Disadvantaged Business Enterprise (DBE)

The U.S. Department of Transportation published an Interim Final Rule (IFR) in the Federal Register on October 3, 2025, which updates 49 CFR Parts 23 and 26 governing the Disadvantaged Business Enterprise (DBE) and Airport Concession Disadvantaged Business Enterprise (ACDBE) Programs.

The IFR and the IFR Frequently Asked Questions (IFR FAQ) issued on October 24, 2025, require Caltrans to operate the DBE and ACDBE Programs in a constitutionally compliant, nondiscriminatory manner. It eliminates all race- and sex-based presumptions of disadvantage and replaces them with a strictly individualized determination standard. The California Unified Certification Program (CUCP) must reevaluate all DBE firms under the new criteria before their eligibility can be confirmed. Until the reevaluation is complete, DBE goals cannot be set on contracts, and no DBE participation may be counted toward any DBE goal.

Effective immediately, all Caltrans divisions, districts, and subrecipients must operate under these new federal requirements.

Suspension of Certain DBE Provisions

• Per 49 CFR § 26.55(i) and § 26.47(e) (as amended), recipients may not count DBE participation toward contract or overall goals until the CUCP completes the required reevaluation of currently certified firms. The requirement to meet the overall goal is also suspended.
• Goal-based compliance monitoring and enforcement activities related to overall DBE attainment are temporarily suspended during this period.
• While DBE provisions are suspended, Caltrans districts, resident engineers, and project managers must continue to enforce certain aspects of active federally funded contracts that were let before October 3, 2025. This includes:
  • Prompt payment for satisfactory performance (49 CFR §26.29(b); and,
  • Termination provisions, i.e., a prime contractor or consultant cannot terminate a DBE or any portion of the DBE’s work listed without "good cause" and without prior written consent from Caltrans. (49 CFR §26.53(f)(3))
• Suspension of DBE provisions does not relieve Caltrans or contractors of their continuing compliance and contract administration responsibilities, including but not limited to adherence to the Subletting and Subcontracting Fair Practices Act (Public Contract Code Section 4100 et. seq.).
• Commercially Useful Function (CUF) reviews are suspended during the DBE reevaluation process.

Goal Setting and Reporting

• Overall DBE goal submissions for FY 2026 and beyond will be developed under the revised § 26.45 requirements once re-evaluations are complete.
• Until then, no new DBE contract goals are to be established on federally funded projects.

Certification and Reevaluation

• The Caltrans DBE Certification Unit and other CUCP certifying partners will issue separate instructions on reevaluation schedules and required documentation.
• No new DBE certifications or renewals will be finalized under the previous standards.

Important Links

The Caltrans Construction Manual has been updated through Construction Procedure Directives.

US DOT Interim Final Rule, published October 2, 2025

Interim Final Rule FAQ, published October 24, 2025

For more information, contact your District Local Assistance Engineer or DBE Coordinator.