June 05, 2023
Denial Statistics numbers have steadily increased throughout the years and re-certification denials are becoming more common. About 20% of our clients have been previously denied and are women or minority owned companies that manage and control their company. The documentation they submitted or the answers they provided on the site visit or in the application did not meet the requirements for certification.
One of the most common questions that we get most often receive from people unfamiliar with the process are from non-minority male business owners who ask, “can’t I just give my wife 51% ownership in the business?” The short is no, it is not that simple. Whether you are trying to get DBE, WBE or MBE certification, the analysis is much more involved that just does a woman or minority own 51% or more of the business. For all certifications, the woman or minority owner must show that not only that they own a controlling share of the business, but that they actually control and manage the business having the required knowledge and skills to run it. So giving 51% to your wife while you are the one actually running the business will not work. The certification process involves an on-site visit where the woman or minority owner will be interviewed to ensure that they have the knowledge required to run the business, and that they actually control the business. Many businesses are denied certification as a result of the woman or minority not being demonstrate adequate knowledge of the business during the on-site visit. Even if the woman or minority runs the office side of the business (accounting, payroll, HR, etc.), if they cannot demonstrate knowledge and experience of what the company does and how it does it they will likely be denied certification. Also, if you just give ownership to a woman or minority, without them paying anything of value (or paying significantly less than the value) for those shares, that will also raise questions and may result in a denial. In order to have the best chance for success in obtaining one of these certifications, a company should make sure that it meets all of the requirements before submitting their application. Once an application is denied, you may have to wait a year to reapply unless an appeal process is warranted.
Remember, the integrity of each certification is of great importance to the Certifying Body. No matter how large, how small, how old, how young, or how much or little your company has in revenue, every company has to meet stringent Certification Requirements, no exceptions! Each certifying agency is very good at ensuring only those companies who qualify and meet these requirements earn their Certification.
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