DBE Program in Peril: Recent Legal Challenges and What They Mean for Women- and Minority-Owned Contractors

Recent legal challenges jeopardize the future of the Department of Transportation’s (DOT) Disadvantaged Business Enterprise (DBE) program, a long-standing initiative designed to support minority- and women-owned businesses in federally funded state and local transportation infrastructure projects. In litigation against the DOT filed in October 2023, two non-DBE firms challenged the constitutionality of the program’s use of race- and sex-based presumptions of social and economic disadvantage to determine DBE eligibility. In the latest setback for the program, on May 28, 2025, the DOT sided with the plaintiffs in filing a joint motion seeking to resolve the case by having the court issue a permanent injunction on the program’s use of the presumption, stipulating that the presumption is unconstitutional. This Client Alert explains the lawsuit challenging the DBE program, the parties’ recent joint filing, and key takeaways for construction firms and other contractors that interact with the DBE program. 

Background of the Case

The case at issue, Mid-America Milling Co. et al. v. U.S. Department of Transportation et al., was filed in the U.S. District Court for the Eastern District of Kentucky in October 2023 by two Indiana-based companies that alleged the DBE program constitutes an equal protection violation by requiring states to set aside a percentage of federally funded contracts for disadvantaged businesses and rebuttably presuming women and minorities to be disadvantaged in determining DBE eligibility.

In September 2024, the court issued a preliminary injunction, finding that the plaintiffs were likely to succeed in their claims and prohibiting the DOT from enforcing DBE contract goals on federally funded projects where the plaintiffs intended to bid. The following month, the court expanded the scope of the injunction, clarifying that DBE contract goals must be set at zero percent for any federally assisted contracts in states where the plaintiffs operate or bid. In January 2025, two businesses sought to intervene and expand the scope of the preliminary injunction, but the court has not yet ruled on the request.

Also in January 2025, a coalition of DBE businesses and advocacy groups sought to intervene to defend against the lawsuit, arguing that the program’s elimination could impact their ability to secure contracts and the government likely would not defend the DBE program given the Trump administration’s position against DEI initiatives, as demonstrated by recent executive orders. On May 21, 2025, the court granted the intervention motion, noting that “while Defendants have thus far litigated the case forcefully, the changing of the guard in Washington suggests that Defendants will likely take a far different stance regarding the constitutionality of the DBE program going forward.”

Just one week later, on May 28, 2025, the DOT and the plaintiffs filed their joint motion requesting to resolve the case via issuance of a permanent injunction effectively prohibiting the use of race- and gender-based preferences in the DBE program. 

Understanding the Joint Motion

The joint motion asks the court to enter a Consent Order to resolve the case. The motion and proposed Consent Order contain several key provisions:

• No Admission of Liability – DOT does not admit liability, but stipulates that, despite previously defending the DBE program, the defendants “have reevaluated their position” and “determined that the program’s use of race- and sex-based presumptions is unconstitutional.”
• Waiver of Findings – Both plaintiffs and DOT waive findings of fact and conclusions of law, requesting the court to approve the Consent Order as its final ruling.
• Permanent Injunction – The Consent Order would hold that 1) the race- and sex-based presumptions violate the Fifth Amendment’s equal protection component, and 2) DOT “may not approve any federal, state or local DOT-funded projects with DBE contract goals where any DBE in that jurisdiction was determined to be eligible based on a race- or sex-based presumption.”
• Intervenor DBEs – The motion recognizes that the DBE coalition was recently permitted to intervene in the case and has not taken a position on the motion.

 Key Takeaways for Construction Firms and Other Contractors That Interact with the DBE Program

As PilieroMazza’s Tony Franco noted in a Washington Post article on the filing, DOT’s changed position aligns with the Trump administration’s broader efforts to eliminate diversity, equity, and inclusion (DEI) initiatives across government programs. While the court has not yet ruled on the motion, the proposed settlement has the potential to upend the DBE program and mark a major shift in how the program operates, with profound implications for the tens of thousands of companies that participate in the DBE program across the country. However, there is reason to believe the program will not disappear altogether but instead may continue by requiring DBE owners to prove that they are socially and economically disadvantaged to be eligible for DBE certification.

1. Intervenor DBEs Could Affect the Outcome – Since the intervening DBE coalition has not agreed to the settlement, their involvement may lead to continued litigation or new arguments in favor of maintaining aspects of the program.
2. The DBE Program Is Unlikely to be Eliminated Altogether – The DBE program was enacted by Congress in the 1980s, and it has been reauthorized numerous times since then. As the proposed Consent Order recognizes, Congress reauthorized the DBE program in 2021 by the Infrastructure Investment and Jobs Act, Pub. L. No. 117-58, and in 2024 via the FAA Reauthorization Act of 2024, Pub. L. No. 118-63. Given this ongoing support at the Congressional level, the program may see changes to bring it in line with recent case law on constitutional equal protection requirements, but it is unlikely to disappear altogether.
3. The Rebuttable Presumption May Be Eliminated – The challenge to the DBE program’s constitutionality centers on the use of the rebuttable presumption of disadvantage only for women and certain minority groups for eligibility purposes. As such, DOT may revise the program to eliminate the presumption and base eligibility on an individual showing of social and economic disadvantage. The program already allows for applications to be based on individual demonstrations of disadvantage rather than reliance on the presumption, so the DOT could simply use this process for all applicants. This would align with the results of several other recent cases that have found race-based presumptions of social disadvantage to be unconstitutional, including the 2023 decision in Ultima addressing the rebuttable presumption utilized by the Small Business Administration’s 8(a) program, and the 2024 decision in Nuiziard, addressing the presumption used by the Minority Business Development Agency (which was removed by a Final Rule effective January 15, 2025).
4. Businesses in the Construction Field and Related Industries Should Prepare for Possible Changes – Companies that interact with the DBE environment should monitor updates and prepare for potential changes. Current DBE firms and firms looking to obtain DBE certification should anticipate that they may be required in the near future to submit a narrative demonstrating the owner’s individual social and economic disadvantage in order to maintain DBE eligibility.

Given the large scale of the DBE program, the outcome of this case has profound implications for thousands of DBE firms and other businesses that bid on or perform under contracts subject to DBE requirements. PilieroMazza is here to answer questions regarding potential changes to the DBE program and to assist firms with preparing narratives demonstrating individual disadvantage. Should you have questions, please contact Jackie Unger, Tony Franco, or another member of the Firm’s Government Contracts Group.

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