Disadvantaged Business Enterprise (DBE) Programs – Status of Legal Challenges, Potential Outcomes, and What A/E Firms Need to Know-Disadvantaged Business Enterprise (DBE) Programs – Status of Legal Challenges, Potential Outcomes, and What AE Firms Need to Know Slides

Disadvantaged Business Enterprise (DBE) Programs – Status of Legal Challenges, Potential Outcomes, and What AE Firms Need to Know Slides

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The presentation by Ann-Therese Schmid and Adeyemi Ojudun analyzes the U.S. Department of Transportation’s (DOT) Disadvantaged Business Enterprise (DBE) program, focusing on the Mid-America Milling Co. v. U.S. DOT lawsuit and its implications. The DBE program, established in 1983 and recently reauthorized under the Infrastructure Investment and Jobs Act, requires state and local transportation agencies receiving federal funds to set annual DBE participation goals. DBEs must be small businesses owned and controlled at least 51% by socially and economically disadvantaged individuals, with specific size and net worth limits. Certain racial and gender groups are presumed disadvantaged, but these presumptions have faced constitutional scrutiny.<br /><br />The challenge in Mid-America argues that the race- and gender-based presumptions in the program violate the Equal Protection Clause under the Fifth and Fourteenth Amendments. The court applied strict scrutiny to racial classifications and intermediate scrutiny to gender classifications, questioning the government’s evidence of past intentional discrimination and the program’s logical end point. In September and October 2024, the court issued injunctions preventing the DOT from mandating these presumptions for plaintiffs’ bids.<br /><br />The DOT responded with guidance suspending race- and gender-based DBE goals for plaintiffs’ bids and resetting goals to zero percent, triggering good faith efforts to identify other contracts. The case is proceeding through discovery, pre-trial motions, and anticipated appeals, potentially reaching the U.S. Supreme Court.<br /><br />The presentation also reviews related challenges in other federal programs, such as the SBA’s 8(a) program and Minority Business Development Agency, emphasizing a trend against race- and gender-based presumptions.<br /><br />If the Mid-America case leads to invalidation or modification of the DOT DBE program, it could prompt changes in federal and state minority- and women-owned business programs. Architecture/engineering firms and contractors are advised to stay informed, maintain relationships with DBEs/MBEs/WBEs, and prepare for evolving legal and regulatory landscapes while recognizing the continuing role of disadvantaged businesses under race- and gender-neutral programs.

Keywords

Disadvantaged Business Enterprise

U.S. Department of Transportation

Mid-America Milling Co. v. U.S. DOT

Equal Protection Clause

race- and gender-based presumptions

strict scrutiny

Infrastructure Investment and Jobs Act

minority business programs

DBE participation goals

legal challenges to affirmative action