News Summary
The U.S. Department of Transportation has revised the Disadvantaged Business Enterprise (DBE) program criteria, removing sex and race as automatic certification factors. Effective October 3, 2023, the interim final rule requires businesses to prove social or economic disadvantage through personal narratives. This change puts over 50,000 DBE-certified firms on hold and raises concerns about its impact on minority and women-owned businesses, particularly in the construction sector. Public commentary on the rule will be accepted for 30 days, as businesses prepare for compliance amid a changing regulatory landscape.
Washington D.C. – The U.S. Department of Transportation (DOT) has enacted a significant policy change by removing sex and race as criteria for automatic certification within the Disadvantaged Business Enterprise (DBE) program, effective October 3, 2023. This interim final rule, announced on September 30, 2023, marks a fundamental shift in how businesses are evaluated for disadvantaged status intending to promote diversity in federal contracting.
The new guidelines dictate that social and economic disadvantage will no longer include considerations based on sex or race. Rather, all current DBE certified businesses will undergo a case-by-case review, requiring them to present personal narratives that exclude these characteristics. This means that being born in a specific country alone will not suffice to classify a person as socially or economically disadvantaged.
As a result of this policy change, the goals for all DBEs are currently on hold while state agencies reevaluate over 50,000 DBE-certified firms across the nation. This adjustment raises concerns for many attorneys and industry experts who highlight that the ruling diminishes the effectiveness of the 45-year-old program, particularly in enhancing opportunities for minority and women-owned businesses within the construction sector.
Impact on Certified Businesses
Current DBE firms will need to adjust to the new requirements or risk losing their certification. Those unable to provide satisfactory evidence of their social or economic disadvantage will face decertification without the possibility to appeal the decision. Existing contracts that include DBE requirements may still be enforceable, despite the recent rule alterations.
General Overview of the DBE Program
The DBE program was established in 1980 and officially enacted into law in 1983, aimed at supporting minority- and women-owned businesses in obtaining federal contracts. According to a previous announcement by the Biden administration, nearly 50,000 businesses are recognized as DBE-certified, alongside an additional 3,500 participating in the DOT’s Airport Concessions DBE program. The importance of the DBE program has been under scrutiny recently, as it has been a vital pillar in the push for greater diversity in federal contracting.
Legal Context and Future Implications
This rule change carefully follows recent judicial decisions challenging the DBE program’s basis on presumed disadvantages linked to sex and race. Specifically, it has been influenced by a 2023 ruling from the Supreme Court which targeted affirmative action in higher education. The approach taken by the DOT under the Trump administration also played a role, as it previously decided against defending the use of race or sex as qualifiers for DBE certification.
As the DOT navigates this regulatory landscape, industry experts indicate that the revised rule may lead to increased litigation surrounding compliance with the Administrative Procedure Act. They caution that future initiatives aimed at broadening the applicant pool could face legal challenges if grounded in race or sex categorizations.
Public commentary on this rule will be accepted for a period of 30 days following its announcement. However, it is noteworthy that the DOT opted to bypass standard public input processes prior to enacting these changes, citing concerns regarding the enforcement of unconstitutional criteria. Businesses are encouraged to prepare personal narratives and respond promptly to notices from relevant state or local agencies to ensure they maintain their DBE certification.
Construction Inclusion Week
The new rule was introduced shortly before the upcoming 2025 Construction Inclusion Week, set to take place starting on October 13, 2023. This event aims to enhance efforts in workforce development and recruitment in the construction industry through various initiatives. The timing raises questions about how the recently updated DBE program will influence discussions surrounding inclusion and diversity in the workforce at this event and beyond.
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
Author: STAFF HERE INDIANAPOLIS WRITER
The INDIANAPOLIS STAFF WRITER represents the experienced team at HEREIndianapolis.com, your go-to source for actionable local news and information in Indianapolis, Marion County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the Indianapolis 500, Indy Jazz Fest, and the Indiana State Fair. Our coverage extends to key organizations like the Indy Chamber and Visit Indy, plus leading businesses in motorsports and healthcare that power the local economy such as Indianapolis Motor Speedway and IU Health. As part of the broader HERE network, we provide comprehensive, credible insights into Indiana's dynamic landscape.
