By: Andrew Campbell and Taimur Rabbani, Esq.
Getting certification as Maryland Disadvantaged Business Enterprise (DBE) or Minority Business Enterprise (MBE) can often be challenging, in part because the disadvantaged owners of company must be able to show that they have the ability to make day-to-day, as well as long-term decisions, on matters of management, policy, and operations of the company. The federal regulations regarding ‘control’ of a business are detailed and complex.
Once an entity is already certified, the hard work in demonstrating ‘control’ is not necessarily complete. For instance, when a certified entity is looking to expand into new areas of work, it may approach the Maryland Department of Transportation (MDOT) to expand the services it is certified to perform. MDOT conducts further investigation to ensure that the disadvantaged owners have the ability to control the work under the requested additional new services, and this investigation can be thorough and rigid.
A recent decision by the U.S. Department of Transportation (USDOT) shed additional light on how MDOT should apply the rules relating to ‘control’ when considering whether to expand a company’s certified services to cover different types of work.
In 2019, a construction company sought to expand its certification to include seven additional codes. MDOT initially denied the expansion of services for all codes on the basis that the owner could not ‘control’ the work in the new codes. MDOT focused, in particular, on the fact that the owner was not physically performing any of the work in the new codes. The construction company appealed the denial to the US Department of Transportation (USDOT).
In its review, USDOT clarified the control requirements for expansion of services. USDOT pointed out that the disadvantaged individual does not need to perform any of the physical tasks themselves to show sufficient ‘control’ over work. Instead, the owner needed to demonstrate that they had an understanding of, and possessed the technical and managerial competence directly related to, the relevant business. The owner also needed to demonstrate that they could make independent decisions with respect to the work after critically evaluating information presented to them.
To assess these facts, USDOT looked at the owner’s resume, various subcontract invoices indicating that the company had performed the work in the past, and the owner’s testimony before the certification advisory committee. Because the evidence demonstrated that the owner did in fact have the ability to control the work, despite not performing the work themselves, the expansion should have been granted for 6 of the 7 codes.
As a result, any business looking to successfully expand its certification under MDOT will need to prove several things, including:
- that the owner can demonstrate the ability to oversee all aspects of the work,
- the company has the technical capacity to perform the work, and
- the company has experience in the work it is looking to expand into.
Our team at O’Riordan Bethel can help your company navigate the complexities of applying for or expanding your services with MDOT, or other certifying authorities. Please contact one of our experienced attorneys to see how we can help grow your business.
