Can Virginia certify a Florida-based business as a 'small business' when Florida won't extend its minority business certification to Virginia firms?

Plain-English summary

Virginia's Department of Minority Business Enterprise asked whether it could certify a Florida-based firm as a "small business" in Virginia. The firm met the Virginia substantive definition of small business. The catch was reciprocity: Virginia's certification statute, § 2.2-1403(B), tells the Department to deny certification to firms from states that deny "like certifications" to Virginia-based small, women-owned, or minority-owned businesses.

The AG concluded that Florida had set things up in a way that triggered the reciprocity bar. Virginia certifies small, women-owned, and minority-owned businesses as three separate categories. Florida rolled all three into one bundled certification called "minority business enterprise," available only to small businesses domiciled in Florida. A Virginia-based firm could not apply for it.

The AG read that as a denial of "like certifications" to Virginia firms. Because Florida's combined small/women/minority certification path was closed to Virginia businesses, the reciprocity clause kicked in and required Virginia to refuse certification to Florida-based firms across all three of Virginia's separate categories. The June 29 opinion revised and replaced an earlier May 11, 2012 letter to the same Director.

Currency note

This opinion was issued in 2012. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Why couldn't Virginia just look at the Virginia small-business definition and ignore Florida?
Because the General Assembly built reciprocity into the certification statute. Section 2.2-1403(B) directs the Department to deny certification to vendors from states that deny like certifications to Virginia firms, or that prefer their own in-state firms. The reciprocity check is part of the statute, not a discretionary policy.

Was this just about small business, or also women-owned and minority-owned?
The AG read the statutes together. Because Florida bundled all three categories into a single certification that excluded Virginia firms, the reciprocity defect blocked Virginia certification of Florida firms in all three categories.

Did the opinion say anything about constitutional concerns with this kind of in-state preference?
No. The opinion stayed within the statutory question. Whether Florida's domicile requirement might raise dormant Commerce Clause or other constitutional issues was outside the request.

Could a Florida firm with a Virginia branch or subsidiary still apply in Virginia?
The opinion didn't reach that. The factual setup was a Florida-domiciled firm, not a Florida firm with a separately incorporated Virginia presence. Anything beyond the precise pattern presented would have been speculation.

Background and statutory framework

Virginia's Department of Minority Business Enterprise was authorized under Va. Code § 2.2-1403(B) to adopt regulations implementing certification programs for small, women-owned, and minority-owned businesses. The same subsection contained the reciprocity bar:

Such certification programs shall deny certification to vendors from states that deny like certifications to Virginia-based small, women-owned or minority-owned businesses or that provide a preference for small, women-owned, or minority-owned businesses based in that state that is not available to Virginia-based businesses.

Florida, by contrast, combined all three criteria into a single certification under the label "minority business enterprise." Small businesses seeking certification with Florida's Division of Purchasing did so within that framework, but the certification and its associated benefits were available only to small businesses domiciled in Florida. Because Virginia firms could not seek it, the AG read Florida as denying a "like certification" to Virginia businesses.

Citations

• Va. Code § 2.2-505 (Attorney General opinions)
• Va. Code § 2.2-1403 (Department certification authority and reciprocity)

Source

• Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
• Original PDF: https://www.oag.state.va.us/files/Opinions/2012/12-031_McPherson_rvsd.pdf

Original opinion text

COMMONWEALTH of VIRGINIA
Office of the Attorney General
Kenneth T. Cuccinelli, II
Attorney General

June 29, 2012

Ms. Ida O. McPherson
Director, Department of Minority Business Enterprise
1111 East Main Street, Suite 300
Richmond, Virginia 23219

Dear Ms. McPherson:
I am responding to your request for an official advisory opinion in accordance with § 2.2-505 of the Code of Virginia. [This opinion revises and supersedes my letter to you dated May 11, 2012, which is hereby withdrawn.]

Issue Presented
You ask whether the Department of Minority Business Enterprise ("the Department") may certify as a "small business" a Florida-based company meeting the Virginia definition of "small business" when the State of Florida has no separate small business certification program and denies Virginia firms the benefits of its "minority business enterprise" certification program.

Response
It is my opinion that the Department may not certify a Florida-based firm as a "small business" in Virginia, because Florida makes a "minority business enterprise" certification available to certain small businesses based in Florida but does not permit similar businesses based in Virginia to apply for that certification or its associated benefits.

Applicable Law and Discussion
Pursuant to § 2.2-1403(B) of the Code of Virginia, the Director of Virginia's Department of Minority Business Enterprise is authorized to "[a]dopt regulations to implement certification programs for small, women- and minority-owned businesses . . . ." Generally, such certification programs are not limited to Virginia-based enterprises; however, § 2.2-1403(B) further provides that

Such certification programs shall deny certification to vendors from states that deny like certifications to Virginia-based small, women-owned or minority-owned businesses or that provide a preference for small, women-owned, or minority-owned businesses based in that state that is not available to Virginia-based businesses.

The determination of whether Florida businesses are eligible for certification in Virginia, therefore, depends on Florida's treatment of Virginia-based firms when they apply for like certifications in Florida. While Virginia certifies small, women-owned, and minority-owned businesses separately, Florida combines all three criteria in the certification it provides under the label "minority business enterprise." Therefore, the eligibility of Virginia firms to seek this certification in Florida is a precondition of Florida-based firms' eligibility to seek all three certifications in Virginia. In particular, small businesses seeking certification with Florida's Division of Purchasing do so within the framework of this certification, but it is available only to small businesses that are domiciled in Florida. Because Florida's certification and its associated benefits are not available to small businesses based in Virginia, the Department, pursuant to § 2.2-1403(B), is precluded from certifying a Florida-based business as a small business in Virginia.

Conclusion
Accordingly, it is my opinion that the Department may not certify a Florida-based firm as a "small business" in Virginia, because Florida makes a "minority business enterprise" certification available to certain small businesses based in Florida but does not permit similar businesses based in Virginia to apply for that certification or its associated benefits.

With kindest regards, I am

Kenneth T. Cuccinelli, II
Attorney General