Most states in the U.S. have a program in place that certifies minority, women and veteran-owned business enterprises. However, these programs differ widely in how they are designed. For example, in some states the certification process can be completed in as little as 10 days. In others, it may take up to three months. States also vary in the types of resources they provide to MWBEs and the amount of financial and technical support they provide. Additionally, some states have developed a program that “sets aside” a certain percentage of state contracting opportunities for MWBEs. At this time, the states with the most robust set-aside programs include:
- Connecticut, which mandates that 25 percent of government contracting opportunities are set-aside for small businesses, and 25 percent of that amount must go to MWBEs.
- Illinois, which has a set-aside goal of 20 percent.
- Ohio, which has set a target of 15 percent participation in government contracts for MWBEs.
- New York, which has the highest target for MWBE pariticpation in state contracts, set at 30 percent. It also has a 6 percent goal for businesses owned by veterans with disabilities.
- New Jersey, which has a set-aside goal of 25 percent for small businesses.
Why Is a Set-Aside Program Important?
Historically, small businesses owned by women and minorities have had lower participation in federal, state and local contracting opportunities than businesses owned by their white, male counterparts. And while procurement agencies and prime contractors often cite low availability as the reason for this disparity, recent studies in a number of states have shown this not to be the case. For example, a 5-year disparity study conducted in New York State between 2010 and 2015 yielded the following results:
- As prime contractors, MWBE utilization varied from a high of 32.54 percent in non-construction services and a low of 13.84 percent in construction-related services.
- As subcontractors, MWBE utilization ranged from 28.84 percent in construction-related services to 22.96 percent in non-construction services.
- MWBE’s represented 53 percent of available prime contractors and 53.5 percent of available subcontractors in New York State during that period of time.
Mason Tillman Associates, the firm that conducted the study, determined from their analysis that there was a statistically significant disparity between the number of available MWBEs and the number of contracting opportunities awarded to MWBEs. The disparity was greatest for prime contractors, especially those in construction-related services such as engineering and architecture. Based on this study, the State of New York recommitted to achieving its set-aside goal of 30 percent and devoted additional resources to assisting MWBEs in developing the capacity to compete for contracts offered by the state.
How Much Money Is at Stake?
Based on projected state spending for 2018, the amount of money available to MWBE contractors who procure government contracts is huge. In New York and New Jersey alone, projected spending totals $343 billion and $64 billion respectively. With a set-aside goal of 30 percent, that means New York has earmarked nearly $103 billion for MWBEs. And New Jersey’s 25 percent set-aside earmarks another $19 million for MWBEs in that state.
If you are a women, minority or veteran who owns a for-profit business, learn more about the MWBE certification process in your state. Not all small businesses will qualify, but you will have access to an amazing array of opportunities if you do. You can find a list of the agencies responsible for managing these programs here.
About Carmoon Ltd
The Carmoon Group Ltd. is an insurance broker headquartered in Hicksville New York. We offer a full suite of risk management and insurance programs to businesses large and small, and we have particular expertise in helping MWBEs meet the unique challenges they face. Please give us a call today to see how we can help you meet your business goals. Or if you prefer, just reach out online and we will get back to you at a convenient time.