Future Of Federal Support For Va. Minority-, Women-Owned Businesses In Transportation In Question

By Nathaniel Cline, Virginia Mercury

December 22, 2025

After a U.S. District Court in Kentucky suspended the federal government’s enforcement of race- and gender-based preferences in transportation contracts pending trial, the U.S. Department of Transportation responded by removing women- and minority-owned business set-asides through an interim final rule. This has significantly impacted businesses in Virginia and across the nation.

Amid these regulatory changes, some business owners continue to navigate economic complications and face stigma associated with being women- or minority-owned.

“Most DBEs (Disadvantaged Business Enterprises) will tell you in a heartbeat: all we need is the opportunity… we’re good at what we do,” said Joanne Payne, a federal lobbyist and president of Women First, an advocacy group representing women-owned small businesses in the highway, transit and airport construction industries.

“The DBE program isn’t a handout, it’s a hand up — ensuring small business owners, especially women and minorities, get a fair chance to compete and thrive.”

How the DBE Program came under threat

In 1983, Congress created the Department of Transportation’s DEB Program to help small business formation and growth in the U.S. About 87,000 businesses are registered as DBEs and the program has been reauthorized multiple times, most recently in 2021. It was designed to help small businesses owned by people who have historically faced discrimination — such as minorities and women — by leveling the playing field in contract bidding.

However, the program was challenged in 2023, when two Indiana-based construction contractors —Mid-America Milling Co., LLC and Bagshaw Trucking, Inc.— argued that the DBE program’s race- and gender-based preferences favor certain firms over others, thereby violating equal protection principles under the U.S. Constitution.

The plaintiffs said in their complaint, “the largest, and perhaps oldest affirmative action program in U.S. history … financed the American transportation system … with a series of race and gender preferences they call ‘goals.’ But in effect … these ‘goals’ amount to discriminatory barriers, preventing many construction companies from competing … on an equal footing.”

To determine whether this was true, the court temporarily blocked the agency from enforcing the race- and gender-based rules governing contracts.

But the U.S. Department of Transportation (DOT) took the matter a step further, using the injunction to issue a ruling on Oct. 3 to remove the presumptions from the program requiring business owners to prove in a personal statement or narrative that they are socially and economically disadvantaged on an individual basis, rather than relying on automatic presumptions for women and minority ownership.

This policy shift has also abruptly terminated some existing contracts and paused new opportunities for minority- and women-owned businesses.

Babur Mian, a board member of Virginia’s Disadvantaged Business Enterprise Transportation Association, said the group is deeply concerned about the situation — and about the Virginia Department of Transportation’s limited response to it.

In an October 3 memo obtained by the Mercury, the state transportation agency only provided procedural guidance and notice of changes for DBEs in the commonwealth and made it clear that the memo was not legal advice.

“As a result, DBE goals on all federally eligible VDOT contracts are set to zero, DBE participation will not be counted, and certain DBE reporting forms are no longer required until the re-evaluation process is complete,” wrote Stephen Brich, commissioner of Highways at VDOT. “The notice is informational only and advises businesses to seek legal counsel for guidance specific to their circumstances.

Mian said the association was hoping for a more sympathetic response.

“We are at a loss to explain VDOT’s reaction to our members,” Mian said. “Our members have had a strong relationship with VDOT over the years, delivering quality work on projects all over Virginia, and yet, now, they seem to be forced to fend for themselves.”

Compared to other agencies in North Carolina, Ohio, and Washington, D.C., Mian said transportation agencies have “actively engaged” with their respective DBE communities, provided direction that existing DBE-related contracts should not be terminated, and recommended using state-administered small and minority business programs to support their DBE businesses.

As questions linger, Mian described Virginia’s response as “silent.”

VDOT did not immediately respond to questions about whether it has done anything else to help businesses affected by changes to the DBE program, specifically regarding the program’s recertification process, which will require business owners to prove their own disadvantage rather than relying on race or gender.

“Unless the recertification process is handled expeditiously and unless VDOT actively engages with the Virginia DBE community, our members and their employees will suffer,” Mian said. “We know that some of our members may not be able to hang on for long. Many will soon have no choice but to consider reducing staff or to take other drastic measures just to survive what should be a temporary lull in activity while recertification occurs and new goals are confirmed.”

Defining the stigma against women, minority-owned businesses

Whether it’s prejudiced assumptions or questions about their qualifications, business owners have told the Mercury that they have faced, in some form or fashion, the stigma that comes with owning a minority- or women-owned business.

Some said clients have questioned their qualifications and ownership, while others said they have been pigeonholed and experienced limits imposed on business opportunities. Still others said they’ve faced extra scrutiny and mistrust about their financial reliability or competence.

Catherine Tojaga, owner and president of an HVAC construction company in Illinois, said this stigma diminishes owners’ achievements. She said she has been repeatedly dismissed as a legitimate business owner because of her gender.

“And I think to myself, well, who wants to work with a fraud? If you think I’m misrepresenting myself, then you must think I’m a fraud, because I just told you I own the company… and that’s the problem I’m really having right now,” Tojaga said. “This has to do with gender, and yet I’m supposed to pretend it doesn’t.”

With women and minority business owners missing out on contract awards, Tojaga said it seems similar to when larger contractors were prioritized over smaller ones during the COVID pandemic. She said some larger companies were awarded contracts in which they were paid based on time spent and materials used, rather than a fixed price, without bidding, while smaller contractors were neglected.

There have been few widely documented construction cases when larger companies were awarded contracts for transportation projects. However, outside of transportation, there have been cases of rapid bid processes on the federal level, including a private donor to President Donald Trump and design work on detention centers in Kansas that raised concerns over fairness and competitive access.

Amid changes to the DBE program, Tojaga said the federal government also made funding cuts that affected organizations, including Chicago Women In Trades, which trains women in the trades industry, exacerbating the labor shortage in the construction field. This came after the Trump administration made significant changes to the Women’s Bureau this year, which was framed as a way to ensure women can earn a living wage and work safely.

All grants were terminated, except for the Chicago Women in Trades grant, which was protected by a court order. The Fostering Access, Rights, and Equity (FARE) grant program supporting women’s workplace rights was also canceled.

“These cuts will likely force organizations nationwide to lay off staff and cancel imminent training programs, and destabilize the Women’s Bureau,” the Chicago Women In Trades said in a May 15 statement.

While conditions remain challenging, women and minority business owners must now recertify to remain in the DBE program by submitting personal narratives — a process owners say heightens the stigma because it requires them to demonstrate their disadvantage.

Tojaga said she completed the narrative for her recertification, but “what really sucked about writing it, which I did, is that all I do is sound like a whiny person that nobody wants to do business with.”

DBE program has been ‘a lifeline’ for some while others don’t see its advantages

Business owners said the DBE program has served as a critical infrastructure for economic and social mobility. The program has offset historic disadvantages and helped develop the next generation of laborers.

“The DBE program has been a lifeline for small, minority owned businesses in the commonwealth by providing these companies with the opportunity to compete for contracts, hire people, and grow their businesses,” Mian said.

But some entrepreneurs said the program and recent changes have not been as helpful. Michael Brown, an operator of a trucking business in Arkansas, said he would like to expand his business to create more jobs, but has had trouble attracting clients since joining the DBE program two years ago. He thinks it may be due to the stigma associated with being a minority-owned business.

Workers in safety gear are installing a black ductile iron pipe into a precast concrete manhole. (Photo courtesy of Virginia DBE Transportation)

Matters have only worsened for Brown’s business since the program’s rule changes. He said he has had to reach out to large contractors, who receive the awards, to see if he can work with them — the opposite of his goals to achieve economic independence through his trucking business, support his family and serve as a positive role model.

He also wants to help disadvantaged individuals by sharing opportunities, advocating for better DBE programs and eventually by starting a nonprofit.

“Ever since I’ve been a DBE, it seems like my income has dropped tremendously, but I still keep hope, you know, that this program will eventually help me in some kind of aspect,” Brown said.

Hoping for some changes to the DBE program, Brown said he’s held off on closing his truck company because of the lack of business.

“(It’s) really depressing,” Brown said. “That’s why I don’t have real confidence in the DBE program, because I feel like they put more pressure on us … than on the big (companies) to help the smaller (companies) like mine.”

Complications, legal battle

The lack of a final court ruling on the DBE program leaves women- and minority-owned businesses in limbo, blocking their ability to recover or plan effectively nationwide.

In the meantime, business leaders are supporting DBEs by providing resources and urging federal lawmakers to reauthorize the program while preparing for the trial hearing.

“I tell people, ‘Congress can help us,’” Payne, the Women's First president, said. “Congress has the authority to authorize this program, and they also have the authority to tell DOT how to administer this program, and that’s what we’re focusing on.”

Advocates, including DBEs of America, which represents almost 50,000 certified DBEs nationwide, are also hosting informational meetings, helping their members with recertification and urging Congress to get involved, including reauthorizing the program by Sept. 30, 2026, when it is set to expire and set off a gap in funding and legal authority.

The groups all stress that reauthorizing the DBE program ensures continued support and fair access for small, minority- and women-owned businesses in federal transportation projects. Its continuation would also prevent monopolies, foster economic opportunity and ensure that public dollars benefit diverse communities nationwide, advocates say.

Stephanie Duncan, director and president of DBEs for America, said failure to reauthorize the program could put business owners in jeopardy.

“It’s just going to shut out small businesses … become a monopoly and the prices are going to go up because there won’t be any competition,” Duncan said. “Small businesses are the backbone of this country, and the dollars that we put into a big construction project stay in our community.”

DOT issued an update to its interim final rule in December, after members of the House of Representatives —including leaders from the House Committees on Transportation and Infrastructure and Small Business, and Democratic Reps. Bobby Scott and Jennifer McClellan, both from Virginia — signed a letter cautioning the agency to “tread carefully” with the department’s plans for the program.

“Changes to the implementation of the DBE program threaten the survival of more than 50,000 existing small businesses across every state and affect the future path for small business participation in federally assisted transportation contracts,” the lawmakers’ letter to Transportation Secretary Sean Duffy stated. “An approach to implementation of the Department’s Interim Final Rule (IFR) that seeks to punish minority- and women-owned small businesses will add chaos, cost, and delay to transportation projects and will have ripple effects throughout the construction industry.”

The agency then announced several changes to its ruling, noting that state agencies can still support small businesses, but only without regard to race or sex.

While the rules are being reviewed, DBE goals are put on hold — which means there are currently no DBE targets, no tracking of DBE participation, and no penalties for missing past goals.

Businesses executing existing contracts and special cases, such as ferries, must use zero DBE goals for now, and any old race- or sex-based requirements no longer apply. DOT will update its paperwork to match the new rules.

A jury trial to determine the final rule is scheduled to begin on Jan. 26 at 10 a.m.

This story was originally published by the Virginia Mercury. For more stories from the Virginia Mercury, visit VirginiaMercury.com.