‘DEI Is Dead. Long Live Economic Development’ Update

By: Margery Newman

In our May 2025 Construction Newsletter edition, the article “DEI Is Dead. Long Live Economic Development” was published, addressing affirmative action programs in the construction industry. As more information has become available, this article is being updated to address more specifically what steps Disadvantaged Business Enterprises (“DBE”) need to take to maintain their certification.

On October 3, 2025, an interim US Department of Transportation (USDOT) rule regarding the criteria for certification as a DBE went into effect. No longer will there be a “presumption” that an individual is socially and economically disadvantaged based on their race or sex. Now, current and future companies that are either certified DBEs or want to become certified DBEs will be required to show how they have been disadvantaged.

In Illinois, the following five sister agencies are part of a unified certification program (ILUCP) that provides a one-stop certification process of DBEs:

1. Illinois Department of Transportation (IDOT)
2. City of Chicago
3. Metra
4. Pace (RTA)

Firms may apply to any of these agencies for DBE certification, and once certified by one agency, that certification will be accepted by all the other agencies.

With the new USDOT interim rule in place, the ILUCP partners are conducting a re-certification process for all firms listed in the ILUCP DBE directory.

By November 24, 2025, all currently certified DBEs will have to submit an updated personal narrative (PN) and personal net worth statement (PNW) documenting how they are socially and economically disadvantaged. Failure to provide such information will result in the decertification of those DBEs who failed to meet the deadline.

Of particular importance to this new requirement is that the determination of disadvantage will not be based in whole or in part on the race or sex of the DBE owner(s). DBEs seeking to remain certified must now show specific examples of economic hardship, systemic barriers and denied opportunities to remain in the DBE program.

A good, but not all-inclusive, checklist of information required for the new personal narrative follows:

1. Early life and foundational barriers to growth in the construction industry. Under 49 CFR §26.67(a)(1)(i), early experiences, such as lack of access to financial, educational, and/or professional opportunities, could establish social disability.
2. Business difficulties due to lack of access to capital and bonding are considered barriers that are applicable for DBE certification.
3. Industry challenges and retaliation by upstream owners or general contractors, such as refusal to consider bids or use a DBE on private work that has no goals.
4. Impact of barriers on company startup and growth.
5. Positive impact of the DBE program on the company to date.

Under the new rules, evidence of disadvantage as set forth above will be judged by a preponderance of the evidence standard. Additionally, the economic threshold to prove economic disadvantage cannot exceed a personal net worth of $2,047,000.00. Therefore, a new PNW statement must also be submitted along with and attached to the PN.

There are still many unanswered questions regarding the implementation of this new program. For example, it is unclear how this new program will impact existing contracts. Further, the basis for reevaluation of certified DBEs is not fixed and there is no bright line for what criteria will be accepted. Ultimately, the updated PN must meet the three pillars of social and economic disadvantages by providing specific instances of:

1. Economic hardship
2. Systemic barriers
3. Denied opportunities