[Code of Federal Regulations]
[Title 49, Volume 1]
[Revised as of October 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 49CFR26.55]

[Page 280-282]
 
                        TITLE 49--TRANSPORTATION
 
          SUBTITLE A--OFFICE OF THE SECRETARY OF TRANSPORTATION
 
PART 26--PARTICIPATION BY DISADVANTAGED BUSINESS ENTERPRISES IN DEPARTMENT OF TRANSPORTATION FINANCIAL ASSISTANCE PROGRAMS--Table of Contents
 
           Subpart C--Goals, Good Faith Efforts, and Counting
 
Sec. 26.55  How is DBE participation counted toward goals?

    (a) When a DBE participates in a contract, you count only the value 
of the work actually performed by the DBE toward DBE goals.
    (1) Count the entire amount of that portion of a construction 
contract (or other contract not covered by paragraph (a)(2) of this 
section) that is performed by the DBE's own forces. Include the cost of 
supplies and materials obtained by the DBE for the work of the contract, 
including supplies purchased or equipment leased by the DBE (except 
supplies and equipment the DBE subcontractor purchases or leases from 
the prime contractor or its affiliate).

[[Page 281]]

    (2) Count the entire amount of fees or commissions charged by a DBE 
firm for providing a bona fide service, such as professional, technical, 
consultant, or managerial services, or for providing bonds or insurance 
specifically required for the performance of a DOT-assisted contract, 
toward DBE goals, provided you determine the fee to be reasonable and 
not excessive as compared with fees customarily allowed for similar 
services.
    (3) When a DBE subcontracts part of the work of its contract to 
another firm, the value of the subcontracted work may be counted toward 
DBE goals only if the DBE's subcontractor is itself a DBE. Work that a 
DBE subcontracts to a non-DBE firm does not count toward DBE goals.
    (b) When a DBE performs as a participant in a joint venture, count a 
portion of the total dollar value of the contract equal to the distinct, 
clearly defined portion of the work of the contract that the DBE 
performs with its own forces toward DBE goals.
    (c) Count expenditures to a DBE contractor toward DBE goals only if 
the DBE is performing a commercially useful function on that contract.
    (1) A DBE performs a commercially useful function when it is 
responsible for execution of the work of the contract and is carrying 
out its responsibilities by actually performing, managing, and 
supervising the work involved. To perform a commercially useful 
function, the DBE must also be responsible, with respect to materials 
and supplies used on the contract, for negotiating price, determining 
quality and quantity, ordering the material, and installing (where 
applicable) and paying for the material itself. To determine whether a 
DBE is performing a commercially useful function, you must evaluate the 
amount of work subcontracted, industry practices, whether the amount the 
firm is to be paid under the contract is commensurate with the work it 
is actually performing and the DBE credit claimed for its performance of 
the work, and other relevant factors.
    (2) A DBE does not perform a commercially useful function if its 
role is limited to that of an extra participant in a transaction, 
contract, or project through which funds are passed in order to obtain 
the appearance of DBE participation. In determining whether a DBE is 
such an extra participant, you must examine similar transactions, 
particularly those in which DBEs do not participate.
    (3) If a DBE does not perform or exercise responsibility for at 
least 30 percent of the total cost of its contract with its own work 
force, or the DBE subcontracts a greater portion of the work of a 
contract than would be expected on the basis of normal industry practice 
for the type of work involved, you must presume that it is not 
performing a commercially useful function.
    (4) When a DBE is presumed not to be performing a commercially 
useful function as provided in paragraph (c)(3) of this section, the DBE 
may present evidence to rebut this presumption. You may determine that 
the firm is performing a commercially useful function given the type of 
work involved and normal industry practices.
    (5) Your decisions on commercially useful function matters are 
subject to review by the concerned operating administration, but are not 
administratively appealable to DOT.
    (d) Use the following factors in determining whether a DBE trucking 
company is performing a commercially useful function:
    (1) The DBE must be responsible for the management and supervision 
of the entire trucking operation for which it is responsible on a 
particular contract, and there cannot be a contrived arrangement for the 
purpose of meeting DBE goals.
    (2) The DBE must itself own and operate at least one fully licensed, 
insured, and operational truck used on the contract.
    (3) The DBE receives credit for the total value of the 
transportation services it provides on the contract using trucks it 
owns, insures, and operates using drivers it employs.
    (4) The DBE may lease trucks from another DBE firm, including an 
owner-operator who is certified as a DBE. The DBE who leases trucks from 
another DBE receives credit for the total value of the transportation 
services the lessee DBE provides on the contract.

[[Page 282]]

    (5) The DBE may also lease trucks from a non-DBE firm, including an 
owner-operator. The DBE who leases trucks from a non-DBE is entitled to 
credit only for the fee or commission it receives as a result of the 
lease arrangement. The DBE does not receive credit for the total value 
of the transportation services provided by the lessee, since these 
services are not provided by a DBE.
    (6) For purposes of this paragraph (d), a lease must indicate that 
the DBE has exclusive use of and control over the truck. This does not 
preclude the leased truck from working for others during the term of the 
lease with the consent of the DBE, so long as the lease gives the DBE 
absolute priority for use of the leased truck. Leased trucks must 
display the name and identification number of the DBE.
    (e) Count expenditures with DBEs for materials or supplies toward 
DBE goals as provided in the following:
    (1)(i) If the materials or supplies are obtained from a DBE 
manufacturer, count 100 percent of the cost of the materials or supplies 
toward DBE goals.
    (ii) For purposes of this paragraph (e)(1), a manufacturer is a firm 
that operates or maintains a factory or establishment that produces, on 
the premises, the materials, supplies, articles, or equipment required 
under the contract and of the general character described by the 
specifications.
    (2)(i) If the materials or supplies are purchased from a DBE regular 
dealer, count 60 percent of the cost of the materials or supplies toward 
DBE goals.
    (ii) For purposes of this section, a regular dealer is a firm that 
owns, operates, or maintains a store, warehouse, or other establishment 
in which the materials, supplies, articles or equipment of the general 
character described by the specifications and required under the 
contract are bought, kept in stock, and regularly sold or leased to the 
public in the usual course of business.
    (A) To be a regular dealer, the firm must be an established, regular 
business that engages, as its principal business and under its own name, 
in the purchase and sale or lease of the products in question.
    (B) A person may be a regular dealer in such bulk items as petroleum 
products, steel, cement, gravel, stone, or asphalt without owning, 
operating, or maintaining a place of business as provided in this 
paragraph (e)(2)(ii) if the person both owns and operates distribution 
equipment for the products. Any supplementing of regular dealers' own 
distribution equipment shall be by a long-term lease agreement and not 
on an ad hoc or contract-by-contract basis.
    (C) Packagers, brokers, manufacturers' representatives, or other 
persons who arrange or expedite transactions are not regular dealers 
within the meaning of this paragraph (e)(2).
    (3) With respect to materials or supplies purchased from a DBE which 
is neither a manufacturer nor a regular dealer, count the entire amount 
of fees or commissions charged for assistance in the procurement of the 
materials and supplies, or fees or transportation charges for the 
delivery of materials or supplies required on a job site, toward DBE 
goals, provided you determine the fees to be reasonable and not 
excessive as compared with fees customarily allowed for similar 
services. Do not count any portion of the cost of the materials and 
supplies themselves toward DBE goals, however.
    (f) If a firm is not currently certified as a DBE in accordance with 
the standards of subpart D of this part at the time of the execution of 
the contract, do not count the firm's participation toward any DBE 
goals, except as provided for in Sec. 26.87(i)).
    (g) Do not count the dollar value of work performed under a contract 
with a firm after it has ceased to be certified toward your overall 
goal.
    (h) Do not count the participation of a DBE subcontractor toward a 
contractor's final compliance with its DBE obligations on a contract 
until the amount being counted has actually been paid to the DBE.

[64 FR 5126, Feb. 2, 1999, as amended at 65 FR 68951, Nov. 15, 2000]

[[Page 283]]