On November 15, 2021, President Biden signed into law the Infrastructure Investment and Jobs Act, also known as the Bipartisan Infrastructure Deal. The $1.75 trillion infrastructure bill, which is the largest investment in the nation’s infrastructure since 1956, will have a significant impact on Small, Women-owned, and Minority-owned businesses (SWaM) and Disadvantaged Business Enterprise (DBE) programs. A brief review of SWaM and DBE certification requirements is necessary before diving into the details of the infrastructure bill.
The SWaM Program is a Virginia small business initiative established to enhance business opportunities for small, women-owned, and minority-owned businesses. A SWaM vendor must be certified by the Virginia Department of Small Business and Supplier Diversity (SBSD) before it is listed in the SWaM Vendor Directory. To be certified as a “small business,” at least 51% of the business must be independently owned and controlled by one or more individuals who are U.S. citizens or legal resident aliens, and must have no more than 250 employees or average annual gross receipts of $10 million or less over the previous three years. A “Women-owned business” is a business that is at least 51% owned and operated by one or more women and a “Minority-owned business” is a business that is at least 51 percent owned and operated by one or more minority individuals. By executive order, Virginia currently has a goal that 42% of the Commonwealth’s purchases come from certified small businesses. It remains to be seen whether the new administration will modify this guidance.
Conversely, the DBE Program is a federal certification program under the U.S. Department of Transportation. The DBE Program focuses on funneling federally-funded projects through the Virginia Department of Transportation, and also includes rail, airport, seaport, and public transit projects. In general, to be eligible for the DBE program, persons must own 51% or more of a “small business,” establish that they are socially and economically disadvantaged within the meaning of DOT regulations and prove they control their business. 49 C.F.R. § 26.5.
The recently enacted infrastructure bill specifically discusses DBEs in Section 11101(e) finding that a compelling reason exists to continue the Department of Transportation’s DBE program. It then requires that not less than 10% of the $1.75 trillion bill must be appropriated to DBEs on federal transportation and transit projects. The bill also emphasizes enforcement of the DBE prompt payment rule, codified at 49 CFR § 26.29, by requiring the Secretary of the Department of Transportation to increase the ability of the department to track and keep records of complaints and to make that information publicly available.
Below are the details of the bill’s appropriation of funds to certain infrastructure projects:
- Roads, bridges, major projects: $110 billion
- Passenger and freight rail: $66 billion
- Public transit: $39 billion
- Airports: $25 billion
- Port infrastructure: $17 billion
- Transportation safety programs: $11 billion
- Electric vehicles: $7.5 billion
- Zero and low-emission buses and ferries: $7.5 billion
- Revitalization of communities: $1 billion
- Broadband internet: $65 billion
- Power infrastructure: $73 billion
- Clean drinking water: $55 billion
- Resilience and Western water storage: $50 billion
- Removal of pollution from water and soil: $21 billion
In short, the bill stands to benefit participants in the DBE program, which are usually also SWaM participants, because a large increase in funds will soon flow through federally-funded infrastructure projects to such small businesses. Companies certified as DBE participants now have an even more valuable asset that will be attractive to road and bridge contractors, design professionals, and consultants looking to fulfill the 10% DBE participation requirement. These will be companies in demand as this money fuels a new infrastructure boom.