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Connecticut General Assembly
Office of Legislative Research
Stephanie A. D’Ambrose, Director
(860) 240-8400
Room 5300
Legislative Office Building
Revenue Caps for Minority-Owned
Small Business Certification
By: Jennifer Proto, Principal Analyst
May 18, 2020 | 2020-R-0096
Issue
Identify states with minority-owned business certifications independent from any revenue criteria.
In addition, identify states with revenue criteria for these certifications that have a higher threshold
than the state of Connecticut.
Summary
According to 2016 research by the National Conference of State Legislatures (NCSL), at least 38
states and Washington D.C. have state-level minority business enterprise (MBE) development
programs involving certification for participation in state government procurement independent of
existing federal disadvantaged business enterprise (DBE) development programs. These programs
usually consist of a certification process and a registry of MBEs. They encourage minority business
participation through assistance such as technical training on government contracting and the
bidding process, as well as notification of current bidding opportunities.
Some states have gone a step further with “set-aside” programs where a certain percentage of
government contracting is reserved for minority firms. These set-asides are expressed as goals that
government agencies are either encouraged, or required, to meet. As examples, NCSL identified
five states, including Connecticut, that operate set-aside programs (the other examples were
Illinois, New Jersey, New York, and Ohio).
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MBEs are often a subset of small businesses, for which there is no standard definition. Although
definitions of small business vary, they are all based on one or more of the following criteria: (1)
number of employees, (2) annual revenue, or (3) ownership (e.g., whether the business is
independently owned). The federal Small Business Administration (SBA) develops small business
“size standards,” which apply to federal law, state and private programs that receive federal
funding, and many other state and private programs that adopt the standards.
The SBA standards are based on a business' annual revenues and number of employees and vary
by industry sectors as established in the North American Industrial Classification System (NAICS).
Except for states that have adopted the SBA standards (e.g., New Jersey, Rhode Island, and
Washington), only Illinois was identified as having revenue criteria with a higher threshold than
Connecticut’s (see BACKGROUND); however, some other states do not include revenues in their
MBE certification criteria (e.g., Indiana and Ohio). Table 1 summarizes state program SBE/MBE
goals and thresholds. (Please note that this list is not exhaustive.)
Table 1: Examples of Minority or Small Business Enterprise Contract Goals & Revenue Caps by State
State
SBE/MBE Revenue Cap
Connecticut
CGS § 4a-60g(1),
as amended by PA
19-117, § 348
“Small contractors” (including MBEs) cannot exceed $20 million in gross
revenues in the most recently completed fiscal year prior to application
Florida
MBEs must have a net worth of less than $5 million and 200 or fewer full-time
permanent employees
Illinois
30 Ill. Comp. Stat.
575/2
Gross sales of businesses owned by minorities, women, or people with
disabilities must be less than $75 million
Indiana
Ind. Code 4-13-
16.5
25 Ind. Admin.
Code 5
No revenue cap found
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Table 1 (continued)
State
SBE/MBE Revenue Cap
Maryland
Personal net worth (PNW) cap applied to the MBE Program is $1,771,564
(adjusted annually based on the Consumer Price Index as required by state
law)
In addition to the cap, firms must meet other eligibility requirements, including
size
New Jersey
N.J. Admin. Code
17:13-1.2
N.J. Admin. Code
17:13-4.1
Small businesses must have no more than 100 full-time employees and:
for goods and services contracts, gross revenues cannot exceed $12
million or the applicable federal revenue standards established at 13
C.F.R. 21.201
for design and construction contracts, gross revenues cannot exceed
$3 million or the applicable annual revenue standards set forth in
federal regulation at 13 C.F.R. 21.201
Revenue thresholds do not appear to apply to MBEs
New York
New York State
Executive Law
Article 15-A
§§ 310-317;
5 NYCRR 140.1
In 2019 Governor Cuomo reauthorized Executive Law Article 15-A, extending
the program to December 31, 2024, and increasing the PNW certification cap
from $3.5 million to $15 million. It also authorizes additional regulations to be
established for PNW limits on an industry-by-industry basis
North Carolina
N.C. Gen. Stat.
§ 143-128.2
No revenue cap found
Ohio
No revenue cap found
Rhode Island
R.I. Gen. Laws
37-14.1-1 et seq
MBE means a small business concern, as defined pursuant to § 3 of the
federal Small Business Act, 15 U.S.C. § 632, and implementing regulations
(13 C.F.R. 121)
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Table 1 (continued)
State
SBE/MBE Revenue Cap
South Carolina
Gross sales receipts of the small business cannot exceed $7.5 million
annually averaged over the preceding three-year period and the eligible
owner's personal net worth cannot exceed $1.32 million
Revenue thresholds do not appear to apply to MBEs
Tennessee
Tenn. Code Ann.
§ 12-3-1102
Small businesses cannot exceed $10 million in gross receipts averaged over a
three-year period and cannot employ more than 99 persons on a full-time
basis
Revenue thresholds do not appear to apply to MBEs
Virginia
Executive Order
35 (2019)
Va. Code § 2.2-
1604
Small businesses have 250 or fewer employees or average annual gross
receipts of $10 million or less averaged over the previous three years
Revenue thresholds do not appear to apply to MBEs
Washington
MBEs must be a small business based on SBA size standards, which is
measured in two ways:
1. An overall business size standard of $23.98 million in gross receipts
over a three-year average
2. Size standards according to the businesses’ NAICS codes listed in
the SBA’s size standard tables
Background
Connecticut’s Supplier Diversity (a.k.a. Set-Aside) Program
By law, state agencies with a budget of more than $10,000 and contractors awarded state-
financed municipal public works or quasi-public agency contracts must annually set-aside or
reserve (1) 25% of the total value of all contracts they let for construction, goods, and services for
exclusive bidding by state certified small business enterprises (SBEs) and (2) 25% of that amount
(6.25% of the total) for exclusive bidding by small contractors that are certified MBEs (i.e., owned by
women, ethnic minorities, or people with disabilities) (CGS § 4a-60g as amended by PA 19-117).
Public works contracts awarded by agencies that are valued at $10,000 or less are exempt from
the set-aside provisions. State-funded contracts awarded by municipalities or quasi-public agencies
valued at $50,000 or less are also exempt. The Department of Administrative Services is
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responsible for certifying businesses as small and minority-owned businesses. Certification is for a
two-year period and is renewable.
The Commission on Human Rights and Opportunities must compile data concerning state contracts
with minority-owned business enterprises and annually report to the legislature (CGS § 46a-
56(a)(6)). According to CHRO’s most recent report covering FY 16–FY 18, the state routinely
exceeds the goals it sets for procurement from SBEs and MBEs. During the reporting period, state
agencies had an average MBE contracting and purchasing goal of $30,562,348 and spent an
average of $110,753,874.
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