Disadvantaged Business Enterprise (DBE) certification provides access to additional opportunities for qualifying businesses. To qualify, the majority owner(s) must be both socially and economically disadvantaged and get certified as a DBE in their home state. Many people don’t realize that DBE certification is not a national certification- a company must get certified as a DBE in every state where they want to do business for a DBE. This is called “interstate certification.” For explanation of the interstate process, please see my prior blog here.

Going through the interstate certification process is supposed to be relatively easy- after all, if the business is already certified in its home state, why not in another state? Unfortunately, certifying agencies make a lot of mistakes during the interstate application process.  It is one of the most frequent complaints that I hear about the DBE process. This is why the proposed new regulations (that as of the publishing of this blog are not final) suggest that the process should be changed: DBE Interstate Certification Simplified in Proposed Changes (natlawreview.com) (note: as of the publishing of this blog, the proposed regulations have not been finalized and what was proposed may be different that the final regulations).

Under §26.85(d)(2) of the regulations, if a business is already certified in its home state, there are only five reasons why an interstate application may be denied:

1. Evidence that the home state certification was obtained by fraud;
2. New information, not available to the home state at time of certification, showing that the company does not meet eligibility criteria;
3. The home state’s certification was factually erroneous or was inconsistent with the regulations;
4. The state law of the subsequent state requires a result different than the home state; and 
5. The applicant didn’t provide all the required information.

Unfortunately, certifying agencies like to go outside the bounds of these rules. There are many USDOT decisions identifying errors in the interstate process. Here are some examples of certifying agencies taking actions not permitted under the regulations:

• A factual error of the home state must be indisputable and an inconsistency plain. Substituting the agency’s judgment for that of the home state is not consistent with the regulations. Engineering Operations, 23-0023; Andis, LLC, 19-0146.
• The interstate application is not to be decided in the same fashion as an initial application. A.B. Steel, Inc., 22-0051. An interstate application need not re-prove every aspect of eligibility, and the interstate process cannot request documents not in the home state’s file.  Stronghold Building & Supply, Inc., 15-0043.
• A certifying agency improperly requested a new Personal Net Worth statement, supporting financial documents, an explanation of an intercompany transfer and other materials not in the home state file. APW Holdings, LLC, 19-0137.
• Interstate certification is not meant to be a series of “do-overs” by subsequent jurisdictions. JP & Concepts Co., 16-0164.