Public procurement has never been just about buying things. Every purchase order is public money in motion, and legislatures and councils have always asked that money to do more than one job at a time. Do an RFQ for the road, yes, but also build the contractor base that can bid on the next road. Put out the RFP for office supplies, yes, but leverage the event to amplify the social value.
These abstract and sometimes conflicting goals evolved into plannable socioeconomic programs: MBE and WBE goals, disparity studies, certification programs, and federal set-aside categories flowing down through grant conditions. And the actual implementation work generally did not go to a policy shop or a task force. Rather, it went to procurement, which had to balance efficiency, quality, and stewardship responsibilities, seeking to blend all three.
Now that a shifting legal and political climate is driving change into these programs, procurement can help forge a thoughtful path, advising policy leaders on operational solutions in changing times – and potentially creating new opportunities.
Let's look at what has changed, where the momentum points, and how to take action.
What Has Changed:
Let's start federally with the 8(a) program, because that is the template so many state and local programs were modeled after. This program has been changing since 2023, when a federal court enjoined its core presumption of disadvantage (Ultima Services v. USDA), and again in 2025 when the Department of Justice told Congress it would no longer defend that presumption in court.
In January 2026, the SBA issued guidance describing 8(a) as a race-neutral program, and its pending rule would replace the old standards entirely with a single test built on individually documented harm. The FAR rewrite points in the same direction. The new Part 19, operating now through agency deviations while the final rule pends, keeps the key small business set-aside (Rule of Two) but drops the formal priority that 8(a), HUBZone, SDVOSB, and WOSB set-asides used to hold over general small business set-asides.
The courts have been just as consistent. Federal courts have struck or enjoined race- and gender-based presumptions in the 8(a) program, the Minority Business Development Agency's programs, and the Department of Transportation's DBE program. The pattern is that group-based shortcuts to proving disadvantage cannot survive strict scrutiny.
Whatever your personal view of that trajectory, the operational fact is unavoidable: any local program built on the old 8(a) presumption structure is now built on a framework the federal government has abandoned.
There is also a second kind of change, and it is moving fast. In March, an executive order created a new federal contract clause barring contractors from race-based DEI practices. It went into new federal contracts in April, and agencies were told to modify every existing federal contract to add it by July 24.
State and local procurement are not federal contractors, but do not read that as a pass. The parallel obligation for recipients of federal grants is already in force: awards now carry a certification that you do not run programs that violate federal anti-discrimination law, and that certification is wired into the False Claims Act, which means getting it wrong is treated as fraud rather than paperwork. The Justice Department has said plainly that this is an enforcement priority, and in April, it announced a $17 million settlement in its first DEI-related False Claims Act case.
Your vendors, many of whom hold federal contracts, are signing that new clause right now, which means they will soon ask you how your local participation requirements align with the federal paper they just signed. The contractors have a deadline. Grant recipients did not, because their obligation is already live.
So if your jurisdiction runs federally funded work through a program that conditions participation on race- or gender-based requirements, you are already in certification risk.
Where The Momentum Is Flowing:
Here is the key opening for redesign: the courts have constrained the means, but they have not outlawed the goal.
In a key case in 2023 (Coalition for TJ v. Fairfax County School Board), the Fourth Circuit upheld a racially neutral policy that was adopted in part to improve diversity, holding that pursuing inclusion through race-neutral measures is a practice the Supreme Court "has consistently declined to find constitutionally suspect." The Supreme Court let that decision stand in 2024. Genuinely neutral criteria do not become unlawful because the people who adopted them hoped they would broaden opportunity.
Maryland's MBE statute is one example of what that principle looks like in legislation. Its findings commit the state to using "race-neutral efforts to the maximum extent feasible" and to using race-conscious measures "only where necessary to eliminate discrimination that was not alleviated by race-neutral efforts". The General Assembly reenacted and extended the program this year on exactly those terms. That is not a loophole. It is the same architecture that federal DOT regulations have required of DBE programs for decades: neutral means first, and then targeted tools as the documented last resort.
How To Take Action:
What does the neutral foundation actually consist of? True small business characteristics: firm size, revenue, capacity, locality, years in operation, and bonding. Also, the core mechanics that enable small firms to actually win work: unbundled solicitations, simplified bidding, realistic insurance and bonding thresholds, prompt payment, technical assistance, and so on.
The Supreme Court itself cataloged these tools as the race-neutral devices available to every jurisdiction back in 1989 (Richmond v. Croson). These approaches broaden the base, they are durable in court, and in practice, they reach many of the same firms the legacy programs were built to serve.
One clear caution: relabeling is not redesign. Renaming an MWBE program as a small business program while keeping eligibility mechanics that function as a proxy for the old categories solves nothing - and current DOJ guidance explicitly targets neutral criteria used as proxies. The defensible path runs through criteria that are neutral in design, application, and effect, supported by a real utilization and availability analysis that shows who is actually in your market and who is actually winning, and documenting every step. This takes a genuine program review, not simply a find-and-replace.
We are working with several public entities in earnest on these redesign efforts, from statewide procurement offices to major cities and counties, and from that work, we have created an implementation framework we call the Local Economic Accelerator Program. Whether you are looking for a starting point or actual design help, we are happy to contribute to your work.
One way or another, my advice is simple: start it while the timeline is still yours, and the clock is running faster than you think.
Reach out if we can help!
