Tags: 

Industry Watch

Selling to Governments

State and city governments are big consumers of products and services, and they have set-asides for businesses owned by women and minorities

By Brian Martucci
Fri, 2017-02-24 11:57

In the present hyper-partisan political environment, government spending is a magnet for controversy. Whatever your politics, you can surely find a federal program or tax credit that offends your sensibilities.

But, like it or not, the public-sector gravy train is an essential piece of the economic puzzle. Each year, Minnesota-based businesses compete with local and national peers for some $2 billion in state contracts. The state’s larger municipalities work with thousands of mostly small and midsize vendors — the city of St. Paul’s supplier portal has more than 4,000 registrants, for instance. And separate carve-outs for small, women-owned and minority-owned enterprises help level the playing field for historically disadvantaged classes.

The city of St. Paul is a leader on the diversity front, says Tiffany Audette, one of the city’s authorized buyers.

“Procurement is a central and key element to [St. Paul’s] Racial Equity plan,” says Audette. A recent change to the city’s Vendor Outreach Program ordinance “expands St. Paul’s commitment to diversifying the supplier base,” she adds. That change comes on top of milestones in other areas — for instance, in 2014 and 2015, approximately 30% of the St. Paul Department of Safety and Inspection’s new hires were people of color, thanks to a host of new internships and trainee positions promoted throughout communities of color.

Making the MBE Cut

To be formally certified as a minority-owned business (MBE), an enterprise must be for-profit, physically located in the U.S. or its territories, and at least 51% non-Caucasian-owned. MBE owners must be U.S. citizens who are actively involved in daily management, too.

Many certification-seeking MBEs reach out to North Central Minority Supplier Development Council (NCMSDC), a Minneapolis-based bridge organization that connects MBEs with public and private partners, from state and municipal agencies to Fortune 500 companies such as Target, U.S. Bank, Xcel Energy and Wells Fargo.

“NCMSDC is in a unique position to promote and market MBEs to our corporate members looking to do business with MBEs,” says Duane Ramseur, NCMSDC’s president and CEO. NCMSDC, which serves five Upper Midwestern states, is one of 23 national Councils. Collectively, the MSDC network has some 16,000 certified MBEs and more than 3,600 corporate members. Those 16,000 businesses can take advantage of state and local governments’ set-asides for enterprises owned by historically disadvantaged classes, gaining valuable visibility in competitive bidding processes.

“The need is there,” says Ramseur. “State and local governments are looking for innovative ideas from their vendors. Minority-owned enterprises bring fresh perspectives and new approaches.”

MBEs matter

MBE certification isn’t a golden ticket to public contracts, but it is a crucial step. Ron Dumra, vice president and CEO of Diverse Maintenance Solutions, knows this firsthand. He and wife Rita, the company’s president and chair, “first realized we were [an MBE] around 2000,” says Dumra. The certification process was surprisingly smooth: Diverse Maintenance Solutions was approved on its first application.

“Certification was very beneficial for us,” says Dumra. “State agencies and large corporations are absolutely looking to promote small, women-owned, and minority-owned businesses.” Diverse Maintenance Solutions is a lean company that advertises largely through word of mouth; each new state and corporate contract was an opportunity to burnish its reputation with deep-pocketed buyers.

Certification isn’t an automatic in, though; Diverse Maintenance Solutions’s bids still must be competitive. As an MBE, Dumra gets a 6% adjustment, meaning he can bid 6% over a non-MBE competitor and receive equal consideration from the buyer.

However, it’s increasingly common for public-sector buyers to put multiple vendors on a single contract and rotate orders through that roster. For Dumra, that means tighter margins and harder work. To win and keep a contract, he needs to be within 6% of the big boys’ bids, and then deliver impeccable, consistent service that keeps the client happy.

“It’s a give-and-take,” he says. “We accept lower margins, stay lean and focus on taking excellent care of our customers.”

SBEs and WBEs too

Minority-owned businesses aren’t the only favored cohort. Women-owned businesses (WBEs) get an extra boost, as do small businesses (SBEs) that meet the criteria. Even were it not minority-owned, Dumra’s business would still qualify for the set-aside.

The SBA’s criteria vary, but businesses usually have fewer than 1,500 employees. Women-owned businesses need to be at least 51% women-owned.

For WBEs, SBEs and MBEs seeking contracts with metro-area agencies, the Central Certification Program (CERT) is the place to start. It is the recognized small business certification for Hennepin County, Ramsey County, the City of Minneapolis and the City of St. Paul. The CERT system is reciprocal; just one application is required. If you own a Minnesota-based small business, there’s a good chance you qualify for a set-aside that improves your chances — or, at least, your visibility — in the contract bidding process. And getting certified is easier than you think. So, what are you waiting for?

 

Public Procurement Resources for Small Businesses 
Looking for help with MBE/SBE/WBE certification? Have general questions about public procurement? These resources can help: 

1. National Association of Minority Contractors, MN Chapter
2. Native Diversification Network – Procurement Technical Assistance
3. WomenVenture
4. Minnesota American Indian Chamber of Commerce
5. Women’s Business Development Center
6. Association of Women Contractors
7. Targeted Group/Economically Disadvantaged/Veteran-Owned (TG/ED/VO) Small Business Procurement Program

 

BIZ BRIEFING

North Central Minority Supplier Development Council
Headquarters: Minneapolis
Inception: 1975
Leadership: Duane Ramseur, president and CEO
Employees: 5
Revenue: $712,821 in 2014; $905,078 in 2015
Description: A bridge organization that provides business development services to corporate and certified MBEs (Minority Businesss Enterprises) to enhance relationships and maximize business opportunities.

Diverse Maintenance Solutions
Headquarters: Blaine
Inception: 1989
Leadership: Rita Dumra, President and Chair; Ron Dumra, Vice President and CEO
Employees: 7
Revenue: Undisclosed
Description: Provides cleaning supplies and maintenance equipment, along with value-added services, for clients in a variety of industries. 

 

In the present hyper-partisan political environment, government spending is a magnet for controversy. Whatever your politics, you can surely find a federal program or tax credit that offends your sensibilities.

But, like it or not, the public-sector gravy train is an essential piece of the economic puzzle. Each year, Minnesota-based businesses compete with local and national peers for some $2 billion in state contracts. The state’s larger municipalities work with thousands of mostly small and midsize vendors — the city of St. Paul’s supplier portal has more than 4,000 registrants, for instance. And separate carve-outs for small, women-owned and minority-owned enterprises help level the playing field for historically disadvantaged classes.

The city of St. Paul is a leader on the diversity front, says Tiffany Audette, one of the city’s authorized buyers.

“Procurement is a central and key element to [St. Paul’s] Racial Equity plan,” says Audette. A recent change to the city’s Vendor Outreach Program ordinance “expands St. Paul’s commitment to diversifying the supplier base,” she adds. That change comes on top of milestones in other areas — for instance, in 2014 and 2015, approximately 30% of the St. Paul Department of Safety and Inspection’s new hires were people of color, thanks to a host of new internships and trainee positions promoted throughout communities of color.

Making the MBE Cut

To be formally certified as a minority-owned business (MBE), an enterprise must be for-profit, physically located in the U.S. or its territories, and at least 51% non-Caucasian-owned. MBE owners must be U.S. citizens who are actively involved in daily management, too.

Many certification-seeking MBEs reach out to North Central Minority Supplier Development Council (NCMSDC), a Minneapolis-based bridge organization that connects MBEs with public and private partners, from state and municipal agencies to Fortune 500 companies such as Target, U.S. Bank, Xcel Energy and Wells Fargo.

“NCMSDC is in a unique position to promote and market MBEs to our corporate members looking to do business with MBEs,” says Duane Ramseur, NCMSDC’s president and CEO. NCMSDC, which serves five Upper Midwestern states, is one of 23 national Councils. Collectively, the MSDC network has some 16,000 certified MBEs and more than 3,600 corporate members. Those 16,000 businesses can take advantage of state and local governments’ set-asides for enterprises owned by historically disadvantaged classes, gaining valuable visibility in competitive bidding processes.

“The need is there,” says Ramseur. “State and local governments are looking for innovative ideas from their vendors. Minority-owned enterprises bring fresh perspectives and new approaches.”

MBEs matter

MBE certification isn’t a golden ticket to public contracts, but it is a crucial step. Ron Dumra, vice president and CEO of Diverse Maintenance Solutions, knows this firsthand. He and wife Rita, the company’s president and chair, “first realized we were [an MBE] around 2000,” says Dumra. The certification process was surprisingly smooth: Diverse Maintenance Solutions was approved on its first application.

“Certification was very beneficial for us,” says Dumra. “State agencies and large corporations are absolutely looking to promote small, women-owned, and minority-owned businesses.” Diverse Maintenance Solutions is a lean company that advertises largely through word of mouth; each new state and corporate contract was an opportunity to burnish its reputation with deep-pocketed buyers.

Certification isn’t an automatic in, though; Diverse Maintenance Solutions’s bids still must be competitive. As an MBE, Dumra gets a 6% adjustment, meaning he can bid 6% over a non-MBE competitor and receive equal consideration from the buyer.

However, it’s increasingly common for public-sector buyers to put multiple vendors on a single contract and rotate orders through that roster. For Dumra, that means tighter margins and harder work. To win and keep a contract, he needs to be within 6% of the big boys’ bids, and then deliver impeccable, consistent service that keeps the client happy.

“It’s a give-and-take,” he says. “We accept lower margins, stay lean and focus on taking excellent care of our customers.”

SBEs and WBEs too

Minority-owned businesses aren’t the only favored cohort. Women-owned businesses (WBEs) get an extra boost, as do small businesses (SBEs) that meet the criteria. Even were it not minority-owned, Dumra’s business would still qualify for the set-aside.

The SBA’s criteria vary, but businesses usually have fewer than 1,500 employees. Women-owned businesses need to be at least 51% women-owned.

For WBEs, SBEs and MBEs seeking contracts with metro-area agencies, the Central Certification Program (CERT) is the place to start. It is the recognized small business certification for Hennepin County, Ramsey County, the City of Minneapolis and the City of St. Paul. The CERT system is reciprocal; just one application is required. If you own a Minnesota-based small business, there’s a good chance you qualify for a set-aside that improves your chances — or, at least, your visibility — in the contract bidding process. And getting certified is easier than you think. So, what are you waiting for?

 

Public Procurement Resources for Small Businesses 
Looking for help with MBE/SBE/WBE certification? Have general questions about public procurement? These resources can help: 

1. National Association of Minority Contractors, MN Chapter
2. Native Diversification Network – Procurement Technical Assistance
3. WomenVenture
4. Minnesota American Indian Chamber of Commerce
5. Women’s Business Development Center
6. Association of Women Contractors
7. Targeted Group/Economically Disadvantaged/Veteran-Owned (TG/ED/VO) Small Business Procurement Program

 

BIZ BRIEFING

North Central Minority Supplier Development Council
Headquarters: Minneapolis
Inception: 1975
Leadership: Duane Ramseur, president and CEO
Employees: 5
Revenue: $712,821 in 2014; $905,078 in 2015
Description: A bridge organization that provides business development services to corporate and certified MBEs (Minority Businesss Enterprises) to enhance relationships and maximize business opportunities.

Diverse Maintenance Solutions
Headquarters: Blaine
Inception: 1989
Leadership: Rita Dumra, President and Chair; Ron Dumra, Vice President and CEO
Employees: 7
Revenue: Undisclosed
Description: Provides cleaning supplies and maintenance equipment, along with value-added services, for clients in a variety of industries.