Washington, D.C., October 10, 2025
News Summary
The U.S. Department of Transportation has issued a rule that eliminates race and sex as criteria for the Disadvantaged Business Enterprise certification. Starting October 3, firms must demonstrate social and economic disadvantages without considering these factors. The move has drawn concerns about the impact on minority and women-owned businesses that rely on federal contracts. Additionally, existing certified firms will undergo reassessment on a case-by-case basis, potentially facing decertification without appeal. This rule comes just ahead of Construction Inclusion Week, raising further discussions about inclusion in the industry.
Washington, D.C. – The U.S. Department of Transportation (DOT) announced an interim final rule on September 30, 2023, that effectively removes race and sex as criteria for automatic certification in the Disadvantaged Business Enterprise (DBE) program, with the changes taking effect on October 3, 2023. This new rule stipulates that social and economic disadvantage cannot be determined by an individual’s race or sex, reshaping how minority and women-owned businesses qualify for federal contracts.
The DBE program was first established in 1980 and becomes law in 1983, aimed primarily at promoting women and minority-owned businesses within federal contracting. However, legal experts perceive this new rule as a drastic alteration that could undermine operations under the nearly 45-year-old program, which has played a critical role in supporting non-majority companies, especially in the construction sector.
Under the updated criteria, all current DBEs will undergo re-evaluation for certification on a case-by-case basis. From now on, these firms must provide personal narratives that do not take into account race, sex, or ethnic origin to demonstrate their social or economic disadvantage. As a result, the DBE goals are currently on hold while every certified business is reassessed.
Contracts that previously included DBE requirements remain enforceable; however, firms that fail to meet the criteria set by the new ruling will face decertification without an option to appeal. This decision raises concerns, especially since there are nearly 50,000 DBE-certified firms nationwide, along with approximately 3,500 firms in the DOT’s Airport Concessions DBE program. Every state, alongside the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, is required to re-evaluate their existing DBEs under these new guidelines.
The announcement comes just weeks before the 2025 Construction Inclusion Week, beginning on October 13, 2023, which aims to promote diversity in the workforce within the construction industry. The timing of this rule change sparks discussions about the efforts to enhance inclusion in the sector.
The DOT has opened a public comment period lasting 30 days following the announcement; however, they opted to bypass the standard engagement process prior to issuance, citing concerns that previous requirements were unconstitutional. Industry firms are encouraged to prepare their personal narratives and to respond promptly to any inquiries from state or local agencies to prevent decertification in light of the new requirements.
This policy change follows recent court decisions that have challenged the DBE program’s reliance on race and sex for determining disadvantages. The Supreme Court’s 2023 ruling against affirmative action in higher education has also influenced this change. The Trump administration previously decided not to defend the use of race or gender as qualifiers for DBE certification, settling pending litigation on these matters.
As this rule takes effect, future attempts to expand applicant pools may come under scrutiny if they are based on race or sex. Legal analysts anticipate that the amendments could trigger new lawsuits regarding their compliance with the Administrative Procedure Act, indicating that this substantial shift in policy might lead to further complexities in the legal landscape surrounding business certification.
Summary of Key Changes
- Elimination of Race and Sex Criteria: The new ruling removes race and sex from automatic DBE certification criteria.
- Re-evaluation of Certification: All current DBEs will be reassessed on an individual basis without considering race or sex.
- Decertification Rules: Firms unable to demonstrate social or economic disadvantage will face decertification with no options for appeal.
- Ongoing Contracts: Existing DBE contract requirements remain valid despite the new policy changes.
- Public Comment Period: A 30-day public comment window has been opened, despite the lack of pre-issuance consultation.
Frequently Asked Questions (FAQ)
What changes were made to the DBE certification process?
The U.S. DOT removed race and sex as automatic criteria for DBE certification, now requiring social and economic disadvantage to be demonstrated without considering these factors.
When will the new rules take effect?
The new rules are effective from October 3, 2023.
What happens to current DBEs under the new rule?
Current DBEs will be re-evaluated on a case-by-case basis. They must provide personal narratives to demonstrate their disadvantage without using race or sex as a factor.
Will existing contracts that include DBE requirements still be honored?
Yes, contracts with DBE requirements in place before the rule change remain enforceable.
How long will the public comment period last?
The public will have 30 days to comment on the newly announced rule.
Key Features of the DBE Certification Changes
Feature | Details |
---|---|
Removal of Criteria | Sex and race are no longer factors for automatic certification. |
Re-evaluation Process | All DBEs will undergo reassessment, focusing on social and economic disadvantage. |
Decertification Risks | Firms unable to provide adequate personal narratives may be decertified without the right to appeal. |
Public Comments | A 30-day period for public feedback on the rule is available. |
Contractual Obligations | Existing DBE contract requirements remain valid despite the changes. |
Deeper Dive: News & Info About This Topic
HERE Resources
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

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