Update on Interim Final Rule
Good afternoon, internal and external partners,
The United States Department of Transportation recently issued an interim final rule (IFR) that took effect on October 3, 2025. The full text of the IFR is available in the Federal Register. This rule change amends the federal Disadvantaged Business Enterprise program (49 CFR part 26) and the Airport Concession Disadvantaged Business Enterprise program (49 CFR part 23), removing race- and gender-based presumptions of social and economic disadvantage from the process of certifying businesses to participate in both programs.
We understand this raises many questions for certified businesses, prime contractors, and other partners. The IFR states that:
- As originally authorized by Congress, the DBE and ACDBE programs automatically presumed certain groups (such as women and federally recognized minority business owners) to be socially and economically disadvantaged. However, the federal government now takes the position that such race- and gender-based presumptions are unconstitutional and should not be enforced.
- Under the new rules, Unified Certification Programs (UCPs) may no longer rely on race- or gender-based presumptions when determining DBE/ACDBE eligibility.
- The new rules state that all new applicants and currently certified firms must provide documentation showing they meet both social and economic disadvantage criteria. Currently certified firms who do not meet the new criteria are to be decertified. Until all currently certified firms are re-evaluated under the new standards set forth in the IFR, no DBE goals may be set on contracts, nor may DBE participation on existing contract goals be counted toward the overall agency goal.
Since 2019, WSDOT has been preparing for the possibility that the presumption that minorities and women are socially disadvantaged would be challenged or removed. In anticipation of these federal actions, WSDOT has taken actions to assist small and disadvantaged businesses including, but not limited to:
- In 2024, WSDOT performed rulemaking for our Certified Public Works Small Business Enterprise & Veteran Owned Business Program to increase our goals from 5% to a maximum of 20% for small businesses; veteran-owned business goals remain at 5%.
- In 2023, WSDOT established a trucking consortium to pool the resources of small and diverse trucking companies to better compete with larger contractors.
- In 2025, we are working with the Port of Seattle, City of Seattle, King County, and Sound Transit to increase the number of agencies, mentors, and proteges within the Capacity Building Mentorship Program.
- Worked with the Washington State Office of Minority & Women’s Business Enterprises, Attorney General’s Office, and Western Washington University to create a new certification program for socially disadvantaged individuals.
- Created and implemented a race-neutral Federal Small Business Enterprises Mandatory Program on specific USDOT federal-aid projects.
- Received additional funding through the legislature for the Small Business Support Services Program, implemented by Tabor 100.
- Worked with the State Legislature and the Washington State Office of Minority & Women’s Business Enterprises to develop two new certification designations. These small business designations are the Emerging Small Business, with annual gross receipts of no more than $3 million, and the Rising Small Business, with annual gross receipts of no more than $10 million. WSDOT can now establish Emerging Small Business and Rising Small Business goals on state-funded projects over $50 million.
- Continued working with the legislature and Western Washington University to analyze the impact of small businesses on Washington State. This information can be used to inform the legislature of the economic benefit to programs of this nature.
In response to the new IFR, WSDOT will be taking the following actions on USDOT federal-aid projects:
- On October 7, 2025, WSDOT received direction from the USDOT Federal Highway Administration that we are not to set DBE goals moving forward. WSDOT, uniquely, has an approved Federal Small Business Enterprise program, which due to its race-neutral nature is not affected by this IFR. WSDOT will be implementing the individual Federal Small Business Enterprise goals until the new DBE certification requirements are implemented by the Washington State Office of Minority & Women’s Business Enterprises.
- The IFR is unclear on how to handle active projects with condition-of-award DBE goals preexisting the rule. WSDOT has asked USDOT’s Federal Highway Administration to provide further guidance to determine if active DBE project goals cannot be enforced. Current projects will continue to be enforced until we are informed otherwise.
- If USDOT informs WSDOT that the current DBE contract goals are unenforceable, WSDOT is planning to convert the current DBE goals via change order to FSBE goals, to the extent permitted by law.
WSDOT will continue to set Public Works Small Business Enterprise & Veteran Owned Business goals on state-funded projects. WSDOT will continue to review state-funded projects over $50 million for Emerging and Rising Small Business Enterprise goals.
We are hosting a listening session with the Washington State Office of Minority & Women’s Business Enterprises tomorrow, October 16, from 10:00 to 11:00 a.m.
We will continue to keep you updated as soon as we have more information.
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