Federal Order as of September 30, 2025 and its Impact on DBE, ACDBE, and Prime Vendors

On September 30, 2025, the U.S. Department of Transportation (“DOT”) announced a significant change to the eligibility criteria for its Disadvantaged Business Enterprise (“DBE”) and Airport Concessions DBE (“ACDBE”) Programs. The Interim Final Rule (“IFR”) regarding the Federal DBE Program (49 CFR Parts 23 & 26) took effect on October 3, 2025.

The IFR removes the use of the race-and-sex based presumptions of social and economic disadvantage for establishing DBE and ACDBE eligibility. The IFR impacts all current DBE and ACDBE firms, including future applicants, and all firms must undergo reevaluation. Under reevaluation, owners must prove individual social and economic disadvantage to keep certification status. Owners that cannot demonstrate individual social and economic disadvantage under the new criteria will be decertified.

I. Key changes in the IFR:

The programs allow for applications to be based on individual demonstrations of disadvantage rather than reliance on race and sex-based presumptions. Determinations for recertification will be on a case-by-case basis by a qualified certifier. The certifier’s decision must not be based in whole or in part on race, national origin, or sex. There are two major IFR requirements for owners to consider when proving individual disadvantage.

First, the owner must provide a personal narrative for the certifier to review. The personal narrative must establish the existence of a disadvantage by a preponderance of the evidence based on individualized proof regarding specific instances of economic hardship, systemic barriers, and denied opportunities that impeded the owner’s progress or success in education, employment, or in business. Owners should provide information about their efforts to obtain financing on the same terms typically available to others who have not faced similar socioeconomic barriers. The narrative must state how the impediments caused the owner economic harm, including a full description of the type of harm and magnitude of the harm.

Second, the owner should attach a personal net worth statement and any ancillary financial data they consider relevant to their case. Being born in a different country will not be sufficient to establish social or economic disadvantage. Under the new rule, DBE and ACDBE certified owners must make a case using the personal narrative and net worth criteria stated above.

II. Existing DBEs and ACDBEs:

Revisions under the new standards are enacted under 49 C.F.R. §26.67. All currently certified DBEs and ACDBEs will undergo reevaluation under the new standards, and certification will not continue unless the new criteria are satisfied. Those that fail to satisfy this criterion may be decertified. Until each state’s Unified Certification Programs (“UCPs”) complete the reevaluation process, agencies may not set DBE or ACDBE contract goals or count DBE/ACDBE participation towards goals.

The most important takeaway is understanding that automatic presumptions of disadvantage are no longer available. Race and ethnicity will not be considered. The IFR revision considered race and sex-based presumptions unconstitutional. All applicants must individually submit a personal narrative accompanied by a personal net worth statement proving measurable, economic harm. Eligibility will be entirely based on individualized proof through personal narratives and net worth statements.

III. Other program elements suspended while currently certified DBEs and ACDBEs are being reevaluated:

• Recipients may not set DBE or ACDBE goals, whether contract-specific or concession-specific until the reevaluation process is complete.
• Recipients cannot count DBE or ACDBE participation toward overall goals during the transition period.
• Compliance provisions are suspended.
• Methods of encouraging participation may not be used.

Until the reevaluation process is complete, the Department of Transportation has frozen all mechanisms that give credit, enforce compliance, or impose obligations based on DBE or ACDBE certification.

IV. Recommended Course of Action:

A. Currently Certified Firms and Firms Looking to Become Certified:

• Begin drafting a concise personal narrative as soon as possible. Firms certified under former presumptions risk decertification if they cannot substantiate individualized disadvantage. The objective of your personal narrative is to demonstrate evidence-based proof of specific instances of economic hardship, systemic barriers and denied opportunities that correlate with quantified economic harm. For example, you may describe personal experiences relating to education and employment barriers, bonding terms, contract gatekeeping, or denials of capital access. It is important to connect these barriers to quantified economic harm compared to similarly situated peers who did not face barriers. Administrative delays should be expected while UCPs process reevaluations. New Applicants should expect heavier front-end documentation and longer processing times during the reevaluation surge.

B. Prime Contractors and Bidders:

• Solicitations will not include DBE goals, and good-faith effort frameworks will largely remain on hold until reevaluations are complete.
• Keep voluntary supplier diversity pipelines active; document DBE-neutral outreach and inclusion plans.

Please do not hesitate to contact us should you need any assistance navigating through the impacts of this IFR.

Sincerely,

Leach | King | Klinger Law LLC