Government Contractor Advisory: The Government’s Crackdown on Fraud in Disadvantaged Business Enterprise (DBE) Programs Promises to Continue in 2011
1/6/2011
By Benjamin B. Tymann and Jennifer J. Mather
Many state and federal government contracts require participation—whether as a contractor, sub-contractor, supplier, or vendor—by Disadvantaged Business Enterprises (DBEs). These DBE regulatory mandates arise from Title VI of the Civil Rights Act of 1964, and were intended to serve a laudable dual purpose: to forbid gender or racial discrimination in government contracting and to open greater opportunities for participation in government-funded contracts by women and minorities. Over the years, however, many DBE programs have become susceptible to fraudulent practices by those trying to take perverse advantage of such programs and the billions of government dollars that flow from them. One common abuse has featured non-DBE firms who partner with, and sometimes create, sham firms who meet DBE eligibility criteria on paper but who perform no actual work—or, in the words of DBE regulations, perform no “commercially useful function”—on the government-funded project. In the final quarter of 2010, federal agencies and law enforcement began cracking down aggressively on DBE fraud.
