Archive for October 2012

Qualification Changes Highlight Most Recent Update of Chicago Regulations Governing Certification of Minority and Women-Owned Businesses

October 29, 2012

In July, 2012, the Chicago Department of Procurement Services updated its regulations regarding eligibility for treatment of business entities as a Minority-Owned Business Enterprise (“MBE”) or a Women Business Enterprise (“WBE”) for construction contracts.  The most recent update broadened who is considered ethnically disadvantaged, increased the monetary threshold for owners of MBE and WBE firms, and developed a means to move established businesses out of the program.

The first key difference since the 2004 update is a new definition for an “economically disadvantaged” person. An economically disadvantaged person is as an individual whose personal net worth is less than $2,000,000 — as compared to only $700,000 in the previous regulation.  An applicant for MBE or WBE certification must establish by a preponderance of the evidence that it is owned, managed, and controlled by an economically disadvantaged individual (a person whose net worth is less than $2,000,000).

The regulations also clarify who is ethnically disadvantaged.  In addition to African-Americans and Hispanics, the new regulation includes Asian-Americans and American Indians as racial or ethnic groups who are “rebuttably presumed to be socially disadvantaged.”  These ethnic or racial groups have decreased opportunities to compete in Chicago area markets.  The regulations aim to combat the social disadvantages these groups suffer due to racial or ethnic prejudice and cultural bias within American society.

Lastly, the update included a new “Established Business Determination” section.  Under the new regulations, the Chief Procurement Officer determines whether an entity is an established business.  An entity is presumed to be an established business if the business entity is no longer a small business as defined by the U.S. Small Business Administration, pursuant to the business size standards found in 13 C.F.R. Part 121, relevant to the scope of work the firm seeks to perform.  If the Chief Procurement Officer determines that an entity is an established business, that entity cannot be certified or recertified as an MBE or WBE.  This new section was added in an effort to help graduate businesses out of the program once they no longer qualify as a small business.

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