173.05 DBE ELIGIBILITY AND CERTIFICATION.
(a) Each business, including the DBE partner in a joint venture, wishing to participate in City contracts as a DBE, shall complete and submit a DBE application. Each entity wishing to participate as a joint venture DBE shall in addition complete and submit a DBE joint venture application. The applications shall be signed by the authorized representative of the business entity and shall be sworn to before a notary public. A business seeking certification as a DBE shall submit the required application with its bid.
(b) The MBE Officer shall apply the following standards in determining whether a business enterprise qualifies for DBE status:
(1) Bona fide minority group membership, including women, shall be established on the basis of the individual's claim that he or she is a member of a minority group and is so regarded by that particular minority community.
(2) An eligible DBE under this part shall be an independent business and shall be a small business concern. The ownership and control by disadvantaged individuals shall be real, substantial and continuing and shall go beyond the pro forma ownership of the firm as reflected in its ownership documents. The disadvantaged individuals shall enjoy the customary incidents of ownership and shall share in the risks and profits commensurate with their ownership interests, as demonstrated by an examination of the substance rather than form of arrangements. Recognition of the business as a separate entity for tax or corporate purposes is not necessarily sufficient for recognition as a DBE. In determining whether a potential DBE is an independent business, the MBE Officer shall consider the date the business was established, the adequacy of its resources for the work of the contract and the degree to which financial, equipment leasing and other relationships with non-disadvantaged individual firms vary from industry practice.
(3) The disadvantaged individuals who are owners shall also possess the power to direct or cause the direction of the management and policies of the firm and to make the day-to-day as well as major decisions on matters of management, policy and operations. The firm shall not be subject to any formal or informal restrictions which limit the customary discretion of the disadvantaged individual. There shall be no restrictions through, for example, bylaw provisions, partnership agreements or requirements of the articles of incorporation for cumulative voting rights or otherwise that prevent disadvantaged individuals, without the cooperation or vote of any owner who is not a disadvantaged individual, from making a business decision of the firm.
(4) If the owners of the firm who are not disadvantaged individuals are disproportionately responsible for the operation of the firm, then the firm is not controlled by disadvantaged individuals and shall not be considered a DBE within the meaning of this chapter. Where the actual management of the firm is contracted out to individuals, other than the owner, those persons who have the ultimate power to hire and fire the managers can, for the purpose of this part, be considered as controlling the business.
(5) All securities which constitute ownership and/or control of a corporation for purposes of establishing it as a DBE under this part shall be held directly by disadvantaged individuals. No securities held in trust, or by any guardian for a minor, shall be considered as held by a disadvantaged individual in determining the ownership or control of a corporation.
(6) The contributions of capital or expertise by the disadvantaged individual owners to acquire their interests in the firm shall be real and substantial. Examples of insufficient contributions include a promise to contribute capital, a note payable to the firm or its owners who are not socially and economically disadvantaged, or the mere participation as an employee, rather than as a manager.
(7) Newly formed firms and firms whose ownership and/or control has changed since the date of the advertisement of the contract shall be reviewed to determine the reasons for the timing of the formation of or change in the firm.
(8) A previous and/or continuing employer-employee relationship between or among present owners shall be reviewed to ensure that the employee-owner has management responsibilities and capabilities discussed in this section.
(9) Any relationship between a DBE and a business which is not a DBE which has an interest in the DBE shall be reviewed to determine if the interest of the non-DBE conflicts with the ownership and control requirements of this section.
(c) A joint venture is eligible under this section if the DBE partner of the joint venture meets the standards for an eligible DBE set forth above and the DBE partner is responsible for a clearly defined portion of the work to be performed and shares in the ownership, control, management responsibilities, risks and profits of the joint venture.
(d) A business wishing to be certified as a DBE or joint venture DBE shall provide such additional information to the City as the MBE Officer requests.
(e) If, after review, the MBE Officer determines that the applying business enterprise is a bona fide DBE, he shall certify the business enterprise as a DBE firm and issue a DBE certification number to the firm. The certification shall be effective as long as the information in the relevant DBE application continues to be true, but no longer than for a period of twelve months.
(f) Once certified, a DBE shall update its DBE application annually. If at any time there is a change in ownership or control of the firm, the DBE shall submit a new DBE application.
(Ord. 93-001. Passed 1-5-93.)