New Disadvantaged Business Enterprise Firms Face Barriers to Obtaining Work at the Nation’s Largest Airports
Each year, the Federal Aviation Administration (FAA) distributes more than $3 billion in Federal grants for airport projects. In accepting these grants, airports are required to establish disadvantaged business enterprise (DBE) and airport concession DBE (ACDBE) programs. These programs provide small businesses owned and controlled by socially and economically disadvantaged individuals with opportunities to compete for construction, professional services, and concession contracts.
In the 2012 FAA Modernization and Reform Act, Congress directed our office to report annually on new DBE participation at the Nation’s largest airports and to identify reasons why some have been more successful. Our review determined that just 83 new DBE firms were awarded contracts and leases in fiscal year 2012, representing only about 5 percent of the approximately 1,600 DBE firms doing business at the Nation’s 64 largest airports. While airports are taking steps to encourage awards to new entrants, including: (1) unbundling contracts and leases, (2) entering into direct contracts or leases with DBE/ACDBE firms, (3) conducting outreach, and (4) providing financial assistance, new firms still face major barriers to obtaining work. These include: (1) limited opportunities for and infrequent turnover of existing disadvantaged firms, (2) access to capital and high entry costs, and (3) firms’ lack of experience with the airport bidding process. We are making several recommendations to help the Department and FAA promote and track new DBE/ACDBE participation at the Nation’s major airports.