The DBE Program Faces a Courtroom Crossroads — What Contractors Need to Know Now
Big news is shaking up the world of federal transportation contracting — and if your business is DBE-certified, it’s time to take this seriously. In a major legal pivot, the Justice Department has moved to dismantle the Disadvantaged Business Enterprise (DBE) program, a long-standing federal initiative that’s helped minority- and women-owned businesses secure billions in transportation contracts. The implications are immediate, far-reaching, and potentially precedent-setting for every firm navigating government procurement.
Let’s break it down — what happened, why it matters, and what small businesses should be doing right now.
What Just Happened: DOJ Flips on DBE
In May 2025, the U.S. Department of Justice reversed its previous stance and agreed with plaintiffs in a Kentucky lawsuit (Mid-America Milling Co. et al. v. USDOT) claiming that the DBE program’s race- and gender-based preferences violate the Constitution’s equal protection clause. A proposed court order would declare the program’s use of such preferences unconstitutional, essentially gutting its core provisions. If approved, this would end automatic DBE eligibility based on being a woman or person of color.
This legal move comes on the heels of the Supreme Court’s 2023 ban on race-conscious college admissions and the 2025 Executive Order 14173 directing agencies to strip DEI language from federal programs. The DBE case is not just about one program — it’s a potential legal gateway to challenge other federal set-asides like the SBA 8(a) program, women owned small business certification, and even agency procurement goals based on socio-economic status.
Why This Matters: Real Money, Real Impact
The DBE program isn’t some obscure bureaucratic checkbox. It directs 10% of all federal highway and transit funding — about $37 billion — to minority- and women-owned firms. Nearly 49,000 certified DBEs rely on these opportunities to compete in a market traditionally dominated by larger, more established players. Without it, the path to transportation contracts for many small firms could narrow dramatically.
Here’s where the ripple effects land hardest:
Minority and women-owned small businesses face losing their competitive edge — and the subcontracts and JV deals that come with it.
Prime contractors may be less motivated to partner with DBEs, since there would be no contractual incentive to do so.
State and local agencies could stop setting DBE participation goals on federally funded projects, even if they want to support small businesses.Programs like SBA 8(a) certification services, already under legal scrutiny, could be next in the courtroom queue.
If your firm has been banking on DBE set-asides — or if you’re pursuing 8a contracts services, women business certification, or disabled veteran government contracts — this legal battle could redefine your growth strategy.
What You Should Be Doing Now: Action Plan for Uncertainty
Even if the final ruling takes months or years, the uncertainty is already affecting contracts and competition. Here's how to get ahead:
Stay Certified, Stay Ready
Keep your DBE certification up to date. Until a final ruling is issued, the program still exists — and some states may maintain or adapt their own requirements.Get Economically Disadvantaged Documentation Ready
Start gathering personal net worth statements, tax returns, and social disadvantage narratives. The future may require more stringent, race-neutral proof of eligibility — just like what happened in the SBA 8(a) program.Diversify Your Certifications and NAICS Codes
Consider pursuing HUBZone, WOSB/EDWOSB, or disabled veteran small business certification if eligible. Update your contractor NAICS code portfolio to reflect broader services and sectors. This is especially important as DBE-certified contractors look to stay competitive in non-transportation sectors with strong government contracting opportunities.Strengthen Subcontractor Relationships Without Relying on Quotas
Market yourself based on performance, not preference. Emphasize your cost-efficiency, reliability, and past performance to primes who may no longer be bound by DBE participation rules.Join Advocacy Coalitions
Groups like the National Association of Minority Contractors and the Conference of Minority Transportation Officials are already intervening in court. Your voice, data, and experience could help influence policy — or at least keep you in the loop.Stay Alert for Changes in Solicitations
Agencies may issue amendments, suspend solicitations, or revise their DBE goals on short notice. Watch SAM.gov and your state DOT bulletins carefully.
Final Thoughts: A Turning Point for Inclusive Contracting
Whether the DBE program is restructured, repealed, or reimagined, it’s clear that federal procurement is moving toward a stricter definition of “race-neutral.” This doesn’t mean equity goals are dead — but the tools to achieve them are changing. Firms that adapt early, expand their certifications, and reframe their value beyond set-aside categories will be in a stronger position to thrive.
If you’re a small firm aiming to stay in the game, don’t wait for the courts to decide your fate. Recalibrate your strategy now — and help shape the next chapter of inclusive government contracting.
For a deeper dive into how small businesses can navigate SBA certifications and contracting advantages beyond DBE, check out “SBA’s 2025 Rule Shake-Up: What Small GovCon Firms Need to Know Now”.
If you aren't a Squared Compass partner, what are you waiting for? From getting your business set up with specific government set aside programs at both the State and Federal level, to being empowered by a Fractional Capture team to win government contracts, to receiving tailored government contract opportunities Squared Compass delivers immense value which helps propel our partners to success. Schedule a chat with our team today.
