Indiana Governor Mike Braun Terminates Race- and Gender-Based Contract Preferences

Indiana Governor Mike Braun on Thursday announced the immediate termination of state contracting preferences that favored businesses based on race or sex, saying the policies violated the state constitution. The move ends a program that had directed a portion of state‑funded contracts to minority‑ and women‑owned firms and marks the latest shift in Indiana’s approach to affirmative‑action‑style procurement.

Core developments

In a press conference at the Indiana Statehouse, Braun declared that the state would no longer consider a contractor’s race or gender when awarding public contracts. He framed the decision as a correction of a “unconstitutional” practice that, in his view, gave unfair advantage to certain groups and undermined merit‑based competition. The governor’s office released a statement confirming that all existing contracts would be honored, but any new award processes would be stripped of the former preference language.

The policy being rescinded was instituted under a 2021 executive order that directed state agencies to set aside a percentage of contracts for minority‑ and women‑owned businesses. The order had been defended by the Indiana Department of Administration as a way to broaden economic opportunities for historically under‑represented entrepreneurs. However, Braun’s administration argued that the order exceeded the governor’s authority and conflicted with the Indiana Constitution’s prohibition on preferential treatment based on protected classes.

State officials said the change would be implemented through a revision of the Indiana Procurement Code, which governs how agencies solicit and award contracts. The revision will remove language that required agencies to “give preference” to firms meeting the race or gender criteria, replacing it with a neutral “equal opportunity” provision. The Indiana Department of Administration, which oversees the procurement process, pledged to issue new guidelines within 30 days.

Why it matters

The decision reverberates beyond Indiana’s borders because it touches on a broader national debate over the legality and efficacy of race‑ and gender‑based preferences in government contracting. Proponents argue that such preferences help correct historic inequities, diversify the supplier base, and stimulate economic growth in marginalized communities. Critics, including many Republican lawmakers, contend that the policies violate equal‑protection principles and can lead to reverse discrimination.

Indiana’s reversal follows similar legal challenges in other states. Courts in several jurisdictions have struck down comparable programs on constitutional grounds, while others have upheld them as permissible affirmative‑action measures. By labeling the preferences “unconstitutional,” Braun aligns Indiana with the more restrictive jurisprudence emerging from recent state supreme court rulings.

Economically, the change could affect a segment of small businesses that have relied on state contracts as a growth engine. Minority‑ and women‑owned firms that previously counted on set‑aside contracts may need to compete on a broader field, potentially reshaping Indiana’s supplier landscape. Conversely, larger firms that had previously been excluded from certain bids may see new opportunities, altering market dynamics.

Differing viewpoints

Supporters of the governor’s move praised the emphasis on merit and constitutional fidelity. The Indiana Chamber of Commerce issued a statement saying the removal of preferential language “creates a level playing field for all businesses and reinforces Indiana’s commitment to free‑market principles.” Civil‑rights groups, however, warned that the rollback could diminish opportunities for historically disadvantaged entrepreneurs. The Indiana NAACP expressed disappointment, noting that the preference program had “opened doors for minority‑owned firms that have been systematically excluded from state procurement.”

Democratic legislators in the state Senate raised concerns that the decision could undermine diversity goals set by the state’s own procurement office. One senator, citing data from the Department of Administration, argued that minority‑ and women‑owned firms had increased their share of state contracts from roughly 5 % to 12 % after the 2021 order was implemented. The senator called the repeal “a step backward for economic inclusion.”

Legal scholars offered a nuanced take. Professor Laura Jenkins of Indiana University’s Maurer School of Law noted that while the governor’s constitutional argument has precedents, “the policy’s removal raises questions about how the state will meet any diversity objectives without explicit preferences.” She suggested that the state could pursue “race‑neutral” strategies, such as outreach and technical assistance, to support under‑represented firms without invoking protected‑class criteria.

What’s next

The Indiana Department of Administration will draft the revised procurement guidelines and circulate them for public comment, a process expected to conclude by the end of September. Once finalized, the new rules will take effect for all contracts issued after the start of the next fiscal year, which begins on July 1, 2027.

Advocacy groups have signaled plans to monitor the implementation closely and may pursue legislative remedies if the revised guidelines fail to address equity concerns. Several bills have already been introduced in the state legislature proposing alternative mechanisms—such as mentorship programs and certification incentives—to support minority‑ and women‑owned businesses without direct contracting preferences.

Meanwhile, the governor’s office indicated that the decision could set a precedent for other states considering similar policy reviews. Braun told reporters that Indiana’s experience would “serve as a model for how we can honor the Constitution while still fostering a competitive, inclusive marketplace.” The coming months will reveal whether the state can balance those goals without the explicit preference language that has now been removed.