Sexism in the WBE / DBE Certification Process (Part 1)

The regrettable presumption that someone’s daughter, or wife, doesn’t have what it takes to operate a construction company, was started not by misogynistic certification officers, it started with a few contractors’ deceptive practices.

Here the cliche is true—a few bad apples—men who wanted more contracts and convinced close female family members to pose as owners so they could get them—spoiled it for everybody else. (Human nature I guess.) They roped in wives and daughters and nieces who knew little about the business and had little interest to learn, and some of these companies, it is rumored, made many millions of dollars as a result.

So now virtually every time a woman applies for certification as a WBE or DBE, there is an inherent suspicion that someone else is pulling her strings, putting her up to it, gaming the system, getting a leg up—that is—illegally gaining a preference in the competitive bidding of public contracts, or deceptively marketing themselves as a subcontractor with the powerful capacity of providing coveted DBE credits toward goals.

This is especially true when the company does work that has cultural connotations that are masculine. 

“The macho work of masons and steel erectors could never be done by woman.” The misogynists may think to themselves. Their illogical way of thinking, I guess, sounds something like this: “if she can’t push a wheelbarrow full of concrete or carry cinder blocks up a scaffold, then she can’t understand and supervise the technical aspects of that work.” What a bunch of BS if I ever heard it. 

This is the first article of a series in which we’re going to review not just the basic prerequisites to certification, we’re going to discuss what the standards mean. That way, you can be ready when the questions start.

When a regulatory officer of a large city, state or federal agency starts to investigate whether you are really who you say you are, really the owner, not just in name but in fact, really in control, really have the knowledge, skills and experience to run the company—you will be ready. You will already know what the rules are and how they apply to you. You will have done your homework and complied with the regulations, not just on paper, but in reality. 

This first problem most applicants for MWBE or DBE certification encounter is… the requirement that the person’s capital contribution is in proportion to her ownership interest. This technical legal / accounting jargon is confusing. Many applicants don’t understand it and are rejected or have their certifications revoked because they violate this requirement, which can be found in one form or another in most state and federal regulations governing the certification process. Indeed a brief review of the administrative agency decisions denying or revoking certifications reveals that almost all are based on the applicant firm’s failure to meet this basic requirement. So what is its all about? What’s the idea? 

The easiest way to understand this requirement is by understanding the illegal situation it is trying to prevent. Let’s say, for example, a woman (or minority) owns 90% of the firm (on paper), but someone else, the 10% owner, perhaps a husband or a father or a non-minority, male “partner,” put in all the start up capital, the equipment, the money, maybe the building in which the company’s offices are located. This isn’t permissible, because it’s pretty obvious that such circumstances point to the woman being only the nominal owner. And even if the legal documents of the company put her in control (on paper), the reality is it’s hard to exercise independent control over a business that someone else has funded. So, in order to ensure that owners are really driving the bus, so to speak, this regulation requires them to put their own assets at risk. 

Speaking of risk, it’s also important that the woman or minority owner’s share of the profits and losses is in proportion to her ownership interest. For example, if the owner is a 90% owner, but only shares 50% of profits and losses, then the share of the MWBE owner is not proportionate to their ownership interest.

More to come on this…