Fla. Admin. Code Ann. R. 60A-9.005 - Certification Eligibility

(1) Applicant businesses shall submit applications for Minority Business Enterprise certification on Form MBE 7500, Application for Minority Business Enterprise Certification, incorporated herein by reference, which can be obtained from the Office.

(2) An applicant business must satisfy paragraphs (a), (b), (c), (d) and (e) below in order to be considered 51 percent owned by minority persons. The ownership exercised by minority persons shall be real, substantial, and continuing, and shall go beyond mere pro forma ownership of the firm as reflected in its ownership documents. In its analysis, the Office may also consider the transferral of ownership percentages with no exchange of capital at fair market value.

(a) The applicant business must satisfy either subparagraphs 1., 2. and 3. below:

1. In a corporate form of organization, the minority shareholders of the corporation must own at least 51 percent of all issued stock. Minority shareholders who own at least 51 percent of each and every class of stock will be presumed to have met this section of the rule. Where the minority shareholders do not own at least 51% of each class of stock, the applicant shall establish that the aggregate of all stock owned by minority shareholders is equal to at least 51% of all issued shares. The applicant may establish that the aggregate of all stock owned by minority shareholders is equal to at least 51% of all issued shares by:

a. Using the par value of the stock, but only where each class of stock has a par value;

b. Using the fair market value of each class of stock;

c. Showing the numerical ratio of stock ownership where all shares, regardless of class, have the same par value or fair market value; or

d. Employing any other method which can be used to determine the ratio of ownership of all classes of stock and which is approved by the Office, or

2. In a partnership form of organization, the minority partners must own at least 51 percent of the partnership, or

3. In any other form of organization, the minority owners must own at least 51 percent of the business interest of the organization, including, but not limited to, 51 percent of the ownership of assets, dividends, and intangible assets such as copyrights and patents.

(b) The minority owners must demonstrate that they share income, earnings, and any other benefits from the business concern which are accorded to any other owner. The minority owners' share of income, earnings and benefits shall be commensurate with the percentage of their ownership in the business concern, including, but not limited to, salaries, draws, bonuses, commissions, insurance coverage, proceeds from business investments and properties, and profit-sharing, and other benefits.

(c) The minority owners must demonstrate that they share in all the risks assumed by the business firm. Such sharing of business risks shall be demonstrated through the minority owners' primary role in decision-making, and negotiation and execution of related transaction documents either as individuals or as officers of the business. The minority owners' sharing in business risks shall be commensurate with their percentage of ownership, including but not limited to, start-up costs and contributions, acquisition of additional ownership interests, third-party agreements, bonding applications and other liabilities. Start-up contributions may be space, cash, equipment, real estate, inventory or services estimated at fair market value. All contributions of capital by the minority owners must be real and substantial. The following are presumed not to be real and substantial capital contributions:

1. Promises to contribute capital;

2. Notes payable to the applicant business;

3. Notes payable to the non-minority owners or to the non-minority family members of any owner; and

4. Past services rendered by the minority persons as an employee, rather than as a decision-maker.

(d) The business firm cannot at any time enter into any agreement, option, scheme, or create any rights of conversion, which, when exercised, would result in less than 51 percent minority ownership or in the loss of the minority owners' control of the business firm.

(e) The minority owners shall not have acquired their majority ownership of at least 51 percent of the applicant business through a transferral of ownership occurring within a minimum of two years, when the previous majority ownership interest in the business was by a non-minority who is or was a relative, former employer, or current employer of the minority persons on whom eligibility is based. This requirement shall not apply to minority persons who are otherwise eligible who take a 51 percent or greater interest in a business that requires professional licensure to operate and who will be the qualifying license holder for the firm when certified.

(3) An applicant must establish that the minority owners possess the authority to control and exercise dominant control over the management and daily operations of the business.

(a) The discretion of the minority owners shall not be subject to any formal or informal restrictions (including, but not limited to, by-law provisions, purchase agreements, employment agreements, partnership agreements, trust agreements or voting rights, whether cumulative or otherwise), which would vary or usurp managerial discretion customary in the industry.

(b) If the applicant business is a corporation and the business affairs of the corporation are managed under the direction of a board of directors as provided by the articles of incorporation or bylaws of the corporation or Section 607.0824, F.S., the articles of incorporation or bylaws must explicitly clarify the number of the board of directors for establishing a quorum, or it will be deemed by this office that a quorum of the board of director's consists of a majority of the number of directors presented by the articles of incorporation or the bylaws.

(c) The minority owners must exercise sufficient management and technical responsibilities and capabilities to maintain control of the business. If the owners of the business who are not minority persons are disproportionately responsible for the operations of the business, then the business is not controlled by minority owners.

(d) The control exercised by the minority owners shall be real, substantial and continuing. In instances where the applicant business is found to be a family-operated business, with duties, responsibilities and decision-making occurring either jointly and mutually among owners and principals, or severally along managerial and operational lines between minority owners and non-minority owners or principals, the minority owners shall not be considered as controlling the business. Where the minority owners substantiate that the assumption of duties is not based on their lack of knowledge or capability to independently make decisions regarding the business' management and day-to-day operations, but on their execution of delegation of duties the minority owners' demonstration of control may not be affected. The minority owners shall establish that they have dominant responsibility for the management and daily operations of the business as follows:

1. The minority owners shall control the purchase of goods, equipment, business inventory and services needed in the day-to-day operation of the business. The minority owners' control of purchasing shall be evidence of their knowledge of products, brands, manufacturers, types of equipment and products and their uses, etc. rather than merely reflective of the minority owners' ministerial execution of the ordering/acquisition of goods.

2. The minority owners shall control the hiring, firing and supervision of all employees, and the setting of employment policies, wages, benefits and other employment conditions. In instances where minority owners have delegated the hiring and firing of employees, the minority owners shall demonstrate that their knowledge and capability is sufficient to evaluate the employees' performance in the given industry.

3. The minority owners shall have knowledge and control of all financial affairs of the business. The ability of any non-minority owner or employee to sign checks and enter into financial transactions on behalf of the business shall be considered in determining financial control. The minority owners shall expressly control the investments, loans to/from stockholders, bonding, payment of general business loans, payroll and establishment of lines of credit.

4. The minority owners shall have managerial capability, knowledge, training, education and experience required to make decisions regarding the operations of the business. In determining the applicant business' eligibility, the Office will review the prior employment and educational backgrounds of the minority owners, the professional skills, training and/or licenses required for the given industry, the previous and existing managerial relationship between and among all owners, especially those who are familially related, and the timing and purpose of management changes. If the minority owners have delegated management and technical responsibility to others, the minority owners must substantiate that they have caused the direction of the management and the technical responsibilities of the business. When the applicant business provides services which require that the business and/or its professional qualifier be licensed, the minority owner shall hold the requisite license issued by the State of Florida or local licensing entity. The minority license holder, need not be the controlling owner of the business, but must hold an ownership interest.

5. The minority owners shall display independence and initiative in seeking and negotiating contracts, accepting and rejecting bids and in conducting all major aspects of the business in regard to any and all bidding and contracting. In instances where the minority owners do not directly seek or negotiate contracts, prepare estimates, or coordinate with contracting officials, but claim to approve or reject bids and contractual agreements, the minority owners shall demonstrate that they have the knowledge and expertise to independently make contractual decisions.

6. The minority owners shall substantiate personal direction and actual involvement with all major aspects of the applicant business. The major aspects shall be defined as those tasks essential to accomplish all objectives and operations related to those services or commodities for which the applicant business requests certification.

(4) To establish that it is a small business concern, the applicant shall:

(a) Demonstrate that it is an independently owned and operated business concern. In assessing business independence, the Office shall consider all relevant factors, including the date the firm was established, the adequacy of its resources, and the degree to which financial, managerial and/or operational relationships exist with other persons and/or business concerns. For purposes of this rule, the Office's consideration of such financial relationships, managerial and/or operational relationships shall not be affected by arrangements made out of necessity or due to the business' inability to secure traditional capitalization through banks, lending institutions or others.

(b) Demonstrate that it is not an affiliate of a non-minority business nor share (on an individual or combined basis) common ownership, directors, management, employees, facilities, inventory, financial resources and expenses, equipment or business operations with a non-minority person and/or non-minority owned business concern which is in the same or an associated field of operation.

(c) To establish that it is a small business concern, the applicant shall demonstrate that the net worth of the business concern, together with its affiliates, does not exceed three (3) million dollars and an average net worth after federal income taxes, excluding any carryover losses, for the preceding two years of not more than two (2) million dollars. In determining the net worth of the business and its affiliates, the Office shall consider the most recent annual financial statement for the business and its affiliates, and in the case of sole proprietorships, annual financial statements for the business and the business owner. If no annual financial statement is available, the applicant may submit a financial statement for any quarter during the previous six (6) months. In determining the business' income, the Office shall consider the two most recent financial statements for the business and/or the most recent federal income tax returns.

(d) To establish that it is a small business concern, the applicant shall provide documentation to demonstrate that it employs 100 or fewer permanent, full-time employees. The number of permanent, full-time employees shall be determined by adding the number of employees the applicant acknowledges to be permanent, full-time employees to the number of permanent positions the applicant needs in order to carry out its business. The number of permanent positions the applicant needs to carry out its business is based upon the quantity of work performed and the annual gross receipts of the business concern. In determining whether the applicant meets this criteria, the Office shall consider such documentation as:

1. Personnel Records.

2. Florida Quarterly Unemployment Reports.

3. Annual Federal Unemployment Report.

4. Payroll Ledgers.

(5) The applicant must demonstrate that it is domiciled in Florida. In determining whether the applicant is domiciled in Florida, the Office shall consider such documentation as:

1. Articles of Incorporation.

2. Partnership Agreement.

3. Certification required to be filed pursuant to Section 620.108, F.S.

4. Business Licenses.

(6) The applicant business must demonstrate that it is at least 51% owned by minority persons who are permanent residents of Florida.

(a) In establishing the permanent Florida residency of the minority owners, the documentation the Office shall consider includes, but is not limited to, the following:

1. Homestead exemption.

2. Voter registration.

3. Driver license.

4. Department of Veteran's Affairs Identification Card.

5. Florida intangible tax returns.

6. Declaration of Florida residency for purposes of filing Federal tax return.

7. Declaration of domicile filed pursuant to Section 222.17, F.S.

8. The applicant business must provide evidence of the minority status of owners who are claiming to be minority persons.

(b) In determining the ethnicity of a person, the Office shall consider any of the following:

1. Birth certificate.

2. Passport.

3. Citizenship papers.

4. Driver license.

5. Voter registration card.

6. Death certificate.

7. Membership or eligibility for membership in a federally recognized Indian tribe.

8. Membership or eligibility for membership in an Indian tribe recognized by the Government of Canada.

9. A letter issued by the Bureau which certifies eligibility to share in a distribution of judgement funds resulting from an aboriginal land claims settlement, i.e., docket number.

10. An Alaskan Native Corporation Shareholder Certificate.

11. A Schedule of the U.S. Census, complete with year, book and page number.

12. Tribal registration.

13. Any other documentation that tends to substantiate the person's claim of minority status.

(c) In determining the gender of a person, the Office shall consider any of the following:

1. Birth certificate.

2. Passport.

3. Citizenship papers.

4. Driver license.

5. Voter registration card.

6. Any other documentation that tends to substantiate the person's claim of minority status.

(d) When determining a person's origins, the Office may consider documentation clearly establishing a direct line of descent.

1. Such documentation may include:

a. Marriage licenses.

b. Divorce decrees.

c. Adoption papers, to show the adopted person's original, not adopted, origins.

d. Court orders which have the effect of changing a person's name.

2. The Office is not required to, but may consider as supporting documentation, the following:

a. An Affidavit, except that of an official of the federal government, a state government or a municipality.

b. A "family tree" or "family chart".

(7) The applicant business shall establish that it is currently performing a useful business function in each specialty area requested by the applicant. For purposes of this rule, "currently" means as of the date of the Office's receipt of the application for certification. The applicant business must also be currently providing goods and/or services to customers other than state agencies. The applicant business is considered to be performing a useful business function when it is responsible for the execution of a distinct element of the work of a contract and carrying out its responsibilities in actually performing, managing and supervising the work involved. The useful business function of an applicant business shall be determined in reference to the products or services for which the applicant business requested certification on the Form MBE 7500. When the applicant business is required by law to hold a license, other than an occupational license, in order to undertake its business activity, the applicant business shall not be considered to be performing a useful business function unless it has the required license(s).

(a) In determining if an applicant business is acting as a regular dealer and that it is not acting as a conduit to transfer funds to a non-minority business, the Office shall consider the applicant business' role as agent or negotiator between buyer and seller or contractor. Though an applicant business may sell products through a variety of means, the Office shall consider the customary and usual method by which the majority of sales are made in its analysis of the applicability of the regular dealer requirements. Sales shall be made regularly from stock on a recurring basis constituting the usual operations of the applicant business. The proportions of sales from stock and the amount of stock to be maintained by the applicant business in order to satisfy these rule requirements will depend on the business' gross receipts, the types of commodities sold, and the nature of the business' operations. The stock maintained shall be a true inventory from which sales are made, rather than be a small stock of sample, display, or surplus goods remaining from prior orders. Consideration shall be given to the applicant's provision of dispensable services or pass-through operations which do not add economic value, except where characterized as common industry practice or customary marketing procedures for a given product. An applicant business acting as broker or packager shall not be regarded as a regular dealer absent a showing that brokering or packaging is the normal practice in the applicant business' industry. Manufacturer's representatives, sales representatives and non-stocking distributors shall not be considered regular dealers for purposes of these rules.

(b) Documentation to substantiate a useful business function may include but not be limited to the following:

1. Executed purchase orders.

2. Executed invoices.

3. Executed contracts.

Notes

Fla. Admin. Code Ann. R. 60A-9.005

Rulemaking Authority 120.53, 287.0943, 287.09451(4)(m) FS. Law Implemented 287.0943(1)(e), 288.703 FS.

New 9-11-96, Formerly 38A-20.005.

New 9-11-96, Formerly 38A-20.005.