The government has been aggressive in pressing recipients of federal funds to step up their oversight of Disadvantaged Business Enterprise (DBE) programs. DBEs, broadly speaking, are small businesses that are majority-owned by women, minorities or certain military veterans. Many federal contracts require participation by DBEs.
Federal regulations also oblige grant recipients to monitor contractors’ compliance with DBE requirements, including that a DBE to whom work is contractually committed is performing a “commercially useful function” — that is, doing the contracted work with its own personnel and resources.
But mounting examples of wrongdoing in DBE programs have called into question the effectiveness of recipients’ oversight.
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