DBE Firms Face Shakeup as Legal Challenges Mount

The future of federal certification of Disadvantaged Business Enterprises (DBEs) may look very different soon. 

A federal lawsuit involving the U.S. Department of Transportation (USDOT) has produced proposed shifts that could change the way firms qualify for DBE status, particularly those historically certified by the presumption of race and gender.

A proposed legal settlement filed on May 28, 2025, would cease to allow the categorical assumption that women and minorities are “socially disadvantaged”. 

Shortly, it is anticipated that DBE applicants will be required to demonstrate that they qualify as disadvantaged on an individual basis. 

This development, reported by the Washington Post and Atlanta Journal-Constitution, is just one of many efforts of the Trump administration to alter government contracting preferences. 

Such a decision could end federal DBE status for many firms that presently utilize it for bidding on public works projects, and a factor in their declarations of minority and gender based ownership.

As previously reported by Contractor News, the DBE program will remain technically intact, but this new requirement represents a tremendous change in what it takes for business owners to qualify. This is also a part of the administration’s whole-scale procurement reform that could overhaul the decades-old policies that are the remnants of the civil rights era in federal contracting.

As DBE firms prepare for possible changes to their certifications, we recommend taking these steps:

• Assess your current certification: Check if your certification was issued on a group presumed disadvantage basis or an individual one to review your individual review status. Contact your certifying agency.
• Collect evidence of personal disadvantage: If new regulations are implemented, firms will be required to provide a description detailing the social and economic disadvantage that has created barriers to access. Begin the process of collecting supporting evidence, such as examples of discrimination, financial difficulty, exclusion from the industry, and socio-economic background.
• Be aware of state and local programs: The federal changes do not affect non-USDOT certification. Many local governments have small, minority, women, veteran, and/or disabled-veteran-owned firm programs that might be used as an avenue to access public projects.
• Discuss with your contractors and agency partners: Prime contractors may pause their commitments to DBEs on certain projects until additional guidance is issued. Let them know you are aware of the issue and proactively take action to ensure DBE certification eligibility.
• Track updates to litigation or changes within your certifying agency: There has not been a formal release from USDOT notifying of any rule change; however, if the settlement is finalized, firms should expect to see new application process formats and additional requirements.

If accepted, the suggested revisions will represent a paradigm shift away from the federal DBE program and toward an individualized basis rather than an assumption-based approach. This may create momentary disruptions to project participation goals and add stress on smaller firms. DBEs acting early by being able to outline comprehensively their eligibility and networking with certifiers will have a greater opportunity to adapt to the changes.