SANDAG ends diversity requirements on all contracts following federal rule change

The San Diego Association of Governments is ending a program that helped woman- or minority-owned businesses win contracts for highway, transit and airport projects.

SANDAG alerted contractors last month it was making “significant changes” to the federal Disadvantaged Business Enterprise program, which helps small businesses owned by “socially and economically disadvantaged” individuals apply for and win Department of Transportation contracts.

The agency’s decision follows an October policy decision by the Trump administration that aligned with the president’s emphasis on ending diversity, equality and inclusion efforts across the federal government.

In an Oct. 24 notice, SANDAG told contractors with federally-funded contracts that it would no longer track, enforce or evaluate any contract for any requirements associated with the long-running Disadvantaged Business Enterprise program.

“SANDAG is working with state and federal partners to identify necessary program and procedural changes to ensure full compliance,” SANDAG spokesperson Jessica Gonzales said.

Until last month, women and racial minorities were considered “disadvantaged” under the under the federal program. The DOT policy change determined businesses must instead make the case that their owner is socially and economically disadvantaged without regard to race or sex. 

Federal officials issued that new rule off the back of a court case against the department in Kentucky. In 2023, a contractor that was not part of the program filed a lawsuit against the DOT alleging the program’s use of race and gender provisions was unconstitutional. The case argued that women and certain racial groups could not be “presumed” to be disadvantaged.

Federal officials under the Biden administration fought the case, but the department changed its position when the Trump administration appointed new leadership. The DOT settled the lawsuit in May, and agreed as part of the settlement to remove the program’s use of “gender-conscious” and “race-conscious” contracting goals.

In June, a coalition of minority- and women-owned businesses said the settlement went beyond the case itself to lend “the full weight of a court order” to ending “equity-focused programs,” and argued it was so sweeping it could block local governments from using race- or gender-conscious contracting goals even if they weren’t seeking federal funds.

“The DBE program has given women and minorities a fragile foothold in construction, where barriers still run deep,” said Theresa Kern of the Women Construction Owners & Executives Illinois Chapter.

The coalition filed a brief urging the court not to approve the agreement without considering further information from impacted groups. While the court has not given a final ruling, an interim final rule was announced Oct. 3 making immediate changes to the program. 

Contractors now have to submit a personal narrative showing the owner is disadvantaged based on “economic hardship, systemic barriers, and denied opportunities that impeded the owner’s progress or success in education, employment, or business.”

SANDAG notified its federally-funded contractors of the changes three weeks after the new DOT directive.

Gonzales told Times of San Diego the agency will not monitor or impose any requirements related to the altered federal program for any agency project — not just those related to federal funding.