An Over Proliferation of Certification

By Dean L. Jones

In what may appear as a no-brainer to some and an over kill to others, in 1793 the ongoing activity was that ‘Free Blacks’ were required by law to register and certify their freedom papers at the county court house.

The law reads:

“Free Negroes or mulattoes shall be registered and numbered in a book to be kept by the town clerk, which shall specify age, name, color, status and by whom, and in what court emancipated.  Annually the Negro shall be delivered a copy of the registration for 25 cents.  A penalty is fixed for employing a Negro without a certificate; the Negro may be committed to jail. Every free Negro shall once in every three years obtain a new certificate.”

The California Public Utilities Commission administers a business ownership certification process, called the California Utility Clearinghouse.  Their regulation General Order 156 reads:

“The clearinghouse shall distribute a renewal verification form to minority firms at least once every three years.  If the renewal is not completed and returned within a reasonable time, the clearinghouse shall notify the minority and utility corporations that the minority will not be listed as a verified minority.”

The primary purpose of this clearinghouse and similar certification agencies like it is to audit and verify the status of minority business ownership.  In addition, to establish and maintain a database of such firms that is accessible to the major corporate buyers.

At this year’s Black Business Association (BBA) Annual Awards Banquet, during the dessert reception, a few members updated one another about corporate contracting engagement trends.  Out of this conversation, a good media sound bite, ‘An Over Proliferation of Certification,’ is a quote from Mr. Earl ‘Skip’ Cooper, II, the President and CEO of the BBA.

The contracting trends for black businesses have significantly changed over the past twenty years according to a couple of the businesses in attendance.  Many say that the buyers will make contact for a bid providing they have an active certification on file with their organization or an acceptable agency.  This general practice of asking for certification is standard with most private corporations and all public organizations.

The black business owners stated that they all had some kind of certification, but all find it excessive, whereas coming to a mutual agreement that the practice is quite exasperating.  Certifying business ownership is beyond the scope and intent of economic development.  It profiles Blacks, Latinos, and Asian entrepreneurs unnecessarily with invasive requests for information and a waste of business time.

When asked about the historical process for classifying free blacks in America, everyone agreed that the business certifying audit process smacks of how the US condoned racial discrimination after the abolishment of slavery.  Remember, blacks had to carry a certification card indicating a freed slave.

Some of the businesses were slightly taken by the harsh comparison.  However, everyone agreed that although it is a strong contrast for attempting to gain contract opportunities and slavery, the oversight concept bears a close resemblance.  The business certification is now more than a forty-year practice for the public and private sectors.

One of the attendees was a new member with the BBA, and the following outlines the general conversation surrounding certification.  For a little background, the new member is profitably serving the commercial construction trade industry, and the old member successfully operates over the past thirty-three years a supply distribution firm.

Old member:  It looks like your company delivers good products and services to some large public and private organizations.

New member: Yes, we have had the privilege of supplying many major corporations throughout the US, since 1982.  Our growth was gradual for the first few years, and over the past five years, we reached $37 million in sales in 2005, operating with 127 full-time employees.

Several of our clients want to take credit for our firm as black-owned and operated.  Have you found as a certified firm an added assistance with the win-capture rate of contracts with these major public and private agencies?

Old member:  No.  My certification does not get me any business.  It does help with creating a rapport with the buyers as being in compliance, but after that, I am required to demonstrate performance.  It probably will serve you well to certify as a black-owned firm for statistic gathering with these big companies and make the buyer happy.  Then, you will be brought in to bid with the other non-minority firms, and your company will be required to demonstrate quality products, on-time delivery, and competitive pricing.

New member: Based on the work that we currently do as a non-certified black owned firm, you just described how we already conduct business.  It appears that the advantage of certification is for the buying agency, not the selling agency.

Old member:  In all of my dealings with doing business, the certification does not give any sort of bidding advantage.  The certification helps to identify fraud where a company falsifies its ownership to gain a contract.

New member: Why would a firm falsify and place itself in jeopardy of legal prosecution if there is no advantage in the bidding or win-capture rate of a contract?  There must be some kind of way where certification means that you will have an advantaged over a non-certified firm.

Old member:  A firm that is certified is listed on a database.  When your commodity code has an operational requirement, then your firm may be asked to provide a bid or attend a bidders’ conference.  The firms that are not certified are on the same database, and when the commodity code is raised, their firm could easily be asked to do the same if the field of potential suppliers is small or manageable.

New member: Is there any costs involved with certification?

Old member:  Sure.  Your staff’s time to assemble the large list of requested documents, and the annual $250.00 charged by the National Minority Supplier Development Council (Southern California Minority Business Development Council)

New member: How many companies are certified as minority owned business?

Old member:  The Small Business Administration, and fifty other agencies around the country conduct certifications, and an estimated that 100,000 firms are certified as minority owned.  An added question is how many of these certified firms receive contracts from the companies requesting certification.  Roughly, 50% of the certified firms ever receive an opportunity to bid and less than 5% of them win a major contract.

This is the kind of dialogue rarely heard among non-minority owned companies.  This is one major reason why trade groups like the BBA remain necessary.  The discussion for doing business remains different if you are not a white male entrepreneur.

While editing this review of ‘An Over Proliferation of Certification,’ it was brought to my attention that it was the custom during the mid 1800’s in the northern states to require the free black people to have ‘free papers.’  It was required that these instruments be renewed often, and the States charged considerable sums from time-to-time by the free people.  In these free papers the name, age, color, height, and form of the freeman were described, together with any scars or other body marks that could assist with certifying identification. This certificate in some measure defeated itself-since more than one man could be found to answer the same general description.

If you are a business owner, you are undoubtedly looking for ways to improve your supplier engagement opportunities without incurring additional costs and red tape.  It has become clear that conducting business as usual has become unusual all the while shipping costs, fuel surcharges, and capacity to conduct business continues to diminish.

I simply believe it is time to ask about the type of privileges gained and lost when it comes to certification practices.  I hope that the aforementioned will spark a dialogue between certification agencies and buying agencies—a dialogue that could see a sunset to a somewhat discriminatory practice.

This article submission is from Dean L. Jones, a BBA President’s Award recipient and business strategist with Southland Business Partnership delivering sustainable supply management processes, marketing strategies, and viable community partnerships.