On September 30, 2025, the U.S. Department of Transportation (“DOT”) announced a major policy change to the Disadvantaged Business Enterprise (“DBE”) and Airport Concessions DBE (“ACDBE”) Programs. Through an interim final rule (“IFR”) effective October 3, 2025, DOT will eliminate race- and sex-based presumptions of social and economic disadvantage. All current and future applicants must now demonstrate disadvantage on an individual basis. Existing DBE/ACDBE firms will be reevaluated, and those unable to prove social and economic disadvantage will be decertified.
Background
Previously, women and certain minority groups were presumed socially and economically disadvantaged for DBE and ACDBE eligibility. These presumptions were challenged in federal court in 2023 as unconstitutional. A 2024 preliminary injunction prohibited DOT from enforcing DBE contract goals for certain plaintiffs, and in 2025, DOT and the plaintiffs jointly sought a permanent injunction barring race- and gender-based preferences.
While that litigation remains pending, DOT—based on legal determinations from both DOT and DOJ—concluded that maintaining race- and sex-based presumptions would be unconstitutional. The agency invoked the “good cause” exception to bypass standard notice-and-comment procedures, finding that delaying implementation would be contrary to the public interest. The IFR invites public comments within 30 days of publication.
Key Changes in the IFR
- Elimination of Presumptions:
The IFR replaces race- and sex-based presumptions with a requirement for individualized determinations of disadvantage. Applicants must submit a Personal Narrative (PN) demonstrating disadvantage through specific examples of hardship, systemic barriers, or denied opportunities in education, employment, or business.
Each PN must:
- Describe how and to what extent these barriers caused economic harm.
- Include a current personal net worth statement and any relevant financial information.
- Show that the owner is economically disadvantaged compared to similarly situated individuals who did not face such barriers.
A finding of disadvantage may not be based on race or sex.
- Reevaluation of Current DBE/ACDBE Firms:
All existing certified firms must be reevaluated. Each Unified Certification Program (UCP) must:
- Identify all certified firms;
- Allow submission of new eligibility documentation;
- Determine whether each firm meets the new standards; and
- Issue written decisions of recertification or decertification.
The IFR specifies that standard decertification procedures will not apply during this reevaluation, which must be completed as quickly as practicable.
- Transition Rules:
Until reevaluations are complete, recipients of DOT financial assistance may not set contract goals or count DBE/ACDBE participation toward goals.
Next Steps:
The IFR fundamentally changes DBE and ACDBE eligibility. Individuals from groups previously presumed disadvantaged must now prove disadvantage by a preponderance of the evidence through individualized narratives and supporting documentation. Firms unable to do so will lose certification without an opportunity for response or hearing.
Given the significant impact on the DBE community, affected firms should prepare thorough and well-supported Personal Narratives. Our team is closely monitoring these developments and is available to assist with DBE and ACDBE eligibility and documentation requirements.
Recent Comments