INDIANAPOLIS — Indiana officials moved Wednesday to dismantle race- and sex-based contracting preferences in state procurement after Attorney General Todd Rokita concluded that central elements of the state's Disadvantaged Business Enterprise program violate the Equal Protection Clause of the Fourteenth Amendment.
State responds with immediate policy change
Gov. Mike Braun directed the Indiana Department of Administration to halt the unlawful portions of the program and replace them with a merit-based approach, saying the state must ensure equal treatment under the law for all Hoosiers. The governor framed the decision as a restoration of a level playing field for businesses seeking state contracts.
"This blatantly illegal program singles out some Hoosiers for disfavored treatment purely because of their sex or the color of their skin," Attorney General Todd Rokita wrote in his formal opinion, calling the policy "both un-American and unconstitutional."
Rokita's review focused on the Minority and Women’s Business Enterprise components, which for decades required state agencies to set race- and sex-specific spending goals on many state contracts and to certify businesses by race and gender. Contractors who failed to meet those targets faced penalties ranging from withheld payments to debarment, the attorney general said.
What the program did and what's changing
Originally established by state law in 1983, the Disadvantaged Business Enterprise (DBE) framework guided procurement goals intended to direct a portion of state contracting dollars to businesses owned by women and members of certain minority groups. Rokita's opinion concluded those statutory mechanisms impermissibly treat people differently based on protected characteristics.
- Effective action: IDOA ordered to end race- and sex-based components.
- Replacement approach: procurement to be based on merit, according to the governor.
- Legal basis: opinion cites the Equal Protection Clause of the Fourteenth Amendment.
The move raises immediate questions for state agencies, contractors and certified firms that have participated in the DBE process for years. Agencies that set goals tied to the program will need to revise procurement rules and guidance to comply with the attorney general’s opinion and the governor’s directive.
| DBE feature | Before | After (ordered) |
|---|---|---|
| Certification by race/sex | Required | To be discontinued |
| Contract spending goals | Set by agencies using race/sex targets | Replaced with merit-based standards |
| Penalties for noncompliance | Bid rejection, withheld payments, debarment | Subject to new procurement rules |
State officials have not released a timeline for implementing revised procurement policies or for reviewing existing contracts and certifications. The department asked the attorney general for the review in August, prompting Rokita’s formal opinion this week.
Local and statewide implications
The decision affects a wide range of stakeholders: small businesses that relied on DBE certifications for access to public contracts, general contractors that factored diversity goals into bids, and state agencies that must ensure compliance with both state statute and constitutional protections. Businesses that had been certified under the DBE system will need guidance on whether their certifications remain valid and how upcoming solicitations will be evaluated.
Legal challenges could follow if affected parties contest the attorney general's interpretation or the administration's response. Courts in other states and at the federal level have wrestled with similar questions about race-conscious contracting in recent years, and Indiana's move places the state among those shifting toward race- and sex-neutral procurement rules.
For now, contractors and vendors seeking clarification should monitor guidance from the Indiana Department of Administration and official bulletins from the attorney general’s office. State procurement officers must quickly draft new rules that align with the opinion while ensuring transparency and fairness in awarding contracts funded by taxpayers.
The development marks a significant policy change in Indiana procurement nearly 43 years after the DBE program's creation, altering how the state will approach contracting priorities and supplier outreach going forward.
