Understanding Supplier Diversity Certifications
There are a lot of supplier diversity certifications your business can apply for, but which ones are the best certifications for your business? In this article, we’ll break down supplier diversity certifications, including the application process, what documents you’ll need, turnaround time to receive your certification, and how often you’ll need to renew your certification.
So, What Is a Diverse Supplier, Anyway?
In brief, a diverse supplier is a business of any size that is owned and operated by an individual or group of people that is part of a traditionally underrepresented or underserved group. In the US, there are seventeen categories used to identify diverse businesses. Note that ownership is specific to the legal ownership of the organization, while operations relates to the day to day running of the organization. Internationally, there are five classifications, but there may be more depending on the country in question.
Could My Business Be Classified as a Diverse Supplier?
If you meet the criteria for any of the classifications listed below, chances are your business could be classified as a diverse supplier:
Disabled Owned – A business that is a least 51% owned by one or more disabled persons who control and operate the business. Control in this context means exercising the power to make policy decisions and operate means being actively involved in the day-to-day management of the business.
Disabled Veteran Business Enterprise (DVBE) – This term is used by the State of California, public utilities, and many private corporations to designate a company that is owned (at least 51%) and controlled by a Veteran with a Service-Connected Disability rating of at least 10% from the Department of Veterans Affairs. Additionally, the Veteran must reside in the state of California.
Disadvantaged Business Enterprise (DBE) – A business that is usually certified by a federal, state or local government agency as having met all of the government standards that award eligibility, but may include women, minority, disabled and other disadvantaged as a result of economic disadvantages with respect to education, employment, residence or business location or social disadvantage and lack of business training.
Disadvantaged Veteran Enterprise (DVE) – A business that is a small business concern owned and controlled by veterans, where not less than 51% is owned, controlled, and managed by veterans.
Historically Black Colleges / Universities & Minority Institutions (HBCU/MI) – Historically Black and minority colleges and universities that are recognized by the government as legitimate set-aside business opportunities.
HUBZone Certified – A business that is operating in a certified historically underutilized business zone. There are 7,000 qualified census tracts (HUD) and 900 qualified non-metropolitan counties.
LGTB Owned (LGBT) – A business that is at least 51% owned and operated by an LGTB person(s).
Minority-Owned – A business that is at least 51% owned by, and whose management and daily business operations are controlled by, one or more members of a socially and economically disadvantaged minority group, namely U.S. citizens who are African Americans (Black), Hispanic Americans, Native Americans, Asian-Pacific Americans, Alaskan Native Americans and Indian Sub-Continent Americans.
Minority Business Enterprise (MBE) – A Minority Business Enterprise usually certified by a federal, state or local governmental agency as having met all of the government standards that award eligibility.
Service-Disabled Veteran (SDV) – A business that is owned by one or more veterans with a disability that is service-connected. The term “service connected” means, with respect to disability, that such disability was incurred or aggravated, in the line of duty in the active military, naval or air service. (38 U.S.C. ‘101(16).
Small Business – A business considered eligible for assistance from SBA as a small business is one that is organized for profit, with a place of business located in the United States. It must operate primarily within the United States or make a significant contribution to the U.S. economy through payment of taxes or use of American products, materials or labor. Together with its affiliates, it must meet the numerical size standards as defined in the Small Business Size Regulations, 13 CFR 121
Small Disadvantaged Business (SDB) – Small Disadvantaged Business: New certification eligibility criteria established by the SBA effective 7/1/99. All firms must be certified by one of the SDB Certification Agencies designated by the SBA. To qualify must be a small business, not exceed standards for Primary SIC, meet Contracting Officers’ assigned SIC code, be a U.S. Citizen and be 51% owned and controlled by one or more Socially & Economically Disadvantaged Individuals. The SBA classification is based on a Preponderance of the Evidence Clause” this SDB Certification is good for 3 years.
Veteran Business Enterprise (VBE) – Under SBA Guidelines Small Business Act (PL 85-536) as amended states: Small Business Concerns owned and controlled by veterans not less than 51% owned by one or more veterans and in the case of a publicly owned business not less than 51% of the stock is owned by one or more veterans.
Veteran Owned – A business that is a least 51% owned by one or more veterans, who control and operate the business. Control in this context means exercising the power to make policy decisions and operate means to be actively involved in the day-to-day management of the business. The term “veteran” (38 U.S.C.’101(2)) means a person who served in the active military, naval, or air service, and who was discharged or released there from under conditions other than dishonorable.
Vietnam Veteran – A business that is a least 51% owned by one or more Vietnam Veterans who served between 1/1/59 and 5/7/75 and have control and operate the business. Control in this context means exercising the power to make policy decisions and operate means to be actively involved in the day-to-day management of the business.
Women-Owned – A business that is at least 51% owned by, and whose management and daily business operations are controlled by one or more women who are U.S. citizens.
Woman Business Enterprise (WBE) – A Women Business Enterprise usually certified by a federal, state or local Government agency as having met all of the government standards that award eligibility.
8(A) Designation – The 8A designation is given to small companies owned by socially and economically disadvantaged persons, so that they may bid and obtain federal government contracts and other assistance to develop their business. The business owner must be eligible under the same rules and guidelines set down by the federal government.
Disabled Owned – A business that is a least 51% owned by one or more disabled persons who control and operate the business. Control in this context means exercising the power to make policy decisions and operate means to be actively involved in the day-to-day management of the business.
LGTB-Owned – A business that is at least 51% owned and operated by one or more LGTB person(s)
Veteran Owned – A business that is a least 51% owned by one or more veterans, who control and operate the business. Country exceptions: Israel, Taiwan
Women-Owned – A business that is at least 51% owned and operated by one or more women.
Which Supplier Diversity Certification is Right for My Business?
Now that you’ve figured out what classification your business falls into, it’s time to think about getting certified for those classifications. Keep in mind that just because you think your business qualifies as diverse doesn’t mean that your business actually qualifies as diverse. Most organizations with supplier diversity programs and initiatives won’t enter into a contract with a diverse business unless that business has a third-party certification to prove diversity status.
There are several types of supplier diversity certifications you can obtain for your business. You can self-certify, but most businesses require a third-party certification in order to enter into a contract with your diverse business. Federal certifications, state-level certifications, local certifications and certifications issued by non-governmental organizations (NGO) are all considered third-party certifications, and those are the certifications we’ll be going over.
Below is a list of currently available non-governmental third-party supplier diversity certifications, and who these certifications apply to:
Third-Party Supplier Diversity Certificates
- National Minority Supplier Development Council (NMSDC)
- African-American (Black), Asian-American, Native American, Alaskan Native American, Indian Sub-Continent American, or Hispanic-owned businesses
- Women’s Business Enterprise National Council (WBENC)
- Woman-owned businesses
- National Gay & Lesbian Chamber of Commerce (NGLCC)
- LGBT-owned businesses
- United States Hispanic Chamber of Commerce (USHCC)
- Hispanic-owned busineeses
- Asian Pacific American Chamber of Commerce (APACC)
- Asian-American and Pacific Islander-owned businesses
- Native American Chamber of Commerce (NACC)
- Native American-owned businesses
- Vets First Certification Program
- Veteran-owned businesses
- Disability-owned businesses
- African-American (Black), Asian-American, Native American, Hispanic, Woman, Veteran, and Disability-owned businesses.
It’s important to note that a single business can hold multiple certifications. Say, if you’re a lesbian Native American woman who owns a business, you’d be eligible for four separate certifications—one from National Minority Supplier Development Council (NMSDC), one from Women’s Business Enterprise National Council (WBENC), one from Native American Chamber of Commerce (NACC), and one from SupplierGATEWAY.
The Supplier Diversity Certification Process
Most diversely-owned businesses obtain their certifications via a third-party certification agency. This is an organization that promotes the business development of a particular group of minority and/or underrepresented people. The process or getting certified varies based on organization, but most require the following in order to certify your business:
- Documentation. All of the certifying organizations listed above require documentations to attest to the truth of your diversity statements.
- Screenings and interviews. You, your staff, and other members of your organization may be interviewed and screened.
- On-site visit. Some organizations require site visits to visually and physically confirm the diversity of your business.
- Waiting. Most applications take several weeks to be approved.
SupplierGATEWAY’s Enhanced Digital Certification® does not require a site visit and is done entirely online via supported documentation and identity verification. The approval process is also expedited—applications are generally approved within 3-5 days, if not sooner. The Enhanced Digital Certification® is also all-in-one and certifies many different classifications with one certificate.
Why is Supplier Diversity Certification Important?
Supplier diversity certification is important for several different reasons. Firstly, most buyers with supplier diversity programs won’t do business with your diverse business unless you have third-party certification to back up your diversity claims. Businesses with supplier diversity programs oftentimes struggle to find diverse suppliers to give contracts to. Being certified means that your business can be identified as diverse, which will help you gain contracts from those companies looking for diverse suppliers. Certification also opens the door for government contracts as well. In the US, the federal government requires that federal projects use a certain percentage of diverse suppliers.
Certification also opens the door to the networks associated with your certifications. For example, once your business is certified, your business will be entered into a database full of other diverse suppliers. Large corporations and other organizations with supplier diversity initiatives rely on these databases to find diverse suppliers to do business with. Aside from exposure to buyers looking for diverse suppliers, your certifications often come with access to specific events, educational opportunities, and business development tools that your business wouldn’t have access to otherwise.
Outside of financial benefit to your business, certification also offers social benefits for supply chain management and corporate responsibility initiatives. Through certification, diverse businesses can work together to advocate for diversity and effect change within current supply chain management culture. The more businesses that become diversity certified, the more robust corporate supply chain diversity programs can become, causing a positive feedback loop for ever-increasing supply chain diversity.