USDOT Announces Significant, Immediate Changes to the Federal DBE Program

The U.S. Department of Transportation has issued an Interim Final Rule (IFR) that removes long-standing race- and sex-based presumptions in the Disadvantaged Business Enterprise (DBE) program. Instead, all applicants must now provide individualized proof of social and economic disadvantage.

This marks a historical and significant shift for DBE and non-DBE firms across the country and in Virginia, and it raises immediate questions about how certifications will be handled and how DBE participation will be tracked on new and existing VDOT federally funded contracts.

Key changes of the ruling include:

Re-certification Required: Every currently certified DBE must undergo reevaluation. Firms will be required to submit new documentation and personal narratives to establish eligibility.
Suspension of Goals and Counting: Until reevaluation is complete, recipients (including VDOT) may not set DBE contract goals or count DBE participation toward existing goals. This could impact reporting on current projects.
Tracking Requirements Changed: Collection and reporting of race and sex data for bidders and DBE certifications will be eliminated.
Higher Documentation Burden: Firms must now submit individualized evidence of disadvantage, which may increase certification time and costs.

What does this mean for Virginia’s transportation program? Simply put, there are many unanswered questions. How will existing VDOT contracts be handled during the transition? What happens if a certified DBE cannot meet the new standard? How will contractors demonstrate good faith efforts while DBE counting is on hold? It is essential to note that VDOT and SBSD (Va. Dept of Small Business and Supplier Diversity) have not yet had the opportunity to assess and answer these and many other questions.

VTCA is working closely with VDOT to understand the impact and assist our members, including DBE and non-DBE, in navigating these changes. While compliance with the new IFR is mandatory, the practical impacts on contractors, DBE firms, and ongoing projects are still being clarified.

Because of the historic and significant changes of the USDOT’s ruling and the uncertainty of how to navigate the transition to the new requirements, it is advised to continue with your existing contractual requirements until VDOT provides clear guidance.

We will keep our members updated as more information becomes available. This represents one of the most significant shifts in the DBE program’s history. You can read the USDOT’s interim final rule here.