DOT Issues Immediate Rule Overhauling DBE and ACDBE Programs in Response to Court Challenges

The U.S. Department of Transportation (“DOT”) has issued an Interim Final Rule (“IFR”) in the Federal Register revising its Disadvantaged Business Enterprise (“DBE”) and Airport Concessions Disadvantaged Business Enterprise (“ACDBE”) programs under 49 C.F.R. Parts 23 and 26.

Published Oct. 3, and effective immediately, the rule invokes the “good cause” exception to bypass the usual 30-day waiting period. DOT acted urgently in response to recent court decisions that struck down race-based and gender-based presumptions as unconstitutional.

Key Takeaways  

• All Presumptions Removed. DOT has eliminated the use of racial and gender presumptions of social disadvantage for program eligibility.
• Individualized Proof Required. All applicants – including currently certified DBEs and ACDBEs – must now submit individualized narratives and supporting documentation showing both social and economic disadvantage.
• Mass Recertification. Every firm previously certified as DBE or ACDBE will be reevaluated under the new individualized standard.
• Limited Use of Goals. During recertification, Government Agencies using DOT funds must pause or limit DBE/ACDBE participation goals, using race-neutral measures only until new certifications are complete.
• Comments Due November 3, 2025. Stakeholders desiring to help shape the final rule can participate in the rule making process by sending in a comment to the DOT rule drafters. The IFN contains the hand delivery and mailing addresses to send in hard copy comments to the DOT. Comments can also be submitted through the Federal Register rule making portal. All comments regarding this IFN must include the docket number DOT-OST-2025-0897.
• Act now to preserve standing to sue. Failure to comment on an issue regarding a proposed federal agency rule during the “comment period” waives one’s standing to sue the agency on that issue later.

Litigation Backdrop  

The IFR follows three major constitutional rulings that collectively dismantled the use of group-based presumptions in federal small-business programs.

• Ultima Services Corp. v. USDA (E.D. Tenn. 2023) The court struck down the SBA 8(a) program’s racial presumption of disadvantage. SBA paused new admissions, redesigned its process, and now requires a personal narrative proving disadvantage for all applicants.
• Mid-America Milling Co. v. USDOT (E.D. Ky. 2024) The court enjoined the DOT from using racial or gender presumptions in its DBE program. After a partial nationwide effect and months of legal uncertainty, the DOT issued this October 2025 IFR to eliminate those presumptions and comply with constitutional standards.
• Nuziard V. MBDA (N.D. Tex. 2024) The court invalidated the Department of Commerce’s Minority Business Development Agency (“MBDA”) racial presumptions. The MBDA responded with a final rule (December 2024, effective January 2025) removing the presumptions and adopting individualized eligibility – mirroring the SBA’s approach.

Together, these decisions forced a government-wide shift from group-based presumption to individualized assessments of disadvantage. DOT’s new rule brings the DBE and ACDBE programs into alignment with that trend.   

What Contractors Should Do Now  

1. Prepare for Recertification. Expect requests from state and local Unified Certification Programs (UCPs) for individualized narratives submissions and updated financial documentation.
2. Review Upcoming Solicitations. New procurements may omit or reduce DBE/ACDBE participation goals and rely instead on race-neutral outreach provisions.
3. Monitor Counting and Credit. Participation may not be credited toward goals until the firm is re-certified under the new rule.
4. Plan for Transition Delays. Certification backlogs and shifting solicitation language could temporarily disrupt DBE/ACDBE goal tracking.
5. Submit Comments by November 3, 2025. Stakeholders may wish to comment on the various aspects of the IFN to help shape the final published rule, and stakeholders are not limited to one comment.
6. Track Cross-Agency Consistency. SBA 8(a) and MBDA programs have already implemented individualized standards; be on the lookout for further FAR and DFARs updates.

Bottom Line  

DOT’s October 2025 rule marks a fundamental policy shift in federal small-business participation: the elimination of disadvantage based on racial or gender presumptions – every applicant must now individually submit evidence of disadvantage. This change will trigger nationwide recertification, temporarily limit goal usage, and could influence how other agencies administer small-business preference programs going forward.

Our team is here to assist with drafting comments to submit to the Department of Transportation before the November 3, 2025 “comment period” deadline. Our attorneys can also explain these new rule developments and assist with navigating the re-certification process. Please do not hesitate to reach out to our team if you have any questions or require assistance.