Contractors, lawmakers call for federal change after hearing on DBE program costs

Senator Justin Gearhart urged the House Finance and Taxation Committee to give a do-pass recommendation to Senate Concurrent Resolution 40-21, which asks the state’s congressional delegation to pursue changes to the federal Disadvantaged Business Enterprise program.

Nut graf: Testimony from contracting trade groups and contractors argued the DBE program — a federal requirement for federally aided contracts — creates administrative overhead and can drive up project costs when state goals force prime contractors to accept higher-priced DBE quotes.

Senator Gearhart told the committee he views the DBE rules as “in direct conflict with the nondiscrimination provision” in federal-aid contracts and said the program “requires us to discriminate against contractors or in favor of certain contractors,” citing federal DBE guidance that presumes certain groups are socially and economically disadvantaged.

Representatives of the Associated General Contractors of North Dakota and several prime contractors testified in support. Carrie Burke of AGC said the program has become “a paperwork magic trick” in some procurement chains and described instances where DBE suppliers merely marked up existing quotes and circulated them as DBE bids, which primes then must use to meet participation goals. Amber Shinborn of Northern Improvement Company described projects where DBE quotes were 33% to 65% higher than non-DBE competitors and recounted a November 2024 bid where the department’s good-faith efforts committee initially recommended not awarding a project despite the bidder being the apparent low bidder; the company ultimately prevailed on administrative reconsideration but said the process delayed work and increased administrative costs.

Northern Improvement said a rebid after a rejected award added roughly $400,000 in taxpayer cost; another project cited involved a $1.9 million bid where the second bidder was $269,000 higher than the apparent low bidder. Testimony also said the North Dakota Department of Transportation spends roughly $1 million to $2 million per biennium operating the DBE office.

Committee members asked whether the resolution would risk federal funding; Amber Shinborn and other witnesses said the resolution seeks federal change and would ask the state’s congressional delegation to pursue reform rather than to unilaterally reject federal requirements. Senator Gearhart said the resolution seeks a federal-level fix because the DBE requirements are tied to federal funds.

The committee approved a do-pass recommendation. The roll call recorded 11 yes, 2 no and 1 absent; the motion carried.

Ending: Supporters urged the committee and state policymakers to push the federal government to change how DBE participation goals and bid-differential rules are applied. The resolution itself asks for federal action and does not change state law or procurement rules.