The decision — one of the first to affect the private sector in the wake of the Supreme Court’s June decision upending race-conscious college admissions — throws into disarray an SBA program that has served minority-owned small businesses for about five decades. Legal experts said it could signal trouble for other programs meant to help underrepresented groups win federal contracts, including veterans and women. Approximately 4,800 businesses participate in the 8(a) program, and nearly 4,000 of them were certified under the presumption of social disadvantage, according to the SBA. In 2020, 8(a) firms were awarded $34 billion in government contracts, according to a Congressional Research Service report.
DBE Program Is Under Attack, And We Are Losing Ground Quickly
U.S. District Judge Gregory Van Tatenhove clarified on October 31st that his previous ruling of September 23rd filed by Mid-America Milling Company and Bagshaw Trucking applied to “all states in which the Plaintiffs operate or bid on Department of Transportation contracts impacted by DBE goals,” not just Indiana and Kentucky. In their request for Judge Van Tatenhove to clarify his order, the original plaintiffs listed 23 states, including Indiana and Kentucky, where they currently do business. States that may be barred from using gender- and race-based presumptions for DBE contracts are:
Tennessee
Arkansas
Ohio
Mississippi
Delaware
Alabama
Louisiana
Virginia
Oklahoma
South Carolina
West Virginia
Missouri
Illinois
North Carolina
Georgia
Michigan
Iowa
Kansas
Minnesota
Texas
Florida
Although it is expected that the President-elect’s DOT will get rid of the DBE Program, in the next few weeks, we will have meetings to discuss joining a coalition with major corporations, law firms, and community activists. We will demand that USDOT do an Impact Study and bring Women First to the table to save the subcontracting industry. The current USDOT has said it will continue the program with possible modifications; however, the state DOTs are panicking because the USDOT needs to figure out what to do regarding the judge’s ruling. There is a movement in Washington to hire a major law firm to fight these court decisions. WE ARE NOT GOING TO GIVE UP!
WOMEN FIRST NLC TRUSTEES ANNUAL DC FLY IN SEPTEMBER 23-25
Women First NLC Trustees held a number of meetings in Washington, DC to meet with members of Congress and staff on the DBE Program and discussed what will happen if the program goes away based on a judge’s ruling in Mid-America Milling Company & Bagshaw Trucking Inc v. U.S. Dept. of Transportation, et al., 23-cv-00072 (E.D. KY). The DBE Program provides remedial assistance to businesses owned by social and economically disadvantaged individuals.
MBELDEF and WOMEN FIRST Joining Forces to Fight for DBE Program
The Minority Business Enterprise Legal Defense and Education Fund (MBELDEF) was founded in 1980 by Parren Mitchell to be a legal watchdog for the minority business community. In 1983 Anthony (Tony) Robinson became the second President of MBELDEF and remains the leader today. MBELDEF and Women First have worked together since 1996 when we banded together to defeat a bill on the US Senate to get rid of the DBE Program, and we have remained partners in this endeavor ever since. Today, with the DBE Program under threat like never before and with a well-funded, politically, and legally connected group attacking our life’s work, we once again, are joining with our friends at MBELDEF to demonstrate that women and minorities continue to be discriminated against in the highway construction industry and the continued need for the DBE Program. More information to follow soon on our joint effort. For more information on MBELDEF, click here
USDOT Issued Final Rule that Modernizes the DBE Program and ACDBE Program Regulations
https://www.transportation.gov/briefing-room/usdot-significantly-modernizes-disadvantaged-business-enterprise-program-and-airport USDOT will host trainings and informational sessions on the final rule starting Tuesday, April 23, 2024. Information to register is here. These Congressionally mandated programs were created over 40 years ago to address and remedy the continuing effects of past discrimination against small businesses owned and controlled by minorities, women, and other socially and economically disadvantaged individuals and continue today to prevent and address ongoing discrimination. Key changes (available ppt here) made to the DBE and ACDBE (Airport Concessions) programs include several provisions that will have a direct impact on eligible firms and the contractors that hire them, such as:
- streamlining the DBE and ACDBE certification and eligibility process
- adjusting the personal net worth (PNW) cap for inflation for small business owners, including excluding retirement assets from the calculation.
- formalizing guidance establishing successful COVID-19 flexibilities such as virtual on-site visits, to conserve certification and firm resources
- modernizing the rules for counting participation by DBE material suppliers and clarifying terminology
- addressing specific distinctive issues with the ACDBE programs involving FAA recipients including holdovers in the definition of “long-term exclusive leases” in the ACDBE program,
- replicating the DBE program’s small business element requirements for the ACDBE program
- making technical corrections and other updates such as expediting interstate reciprocity.
- expanding recipient reporting requirements to USDOT to gain greater knowledge of DBE/ACDBE characteristics, bidding/solicitation practices and utilization and overall program impact
- strengthening monitoring and prompt payment requirements
- enhancing ACDBE goal setting and reporting requirements
Another part of the USDOT update, is a tiered system for Federal Transit Agency (FTA) grant recipients. This new system will result in data collection from more FTA recipients and clarity around prohibited discriminatory practices, which will help the FTA ensure that contractors working on transit projects are not subjected to discrimination in the award and administration of FTA-funded contracts. Beginning in FY 2025, FTA will move to this tiered system for DBE program compliance:
- Tier I Recipients: FTA grant recipients who award more than $670,000 in FTA funds annually in 3rd party contracts are subject to all provisions
- Tier II Recipients: FTA grant recipients who award $670,000 or less in FTA funds annually are subject to a subset of provisions, such as the reporting requirements and the small business element
Former Trump Staffer Comes After DBE Program in The Courts
Stephen Miller, the former Trump staffer, heads a legal group that has filed complaints with the Equal Employment Opportunity Commission asserting that “woke corporations” like Disney, Nike, Mattel, Hershey, United Airlines and the National Football League discriminate against white males. His organization is also coming after the DBE Program via the lawsuit they filed in Kentucky https://www.nytimes.com/2024/03/21/us/politics/stephen-miller-america-first-legal.html?smid=nytcore-ios-share&referringSource=articleShare
**ALERT**
DBE PROGRAM UNDER THREAT OF BEING RULED UNCONSTITUTIONAL
PROGRAM WILL CEASE IMMEDIATELY LIKE
SBA 8(A) AND COMMERCE’S MINORITY BUSINESS DEVELOPMENT AGENCY PROGRAMS
Last fall, a new legal challenge to the DBE program was filed in the Federal District Court for the Eastern District of Kentucky. Using the same arguments that were in Bruckner, Nuziard, and Ultima, Mid-America Milling Company, LLC, et. al. v. U.S. Department of Transportation, et. al., Case No. 3:23-cv-72, challenges the Department of Transportation’s (DOT’s) use of rebuttable presumption when determining “socially disadvantaged” applicants for purposes of the DOT’s DBE Program. The plaintiffs, Mid-America, are represented by the Wisconsin Institute for Law & Liberty, a well-funded organization, headed by former Trump Administration officials, has filed anti-affirmative action lawsuits across the country, and is the same firm that represented the plaintiffs in the Bruckner and Nuziard cases which had a judge rule the SBA 8(a) program was unconstitutional.
Per JDSupra, “the plaintiffs in Mid-America question the DOT’s use of a rebuttable presumption to determine whether an individual is socially disadvantaged and argue it is unconstitutional racial discrimination. Specifically, they contend the department’s use of a rebuttable presumption that businesses owned by women and certain races and ethnicities are socially disadvantaged is unconstitutional disparate treatment on the basis of race and sex.”
“The DOT has moved to dismiss the plaintiffs’ claims with the argument that they lack standing because they have failed to identify any specific contracts, they lost due to any preference given to DBEs. On February 6, the plaintiffs filed their opposition to the federal government’s motion to dismiss. The opposition does not raise any new claims or arguments against the program. It focuses instead on establishing the plaintiffs’ standing to bring their claims.”
**ALERT**
SBA program upended in wake of Supreme Court affirmative action ruling
A Trump-appointed judge in Tennessee struck down a provision in the SBA federal program meant to help minority-owned businesses, a ruling that could imperil other programs that benefit underrepresented groups such as the Disadvantaged Business Enterprise Program (DBE) administered by the U.S. Department of Transportation. The federal judge declared a key provision of a popular 8(a) federal program unconstitutional because of its “social disadvantage,” extending the U.S. Supreme Court’s recent retreat from affirmative action. The Small Business Administration’s 8(a) Business Development program was meant to open a pipeline to billions in government contracting dollars for historically disadvantaged groups. But in July, a federal judge in Tennessee struck down a provision of the program that equated race with social disadvantage.
About Women First NLC
Women First is a privately-funded, nonpartisan, national grassroots effort that advocates for women-owned small businesses certified in the U.S. Department of Transportation Disadvantaged Business Enterprise (DBE) Program.
A strong supporter and advocate for DBEs, our mission is to promote, protect and leverage the economic, social and political influence of women DBE certified businesses in the U.S.
Currently there are many national associations that include DBE contracting as part their platforms. But until Women First there has not been a national organization solely dedicated to this purpose or one that specifically addresses women in transportation and construction.
Women in this industry have the potential to be a powerful voice. In 2016, there were 25,910 women-owned businesses in the Highway, Transit and Airport construction according to United States Department of Transportation survey. With approximately 200,000 people employed, women-owned small businesses are a critical makeup of the transportation construction industry. Our effort to coalesce a strategy for them is needed and can be an important strategy to protect these businesses to thrive economically.
