As part of my service to the community, I delivered a talk at the CAMDAL Professional Mentorship Program, held on August 12, 2023, at the Audubon Recreation Center, Garland, Texas, on inclusive procurement titled “Leveraging the benefits of minority/diverse certification”. During the talk, I provided guidelines on how small businesses could get certified as minority/diverse suppliers, the available programs, and how minority/diverse suppliers benefits from being certified.

In simple terms, a minority business enterprise (MBE) is a business that is majority-owned by a citizen from a recognized minority group. The United States (US) business law defines a minority-owned business as one that is owned by African Americans, Asian Americans, Hispanic Americans, and Native Americans. Considering this, MBE certification is a process of gaining official government recognition that a business is majority-owned by someone from a racial minority group. Being certified makes a small business look better in the eyes of the Government & Corporate. Certification provides small/diverse businesses with a nationally recognized and highly respected status that makes the business stand out against marketplace competition for elite and distinguished competitors. It is of interest to note that there are at least 38 States in the US with minority programs.

Interesting facts:

• In the fiscal year 2021, a total of $154.2 billion, or 27.2 percent of all contracting dollars, went to small businesses, an $8 billion increase from the previous fiscal year (The SBA’s Small Business Procurement Scorecard, 2021).
• The General Services Administration (GSA) on July 18, 2022, announced steps to advance equity and supplier diversity in federal procurement, to reach the federal Administration’s goal of increasing the share of contracts awarded to small, disadvantaged businesses to 50% by 2025.
• A survey conducted by Deloitte Global (2021) estimates that over 90% of large corporations are interested in socially responsible purchasing, and over 60% of their procurement offices are now being formally measured by how much they spend with small and diverse suppliers.
• The Small Business Administration (SBA) works with federal agencies to award 23% of government contract dollars to eligible small businesses (https://cdn.advocacy.sba.gov/wp-content/uploads/2020/11/05122043/Small-Business-FAQ-2020.pdf).
• In the 2022 Fiscal year, the federal government achieved its small business sub-contracting goals, awarding 30.9%, or $79.1 billion, to small business subcontractors.
• Businesses that work with certified Minority Business Enterprises (MBEs) may be eligible to receive certain tax benefits (https://www.uschamber.com/co/run/finance/minority-owned-businesses-taxes).

One of the key benefits of small business certification is supplier diversity programs. Businesses with supplier diversity programs oftentimes struggle to find diverse suppliers to give contracts to. Supplier diversity, which is part of inclusive procurement, is the practice of creating opportunities for traditionally minority/diverse suppliers to be introduced into large corporate and public procurement. It is a business strategy that provides market access opportunities, enabling diverse suppliers to have a fair possibility for contracts and/or to build the capacity to do so in the future. Organizations that expand business sourcing in this way offer commercial and social benefits, buying from more diverse suppliers, the suppliers themselves, and the broader business ecosystem and society.

Also, the federal government establishes formal goals to ensure small businesses get their fair share of work. Every federal government purchase between $10,000 and $250,000 is automatically set aside for small businesses if there are at least two companies that can provide the product or service at a fair and reasonable price as follows:

• 8(a) Business Development.The federal government tries to award at least 5% of all federal contracting dollars to small, disadvantaged businesses each year.
• The federal government tries to award at least 3% of all federal prime contracting dollars to HUBZone-certified small businesses each year.
• Women-Owned Small Business. The federal government tries to award at least 5% of all federal contracting dollars to women-owned small businesses each year.
• Service-Disabled Veteran-Owned. The federal government tries to award at least 3% of annual federal contracting dollars to service-disabled veteran-owned small businesses.

Here are a few examples of state and local programs:

• Connecticut: Connecticut has a Set-Aside Program which mandate of 25% of government contracting for small and minority-owned businesses.
• Illinois: Illinois sets aside a goal of 20% for Business Enterprise Program businesses.
• Ohio: Ohio has a state target of 15% for Minority Business Enterprise Program contracts.
• New York: In 2014, New York set a 30% state target for minority-and women-owned businesses as well as a 6% target for veterans with disabilities-owned businesses.
• New Jersey: New Jersey has a 25% set-aside goal for small businesses and 3% set aside for Disabled Veteran Owned Business Enterprises.
• Maryland. In 2013, Maryland established a 29% Minority Business Enterprise participation goal in all qualifying state procurement expenditures. On February 16, 2023, Maryland’s Governor Signed an Executive Order to Strengthen Government Accountability for Maryland’s Minority Business Enterprise Program.
• Pennsylvania. In Pennsylvania, Governor Tom Wolf has set a goal of increasing the percentage of small diverse business contracts to 26.3%, which is approximately a 400% increase.

If you are a small business in the United States and fall within the designated category groups for minority businesses, take advantage of the opportunity to increase contracting opportunities for your business.