MBE/WBE/DBE Frequently Asked Questions What is the Minority Business Enterprise Program? On December 30, 1983, former Governor J. Joseph Garrahy issued Executive Order No. 83-13 which initiated a Minority Business Enterprise (MBE) Program. The Rhode Island General Assembly later enacted legislation to create the MBE Program through the issuance of RIGL § 37-14.1 which states that it is the policy of the State of Rhode Island that Minority Business Enterprises (MBEs) shall have the maximum opportunity to participate in all state procurements. What is a Minority Business Enterprise (MBE)? In order to meet the eligibility requirements for certification as an MBE, applicant firms must be for-profit small business enterprises, owned and controlled, both administratively and operationally, at least 51%, by one or more socially and economically disadvantaged individuals. Under the current MBE program, individuals who belong to one of the following groups are rebuttably presumed to be socially disadvantaged: Black Americans, Hispanic Americans, Portuguese Americans, Asian Americans, American Indian or Alaskan Natives, and Women. All applicants must demonstrate that they meet the economic disadvantage criteria. Individuals who are not members of one of the presumptive groups may also be eligible for certification if they establish, through a preponderance of evidence, their social and economic disadvantage. A determination of individual disadvantage is made on a case-by-case basis. What is the USDOT Disadvantaged Business Enterprise Program? The U.S. Department of Transportation (USDOT) requires that state and local agencies that issue procurements that are funded with the assistance of USDOT must have a Disadvantaged Business Enterprise Program. Each state agency that receives financial assistance from USDOT must establish DBE goals. In Rhode Island, the following state agencies participate in the DBE program: Rhode Island Department of Transportation (RIDOT); Rhode Island Airport Corporation (RIAC); and the Rhode Island Public Transit Authority (RIPTA). What is a USDOT Disadvantaged Business Enterprise (DBE)? In order to meet the eligibility requirements for certification as a DBE under the USDOT’s DBE Program, applicant firms must be a for-profit small business concern that is at least 51% owned by one or more individuals who are both socially and economically disadvantaged or, in the case of a corporation, in which 51 percent of the stock is owned by one or more such individuals, and whose management and daily business operations are controlled by one or more of the socially and economically disadvantaged individuals who own it. Under the USDOT DBE Program, individuals who belong to one of the following groups are rebuttably presumed to be socially and economically disadvantaged: Black Americans, Hispanic Americans, Native Americans, Asian-Pacific Americans, Subcontinent Asian Americans, and Women. Individuals who are not members of one of the presumptive groups may also be eligible for DBE certification if they establish their social and economic disadvantage. A determination of individual disadvantage is made on a case-by-case basis. Does the State of Rhode Island have a Women Business Enterprise (WBE) Program? The State of Rhode Island does not maintain a separate WBE program. Rather, WBEs are included within the State’s MBE program. How can I participate in the MBE or DBE Programs? In order to participate in either the State of Rhode Island’s MBE Program or the DBE Program, firms must be certified as an MBE or DBE, respectively, by the State of Rhode Island, Department of Administration, Office of Diversity Equity and Opportunity (ODEO). ODEO is the only State agency that has the authority to certify firms for either the MBE or the DBE Program. Certification is an application process, and the criteria for eligibility is prescribed by each program. Firms certified by ODEO as either an MBE, WBE, or MBE/WBE may participate under the State’s MBE Program governed by RIGL § 37-14.1. Firms certified by ODEO as either a DBE or ACDBE may participate under the USDOT’s DBE program governed by 49 CFR 26 and 49 CFR 23, as applicable, for those procurements that received USDOT financial assistance. What are the small business size standards? Both the MBE Program and the DBE Program define a small business concern pursuant to Section 3 of the U.S. Small Business Act and the U.S. Small Business Administration regulations implementing it (13 CFR 121). Additionally, the USDOT DBE Program establishes an overall cap on average annual gross receipts pursuant to 49 CFR 26.65(b). What are the economic disadvantage eligibility criteria? Both the MBE Program and the DBE Program have economic disadvantage eligibility criteria. Essentially applicants must meet personal net worth (PNW) criteria for certification. The personal net worth of applicants seeking certification as either an MBE or DBE may not exceed $1.32 million, with the following exclusions: 1) PNW calculations will exclude an individual’s ownership interest in the applicant firm; 2) PNW calculations will exclude the individual’s equity in his or her primary residence (except any portion of such equity that is attributable to excessive withdrawals from the applicant firm); and 3) With respect to assets held in vested pension plans, Individual Retirement Accounts, 401(k) accounts, or other retirement savings or investment program in which the assets cannot be distributed to the individual at the present time without significant adverse tax or interest consequences, PNW calculations will include only the present value of such assets, less the tax and interest penalties that would accrue if the asset were distributed at the present time. Do firms graduate from the MBE or DBE Programs? Yes, firms may graduate from either the MBE Program or the DBE Program if the firm exceeds either the small business size standards or the economic disadvantage certification eligibility criteria as applicable. Additionally, firm may graduate from the DBE Program if they exceed the overall DBE size cap as established in 49 CFR 26.65(b). Is there a cost or fee to apply for certification as either an MBE or DBE? No. The State of Rhode Island does not charge a fee for applicants seeking certification as either an MBE or DBE. Once a firm is certified as either an MBE or DBE, is there a recertification process? Once a firm is approved as either an MBE or a DBE, firms do not have to apply for recertification. However, firms are required to provide annual update information including applicable “No Change Affidavits” and documentation that the firm still meets the eligibility criteria. Additionally, every five (5) years the firms will undergo a more substantive review including a new site visit and interview. Note, however, that failure of a certified firm to provide annual update information as required, and/or failure by a certified firm to cooperate with requests for information by ODEO is grounds for the initiation of certification removal proceedings. Where can I find information regarding State procurement opportunities? All state agencies and quasi-state agencies are required to utilize the Division of Purchases website for posting of procurement opportunities. The Division of Purchases’ website is located at www.purchasing.ri.gov, and all firms are strongly encouraged to register as a vendor with the Division of Purchases. Do firms have to be certified by ODEO in order to count towards MBE participation requirements? Yes, firms must be certified as either an MBE, WBE, or MBE/WBE by the State of Rhode Island, Department of Administration, Office of Diversity, Equity and Opportunity (ODEO) in order to be eligible for participation in the State of Rhode Island’s MBE program. Firms not currently certified by ODEO at the time of the tentative award and/or submittal of an MBE Utilization Plan if required prior to tentative award, as applicable, will not be considered towards fulfilling either the MBE participation requirement or towards a vendor’s documentation of “Good Faith Efforts”. How is MBE participation counted? MBE/WBE certified firms must self-perform 100% of the work with their own forces or subcontract to another RI certified MBE/WBE in order to receive MBE participation credit. Any work subcontracted out to a non-MBE firm does not count towards the MBE participation requirement. Vendors may count 60% of expenditures for materials and supplies obtained from an MBE/WBE certified as a regular dealer/supplier, and 100% of such expenditures obtained from an MBE/WBE certified as a manufacturer. For firms certified as a broker, you may receive MBE participation credit only for the fees and commissions charged for the procurement of the good and materials, but not the cost of the materials themselves. What requirements do prime vendors have with respect to MBE participation once an MBE Utilization Plan is approved? Once ODEO has approved an MBE Utilization Plan, vendors may not make any changes or substitutions to an approved plan without the prior written approval of the ODEO. In addition, vendors are required to provide ODEO with periodic MBE submittals, including, not necessarily limited to, MBE Utilization reports, copies of all subcontracts and purchase orders issued to MBE subcontractors and suppliers, copies of all MBE invoices, and copies of cancelled checks for payment of same. Failure to have an approved MBE Utilization Plan as required and/or failure to fulfill the requirements of an approved MBE Utilization Plan may result in a finding that the vendor is in non-compliance with RIGL § 37-14.1. What are the possible sanctions for non-compliance? Per RIGL § 37-14.1-8, the Director of the Department of Administration shall have the power to impose sanctions upon vendors not in compliance with RIGL § 37-14.1, which may include, but not be limited to: 1) Suspension of payments; 2) Termination of the contract; 3) Recovery by the state of ten percent (10%) of the contract award price as liquidated damages; and 4) Denial of the right to participate in future projects for up to three (3) years.