[Code of Federal Regulations]
[Title 49, Volume 1]
[Revised as of October 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 49CFR26.87]

[Page 294-296]
 
                        TITLE 49--TRANSPORTATION
 
          Subtitle A--Office of the Secretary of Transportation
 
PART 26_PARTICIPATION BY DISADVANTAGED BUSINESS ENTERPRISES IN DEPARTMENT 
OF TRANSPORTATION FINANCIAL ASSISTANCE PROGRAMS--Table of Contents
 
                   Subpart E_Certification Procedures
 
Sec. 26.87  What procedures does a recipient use to remove a DBE's 
eligibility?

    (a) Ineligibility complaints. (1) Any person may file with you a 
written complaint alleging that a currently-certified firm is ineligible 
and specifying the alleged reasons why the firm is ineligible. You are 
not required to accept a general allegation that a firm is ineligible or 
an anonymous complaint. The complaint may include any information or 
arguments supporting the complainant's assertion that the firm is 
ineligible and should not continue to be certified. Confidentiality of 
complainants' identities must be protected as provided in Sec. 
26.109(b).
    (2) You must review your records concerning the firm, any material 
provided by the firm and the complainant, and other available 
information. You may request additional information from the firm or 
conduct any other investigation that you deem necessary.
    (3) If you determine, based on this review, that there is reasonable 
cause to believe that the firm is ineligible, you must provide written 
notice to the firm that you propose to find the firm ineligible, setting 
forth the reasons for the proposed determination. If you determine that 
such reasonable cause does not exist, you must notify the complainant 
and the firm in writing of this determination and the reasons for it. 
All statements of reasons for findings on the issue of reasonable cause 
must specifically reference the evidence in the record on which each 
reason is based.
    (b) Recipient-initiated proceedings. If, based on notification by 
the firm of a change in its circumstances or other information that 
comes to your attention, you determine that there is reasonable cause to 
believe that a currently certified firm is ineligible, you must provide 
written notice to the firm that you propose to find the firm ineligible, 
setting forth the reasons for the proposed determination. The statement 
of reasons for the finding of reasonable cause must specifically 
reference the evidence in the record on which each reason is based.
    (c) DOT directive to initiate proceeding. (1) If the concerned 
operating administration determines that information in your 
certification records, or other information available to the concerned 
operating administration, provides reasonable cause to believe that a 
firm you certified does not meet the eligibility criteria of this part, 
the concerned operating administration may direct you to initiate a 
proceeding to remove the firm's certification.
    (2) The concerned operating administration must provide you and the 
firm a notice setting forth the reasons for the directive, including any 
relevant documentation or other information.

[[Page 295]]

    (3) You must immediately commence and prosecute a proceeding to 
remove eligibility as provided by paragraph (b) of this section.
    (d) Hearing. When you notify a firm that there is reasonable cause 
to remove its eligibility, as provided in paragraph (a), (b), or (c) of 
this section, you must give the firm an opportunity for an informal 
hearing, at which the firm may respond to the reasons for the proposal 
to remove its eligibility in person and provide information and 
arguments concerning why it should remain certified.
    (1) In such a proceeding, you bear the burden of proving, by a 
preponderance of the evidence, that the firm does not meet the 
certification standards of this part.
    (2) You must maintain a complete record of the hearing, by any means 
acceptable under state law for the retention of a verbatim record of an 
administrative hearing. If there is an appeal to DOT under Sec. 26.89, 
you must provide a transcript of the hearing to DOT and, on request, to 
the firm. You must retain the original record of the hearing. You may 
charge the firm only for the cost of copying the record.
    (3) The firm may elect to present information and arguments in 
writing, without going to a hearing. In such a situation, you bear the 
same burden of proving, by a preponderance of the evidence, that the 
firm does not meet the certification standards, as you would during a 
hearing.
    (e) Separation of functions. You must ensure that the decision in a 
proceeding to remove a firm's eligibility is made by an office and 
personnel that did not take part in actions leading to or seeking to 
implement the proposal to remove the firm's eligibility and are not 
subject, with respect to the matter, to direction from the office or 
personnel who did take part in these actions.
    (1) Your method of implementing this requirement must be made part 
of your DBE program.
    (2) The decisionmaker must be an individual who is knowledgeable 
about the certification requirements of your DBE program and this part.
    (3) Before a UCP is operational in its state, a small airport or 
small transit authority (i.e., an airport or transit authority serving 
an area with less than 250,000 population) is required to meet this 
requirement only to the extent feasible.
    (f) Grounds for decision. You must not base a decision to remove 
eligibility on a reinterpretation or changed opinion of information 
available to the recipient at the time of its certification of the firm. 
You may base such a decision only on one or more of the following:
    (1) Changes in the firm's circumstances since the certification of 
the firm by the recipient that render the firm unable to meet the 
eligibility standards of this part;
    (2) Information or evidence not available to you at the time the 
firm was certified;
    (3) Information that was concealed or misrepresented by the firm in 
previous certification actions by a recipient;
    (4) A change in the certification standards or requirements of the 
Department since you certified the firm; or
    (5) A documented finding that your determination to certify the firm 
was factually erroneous.
    (g) Notice of decision. Following your decision, you must provide 
the firm written notice of the decision and the reasons for it, 
including specific references to the evidence in the record that 
supports each reason for the decision. The notice must inform the firm 
of the consequences of your decision and of the availability of an 
appeal to the Department of Transportation under Sec. 26.89. You must 
send copies of the notice to the complainant in an ineligibility 
complaint or the concerned operating administration that had directed 
you to initiate the proceeding.
    (h) When you decertify a DBE firm certified by the SBA, you must 
notify the SBA in writing. The notification must include the reason for 
denial.
    (i) Status of firm during proceeding. (1) A firm remains an eligible 
DBE during the pendancy of your proceeding to remove its eligibility.
    (2) The firm does not become ineligible until the issuance of the 
notice provided for in paragraph (g) of this section.

[[Page 296]]

    (j) Effects of removal of eligibility. When you remove a firm's 
eligibility, you must take the following action:
    (1) When a prime contractor has made a commitment to using the 
ineligible firm, or you have made a commitment to using a DBE prime 
contractor, but a subcontract or contract has not been executed before 
you issue the decertification notice provided for in paragraph (g) of 
this section, the ineligible firm does not count toward the contract 
goal or overall goal. You must direct the prime contractor to meet the 
contract goal with an eligible DBE firm or demonstrate to you that it 
has made a good faith effort to do so.
    (2) If a prime contractor has executed a subcontract with the firm 
before you have notified the firm of its ineligibility, the prime 
contractor may continue to use the firm on the contract and may continue 
to receive credit toward its DBE goal for the firm's work. In this case, 
or in a case where you have let a prime contract to the DBE that was 
later ruled ineligible, the portion of the ineligible firm's performance 
of the contract remaining after you issued the notice of its 
ineligibility shall not count toward your overall goal, but may count 
toward the contract goal.
    (3) Exception: If the DBE's ineligibility is caused solely by its 
having exceeded the size standard during the performance of the 
contract, you may continue to count its participation on that contract 
toward overall and contract goals.
    (k) Availability of appeal. When you make an administratively final 
removal of a firm's eligibility under this section, the firm may appeal 
the removal to the Department under Sec. 26.89.

[64 FR 5126, Feb. 2, 1999, as amended at 68 FR 35556, June 16, 2003]