New USDOT Requirements for DBE Programs

By U.S. Department of Transportation

Editor’s note: In light of the recent Interim Final Rule (IFR) that removes the presumptions of disadvantage based on race and/or sex from DBE certifications, Small Business Exchange will prioritize updates and resources offered to DBEs/ACDBEs seeking recertification or certification. Below is the text of the letter from the United States Department of Transportation. The letter is also available at https://www.sbeinc.com/resources/ifr_guidance.cfm
 

U.S. Department of Transportation

Office of the Secretary of Transportation

Office of Civil Rights

September 30, 2025
 

This guidance provides information about important changes that the U.S. Department of Transportation (“Department” or “DOT”) is requiring recipients of financial assistance from the Department to make with respect to the Disadvantaged Business Enterprise (“DBE”) and the Airport Concession Disadvantaged Business Enterprise (“ACDBE”) programs.
 

Background

Recipients of highway, transit, and airport funding distributed by DOT are subject to the requirements of the DBE program, under which they must set goals for participation by small businesses owned and controlled by “socially and economically disadvantaged” individuals.¹ Recipients of airport funding are also subject to the requirements of the ACDBE program, which requires them to set similar goals with respect to airport concessionaries.²

Unfortunately, not all individuals have been treated equally under this program. Instead, Congress has mandated that DOT treat certain individuals—women and members of certain racial and ethnic groups—as “presumed” to be disadvantaged.³ Other individuals do not benefit from that presumption. This means that two similarly situated small business owners may face different standards for entering the program, based solely on their race, ethnicity, or sex.
 

On September 23, 2024, the U.S. District Court for the Eastern District of Kentucky determined that the DBE program’s use of race- and sex-based presumptions likely does not comply with the Constitution’s promise of equal protection under the law.⁴ Accordingly, the Court issued a preliminary injunction that prohibits DOT from mandating the use of race- and sex-based presumptions with respect to contracts on which the two plaintiff entities bid.
 

In accordance with the directives of the President and the Attorney General, DOT and the Department of Justice (“DOJ”) have evaluated the DBE and ACDBE programs. DOT and DOJ, consistent with the ruling of the District Court, have determined that the DBE program’s race- and sex-based presumptions do not comply with the Fifth Amendment’s Due Process Clause, which prohibits the Federal Government from depriving individuals of the equal protection of the laws.
 

On May 28, 2025, DOT (represented by DOJ), along with the plaintiffs in the litigation in the U.S. District Court for the Eastern District of Kentucky, asked the Court to enter a Consent Order resolving a constitutional challenge to the DBE program.⁵ The motion is currently pending. In the proposed Consent Order, DOT stipulated and agreed that “the DBE program’s use of race- and sex-based presumptions of social and economic disadvantage . . . violates the equal protection component of the Due Process Clause of the Fifth Amendment of the U.S. Constitution.” The parties asked the Court to declare that “the use of DBE contract goals in a jurisdiction, where any DBE in that jurisdiction was determined to be eligible based on a race- or sex-based presumption, violates the equal protection component of the Due Process Clause of the Fifth Amendment,” and to hold and declare that DOT “may not approve any federal, state, or local DOT-funded projects with DBE contract goals where any DBE in that jurisdiction was determined to be eligible based on a race- or sex-based presumption.”
 

On June 25, 2025, the Solicitor General wrote to the Speaker of the House, consistent with 28 U.S.C. § 530D, to advise the Speaker that DOJ had concluded that the DBE program’s presumptions violate the Constitution, that DOJ would no longer defend the presumptions in court, and that DOJ had taken that position in ongoing litigation.⁶ DOT agrees with and adopts the Solicitor General’s analysis.
 

Interim Final Rule and Guidance
 

In light of DOT’s determination that the DBE program’s race- and sex-based presumptions are unconstitutional, DOT issued an interim final rule removing the presumptions from the DBE program regulations (“Interim Final Rule”).⁷ Because the ACDBE presumptions are functionally identical and suffer the same constitutional infirmity, the rule also removes the presumptions from the ACDBE regulations.