News Summary
The U.S. Department of Transportation has announced a significant change to the Disadvantaged Business Enterprise program, eliminating sex and race as criteria for certification. Effective October 3, businesses will now need to demonstrate social or economic disadvantage without considering racial or gender identity. This policy shift, which comes just before Construction Inclusion Week, has raised concerns about its implications for minority and women-owned businesses, as all current DBE firms must re-apply on a case-by-case basis, potentially leading to decertification.
Washington, D.C. – The U.S. Department of Transportation (DOT) has announced a significant policy change regarding the Disadvantaged Business Enterprise (DBE) program. Effective October 3, 2023, an interim final rule will eliminate sex and race as criteria for automatic certification of businesses within this program. This change has raised concerns among attorneys and advocates who believe it undermines decades of efforts to support minority- and women-owned businesses in federal contracting.
The rule states that a determination of social and economic disadvantage cannot be based on racial or gender identity. Additionally, simply being born in a specific country is no longer considered sufficient to establish a claim of disadvantage. As a result, all current DBE firms will be re-evaluated on a case-by-case basis, requiring them to provide personal narratives that exclude considerations of sex, race, or ethnic origin.
This change comes just before the start of the 2025 Construction Inclusion Week, which emphasizes promoting diversity in the construction workforce. However, during this same period, all current DBE goals will be paused as states, along with D.C., Puerto Rico, and the U.S. Virgin Islands, re-evaluate existing DBEs under the updated guidelines. Firms that fail to meet the new criteria could face decertification without an option to appeal their status.
According to data from a previous Biden administration release, there are nearly 50,000 DBE-certified firms across the nation, with an additional 3,500 in the DOT’s Airport Concessions DBE program. The DOT’s new rule affects virtually all of these businesses, as it requires a stricter demonstration of social or economic disadvantage to maintain their certification.
Despite the changes, existing contracts that include DBE requirements will generally remain enforceable. Nonetheless, firms currently certified as DBEs must prepare comprehensive personal narratives and respond promptly to any notices from state or local agencies to avoid decertification. This new approach has sparked concerns about future efforts to broaden applicant pools for federal assistance programs, as these may now be subject to scrutiny if they are perceived to be based on race or gender.
The interim final rule’s introduction follows recent court rulings that questioned the foundational principles of the DBE program, specifically its reliance on presumptive disadvantages linked to race and ethnicity. This scrutiny has been bolstered by the Supreme Court’s ruling in 2023, which questioned affirmative action policies in higher education, leading to broader implications for programs like the DBE.
Legal experts anticipate that this policy shift may lead to further litigation concerning its compliance with the Administrative Procedure Act. The DOT, bypassing the usual requirement for public input prior to issuing such rules, has opened a 30-day public comment period, indicating a level of urgency to implement these changes due to concerns over unconstitutional requirements.
In the past, under the Trump administration, the DOT had already begun distancing itself from using sex or race as qualifiers for DBE certification, opting instead to settle outstanding litigation on the matter. The complete removal of these criteria marks a pivotal shift in the ongoing debate over affirmative action and support for minority-owned businesses.
As construction firms prepare for the upcoming Construction Inclusion Week, many programs focused on workforce development and recruitment initiatives will continue as planned. However, the implications of the new DBE rules will likely shape conversations in this sector moving forward, potentially defining the landscape of diversity efforts in federal contracting for years to come.
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Additional Resources
- ENR: US DOT Calls DBE Program Unconstitutional
- Wikipedia: Disadvantaged Business Enterprise
- National Law Review: DBE Contracting After Affirmative Action
- Google Search: DBE Program Changes 2023
- JD Supra: Federal Highway Administration Releases Updates
- Encyclopedia Britannica: Disadvantaged Business Enterprise
Author: STAFF HERE MILWAUKEE WRITER
MILWAUKEE STAFF WRITER The MILWAUKEE STAFF WRITER represents the experienced team at HEREMilwaukee.com, your go-to source for actionable local news and information in Milwaukee, Milwaukee County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as Summerfest, Milwaukee Film Festival, and the Milwaukee Boat Show. Our coverage extends to key organizations like the Metropolitan Milwaukee Association of Commerce and Visit Milwaukee, plus leading businesses in manufacturing and brewing that power the local economy such as Harley-Davidson and MillerCoors. As part of the broader HERE network, we provide comprehensive, credible insights into Wisconsin's dynamic landscape.
