The What, How and Why of Minority Business Certification

Fred McKinney | 2/3/2010, 6:42 a.m.
Fred McKinney, president and CEO of the...

But business owners who understandably are wary of sharing sensitive personal and business information need to realize that in the world of corporate and public sector procurement, the buying community will demand this information as well. In business these days there really are very few secrets.  GNEMSDC certification costs $300 and this must be renewed every year on the anniversary of the initial certification with a payment of $150.

The GNEMSDC certification can be downloaded from our Website, www.gnemsdc.org or by calling the office 888-875-7114.

On the federal level, there are several types of certifications for minority businesses. The Small Disadvantaged Business (SDB) certification was once a time consuming but free certification that required a detailed certification application. Now SDB certification is what is called “self certification.”  

SDB businesses are businesses that are at least 51 percent owned and managed by entrepreneurs who are considered “disadvantaged.” There is a presumption that ethnic and racial minority entrepreneurs and women entrepreneurs are “disadvantaged.” In order to get this status, all an entrepreneur has to is claim on a federal contract that they are an SDB.

If the entrepreneur has a net worth, excluding the ownership value in their company and their primary residence, greater than $750,000, the entrepreneur and their business are not eligible for SDB status. SDB’s benefit because federal contractors often have a 5 percent SDB goal and there are 10 percent price preferences for SDBs.  The price preference means that SDB bids that are less than 10 percent higher than non-SDB bids are considered superior.  To register your business as an SDB, you should contact the Central Contracting Registration site, www.ccr.gov.

 To complete this registration, you will need a Tax ID number, a DUNNS number, information about your business including your North American Industrial Codes and the ability to conduct business electronically through Electronic Funds Transfers (EFTs). Without this information, having SDB status is worthless.  

The Federal Government, Department of Transportation/Federal Highway Administration also has what is called the Disadvantaged Business Enterprise (DBE) certification. The Federal Highway Administration (FHA) interacts with state Departments of Transportation around the country, like MASSDOT and CONNDOT or related agencies like MBTA.

Minority business owners who want to participate in the hundreds of millions of dollars of MBTA contracts must have the DBE certification if they want a reasonable chance of securing MBTA contracts as either primes or subs.

In order to get DBE certification, a business should visit the Department of Transportation in their state. For information on your state’s DBE program visit (http://www.osdbu.dot.gov/DBEProgram/StateDBELiaisonCertificationOfficers.cfm).

States also have minority small business certification programs.  Massachusetts State Office of Minority and Women Business Assistance (SOMWBA) and the Connecticut the Department of Administrative Services are the two organizations that certify businesses as minority or women owned.

These certifications are designed to assist procurement organizations in state government (some municipalities also use State certifications) find minority and women owned small businesses.  In many states, including Massachusetts and Connecticut, the state has goals and in some cases set asides, for minority or women small businesses.

In Connecticut, the 6.25 percent set-aside program reads minority “or” women, making the two groups competitors for the same dollars. In Massachusetts, 6 percent of the over $4 billion in state spending is targeted to SOMWBA certified businesses.

 The good news is that the information needed on one of these applications is the same information needed on the others. Minority entrepreneurs can speed up the process of applying for these various certifications at the same time.

We recommend that entrepreneurs seek all of these certifications. You never know when you will need one, but rest assured, if you are planning to sell goods and services to businesses and the public sector, you will need them.

Dr. Fred McKinney is president and CEO of the Greater New England Minority Supplier Development Council.