The concept of classifying a minority or women-owned business stems from an executive order issued in 1969 by President Nixon. (Yeah, we were surprised too). In it, he established what is currently known as the Minority Business Development Agency recognizing the impact of minority and women-owned businesses on the nation’s economy and on the general welfare of the country.

However, MWBE’s do more than just strengthen the economy, they teach young black and brown children about entrepreneurship and socio-economic development. Seeing someone who looks like you reach for the American Dream, hold it tight, and build a better life, can give children the confidence that they too can achieve their own dreams.

Far too often, minority and women-owned business are overlooked in the business world. Whether it be public or private, they have fought many battles just to be included. MWBE’s can be seen as affirmative action hires, lacking in the skills a non-MWBE (aka white man) is assumed to have.

Because of this, billions of dollars each year slip through the hands of many talented firms that would have had a significant positive impact on their communities.

There is also a lack of knowledge with minority and women entrepreneurs about the MWBE certification and the opportunities that come with it. As more firms become certified, it will be harder for them to be excluded, forcing non-MWBE’s to accept the talent they have. As with many problems, the solution starts with education. By educating eligible firms on all they and society have to gain, we can work together to change the status quo, and increase community and economic self-sufficiency.

As with any regulation, there are ways some organizations intentionally try to avoid the compliance surrounding the MWBE initiative. Maybe they pretend there are no qualified MWBEs to perform the work, or maybe it’s by not competitively bidding out the contracted work in the first place, handing big contracts to their friends. Partnerships between MWBE firms and non-MWBE firms can provide an opportunity to access contracts and funds that may not be available independently, but some firms may instead use an MWBE firm as an extension of itself; controlling everything and preventing the firm from providing an independent “commercially useful function” (IE the MWBE firm does not itself provide value except insofar as it saves the non-MWBE firm from having to seek out talented black, brown, and women entrepreneurs: what a burden).

There are numerous tactics firms use to skirt the regulations but whatever method they use, the outcome is the same. These organizations damage the integrity of the MWBE program and discourage MWBE inclusion. Many minority and women entrepreneurs who would benefit from the certification decide not to do so because they see a deliberate attempt by some to exclude them from contracting opportunities.

Fortunately, there are whistleblower protections in place to help firms who speak out, and heavy penalties can be given to firms that try to circumvent the laws. Firms found to be using deceptive practices can be given heavy fines, be subject to debarment from public contracts, or even found guilty of fraud. For example, in 2010, a New York state firm settled a federal probe for more than 22 million dollars, another firm in New York City settled for almost 20 million dollars in 2011, and claims filed in Chicago settled for 14 million in 2014.

One would ask why would some organizations incur these potential company ending penalties when it's much easier to be part of the solution that helps build a stronger economy for everyone. Maybe they don’t know the regulations, maybe it’s pure greed, or maybe it’s because socio-economic racism and sexism are alive and well in America.

As another American president once said:

“Having one's own business is a powerful engine for social and economic progress. Countless of our minority citizens are taking advantage of the opportunity called free enterprise. It's very fitting that today we acknowledge what minority business people are doing, not just for themselves and their families but for our nation.” – Ronald Reagan

These regulations aren’t decided based on a whim or unforgiving. Over the last fifty years, case law has solidified what regulations can be put in place. Regulations must be backed by studies showing evidence of current disparities, rather than historical ones. Firms may also get a waiver in the event that qualified MWBE firms are genuinely unavailable in the region. The list goes on.

Ultimately, MWBE regulations must not be viewed as a burdensome practice to force minorities and women into roles they don’t qualify for, but a way to mitigate disparities and compensate for real and current prejudices.

Despite what may seem like a bleak scenario, there is some good news. In New York City, the Mayor’s office has decided to tackle the issue head-on. They have a goal of engaging MWBE’s in over $16 billion in city-funded contracts by 2025. With the OneNYC program and agencies like Small Business Services and the Economic Development Corporation making their own concerted efforts, their numbers have seen a marked improvement. Initiatives like these are what is needed to bridge the gap and provides a more diverse workforce and business community.

With the conscious efforts of agencies to combat the offenses of some bad actors and the MWBE community standing together, we can bring the program to where we need it to be and help build stronger communities. At least until we can move to Wakanda.

MWBE

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