The Trump administration on Wednesday proposed ending a four-decade-old program that mandates the hiring of minority- and women-owned businesses for federal transportation contracts.

It could have major implications for thousands of businesses.

The move came as a response to a 2023 federal lawsuit against the U.S. Department of Transportation alleging the program was unconstitutional.

While the Biden administration had been defending the program in court, the Trump administration has taken the opposite approach with the proposed settlement.

The lawsuit was filed by two Indiana-based hauling and milling companies against what’s known as the DBE program, which aims for 10% of transportation spending to be awarded to “disadvantaged business enterprises,” or minority- and women-owned companies.

In a statement Wednesday, plaintiff Kramer Koetter of Mid-America Milling Company said, “All we want is a level playing field. If my team can put forth the best product or service at a reasonable cost, then we should be rewarded for that.”

Three of the biggest managers of transportation contracts in Georgia are the state Department of Transportation, Hartsfield-Jackson Atlanta International Airport and MARTA. Each has minority contracting goals that exceed 10%, but it’s unclear what such a settlement, if approved by a judge, could mean for each of these entities.

Officials from the agencies told The Atlanta Journal-Constitution they could not immediately say what the effect of such a settlement, if approved, would be.

In a statement, Hartsfield-Jackson noted it “will do its due diligence and evaluate potential future impacts to our programs here in Atlanta.”

‘Devastating to the community’

According to the U.S. Department of Transportation’s website, the program was created by Congress in 1983 “to assist small business formation and growth” by removing barriers to participation.

It was inspired by the success of Atlanta’s own unprecedented minority contracting requirements in the late 1970s under the city’s first Black mayor, Maynard Jackson, created in response to steep inequality in municipal contract awards.

State transportation departments are responsible for certifying participants; state and local transportation agencies are the entities that actually distribute federal DOT funds.

A federal judge in September sided with the plaintiffs and temporarily halted the program.

On Wednesday, the Transportation and Justice departments wrote they “have reevaluated their position,” given a 2023 Supreme Court decision banning college affirmative action programs. President Donald Trump has, this year, also signed several executive orders targeting affirmative action programs across the federal government.

“USDOT has determined that the race- and sex-based presumptions in its DBE program can no longer pass constitutional scrutiny,” the government wrote.

A judge still needs to sign the proposed consent decree.

For Sheila Jordan, CEO and founder of Atlanta-based Knowledge Architects, the dismantling of the program would be “devastating.”

She got her DBE certification when she started her company 16 years ago and has grown to $7 million-$8 million in annual revenue. About 70% of her business wouldn’t exist without the DBE program, she said.

She works with MARTA and about 15 other clients across the U.S., helping them update their processes and upskill technicians, mechanics and engineers.

“These programs are very important to small business growth and stability,” Jordan told The Atlanta Journal-Constitution in an interview. “And so, taking them away is going to be devastating to the community.”

About 3,500 companies in Georgia have registered as federal DBEs, according to an AJC analysis of Georgia DOT data. DBEs are often hired as subcontractors to handle pieces of larger projects.

Decades of ‘explicit and implicit discrimination’

Earlier this year, in an effort to pick up the legal mantle from the Biden administration, a collection of minority contractor associations and contractors themselves intervened in the lawsuit to defend the program.

They wrote that Congress has “repeatedly recognized” its value “as a means of remedying decades of consistent explicit and implicit discrimination against women and people who are members of particular racial or ethnic groups.”

In 2021, minority-owned businesses represented nearly a quarter of those eligible for federal contracts across departments, but they accounted for just 3% of all contracts awarded that year, according to a study conducted by the Biden administration.

“In a lot of ways, minorities are forced to subsidize our own exclusion through the tax dollars that we pay,” said Ernest Ellis, president of the Atlanta chapter of the National Association of Minority Contractors, one of the associations pushing back against the Trump administration’s move.

Ellis is also CEO of Georgia-based construction firm FS360, and while he hasn’t participated in the DOT’s DBE program, he has benefited from the “potpourri” of other minority certifications, like from the city of Atlanta and private associations, he said.

It’s unclear, if the Trump administration is successful in ending the federal DBE program, exactly how the change would impact the complex layers of minority contracting certifications embedded in federal, state and local contracts. But Ellis said, “Reading a crystal ball, I think it becomes a political decision at that point.”

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