The U.S. government buys more than $200 billion in goods and services each year from the private sector. Federal policy actively gives contracting preferences to certified small and disadvantaged firms, and many state and local entities follow suit. At the federal level, contracting goals have been established that encourage agencies to spend 23% of their budgets annually with small businesses, 5% with minority- and woman-owned firms, and 3% with service-disabled veteran-owned and underutilized businesses.
Similar goals are in place for state and local government purchases. Many large corporations also have programs that encourage contracting with minority- and woman-owned businesses. These “supplier diversity” programs are often managed by a Small Business Liaison Office (SBLO) who is responsible for ensuring that their internal contracting goals are met. If your small business is at least 51% owned and operated by a minority, woman, or veteran, it could be worth your while to explore getting certified so you can take advantage of set-aside programs.
The purpose of these programs is to give small disadvantaged businesses a more level playing field in competing for government contracts against larger, more entrenched firms. What is Certification? Becoming certified is a way to officially record your business ownership status. Your business may be minority- or woman-owned but if you haven’t been certified as such, you won’t be able to qualify for set-aside contract opportunities. Certification is a review process that ensures a small business is actually owned, controlled, and operated by the applicants.
The application process is administered by a certifying agency which may be a government agency or a private organization depending on the type of certification you are seeking. What are the Benefits? For many small businesses, certification can lead to the right contact within a federal agency and open the door to several state and local government opportunities. It can also help you bypass competition and land “sole source” contracts of up to $5 million. With large commercial businesses, a certified company can pitch its value as a “diversity supplier.” That can help you get contracts in the form of measured set-asides, a percentage of contract awards earmarked for diversity, or simply because of corporate policies.
The work can be awarded directly to your company (so-called Tier 1 contracts) or you can become a subcontractor to other companies that secure such contracts (Tier 2). In addition to contract preference, certification allows a business the advantage of a variety of loan and bonding programs, as well as programs that provide technical assistance. It also provides visibility for your business (through business directories) and some discounts on services and technical assistance.
Basically, becoming certified puts you into position to bid for big, long-term contracts from large corporations and/or from local, state, and federal government agencies. But certification doesn’t give you anything in and of itself. Like any marketing tool, it’s your strategy and plan that gets you the business. What certification can do is increase your chances of being in the room when the deals get done.
Is Certification Required? Certifying your small business is NOT a requirement to do business with the government; rather, it is a way to set your company apart and help you gain competitive advantage. The application process is usually very tedious and there is often a processing fee. Therefore, you need to carefully weigh the advantages to your business of spending the time and effort to get certified. Certification may open doors for you but you need to be willing to knock first.
Who Provides Certification? There are various types of certification from different private organizations and public agencies. Plus, each certifying group has its own form and requires specific information and documentation. Be prepared. This can be a drawn-out process. Before you begin filling out applications, research which certifications will benefit your business.
These are the primary levels of certification and the organizations that manage the application process:
|Federal||8(a), Small Disadvantaged Business (SDB), HUBZone, Service-disabled Veteran-owned||U.S. Small Business Administration|
|State||Disadvantaged Business Enterprise (DBE), Disabled Veteran Owned Business Enterprise (DVBE)||State government agencies, state Department of Transportation and affiliated organizations|
|Local||Small Business Enterprise (SBE)Community small Business Enterprise (CSBE) Community Business Enterprise (CBE) Micro /Small Business Enterprise (ME/SBE) Disadvantaged Business Enterprise (DBE) Micro Enterprise Program (MBE)||City or County government agencies depending on where your business is located|
|Corporate||Minority Business Enterprise (MBE), Woman-owned Business Enterprise (WBE)||National Minority Supplier Development Council, Women’s Business Enterprise National Council|
|Consultants||Assistance with application for various certifications||Small Business Development Centers, Procurement Technical Assistance Centers, EZCertify|