The US Department of Transportation (USDOT) is a defendant in a lawsuit filed last year in the U.S. District Court for the Eastern District of Kentucky challenging the constitutionality of USDOT’s Disadvantaged Business Enterprise (DBE) program. Plaintiffs Mid-America Milling Company (“MAMCO”) and Bagshaw Trucking (“Bagshaw”), Indiana-based non-DBE subcontractors who work on highway projects, allege that the statutes authorizing the program, as well as USDOT’s implementing regulations, unlawfully discriminate on the basis of race and gender and therefore violate the equal protection component of the Fifth Amendment’s Due Process Clause.
On September 23, 2024, the Court issued a preliminary injunction prohibiting USDOT from mandating the use of the DBE program’s race- and gender-based rebuttable presumptions of disadvantage on USDOT-funded contracts on which Plaintiffs bid for work as subcontractors. USDOT construed this decision as limiting the reach of the injunction to contracts in Indiana and Kentucky. However, on October 31, the Court issued an opinion and order clarifying the preliminary injunction as reaching contracts with DBE goals “in any state in which Plaintiffs operate or bid on such contracts.”
To date, Plaintiffs have identified twenty-five (25) states in which Plaintiffs operate or plan to bid on federally funded state contracts with DBE goals, and they have identified contracts in nine (9) of those 25 states:
On November 18, 2024, USDOT issued general guidance to all Directors of Field Services, Division Administrators, and Deputy Division Administrators to supplement the guidance that the Federal Highway Administration has already provided to the 9 states in which Plaintiffs have identified specific contract opportunities they are pursuing. In the guidance, USDOT advises:
- Federally-assisted contracts on which Plaintiffs intend to submit a quote in any state must have DBE goals set at zero percent.
- Plaintiffs may identify additional contracts in other states. States should issue an amendment or revision setting a 0% DBE goal for each Identified Contract prior to the letting.
- Except for any contracts that are identified by the Plaintiffs, the DBE Program will continue to operate pursuant to the applicable DBE regulations at 49 CFR part 26 and approved DBE programs for each State.
- USDOT will provide additional written guidance as necessary. This memorandum and any such additional guidance will be posted on the FHWA’s webpage.
