News Summary
The U.S. Department of Transportation has announced a significant rule change to the Disadvantaged Business Enterprise (DBE) program, removing sex and race as automatic certification criteria. Starting October 3, 2023, determinations of disadvantage will be based on personal narratives without references to race or sex, leading to potential decertification for firms unable to demonstrate social or economic disadvantage. This move follows judicial challenges to affirmative action, raising concerns about the future of diversity initiatives within federal contracting.
Washington, D.C. – The U.S. Department of Transportation (DOT) has announced an interim final rule that will remove sex and race as criteria for automatic certification in the Disadvantaged Business Enterprise (DBE) program, effective October 3, 2023. This significant change means that a determination of social and economic disadvantage will no longer include considerations of an individual’s race or sex.
This new rule indicates that simply being born in a particular country will not be sufficient to classify someone as socially and economically disadvantaged. All current DBEs will undergo re-evaluation on a case-by-case basis, mandating that companies provide personal narratives that do not include references to sex, race, or ethnic origin. As a result, all DBE goals will be paused while each certified DBE is reassessed under these updated criteria.
The implications of this rule change are substantial, as legal experts suggest it effectively undermines the integrity of the DBE program, which has been pivotal for women- and minority-owned businesses seeking access to federal contracting opportunities since its establishment in 1980 and enactment into law in 1983. It is anticipated that firms unable to demonstrate social or economic disadvantage as defined by the new rule will face decertification, with no option for appeal. Existing contracts with DBE requirements, however, are expected to remain enforceable despite the newly introduced changes.
The announcement comes just days before the start of the 2025 Construction Inclusion Week on October 13, 2023, which aims to promote diversity within the construction workforce through a variety of initiatives. It underscores a growing tension between efforts to enhance inclusion and the latest regulatory adjustments made by the federal government.
The DOT has initiated this rule change in light of recent judicial rulings that challenged the use of race and sex as presumptive grounds for determining disadvantage within the program. Notably, this shift aligns with the Supreme Court’s determination in 2023 regarding affirmative action in higher education. The previous administration under President Trump had also opted not to defend the criteria based on race and sex, settling ongoing litigation on the matter.
As of now, it is estimated that there are nearly 50,000 DBE-certified firms across the nation, with an additional 3,500 participating in the DOT’s Airport Concessions DBE program. Each state, along with the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, will have the responsibility of reevaluating existing DBEs based on the new guidelines.
The DOT has allowed a 30-day period for public comment following the announcement, although it bypassed the usual requirement for public input prior to issuing this rule. Legal analysts warn that this procedural choice could open the door for litigation regarding compliance with the Administrative Procedure Act.
For firms currently certified under the DBE program, it is crucial to prepare personal narratives in response to notifications from state or local agencies to avoid potential decertification. As the new rule comes into effect, future endeavors aimed at broadening DBE applicant pools could be scrutinized more closely if they utilize criteria tied to race or sex.
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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 BALTIMORE WRITER
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