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Disadvantaged Business Enterprise (DBE)
Termination/Replacement

If the prime consultant/contractor seeks to terminate a DBE on a federal-aid project, the prime consultant/contractor must notify the DBEin writing. The request must give the DBE notice of the prime's intent to terminate and the reason.

As stated in 49 CFR Part 26, good cause determination for terminating a DBE on a contract, are:

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    • The listed DBE fails or refuses to execute a written contract;
    • The listed DBE fails or refuses to perform the work of its sub-agreement/subcontract in a way consistent with normal industry standards. Provided, however, that good cause does not exist if the failure or refusal of the DBE to perform its work on the sub-agreement/subcontract results from the bad faith or discriminatory action of the prime consultant/contractor;
    • The listed DBE fails or refuses to meet the prime consultant/contractor's reasonable, nondiscriminatory bond requirements.
    • The listed DBE becomes bankrupt, insolvent, or exhibits credit unworthiness;
    • The listed DBE is ineligible to work on public works projects because of suspension and debarment proceedings pursuant 2 CFR Parts 180, 215 and 1,200 or applicable state law;
    • You have determined that the listed DBE is not a responsible consultant/contractor;
    • The listed DBE voluntarily withdraws from the project and provides to you written notice of its withdrawal;
    • The listed DBE is ineligible to receive DBE credit for the type of work required;
    • A DBE owner dies or becomes disabled with the result that the listed DBE is unable to complete its work on the agreement/contract;
    • Other documented good cause that you determine compels the termination of the DBE. Provided, that good cause does not exist if the prime consultant/contractor seeks to terminate a DBE it relied upon to obtain the agreement/contract so that the prime consultant/contractor can self-perform the work for which the DBE was engaged or so that the prime consultant/contractor can substitute another DBE or non-DBE afteraward.
  1. Notify the DBE, in writing, the specific intent to terminate and the reason(s). The prime consultant/contractor mustcopy the DBELO (Jenny Allen; jallen@odot.org) onto the letter. The notification must include the DBE has 5 calendar days to respond to the notice, if any, on why it objects to the proposed termination and why the prime's request to terminate should not be approved.
  2. After notifying the DBE, the primeshall submit a DBE Form 4 for review. Prime is required to include copies of written objections the DBE may have provided within the 5 calendar days.
  3. The Department will make the final determination and notify the prime consultant/contractor in writing of the decision. If ODOT does not approve the request, the prime consultant/contractor shall continue to use the committed DBE in accordance with the agreement/contract.
  4. The decision is final with no right of appeal, formal or informal.

If Termination Does Not Result in DBE Shortfall

If termination of a DBE firm does not result in a DBE contract goal shortfall, the prime consultant/contractor is not required to find a substitute DBE firm.

If Termination Results in a DBE Shortfall

When a termination of a DBE firm results in a shortfall, the prime consultant/contractor must make Good Faith Efforts to find, as a substitute for the original DBE, another DBE to perform, at least to the extent needed to meet the established contract goal. The prime consultant/contractor will document its Good Faith Efforts to find and secure a substitute DBE within seven days, which may be extended for an additional seven days if necessary at the request of the consultant/contractor. The prime consultant/contractor will request, in writing, approval from ODOTto utilize the substitute DBE on the DBE Form 4.


Disadvantaged Business Enterprise (DBE)
DBE Substitution

If a substitute DBE firm is not found that can perform at least the same amount of work as the terminated DBE, the prime consultant/contractor shall submit Good Faith Efforts documenting the steps taken.

Such documentation shall include, but not be limited to, the following:

  • Copies of written notification soliciting DBEs.
    • Efforts to negotiate with DBEs to include at a minimum:
      • The names, addresses, and telephone numbers of DBEs who were contacted.
    • A description of the information provided to DBEs regarding the plans and specifications for portions of the work to be performed.
  • A list of reasons why DBE firm quotes were not accepted.

ODOT will provide the prime consultant/contractor with a written response either accepting or rejecting the Good Faith Efforts. If the prime consultant/contractor’s good faith efforts are rejected, ODOT shall assess whether administrative remedies are appropriate.

Last Modified on Nov 01, 2020
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