Compliance News Blog

While bidding on government-funded projects, private industry contractors are invariably faced with the prospect of having to subcontract a specified percentage of the contract to a socially or economically disadvantaged business. In New York State, disadvantaged businesses can register with the Disadvantaged Business Enterprise (DBE) program, the Minority and Women-Owned Business Enterprise (MWBE) program, or both in order to be eligible to participate on contracts requiring disadvantaged business participation. But the close similarities between the programs can cause bidders to confuse one for the other and, ultimately, cause them to lose the bid even if they are the lowest bidder.

So, what are the differences between the DBE and MWBE programs?

The goal of the programs are identical. First, they are to ensure that socially and economically disadvantaged businesses receive their fair share of state contracts. Second, the programs are similar in that DBE and MWBE firms are both defined as business entities majority owned by African Americans, Hispanics, Native Americans, Asian-Pacific and Subcontinent Asian Americans, and/or women. Despite these parallels, the state agencies managing and implementing the programs differ significantly.

The DBE program, for instance, is utilized on projects that include federal-funding and is primarily administered by the New York Department of Transportation (NYSDOT). Even though the program is federally funded and mandated, it is still the responsibility of the department to set an overall DBE utilization goal and individual contract goals; NYSDOT places goals on individual contracts to ensure that DBEs participate in the state’s procurement market. Also, businesses eligible for DBE certification are restricted by the federal Small Business Administration’s size standards.

The MWBE program, on the other hand, is state-funded and broadly managed by the Empire State Development Corporation (ESDC). While its management is centralized in the ESDC, the specifics of the program are actively implemented by individual state agencies. More precisely, state agencies are responsible for setting their own annual MWBE utilization goals and individual contract goals, if necessary, on non-construction contracts exceeding $25,000 and construction contracts exceeding $100,000. Also unlike the DBE program, MWBE certification is not restricted by size standards.

But the question remains: Why are these differences important to my bid?

Contracts will specify whether or not DBE or MWBE firms are required on a certain project. It is important for bidders to understand that all disadvantaged businesses are not one in the same and cannot be substituted for one another in the bid documents; just because DBE and MWBE certified firms are socially and economically disadvantaged does not mean they are interchangeable. If a bidder incorrectly identifies a DBE as an MWBE on bid documents, they may lose the bid even if they are the lowest bidder.

Do I have to include disadvantaged businesses on a project?

If a state agency or department requires a certain percentage of the project to be contracted out to DBEs or MWBEs, then general contractors must make a good faith effort to include disadvantaged businesses on the project. If they fail to perform the outreach required, then the prime bidder may lose the bid.

To learn more about New York State’s DBE program, visit: http://www.nysdot.gov/portal/page/portal/main/businesscenter/civilrights/ contacts/dbeojt#dbe

To view Article 15-A of New York’s Executive Law, which established the MWBE program, visit: http://www.nylovesbiz.com/pdf/artcl15a.pdf

To learn more about both programs, visit: http://www.insightcced.org/index.php?page=newyork