What’s Being Certified?

We get asked this question frequently: I’m selling my business (or buying one). Is the diversity certification transferable? There is no short yes or no answer, the reality is that it depends on the type of certification held and who is  purchasing the business.

What’s actually being certified? The certification process is two-fold. 1) The business itself is being certified as having the capability to provide its products and/or services. Our favorite example to use is a pretzel maker — during application review and site visit the certifying agency will verify that the business has the expertise, equipment, staff and back-office support needed to produce its end product, a pretzel. 2) The business is being certified as being at least 51% owned, operated, and controlled by a SDMWVLGBTBE (Small Disadvantaged or Disabled, Minority, Women, Veteran, Lesbian, Gay, Bisexual or Transgendered Business Enterprise) owner(s) who possesses the knowledge and skill to run the business applying for certification.

This means that the business’s diversity certification is reliant on its owner(s).

All certifiers require that any major changes to the business be reported (in writing with supporting documentation) within 30 days. Major changes include:

  • Business Structure  (i.e. a sole prop becoming an LLC)
  • Ownership
  • Management and/or Control of the Business
  • Address
  • Work Capabilities

An instance where a certification cannot be maintained: A business is certified as veteran owned and a non-veteran purchases more than 49% of the business.

An instance where a certification is eligible* to be maintained: A business is certified as minority owned and another person designated as a minority purchases the business.

* We say eligible because certifiers will not automatically approve new ownership.  The new owners must demonstrate the ability to run the business and the supporting documentation MUST illustrate that the business remains at least 51% owned, operated, and controlled by a SDMWVLGBTBE owner(s).

If you’re looking to buy or sell a company where diversity certification is considered an asset of the business, please exercise due diligence.  Check with the certifying agent(s) to make sure that you understand their rules for maintaining the business’s certified status.

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Best Practices

In the world of supplier diversity literature, best practices are defined and expressed by the professionals in corporations and government agencies. SDMWVLGBTBE (Small Disadvantaged or Disabled, Minority, Women, Veteran, Lesbian, Gay, Bisexual or Transgendered Business Enterprise) owners are often unaware of the challenges facing supplier diversity organizations.

We’ve written about The Inclusion Dividend: Why Investing in Diversity and Inclusion Pays Off by Mark Kaplan and Mason Donovan, a book that we believe provided the roadmap for best practices in D&I, though its focus was certainly more human resources oriented. Essentially, they document and encourage organizations to practice:

  • Executive commitment to diversity.
  • Diversity in planning, vision and mission.
  • Diversity as a core value.
  • Leadership teams mirroring customer base and its general population diversity.
  • Reporting on established diversity metrics.
  • Mentoring programs to increase diverse participation.
  • Diversity awareness training.

When you Google “Supplier Diversity Best Practices”, you’ll find that the top recommendations are very similar:

  • Top management support.
  • Purchasing committed to supplier diversity
  • Set measurable goals and make sure supplier diversity improvements are made.
  • Develop/track qualified diverse supplier pool (database).
  • Partner with supplier diversity organizations (NGLCC.org; NMSDC.org; USBLN.org; WBENC.org, etc.).
  • Promote diversity.
  • Make diverse spend flow down (through subcontracting criteria).

What can we, as MBE, WBE, VBE, DOBE, SDVOSB or LGBT business enterprises, do to mirror these best practices in our own companies?

  • First, regardless of size, we should be committed diversity in our own organizations.  That can  seem overwhelming to a small business, but even a one person business has suppliers and can make its purchases from other diverse suppliers or large suppliers who are committed to supplier diversity.
  • We can establish our own formal supplier diversity programs, something we wrote about last year. We can partner with other diverse suppliers to offer unique solutions to address our clients’ business needs while offering them additional resources to meet their diversity goals.
  • We can grow our capacity through strategic partnerships in order to compete for larger projects with our customers who are committed to diverse spend.  For example, innovative building material supplier partnering with a general contractor or with architects; a software product company with an IT services provider; equipment rental with masonry contractor; or, a savory caterer with a baker.  The possibilities are endless.

Supplier diversity is global issue for the large companies that so many SDMWVLGBTBEs want as customers.  It would be in their, and our own, best interests to help them achieve their diversity goals and objectives.

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Golden Tickets

We hear stories from SDMWVLGBTBE (Small Disadvantaged or Disabled, Minority, Women, Veteran, Lesbian, Gay, Bisexual or Transgendered Business Enterprise) owners about how a client told him or her to get a diversity certification. And, while we’re perfectly happy to work with those owners, there are a few thoughts we like to share. Because we’re certification neutral, we start by asking who the target customer-base is, or will be. We believe the business owner should choose certifiers based on what is most advantageous for the business, and we wrote about it in strategies. If this possible  customer has recommended a specific certification, then you’ll know that company will be able to accept or recognize your certification if they buy goods or services from you.  But, unless they are already a client, the one thing you don’t know is whether being certified will actually help you get business from that client.  They might not even know, but they are telling you the odds are better if you’re certified.

We’re committed to certification.  At last count, our WBE/DOBE (women owned/disabled owned) company holds 29 certificates with one pending.  It fits our business model to become certified in each state where we do business because we contract directly with state agencies.  Those agencies can’t count the money they spend with us toward their diversity goals unless we are certified in their state.  But, some of those certifications have not yet helped us.

These certifications aren’t Golden Tickets to Willy Wonka’s world, as sweet as that might be to imagine.  They are really sales and marketing tools — with access to educational, networking and capacity building events when third party certified by organizations like NGLCC, NMSDC, USBLN, and WBENC.  Many large corporations and government agencies simply can’t contract directly with small businesses, particularly brand new ones.  These potential clients will often expect small, or micro, businesses to be second or third tier suppliers.

First tier, or a Prime vendor is the organization or company that has a direct relationship with the end customer. The Prime performs work/services or provides goods; and bills the customer directly for its goods or services. Yes, a SDMWVLGBTBE can be a prime vendor!  Our 35 year old business has served as both first and second tier supplier — sometimes to the same client.

Second tier, or the Sub-Contractor has a direct relationship with the Prime Vendor. The Sub performs work/services or provides goods 1) directly to the Prime or 2) to the end customer under the guidance of the Prime. The Sub bills the Prime for its goods and services. In this scenario, the Prime is the Sub’s direct customer, regardless of which organization consumes the goods or services. Examples of this type of relationship:

  • General Contractor (prime) -> Plumbing Contractor (sub)
  • Trucking Company (prime) -> Independent Owner Operator (sub)
  • Property Management Company (prime) -> Janitorial Service (sub)
  • Hospitals/Hospices (prime) -> Hairdresser (sub)
  • Convention Center (prime) -> Caterers (sub)
  • Automotive Manufacturer (prime) -> Gas Cap Manufacturer (sub)
  • Big Four Accounting Firm (prime) -> Independent Auditor (sub)

This is a second-tier relationship because the SDMWVLGBTBE is a step away from a direct relationship with the end customer.

The third tier, or  Sub-Sub-Contractor has a direct relationship with the Sub-Contractor. This Sub performs work/services or provides goods 1) directly to the Sub-Contractor, 2) directly to the Prime or 3) to the end customer under the guidance of the Prime. The Sub-sub-contractor bills the sub-contractor, who bills the Prime for the goods or services. In this scenario, the Sub-contractor is the Sub-sub-contractor’s direct customer, regardless of which organization consumes the goods or services. An example of this type of relationship, a large hospital engages a computer software prime vendor, who uses a managed service provider (MSP/gate keeper) to acquire consultants from a moderately-sized consulting firm who partners with a still smaller business. In this scenario, the small business takes direction from the Customer or the Prime, but bills the moderately sized business who bills the MSP who bills the prime who bills the hospital. This is a multi-tiered relationship because the SDMWVLGBTBE is multiple steps away from a direct relationship with the end customer.

The good news, at each of the multi-tiers, there is a good chance that your certification will be considered a value add. Most customers these days expect their Primes to help meet their diversity spend goals — at both commercial enterprises and government agencies. And, the Primes rely on their Subs to help fulfill that mission. So, while your certification isn’t a Golden Ticket, it is entry pass that will help garner your business recognition in the procurement process.

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Are Pictures Louder Than Words?

Did you notice that the real Rosie the Riveter passed away?  This iconic image was the first widespread public validation I had that girls could do anything in the workforce.  A lesson that we, as SDMWVLGBTBE (Small Disadvantaged or Disabled, Minority, Women, Veteran, Lesbian, Gay, Bisexual or Transgendered Business Enterprise) owners should be very aware of when choosing images that will reflect our own commitment to diversity and inclusion.  In fact, you’ll notice that we use cartoon-like stick figures on our blog and other affiliated websites.  This art was designed after we dropped a multicultural photo image.  We dropped the image because so many other companies started using it — which we believe is because there are so few to choose from. And, the models’ clothing and hairstyles were severely out of date.  Our current colors come from an early conversation the boss had with a prior employer … “I don’t care black, purple, brown, orange or green this department will always look to hire the best people!”

So what bothers us about so many commercial (B2B or B2Consumer) websites is this lack of people: of color; with disabilities; and/or women in general. One associated with the military, for example, pictured nice young Caucasian men in business attire shaking hands.  A nice image, but what percentage of folks in uniform are women? What percentage now have spare parts or visible disabilities? And how many are not just the white guys in this particular photo?

The world we SDMWVLGBTBE owners live, hire and sell in has always been multicultural.  Our big corporations have begun to understand and address that multiculturalism in their television advertising (check out recent Indeed, Toyota and Marriott ads).  And, because we always preach walking the walk, perhaps SDMWVLGBTBEs should actually lead the way.  Let’s talk to our marketing people, our website designers, our advertising agencies and others about finding and using images that reflect better on the diversity and inclusion in our own businesses.

Let’s be proactive! People of color, women, people with disabilities, we need to see them – us – in business situations, conducting business, being the boss, being the sales person, giving the speeches, doing the work, etc.  Those are the images that will help encourage the next generation to see themselves as SDMWVLGBTBE business owners.

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Opposites Day

A group of SDMWVLGBTBE (Small Disadvantaged or Disabled, Minority, Women, Veteran, Lesbian, Gay, Bisexual or Transgendered Business Enterprise) owners got together for lunch at Coach Monique & Associate’s office the other day.  And it was wonderful.  Amazing company, delicious food, comfortable and comforting to spend time with others who face similar business issues in such a beautiful spot.  I’m a collector of stories and love learning new words.  The Coach had a word I’d never seen displayed in the unisex bathroom – PRONOIA.  And a definition to go with it.  It is an opposite state of mind to paranoia, believing there is a conspiracy that exists to help us.

The thought occurred to us, those of us who are optimists — glass half full types — that we’ve been fortunate in our business lives, to experience pronoia. Meeting and clicking with key client contacts.  Solving critical problems. Creating new approaches. Closing big deals. Having a great day, week, month or year.  Of course, it isn’t always easy.  We’ve had to work hard, and be smart about how we spend our time.   But choosing to make the assumption that things will go well, or deciding that the universe is on our side can help us foster a belief in pronoia and our own success.

So from all of us at GetDiversityCertified.com, we hope pronoia will surround everyone.  Spreading success and prosperity throughout the SDMWVLGBTBE community, amongst our customers, vendors, co-workers, friends and those people we don’t know yet.  Happy New Year and may 2018 be your best year yet!

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More About Acronyms

In November, we talked about ABC’s of supplier diversity nomenclature.  It is a subject full of abbreviations and acronyms that can be completely confusing to a new SDMWVLGBTBE (Small Disadvantaged or Disabled, Minority, Women, Veteran, Lesbian, Gay, Bisexual or Transgendered Business Enterprise) owner.  The earlier post spells out many of the common terms used when talking about diversity certification.  But who certifies SDMWVLGBTBEs?

Certifiers
Note: This list does not include all state certifying agencies, but references the country-wide Department of Transportation (DOT) based Unified Certification Program (UCP). Information about individual state certifiers can generally be found on their web sites..

  • EPHCC: El Paso Hispanic Chamber of Commerce, a SBA-approved certifier for the WOSB program for both WOSB and EDWOSB status.
  • HUD: Housing and Urban Development, a Federal agency that offers its own certification – Section 3.
  • NGLCC: National Gay & Lesbian Chamber of Commerce, the 3rd party certifier for LGBT owned businesses.
  • NMSDC: National Minority Supplier Development Council, the 3rd party certifier for minority owned businesses.
  • NWBOC: National Women Business Owners Corporation, a 3rd party certifier of women owned businesses and a SBA-approved certifier for the WOSB program for both WOSB and EDWOSB status. They also offer a MBE and VBE certification.
  • SBA: United States Small Business Administration, certifier for 8(a) and HUBZone and repository holder for the Federal WOSB/EDWOSB program.
  • UCP: Unified Certification Program, this program is available in every state and offers DBE certification.
  • USBLN: US Business Leadership Network, the 3rd party certifier for Person with Disability or Disabled owned businesses.
  • USWCC: US Women’s Chamber of Commerce, 3rd party certifier of women owned businesses offering WBE and International WBE certification and is a SBA-approved certifier for the WOSB program for both WOSB and EDWOSB status.
  • VA: Veterans Administration, the Federal certifier for Veteran or Service-Disabled Veteran certification. (Some states offer their own veteran owned business certification.)
  • WBENC: Women’s Business Enterprise National Council, the largest 3rd party certifier of women owned businesses and a SBA-approved certifier for the WOSB program for WOSB status only. Also affiliated with WEConnect International, who certifies women-owned businesses internationally including: Canada, China, Europe, and India.

Other Related Acronyms

  • BDR: Billion Dollar Roundtable, a group of corporate entities working to increase commitment and spending levels with diverse suppliers.
  • CAGE Code: Commercial and Government Entity Code, a unique ID assigned to Federal suppliers.
  • DUNS: Data Universal Numbering System also known as the Dun and Bradstreet ID Number, a credit reporting number for your business.
  • FAR: Federal Acquisition Regulations, the rules governing how the Federal government procures goods and services.
  • FedBizOpps: The website where Federal procurement opportunities are posted by government buyers.
  • FEIN: Federal Employer Identification Number
  • FSC: Federal Supply Codes, a set of codes the Federal government uses to “group products into logical families for management purposes.”
  • GSA: United States General Services Administration, they establish long-term government-wide contracts known as GSA Schedules (also known as Multiple Award Schedules or Federal Supply Schedules). These schedules are organized by the goods, services or products purchased. NOTE: The Department of Veterans Affairs (VA) has their own schedule, the VA Federal Supply Schedules Program, to procure medical supplies.
  • Home-State: State in which your business is headquartered or domiciled.
  • NAICS: North American Industry Classification System, a way to classify your business (products and services sold).
  • NIGP Codes: National Institute of Governmental Purchasing Codes, a way to classify your business (products and services sold).
  • OSDBU: Office of Small Disadvantaged Business Utilization, virtually every federal agency has an office to ensure use of diverse businesses similar to supplier diversity in corporate America.
  • PNW: Personal Net Worth Statement, a financial reporting document listing short and long-term assets and liabilities of an individual. Required for DBE certification.
  • PSC: Product Service Codes, a way to classify your business (products and services sold) – these codes are broken down into three types: products, services, and research and development projects; and are used in the SAM (see below) system.
  • PTAC: Procurement Technical Assistance Centers, they provide government contracting (federal, state, and/or local) assistance, at little or no charge, through training and one-on-one counseling. PTACs are part of the Procurement Technical Assistance Program.
  • PTAP: Procurement Technical Assistance Program, a program established to expand the number of businesses capable of participating in government contracts.
  • SAM: System Award Management, the Federal government’s contracting registration system. You MUST BE registered to be certified by or do business with the Federal government. SAM has replaced the following disparate systems: CCR (Central Contractor Registration), FedReg (Federal Agency Registration), ORCA (Online Representations and Certifications Application), and EPLS (Excluded Parties List System).
  • SIC: Standard Industrial Classification, a way to classify your business (products and services sold).
  • UNSPSC: United Nations Standard Products and Services Code, a way to classify your business (products and services sold).

Like any other field, knowing the common terminology will help you understand how to take advantage of the opportunities certification presents.

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ABC’s of Supplier Diversity

If you’re a newbie to the SDMWVLGBTBE (Small Disadvantaged or Disabled, Minority, Women, Veteran, Lesbian, Gay, Bisexual or Transgendered Business Enterprise) certification world, your head is likely swimming with the terms and acronyms the rest of the community uses as shorthand.  We thought we’d take a moment to introduce you to the definitions of some important ones.

What is Supplier Diversity? It is proactive business programs to encourage the use of disable owned, LGBT owned, minority owned, women owned, veteran or service disabled veteran owned, historically underutilized business, and Small Business Administration (SBA)-defined small business concerns as suppliers. These programs exist at most large businesses and all of your local, county, state and federal government agencies in the US. There are strong supplier diversity programs being developed in many countries around the world – the UK, the EU, Canada, South America, India, etc. so the issues of diversity and inclusion are actually international.

Relevant Supplier Diversity Terms

  • Diverse/Diversity: An easy way to refer to all minorities and women with a single word. Often the term “minority” is used to describe a group that represents a smaller percentage of the total population than another group or groups. In the United States a minority is a person who is an African American; Asian Pacific; Hispanic; Native Americans (of all tribes including Native Hawaiians/Pacific Islander); and Subcontinent Asian. Women are considered among the minority group because historically, they have had limited access to educational and professional opportunities. Veterans and Service Disabled Veterans of the U.S. Armed Forces (Air Force, Army, Coast Guard, Marines and Navy), Persons with Disability and LGBTs can also be included in the disadvantaged category for diversity spend and certification.
  • Spend: The amount that a corporation or government entity purchases from diverse suppliers; this amount is typically tracked both by individual vendor and in aggregate.
  • Strategic Sourcing: A systematic approach to minimize costs, streamline processes, and improve quality; results in the clustering of like purchases from fewer vendors.
  • Tier 1: Direct supplier to a customer; prime contractor.
  • Tier 2: Second-level contractor; subcontractor; also referred to as Tier 2 supplier.
  • NAICS (North American Industry Classification System) code: US-based coding system that groups establishments into industry sectors based on what the business does. NAICS is a comprehensive system covering the entire field of economic activities, producing and non-producing. It is used by Corporate America, as well as local, state, and federal government entities.
  • SIC Codes: Standard Industrial Classification, a way to classify your business (products and services sold). Not often used anymore, as the NAICS codes have become the code of choice.
  • UNSPSC Codes: United Nations Standard Products and Services Code, an international way to classify your business (products and services sold), this systems is much more detailed than NAICS codes. We include our SIC and NAICS codes on our web page, and offer file of UN Codes because there are so many related to computer system design and programming.

Certification Types

  • 8(a): Federal Small Business development program
  • DBE: Disadvantaged Business Enterprise (must be socially and economically disadvantaged to qualify). ACDBE, are airport concessionaire businesses with DBE certification status.
  • HUBZone: Federal designation for historically underutilized business in designated urban or rural areas or designated census tracts, the business must be located in a designated area and 35% of its employees must live in designated HUB areas to qualify.
  • LGBT: Lesbian, Gay, Bisexual or Transgendered
  • MBE: Minority Business Enterprise (minorities recognized for certification in in the United States are: African American; Asian Pacific; Hispanic; Native Americans (of all tribes including Native Hawaiians/Pacific Islander); and Subcontinent Asian. Some states will breakdown these categories further.
  • PWD: Person with Disability or Disabled
  • SBE: Small Business Enterprise
  • Section 3: Housing and Urban Development agency specific certification, criteria is different county-by-county across the country.
  • VBE or SDVBE: Veteran or Service-Disabled Veteran Business Enterprise
  • WBE: Woman Business Enterprise
  • WOSB/EDWOSB: Federal designation for Woman Owned Small or Economically Disadvantaged Woman Owned Small Business

Related Terms: Next time we’ll look at acronyms often thrown around in the diverse supplier community.

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Community Support

Sometimes, in today’s political climate, it is hard to remember that this is a country with a commitment to diversity; a country that recognizes this commitment as a fuel driving the engines of both our civil liberty and national economy. Building a free and vibrant community depends on inclusion and opportunity for all.

The Kennedy and Johnson administrations’ Civil Rights Act of 1964 brought us the Equal Employment Opportunity (EEO) programs beginning affirmative action with prohibition of discrimination in all aspects of human resource practices. The supplier diversity movement began about forty-five years ago when President Nixon’s executive order directed federal agencies to develop comprehensive plans and specific program goals for a national Minority Business Enterprise (MBE) contracting program. Eleven years later, President Reagan issued another executive order requiring each federal agency with substantial procurement or grant making authority to develop a Minority Business Enterprise (MBE) development plan. Where the federal government goes, large corporations – especially those who sell or report to the fed – follow.

It took many civil activists and all political parties to help us build today’s broad community that encompasses SDMWVLGBTBE (Small Disadvantaged or Disabled, Minority, Women, Veteran, Lesbian, Gay, Bisexual or Transgendered Business Enterprise) owners and supplier diversity professionals. And, while there remains room for improvement, it is today’s community that will influence tomorrow’s direction.  Personally, we see this community as a far-flung family that should be supportive of each other. Some people call this paying it forward. We think that if other SDMWVLGBTBEs see good role models in their associates and competitors practicing diversity with each other, it will help lift us all. For us, this means acting with intention — looking for diversity when partnering for proposals and procuring the goods and services out organization needs. In fact, we even created our own supplier diversity plan that guides everyone in our organization on how to locate potential SDMWVLGBTBE partners and suppliers.

In 2016, we talked about disparity studies and the new perspective we gained from our MWBE partner who wanted to know if diversity and inclusion practices of certified SDMWVLGBTBEs had resulted in employee populations that mirrored their state’s population statistics. We saw that as such a good question, because so many of us forget to practice diversity inside our own walls. Shame on us if we don’t. Not only will we benefit from a diverse employee and supplier base, but those of us who practice what we preach will shine a light on the legacy of lifting our entire community, together … one hiring, purchasing or partnering opportunity at a time.

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Dog Days

It is the hot, humid and last lazy dog days of summer, as our mother used to refer to them.  Then we were excited about new home room teachers, cool clothes and maybe even a new school building.  These days, its the return to a more normal business landscape.  Our customers will be back from final vacations in a week or two and we’re planning how to make the most of this year’s final quarter.  For many SDMWVLGBTBE (Small Disadvantaged or Disabled, Minority, Women, Veteran, Lesbian, Gay, Bisexual or Transgendered Business Enterprise) business owners, this has become a good time to think about the benefits of diversity certification — most of our company’s certifications renew in September and October — and we’ve been getting calls from many people who are just starting their certification research.  So it seems like a good time to talk about certifers and what’s out there.

Who are the certifying organizations? 

It is a lengthy list that can be simplified by type.  There are diversity certifications offered by virtually every level of government: federal, state, county and municipality. These certifications often rely on the US Department of Transportation’s rules to define which businesses may be certified. Each certifier may have slightly different expectations and processes, but underlying programs expect:

  • Company is an independent, for-profit business.
  • The business is at least 51% owned and controlled by a socially and economically disadvantaged individual(s).
  • The company’s disadvantaged owners are US citizens or lawfully admitted permanent residents.
  • The business meets the Small Business Administration’s size standards for its primary NAICS code.

There are several third party certifiers: Women’s Business Enterprise National Council (www.wbenc.org); National Minority Supplier Diversity Council (www.nmsdc.org); LGBT business owners – National Gay and Lesbian Chamber of Commerce (www.nglcc.org); or people with disabilities business owners – US Business Leadership Network (www.usbln.org).  Third party supplier rules can be different.  For example, social or economic disadvantage is not part of the criteria — and personal net worth statements are generally not required.  In general, the businesses are not restricted to being considered small — large DMWVLGBTBEs can apply and be certified.  But, NMSDC only certifies US citizens.

Don’t know what to choose because there are so many choices? Taking time to poll your customers may be the best way to choose.  We often recommend reviewing these certification strategies.

What will certification do for me?

Hate to say, but it depends.  Diversity certification isn’t a golden ticket, it’s a marketing tool. You still have to be good at what you do, and continue to offer valuable goods or services to your customers.  What it does offer is instant recognition.  Many SDMWVLGBTBEs aren’t aware of the value certification adds in supporting their clients’ diversity  and inclusion goals — and it is NOT just the government clients. Corporate cultures are becoming more interested in commitments to supporting their own diverse customer base.  Take, for example, the Billion Dollar Roundtable (BDR) comprised of 24 corporations with a minimum $1 billion annual 1st Tier MWBE Supplier Diversity  spend, that in 2011 spent another $6.5 Billion with “Other Diverse Suppliers” including veterans, service disabled veterans and LGBT suppliers. BDR members encourage  prime suppliers to engage with SDMWVLGBTBEs by setting participation goals.

In our world, we use our certifications in three ways.  We often serve as prime on moderate-sized government contracts. In many cases those contracts also require us to meet supplier diversity goals — we can self-fulfill the WBE portion of the contract but not the MBE portion, so we have MBE certified suppliers.  We’re approached frequently to subcontract to other government primes, some who may be certified themselves but most often with large companies that aren’t certified — remember, government agencies have size limits. And finally, in every piece of marketing material, web site, business card, etc. we declare our certification status so potential clients know we’re certified.

The key to successful SDMWVLGBTBE certification is choosing the program that best suits your business and using it to enhance your marketing efforts.

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Perspectives

We often talk about the history of supplier diversity, how its roots are buried in the affirmative action/equal employment opportunities that came out of the Kennedy, Johnson and Nixon administrations.  Some of our staff actually marched (and sat) in solidarity with Martin Luther King, Jr’s mission at various locations and campuses in the Midwest and New England.  The many federal, state, local and third party diversity certification  processes began as an idea in Nixon’s 1971 Executive Order 11625, that directed federal agencies to develop comprehensive plans and specific program goals for a national Minority Business Enterprise (MBE) contracting program.  Today, there are many robust  programs offering SDMWVLGBTBE (Small Disadvantaged or Disabled, Minority, Women, Veteran, Lesbian, Gay, Bisexual or Transgendered Business Enterprise) certifications.  Theses certifications open doors for us and are a value add when pursuing commercial and government contract opportunities with customers who are committed to diversity and inclusion in their own organizations.

What we haven’t talked about much, is how and why the certification processes have changed.  Granted, at GetDiversityCertified.com we only have direct experience since the late 1980s, but that’s still almost three decades.  Our business owners first heard about MWBE (minority and women business enterprise) issues around 1988.  There was a local news story about an MBE firm that was charged with fronting  for a non-minority owned company in a computer related contract.  Today, that would be called a pass-through. This type of arrangement has always been illegal.  The SDMWVLGBTBE must provide a legitimate and commercially useful function (CUF). A few months later, after winning a state contract, we were asked to complete a one page survey about our business, its ownership and our sales volume. A return letter certified us as a large – size standards were different then – WBE in the state of Illinois, which made our client agency very happy and, combined with good performance, led to more work. That’s when we began to understand the true impact certification had on our business.

Based on that experience, we applied for certification in our home state of Pennsylvania.  At the time, there were several agencies that certified MWBEs — Department of General Services (DGS), Department of Transportation (DOT) and the major counties like Allegheny.  And all three had different certification criteria, application forms and required documentation. Today, Allegheny County is apart of Pennsylvania’s Unified Certification Process (UCP) which ties into the DOT’s Disadvantaged Business Enterprise (DBE) program – the County still sends an additional letter to confirm WBE, MBE, or MWBE status – and DGS no longer certifies business’s but rather verifies them. DGS grants SBE verification with submission of business taxes for size standard proof and for MWBE status a business must submit proof of their DBE or 3rd party SDMWVLGBTBE certification.

But we digress, because what’s changed most is the progressively detailed information  and amount of supporting documentation necessary to prove that your business is actually 51% owned, controlled and operated by diverse citizens (or permanent residents) of the United States. In 2002 when we first applied for DBE status as a corporation our certifier required that we provide: a financial statement from our CPA, preferably audited; three years corporate tax returns; three years personal tax returns; resumes of the owners and officers; proof of our ability to perform work in Pennsylvania (basically a good standing certificate); copies of any 3rd party rental agreements (leases) and management services agreements; articles of incorporation; by-laws; record of our first corporate organization meeting; issued stock certificates (front and back); and a stock ledger. If there were any stipulations on stock/ownership options, restrictions on disposal of stock loans or voting, or stockholder or buy-rights agreements that information also had to be provided. This list of paperwork seems pretty short by today’s standards, but it was significantly more than our initial one page survey in 1989.

In 2014 the United State’s Department of Transportation made changes to the DBE program which filtered down to all 53 states or territory programs. Some of the changes were minor, formatting corrections made to the application.  For example, before the older DBE application asked about “Immediate Family Member” relationships between owners on page one before asking who actually owned the business on page three. Additional questions about the owner and business were also added, such as “Does this owner work for any other firm, non-profit organization, or is engaged in any other activity more than 10 hours per week?” and “At present, or at any time in the past, has your firm: Served as a subcontractor with another firm constituting more than 25% of your firm’s receipts?” Supporting documentation also changed.  Before late 2014:

  • Resumes only needed submitted for owners and officers of the business, but now all owners, officers, and key personnel resumes must be included;
  • Business tax returns for the previous three years now include any requests for extensions filed as well as three years worth of affiliated business’s tax returns with related schedules;
  • If a business owns or leases a vehicle they now also have to include VIN numbers, copy of titles, proof of ownership/lease, and insurance cards for each vehicle; and
  • Corporations used to only need to provide minutes for the first and most recent stockholders and board of directors meetings, but now must provide ALL meeting minutes.

The amount of supporting documentation can feel intimidating, but there is a valid purpose behind it.  The certifier must be sure that the business has  provided proof that both the business and the owner(s) meet the eligibility requirements set forth by the rules or legislation of its governing body (federal and/or state laws and procurement regulations); and ensure that the business is capable of performing the services or producing the products it says it does. It is incumbent upon you and your business to prove that you’re  certifiable.

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