220 R.I. Code R. 220-RICR-80-15-1.5

Current through October 25, 2024

Section 220-RICR-80-15-1.5 - Certification Criteria

A. DOA will certify or recertify only those firms which meet all of the requirements as outlined below:

1. Be a small business concern as defined pursuant to the U.S. Small Business Administration criteria and size standards in 13 C.F.R. Part 121.

2. Owner(s) must be a veteran found to be economically disadvantaged, in accordance with 49 C.F.R. Part 26.

3. Veteran owners/partners/shareholders must own at least fifty-one percent (51%) of the business.

4. Veteran owners must possess control of the business and 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 management, policy and operations.

5. Veteran owners must be substantial investors in the business.

6. The business must be an on-going concern.

7. The business must be in operation a minimum of six (6) months prior to applying for certification.

8. Existing businesses whose ownership and control have been transferred to veterans must be in the control of the veterans a minimum of six (6) months prior to applying for certification.

B. Ownership Requirements

1. An applicant must satisfy either of §§ 1.5(B)(1)(a) and (b) or (c) of this Part, as well as §§ 1.5(B)(1)(d) through (f) of this Part, below, in order to be considered fifty-one percent (51%) owned by veterans:

a. In a corporate form of organization, the veteran shareholders of the corporation must own at least fifty-one percent (51%) of each and every class of stock, including fifty-one percent (51%) of all voting stock in the corporation; or

b. In a partnership form of organization, the veteran partners must own at least fifty-one percent (51%) of the partnership; or

c. In any other form of organization, the veteran owners must own at least fifty-one percent (51%) of the business interest or the organization including but not limited to fifty-one percent (51%) of the ownership of assets, dividends, and intangible assets such as copyrights and patents; and

d. The veteran owners must demonstrate that they are entitled to receive profits from the business firm and that they are entitled to share in any other benefit which accrues to all owners of the business firm; and

e. The veteran owners must substantially share in all the risks assumed by the business firm; and

f. The business firm cannot at any time enter into any agreement, option, scheme, or create any rights of conversion, which if exercised, would result in less than fifty-one percent (51%) veteran ownership of the business firm.

C. Control Requirements

1. To prove that the veteran owners possess control over the business, an applicant must satisfy all of the requirements of §§ 1.5(C)(1)(a) through (e) of this Part, below:

a. The veteran owners must demonstrate that they have control over the day-to-day management of the business and the policy making mechanism of the business.

b. The ownership and control by the veteran owners must be real, substantial, and continuing and shall go beyond the pro forma ownership of the firm as reflected in the ownership document.

c. The veteran owners must establish their control by providing substantial evidence that they possess the power to direct or cause the direction of the management of the firm and to make day-to-day as well as major decisions on matters of management, policy, and operations by establishing the following:

(1) Have the power to direct or cause the directions of the purchase of goods, equipment, business inventory and services needed in the day-to-day operations of the business.

(2) Have the authority to hire and fire employees, including those to whom management authority is delegated.

(3) Be an authorized signature on all corporate accounts - checking, savings and other financial accounts.

(4) Have a thorough knowledge of the financial structure of the business and authority to determine all financial affairs.

(5) Have the capability, knowledge and experience required to make decisions regarding the particular type of work engaged in by the VBE.

(6) Have displayed independence and initiative in seeking and negotiating contracts, accepting and rejecting bids, and in conducting all major aspects of the business.

d. Any of the following conditions creates an irrefutable presumption that the veteran owners do not have control of the business that is applying for certification:

(1) If the veteran owners are currently employees of a non-veteran owned business corporation, or individual, or partnership which has significant ownership interest in the business firm applying for certification.

(2) If the directors and/or management of the applicant firm is substantially the same as the affiliated non-veteran owned firm.

(3) If the applicant is a wholly-owned subsidiary of a non-veteran owned firm.

(4) If the applicant firm has an extremely dependent relationship on a non-veteran owned firm or individual.

e. Any agreement, option, right of conversion, scheme or other restraint, which, if exercised, would result in less than dominant control by the veteran owners is prohibited.

D. Substantial Investment in Business Requirements

1. The veteran owners must demonstrate that they have substantial personal investment in the business. Proof of such substantial investment must be established by producing evidence of the following:

a. A substantial amount of money invested in the business, or

b. Investment in the form of capital, equipment, contribution of property, space, patents, and copyrights.

2. Contributions of personal or professional services alone will not be considered substantial investment for the purpose of this section. However, a contribution of such services will receive consideration when given in conjunction with other tangible forms of investment.

3. There will be an irrefutable presumption that the veteran owners have not made a substantial investment in the business if a significant portion of the applicant's equity is financed by a loan or gift from a non-veteran corporation, partnership, or individual that has a significant interest in the applicant.

E. Continuing Operational Requirement

1. The applicant must be an ongoing business concern. It must demonstrate to the satisfaction of DOA that it was not established solely for the purpose of competing for the VBE program.

220 R.I. Code R. 220-RICR-80-15-1.5

Adopted effective 7/3/2019