BART - DBE Certification Determinations

I. DBE Certification Determinations
Certification is the process by which all firms seeking to participate in the District's DBE Program are determined to have met the requirements set forth in 49 CFR Part 26. This Appendix provides guidance for certifying firms as DBEs.

A. Burdens of Proof
In accordance with 49 CFR Section 26.61 the firm seeking certification has the burden of demonstrating to the District, by a preponderance of the evidence, that it meets the requirements concerning group membership or individual disadvantage, business size, ownership and control. The District will rebuttably presume that members of the designated groups identified herein are socially and economically disadvantaged. Where the presumption does not apply or has been rebutted, the individuals have the burden of proving, by a preponderance of the evidence, that they are socially and economically disadvantaged. The District will make determinations concerning whether individuals and firms have met the burden of demonstrating group membership, ownership, control, and social and economic disadvantage by considering all the facts in the record, viewed as a whole.

B. Group Membership Determinations
Pursuant to 49 CFR Section 26.63, if the District has reason to question whether an individual is a member of a group presumed to be socially and economically disadvantaged, the District will require the individual to demonstrate, by a preponderance of the evidence, that he/she is a member of such group. In making that determination, the District will consider whether or not the person has held himself/herself to be a member of the group over a long period of time prior to application for certification and whether the person is regarded as a member of the group by the relevant community. The District may require the applicant to produce appropriate documentation of group membership. If the District determines an individual claiming to be a member of a group presumed disadvantaged is not a member of such group, the individual must demonstrate social and economic disadvantage on an individual basis. The District's decision concerning membership in a designated group will be subject to the certification appeal procedures.

C. Social and Economic Disadvantage Determinations

1.      Social Disadvantage. Socially disadvantaged individuals are those who have been subjected to racial or ethnic prejudice or cultural bias within American society because of their identities as members of groups and without regard to their individual qualities. Social disadvantage must stem from circumstances beyond their control. Evidence of individual social disadvantage must include at least one objective distinguishing feature that has contributed to social disadvantage such as race, ethnic origin, gender, disability, long-term residence in an isolated environment or similar causes not common to individuals not socially disadvantaged; personal experiences of substantial and chronic social disadvantage in American society, not in other countries; and negative impact on entry into or advancement in the business world because of the disadvantage. The District will consider any relevant evidence in its assessment of this element, and in every case the District will consider education, employment, and business history to see if the totality of circumstances shows disadvantage in entering into or advancing in the business world.

2.      Economic Disadvantage. Economically disadvantaged individuals are socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same or similar line of business who are not socially disadvantaged. The District requires submission of narrative and financial information from each individual claiming economic disadvantage which must describe the conditions that are the basis for the claim in a narrative statement, and the individual must submit personal financial information. The District will require a married individual to submit separate financial information for his/her spouse unless they are legally separated. In considering diminished capital and credit opportunities, the District will examine all factors relating to personal financial condition, including personal income for the past three years, (including bonuses and the value of company stock given in lieu of cash), personal net worth, and the fair market value of all assets, whether encumbered or not. The District will also consider the financial condition of applicants and compare financial profiles of small businesses in the same primary industry classification(s) or similar lines of business which are owned and controlled by socially and economically disadvantaged individuals. The financial profiles to be compared include total assets, net sales, pre-tax profit, sales/working capital ratio, and net worth. The District will attribute to any individual claiming disadvantaged status any assets which that individual has transferred to an immediate family member, trust, or beneficiary for less than the fair market value within the prior two (2) years of the concern's application, unless that individual demonstrates that the transfer is to or on behalf of an immediate family member for that individual's education, medical or some other form of essential support, excluding gifts for birthdays, graduations, anniversaries, retirements or other special occasions. In determining an individuals access to capital and credit, the District will consider assets transferred by an individual within the previous three (3) year period that are not considered in evaluating the individual's assets and net worth, such as transfers to charities.

3.      Presumption of Disadvantage. The District will rebuttably presume that citizens of the United States (or lawfully admitted permanent residents) who are women, Black Americans, Hispanic Americans, Native Americans, Asian-Pacific Americans, Subcontinent Asian Americans, or other minorities found disadvantaged by the Small Business Administration are socially and economically disadvantaged individuals.

a. Pursuant to 49 CFR Section 26.67, the District will require each individual owner of a firm applying to participate as a DBE and whose ownership interest is relied upon for DBE certification to submit a signed, notarized certification that each presumptively disadvantaged owner is, in fact, socially and economically disadvantaged.

b. Pursuant to 49 CFR Section 26.67, the District will require each individual owner of a firm applying to participate as a DBE and whose ownership interest is relied upon for DBE certification to submit a signed, notarized statement of personal net worth with appropriate supporting documentation that each presumptively disadvantaged owner is, in fact, socially and economically disadvantaged. In determining net worth, the District will exclude an individual's ownership interest in the applicant firm and the individual's equity in his/her primary residence (except any portion of such equity that is attributable to excessive withdrawals from the applicant firm). A contingent liability does not reduce an individual's net worth.

i. If the statement of personal net worth that an individual submits shows the individual's personal net worth to exceed $750,000, the individual's presumption of economic disadvantage will be rebutted. The District is not required to have a proceeding in order to rebut the presumption of economic disadvantage in this case.

ii. If the District has a reasonable basis to believe that an individual who is a member of one of the designated groups in not, in fact, socially and/or economically disadvantaged the District may, at any time, start a proceeding to determine whether the presumption should be regarded as rebutted with respect to that individual. The District must follow the procedures set forth in 49 CFR Section 26.87. The District may require the individual to produce additional information relevant to the determination of his/her disadvantage.

When an individual's presumption of social and/or economic disadvantage has been rebutted, his/her ownership and control of the firm cannot be used for purposes of DBE eligibility unless and, until he/she makes an individual showing of social and/or economic disadvantage. If the basis for rebutting the presumption is a determination that the individual's personal net worth exceeds $750,000, the individual is no longer eligible for participation in the Program and cannot regain eligibility by making an individual showing of disadvantage.

4.      U. S. Small Business Administration Section 8(a) Firms. Pursuant to 49 CFR Section 26.67 (c), if a firm applying for certification has a current valid Section 8(a) certification from or is recognized by the U.S. Small Business Administration under the Section 8(a) Program, the District may accept the firm's 8(a) certification in lieu of conducting its own certification proceeding.

5.      Individual Determinations of Social and/or Economic Disadvantage. Pursuant to 49 CFR Section 26.67, firms owned and controlled by individuals who are not presumed to be socially and economically disadvantaged (including individuals whose presumed disadvantage has been rebutted) may be certified by the District on a case-by-case basis. The District will determine whether each individual whose ownership and control are relied upon for DBE certification is socially and economically disadvantaged. In such a proceeding, the applicant firm must demonstrate, by a preponderance of the evidence, that each of the individuals who own and control it are socially and economically disadvantaged. An individual whose personal net worth exceeds $750,000 will not be determined to be economically disadvantaged. The District will use guidance in Appendix E of 49 CFR Part 26.

D. Business Size Determinations
In accordance with to 49 CFR Section 26.65, in order to be an eligible DBE, a firm (including its affiliates) must be an existing small business as defined by SBA standards. The District will apply current SBA business size standards found in 23 CFR Part 121 appropriate to the types of work the firm seeks to perform in federally funded contracts. Even if the firm meets the SBA requirements, a firm is not an eligible DBE in any federal fiscal year if the firm (including its affiliates) has had average annual gross receipts as defined by SBA regulations over the firm's previous three fiscal years in excess of $17 million, as adjusted for inflation from time to time.

E. Ownership Determinations

1.      In accordance with 49 CFR Section 26.69, in determining whether the socially and economically disadvantaged participants in a firm own the firm, the District will consider all the facts in the record, viewed as a whole.

2.      To be an eligible DBE, a firm must be at least 51 percent owned by socially and economically disadvantaged individuals. In the case of a corporation, such individuals must own at least 51 percent of each class of voting stock outstanding and at least 51 percent of the aggregate of all stock outstanding. In the case of a partnership, at least 51 percent of each class of partnership interest must be owned by socially and economically disadvantaged individuals and must be reflected in the firm's partnership agreement. In the case of a limited liability company, at least 51 percent of each class of member interest must be owned by socially and economically disadvantaged individuals.

3.      The firm's ownership by socially and economically disadvantaged individuals must be real, substantial and continuing, going beyond pro forma ownership of the firm as reflected in the ownership documents. The disadvantaged owners must enjoy the customary incidents of ownership and share in the risks and profits commensurate with their ownership interests, as demonstrated by the substance, not merely the form, of arrangements.

4.      All securities that constitute ownership will be held directly by disadvantaged persons. Except as provided in 49 CFR Section 26.69(d), no securities or assets held in trust, or by any guardian for a minor, are considered as held by disadvantaged persons in determining ownership of a firm.

5.      The contributions of capital or expertise by the socially and economically disadvantaged owners to acquire their ownership interests must be real and substantial.

6.      In a situation in which an individual's expertise is relied upon as part of a disadvantaged owner's contribution to acquire ownership, the owner's expertise must be: in a specialized field; of outstanding quality; in areas critical to the firm's operations; indispensable to the firm's potential success; specific to the type of work the firm performs; and documented in the records of the firm. The individual whose expertise is relied upon must have a significant financial investment in the firm.

7.      For purposes of determining ownership, the District will deem as held by a socially and economically disadvantaged individual all interests in a business or other assets obtained by the individual:

a. As the result of a final property settlement or court order in a divorce or legal separation; and

b. Through inheritance or otherwise because of the death of the former owner.

8.      The District will presume as not being held by a socially and economically disadvantaged individual, for purposes of determining ownership, all interests in a business or other assets obtained by the individual as the result of a gift, or transfer without adequate consideration, from any non-disadvantaged individual or non-DBE firm which is:

a. Involved in the same firm for which the individual is seeking certification, or an affiliate of that firm;

b. Involved in the same or a similar line of business; or

c. Engaged in an ongoing business relationship with the firm, or an affiliate of the firm, for which the individual is seeking certification.

9.      To overcome the foregoing presumption and permit the interests or assets to be counted, the disadvantaged individual must demonstrate by clear and convincing evidence that:

a. The gift or transfer was made for reasons other than obtaining certification as a DBE; and

b. The disadvantaged individual actually controls the management, policy, and operations of the firm, notwithstanding the continuing participation of a non-disadvantaged individual who provided the gift or transfer.

10. The District will apply the following rules in situations in which marital assets form a basis for ownership of a firm:

a. When marital assets (other than the assets of the business in question), held jointly or as community property by both spouses, are used to acquire the ownership interests asserted by one spouse, the District will deem ownership interest in the firm to have been acquired by that spouse with his/her individual resources,

b. provided that the other spouse irrevocably renounces and transfers all rights in the ownership interest in the manner sanctioned by the laws of the state in which either spouse or the firm is domiciled. The District will not count a greater portion of joint or community property assets toward ownership than state law would recognize as belonging to the socially and economically disadvantaged owner of the firm.

c. A copy of the document legally transferring and renouncing the other spouse's rights in the jointly owned or community assets used to acquire an ownership interest in the firm must be included as part of the firm's application for DBE certification.

11. The District may consider the following factors in determining the ownership of a firm, but will not regard a contribution of capital as failing to be real and substantial nor find a firm ineligible, solely because:

a. A socially and economically disadvantaged individual acquired his or her ownership interests as the result of a gift or transfer without adequate consideration other than the types set forth in paragraph E above;

b. There is a provision for the co-signature of a spouse who is not a socially and economically disadvantaged individual on financing agreements, contracts for the purchase or sale of real or personal property, bank signature cards, or other documents; or

c. Ownership of the firm in question or its assets is transferred for adequate consideration from a spouse who is not a socially and economically disadvantaged individual to a spouse who is such an individual. In this case, the District will give particularly close and careful scrutiny to the ownership and control of a firm to ensure that it is owned and controlled, in substance as well as in form, by a socially and economically disadvantaged individual.

F. Control Determinations

1.      In accordance with 49 CFR Section 26.71, in determining whether socially and economically disadvantaged owners control a firm, the District will consider all the facts in the record, viewed as a whole.

2.      Only an independent business may be certified as a DBE. An independent business is one the viability of which does not depend on its relationship with another firm or firms. In determining whether a potential DBE is an independent business, the District will scrutinize relationships with non-DBE firms in such areas as personnel, facilities, equipment, financial and/or bonding support, and other resources. The District will consider present or recent employer/employee relationships, the firm's relationship with prime contractors, and factors related to the independence of a potential DBE firm. Further, the District will consider the consistency of relationships between the potential DBE and non-DBE firms with normal industry practice.

3.      A DBE firm must not be subject to any formal or informal restrictions which limit the customary discretion of the socially and economically disadvantaged owners. The socially and economically disadvantaged owners must possess the power to direct or cause the direction of the management and policies of the firm and to make day-to-day as well as long-term decisions on matters of management, policy and operations. In a corporation, disadvantaged owners must control the board of directors.

4.      A disadvantaged owner must hold the highest officer position in the company (e.g. chief executive officer or president). In a corporation, disadvantaged owners must control the Board of Directors.

5.      In a partnership, one or more disadvantaged owners must serve as general partners with control over all partnership decisions.

6.      Individuals who are not socially and economically disadvantaged may be involved in a DBE firm as owners, managers, employees, stockholders, officers, and/or directors. Such individuals must not possess or exercise the power to control the firm, or be disproportionately responsible for the operation of the firm. The socially and economically disadvantaged owners may delegate various areas of management, policymaking, or daily operations of the firm to other participants in the firm, regardless of whether these participants are socially and economically disadvantaged individuals. Such delegations of authority must be revocable, and the socially and economically disadvantaged owners must retain the power to hire and fire any person to whom such authority is delegated. The managerial role of the socially and economically disadvantaged owners in the firm's overall affairs must be such that the District can reasonably conclude that the socially and economically disadvantaged owners actually exercise control over the firm's operations, management and policy.

7.      The socially and economically disadvantaged owners must have an overall understanding of, and managerial and technical competence directly related to, the type of business in which the firm is engaged and the firm's operations.

8.      If the state or local law requires the persons to have a particular license or other credential in order to own and/or control a certain type of firm, then the socially and economically disadvantaged persons who own and control a potential DBE firm of that type must possess the required license or credential.

9.      The District will consider differences in remuneration between socially and economically disadvantaged owners and other participants in the firm, in the context of the duties involved, normal industry practices, and the firm's policies and practices.

10. In order to be viewed as controlling the firm, a socially and economically disadvantaged owner cannot engage in outside employment or other business interests which conflict with the management of the firm or prevent the individual from devoting sufficient time and attention to the affairs of the firm.

11. A socially and economically disadvantaged individual may control the firm even though one or more of the individual's immediate family members (who themselves are not socially and economically disadvantaged individuals) participate in the firm. If the District cannot determine that the socially and economically disadvantaged owners, as distinct from the family as a whole, control the firm, then the socially and economically disadvantaged owners have failed to carry the burden of proof concerning control even though they may participate significantly in the firm's activities.

12. Where a firm was formerly owned and/or controlled by a non-disadvantaged individual (whether or not an immediate family member), ownership and/or control were transferred to a socially and economically disadvantaged individual, and the non-disadvantaged individual remains involved with the firm in any capacity, the disadvantaged individual now owning the firm must demonstrate by clear and convincing evidence that the transfer of ownership and/or control to the disadvantaged individual was made for reasons other than obtaining certification as a DBE and that the disadvantaged individual actually controls the management, policy, and operations of the firm, notwithstanding the continuing participation of a non-disadvantaged individual who formerly owned and/or controlled the firm.

13. In determining whether a firm is controlled by its socially and economically disadvantaged owners, the District will consider whether the firm owns equipment necessary to perform its work. The District will not determine that a firm is not controlled by socially and economically disadvantaged individuals solely because the firm leases, rather than owns, such equipment, where leasing equipment is a normal industry practice and the lease does not involve a relationship with a prime contractor or other party that compromises the independence of the firm.

14. The District will grant certification to a firm only for specific types of work in which the socially and economically disadvantaged owners have the ability to control the firm. To become certified in an additional type of work, the firm must demonstrate only that its socially and economically disadvantaged owners are able to control the firm with respect to that type of work. The District will not require that the firm be renewed or submit a new application for certification but will verify the disadvantaged owner's control of the firm and the additional type of work.

15. The District may certify a business operating under a franchise or license agreement if it meets the standards in 49 CFR Part 26 Subpart D, and the franchiser or licenser is not affiliated with the franchisee or licensee. In determining whether affiliation exists, the District will generally not consider restraints relating to standardized quality, advertising, accounting format, and other provisions imposed by the franchise agreement or license, provided the franchisee or licensee has the right to profit from its efforts and bears the risk of loss commensurate with ownership.

16. In order for a partnership to be controlled by socially and economically disadvantaged individuals, any non-disadvantaged partners must not have the power, without the specific written concurrence of the socially and economically disadvantaged partner, to contractually bind the partnership or subject the partnership to contract or tort liability.

17. The socially and economically disadvantaged individuals controlling a firm may use an employee leasing company. This does not preclude such individuals from controlling their firm if they continue to maintain an employer-employee relationship with the leased employees, including responsibility for hiring, firing, training, assigning, and otherwise controlling on-the-job activities of the employees as well as ultimate responsibility for wage and tax obligations related to the employees.

G. Other Considerations

1.      Commercially Useful Function. Except as provided in paragraph 2, below, the District will not consider commercially useful function issues in any way in making decisions about whether to certify a firm as a DBE. Consideration of whether a firm performs a commercially useful function or is a regular dealer pertains solely to counting toward DBE goals any participation of firms which have already been certified as DBEs.

2.      Pattern of Conduct. In making certification decisions, the District will consider whether a firm has exhibited a pattern of conduct indicating its involvement in attempts to evade or subvert the intent or requirements of the DBE program.

3.      Present Circumstances. The District will evaluate the eligibility of a firm on the basis of present circumstances and will not refuse to certify a firm based solely on historical information indicating lack of ownership or control by socially and economically disadvantaged individuals at some time in the past, if the firm currently meets ownership and control standards. The District will not refuse to certify a firm solely on the basis that it is a newly formed firm.

4.      DBE Cooperation. The District expects all participants in the District's DBE Program, including DBE firms and firms seeking DBE certification, to cooperate fully with requests for information relevant to the certification process and other requests for information. Failure or refusal to provide such information is a ground for denial or removal of certification or such other remedies as may be provided by 49 CFR Section 26.109 (c).

5.      For-Profit Firms. Only firms organized for profit may be eligible DBEs. Not-for-profit organizations, even though controlled by socially and economically disadvantaged individuals, are not eligible to be certified as DBEs.

6.      Subsidiaries and Affiliates. An eligible DBE firm must be owned by individuals who are socially and economically disadvantaged. Except as provided by this policy and in 49 CFR Section 26.73 (e), a firm that is not owned by such individuals, but instead is owned by another firm-even a DBE firm-cannot be an eligible DBE. If socially and economically disadvantaged individuals own and control a firm through a parent or holding company, established for tax, capitalization, or other purposes consistent with industry practice, and the parent or holding company, in turn, holds and controls an operating subsidiary, the District may certify the subsidiary if it otherwise meets all requirements of 49 CFR Part 26, including the requirement that there be cumulatively at least 51 percent ownership of the subsidiary by socially and economically disadvantaged individuals. In this situation, the individual owners and controllers of the parent or holding company are deemed to control the subsidiary through the parent or holding company.

7.      Recognition of a business as a separate entity for tax or corporate purposes is not necessarily sufficient to demonstrate that a firm is an independent business, owned and controlled by socially and economically disadvantaged individuals.

8.      Pre-qualification. The District will not require that a DBE firm be pre-qualified as a condition for certification unless the District requires all firms that participate in its contracts and subcontracts, or in a particular contract or subcontract be pre-qualified.

9.      Tribal Organizations. The District recognizes that a firm owned by an Indian tribe, Alaska Native Corporation, or Native Hawaiian organization as an entity, rather than by Indians, Alaska Natives, or Native Hawaiians as individuals, may be eligible for certification as long as such firm meets the size standards and is controlled by socially and economically disadvantaged individuals.

II. DBE Certification Procedures
In accordance with 49 CFR Section 26.83, the District will ensure that only firms certified as eligible DBEs participate as DBEs in the DBE Program. The District will determine the eligibility of firms as DBEs consistent with the standards of 49 CFR Part 26, Subpart D.

1. The District will require potential DBEs to complete and submit an appropriate application form. The District will assure that the applicant attests to the accuracy and truthfulness of the information on the application form. This will be done either in the form of an affidavit sworn to by the applicant before a person authorized by state law to administer oaths or in the form of an unsworn declaration executed under penalty of perjury of the laws of the United States. The District will review all information on the form prior to making a decision about the DBE eligibility of the firm.

a. The District may request additional information if there is insufficient evidence upon which to base a determination. No action will be taken on an application until all items have been submitted. Failure or refusal of an applicant to comply with requests for information or submission deadlines may result in the denial of DBE certification.

b. Applicants are evaluated on the basis of documentation in existence at the time of application. Any changes in ownership and control after the date of the application will not be considered. These changes include:

- - Execution of new agreements, board or shareholders' resolutions, memoranda of understanding;
  - Consolidation, liquidation, reorganization, merger;
  - Election of new officers or directors, appointment of new principals or key personnel; and
  - The purchase and sale of shares, new issues of shares.

c. Applicants who fail or refuse to submit information deemed necessary for certification review will not be certified. If any information requested is not available or applicable, the applicant must provide a written explanation therefor.

d. Any applicant who wishes to apply for certification whose file has been closed must follow the procedures for initial application.

2. The District will take all the following steps in determining whether a DBE firm meets said standards:

a. The District will perform an on-site visit to the offices of the firm and will interview the principal(s) of the firm and review their resumes and/or work histories. The District will also perform visits to job sites if there are such sites on which the firm is working in the District's jurisdiction at the time of the eligibility investigation. The District may rely upon the site visit reports of any other U.S. DOT grantee with respect to a firm applying for certification;

b. If the firm is a corporation, the District will analyze the ownership of stock in the firm as well as all relevant documents;

c. Analyze the bonding and financial capacity of the firm;

d. The District will determine the work history of the firm, including contracts it has received, and work it has completed;

e. The District will obtain a statement from the firm of the type of work it prefers to perform as part of the DBE Program and its preferred locations for performing the work, if any;

f. The District will obtain or compile a list of equipment owned by or available to the firm and the licenses the firm and its key personnel possess to perform the work it seeks to do as part of the DBE Program; and

g. All data pertaining to the firm's eligibility will be forwarded together with a recommendation to the Department Manager of the Office of Civil Rights. The Department Manager will submit the staff recommendation to the California Unified Certification Program (CUCP) for approval. If certified, the firm will be included in the CUCP Database and shall be certified for a period of three years from the date of the certificate of certification.

3. When another grantee, in connection with its consideration of the eligibility of a firm, makes a written request for certification information the District has obtained about that firm, the District will promptly make the information available to the other grantee

4. When another U.S. DOT grantee has certified a firm, the District has the discretion to take any of the following actions:

a. Make an independent certification decision based on documentation provided by the other grantee augmented by any additional information on the District requires the applicant to provide; or

b. Require the applicant to go through the District's application process without regard to the action of the other grantee.

5. The District will not impose an application fee for firms to participate in the DBE certification process.

6. The District will not impose an application fee for firms to participate in the DBE certification process.

7. The District shall safeguard from disclosure from unauthorized persons all information gathered as part of the certification process that may be regarded as proprietary or other confidential business information, consistent with applicable federal, state and local laws.

8. Once the District has certified a firm as a DBE, it will remain certified for a period of at least three (3) years unless and until its certification has been removed. The District will not require DBEs to reapply for certification as a condition of continuing to participate in the Program during this three-year period unless the factual basis on which the DBE certification was made changes.

9. Once certified, a DBE firm must inform the District in writing of any changes in circumstances affecting the firm's ability to meet size, disadvantaged status, ownership, or control requirements, or any material change in the information provided in the certification application process, and attach supporting documentation describing in detail the nature of such changes. Changes in management responsibility among members of a limited liability company are also covered by this requirement. Such notice of change from the DBE firm must take the form of an affidavit sworn to before a person authorized by state law to administer oaths, or of an unsworn declaration executed under penalty of perjury of the laws of the United States. The written notification must be provided by the DBE within thirty (30) days of occurrence of the change(s). If the DBE fails to make timely notification of such change(s), it will be deemed to have failed to cooperate as required.

10. The District will make decisions on applications for DBE certification within ninety (90) days of receiving from the applicant firm all information required. The District may extend this time period once, for no more than an additional sixty (60) days, upon written notice to the firm explaining the reasons for the extension.

III. DBE Certification of Continuing Eligibility
Every firm certified by the District as a DBE must provide to the District, every three (3) years on the anniversary of the date of initial certification, an affidavit sworn to by the firm's owners before a person who is authorized by state law to administer oaths or an unsworn declaration executed under penalty of perjury of the laws of the United States. This affidavit must affirm that there have been no changes in the firm's circumstances affecting its ability to meet size, disadvantaged status, ownership, or control requirements of 49 CFR Part 26 or any material changes to the information provided in its original application, except for changes about which it has notified the District. The affidavit will specifically affirm that the DBE continues to meet SBA business size criteria and the overall gross receipts cap set forth in 49 CFR Part 26, documenting this affirmation with supporting documentation of the DBE's size and gross receipts. In addition, the owner whose interest is relied upon for DBE certification must affirm that the owner's personal net worth has not exceeded $750,000. The owner whose interest is relied upon for DBE certification will be required to submit a new Personal Net Worth statement along with three years of personal income tax returns (Form 1040 along with all schedules). If the DBE fails to provide this information in a timely manner, it will be deemed to have failed to cooperate as required.

IV. DBE Utilization

1. Commercially Useful Function.
A DBE is considered to perform a commercially useful function when it is responsible for the execution of a distinct element of the work of a contract and carrying out its responsibilities by actually performing, managing, and supervising the work involved. If a DBE does not perform at least 30 percent of the total cost of its contract with its own workforce, there shall be a refutable presumption that the DBE is not performing a commercially useful function.

2. DBE Participation
a. DBE participation includes contracts (other than employee contracts) between DBEs and the prime contractor for any goods or services specifically required for the completion of the work under the contract. A DBE may participate as a prime, joint venture partner, first-tier subcontractor or supplier. The bidder assumes responsibility for accurately identifying the status of DBE firms proposed on the Designation of Subcontractors and DBEs Form. At the time of bid opening, OCR will determine whether the DBE has the proper license to perform the work and is certified in the classification or specialty for which it is listed.

b. A DBE joint venture partner must be responsible for a clearly defined portion of the work to be performed in addition to satisfying requirements for ownership and control. The DBE joint venturer must submit information for determining joint venture eligibility.

c. DBE firms listed on the Designation of Subcontractors and DBEs Form will be counted toward meeting the DBE goal. DBE participation will be counted as follows:

The total dollar value of the contract if the bidder is a DBE. If the Bidder is a joint venture, only the proportionate interest of the DBE in the joint venture will be counted towards the goal;
The dollar value of all DBE subcontracts for work or services under the contract;
The dollar value of material or supplies purchased from a DBE manufacturer of such material or supplies;
Sixty percent of the dollar value of material or supplies purchased from a DBE regular dealer. A regular dealer is a firm that owns, operates, or maintains a store, warehouse or other establishment in which the material or supplies required for the performance of the contract are kept in stock, and regularly sold to the public in the usual course of business. To be a regular dealer, the firm must engage in, as its principal business, and in its own name, the purchase and sale of the products in question. A regular dealer in such bulk items as steel, cement, stone, gravel, and petroleum products need not keep such product in stock, if it owns or operates distribution equipment. Brokers and packagers shall not be regarded as manufacturers or regular dealers.
Fees or commissions charged for providing a bona fide service and assistance in the procurement of essential personnel, facilities, equipment, materials or supplies required for performance of the contract, delivery of materials and supplies required on a jobsite; or for
providing any bonds or insurance specifically required for the performance of the Contract, provided that such fees or commissions are reasonable and not excessive as compared with fees or commissions customarily allowed for similar services.

3. Substitution
DBE subcontractors may not be substituted during the life of the contract without the written consent of OCR. The prime contractor shall be required to make good faith efforts to replace a DBE subcontractor with another DBE subcontractor.

4. Reporting Responsibilities
The Contractor shall adhere to the contract specifications for the District's specific DBE reporting and record keeping requirements.

5. DBE Activity Participation Status Report Forms
All Contractors shall submit the DBE Participation Status Report on a monthly basis to OCR through the resident engineer or project engineer. For other types of contracting, DBE participation reports shall be submitted to the project manager on a periodic basis as specified in the contract, and a final DBE report shall be submitted at the completion of the project. Failure to submit these reports in a timely manner may result in liquidated damages for each day and each report is delayed as set forth in Appendix H.

6. Compliance Review and Evaluation

a. OCR staff shall review the contractor's DBE Participation Status Report to determine whether the utilization of DBE firms is consistent with the commitment of the contractor as stated in its bid or proposal.

b. If it is determined that the contractor's DBE utilization is not consistent with the commitment thereto, the contractor shall be requested, in writing, to submit evidence of its good faith efforts to meet the goal. The contractor shall be given ten (10) working days to submit this documentation. Failure to respond shall place the contractor in non-compliance.

c. The contractor's good faith efforts documentation shall be reviewed for accuracy and sufficiency. Staff shall make a determination as to the adequacy of the contractor's good faith efforts documentation and so inform the contractor. If it is determined that the contractor's good faith efforts documentation is acceptable, the contractor shall be deemed to be in compliance with the DBE utilization goals.

d. If it is determined that the contractor's good faith efforts documentation is not acceptable, the contractor shall be deemed to be in non-compliance with the DBE utilization goals and shall be so notified.