... and, that money is only spent with certified businesses.

In order to prove that diverse suppliers are participating in and awarded contract dollars, each organization must get copies of the supplier's diversity certificate.  Certifying and tracking dollars spent with diverse business has become a big issue. It is a political hot potato at the federal level, because these goals are not being met. Diversity certification will continue to grow in importance.

 

What do we mean “diverse business owners”?
A business owned by members of a diversity group. The business has to be owned and controlled by ethnic minorities or women. They must own at least 51% of the business. In the United States: a person who is American Indian or Alaskan Native, Asian, Black or African American, Native Hawaiian or Other Pacific Islander, a person whose ethnicity is Hispanic or Latino; and/or female; and/or veterans or service disabled veterans of U.S. Armed Forces.

 

Who should get certified?
Businesses that are minority, women, veteran or service disabled veteran (51% or more) owned should consider getting certified if certification will benefit their business. Depending on who your end clients are, that may be you. If you market products or services to any government agency, a certification may open doors to contracts or sales that are not typically available to non-certified firms. If your corporate clients have diversity spend goals, or serve as prime vendors to government agencies, again certification can be beneficial. Certification should be part of an overall sales and marketing strategy. Take the time to research your current and targeted customers, asking: What diversity spending goals do my customers have? Does this client buy what I sell directly from a diversity business, or do they ask prime vendors to make the acquisition for them? What certification(s) does this individual customer accept? Check out this article on diversity certification strategies.

 

How do I know my business is eligible for a U.S. certification?
The fundamental eligibility question: "Is the business 51% owned AND operated by a person (or group of persons) that is: 1) a racial or ethnic minority or a woman; and 2) citizens or permanent residents of the United States? Without 51% ownership and control, certification is unlikely.

• To achieve Disadvantaged certification, personal net worth of the owner(s) must be below $1.32 million (occasionally, below $750,000) excluding the value of his or her personal residence.  In some instances, the certifier will request that the owner(s) write a narrative about the social and economic barriers s/he has expereienced.
• To get Small Business certification, the business's average sales must meet the Small Business Administration guidelines based on its industry type.
• To be Veteran Certified, the business must be 51% owned and operated by a Veteran of the US Armed Services (Air Force, Army, Coast Guard, Marines or Navy). To be or Service-Disabled certified, the business must be 51% owned and operated by a US Veteran with a service-connected disability determined by the VA or Defense Department.

If the business meets ownership criteria, it must also meet size, independence and often for-profit requirements. To learn more about your business's eligibility for specific certifications, give us a call at 800-544-1210 to complete our Eligibility Questionnaire.

 

Why do governments and corporate buyers want proof of diversity certification?
Fraud Prevention!  Many front companies have been started with minorities or women as the supposed head of the business.  As recently as 2014 a New York Grand Jury concluded that "... contracting programs set aside for firms run by women and non-whites are riddled with criminal conduct that has diverted millions of dollars over many years". During 2010, a $20 million civil forfeiture related to DBE fraud on various public works contracts was negotiated by a New Jersey construction firm who had fraudulently submitted DMWBE utilization reports. In 2005, the Chicago Sun Times ran a story about a company who won an O’Hare airport contract as a minority firm; even though the president admitted he was not running the business as required by the City. During 2004, the Scripps Research Institute awarded a contract to MCO Construction & Services, "to facilitate an outreach program for small businesses in the country and to be involved in the procurement strategy to ensure maximum local and small business participation." This company allowed itself to serve as a front company in a program designed to help small, minority-owned businesses participate in county government contracts during 2001.

Certification processes are organized to assure that a business seeking certification is really owned and controlled by members of the diverse community.

 

Why get certified?
A big issue for business is how to maximize revenues and profits.  Many U.S. businesses, are owned and operated by members of designated diversity classes (e.g.: Native American, Asian American, African American, Hispanic American; or, Women). These businesses often pursue certification as a marketing strategy. Once certified, the business is eligible to participate in procurement initiatives to meet federal, state or local government and corporate America’s goals for diversity spending. While holding a diversity certificate does not guarantee sales, it is a valuable tool used to open doors to opportunities, increase visibility and build relationships. A diversity certification implies a certain aura of legitimacy that is respected by procurement professionals.

 

What is Supplier Diversity?
Supplier Diversity is usually part of the purchasing department in government agencies and corporations.  Their mission is to make sure that their organization meets its goal in buying goods and services from small and diverse businesses.

Supplier Diversity has its roots in Civil Rights legislation. In 1963, President John F. Kennedy championed civil rights working with Congress on HR 5271, the bill that ultimately became the Civil Rights Act of 1974. In a “brilliant move by the arch foe of civil rights"(1), Congressman Judge Howard W. Smith introduced an amendment to insert the word sex into the Act. This broadened Kennedy’s 1961 Executive Order (EO) 10925 which requires federal contractors to take "affirmative action to ensure that applicants are treated equally without regard to race, color, religion or national origin." President Johnson amended EO 11246, creating the Office of Federal Contract Compliance, in 1967 to include affirmative action for women. This required Federal contractors to make good-faith efforts to expand employment opportunities for both women and minorities. President Nixon used EO 11458 to create a federal Office of Minority Business Enterprise (OMBE). During 1979, this agency was renamed the Minority Business Development Agency (MBDA) and is part of the U.S. Department of Commerce.

In 1971, President Nixon issued E.O. 11625 requiring that federal agencies develop comprehensive plans and specific goals for a national Minority Business Enterprise (MBE) contracting program. In 1983, President Ronald Reagan issued E.O. 12432, which required each federal agency that spends substantial dollars or makes large grants to develop a Minority Business Enterprise (MBE) development plan.(2)

The actions of Presidents Nixon and Regan led to the formal process of identifying and vetting the credentials of businesses that claim to be owned and operated by qualified members of diverse ethnicity, veteran, women or disabled groups.

 

What other services are available?
GetDiversityCertified.com also offers support for annual updates and the re-certification applications usually required every three years. Maintaining certifications for our clients is a major aspect of GetDiversityCertified.com: notifying you when materials are due to whom; prompting you to upload annual documents; and, alerting you whenever certification rules or processes change.

Additional consulting services are available: review of application materials (technical or legal); or assistance in the application process itself.

GetDiversityCertified.com provides organized storage of the documents and paperwork that you must submit with an application. This gives you a remote secure backup location for all sorts of important paperwork, protecting it from damage or loss during catastrophic events like a fire, hurricane or earthquake.

 

What certification applications are available?
A list of the current applications will eventually include all 50 state applications; a large number of unified certification program (UCP) forms; Small Business Administration forms; and, applications from third party certifiers.

 

What is a Unified Certification Program (UCP)?
The United States Department of Transportation (DOT) Disadvantaged Business Enterprise (DBE) regulations (49 CFR 26.81) required recipients of USDOT funds to create UCP programs by March 2002.  Their purpose is "one stop shopping" for businesses to become DBE certified for DOT contract opportunities. Some states have embraced the DOT process completely. Others have accepted the standard process but added supplemental questions and extra documentation.  Many offer both the standard DOT DBE certification through the state's DOT and other certifications through other state or county agencies.  GetDiversityCertified.com makes them all available.

 

What certification should I apply for?
It depends on your business and goals.  Are your customers primarily corporate? Then, look to the National Minority Supplier Diversity Council (NMSDC) or the Women's Business Enterprise Council (WBENC).  Government customers tend to prefer government certifications, especially those from their own state certification agencies.  Also, consider geography. Abator’s certifications appear odd at first -- we’re a Pittsburgh, Pennsylvania company with certifications throughout the country (including the states of Washington and Rhode Island). Each state certificate was sought to support sales to that specific state's agencies. What is your organizational objective? Plan your certification strategy to support that objective.

 

What is Socio-economic Disadvantage?
Social and economic disadvantage is made up of several objective components. The easily identified ones are: race, ethnic origin, gender, physical handicap, long-term residence in an environment isolated from the mainstream of American society, or other similar causes not common to individuals who are not socially disadvantaged. When you are asked to document or narrate your social disadvantage, you must be prepared to write about and document the barriers you have personally experienced. These barriers could things like: inability to obtain adequate bonding, credit or financing; inability to obtain licenses or leases; restriction of your market to certain racial, ethnic, or social groups; underemployment or unemployment, etc. Whenever possible you should be able to provide documented evidence such as affidavits, denials of loan applications, denials of employment opportunities (including non-selection for particular jobs, denials of promotions, or unequal work environment or treatment), and documents to support any formal action taken by you because of the alleged discrimination. Examples of discrimination could include: unequal access to colleges or professional schools; exclusion from professional or business associations; being denied educational honors or recognition; experiencing discriminatory social pressure which may have discouraged you from pursuing a professional or higher education or may have forced you into non-professional or non-business fields; discrimination in employment opportunities or pay and fringe benefits; unequal access to business credit or capital; and discrimination in the awarding, bidding process, or negotiating of government or private sector contracts.

 

How difficult and time consuming is this process?
If you use GetDiversityCertified.com, you’ll be asked a series of questions about your business basically: who, what, when, where and how questions.  You’ll be prompted to transfer (upload) copies of your supporting documents to DiversityBusinessVault.com.  This private vault is your personal storage area – and maintains your important paperwork electronically in three physical locations, protecting them from loss.

You'll go through the process once and choose the certifications you want.  The flat fee structures mean you can pick and choose, both which certificates and when you want to apply for them, based on your strategy and financial resources.

 

Am I too small to get certified?
Probably not! The federal spending goal includes 23% for small business. We are told "Small business is the backbone of the American economy." What does this mean in today's economic climate? According to the latest data available from the Office of Advocacy at the SBA, in 2015 there were 28.4 million small businesses in the United States. Small businesses are very important to the U.S. economy as they:

• Represent 99.7% of all employer firms
• Employ just under half (48.4%) of all private sector employees
• Pay 42.9% of total U.S. private payroll
• Generated 63% of net new jobs created between 1993 and mid-2013 and 60% since the end of the recession from mid-2009 to mid-2013
• Are 52% home-based and 2% franchises
• Produce 16 times more patents per employee than large patenting firms.

The Census Bureau does not offer statistics relative to Veteran, Disabled or LGBT business ownership. In 2007 however, businesses where veterans were majority owners or half-owners numbered 3.7 million, representing 13.5 percent of all businesses nationwide, accounting for more than $1.6 trillion in receipts and employing 8.2 million people.

 

Micro Business Power From 2004 to 2010, U.S. micro-businesses (1 to 4 employees) created a net of 5.5 million jobs; large businesses (those with greater than 500 employees) lost 1.8 million jobs during the same period. Forbes.com had some interesting 2013 statistics:

• There were 22.5 million nonemployer firms in 2011 (up almost 2% from the year before)
• To classify as a “nonemployer” business you must have annual business receipts of $1,000 or more and be subject to federal income taxes
• Approximately 75% of all U.S. businesses are nonemployer businesses
• 19.4 million nonemployer businesses are sole proprietorships, 1.6 million are partnerships and 1.4 million are corporations

In addition to creating jobs, small businesses consume goods and services from small and large sources, alike. And, small businesses grow ... sometimes into huge corporations. George Westinghouse, Steven Jobs and Bill Gates started small, in garages.

 

How do I know my information is secure and protected?
We've taken all the industry standard precautions for computer hardware, software and operating systems.  Because we're serious, our security features protect your data in a variety of ways. We do not publish or share the addresses of our server facility locations. The servers are maintained in physically secure locations with limited access. These facilities are manned 24x7, monitored by video cameras and protected by alarm systems.  And, our software makes it virtually impossible to relate the data and files to you or your business.  Essentially, your information can't be used by anyone else.  Abator staff members do not have access to your information unless you invite one of us to visit your Vault.  Each staff member has signed confidentiality statements agreeing to protect our clients' information.  Any breach of confidentiality will be prosecuted to the fullest extent of the law.

 

What does it cost to use GetDiversityCertified.com?
Sorry, we have to say "it depends", but each business is unique and it depends on the complexity of your individual business.  See our pricing page for more information.

 

How do I pay for this?
Payment can be made by check, ACH or credit card.  Please call 800-544-1210 for details.

 

What documents will I need to get certified?
When your business pursues diversity certification, a number of supporting documents are required. Abator is routinely required to provide 100 to 150 pages of supporting documents (we're a 20+ year old corporation with five owners) when applying for a diversity certification. The following is a partial list of those documents:

• Last three years of Federal tax returns (returns must show owners/officers’ salaries and dividends (if a corporation), salaries, and distribution of profits to owners and senior management).
• Copy of Federal tax form 941 filed for the two most recent quarters.
• Last three years’ W2 and/or 1099 forms for all owners, directors, officers, and senior management.
• Resumes of all owners, directors, officers, and senior management. Must be up-to-date, chronological and detailed. Should describe experience and/or training in the type of business being conducted.
• Copies of any relevant licenses, certificates of training, and degrees held by the company or its owners/employees.
• Copy of the Articles of Incorporation or Copy of Certificate of Organization.
• Copy of stock certificates (front and back of each certificate) and stock transfer ledger for corporations.
• Copy of corporation by-laws.
• Copy of the record/minutes of first corporate organization meeting.
• Copy of minutes from the stockholder meeting where current board of directors was elected. Some agencies will require copies of original stockholder meeting record/minutes.
• Copy of operating agreements.
• Copies of partnership, buy-out rights, and profit-sharing agreements.
• Copies of all rental or lease agreements and/or management service agreements (e.g., office space, equipment, car rental, etc.). Copy of deed or lease, if the business is home-based.
• Copies of any signed financial documents relating to loans for the business.
• Copy of the initial form(s) signed when the company’s bank accounts were opened, showing who is authorized to write checks or transact other banking business. Older businesses may be required to submit current bank signature cards.
• Explanations and proof of how primary owner(s) financed the establishment or purchase of the business (i.e., how it was capitalized). If ownership was obtained by other means (inheritance, gift, etc.).
• Copies of three recent contracts or client invoices (invoices given to clients). If the business is a supplier, provide manufacturer’s agreements or invoices for products sold.
• Copies of several recent checks to demonstrate signatures.
• Copies of equipment lists (depreciation schedules) and owned vehicle titles.
• If seeking disadvantaged status, copies of Personal Net Worth Statements for each major owner.
• Copy of any other diversity certifications that have been awarded.
• Copy of one of the following proofs of citizenship: certificate of US citizenship, certificate of naturalization, birth certificate, passport, or tribal card.
• Copy of company’s Fictitious Name Registry (or Doing Business As – DBA).
• The following documents may also be required: stock options; ownership options; stockholder agreements; buy-out rights; stockholder voting rights; restrictions on selling stock; loan agreements; information about share value; ownership of voting securities; control of trust, etc.

 

I got certified, now what?
First, you should notify your current and targeted customers when you get your certificate (your direct customer contacts, their purchasing people and their supplier diversity offices). Update your website with a copy of the certification.  Tell everyone ... mention your certification at every opportunity and remind your customers that in addition to offering superior goods or services, your certification will help them meet their supplier diversity goals.

Go to diversity supplier fairs and network with the people who buy what you sell. Don't forget, other diversity businesses may be good customers or business partners, too! Check out our blog and links to learn more.

 

Where can I get business planning advice?
A few helpful links for business planning and other entrepreneurial resources can be found on our resources page.