Attorney General determines that the race- and sex-based components of Indiana's DBE program are unconstitutional and should be eliminated

Attorney General Todd Rokita today released a formal advisory opinion concluding that the Minority and Women’s Business Enterprises (M/WBE) components of Indiana’s Diversity Business Enterprises (DBE) Program are unconstitutional under the Equal Protection Clause of the Fourteenth Amendment.  

“This blatantly illegal program singles out some Hoosiers for disfavored treatment purely because of their sex or the color of their skin, and it insults other Hoosiers by suggesting they cannot compete on a fair playing field. The program is both un-American and unconstitutional,” said Attorney General Rokita. 

In the opinion, Attorney General Rokita also concluded that Governor Mike Braun has authority to instruct the Indiana Department of Administration (IDOA) to discontinue the unlawful aspects of the program based on his office's determination of unconstitutionality. In response, Governor Braun has announced that Indiana will end race- and sex-based contracting preferences and replace them with a merit-based approach that gives every Hoosier business a fair opportunity to compete.

"Our Constitution mandates equal protection under the law, because a system where the government picks winners and losers on the basis of race or sex can never be fair. Indiana has replaced divisive, politically-charged programs with a focus on Merit, Excellence, and Innovation: a level playing field where every single Hoosier has the chance to get ahead with hard work." — Governor Mike Braun 
 
The DBE Program was created by statute in 1983 and requires state agencies to use race- and sex-based spending goals in most state contracts.  Under these goals, state agencies and government contractors must attempt to allocate a minimum percentage of state funds spent on a given contract to businesses owned by members of particular minority groups or women, thus giving preferential treatment to certain businesses based on race and sex.  
 
Contractors that do not satisfy the M/WBE requirements may face bid rejection, withheld payments, contract termination, or debarment. In administering the Program, the State is required to label and categorize Hoosier businesses based on race and sex through a certification process. 

“Having just celebrated 250 years of independence, Hoosiers should have fresh in their minds the words of the Declaration that launched our Revolution: ‘All men are created equal.’ From Reconstruction to the passage of the 19th Amendment and ending Jim Crow, our country has fought throughout its history to fulfill this promise of equality under the law. The elimination of race-and sex-based preference programs like the M/WBE program is just the latest step in the march toward equality,” Attorney General Rokita added. 

The Attorney General’s opinion explains that the program’s numerical spending goals, race- and sex-based certifications, subcontracting mandates, and enforcement mechanisms all fail strict scrutiny.  

The opinion’s reasoning is supported by, among other things, the Supreme Court’s 2023 decision in Students for Fair Admissions, which makes clear that discriminatory racial preference programs can rarely if ever be justified under the Constitution. The opinion also concludes that the Governor has the authority to decline to implement clearly unconstitutional statutes that infringe on citizens' rights.
 
Key elements of the opinion: 

• The MBE and WBE components of the DBE Program are unconstitutional.  
• Contract preferences for veteran-owned businesses are lawful. 
• IDOA has discretion in deciding how to unwind the unlawful aspects of the DBE program. 
• IDOA may implement new, race- and sex-neutral preferences for veterans, small businesses, and Indiana-domiciled businesses that comply with the U.S. and Indiana Constitutions. 

Attorney General Rokita’s office will advise IDOA on a lawful transition and work with the General Assembly to repeal the underlying statute. 
 
Read the opinion here.