WHAT IS THE PRACTICAL PURPOSE OF MBE CERTIFICATION?
Major corporations include supplier diversity as a core business strategy, and use certification as a tool to validate and hire qualified minority businesses. Supplier diversity programs require valid MBE certification to receive credit toward supplier diversity goals. Plus, the federal government has a requirement that a minimum of 23% of total acquisition dollars (estimated at the trillions of dollars) are ‘set aside’ and must be spent with diverse businesses. To help reach this 23% goal, the federal government has special stipulations in place that help certified MBEs compete for contracts with the federal government.
Corporations, the federal government, and state agencies all want to do business with minority-owned companies. The Department of Transportation, for example, requires that recipients of its funding award a percentage of contracts to minority-owned businesses and many large companies have goals for buying from minority-owned suppliers.
The reason for such mandates is twofold. First, contracting with minority-owned businesses is important to customers: ‘Corporate America understands that you cannot expect minorities to buy things when you haven’t done business with minorities,’ says Steven Sims, the vice president of the National Minority Supplier Development Council. Second, it’s responsible: ‘It’s important because we have an obligation in government to ensure that all firms in our state have an opportunity to participate in contracts that are paid for with tax dollars,’ says Luwanda Jenkins, the special secretary of minority affairs for Maryland.
To meet their objectives, private and public sector firms search for minority-owned suppliers through programs that have formal certification processes. If you’re not certified, you can miss out on business ranging from a marketing opportunity to reduced-competition access to a public contract.
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