Minority-Owned Contractors Face Business Threats from Federal Program Changes

Business owners from minority communities report significant challenges to their operations following federal court approval of changes to a Transportation Department program. The modifications eliminate automatic qualification assumptions for minority and women-owned enterprises, requiring new documentation processes that have created delays and uncertainty.

Business owners from minority communities across the nation report mounting challenges to their operations following significant changes to a federal transportation contracting program, with many facing reduced profits, workforce cuts, and project postponements.

The modifications stem from a federal court decision last October in Kentucky that permitted the current administration to eliminate automatic qualification assumptions for the Transportation Department’s Disadvantaged Business Enterprise program. This 42-year-old federal initiative was designed to help minority and women-owned companies compete for infrastructure repair contracts.

The changes affect a program tied to the 2021 bipartisan Infrastructure Investment and Jobs Act worth $1.2 trillion, which established a national objective for the Transportation Department to direct no less than 10% of surface transportation, public transit, and highway safety research funding toward disadvantaged enterprises.

Approximately 50,000 companies nationwide must now provide “personal narratives” alongside financial documentation for recertification under the modified regulations. These businesses must prove social and economic disadvantage through individual experiences without referencing race or gender, detailing specific instances of hardship, systemic obstacles, and missed opportunities.

The certification process operates at the state level where federal transportation funding gets allocated, creating varying timelines and procedures across states while suspending participation objectives for major infrastructure initiatives.

The U.S. Department of Transportation stated in a communication to Reuters that it “did not mandate” specific timing or methods for states to make certification decisions for the Disadvantaged Business Enterprise program, though decisions “cannot be based on race or sex.”

More than 25 interviews with minority contractors revealed that the alterations in state and federal contracting threaten their enterprises and income sources, already contributing to decreased earnings, job cuts, and project setbacks.

Companies previously holding disadvantaged business certification must now reapply, with some awaiting responses from state agencies for several months.

Throughout the extended review period, minority and women-owned enterprises can still submit contract bids but compete against larger, better-funded companies, which undermines the program’s intended purpose of creating equal opportunities in transportation contracting, according to four procurement advisors and attorneys.

“Prime contractors and general contractors do not use women and minorities unless they have to,” stated Joann Payne, president of Women First, an advocacy organization for women-owned businesses in transportation and construction. “Taking away the goals has devastated the program.”

The recertification uncertainty affects major infrastructure projects nationwide. Minnesota transportation officials removed their minority participation objective from a $1.8 billion bridge replacement project, the state’s largest in history. Before the October ruling, the project established an 8.6% participation goal for minority contractors, according to an unpublished Minnesota Department of Transportation document.

Minnesota began reviewing contractor certifications in November but has not indicated completion timing or numbers. Pippi Mayfield, spokesperson for the Minnesota Department of Transportation, said she expects participation goals will return eventually, but “we do not know when.” Meanwhile, minority-owned companies can bid on contracts without disadvantaged certification, she noted.

In February, the current administration paused the $16 billion Gateway Tunnel project between New York and New Jersey to verify funding wasn’t connected to diversity, equity and inclusion initiatives deemed unconstitutional. A federal court ordered fund release nearly two weeks later.

New Jersey initiated disadvantaged business reevaluations on January 12 but provided no completion timeline. The New York State Department of Transportation did not respond to comment requests.

A Gateway Development Commission spokesperson stated they “will continue to ensure the Hudson Tunnel Project adheres to the latest federal regulations.”

Florida, receiving $16.7 billion under the Infrastructure Investment and Jobs Act, advocates for complete federal Disadvantaged Business Enterprise program repeal. A November 20, 2025 memo from Florida Department of Transportation Secretary Jared W. Perdue stated “Florida firmly believes” the federal program “must be repealed entirely and replaced with a program whose primary purpose is advocating for improving economic competitiveness and small business development.”

Perdue and the Florida Department of Transportation did not respond to comment requests.

The $1.2 trillion Bipartisan Infrastructure Law intended to channel federal dollars through state and local agencies for local job creation. However, minority contractors argue that without the Disadvantaged Business Enterprise program, those funds won’t reach minority and women-owned enterprises.

“These businesses build jobs, they pay taxes and they build communities,” said Don Cravins, CEO of the National Minority Supplier Development Council.

Former program participants argue the initiative has been incorrectly portrayed as a quota system when it actually established participation objectives encouraging genuine efforts to include minority-owned companies in taxpayer-funded projects.

Texas contractor Gregory Cody, 63, who worked as prime and subcontractor for multiple government agencies over 20 years, said some Republican-led states treated objectives as “performative” to secure federal funding, “but now they’re saying we don’t need you anymore.”

Cody submitted recertification paperwork in October, but the Texas Department of Transportation hasn’t indicated if or when he’ll be recertified. A department spokesperson confirmed no companies have been recertified since beginning reevaluations in February.

Terrell Johnson, 35, who operates a trucking company in Portsmouth, Virginia, said there was always a “lack of genuine opportunities” even when certified as a Disadvantaged Business Enterprise under previous regulations.

“It seems like the same contractors in my area are always awarded the big jobs. They controlled and monopolized work from smaller firms,” he explained.

Johnson decided against reapplying for disadvantaged business certification in Virginia. Virginia did not respond to Reuters’ comment request about Johnson’s claims, which could not be independently verified. The department stated it works to “complete reevaluations as soon as practicable.”

Sean Link, 55, a dump-truck contractor in North Carolina, described forced recertification as “10 steps backwards” for minority-owned companies already competing for limited opportunities in his field.

Link held disadvantaged business certification under previous regulations and applied for recertification in North Carolina.

Jamie Kritzer, North Carolina Department of Transportation spokesperson, said the state began recertification March 16. “Businesses will have 60 days to submit materials to apply for recertification, and the state aims to complete the reevaluations by June,” he wrote in an email.

Link plans to diversify by bidding on federal contracts beyond hauling, including office and cleaning product supplies.

“You have to find other ways in this industry to survive,” he said.