Getting certified: How the system works

Minority business (MBE), disadvantaged business (DBE), women-owned business (WBE) or small business (SBE) - you will see these abbreviations in many government bid opportunities. Government agencies have programs to encourage inclusion of groups that have historically been excluded from the contract process. Oftentimes, large businesses receive the prime contract, but the terms of the contract require that the prime contractor must subcontract a certain percentage of the contract to targeted groups. There are also incentives for prime contractors to mentor businesses from a targeted group, to help grow their business.

Unfortunately, there are four primary certification processes:

1. Federal SBA certification for small (SBE), women-owned (WBE) or disadvantaged business (SBD).
2. California DGS (Department of General Services) - one application for two certifications: Small Business (SBE) and Disabled Veterans (DVBE),
3. CalTrans - for federally funded projects (for disadvantaged business (DBE))
4. Utility uniform certification - for Minority (MBE), Woman (WBE) or Minority-Woman (WMBE)

Local agencies may have their own certification or may recognize one of the primary certifications above.

There is a trend away from race and gender qualifications to using the results of "disparity" studies, showing what group is actually under-represented in the contract process. The courts are requiring that agencies use as many race-neutral programs as possible, and only use race/gender programs where there is a disparity.

The intent is to include all businesses in government bid opportunities - but the reality is that to determine who is under-represented, the agencies will continue to request race and gender information. As an example, CalTrans completed a study showing that African-American, Pacific Islander, Native American and women were under-represented, while Hispanic businesses were not. This allows CalTrans to develop programs to increase the participation of those four groups.

Yet even though some groups are targeted, all businesses, regardless of ethnicity or gender, should get certified. Getting certified puts you in the pool of businesses which are ready, willing and available to do government jobs - to be accessed by both government agencies and by prime contractors looking for sub-contractors.

What to do:

• SBA small businesses are self-certified, meaning that you look at the rules and if you satisfy them, you are considered a small business. The rules are based on your total receipts and/or employees and your NAICS code. If you have less than $750,000 in receipts and fewer than 100 employees, you qualify. If you exceed either of these limits, go to http://www.census.gov/eos/www/naics/ and search for your NAICS code for the specific requirement.
• SBA women-owned business is also self-certified. If 51% of your business is owned and operated by women, you register at http://www.pro-net.gov. This is a free database maintained by the SBA and is used by the federal government and large government contractors looking for women-owned businesses.
• State DGS certification: This can now be done online and is relatively painless. Go to
  http://www.pd.dgs.ca.gov/smbus. To be certified, all the owners of the business must live in California and you must provide information from your business' tax returns and quarterly wage reports if you have employees.
• CalTrans DBE certification for federal contracts: Unfortunately, this certification is much more involved (30 pages including a personal financial statement and a notary requirement). This certification must show that your net worth (excluding your house and business) is less than $750,000. It also asks for lots of detail to prove that your business is truly being operated by a disadvantaged owner. Click here for the application.
• The Utilities' Supplier Clearinghouse Application is similar to the CalTrans certification. It also requires notarization, your tax returns, detailed resume or work history, at least two supplier agreements or contracts, and copies of your legal agreements. The purpose is to make sure that you are a real business, not just a shell set up to get special benefits. Click here for the application.