observed self-employment 
rate is 17.9 percent and the model predicts that it would be 10.3 
percentage points higher--28.2 percent--if minorities as a group faced 
the same market outcomes as non-minority males. This yields a disparity 
index of 63.4.
      For non-minority females, the observed self-employment 
rate is 18.3 percent and the model predicts that it would be 8.1 
percentage points higher--26.4 percent--if non-minority females faced 
the same market outcomes as non-minority males. This yields a disparity 
index of 69.2.
      For minorities and women as a group, the observed self-
employment rate is 18.2 percent and the model predicts that it would be 
9.5 percentage points higher--27.7 percent--if minorities and women as 
a group faced the same market outcomes as non-minority males. This 
yields a disparity index of 65.8.

  Table 11. Actual and Potential Minority Business and Female Formation
                     Rates, 2014-2018, Construction
------------------------------------------------------------------------
                                        Current    Expected    Disparity
                                       Business    Business      Index
                                       Formation   Formation -----------
           Race, Location              Rate (%)    Rate (%)
                                     ------------------------     (3)
                                          (1)         (2)
------------------------------------------------------------------------
Regression Model A......................................................
------------------------------------------------------------------------
African American....................       17.78       26.64
Hispanic............................       17.90       26.58
Asian and Pacific Islander..........       23.64       27.52
American Indian and Alaska Native...       19.13       28.19
Two or More Races...................       20.10       25.79
Minority............................       18.25       26.77
Non-minority female.................       17.91       26.92
DBE.................................       18.20       27.06
Non-minority male...................       26.84
------------------------------------------------------------------------
Regression Model B......................................................
------------------------------------------------------------------------
African American....................       17.78       26.47
Hispanic............................       17.90       23.52
Asian and Pacific Islander..........       23.64       26.53
American Indian and Alaska Native...       19.13       27.00
Two or More Races...................       20.10       22.43
Minority............................       18.25       24.33
Non-minority female.................       17.91       27.92
DBE.................................       18.20       25.65
Non-minority male...................       26.84
------------------------------------------------------------------------
Regression Model C......................................................
------------------------------------------------------------------------
African American....................       17.78       25.27
Hispanic............................       17.90       26.90
Asian and Pacific Islander..........       23.64       30.45
American Indian and Alaska Native...       19.13       27.06
Two or More Races...................       20.10       22.62
Minority............................       18.25       28.24
Non-minority female.................       17.91       26.38
DBE.................................       18.20       27.65
Non-minority male...................       26.84
------------------------------------------------------------------------
Source and Notes: See Table 10.

            e. Findings for Architecture/Engineering
    When the scope of the inquiry is limited to just the Architecture/
Engineering industries, the results appear in Table 12. When we examine 
just the Architecture/Engineering industries, Model A identifies large, 
adverse, and statistically significant disparities in business 
formation rates in 2014-2018 for all minority groups and for women. The 
results for Model A show:
      For African Americans, the observed self-employment rate 
is 6.5 percent and the model predicts that it would be 5.2 percentage 
points higher--11.8 percent--if African Americans faced the same market 
outcomes as non-minority males. This yields a disparity index of 55.6.
      For Hispanics, the observed self-employment rate is 8.4 
percent and the model predicts that it would be 3.4 percentage points 
higher--11.8 percent--if Hispanics faced the same market outcomes as 
non-minority males. This yields a disparity index of 71.1.
      For Asian and Pacific Islanders, the observed self-
employment rate is 6.5 percent and the model predicts that it would be 
5.1 percentage points higher--11.5 percent--if Asian and Pacific 
Islanders faced the same market outcomes as non-minority males. This 
yields a disparity index of 55.9.
      For American Indians and Alaska Natives, the observed 
self-employment rate is 6.2 percent and the model predicts that it 
would be 5.3 percentage points higher--11.5 percent--if American 
Indians and Alaska Natives faced the same market outcomes as non-
minority males. This yields a disparity index of 53.7.
      For minorities as a group, the observed self-employment 
rate is 7.4 percent and the model predicts that it would be 4.5 
percentage points higher--11.9 percent--if minorities as a group faced 
the same market outcomes as non-minority males. This yields a disparity 
index of 62.
      For non-minority females, the observed self-employment 
rate is 7.8 percent and the model predicts that it would be 4.2 
percentage points higher--12 percent--if non-minority females faced the 
same market outcomes as non-minority males. This yields a disparity 
index of 65.4.
      For minorities and women as a group, the observed self-
employment rate is 7.6 percent and the model predicts that it would be 
4.7 percentage points higher--12.3 percent--if minorities and women as 
a group faced the same market outcomes as non-minority males. This 
yields a disparity index of 62.

    Despite the addition of important qualifications and capacity 
variables, the results for Model B show that, for the economy as a 
whole, disparities in business formation rates remain large, adverse, 
and statistically significant even when we compare individuals that are 
similarly situated in terms of their educational attainment, their 
geographic location, and their labor market experience. Specifically, 
the results for Model B show:
      For African Americans, the observed self-employment rate 
is 6.5 percent and the model predicts that it would be 3.6 percentage 
points higher--10.1 percent--if African Americans faced the same market 
outcomes as non-minority males. This yields a disparity index of 64.6.
      For Hispanics, the observed self-employment rate is 8.4 
percent and the model predicts that it would be 1.6 percentage points 
higher--9.9 percent--if Hispanics faced the same market outcomes as 
non-minority males. This yields a disparity index of 84.4.
      For Asian and Pacific Islanders, the observed self-
employment rate is 6.5 percent and the model predicts that it would be 
4.4 percentage points higher--10.9 percent--if Asian and Pacific 
Islanders faced the same market outcomes as non-minority males. This 
yields a disparity index of 59.2.
      For American Indians and Alaska Natives, the observed 
self-employment rate is 6.2 percent and the model predicts that it 
would be 4.4 percentage points higher--10.5 percent--if American 
Indians and Alaska Natives faced the same market outcomes as non-
minority males. This yields a disparity index of 58.6.
      For minorities as a group, the observed self-employment 
rate is 7.8 percent and the model predicts that it would be 3.1 
percentage points higher--11 percent--if minorities as a group faced 
the same market outcomes as non-minority males. This yields a disparity 
index of 71.4.
      For non-minority females, the observed self-employment 
rate is 7.4 percent and the model predicts that it would be 3.1 
percentage points higher--10.5 percent--if non-minority females faced 
the same market outcomes as non-minority males. This yields a disparity 
index of 70.5.
      For minorities and women as a group, the observed self-
employment rate is 7.6 percent and the model predicts that it would be 
3.3 percentage points higher--10.9 percent--if minorities and women as 
a group faced the same market outcomes as non-minority males. This 
yields a disparity index of 69.6.

    In Model C, numerous additional variables are included that measure 
individual financial assets, family structure, mobility, immigration 
status, military status, and local macroeconomic conditions. Despite 
the inclusion of all these additional explanatory variables, the 
results still show that disparities in business formation rates remain 
large, adverse, and statistically significant when we compare 
individuals who are also similarly situated in terms of these 
additional measures. The specific results for Model C show:
      For African Americans, the observed self-employment rate 
is 6.5 percent and the model predicts that it would be 3 percentage 
points higher--9.6 percent--if African Americans faced the same market 
outcomes as non-minority males. This yields a disparity index of 68.3.
      For Hispanics, the observed self-employment rate is 8.4 
percent and the model predicts that it would be 1.8 percentage points 
higher--10.2 percent--if Hispanics faced the same market outcomes as 
non-minority males. This yields a disparity index of 82.3.
      For Asian and Pacific Islanders, the observed self-
employment rate is 6.5 percent and the model predicts that it would be 
4.9 percentage points higher--11.4 percent--if Asian and Pacific 
Islanders faced the same market outcomes as non-minority males. This 
yields a disparity index of 56.7.
      For American Indians and Alaska Natives, the observed 
self-employment rate is 6.2 percent and the model predicts that it 
would be 4.1 percentage points higher--10.3 percent--if American 
Indians and Alaska Natives faced the same market outcomes as non-
minority males. This yields a disparity index of 60.3.
      For minorities as a group, the observed self-employment 
rate is 7.8 percent and the model predicts that it would be 3.4 
percentage points higher--11.2 percent--if minorities as a group faced 
the same market outcomes as non-minority males. This yields a disparity 
index of 69.9.
      For non-minority females, the observed self-employment 
rate is 7.4 percent and the model predicts that it would be 3.1 
percentage points higher--10.5 percent--if non-minority females faced 
the same market outcomes as non-minority males. This yields a disparity 
index of 70.5.
      For minorities and women as a group, the observed self-
employment rate is 7.6 percent and the model predicts that it would be 
3.5 percentage points higher--11.1 percent--if minorities and women as 
a group faced the same market outcomes as non-minority males. This 
yields a disparity index of 68.5.

  Table 12. Actual and Potential Minority and Female Business Formation
               Rates, 2014-2018, Architecture/Engineering
------------------------------------------------------------------------
                                        Current    Expected    Disparity
                                       Business    Business      Index
                                       Formation   Formation -----------
           Race, Location              Rate (%)    Rate (%)
                                     ------------------------     (3)
                                          (1)         (2)
------------------------------------------------------------------------
Regression Model A......................................................
------------------------------------------------------------------------
African American....................        6.54       11.77
Hispanic............................        8.37       11.78
Asian and Pacific Islander..........        6.45       11.54
American Indian and Alaska Native...        6.18       11.50
Two or More Races...................        8.68       11.92
Minority............................        7.40       11.94
Non-minority female.................        7.84       11.99
DBE.................................        7.60       12.25
Non-minority male...................       12.15
------------------------------------------------------------------------
Regression Model B......................................................
------------------------------------------------------------------------
African American....................        6.54       10.13
Hispanic............................        8.37        9.92
Asian and Pacific Islander..........        6.45       10.89
American Indian and Alaska Native...        6.18       10.54
Two or More Races...................        8.68        9.83       88.30
Minority............................        7.40       10.50
Non-minority female.................        7.84       10.98
DBE.................................        7.60       10.92
Non-minority male...................       12.15
------------------------------------------------------------------------
Regression Model C......................................................
------------------------------------------------------------------------
African American....................        6.54        9.58
Hispanic............................        8.37       10.17
Asian and Pacific Islander..........        6.45       11.37
American Indian and Alaska Native...        6.18       10.25
Two or More Races...................        8.68        9.85       88.12
Minority............................        7.40       10.49
Non-minority female.................        7.84       11.22
DBE.................................        7.60       11.09
Non-minority male...................       12.15
------------------------------------------------------------------------
Source and Notes: See Table 10.

2. Discrimination Impacting Business Earnings
    Even for those disproportionately few minority and female 
entrepreneurs who manage against the odds--as we have just seen from 
the results in Tables 10-12--to form their own businesses, their 
earnings from those businesses tend to lag far behind their non-
minority male counterparts. These disparities, just as those observed 
with respect to business formation, tend to remain large, adverse, and 
statistically significant--even when other important non-discriminatory 
attributes are held constant.
            a. Methods and Data
    I examined deficits in business owner earnings between minorities, 
women, and their non-minority male counterparts using the same 
framework as above. Model A included only the race, sex, and time 
indicators, thus showing the raw disparities in earnings between the 
groups. Model B consisted of our set of qualifications and capacity 
controls, which include educational attainment, geographic location, 
and labor market experience. Finally, Model C included all the controls 
from Models A and B plus those for individual financial assets, family 
structure, mobility, immigration status, military status, and local 
macroeconomic conditions.
            b. Economy-Wide Findings
    As shown in Table 13, the baseline regression equation (Model A) 
includes only indicators for race, sex and time. This is the raw 
difference in earnings between minority and women business owners, one 
the one hand, and non-minority male business owners, on the other. The 
results for Model A show:
      African American business owners earned 46.2 percent less 
than non-minority male business owners from 2014-2018. In other words, 
for each dollar of business earnings accruing to non-minority males, 
African American business owners made just 54 cents.
      Hispanic business owners earned 26.9 percent less than 
non-minority male business owners from 2014-2018. For each dollar of 
business earnings accruing to non-minority males, Hispanic business 
owners made just 73 cents.
      Asian and Pacific business owners earned 8.9 percent less 
than non-minority male business owners from 2014-2018. For each dollar 
of business earnings accruing to non-minority males, Asian and Pacific 
business owners made just 91 cents.
      Native business owners earned 44 percent less than non-
minority male business owners from 2014-2018. For each dollar of 
business earnings accruing to non-minority males, Native business 
owners made just 56 cents.
      Minority business owners earned 29.9 percent less than 
non-minority male business owners from 2014-2018. For each dollar of 
business earnings accruing to non-minority males, minority business 
owners made just 70 cents.
      Non-minority female business owners earned 46.3 percent 
less than non-minority male business owners from 2014-2018. For each 
dollar of business earnings accruing to non-minority males, non-
minority female business owners made just 54 cents.
      Minority and Female business owners earned 39.2 percent 
less than non-minority male business owners from 2014-2018. For each 
dollar of business earnings accruing to non-minority males, minority 
and female business owners made just 61 cents.

    In Model B, which accounts for some common qualifications and 
capacity controls, we observe small changes in both directions for all 
the groups except Asian and Pacific Islanders, for whom the business 
earnings gap increases significantly compared to Model A. Specifically, 
the results for Model B show:
      African American business owners earned 44.8 percent less 
than non-minority male business owners from 2014-2018. In other words, 
for each dollar of business earnings accruing to non-minority males, 
African American business owners made just 55 cents.
      Hispanic business owners earned 26.1 percent less than 
non-minority male business owners from 2014-2018. For each dollar of 
business earnings accruing to non-minority males, Hispanic business 
owners made just 74 cents.
      Asian and Pacific business owners earned 18.2 percent 
less than non-minority male business owners from 2014-2018. For each 
dollar of business earnings accruing to non-minority males, Asian and 
Pacific business owners made just 82 cents.
      Native business owners earned 40.6 percent less than non-
minority male business owners from 2014-2018. For each dollar of 
business earnings accruing to non-minority males, Native business 
owners made just 59 cents.
      Minority business owners earned 30.9 percent less than 
non-minority male business owners from 2014-2018. For each dollar of 
business earnings accruing to non-minority males, minority business 
owners made just 69 cents.
      Non-minority female business owners earned 45 percent 
less than non-minority male business owners from 2014-2018. For each 
dollar of business earnings accruing to non-minority males, non-
minority female business owners made just 55 cents.
      Minority and Female business owners earned 39.6 percent 
less than non-minority male business owners from 2014-2018. For each 
dollar of business earnings accruing to non-minority males, minority 
and female business owners made just 60 cents.

    In Model C, which accounts for a large set of additional 
explanatory variables related to business owner earnings, we again 
observe small changes in both directions for all the groups except 
Asian and Pacific Islanders, for whom the business earnings gap 
increases significantly compared to Model B. Specifically, the results 
for Model C show:
      African American business owners earned 38.2 percent less 
than non-minority male business owners from 2014-2018. In other words, 
for each dollar of business earnings accruing to non-minority males, 
African American business owners made just 62 cents.
      Hispanic business owners earned 29.4 percent less than 
non-minority male business owners from 2014-2018. For each dollar of 
business earnings accruing to non-minority males, Hispanic business 
owners made just 71 cents.
      Asian and Pacific business owners earned 28.9 percent 
less than non-minority male business owners from 2014-2018. For each 
dollar of business earnings accruing to non-minority males, Asian and 
Pacific business owners made just 71 cents.
      Native business owners earned 36.9 percent less than non-
minority male business owners from 2014-2018. For each dollar of 
business earnings accruing to non-minority males, Native business 
owners made just 63 cents.
      Minority business owners earned 44.4 percent less than 
non-minority male business owners from 2014-2018. For each dollar of 
business earnings accruing to non-minority males, minority business 
owners made just 56 cents.
      Non-minority female business owners earned 33.3 percent 
less than non-minority male business owners from 2014-2018. For each 
dollar of business earnings accruing to non-minority males, non-
minority female business owners made just 67 cents.
      Minority and Female business owners earned 41.1 percent 
less than non-minority male business owners from 2014-2018. For each 
dollar of business earnings accruing to non-minority males, minority 
and female business owners made just 59 cents.

    All of these economy-wide findings are statistically significant at 
a 95 percent probability level or better.

 Table 13. Minority and Female Business Owner Earnings Disparities, All
                               Industries
------------------------------------------------------------------------
                                                   Business      Cents
                                                   Earnings   Earned Per
                                                    Deficit    Dollar of
                                                      (%)        Non-
                 Race, Location                  ------------  Minority
                                                                 Male
                                                               Earnings
                                                      (1)    -----------
                                                                  (2)
------------------------------------------------------------------------
Regression Model A......................................................
------------------------------------------------------------------------
African American................................           -           
Hispanic........................................           -           
Asian and Pacific Islander......................           -           
American Indian and Alaska Native...............           -           
Two or More Races...............................           -           
Minority........................................           -           
Non-minority female.............................           -           
DBE.............................................           -           
------------------------------------------------------------------------
Regression Model B......................................................
------------------------------------------------------------------------
African American................................           -           
Hispanic........................................           -           
Asian and Pacific Islander......................           -           
American Indian and Alaska Native...............           -           
Two or More Races...............................           -           
Minority........................................           -           
Non-minority female.............................           -           
DBE.............................................           -           
------------------------------------------------------------------------
Regression Model C......................................................
------------------------------------------------------------------------
African American................................           -           
Hispanic........................................           -           
Asian and Pacific Islander......................           -           
American Indian and Alaska Native...............           -           
Two or More Races...............................           -           
Minority........................................           -           
Non-minority female.............................           -           
DBE.............................................           -           
------------------------------------------------------------------------
Source and Notes: Calculations by the author from the 2014-2018 ACS
  PUMS. Figures in italics are statistically significant at a 95 percent
  probability level or better.

            c. Findings for Construction
    As shown in Table 14, the baseline regression equation (Model A) 
includes only indicators for race, sex and time. This is the raw 
difference in earnings between minority and women business owners, one 
the one hand, and non-minority male business owners, on the other. The 
results for Model A show:
      African American business owners earned 40.4 percent less 
than non-minority male business owners from 2014-2018. In other words, 
for each dollar of business earnings accruing to non-minority males, 
African American business owners made just 60 cents.
      Hispanic business owners earned 12.4 percent less than 
non-minority male business owners from 2014-2018. For each dollar of 
business earnings accruing to non-minority males, Hispanic business 
owners made just 88 cents.
      Asian and Pacific business owners earned 1.1 percent less 
than non-minority male business owners from 2014-2018. For each dollar 
of business earnings accruing to non-minority males, Asian and Pacific 
business owners made just 99 cents.
      Native business owners earned 30.4 percent less than non-
minority male business owners from 2014-2018. For each dollar of 
business earnings accruing to non-minority males, Native business 
owners made just 70 cents.
      Minority business owners earned 17.3 percent less than 
non-minority male business owners from 2014-2018. For each dollar of 
business earnings accruing to non-minority males, minority business 
owners made just 83 cents.
      Non-minority female business owners earned 45.6 percent 
less than non-minority male business owners from 2014-2018. For each 
dollar of business earnings accruing to non-minority males, non-
minority female business owners made just 54 cents.
      Minority and Female business owners earned 22.3 percent 
less than non-minority male business owners from 2014-2018. For each 
dollar of business earnings accruing to non-minority males, minority 
and female business owners made just 78 cents.

    In Model B, which accounts for some common qualifications and 
capacity controls, we observe small changes in both directions for all 
the groups except Asian and Pacific Islanders, for whom the business 
earnings gap increases significantly compared to Model A. Specifically, 
the results for Model B show:
      African American business owners earned 39.9 percent less 
than non-minority male business owners from 2014-2018. In other words, 
for each dollar of business earnings accruing to non-minority males, 
African American business owners made just 60 cents.
      Hispanic business owners earned 11 percent less than non-
minority male business owners from 2014-2018. For each dollar of 
business earnings accruing to non-minority males, Hispanic business 
owners made just 89 cents.
      Asian and Pacific business owners earned 10.7 percent 
less than non-minority male business owners from 2014-2018. For each 
dollar of business earnings accruing to non-minority males, Asian and 
Pacific business owners made just 89 cents.
      Native business owners earned 26.9 percent less than non-
minority male business owners from 2014-2018. For each dollar of 
business earnings accruing to non-minority males, Native business 
owners made just 73 cents.
      Minority business owners earned 18.5 percent less than 
non-minority male business owners from 2014-2018. For each dollar of 
business earnings accruing to non-minority males, minority business 
owners made just 82 cents.
      Non-minority female business owners earned 46.4 percent 
less than non-minority male business owners from 2014-2018. For each 
dollar of business earnings accruing to non-minority males, non-
minority female business owners made just 54 cents.
      Minority and Female business owners earned 25.1 percent 
less than non-minority male business owners from 2014-2018. For each 
dollar of business earnings accruing to non-minority males, minority 
and female business owners made just 75 cents.
    In Model C, which accounts for a large set of additional 
explanatory variables related to business owner earnings, we again 
observe small changes in both directions for all the groups except 
Asian and Pacific Islanders, for whom the business earnings gap 
increases significantly compared to Model B. Specifically, the results 
for Model C show:

      African American business owners earned 32.8 percent less 
than non-minority male business owners from 2014-2018. In other words, 
for each dollar of business earnings accruing to non-minority males, 
African American business owners made just 67 cents.
      Hispanic business owners earned 16.7 percent less than 
non-minority male business owners from 2014-2018. For each dollar of 
business earnings accruing to non-minority males, Hispanic business 
owners made just 83 cents.
      Asian and Pacific business owners earned 21.6 percent 
less than non-minority male business owners from 2014-2018. For each 
dollar of business earnings accruing to non-minority males, Asian and 
Pacific business owners made just 78 cents.
      Native business owners earned 22.2 percent less than non-
minority male business owners from 2014-2018. For each dollar of 
business earnings accruing to non-minority males, Native business 
owners made just 78 cents.
      Minority business owners earned 47.5 percent less than 
non-minority male business owners from 2014-2018. For each dollar of 
business earnings accruing to non-minority males, minority business 
owners made just 52 cents.
      Non-minority female business owners earned 22.5 percent 
less than non-minority male business owners from 2014-2018. For each 
dollar of business earnings accruing to non-minority males, non-
minority female business owners made just 78 cents.
      Minority and Female business owners earned 30.7 percent 
less than non-minority male business owners from 2014-2018. For each 
dollar of business earnings accruing to non-minority males, minority 
and female business owners made just 69 cents.

    With only one exception, once again, all of these findings for the 
construction regressions are statistically significant at a 95 percent 
probability level or better.\38\
---------------------------------------------------------------------------
    \38\ The sole exception is again the result in Model A for Asian 
and Pacific Islanders. However this result was not statistically 
significant.

   Table 14. Minority and Female Business Owner Earnings Disparities,
                              Construction
------------------------------------------------------------------------
                                                   Business      Cents
                                                   Earnings   Earned Per
                                                    Deficit    Dollar of
                                                      (%)        Non-
                 Race, Location                  ------------  Minority
                                                                 Male
                                                               Earnings
                                                      (1)    -----------
                                                                  (2)
------------------------------------------------------------------------
Regression Model A......................................................
------------------------------------------------------------------------
African American................................           -           
Hispanic........................................           -           
Asian and Pacific Islander......................        -1.1         99
American Indian and Alaska Native...............           -           
Two or More Races...............................           -           
Minority........................................           -           
Non-minority female.............................           -           
DBE.............................................           -           
------------------------------------------------------------------------
Regression Model B......................................................
------------------------------------------------------------------------
African American................................           -           
Hispanic........................................           -           
Asian and Pacific Islander......................           -           
American Indian and Alaska Native...............           -           
Two or More Races...............................           -           
Minority........................................           -           
Non-minority female.............................           -           
DBE.............................................           -           
------------------------------------------------------------------------
Regression Model C......................................................
------------------------------------------------------------------------
African American................................           -           
Hispanic........................................           -           
Asian and Pacific Islander......................           -           
American Indian and Alaska Native...............           -           
Two or More Races...............................           -           
Minority........................................           -           
Non-minority female.............................           -           
DBE.............................................           -           
------------------------------------------------------------------------
Source and Notes: See Table 13.

            d. Findings for Architecture/Engineering
    As shown in Table 15, the baseline regression equation (Model A) 
includes only indicators for race, sex and time. This is the raw 
difference in earnings between minority and women business owners, one 
the one hand, and non-minority male business owners, on the other. The 
results for Model A show:
      African American business owners earned 59.2 percent less 
than non-minority male business owners from 2014-2018. In other words, 
for each dollar of business earnings accruing to non-minority males, 
African American business owners made just 41 cents.
      Hispanic business owners earned 16.3 percent less than 
non-minority male business owners from 2014-2018. For each dollar of 
business earnings accruing to non-minority males, Hispanic business 
owners made just 84 cents.
      Asian and Pacific business owners earned 23.4 percent 
less than non-minority male business owners from 2014-2018. For each 
dollar of business earnings accruing to non-minority males, Asian and 
Pacific business owners made just 77 cents.
      Native business owners earned 60.8 percent less than non-
minority male business owners from 2014-2018. For each dollar of 
business earnings accruing to non-minority males, Native business 
owners made just 39 cents.
      Minority business owners earned 30 percent less than non-
minority male business owners from 2014-2018. For each dollar of 
business earnings accruing to non-minority males, minority business 
owners made just 70 cents.
      Non-minority female business owners earned 46 percent 
less than non-minority male business owners from 2014-2018. For each 
dollar of business earnings accruing to non-minority males, non-
minority female business owners made just 54 cents.
      Minority and Female business owners earned 39 percent 
less than non-minority male business owners from 2014-2018. For each 
dollar of business earnings accruing to non-minority males, minority 
and female business owners made just 61 cents.

    In Model B, which accounts for some common qualifications and 
capacity controls, we observe once again just small changes in both 
directions for all the groups except Asian and Pacific Islanders, for 
whom the business earnings gap increases significantly compared to 
Model A. Specifically, the results for Model B show:
      African American business owners earned 55 percent less 
than non-minority male business owners from 2014-2018. In other words, 
for each dollar of business earnings accruing to non-minority males, 
African American business owners made just 45 cents.
      Hispanic business owners earned 6.9 percent less than 
non-minority male business owners from 2014-2018. For each dollar of 
business earnings accruing to non-minority males, Hispanic business 
owners made just 93 cents.
      Asian and Pacific business owners earned 28.1 percent 
less than non-minority male business owners from 2014-2018. For each 
dollar of business earnings accruing to non-minority males, Asian and 
Pacific business owners made just 72 cents.
      Native business owners earned 70.5 percent less than non-
minority male business owners from 2014-2018. For each dollar of 
business earnings accruing to non-minority males, Native business 
owners made just 30 cents.
      Minority business owners earned 27.2 percent less than 
non-minority male business owners from 2014-2018. For each dollar of 
business earnings accruing to non-minority males, minority business 
owners made just 73 cents.
      Non-minority female business owners earned 43.4 percent 
less than non-minority male business owners from 2014-2018. For each 
dollar of business earnings accruing to non-minority males, non-
minority female business owners made just 57 cents.
      Minority and Female business owners earned 36.7 percent 
less than non-minority male business owners from 2014-2018. For each 
dollar of business earnings accruing to non-minority males, minority 
and female business owners made just 63 cents.

    In Model C, which accounts for a large set of additional 
explanatory variables related to business owner earnings, we again 
observe just small changes in both directions for all groups. 
Specifically, the results for Model C show:
      African American business owners earned 50.6 percent less 
than non-minority male business owners from 2014-2018. In other words, 
for each dollar of business earnings accruing to non-minority males, 
African American business owners made just 49 cents.
      Hispanic business owners earned 9.1 percent less than 
non-minority male business owners from 2014-2018. For each dollar of 
business earnings accruing to non-minority males, Hispanic business 
owners made just 91 cents.
      Asian and Pacific business owners earned 30.7 percent 
less than non-minority male business owners from 2014-2018. For each 
dollar of business earnings accruing to non-minority males, Asian and 
Pacific business owners made just 69 cents.
      Native business owners earned 71 percent less than non-
minority male business owners from 2014-2018. For each dollar of 
business earnings accruing to non-minority males, Native business 
owners made just 29 cents.
      Minority business owners earned 45.1 percent less than 
non-minority male business owners from 2014-2018. For each dollar of 
business earnings accruing to non-minority males, minority business 
owners made just 55 cents.
      Non-minority female business owners earned 28.9 percent 
less than non-minority male business owners from 2014-2018. For each 
dollar of business earnings accruing to non-minority males, non-
minority female business owners made just 71 cents.
      Minority and Female business owners earned 39.5 percent 
less than non-minority male business owners from 2014-2018. For each 
dollar of business earnings accruing to non-minority males, minority 
and female business owners made just 60 cents.

    With only two exceptions, all of these findings for the 
Architecture/Engineering regressions are statistically significant at a 
95 percent probability level or better.\39\
---------------------------------------------------------------------------
    \39\ The exceptions are the results in Models B and C for 
Hispanics.

   Table 15. Minority and Female Business Owner Earnings Disparities,
                        Architecture/Engineering
------------------------------------------------------------------------
                                                   Business      Cents
                                                   Earnings   Earned Per
                                                    Deficit    Dollar of
                                                      (%)        Non-
                 Race, Location                  ------------  Minority
                                                                 Male
                                                               Earnings
                                                      (1)    -----------
                                                                  (2)
------------------------------------------------------------------------
Regression Model A......................................................
------------------------------------------------------------------------
African American................................           -           
Hispanic........................................       -16.3         84
Asian and Pacific Islander......................           -           
American Indian and Alaska Native...............       -60.8         39
Two or More Races...............................           -           
Minority........................................           -           
Non-minority female.............................           -           
DBE.............................................           -           
------------------------------------------------------------------------
Regression Model B......................................................
------------------------------------------------------------------------
African American................................           -           
Hispanic........................................        -6.9         93
Asian and Pacific Islander......................           -           
American Indian and Alaska Native...............           -           
Two or More Races...............................           -           
Minority........................................           -           
Non-minority female.............................           -           
DBE.............................................           -           
------------------------------------------------------------------------
Regression Model C......................................................
------------------------------------------------------------------------
African American................................           -           
Hispanic........................................        -9.1         91
Asian and Pacific Islander......................           -           
American Indian and Alaska Native...............           -           
Two or More Races...............................           -           
Minority........................................           -           
Non-minority female.............................           -           
DBE.............................................           -           
------------------------------------------------------------------------
Source and Notes: See Table 13.

            e. Conclusions from American Community Survey Data
    This section has documented that when we examine the status of 
minorities and women compared to non-minority males in the industry 
segments relevant to Federal surface and aviation transportation 
funding, the results look very similar to what we observe elsewhere in 
the economy.
    That is, even when other non-discriminatory factors are held 
constant using the statistical technique of regression analysis, the 
disparities in business formation rates between African Americans, 
Hispanics, Asians and Pacific Islanders, American Indians and Alaska 
Natives, and women, on the one hand, and their non-minority male 
counterparts, on the other, remain large, adverse, and statistically 
significant. I have documented such disparities in this testimony for 
the Nation as a whole and throughout the states, and in the economy as 
a whole as well as in Construction and Architecture/Engineering, which 
are key industries with respect to Federal surface and aviation 
transportation funding.
    Furthermore, I have documented that even for those minority and 
female entrepreneurs who manage against the odds to form their own 
businesses, their earnings from those businesses lag far behind their 
non-minority male counterparts.\40\ These disparities as well remain 
large, adverse, and statistically significant even when other non-
discriminatory attributes are held constant.
---------------------------------------------------------------------------
    \40\ In addition to the analyses of business owner earnings, I also 
ran comparable analyses on the annual earnings of wage and salary 
workers--as opposed to business owners--in the industry segments 
relevant to Federal surface and aviation transportation funding as well 
as in the economy as a whole. Disparities facing wage and salary 
workers matter to the analysis of business enterprise discrimination 
because that is where much of the entrepreneurial talent pool starts--
especially in industries such as construction, architecture, and 
engineering. Though not reported here, the results of the wage and 
salary regressions look very similar to those presented above--in the 
vast majority of instances, large, adverse, and statistically 
significant deficits were observed for African Americans, Hispanics, 
Asians and Pacific Islanders, American Indians and Alaska Natives, and 
non-minority women, as well as for minorities as a group and minorities 
and women as a group.
---------------------------------------------------------------------------
    These results are fully consistent with the conclusion that 
discrimination continues to adversely affect minorities and women 
operating in United States business markets, and in particular those 
markets that are relevant to Federal surface and aviation 
transportation funding.
                         E. Overall Conclusions
    In preparing this testimony, I conducted extensive original 
research using almost 100 previously produced disparity studies, and 
current and past data from the Survey of Business Owners, the Annual 
Business Survey, and the American Community Survey. This research is a 
continuation of similar research I have performed over the course of my 
career as an economist. Based on the findings presented above, I 
conclude that there is strong evidence, both past and present, of 
large, adverse, and statistically significant disparities facing 
minority-owned and women-owned business enterprises in the United 
States. Moreover, these disparities cannot be explained solely, or even 
primarily, by differences between the relevant populations in factors 
untainted by the effects of discrimination. These disparities are 
primarily due to discrimination, in the economy as a whole, as well as 
in the markets such as construction, architecture, and engineering that 
most relevant to Federal surface and aviation transportation funding.
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the May 23, 1996 Review of Barriers for Minority- and Women-Owned 
Businesses,'' supplementing the testimony of David Hinson, National 
Director, Minority Business Development Agency, U.S. Department of 
Commerce, before the U.S. House Committee on Oversight and Government 
Reform, Subcommittee on Government Management, Organization, and 
Procurement, September 22, 2010.
    Wainwright, Jon S. 2000. Racial Discrimination and Minority 
Business Enterprise, Evidence From the 1990 Census, Studies in 
Entrepreneurship Series, S. Bruchey (ed.). New York: Garland 
Publishing.
    Wainwright, Jon S. (2013a), Report of Defendant's Expert in Rothe 
Development, Inc. v. Department of Defense and Small Business 
Administration, United States District Court for the District of 
Columbia, Case No. 12-CV-744, March 8.
    Wainwright, Jon S. (2013b), Report of Defendant's Expert in Midwest 
Fence Corporation v. United States Department of Transportation, et 
al., United States District Court for the Northern District of 
Illinois, Case No. 10-CV-5627, May 20.
    Wainwright, Jon S. (2013c), Reply to Report of Plaintiff's Expert 
in Midwest Fence Corporation v. United States Department of 
Transportation, et al., United States District Court for the Northern 
District of Illinois, Case No. 10-CV-5627, July 19.
    Wainwright, Jon S. (2012), Report of Defendant Intervenor's Expert 
in Geyer Signal, Inc. and Kevin Kissell v. Minnesota Department of 
Transportation, et al., United States District Court for the District 
of Minnesota, Case No. 0:11-cv-00321-JRT, December 30.
    Wainwright, Jon S. (2010), Report of Defendant's Expert in Kevcon, 
Inc. v. The United States, No. 09 625, United States Court of Federal 
Claims, April 29.
    Wainwright, Jon S. (2008), ``Discrimination facing small minority-
owned and women-owned businesses in commercial credit markets,'' 
Testimony before the U.S. Senate, Committee on Small Business and 
Entrepreneurship, Hearing on ``Business Start-up Hurdles in Underserved 
Communities: Access to Venture Capital and Entrepreneurship Training,'' 
September 11.
    Wainwright, Jon and Colette Holt. 2010. Guidelines for Conducting a 
Disparity and Availability Study for the Federal DBE Program. National 
Cooperative Highway Research Program Report 644. Washington, DC.: 
Transportation Research Board.

    Mr. DeFazio. Thank you, Dr. Wainwright, a good summary of 
90 pages of comprehensive research. So thanks very much. Your 
full research will be entered into the record.
    So now we will proceed to questions. Each Member will have 
5 minutes to question the witnesses. I will first begin by 
recognizing myself.
    Ms. Boyer, in addition to your testimony today, you sent a 
compelling letter to the committee, when the committee 
reauthorized the DBE program in H.R. 2 earlier this year. I ask 
unanimous consent to put this letter in the record.
    Without objection.
    [The information follows:]

                                 
Letter of June 25, 2020, from Geri E. Boyer, P.E., President, Kaskaskia 
   Engineering Group, LLC, Submitted for the Record by Hon. Peter A. 
                                DeFazio
                                                     June 25, 2020.
Congressman Peter DeFazio,
Chairman,
House Committee on Transportation and Infrastructure, United States 
        House of Representatives, Washington, DC.

RE:  Response to the request from the Committee on Transportation and 
Infrastructure for a letter or statement on the Disadvantaged Business 
Enterprise Program.

    Dear Congressman DeFazio:
    I am a licensed professional engineer and sole owner of Kaskaskia 
Engineering Group, a civil engineering design firm. My firm has had the 
opportunity to work on public infrastructure projects across the 
Midwest, and approximately 82% of the $10,000,000 of work done every 
year can be attributed to the Disadvantaged Business Enterprise Program 
(DBE). It is because of the DBE Program that my firm is in existence 
and continues to grow.
    For the first twenty five years of my civil engineering career, I 
experienced discrimination on many levels including advancement and 
salary. I was told over and over by supervisors at a state agency that 
although I was an overachiever and did excellent work it would not be 
reflected in my yearly raise because I was not ``the breadwinner'' of 
my family. When I left that agency, the lowest paid managers were all 
women. In those years, I was also told that I needed to make a choice 
between being an engineer and being a mother. My inspiration for 
started my own firm was to take care of myself, to have the flexibility 
to work while being a mother, and to afford those same opportunities to 
other women and men.
    The only reason I was able to start my own business was the DBE 
program. I worked with DBE firms while employed by a large ``white-male 
led'' company, and realized that with the help of the program, I could 
be a business owner. I survived the first year while working through 
the certification processed on small city projects I got because of my 
reputation. Those projects were small and it was only enough fee to 
keep a few people busy. Once I was BDE certified, many consulting firms 
used my firm to satisfy their DBE requirement. My firm grew fast once I 
had the certification.
    Even though I have been in business for 14 years and won several 
statewide awards for my engineering, I still cannot compete with 
established engineering firms owned/managed by white-males. I have 
participated in many equity surveys and discussions, and the question 
always comes up about the need for this program to continue. I can 
testify that without this program, the work I get on federal and state 
infrastructure projects would cease. The only reason other firms team 
with me is because I am a certified DBE firm first and then because I 
do excellent work. I am not their buddy. I do not look like them. Large 
firms do and will continue to keep all the work for themselves unless 
they are mandated to give a percentage away. Small firms do not have 
the capacity to propose on large projects by themselves, so without the 
DBE program, small firms would never have a chance to work on a portion 
of these large projects.
    Instead of discussing if the program is needed, the discussion 
should center around expanding the program by increasing the limits and 
making the program more accessible. A policy of helping small 
businesses owned and controlled by socially and economically 
disadvantaged individuals, including minorities and women, 
participating in contracting opportunities created by Department of 
Transportation (DOT) financial assistance programs, has been in effect 
for more than 20 years. It has had several revisions which has made the 
program function more efficiently for business such as the Unified 
Certification Program (UCP) and the interstate certification provision. 
But there is still more that needs to be done to help this program be 
more successful.
    In an ever changing and volatile business market, corporate growth 
and stability rely on diversification strategies, which often include 
providing services to multiple federal, state, and local agencies, as 
well as private corporations across regional, national, and 
international markets. Diversification has long been a successful 
strategy for large businesses, but it is just as important for the 
survival and development of small firms.
    Firms owned by women and minority groups that want to employ 
diversification strategies are encumbered by the individual state 
agencies that do not want to accept the DBE's certification from their 
cognizant certifying agency. The amended 49 CFR Part 26, which went 
into effect on November 3, 2014, implemented a revised uniform 
certification application and reporting forms and created a uniform 
personal net worth form for use by applicant owners, which collects the 
data required by the Department's Surface Transportation 
Reauthorization, Moving Ahead for Progress in the 21st Century Act 
(MAP-21). Even though there is a uniform process, states do not trust 
the certification process of neighboring states and require the entire 
application again. This creates unnecessary work for the DBE firm and 
the public agency who both have limited time and budget pressures. And 
with the rising problem of identity theft, it's stressful to be sending 
all your personal information to multiple agencies in multiple states.
    A national unified program could strengthen, streamline, and 
simplify the DBE certification program, creating a program that is more 
efficient and effective for women and minority firms working for 
multiple agencies across multiple states. A National UCP to serve as a 
``one-stop shopping'' to applicants for certification is needed. Any 
state agency using the unified certification application could be a 
coordinating member of the National UCP, and its certification would be 
recognized as a National UCP. Under a National UCP, the firm applies 
one time for certification as DBE with their participating cognizant 
agency or a national organization. If approved, that certification 
would be honored by all recipients of federally funded and non-
federally funded projects in all states. The National UCP would only 
certify firms using the unified certification application. 
Prequalification, determination if an applicant has the requisite 
resources and experience to complete the service/category as required, 
would remain with the contracting agency.
    The certification and record would be held by a national agency/
organization, such as the Federal Highway Administration (FHWA), 
National Council of Examiners for Engineering and Surveying (NCEES) or 
Women's Business Enterprise National Council (WBENC). The FHWA has 
offices in every state and would be locally available to firms that 
have questions or need to meet in person. NCEES and WBENC already have 
systems in place to review a standard application, evaluate its 
compliance with federal regulations, and certify its credibility. They 
both allow for the upload of documents necessary for annual renewal 
(Affidavit of Continued DBE Certification). WBENC's regional offices 
also have the capacity to conduct site visits for compliance with the 
49 CFR Part 26. Members of the NCEES system can easily request their 
record be sent to other states for licensure. A similar system could be 
employed by NCEES for a National UCP. A national unified program could 
strengthen, streamline, and simplify the DBE certification program, 
creating a program that is more efficient and effective for women and 
minority firms working for multiple agencies across multiple states.
    If you have any questions or need any additional information, 
please contact me.
        Respectfully,
                                       Geri E. Boyer, P.E.,
                       President, Kaskaskia Engineering Group, LLC.

    Mr. DeFazio. You know, you detailed experiences there with 
discrimination throughout your career. And you said it was only 
because of the DBE program you were able to start your 
business, grow your business in the face of that 
discrimination. And one quote was, ``Even though I have been in 
business for 14 years and won several statewide awards for my 
engineering, I still cannot compete with established 
engineering firms owned and managed by White males. I have 
participated in many equity surveys and discussions, and the 
question always comes up about the need for this program to 
continue. I can testify that without this program, the work I 
get on Federal and State infrastructure projects would cease. 
The only reason other firms team with me is because I am a 
certified DBE firm first and then because I do excellent work. 
I am not their buddy. I do not look like them.''
    That is pretty compelling, Ms. Boyer. You stand by that 
quote?
    Ms. Boyer. Absolutely.
    Mr. DeFazio. Yes, OK. That is pretty sad.
    Ms. Williams, would you agree with Ms. Boyer's assessments 
in these matters?
    Ms. Williams. Absolutely.
    Mr. DeFazio. OK. Well, that really underlines why we are 
here today, why we are reauthorizing the program, and also 
looking at ways to make the program work better.
    Dr. Wainwright, at the end of your testimony you mentioned 
the private-sector study versus the public sector with the DBE 
program. Can you give us a rough, quantified comparison in any 
way, in brief?
    I know that you go into it in more depth in your study, 
but--Dr. Wainwright, are you still there?
    [Pause.]
    Mr. DeFazio. Yes, I see you over there. You need to unmute.
    Mr. Wainwright. Yes, I am not sure I fully understand the 
question. Can you----
    Mr. DeFazio. Well, you concluded, the private sector versus 
public sector, and you are doing these comparative studies. In 
aggregate, is there any way--can we say--it is a small 
percentage of the work, overall, in the public programs? What 
percent is it where the public programs with DBE aren't--how 
much smaller is that?
    Mr. Wainwright. Oh, sure. I think I understand now, sorry.
    Mr. DeFazio. Yes.
    Mr. Wainwright. The public sector, as a share of the 
overall economy, is maybe 20 percent. The DBE program and 
programs like it throughout the country are, you know, to some 
degree, a finger in the dike. You don't see these programs very 
much at all in the private sector. So you have got the DBE 
program and programs like it, trying on their own, largely, to 
remedy discrimination and remediate discrimination, with only 
20 percent of the economic activity to work with. The other 80 
percent remains practically untouched.
    Mr. DeFazio. Great. That is what I was looking for. I 
didn't know what the comparison was. So 20/80, and then we get 
a fraction of the 20. So----
    Mr. Wainwright. That is correct.
    Mr. DeFazio. Thanks.
    To anybody else, I have got about 1 minute left. Anybody 
else want to expand on their remarks for about 1 minute?
    [No response.]
    Mr. DeFazio. OK, I am not hearing anybody.
    Oh, go ahead.
    Ms. Lerdahl. I would just like--this is Mary Lerdahl 
again--I would just like to reiterate the importance of 
waivers, and the effect that they have on hurting DBE firms 
that, while they may have enjoyed some success within the DBE 
group, they are still far from being ready to be kicked out or 
graduated from the program.
    I think also that in Washington, the waiver that was 
enacted to exclude White women actually really separated the 
DBE community, and actually pit one group against the other, 
which, of course, you know, it is the last thing that we need. 
We want to bring DBE communities together. And they are--you 
know, just by the numbers of statistics, there will always be 
one group that is going to do better in any particular data 
segment than another. But overall, the DBE community still is 
just getting pennies of the Federal highway dollar.
    So I would like to submit that the committee consider that 
waivers should never be enacted against one group or another. 
They are very destructive, and they are not necessary. In our 
State of Washington, because we were covered by the Ninth 
Circuit District for court decisions, I realize that the State 
of Washington had the opportunity to ask for a waiver, but it 
was not required that they seek a waiver. And that is an 
important distinction that I hope that the committee would 
perhaps consider writing into the reenactment, that never again 
that waivers would waiver out one group in the DBE community 
against the other. Thank you.
    Mr. DeFazio. OK, thanks for that observation. Now I would 
turn to Ranking Member Graves for his questions.
    Oh, no. He's not there. It would be Representative Weber 
who will ask.
    Mr. Weber. Thank you, Mr. Chairman. I have questions for 
Farad Ali, and I am not sure how we get him up on the screen. I 
guess we look to whoever the speaking part is.
    Mr. Ali, does the DBE program assist minorities in 
attaining financing?
    Mr. Ali. Thank you for your question. I have been also the 
executive director of the Small Business Transportation 
Resource Centers that is through your NCDOT funding. In that 
program, part of the milestones are to provide technical 
assistance and access to capital, or resources for them to get 
that access to capital. But the program doesn't actually 
provide the financing. You have to go out and find sources.
    I will tell you in my work I have seen that we have had to 
go out and find specialized--or people of color or women to 
support this group, to help them, to show a duty of care, to 
make sure they can get the financing and the bonding necessary 
to participate on roadside projects, as well as the ACDBEs. So 
you also do see some institutional discrimination in that work, 
from allowing people to show duty of care and helping others.
    Mr. Weber. Are you able--when that happens, do you have a 
matrix? Are you able to track how--from each project or each 
company, how good it went, what the pitfalls were, and how to 
improve upon that?
    Mr. Ali. Yes, thank you. Great question again, Congressman. 
In our program, what we would do is look at some of the ways 
that we--weaknesses in the DBEs, or that we may see that are 
important. We find ways to strengthen it, if it is on asset 
base, or if it is credit, or whatever it may be, to help them 
to get the financing.
    Again, the financial system has not always treated ACDBEs 
or even DBEs fairly.
    And it is hard to speak to this, because I know in the 
banking system or the financial system, there are rules of the 
way people operate. But it is also the ways that people have 
culture in allowing people to feel like they can have 
opportunity.
    So we do measure, when people actually look for financing 
opportunities, figure out ways to help them to overcome any 
obstacles, and then success in getting them financing or 
bonding needed to meet the requirements of the project.
    The answer is yes.
    Mr. Weber. OK, that is good to know. And then I am going to 
jump over to Ms. Sandra Norman, if I may.
    Ms. Norman, what would you say, in your experience, is the 
biggest obstacle to increasing minority participation in 
transportation-related projects in your State?
    Ms. Norman. I would say, as you just talked about, access 
to capital. The other part, too, is the--how we procure 
projects, making sure that our DBEs have the opportunity on the 
design side of the house, as well as the construction side of 
the house, so making sure that we do set aside some smaller 
bundle of projects so that the small business DBEs will have 
the opportunity to compete and win contracts. We just don't 
want them to compete for it, we want them to be awarded the 
contract, and be successful in carrying it out from beginning 
to end, making that project a win-win for both the DBE and for 
the DOT.
    Mr. Weber. So, as kind of a follow up, I guess, with my 
question with Mr. Ali, do you have a process, Ms. Norman, with 
the way you are doing it?
    I mean, is there a hotline for help set up? Do you 
encourage participation? Do you reach out and get feedback from 
them, I guess?
    Ms. Norman. Just like Mr. Ali, we do have what we call the 
BOWD Center, the Business Opportunity Workforce Development 
Center. It is through a supportive services program. We do 
provide technical assistance. And one of the things that I do, 
I do a lot of outreach, a lot of networking through different 
entities, through different partnerships with State, local 
programs, so that our DBEs will have that opportunity.
    But sometimes the requirements for our DBEs are stricter 
and harder for them to have that level playing field with 
regards to access to capital.
    But to your point, yes, we do provide technical support and 
assistance, make sure that we do have partnership opportunities 
for our DBEs.
    Mr. Weber. Well, thank you for that.
    I have been kind of setting the stage for you, Ms. Lerdahl. 
You are the last one up. I am quickly getting close to my time, 
and I appreciate the chairman's indulgence. Since you have run 
a company, Ms. Lerdahl--you have heard the panelists, 
especially the last two that I have had questions for--from 
your business experience, would you be able to give them 
suggestions--maybe you want to hire on as a consultant, I don't 
know, but would you be able to give them suggestions on how to 
better help these companies successfully compete on these jobs?
    Ms. Lerdahl. Yes, thank you. Well, I do think they touched 
on the importance of access to capital. I will state that, in 
the 9 years I was in business, I was never able to obtain a 
line of credit, except for the one project that was provided 
through the Small Business Transportation Center. I was able to 
get a $250,000 line of credit to do one particular project. So 
that really did help. But the rest of my work, $80 million 
worth of work, was done without a line of credit. So I became a 
really good bill collector; otherwise, I couldn't pay.
    I do think, too, there is definitely, not only in the 
banking segment, discrimination against small business, and 
particularly women- and minority-owned businesses, but also 
with creditors. I was not able to get the pricing on big loads 
of material--$500,000 pull orders, for example--that my larger 
contracting competitors could.
    So--and there was a few times I tried to pursue collusion 
within the supplier network, and that was a very difficult 
thing to prove, because, of course, if they are not going to 
bid to you, how can you prove that they are stacking the deck 
against you?
    I do think that there is also evidence of supplier fraud, 
where even, unfortunately, DBE firms that are a supplier up the 
pricing of a package of materials on bid day to a non-DBE 
electrical firm or other firm in order to win the bid, because 
they can count 60 percent of that billable material. So that, 
again, stacks against DBEs. It is almost the DBE supplier 
working against the DBE contractor.
    And so there is a lot of games that get played in the 
supplier DBE industry, unfortunately, as well as access to 
credit in both the suppliers and the banking forums.
    Mr. Weber. Well, thank you for that. It sounds like you 
would be a good resource for the other folks on the panel on 
working on some of the pitfalls that a lot of these business 
owners see.
    So I appreciate your indulgence, Madam Chairwoman. I yield 
back.
    Ms. Norton [presiding]. I thank my good friend, and I 
recognize myself for the next series of questions.
    I think I want to start with Ms. Williams and Ms. Boyer, 
because I am interested in why this discrimination continues to 
occur.
    Now, you would have the same ability, even more experience, 
if the DBE program went away. So I would like you to elaborate 
on why you think opportunities for small businesses like yours 
would dry up--you all seem to have testified to that effect--
without the DBE program. I am trying to find whether there is a 
real remedy here that is lasting.
    For example, do you think that these contracts are based on 
personal relationships that these companies have? Is it based 
on the size they prefer, larger companies? Is it based on the 
nature of the competition? Indeed, are they competed? I am 
trying to get at the cause of what you have--virtually, all of 
you have--elaborated as continuing discrimination, 
notwithstanding the DBE program.
    So I will start with Ms. Williams.
    Ms. Williams. Thank you so much. I think that one of the 
unintentional consequences of the DBE program is that the 
program is set up to invite and encourage the checkbox. In 
other words, you have to check the box [inaudible] so in large 
majority firms, and the goal is 25 percent, I am looking for a 
DBE, and I check the box. If I am a large, majority firm, I am 
trying to get 40--50 to 60 percent of the project. And so, I 
have got to give out 25. I mean it is all in the numbers.
    And so I think if you graduated or you weren't a DBE, they 
would not pick you as just a good engineering company. 
[Inaudible.] So it is an unintentional consequence that the DBE 
program has developed. But it is what it is.
    Ms. Norton. Ms. Boyer, do you have any views on this?
    Ms. Boyer. Yes, of course. So thank you for the question.
    Excluding the city that I live in and I am headquartered 
in, Belleville, Illinois, they give us work because we are 
right here in their community, serving their needs, going the 
extra mile all the time. And we do excellent work. And it 
doesn't matter if I am a DBE here, because this is where I 
work, and they know me. So I think a lot of it has to do with 
relationships, although it is also about the culture of our 
Nation.
    And so, even though I work with large engineering firms, 
and we give work back and forth all the time, I think for us in 
Illinois it has more to do with--the Illinois Department of 
Transportation really emphasizes that they want DBEs to 
succeed, and they want prime firms to be giving DBEs chances to 
lead. And they know the only way that they are going to win the 
work is to work with DBEs, because that is what the State 
wants.
    So it is all about winning. It is all about getting a leg 
up. And if a firm thinks that they are going to have a better 
chance to win with a DBE, then we are great. Even if we do 
fantastic work, they won't use us if they don't have to, 
because it is all about winning the most. It is all about this 
individual culture that we have in the U.S., that the more for 
me, the better. And the only way people are going to share is 
if they are made to share. I hate to say it.
    Ms. Norton. Interesting to note, and it says a lot about 
the importance of continuing this program, because you would 
think, automatically, these firms, women- and minority-owned 
firms, would work their way into the industry.
    Ms. Lerdahl, I must say, your story was particularly 
chilling to me, about the problems of women business owners. 
And I am trying to find out the difference between waivers and 
graduation from the program. I am confused on that. What is 
your response for those who believe that the program should 
exclude automatically certain groups, once they have attained 
what is known as parity in the market?
    Ms. Lerdahl. Well, thank you for that question. It is a 
great one.
    First, a big difference between graduating and the waiver. 
The waiver sought to exclude White women as a result of a 
disparity study. It, again, had some unusual data in it, with 
these two big mega-projects, where billions of dollars of 
contracts with multiple years of work were counted in that 2009 
to 2011 study data period.
    Other firms--ironically, the two biggest firms in our 
State--one is Valley Electric, one is Elcon Electric--both used 
to be DBE firms, but they were allowed the time and the length 
of the runway to grow, and to graduate from the program. Elcon 
is owned by an African-American gentleman, and Valley Electric 
was a women-owned majority business. But they had----
    Ms. Norton. They are not in the program any longer, those 
two firms?
    Ms. Lerdahl. Yes, they graduated from the program.
    Ms. Norton. Yes, OK.
    Ms. Lerdahl. But in the case of a waiver, we were 
essentially kicked out by our own agency because of the 
disparity study data that indicated that White women were 
getting more than our share of the DBE dollar, which is 
absolutely not true. So my company barely got [inaudible] and 
started to do great projects, like the 520 bridge, and then I 
was completely cut off at the knees.
    And I would also share what the other ladies talked about, 
not getting work without there being a condition of award. I 
bid--from the time the waiver was enacted in June of 2017, I 
bid hundreds of projects. I pulled out every networking--I 
begged, I pleaded. I mean, I had never not finished a job on 
time or ahead of schedule. I had done multiple millions of 
dollars' worth of work, never with a problem. And I could not 
get a single job. But that is because discrimination is even 
more real than I thought.
    Now, I have been in business for 22 years. I had a great 
reputation in the community, and not only as a DBE firm, but as 
an electrical contractor. I had been in business for 10 years 
prior to starting my own firm, in a non-DBE firm. I knew 
everybody. Everybody knew me. But I couldn't get one job to 
save my company, and that is why my company died a death of 
1,000 cuts over 18 months, $9 million a year to [inaudible].
    Ms. Norton. Thank you. My time has expired. I do note that 
you cited two firms that had graduated from the program. I 
would hope that, if we have this hearing again, we will invite 
at least one firm that has graduated from the program, so that 
we can learn about what the program does for people to put them 
on their own. I think that would have added a great deal to 
this hearing.
    I am pleased now to recognize Representative Davis.
    Mr. Davis. Thank you, Madam Chair, and thanks again to all 
the witnesses.
    Ms. Boyer, I heard that Mr. Bost did a fine job with your 
introduction while I was absent.
    Ms. Boyer. Yes.
    Mr. Davis. I do want to start my question with you. Based 
on your experience, do you believe that a mentorship program 
between prime contractors and your company, like your company, 
Kaskaskia Engineering Group, would have been helpful to you 
when you first became a business owner?
    Ms. Boyer. Obviously, the mentor programs are so beneficial 
in getting started, and even just getting into different forms 
of work. So I have actually participated with mentor programs 
in both engineering and on the contracting side.
    The problem with mentor programs is it takes a lot of 
administration, both by the companies and by the agency. So 
often the followup and making sure that it is really happening 
falls through the cracks, because people are short-staffed and 
they are just too busy. But mentorships do work when there is 
enough staff to make it work.
    Mr. Davis. Great. Great to hear that. Another question for 
you.
    Has either the DBE program's personal net worth or the 
gross receipts limitation factored into your decisionmaking 
when considering new business opportunities?
    Ms. Boyer. Absolutely. It is a strategy. I know right now 
that I could not survive if I graduated out of the DBE program 
right now. My foundation is not deep enough. And so, yes, it 
has everything to do with the decisions that I make. I need to 
stay in the program right now, because I have 45 mouths to feed 
here.
    Mr. Davis. Would you be more interested in getting off, 
making more dollars available, if there was a better off-ramp 
to move toward self-sufficiency?
    Ms. Boyer. Absolutely. I mean, one of the things that I 
actually looked at with a firm in Minnesota as they were 
graduating out of the program is to form a joint venture with 
them, a joint venture company, in a sense, that would go after 
Federal work there, and share the work, me being a DBE, but 
giving them, like, 40 percent of it to kind of pad them as they 
graduated out of the program, and built and sustained 
themselves.
    In the end, we couldn't come up with an agreement. And I 
think that there are a lot of problems right now with staffing 
engineers. There is a huge shortage. And I think the close 
relationship scared them, that their people might like our firm 
better, and have some people move over. So they decided not to 
do it with us.
    But I think that just the exercise of looking at how can 
you stabilize a firm as they jump out of the program, and 
teaming with another DBE to share work back and forth could 
lift both firms. So I think there are a lot of opportunities 
there.
    Mr. Davis. You know, it is great to hear, and that the 
program has been so successful for companies like yours. But I 
think some of the things you just mentioned, Ms. Boyer, could 
make the program better. And we look forward to working with 
you on those issues.
    I know that this program has meant a lot for you and your 
company. We heard about that in your opening statement. And I 
just wanted to give you another chance. Is there anything that 
you haven't yet said about this having an impact on you and 
your life that you would like to mention to us in the 
committee?
    Ms. Boyer. Well, you certainly would never see a mother-
daughter engineering firm. And this program has made that 
available.
    Mr. Davis. Well, that is wonderful.
    Ms. Boyer. I also do want to say that this idea of a 
unified certification is so important. And, you know, we have a 
lot of stuff going on in the United States right now. We have 
the DBE program, but we also have a lot of people trying 
things. Our utility companies are trying to come up with their 
own DBE programs, and they have separated out women and 
minorities.
    And so, you know, when I would work in 7 States, I have to 
get 17 different certifications. And it just seems that we are 
far enough along in our electronic world that we could have one 
place, one repository, and that we could certify DBEs in 
categories of women or minorities, so that everybody doesn't 
have to do the same thing over and over and over. It takes one 
full staff member of mine to just keep up with this.
    So I think it can be simplified, but it takes our agencies 
to trust each other. And the Small Business Administration does 
a great job. They are the perfect candidate for something like 
that.
    Mr. Davis. That is another great idea. Look, we know--and 
we see the emotion that you have shown us--how much of an 
impact this has had in your life. Thank you for being here. I 
look forward to seeing you in person again soon.
    And I yield back the balance of my time.
    Ms. Norton. The gentleman has yielded. I must say I was 
very touched to hear the testimony about a mother-daughter 
engineering firm. I mean, typically, we see businesses like 
this passed on to sons. The notion that you had that effect 
within your family is telling about the importance of this 
program. I appreciated that, hearing that, very much.
    We will next hear from Representative Larsen.
    You are recognized for 5 minutes.
    Mr. Larsen. Thank you. I have a question for Mr. Ali.
    It is clear the pandemic continues to have a significant 
impact on the U.S. aviation industry, particularly on airport 
concessionaires. Even more concerning is the fact that 
minority-owned small businesses are disproportionately impacted 
by the effects of the pandemic. Could you cover for us how the 
pandemic has affected AMAC members and airports, concessions, 
disadvantaged business enterprises?
    Mr. Ali. Yes, thank you, Congressman. It is really 
important to understand the process of how these work. You look 
at an airport--I look at it, really, as a hotel--and big 
concessionaires, which are mainly foreign-owned, secure pieces 
of the airport to be able to provide services for their 
passengers.
    And as you have heard earlier, a lot of the DBEs, the 
status of DBE allows for them to partner with other minority- 
and women-owned firms. And many of these concessionaires, these 
large concessionaires, look for women- and minority-owned firms 
to participate, and that is how they get a pathway into being 
concessionaires, either from streetside to airports, or even 
beginning new businesses.
    A lot of the investment, the investment for these airports 
to, as you could see, the--improvements inside of the airport 
are shared cost by DBEs. So they are making investment in 
public assets based on a contract for 5, 7, or 10 years, and 
they have to pay those loans back, typically, to their master 
concessionaire.
    So when you have the COVID crisis, which took down 90 
percent of the travel, a lot of these ACDBEs are now having to 
still make payments which are not being received. And because 
they made them in public assets, they can't get traditional 
funding, which is really hard, because then, if you can't get 
traditional funding from a bank, there is no way you could 
refinance or restructure your loan. And as a result, you find 
yourself in a cataclysm of debt, of not only business debt from 
the pandemic, but business debt from being able to pay back 
your loan.
    So not being able to get access to the PPP, it didn't help 
these businesses, ACDBEs. And some of them weren't able to get 
the EIDL loan, because the EIDL loan, which was once at $2 
million, went down to $150,000. But a lot of these businesses 
needed the EIDL loan so that they could continue to cooperate 
and manage inside of these airports.
    So you find a lot of the concessionaires are in default, 
which means they are in a position where they could be 
eliminated from these contracts that they needed, and whatever 
assets they had tied up would be lost.
    Mr. Larsen. Yes. And what effect would large-scale closures 
of the concessionaires have on airport operations?
    Mr. Ali. It would do a whole lot of things for airport 
operations, thanks for the question.
    If you look at these ACDBEs or these DBEs that would be 
eliminated from contracts, they will lose these opportunities. 
You will have societal impacts to them where these communities 
that look to these DBEs for support or hiring, so they would 
lose all of these employees. These employees would lose houses.
    I mean, the trickle-down effect of ACDBEs going out of 
business or DBEs going out of business, please note if you look 
at some of the statistical analysis, most DBEs hire people of 
color or women than any other constituency groups. So when they 
go out of business, it has a real trickle-down effect into 
either of the communities and the airport community.
    Mr. Larsen. Yes, thank you.
    A question for Mr. McDonald. So, Mr. McDonald, I am the 
chair of the Aviation Subcommittee and certainly acutely aware 
of the lack of diversity in U.S. aviation and the need to 
attract new talent to ensure this industry remains competitive.
    In the time I have remaining, which is about 1 minute, I 
think, can you discuss some of the successful initiatives that 
you have implemented within the DBE program that have attracted 
more participation from women- and minority-owned firms, 
particularly related to aviation?
    Mr. McDonald. Yes, I would say that through our community 
partners--again, I am with the Office of Economic and Small 
Business Development, and because of that we have community 
partners. We have a group called the Greater Fort Lauderdale 
Alliance that works with the attraction and the retaining of 
businesses in our county.
    And through that group, we also have a cohort of aviation 
type businesses, but from education and training and 
apprenticeship, we have been able to create a collaboration 
where we attract not only those businesses, but we engage those 
business opportunities, and we align that with our DBE program.
    So our upside is by being an economic development office, 
also operating the Small Business Program, also by 
administering the Federal program, we leverage our resources 
and our partnerships.
    And, again, that is one of our saving graces. The idea that 
we also have an aviation director who is supportive of the 
program. We have education and institutional organizations that 
are willing to commit their resources, and this becomes, as you 
can imagine, attractive to the business community who 
recognizes your growth and your opportunity.
    Because, as you know, businesses always speak to do I have 
access to that employee, to that individual who has the skill 
set as well as the interest?
    So it is through our collaboration and our partnerships 
that we have been able to have some success in growing the 
businesses, which also introduced opportunities for our DBEs to 
participate.
    Mr. Larsen. That is great. That is really helpful. I 
appreciate that.
    And according to my personal timer, I am out of time, and I 
will yield back.
    Thank you, Mr. McDonald.
    Ms. Norton. I note this term ``trickle-down effect.'' It 
seems to me that is very important to hear. We are talking 
about engineering, where minorities and women have not 
participated in nearly the numbers they do in other 
professions.
    So the notion that this encourages minorities and women to 
even enter the profession, it seems to me, should be 
encouraging to this committee.
    I am pleased to recognize Representative Woodall at this 
time.
    Mr. Woodall. Thank you very much, Madam Chair.
    I wanted to start with Dr. Wainwright. I appreciated his 
likening our challenges to blood pressure medication, and we 
certainly do not want to end the blood pressure medication.
    I wanted to find out, Dr. Wainwright, if you saw anything 
in your research that helped us on the pathway to a cure. I 
have heard lots of concerns about graduating from the program. 
I have heard lots of concerns about the impact of categorical 
exclusions.
    At the end of the day, the DBE program was intended to be a 
step towards a cure. Do you see anything that could help us 
alter the program in ways that alleviate some of the fears of 
graduation and bring us closer to that societal cure?
    Mr. Wainwright. Thank you, Representative.
    A couple of things. One is I am not a policy guy as much as 
a statistical guy. So I am not sure I can speak about what 
detailed improvements in the DBE program might get to the cure, 
as you are mentioning.
    But as Chairman DeFazio mentioned at the beginning, one of 
the touchstones for me would be to see greater spillover of 
efforts like the DBE program, like the State and local MWBE 
programs, into the private sector, which, as I mentioned, is 
about 80 percent of the economic activity.
    So the DBE program at its best is affecting a fraction of 
20 percent that the public sector controls and, you know, still 
more, we are talking today just about the transportation 
sector.
    In the 37 years that the program has been in effect, we are 
starting to see some of that, but it is still a long, long way 
off. When I started working on this in 1989, you never heard of 
the term ``supplier diversity officer'' at a public agency, let 
alone a private agency.
    So there is a demonstration effect, I think, to see and 
then to witness the positive effects that this program has on 
many of the witnesses you have here today, business owners.
    Hopefully, that has a demonstration effect into the private 
sector and will encourage more private companies to diversify 
their supply chains and their contracting and procurement 
chains.
    And when that day comes, I may be getting off my blood 
pressure medicine at some point down the road from that. So 
that is a great question. Thank you.
    Mr. Woodall. I thank you for that, Dr. Wainwright.
    I think it was Ms. Norman who mentioned that one of the 
side effects of that blood pressure medication could just be 
creating a check box program.
    Ms. Norman, I kind of heard that from Ms. Lerdahl's 
testimony, that she had done amazing work, built amazing 
relationships, and as soon as she was excluded from the 
program, all of that hard work disappeared because those folks 
were not prioritizing her relationships or her quality work. 
They were focused on getting that check box done.
    Could you speak a little bit more about your concern that 
it is turning into a check box program and maybe some ideas 
about how we can solve that so that these relationships and 
these good work ethics can be continued?
    Ms. Norman. So while I do not want to just say it is a 
check box--in essence, it is--but without it, sir, they would 
not get these opportunities.
    So it is very important to have that, to have these 
demonstrated goals requirements, not just an aspiration, but a 
requirement to make sure that part of the process that the DBEs 
and women-owned businesses get that fair opportunity to bid and 
compete and win those contracts.
    The other part that can assist with that as Virginia, we 
have what they call the Virginia Small Business Enterprise 
Program, and that allows us to de-bundle some of these 
contracts on the construction side of the house and the 
professional services side of the house, $750,000 or less or up 
to $1 million, looking at those projects to see for a 
subcontractor to then step into the arena of being a prime.
    So a lot of times these larger businesses forget that they 
started out as a small business as well.
    However, we have been fortunate on the construction side of 
the house. We still have some work to do on the professional 
services side of the house of identifying those kinds of 
projects.
    So while we say it is a check box, without that check box 
these small businesses and women-owned businesses would not 
have that opportunity.
    Ms. Norton. Well, thank you.
    Mr. Woodall. I certainly recognize to Chairwoman Norton's 
point. When we have our next hearing on this topic, it hurts to 
hear the fears of graduating from the program. Graduation 
should be something that we are aspiring to.
    But I hope we will be able to make some changes and explore 
some ways to make them a more comfortable transition.
    Chairwoman, thank you for your indulgence. I yield back.
    Ms. Norton. I thank the gentleman for his questions.
    We hear next from Representative Sires.
    Mr. Sires. Thank you, Ms. Norton.
    And thank you for the people that are giving testimony 
today. It is very important.
    Mr. Ali, thank you very much. My question will be directed 
to you.
    I represent a portion of the Newark Airport with my 
colleague, Don Payne. We both represent the airport. You have 
said that without the Disadvantaged Business Enterprise 
programs some of the contracting opportunities for minorities 
are gone.
    Well, as you know, Newark Airport, the new terminal 1 is 
being built, and they are probably now going through the 
process of selecting bids. I am hopeful that minority women-
owned businesses, minority-owned Black businesses, and minority 
Latino businesses get to participate in this process and are 
able to secure some of these bids.
    Would you know what percentage of minority women and 
Latino-owned businesses currently represent airport concessions 
across the country?
    Mr. Ali. No, sir, I do not have that answer. That is 
something the fiscal guy can tell you, the doctor. I do not 
have all of those stats.
    Mr. Sires. So you would not know anything about New Jersey 
either, right?
    Mr. Ali. No, sir, I am sorry. Not about specific or, I 
mean, in general, no, sir.
    Mr. Sires. Well, I think it would help if there would be 
some data about how many minority businesses are participating 
in these airports because we do not know if there are enough or 
there are too many or there are not enough.
    Mr. Ali. Yes, sir.
    Mr. Sires. So I do not know who would put those statistics 
together.
    Mr. Ali. Yes, sir, Congressman. I believe that the FAA 
should be able to provide you with that information, sir, as 
well as the DOT Office of Civil Rights.
    Mr. Sires. So I am going to get my staff on that because I 
am very concerned that this new wing that we have in Newark, 
this terminal 1, that the minorities get their fair share of 
concessions in that new wing.
    Mr. Ali. Yes, sir.
    Mr. Sires. What role do you think that the DBE program 
plays in the recovery of businesses like yours with this 
pandemic? How has that impacted?
    Mr. Ali. Sir, the businesses that we represent I will tell 
you that COVID has adversely affected businesses in that they 
have been able to have to deal with it. Most of the contracts 
for ACDBEs have been secured against contracts with the 
airports, and those airports have used contracting to get 
rents, and those rents and those payments all go to pay for 
bonding and other things inside of the airport and aviation 
business.
    So when you have a slowdown in traffic and those ACDBEs are 
no longer able to get passengers to pay the facility charges or 
the costs, it becomes a really critical role of making sure 
that we have the ACDBEs involved, but they also lose out when 
the airport industry is inhibited by the lack of passengers.
    Mr. Sires. And have you noticed where there is big 
investment in airports across the country where the minority 
businesses are able to take part after such investments in some 
of these airports, or do you feel that maybe they are cast out 
some places?
    Mr. Ali. Yes, thank you. That is a really good question.
    I do believe that you have offered, in your funding to 
these airports, you have offered the opportunity for them to 
share that with their concessionaires and the ACDBEs. It is my 
understanding that each airport has the authority to make a 
determination of how much they will share or if they will 
share.
    I think each area would need to be audited for that 
particular concern. So if you are interested in New Jersey and 
New York, I think you should ask if the resources that you 
provide for them, how much of that were they able to share with 
the ACDBEs.
    Mr. Sires. Yes, I am concerned about New Jersey and New 
York, but quite frankly, I am concerned about the rest of the 
country also because there is big investment in some of these 
airports, and I would like to see minority-owned business not 
be cast out because, well, you know how it works.
    Mr. Ali. We have heard from our members that there has not 
been shared prosperity with those resources. Those resources 
have not necessarily been shared.
    So members have asked airport directors and airport 
authority members to share and find resources. I know of a 
particular case out West where an ACDBE constituency group was 
concerned that a major airport got a lot of resources, but 
those resources have not been shared.
    As a result, there has been a multimillion-dollar business 
that may have to come back to the city council and ask for 
additional funding because the airport did not share in the 
resources to help them stay in business.
    Mr. Sires. Well, if I can ever be of service.
    Ms. Norton. Thank you very much.
    Mr. Sires. Thank you.
    Ms. Norton. The next question is from Representative Carol 
Miller.
    Mrs. Miller. Thank you, Acting Chairwoman Norton.
    With some of your comments that you made earlier, the 
thought came into my mind about how grateful I am that over the 
last few years our educators are focusing more on STEAM and 
STEM education, which will give the opportunity to all our 
children, the little girls, the minority children, the 
opportunity to learn what they need in order to have some of 
these businesses, like mother-daughter engineering.
    And thank you all, all of you, for being here today as 
witnesses. I am grateful for the opportunity to hear from the 
stakeholders that do represent DBEs and ACDBEs. The initials 
are still kind of hard for me.
    As these organizations attempt to cultivate their 
businesses, it is important that we continue to monitor 
discrimination so that we can continue to build and expand on 
this program to allow for fair and equal opportunities to have 
access.
    Mr. Ali, could you please speak about the difference 
between direct and indirect discrimination and what your 
suggestions would be so that we could ensure that minority-
owned businesses are properly represented?
    Mr. Ali. Yes. Thank you, Congresswoman.
    I think it is important that you strengthen the program in 
the way that you evaluate it and open up opportunities.
    Direct discrimination is organizations making the 
determination that they really are not going to have inclusion. 
They say they will have inclusion.
    I will tell you an example of the time I was in an airport 
directors' meeting, and someone indicated that they were going 
to do maybe 5 percent with minorities and try to do another 5 
percent to get to the 10 percent.
    And I indicated back with them at the meeting, well, then 
maybe we will try to sign your contract.
    The attitudes change really quickly. Within 48 hours they 
were able to attain the other 5 percent to make sure they had 
the 10 percent.
    So to really enforce the utilization of good faith effort 
at inclusion is going to be important.
    Some of the other issues around institutional 
discrimination are really cultural, and a lot of that has to be 
really developed through organizations and sometimes through 
policy, where people are not really allowing ACDBEs or DBEs to 
come to the table, where they may put them inside of a 
contract, as you heard from earlier testimony, but not have 
them actually really participate and grow their business so 
that they cannot just be airport-side. They can grow their 
business to be on the private sector side that would help them 
make it to the 80-percent level.
    So this is truly not just a groundbreaking way to get 
minorities and women into the transportation industry, but a 
lot of them use this and catalyze this and leverage this 
opportunity to be able to go to the private side, which allows 
them to really grow their business and, as you would say, 
graduate, but to really bifurcate their portfolio so they can 
diversify it long enough so that they can be able to build 
sustainable businesses.
    Mrs. Miller. Thank you so much.
    Mr. McDonald, following the COVID-19 pandemic, Broward 
County has had to adjust and adapt their business practices to 
help the DBEs stay on their feet. Could you speak to how 
Broward County utilized current resources to prepare the DBEs 
for the pandemic?
    Did the county use the funds to prepare the DBEs for the 
pandemic or to help them respond to the pandemic?
    Mr. McDonald. Thank you for that question, a good question.
    We actually did both. We were able, based on our 
programming and our activity, and specifically projects, 
because we had already scheduled some projects with aviation, 
and we have some other county projects that also spoke to 
transit rather than to our DBE activity that we already had 
funds for.
    So when we recognized the troubles of COVID, one of the 
things that the commission had moved forward was to make sure 
that projects that were aligned with dollars, we could still 
continue those projects.
    But in the meantime, as we also look forward to rolling 
those projects out, we made sure in the economic development 
side of our office that we also involved the necessary 
handholding as our DBEs and other small businesses, minority 
and women, were looking to identify if they could qualify for 
PPP, EIDL, our regular State bridge loan program.
    We also made sure that we worked closely with our Miami 
office of the Small Business Administration to take other 
additional resources that have always been available, but make 
sure that those virtual workshops were in front of all of our 
DBEs.
    And where we are right now, we are beginning to roll out 
projects and activities that we, again, have the funding for, 
and since aviation traffic as one example is still slow, some 
of the projects that our airport director was looking to do, we 
can now start those projects. We can begin to align those 
goals, and we can have a way for our DBEs to participate.
    So we were able to at least juggle some opportunities on 
the frontend, use projects the county had already committed as 
a way to stabilize some of our DBEs, as well as to rejuvenate 
our economy with those projects, but more importantly, it did 
take time to make sure that those were projects that may not be 
available, but were able to take advantage of those Federal 
funds and other financial resources that were available.
    Ms. Norton. Thank you very much.
    The gentlelady's time has expired.
    I want to call next on Representative Eddie Bernice 
Johnson.
    Ms. Johnson of Texas. Thank you very much, Madam Chair, and 
thanks to all the witnesses present.
    Let me say that this is my 28th year on this committee, and 
this is the most prevailing concern that has been expressed to 
me around the country since I have been a member of this 
committee, most especially with my own area.
    It was one of the first issues that I started working on 
when I came to this committee. Secretary LaHood, who came from 
this committee to become Secretary of Transportation, worked 
with us on language in order to make sure that when the 
language was put in the RFPs, there would be some sanctions if 
they were not followed.
    What we have gotten since we put this in place is a lot of 
RFPs that included minorities, but never got them involved once 
they got the RFP.
    I have been visited with women, minority women from all 
over this country complaining about that. He helped us come up 
with language, but we could not get Chairman Mica to support it 
at the time.
    And I notice there that is still overwhelming evidence of 
discrimination, and really when we first started looking at 
this, there were companies that were putting the name of the 
company into the spouse's name in order to get Anglo women 
qualified. And so all of that has been experienced.
    And I really have a great interest in fairness and 
opportunity with it. So I have heard great testimony. I 
appreciate everyone being here, but I want to know from the 
witnesses when these RFPs are sent out and the minority 
participation is dictated, have you experienced any reason to 
believe that it is a serious effort to include minorities?
    Let me start with Mr. McDonald.
    Mr. McDonald. Thank you for the question.
    I believe that to your point, and you have certainly been 
at it longer than I have, but you are 100 percent correct. The 
language that was put in, it is my job as a Disadvantaged 
Business Enterprise Liaison Officer to make sure and work with 
aviation and/or transit. When those RFPs cross our desk, I have 
to make sure that language is there that even supersedes that 
good faith effort.
    I have to make sure that there is language that is not 
impediments or hurdles to the minority. So, yes, I do believe 
there have been situations, as the agency prepared the RFPs, 
that that language that supports DBEs is silent and those 
things that give opportunity to overwrite the program are 
present.
    But it is the responsibility of individuals like myself, 
UCPs, as we are reviewing these, to catch that and to address 
that, and I can say at least in my 7 years here in Broward, 
especially the last 3 years, working with my aviation director 
and my transit director, they have worked with me to assure 
that their RFPs, and with their staff, we are addressing that.
    But it is certainly has happened in the past, no question.
    Ms. Johnson of Texas. Thank you very much.
    Mr. McDonald, I have had minority women visit me in Dallas, 
Texas, from Florida complaining that their names went into the 
RFPs, but they never got a call or even a word after the 
contract was let.
    Have you heard any reports of that?
    Mr. McDonald. Yes, I have, and one of the examples I can 
explain is that when the DBEs are a part of the process and we 
do the letters of interest and the prime has to identify which 
DBEs they are going to be working with, as you can imagine, 
most primes go out and find five or six to try to reach that 
10, 15, or 20 percent goal.
    When they submit their RFP, they have to identify 
specifically which of the DBEs they are going to use. It is 
that review that we do, and what we have started doing is 
asking our agency. But the primes notify the non-DBEs or the 
nonminorities that you are not going to use them.
    But we require that they submit who they are actually going 
to use as a part of the bid, and as a part of that posting, we 
list that.
    So it is true that a prime would have five or six to try to 
reach their goal, but they only need two or three, and it is 
the two or three they submit on the bid we hold them two, but 
yes, the other ones should be notified that they were not used.
    But we definitely record minority and women and the 
participation.
    Ms. Johnson of Texas. Thank you very much.
    I have heard from my own city, the DART, which is the 
Dallas Area Rapid Transit, that they have no power to insist 
that the RFP that was selected include what they have in a 
contract; that they cannot enforce the fact that they have 
named the minority firm, and then they do not hire them.
    Do you have difficulty looking at the language to see 
whether or not there is enforcement language there? Because it 
is not being done in Dallas, Texas.
    And I just wonder if any of you have any experience with 
saying that their hands are tied of the local authorities for 
not sticking with the contract once it is let.
    Mr. Ali? Unmute.
    Mr. Ali. Yes, ma'am. Congresswoman, I apologize.
    I not aware of the situation. I have heard many stories 
like you have heard from Mr. McDonald of contracts like that, 
but I am not aware of any specific situation where that has 
occurred.
    I have had members express this to me, but I have not been 
witness to any of the information on it.
    Ms. Norton. The gentlelady's time has expired.
    Ms. Johnson of Texas. Yes, ma'am.
    Ms. Norton. The gentlelady's time has expired.
    Ms. Johnson of Texas. Thank you.
    Ms. Norton. Representative Babin.
    Dr. Babin. Yes, ma'am. Thank you so much, Madam Chair.
    I want to thank all of you for your giving your time to 
participate as witnesses today, and I appreciate the work that 
went into setting up today's hearing.
    However, I think we can all agree that the Department of 
Transportation Disadvantaged Business Enterprise program is a 
very important program and one that is overwhelmingly and 
bipartisanly supported here in Congress.
    And to suppose that anyone on this committee feels 
otherwise I think would be misleading and politically 
motivated.
    Now, with that said, I will keep this short. Every single 
day that focuses on identity politics is a day that we are not 
focusing on finding solutions to very real problems, problems 
like a debilitating national debt; a poor southern border where 
our interstates and our highways are being used to transport 
millions of tons of deadly drugs into our country; a port 
system that today is being use to facilitate the real 
institution of modern day slavery, and that is human 
trafficking.
    All of these issues and more deserve our full attention. 
But we are here using our time and resources celebrating a 
program that is already supported by the Trump administration, 
by congressional Democrats and Republicans.
    I am not saying that this program is not worthy at all. It 
is certainly worthy of our attention, but much the opposite, as 
we heard from Ms. Boyer's testimony earlier today, and that as 
long as we emphasize identity politics, we can expect to see 
more division, more exclusion.
    We are one America, folks, all sexes, all races, all 
creeds, and identity politics is dividing us and in many ways 
keeps vulnerable communities oppressed through perceived 
grievances and resentment.
    The American dream has produced prosperity and liberty, 
without a doubt, but some here maintain that it has increased 
inequality, and we are seeing the consequences of that right 
now all across this great land and Nation of ours.
    My earnest prayer is that we could come together and 
effectively address the many issues within our committee's 
jurisdiction that are not getting the attention that they 
deserve.
    I would like to thank you, Madam Chair, and I will yield 
back.
    Ms. Norton. The gentleman yields back.
    This is an oversight hearing, and we have an obligation to 
do oversight, especially since we have just passed one of the 
few bills that has passed this time, which has been the 
transportation infrastructure bill.
    I am pleased to recognize Representative Hank Johnson.
    Mr. Johnson of Georgia. Thank you, Madam Chair.
    This country was born out of the soil of racism. Slavery is 
what built this country, free labor off the backs of Black 
people. For 250 years, Black people were enslaved in this 
country, and then for 100 years thereafter we had Jim Crow 
apartheid imposed upon us.
    And then to say that in the 400-year history, 401-year 
history we should now consider Black businesses to compete on 
the same playing field, starting from the same starting point 
as White businesses, some of which have been in existence in 
this country, you know, for 200, 300 years; to say that those 
Black businesses must compete with those White businesses from 
a level playing field, it is impossible.
    And that is why affirmative action has always been 
necessary, and as it was said earlier today, if you have got 
high blood pressure and you take medication for it, just 
because your medication has produced equilibrium, that does not 
mean that you stop taking the medication.
    So that is where we are in this country with the DBE 
program.
    And, Mr. Ali, in response to Congressman Larsen's question, 
you revealed some of the specific challenges that airport DBEs 
are grappling with to survive during the ongoing COVID-19 
pandemic.
    Are there any other challenges that minority airport 
concessionaires currently face that you want to bring to our 
attention?
    And are there any foreseeable challenges that DBEs are 
likely to face as they seek to compete in a post-pandemic 
recovery?
    Mr. Ali. Yes, I thank you, Congressman.
    I think it is important that we either focus on the short-
term issues of the underwriting requirements, and so the 
constraints of what is making the private sector investment in 
these public assets. I mean, you do not have the same type of 
collateral.
    You cannot pledge the same kind of assets. You cannot give 
people the same sort of security interest in the underlying 
assets of your business when you are doing this work.
    And so the crippling effect of there is a quote that when 
one community gets a cold, the other one gets pneumonia. I 
would say the other one may be getting COVID, and it is a slow 
kill.
    So it becomes quintessential that in these public-private 
partnerships that we are able to find resources like with the 
SBA and the EIDL loan program or the Main Street Lending 
Program, that there is some attention to not just providing 
resources for airports, but providing resources for the ACDBEs 
to be able to get maybe MAG abatement--minimal annual 
guarantee--fees abated.
    Right now there is currently a $3.5 billion proposal in the 
Senate bill which will include relief for concessionaires, and 
we are hoping that that will be addressed and may be in the 
bill for the CR.
    Mr. Johnson of Georgia. Thank you.
    Ms. Boyer, in your testimony you argued for a national DBE 
certification process as opposed to the current process which 
adheres to a State-by-State certification process. You contend 
that the 50-State certification process serves as an additional 
and unnecessary barrier to competition that women- and 
minority-owned businesses already face.
    Do you have anything else to tell us about the difficulties 
that the 50-State DBE certification process poses to your 
company's ability to grow and compete?
    And do you believe that the 50-State certification process 
was put into place as an intentional barrier?
    Ms. Boyer. No, I certainly do not think it was an 
intentional barrier. Until something is lived, we have no idea 
to understand what the challenges are with it.
    So I think the program that was put in place was a great 
start, but because of the challenges that we have had, it's 
just there to light that we do not have the same opportunities 
as large companies that are more nimble, that can cross State 
lines.
    And when we develop a relationship with a large engineering 
firm, let's say, that uses our expertise, they want us to be 
their partners, and we both together have a better ability to 
win projects by moving from State to State.
    It is just that they can just move State to State and get a 
business license. We have to get a business license and then 
start a certification process, and then on top of it we have to 
get a prequalification with the State that we are going to.
    So just to have that nimbleness of a unified DBE 
certification in the 50 States, I think, again, it just takes a 
little bit of the challenge away, and any layer of challenge 
that we can eliminate just helps all of us.
    Mr. Johnson of Georgia. Thank you.
    Ms. Williams, your company is certified in many areas, and 
one of your strengths has been that you are able to provide 
transit market research. In your company's work and research, 
have you uncovered disparities in transit availability and 
equity that perhaps larger private companies overlook?
    And what factors enable DBEs to be uniquely positioned to 
provide transit data that most affects underrepresented 
communities or communities facing transit inequity?
    And would a greater presence of DBEs on transit projects 
result in reducing transit inequity in underrepresentative 
communities?
    Ms. Williams. Wow, that was a tall order. I am going to try 
and remember the question.
    One of the things you mentioned, transit market research. 
So we know that transit agencies typically service 70 percent 
of their riders may come from low-income or disadvantaged or 
underrepresentative neighborhoods.
    What has helped us in the transit market research business 
is the ability to go out and talk to these folks, to gather the 
information that is necessary for transit systems to make great 
decisions on routes and how they are serving the public.
    Then a minority firm is doing the market research. 
Typically we hire people that look like so. So we are able to 
connect.
    One of the things that was not mentioned here is on the 
IDIQ and task order type contracts, a lot of times what is 
happening these days is that you see a lot of these type 
contracts where you are included in the team, but your--and I 
hear the bell--your number is never pulled.
    So you are with a big firm. You are on the team, but 
because it is a service order contract, they will just tell you 
your services were never required or never came up. And I have 
lost a lot of business on just that.
    Ms. Norton. The gentleman's time has expired.
    I want to call next on Representative Garcia.
    Mr. Garcia of California. Thank you, Madam Chair.
    I really appreciate the opportunity here. A very important 
discussion, obviously. As a business owner myself and my wife a 
small business owner, I do understand the value of this and 
support the cause.
    Just going back to a statement that I believe Ms. Boyer 
made, it may have been Ms. Lerdahl made the statement as well. 
The frustrations with a formal mentorship program, I have been 
in several mentorship programs that are frustrating because 
they end up creating more work and more bureaucracy, and it 
sometimes slows us down while the intent is to help us speed 
up.
    I would just encourage a more informal mentorship program 
or network of mentors and mentees to where you could connect 
folks within industry to help each other out and synergize as 
much as possible.
    I know that is probably beyond the reach of any one of your 
charters or even the DBE's charter, but I think that will pay 
off huge dividends if we can figure out how to get these sort 
of informal mentorships in motion and make those connections 
happen for the various folks.
    My question is somewhat along those lines. But do 
individual members, do individual business owners have access 
to a repository of some sort where there is a list of best 
practices or lessons learned from previous engagements or 
different agencies and equities that you can point someone in 
the right direction and just say, ``Hey, when this type of RFP 
comes out with this sort of turnaround time, this is where we 
have seen the most success. Contact this agency first, this 
agency second''?
    I do not know what those solutions would be. You guys 
would, but is there a database somewhere or some sort of a 
repository that is made available to folks that can tap into 
those lessons learned and not make some of the mistakes that we 
all have made in the past as we navigate these competitions, 
which is what they are?
    Is there a place that has the right contact plans, the 
right capture plans, and sort of the lessons learned from 
several, probably hundreds of different captures?
    And I guess, you know, that is directed to Mr. Wainwright, 
Ms. Boyer, and Ms. Williams as well.
    Mr. Wainwright. Well, I will jump in. I am not sure I am 
the perfect person to answer that, but I would think that 
organizations like those that are represented here today, 
COMTO, AMAC, ACCA, that is where people go every year and 
multiple times a year to network with their colleagues, to 
share those ideas they have, certification levels for their own 
people as their trainers get better and better at what they 
know.
    And I am sure Ms. Williams and Mr. Ali can speak more to 
that, but that would be probably the first place I would think 
where that kind of institutional knowledge is deposited.
    Mr. Garcia of California. And before you jump in, guys, I 
think my question is: is it memorialized somewhere? Is it a 
link or a database somewhere that folks can access and get sort 
of the uniformity of it, but also the consistency and making 
sure that everything is actually memorialized?
    Mr. Wainwright. That I do not know. My guess is it comes 
and I know in my experience with those associations, every 
annual meeting I go to I come away with reams of good, solid 
information that I did not have before.
    Whether it is easy to get to as a link, I doubt, but Ms. 
Williams and Mr. Ali may know better about that, 
Representative.
    Thank you.
    Ms. Williams. This is Eve Williams.
    In regard to COMTO, as you said, Mr. Wainwright, there is a 
tremendous amount of outreach [inaudible].
    A database of sorts that might [inaudible], with APTA, 
which is the American Public Transportation Association, is to 
develop such a database, and we have talked about it a number 
of times and to become more of a free source for small and 
disadvantaged businesses so they can reach us and get 
information on how to do certain things.
    This is the type of work that comes for people to actually 
have. They are so difficult to [inaudible], and until somebody 
comes up with a question that is typically not an answer, but 
an app that we did not have, industry standards and [inaudible] 
have a lot of things that are available to our members, as well 
as COMTO.
    Mr. Garcia of California. OK. Thank you.
    I see I am out of time. I yield back, Madam Chair.
    Ms. Norton. Thank you very much.
    We will hear next from Representative Maloney.
    Representative Maloney, are you muted?
    [No response.]
    Ms. Norton. We will pass on then to Representative 
Brownley.
    Representative Brownley, are you muted?
    [No response.]
    Ms. Norton. Then we will go to Representative Payne.
    Mr. Payne. Thank you, Madam Chair.
    Before I start, I cannot help but comment on one of my 
colleagues, two gentlemen prior to me on the other side of the 
aisle representing identity politics.
    Well, on a topic such as this, and I appreciate the 
chairwoman pointing out our oversight duties, which is the 
bottom line, it just appears that one of the reasons that we 
are in the situation are statements and opinions such as that.
    So the good ol' boys network is still in place.
    Mr. Ali, what tools does the Airport Minority Advisory 
Council organization use [inaudible] from airports on the 
runway side and the horizontal-vertical side of civil builders? 
[Inaudible] airports?
    Ms. Norton. I am not sure that the question was received. 
Do you receive the question? Part of it was----
    Mr. Ali. No, ma'am, I could not receive the question.
    Ms. Norton. Could I ask Representative Payne to repeat the 
question?
    Representative Payne, part of the question was not heard by 
us or by the gentleman you asked to respond. So could you 
repeat your question again?
    You may be muted. Could you unmute, Representative Payne?
    Mr. Payne. Is that better?
    Ms. Norton. Yes.
    Mr. Payne. Oh, I am sorry. I am so sorry.
    Mr. Ali, what tools does the Airport Minority Advisory 
Council use to get more DBE contractors ready for work at 
airports on the air runway side and the horizontal and vertical 
side of civil builders?
    Can the Federal Government play a stronger role in 
developing more industry contractors at airports?
    Mr. Ali. I thank you, Congressman.
    Before COVID, we had lots of training and development that 
we did face to face at our annual conference when we talked 
around service delivery as well on the construction side and 
the service side.
    During the pandemic side, we have moved to webinars to be 
able to facilitate some of that training. As you can imagine, 
certain contracts in construction are for the DBE program, but 
a lot of that is your social networks.
    And so social networks and business allow for people to 
participate more readily than others. So we recognize that. So 
we try to make sure we do matchmaking with the larger 
contractors with the people that we may have in our database so 
they can have some great opportunities.
    We also have regional directors throughout the country so 
that it can align and find themselves to do more partnerships 
with that.
    And then as you continue to move forward, I think if you 
were looking at ways for the Federal Government to create 
policies that would be important or impactful is how do we look 
at PFCs in the future.
    As we know, a lot of the funding has moved from AIP funding 
to PFC funding, is to ensure that the DBE regulation as you go 
forward will have or also include PFC dollars. As many people 
can tell you here, the AIP dollars or airport improvement 
dollars have the DBE program. The PFCs, which is the passenger 
facility charges, do not have the DBE grant assurances.
    So as a result, I believe, you will start seeing a 
diminishing of utilization of DBEs.
    Mr. Payne. OK. Thank you.
    Mr. McDonald, we have heard positive things about Broward 
County's funded capital construction program. What type of 
success have you had with providing work to local DBE firms?
    And can your program plan be implemented in other areas?
    [Interruption to audio.]
    Ms. Norton. Thank you.
    Continue please.
    Mr. Payne. Thank you.
    Mr. McDonald, should MWDBE participation in your program 
require third party determination and signoff before majority 
primes sign contracts with DBE inclusion?
    Mr. McDonald. Thank you, Congressman, for that question.
    Yes. Our program can be duplicated. Again, running an 
economic development and a small business office and 
administering the Federal program, we understand the importance 
from my local small businesses all the way to my DBEs where 
they need the additional assistance.
    So one of the things we do, similar to what Mr. Ali just 
shared, we do as many meet and greets, whether purchasing does 
pre-bids or not.
    During COVID and pre-COVID, we did pre-meetings or what we 
call meet and greets as possible, for sure, that from an agency 
perspective, we speak to the DBEs about all of the 
opportunities that are on the route.
    From potential prime perspective, we call them in as 
potential primes and explain the program and the expectations 
of the office.
    As mentioned earlier to one of the speakers, we actually do 
have a requirement as a part of that LOI, whoever you submit 
you are married to unless it goes through a process of my 
office and my final signature that there is a reason to 
substitute.
    So it is the idea that the program tries to enforce exactly 
what 49 CFR requires us to do. It is the idea that I do have 
the support of the county commission, the county administrator, 
and my agency that support the bid all the way to the 
utilizations of the primes.
    And we do believe that as a model--and nothing is perfect, 
I am not acting as if it is--there is an opportunity to empower 
primes to recognize that this requirement is one that we also 
want, as you have heard, to develop and nurture those 
relationships.
    Mr. Payne. OK.
    Mr. McDonald. We were given an [inaudible] a few years ago 
to not set a goal just to see. I refused. I knew that without 
the goal they would not do it.
    So we are crystal clear. I just had a primes meeting last 
month--a virtual--to let them know that this is not only a 
requirement. It is also monitored and reported, and we will act 
on it.
    So it really requires us to do what the law allows us to 
do.
    Mr. Payne. Thank you very much.
    And, Madam Chair, I yield back.
    Ms. Norton. The gentleman's time has expired. I thank you.
    Representative Palmer.
    Mr. Palmer. Thank you, Madam Chairman.
    Ms. Boyer, in 2013, the Office of Inspector General issued 
a report saying that there were DBE firms that were 
deliberately limiting the amount of new contract dollars in 
order to stay eligible for the program.
    Do you think that that is harmful to those programs?
    And I will explain why I asked this in a moment.
    Is she still there?
    Ms. Boyer. Yes. Yes, I am.
    I do think it is harmful to the program. I believe that the 
program is about empowering firms to get a leg up, get a start, 
get a lot of experience, and be able to step out and perform on 
a level playing field.
    I think it is the fear that overcomes a small business to 
step out because it is that, you know, we hear so often that if 
there is not a DBE goal, then we are going to do it ourselves.
    So I think it is a fear, and I just think there needs to be 
more of a ladder in between.
    Mr. Palmer. Well, the reason I bring this up and the 
possibility that there needs to be some term limits for how 
long you can stay in the program is you made another point 
earlier about lacking the nimbleness that larger firms have.
    And is that not largely a function of resources, your 
undercapitalized cash flow issues, that you do not have the 
nimbleness that the other firms have?
    Ms. Boyer. Yes, certainly. I mean, it is nimbleness when it 
comes to being able to move to opportunities. I think within 
our company, we are actually were able to move fairly quickly, 
but we are mostly undercapitalized. It is very difficult to get 
capital, and it takes years and years.
    So my company is only 16 years old. So it takes years and 
years to get to a point where you can sustain yourself.
    Mr. Palmer. My point about this is that I am kind of odd in 
my reading choices. Where some people read novels, I tend to 
read reports.
    But there was a report from the Federal Reserve Bank, I 
think one from St. Louis and one from Atlanta, that talked 
about how minority-owned and women-owned businesses are 
undercapitalized.
    And one of the things that I think we need to do to address 
this situation is to follow on what President Trump has done 
with the Opportunity Zones and maybe do a broader version of 
that that incentivizes financial institutions to work with 
minority-owned and women-owned businesses to help them to get 
to a stronger position in terms of available capital, which 
will help address this nimbleness issue that you raised.
    But I think it is also important in the DBE program that we 
not incentivize companies that are in that program to stay in 
that program because you will never grow. And I would just like 
your thoughts on that and maybe Mr. Wainwright weigh in on that 
as well.
    Ms. Boyer. Sure. So I mean, it would help to have the 
financial institutions more onboard in helping minority- and 
women-owned businesses. I mean, it is definitely something that 
holds most people back.
    For me, our company always kids that we are in the basement 
of the bank. They always ask, ``Is there a man that is involved 
in your decisionmaking?''
    And, we have been building a successful business and doing 
well being run by women. So I think it would help.
    Mr. Palmer. And your answer is you don't need no stinking 
man?
    Ms. Boyer [Laughter.] In collaboration and, yes, in 
support.
    Mr. Palmer. You just need a good banker.
    Ms. Boyer. And good bankers are hard to find for women and 
minorities. I mean, we know the banking industry. It is always 
a challenge. It really is.
    Right now I am using a very small bank from my hometown, 
not even in the State that I am working in. Because of the 
personal relationships, they know my family. They know my 
brothers and sisters, and they trust me.
    Mr. Palmer. Madam Chairman, I know we are in the midst of a 
highly partisan election, but I think what we need to at least 
give some credit to the Trump administration on the Opportunity 
Zones, and we need to think about how we expand this to make 
more capital available to minority-owned and women-owned 
businesses.
    And I would recommend that our colleagues look at these 
reports from the Federal Reserve Banks and start thinking about 
how at some point we work together to address this.
    And I yield back.
    Ms. Norton. I thank the gentleman for his suggestion, and 
as he notes, this is a very bipartisan committee, and this 
issue is very bipartisan. So I believe the chairman will take 
note of what you have asked astutely.
    Representative Plaskett.
    Are you muted, Representative Plaskett, who is next?
    [No response.]
    Ms. Norton. Then we will move to Representative Carbajal.
    Mr. Carbajal. Thank you, Madam Chair.
    Dr. Wainwright, today we have heard business owners tell us 
they believe discrimination would prevent them from being 
successful in business in the absence of this program. 
Statistical analysis can shed further light on the question by 
comparing situations where a DBE program is in effect with 
situations in the same jurisdiction the program is not in 
effect.
    Do you agree and do you believe doing that provides useful 
evidence?
    And if so, what does the evidence you have reviewed 
demonstrate?
    Mr. Wainwright. Thank you, Representative.
    We have heard from Ms. Lerdahl about what has happened in 
Washington DOT. The overwhelming majority of examples of so-
called parity that I am familiar with are quite recent, and as 
some DBE programs have matured and programs like them.
    In my experience they are rarely statistically significant, 
which means they do not necessarily show parity at all, which 
is what we learned with the subsequent disparity study that was 
performed by Washington DOT, despite U.S. DOT ignoring those 
results when the request to rescind the waiver came in.
    But second, these results in the rare instances that they 
occur are statistically significant in the context in which 
availability figures have been artificially depressed due to 
discrimination.
    You remember I testified that minority- and women-owned 
firms are forming at much lower rates than similarly situated 
majority firms because of discrimination. If such firms were 
forming at the same rate as majority male firms, there would be 
few, if any, findings of parity.
    Third, you really should not consider a category of DBE to 
have achieved parity until you have seen the same result appear 
consistently in the private sector, that is, in the census 
data.
    Again, this is like the blood pressure metaphor I have used 
previously.
    Remember the only markets in which there has been any 
attempt to level the playing field are the public contracting 
markets, like the federally assisted transportation market.
    And the far larger and more lucrative private sector DBE 
programs are rare to nonexistent, and majority male-owned firms 
generally get almost all of the business.
    We also have to remember that majority male-owned firms 
have literally had centuries to grow and establish their firms 
with effectively zero competition from minorities and women.
    Early on, the lack of competition was a direct result of 
laws that intentionally and explicitly disadvantaged women and 
minorities. Later it was the result of discriminatory practices 
that were permitted to continue despite civil rights laws.
    Finally, we should consider the practical effects of 
suspending the operation of the program every time some 
subcategory of program participant achieves a modicum of 
success. This will not reduce discrimination. It will just tend 
to increase bankruptcies, as we have heard so poignantly from 
Ms. Lerdahl, and then those same entrepreneurs or others like 
them will need to be added right back into the program.
    Thank you.
    Mr. Carbajal. Thank you.
    Dr. Wainwright, this committee has received reports that 
some State and local transportation agencies have excluded 
certain minority ethnic or gender groups from their programs 
because these groups have finally reached or exceeded, quote, 
unquote, ``parity'' according to a disparity study.
    Do you believe excluding from the program certain groups 
who reach some measure of parity in the market is the right 
approach?
    Mr. Wainwright. No, it is not, and I believe that was what 
I just addressed in my previous response. So maybe I 
misunderstood your initial question.
    Mr. Carbajal. Thank you.
    I have limited time. So, Ms. Lerdahl, you stated in your 
testimony that after being excluded from the DBE program, you 
bid on several contracts, but were unsuccessful.
    To your knowledge, did those contracts go to other DBEs?
    Ms. Lerdahl. Thank you, Representative, for the question.
    No, absolutely not. They went to large electrical companies 
that were not DBE firms, and in fact, our experience in the 
State of Washington was when the waiver was enacted, prior to 
that, the DBE community had about 17 percent participation, and 
after the waiver was enacted, that fell to about 8 percent or 
8\1/2\ percent participation, approximately.
    So those DBE dollars did not go to other DBE firms. They 
actually went to the prime contractors who self-performed that 
work.
    Mr. Carbajal. Thank you very much.
    Madam Chair, I yield back.
    Ms. Norton. Thank you very much.
    Representative Graves, and thank you, Representative 
Carbajal. We now go to Representative Graves.
    Mr. Graves of Louisiana. Thank you. Thank you, Madam Chair.
    Witnesses, I want to thank you very much for your testimony 
and participation today.
    My first question is for Mr. Ali.
    Mr. Ali, in the 2018 FAA reauthorization bill, we changed 
the size standard for DBEs in the legislation in regard to FAA 
DBE participation. I am just curious if you have any reflection 
or reaction to that law change and how it might have caused an 
impact on DBE contracts within the aviation space.
    Mr. Ali. Yes, I think it was good that we had, in regard to 
that position, when you start looking at it, we had to have the 
size to equal the SBA. I mean, that helped with DBEs because 
some of the size standards were not working. They were not 
equivalent.
    So we really appreciate what the committee has done and 
argued for this inclusion of this kind in the Moving Forward 
Act we thought.
    Mr. Graves of Louisiana. Thank you.
    I want to first ask Mr. McDonald and perhaps Ms. Norman. 
Our State department of transportation in Louisiana has 
indicated that some of their success in growing DBE 
participation has been the result of these community 
partnerships that they have helped to establish and sort of 
create a larger market within the DBE community for some of the 
contractors to be able to hit their DBE goals.
    Have you all established any type of partnerships or any 
other strategies that have resulted in increasing DBE 
participation?
    Mr. McDonald. I would say that we have, and as I mentioned 
earlier, the idea that we extend that same olive branch to our 
primes that I do with my DBEs. I actually hold virtual 
workshops now during COVID, but prior, meet and greets with the 
primes to make sure that they understand the county's program, 
that they understand the Federal program; they understand our 
expectations.
    And certainly, we want to entertain any questions or 
concerns they may have historically had with our DBEs. We also 
then do the same with the primes and the DBEs.
    The model I am trying to describe is that the more we know 
about the project price, the more we extend the information to 
the DBE community as well as the prime community before the bid 
ever comes out helps to build the relationship so that they 
understand the county is serious about the Federal program.
    We are going to adhere to the 49 CFR regulations, and that 
is not against the prime. That just makes sure that the prime 
understands that it's a commitment for our great economy to use 
our minorities and women and, yes, to allow our minorities and 
women as DBEs to get in front of our primes early for the pre-
qualifiers.
    So that's one of the things that we do on a regular basis 
to try to assure that who the primary themselves who have the 
DBE, they maintain them and also to let us know that we are 
having challenges with our DBE so that we can continue to try 
to develop them.
    So we do the collaboration regularly.
    Mr. Graves of Louisiana. Thank you. Thank you. I appreciate 
that.
    Ms. Norman, I don't know if there is anything you wanted to 
add.
    Ms. Norman. Yes, same here. We do our collaboration 
opportunities with our primes.
    We also have what we call the TDAC. It is the DBEs, our 
Transportation DBE Advisory Committee. It is where the DBEs 
come together along with the primes. They have their president, 
their vice president, secretary, and treasurer. We meet 
quarterly.
    Out of that they build relationships. Every year we hold 
what we call a DBE symposium, where we bring in primes, where 
we bring in DBEs who have graduated from the program.
    We also have, as you enter the workshop, we have what we 
call a matchmaking event so that we can match some of the DBEs 
with the primes, some of the scope of work opportunities, and 
so we do that often.
    We also seek out, as someone talked about earlier, 
mentorship programs, partnering with large firms like within 
the tolling industry where there are not a lot of DBEs who have 
that skill set; partnering with those kinds of agencies to 
build the capacity for our DBE firms.
    So it is about partnership, and it is about collaboration.
    Mr. Graves of Louisiana. Thank you, Ms. Norman. Thank you 
and Mr. McDonald.
    The last question, I am going to kind of bring those two 
together. So years ago I ran a large infrastructure program, 
and often we would meet with DBEs that wanted more work.
    The type of work that we did in some cases was a very 
specialized area, and so we would be sitting there with 
contracts of tens of millions or maybe even hundreds of 
millions of dollars, and as you can understand, somewhat 
cautious or concerned about giving a contract to a firm that 
maybe does not have that resume or that portfolio of expertise 
in the field.
    You have both talked about partnerships and mentoring 
programs. So on the one hand, we have eliminated the gross 
receipts cap in the FAA, the H.R. 2. The highway bill that is 
moving through also eliminates that nearly $24 million gross 
receipts cap.
    I am trying to figure out how do you strike that right 
balance of not giving contracts to folks that do not have the 
right expertise, but at the same time do not allow these huge 
contracts to slide in under a DBE label whenever they are 
taking work from smaller businesses.
    Ms. Boyer, do you want to comment on that at all?
    Ms. Boyer. I think one of the things that we have done in 
Illinois for the Illinois Department of Transportation is we do 
a lot of teaming between small firms and large firms, and that 
seems to really work well. It gives the small firms the ability 
to lead the project, but it has the support of the larger firms 
that have the breadth of experience and really a workforce that 
can help us out when we need the extra manpower.
    So I think joint mentoring and teaming opportunities 
between prime and DBE firms is really important, and I think it 
is a way to advance us all because what it also does is the 
prime firm learns or the bigger firm learns how to be a sub. 
They learn that information needs to flow up and down, and 
sometimes if they never have the opportunity to work as a 
subconsultant or a subcontractor, they never understand the 
importance of passing on information in a timely manner.
    They do not even have any idea what it is like to be a DBE 
firm. So I think overall it strengthens the entire industry.
    Mr. Graves of Louisiana. Thank you very much. I appreciate 
it.
    I yield back, Ms. Chair.
    Ms. Norton. I thank the gentleman for his question.
    Representative Stanton.
    Mr. Stanton. Thank you very much, Madam Chair. Thank you 
for holding this important hearing.
    Thank you to the witnesses for being here.
    As people on the committee know, I am a new Member to 
Congress. My former job was mayor of a large city, mayor of the 
city of Phoenix, and I am a huge fan of the DBE program.
    I witnessed with my own eyes when we were lucky enough to 
do a large infrastructure program at our airport or advanced 
light rail in my city or build a water treatment plant the 
opportunity to get businesses, often small businesses led by 
women, led by people of color, an opportunity to get a portion 
of that work and see them build their companies, grow 
employment, build their own wealth.
    It is really great for the city, and a benefit of this 
program also that I witnessed over and over again is that the 
DBE firm leadership often would become the leadership of the 
city. As those companies grew in size and importance in our 
community, I would tap the leadership of those companies for 
important boards and commissions or nonprofit board seats, et 
cetera.
    They tend to be some of the most civically active business 
leaders in a community. The DBE program is critically important 
to opening the door for small businesses owned by socially and 
economically disadvantaged individuals to compete for important 
federally funded projects.
    Today I want to highlight just one DBE success story in 
Arizona. Arizona Heat Contracting, a woman-owned DBE company, 
had only one contract with our State DOT prior to joining the 
South Mountain Freeway Team, the largest project to date in 
Arizona at almost $2 billion. The company was contracted to 
perform trucking activities on this new 22-mile freeway.
    The original contract was for $25,000. That was just the 
start. The company did well and kept growing and growing, got 
in new contracts, ultimately got contracts valued up to $9 
million, and then they were able to subcontract with over 81 
DBE and non-DBE trucking firms to assist in delivering the main 
portion of the project's trucking needs.
    That is a great success story. They were successful in 
maintaining ownership and control of the trucking operations on 
a project which had an aggressive schedule and many 
requirements.
    Arizona Heat was able to quickly adapt to take the 
necessary steps in a very short period of time in order to 
sustain the needs of the project and increase its capacity.
    I mean, that story has played out over and over and over 
again in communities throughout this country. It is just one 
example of many successful DBE programs in my State and has 
been in so many other States.
    I have a question for Ms. Williams.
    Ms. Williams, the committee recently enacted a provision 
which was included in H.R. 2, the Moving Forward Act, to remove 
the gross receipts cap under the DBE provisions applicable to 
the Surface Transportation Program.
    If enacted, certified DBEs would be eligible to participate 
in federally funded highway and transit projects based upon 
their Small Business Administration size standard, as is the 
case in the aviation DBE program.
    Ms. Williams, how would such a change benefit certified 
DBEs seeking to participate on highway and transit projects?
    Ms. Williams. Thank you. That is a great question.
    I think it will help if those caps were lifted. However, 
many times the problems for graduating or the problem existed 
that pushes people out of the program is not the cap on gross 
receipts. It is the cap on personal net worth.
    If I do not have the personal net worth to go after a $24 
million project, then it does not behoove me to go after it. I 
do not have the resources to fund it.
    And so I think a greater emphasis should be put on looking 
at the personal net worth cap as well.
    Mr. Stanton. All right. You have given this committee a lot 
of food for thought with that good advice. I appreciate that, 
Ms. Williams.
    Mr. Ali, how has participation in the DBE and ACDBE 
programs made AMAC members more competitive outside of the DBE 
program?
    Mr. Ali. Yes, thank you for the question.
    What we found, as you heard earlier, the joint ventures 
that you heard from Ms. Boyer, those joint ventures and those 
teaming arrangements, that you have seen that happen more 
often, and as a result, they have been able to take some of 
those partnerships outside of the airport industry into other 
transportation industries as well as into the private industry, 
which allows them to build relationships.
    We should never forget business is done with people in 
business with people you know, people you like, and people you 
trust. And that is really done in this space where you get 
people to engage.
    So the DBE program kind of helps to align for some of that, 
particularly since there has been so much discrimination in the 
past, that this provides a way for people to partner and grow 
and learn to work and build together so they can do exactly 
what you said. People get to know who they are and be able to 
put them on board commissions together.
    Mr. Stanton. Thank you, Mr. Ali.
    Thank you, Madam Chair. It has been an excellent, excellent 
hearing. I yield back.
    Ms. Norton. I thank the gentleman.
    Representative Fletcher. Representative Fletcher.
    Mrs. Fletcher. Yes. Thank you, Chairwoman, and thank you 
and also Ranking Member Graves and Chairman DeFazio for holding 
the hearing today.
    Thank you so much to the witnesses for taking the time to 
testify. Your stories have been very powerful.
    I also want to thank my colleagues for their thoughtful 
questions and their ongoing support of the important work we 
are doing here today, especially Mr. Johnson from Georgia, who 
reminded us all why this program exists and why it matters.
    As we have heard, the DOT Disadvantaged Business Enterprise 
program is an important program created to ensure that 
minority- and women-owned businesses have a fair chance to 
compete for Federal DOT funds, a program that has historical 
roots that, as we have heard from our witnesses, is very much 
needed today.
    For more than 40 years, the program has opened access to 
small businesses across the country who would otherwise not be 
able to compete for many of these projects, and we have seen 
the results in my hometown, for example.
    Thanks to this program, more than 30 percent of both George 
Bush Intercontinental Airport and William P. Hobby Airport 
contracting and concessions goes to ACDBEs.
    But as we have heard today, the committee has an important 
role in ensuring that the marketplace for DOT-assisted 
contracts is free from artificial and discriminatory barriers 
for women- and minority-owned businesses who wish to compete on 
a level playing field.
    So I want to use my time here today to follow up on a few 
questions that some of my colleagues have already asked, and I 
actually want to start with Ms. Williams.
    In your opening statement, I think the end of your opening 
statement was interrupted, and so I would like to give you the 
opportunity to just repeat the concluding sentence, the thing 
that you wanted to say in conclusion of your opening remarks.
    Ms. Williams. Well, thank you so much.
    I will repeat that. So in conclusion, I wanted to say that 
the program is not a handout. It is a leg up. It forces big 
companies and public transit agencies or public transportation 
authorities to do business with minority companies.
    Without the DBE program, we would probably be out of 
business at the end of the life cycle of our contracts that are 
in the pipeline.
    And my last statement there was that we need to be 
protected like we protected the bald eagle.
    Mrs. Fletcher. Well, thank you so much, Ms. Williams. I did 
want to hear you full statement, and I want to follow up with 
you on a particular question kind of following up on what 
Chairman DeFazio was asking in his questions to Dr. Wainwright 
about public versus private projects.
    Can you share with us kind of the percentage of your work 
or your revenues that comes from public versus private 
projects?
    And talk about kind of the effect of the DBE program, 
public versus private, and how that might help particularly in 
the bidding process in Dallas, but also more generally.
    Ms. Williams. Private work is null. We have probably done a 
few private projects in the past. They tend not to come 
frequent enough to sustain us, and they also come with other 
issues that we do not face when we do public work, like getting 
paid. That is important.
    As far as the contracts that we do have in the public 
sector, those have been our lifeline. I think that without 
those projects, we would not be in business. We just simply 
would not because we depend on the DBE program.
    Would I like to graduate? I would, but as others have 
mentioned, it is frightening because I know what happens when 
you pull the covers back.
    I think sustainability is really important, and 
sustainability happens when there is continuity between 
projects, when you are able to retain staff between projects, 
when the team you have worked with is continuing on to another 
project together.
    And so there is a lack of continuity, and what happens is 
you are forced to lose your resources because you cannot sit 
them on a bench. And so this cycle just starts over and over 
and over again.
    Thank you.
    Mrs. Fletcher. Thank you very much, Ms. Williams.
    And I want to use the remaining time that I have, which is 
not a lot, to direct a question to Dr. Wainwright.
    In your testimony, you stated that statistically 
significant disparities facing minority-owned and women-owned 
businesses persist to this day, according to research, and 
looking at the disparities, what gaps do you feel your research 
reveals where the DBE program could be used to further reduce 
the existing and currently present disparities?
    Mr. Wainwright. I want to make sure I understand your 
question, Representative. Is it what more could the DBE program 
be doing?
    Mrs. Fletcher. Yes. I mean, does your research reveal gaps 
where the DBE program could be used to further reduce the 
continuing and existing disparities?
    And very quickly. I think I have gone over my time here.
    Mr. Wainwright. Yes. It is kind of a policy question, a 
little bit out of my wheelhouse. I guess I would say quickly, 
seeing these programs, there are still a lot of cities and 
counties and States around the country that do not run 
comparable programs, and it would be nice, and as one of them I 
would say also within the Federal Government outside U.S. DOT.
    So it would be good to see a more consistent and widespread 
effort to promote contracting diversity in the public sector 
and, of course, to see that spill over into the private sector.
    Ms. Norton. I thank the gentleman.
    Mrs. Fletcher. Thank you very much, Dr. Wainwright, and 
Madam Chairwoman, I yield back.
    Ms. Norton. I thank the gentlelady for her question.
    Representative Espaillat.
    Representative Espaillat, are you muted?
    Mr. Espaillat. Yes, I am here.
    Ms. Norton. All right.
    Mr. Espaillat. How are you?
    Ms. Norton. Go ahead.
    Mr. Espaillat. Yes. Thank you, Madam Chair, and thank you 
to all the panelists for being here.
    This is an incredibly important hearing. I am grateful to 
come from a State and a city like New York which has programs 
in the transportation and construction sector that go well 
beyond the requirements of disadvantaged business enterprises. 
But there are so many underlying issues that I believe we need 
to address.
    Last year I held a meeting with my local Transportation 
Task Force to discuss better inclusion of DBEs. I have had our 
local contractors association provide us a thorough examination 
to a number of community groups and leaders so they could 
ensure small businesses in the city have a good sense of how 
the DBE program works.
    One of the biggest take-aways from the meeting was that 
even though New York is full of diversity and has very 
aggressive diversity goals, there is still a pipeline issue in 
the construction sector.
    That is why I am working closely with former congressman 
Charlie Rangel and City College of New York to develop a state-
of-the-art infrastructure training program because we feel that 
there is just not enough young people particularly ready for 
the potential jobs that may be coming towards the future.
    So I believe that as we invest in infrastructure, we also 
need to invest in training the diverse field of candidates for 
the jobs that will come along the way.
    Another issue has been brought to my attention is the NAICS 
issue. The NAICS size standard negatively impacts the ability 
of DBEs to grow.
    So I want to ask the panelists: have you faced similar 
issues?
    Do you believe that changes need to be made to the INVEST 
in America Act to sufficiently resolve these issues?
    And is there more that we can do to ensure that DBEs are 
not held back?
    Any of the panelists.
    Ms. Williams. This is Eve Williams.
    I would like to address the NAICS standards on senior 
[inaudible] architectural services, and it puzzles me as to why 
engineering [inaudible] service. The engineering cap on gross 
revenue is somewhere near $14 million over an average 3-year 
period, but yet engineering architecture services are near $7 
million.
    I think in speaking for the architects, I think that they 
are severely held back because of the NAICS code standards or 
cap on just architectural services.
    Mr. Ali. Yes, this is Farad Ali from AMAC.
    I would say that there needs to be some real evaluation of 
what Ms. Williams was talking about earlier, which is personal 
net worth. I think it is unreasonable to believe. I think you 
create some kind of economic discrimination by keeping the 
number so low and then expect for businesses to, quote, 
unquote, ``graduate'' or to ``perform better.''
    It is hard to continue to have a small net worth and expect 
that people can grow to $30 million or $40 million or $15 
million. I mean, it is almost unreasonable.
    That is the problem that we ran into in the car rental 
industry because you have got a $1.3 million net worth 
requirement, net standard, that means you cannot have over 
that, but yet you have the cars.
    If you wanted to be a dealer for rental cars when you have 
got $50 million of rental cars, if you only have a net worth of 
$1.3 million, you could not even get a contract to do that 
work.
    So I think there should be some real intensive studies on 
understanding the impact of keeping the net worth at its 
current level and how that has also created some economic 
discrimination until you start really raising that so people 
can have growth and share in the prosperity.
    Mr. Espaillat. Anything on the pipeline issue from anybody 
or do you find that there are not enough trained folks for the 
jobs that may be coming our way in the future?
    And what can we do about it?
    Mr. McDonald. No, the pipeline actually is an issue, and 
you are absolutely correct.
    So we are working here within our State and with our county 
to expand our apprenticeship program in addition to what we are 
trying to do to prepare for DBEs.
    As the county we, too, just decided that we are going to 
align our own county procurement with apprenticeship, requiring 
primes to use a percentage of their activity with the contracts 
they win from the county to be done with apprenticeship.
    So we are believing that we are going to able to grow that 
in a similar manner over with the DBE, but the pipeline is an 
issue that we are trying to address right now because we do not 
have disciplines as we go forward and infrastructure begins to 
grow and bloom as opportunities for small businesses.
    Mr. Espaillat. Thank you, Madam Chair. I yield back.
    Ms. Norton. I thank the gentleman for his question.
    Representative Garcia? Representative Garcia? Are you muted 
or are you present?
    [No response.]
    Ms. Norton. Then I am going to move on to Representative 
Cohen.
    Representative Cohen, are you muted?
    [No response.]
    Ms. Norton. Then the last Member who has not been heard is 
Representative Carson.
    Representative Carson, are you muted?
    [No response.]
    Ms. Norton. I want to thank all of the witnesses for their 
testimony today. I think this hearing has been very telling and 
essential.
    It was particularly essential this year when we are seeing 
demonstrations over racial discrimination. It is one thing to 
demonstrate to take down a Confederate statute that was erected 
decades ago and be successful at that.
    It is quite another thing to make sure to raise up the 
ability of minorities and women to participate in Government 
programs.
    That is an issue for today and in keeping with the kinds of 
reckoning that are happening in our country.
    The comments of our witnesses today have been very helpful. 
They will be taken into consideration, especially your comments 
calling for changes in the statute itself.
    I want to thank each of the witnesses for your testimony, 
your very informative and helpful testimony.
    I ask unanimous consent that the record of today's hearing 
remain open until such time as our witnesses have provided 
answers to any questions that may be submitted to them in 
writing.
    I also ask unanimous consent that the record remain open 
for 15 days for any additional comments and information 
submitted by Members or witnesses to be included in the record 
of the day's hearing.
    Without objection, so ordered.
    If no other Members have anything to add, the committee 
stands adjourned.
    Thank you very much.
    [Whereupon, at 1 p.m., the committee was adjourned.]


                       Submissions for the Record

                              ----------                              

 Prepared Statement of Hon. Eddie Bernice Johnson, a Representative in 
                    Congress from the State of Texas
    Almost four decades ago, the Disadvantaged Business Enterprise 
program was enacted to address the stubborn and harmful 
institutionalized bias and systemic racism people of color were facing 
in the transportation industry. Since its enactment, the program has 
made progress, but that progress has been far too slow. This committee 
has collected enormous amounts of evidence that illustrates just how 
difficult it is for DBEs to succeed in today's environment. The bottom 
line is that DBEs must fight twice as hard and still usually end up 
getting far less money than goes to firms owned by non-minority males.
    Discrimination greatly increases the difficulty for women and 
minority owned firms to succeed. A recently published disparity study 
conducted for the Texas Department of Transportation used Census data 
to examine this issue. The study found that the business formation rate 
for white males was 5.4 percent, but the rate for African Americans was 
less than a third of that--1.6 percent. For Hispanic Americans it was 2 
percent, for Native Americans it was 2.9 percent, and for white women 
it was 3.1 percent. For Asian/Pacific Islanders it was better--5.2 
percent but still lower than for white males.\1\
---------------------------------------------------------------------------
    \1\ Texas Department of Transportation Disparity Study 2019, 
Colette Holt & Associates, 2019, at 133.
---------------------------------------------------------------------------
    The disparities for firm formation in construction in Texas were 
even worse. White men formed construction firms at a rate of 10.3 
percent, but for Asian/Pacific Islanders the rate was only 9.5 percent. 
For white women it was 8.9 percent. Shockingly the construction firm 
formation rates for Native Americans, Hispanic Americans and African 
Americans were 4.9 percent, 3.5 percent and 2.9 percent respectively.
    Think about what this means--as bad as the economic disparities are 
for firms owned by minorities and women, the current data actually 
understates the problem, since it doesn't take into consideration all 
the firms that could never even get off the ground. How can minorities 
and women ever erase the gaps in business inequality if discrimination 
keeps them from even forming the businesses they need to compete?
    This is exactly what makes the DBE program so important--while it 
doesn't fully level the playing field, it provides a demand for 
businesses owned by minorities and women and gives those businesses 
that do exist at least a fighting chance to compete.
    It is my hope that this hearing today will help us better 
understand the importance of this program along with the areas where 
this program can be improved upon. I look forward to hearing from our 
witnesses. Thank you.

                                 
 Prepared Statement of Hon. Rick Larsen, a Representative in Congress 
  from the State of Washington, and Chairman, Subcommittee on Aviation
    Thank you, Chair DeFazio and Subcommittee Chair Norton, for holding 
today's hearing on the importance of the U.S. Department of 
Transportation's Disadvantaged Business Enterprise (DBE) Program.
    Women and minority-owned businesses are fundamental to economic 
growth in Northwest Washington and the success of U.S. transportation.
    I saw this firsthand when I met with Marques Warren of Warren's 
News and Gifts at SeaTac Airport in Seattle.
    Marques' father, Ardie Warren, opened the family's first store, 
Northwest Encounter, at SeaTac in 1994. The news and gift store has now 
grown to 18 locations in the airport in partnership with the Hudson 
Group.
    To launch their business, the Warrens depended on Airport 
Concessions Disadvantaged Business Enterprise (ACDBE) loans, which help 
level the playing field for airport concessionaires.
    The needs of U.S. transportation industry are as diverse as the 
passengers it serves.
    Congress must work to improve equity in the industry and increase 
economic opportunity for women and minority business owners.
    One of the ways Congress can support these efforts is through 
preserving and improving the Disadvantaged Business Enterprise (DBE) 
Program.
    According to the American Community Survey, women and minorities 
significantly establish fewer businesses and earn less from those 
businesses than their white male counterparts.
    To address these disparities, the DBE program aims to increase the 
participation of women and minority-owned businesses in federally 
funded transportation and infrastructure projects.
    The Port of Seattle is one example of the DBE program's positive 
impact.
    According to the Port, DBE firms received more than $4.9 million 
for work performed on Federal Aviation Administration (FAA) funded 
projects, including taxiway improvements and residential noise 
insulation.
    The Port's Diversity in Contracting program tripled the number of 
women and minority-owned businesses doing business with the Port. Last 
year, the program met its five-year goal of increasing the amount of 
spend on these contracts to 15 percent.
    The DBE program is key to improving economic opportunity for small 
businesses in U.S. transportation, but Congress can do more to meet the 
needs of women and minority entrepreneurs.
    Last year, the Washington State Department of Transportation 
(WSDOT) conducted a disparity study, which found:
      Smaller airports want more assistance from the FAA and 
WSDOT to increase DBE participation; and
      Without the program, DBEs would be effectively shut out 
of the market with devastating impacts to these businesses, among other 
conclusions.

    I look forward to hearing from today's witnesses, including the 
Airport Minority Advisory Council (AMAC), regarding the critical need 
to continue the DBE program and ways to improve it for women and 
minority-owned businesses, particularly in aviation.
    Diversity in hiring and contracting is essential to strengthening 
the nation's transportation and infrastructure, and to keep the country 
competitive in the global market.
    Today's witnesses are important partners in these efforts.

                                 
  Letter of July 13, 2020, from Lawrence T. Green, President, Divine 
    Cement, Inc., Submitted for the Record by Hon. Peter A. DeFazio
                                                     July 13, 2020.
Mr. Peter DeFazio,
Chairman,
House Committee on Transportation and Infrastructure, United States 
        House of Representatives, Washington, DC.

Re: In Response to the Request from the Committee on Transportation and 
Infrastructure for a Letter or Statement on the Disadvantaged Business 
Enterprise Program

    Dear Chairman DeFazio,
    Construction is an area that has historically excluded black 
workers. This includes the unionized portion of the industry. Giving 
minority workers access to good paying jobs has always been an 
important part of closing our large and persistent racial wage 
inequities. This is a critical issue that must be addressed and 
resolved. Trade unions have had a complicated and often ugly history 
with race. That history has helped shut blacks and Hispanics out of 
these highly coveted lines of work.
    I have worked in the construction industry since the age of 
sixteen. I worked as a cement finisher another sixteen years before 
starting my own company, Divine Cement, Inc.
    The construction trade has always been employment set aside for 
predominately Caucasian men. During high school, I remember vividly my 
white counterparts landing summer jobs in the trades while my black and 
hispanic counterparts worked in the fast food industry or retail such 
as clothing and shoe stores at the local mall.
    In June 1971 the New York Times wrote, ``The building of houses, 
offices and factories, of bridges and dams and highways is still 
largely white man's work in America.''
    Despite Government-imposed quotas and timetables, despite voluntary 
``hometown solutions'' and ``outreach'' programs to train inner-city 
youths along with seemingly constant litigation, the number of black 
and other minority workers entering the construction industry remains a 
thin trickle.
    There is some evidence that these efforts have forced open the door 
to employment in the construction trades at least a crack. The number 
of blacks now entering construction jobs is still insignificant in 
terms of their need for employment and higher income. The crack is so 
insignificant, light can't shine through.
    According to a 2018 Crain's New York Business article, ``In 2015, 
the Center for Union Facts, released data on the racial pay disparities 
in the construction unions. We noted that only 25% of unionized 
construction workers were black, compared with 53% and 43% in the 
health care and transportation sectors, respectively. Additionally, we 
found white workers were getting better-paid job assignments than 
minorities, who often had lower-paying apprenticeships. Fast forward to 
current research and those figures confirms there has been little to no 
change.''
    The reasons for Black invisibility at street construction sites are 
racist exclusion, cheap labor, and the refusal of city and county 
officials to enforce anti-discrimination labor laws. While the laws are 
in place, they are routinely circumvented allowing discrimination to 
continue. But most importantly, the reason is racist exclusion and it 
starts with the unions. The long history of racial closed doors toward 
African Americans in the trades is well-known and documented with 
construction at the top of the list. These are the plum paying and plum 
benefit jobs in the construction industry. They have long been 
jealously guarded as the sole preserve of blue-collar whites as cited 
in ``The Hutchinson Report'' by author and political analyst Earl Ofari 
Hutchinson.
    Some of my personal experiences begin with unfair practice of how 
and when mobilization is paid out. When my company is selected as the 
subcontractor, we have a significant amount of work to perform and rely 
on mobilization monies to purchase equipment and materials to start the 
job. We are forced to wait until two weeks prior to the scope of work 
starting before being paid mobilization. Often times, we do not receive 
mobilization until after the scope of work has begun.
    More importantly, we are forced to wait sometimes months after the 
general contractor is paid before we receive payment. More times than 
not, we are forced to call the general contractor numerous times 
requesting we be paid and this is after confirming they have been paid 
by the owner. It is extremely frustrating to complete a job on or ahead 
of schedule, with complete satisfaction of the general contractor only 
to be sent a perceived message of, ``You'll get paid when I feel like 
paying you and not a day before!'' It is extremely disheartening.
    The DBE Program has enhanced Divine's opportunities in the highway, 
transit, and airport construction industries simply by existing. The 
consequences of not having the program would be our business would not 
exist. But for the Disadvantage Business Enterprise and the 
requirements to use minority owned businesses, Divine Cement, Inc. 
would not a reality because general contractors would self-perform.
    Securing working capital is extremely difficult for minority owned 
businesses. Personally, I am repeatedly forced to secure loans with 
interest rates that mirror loans from merchant cash advances. While the 
interest rates are uncomfortably high, the loans are necessary to make 
payroll and purchase the equipment and materials needed to perform the 
job in the absence of mobilization.
    Our saving grace has been that the consistent superior quality of 
work Divine Cement provides has afforded us the opportunity for 
additional work. Moreover, additional contracts are awarded after the 
realization that Divine Cement's performance surpasses expectation. One 
of the visions of Divine is to create a state-of-the-art training 
center to equip other minorities to provide a more diverse group of 
highly trained and qualified tradesmen thereby opening the door for my 
more successful minority owned companies like Divine Cement, Inc.
        Sincerely,
                                         Lawrence T. Green,
                                     President, Divine Cement, Inc.
                                 
 Letter of July 15, 2020, from Linda Moen, P.E., LEED BD+C, President 
 and Managing Member, EFK Moen, Submitted for the Record by Hon. Peter 
                               A. DeFazio
                                                     July 15, 2020.
Hon. Peter DeFazio,
Chair,
House Committee on Transportation and Infrastructure, United States 
        House of Representatives, Washington, DC.

Re: Request from the Committee on Transportation and Infrastructure on 
the Disadvantaged Business Enterprise (DBE) Program

    Dear Mr. DeFazio,
    My company, EFK Moen, is a woman-owned civil engineering design 
firm with offices in Missouri, Illinois, and Georgia. I own 57% of the 
company and I worked in the public sector as a highway design engineer, 
project leader and regional design & operations manager for 13 years 
before starting my company. I have a strong background in highway 
design and in management of public highway projects, but it was still 
difficult for me to get approval in the DBE program--the state 
Department of Transportation (DOT) I first applied for DBE 
certification with challenged me to prove that my father (a retired 
construction engineer with no design experience and no involvement with 
my company) or the other men who worked at my company were not the 
``brains'' or ``influencers'' of my company. I stood firm, overcame 
those hurdles and have been in business for over 22 years (1998 to the 
present). I have grown my company from 4 to 54 engineers and surveyors; 
with 5 offices in Missouri-Illinois-Georgia; and EFK Moen has a 
respected position in the industry as an experienced design firm 
capable of leading large highway and bridge infrastructure projects and 
as a valued teaming partner with other national civil engineering 
design firms. Without the DBE program, I expect I would be dabbling on 
very small project assignments or I would be out of business.
    The construction industry is built on managing risk and trusting 
that others will be able to do their job well and contribute to a 
project's profitability. For an agency or a prime contractor to take a 
chance on a new/unknown/small firm there needs to be an incentive. 
Women-owned and Minority-owned firms are ``unknowns'' because we are 
seen as strangers to this industry--still after over 30 years of DBE-
MBE-WBE programs--because we do not fit the typical image of 
construction workers and project managers. There are individuals who 
are interested in giving firms a chance, but when they see it could 
impact their bottom line it is a very hard call to make without an 
incentive. The DBE program provides incentive and has been very 
successful in the markets I work in. The program gives me enough value-
potential to have the initial discussions with a potential client--
whether that is an agency or prime contractor/consultant. Then my 
company can prove that we are capable and have value on our own, beyond 
the DBE incentives. We can build relationships that break the pattern 
and help women and minorities become part of the ``face of the 
industry''. EFK Moen has successfully become one of the top engineering 
design firms in the Missouri public works market with MoDOT and with 
local counties and municipalities; we have successfully become a valued 
part of the very large engineering design industry in Illinois; and we 
are starting out strong in the Georgia engineering public highway and 
bridge design market. In each new market, our DBE certification has 
provided us opportunities to team with other engineering firms and 
prove our value.
    The DBE programs run by the state DOT's we work with are very 
strong, inclusive and ethical. The DOTs provide training opportunities 
on how to do business with government agencies (which is quite a bit 
different than doing private work) and facilitate introductions to 
prime firms in the industry. Business owners in the program support 
each other and support the philosophy of bringing other disadvantaged 
people and firms into the industry. The FHWA and state DOT commitment 
to the program sets the tone for the industry to value the program 
also, and to strive to build up the industry's woman-owned and 
minority-owned firms to match/represent the communities where those tax 
dollars are spent. The state success in supporting capable DBE firms 
creates a pool of women-owned and minority-owned firms who are 
available to do work in their region on projects outside the program 
also.
    The culture created by the DBE program is valuable to our industry 
and supports a healthy inclusive environment for firms and for diverse 
individuals who are under-represented in our industry. Engineers' and 
surveyors' potential is not based on their skin tone, ethnicity, 
culture or gender--success in technical fields is based on a love of 
problem solving. Encouraging diversity in our industry pushes that 
reality forward and teaches us not to judge a person's capabilities 
based on the appearance of other capable engineers we have worked with 
in the past. As in any process, it is ``easier'' to continue the status 
quo, to continue doing business with the same type of people you have 
always worked with. But the reward for the community comes when we try 
a little harder and reach out with opportunities for everyone.
    Thank you for accepting my letter of support for the DBE program. 
It has been very valuable to me, to my company, to the engineering/
construction industry and to our community.
        With warm regards,
                               Linda Moen, P.E., LEED BD+C,
                           President and Managing Member, EFK Moen.

                                 
  Letter of July 1, 2020, from Carla M. Williams, DBELO, Director of 
 Community and Business Engagement, Hillsborough Area Regional Transit 
Authority, and President, COMTO Central Florida Chapter, Submitted for 
                  the Record by Hon. Peter A. DeFazio
                                                      July 1, 2020.
Hon. Peter DeFazio,
Chair,
House Committee on Transportation and Infrastructure, United States 
        House of Representatives, Washington, DC.

RE:  The Hillsborough Transit Authority's (HART) Support for the 
Reauthorization of the DOT's DBE Program

    The Hillsborough Transit Authority's (HART) is responding to the 
request from the Committee on Transportation and Infrastructure for a 
statement on the Disadvantaged Business Enterprise Program.
    The DBE program has enhanced transit in the Tampa Bay area, in 
Florida. Over a ten-year period (2010-2019), awards, with federal 
dollars to primes averaged about $4.1 million, while about 11.1% of 
$4.1 million went to DBE's. The major construction projects during this 
period (2010-2013) included:
      CNG Fueling Facility
      TECO Streetcar Line Phase II

    Contracts to DBE's spiked in 2011 to 108 DBE's. The final 
construction was completed by 2014 and overall federal funds levelled 
off after 2015 to average about 14.6 DBE contract awards.
    Consequences if the Program Were Not to Receive Reauthorization
    It would be unimaginable to discontinue the DBE program during 
these tumultuous, economic strained times. The COVID-19 crisis hit with 
people of color struggling to stay healthy, provide for their families, 
and keep their small businesses going, while still striving to stay 
safe from enforcement brutality or worst. The death toll of this 
pandemic has been reported to hit Black and Brown skinned people in the 
United States at a higher proportion than others. Removal of continued 
support to Disadvantaged businesses would be like adding an accelerant 
to an already well burning fire.
    If the country's goal is to maintain a level playing field, 
assistance is still needed for the minority disadvantaged business. 
Yes, there has been improvement since the 1982 inception of the DBE 
program. However, the scale of fairness and the Good Ole Boy Network 
still is vibrant and not willing to yield to inclusion.
    Still most of the subcontracting opportunities on HART projects are 
only filled with a DBE when a goal is set because of federal funding 
(Race Conscious). HART has experienced a major, well-known and highly 
utilized company agreeing to hire DBE's but backed out and said that 
the DBE was not cooperating on their expected salary. When in truth the 
DBE Company was never contacted and the conversation about salary never 
took place. The prime contractor found a non-DBE with a similar name 
and attempted to pass the company off as the DBE. This deviousness only 
surfaced when the DBE firm called the HART DBE Coordinator to ask what 
was going on and when they could expect to start work.
                           Procurement Issues
Issue 1: Open and Transparent Communication of Informing DBE's of 
        Upcoming Opportunities
    Notifying DBE's on regular solicitation lists. Currently DBE's, 
registered in the HART Vendor System, are not notified automatically 
when opportunities arise. The solicitations are advertised on the HART 
website, however since the procurement solicitation is not linked to 
the vendor registration system it can't automatically search for 
vendors with the NAICS codes.
    The vendor is required to download the bonfire software to their 
individual computer for automatic notifications and to get details of a 
solicitation.
    Our DBE staff is collaborating with the Procurement Department to 
improve the process to ensure the information can be transmitted to 
qualified DBE's, who are registered in the HART Vendor System in a 
timely manner so that they are aware of the bid opportunities and have 
time to prepare the appropriate paperwork.
Issue 2: Good Faith Efforts to Sub-Contract DBE's
    DBE Goal Waived by the Director of Procurement: HART experienced a 
prime contractor who came unbelievably close to the project's 
Independent Cost Estimation. The eligible, federally funded project 
allowed for a DBE goal. When the solicitation was examined none of the 
selected subcontractors were Unified Certification Program (UCP) DBE's. 
This procurement required the use of the Good Faith Efforts clause. 
After efforts were made to obtain UCP DBE's and the results were 
examined, the additional expense to the prime contractor would have 
been $66. HART DBE Compliance ruled the additional price was not 
sufficient enough to stop the use of UCP DBE's on the project. The 
Procurement Director had the last say. The Procurement Director ruled 
the prime contractor had completed all that was asked of them and 
because of that, the utilization of DBE's on the project was not 
required.
    Dropping DBE subcontractors from projects: After collaborating with 
Hillsborough County DBE staff, they saw a pattern where the same Prime 
Contractors solicit bids naming the DBE on their contract and later on 
dropped the DBE from the project. While it may be a legitimate reason, 
there may be a need to be notified by procurement staff at the time of 
solicitation when the same Prime Contractor keeps repeating the 
pattern.
    Continuing the DBE Program will assist HART in continuing to make 
transit a viable travel option for residents within the Tampa Bay 
Region and attaining the objective to support transit projects that 
promote economic development and job creation. HART strongly supports 
the continuation of the DBE Program.
        Sincerely,
                                  Carla M. Williams, DBELO,
  Director of Community and Business Engagement, Hillsborough Area 
                                        Regional Transit Authority.
                          President, COMTO Central Florida Chapter.

                                 
    Letter of September 19, 2020, from Colette Holt, Colette Holt & 
     Associates, Submitted for the Record by Hon. Peter A. DeFazio
                                                September 19, 2020.
Hon. Peter DeFazio,
Chairman,
House Committee on Transportation and Infrastructure, United States 
        House of Representatives Washington, DC.

    Dear Chairman DeFazio:
    I write in support of the continuation of the Disadvantaged 
Business Enterprise program for federally-assisted transportation 
projects. My law and consulting firm, Colette Holt & Associates, has 
been involved in the DBE program and other contracting supplier 
diversity programs for over 25 years. I have conducted or participated 
in over 75 high-quality disparity and availability studies in recent 
years. These research projects evaluated whether there was sufficient 
evidence of discrimination for relevant jurisdictions to continue or to 
enact remedial race- and gender-based programs for public sector 
contracts. The statistical and anecdotal evidence gathered in these 
studies is necessary to support the use of race- and gender-conscious 
goals to combat discrimination and to ensure that program elements meet 
applicable constitutional standards.
    This discussion focuses on the salient evidentiary findings that 
emerge from the following 23 Colette Holt & Associates studies. My 
conclusions are also informed by my decades of work with federal 
agencies, including USDOT and state and local government agencies 
across the country. Over 30 years of research reveals a stark truth:

        DBE goals remain necessary to ensure that minority- and woman-
        owned businesses have full and fair opportunities to compete 
        for USDOT-funded contracts. Without goals, DBEs receive little 
        to no work. There is also no doubt that the availability and 
        capabilities of these firms are depressed by the effects of 
        past and current race and gender discrimination. The DBE 
        program therefore remains essential to ensure that the federal 
        government does not function as a passive participant in 
        ongoing discrimination in the market for USDOT-funded 
        contracts.

    This finding is supported by two types of proof: 1. Quantitative or 
statistical evidence looks at the utilization and availability of 
minority and woman firms, and where necessary for agencies located in 
the Ninth Circuit Court of Appeals, disparities between the utilization 
and availability of DBEs. 2. Qualitative or anecdotal data that 
describes the experiences of business owners in their market areas with 
discriminatory barriers.
 Quantitative Evidence from Recent Colette Holt & Associates Disparity 
                                Studies
    A high quality disparity or availability study provides detailed 
results of an analysis of the recipient's utilization of DBEs, measured 
in dollars paid as a percentage of all firms' receipt of dollars paid. 
Contract records must include prime contract dollars and all 
subcontractor dollars, not just those paid to DBE subcontractors. These 
records must be examined at the 6-digit North American Industry 
Classification System (``NAICS'') code level to ensure the results are 
``narrowly tailored'' to the recipient's own contracting activities.
    Next, a study must estimate the availability of minority- and 
woman-owned businesses at the 6-digit level in the recipient's market 
area that provide the types of services and goods purchased by the 
recipient, as established by the utilization analysis.
    Where there is a large gap between utilization and availability, 
the courts have held that such disparities can support an inference of 
discrimination. A ratio of 80 percent or lower supports a prima facie 
inference that the cause of the disparity might be discrimination. This 
``disparity testing'' is not required for recipients outside the Ninth 
Circuit, since Congress, through the legislative process has previously 
determined that discrimination constitutes a failure in the market for 
USDOT-funded contracts. Even where statistical analyses is not 
required, the gulf between the minority- and woman-owned firms that 
could have received dollars and the actual dollars such businesses 
received presents strong evidence that remedial intervention through 
the use of narrowly tailored DBE contract goals is necessary and 
supportable.
    It can also be illuminating to contrast the results of the DBE 
program, that uses contract goals to ensure equal opportunities, with 
programs in the same market area that do not take affirmative steps to 
remedy discrimination. Again, we found that without the use of goals, 
DBEs received little or no work.
    We have provided our studies to the Committee. Please allow me to 
highlight a few results:
      Our 2017 Disparity Study for the Washington State 
Department of Transportation (``WSDOT'') found that DBEs received 
dollars close to their availability on Federal Highway Administration 
funded contracts: DBE availability was 13.80 percent, and they were 
paid 12.90 percent of the dollars, yielding a disparity ratio of 93.30 
percent. However, on state-funded highway construction projects on 
which WSDOT is prohibited from setting race- and gender-conscious goals 
by a state constitutional amendment, DBE availability was 19.0 percent 
\1\, but they received only 6.40 percent of the dollars, yielding a 
disparity ratio of 33.50 percent. Clearly, the use of goals is what 
drove the FHWA results.
---------------------------------------------------------------------------
    \1\ The availability estimates vary by funding source because the 
types of contracts are somewhat different in scope and scale.
---------------------------------------------------------------------------
      Even when DBE contract goals are set, disadvantaged firms 
often received significantly less than would be expected in a 
discrimination-free market. For example, DBEs constituted 8.90 percent 
of the firms available to perform on FHWA-funded contracts awarded by 
the Texas Department of Transportation in our 2019 Disparity Study, yet 
their availability was 28.10 percent, yielding a disparity ratio of 
31.67 percent.
      Our 2019 State of Washington Disparity Study, which 
examined state-funded contracts other than for highway construction, 
found that minority and woman firms constituted 16.53 percent of the 
available firms but received only 9.00 percent of the dollars, for a 
disparity ratio of 54.43 percent.
      Even in the FHWA DBE program, DBEs, especially Black-
owned businesses, often received few dollars in the recipient's core 
contracting activities. For example, in NAICS code 237310, Highway, 
Street and Bridge Construction, non-DBEs received 94 percent of 
contract dollars from NCDOT; Blacks received 0.3 percent. In the same 
subindustry in Washington State, non-DBEs received 88 percent of 
contract dollars; Blacks received zero dollars. Likewise, in code 
237990, Other Heavy and Civil Engineering
      Construction, non-DBEs received 100 percent of contract 
dollars from NCDOT; DBEs received nothing. In the same subindustry in 
Washington State, non-DBEs received 94 percent of contract dollars; 
Blacks received zero dollars.

    These and many more reports make it clear that discrimination 
continues to impede opportunities on the basis of race and gender, and 
that without the use of contract goals, the ``playing field'' for 
federal-aid contracts would remain tilted in favor of long established 
firms that enjoy the benefits of historic and ongoing structural 
exclusion that advantages White males.
 Qualitative Evidence from Recent Colette Holt & Associates Disparity 
                                Studies
    Qualitative evidence gathered through surveys and personal 
interviews from these and other studies further supports the conclusion 
that racism and sexism continue to impede the entrepreneurial 
aspirations of DBEs seeking government contracts. Some representative 
comments follow.
Discriminatory Attitudes and Negative Perceptions of Competency and 
        Professionalism
    Many minority and women business owners reported that they continue 
to encounter discriminatory attitudes, stereotypes and negative 
perceptions of their qualifications and core competencies and 
capabilities by other firms and government officials. Explicit and 
implicit biases impact their attempts to obtain contracts and to be 
treated equally. Respondents reported that White men frequently display 
negative attitudes relative to their competency, skill, and 
professionalism.

        ``When people meet me, [being an MBE] they assume certain 
        things. As they get to know me and understand that I can speak 
        construction, that I'm bilingual, that I speak engineering, 
        then I get the comment, `Oh you're different.' Or, `You're 
        educated.' '' (2019 Dallas Fort Worth Int'l Airport Disparity 
        Study).

        ``The perception is just there that if you're Black or if 
        you're a woman you probably don't know how to do X, Y, and Z 
        type of work. So, they've already put [you] in that 
        pigeonhole.'' (2014 State of Missouri Disparity Study).

        ``[State personnel] look down on us as some kind of beggars for 
        percentages.'' (2016 Illinois State Toll Highway Authority).

    Minority- and woman-owned businesses reported that they were 
perceived to lack the capacity to do additional or more complex work.

        ``There is significant evidence that the larger the goals are, 
        the higher the capacity building . . . . People will take the 
        opportunities. Because we're women or we're minorities doesn't 
        mean that we're not entrepreneurs and we don't seize 
        opportunity. It's just that the opportunity doesn't exist in 
        the current market.'' (2015 State of Illinois Disparity Study).

    Many women reported unfair treatment or sexual harassment in the 
workplace.

        ``I still do find the initial contact with specifically, a 
        general contractor, there is somewhat that attitude of you're a 
        woman, let me tell you how to do this.'' (2019 Texas Dept. of 
        Transportation Disparity Study).

        ``I am the female, and they bring me like a tiny, little role 
        in this large contract. They bring me to the interview to make 
        the showing because I interview well and so they're going to 
        put me in front of people . . . Then no work comes out of it.'' 
        (2017 Washington State Department of Transportation Disparity 
        Study).

        ``If you go into a construction zone, and you got wall-to-wall 
        men construction in concrete, whether it's Mexican, it doesn't 
        matter, but you feel like you're the only woman there. I got a 
        gun with me all the time, all the time.'' (2019 State of 
        Washington Disparity Study).

        ``Let's just be honest. I'm a woman who's in construction so 
        that just equals bulls' eye . . . Other contractors who come in 
        behind you and they call you [trade] chicks . . . Or, they tell 
        you, what has the world come to because you're [trade] chicks . 
        . . Men come out and they complain that a woman is running the 
        crew . . . Even the men that I hire--I'm giving you a 
        paycheck--struggle with taking orders from a woman . . . 
        Someone comes to the job and they go to one of the guys [I 
        employ] and they say, are you the lead there?'' (2016 Illinois 
        State Toll Highway Authority).

        `` `Here comes that big titted blonde'. That's what they'll 
        say, right out loud, in front of everybody. And all the guys 
        will just laugh. And I've got to suck it up and just do my job 
        . . . [Even my employees often won't stand up for me.] If I 
        react, that's just going to make me more belittled and [look] 
        petty.'' (2019 State of Washington Disparity Study).
Access to Industry and Professional Networks
    Relationships are pivotal to obtaining public transportation work 
as subcontractors and to opportunities to work as prime vendors. Both 
minority and women respondents reported difficulty in accessing 
networks and fostering relationships necessary for professional success 
and viability. Business owners frequently stated that there is a ``good 
old boy'' network. Barriers extended to agency staff; DBEs were unable 
to gain access to and communicate with key agency decisionmakers.

        ``The transportation industry as a whole is dominated by the 
        civil engineers, which typically the folks graduating in civil 
        engineering are White men. You have a very low proportion of 
        women and minorities with those degrees. Inherently, then in 
        the workplace, you're seeing very low amounts of diversity. 
        Same thing in environmental services. You don't get a lot of 
        women who are wildlife biologists. Someone with that type of 
        experience typically has been hunting and fishing with his 
        father and his grandpa their entire lives and they have a good 
        old boys club. They go drinking, they go fishing, they go 
        playing golf.'' (2019 Texas Department of Transportation 
        Disparity Study).

        ``It's not being respected in the room, and it is body 
        language. It's relationships, which I heard over and over again 
        here, as a side word for experience. It's really, `Do I have 
        experience with you?' And somebody I'm more comfortable with, 
        because they look like me, I'm going to choose the person I'm 
        more comfortable with because they look like me.'' (2017 
        Washington State Department of Transportation Disparity Study).

        ``People have relationships with people that they feel that 
        they can identify with. And that might be a problem because 
        they're not willing to open the door for you and let you get 
        in.'' (2014 Metropolitan Nashville Airport Authority Disparity 
        Study).
Obtaining Work on an Equal Basis
    DBEs were in almost unanimous agreement that contract goals remain 
necessary to level the playing field and equalize opportunities. 
Without contract goals, they would receive little or no work. Race- and 
gender-neutral approaches alone are viewed as inadequate and unlikely 
to ensure a level playing field.

        ``If those DBE goals had not been in there, we absolutely would 
        not have been considered . . . . In fact, we were point blank 
        told on a contract because they didn't have a DBE goal of some 
        kind, they didn't even need to consider us.'' (2014 
        Metropolitan Nashville Airport Authority Disparity Study).

        ``I remember when the Tollway had no goals, and it was 
        absolutely abysmal. There was never a minority or a female that 
        worked on a Tollway job, ever. And we would tell them, DOT has 
        goals. They find women and minorities to do work. It's the same 
        kind of work that the Tollway does, and the DOT does. And it 
        wasn't until the Tollway started to have some goals that we 
        started to get work on Tollway projects.'' (2016 Illinois State 
        Toll Highway Authority).

        ``If there is no goal-setting, you don't have any opportunity 
        to perform as a subcontractor.'' (2016 Kansas City Consortium 
        Disparity Study).

        ``[Prime contractors] use us because they have to.'' (2017 
        Washington State Department of Transportation Disparity Study).

        ``If you're not a DBE or HUB or SBE, you're not going to be 
        considered for any work as a consultant for TxDOT because 
        they're going to use these legacy firms for most of their work 
        on the consulting side.'' (2019 Texas Dept. of Transportation 
        Disparity Study).
                               Conclusion
    The findings from our studies and other reports provide strong 
quantitative and qualitative evidence that Congress has a strong basis 
in evidence to continue to require recipients to implement the remedial 
DBE program. The studies provide proof of pervasive and systemic 
discrimination against women and minorities in the market for federal-
aid contracts and support the need for appropriate race- and gender-
conscious measures.
    Thank you for the opportunity to submit this information.
        Very truly yours,
                                              Colette Holt,
                                         Colette Holt & Associates.

                                 
Letter of June 16, 2020, from Katherine M. Cloonen, President, JK Steel 
   Erectors, Inc., Submitted for the Record by Hon. Peter A. DeFazio
                                                     June 16, 2020.
Hon. Peter DeFazio,
Chairman,
House Committee on Transportation and Infrastructure, United States 
        House of Representatives, Washington, DC.

    Dear Mr. DeFazio:
    Regarding the DBE program and discrimination faced by female 
contractors, I am writing to provide a few examples of how, after 
owning my own business for nearly thirty years, I, the female owner, 
still face discrimination in the construction field. My company 
specializes in the installation of structural steel and rebar. The 
following examples punctuate the need to continue the DBE program in 
the 2020 highway bill:
      I asked a truck dealer for the bottom price on a pickup 
truck. A male employee called the same dealer for the bottom price on 
the same truck from the same sales rep, and he was able to get a lower 
price, even though my name was on the check written for the purchase.
      A prime contractor calls asking for the estimator of the 
company. When I say that I am the estimator, the person hangs up the 
phone.
      A salesperson calls and asks for the man in charge of 
buying the tools, and I say that I am the woman in charge of buying 
tools. The person hangs up the phone.
      When I am owed money by a contractor, and I call to ask 
about the funds, the accounts payable person 1) is not available, 2) 
has misplaced my check, 3) has misplaced my invoice or other required 
paperwork, or 4) simply does not return my call. When a male employee 
from my company calls, the money suddenly is on its way.
      The project manager of a prime contractor always called 
my foreperson, who was a male, for scheduling, he would not call me, 
even though I told him I was in charge of scheduling.
      A male project manager lied in a meeting as to what was 
said in a phone conversation with me. That particular lie cost me 
nearly $100,000 even though I stated he clearly lied.
      After a deadline for a bid, I found that I was not asked 
to bid a project because they ``don't need no women on the job.''
      A contractor called and asked me if I wanted to make more 
money. Instead of giving me an invitation to bid, he invited me to a 
meeting to sell health and beauty products for a multi-level marketing 
company. I told him that if I had to sell the beauty products in order 
to be a subcontractor for him, I would not do it. I have not done 
business with that company since then.

    There are more examples over the years, but this is a sample of 
what still happens in the construction industry. Thank you for your 
consideration.
        Sincerely.
                                      Katherine M. Cloonen,
                                 President, JK Steel Erectors, Inc.

                                 
Letter of June 24, 2020, from Carol L. Kwan, Carol Kwan Consulting LLC, 
           Submitted for the Record by Hon. Peter A. DeFazio
                                                     June 24, 2020.
Hon. Peter DeFazio,
Chairman,
House Committee on Transportation and Infrastructure, United States 
        House of Representatives, Washington, DC.

Subject: Testimony Regarding the Disadvantaged Business Enterprise 
Program

    Dear Mr. DeFazio:
    I am responding to the request from the Committee on Transportation 
and Infrastructure for a letter or statement on the Disadvantaged 
Business Enterprise (DBE) Program.
    My company began in 2003 after I was laid off from a large 
residential development corporation. My daughter was one-year old and 
had been very sickly, making it difficult for me to perform my duties 
reliably. It was a mutually agreed upon lay off. My former employer 
gave me a generous severance package and has been one of my clients 
occasionally since that time.
    For the first several years, I focused on private clients until my 
daughter became healthier. Beginning in 2008, I returned to working in 
construction, mostly smaller projects. Because of the recession, by 
2011 most of my work had dried up. My net income that year was $4,000 
and I considered myself lucky that it was in the black. I had become 
aware of the DBE program several years earlier but was busy enough at 
the time not to bother with it. Desperate times call for desperate 
measures, and I set about having my company certified as a DBE. That 
came through in 2012, and I started getting more work. Two large 
general contractors subcontracted with me on DBE projects, one with EPA 
funding and one with DOT funding. The first company had contacted me 
for the EPA funded project. A year or so later, I was bidding on a non-
DBE project and contacted the company about providing a bid. The man 
that I spoke with seemed reluctant, as though he doubted that I could 
do the work. I encounter that often as a woman working in construction. 
Fortunately, he checked with the project manager for the contract that 
I already had with the company, who vouched for me. I have had many 
contracts with both the first and second contractors since then, both 
DBE and non-DBE projects.
    As a Certified Arborist, there are few of us who work in the 
construction industry here in Hawaii. My primary competitor has been 
doing this type of work for over five decades and was the first person 
that contractors thought of when they needed tree protection work. He 
is a nice man and highly qualified, but a formidable competitor for a 
company like mine that was trying to get established. The DBE program 
gave me a foot in the door in being able to compete against him. My net 
income (basically my salary as a 1-person company) has gone from around 
$40,000 a year to around $80,000-$120,000 a year, a much more livable 
income in the State of Hawaii, in large part because of the network of 
clients that I have built as a DBE company.
    I still encounter contractors who refuse to hire a woman, either as 
a subcontractor or an employee. Some of these contractors are small, 
ethnic companies with cultural backgrounds that are strongly opposed to 
nontraditional roles for women. Occasionally one of them will hire me 
because they are desperate and are unable to find anyone else. It can 
make for an uncomfortable working situation, but I do it in part 
because I look at it as chipping away at their preconceived biases of 
what women can and cannot do. The DBE program helps to do that. By 
forcing contractors out of their comfort zone, it helps to chip away at 
societal biases and makes the playing field a little more level.
    I hope that Congress will act to continue the DBE program. It is 
worthwhile and it does make a difference. Should you have any questions 
or would like additional information, I can be reached at [redacted].
        Very truly yours,
                                             Carol L. Kwan,
                                         Carol Kwan Consulting LLC.
                                 
 Letter of May 26, 2020, from Sarah Imberman, S. Levy Foods, Submitted 
                for the Record by Hon. Peter A. DeFazio
                                                      May 26, 2020.
To:     Peter DeFazio--Chairman of the House Committee on 
Transportation and Infrastructure
Re:     Statement on the Disadvantage Business Enterprise Program

    Dear Mr. DeFazio,
    I am writing to convey the importance of the Disadvantage Business 
Enterprise (DBE) Program. I started my company in 2004, making 
chocolate out of my mom's kitchen. After operating my bakery in Chicago 
for five years, I learned about the DBE program and first became 
certified as an Airport Concession Disadvantage Business Enterprise 
(ACDBE) in 2009.
    I have often felt discriminated against and treated differently 
because of the fact that I am a woman in business. I will never forget 
when the owner of a local Chicago bank asked for a meeting and wanted 
to discuss my decision to close my street side operation in order to 
focus on growing my business bringing local restaurants to airports. I 
remember leaving the meeting feeling like I had been ``called into the 
principal's office'' as he said things to me like, ``I think your 
decision was rash and immature.'' Do I think he would have said this to 
me if I was a businessman instead of businesswoman? No. It turns out 
that closing my street side location to focus on growing the airport 
business was the best business decision that I had made, albeit an 
extremely difficult one. I am so fortunate that the ACDBE program 
exists, as it has allowed me to grow my business beyond my mom's 
apartment and into seven airports across the country.
    I have benefited greatly from the DBE program and cannot imagine 
what my business would become without it. Because of the ACDBE program, 
I have a seat at the table in the airport industry, even when others 
don't want me to.
        Sincerely,
                                            Sarah Imberman,
                                                     S. Levy Foods.

                                 
  Letter of June 17, 2020, from Constance Macolino, President, Puget 
   Sound Steel Co., Inc., Submitted for the Record by Hon. Peter A. 
                                DeFazio
                                                     June 17, 2020.
Mr. Peter DeFazio,
Chairman,
House Committee on Transportation and Infrastructure, United States 
        House of Representatives, Washington, DC.

RE: Disadvantaged Business Enterprise Program

    Dear Chairman DeFazio:

    I am writing to you to request your support for the authorization 
of the DBE program in the upcoming 2020 highway bill. My firm is a 
reinforcing steel fabricator with over fifty years in business in the 
State of Washington and I can attest to the real need for this program 
for women-owned businesses in the transportation construction 
marketplace. The plain and simple fact is that disadvantaged businesses 
do not face a level playing field and continue to suffer discriminatory 
barriers to full and fair access to construction contracts.
    By way of illustration, in June of 2017, majority women were waived 
out of the WSDOT DBE program due to the results of a disparity study. 
In the two years prior, Puget Sound Steel was awarded a total of 23 
contracts with WSDOT totaling almost 3,000 tons of steel and over 
$4,000,000.00 in revenue. Since June 2017, we have bid in excess of 
7,000 tons of WSDOT work and have been awarded 1 job, for a total of 
185 tons and $259,000.00 in revenue. Most, if not all, of that work 
went to public companies listed on the NYSE.
    Then there are the anecdotal examples of why this program is 
needed. Puget Sound Steel has supplied reinforcing steel to a number of 
prime contractors who do both commercial and civil work; when the 
primes don't know we are a women owned business (commercial arena) we 
are awarded jobs based on price and past performance. When we designate 
as a DBE (civil arena) and without set DBE goals on a given project, we 
are passed over for work. On multiple occasions I have had to ask 
employees at the same company to please walk across the hall and tell 
their civil division that our firm is competent and able to perform the 
work on any given project.
    I cannot over-state how important this program is to small 
businesses, such as mine. Prime contractors, most of whom are owned 
publicly or by white males, already receive almost ninety percent of 
federal contract dollars in construction. This program allows us the 
opportunity to participate, which is all we ask.
    I would welcome the opportunity to give additional information to 
your committee, if you would find that helpful, and thank you in 
advance for your continued support of this necessary program.
        Very truly yours,
                                        Constance Macolino,
                             President, Puget Sound Steel Co., Inc.

                                 
    Letter of September 9, 2020, from Robert S. Bright, Founder and 
  President, Talson Solutions, LLC, Submitted for the Record by Hon. 
                            Peter A. DeFazio
                                                 September 9, 2020.
Mr. Matt Leasure,
Special Assistant to the Chairman,
House Committee on Transportation and Infrastructure.

Re:  Disadvantaged Business Enterprise Program--Personal Net Worth

    Mr. Leasure:
    I am pleased to submit my comments and suggestion for change to the 
Disadvantaged Business Enterprise (DBE) Program. I am Robert S. Bright, 
Founder and President of Talson Solutions, LLC (Talson), a DBE, 
Minority Business Enterprise (MBE) and Small Business Enterprise (SBE). 
Founded in 2001 and headquartered in Philadelphia, Talson is a capital 
project consulting firm with domestic United States and international 
experience in the transportation and infrastructure industries. Our 
clients include Allegheny Port Authority, LA Metro, New Jersey Transit, 
Panama Canal Authority, Sound Transit, and Denver International Airport 
to name a few.
    I wish to bring to your attention with the Personal Net Worth (PNW) 
requirement to establish and maintain the DBE status. In essence, the 
PNW requirement of $1.32 million has not changed or been adjusted for 
inflation in approximately ten years. However, the price of labor, 
goods and services (Consumer Price Index) have increased. DBE's PNW are 
typically based on the value of an owner's retirement account or other 
forms of investment that are not readily available without adverse tax 
consequences. As a result, the growth of these assets has significantly 
increased with advances in the United States stock market (i.e. S&P 
Index). As the value of the investment may increase, this potentially 
causes the PNW to increase without day-to-day management from the DBE 
owner. Although this may appear good, it is not for the DBE owner whom 
is worried about exceeding the initial PNW base and thereby losing the 
DBE status. The DBE owner is then forced to concentrate on the PNW 
value and not the business operation. In addition, the DBE owner may 
choose to take drastic steps or sell equities with tax disadvantages in 
order to maintain the required PNW. The loss of DBE status for many 
firms would cause irrevocable harm leading to business interruption and 
loss revenue preventing long-term firm growth for value generation.
    The State of Maryland Department of Transportation and New York 
recognized the need for increases in the PNW. As a DBE firm grows, the 
Owner' s PNW typically increases due to retirement investments and 
asset purchases. This allows the DBE to increase their confidence to 
take on greater risks and larger value contracts. However, if the DBE 
exceeds its PNW, there is a substantial risk that DBE participation in 
future contracts will decrease due to the lack of the DBE 
certification. The following two examples reflect an adjustment by the 
Maryland Department of Transportation and a petition from New York on 
the need for changes in PNW:
    (1)  In December 2019, The Maryland Department of Transportation 
announced that the Personal Net Worth (PNW) cap applied to the Minority 
Business Enterprise (MBE) Program will increase from $1,749,347 to 
$1,771,564, effective January 1, 2020. As required by Maryland law, the 
State's MBE Program adjusts its PNW cap annually based on the Consumer 
Price Index.
    (2)  New York's Governor Cuomo rejected a petition to eliminate the 
$3.5 million personal net worth requirement especially for those in 
both the construction and financial sectors, in order to grow and 
participate in government contracts. These sectors have minimum income 
requirements that need to be met in order to be eligible to bid, win 
mid-size projects, and gain access to capital. It will also enable 
prime contractors to fulfill their 30% MWBE sub-contracting goal.

    Failure to adjust the PNW requirement prevents real growth for DBEs 
and the introduction of new DBEs. Additionally, without an annual PNW 
adjustment, the USDOT may fail to capture the importance of the overall 
DBE program by allowing DBEs to grow and build long-term investment in 
the business and communities in which we live.
    Thank you for your consideration to review the maximum PNW 
requirement for DBEs. Consideration for annual adjustment (i.e., 
Consumer Price Index) is strongly recommended and can only reflect 
current economic trends.
        Respectfully yours,
                                          Robert S. Bright,
                      Founder and President, Talson Solutions, LLC.

cc: Ms. Nicole Christus, American Public Transportation Association

                                 
Letter of September 8, 2020, from Lorenzo Thompson, Principal, Thompson 
     Civil, LLC, Submitted for the Record by Hon. Peter A. DeFazio
                                                 September 8, 2020.
Hon. Peter DeFazio,
Chair,
House Committee on Transportation and Infrastructure, United States 
        House of Representatives, Washington, DC.

Re:  Request from the Committee on Transportation and Infrastructure on 
the Disadvantaged Business Enterprise (DBE) Program

    Dear Mr. DeFazio,
    I am Lorenzo Thompson and Principal of Thompson Civil, LLC. The 
only way for my firm to enjoy the work we perform is to be a part of a 
program that provides project participation from diverse firms. We are 
located in St. Louis, Missouri, and Illinois. We have only been in the 
program for 3 years and it has highly contributed to our success.
    The construction industry is built on managing risk and trusting 
that others will be able to do their job well and contribute to a 
project's profitability. For an agency or a prime contractor to take a 
chance on an unknown firm there needs to be an incentive. Women-owned 
and Minority-owned firms are ``unknowns'' because women and many 
minorities are seen as strangers to this industry--still after over 30 
years of DBE-MBE-WBE programs--because we do not fit the typical image 
of the construction workers and project managers. The DBE program 
provides incentive and has been very successful in the state Department 
of Transportation (DOT) markets.
    The Federal Highway Administration (FHWA) and state DOT commitment 
to the DBE program sets the tone for the industry to value the program 
and to strive to build up the industry's woman-owned and minority-owned 
firms to match/represent the communities where the tax dollars are 
spent. The state DOT success in supporting capable DBE firms creates a 
pool of women-owned and minority-owned firms who are available to do 
work in their region on projects outside the program also.
    The culture created by the DBE program is valuable to our industry 
and supports a healthy inclusive environment for diverse firms and for 
diverse individuals who are under-represented in our industry. 
Engineers' and surveyors' potential is not based on their skin tone, 
ethnicity, culture, or gender--success in technical fields is based on 
a love of problem solving. Encouraging diversity in our industry pushes 
that reality forward and teaches us not to judge a person's 
capabilities based on the appearance of capable engineers we have 
worked with in the past. As in any process, it is ``easier'' to 
continue the status quo, to continue doing business with the same type 
of people you have always worked with. But the reward for the community 
comes when we try a little harder and reach out with opportunities for 
everyone.
    Thank you for accepting this letter of support for the DBE program. 
It has been very valuable to my company, to the engineering/
construction industry and to our community.
        With warm regards,
                                          Lorenzo Thompson,
                                    Principal, Thompson Civil, LLC.

                                 
   Letter of July 1, 2020, from Katey Doman, President, TyE Bar LLC, 
           Submitted for the Record by Hon. Peter A. DeFazio
                                                      July 1, 2020.
Mr. Peter DeFazio,
Chairman,
House Committee on Transportation and Infrastructure, United States 
        House of Representatives, Washington, DC.

RE:  Disadvantaged Business Enterprise Program

    Dear Chairman DeFazio:
    With the upcoming 2020 Highway Transportation Bill being discussed, 
I felt compelled to reach out to you for your support of the DBE 
Program to be included in the proposed bill. As owner of TyE Bar LLC, a 
DBE reinforcement steel and concrete paving hardware manufacturer, I 
still consider myself a start-up company since we have only been in 
existence for just 5 years. Without having my DBE Certification, I 
firmly believe my company wouldn't have made it this far when competing 
against the conglomerate steel manufacturing companies across our 
nation's landscape.
    In 2015 I felt compelled to start a manufacturing business in the 
heart of Pittsburgh, to bring manufacturing jobs back to an area that 
has been left abandoned over the last few decades. I knew that it 
wouldn't be possible to compete in the market unless I was able to 
receive my DBE certification. Prior to receiving my certification, I 
had only been awarded contracts that totalled $800,000, once my 
certification had been granted, I picked up an additional $1,800,000 of 
revenue in just 3 months--my revenue had more than doubled.
    Being a start-up company with over a million dollars in loans, it 
is inevitable that I am not the low price to the DOT Contracting 
Communities. With no ties to steel mills I am receiving raw material 
from my very own competitors--I can never be low for that reason alone. 
Without DOT Agency's having DBE Programs in place there wouldn't be an 
arena that I could possibly compete in due to the disadvantages I face 
as a woman-owned, independent, start-up manufacturer.
    What does the DBE Program do for the American People?
    In 2015 I had employed 4 blue-collared employees and five years 
later I am proud to have 34 employees helping manufacture products that 
go into the roads and bridges that our American people travel every 
day. Last year our revenue has grown to $11,000,000 and if the DBE 
program remains in effect for the 2020 Transportation Bill I anticipate 
with my past growth rate that by 2022 we will employ more than 70 
people and manufacture over $23 million dollars in heavy highway 
products.
    The inclusion of the DBE Program is vital to helping small 
businesses such as TyE Bar. Without the DBE Program I would lose more 
than three quarters of my business, most likely TyE Bar would cease to 
exist. The DBE Program allows for us to participate, doesn't guarantee 
us work, but gives us the opportunity to be considered.
    Mr. Chairman, I ask that you consider what the DBE Program brings 
to small businesses and the American People. If there is any additional 
information that you would find helpful, please don't hesitate to reach 
out to me.
        Thank you kindly for your consideration,
                                               Katey Doman,
                                            President, TyE Bar LLC.

                                 
 Statement of Joann Payne, President, Women First National Legislative 
      Committee, Submitted for the Record by Hon. Peter A. DeFazio
    Chairman Peter DeFazio, Congressman Sam Graves and Chairwoman 
Eleanor Holmes Norton----
    Thank you for the opportunity to submit a statement for the 
Congressional Record on behalf of Women First National Legislative 
Committee (Women First). Women First is a nonpartisan, national 
grassroots advocacy group that promotes and protects the interests of 
women owned businesses certified in the United States Department of 
Transportation Disadvantaged Business Enterprise (DBE) Program. Founded 
in 1985, Women First has been advocating for small women owned 
businesses in the highway construction industry for the past 35 years.
                              Introduction
    In 2001, Women First submitted an Amicus Brief to the Supreme Court 
in Adarand Construction v. Mineta. In the brief, it said, ``they have 
experienced firsthand the detrimental effects of the discriminatory 
practices, which, to this day, continue to plague the construction 
industry. As a result of this discrimination, the ability of women 
owned businesses to compete for government contracts in the 
transportation related area has been severely hampered.'' \1\
---------------------------------------------------------------------------
    \1\ Brief of Women First National Legislative Committee, et al., 
Amici Curiae in Support of Affirmance of the Tenth Circuit Court of 
Appeals.
---------------------------------------------------------------------------
    And in 2020 those words are still true today.
    From the day Eve took a bite out of the apple in the Garden of 
Eden, women have been submitted to systemic sex discrimination in every 
aspect of their social, economic, and political lives. They have been 
undervalued and remain underrepresented in position of power.
    A study conducted by the Pew Research Center found that two-thirds 
of women in the United States believe we still have a way to go to 
achieving equality. Women executives, doctors, lawyers, and 
professional athletes earn less money than men. According to a 2019 
study done by McKinsey & Company women earn more bachelor's degrees 
then men, but men obtain more entry-level positions in corporate 
America. The study also found that men outnumber women in management-
level positions 62% to 38%. There are only 7% of Fortune 500 CEOs that 
are women. Congress in 2020 is 75% men.
    When I testified in 1986 to the Senate Environment and Public Works 
Committee supporting the inclusion of women in the DBE program, I 
testified that women made 70 cents to a man's dollar. Today, a woman 
makes 79 cents to a man's dollar. The US Women's Soccer Team has won 
four World Cups, four Olympic gold medals, and eight Gold Cups, yet 
they are grossly underpaid, lack the necessary training facilities and 
poor travel conditions that are not equal to the US Men's Soccer Team, 
who has not been as successful as the women's team.
    Like the men's soccer team, the women's soccer team is governed 
under the US Soccer Federation (USSF) with the same rules, regulations 
and international competition agenda. The US Women's Soccer Team filed 
a gender discrimination lawsuit against the USSF. USSF response to the 
lawsuit was Men were superior to women because they have greater 
physical strength and skills . . . need I say more?
                            Program Overview
    The DBE Program is a competitive small business program that has an 
innovative goal setting economic development program that produces 
results year after year.
    The program:
      Creates jobs--approximately 125,000 jobs are created by 
DBE companies annually
      Serves as an engine of growth for our nation's economy 
even in with the Pandemic
      Establishes a tax base from women and minority owned 
businesses;
      Promotes competition in an industry where there was very 
little for years;
      Levels the playing field by opening access
      Promotes diversity

    The DBE Program has proven to be an equal opportunity program, 
which benefits all Americans by promoting the development and 
competitiveness of America's small businesses. In fact, the DBE Program 
is the most successful small business contracting program for women. 
For example, the DBE Program has significantly increased the percentage 
of women owned construction firms. Women DBE participation has 
increased from 1.6% in 1986 to over 7% in 2018.
                          Responses from DBEs
    Women First collected about 40 letters from DBEs across the country 
asking them to submit to the Committee on Transportation & 
Infrastructure their stories and why the DBE program should continue.
    Wisconsin: ``I am writing to emphasize the importance of the 
reauthorization of the Federal DBE Program in the Highway 
Transportation Bill. We are a minority-owned business of color and we 
have been shut out of many opportunities to participate on projects. I 
would like to see more opportunity for disadvantaged business 
enterprises of Hispanic Americans''.
    Washington State: ``Against many challenges, both from individuals 
and firms within the male-dominated construction industry, labor 
unions, lack of capital and bonding, my firm rose to become the only 
female-owned, union electrical contractor specializing in highway 
electrical work in the State of Washington. From 2010-2017 my firm 
successfully completed 122 projects valued at nearly $ 80 million. That 
is, until the agency that was supposed to support women and minority 
owned businesses, WSDOT Office of Equal Opportunity, removed white 
women from the federal DBE program in June of 2017. My firm went from 
doing nearly $ 9 million a year, preparing to graduate from the 
program, to being out of business in only 18 months''.
    Missouri: ``The construction industry is built on managing risk and 
trusting that others will be able to do their job well and contribute 
to a project's profitability. For an agency or a prime contractor to 
take a chance on a new/unknown/small firm there needs to be an 
incentive. Women-owned and Minority-owned firms are ``unknowns'' 
because we are seen as strangers to this industry--still after over 30 
years of DBE-MBE-WBE programs because we do not fit the typical image 
of construction workers and project managers. The DBE program provides 
incentive and has been very successful in the markets I work in. The 
program gives me enough value-potential to have the initial discussions 
with a potential client--whether that is an agency or prime contractor/
consultant. Then my company can prove that we are capable and have 
value on our own, beyond the DBE incentive''.
    Illinois: ``More importantly, we are forced to wait sometimes 
months after the general contractor is paid before we receive payment. 
More times than not, we are forced to call the general contractor 
numerous times requesting we be paid and this is after confirming they 
have been paid by the owner. It is extremely frustrating to complete a 
job on or ahead of schedule, with complete satisfaction of the general 
contractor only to be sent a perceived message of, `You'll get paid 
when I feel like paying you and not a day before!' It is extremely 
disheartening. The DBE Program has enhanced our opportunities in the 
highway, transit, and airport construction industries simply by 
existing. The consequences of not having the program would be our 
business would not exist. But for the Disadvantage Business Enterprise 
and the requirements to use minority owned businesses, we would not in 
reality because general contractors would self-perform. Securing 
working capital is extremely difficult for minority owned businesses. 
Personally, I am repeatedly forced to secure loans with interest rates 
that mirror loans from merchant cash advances. While the interest rates 
are uncomfortably high, the loans are necessary to make payroll and 
purchase the equipment and materials needed to perform the job in the 
absence of mobilization.''
    Massachusetts: ``Small businesses, especially women-owned firms, 
need to be given a chance to prove themselves. The DBE program does 
just that by highlighting firms that may otherwise have doors 
permanently closed. I have experienced discrimination in the 
construction industry through the years, and, have been pushed off 
projects that I was equally qualified to do. I am thankful for the DBE 
program. It serves a vital role by providing checks and balances to 
assure that all companies, large, small, women, and minorities are 
allowed the equal opportunity to participate.''
                       Changes to the DBE Program
    The DBE program only applies to highway, transit, and airport 
construction and related industries. One purpose of the DBE program is 
to develop minority and women construction businesses so they can gain 
experience and expertise to compete for federal, local, and state 
contracts.
    The perceived outcome is DBEs would achieve three consecutive years 
of gross receipts of $23.980 million and graduate out of the program 
and successfully compete equally with majority male firms for federal, 
state, and local contracts. Unfortunately, the beneficiaries of the 
statutory size cap of 23.980 million applies only to a small percentage 
of DBEs.
    In reality, the DBE program is a subcontracting program where 
ninety-nine percent of DBEs are limited to the Small Business Size 
Standard and the cap governed by the North American Industry 
Classification System (NAICS) Code. Depending on the code 
classification, highway, transit, and airport construction, specialty 
trade sub contractors may have a cap that is between $3 million to $17 
million. By connecting the subcontractors to the size standard in the 
NAICS Codes, it prohibits DBEs from developing into prime/ general 
contractors and puts them at a disadvantage with non-DBE companies.
    Additionally, it creates an endless cycle of DBEs graduating out of 
the program to finding their company has lost fifty percent or more of 
its business and a need to reapply back into the program after one 
year. One of the main reasons this cycle continues to escalate is the 
rise in material cost in the construction industry especially in the 
last three years.
                            Recommendations:
1. Gross Receipts
    There should be two statutory gross receipts levels. One for DBE 
companies that compete as prime contractors and one for the Specialty 
and sub-contractors. Once the DBE graduates out of the Small Business 
levels, Congress should create a new medium-size business program that 
would include all medium size companies (majority males included) with 
goals, certification, limited personal worth and gross receipts.
2. DBE Procurement Disagreements with Prime Contractors and Recipients
    The Secretary should take additional steps and procedures to ensure 
that recipients report immediately to the Federal Administrator any 
procurement disputes that may develop between DBEs, general contractors 
and or recipients. There has been an increase in procurement disputes 
between DBEs general contractors and state DOTs. DBEs have contract 
agreements with general contractors. The states try to stay out of the 
mix but are asked to notify FHWA if conflict arises, however, they have 
been slow to report problems. This has resulted in millions of dollars 
lost by DBE firms. Let us not forget that firms that are certified in 
the program are there because they are at a disadvantaged over non-
minority firms.
3. Disparity Studies
    The Secretary should create a Disparity Study Committee to develop 
guidelines for firms and recipients conducting Disparity Studies. The 
Committee should include, but not limited to representatives from 
disparity study firms, DBEs, DBE advocates, Federal Highway's Office of 
Civil Rights, department lawyers, and state department of 
transportation. Presently, there are no guidelines in place for firms 
who conduct disparity studies or recipients who want the studies 
conducted. This situation has resulted in an unresolved issue in 
Washington State that has left one of the protected groups out of the 
``goal-counting'' on federal projects.
4. Unbundling
    Require the Secretary to create an incentive program for state 
department of transportation and other recipients to unbundle mega-
contracts and create contracts that are $2 million dollars or less for 
DBEs to compete for as primes.
                    If the Program Does Not Continue
    In representing women-owned DBEs for thirty-five years, I have 
heard women discuss the problems they face in the construction industry 
with Members of Congress and the Administration. These women, everyday, 
have to face the assumption by others that they can not do the work and 
run their businesses. Women owned businesses still have problems 
obtaining loans and bonding and after years in business they still have 
to explain that they are the boss to men on the jobs who refuse to 
believe that a woman can be the boss.
    If the DBE Program were not to continue, I believe not just women 
and minority owned companies will be severely affected, but small 
majority owned sub-contracting businesses will be affected as well. The 
only small business program in the highway, airport and transit 
industries will disappear. There would be no reason for sub-contract 
work even to majority firms thus competition would be eliminated and 
prices will climb.
    The trend of the industry the last several years has been the prime 
contractors are doing more of the work in-house. A great example is 
what happen in Washington State when women were removed from the goal 
setting program. The group that benefited the most and increase in 
percentage was the large majority firms.
                               Conclusion
    I had a member of the Women First Board of Trustees tell me when 
asked why she still felt the burn of discrimination after years in 
business. She said to me that when she attends meetings there are very 
few women, if any, around the table.
    She thinks, ``Well it will be ok because I am at the table, I know 
these people, I've worked with them and I make a pretty good living--so 
why do I still feel the subtle discrimination--and then I realized 
why.'' She continued, ``It's because I am not like them, I will never 
be like them, I am different and they don't understand the importance 
of that.''
    I have thought about her statement a lot and I believe this 
awareness should empower her and other women owned businesses, because 
they contribute and make better an industry that is vital to our 
country's daily life. And it also why diversity is so important in the 
highway industry and in our nation. Our diversity is what strengthens 
and binds us together. We are a government for all the people and all 
of our people deserve a chance to compete and to contribute.

                                 
 Statement of the American Road & Transportation Builders Association, 
        Submitted for the Record by Hon. Sam Graves of Missouri
    Chair DeFazio and Ranking Member Graves, thank you for allowing the 
American Road & Transportation Builders Association (ARTBA) to offer 
our views as part of today's hearing on the Disadvantaged Business 
Enterprise (DBE) Program.
    Established in 1902, ARTBA is the oldest national transportation 
construction-related association. ARTBA's more than 8,000 members 
include public agencies and private firms and organizations that own, 
plan, design, supply and construct transportation projects throughout 
the country and world. The industry we represent generates more than 
$500 billion annually in U.S. economic activity and sustains more than 
4 million American jobs.
    In the midst of the current pandemic, ARTBA remains a steadfast 
advocate for increased federal transportation investment. Given 
additional resources, the transportation construction industry can help 
lead the nation's economic recovery. It is important to view the DBE 
program--and its potential opportunities--in this context.
    Compliance with the DBE program, which has been in place for nearly 
40 years, is a key task for transportation agencies and contractors on 
federal-aid transportation projects. The program's purposes include 
developing DBE firms and ensuring a level playing field in contracting 
for federal-aid projects. As with other regulatory requirements, the 
transportation construction industry seeks to comply with the DBE 
program rule while carrying out its core objective of delivering 
projects in an efficient, timely and safe manner. Moreover, the 
integrity of the DBE program is critical.
    While Congress authorizes and establishes parameters for the DBE 
program, the U.S. Department of Transportation (USDOT), its modal 
administrations, and state and local transportation agencies are 
responsible for the program's implementation. This includes USDOT 
rulemaking and issuance of guidance, in which the industry always 
maintains great interest. Our submission today references a number of 
these administrative actions and policies. While we know the committee 
wants to stay abreast of these activities because of its oversight 
responsibilities, we also hope you consider our proposed improvements 
as potential future legislative provisions, such as in the next surface 
transportation reauthorization bill.
    We seek to highlight ways in which the DBE program can be run more 
efficiently and effectively, including for the benefit of those 
emerging businesses for which the program was developed. Similarly, we 
point out specific aspects of the current DBE rule and guidance where 
the opposite often results. We are informed in our comments by examples 
of collaborative efforts to structure and implement state-level DBE 
programs around the country, in which various ARTBA members and 
affiliated chapters have participated.
    In describing our proposed improvements, we cite (with page 
numbers) USDOT's DBE guidance entitled ``Official Questions and Answers 
(Q&A's) Disadvantaged Business Enterprise Program Regulation (49 CFR 
26),'' dated April 25, 2018 (and referred to as the ``guidance'' or 
``Q&A''); and one of its addenda, the single-page ``Procedures for 
Submitting Good Faith Efforts Information on Design-Bid-Build 
Contracts,'' dated June 20, 2018.
    Our four primary themes are the following: 1.) identification of 
policies that diverge markedly from customary and efficient industry 
practices, which can add project costs and sometimes work to the 
detriment of DBE firms themselves, 2.) inconsistencies in USDOT's 
adherence to its own DBE guidance document, which explicitly advises 
recipient-agencies to craft aspects of their DBE programs using 
``information about the real world of contracting in the recipient's 
contracting area,'' because ``[r]ecipients know their own markets'' [p. 
61]; 3.) lack of meaningful consultation with the industry and other 
legitimate stakeholders about important policy changes; and 4.) failure 
to modernize the DBE guidance to reflect evolving business practices in 
the industry (especially those involving emerging technologies), with 
numerous Q&A sections dating back to the previous century. ARTBA hopes 
to see a collaborative effort to improve DBE program implementation in 
these respects.
          Good Faith Effort and Submission of DBE Commitments
    USDOT conducted a significant DBE rulemaking in 2012-14, issuing 
its final rule on October 2, 2014 (79 CFR 59565). A key and contentious 
issue was the department's initial proposal to abolish the longstanding 
``responsibility'' option, through which recipient-agencies had the 
option of accepting DBE utilization plans from bidders (or sometimes 
just the apparent low bidder) within a reasonable number of days after 
the bid on design-bid-build projects. Had the department stayed with 
its original position, as ARTBA and numerous other commenters noted, 
prime contractors and DBE subcontractors, among others, would have been 
overwhelmed with the mandate to gather or submit quotes for numerous 
projects at the same time, many/most/all of which would be for projects 
in which they would not eventually participate, which is the nature of 
the letting process. The potential for added administrative costs was 
obvious. For example, at the time of the rulemaking, Illinois had a 
state ``no cure'' law similar to USDOT's proposed provision. While 
Illinois' law was in effect, fewer projects met the DBE goal. Worse 
yet, some DBE subcontractors overcommitted themselves during the 
bidding process, leading to their demise.
    Ultimately, to the great relief of industry and many recipients, 
the department settled on a maximum seven-day window (later to be 
shortened to five days) for the submission of DBE commitments under the 
responsibility option. To the best of our knowledge, in a series of 
written, audio and video communications rolling out the DBE rule 
changes in late 2014 and early 2015, no one from USDOT averred 
recipients would now need to require all bidders to submit their DBE 
commitments in all circumstances. The practice among the states would 
continue to vary permissibly, in that some states only required this 
information from the lowest apparent bidder, others the lowest two 
bidders, and so forth.
    In fact, in the publication of its final rule in 2014, USDOT 
described the responsibility option as follows: ``We think it 
reasonable ultimately to limit the time to a maximum of 5 calendar days 
to protect program beneficiaries and overall program integrity.'' In a 
related footnote, ``Due to the definition of `days' adopted in this 
final rule, bidders or offerors will have 5 calendar days (i.e., not 
business days) to submit the necessary information. Thus, if a bid is 
submitted on Thursday, the apparent low bidder would have until Tuesday 
to submit the information'' [emphasis added].
    It was therefore shocking and disappointing when the department 
issued a one-page guidance on June 20, 2018, ordering that on design-
bid-build contracts, ``all bidders . . . submit credible documentation 
of DBE commitments and/or good faith efforts either with their sealed 
bid, as a matter of responsiveness; or no later than five days after 
bid opening, as a matter of responsibility'' [emphasis in original]. 
Department officials have since contended this revised guidance was not 
a change in policy, but a restated means of reviewing the performance 
of all bidders and their respective good faith efforts. Under that 
reasoning, the pronouncements made upon publication of the final rule 
were misleading and/or opaque--whether intentional or not. (On at least 
two occasions, a department official publicly stated or implied 
recipients could maintain current options for implementing the 
responsibility approach, if they abided by the newly-prescribed time 
limit.)
    It is puzzling the department would let 1,357 days (or three years, 
eight months and 18 days) elapse between publication of its final rule 
and this supposed clarification of related, existing policy. (If it was 
part of longstanding policy, why not make that clear while rolling out 
the rule changes?) Had ARTBA and other stakeholders been given the 
opportunity to submit public comments, we would have made a compelling 
argument this change in policy will add costs to many projects, in 
direct contravention of the administration's regulatory reform 
principles.
    To be certain, implementation of this good faith effort guidance 
provision will increase project costs in a number of states. In the 
past, we have seen this draconian approach result in fewer bidders 
among prime contractors, DBE contractors' quoting too few projects (for 
fear of overcommitment) or too many (sometimes leading to their 
dissolution) and decreased achievement of DBE project goals. In 2013, 
ARTBA facilitated a survey of nearly 300 transportation construction 
contractors, who overwhelmingly anticipated the proposed new DBE 
regulations (such as one similar to the 2018 guidance) would increase 
the cost of projects because of added compliance burdens.
    Moreover, proponents of the ``all bidders'' approach ignore--and 
have no coherent response for--the fact that most DBE firms (which are 
small businesses, and often start-ups) do not have the capacity to 
provide quotes for a large number of projects at the same time, as part 
of the same letting, especially given the likelihood they will 
participate in just a few of them, at best.
    It is also troubling that USDOT has forced this ``misguidance'' 
provision on recipient-agencies and contracting communities in states 
with DBE programs considered successful and effective by all parties.
    USDOT should reverse this back-door rulemaking and work with all 
parties--including DBE and non-DBE contractors--to address any concerns 
that led to its adoption in the first place. That is far preferable to 
the department's issuing mandates in conflict with its own rules.
                      Good Faith Effort Parameters
    After nearly four decades, the DBE rule and guidance still do not 
provide objective descriptions of good faith efforts to be undertaken 
by prime contractors. USDOT should compile examples of successful good 
faith effort practices nationwide, which would function similarly to 
case law in the legal realm. At the same time, while the department 
advises that prime contractors need not accept DBE subcontractors' 
prices which are ``excessive or unreasonable,'' the guidance has never 
provided insight as to how to define those terms.
    ARTBA members have noted examples of recipient-agencies in their 
respective markets that do not maintain current or accurate databases 
or lists of DBE firms actually ready, willing and able (as the rule 
states) to participate in a transportation project. These lists--if 
they exist at all--commonly include firms in disciplines unrelated to 
transportation or construction, not qualified or certified to work on a 
project for that agency, or out of business or unreachable. The related 
concept of ``potential DBEs,'' as used in assessing good faith effort 
or setting overall DBE goals in a jurisdiction, strains the limits of 
credulity.
    For all these reasons, USDOT should direct recipients to compile 
and maintain information for legitimate and relevant DBE firms. The 
current rule also suggests a prime contractor use the services of 
community organizations and business assistance offices as part of its 
good faith effort. That role is more properly assigned to the 
recipient, for the benefit of all prime contractors and DBE firms.
                      Prompt Payment and Retainage
    There have been ongoing concerns that the USDOT guidance on prompt 
payment and retainage (pp. 4-9) does not reflect the ``real world of 
contracting.'' In the recent past, ARTBA members reported a development 
at the state level, in which prime contractors were prohibited from 
withholding funds for a DBE subcontractor's pro-rated bond, as well as 
their state/local association dues. This prevents a common industry 
practice and puts affected DBE subcontractors at a disadvantage, in 
that their non-DBE counterparts are able to address surety protection 
and association membership as part of the contractual relationship with 
their prime contractor. To address this and related prompt payment 
issues, we suggest a collaborative effort with recipients and industry 
to better understand everyone's respective views of the payment 
process.
            Prime Contractor/DBE Subcontractor Relationship
    In some notable cases, the department's Q&A prohibits DBE credit 
for that firm's carrying out customary and efficient industry 
practices. Generally, the cost of equipment purchased or leased by a 
DBE subcontractor from a prime contractor does not count for DBE credit 
(p. 12). (Similarly, materials purchased from a prime contractor do not 
count either.) Given that it is common for ``primes and subs'' to 
undertake these types of transactions, the rule and guidance actually 
put DBE firms at a disadvantage in this regard. Industry has long made 
the point that materials suppliers may be limited in a given geographic 
area, and as a result it may be necessary for a prime contractor, who 
is also the sole/dominant supplier there, to sell material to the DBE 
subcontractor. The DBE rule should stop ignoring the realities of that 
circumstance, and instead allow counting of the material for DBE credit 
when appropriate.
    USDOT's Q&A also directs prime contractors to consult with their 
recipient-agency about the appropriateness of their relationship with a 
DBE subcontractor. Unfortunately, the recipient's assessment can count 
for little or nothing should law enforcement question the relationship 
at a future time. A future legislative revision to the DBE program 
should designate these agency assessments as a safe harbor for the 
contracting parties should they follow the agency's parameters.
                            Regular Dealers
    In another issue addressed in the 2012-14 rulemaking, the 
department initially explored abolishing the regular dealer designation 
for DBE firms. The final rule mandated those firms' status would be 
determined on a project-by-project basis.
    The Q&A betrays a strong presumption that drop shipment of supplies 
or materials to a project site downgrades a DBE supplier's status from 
regular dealer to that of expediter or broker. In that case, the prime 
contractor may not count any of the materials cost (other than the DBE 
firm's commission) for DBE credit, and the practice also calls into 
question the subcontractor's commercially useful function.
    This viewpoint is outdated and shows unawareness of current 
business practices in the industry, in which emerging technologies and 
efficiencies continue to develop. The ``case-by-case'' approach is also 
excessively subjective and puts this determination in the hands of 
perhaps one agency official.
    In recent years, USDOT has conducted at least one ``listening 
session'' on the regular dealer issue, but limited the number of 
participants and did not include a representative cross-section of the 
industry. The department should commit to improving this 2014 provision 
to reflect the decade (and century) we are in, while collaborating with 
all interested stakeholders in doing so.
                      Commercially Useful Function
    This section of the USDOT Q&A (pp. 40-42) addresses the requirement 
for DBE firms to meaningfully participate in a project, rather than 
assuming a role contrived so DBE goals can be achieved. Again, however, 
the guidance does not capture current industry practices and potential 
roles on a transportation improvement project. The material in this 
section dates back to 1999 and 2012. Technology and other developments 
have created new opportunities and potential responsibilities for 
subcontractors, DBE and otherwise. (One example of many is a social 
media coordinator for a major project, where public communications are 
vital.) The department should initiate a dialogue with industry to 
bring this section up to date.
                              Joint Checks
    It is common industry practice for a prime contractor to issue a 
check jointly to its first-tier subcontractor and that subcontractor's 
material supplier. Joint checks are used regardless of a subcontractor 
or supplier's status as a DBE. Many such firms prefer this method of 
payment. Yet USDOT's DBE Q&A deems the use of joint checks as a `` `red 
flag' calling for further scrutiny.'' Again, the department should make 
an effort to better understand typical industry transactions and not 
approach this practice with a presumption of guilt.
                        Mentor-Protege Programs
    More than 20 years ago, the department's Q&A recognized the use of 
mentor-protege programs in DBE development. Many members of the 
industry--including emerging DBE firms--believe in their value as well. 
However, USDOT's guidance provides virtually no direction as to the 
permissible structure of such a program, instead giving responsibility 
to the private sector. Prime contractors may have little incentive to 
participate, especially considering the legal risk they may incur if 
law enforcement later accuses the parties of an improper relationship 
that undercuts the DBE firm's commercially useful function.
    A better approach would be directing recipients to initiate mentor-
protege programs in consultation with the industry in their market. 
Again, the department should compile permissible practices for all to 
see, and stand behind them as a legal safe harbor for program 
participants.
             Alternative Contracting & Procurement Methods
    In 2018, the Federal Highway Administration's Office of Civil 
Rights published the ``Disadvantaged Business Enterprise Program 
Administration and Oversight on Projects with Alternative Contracting & 
Procurement Methods Handbook.'' A major premise of the document is that 
planning and implementing DBE compliance on design-build and similar 
projects, where the scope and specifics of subcontracting opportunities 
evolve over its life, require a more collaborative and flexible 
approach than for ``design-bid-build'' projects. However, ARTBA 
believes some of the same methods outlined in the handbook would also 
be appropriate for use in many such ``traditional'' projects. We hope 
to explore wider use of these innovations with the agency when 
possible.
              Government Accountability Office (GAO) Study
    ARTBA, various members of this committee, and others involved in 
today's hearing have pointed out shortcomings of and potential 
improvements for the DBE program. This is an opportune time for the 
Government Accountability Office (GAO) to conduct a study of the DBE 
program's first four decades, focused on assessing the program's 
fulfillment of its stated purposes and recommendations for program 
improvements to achieve its desired outcomes. In carrying out the 
study, the GAO should seek a full range of stakeholder views.
    ARTBA suggests that this committee include direction for this GAO 
study in its next draft of surface transportation reauthorization 
legislation. It will serve as a catalyst for all interested 
stakeholders--including the U.S. Department of Transportation, state 
agencies, contractors and the minority- and women-owned business 
communities--to collaborate on improving the DBE program's efficiency 
and effectiveness.
                               Conclusion
    By exploring and incorporating the improvements described above, 
the DBE program can be a more productive component of federal-aid 
transportation programs that maximize business opportunities and put 
Americans to work, while operating with efficiency and integrity. We 
appreciate this committee's consideration of ARTBA's views and hope to 
engage in a continuing dialogue as the surface transportation 
reauthorization process moves forward.

                                 
Letter of October 7, 2020, from James V. Christianson, Vice President, 
   Government Relations, Associated General Contractors of America, 
        Submitted for the Record by Hon. Sam Graves of Missouri
                                                   October 7, 2020.
Hon. Peter DeFazio,
Chairman,
Committee on Transportation, United States House of Representatives, 
        Washington, DC.
Hon. Sam Graves,
Ranking Member,
Committee on Transportation, United States House of Representatives, 
        Washington, DC.

RE:  Hearing entitled, ``Driving Equity: The U.S. Department of 
Transportation's Disadvantaged Business Enterprise Program''

    Dear Chairman DeFazio and Ranking Member Graves:
    On behalf of the Associated General Contractors of America (AGC or 
Association)--the leading association in the construction industry 
representing more than 27,000 firms, including America's leading 
general contractors and specialty-contracting firms--thank you holding 
the important hearing entitled: ``Driving Equity: The U.S. Department 
of Transportation's Disadvantaged Business Enterprise Program.'' AGC 
respectfully puts forward the following comments on fostering diversity 
and inclusion in the construction industry and recommendations for the 
U.S. Department of Transportation's (U.S. DOT) Disadvantaged Business 
Enterprise (DBE) program.
                       The Construction Industry
    The construction industry is large, diverse, and fragmented. In 
2018, the construction industry had 733,689 firms and 6,814,979 million 
paid employees. In that same year, ninety-one percent (666,697) of 
construction firms had fewer than 20 employees; one percent (8,666) of 
construction firms had 100 or more employees; the average construction 
firm had fewer than 9 employees.\1\
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    \1\ All Sectors: County Business Patterns by Legal Form of 
Organization and Employment Size Class for U.S., States, and Selected 
Geographies: 2018. U.S. Census Bureau. https://rb.gy/xtybhe (link 
shortened). Accessed: October 1, 2020.
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    As with other industries, construction is not free of 
discrimination. However, construction is an intensely competitive 
industry and that competition penalizes any company that resorts to 
discrimination. The unique nature of the construction bidding process 
can also help prevent discrimination from occurring. Most public owners 
are subject to legal requirements for open competitive bidding, which 
typically include a publicly announced deadline for the submission of 
sealed bids, the public opening of the bids, and contract award to the 
lowest responsive and responsible bidder, eliminating the ability for 
public owners to engage in unlawful discrimination. The resulting 
pressure on prime contractors makes it necessary to select 
subcontractors based on experience, price, and quality.
                        Diversity and Inclusion
    Nevertheless, AGC is committed to fostering a business climate that 
enhances opportunities for all companies and employees in the 
construction industry. AGC fully embraces diversity among its employees 
and within its membership. People of diverse backgrounds, opinions, 
perspectives, experiences, and ideas bring creativity and vitality that 
maximizes member engagement at all levels of the Association. Fostering 
an environment that is welcoming and inclusive to all individuals is 
essential to achieving the Association's mission and places members in 
a position to contribute to the construction industry's future success. 
In furtherance of this commitment, AGC undertook several efforts over 
the years, many of which are ongoing. Some of these efforts are 
described in further detail below.
      Established a Diversity and Inclusion Council (Council) 
within AGC in 2017. The goal of the Council is to foster an environment 
both in the Association and in the industry that is welcoming and 
inclusive to all individuals regardless of one's background, opinions, 
perspectives, experiences, or ideas. A key strategy of the Council's is 
to identify barriers that prevent individuals from underrepresented 
groups from pursuing a career in construction and developing resources 
to eliminate those roadblocks.
      Authored and released a report, titled ``The Business 
Case for Diversity & Inclusion in the Construction Industry,'' that 
outlines six reasons why diversity and inclusion are strategically 
valuable in generating corporate/industry innovation, increasing 
profitability, and ensuring a positive and sustaining legacy of 
progress for a company.
      Partnered with AGC of Washington to create an initiative 
called the Culture of CARE. Launched nationwide in March 2020, the 
Culture of CARE seeks to advance the construction industry as the 
industry of choice for diverse and talented workers by building 
inclusive work environments in construction firms nationwide. The 
Culture of CARE is built on four principles \2\. There are two ways to 
participate in the Culture of CARE. The first is that a company can 
commit to a Culture of CARE by signing the company pledge. The second 
is that an employee can sign an individual pledge. To date, 
approximately 375 companies and 950 individuals took the pledge. Upon 
taking the pledge, there are resources available to a company such as 
tools to communicate a company's pledge, a model human resources policy 
and best practices, and kits for toolbox talks, with additional 
resources continuing to be developed.
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    \2\ Culture of CARE's four principles: (1) commit to hire and pay 
based on skill and experience regardless of age, ethnicity, gender 
identity, nationality, race, religion, sex, or sexual orientation; (2) 
attract prospective employees by creating inclusive workplaces that are 
free from harassment, hazing and bullying; (3) retain high-performing 
employees by identifying and removing barriers to advancement; and (4) 
empower every employee to promote a culture of diversity and inclusion.
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      Created the annual Diversity and Inclusion Excellence 
Awards in 2018 to honor AGC members that are champions in advancing 
diversity and fostering a culture of inclusion within their workforce, 
supply chain, and in the communities they serve. By showcasing and 
recognizing best practices from companies that are developing and 
delivering diversity and inclusion initiatives with demonstrable 
success, award winners have the opportunity to share their track record 
of achievement and commitment, which will help spur other companies to 
establish or improve their own initiatives.
                              DBE Program
    The DBE program (or program) plays a pivotal role in fostering 
diversity and inclusion in the construction industry by ensuring that 
certified small businesses owned and controlled by socially and 
economically disadvantaged individuals can compete for federally funded 
highway, public transit, and airport projects. The program was 
originally established by regulation in 1980. In the years since, 
Congress included provisions in certain transportation laws that 
established goals for a certain amount of federal funding to be 
expended through DBEs.
    Most recently, Congress continued the goal that not less than 10 
percent of certain federal funding, including funding for highways and 
public transit projects, be expended through DBEs in the Fixing 
America's Surface Transportation Act (FAST Act; P.L. 114-94). In 
addition, the FAST Act authorized up to $10 million of the total amount 
authorized for the administrative expenses of the Federal Highway 
Administration each fiscal year to be used for the Disadvantaged 
Business Enterprises-Supportive Services (DBE-SS) program. The Federal 
Aviation Administration Reauthorization Act of 2018 (FAA 
Reauthorization Act of 2018; P.L. 115-254) continued the goal that at 
least 10 percent of certain federal funding for airports be expended 
through DBEs or qualified HUBZone small business. Notably, it also 
amended the definition of a ``small business concern'' for the 
construction industry, tying it to the ``size standard for the North 
American Industry Classification System Code 237310, as adjusted by the 
Small Business Administration'' for the purposes of the DBE program. 
The DBE program and associated goals are administered by the 
Departmental Office of Civil Rights, the relevant modal administrations 
within U.S. DOT, and recipients of certain federal funding.
                  The Challenges and Recommendations:
    First and foremost, AGC supports the continuation of the DBE 
program. As with any federal program, there are important improvements 
to the DBE program that should be made to ensure its continued success. 
AGC is having ongoing conversations with its members to develop both 
legislative and regulatory recommendations to help improve the DBE 
program. In the near-term, AGC respectfully urges the Committee to 
consider the following recommendations.
Definition of a ``Small Business Concern''
    Challenge: To meet the definition of a ``small business concern'' 
for the purpose of the DBE program for federal highway and public 
transit funding a company's average annual gross receipts during the 
preceding three fiscal years must not exceed $23,980,000, under the 
FAST Act. The amount is adjusted annually for inflation by the 
Secretary of Transportation. The amount was previously $22,410,000, 
adjusted annually for inflation, under the Moving Ahead for Progress in 
the 21st Century Act (P.L. 112-141). This definition limits the ability 
of DBEs to grow their companies into sustainable, long-term businesses. 
Instead, the definition can force DBEs out of the program prematurely 
or require a DBE to sell off a part of their business. When this 
occurs, the capacity of certified DBEs in a state dwindles, making it 
difficult to achieve DBE goals, which undermines the very intent of the 
DBE program.

        Recommendation: Congress should amend the definition of a 
        ``small business concern'' for the purposes of the DBE program. 
        Specifically, the definition should provide for a significant 
        increase in the annual gross revenue receipts during the 
        preceding three fiscal years. This new amount should continue 
        to be adjusted for inflation. The increase will help ensure 
        that DBEs that exceed the amount are more likely to succeed 
        outside of the DBE program and it will help address capacity 
        issues.
Reciprocity of DBE Certifications
    Challenge: Prior to being eligible to participate in a state's DBE 
program, a company must go through a rigorous certification process. 
The company bears the ``burden of demonstrating to you, by a 
preponderance of evidence, that it meets the requirements of this 
subpart concerning group membership or individual disadvantage, 
business size, ownership, and control'' (49 CFR 26.61). Federal 
regulations (49 CFR 26 Subparts D and E) set forth the standards and 
procedures for making a certification decision for an applicant company 
by a state certification agency.
    Once a company is certified as a DBE, it remains certified until or 
unless a state certification agency removes its certification in whole 
or in part through a separate process outlined in federal regulations. 
A state certification agency cannot require a certified DBE to reapply 
for certification or undergo a re-certification process. However, a 
state certification agency may conduct a certification review of a DBE 
if appropriate. A certified DBE is required to inform a state 
certification agency of any changes to its circumstances (i.e., 
disadvantaged or economic status) that affect its ability to meet 
federal requirements or its application and it must provide a state 
certification agency with a sworn affidavit on an annual basis that 
affirms that there have not been any changes to the company's 
circumstances.
    While the federal regulations allow for a state certification 
agency to accept another state's certification of a DBE, there is 
discretion given to a state certification agency in terms of accepting 
that certification (49 CFR 26.85) and the process for doing so is also 
rigorous. The lack of direct reciprocity for states' DBE certifications 
artificially limits the ability of DBEs to expand their businesses. In 
addition, it hinders the ability for a prime contractor to address any 
capacity constraints in a state that impacts its ability to meet DBE 
goals.

        Recommendation: Congress should facilitate increased 
        reciprocity of DBE certifications between states by 
        establishing in law a streamlined process through which a state 
        certification agency must accept another state's certification, 
        which is in keeping with the Uniform Certification Program that 
        allows for a DBE certification to be honored by all recipients 
        in a state. The process should provide for an exception in the 
        event that the state certification agency can demonstrate good 
        cause for rejecting another state's certification.
Business Development and Supportive Services
    Challenge: The DBE-SS program (23 USC 140 (c)) provides training, 
assistance, and services to DBEs with the objective of furthering the 
development of their companies. As previously noted, Congress 
authorized up to $10 million each fiscal year for the DBE-SS program. 
While federal regulations provide guidance regarding the types of 
training, assistance, and services that should be provided (23 CFR 230 
Subpart B) and allow a recipient to establish their own business 
development program (49 CFR 26.35), these well-intentioned efforts can 
fall short of effectively supporting DBEs. AGC members are concerned 
that emphasis on certain services is misplaced and that the consultants 
hired by recipients to offer services can miss the mark.

        Recommendation: Congress should reinvigorate the DBE-SS program 
        to ensure that it focuses on providing the education, training, 
        technical assistance, and services that bolster the success of 
        DBEs. Specifically, Congress should place an emphasis on 
        securing financial and bonding services, certification 
        assistance, bidding and estimating, increasing awareness of and 
        compliance with federal requirements for projects, and 
        procuring new equipment and technologies. In addition, Congress 
        should ensure that consultants hired to provide any of these 
        resources are have appropriate technical and industry 
        expertise. Finally, Congress should continue to provide funding 
        for the DBE-SS program.
Administration of the DBE Program
    Challenge: The DBE program evolved over the years through various 
legislative and regulatory changes. AGC members remain concerned with 
the interpretation of the requirements of the DBE program. In addition, 
there is not always uniformity in the way the recipients administer the 
requirements through their respective programs. The construction 
industry wants to ensure the success of the DBE program. However, the 
uncertainty and confusion associated with the DBE program's 
requirements, which is in part due to issues with the program's 
regulations and guidance, poses a real concern for all contractors. 
Contractors found to be in violation of the DBE program's requirements 
can face suspension, debarment, or civil and/or criminal prosecution--
any of these can put a company out of business and a business owner in 
prison.

        Recommendation: Congress should initiate a thorough and 
        balanced review of the DBE program. The review should focus on 
        the administration of the program, rely on quantitative and 
        qualitative analyses, and provide ample opportunities for input 
        from all affected or interested parties. The review should also 
        include recommendations for Congress and U.S. DOT's 
        consideration that will ensure the continued success of DBE 
        program in the future.
                               Conclusion
    Again, AGC thanks the Committee for holding this important hearing 
and looks forward to working with the Committee as works to ensure the 
continued success of the DBE program.
        Sincerely,
                                     James V. Christianson,
          Vice President, Government Relations, Associated General 
                                            Contractors of America.

                                 
 Statement of the Airport Restaurant and Retail Association, Submitted 
                   for the Record by Hon. Rick Larsen
    Mr. Chairman and Members of the Committee:
    Thank you for holding this hearing today. The Airport Restaurant & 
Retail Association (ARRA), representing the businesses, including many 
small, minority and women owned Airport Concession Disadvantaged 
Business Enterprises (ACDBEs), that operate the retail stores and 
restaurants serving airports and air travelers nationwide, is seeking 
your support to ensure the Disadvantaged Business Enterprise (DBE) 
Program and the ACDBE Program continue and that the ACDBE companies 
survive this unprecedented air-traffic downturn due to the COVID-19 
pandemic. This hearing, focusing on the DBE Program at the Department 
of Transportation (DOT), is well timed. While we are writing to 
emphasize that there is a continuing need and compelling government 
interest in the federal DBE and ACDBE programs and register our strong 
support thereof, our message today is that unless Congress acts 
quickly, many of these companies and these programs may not have a 
future. Without immediate aid, many DBEs and ACDBEs and the important 
benefits these programs provide our nation's airports, highway and 
public infrastructure will be lost. It is that simple.

        The DBE program is essential to remedy discrimination and its 
        effects on women- and minority-owned businesses while ensuring 
        all businesses can compete for Federal transportation dollars 
        on a level playing field.

    DOT's DBE program, since its inception, has been devoted to 
combatting discrimination, and the continuing effects of past 
discrimination, in federally assisted highway, transit and airport 
programs and projects. ARRA fully supports the core goals and 
objectives of the DBE program, which are to level the playing field by 
providing small businesses, like the airport concessionaires within our 
membership, that are owned and controlled by socially and economically 
disadvantaged individuals, with fair and significant opportunities to 
compete for federally funded transportation contracts and compete in 
contracting and business opportunities.
    The ACDBE program has been instrumental in providing opportunities 
for small minority and women owned disadvantaged companies to 
participate in the aviation industry and the airport concessions 
business. Airports are very challenging environments in which to start 
up and operate a business. These companies face large upfront capital 
expenditures, high construction costs, limited access to capital, high 
rents and minimum annual guarantees (MAGs) that are required to operate 
in airport spaces, and higher operating costs due to the federally 
regulated safety and security requirements at airports.
    Even with the DBE/ACDBE programs the barriers to entry are many and 
substantial. The challenge of survival has never been greater than it 
is now during the COVID-19 pandemic. While ACDBEs have grown under the 
Department of Transportation and Federal Aviation Administration's 
guidance and oversight, and opportunities expanded during the period of 
continuous growth of air travel, we now face a real threat to the ACDBE 
program and many small companies and individual owners/operators.
    Operating within the heavily restricted airport environment, 
airport concessionaires are highly dependent on passenger traffic for 
their customers and sales. After a period of record passenger growth, 
within only a few months the pandemic cost airports and their 
concessionaires about 95% of their passengers and business. 
Concessionaires were forced to furlough 80-95% of their employees, 
close the vast majority of their stores and drastically reduce 
operations for those few that were able to continue operating. Unlike 
other restaurants and retail operators, airport concessionaires cannot 
conduct business with the general public outside the airport 
environment, and thus have not been able to sustain any business 
through drive-thru, delivery or carry-out sales. They are totally 
captive to the number of air travelers at the airport.

        Unless Congress acts quickly to provide immediate aid, many of 
        the DBE/ACDBE companies, the program itself and the important 
        benefits these programs provide our nation's airports, highway 
        and public infrastructure will be lost.

    In talking to our members around the country and in every airport, 
the story is the same. Business has effectively come to a standstill 
and passengers won't return until people feel comfortable and safe 
traveling again.
    Airline travel has been devastated by the COVID-19 pandemic, and 
the restaurant and retail airport industry has been particularly 
impacted. We have experienced, and continue to experience, mounting 
losses in jobs and revenues. Beyond air carriers and airport operators, 
our members, airport concessionaires, are the third major partner in 
the aviation ecosystem that serve air travelers. Airport 
concessionaires completely transform empty airport terminals into 
vibrant shopping and dining destinations that enhance the travel 
experience, generate $10B in sales annually and employ more than 
125,000 workers in steady jobs that provide good pay and benefits and 
opportunities for advancement. Moreover, airport concessionaires 
contribute $2.5B in non-aeronautical revenue to airports (approximately 
10% of all airport operating revenues) under contracts and agreements 
that deliver services that travelers and airports need and fuel airport 
operations, development, bond financing, and growth.
    For our members to survive, and continue to make the DOT DBE/ACDBE 
program vibrant and effective, we need at minimum:
      $3.5B in relief for airport concessionaires; and
      $10B for airports in the next COVID-19 package.

    It is vital that these funds be added to any final negotiated 
legislation on COVID-19 relief. ARRA, together with the Airport 
Minority Advisory Council (AMAC), the International Association of 
Airport Duty Free Stores (IAADFS), the American Car Rental Association 
(ACRA) and the National Parking Association (NPA), along with the 
airport trade associations--the Airports Council International-North 
America (ACI-NA) and the American Association of Airport Executives 
(AAAE)--are united in requesting at least $13.5B in grants to airports, 
with $3.5B dedicated to support Minimum Annual Guarantee (MAG) and rent 
abatement for airport concessionaires at airports across the country.
    In our reports (attached for the hearing record) Facing Facts: The 
Survival and Revival of Shopping and Retail Concessions at Airports, 
ARRA demonstrates that concessionaires cannot survive at current 
traffic levels and have little chance until passenger traffic returns 
to near pre-pandemic levels. Airport restaurant and retail 
concessionaires will lose an estimated $3.4B between now and the end of 
2021. In the next 18 months, they will lose 3 years of profit.
    Most airline, FAA and industry projections show that it will be at 
least 18-36 months, and possibly five years, before the aviation 
industry returns to normal. Without immediate federal relief, many DBE/
ACDBEs and other concessionaires will not survive. Since these 
companies operate in a highly restricted and federally regulated 
airport environment, they will live or die based on government 
policies, travel restrictions, airline schedules, public confidence in 
the health safety of air travel and other factors over which they have 
no control--including whether the Congress appropriates targeted relief 
funding.
    Airport concessionaires include more than 3,500 small minority and 
women-owned businesses who operate under the Congressionally authorized 
ACDBE program, which is administered by DOT/FAA. These businesses' 
survival is threatened by the pandemic's disproportionate negative 
impact on them. Our fear is that many airport concessionaires will fail 
to weather this storm without significant financial assistance from the 
federal government and relief from airport rents and MAG payments. Air 
travel demand must increase substantially beyond what it is now for 
airport concessionaires to generate sufficient revenue, meet airport 
rent obligations, pay debt service and rebound as the key component of 
the aviation system that they were prior to the pandemic.
    The CARES Act (Phase III) provided passenger air carriers with $50B 
and air cargo carriers with $8B. Airports received $10B and air carrier 
associated contractors received $3B in immediate financial aid and for 
future recovery. Airport concessionaires received $0.
    The $3.5B and the additional $10B airports and concessionaires are 
requesting are vital to the airport community, and we urge you to 
ensure that it is included in any legislation aiding the industry. 
These funds will help sustain airports and speed their recovery by 
helping them offset the drastic loss of operating revenue, meet debt 
service obligations and provide MAG and rent abatement to airport 
concessionaires. The requested $3.5B for airport concessionaires MAG 
and rent abatement is the first step in assuring companies survive in 
the short term but like the airlines and airports, many ACDBEs and 
airport restaurant and retail concessionaires will also need additional 
financial assistance for continuing operating expenses, debt payments, 
and reopening and rehiring employees to be part of the airport and 
aviation industry's recovery. ARRA is supportive of programs such as 
the Payroll Protection Program (PPP) and Main Street Lending Program 
(MSLP), however these programs are not designed and do not meet the 
needs of airport concessionaires given their unique circumstances and 
operating characteristics. We support improvements to these programs 
that are designed to enable ACDBEs and concessionaires to benefit, and 
other legislative and administrative initiatives to give airport 
concessionaires, and ACDBEs in particular, better access to federal 
grants and no- or low-interest loan programs, such as SBA and MSLP 
lending programs and other forms of financial assistance.
    The requested $13.5B for airport and airport concessions relief--
necessary to help airports and concessionaires survive the months 
ahead--in combination with additional grants and loan programs targeted 
for airport concessionaires, will help ensure the continued vitality 
and survival of DOT's ACDBE program. ACDBE firms and concessionaires at 
airports across the country desperately need the support of Congress in 
order to assure the survival and speedy recovery of our industry and 
the nation's economy.
    We are submitting this statement both to voice our strong support 
for the DBE and ACDBE programs and to urge Congress to pass financial 
relief and assistance specifically for airport restaurateurs and 
retailers and ACDBEs given the unprecedented and disastrous long-term 
business impact caused by the pandemic. We are also attaching for the 
record the statements and testimonials of individual ACDBE companies in 
strong support of the DBE/ACDBE program. If airport concessionaires do 
not receive this immediate critical relief, many will cease to exist 
and this critical program will disappear.
    For these reasons, ARRA urges Congress to SAVE OUR INDUSTRY and 
include financial relief and direct assistance to airport 
concessionaires as it works to mitigate the severe economic and public 
health impacts of this unprecedented pandemic.
    Thank you.
                               About ARRA
    ARRA represents the companies who operate restaurant and retail 
stores and shops at airports across the U.S. More than 80% of ARRA 
Members are ACDBEs--small minority and women-owned businesses. ARRA's 
mission is to work collaboratively with the airport community and the 
aviation industry on matters of policy decision-making, with a 
collective impact on restaurant and retail operators, and also to 
empower small, minority, women-owned, and disadvantaged businesses to 
participate in and contribute to the aviation industry.
                              attachments
Letters and testimonial statements from ACDBE companies
[The letters and testimonials are retained in committee files.]

ARRA Reports: ``Facing Facts 2: The Survival and Revival of Airport 
Shopping and Dining--July 2020''
[This report is available online at https://www.arra-airports.com/
uploads/1/3/2/1/
132108975/arra_facing_facts_2_the_survival_and_revival_of_airport_
shopping_and_dining.pdf and is retained in committee files.]

``Facing Facts: The Survival of Airport Shopping and Dining--June 
2020''
[This report is available online at https://www.arra-airports.com/
uploads/1/3/2/1/
132108975/microsoft_word_-_final_arra_10_facts_.pdf and is retained in 
committee files.]

                               Appendix

                              ----------                              


    Question from Hon. Troy Balderson to Sandy-Michael E. McDonald, 
 Director, Office of Economic and Small Business Development, Broward 
                            County, Florida

    Question 1. Federal and state Miller Acts help protect 
subcontractors against loss by requiring payment and performance bonds 
for infrastructure projects. However, some delivery methods, including 
public-private partnerships do not require the same levels of 
protection. To help ensure these protections are in place, Rep. Lynch 
and I introduced H.R. 6359, the Promoting Infrastructure by Protecting 
Our Subcontractor and Taxpayers Act, which would ensure that these 
protections are applied to TIFIA finance projects. A recent Op-ed from 
in the Daily Kos, ``Protecting the Builders Rebuilding America,'' from 
Wendell Stemley, the Emeritus Director of the National Association of 
Minority Contractors, spoke in support of H.R.6359, specifically the 
benefits of ensuring proper payment and performance security is in 
place on infrastructure projects to protect subcontractors, including 
Disadvantaged Business Enterprise program participants.
    We believe these requirements are needed now more than ever as 
states are cancelling transportation projects due to the reduced 
funding. This puts additional risk on contractors' financial solvency, 
and therefore adds risk to subcontractors that are part of those 
projects.
    Can you speak to the importance of having these protections in 
place for DBE's that are subcontracted on large scale multimillion-
dollar infrastructure projects if the lead contractor falls into 
insolvency or experiences financial difficulty, and is unable to 
complete the project?
    Answer. Thank you for the question you provided and the opportunity 
to respond to what I believe is another substantive opportunity to 
support our DBE's.
    One of the main reasons small businesses fail is due to a lack of 
access to capital. According to Forbes \1\, it is the number two reason 
small businesses or entrepreneurs go out of business--Access to 
Capital. Unfortunately, many entrepreneurs and small businesses with 
good plans, innovative ideas and genuine intentions, fall short due to 
running out of cash and not being able to access capital. This also 
holds true when you take into consideration the obligations and risk 
that is taken on every day by the Minority and Woman Owned Businesses 
who serve as our Disadvantaged Business Enterprises (DBEs) under 
Department of Transportation (DOT) contracts. If they are successful in 
navigating the typical roadblocks of starting a business, they must 
then be able to maintain and continue to get over the hurdles 
associated with slow payments and address the risks of not being 
covered. This is stated in your H.R. 6359 as, ``appropriate payment and 
performance security''.
---------------------------------------------------------------------------
    \1\ Burns, Stephanie. (April 30, 2019). Why Entrepreneurs Fail: Top 
10 Causes of Small Business Failure. Forbes.
---------------------------------------------------------------------------
    Representative Balderson, as you have indicated, now more than 
ever, and certainly as an impact of COVID-19, DBEs need support. With 
the reduction in funding projects, they need security and financial 
assistance as soon as possible. The daily risks that are taken on 
projects are greater for our smaller businesses and subcontractors then 
the risks experienced by the prime contractors. What should be an 
incentive for taking a contract must not also be a deterrent in fear of 
``what could happen'' if I am not protected or covered.
    The nature of subcontracting places small businesses in the 
position to be second and third tier performers on a project. It is the 
consequence of being the second or third tier performer that also 
dictates the payments and possible profit margins to be made by these 
companies. They are typically here due to their size and financial 
capacity. To consider a scenario where a multimillion-dollar project 
does not continue and the prime contractor, that is a multimillion-
dollar company, would have recourse and resources if they fell into 
insolvency is the challenge subcontractors are faced with. Without 
necessary support and guarantees, our DBE's are at more risk. With this 
risk, contracts that should be favorable and inviting from DOT, 
unfortunately, appear far more intimidating and extremely risky.
    H.R. 6359, established from the principles of the Miller Act is 
progress in the right direction. More importantly, it is the necessary 
incentive, security, and protection the subcontractors need. Whether 
the responsible party is local or state government, payments and 
performance securities for the subcontractor are the right protection. 
DOT taking the responsibility to ensure that these protections are in 
place, would speak to several of the objectives of the DBE program; 
e.g.:
    1)  To create a level playing field on which DBE's can compete 
fairly for DOT assisted contracts;
    2)  To help remove barriers to the participation of DBE's in DOT 
assisted contracts;
    3)  To assist the development of firms that can compete 
successfully in the marketplace outside of the DBE program.

    In conclusion, the opportunity to share my feedback and perspective 
is greatly appreciated. To allow our DBE's to grow their businesses, 
account for their company's fiscal growth, and to compete in 
competitive markets where competition is the true concern; rather than 
losing their revenue or their business because of insolvency due to the 
financial difficulty of the prime contractor is essential. H.R. 6359 is 
the road now and in the future for our DBE's to travel with the support 
of DOT.

   Questions from Hon. Peter A. DeFazio to Jon S. Wainwright, Ph.D., 
            Affiliated Consultant, NERA Economic Consulting

    Question 1. Some critics say disparity studies should not be given 
any credibility because they do not adjust for the capacity of DBEs. Is 
that true?
    Answer. No. That is not true.
    First, most disparity studies address capacity in many meaningful 
ways. They consider, for example, qualities like education level, labor 
market experience, geographic and industry location, and dollar 
weighting to account for specific industry spending patterns by 
government agencies.
    Second, many studies also conduct statistical regression analysis, 
which demonstrates that disparities remain even when holding capacity-
related factors constant between groups.
    Third, we must recognize that some aspects of what people think of 
as ``capacity'' are themselves negatively impacted by current and 
historical discrimination. There is a long list of examples here, with 
credit and capital discrimination being the most obvious, differences 
in firm size and access to formal and informal business networks both 
running a close second. Such differences in ``capacity'' are not 
evidence of a lack of discrimination. On the contrary, they point to 
the existence of pervasive discrimination.
    It's critical, from a good social science perspective, that in 
trying to measure discrimination, we do not treat factors that are 
themselves the result of discrimination as endogenous variables.

    Question 2. Some state and local transportation agencies have 
excluded certain minority, ethnic or gender groups from their programs 
because these groups have reached or exceeded ``parity'' according to a 
disparity study. Is this the right approach in your opinion?
    Answer. No. It is not the right approach.
    First, the overwhelming majority of examples of ``parity'' are 
quite recent, as some DBE programs have matured, and in my experience 
they are very rarely statistically significant, which mean they don't 
actually show ``parity'' at all.
    Second, these results, in the rare instances they occur and are 
also statistically significant, appear in a context in which 
availability figures have been artificially depressed due to 
discrimination. As I testified, minority- and women-owned firms are 
forming at much lower rates than similarly-situated majority male firms 
because of discrimination. If such firms were forming at the same rate 
as majority male firms there would be few, if any, findings of 
``parity''.
    Third, it's inappropriate to consider a category of DBE to have 
achieved parity until you see the same result occurring consistently in 
the private sector--that is, in the Census data. Again, this is like 
checking the blood pressure of a patient with high blood pressure who 
is on medication--seeing it's 120 over 80 and concluding--wrongly--that 
the patient is cured and can stop their medication.
    Remember: The only markets in which there has been any attempt to 
level the playing field are the public contracting markets--like the 
federally-assisted transportation markets. In the far larger and more 
lucrative private sector markets, DBE programs are rare to non-existent 
and majority male-owned firms generally get almost all of the business.
    We also have to remember that majority male-owned firms have 
literally had centuries to grow and establish their firms with 
effectively no competition from minorities and women. Early on the lack 
of competition was a direct result of laws that intentionally and 
explicitly disadvantaged minorities and women. Later it was the result 
of discriminatory practices that were permitted to continue despite 
civil rights laws.
    Finally, we should consider the practical effects of suspending the 
operation of the program every time some subcategory of program 
participant achieves a modicum of success. This won't reduce 
discrimination, it will just tend to increase bankruptcies and then 
those same entrepreneurs, or others like them, will need to be added 
right back into the program.

    Question 3. Does it provide useful evidence, in your professional 
opinion, to compare situations where a DBE program is in effect with 
situations in the same jurisdiction where such a program is not in 
effect?
    Answer. Yes. This evidence can be very powerful when it is 
available and it tends to highlight the profound importance of the DBE 
program. Three examples come immediately to mind:
    First, in the immediate aftermath of the Croson and Adarand 
decisions we saw programs shut down from fear of litigation or enjoined 
as the result of litigation and we can compare the data from before and 
after these events.
    Second, we often see agencies that use goals for their federal DBE 
program but not for exactly similar spending with their state or local 
funds.
    Third in some of the disparity studies I have authored, I've had 
the opportunity to compare DBE participation on contracts with goals to 
contracts without.
    In almost every one of the aforementioned cases, when DBE goals are 
absent minority- and women-owned firms' participation plummets. This 
type of evidence shows the profound importance of the DBE program.
    I would add this one caveat, however. Just because this evidence is 
powerful does not mean we always want to have it or create it. You have 
heard testimony during your September 23rd hearing from business owners 
who explained that without the DBE program they would not get any work 
at all. We should not undertake experiments that end up resulting in 
harm to disadvantaged firms.

    Question 4. Are you concerned about so called ``overconcentration'' 
of DBEs in specific markets? Why or why not?
    Answer. I see several potential problems that might fall under the 
category of ``overconcentration''.
    First, one of the problems is that ``overconcentration'' has been, 
defined differently by different people, and this has the potential to 
lead to hasty and ill-advised policy decisions. For instance, it is 
demonstrably incorrect to say that simply increasing the number and 
percentage of DBEs participating in subcontracting on federally 
assisted contracts constitutes ``overconcentration''. That's not 
overconcentration--it's evidence of the first steps of addressing 
centuries of discrimination.
    Second, my experience has been that most examples of so-called 
overconcentration are recent, temporary, and rarely statistically 
significant, meaning they don't really show ``overconcentration'' at 
all. We should not permit anomalous improvements in DBE participation 
to lead to the suspension of DBE programs for some or all DBEs. As I 
stated above, we should not consider improvements in DBE participation 
to constitute overconcentration unless they are sustained, 
statistically significant and reflected in the broader private 
contracting market.
    Third, I am concerned about the history of shunting minority- and 
women-owned firms into those industry areas that tend to have the 
lowest profit margins and the highest risk. That's wrong and sadly, 
that is where we are most likely to see ``overconcentration'' first. 
Instead, we should be helping DBEs expand beyond such low margin 
industries where they have often been concentrated due to 
discrimination such as lack of access to capital and business networks.
    Finally, I must add, and as my written testimony demonstrates, that 
for every single instance in which DBEs have made progress in a 
particular industry, I can provide dozens of examples of industries in 
which minority- and women-owned firms are largely, or even completely, 
excluded.
    Question 5. How do you know that the DBE program is working? How do 
you know that any reduction in disparities is due to the program?
    Answer. I think there are two ways to answer this. First, with 
reference to the quantitative and qualitative evidence I have seen, and 
second, with respect to my own first-hand observations of these 
programs over the years.
    With respect to evidence, two important data points come to mind. 
First, in almost every case where DBE type goals are removed, DBE 
participation rates subsequently plummet. That suggests a pretty close 
relationship between the program and participation rates. Second, in my 
own studies, I also conducted surveys and interviews to capture what 
firms actually experience in their day-to-day operation. Minority- and 
women-owned firms almost universally report that the DBE program is 
invaluable to them in helping them win contracts and grow their firms. 
A number of majority male-owned firms also report that they think the 
program is a positive thing.
    Second, I have my first-hand observations. The DBE program has made 
real changes on the ground. Previously there was not staff assigned to 
monitor contracting diversity and provide training and information to 
DBEs and ACDBEs. To the extent any staff were dedicated to the issue at 
all, they were fairly low level. Now the rules require that senior DBE 
staff have direct access to the agency CEO. Previously the federal 
government did not require prompt pay provisions in every contract 
funded with federal dollars--now they do. That makes a huge 
difference--and by the way, those prompt pay provisions help all firms, 
not just DBEs. There are a lot of changes caused by the DBE Program 
that I think are genuinely important in beginning to chip away at the 
ingrained effects of discrimination. Moreover, as the DBE program has 
grown and matured, it has improved in its effectiveness. For instance, 
in recent years recipients of federally assisted transportation funding 
have dramatically improved the accuracy of goals due to DOT regulations 
requiring that goal-setting be data-driven. In addition, the program 
has improved the detection of fraud, abuse and unfair business 
practices that have long injured DBEs and other small businesses.
    With all of that said, however, I cannot emphasize enough that we 
still have a long way to go. The statistics I presented in my testimony 
are devastating. Moreover, I am deeply concerned about the effect this 
pandemic will have. Remember, all of the data I presented pre-dates the 
pandemic and it still shows incredibly bad results for firms owned by 
minorities and women. My colleague Professor Bob Fairlie has already 
raised the alarm that minority- and women-owned firms are disappearing 
during the pandemic at a much higher rate than majority male-owned 
firms.\1\
---------------------------------------------------------------------------
    \1\ Fairlie, Robert (2020). ``The Impact of COVID-19 on Small 
Business Owners: Continued Losses and the Partial Rebound in May 
2020.'' Working Paper.
---------------------------------------------------------------------------
    If you really want to say that the program has been such a success 
that it is no longer needed, you would of course need to see the 
elimination of disparities in the public sector where goals are 
utilized and you would want to see that those gains are matched by 
similar gains in the private sector where goals are generally not used. 
As my testimony demonstrates, we are definitely not there yet.

    Question 6. Your research utilizes an impressive amount of 
federally collected data. Do you have the data you need to conduct 
these studies and are their other types of data you might need?
    Answer. This is a timely question. As the country rightfully 
grapples with our national history of racism, Congress is well-
positioned to expand the collection of data for researchers like myself 
who are interested in studying the effects of racial and gender 
discrimination. This is especially important in the context of the 
Supreme Court's increasingly stringent requirements on legislators who 
seek to remedy discrimination. I would be happy to work with the 
Committee to discuss this issue at length as it is terribly important. 
In this context, however, I would raise two actions that the Congress 
could take immediately:
    First, reinstate the collection of data that was previously 
compiled by the Survey of Small Business Finances (SSBF) so that we can 
monitor discrimination in credit for small businesses owned by women 
and minorities. The SSBF, previously conducted under the auspices of 
the Federal Reserve Board, in conjunction with the Small Business 
Administration, was a very detailed survey that oversampled minorities 
and women and therefore allowed us to assess discrimination in access 
to business credit for small businesses while controlling for many 
common balance sheet factors. The fact that the government stopped 
conducting this survey in 2008 means that we lost an important source 
of data that might have helped us better understand the special 
vulnerability of minority and women owned firms to both the Great 
Recession and the more recent, and ongoing, pandemic-related economic 
recession and dislocations. It is often said that credit is the life 
blood of business. If that is true, we must work harder to eliminate 
discrimination in business lending. That process begins with 
understanding the problem, not ignoring it by ceasing to collect the 
data required to understand it.\2\
---------------------------------------------------------------------------
    \2\ Robb, A. (2010). ``Beyond the late, lamented Survey of Small 
Business Finances,'' Newsletter of the Association of Public Data 
Users, 33, no. 2, March/April.
---------------------------------------------------------------------------
    Second, reverse the elimination of the collection and reporting of 
information on non-employer firms that recently occurred when the 
Census Bureau's Survey of Business Owners (SBO) was eliminated and 
absorbed into a new survey called the Annual Business Survey (ABS). 
While there are certain improvements in the ABS compared to the SBO, 
such as reporting data annually rather than twice per decade, these are 
dwarfed in importance by the elimination of data on non-employer firms, 
which constitute more than 80 percent of all businesses in the United 
States. Non-employer firms are, obviously, a hugely important component 
of the small business market, and ignoring them in the only federal 
survey dedicated to collecting information on minority- and women-owned 
businesses and business owners is a huge mistake.

                           [all]