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Local Government Purchasing and Contracting

Frequently Asked Questions for Minority and Non-minority Contractors

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FAQs

Do local governments in North Carolina have M/WBE participation requirements for public construction contracts?
Answer: 

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.

What types of projects require M/WBE efforts?
Answer: 

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)).

What are the qualifications to be considered an M/WBE?
Answer: 

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.

Are M/WBEs required to be certified?
Answer: 

 

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.

What is the advantage to a minority contractor of becoming certified?
Answer: 

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.

What are the M/WBE-related steps a local government must take before awarding a contract?
Answer: 

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.

Are M/WBEs given preferences when awarding contracts?
Answer: 

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.

What does the law require a prime contractor to do to encourage M/WBE participation in subcontracting?
Answer: 

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)
What happens if a prime contractor does not meet the goal or satisfy the good faith effort requirements?
Answer: 

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.

Where can M/WBEs find information about public contracting opportunities in North Carolina?
Answer: 

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.

Where can M/WBEs find information about public contracting opportunities in North Carolina?
Answer: 

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.

Where can prime contractors find lists of available M/WBEs?
Answer: 

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

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