What DBE Owners Need to Know About Delegation

By: Danielle Dietrich

If you own a business and want to qualify as a socially and economically disadvantaged owner (SEDO) for the U.S. Department of Transportation's Disadvantaged Business Enterprise (DBE) or Airport Concession Disadvantaged Business Enterprise (ACDBE) programs, you need to know the rules on how you can delegate tasks to others in your firm. These rules are designed to ensure that you have the ultimate control and decision-making authority over your business, and that you are not just a figurehead or a front for someone else.

The basic rule is that you must be the ultimate decision-maker in the firm, regardless of operational, policy, or delegation arrangements. This means that you must hold the highest officer position in the company, such as CEO or president, and have control over the firm's board of directors or other governing body through the number of eligible votes. If you are in a partnership, you must be a general partner with control over all partnership decisions.

You can delegate some administrative activities or operational oversight to a non-SEDO individual, such as a manager or a consultant, as long as you retain the power to fire them, and the chain of command is clear to everyone in the company and to everyone you do business with. However, you cannot delegate any power that is equal to or greater than yours, considering all the circumstances. For example, you cannot let a non-SEDO make non-routine purchases or disbursements, enter into substantial contracts, or make decisions that affect the company's viability without your consent.

You can, however, have written provisions or policies that specify the terms under which non-SEDOs can sign or act on your behalf with respect to recurring matters, such as payroll, invoices, or routine supplies, as long as they are consistent with you having the ultimate responsibility for the action. This way, you can avoid micromanaging every detail of your business, while still maintaining your control and authority as a SEDO.

The bottom line is that you can delegate some tasks to non-SEDOs, but you cannot delegate your control or your decision-making power as a SEDO. You must have an overall understanding of your business and its essential operations, and you must critically analyze the information provided by non-SEDOs and use it to make independent decisions. If you follow these rules, you can demonstrate that you are a bona fide SEDO and benefit from the DBE or ACDBE programs.

If your company needs assistance with DBE or ACDBE certification, please contact Danielle Dietrich, Esq. at ddietrich@potomaclaw.com or 412-449-9141.

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