The Department of Transportation published a final rule Friday morning that keeps the end of race- and sex-based presumptions of disadvantage in the Disadvantaged Business Enterprise program, and attaches to that change the thing the earlier version had been criticized for lacking: dates.
The rule runs from page 60885 to page 60900 of volume 91 of the Federal Register, docket DOT-OST-2025-0897, and takes effect the day it published. It amends 49 CFR Parts 23 and 26. It answers 637 comments.
Most of its substance was already in place. What is new is a calendar, and the calendar is what firms and state certifying agencies will now organize around. Certifiers must finish reviewing every currently certified firm by December 24, 2026. Firms that have not submitted their paperwork by March 24, 2027 get a final notice, then ninety days, then automatic disqualification.
The shift itself happened a year ago. The clock is what is new.
The presumptions came out in an interim final rule published October 3, 2025, at 90 FR 47979. Before that rule, the program treated Black Americans, Hispanic Americans, Native Americans, Asian-Pacific Americans, Subcontinent Asian Americans, and women as socially and economically disadvantaged by definition. The department concluded that this was unconstitutional and replaced it with an individualized process: every owner now has to establish disadvantage through a personal narrative, called a PN, supported by a personal net worth statement.
The agency made that change effective immediately. It has spent the year since managing the consequences, and the comment file for this rule is largely a record of them. Recipients asked whether contracts signed before October 2025 still counted. Some states let existing contracts proceed while others issued stop-work orders. An association of general contractors asked for a safe harbor for active contracts.
The department declined to revisit the effective date. It said the immediate date "was necessary to bring the program into constitutional compliance," and pointed to a set of frequently asked questions it posted alongside the interim rule as the place where the practical questions were answered. What it did instead was codify the deadlines that commenters said were missing.
December 24, 2026 is now a date, not a hope
The interim rule told Unified Certification Programs, the state-level bodies that certify firms, to complete reevaluations "as quickly as practicable." Commenters pointed out what that meant in practice. A firm could meet the new eligibility standard, hold a technically valid certification, and still be unable to earn goal credit on a contract, because the recipient's program could not use DBE goals until its certifier finished. One recipient projected that larger agencies might finish in sixty to ninety days while smaller ones could take six to twelve months. Another warned of a "mosaic" in which eligibility depended on geography.
Under the final rule, the deadline is fixed. Section 26.111(c) and its airport counterpart at 23.81(c) require each certifier to complete the reevaluation process no later than December 24, 2026. A certifier may request one extension of up to ninety days, it has to be requested before the deadline, and it is granted only if the department's Office of Small and Disadvantaged Business Utilization finds good cause.
When a certifier finishes, it has to report three numbers to that office: how many firms remain certified, how many were removed because the owner did not meet the disadvantage standard, and how many did not respond at all. It must also declare that it serves as the jurisdiction of original certification for every firm it retained. The department reserved the right to audit the underlying documentation.
March 24, 2027 is the date that ends in a grace period
The second deadline is aimed at firms that simply do not answer. A new paragraph, Section 26.111(d), requires certifiers to issue a final written notice of nonresponse to any firm that has not submitted its documentation by March 24, 2027. Those firms then get a final ninety-day window. If the paperwork does not arrive inside it, they are disqualified automatically.
The department framed the paragraph as a resolution of two problems at once. It gives a small business a last clearly communicated chance to produce a document the department itself describes as complex. It also gives certifiers a uniform way to close out files without running a contested proceeding for each one, which is what the department said had produced the paralysis commenters described.
That second half is where the sharpest objection sits. Some commenters argued that the interim rule stripped firms of notice and a hearing before they lost something they had held for years. The final rule separates the two removal types. A decertification, under the existing Section 26.87, carries the burden of proof and administrative due process the program has always used. A disqualification under Section 26.111 is different: the department says it reflects a firm's failure to demonstrate that it meets a requirement now applied to everyone, including first-time applicants, so the decertification provisions do not attach.
What does attach is Section 26.86(a). Disqualification decisions have to follow its due process protections, and every disqualification letter has to state the reasons and carry appeal instructions verbatim as the department publishes them. The rule also amends Sections 26.111(a)(4) and 23.81(a)(4) to replace the word decertified with disqualified, a change the department said was needed because the old wording had created confusion about which burden of proof applied.
A firm now has to write its own disadvantage into a file
The eligibility standard is Section 26.67, and this rule adjusts its wording in ways that matter to anyone drafting a narrative. The phrase "systemic barriers" becomes "social barriers," which the department said keeps the text aligned with the specific, individual experience a narrative is supposed to describe.
The department also addressed a misreading. Commenters had worried that the phrase "without regard to race or sex" barred an applicant from describing race- or sex-based discrimination at all. It does not, the department said. The revision states that individualized determinations must be made without relying on race- or sex-based presumptions of disadvantage, and it confirms that an applicant may offer evidence of discrimination, social barriers, denied opportunities, or anything else the applicant contends contributed to disadvantage. The department tied that reading to DOT Order 2100.9, issued November 10, 2025, which requires eligibility decisions to rest on individualized evidence rather than group-based classifications.
Elsewhere, the phrase "similarly situated" is replaced with "non-disadvantaged individuals with comparable qualifications," and the department set specific reevaluation reporting deadlines to go with the December date. Commenters had asked for standardized templates and checklists, warning that fifty-three certifying programs would otherwise invent fifty-three standards. The rule does not supply a template.
What the comment record shows the transition has already cost
The 637 comments read as a year of strain rather than an argument about first principles. More than 150 came from professional engineers, who told the department that regulatory predictability is part of delivering infrastructure safely. A construction equipment firm said bid invitations stopped within days of the interim rule and that it was weighing layoffs. A firm owner said she had already let employees go.
The department acknowledged the cost without changing course. It said the changes "may cause temporary losses to firms that have participated in the program under the former criteria," urged firms to submit narratives quickly, and urged certifiers to process them quickly, describing the individualized process as an on-ramp. Then it restated the premise: basing eligibility on race- and sex-based presumptions is unconstitutional, and a firm that cannot make the individualized showing cannot participate in a program aimed at firms owned and controlled by socially and economically disadvantaged individuals.
Two groups were carved out. Firms owned by Indian Tribes, Native Hawaiian Organizations, and Alaska Native Corporations are exempt from the reevaluation and narrative requirements, on the reasoning that their eligibility rests on the government-to-government relationship and on statutory provisions rather than on a racial classification. They still have to satisfy the remaining certification criteria, including business size, control, and personal net worth. Alaska Native Corporations continue under the separate certification path that reflects their treatment under the Alaska Native Claims Settlement Act.
What the rule does not settle
The constitutional question is still live in court. The rule's own framing traces to Executive Orders 14151 and 14173, a March 2025 attorney general memorandum, and a June 2025 letter from the Solicitor General to the Speaker of the House. The litigation that prompted much of this is Mid-America Milling Co. v. U.S. Department of Transportation, in which a federal judge in the Eastern District of Kentucky issued a preliminary injunction in September 2024 on equal protection grounds, drawing on Students for Fair Admissions v. Harvard. A final rule that resolves a docket does not resolve a case, and a plaintiff who wins an injunction against a program's use of presumptions has not conceded that the program may continue without them. The department and the plaintiffs both argue from Supreme Court precedent rather than against it, and nothing here resolves which reading of that precedent holds. That contrast is familiar on this beat: a second federal judge blocked the Postal Service's mail-ballot rule this month on the finding that the agency had gone beyond its statutory authority, which is a different question from whether the policy was sound.
There is also the practical question of whether a deadline changes behavior. The department's own comment summary describes certifiers without the staffing to process thousands of narratives at once, and describes firms without the documents or the counsel to produce them. The agency can require the report; it cannot staff the office. That gap is not unique to this program: the federal small-business cybersecurity help that already exists has the same shape, where the resource is funded and the awareness is not.
So the sequence to watch runs from now to December 24, when certifiers report three numbers, then to March 24, 2027, when the firms that have not answered receive their last notice. The number that matters most may be the third one in that report: the firms that never responded at all. That figure will say less about who was eligible than about who never got the message.
Primary sources
- Disadvantaged Business Enterprise and Airport Concession Disadvantaged Business Enterprise Program Revisions, final rule, 91 FR 60885 (Sept. 25, 2026), Docket No. DOT-OST-2025-0897, RIN 2105-AF33: Federal Register
- Disadvantaged Business Enterprise Program and Disadvantaged Business Enterprise in Airport Concessions Program Implementation Modifications, interim final rule, 90 FR 47979 (Oct. 3, 2025): Federal Register
- Mid-America Milling Co. v. U.S. Department of Transportation, No. 3:23-cv-00072, 2024 WL 4267183 (E.D. Ky. Sept. 23, 2024).
- Students for Fair Admissions, Inc. v. President and Fellows of Harvard College, 600 U.S. 181 (2023).
- Morton v. Mancari, 417 U.S. 535 (1974).
- Executive Orders 14151 and 14173; DOT Order 2100.9, Ensuring Nondiscrimination and Equal Opportunity in Department of Transportation Policies, Programs, and Activities (Nov. 10, 2025).