Local Business

Program for Small Businesses Under Council Scrutiny

As stated in legislation that passed more than a decade ago, Certified Business Enterprise (CBE) designation would place D.C. small business owners from historically disadvantaged groups in a better position for government contracting opportunities.

However, without the appropriate data from the Department of Small and Local Business Development, the degree to which that goal has been fulfilled remains clouded in mystery, to the chagrin of some entrepreneurs and advocates, and a local lawmaker.

“The challenge has been how likely certified business enterprises would get a contract,” said Evette Banfield, vice president of economic development policy and wealth-building strategies at the Coalition for Nonprofit Housing and Economic Development in Northwest.

At a D.C. Council roundtable session held last month by the council’s Committee on Business and Economic Development, Banfield spoke about the hurdles some of her clients in the small-business community struggled to overcome in the certification process, only to never land a city government contract.

Though she commended the department for easing the process and hosting tutorials for applicants in recent years, Banfield questioned whether the smaller, lesser-known entities among the CBEs received a significant portion of the $1 billion doled out by the D.C. government in the most recent fiscal year.

She has called for the launch of a disparity study every five years, and critiqued the bundling process, through which several projects get consolidated into one, leaving the awardee — likely a larger contractor — with the task of selecting small-business subcontractors.

“Some business owners have grown frustrated and some may have opted to not renew or recertify because they don’t see the advantage,” Banfield said. “People said they would like transparency around who’s getting these contracts. If it’s the same companies, that’s a problem.”

The council passed emergency legislation in 2005 mandating that the department give triennial reports documenting the results of independent assessments of the CBE program, including the proportion of government contracts awarded to CBEs and its overall economic and employment outcomes.

At the Oct. 24 roundtable, Councilman Kenyan McDuffie (D-Ward 5) noted that the department hasn’t produced a report in nearly four years, nor given a reason why. At an oversight hearing earlier in the year, department officials told lawmakers that data would be available at the end of 2018, but has since pushed the date back to next spring.

McDuffie, the committee chairman, recounted conversations with entrepreneurs who questioned the efficacy of D.C.’s contract procurement process as he stressed the importance of the triennial review.

“I believe in the potential of the District’s Certified Business Enterprise program to be a powerful tool for creating economic opportunities in D.C., but we need reliable data on the program to know it is working,” McDuffie wrote in a statement.

This month, council members discussed a bill McDuffie introduced in September establishing the Small Business Bonding Program, which aims to assist small businesses in obtaining insurance they need to qualify for participation in larger, more expensive development projects.

However, McDuffie said his focus has remained on the CBE program’s overall effectiveness.

“The roundtable was another opportunity to continue to put a spotlight on the District’s CBE program, so we can be sure it is truly working for the District’s small and historically disadvantaged businesses,” he said. “I am disappointed that the triennial review of the program has not been completed, but as the hearing demonstrates, I will continue to press until the report is published, just as I will continue to support the goals of our important CBE program.”

The department didn’t answer The Informer’s inquiry about the delay of the triennial review but wrote in an email that more than a quarter of the amount given to CBEs in the past fiscal year went to small business enterprises (SBE).

The Department of Small and Local Business Development is also developing a program, in conjunction with the Department of General Services (DGS), that would require prime contractors on DGS projects to collaborate with and boost the capacity of three SBEs generating an annual revenue of between $250,000 and $2 million.

Even so, some business owners said colleagues remain cynical of the overall process and often question why smaller businesses don’t learn of procurement opportunities in a time frame that would allow for proper preparation.

Others such as Bernadette Harvey of BCONSTRUX, Inc., acknowledged that access to opportunities often depends more on who a person knows than what they know.

“The business is often predicated on relationships and when they are large-dollar amounts, the people involved aren’t willing to take risks on people they don’t know,” Harvey said in her testimony during last month’s roundtable, during which she called for tighter oversight of the CBE program.

“There has to be some business acumen on [the part of] business owners on how to approach and prepare themselves to subcontract with large companies,” she said.

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