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Small Businesses

DOT's Small and Disadvantaged Business Program is designed to ensure that Small Businesses have an equitable opportunity to participate in DOT's procurement programs and that they receive a fair share of the resulting contract awards.   A Small Business is one that:

• Is organized for profit;
• Has a place of business in the United States;
• Makes a significant contribution to the U.S. economy by paying taxes or using American products, materials or labor; and
• Does not exceed the numerical Size Standard for its industry (see Table below). 

A Small Business may be a sole proprietorship, partnership, corporation, or any other legal form.

The Central Contractor Registration (CCR) has aligned its classification standard with the official classification from SBA. SBA has a Size Standard for all private sector industries in the U.S. economy. SBA uses the North American Industry Classification System (NAICS) to identify the industries. Size Standards (usually stated in number of employees or average annual receipts) represent the largest size that a business (including its subsidiaries and affiliates) may be to remain classified as a Small Business for SBA's programs and for federal contracting programs. SBA has several general Size Standards (see Table below).

If the size of a business exceeds the size standard for its overall industry group, it may still be a Small Business for the specific NAICS industry in that group. Some industries have higher size standards than the general one for the industry group. A Table of Size Standards by NAICS industry is on SBA's Size Standards Web Page. For federal contracting, a Small Business must meet the Size Standard stated in the solicitation. The contracting officer designates the Size Standard of the procurement by selecting the Size Standard established for the NAICS industry that best describes the principle purpose of the procurement.

Table of SBA Size Standards

More information on the SBA size standards can be found on the SBA Website.

Small businesses owned by socially and economically disadvantaged individuals, women, or service-disabled veterans can qualify for additional preferences in federal procurement.  Government agencies are required by law to award a percentage of contracts to small disadvantaged businesses. Agencies also set procurement goals for woman-owned and service-disabled veteran-owned small businesses. 
To qualify as a small disadvantaged, woman- or service-disabled veteran-owned business, a company must fit the definitions set out by the SBA. Companies can be certified in more than one category if the owner fits more than one definition, e.g., small disadvantaged and woman-owned business.  In addition, DOT participates in the Disadvantaged Business Enterprise (DBE) program, which is unique to the transportation sector.  The DBE program covers contracts let by state highway agencies, airports, transit authorities, and other state and local agencies that receive DOT funds.  These definitions are discussed in the subsections below.

Small Disadvantaged Businesses (SDB)

SDBs are small businesses that are at least 51% owned and controlled by a socially and economically disadvantaged individual or individuals. African Americans, Hispanic Americans, Asian Pacific Americans, Subcontinent Asian Americans, and Native Americans are presumed to qualify. Other individuals can qualify if they show by a preponderance of the evidence that they are disadvantaged.

All individuals must have a net worth of less than $750,000, excluding the equity of the business and primary residence. Successful applicants must also meet applicable size standards for small businesses in their industry. The program is intended to help federal agencies achieve the government-wide goal of 5 percent SDB participation in prime contracting.  More information on the SDB Program can be found on the SBA website at http://www.sba.gov/aboutsba/sbaprograms/sdb/index.html

8(a) Businesses

Section 8(a) of the Small Business Act authorizes SBA to contract for goods and services with federal agencies. SBA then subcontracts actual performance of the work to socially and economically disadvantaged small businesses, which have been certified by SBA as eligible to receive these contracts. The major advantage of this program is that it allows the government to contract, on a noncompetitive basis, with socially and economically disadvantaged small businesses. SBA also offers managerial, technical, and financial support to participating firms not to exceed $3 million per contract.

DOT gives special emphasis to identifying procurement requirements for matching with the capabilities and potential of approved 8(a) firms. DOT has obtained special authority from the SBA to negotiate directly with 8(a) firms on the behalf of SBA.

More information about the 8(a) program can be found on the SBA Website.

Woman-Owned Small Businesses (WOB)

To qualify as a WOB, a small business concern must meet the following two conditions:

• At least 51 percent owned by one or more women; or, in the case of any publicly owned business, at least 51 percent of the stock of which is owned by one or more women; and
• Management and daily business operations are controlled by one or more women.

In 1994, Congress established a government-wide goal that WOBs be awarded at least 5% of the total value of all prime contract and subcontract awards for each fiscal year; however, there are no set-aside procurement programs or incentives for awarding a contract to a WOB. The federal government does not require any formal certification for women-owned small businesses that are proposing as prime contractors on federal procurements. If a business meets the two conditions stated above, that business can “self-certify.”  Should a WOB status be challenged upon procurement award, the procuring agency may request proof of the firms WOB status.

More information about WOB programs can be found on the SBA Website.

Veteran-Owned Small Businesses (VOSB)

DOT strongly supports the use of veteran-owned firms as contracting resources.  To qualify as a VOSB, a business concern must be at least 51% owned by one or more eligible veterans; or, in the case of any publicly-owned business, at least 51% of the stock is owned by one or more veterans, and whose management and daily business operations are controlled by such veterans.

The Center for Veterans Enterprise (CVE) in the U.S. Department of Veteran’s Affairs (VA) provides the following services free to anyone who served in the active military, naval or air service, and who was discharged or released there from under conditions other than dishonorable:

• Vendor Information Pages (VIP) – a veteran business database that lists businesses that are 51% or more owned by veterans or service-connected disabled veterans. VIP averages over 4500 visits per month accounting for over 4100 vendor searches by federal agencies, prime contractors and private citizens. This database is also the sole source for all inquiries for market research requested through CVE and VA.  VIP is located at http://www.vip.vetbiz.gov/
• Assistance Program Pages (APP) – an electronic Clearinghouse that provides a wealth of resources for the veteran contemplating small business ownership and veteran small business owners considering expansion. This database of professional business development organizations provides assistance in startup, financing and procurement as well as other areas in your local community. APP provides a one stop resource center for veterans interested in business ownership and can be found at http://app.vetbiz.gov/
• Business, Coaching, Networking and Outreach -- In-house experts help veteran business owners with specific business questions, brainstorming and counseling.  For information, call toll free at 866-584-2344 or send an email to VACVE@va.gov

Service Disabled Veteran-Owned Small Businesses

In 2003, Congress created a procurement program for small business concerns owned and controlled by service-disabled veterans (commonly referred to as the "Service-Disabled Veteran-owned Small Business (SDVOSB) Procurement Program").  The purpose of the program is to provide federal contracting assistance to SDVOSBs. 

The SDVOSB Program requires that federal contracting agencies establish and achieve a participation goal of 3% of the total value of all prime contract and sub-contract awards for each fiscal year for small businesses owned and controlled by veterans with service-connected disabilities.

There is no federal SDVOSB certification program.  The service disabled veteran business owner self represents his or her service-disabled status and small business status in the contract representations and certifications.  To be eligible for the SDVOSB program, a veteran must be able to produce one of the following stating that s/he has a service-connected disability in the event of a protest:

• Adjudication letter from the Veterans Administration; or
• Department of Defense Form 214, Certificate of Release or Discharge from Active Duty.

According to the Center for Veteran’s Enterprise, Defense Form 214 is needed to prove that the individual is honorably discharged and it also documents the type of service disability. The letter from VA is needed for confirmation that the individual is eligible to under the program and that there is a disability. 

To be seen as a SDVOSB, a small business concern must meet the following two conditions and this is a self-certification process:

• At least 51 percent owned by one or more Service-Disabled Veterans; or, in the case of any publicly owned business, at least 51 percent of the stock of which is owned by one or more Service-Disabled Veterans; and
• Management and daily business operations are controlled by one or more Service-Disabled Veterans (or in the case of a veteran with a permanent and severe disability, the spouse or permanent caregiver of such a veteran).

More information on the SDVOSB Program can be found on the Veterans Affairs web site at: http://www.vetbiz.gov/   Also, FAR 19.14 provides details of the program here.

Historically Underutilized Business Zone (HUBZone) Businesses

The HUBZone Program stimulates economic development and creates jobs in urban and rural communities by providing federal contracting preferences to small businesses. These preferences go to small businesses that obtain HUBZone (Historically Underutilized Business Zone) certification from the SBA. To qualify for the program, a business (except tribally-owned concerns) must meet the following criteria:

• It must be a small business by SBA standards;
• It must be owned and controlled at least 51% by U.S. citizens, or a Community Development Corporation, or an agricultural cooperative or an Indian tribe;
• Its principal office must be located within a “Historically Underutilized Business Zone,” which includes lands considered “Indian Country” and military facilities closed by the Base Realignment and Closure Act; and
• At least 35% of its employees must reside in a HUBZone. 

The SBA regulates and implements the program, determines which businesses are eligible to receive HUBZone contracts, maintains a listing of qualified HUBZone small businesses that federal agencies can use to locate vendors, and adjudicates protests of eligibility to receive HUBZone contracts.

More information on HUBZones can be found on the SBA Website.

Disadvantaged Business Enterprises (DBEs)

DBEs are for-profit small business concerns where socially and economically disadvantaged individuals own at least a 51% interest and control management and daily business operations.

• African Americans, Hispanics, Native Americans, Asian-Pacific and Subcontinent Asian Americans, and women are presumed to be socially and economically disadvantaged.
• Other individuals can be characterized as socially and economically disadvantaged on a case-by-case basis.
• To participate in the program, a small business owned and controlled by socially and economically disadvantaged individuals must receive DBE certification from their relevant state or local transportation agency.  Note: this is not a federal certification and is not applicable to federal contracts.
• Irrespective of what the size standard is, a firm cannot exceed the size of $20.41 million and still be seen as a Small Business.  This size limit is periodically adjusted for inflation.

Visit the DBE page for more information about the DBE Program.

Prime Contractors

Any federal contractor receiving a contract for more than the simplified acquisition threshold must agree in the contract that small businesses (including veteran-owned, service-disabled veteran-owned, HUBZone, disadvantaged, and women-owned businesses), will have the maximum practicable opportunity to participate in the contract consistent with its efficient performance. Furthermore, large prime contractors receiving a federal contract exceeding $500,000 ($1 million in the case of construction), and that offer subcontracting opportunities, must establish subcontracting plans with goals that provide opportunities to these small businesses.

OSDBU works closely with Small Business Administration and its Procurement Center Representatives (PCRs) to coordinate policy direction and develop new initiatives on subcontracting issues including evaluating, reviewing, and making recommendations on subcontracting plans.  OSDBU also helps large prime contractors in identifying potential small businesses to assist them in attaining their subcontracting goals.

For more information, visit the Subcontracting with DOT page.

DOT Financial Recipients

Each year US DOT provides substantial financial assistance to state and local transportation agencies for their highway, transit, and airport improvement programs.  These agencies are then required to allocate a percentage of these funds to small firms that are certified as Disadvantaged Business Enterprises (DBEs).   For more information, visit the DBE Program page.