Disadvantaged / Minority Business Enterprise Program
Frequently Asked Questions
As stated by the Maryland Department of Transportation:
Q. What is the Minority Business Enterprise (MBE) Program?
A. Maryland enacted the State MBE Program in 1978, which was the same year the Federal Disadvantaged Business Enterprise (DBE) Program was enacted. Federal and State regulations were developed to provide additional detail. Businesses must apply for certification and provide evidence of ownership and control by the minority person(s) as part of the D/MBE certification process.
Q. What is a Minority Business Enterprise (MBE)?
A. Both the MBE Program and the Federal DBE Program are generally referred to as the MBE Program. Both Programs are goal based to achieve a percentage of MBE participation on State issued contracts.
A MBE is a business that is at least 5l % owned and controlled by one or more minority persons. A minority is generally defined as an individual who is African American, Hispanic American, Asian American, Native American, a Woman or a Disabled person. Additionally, the State also recognizes non-profit firms that are organized to promote the interests of the physically or mentally disabled. The Federal Government DBE Program also includes Alaskan Natives, Pacific Islanders, Aleuts, and persons who are not minorities but who are socially and economically disadvantaged in its definition. The socially and economically disadvantaged owners must demonstrate longstanding, chronic and substantial disadvantage since the business is not owned by persons in the cited minority groups.
Q. How does MDOT determine which businesses can participate in the MBE Program?
A. MDOT has a very comprehensive certification process to determine the ownership and control of firms, which apply for MBE certification. There are many specific eligibility criteria for certification. In assessing ownership, investments by the minority owner are important. Control includes both managerial and operational control with technical knowledge of the firms' major areas of work being an important component for assessing operational control.
Applications are carefully reviewed and personal interviews are conducted by trained MBE Agents. Skilled construction personnel assist in the process, providing technical information when needed. Before becoming certified, applicants appear before the MBE Advisory Committee (MBEAC) to discuss their business and to respond to questions asked by the committee members. The MBEAC is a public meeting, which can be observed by prospective applicants. The committee makes recommendations to the MBEAC Chairperson who makes the certification decision. The entire certification process assures that only bona fide MBEs participate in the program.
Q. Why does MDOT Require a Personal Net Worth Statement?
A. Effective July 1, 2001 , the Maryland State legislature enacted a Personal Net Worth ( PNW ) eligibility requirement to qualify as a certified Minority Business Enterprise (MBE) under the State's program. A PNW requirement is also in effect for Federal United States Department of Transportation (USDOT) assisted contracts included under the Disadvantaged Business Enterprise (DBE) Program. The requirements for the State and Federal programs are not the same. For participation on USDOT assisted contracts, the PNW of each socially and economically disadvantaged individual who owns and controls the firm, as a part of the 51% ownership, must not exceed $750,000.00. When an individual(s) PNW exceeds the $750,000.00 threshold, the individual is no longer eligible to participate in the DBE Program. The PNW excludes the value of the MBE/DBE business and the primary residence of the MBE/DBE owner(s).
The passage of HB 483 in the 2004 Session of the Maryland General Assembly requires certain modifications to the Maryland Department of Transportation's Minority Business Enterprise Program's Personal Net Worth ( PNW ) requirement. This bill increased the PNW program participation cap from $750,000.00 to $1,500,000.00. It is important to note, however, that this increase does not apply to the $750,000.00 PNW cap required by the United States Department of Transportation ("USDOT") Disadvantaged Business Enterprise ("DBE") Program. This new requirement is effective October 1, 2004 .
Q. Do firms graduate from the MBE Program?
A. Yes. As of October 1, 2000 , if a certified MBE has a three (3) year annual average of gross receipts (or for retail and manufacturing businesses number of employees) that meets or exceeds the revenue (or employee) totals as specified by the U.S. Department of Transportation (USDOT), the firm would not be eligible to participate in the MBE program. The first year to be included in the average is 1997. This has existed for federally assisted contracts within the DBE program for many years.
Q. What are the advantages of becoming certified as an MBE?
A. Certification as a MBE provides greater exposure for work opportunities on State projects. The names of all certified MBEs appear in the MBE Directory, a reference manual which is widely disseminated to each MDOT administration, other state departments, local governments, contractors and to the public. Contractors use the MBE Directory as a basic resource for soliciting minority participation on projects. If a firm is not certified, a contractor cannot receive credit toward achievement of the MBE participation goal by using that firm.
Q. Will this certification allow me to bid as a MBE on other state contracts?
A. MDOT administers the State of Maryland MBE certification program. Once you are certified through MDOT, you may participate as a MBE subcontractor on ANY state contract, regardless of the agency. Any business may bid directly on any bid or proposal without regard to certification.
Q. How does MDOT establish the goals for minority business participation?
A. Every attempt is made by MDOT to establish realistic and achievable MBE goals. Individual contract goals are set based upon the dollar value of the project, the availability of MBEs to perform the work which is to be subcontracted, and the availability of certified MBEs in the location where the work is to be done. While the established goals may vary on individual contracts, the total of MBE participation in each administration is combined to one report for the MDOT MBE participation year.
Q. What types of work are available?
A. Opportunities to participate in construction work, construction-related work and the procurement of goods and services are varied. Minority participation is encouraged on all projects. Although many contracts with MBEs are for sub-contract work in construction fields, certified MBEs have leased concessions, provided consultant services in technical fields and have been awarded projects as prime contractors.
Q. Once certified, can a firm be assured of getting contracts and subcontracts?
A. No. Certification does not guarantee work to a MBE; however, it does enhance a MBEs exposure to prime contractors and the business community. To be successful, a firm must market itself, its personnel and its services, as any good business should.
Q. What is expected of the MBE once a contract is awarded?
A. All firms are expected to meet performance standards as established by contract specifications. This relates to the quality of work done, the submission of reports and written information in a timely manner and the firm's compliance with applicable regulations and laws. Once a MBE has been awarded a sub-contract, the MBE is responsible for submitting verification of all payments received to the contracting agency. This includes the amount of payment and date received.
Q. Does the general contractor have any responsibility in the MBE Program?
A. Yes. The general contractor must first meet the MBE goals established on the contract by seeking out and utilizing certified MBEs. Once work begins, the general contractor is responsible for all project activities including those of subcontractors.
Regular monitoring assures that contractual items are performed in accordance with specifications. Monthly reports must be submitted by the general contractor such as payroll, cost and time estimation and progress reports. When changes are needed, the general contractor must get approval from the agency project manager. Any changes in the MBE participation must be approved.
Q. How does MDOT assure that "fronts" or "sham" organizations do not benefit from the MBE Program?
A. The MBE certification process is used to determine if a firm is minority owned and controlled. To qualify as an MBE, the owner must demonstrate that he or she is a minority person and provide documentation establishing at least 51 % ownership of the company.
Once the ownership of a firm is established, the business owner must demonstrate the technical knowledge and experience to make independent business operating and management decisions.
Annual reviews of all certified firms are made to determine if the ownership and control of the MBE has changed. Consideration is given to reports filed by the administrations, which describe how the MBE has managed and performed on projects. Effective contract compliance monitoring procedures also facilitate the identification of "front" or "sham" MBE firms.
Q. How can suspected abuse of the MBE Program be reported?
A. Suspected abuse is taken very seriously and should be reported on the MBE Hotline: 1-800-544-6056 . Reports may also be made to the MBE personnel within the administration. The above listed number is available 24 hours a day to receive your concerns. With your help, the integrity and fairness of the program will be maintained for all qualified participants.
Q. What happens to MBEs and general contractors who have abused the MBE Program?
A. Progressive administrative sanctions can be applied when contractors (MBEs and non-MBEs) have abused the MBE Program. These sanctions include:
- Suspension of work
- Withholding a percentage of progress payment
- Default of the contract
- Referral to the Office of the Attorney General for criminal investigation
- Suspension of the right of the contractor to participate in future state contracts (debarment), and
- Other appropriate administrative actions within the discretion of the Administrator
Q. Where can I find information on upcoming contract opportunities?
A. All construction, maintenance and services projects expected to exceed $25, 000 are advertised as follows:
- The Maryland Contract Weekly
- The Washington and Baltimore Afro-American Newspapers
- The Maryland Highway Contractors Association
- The Maryland Minority Contractors Association
- The Dodge Report
- The Daily Record
Projects located in one to three counties or a single SHA District will be advertised in local newspapers serving the project area. Projects located in more than three counties or more than one SHA District will be advertised as noted above.
You may purchase plans and specifications from the SHA Cashier's Office (410-545-8489). If, however, you are interested in providing materials, supplies, or services to the companies which bid on the job, you may visit the SHA Cashier's Office and copy the list of potential bidders. This information is not given by telephone.