The DBE Program Reboot in California
July 29, 2026The DBE Final Rule was officially published in the Federal Register on September 25, 2026. The USDOT published frequently asked questions (FAQs) at the same time.
The DBE Final Rule did not change the transition to individualized determination of social disadvantage requirements. The Final Rule provides minor clarifications that are considered administrative refinements to the Interim Final Rule.
Key Clarifications in the Final Rule:
- A business owner may discuss actual experiences of discrimination involving race or sex in the Personal Narrative. However, race or sex by itself cannot be used to automatically determine that the owner is disadvantaged.
- USDOT replaces the term "similarly situated" with a clearer standard that compares the owner with non-disadvantaged individuals who have comparable qualifications.
- Meeting the Personal Net Worth requirement alone is not enough. The owner must also demonstrate that they are economically disadvantaged in fact.
- USDOT establishes specific deadlines for UCPs that have not completed their reevaluations, including a 90-day completion requirement from September 25, 2025 (until December 24, 2025). This also allows a UCP to request a single 90-day extension.
- Goals may start again after a UCP has completed its reevaluation
- Former DBE firms that have not responded to reevaluation requests will receive a final notice and have 90 days to submit their personal narrative. They will be considered "disqualified" from the DBE database afterwards.
- The basic framework established by the IFR for DBE goal setting and counting remains in place under the revised race- and sex-neutral approach.
- Disparity studies may now only be used to measure the availability and capacity of small businesses.
- The public consultative process must include other organizations and not only minority and women contractor organizations.
The California UCP completed its reevaluation on July 21, 2026. This means that some recipients of DOT funds have already started developing overall goals and/or submitted revised DBE Program Plans to comply with the IFR/FR. Caltrans issued a public notice regarding their FHWA Overall DBE goal on August 17, 2026. Their draft goal is 11.8%. Public comments are allowed until September 30, 2026, and Caltrans plans to issue the overall DBE goal on October 1, 2026. This means that Caltrans subrecipients will likely be required to start using DBE goals on any FHWA funds received from Caltrans when subcontracting opportunities exist soon after.
Final Rule FAQs:
The USDOT also issued FAQs to the Final Rule on September 25, 2026. The FAQs provide additional information about the Final Rule, including:
- When the reevaluation process must be completed
- Allowing other relevant sources to supplement the DBE directory for goal development
- The use of Small Business programs, and
- How disparity studies can be used for DBE overall goal development.
Key FAQs in the Final Rule:
General Reporting & Reevaluation
- Uniform Reports: Recipients are not required to submit Uniform Reports under 49 CFR 26.21 until the Unified Certification Program (UCP) in their jurisdiction completes the mandatory reevaluation under 49 CFR 26.111 and notifies USDOT.
- DBE Goals: Recipients cannot set contract goals or count DBE participation toward goals until the UCP completes the reevaluation.
Certification & Termination Provisions
- Termination enforcement: The regulatory DBE termination provisions do not apply during the reevaluation period. USDOT will not enforce them against recipients or prime contractors until the reevaluation deadline passes or the UCP completes its process, whichever comes first.
- Extensions: If a UCP gets a 90‑day extension but finishes early (e.g., after 60 days), the stay in enforcement ends at 60 days.
Reevaluation Process, Deadlines, & Processing
- Recipient’s failure to implement the reevaluation process: Recipients failing to implement the reevaluation process could face a finding of noncompliance with the DBE regulations and subject the recipient to the loss of Federal funds if the noncompliance is not corrected.
- UCP reevaluation completion: The UCP for the Jurisdiction of Original Certification (JOC) must complete their reevaluations no later than December 24, 2026, 90 days after the final rule’s effective date. A one-time 90-day extension to a particular UCP may be granted by the Department’s Office of Small and Disadvantaged Business Utilization (OSDBU) based upon special circumstances.
- Certifiers must wait to receive required reevaluation documents: The certifier must wait until December 24, 2026 for a DBE to submit the required documents. The UCP must issue a Notice of Decision (NOD) after 180 days stating that the firm has been disqualified for failing to provide the PN and PNW statement.
Practical Implications
- For recipients: No early reporting or goal setting until UCP reevaluation is complete; termination enforcement is paused during reevaluation.
- For UCPs: Must complete reevaluation under 49 CFR 26.111 before triggering reporting and goal-setting obligations.
- For contractors: DBE participation counts and goals are not valid until reevaluation is complete.
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Written By: Edward Salcedo, Jr., Esq., President of GCAP
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