GOOD MORNING CONGRESSWOMAN COLLINS AND DISTINGUISHED MEMBERS OF THE HOUSE COMMITTEE ON GOVERNMENT OPERATIONS, SUBCOMITTEE ON GOVERNMENT ACTIVITIES AND TRANSPORTATION. MY NAME IS MICHAEL L.

NAIRNE, DEPUTY SECRETARY TO GOVERNOR MARIO M. CUOMO OF THE STATE OF NEW YORK AND DIRECTOR OF THE GOVERNOR'S OFFICE OF CONTRACT COMPLIANCE AND MINORITY AND WOMEN-OWNED BUSINESS ENTERPRISE. ON BEHALF OF GOVERNOR CUOMO, I AM PLEASED TO EXPRESS HIS AND MY APPRECIATION FOR THE OPPORTUNITY YOU HAVE GIVEN ME TO ADDRESS

THIS COMMITTEE AND TO RESPOND TO ANY QUESTIONS YOU MAY HAVE.

IN RESPONSE TO YOUR INVITATION OF SEPTEMBER 22, I WILL LIMIT MY TESTIMONY TO NEW YORK STATE'S UNIFIED D/W/MBE CERTIFICATION PROGRAM AND THE PARTICIPATION OF UMTA RECIPIENTS.

UPON ASSUMING THE RESPONSIBILITIES OF MY POSITION TWO AND

ONE HALF YEARS AGO, I DIRECTED MY STAFF TO CAREFULLY EXAMINE THE EXISTING METHODS USED BY DIFFERENT STATE AGENCIES TO VERIFY THE OWNERSHIP AND CONTROL OF PURPORTED MINORITY AND WOMEN BUSINESSES. WHAT WE FOUND AS A RESULT OF OUR ANALYSIS WAS CERTAIN AGENCIES HAD CERTIFICATION PROGRAMS THAT INCLUDED DESK AND FIELD AUDITS, OTHER AGENCIES HAD VARIOUS FORMS OF SELF-IDENTIFYING PROGRAMS THAT AT BEST INCLUDED A DESK AUDIT, AND STILL OTHER AGENCIES USED PRIVATE CONSULTANTS TO CERTIFY THAT A BUSINESS WAS MINORITY OR WOMEN-OWNED. AS A RESULT THERE WERE NUMEROUS COMPLAINTS FROM BUSINESS OWNERS OF HAVING TO GO THROUGH THE CERTIFICATION PROCESS MORE THAN ONE TIME, AT CONSIDERABLE EXPENSE WITH ACCOMPANYING DELAYS AND BACKLOGS AMONG STATE AGENCIES PROCESSING THE THE PROGRAM, AT THIS STAGE, COULD ONLY BE

APPLICATIONS.

CHARACTERIZED AS DUPLICATIVE AND INEFFICIENT.

COINCIDENTALLY, AT THIS TIME, THE NEW YORK STATE INVESTIGATION COMMISSION RELEASED THE RESULTS OF A SERIES OF HEARINGS THROUGHOUT NEW YORK AND FOUND WIDESPREAD FRAUD AND ABUSE

IN THE PROGRAM. BASED ON THIS EVIDENCE THEY RECOMMENDED A UNIFIED CERTIFICATION PROGRAM. IN ADDITION, IN JULY, 1983 THE UNITED STATES DEPARTMENT OF TRANSPORTATION IN THE FEDERAL REGISTER STATED THAT IT WOULD BE USEFUL FOR RECIPIENTS IN A GEOGRAPHICAL AREA TO EXPLORE SETTING UP A CERTIFICATION

CONSORTIUM.

THEREFORE, IN OUR JUDGEMENT THE BEST POSSIBLE METHOD OF EFFICIENTLY AND EXPEDITIOUSLY DETERMINING BUSINESS OWNERSHIP WOULD BE THE ESTABLISHMENT OF A CONSORTIUM OF AGENCIES ALL UNDER A UNIFIED STATE PROGRAM. WE DECIDED TO FOCUS OUR EFFORTS ON CREATING A SYSTEM WHEREBY MY OFFICE WOULD BE RESPONSIBLE FOR THE OVERALL SUPERVISION OF THE CERTIFICATION PROGRAM AND WITH THE COOPERATION OF CERTAIN STATE AGENCIES AND AUTHORITIES THE PROGRAM WOULD REMAIN MANAGEABLE AND SELF-CONTAINED.

MY OFFICE DESIGNED SUCH AS PROGRAM WHICH WAS APPROVED BY GOVERNOR CUOMO IN OCTOBER OF 1984. ONCE APPROVED, WE HIRED A CONSULTANT TO DESIGN A PROCEDURES MANUAL, THAT WOULD MINIMIZE THE SUBJECTIVITY OF DECISIONS, TO DEVELOP ONE APPLICATION AND TRAIN

ALL AGENCY PERSONNEL IN THE SAME PROGRAM.

ONE AGENCY WOULD BE DESIGNATED THE INTAKE AGENCY AND SEVERAL OTHERS WOULD SERVE AS CERTIFICATION AGENCIES, THEREBY ELIMINATING THE BURDEN ON ANY SINGLE AGENCY AND MAXIMIZING THE LIMITED STAFF AND RESOURCES AVAILABLE. THIS CONSORTIA OF AGENCIES WOULD

PARTICIPATE EQUALLY IN PROVIDING A STANDARDIZED APPROACH TO THE

CERTIFICATION OF

FIRMS PRESENTING THEMSELVES AS D/W/MBES. AGENCIES WHICH WERE ASKED TO PARTICIPATE IN THE CERTIFICATION PROCESS WERE SELECTED ON THE BASIS OF THEIR LEGAL AUTHORITY, THE ORIGINAL CONSORTIA

I.E., STATE LAW OR FEDERAL REGULATION.

8.

METROPOLITAN TRANSPORTATION AUTHORITY

WE WERE PREPARED TO IMPLEMENT THE PROGRAM IN JUNE OF 1985, WHEN TWO (2) OF THE FOUR (4) UMTA GRANTEES, NYC TRANSIT AUTHORITY AND THE METROPOLITAN TRANSPORTATION AUTHORITY DECIDED TO PULL OUT OF THE PROGRAM. A SERIES OF MEETINGS WERE HELD BETWEEN THE GOVERNOR'S OFFICE, BOTH AUTHORITIES AND FEDERAL UMTA PERSONNEL. SO AS NOT TO DELAY FURTHER IMPLEMENTATION OF THE PROGRAM, WE PROCEEDED WITHOUT THEM AND FORMALLY BEGAN NYS'S UNIFIED M/WBE CERTIFICATION PROGRAM ON AUGUST 21, 1985.

THE PROGRAM SERVES TO PROVIDE A POOL OF VERIFIED FIRMS FOR

USE IN PROCUREMENT PROGRAMS FOR ALL STATE AGENCIES AND MOST

AUTHORITIES (E.G., THE URBAN DEVELOPMENT CORP., DORMITORY AUTHORITY, BATTERY PARK CITY AUTHORITY, NIAGARA FRONTIER TRANSIT AUTHORITY AND JACOB K. JAVITS CONVENTION CENTER).

ONLY ONE APPLICATION IS NECESSARY AND, IF APPROVED,

CERTIFIES THE COMPANY FOR UP TO TWO YEARS AND ELIMINATES THE NEED

FOR A BUSINESS TO COMPLETE ELIGIBILITY FORMS FOR EACH INDIVIDUAL STATE AGENCY AND/OR AUTHORITY. UNDER THE STATEWIDE CERTIFICATION PROGRAM, WHEN THE CLASSIFICATION OF A FIRM IS DETERMINED, THAT FIRM WILL BE RECOGNIZED BY ALL STATE AGENCIES AND MOST

AUTHORITIES AS A BONA FIDE MINORITY, WOMEN, OR DISADVANTAGED BUSINESS ENTERPRISE.

THE N.Y.S. DEPARTMENT OF COMMERCE MAINTAINS

A CENTRAL REGISTRY OF FIRMS FROM WHICH A DIRECTORY OF FIRMS IS

DECERTIFIED.

PUBLISHED AND CONTINUALLY UPDATED. COPIES OF THE DIRECTORY ARE ISSUED TO ALL STATE AGENCIES AND AUTHORITIES AND AVAILABLE TO CORPORATIONS AND LOCAL GOVERNMENTS. FOR A $16 FEE, THE DIRECTORY MAY BE PURCHASED WHICH ALSO ENTITLES THE SUBSCRIBER TO RECEIVE MONTHLY UPDATES OF BUSINESSES NEWLY CERTIFIED OR RECENTLY APPROXIMATELY 1200 BUSINESSES ARE CONTAINED IN THE DIRECTORY OF CERTIFIED MINORITY AND WOMEN-OWNED BUSINESS ENTERPRISES. OF THAT NUMBER, 473 ARE BUSINESSES CERTIFIED UNDER THE UNIFIED STATE CERTIFICATION PROGRAM BEGUN ON AUGUST 21, 1985. THE REMAINING 727 BUSINESSES ARE THOSE THAT HAVE BEEN GRANDFATHERED INTO THE CURRENT PROGRAM. THESE ARE FIRMS THAT HAD BEEN CERTIFIED BY INDIVIDUAL STATE AGENCIES PRIOR TO THE COMMENCEMENT OF THE UNIFIED CERTIFICATION PROGRAM. INCLUDED AMONG INFORMATION LISTED IN THE DIRECTORY IS THE FIRM'S NAME, ADDRESS AND CONTACT PERSON; STATUS (I.E., MBE, WBE), WHERE ANNUAL SALES, TYPE OF BUSINESS OR SERVICE CONDUCTED AND/OR GOODS PRODUCED.

AVAILABLE

ANY BUSINESS OWNED AND OPERATED BY MINORITIES, WOMEN AND

THOSE WHO MAY BE ELIGIBLE AS DISADVANTAGED BUSINESS ENTERPRISES

PURSUANT TO FEDERAL REGULATION MAY APPLY FOR CERTIFICATION. BRIEFLY STATED, THE CRITERIA IS:

O MINORITY: BLACK, HISPANIC, ASIAN, PACIFIC ISLANDERS AND

OWNERSHIP: AT LEAST 51% OF THE COMPANY, MANAGERIAL AND

OPERATIONAL CONTROL OF THE COMPANY

IN BUSINESS, GENERALLY, FOR AT LEAST ONE (1) YEAR

FOR DBE STATUS: U.S. SMALL BUSINESS ADMINISTRATION SIZE STANDARDS APPLY

IT IS IMPORTANT TO NOTE THAT A COMPANY MAY APPLY FOR MORE THAN ONE STATUS AT THE TIME OF APPLICATION (I.E., MBE AND WBE). WHILE THE GRANTING OF CERTIFICATION DOES NOT DETERMINE CAPABILITY OF A FIRM, SOME AGENCIES MAY REQUIRE A SEPARATE REVIEW TO DETERMINE PERFORMANCE CAPABILITY.

THE DEPARTMENT OF COMMERCE SERVES AS THE INTAKE AGENCY. COMPLETED CERTIFICATION APPLICATIONS AND SUPPORTING DOCUMENTS ARE REVIEWED FOR THEIR COMPLETENESS. IF ALL REQUIRED INFORMATION IS NOT RECEIVED, WITHIN 10 DAYS WRITTEN NOTICE WILL BE GIVEN TO THE APPLICANT AND HE/SHE HAS 30 DAYS TO CURE THE DEFICIENCY. WHEN COMPLETE, A DETERMINATION WILL THEN BE MADE AS TO WHICH OF THE FIVE (5) CERTIFYING AGENCIES WILL BE RESPONSIBLE FOR THE VERIFICATION OF DATA AND CERTIFICATION OF M/W/DBE STATUS.

AFTER THE FILE IS RECEIVED BY THE AGENCY RESPONSIBLE FOR THE

CERTIFICATION, THE INFORMATION CONTAINED THEREIN MUST BE EXAMINED FOR VERIFICATION OF THE CONTENT OF THE DOCUMENTS. THE AGENCY HAS THE AUTHORITY TO REQUEST ADDITIONAL INFORMATION IF SUCH IS