Dear WBE, MBE, and DBE Contractors,
Approximately every three years, the Office of Minority and Women’s Business Enterprises (“OMWBE”) reevaluates your certification and issues a letter hopefully congratulating you on your renewed certification. While this OMWBE letter generally means you can continue going about your business as usual, it is important to review the wording carefully, especially the portion that lists the NAICS codes OMWBE has assigned to your firm.
The North American Industry Classification System (“NAICS”) is the standard used by both Federal and State agencies to classify businesses activities. A list of the NAICS codes can be found here. At the time of application for WBE, MBE, or DBE certification, the applicant firm is asked to identify its primary business and professional activities and the associated NAICS codesThe OMWBE grants certification only for the specific NAICS Codes which the firm has listed and that OMWBE has verified the firm is capable of performing. A certified firm can only perform and receive credit for work associated with the specific NAICS codes it is assigned.
Thus, it is crucial to check that your firm is assigned the correct NAICS codes because, in determining whether your firm is small enough to remain in the WBE, MBE, or DBE program, OWMBE applies the current Small Business Administration (“SBA”) size standards related to those NAICS codes (expressed in either millions of dollars or employees). For example, the current SBA size standard for most building specialty trade contractors is $14 million while the size standard for building general contractors and heavy and civil engineering general and special trade contractors is $22.41 million (although the chart shows $33.5 million, this number is modified by the federal regulations for USDOT/WSDOT projects). Thus, if you are a building specialty contractor and the average of your last three years of revenue exceeds $14 million, you will be graduated (decertified) from the program. The current SBA size standards can be found here.
In the three-year certification letter, OMWBE usually states language similar to the following paragraph:
“The state program requires the firm to notify OMWBE in writing of any changes in its ownership, control, size or activities, and provide supporting documentation describing the change(s). This information must be submitted within thirty (30) days of the change(s).”
(emphasis added). Although a firm may have been performing work in an area with a higher size limit for years, OMWBE may rely on these letters and a firm’s failure to modify its assigned NAICS code to challenge a firm’s appeal of its graduation from the program. Therefore, if you fail to notify OMWBE in writing of changes that need to be made within 30 days of the certification letter, you may waive your right to add or change NAICS codes down the line.
Recommendation: To avoid possibly waiving your right to change or add NAICS code classifications, be sure to review your current NAICS Code classifications and make sure you have been assigned all of the appropriate NAICS code classifications. These will be listed in OMWBE’s certified directory. For DBE code classifications, click here. For MBE/WBE code classifications, click here.
If the appropriate codes are not listed, contact OMWBE to request the appropriate NAICS codes. You will likely need to provide additional support to establish that your firm performs this work (e.g., past or current contracts, evidence of activity specific equipment, etc.). In addition, it is also wise to see where your firm stands with regard to the SBA size limitation so you can track and anticipate a potential graduation from the program. To do so, compare the SBA limit with the average of your last three years of revenue.
Ahlers & Cressman PLLC’s lawyers have been assisting numerous general contractors, and small women and minority owned firms with their DBE questions over the last twenty-five years. Should you have any issues correcting your assigned NAICS codes or have any other questions, please contact Lindsay Taft (email@example.com or 206-529-3017).