New York Minority and Women-Owned Business Enterprise Amendments: What Businesses Need to Know

New York’s proposed Minority and Women-owned Business Enterprise (“MWBE”) amendments affect certification requirements, expand “commercially useful function” (“CUF”), and impact utilization credits. This alert summarizes the MWBE amendments’ practical implications.

Senator Baskin, the primary sponsor, shared with Hodgson Russ that the amendments will ensure “no more pausing people's MWBE status while they are under review for recertification compliance.”

Certification Criteria: Ownership, Operation, and Control

The amendments reshape certification eligibility in two primary ways: a more accommodating view of ownership and a more demanding standard for operational authority and technical control.¹ The proposal adopts a more pragmatic concept of ownership, recognizing passive investors and family‑based ownership transfers as legitimate capital structures.² Operation and control requirements are more demanding, reinforcing that certification hinges on the qualifying owner’s real authority, industry‑specific competence, and ability to make and oversee critical decisions.³

The amendments also introduced Professional Declaration of Eligibility applications (“PDEs”).⁴ PDEs permit an expedited certification route in which certain New York–licensed professionals – attorneys, CPAs, architects, engineers, and land surveyors with at least five years of licensure – may attest that an applicant meets all eligibility requirements.⁵

Commercially Useful Function (“CUF”)

The amendments make CUF a core requirement for certification, utilization credit, and post‑award review.⁶ MWBEs must show they perform meaningful work independently rather than passing tasks through to others. Failure to meet these requirements can lead to loss of credit, penalties, temporary directory removal, or revocation.⁷ New York’s new framework mirrors the federal Disadvantaged Business Enterprise (“DBE”) model by capping credit for participation that is genuine but limited, particularly for brokers, distributors, and suppliers.⁸

Utilization Credits

The amendments codify previously informal guidance on utilization credits. Utilization credit plan forms must now include the commodity codes for each MWBE and impose a good‑faith requirement on contractors to engage every MWBE listed in the approved plan.⁹ The Division of Minority and Women’s Business Development (“Division”) retains authority to assign and manage industry and commodity codes, which in turn control what work an MWBE can pursue.¹⁰

Credit for MWBE utilization shall only be given if the certified MWBE:

• Provided a commercially useful function.
• Was listed in the Directory maintained by the Division at the time of the contract.
• Commodity codes assigned by the Division align with the scope of work the MWBE was paid to perform at the time of the contract.
• Has an approved utilization plan.¹¹

Only the work performed directly by certified MWBEs, whether prime or subcontract, can be counted for utilization credit.¹² The amendments provide definitions for roles like manufacturer, supplier, passive investor, and distributor.¹³ These distinctions affect how utilization credit is calculated.¹⁴

A contractor may request modification to a utilization plan only after notifying affected MWBEs, giving them time to ask questions or comment, and submitting the revised plan for Division review before it becomes final.¹⁵ A modification request is allowed only when the certified MWBE:

• Does not respond despite documented email, mail, and phone outreach.
• Formally declines to perform the agreed‑upon work.
• Is no longer certified.
• States in writing that it cannot perform the required commercially useful function.
• Additional work arises that requires adding new MWBEs.¹⁶

For planning purposes, the amendments require those seeking MWBE utilization credit to maintain active goal plans, conduct growth planning, provide more detailed reporting, and complete required training.¹⁷

Hodgson Russ’ Take

The MWBE amendments balance pro‑business streamlining with stronger safeguards against fraud and misrepresentation. For more information, contact Adam Perry, Glen Doherty, or a member of the Hodgson Russ Labor and Employment Practice. (Law Clerk Ana Ocasio assisted with this alert).

1. See N.Y. Comp. Codes R. & Regs. tit. 5, § 144.2.
2. § 144.2(b)(3)-(4).
3. § 144.2(c)-(d).
4. § 144.9.
5. Id.
6. See § 142.14(c).
7. See § 142.14(c)(2).
8. See 49 C.F.R. 26.55.
9. § 141.8(b)(5), (e).
10. § 144.3.
11. See § 142.7(a).
12. § 142.7(b)(1)-(2).
13. See, e.g., § 140.1(q), (dd), (ll), (xx).
14. The amendments provide that manufacturers and self-performing subcontractors receive full (100%) credit; suppliers receive 60% credit for construction contracts, and are eligible for 100% credit for non-construction contracts; distributors receive 40% credit; and brokers receive 10% credit.¹⁴ See id.
15. See § 142.4(a).
16. See § 142.5(a)(i)(1).
17. § 141.7(b).