Indiana Ends Diversity Policy for Government Contracts
Indiana drops race- and sex-based preferences from state contracting policies.
Why it matters: This shift affects contractors and legal advisers who monitor diversity compliance and could trigger lawsuits over the program's constitutionality.
- On July 15, 2026, Governor Mike Braun terminated Indiana's race- and sex-based contracting preferences, citing equal protection mandates.
- Attorney General Todd Rokita declared parts of the Diversity Business Enterprises Program unconstitutional under the Fourteenth Amendment.
- The original DBE Program, established in 1983, required minimum contracting allocations to minority- and women-owned businesses.
- Governor Braun plans to replace the DBE Program with a merit-based Indiana Small Business Program, details forthcoming.
On July 15, 2026, Indiana Governor Mike Braun officially ended the state's race- and sex-based preferences in government contracting, replacing them with a merit-focused system. This decision came after a legal review by Attorney General Todd Rokita, who concluded that the Minority and Women's Business Enterprises (M/WBE) components of the Diversity Business Enterprises (DBE) Program violate the Equal Protection Clause of the Fourteenth Amendment (WBIW, 2026).
The DBE Program, in place since 1983, mandated state agencies to allocate a minimum percentage of contracting funds to businesses owned by minorities or women (Ogletree Blog). Governor Braun emphasized constitutional fairness, stating, "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." (WBIW, 2026).
Attorney General Rokita criticized the prior program, calling it "blatantly illegal" for discriminating based on race or sex and diminishing fair competition (WBIW, 2026).
Earlier in January 2025, Governor Braun had signed an executive order eliminating diversity, equity, and inclusion (DEI) initiatives in state agencies, pivoting toward merit, excellence, and innovation (Inside Higher Ed, 2025).
To assist Indiana businesses, Braun announced plans for a new Indiana Small Business Program to replace the DBE Program, though specific details and timelines remain undisclosed (WBIW, 2026).
The move has garnered criticism from some state lawmakers. Representative Mitch Gore argued that any changes to Indiana law should be handled through the legislature, stating, "If Governor Braun believes portions of Indiana law should be changed to better reflect evolving constitutional precedent, he should come to the General Assembly and ask us to amend the statute." (WBIW, 2026)
Indiana's policy change reflects a broader national trend following the 2023 Supreme Court decision in Students for Fair Admissions, which challenged racial preferences in public programs. Legal advisers and contractors should anticipate adjustments to compliance strategies and potential legal challenges in the state contracting arena.
By the numbers:
- 1983 — Year Indiana's Diversity Business Enterprises Program was established
- July 15, 2026 — Date Governor Braun announced the end of race- and sex-based preferences
- January 2025 — Governor Braun's executive order eliminated DEI initiatives in state agencies
Yes, but: Specifics about the new Indiana Small Business Program and timelines for DBE Program phase-out remain unclear, leaving uncertainty for affected businesses.
What's next: Watch for details on the Indiana Small Business Program launch and any legislative or legal responses to this policy shift.