Indiana suspends M/WBE contracting program, leaving questions for Southwest Indiana businesses

In Evansville, the suspension of Indiana’s Minority and Women’s Business Enterprises program is already changing how the city handles contracting.

The city has relied on the State of Indiana to certify minority- and women-owned businesses. Without that certification process in place or adequate staffing and resources to create and manage a separate certification system, Evansville can no longer administer its local program as it previously did.

The change comes after Gov. Mike Braun signed Executive Order 26-17 on July 15, immediately stopping new MBE and WBE certifications and recertifications, suspending pending and active certifications, and directing state agencies to remove MBE/WBE participation requirements from new state procurement materials.

Mayor Terry said the state’s decision has affected Evansville’s ability to administer its local program as it previously existed.

“Historically, our local program has relied on the State of Indiana to certify minority- and women-owned businesses,” Terry said. “Without that certification process in place or adequate staffing and resources to create and manage a separate certification system, the City can no longer administer our program as it currently exists.”

The city has already begun updating procurement documents. An Aug. 3 addendum for the Wesselman Tennis Court Lighting Improvements project removed references to the Minority and Women’s Business Enterprises Program and eliminated related MBE/WBE paperwork requirements from the bid process.

Terry said the city still plans to focus on creating opportunities for small, minority-owned and women-owned businesses.

“One of my priorities as mayor has been making it easier for businesses to understand how to work with the City and compete for opportunities,” she said.

What changes now?

The executive order does not cancel existing state contracts. Contracts already containing minority- or women-owned business participation commitments remain in effect, and state agencies must continue administering those agreements under their original terms.

For projects still in the procurement process, the changes could create delays. The order directs agencies to amend, reissue, or rescore solicitations to remove supplier diversity requirements.

The impact on local governments in Southwest Indiana is less certain. The executive order applies to the state program created under Indiana Code § 4-13-16.5, but it does not automatically eliminate supplier diversity programs created by cities, counties, or other local entities.

However, because some local programs rely on state MBE and WBE certifications, local governments may need to determine how they will handle certification moving forward.

The executive order does not affect Indiana Veteran-Owned Small Business certifications or the state’s veteran-owned contracting goals.

What does the change mean for Evansville?

City purchasing data provides a more specific look at local participation.

City data for 2024, 2025 and the partial year of 2026 shows direct payments to the following number of MBE and WBE vendors:

Year	MBE vendors	WBE vendors	Total amount allocated to POs	MBE spending	MBE %	WBE spending	WBE %
2024	6	26	$129,820,046.19	$773,011.77	0.595%	$939,141.79	0.723%
2025	5	21	$61,297,274.75	$1,376,354.13	2.245%	$691,072.55	1.127%
2026	7	25	$56,264,237.06	$325,932.00	0.579%	$196,794.10	0.350%

Graphic caption: The figures show direct payments to MBE- and WBE-certified vendors and exclude subcontractor spending. The 2026 figures reflect partial-year data. Source: City of Evansville purchasing data provided to Our Times Newspaper.

The city separately provided subcontractor data and said including it did not materially change its overall utilization percentages.

Evansville’s annual good-faith goals are 12% MBE participation and 7% WBE participation. According to the city, the goals apply to overall spending and include subcontractor participation. Because the percentages in the table measure direct payments only, they are not a like-for-like measure of whether the city met those goals.

“These numbers tell us there is still work to do,” Terry said.

Terry said the city plans to continue its annual Doing Business with the City event in partnership with the Small Business Development Center, which connects businesses with city staff, information about upcoming projects and the city’s procurement process.

The Southwest Indiana Small Business Development Center has declined to comment for this story.

Terry said she hopes Indiana’s replacement program will provide municipalities and businesses with a consistent process.

“It is my hope that the state’s new program establishes a clear process that municipalities and businesses can use, including certification, training and resources to help businesses compete for contracts and build relationships with prime contractors,” she said.

“Having a consistent statewide system is especially important for smaller businesses that may not have the resources to navigate different requirements from one community to another.”

How the program worked

Indiana established the Governor’s Commission on Supplier Diversity in 1983. The commission was responsible for identifying minority- and women-owned businesses, helping them compete for state contracts, monitoring participation and establishing annual contracting goals.

Certification did not guarantee a company a state contract. Instead, it allowed businesses to be identified as certified suppliers and allowed their participation to count toward goals on eligible state contracts. Certification could also help prime contractors identify certified subcontractors.

Indiana’s statewide participation goals included an average of 8% for minority-owned businesses and 10% for women-owned businesses. For construction contracts, the goals were 7% MBE and 5% WBE. The state’s goal for Indiana Veteran-Owned Small Businesses was 3%.

State Rep. Robin Shackleford, D-Indianapolis, a former subcontractor who worked for a certified M/WBE, said the goals could help businesses gain access to opportunities they otherwise might not have received.

“Many times, the only reason we got a subcontract was because of the goals in this program,” Shackleford said. “But those goals only got us in the room. We still had to earn every dollar on cost, quality, and performance, just like any other business competing for the work.”

Who participated and how much did they receive?

Most of the prime-contractor spending in Indiana’s first-quarter 2024 report was not attributed to the MBE, WBE or veteran-owned categories. Of the approximately $330.5 million reporting base, about $196.8 million — or 59.55% — fell outside those categories.

WBE prime contractors received about $78.2 million, or 23.65% of the reporting base. MBE prime contractors received about $46.6 million, or 14.11%, while veteran-owned prime contractors received about $8.9 million, or 2.69%.

Spending at a glance

Category	Q1 2024 prime spending	Share of reported spending
WBE	$78.2 million	23.65%
MBE	$46.6 million	14.11%
Veteran-owned	$8.9 million	2.69%
Remaining reported spending	$196.8 million	59.55%
Total	$330.5 million	100%

Graphic caption: Of the approximately $330.5 million in reported prime-contractor spending for the first quarter of 2024, 59.55% was not attributed to the MBE, WBE or veteran-owned categories shown. These figures cover one quarter of reported prime spending, not all Indiana procurement, and do not include subcontractor payments. Source: Indiana Department of Administration, Governor’s Commission on Supplier Diversity.

The MBE and WBE figures were above the state’s weighted participation goals for that quarter, while veteran-owned prime spending was close to its 3% goal.

But that does not mean the program consistently met its goals statewide.

Utilization varied among agencies and institutions. During the third quarter of 2024, for example, the University of Southern Indiana reported MBE utilization of 6.89%, WBE utilization of 23.84%, and Indiana Veteran-Owned Small Business utilization of 0.39%. Vincennes University reported 4.85% MBE, 18.61% WBE, and 1.51% veteran-owned utilization.

Those differences illustrate why there is no single statewide percentage that can determine whether the program was successful.

What did the program accomplish?

One measurable success was the size of the certified vendor network.

Indiana had more than 2,300 MBE and WBE certifications in 2024. During the first quarter of that year, MBE and WBE prime contractors received a combined $124.8 million in reported payments.

The program also included outreach and technical assistance. From January through August 2024, the Division of Supplier Diversity reported participating in 78 outreach events attended by 3,634 people.

A previous state disparity study provides additional context. The 2015-16 study found M/WBE participation of about 18% on larger Indiana Department of Administration contracts it examined, compared with estimated M/WBE availability of about 19%.

The study also found greater disparities on some public works and state educational institution contracts that did not use participation goals. Black-owned businesses experienced substantial disparities across the contracts studied.

The study concluded that participation goals encouraged M/WBE participation and pointed to subcontracting opportunities, smaller contracts, outreach, and prompt payment as ways to improve access.

That study is more than a decade old, however, and does not establish what conditions looked like in 2026.

Where did the program fall short?

State records also identified problems with how the program was administered and measured.

A 2024 commission report noted communication problems between state agency contract administrators and the Division of Supplier Diversity, including incorrect dollar amounts being entered into reporting systems. Those issues affected the accuracy of compliance reporting.

Certification itself also did not mean a business received state work.

A business could be certified without submitting a bid, winning a prime contract, being selected as a subcontractor or ultimately receiving payment. Those are different stages of participation, making it important to distinguish between the number of certified businesses and the number that actually benefited financially.

That leaves an important question for the state: How many certified businesses actually received state payments, and how much did they receive over multiple years?

More recent annual MBE and WBE prime and subcontracting commitments and actual payments from fiscal years 2021 through 2026 would provide a clearer picture, but that data was not included in the most recent publicly available reporting used for this story.

Why was the program suspended?

The Braun administration’s decision followed a review requested by the Indiana Department of Administration examining the constitutionality of Indiana’s race- and gender-based contracting goals.

Attorney General Todd Rokita concluded that portions of the state’s Diversity Business Enterprises and M/WBE programs were unconstitutional because they provided preferences based on race and sex.

“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,” Rokita said in a statement. “The program is both un-American and unconstitutional.”

The opinion relied heavily on the U.S. Supreme Court’s 2023 decision involving race-conscious admissions policies, arguing that similar constitutional concerns apply to state contracting programs.

Gov. Braun echoed that reasoning.

“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,” Braun said in a statement. “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.”

However, the program has not been repealed by the Indiana General Assembly, and no court has specifically ruled that Indiana’s supplier diversity law is unconstitutional. The Attorney General’s opinion is advisory rather than a court ruling, leaving open the possibility of legal challenges to the executive order.

What happens next?

The change affects a program that, according to state records, had 978 certified Minority Business Enterprises and 1,343 certified Women Business Enterprises as of Aug. 31, 2024. The state also reported 258 certified Indiana Veteran-Owned Small Businesses.

The Braun administration has announced plans to replace the suspended program with an Indiana Small Business Program focused on helping qualified Indiana businesses compete for state contracts. The Office of Management and Budget has been directed to develop procurement policies for the new program by Oct. 1, 2026.

Terry said she hopes the new program will provide a consistent statewide system for businesses and municipalities.

“The program may be changing, but our goal is not. We want more local businesses competing for City work,” Terry said.

Supporters of M/WBE programs argue they helped address historical barriers faced by minority- and women-owned businesses seeking government contracts.

“Gov. Braun’s decision erases opportunities for Black Hoosiers, women and other minority business owners who have historically been shut out of contracting, not because they lack merit or talent, but because the system was built to exclude them,” said Rep. Earl Harris, chair of the Indiana Black Legislative Caucus.

For Southwest Indiana, the question now is whether the state’s replacement program will maintain meaningful opportunities for small businesses while addressing the shortcomings identified in the previous system.

The available data shows that Indiana’s M/WBE program generated substantial contracting activity and created a large network of certified businesses. It also shows uneven utilization and limitations in the state’s reporting.

For Evansville, the direct-payment data shows MBE and WBE utilization remained in the low single digits during the period reviewed. The city said including subcontractor participation did not materially change its overall percentages, while the state certification system Evansville relied upon is no longer operating as it did before.

As Indiana moves toward a new system, businesses, contractors and local governments will be watching to see whether the replacement program changes who gets access to state contracts and how the state measures whether it works.