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Government agencies have been providing access to government contracts to Minority-Owned Businesses..but who is an MBE

MBE – Does your Birth Country Count?

By Jordan Matyas

Federal, state, and local government agencies provide access to government contracts to MBE’s, Minority-Owned Business Enterprises to encourage these businesses to bid on government contracts. MBE’s are owned by traditionally socially and economically disadvantaged individuals. A major hurdle to clear when qualifying a business as an MBE is demonstrating one’s ethnicity when proving affiliation with a disadvantaged group of persons. Someone who falls within the restrictions set forth by federal, state, and local agencies, does not have to have been born in the country of origin to be considered for status as a Minority-Owned Business Enterprise.

The U.S. Federal Government’s Small Business Administration was instituted in 1953 to help small businesses with loan servicing, contracts, and other forms of assistance. It is the SBA that manages set-asides for MBEs. Set-asides require that a particular percentage of all government contracts be specifically tagged for small businesses owned by “social and economically disadvantaged” people. CFR §124.103 defines who is socially disadvantaged and sets a rebuttable presumption that the following individuals are socially disadvantaged: Black Americans; Hispanic Americans; Native Americans (Alaska Natives, Native Hawaiians, or enrolled members of a Federally or State recognized Indian Tribe); Asian Pacific Americans (persons with origins from Burma, Thailand, Malaysia, Indonesia, Singapore, Brunei, Japan, China (including Hong Kong), Taiwan, Laos, Cambodia (Kampuchea), Vietnam, Korea, The Philippines, U.S. Trust Territory of the Pacific Islands (Republic of Palau), Republic of the Marshall Islands, Federated States of Micronesia, the Commonwealth of the Northern Mariana Islands, Guam, Samoa, Macao, Fiji, Tonga, Kiribati, Tuvalu, or Nauru); Subcontinent Asian Americans (persons with origins from India, Pakistan, Bangladesh, Sri Lanka, Bhutan, the Maldives Islands or Nepal).  The regulations further provide that being born in a country does not, by itself, suffice to make the birth country an individual’s country of origin for purposes of being included within a designated group. CFR §124.104 specifically defines economically disadvantaged as individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same or similar line of business who are not socially disadvantaged.

The National Minority Supplier Development Council, a national membership organization which reviews and certifies MBEs, seems to have the strictest standards for business ownership. NMSDC requires that the minority group members own at least 51% of the business, and are U.S. Citizens with at least one quarter Asian-Indian (India, Pakistan, Bangladesh); Asian-Pacific (Japan, China, Indonesia, Malaysia, Taiwan, Korea, Vietnam, Laos, Cambodia, the Philippines, Thailand, Samoa, Guam, the U.S. Trust Territories of the Pacific, or the Northern Marianas); Black (African descent); Hispanic (Mexico, Central America, South America, and the Caribbean Basin only); or Native American (American Indian, Eskimo, Aleut, or Native Hawaiian).

The City of Chicago has an MBE program as well, and provides that any individuals in the following racial or ethnic groups are  presumed to be socially disadvantaged: African Americans or Blacks including persons having origins in any of the Black racial groups of Africa; Hispanics including persons of Spanish culture with origins in Mexico, South or Central America or the Caribbean Islands, regardless of race; For non-construction certification, Asian Americans including persons having origins in any of the original peoples of East Asia, Southeast Asia, the Indian subcontinent, or the Pacific Islands; or Individual members of other groups, including but not limited to Asian Americans (for construction certification), Arab Americans and Native Americans, found by the City to be socially disadvantaged by having suffered racial or ethnic prejudice or cultural bias within American society, without regard to individual qualities, resulting in decreased opportunities to compete in Chicago area markets or to do business with the City of Chicago.

The Minority Business Development Agency, a U.S. Federal Agency under the Department of Commerce, is another excellent source of information and offers links for MBEs to sources around the country, while advocating with policy makers and business leaders. 

A business owner’s ethnicity absolutely counts when they are attempting to qualify as a Minority Owned Business Enterprise, however the regulations do not require that one must be born in the country of origin claimed.

The information in this blog post is provided for informational purposes only and is not intended to be legal advice. You should not make a decision whether or not to contact an attorney based upon the information in this blog post. No attorney-client relationship is formed nor should any such relationship be implied. If you require legal advice, please consult with an attorney licensed to practice in your jurisdiction.

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