Transportation Department Ends Race and Sex Presumptions in Contracting Programs

The U.S. Department of Transportation finalized the elimination of race- and sex-based presumptions of social and economic disadvantage from its Disadvantaged Business Enterprise (DBE) and Airport Concession Disadvantaged Business Enterprise (ACDBE) programs, effective 25 September 2026. The final rule, signed by Secretary Sean P. Duffy, was published in the Federal Register of Friday, 25 September 2026 (Vol. 91, No. 185, p. 60885) as FR Doc. 2026-19688, under Docket No. DOT–OST–2025–0897 and RIN 2105–AF33. From now on, every firm bidding on federally funded highway, transit and airport contracts must demonstrate disadvantaged ownership through an individualized personal narrative rather than group membership.

The action finalizes, with minor clarifications, the interim final rule published on 3 October 2025 (90 FR 47979), which had already suspended the presumptions. Congress authorized the DBE program in 1983 and codified the ACDBE program in 1987 (49 U.S.C. 47107(e)), most recently reauthorizing the DBE program in Section 11101(e) of the Infrastructure Investment and Jobs Act (Pub. L. 117–58, 15 November 2021). The Department concluded the presumptions were unconstitutional after the U.S. District Court for the Eastern District of Kentucky’s preliminary injunction in Mid-America Milling Co. v. U.S. Dep’t of Transp. (No. 3:23–cv–00072, 23 September 2024) and the Supreme Court’s decision in Students for Fair Admissions, Inc. v. President and Fellows of Harvard College (600 U.S. 181). It also cited the Attorney General’s memorandum of 21 March 2025, Executive Order 14151 and Executive Order 14173, and a 25 June 2025 letter from Solicitor General D. John Sauer to House Speaker Mike Johnson stating that the Department of Justice would no longer defend the presumptions.

What the rule changes

Under the amended 49 CFR Parts 23 and 26, an owner must now submit a Personal Narrative (PN) establishing disadvantage by a preponderance of the evidence, based on individualized proof of specific instances of economic hardship, social barriers or denied opportunities. The rule requires:

• At least one objective basis for the owner’s disadvantaged status, described as an objective distinguishing feature (ODF).
• A statement of how and to what extent those impediments caused economic harm, including its type and magnitude.
• A current Personal Net Worth (PNW) statement attached to the narrative.
• A standalone “economically disadvantaged in fact” (EDIF) test, under which a certifier may reject an owner whose assets, income, access to credit or capital show they are not in fact disadvantaged.

The Department also replaced the term “similarly situated” with “non-disadvantaged individuals with comparable qualifications,” and substituted “social barriers” for “systemic barriers.” It made a technical correction restoring the heading of § 23.35 to “Personal net worth.”

Deadlines for recertification

Every Unified Certification Program (UCP) must complete the reevaluation of its currently certified firms no later than 24 December 2026, with a possible one-time extension of up to 90 days if the Office of Small and Disadvantaged Business Utilization (OSDBU) finds good cause. Firms that fail to submit a PN and PNW statement by the completion date receive a written notice of nonresponse and have until 24 March 2027 to comply; those that still fail are automatically disqualified without further administrative proceedings. Contract goals and counting of DBE participation remain suspended during the transition, and the Department has issued guidance in the form of frequently asked questions.

Exemptions and rejected alternatives

The Department declined several requests made during the comment period, which drew 637 public comments. It refused automatic reciprocity for firms certified under the Small Business Administration’s 8(a) Business Development Program, and rejected converting the program to a race-neutral Small Business Enterprise (SBE) model or grandfathering existing certifications. It did, however, exempt representatives of Alaska Native Corporations, Indian Tribes and Native Hawaiian Organizations from the reevaluation and narrative requirements, since those firms are owned by sovereign entities rather than individuals; they must still meet all other certification standards, including size, control and PNW.

The rule reshapes how billions of dollars in federal transportation assistance are awarded, shifting the burden of proof onto individual business owners across highway, transit and airport contracting. Firms that cannot document specific, personal experience of discrimination and economic harm risk losing eligibility, while the Department argues the change restores equal protection principles and reduces litigation risk.

Source: Federal Register, Vol. 91, No. 185, 25 September 2026, Rules and Regulations, p. 60885 (official reference: FR Doc. 2026-19688).