Each year state, local and federal agencies award billions of dollars in contracts to private businesses and of those contracts awarded, government agencies set aside a percentage of business opportunities or contacts for certified Women Business Enterprises (WBE). These government set-asides are for businesses certified as a WBE and sometimes require additional certification as a small business, as such term is defined under federal or state applicable laws to be a Women Owned Small Business (WOSB) and/or industry specific requirements. In addition to government work, many large private sector companies seek to have business relationships with women owned businesses. If a business meets certain requirements, the business could certify as a WBE and reap the benefits of lucrative private sector contract initiatives. For this reason alone, certification solely as a WBE could greatly benefit your business.
A business can be WBE certified by a state government, the Federal Government, a third party certifier such as the Women’s Business Enterprise National Council, or, on the federal and often private sector level, by self-certification. While the WBE certification process may vary slightly depending on the applicable government agency or private company, the requirements are generally similar. At least 51% of the business must be owned and controlled by women and the day-to-day operations managed by women. For certain government contract set-asides, including the Federal Government, an entity must operate in approved industries and not exceed certain size and/or revenue limitations with respect to such industry to qualify as a small business under applicable law.
Certifiers take this process seriously and require, among other things, various organizational, governance and tax documents to vet the applicant. Certifiers are particularly concerned with the “control” requirement and endeavor to look beyond the applicant’s ownership into the realities of decision-making and management. Careful attention is required when there is ownership through other entities or estate planning trusts. Furthermore, certifiers typically prefer applicants to be in existence and conducting business for at least a year prior to submitting an application for WBE status. New York, for example, strongly recommends, but does not require, that businesses operate for at least one year prior to applying for WBE certification. As such, an entity may apply for WBE status prior to operating for one year, but may face issues in collecting the necessary documentation.
While the application process can be scrutinizing in some respects, the benefits of being certified as a WBE can be well worth the process. As a WBE, businesses are afforded improved access to government and private sector work and set-asides. While WBE status does not guarantee more work by virtue of the status itself, WBE status places businesses in favorable positions as they bid for contracts or business relationships with those seeking to work with WBEs. For a business looking to grow, becoming a WBE could be the key to greater revenues and connecting with new industry contacts.
There are similar certifications available for minority-owned businesses.
As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.
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