The purpose of the Disadvantaged Business Program (DB) is to promote the use of small and emerging businesses by giving them opportunities to participate in state contracting.

Many of the companies that qualify for the program are too small to submit proposals as prime contractors on state contracts; however, most state contracts provide subcontracting and joint venture opportunities that would be within the capacity of a small business. The Disadvantaged Business Program encourages prime contractors to consider Disadvantaged Businesses when seeking supplies and services their own companies cannot provide.

How does a business qualify as disadvantaged?

There are actually two types of Disadvantaged Businesses: 1) Small Disadvantaged Businesses and 2) Socially Disadvantaged Businesses.

Small Disadvantaged Business

1. Certified as either a Minority or Woman Business Enterprise (MBE/WBE) through the Bureau of Minority & Women Business Opportunities (BMWBO) or an 8(a) business small business concern through the U.S. Small Business Administration, or self-certified as a Small Disadvantaged Business through the U.S. Small Business Administration.
2. Grosses less than $20 million annually or $25 million for companies involved in Information Technology (IT) services or sales.*
3. 100 or fewer full-time or full-time equivalent employees.
4. Able to do the work in question.

*Proof of gross revenues can include a recent tax or audited financial statement or a letter from the company's CPA, on the CPA's letterhead, with the company's name and gross annual revenues. If the company has subsidiaries or is the subsidiary of another company, the total revenue of the company and its subsidiaries must be under $20 million ($25 million for IT companies).

Socially Disadvantaged Business

1. Must be bidding as a prime contractor on the RFP.
2. Must have suffered chronic and substantial racial or ethnic prejudice or cultural bias in the United States due to the business person’s color, ethnic origin, or gender.
3. The prejudice or cultural bias must have negatively impacted the business’s establishment or growth.

To qualify as Small and Socially Disadvantaged Businesses, companies must be for-profit (non-profit entities do not qualify). They must also be owned by U.S. citizens.

Priority Rankings for Disadvantaged Business points

In the RFP process, contracts are awarded according to a point system. Each proposal is evaluated, and points are assigned for the technical aspect of the proposal, cost, Disadvantaged Business participation, and other possible factors. The total of these points determines which offeror will be selected for contract negotiations.

An offeror can earn Disadvantaged Business points according to the following priority ranking. The higher the ranking, the greater the potential points:

The prime contractor is responsible for verifying Disadvantaged Business status with each contract:

• If a business claims Disadvantaged Business status because it is DGS-certified, the offeror must provide a copy of the certificate, proof that the company does less than $20 million in gross annual revenues ($25 million for IT companies), and attest that the company has fewer than 100 full-time or full-time equivalent employees.
• If a business claims Disadvantaged Business status because it is an SBA-certified 8(a) small business concern, the offeror must provide proof of certification, gross annual revenues (less than $20 million or $25 million for IT companies), and U.S. citizenship, and attest that the company fewer than 100 full-time or full-time equivalent employees.
• If a business claims Disadvantaged Business status because it is self-certified as an SBA Small Disadvantaged Business, the offeror must provide documentary proof to support the self-certification and show that it meets the SBA's criteria for small disadvantaged business, proof that the company does less than $20 million in gross annual revenues ($25 million for IT companies), and attest that the company has fewer than 100 full-time or full-time equivalent employees.
• If a business claims Disadvantaged Business status because it has suffered racial or ethnic prejudice or cultural bias due to the business person’s color, ethnic origin, or gender, the offeror must provide evidence that negative treatment occurred in American society, is chronic and substantial, and has hindered the business person’s entry or advancement in the business world.

Include the appropriate verifications in the Disadvantaged Business portion of the proposal.

Read the RFP and follow it carefully!

Important information to note:

1. You must name the specific Disadvantage Business(es) to which you are making commitments. List the company name, address, and telephone number for each specific Disadvantaged Business included in the proposal. You will not receive credit by stating that you will find a Disadvantaged Business after the contract is awarded or by listing several companies and stating you will select one later.
2. Specify the type of goods or services the Disadvantaged Business(es) will provide. Specify the timeframe for each Disadvantaged Business to provide the goods or services and the location where the Disadvantaged Business(es) will perform these services.
3. Specify the estimated dollar value of the contract to each Disadvantaged Business. If subcontracting, include a signed subcontract or letter of intent in the Disadvantaged Business portion of the proposal. Also estimate what percent of the total value of services or products purchased under the proposal that the disadvantaged businesses will provide.

Bind the Disadvantaged Business portion separately from the rest of the proposal. (Most RFPs ask that the Disadvantaged Business section be sealed in an envelope). Two copies of the Disadvantaged Business section are needed. Be sure to identify your company on the outside of the envelope.

How do I find qualified Disadvantaged Businesses?

BMWBO maintains a database of all MBEs and WBEs certified by the PA Department of General Services. Information on these firms is available on BMWBO’s website at www.dgsweb.state.pa.us/mbewbe/VendorSearch.aspx.

If you have difficulty using the website to search for MBEs and WBEs, contact BMWBO for assistance. Please note that the businesses in BMWBO’s database are coded according to the goods or services they are certified to provide. If you have problems finding the correct codes for the supplies or services you are seeking, you can access a copy of the code list in Excel format at www.portal.state.pa.us/portal/server.pt?open=512&objID=1360&PageID=246013&mode=2 (code list is available only in electronic format).

For more information on the Federal 8(a) program or SDB self-certification, contact the U.S. Small Business Administration at 1-800-U-ASK-SBA (phone), visit their website at www.sba.gov, or search their federal vendor database directly at www.ccr.gov. Select Dynamic Small Business Search. Be sure to select the "Required (Active Certifications only)" option for 8(a) Certified to limit your search to the appropriate companies.

In some instances, you can also find qualified Disadvantaged Businesses by attending the preproposal conferences that are usually held on RFPs. BMWBO staff attend most preproposal conferences to explain the DB Program and answer questions. In addition, qualified Disadvantaged Businesses may have representatives at the conference, looking for partnering and subcontracting opportunities.

Disadvantaged Business commitments are binding.

Commitments to Disadvantaged Businesses made at the time of proposal submittal or contract negotiation become part of the resulting contract and must be maintained throughout the term of the contract. Any requested changes must be submitted to and approved by BMWBO.

Joint Ventures

A Joint Venture is an association of two or more companies to carry out a project for profit. A Joint Venture generally requires a shared interest in the performance of a common purpose. After the project is completed, the Joint Venture terminates.

The Joint Venture relationship is created by a contract between two or more companies. Each invests its money, labor or skills in the venture. The profits are divided between them.

All parties must agree on the terms of the contract before a Joint Venture relationship exists.

Co-ownership of the project is one indication of a true Joint Venture, which occurs when two or more companies pool their resources in a common enterprise comprised of equal obligations and benefits. If the contract indicates that one company is merely employed to provide certain goods or perform certain services and has no financial interest in the enterprise other than compensation, there is no Joint Venture. When a company has invested nothing in or contributed nothing to the project, there is no Joint Venture.

Generally, shared interest in the profits and losses resulting from a project is indicative of a Joint Venture. The participation in profits is an indispensable requisite of a Joint Venture relationship. The absence of participation in profits is conclusive that it is not a Joint Venture.

The burden of proving a Joint Venture is on the party who asserts it.

Examples of evidence indicating a Joint Venture relationship include: 1) showing a checking account with the Joint Venture name, 2) providing a copy of the contract establishing the Joint Venture, 3) providing an individual income tax return showing Joint Venture income, 4) documenting a pooling of assets into a common enterprise with a division of profits, 5) providing evidence of a parity in direction and management, and 6) showing proof of the securing of insurance in the name of the Joint Venture.

If asserting a joint venture with a disadvantaged business, the Joint Venture Agreement must be included in the Disadvantaged Business portion of the proposal.

For more information on Joint Ventures, contact BMWBO’s Supplier Diversity Division at 717-787-7629.