Republicans press to cut DEI requirements from federal contracts as Key Bridge funding dispute surfaces

WASHINGTON — Republicans on the Senate Small Business Committee moved to strip Diversity, Equity and Inclusion (DEI) requirements from federal contracting as the September 30 deadline to reauthorize key small-business programs approaches. Sen. Joni Ernst, R-Iowa, chair of the panel, said the INNOVATE Act would replace current authorization language and remove DEI considerations and direct grants based on merit, not politics. A companion House effort led by Rep. Roger Williams, R-Texas, is designed to align with the Senate plan in pursuing a rapid reauthorization while pushing to eliminate DEI prerequisites in grant programs that span multiple agencies.

Ernst said the goal is to restore a focus on performance and fairness in federal funding, arguing that current rules tie contracts to DEI goals rather than strictly evaluating project quality and impact. The push comes as lawmakers seek to avert lapses in funding for programs widely described as federal support for innovation, including the SBIR and STTR programs, nicknamed “America’s seed fund.” The two programs, which help small businesses apply for grants across federal agencies in commercial and technology sectors, face a Sept. 30 sunset unless reauthorized.

Ernst highlighted several grants she described as wasteful under the current rubric, saying the examples illustrate why reform is needed. She pointed to a $1.4 million NIH award for a project labeled a "Mobile App Promoting Sexual Health for Young Black Men Who Have Sex With Men" and a separate grant of about $283,526 for "Evidence-Based Parent Training for Diverse Families"—projects she argued deploy DEI criteria that divert funds from merit-based evaluation. A person familiar with the matter said similar grants were approved across other agencies under prior administrations, underscoring the breadth of the issue. With Republicans united on curbing DEI spending but Democrats resistant, several briefings have failed to bridge the gap before the reauthorization deadline.

A source familiar with the talks acknowledged the math is against the effort while lawmakers on both sides push competing visions for how federal dollars should be awarded. The result: a tense sprint to a compromise that could determine the fate of hundreds of millions in small-business research funding if Congress does not act.

Rep. Williams has favored a one-year extension of the current SBIR/STTR program to give lawmakers time to pursue reform without a lapse, while still supporting a package of reforms in both chambers. Williams told Fox News Digital that he aims to ensure contracts are awarded on merit and pledged to protect ongoing SBIR/STTR participants as the September 30 deadline approaches. "I want to thank Senator Ernst for her partnership when introducing the House version of her INNOVATE Act in July, and remain in lockstep with her on ensuring contracts are awarded based on merit, not DEI," Williams said. "We must ensure there is no lapse in funding for current, deserving SBIR/STTR participants before the September 30 deadline."

Across the Anacostia River from the Capitol, the Maryland dispute over DEI-like contracting took a different turn. Transportation Secretary Sean Duffy wrote to Maryland Gov. Wes Moore after learning of the state’s rubric for similar contracts tied to the Francis Scott Key Bridge rebuild on the Baltimore Beltway. Duffy warned that Annapolis may be considering awarding contracts in a manner that relies on the race and sex of contractors, cautioning about potential legal ramifications under the Civil Rights Act. He noted that the bridge project was already under intense scrutiny after the 2024 collapse that destroyed the iconic span and left a legacy of high costs and scheduling uncertainty. On the day of the collapse, then-President Joe Biden pledged federal help to cover the estimated $1.8 billion price tag to overhaul Interstate 695 into a full belt, while Maryland officials have disputed who controlled the state’s transportation authority at the time of the incident.

Moore, responding to the letter, told Fox News Digital that Maryland would continue to work with the federal administration to control costs and rebuild as quickly as possible. He stressed that safety and prudent use of taxpayers’ money guide the project and noted that the price-estimation process is expected to be finalized in coming months, with MDTA providing regular updates. Moore has repeatedly asserted progress on the project and, in a public exchange captured at the U.S. Naval Academy, told President Donald Trump that the bridge would be completed by 2028. He also emphasized the state’s willingness to pursue litigation and use advance construction costs and insurance settlements to keep the project moving.

The tug-of-war over DEI policy and the Key Bridge rebuild crystalizes a broader, high-stakes debate in Washington and Annapolis: whether federal contracting should prioritize diversified participation and equity goals or rely strictly on merit and demonstrated capability, and how to balance ambitious infrastructure commitments with fiscal and legal responsibilities. With September 30 looming, lawmakers on both sides of the aisle say the outcome will shape not only how federal money is allocated to small-business research but how large-scale infrastructure projects are funded and awarded in the years ahead.