Minority- and women-owned business state certifications updated to thwart fraud

Several state rules regarding the awarding of minority- and women-owned businesses certifications have been modified in an attempt to weed out “front and pass-through companies” that allow non-minority firms to benefit from set-aside contracts, the Ohio Department of Administrative Services (DAS) announced in a statement. The guidelines for three certification […]

Several state rules regarding the awarding of minority- and women-owned businesses certifications have been modified in an attempt to weed out “front and pass-through companies” that allow non-minority firms to benefit from set-aside contracts, the Ohio Department of Administrative Services (DAS) announced in a statement.

The guidelines for three certification programs — Minority Business Enterprise (MBE); Encouraging Diversity, Growth, and Equity (EDGE); and Women’s Business Enterprise (WBE) — passed the Joint Committee on Agency Rule Review (JCARR) on Tuesday, Sept. 29.

The changes, the statement said, were based on the recommendations of a working group of minority and economically disadvantaged business owners tasked with improving the integrity of the three programs, which are plagued with the prevalence of non-minority-businesses participation.

The new rules add a requirement for MBE certification that eligible companies demonstrate owners are “performing, paying, managing and supervising the work” involved in any minority-certified contract. The new rules also include more “stringent and frequent financial documentation requirements” and includes a DAS hotline to report possible violations. (It can be reached at 1-888-327-8477 or DAS-TIPS).

“Nothing is more frustrating to companies playing by the rules than seeing a front-company obtaining state work through deception,” said DAS director Matt Damschroder in a statement. “These rules will help ensure state-certified businesses are who they say they are.”

The DAS Equal Opportunity division now will have the ability to identify pre-verified, third-party certifiers of comparable programs, when the business already holds one of these verified certifications, to expedite MBE and WBE certification applications.

An additional change allows the state to validate the ownership status of a women-owned businesses to be used in awarding contracts in Ohio and other states that maintain a similar women-owned business certification.

The new rules also allow more non-minority individuals to sit on a minority-owned company board of directors; remove the 10-year cap for EDGE certification; and ensure that only small businesses participate in the EDGE program by adopting a Small Business Administration standard size cap for participating companies.

All the new rules will go into effect on Friday, Oct. 9. Businesses that violate certification laws or rules risk decertification and the loss of business opportunities.

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