The Department of Transportation has issued an interim rule that makes significant changes to the eligibility rules and administration procedures used in the Disadvantaged Business Enterprise programs and Airport Concession Disadvantaged Business Enterprise program. The DBE and ACDBE programs were established to provide opportunities to small businesses owned and controlled by socially and economically disadvantaged individuals to participate in publicly-funded highway, transit, and airport projects.
DOT’s interim rule, which went into effect on October 3, 2025, eliminates the presumption that a business is “disadvantaged” solely because of the owner’s race or gender. It immediately suspends all existing DBE and ACDBE certifications and requires companies holding them to submit new applications proving that they are eligible for certification under the interim rule. DBE and ACDBE participation requirements are also temporarily suspended. Payments will not count towards DBE or ACDBE participation goals until the recertification process is completed.
DOT’s explanatory text states that the rule changes are a response to the decisions in Students for Fair Admissions, Inc. v. President & Fellows of Harvard College and Mid-America Milling Co. v. U.S. Dep’t of Transportation. The Harvard case is the 2022 Supreme Court decision holding race-based affirmative action programs unconstitutional because they deny equal protection to individuals seeking admission to college. Mid-America Milling is a Kentucky district court case brought by trucking companies asserting that the DBE program rules unfairly denied them an opportunity to compete for DOT contracts. In September 2024, the court in Mid-America Milling entered a preliminary injunction barring DOT from “mandating the use of race-based and gender-based rebuttable presumptions for United States Department of Transportation contracts impacted by DBE goals upon which the Plaintiffs bid.”
The interim rule is thus closely aligned with Trump Administration’s approach to race and gender preferences. It follows Executive Orders 14151 and 14173, which direct federal agencies to terminate “equity action plans” and “diversity, equity and inclusion” programs. Our client alerts and blog entries on the Trump Administration’s DEI initiatives are available here.
Requirement for proof of social and economic disadvantage
The interim rule eliminates the rebuttable presumption that women and members of specified ethnic and racial minorities qualify as “disadvantaged.” Instead, “[a]ll applicants must demonstrate social and economic disadvantage (SED) affirmatively based on their own experiences and circumstances within American society, and without regard to race or sex.” Applicants will be required to submit a personal narrative and supporting documentation showing the “existence of disadvantage by a preponderance of the evidence based on individualized proof regarding specific instances of economic hardship, systemic barriers, and denied opportunities that impeded the owner’s progress or success in education, employment, or business.” Each applicant will be evaluated individually. Each applicant will be required to prove their eligibility by a preponderance of the evidence.
The revised DBE certification process will apply not only to new applications, but also to contractors certified under the prior rule. The interim rule requires the Unified Certification Program in each state to reevaluate all currently-certified DBEs and ACDBEs to determine their eligibility for certification under the revised standard of proof. The process requires UCPs to identify each certified firm, to provide them with an opportunity to submit documentation required to show that they are eligible for certification, make a new eligibility determination, and issue a written decision.
The recertification process contemplated in the interim rule may be similar to the updated application process for the 8(a) business development program that the Small Business Administration adopted in response to the Eastern District of Tennessee’s July 2023 decision in Ultima Servs. Corp. v. U.S. Dep’t of Agriculture, which eliminated the “rebuttable presumption of social disadvantage” in the 8(a) program.
Immediate suspension of DBE Participation Goals
The impact of DOT’s interim rule is not limited to those seeking certification as a DBE or ACDBE business. The interim rule states that agencies may not set new DBE contract goals and may not count DBE participation towards existing DBE goals until the recertification process is complete. Already, several state UCPs — e.g., Missouri, Virginia, and California — have announced the roll-back of DBE contract goals pending recertification of DBE contractors. The interim rule does not address how this transition affects existing contracts or ongoing projects.
How DOT’s interim rule will change DOT contracting
The DBE and ACDBE programs have been a source of opportunities on DOT-funded projects for thousands of small businesses over a long period of time. The interim rule will certainly mean that some existing DBE and ACDBE companies will no longer qualify as socially and economically disadvantaged and will therefore be unable to participate on DOT-funded projects. With fewer eligible participants, DBE and ACDBE participation goals will change, as will expectations as to efforts needed to meet them. On the whole, contractors should expect disruption in the short term and look for opportunities in the long term.