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Frequently Asked Questions
for Minority and Non-minority Contractors
- Do local governments in North Carolina
have M/WBE participation requirements for public construction
contracts?
- What types of projects require M/WBE
efforts?
- What are the qualifications to be considered
an M/WBE?
- Are M/WBEs required to be certified?
- What is the advantage to a minority
contractor of becoming certified?
- What are the M/WBE related steps a
local government must take before awarding a contract?
- Are M/WBEs given preferences when awarding
contracts?
- What actions must a prime contractor
take to encourage M/WBE participation in subcontracting?
- What happens if a prime contractor
does not satisfy the good faith effort requirements?
- Where can M/WBEs find information
about public contracting opportunities?
- Where can prime contractors find lists
of available M/WBEs?
- Q: Do local governments
in North Carolina have minority and women-owned business
enterprise (M/WBE) participation requirements for
public construction contracts?
A: North Carolina state law (G.S. 143-128.2)
requires public agencies including local governments
to carry out programs to promote the use of M/WBEs
in building construction and repair projects. These
goals or good faith efforts requirements apply to
projects where total costs exceed $100,000 funded
by state grants or appropriations, or $300,000 for
projects using local funds. Projects in the informal
bid range ($30,000 to $500,000) are subject to less
stringent requirements under G.S. 1143-131(b) to promote
M/WBE participation.
- Q: What types of projects
require M/WBE efforts?
A: The minority outreach requirements in G.S. 143-128.2
apply only to building construction or repair projects.
The statute does not define the term “building.”
Local governments must decide on a case-by-case basis
whether a particular project is subject to the statute.
Though not exclusively, the word building is usually
associated with construction projects that require
plumbing, electrical, and heating or air conditioning
contractors. Most jurisdictions interpret “building
and construction repair” to mean that the requirements
do not apply to other types of construction such as
streets or utilities. The North Carolina Department
of Environment and Natural Resources (DENR), however,
interprets the statute to apply to utilities. Therefore,
a local government entity using grant funds from DENR
for utility construction will be subject the requirements
of this statute. The statute explicitly states, though,
that the requirements do not apply to “prefabricated
or relocatable” buildings (G.S.143-128(g)).
- Q: What are the qualifications
to be considered an M/WBE?
A: A minority business is defined as a business that
is at least 51 percent owned by one or more minority
persons or socially or economically disadvantaged
persons. These persons must control the management
and daily operations. A United States citizen or lawful
permanent resident who is Black, Hispanic, Asian,
American Indian, or female is considered a minority.
A “socially and economically disadvantaged individual”
is defined by reference to a federal statute (15 U.S.
C. § 637). Socially disadvantaged individuals
are “those who have been subjected to racial
or ethnic prejudice or cultural bias because of their
identity as a member of a group without regard to
their individual qualities.” Economically disadvantaged
individuals “are those socially disadvantaged
individuals whose ability to compete in the free enterprise
system has been impaired due to diminished capital
and credit opportunities as compared to others in
the same business who are not socially disadvantaged.”
The federal law provides methods of determining economically
disadvantaged status based on the individual’s
assets and net worth. A socially and economically
disadvantaged business is one that is 51 percent owned
by one or more socially and economically disadvantaged
individuals, an economically disadvantaged Indian
tribe, or an economically disadvantaged Native Hawaiian
organization.
- Q: Are M/WBEs required to
be certified?
A: State law does not yet require certification. Some
local governments, however, do have certification
programs. While certification is not required for
state-funded projects, M/WBEs are strongly encouraged
to certify with the Office of Historically Underutilized
Businesses (HUB). HUB maintains a vendor database
of certified firms, which can greatly increase opportunities
for M/WBEs to learn about and be notified about public
projects. There is no uniform statewide certification
program. Some local governments have their own certification
procedures, while others may require certification
from one of a number of certifying entities including
HUB. Check with local governments in the areas where
you do business to determine their certification requirements. In 2007, the North Carolina General Assembly gave the Secretary of Administration the authority to develop a state-wide certification program for historically underutilized
businesses, which are defined to include M/WBEs. G.S. 143-128.4(e) requires that, as of July 1, 2009,
"[a]ll State departments, agencies, and institutions, and political subdivisions of the State shall only use historically underutilized businesses" that are certified under this state-wide program for purposes of the M/WBE requirements in G.S. 143-128.2 and G.S. 143-131.
- Q: What is the advantage
to a minority contractor of becoming certified?
A: Certification demonstrates the contractor’s
eligibility for projects. Inclusion on a list of certified
M/WBEs increases opportunities to be used by general
contractors or local governments. Certification does
not guarantee contract awards, though, and minority
contractors may be considered in many jurisdictions
even if they are not certified. As of July 1, 2009, certification with the state-wide certification program will be required for a minority contractor to be considered an M/WBE for purposes of the M/WBE requirements in G.S. 143-128.2 and G.S. 143-131.
- Q: What are the M/WBE-related
steps a local government must take before awarding
a contract?
A: Local governments are required to adopt a percentage
goal for M/WBE participation in covered contracts.
(See Question 1 above.) They also must establish guidelines
to ensure “good faith efforts” in recruiting
and selecting M/WBEs. These efforts include developing
a minority business outreach plan, attending pre-bid
conferences, and providing notice to minority businesses
at least ten days prior to bid opening.
- Q: Are M/WBEs given preferences
when awarding contracts?
A: No. The public agency must award contracts to the
lowest responsible, responsive bidder without regard
to race, religion, color, creed, national origin,
sex, age, or handicapping condition. The M/WBE program
establishes participation goals for projects, not
quotas. The local government and prime contractors
are required to use a number of strategies to encourage
bids from M/WBEs, but they are not required to award
a contract to an M/WBE that is not the lowest responsible
bidder.
- Q: What does the law require
a prime contractor to do to encourage M/WBE participation
in subcontracting?
A: A prime contractor must meet the M/WBE participation
goal set by the local government for the project,
or demonstrate a good faith effort to meet the goal.
State law outlines ten actions that prime contractors
can take to satisfy the “good faith effort”
requirement. The prime contractor is not required
to do all of these activities. Each effort is assigned
a point value, and a prime contractor must achieve
a minimum of 50 points to constitute a good faith
effort. Local governments may include other actions
in addition to the ten outlined by the state. The
ten actions and assigned point values are as follows:
- Contacting minority businesses that reasonably
could have been expected to submit a quote and
that were known to the contractor or available
on State or local government maintained lists
at least 10 days before the bid or proposal date
and notifying them of the nature and scope of
the work to be performed. (10 points)
- Making the construction plans, specifications
and requirements available for review by prospective
minority businesses, or providing these documents
to them at least 10 days before the bid or proposals
are due. (10 points)
- Breaking down or combining elements of work
into economically feasible units to facilitate
minority participation. (15 points)
- Working with minority trade, community, or contractor
organizations identified by the Office for Historically
Underutilized Businesses and included in the bid
documents that provide assistance in recruitment
of minority businesses. (10 points)
- Attending any prebid meetings scheduled by the
public owner. (10 points)
- Providing assistance in getting required bonding
or insurance or providing alternatives to bonding
or insurance for subcontractors. (20 points)
- Negotiating in good faith with interested minority
businesses and not rejecting them as unqualified
without sound reasons based on their capabilities.
Any rejection of a minority business based on
lack of qualification should have the reasons
documented in writing. (25 points)
- Providing assistance to an otherwise qualified
minority business in need of equipment, loan capital,
lines of credit, or joint pay agreements to secure
loans, supplies, or letters of credit, including
waiving credit that is ordinarily required. Assisting
minority businesses in obtaining the same unit
pricing with the bidder's suppliers in order to
help minority businesses in establishing credit.
(25 points)
- Negotiating joint venture and partnership arrangements
with minority businesses in order to increase
opportunities for minority business participation
on a public construction or repair project when
possible. (20 points)
- Providing quick pay agreements and policies
to enable minority contractors and suppliers to
meet cash flow demands. (20 points)
- Q: What happens if a prime
contractor does not meet the goal or satisfy the good
faith effort requirements?
A: If a prime contractor does not satisfy the goal
for M/WBE participation on a project and does not
provide the required documentation to show that the
prime contractor made the necessary good faith efforts
to try to satisfy the goal, the public agency may
reject the prime contractor’s bid as nonresponsive.
- Q: Where can M/WBEs find
information about public contracting opportunities
in North Carolina?
A: The North Carolina Office of Historically Underutilized
Businesses (HUB) provides a variety of information
for contractors regarding workshops and training,
networking opportunities, bid opportunities, and other
resources that will help M/WBEs learn how to conduct
business with the state. M/WBEs can register with
HUB to be listed in their vendor database. HUB’s
website is http://www.doa.state.nc.us/hub/.
The website includes links to additional resources
in local areas. The UNC-CH
HUB office offers several online resources as
well.
- Q: Where can prime contractors
find lists of available M/WBEs?
A: The North Carolina Office of Historically Underutilized
Businesses (HUB) maintains an on-line, searchable
vendor database called Vendor Link (http://www.ips.state.nc.us/ips/vendor/srchven.asp).
Prime contractors can perform customized searches
to locate M/WBEs that may be available for work on
projects. Some local governments also maintain vendor
lists, including MWBE lists. The following websites
are examples of vendor lists:
Raleigh
M/WBE directory
Winston-Salem
M/WBE directory
N.C.
Department of Transportation DBE directory
For comments or questions about this website e-mail Eileen Youens, Assistant Professor of Public Law
and Government at the School of Government, University
of North Carolina at Chapel Hill.
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