US DOT’s October 3, 2025 Interim Final Rule (IFR) directing states to discontinue implementing the disadvantaged business enterprise (DBE) program by using race or gender-based presumptions to determine DBE status has created a great deal of uncertainty for states and contractors in meeting DBE mandates. While U.S. DOT is taking comments on the DBE IFR through Nov. 3, states have been implementing the program in a variety of different ways. US DOT last week released FAQ guidance to clarify many of the implementation issues. While the FAQ gives some guidance on proceeding with the program much confusion still exists.
One of the main points of uncertainty addressed by the FAQs is how to address contracts that have already been let containing DBE goals. The FAQ says that state DOTs must remove DBE goals from upcoming advertisements and “zero out” goals on projects that have been let but not yet awarded/executed. However, contracts that have been executed before October 3, 2025 do not need to be modified and can proceed as usual.
The FAQ also address termination provisions indicating that a prime contractor cannot terminate a DBE or any portion of the DBE’s work listed in response to the good faith efforts bidding requirements without the state’s prior written consent upon a showing of good cause, unless the state causes the termination or reduction. The FAQ states: “Good cause does not exist if the prime contractor seeks to terminate a DBE or any portion of its work that it relied upon to obtain the contract so that the prime contractor can self-perform the work for which the DBE contractor was engaged, or so that the prime contractor can substitute another DBE or non-DBE contractor after contract award.”
Another significant issue for implementing the program is the existing annual goal setting requirements. The FAQ indicates that states are not required to do anything with their current DBE goals until their respective certification reevaluation process has been completed. States are also not required to update their overall goal methodologies for determining annual goals until completion of the reevaluation process. Furthermore, no DBE participation may be counted toward a state’s overall goal, until such participation is approved.