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DBE vs. MBE vs. Federal Contracts: Which is better?

 In GovCon Tips

While there are opportunities in DBE, MBE, and Federal Contracts, one may have questions as to which route is best to take. By diving into and comparing the three, we will see which one is ultimately the best choice for small businesses.

  1. Program Funding

MBE supports local and municipalities. This means the local city would be the one providing the funds. The bad part is, they occasionally have issues with paying people. We’re not talking about a week or two weeks late, but a month or two months plus! The DBE is not as likely to have these issues but if the market crashes (which it has), this affects how they are able to pay the contractors. Federal contracts on the other hand, are backed by funding. You will not get a contract by the federal government unless the funding is already there.

No pay, maybe pay, guaranteed pay? I don’t think there’s another question to ask.

Winner: Federal Contracts


  1. Prime Mindset

As a small business, you will most likely be working as a sub-contractor with a prime. At the local level with MBE, you are not really protected. Why? They do not blacklist or remove primes who treat others poorly, unfairly or fail to pay others. This is both careless and reckless, as they do not govern how they should operate and treat businesses, especially small businesses. At the DBE level, they are more mindful. Working with larger firms, they are more conscious, but they can still avoid paying you. At the federal level, they do not want to lose money. These are their bread and butter contracts. Therefore, they will not jeopardize this by not having people paid. If the prime doesn’t pay their subcontractor, they will be marked negatively.

Winner: Federal Contracts


  1. Company Size

At the state and local level, goals are about 5 million or less. In the federal arena, at 10k employees or $33.5 million, you’re considered a small business. That’s almost a ten-fold potential for your company to grow into before you reach the mid or large size business brackets!

Winner: Federal Contracts


  1. Teams

Teams are integral in business. Most businesses start off small with 1 or 2 people doing the work. Meaning a few companies will have to work together to accomplish a task. At the local level, they do not support teams. When two companies attempt to work together, they call it “co-collusion.” You will actually have to sign to say you while not be working with others to complete the tasks! The DBE doesn’t support teams either. They aren’t so up front about it, but they expect you and your employees to complete the task. Where with the federal government, working together or with your competition is the norm. The most important part for them is getting the task done, regardless of the number of companies needed to join together to make it happen.

Teamwork makes the dreamwork? 

Winner: Federal Contracts


  1. Contract Rules

Both MBE and DBE’s rules vary and differ from county-to-county or state-to-state. On the other hand, the federal government entails the entire US, meaning they use the same set of rules, the FAR or DFARS. No matter where you go, you follow the same rules.

Winner: Federal Contracts


  1. Source Selection

The MBE and DBE go with the low bidder, even if they know the contractor cannot perform because that is their policy. The federal government is a little bit smarter and tends to learn from both theirs and other’s mistakes. Instead, they go with the lowest responsive bidder. Taking this route means they can throw out the bids that are deemed “non-responsive” and go with the next lowest bidder. They will continue this process if necessary until they find the someone that can complete the job. If they can’t, they throw away the entire job and start over. Quality matters.

Winner: Federal Contracts


  1. Growth Potential

Here we will dive into the DBE, MBE, and Federal Contracts growth potential. The MBE and the DBE allows you up to your set goal. For example, if you say 5 million, then you’re capped at 5 million. Whereas with federal government, the sky’s the limit. Therefore, your growth is unlimited.

Winner: Federal Contracts


  1. Business Development

Business development is last on the list. When you want to succeed, you want to learn and you want to grow. Both, MBE and DBE do not provide you these opportunities like the federal government does. They have programs, small classes and workshops, but they are ineffective and are not reaching their targeted goals. Whereas at the federal level, there are formal business development programs to help you improve and grow. There are even agencies designed to help small businesses win contracts, like the 8a program. Overall, the knowledge and assistance you receive is invaluable.

Winner: Federal Contracts

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After 8 different topics and analyzing and comparing DBE, MBE, and Federal Contracts, I think you know who the winner is—federal contracts! We can easily say federal contracts blow the others out of the water. They are overall the most effective and trustworthy choice of the three.


If you want to learn more about the differences, advantages and disadvantages between the three, watch the video below. If you want to learn more about federal contracting, visit our YouTube Channel.

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