(A) To ensure that the DBE program/policy benefits only firms owned and controlled by minorities or women, the Commuter Rail Division is required to certify the eligibility of each DBE that wishes to participate as a DBE in the procurement process of the Commuter Rail Division. This requirement is consistent with the intent of the authority to ensure that traditionally socially and economically disadvantaged individuals are given full opportunity to participate in the programs of the CRD, and to ensure that this objective is not diluted by fraudulent claims of minority or female ownership status.
(B) Joint ventures may be eligible to participate for certification in accordance with the CRD’s program/policy if the DBE partner of the joint venture meets the standards for an eligible DBE as set forth herein, the DBE partner is responsible for a clearly defined portion of the work to be performed and shares in ownership, control, management responsibilities, risks and profits of the joint venture.
(C) Firms wishing to be certified by the CRD as a DBE, or joint venture DBE, shall supply such information as may be requested by the CRD in order to make a determination. Information supplied shall be made under oath, and misrepresentation is grounds for terminating any contract which may have been awarded in reliance thereon and may result in referral to the Secretary of the Department of Transportation for further action.
(D) Based upon the Department of Transportation guidelines, the CRD has established the following standards in determining whether a firm is owned and controlled by one or more minorities or women and, therefore, eligible for certification as an DBE.
(1) Bona fide minority group membership may 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. However, the authority is not required to accept this claim if it is determined to be invalid.
(2) An eligible business enterprise shall be an independent business. The ownership and control by minorities or women shall go beyond the pro forma ownership of the firm as reflected in its ownership documents. In determining whether a potential MBE or WBE is an independent business, the CRD shall consider all relevant factors, including the date the business was established, the adequacy of its resources to perform the contract and the degree to which financial and other relationships with non-minority persons or firms vary from industry practice.
(3) The minority or women owners 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 the form of arrangements. Recognition of the business as a separate entity for tax or corporate purposes is not necessarily sufficient for certification.
(4) The minority or women owners shall 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 the major decisions on matters of finance, management, policy and operations.
(5) The firm shall not be subject to any formal or informal restrictions which limit the customary discretion of the minority or women owners. There shall be no restrictions through, for example, by-law provisions, partnership agreements or charter requirements for cumulative voting rights or otherwise which prevent the minority or women owners from making business decisions of the firm, without the concurrence, cooperation or vote of any owner who is not a minority or female.
(6) If the owners of the firm who are not minorities or women are disproportionately responsible for the operation of the firm, then the firm is not controlled by minorities or women and shall not be considered an eligible participant in this program. 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 may be considered as controlling the business.
(7) All securities which constitute ownership and/or control of a corporation for purposes of establishing it as an eligible participant shall be held directly by minorities or females. No securities held in trust, or by any guardian for a minor, shall be considered as held by a minority or a female in determining the ownership or control of a corporation.
(8) The contributions of capital or expertise by the minority or women 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.
(E) In addition to the foregoing standards, the CRD shall give special attention to the following circumstances in determining eligibility for certification.
(1) Newly formed firms and firms whose ownership and/or control has changed since the date of the advertisement of the contract will be closely scrutinized to determine the reasons for the timing of the formation of, or change in, the firm.
(2) A previous and/or continuing employer-employee relationship between or among present owners will be carefully reviewed to ensure that the employee-owner has management responsibilities and capabilities.
(3) Any relationship between an MBE and a business which is not minority or female owned, which has an interest in the MBE, will be carefully reviewed to determine if the interest of the non-MBE conflicts with the ownership and control requirements of this program/policy.
(F) Whenever there is a change in ownership or control of a certified firm, the firm is required to provide prompt notification to the CRD.
(G) The Commuter Rail Division may, in its discretion, accept the certification of an applicant’s status made by any element of the Department of Transportation, the SBA or any other agency that uses essentially the same definitions and ownership and control criteria as adopted herein. The burden of proof rests with the applicant to demonstrate to the CRD that the certification was obtained based upon procedures which are parallel to, and at least as effective as, those adopted in this program/policy.
(H) Firms denied certification shall be advised in writing by the CRD and informed of their right to appeal. The denial of certification shall be final for that contract and other contracts being let by the CRD at the time of the denial of certification; however, firms may correct deficiencies in their ownership and control and apply for certification for future contracts.
(Ord. CRB 84-42, passed 9-14-1984)