USDOT's elimination of race- and sex-based presumptions has forced states to recertify DBEs, suspend traditional participation goals, and rethink compliance on federally funded projects. 

The DBE program was established under the Surface Transportation Assistance Act of 1982, enacted in 1983, requiring that at least 10% of certain federally funded highway and transit dollars be spent with businesses owned and controlled by socially and economically disadvantaged individuals.

This funding was set aside to enable businesses from disadvantaged sections of society to access federal projects.

State and local transportation DOTs carry out DBE goals as prescribed by the USDOT for all federally-funded projects. Small businesses that meet the DBE requirements must be certified to bid on subcontracting opportunities.

On Oct 3 2025, the USDOT, through an Interim Final Rule (IFR) removed certain provisions to the DBE program. The rule stated that it was presumptuous to assume that women- and minority-owned businesses were disadvantaged, and that all such businesses must be decertified immediately. The new rule requires local agencies to certify businesses on an individual basis.

This has affected not just small businesses but also ongoing projects. 

In Oregon, businesses received two months to apply for recertification with COBID, and had to submit individual instances of how they faced social or economic disadvantages or discrimination. All ODOT DBE goals on contracts have been suspended for the time being.

For California-based businesses, this new rule has led to suspension or disruption of existing DBE goals on federal contracts and affected projects across Caltrans, Los Angeles Metro, BART, SFO, LAX, and other transportation agencies. There is also increased uncertainty for prime contractors, which historically relied on meeting DBE participation for bid compliance.

Businesses that once didn’t qualify for DBE certification would now be eligible; there is also a potential reduction in the number of certified DBEs.

California is among the states that have seen a greater impact from this new rule, as it has the country’s largest transportation construction markets.