Latest News

21 May, 2014

DBE Violations Can Be Costly—A lesson in what not to do.

2018-04-23T23:55:14-06:00May 21st, 2014|Construction Contractor Advisor, Disadvantaged Business Enterprises|

The federal government takes very seriously the Disadvantaged Business Enterprise (DBE) regulations. When a contractor hires a DBE, the DBE must do the work with minimal involvement or control by the general contractor. A Chicago based contractor, James McHugh Construction, decided to ignore the regulations and hired a DBE that it could control and used them as pass-throughs in order to obtain over $156 million in projects. McHugh won the [...]

4 Jun, 2013

The DBE Program is Not Working

2018-04-23T23:55:17-06:00June 4th, 2013|Construction Contractor Advisor, Disadvantaged Business Enterprises|

The U.S. Department of Transportation’s Office of Inspector General completed its audit of the Disadvantaged Business Enterprise and found that the program is not working.  (Hat Tip to Wally Zimolong, Supplemental Conditions)  The scathing audit found that the entire DBE program is poorly run, which is not a surprise to contractors having to deal with the program. The Inspector General’s Audit , consisting of 40 single spaced pages, finds failures [...]

17 May, 2012

What is the Good Faith Requirement for DBE Contracts?

2012-05-17T16:19:59-06:00May 17th, 2012|Disadvantaged Business Enterprises|

In a post last week, we discussed an unfortunate situation in which a business owner was convicted of defrauding the disadvantaged business enterprise (DBE) program. Given that DBE participation is a goal, not a requirement, one may ask whether the business owner made a good faith effort to meet the DBE contract goal? And, whether there was ever an intention to meet the DBE contract goal? In this post I’ll [...]

10 May, 2012

Biggest DBE Fraud Ever or Best Proof of Major Flaw in the DBE Program

2012-05-10T09:05:11-06:00May 10th, 2012|Disadvantaged Business Enterprises, Penalty, Public Contracts|

Last month a business owner was convicted in what is being heralded as the largest Disadvantaged Business Enterprise (DBE) fraud case in history. The scheme lasted over 15 years and involved over $136 million in government contracts. But, is this simply a story of fraud or does it expose a much larger issue -- a major flaw in the DBE program? The case was filed against Joseph Nagle, the president, [...]

3 May, 2012

Are DBEs performing a “Commercially Useful Function” on Your Project?

2012-05-03T16:39:18-06:00May 3rd, 2012|Disadvantaged Business Enterprises|

A recent press release from the U.S. Attorney in New York drives home the point that in 2012, it is still incredibly important to make sure your company is legitimately utilizing Disadvantaged Business Enterprises (DBE) on your work site. The $7.5 million penalty paid by the two general contractors involved in the joint venture also illustrates the continuing seriousness with which the government is treating the use of DBEs. The [...]