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HomeMy WebLinkAboutIR 9605 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9605 To the Mayor and Members of the City Council December 3, 2013 Page 1 of 3 r SUBJECT: MINORITY-OWNED BUSINESS TERMS r•F� The purpose of this Informal Report is to provide City Council with an explanation of the differences between Minority/Women/Disadvantaged and Historically Underutilized Businesses terminology and certifications. These terms were first introduced by federal and state entities to determine if a business met the requirements for a specific certification in order to participate in procurement goals for business utilization. In addition, the United States Department of Transportation (DOT) established the specific criteria to define all Minority Business Enterprise (MBE), Women-Owned Business Enterprise (WBE) and Disadvantaged Business Enterprise (DBE) firms. As part of our Business Diversity initiative, the City has included these widely accepted terms and certification requirements in our adopted ordinance. In order to receive certification as a Minority Business Enterprise (MBE) or Woman-Owned Business Enterprise (WBE) firm, the following requirements must be met: • The firm must be at least 51% owned by one or more minorities (Black Americans, Hispanic Americans, Native Americans, Asian Pacific Americans and Asian Indian Americans) or women individual(s) • The minority or women owner(s) must be a United States citizen or lawfully admitted permanent resident of the United States • The firm must be organized as a for-profit business Per the Code of Federal Regulations, the Texas Unified Certification Program (TUCP) was established to certify firms as DBEs. Only six entities in the State of Texas are authorized to certify DBEs through the TUCP, including the North Central Texas Regional Certification Agency (NCTRCA), South Central Texas Regional Certification Agency (SCTRCA), City of Austin, City of Houston, City of Corpus Christi, and the Texas Department of Transportation (TxDOT). Certification as a DBE allows for bidding on all U.S. DOT funded transportation projects including aviation, highway, and public transportation. In order to receive certification as a Disadvantaged Business Enterprise (DBE), the firm must meet the following requirements: • The firm must be at least 51% owned by a socially and economically disadvantaged individual(s) • The disadvantaged owner must be a United States citizen or lawfully admitted permanent resident of the United States • The firm must be a small business that meets the Small Business Administration's size standard and does not exceed $22.51 million in gross receipts for DBEs • The personal net worth for all owners claiming disadvantaged status for the DBE program must not exceed $1.32 million. • The firm must be organized as a for-profit business ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9605 To the Mayor and Members of the City Council December 3, 2013 `�` Page 2 of 3 r SUBJECT: MINORITY-OWNED BUSINESS TERMS A key component of the MBE/WBE/DBE certification is that the firm's ownership by minority, women or disadvantaged individuals must be real, substantial and continuing, going beyond pro forma ownership of the firm as reflected in the ownership documents. These individuals must control the management and daily business operations of the firm in order for the certification to be valid. In addition, the DBE certification is utilized for TxDOT contracts. All state and local public entities receiving federal funds are subject to the DBE requirements. Failure to comply with the federal DBE requirements may result in a loss of federal funding. The term Historically Underutilized Business (HUB) was created and certification criteria for this designation approved upon adoption of the State of Texas underutilization procurement plan. State Law requires each state agency to establish its own goals for contracting with HUBs in each procurement category based on expenditures scheduled for that category and the availability of HUBs in each category. Historically Underutilized Business (HUB) certification requirements are as follows: • The firm is a for-profit entity that has not exceeded the size standards prescribed by 34 TAC $20.23 (SBA size standards), and has its principal place of business in Texas • The firm must be least 51% owned by an Asian Pacific American, Black American, Hispanic American, Native American, American woman and/or Service Disabled Veteran, who resides in Texas and actively participates in the control, operations and management of the entity's affairs The City does not utilize certified HUBs due to the inability to access and integrate the State's HUB database into the City's database. The City's database was designed and built to improve the City's ability to track and monitor MWWBE participation on City contracts. This involves the ability to quickly confirm a business's certification, track payments to MWBEs, and monitor prime commitments versus actual payments. Part of the database's efficiency is the ability to directly download the NCTRCA's database into the City's database in a user-friendly manner that provides the platform for listing applicable MWBEs on specific contracts. The City's NCTRCA download capability and integration into the City's database also provides an efficient method to quickly confirm the six-county location requirement of our ordinance. Another challenge in utilizing the State's HUB certification is that the certification itself is valid for four years. This period of certification increases the risk of fraudulent or inaccurate certifications due to the infrequent review of ownership, control and daily management of the applicable firm. By utilizing the MBE/WBE/DBE certification through NCTRCA, the risk to the City is minimized by the stringent certification process utilized by the agency. ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9605 To the Mayor and Members of the City Council December 3, 2013 `�` Page 3 of 3 r SUBJECT: MINORITY-OWNED BUSINESS TERMS The City is a founding member of NCTRCA and has a representative on the NCTRCA Board that can provide guidance over policies and processes that could impact the City's Business Diversity initiative. The City has no comparable influence on the State's HUB certification process or in implementation of the HUB certification program. Please contact Jay Chapa, Director of Housing and Economic Development, if you have any questions or concerns. Tom Higgins City Manager ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS