The Department of Transportation (DOT) in the United States has launched an extensive revamp of its Disadvantaged Business Enterprise (DBE) program, which has been avilable for public comments.
The main feature of the interim final rule, which became effective on October 3rd, 2025, is the change in the standard for eligibility, from a blanket presumption based on race or gender to a case-by-case evaluation. Each applicant, the owner of the business seeking to become certified as a DBE, must show social and economic disadvantage individually; therefore, the longstanding practice of automatically associating disadvantage with race or gender has been discontinued.
All applicants, including about 41,000 firms that are currently certified, must submit narratives with supporting details that demonstrate how they have faced barriers, such as economic distress, denied access to capital, or systemic barriers to their success. Unified Certification Programs (UCPs) will recertify or decertify firms under the new standard nationally, while they temporarily suspend current DBE goals.
Reactions from local businesses, industry associations, and local agencies have been mixed regarding the transition. Some companies that qualified based on group status in the past may now feel uncertain about meeting the new standards certification requirements due to the documentation required for the consideration factors.
These businesses have suggested that additional technical assistance, legal counsel, and outreach support are needed. Some state DOTs and business advocacy organizations have held workshops and provided online resources that explain the new documentation and narrative requirements to aid entrepreneurs in gathering documentation and substantiating it with narrative supporting and demonstrating evidence for certification under the updated qualifying standards.
DOT's decision follows a series of legal cases and constitutional scrutiny, with federal courts finding that a presumption based solely on race or sex no longer aligns with equal protection requirements. As a result, the DBE program is now fully “race- and gender-neutral” in its eligibility criteria for federally funded contracting.
Industry experts expect early disruption in industry involvement, since some of the prior certified firms may not pursue recertification, and goals will require adjustment as contracting goals will be adjusted until the recertification process is completed. Contractors and agency recipients are being asked to update bid documents, reset expectations, and prepare for changes in compliance and reporting throughout 2026.
The DOT has offered states and certifiers recommendations on timelines, narrative requirements, and best practices, noting that program participation and goals will only recommence once certification under the new rules is achieved. Even though the group-based presumptions are no longer valid, most federal and state inclusion programs, including M/WBE programs, are likely to persist and evolve.
Such a significant change will impact numerous small businesses and alter the way we consider diversity in infrastructure-related contracting in the U.S. Everyone should keep watching for more advisories and breakdowns of the situation in the coming months, as the agencies and the contractors will be gearing up for the implementation of this new regime.
Many changes are underway at the local level, as some cities and states are proactively altering their regional certification programs.
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