Published on May 26, 2025
Diversity certifications play an important role in construction by enabling greater participation by historically underrepresented contractors and bringing greater diversity to the jobsite. This guide is intended to provide an overview on some of the contracting and participation requirements and the most common minority and women business enterprises (M/WBEs).
If you own a construction business and are a woman, minority, or member of an underrepresented group you need to consider the opportunities and advantages of obtaining a diversity certification. Diversity certificates are formal verifications that a business is at least 51% owned, operated, and controlled by individuals who historically have been considered socially or economically disadvantaged.
These businesses are often referred to as Minority Business Enterprises (MBEs), Women Business Enterprises (WBEs), Disadvantaged Business Enterprises (DBEs), or M/WBEs, in general. There are programs at the federal, state, local, and private levels aimed at providing more contracting opportunities to these businesses in the form of sole-source contracts and set-asides in order to meet various participation goals. M/WBE certifications also provide enrolled businesses with access to training and mentorship programs, networking opportunities, and affordable loans and grants.
This guide will cover the following diversity certifications commonly used in the construction industry:
Trade contractors who hold diversity certificates can get a leg up with general contractors who are needing to award a certain percentage of a project’s contracts to M/WBEs. At the very least, certified contractors may find themselves receiving more invitations to bid (ITBs) from general contractors who need to show they made a good faith effort to meet participation goals.
General contractors can also obtain diversity certifications if they meet the requirements of the certifying agency. Prime contractors should ask subcontractors to provide copies of their M/WBE certifications during their prequalification process. This will make it easier to hit participation goals or prove good faith efforts were made when soliciting bids from subcontractors and suppliers.
Certification requirements can differ greatly among the various agencies at the federal, state, and local levels. This means your business may need more than one certification depending on the state or jurisdiction you are working in and requirements from the project owner. There are also some third-party organizations that offer certification that may or may not meet the requirements of the contracting agency.
On one hand, some certifications and programs require the owner or owners to also be US citizens while others only require legal status, such as having a valid green card. On another hand, for many federal contracts the certification is done through the US Small Business Administration (SBA) so in addition to being a member of an underrepresented group, you must also be classified as a small business.
Here’s a look at some of the various programs and certifications available to M/WBEs.
The Disadvantaged Business Enterprise program was established in 1983 by Congress and is run by the US Department of Transportation (USDOT). The program aims to promote participation and provide assistance to small businesses owned and controlled by socially and economically disadvantaged individuals on transportation, transit, and airport projects receiving federal funds.
DBE certification is conducted by each state’s Unified Certification Program (UCP) and provides reciprocity to all state and local agencies that receive Federal DOT money.
WBE certification is reserved for businesses that are 51% owned, operated, controlled, and managed by a woman or women. Certification is commonly done by a state agency or through a third-party organization such as the National Women Business Owners Corporation, US Women’s Chamber of Commerce (USWC), or Women’s Business Enterprise National Council.
Many public state and local construction projects have set-asides for WBE participation, as well as some private sector construction projects.
The Women-Owned Small Business (WOSB) Federal Contracts program offers set-asides for WOSBs on federal contracting opportunities. The SBA provides certification for WOSBs as well as Economically Disadvantaged Women-Owned Small Businesses (EDWOSBs).
To be eligible for WOSB certification, a company has to meet SBA small business size standards, be at least 51% owned and controlled by women who are U.S. citizens, and have women in charge of long-term decisions and day-to-day operations.
EDWOSB certification must meet the same eligibility requirements as WOSBs. The must also be owned and controlled by one or women, each with a personal net worth less than $850,000, an average adjusted gross income of $400,000 over the past three years, and $6.5 million or less in personal assets.
Many states offer Small Business Enterprise (SBE) certification and provide set-asides for contracting opportunities. Eligibility requirements vary depending on the state but typically require the business to be headquartered in the state and be below a threshold for net or gross income and number of employees. For example, in North Carolina a company must operate for profit, have an annual net income that doesn’t exceed $1.5 million, and have fewer than 100 employees.
For federal contracts, the SBA has established size standards based on a company’s North American Industry Classification System (NAICS) to determine eligibility for SBE set-asides or contracts reserved just for SBEs. For construction, the SBA doesn’t have a number of employees threshold but annual receipts. For construction of buildings (general contractors) the size standard is $45 million but only $19 million from most trade and specialty contractors.
The 8(a) Business Development program was authorized under the Small Business Act. It allowed the SBA to develop a program to provide training and federal contracting opportunities to experienced SBEs who are socially and economically disadvantaged. The 8(a) certification is good for a maximum of nine years and is a one-time only program.
To receive 8(a) certification you have to be a small business that is at least 51% owned and controlled by a U.S. citizen that is socially or economically disadvantaged. The owner must have a personal net worth of $850,000 or less, adjusted gross income of $400,000 or less, and assets of $6.5 million or less. The owner must also demonstrate strong character and a potential for success such as being in business for two or more years.
Certification in the 8(a) Business Development program is overseen by the SBA. Participants must certify annually that they meet the statutory and regulatory requirements to maintain their certification.
A Minority Business Enterprise (MBE) is a company that is 51% owned, operated, and controlled by individuals who are U.S. citizens and identify as African American, Asian, Pacific Islander, Hispanic, or Native American.
MBE certification is typically done by state and local agencies. Third-party organizations such as the National Minority Supplier Development Council (NMSDC) also provide MBE certification that is commonly recognized by state and local agencies.
An African American Business Enterprise (AABE) is an MBE that is 51% owned, operated, and controlled by individuals who are U.S. citizens and identify as African American. Certification can be done through a state or federal MBE program or by a third-party certification organization such as the NMSDC or ByBlack.
An Asian American Business Enterprise (ABE) is an MBE that is 51% owned, operated, and controlled by individuals who are U.S. citizens and identify as Asian American. Certification can be done through a state or federal MBE program or by a third-party certification organization such as the NMSDC or the U.S. Pan Asian American Chamber of Commerce.
A Hispanic Business Enterprise (HBE) is an MBE that is 51% owned, operated, and controlled by individuals who are U.S. citizens and identify as Hispanic. Certification can be done through a state or federal MBE program or by a third-party certification organization such as the NMSDC.
A Native American Business Enterprise (NABE) is an MBE that is 51% owned, operated, and controlled by individuals who are U.S. citizens and identify as Native American. Certification can be done through a state or federal MBE program or by a third-party certification organization such as the NMSDC or the National Native American Supplier Council.
An LGBT Business Enterprise (LGBTBE) is a business that is 51% owned, operated, and controlled by individuals who are U.S. citizens and identify as lesbian, gay, bisexual, or transgender. Certification can be done through the National LGBT Chamber of Commerce.
An LGBTBE could also be certified as an MBE or WBE if the owners are part of a recognized minority group or are women. States like New York, Massachusetts, and Pennsylvania have established diversity initiatives or set-asides that either directly target or include LGBTBEs.
A Historically Underutilized Business (HUB) that is at least 51% owned and controlled by a person or persons from a historically underrepresented group. This can be women, minorities, disabled people, or service-disabled veterans, among other groups, depending on the specific HUB program. There are HUB programs at the federal, state, and local levels and certification requirements can vary among the various agencies.
For example, the federal HUBZone program administered by the SBA requires that the business be classified as a small business based on their size standards. The business must also be 51% owned and controlled by U.S. citizens, a Community Development Corporation, an agricultural cooperative, an Alaska Native corporation, a Native Hawaiian organization, or an Indian tribe. The business must also have its main office in a HUBZone and 35% of employees must live in a HUBZone. HUBZone maps are updated every five years.
A Disability-Owned Business Enterprise (DOBE) is a for-profit business that is 51% owned, operated, and controlled by an individual or individuals with a disability who are U.S. citizens. Certification is done by Disability:IN, formerly known as the U.S. Business Leadership Network (USBLN).
Disability:IN also provides Veteran Disability-Owned Business Enterprise (V-DOBE) certification for veterans with disabilities that were not incurred during their military service and Service-Disabled Veteran Disability-Owned Business Enterprises (SDV-DOBE) for veterans who were disabled during their time in military service.
A Veteran-Owned Small Business (VOSB) is a small business (based on SBA size standards) that is 51% owned, operated, and controlled by an individual or individuals who are veterans. VOSB certification is currently handled by the SBA after previously being administered by the U.S. Department of Veterans Affairs (VA).
In addition to federal SBE opportunities, VOSBs are also eligible to pursue sole-source and set-aside contracts at the U.S. Department of Veterans Affairs (VA) under the VA’s Vets First program.
A Service-Disabled Veteran-Owned Small Business (SDVOSB) is a small business (based on SBA size standards) that is 51% owned, operated, and controlled by an individual or individuals who are veterans and sustained a disability during their time in the service. SDVOSB certification is done through the SBA.
In addition to federal SBE opportunities, SDVOSBs are also eligible to pursue SDVOSB sole-source and set-aside contracts throughout the federal government.
Area simplifies the process for employers to request, collect, and store M/WBE certifications from all their contractors. For contractors, uploading all your certifications into Area is super simple and you’ll receive automated alerts and reminders when your M/WBE certifications are set to expire and need to be renewed.