How can small businesses that are seeking to grow, including enterprises owned by women and minorities, gain access to more government contracting opportunities?
Tisidra Jones, a lawyer managing the vendor outreach program at the City of St. Paul, has a suggestion for businesses in the Minneapolis-St. Paul area: become CERT-certified.
Launched in 1998 by a group of public entities that included the City of St. Paul (the lead agency), Hennepin County, and Ramsey County, CERT (short for “Central Certification”) was created to identify businesses that can help its founding entities and others meet their diversity and inclusion goals. For example, the City of St. Paul requires all of its contracts to include opportunities for small business enterprises (SBEs), which includes the subcategories of minority-owned business enterprises (MBEs) and women-owned business enterprises (WBEs). The CERT Program verifies a business’s status as an SBE, WBE, or MBE; categorizes the type of work the business does; and maintains the record in an online database located at cert.smwbe.com. Larger enterprises, such as construction firms, that are pursuing government contracts containing inclusion requirements can then consult this database in order to find SBE-, WBE-, or MBE-verified contractors or subcontractors to hire. To meet the inclusion goals of CERT’s creators, consulting the database is an absolute must: The City of St. Paul, Hennepin County, and Ramsey County, when checking for compliance with their contract requirements, recognize only those small businesses that are enrolled in the CERT Program.
“There are hundreds of millions of dollars paid out in contracts each year from local government,” says Jones, “and there are many opportunities for small businesses to win some of those contracts.”
The CERT database currently contains nearly 1,300 SBEs with active certifications, and approximately ten additional applicants receive certification each week, according to Jones. Certifications remain active for three years. As of January 2015, roughly 45 percent of the businesses in the database are WBEs, 30 percent are MBEs, and 25 percent are white-male-owned SBEs. To be eligible for registration, a business must be headquartered in one of the 15 counties that make up the Twin Cities metropolitan region and must meet industry-, size-, and some demographic-specific conditions (SBEs do not have gender- or race-based ownership conditions).
“Although CERT is the largest database of its kind in Minnesota, the number of certified businesses in the database is a drop in the bucket,” says Jones, noting that the database contains about 750 additional businesses whose certifications have expired but who can apply for recertification. “We know there are so many more small businesses out there that qualify. We want them to register.”
Documenting disparities and narrowing gaps
For the entities that consult the CERT database, business inclusion is a priority. That’s especially so for the City of St. Paul, where inclusion is the law. In 2006, the city conducted a procurement disparity study to better understand who was winning city contracts and how much money was going to different types of businesses. The analysis revealed a considerable gap between large companies and companies that fell in the SBE, WBE, and MBE categories—particularly the latter two. To increase the share of expenditures going to these businesses, the city enacted an ordinance in 2008 requiring all city contracts, with limited exceptions, to include business inclusion goals. Generally on projects, 5 percent of the business opportunity should be targeted toward MBEs, 10 percent to WBEs, and 10 percent to SBEs, for an overall 25 percent inclusion goal.
A comparison between the City of St. Paul’s pre- and post-ordinance contract expenditures illustrates the significance of the changes. Of the $128 million the city paid out for city construction projects and professional services in 2008, just $4.85 million, or 3.7 percent, went to WBEs, MBEs, or SBEs. At the end of 2014, the business inclusion goals set a half-decade earlier had had the desired effect: the city awarded 41 percent of the $437 million available for goods and services, or about $180 million, to MBEs, WBEs, and SBEs. The exact breakdown was 18.19 percent to SBEs, 17.75 percent to WBEs, and 5.35 percent to MBEs.
“We’re thrilled that we exceeded our goals,” Jones says. “We’re now looking into having an updated disparities study to see what’s changed in our marketplace and if our target numbers need to increase as well.”
While Hennepin County doesn’t have specific goals for MBEs or WBEs, it does have inclusion goals for SBEs: 20 percent of the expenditures for commodities, maintenance and operational services, such as office supplies and waste removal; 25 percent of the expenditures for “hard” construction contracts, such as road improvements; and 25 percent of the expenditures for personal and professional services, such as information technology services. Ramsey County also focuses on SBE growth opportunities by granting department directors the authority to pursue contracts with a small business directly, if the total contract cost is $100,000 or less. The transactions must follow established solicitation policies and procedures and, for construction projects, must have SBE goals in place.
In addition to the entities that created CERT, a group of prominent organizations in the Twin Cities area, including the University of Minnesota, the Minnesota Council on Foundations, and Knutson Construction, use the CERT database to find SBEs, MBEs, and WBEs to conduct business with.
“Many of these entities have diversity inclusion goals of their own,” says Jones, “and they want to make sure that they’re doing their best to include local small businesses.”
What about non-CERT certifications?
Small businesses in the Twin Cities area and beyond, including minority- and woman-owned enterprises, may pursue certification credentials with other small business recognition programs to expand their marketability and contracting opportunities. These certification programs come with varying degrees of requirements and are recognized by different public entities and organizations. Some examples:
Programs for Minnesota-based businesses
- The Minnesota Unified Certification Program (MnUCP) operates the Disadvantaged Business Enterprise (DBE) Program on behalf of the U.S. Department of Transportation. This is a federal certification that is accepted by the City of Minneapolis, the Metropolitan Council (a multi-jurisdictional planning body in the Twin Cities region), the Minnesota Airports Commission, and the Minnesota Department of Transportation. www.mnucp.org
- Minnesota’s Department of Administration operates the Targeted Group/Economically Disadvantaged (TG/ED) Small Business Program. This is a state certification. www.mmd.admin.state.mn.us/mn02001.htm
Other programs (For information on state- or region-specific programs where you are, contact your state’s commerce department or your local chamber of commerce.)
- The U.S. Small Business Administration operates a program to certify small businesses. This is a federal certification. www.sba.gov/offices/headquarters/obd/resources/4210
- The Women’s Business Development Center operates a program to certify woman-owned businesses. This is a private certification. www.wbdc.org
- The North Central Minority Supplier Development Council operates a program that certifies minority-owned businesses. This is a private certification. www.northcentralmsdc.net
To determine which certifications to pursue, Pat Calder, a senior equal opportunity consultant at the Metropolitan Council, suggests a fairly straightforward tactic: “Look at where the funding comes from. If the contract is from a federal agency, you’ll want to look at a federal certification. If you’re in Minnesota, say, and you’re looking at contracts that are paid for with just state money, then you probably want to look at the TG/ED program. Similarly, if you’re looking at a contract that is local, such as from the City of St. Paul, then you’ll want the CERT certification. The only exception to this tactic is with the City of Minneapolis. Although it’s not a recipient of federal dollars, the city utilizes only MnUCP DBE certified firms to meet its small and underutilized business program goals.”
 St. Paul Public Schools and the City of Minneapolis were also among the original government entities that funded the creation and maintenance of the CERT database and program. St. Paul Public Schools later withdrew due to budget constraints. Starting in 2012, the City of Minneapolis ceased recognizing businesses in the CERT database and switched to the Minnesota Unified Certification Program, which is described in the sidebar below.
 Eligible businesses must be based in the Minnesota counties of Anoka, Benton, Carver, Chisago, Dakota, Hennepin, Isanti, Ramsey, Scott, Sherburne, Stearns, Washington, or White; or the Wisconsin counties of Pierce or St. Croix.
 To access information about the conditions that businesses must meet to be certified as SBEs, WBEs, or MBEs, follow the “Eligibility Criteria” link on the CERT home page at cert.smwbe.com.