The initialisms of competitive advantage
The business tactic of honing and maintaining a competitive edge is as important to those companies doing business with government agencies as it is in the private sector. In many ways, it is even more critical now , particularly as the overall economy continues its slump and dollars tighten across the board.
Government itself offers a number of implements to assist those who do business with the public sector. Along with the more typical outreach devices as vendor fairs and news releases, there are creative approaches by agencies utilizing town hall meetings and presentations at contractor associations to announce contracting opportunities.
For the small and disadvantaged business communities, knowing about these outlets can represent a lifeline in times of economic uncertainty.
Many of the other tools at hand read as an alphabet soup: DBE, MBE, WBE, SBE, LBE, DVBE, OBE, etc. Each of them confers a specific competitive advantage to the holder. Additionally, each of them has distinctive characteristics one should consider prior to applying.
We will consider a few of them in this article. This discussion is not intended to be exhaustive.
DBE (Disadvantaged Business Enterprise) bears its primary utility from federal agencies and those public entities that use federal dollars in executing contracts. Transit properties are federal grantees, typically – Orange, California-based Orange County Transportation Authority, for example.
As such, they use federal dollars (in the form of grants) for much of their construction, supply and professional services contract awards. It is worth noting, too, that a number of state agencies require DBE participation in their contracting processes absent a specific federal funding mandate.
Qualifying as a DBE can be an onerous prospect. Fortunately, California has an effective unified certification process that streamlines greatly the application effort. The unified certification process nearly guarantees reciprocity, which provides access to a broad canvas of opportunities.
In times past, getting certified with one agency was no assurance that a neighboring agency would recognize that certification. Some vendors and contractors, desiring access to multiple contracting opportunities, were required to engage the rather involved DBE application procedure with each certifying agency independently.
To be valid and accepted by the federal government for funding purposes, “DBE programs must prove disparate utilization of economically or socially disadvantaged firms,” according to Raymond Lee, DBE Officer for the San Carlos, Calif.-based San Mateo County Transit District. The evaluative mechanism, called a disparity or predicate study, seeks to establish quantitatively the underutilization of qualified and available DBEs within a contracting community.
Though distantly related, this methodology is distinct from the more sterile size standards imposed on Small Business Administration (SBA) 8-A program participants. Some argue that the SBA 8-A size standards are more objective, definable, defensible and race- and gender-neutral than the best DBE program constructions. That discussion is beyond the scope and intent of this article.
In the absence of an approved DBE program, one operating within the authority of an accepted predicate study, i.e., agencies may encourage DBE utilization but may not set mandatory goals. Some agencies skirt this reality by setting voluntary goals and buttressing the effort by asking contractors and vendors to assist the agency in growing and grooming small, disadvantaged firms.
MBEs (Minority Business Enterprises) and WBEs (Women-owned Business Enterprises) are much less prominent in many states (and almost completely dismantled in California with the passage of the anti-affirmative action prohibitions attendant to Proposition 209). Just the same, some agencies still manage a highly modified and carefully constructed iteration of this leveling-the-playing-field arrangement. The County of Los Angeles is one such agency.
A typical MBE or WBE program encourages prime contractors and vendors to utilize MBE/WBE firms without setting or, often, even mentioning goals.
Another creative entry is the LBE (Local Business Enterprise). This arrangement varies greatly by agency but can be a real advantage to companies based in jurisdictions that have an LBE in place (the City and County of San Francisco, Calif. offers a widely heralded and expansive LBE, e.g.).
The federal government tends to frown on LBE initiatives so one is not likely to find an LBE program within an agency that depends on federal funds.
The typical LBE boasts impressive justifications. In contrast to its absence, “an effective LBE encourages a higher level of participation for small, developing businesses,” according to Bayard Fong, contract compliance officer with the San Francisco Human Rights Commission. Fong adds, “(the LBE program) encourages revolving economics,” a circular model of financial reinvestment within a locality.
LBEs may also improve the tax base by requiring local hiring practices, which assists the employment sector and girders community economic health, as well. Fong explains it this way: “Local businesses inherently employ local people. Non-LBE firms…often will want to bring in their own crew. Local entities can pass LBE legislation to make this (hiring of local workers) required.”
SBE (Small Business Enterprise) programs developed with some strength and urgency during heated discussions in the U.S. Congress during the 1990s that threatened to dissolve federal DBE programs. The SBE programs were designed to mimic the SBA 8-A model, thus ensuring SBE program defensibility.
The SBE’s key features included race-neutral qualifying criteria in the form of size standards and objective, clearly measurable vetting of personal net worth data.
The SBA has the only federal SBE-type program; all other SBE programs are locally or regionally administered and funded. In California, its Department of General Services administers the state’s SBE program. Other SBE programs exist within the state at regional levels, however. This fact can complicate rather than simplify SBE conformity.
Part of the problem is that firms certifying with a regional network remain ineligible to claim reciprocity with the state’s SBE program. This renders them unable to participate as an SBE on state procurements unless they certify with the state independently. Many SBE firms regionally- or locally-certified may be unaware of the distinction.
Finding a fit: Firms that desire appending one or more of the many initialisms discussed above stand to benefit in considerable measure provided the program fits the organization. A cottage industry of consultants exists whose stock in trade consists of its familiarity with the various programs and facility in working through hiccoughs in the widely discordant processes.
The best of the government agencies go one better by providing consultant-grade assistance within it, offering one-stop shopping to enterprising vendors and contractors.
It is advisable to begin with the regional certifying agency of your choice in seeking answers to questions regarding certification. Knowing the correct questions to ask assists handily in garnering useful answers.
A good place to begin is the San Francisco-based Small Business Exchange; it offers links to state and local business and economic development programs of nearly every description.
