WASHINGTON, D.C. — Oct. 9, 2025 — Just days before the start of Construction Inclusion Week, the U.S. Department of Transportation (DOT) has issued a sweeping interim final rule that removes race and sex as automatic criteria for the federal Disadvantaged Business Enterprise (DBE) program — a 45-year-old initiative designed to ensure women- and minority-owned businesses could compete for federally funded transportation projects.
The rule, published Sept. 30 and effective Oct. 3, states:
“A determination that an individual is socially and economically disadvantaged must not be based in whole or in part on race or sex. Being born in a particular country does not, standing alone, mean that a person is necessarily socially and economically disadvantaged.”
The change effectively upends the foundation of the DBE program, which since its creation in 1980 — and its codification into law in 1983 — has been a cornerstone of federal equity in public contracting. The move comes at a politically sensitive time, coinciding with an industry-led inclusion campaign and signaling a major shift in how government will assess disadvantage in contracting.
Under the new rule, all current DBEs must be re-evaluated based solely on individual circumstances, without consideration of race, gender, or ethnicity.
Attorney Danielle Dietrich of the Potomac Law Group explained that the new framework represents an unprecedented pause in the program’s operations.
“It means that all of the DBE goals are currently paused,” Dietrich said. “All of the contracts and overall goals are basically gone until such time as the states reevaluate every single one of their DBEs on a basis that does not take into consideration sex, race or ethnic origin.”
Dietrich added that firms decertified under the rule currently have no clear path for appeal, though existing contracts with DBE clauses will likely remain enforceable.
According to DOT’s most recent figures, nearly 50,000 firms are certified under the DBE program, with an additional 3,500 in the Airport Concessions DBE (ACDBE) program. Each state, along with D.C., Puerto Rico, and the U.S. Virgin Islands, operates its own Unified Certification Program (UCP) to manage certifications across local agencies.
Now, all of those UCPs must reassess every certified firm individually, potentially affecting thousands of businesses that have relied on the program for decades.
The DOT’s move follows a series of court challenges and a 2023 Supreme Court decision in Students for Fair Admissions v. Harvard, which struck down affirmative action policies in higher education. That ruling has since emboldened legal challenges to race-based programs across government.
Attorney Jacqueline Unger of PilieroMazza noted that the rule bypassed the typical public comment process:
“While agencies generally are required to provide the public with notice of proposed rulemaking and an opportunity to comment prior to publication of a substantive rule, DOT found that an exception applied because continuing to enforce requirements it found unconstitutional would be contrary to the public interest.”
In Anchorage, Alaska, attorney Chris Slottee of Schwabe advised companies to prepare for rapid compliance changes:
“If they do not respond, it appears that they will be decertified,” Slottee said. He added, “Any efforts to broaden the applicant pool for construction jobs may result in more attention or concern if it is based on race or sex factors, as opposed to economic disadvantage.”
Attorney Maureen Sweeney of Steptoe & Johnson predicted the rule could spark new litigation under the Administrative Procedure Act for procedural violations.
“This action by the DOT will likely be challenged for failure to comply with the Administrative Procedure Act,” Sweeney wrote. “In the meantime, this new rule becomes effective immediately upon publication in the Federal Register.”
The timing of the announcement — just before the Oct. 13 kickoff of Construction Inclusion Week (CIW) — has drawn sharp attention.
The annual, industry-led event emphasizes expanding diversity, equity, and inclusion within construction workforces. However, amid the current political climate, organizers say they are broadening the definition of inclusion to focus on opportunity for all.
Abrar Sheriff, co-chair of Inclusion Week and president of Turner Construction, said the program’s intent remains strong despite the policy shift.
“This is a good thing we are doing,” Sheriff said. “We’re bringing more people into the industry. We hope people see that and that we’re doing this for the right reasons.”
This year’s CIW will include 13 toolbox talks, social media toolkits, a workforce directory, and bilingual training materials to encourage participation at jobsites nationwide.
The DOT’s action is part of a wider trend reshaping diversity policy in federal contracting. Both the DBE and Small Business Administration’s 8(a) programs have faced judicial scrutiny over their use of race- or gender-based presumptions.
While supporters argue that removing such criteria promotes fairness and legal compliance, critics warn it could reverse decades of progress for women and minority entrepreneurs.
For now, thousands of certified firms await guidance from their state agencies on whether they must submit personal narratives proving disadvantage to maintain their certification status.
The coming months — as public comments are collected and challenges emerge — will likely determine whether the DBE program can survive in its revised form or faces further rollback in the courts.
Originally reported by Joe Bousquin in Construction Dive.
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