The MWBE Certification System in NYS is Broken
Here are some Steps to Streamline MWBE Certification and Make it Work.
I want to sound off a bit on something that irks me. This is an issue that directly affects my bottom line, the viability of myriads of small businesses, and will ultimately impact how we respond to the threat of climate disruption.
MWBE certification, which stands for Minority and Women-Owned Business Enterprise certification, is a program designed to provide “minority” (for the record i hate that term. There is nothing “minor” about me and that term is vague and unspecific and centers “whiteness” as the norm when, if you look around the world, it most certainly is not) and women-owned businesses with greater access to contracting opportunities with government agencies and private sector firms in the State of New York. While the program is intended to support these businesses, there are several challenges that applicants may face when seeking certification. Some of these challenges include:
Meeting eligibility requirements: To qualify for MWBE certification, a business must meet certain eligibility requirements, such as being at least 51% owned, controlled, and operated by a minority or woman, and having been in business for at least one year. Meeting these requirements can be a challenge for some businesses.
Documenting ownership and control: One of the key requirements for MWBE certification is demonstrating that the owner(s) have actual control over the business. This can be difficult to document, particularly in cases where there are multiple owners or complex ownership structures.
Providing detailed financial information: The MWBE certification process requires applicants to provide detailed financial information, such as tax returns and bank statements, to demonstrate the financial health of the business. This can be challenging for businesses that have not kept detailed financial records or that have experienced financial difficulties in the past. In other words, you have to have your shit together.
Competition for contracts: Even with MWBE certification, businesses may still face stiff competition for contracting opportunities. Winning contracts often requires a combination of factors, including competitive pricing, strong performance history, and relationships with key decision-makers. Basically, all the old rules still apply for actually winning business.
Renewal and recertification: MWBE certification is not a one-time process; businesses must renew their certification every three years and provide updated information to maintain their eligibility. This can be a challenge for businesses that have undergone significant changes or have not kept detailed records of their activities.
Overall, MWBE certification can be a valuable tool but it does require careful planning, attention to detail, and persistence to overcome the challenges of the application process and compete successfully for contracts.
That’s my overview. My beef is more simple. It is possible for individuals or businesses to attempt to take advantage of the MWBE certification program in ways that are not in compliance with its rules and requirements. These individuals or businesses may not meet the eligibility criteria for MWBE certification, but attempt to obtain certification anyway through fraudulent means. They may misrepresent their ownership and control structures, financial information, or other aspects of their business to qualify for MWBE certification. In some cases, businesses may misrepresent themselves as minority or women-owned when they are not, or may use "front" companies to falsely claim MWBE status.
Now, who/what type of person/s do you think would try and do something like that?
Perhaps the same people who think rules do not apply to them or perhaps that the rules apply to them only when they facilitate their ascension?
When individuals or businesses that do not meet the eligibility criteria attempt to obtain MWBE certification fraudulently, they not only undermine the integrity of the program, but also make it harder for legitimate minority and women-owned businesses to obtain certification and compete for contracts. This is because the program has limited resources to review and process certification applications, and fraudulent applications take up valuable time and resources that could be used to review legitimate applications.
Read that last sentence again and know that I have been waiting for almost 6 months to get NYS certified because individuals or businesses that do not meet the eligibility criteria have attempted to obtain MWBE certification fraudulently and the agency that manages the program (The MWBE program in New York is managed by the Empire State Development Corporation (ESD) is inundated with so many fake claims that legitimate ones (like mine) get lost in a mountain of paperwork and a maze of overworked bureaucrats.
New York State has set a goal of achieving 30% utilization of certified Minority and Women-owned Business Enterprises (MWBEs) in state contracts and procurement opportunities. In addition, the state has a goal of achieving 40% MWBE participation in state-funded capital projects. These goals were established to promote “diversity and inclusion” in state contracting and to ensure that MWBEs have equal access to contracting opportunities.
Yet, the program is broken and getting ones certification is rife with delays. What does this ensure? The same old same old of corruption in state contracting.
Corruption in the procurement process for state contracts can take many forms, but some common methods include:
Bid-rigging: This occurs when individuals or companies collude to manipulate the bidding process in order to ensure that a specific contractor wins the contract.
Bribery: This involves offering money or other forms of payment to influence the decision-making process or to secure a favorable contract.
Conflict of interest: This occurs when a public official or a member of their family has a financial interest in a company that is bidding on a state contract.
Kickbacks: This involves a contractor paying a public official in exchange for being awarded a contract or receiving preferential treatment.
False or inflated billing: This occurs when a contractor bills the state for work that was never performed, or inflates the cost of the work that was performed.
Insider information: This involves a contractor or a public official sharing confidential information about the bidding process with a specific contractor to give them an unfair advantage.
If the MWBE program exists to stem corruption and it is also to address the wrongs and of the past, then the program needs to be dramatically improved to ensure that it works and that qualified firms can get certified.
Here are some ways to streamline MWBE certification:
Simplify the application process: The MWBE certification process can be complex and time-consuming. Simplifying the application process by reducing paperwork, offering online application options, and providing clear guidelines can make the process easier and more efficient. (It took me a month of basically full-time work to get my NYC certification).
Increase transparency: Providing clear information about the certification process, eligibility criteria, and required documentation can increase transparency and help potential MWBEs understand what is required for certification. Often there are second and third rounds of information needed that they could save everyone time and energy by stating up front.
Provide resources and support: Offering resources and support to MWBEs can help them navigate the certification process more effectively. This can include workshops, training sessions, and one-on-one counseling.
Expedite the review process: Streamlining the review process by reducing the time it takes to review and approve applications can help to get MWBEs certified more quickly. Another way would be to allow applicants to come into a facility and apply in person.
Allow reciprocity with other certifications: Allowing reciprocity with other certification programs can make it easier for MWBEs that are already certified in other programs to become certified in New York State. There should be agreements between states to allow certifications to be honored in other states - particularly when states are close and have shared interests and agreements in other areas.
Allow for nuanced membership structures. A cooperative business is a type of business that is owned and operated by its members. In a cooperative, the members work together to achieve common goals, and share in the profits and benefits of the business. Cooperative businesses can take many different forms, including consumer cooperatives, worker cooperatives, and producer cooperatives. However, based on current rules cooperatives do not qualify as MWBE. This needs to change.
Ok. Sounded Off Done. I hope you send this to your local representative. If we are going to meet our lofty CLPCA and Inflation Reduction Act goals we need to adopt these simple steps to make MWBE certification work.
‘nuff said.
