On July 15, 2026, the executive branch of the Indiana state government took action that will impact Minority Business Enterprise (MBE) and Women Business Enterprise (WBE) contracting practices on construction projects and other procurements involving the State of Indiana. Below is a brief summary of the law at issue, the executive order suspending the law, and how it impacts active construction projects and pending procurements.

Indiana Supplier Diversity Program: Key Background and Requirements

Indiana Code § 4-13-16.5 establishes the Governor’s Commission on Supplier Diversity (the “Commission”). The Commission has been in operation since this law was passed in 1983. Indiana Code § 4-13-16.5 empowers the Commission to:

1. Identify MBEs and WBEs in Indiana;
2. Initiate aggressive programs to assist minority and women's business enterprises in obtaining state contracts;” and 
3. Establish annual goals for use of MBEs and WBEs on state projects.  

The regulations implementing Indiana Code § 4-13-16.5 are outlined primarily in 25 IAC 5 and 25 IAC 9 of the Indiana Administrative Code. With respect to construction projects, the MBE goal was most recently 7% and the WBE goal was 5%. Failing to meet such goals could lead to, among other consequences, classification of a bidder as non-responsible or withholding of progress payments on active projects.

What Does Executive Order 26-17 Change for Indiana MBE and WBE Programs?

Governor Mike Braun issued Executive Order 26-17 on July 15, 2026, suspending Indiana’s Supplier Diversity Program. The executive order states that the suspension takes effect immediately. It also states that no new certifications or recertifications shall be issued, and that it “suspends all pending and active certifications.” State agencies are directed to, “immediately update procurement templates, evaluation guidance, and materials to remove supplier diversity commitment references for solicitations issued as of the date of this suspension.” 
    
The executive order is based on a companion Attorney General Advisory Opinion 2026-3. It concludes, “The Minority and Women’s Business Enterprises components of the Diversity Business Enterprises program violate the Equal Protection Clause of the Fourteenth Amendment of the United States Constitution and are therefore unconstitutional.” The Attorney General’s analysis relies heavily on Students for Fair Admissions, Inc. v. President & Fellows of Harvard Coll., 600 U.S. 181, 279 (2023), the United States Supreme Court opinion providing that race-based affirmative action programs in most college admissions violate the Equal Protection Clause of the Fourteenth Amendment. The Attorney General determined that the governor has the authority to decline to execute or implement an unconstitutional statute and thus has the ability to discontinue implementation of the Supplier Diversity Program.

What Should Contractors, Suppliers, and Public Owners Do Next?

Despite the governor’s action, the statutes establishing Indiana’s Supplier Diversity Program have not been declared unconstitutional by any state or federal court, nor have they been repealed or amended by the Indiana General Assembly. As a result, legal challenges to the executive order appear likely.

The executive order does not apply to existing contracts as it specifically states:

All existing state contracts, including those containing minority or women-owned business participation commitments, shall remain in full force and effect, and agencies shall continue to administer and enforce such contracts pursuant to their terms. Nothing in this Executive Order shall be construed to impair vested contractual rights.

With respect to projects in the procurement phase, the executive order states:

Solicitations currently under evaluation shall be amended, reissued, or rescored consistent with this Executive Order and as determined necessary by IDOA to ensure fair competition. This Executive Order does not apply to preliminary solicitation awards as of the date of this directive or subsequent contracts in negotiations.

This could lead to delays in the award of contracts for projects subject to current solicitation.
    
The executive order applies only to Indiana diversity programs as established by Indiana Code 4-13-16.5. It does not apply to diversity programs established by municipalities and local governments, although such programs could be addressed during the 2027 legislative session. However, the executive order’s suspension of “all pending and active certifications” may affect municipal and local programs since many of those programs rely on the state’s certification of the business as a MBE or WBE. Such governmental entities will have to establish their own certification programs as some jurisdictions (such as the City of Indianapolis) already do.

The executive order has no effect on Indiana Veteran Owned Business certifications or construction contract goals with Indiana Veteran Owned Small Business Enterprises, currently set at 3%.

As an alternative to MBE and WBE programs, Governor Braun announced plans for a new Indiana Small Business Program intended to promote and facilitate the use of qualified Indiana small businesses in state procurement. The Attorney General’s opinion noted that Indiana could likely pursue alternative procurement preferences based on veteran status, small business status, or Indiana-based businesses. Governor Braun ordered the Office of Management and Budget to develop procurement policies and procedures that will promote and facilitate the use of Indiana small businesses in the Indiana Small Business Program by October 1, 2026.

Contractors, designers, and suppliers pursuing Indiana public work should closely monitor agency guidance and any legal challenges to Executive Order 26-17, as additional developments may affect both ongoing procurements and future contracting requirements.

Ice Miller’s Construction practice group is actively monitoring the situation. Please reach out to a member of the group or your Ice Miller attorney if you have any questions.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.